Del Webb Communities, Inc. v. Partington et al

Filing 89

ORDER Denying 53 Motion for Summary Judgment. Denying 55 Motion for Partial Summary Judgment. Signed by Judge Robert C. Jones on 9/17/09. (Copies have been distributed pursuant to the NEF - AXM)

1 2 3 4 5 6 DEL WEBB COMMUNITIES, INC., 7 Plaintiff, 8 vs. 9 10 11 12 Defendants. 13 14 15 16 17 18 19 20 21 22 23 24 25 CHARLES LESLIE PARTINGTON d/b/a M.C. MOJAVE CONSTRUCTION, JOHN WILSON, individually, and DOE INDIVIDUALS I­X, inclusive; and ROE ENTITIES I­X, inclusive, ) ) ) ) ) ) ) ) ) ) ) ) ) ) 2:08-cv-00571-RCJ-GWF ORDER UNITED STATES DISTRICT COURT DISTRICT OF NEVADA

Del Webb Communities builds homes. Charles Partington and John Wilson operated a business, M.C. Mojave Construction, in which they offered Del Webb's customers free home inspections. In connection with those inspections, Partington and Wilson provided the homeowners with information about their rights and ability to file complaints for defects in their homes. This lawsuit arises out of Del Webb's claims against Partington and Wilson for conducting home inspections without a proper license, making false statements of fact in connection with their advertised services, and interfering with the contracts between Del Webb and its customers. Both parties have filed motions for summary judgment. (#53, #55). The Court has considered the motions, briefs, pleadings, and oral argument on behalf of all parties and issues the following order. IT IS HEREBY ORDERED that the Mojave Defendants' Motion for Partial Summary Judgment is DENIED. (#53). IT IS FURTHER ORDERED that Del Webb's Motion for Partial Summary Judgment is GRANTED as to the champerty claim but DENIED as to its other claims. (#55).

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I.

BACKGROUND Plaintiff Del Webb Communities, Inc. develops residential communities, including master-

planned, age-qualified communities in Nevada. (#34, ¶ 10). In 1998, Del Webb opened Sun City Anthem, an age-restricted community in Clark County, Nevada. (Id. at ¶ 3). Beginning in 2001, Del Webb offered residents a warranty plan that provided residents with protection for certain structural elements of their homes for up to ten years (the "2001 Del Webb Home Protection Plan"). (Id. at ¶ 12). The 2001 Home Protection Plan also provided that all unresolved disputes between Del Webb and its residents were to be first submitted to mediation. (Id. at ¶ 13). Defendant Charles Partington began a sole proprietorship called MC Mojave Construction around 1985. (#53, Ex. D, 10:1­9). Mojave Construction originally limited its operations to doing jobs like room additions and patio covers. (Id.). Partington conducted such work under a Nevada B-2 contractors license. (Id. at 10:24­11:1). Over time, Partington expanded the scope of Mojave's operations, constructing tract homes, new homes, and renovating homes and apartment. (Id. at 11:9­11:24). Beginning around 2006, Mojave added an inspection division that specialized in identifying building violations in homes. (Id. at 11:22­12:10. Defendant John Wilson was hired to work in Mojave's inspection division. He was responsible for overseeing the inspections. (Id. at 32:19­33:12; #64, Ex.1, 24:23­25:22). Prior to working for Mojave, Wilson had been a roofing contractor in California and had supervised home inspections with a company called Construction Design Specialist ("CDS"). (Id. at 33:10­13; Ex. E, 21:1­12). To generate business for the home inspections division, Wilson and other Mojave employees went door-to-door throughout the Sun City Anthem development, soliciting residents' business and leaving fliers advertising their services. (#55, Exs. 19­21). The fliers informed homeowners that Mojave would provide them a free home inspection to detect any defects in the roofing, concrete, or stucco of their homes. (Id.). One flier cited Nevada Revised Statute 40.655, informed Page 2 of 33

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homeowners that under that statute they had a right to be reimbursed for costs associated with constructional defects, explained how they could notify their builder (in this case, Del Webb) that Mojave had conducted an inspection of their home and discovered constructional defects, explained how they could assist with a home inspection, and then explained that they could hire a law firm to pursue their Chapter 40 claims. (#1, Ex. 1). Wilson and Partington would provide interested homeowners with a Chapter 40 Inspections and Evaluation Agreement, which explained Mojave's fees for conducting the home inspection and explained that Mojave would receive payment for its services only if the homeowner succeeded in getting reimbursed from the builder, but that even if the homeowner was not successful, that the homeowner agreed to assign his or her right to reimbursement to Mojave. (#1, Ex. 2). Once an inspection was agreed to, Mojave would leave a placard on or around the property to be inspected, providing information as to the impending inspections. (#1, Ex. 3). One law firm with which Wilson and Partington worked with in connection with legal representation of homeowners for their Chapter 40 claims was Angius & Terry. (#55, Ex. 40). Angius & Terry's retainer letter stated that if the client ended Angius & Terry's representation, but recovered from the builder, the client would be responsible to pay all fees and costs associated with the litigation. (Id.). Del Webb has instituted the present lawsuit to challenge the activities of Partington and Wilson (collectively, the "Mojave Defendants") in connection with the Mojave home inspection business. In May 2008, Del Webb filed this lawsuit with the following claims against the Mojave Defendants: (1) champerty and maintenance; (2) violation of Nevada's Deceptive Trade Practices Act; (3) violation of the Lanham Act for false advertising; (4) intentional interference with contractual relationships; and (5) attorneys' fees. (#1). In October 2008, this Court granted a preliminary injunction against the Mojave Defendants, prohibiting them from performing home inspections or soliciting any business related thereto. (#34). The Mojave Defendants and Del Webb have now moved for summary judgment as to all or part of Del Webb's claims. (#53, #55). Page 3 of 33

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II.

LEGAL STANDARD The Federal Rules of Civil Procedure provide for summary adjudication when "the

pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). Material facts are those which may affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute as to a material fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. See id. A principal purpose of summary judgment is "to isolate and dispose of factually unsupported claims." Celotex Corp., 477 U.S. at 323­24 (1986). In a summary judgment posture, the Court must consider the parties' respective burdens. "When the party moving for summary judgment would bear the burden of proof at trial, it must come forward with evidence which would entitle it to a directed verdict if the evidence went uncontroverted at trial. In such a case, the moving party has the initial burden of establishing the absence of a genuine issue of fact on each issue material to its case." C.A.R. Transp. Brokerage Co., Inc. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) (citations omitted). In contrast, when the nonmoving party bears the burden of proving the claim or defense, the moving party can meet its burden in two ways: (1) by presenting evidence to negate an essential element of the nonmoving party's case; or (2) by demonstrating that the nonmoving party failed to make a showing sufficient to establish an element essential to that party's case on which that party will bear the burden of proof at trial. See Celotex Corp., 477 U.S. at 323­24. If the moving party fails to meet its initial burden, summary judgment must be denied and the court need not consider the nonmoving party's evidence. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 159-60, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). If the moving party meets its initial responsibility, the burden then shifts to the opposing party to establish that a genuine issue as to any material fact actually does exist. See Matsushita Page 4 of 33

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Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). To establish the existence of a factual dispute, the opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient that "the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial." T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 631 (9th Cir. 1987). In other words, the nonmoving party cannot avoid summary judgment by relying solely on conclusory allegations that are unsupported by factual data. See Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989). Instead, the opposition must go beyond the assertions and allegations of the pleadings and set forth specific facts by producing competent evidence that shows a genuine issue for trial. See Fed. R. Civ. P. 56(e); see also, Celotex Corp., 477 U.S. at 324. When considering a summary judgment motion, the Court examines the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any. Fed. R. Civ. P. 56(c). At summary judgment, the judge's function is not to weigh the evidence and determine the truth but to determine whether there is a genuine issue for trial. See Anderson, 477 U.S. at 249. The evidence of the nonmovant is "to be believed, and all justifiable inferences are to be drawn in his favor." Id. at 255. But, if the evidence of the nonmoving party is merely colorable or is not significantly probative, summary judgment may be granted. See id. at 249­50. ANALYSIS III. MAINTENANCE AND CHAMPERTY Both parties have moved for summary judgment as to Del Webb's claims for maintenance and champerty. Maintenance and champerty are closely related common law doctrines. Maintenance "is officious intermeddling in a suit which in no way belongs to the intermeddler, by maintaining or assisting either party to the action, with money or otherwise, to prosecute or defend it." 14 AM. JUR. 2d Champerty, Maintenance, and Barratry § 1 (2000). Champerty is a species of maintenance "in Page 5 of 33

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which the intermeddler makes a bargain with one of the parties to the action to be compensated out of the proceeds of the action." Id. The United States Supreme Court has said, "[p]ut simply, maintenance is helping another prosecute a suit; champerty is maintaining a suit in return for a financial interest in the outcome; and barratry is a continuing practice of maintenance or champerty." In re Primus, 436 U.S. 412, 424 n. 15, 98 S.Ct. 1893, 1900 n. 15, 56 L.Ed.2d 417, 429 n. 15 (1978). The doctrines of champerty and maintenance originated in medieval England. Osprey, Inc. v. Cabana Ltd. Partnership, 340 S.C. 367, 532 S.E.2d 269 (S.C. 2000). In medieval England, feudal lords and other privileged society members would often assist others, usually those of little means, by supporting the unprivileged's legal disputes against a third party, often the wealthy citizen's personal or political enemy. Id. at 374­75. In return for funding the lawsuit, the party to whom the claim actually belonged promised to give his or her benefactor a stake in the outcome of the lawsuit. Id. By such practices, the wealthier actually became wealthier. "Champerty was a `means by which powerful men aggrandized their estates and the background was unquestionably that of private war.'" Id. at 375 (quoting Max Radin, Maintenance by Champerty, 24 Cal.L.Rev. 48, 58­64 (1935)). In response to rampant champerty and maintenance in feudal society, the law came to sternly prohibit these practices. Id. at 375­76. Some states have outrightly abolished these ancient doctrines. In Saladini v. Righellis, the Massachusetts Supreme Court held that champerty and maintenance would no longer be recognized in the state. 687 N.E.2d 1224, 1226 (Mass. 1997). In Saladini, Saladini and Righellis executed an agreement under which Saladini agreed to fund Righellis's potential lawsuit. In return, Righellis agreed that if Righellis was successful in his lawsuit, he would first reimburse Saladini and then give Saladini 50% of the recovery left over after attorneys' fees. Id. at 1234­35. The Massachusetts Supreme Court concluded that the agreement was champertous, but declined to declare the agreement void under the doctrine of champerty. As to whether Massachusetts would continue to recognize the doctrine in any case, the court held: Page 6 of 33

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We also no longer are persuaded that the champerty doctrine is needed to protect against the evils once feared: speculation in lawsuits, the bringing of frivolous lawsuits, or financial overreaching by a party of superior bargaining position. There are now other devices that more effectively accomplish these ends. Id. at 1226. The Court ultimately determined that in the future, the legal analysis would turn on whether the fees charged were excessive or "overreaching," not whether the agreement was void under champerty. Id. at 1227. See also, Osprey, Inc., 532 S.E.2d at 279 (abolition by South Carolina Supreme Court, concluding that "[w]e abolish champerty as a defense because we believe it no longer is required to prevent the evils traditionally associated with the doctrine as it developed in medieval times."). Nevertheless, Nevada still recognizes maintenance and champerty. For purposes of these summary judgment motions, the Court limits its analysis to champerty. Champerty and maintenance are closely related, but there is a crucial distinction between the two: the offense of champerty differs from maintenance in that in the latter, the person assisting the suitor receives no benefit, while in the former, he receives some stake in the lawsuit. Here, Del Webb is basing its claim on the Mojave Defendants' efforts to promote the Chapter 40 complaints against Del Webb with the agreement that the Mojave Defendants would be reimbursed from the recovery. Therefore, although Del Webb characterizes its claim as one for champerty and maintenance, the claim is more appropriately limited to champerty. Nevada recognizes the common law doctrine of champerty. In Schwartz v. Eliades, Schwartz, Eliades, and four other individuals with ownership interests in Checker Cab Company of Nevada, Inc. ("Checker Cab") and Yellow Cab Company of Nevada, Inc. ("Yellow Cab") filed a defamation lawsuit. 113 Nev. 586, 588, 939 P.2d 1034 (Nev. 1997). During the litigation, Schwartz executed documents with Checker Cab and Yellow Cab in which Schwartz undertook all liability for past and future expenses related to the litigation and would receive all proceeds, if any, from the litigation. Id. Later on Schwartz and Eliades entered a contractual agreement in which Eliades Page 7 of 33

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would be entitled to one-half of any proceeds from the litigation in exchange for paying Schwartz $187,421.50 plus one-half of any costs related to the litigation due and one-half of any costs incurred in the future. Id. They lost the defamation lawsuit and Schwartz sought to recover the money that Eliades promised to pay him under their agreement, but Eliades refused to pay. As a result, Schwartz sued for breach of contract. The district court ruled in favor of Eliades, holding the agreement between him and Schwartz to be unenforceable under the doctrine of champerty. Id. at 589. The decision was appealed to the Nevada Supreme Court. The court summarized the doctrine of champerty, acknowledging it as valid under Nevada law. Id. at 589­90. Nevertheless, the court concluded that Eliades still had an interest in the Checker Cab and Yellow Cab companies when he executed the agreement with Schwartz. As a result, Eliades was not a "stranger to the lawsuit" and could not be charged with entering a champertous agreement. Id. at 591. The Schwartz v. Eliades decision illustrates that champerty is a viable doctrine under Nevada law. Champerty is "intended to prevent the interference of strangers having no pretense of right to the subject of the suit, and standing in no relation of duty to the suitor." Smith v. Hartsell, 150 N.C. 71, 78­79, 63 S.E. 172 (1908) (citation omitted). There are three basic elements of a champerty claim. First, the party involved must be one who has no legitimate interest in the suit. Second, the party must expend its own money in prosecuting the suit. Third, the party must be entitled by the bargain to share in the proceeds of the suit. In this case, the Mojave Defendants had no interest in any lawsuit or similar proceeding between Del Webb and its homeowners. Del Webb already provided its homeowners protection for certain defects in their homes, which the homeowners needed to seek from Del Webb under the 2001 Del Webb Home Protection Plan. The Mojave Defendants expended their own money in instigating the complaints against Del Webb. The Mojave Defendants expended their time, money, and resources to provide the home inspections and related reports that were necessary to file the complaints. The Mojave Defendants did not charge Page 8 of 33

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the homeowners up front, but they ultimately required them to pay the Mojave Defendants from the proceeds that the homeowners got from Del Webb. Under the agreements that the Mojave Defendants had the homeowners sign, the Mojave Defendants were entitled to be reimbursed for the home inspections they performed or to the assignment of the homeowners' right against Del Webb so that the Mojave Defendants could collect their fees directly from Del Webb. The situation in this case is particularly problematic because the Mojave Defendants did not just offer a free home inspection, but they informed homeowners of how they could file complaints against Del Webb under Nevada law, the role of the home inspection in filing such complaints, and how they should go about hiring a law firm to assist with filing the complaint. As a result, the Mojave Defendants are liable for champerty in this case. As an evidentiary matter, Del Webb has properly opposed the admission of or this Court's consideration on summary judgment of the expert declaration by California attorney, Robert Kehr. Mr. Kehr has provided a declaration on his opinion of the doctrine of champerty. Federal Rule of Evidence 702 ("Rule 702") governs the admissibility of expert testimony, which states in full: If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case. In general, Rule 702 is viewed as requiring the trial judge to ensure that proffered expert testimony is both reliable and relevant. Kumho Tire Co. v. Carmichael, 526 U.S. 137, 147, 119 S.Ct. 1167, 1174 (1999) (citing Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 589-90, 113 S.Ct. 2786, 2795, (1993)). Mr. Kehr's opinions simply define the common law doctrines of champerty and maintenance, summarize the treatment of these doctrines by the courts of this country, and conclude that the Court cannot recognize any affirmative cause of action under these doctrines. One type of expert Page 9 of 33

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testimony courts are consistently reluctant to admit is an expert's opinions of law. See, e.g., Mendenhall v. Cedarapids, Inc., 5 F.3d 1557, 1574 (Fed. Cir. 1993); Burkhart v. Washington Metro. Area Transit Auth., 112 F.3d 1207, 1213 (D.C. Cir. 1997) ("an expert may offer his opinion as to facts that, if found, would support a conclusion that the legal standard at issue was satisfied, but he may not testify as to whether the legal standard has been satisfied"); United States v. Duncan, 42 F.3d 97, 101 (2d Cir. 1994). As the D.C. Circuit once aptly noted, "[e]ach courtroom comes equipped with a `legal expert,' called a judge." Burkhart, 112 F.3d at 1213. Rule of Evidence 704 ("Rule 704") allows expert testimony on an ultimate issue, but that does not mean an expert may advise the court on purely legal issues. Mr. Kehr's opinions are purely on legal issues. As a result, the Court holds that Mr. Kehr's opinions are inadmissible under Rule 702 and cannot be considered by this Court on summary judgment. See Ballen v. City of Redmond, 466 F .3d 736, 745 (9th Cir. 2006) (court "may only consider admissible evidence in ruling on a motion for summary judgment."). For these reasons, the Court DENIES the Mojave Defendants' Motion for Summary Judgment as to Del Webb's first cause of action and GRANTS Del Webb's Motion for Partial Summary Judgment as to its champerty claim. IV. THE NDTPA NRS 41.600 states that "[a]n action may be brought by any person who is a victim of consumer fraud." NRS 41.600(1). Chapter 41.600(2)(e) defines "consumer fraud" to include "[a] deceptive trade practice as defined in NRS 598.0915 to 598.0925, inclusive." If the claimant prevails, he is entitled to recover "[a]ny damages that he has sustained," as well as costs and attorneys' fees. Id. at 41.600(3). The Nevada Deceptive Trade Practices Act ("NDTPA"), NRS 598.0915 et seq., defines a "deceptive trade practice" as "when in the course of his business or occupation he knowingly . . . [c]onducts the business or occupation without all required state, county or city licenses." NRS 598.0923(1). Page 10 of 33

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The consumer fraud and deceptive trade practice at issue here is grounded in the Mojave Defendants' failure to secure a license under NRS 645D. The Mojave Defendants argue that they operated their home inspections division under Partington's general contractor's license, which they argue was sufficient for their inspection services. The Court must determine whether Nevada's statutory scheme requires contractors who perform home inspections, like the ones performed by the Mojave Defendants, to be licensed pursuant to NRS 645D. Both parties have moved for summary judgment on this issue. Chapter 645D governs inspections of structures. Chapter 645D.080 defines "inspector" as "a person who examines any component of a structure and prepares or communicates an inspection report." Chapter 645D.060 defines "inspection" as "a physical examination of the mechanical, electrical or plumbing systems of a structure or of the structural components of a structure," which includes "any consultation regarding a structure that is represented to be a certified inspection or any other title, word or other designation intended to imply or designate that the consultation is a certified inspection." Chapter 645D.070 defines "inspection report" as the following: Inspection report" means an analysis, opinion or conclusion, regarding the condition of a structure, that is: 1. Provided after an inspection, in a written report, for or with the expectation of receiving compensation for the report; and 2. Designed to describe and identify the inspected systems or structural components of the structure, their physical condition, any material defect and any recommendation for evaluation by another person. NRS 645D.160 mandates that "[a]ny person who, in this state, engages in the business of, acts in the capacity of, or advertises or assumes to act as an inspector" obtain a certificate or license pursuant to chapter 645D. Chapter 645D provides numerous educational requirements and other professional standards for one to be licensed or certified to conduct inspections. See NRS 645D.180(1); NRS 645.180(2); NRS 645D.190; NRS 645D.195; NAC 645D.210; NAC 645D.460. The Real Estate

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Division of the Department of Business and Industry is responsible for administering the licensing or certification of inspectors. NRS 645D.050; NRS 645D.110. The Mojave Defendants argue that NRS 645D is a certification scheme rather than a licensing scheme and that acting without a certificate does not come within the purview of NRS 598.0923.1, which uses the word license. The Mojave Defendants provide no authoritative argument for treating these two terms differently. In fact, NRS 645D uses the terms "license," "certificate," and "registration" interchangeably. See, e.g., NRS 645D.900. This argument is without merit. More importantly, the Mojave Defendants argue that they did not need to have a NRS 645D license to conduct their home inspection activities. According to them, NRS 645D and NAC 645D are narrowly tailored to licensing individuals to conduct home inspections prepared in advance of real estate sales. They argue that because their inspections were not conducted in conjunction with the sale of a home and were only done to gauge compliance with building code violations, they were not required to be licensed under NRS 645D. The Mojave Defendants' argument is principally based on the expert opinions of Mr. Glen Curtis, a certified master inspector in the State of Nevada, and Mr. Richard Franklin, a construction consultant and a licensed general contractor. Their reports discuss the history and purpose of NRS 645D, opine that those certified under NRS 645D do not have the qualifications for and do not as a matter of custom do the kind of home inspections performed by the Mojave Defendants. (#53, Ex. C). For the same reasons explained above in connection with considering Mr. Kehr's expert opinions under Rule 702, the Court cannot consider the expert opinions of Mr. Franklin and Mr. Curtis. The Court's sole job here is one of law: the Court must interpret NRS 645D and draw a legal conclusion as to whether those who conduct home inspections, like those conducted by the Mojave Defendants, are required to be licensed under NRS 645D. Mr. Franklin and Mr. Curtis are not trained in the law; so their opinions as to the meaning, purpose, history, and scope of NRS 645D are Page 12 of 33

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inadmissible. The Court needs to be the legal expert as to Nevada law and determine the meaning of NRS 645D. The Nevada courts have not construed NRS 645D. "Where the state's highest court has not decided an issue, the task of the federal courts is to predict how the state high court would resolve it." Giles v. Gen. Motors Acceptance Corp., 494 F.3d 865, 872 (9th Cir. 2007) (quotation marks omitted). "In answering that question, this court looks for `guidance' to decisions by intermediate appellate courts of the state and by courts in other jurisdictions." Id. (quotation marks omitted). The Court looks to Nevada rules of statutory interpretation to determine the meaning of a Nevada statute. See In re First T.D. & Inv., Inc., 253 F.3d 520, 527 (9th Cir. 2001). The Court begins with the statute's plain language. Washoe Med. Ctr. v. Second Judicial Dist. Court, 122 Nev. 1298, 148 P.3d 790, 793 (Nev. 2006) (en banc). If the statute is unambiguous on its face, then the Court does not go beyond the statute's language. Id. The Court concludes that the statute's language is unambiguous. The statute states that if an individual conducts "a physical examination of the mechanical, electrical or plumbing systems of a structure or of the structural components of a structure" and issues "an analysis, opinion or conclusion, regarding the condition of a structure, that is (1) [p]rovided after an inspection, in a written report, for or with the expectation of receiving compensation for the report; and (2) [d]esigned to describe and identify the inspected systems or structural components of the structure, their physical condition, any material defect and any recommendation for evaluation by another person," that individual is required to be licensed or certified under NRS 645D. The Mojave Defendants do not dispute that the term "structure" reaches homes, but they contend it only reaches home inspections done in connection with the sale of a home. The text does not support this distinction. The text draws no line in the sand between an inspection done with the sale of a home from any other home inspection. Furthermore, chapter 645D actually lists several categories of people to whom chapter 645D does not apply, but there is no indication that those exceptions reach the Mojave Defendants. NRS Page 13 of 33

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645D.100. Under the statutory canon of expressio unius est exclusio alterius, "the expression of one thing implies the exclusion of another." Ayes v. U.S. Dept. of Veterans Affairs, 473 F.3d 104, 110­11 (4th Cir. 2006). Under this canon, chapter 645D's articulation of eight specifically defined exceptions to chapter 645D's certification implies the exclusion of other possible categories of individuals excluded from its requirements. There is no indication in the language of NRS 645D that the Nevada legislature intended to bifurcate the licensing requirements for those inspecting homes between those who did it for a home being sold and all other homes. Had the Nevada legislature intended to create such an exception, it could have done so by expanding its exceptions. To the extent there is an ambiguity in NRS 645D, legislative intent is controlling. Washoe Med. Ctr., 148 P.3d at 793. The legislative history of NRS 645D showers significant light on the Court's position as to the plain meaning of the statute. The sponsor of the bill, Assemblyman Bernie Anderson, described the mischief that gave rise to the bill that became NRS 645D as being "the fact that in the construction world there were people who offered themselves as building inspectors who in fact did not meet any type of criteria in terms of testing or certification." (#64, Ex. 5). As a result, "the unsuspecting homeowner subscribed to a program that ultimately may or may not give them a proper inspection of their property." (Id.). In fact, the legislative history expressly refutes the Mojave Defendants' claim that a general contractors license should suffice to conduct home inspections. Assemblyman Anderson "stated that because someone was a contractor he was not necessarily qualified to be a home inspector. A home inspector required a different level of criteria than to simply meet the requirements of a contractor." (Id.). In sum, state legislators intended on protecting homeowners--all homeowners. The legislative history did not stress the inspections of homes done at the time the homes are sold. It simply focused on protecting homeowners by ensuring that anyone who inspects their home meets certain requirements. The law would "give a standard for anyone in that profession and enable the homeowner to rely upon the fact that the state had indeed screened someone before he offered his services." (Id.). Therefore, the legislative Page 14 of 33

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history supports the Court's interpretation of the statute's plain language that the Mojave Defendants were required to secure licenses under NRS 645D to conduct home inspections in connection with their business. In light of the plain language and legislative history, the Court concludes that NRS 645D does require a license to conduct a home inspection like the ones done by the Mojave Defendants. This conclusion is consistent with "the policy and spirit of the law" and does not lead to "an absurd result." Washoe Med. Ctr., 148 P.3d at 793. As a result, the Mojave Defendants engaged in a deceptive trade practice and consumer fraud as defined under NRS 41.600 and NRS 598.0923(1) by knowingly conducting their home inspections business without the required license. The Mojave Defendants argue that only the Nevada Real Estate Division and Nevada Consumer Affairs Division have the right to enforce NRS 645D and that Del Webb has no standing to pursue the present cause of action against the Mojave Defendants. This argument must fail in light of the plain language of NRS 41.600. Nevada Revised Statute Chapter 598 "generally provides for a public cause of action for deceptive trade practices." Nev. Power Co. v. Eighth Judicial Dist. Court of Nev., 102 P.3d 578, 583 n.7 (Nev. 2004). However, NRS 41.600 provides that a victim of "consumer fraud" may assert a private cause of action. Id. Consumer fraud includes "[a] deceptive trade practice as defined in NRS 598.0915 to 598.0925, inclusive." Id. (quoting NRS 41.600(2)(d)). The Mojave Defendants further argue that Del Webb cannot sue under the NDTPA because Del Webb was not the actual victim of the Mojave Defendants' alleged consumer fraud. NRS 41.600 requires that, at a minimum, a victim of consumer fraud prove that (1) an act of consumer fraud by the defendant (2) caused (3) damage to the plaintiff. Picus v. Wal-Mart Stores, Inc., Nos. 2:07-CV-00682, 2:07-CV-00686, and 2:07-CV-00689, 2009 WL 667419, at *6 (D.Nev. Mar. 16, 2009). Of course, a threshold inquiry is whether Del Webb constitutes "a victim" within the meaning of § 41.600. The term "victim" in § 41.600 is not defined, and the Nevada Supreme Court has not furnished any definition. Page 15 of 33

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The Mojave Defendants argue that a third party business cannot be a "victim" under § 41.600. The Court disagrees. NRS 598.0953(1) states that "[e]vidence that a person has engaged in a deceptive trade practice is prima facie evidence of intent to injure competitors and to destroy or substantially lessen competition." As one judge in this district has already concluded, "[b]y creating a presumption that deceptive trade practices harm competitors, then making those same deceptive trade practices into acts of consumer fraud, the Nevada legislature impliedly defines competitors harmed by deceptive trade practices as victims of consumer fraud." Southern Service Corp. v. Excel Bldg. Services, Inc., No. 03:05-CV-0297, 2007 WL 2325203, at *2 (D. Nev. Aug. 13, 2007) (Hicks, J.). Del Webb provided warranties to its buyers under which Del Webb promised remedies for certain structural defects in the homes it sold. Under the 2001 Del Webb Home Protection Plan, upon receiving a notice or complaint of a defect that fell within the scope of the Plan, Del Webb would have inspected the home and repaired the defect. By offering its own free home inspections to detect defects, the Mojave Defendants put themselves in a competitive posture vis-a-vis Del Webb. As a result, Del Webb has justified its position as a victim of the Mojave Defendants' alleged consumer fraud. Even if Del Webb is not a per se competitor with the Mojave Defendants, Del Webb still qualifies as a victim. When the Mojave Defendants went door-to-door throughout Del Webb's large residential neighborhood and solicited business, they were suggesting, if not encouraging, the residents to file a lawsuit or Chapter 40 complaint against the builder, which in this case was Del Webb. The Mojave Defendants should have known that their practices were inevitably going to be adverse to Del Webb. Del Webb has satisfied the first element, for the reasons explained above, by establishing that the Mojave Defendants engaged in consumer fraud. The problem for Del Webb is that it needs to prove that the Mojave Defendants' consumer fraud or deceptive trade practices caused damage to Del Webb. In addition to allowing one to recover his or her costs and attorneys' fees associated with Page 16 of 33

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a lawsuit under NRS 41.600, the statute allows only one type of monetary relief--damages that he or she has sustained. Del Webb argues in a conclusory manner that this deceptive conduct "harmed Del Webb by causing the disruption of Del Webb's relationship with its homeowners in general and under warranty programs." (#55 at 24; #64 at 15). Del Webb has produced deposition testimony that certain homeowners did rely upon the Mojave Defendants' misrepresentations that they were licensed or working in conjunction with Del Webb to allow the Mojave Defendants to conduct the inspections. As a result of allowing those inspections and initiating Chapter 40 claims against Del Webb, Del Webb has shown that their customers put themselves in breach of their warranties with Del Webb, precluding Del Webb from communicating with them or being able to repair their customer's homes under the warranties. (#64, Ex. 22, 82:22­25; Ex. 23, 83: 8­24; Ex. 24, 47: 7­15; Ex. 25, 49: 2­5). Such evidence creates a genuine issue of material fact that the Mojave Defendants' deceptive trade practices caused Del Webb to sustain damages in response to the Mojave Defendants' summary judgment motion, but such evidence is not sufficient to grant Del Webb a summary judgment motion. Del Webb has not carried its own burden on its summary judgment motion that it has actually sustained damages from the Mojave Defendants' deceptive trade practices. In light of the foregoing, the Court DENIES the summary judgment motions presented by both Del Webb and the Mojave Defendants as to this cause of action. There is no genuine issue of material fact that the Mojave Defendants engaged in deceptive trade practices or that those practices adversely impacted the relationship between Del Webb and its homeowners. Yet, the record does not make clear how and to what extent those practices and disruptions actually damaged Del Webb. V. THE LANHAM ACT To establish a false advertising claim under § 43(a) of the Lanham Act (15 U.S.C. § 1125(a)), a plaintiff must show: Page 17 of 33

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(1) a false statement of fact by the defendant in a commercial advertisement about its own or another's product; (2) the statement actually deceived or has the tendency to deceive a substantial segment of its audience; (3) the deception is material, in that it is likely to influence the purchasing decision; (4) the defendant caused its false statement to enter interstate commerce; and (5) the plaintiff has been or is likely to be injured as a result of the false statement, either by direct diversion of sales from itself to defendant or by a lessening of the goodwill associated with its products. Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1139 (9th Cir.1997) (footnote omitted). Del Webb argues that the Mojave Defendants made three false statements in connection with the advertisement of their home inspection services. First, Del Webb argues that the Mojave Defendants advertised that the home inspections that they provided were free to home owners when in fact, they were not. Second, Del Webb contends that the Mojave Defendants represented that they were licensed to perform the advertised home inspections when in fact, they were not. Third, Del Webb argues that the Mojave Defendants falsely represented that they were performing their home inspection services in collaboration with Del Webb. Both parties have moved for summary judgment on this claim. A. Competitive Injury

As a threshold matter, the Mojave Defendants argue that Del Webb cannot sue the Mojave Defendants for false advertising because they are not competitors. For false advertising,

"[r]epresentations constitute commercial advertising or promotion under the Lanham Act if they are 1) commercial speech; 2) by a defendant who is in commercial competition with plaintiff; 3) for the purpose of influencing consumers to buy defendant's goods or services." See Rice v. Fox Broad. Co., 330 F.3d 1170, 1181 (9th Cir. 2003). The Mojave Defendants misconstrue what the Ninth Circuit requires for proof related to "commercial competition." In Coastal Abstract Services v. First American Title Ins. Co., for example, the Ninth Circuit rejected an argument by the defendant, a title insurance company, that it was not in commercial competition with the plaintiff, an escrow agent, for purposes of the plaintiff's Lanham Act claim. 173 F.3d 725, 730 (9th Cir. 1999). In Coastal Abstract, an officer Page 18 of 33

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of the defendant title company, First American, argued that he could not be liable "under the Lanham Act because he, as an individual, is not in competition with Coastal," the plaintiff escrow agency. Id. at 734. The Court found that the defendant corporation's officer could be liable under the Lanham Act because he "sought by his statements to divert business from Coastal to First American," thereby causing plaintiff a competitive injury. Id. The court declined to focus on whether parties were "in competition," stating that "the crux of [the Ninth Circuit's seminal case on the competitive injury requirement] was that the victim . . . had not suffered a competitive injury." Id. at 725 (emphasis added). Coastal Abstract illustrates that a "competitive injury," rather than an exact identity between the businesses of the plaintiff and defendant, is the key to standing on a Lanham Act false advertising claim. In Coastal Abstract, the Ninth Circuit did not focus on whether the parties were for profit or non-profit entities, or on the structure of their businesses, but on whether the statements in issue tended to divert business from the plaintiff to the defendant. The first problem with the Mojave Defendants' argument is that their home inspection services were one part of their business. It was not their entire business. Mojave Construction originally limited its operations to doing jobs like room additions and patio covers, but expanded its business to constructing tract homes, new homes, and renovating homes and apartment. (#53, Ex. D, 11:9­11:24). In 2006, it began the home inspection division, but there is no evidence that they ceased their prior operations related to constructing and renovating homes. As a result, Mojave Construction did directly compete with Del Webb. Furthermore, even if the Mojave Construction business was limited to home inspections, false advertisements about the home inspection business could have inflicted a competitive injury upon Del Webb. Del Webb had warranties with its homeowners. Pursuant to those warranties, the homeowners were supposed to contact Del Webb and Del Webb would be entitled to inspect the claim and repair it if necessary. This was part of Del Webb's business. By making false Page 19 of 33

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representations about their home inspection services and conducting such inspections, the Mojave Defendants were doing something that Del Webb was entitled to do pursuant to its warranties with its buyers. Therefore, the Mojave Defendants were diverting Del Webb's customers away from Del Webb. Also, to the extent the Mojave Defendants were finding and reporting defects that were either trivial or non-existent, the Mojave Defendants could have injured Del Webb's reputation and taken future business away from them. Based upon the foregoing, the Court finds that Del Webb has established a competitive injury and standing for its false advertising claim. B. Falsity of Statements

Falsity under the Lanham Act includes statements that are literally false, either on their face or by necessary implication, or statements that are literally true but likely to mislead or confuse consumers. Id. "Where a statement is not literally false and is only misleading in context . . . proof that the advertising actually conveyed the implied message and thereby deceived a significant portion of the recipients becomes critical." William H. Morris Co. v. Group W, Inc., 66 F.3d 255, 258 (9th Cir. 1995). However, where a defendant intentionally misled consumers or the

advertisement is literally false, a presumption arises that consumers were in fact deceived and the burden shifts to the defendant to prove otherwise. Time Warner Cable, Inc. v. DIRECTV, Inc., 497 F.3d 144, 153 (2d Cir. 2007); William H. Morris Co., 66 F.3d at 258. In this case, Del Webb is arguing that the Mojave Defendants' actionable statements were literally false, thus triggering a presumption that consumers were in fact deceived. The first alleged misrepresentation deals with the Mojave Defendants' advertisement of "free" home inspection services. The Mojave Defendants clearly advertised that their home inspection services were "free." (#55, Exs. 19­21). Yet, other forms that the Mojave Defendants prepared for consumers or had consumers sign included other statements discussing the cost of the home inspection services, thereby serving as evidence that the other statements about the "free" home services were literally Page 20 of 33

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false. The Chapter 40 notices that the Mojave Defendants had consumers submit to Del Webb notified Del Webb of the "expense" that the consumers had incurred by having the Mojave Defendants inspect their home. (#55, Exs. 26­30). The Mojave Defendants' Chapter 40 Inspections and Evaluation Agreement with homeowners explained the description and "cost" of their home inspection services. (Id., Ex. 34). The Agreement specified that the Mojave Defendants would collect such fees if the builder reimbursed the homeowner. (Id.). The Mojave Defendants argue that such an arrangement shows that the inspections were free to the homeowners. But if homeowners took the time and resources to pursue a Chapter 40 complaint and actually recovered, such conduct itself was a cost to them and they were then required to apportion part of their recovery to pay the Mojave Defendants. In fact, knowing that they would have to pay the Mojave Defendants would likely affect the amount that homeowners would settle for in the end. In short, the evaluation was not "free" to homeowners. Something is free when nothing is received in return. The Mojave Defendants required payment if the homeowners recovered, and even if the homeowners did not recover, the Agreement required them to assign their right to recover to the Mojave Defendants. In light of the foregoing, the Mojave Defendants made false statements of fact about their commercial home inspection services. The second misrepresentation of fact deals with the Mojave Defendants advertising that they were authorized and licensed to perform the advertised home inspections, when in fact, they were not. For the reasons explained in the prior section, this Court concludes that the Mojave Defendants did not have the required license under NRS 645D. By advertising their home inspection services, by necessary implication, they were advertising that they were licensed to do so. Moreover, Del Webb has produced deposition testimony from homeowners that the Mojave Defendants or their agents represented that they were properly licensed to conduct the home inspections and that they relied upon these representations. (#55, Ex. 14, Deposition of Mary McCullough, 28:8­10; Ex. 12,

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Deposition of Leonard Eposito, 29: 3­5). As a result, they made false representations of fact about their authority to conduct their commercial home inspection services. The third misrepresentation relates to advertising that Del Webb was associated with the Mojave Defendants or sponsoring the home inspections. The main example of this representation was on placards that the Mojave Defendants left at homes after an agreement was made to have the Mojave Defendants conduct their inspections. The placard stated: As a courtesy, we are informing you that, due to a "Builder" home inspection, you may experience a few hours of extra vehicular traffic in your neighborhood. These vehicles belong to representative & experts from both MC Mojave Construction & your Builder, his subcontractors and agents. (#1, Ex. 3). This issue is not as clear cut as the two misrepresentations discussed above. A "builder's inspection" could refer to a generic home inspection designed to determine if the builder complied with the necessary local building codes. Alternatively, a "builder's inspection" could mean an inspection conducted or sponsored by the actual builder, in this case Del Webb. Such an interpretation of the placard's message is somewhat bolstered by the message capitalizing the term "Builder," as if it was referring to a specific builder. Del Webb has cited to one deposition where a home owner could not definitely remember seeing the placard but testified that she would interpret the placard to mean the Mojave Defendants and Del Webb were working together. (#64, Ex. 22, Deposition of Rosalind Flans, 64:21­65:21). Nevertheless, the language is such that it could be literally true, but likely to mislead or confuse consumers. In such case, Del Webb is required to provide "proof that the advertising actually conveyed the implied message and thereby deceived a significant portion of the recipients becomes critical." William H. Morris Co., 66 F.3d at 258. Aside from Rosalind Flans's testimony, which is not very strong because she could not state that she actually saw the placard, Del Webb has provided no proof that the message on the placard actually deceived any homeowners. Therefore, Del Webb has not created a genuine issue of material fact

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that the Mojave Defendants falsely advertised an association with Del Webb in connection the placard. Nevertheless, other homeowners have testified that the Mojave Defendants personally represented to them that Mojave was working with Del Webb. One homeowner named Marilyn Hendrickson testified that when the Mojave Defendants or their representatives came out to her home to speak to her, they told her that they "were working with Del Webb," which she understood to mean that the Mojave Defendants were working in partnership with Del Webb to fix homes. (#64, Ex. 16, Deposition of Marilyn Hendrickson, 35: 3­14; 38: 8­19). Another homeowner named Ellen Dreyer had the same misunderstanding of the relationship between Del Webb and Mojave from the Mojave Defendants representations. (Id. at Ex. 18, Deposition of Ellen Dreyer, 14: 8­13, 16: 21­17:4; 28:21 ­ 29:12) ("And I kind of looked of Mojave as kind of the liason between the senior citizens live there and dealing with Del Webb so we wouldn't have to deal directly with them. And that was my understanding of what Mojave was doing with Del Webb"). The Mojave Defendants have not refuted this testimony. As a result, Del Webb has established that the Mojave Defendants falsely represented an association or partnership with Del Webb. Del Webb has also presented evidence that such representations were material, as homeowners would not have allowed the inspections if they had known that the Mojave Defendants were not licensed or not working with Del Webb. (Id. at Ex. 17, 31:22­24; Ex. 14, 28:11­17; Ex. 12, 29:3­5; Ex. 15, 29:19­22). The Mojave Defendants argue that the Lanham Act only renders actionable misrepresentations about goods, but that here the Mojave Defendants were advertising an event (i.e., a home inspection). This argument fails under the language of the Lanham Act itself, which states: Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the Page 23 of 33

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origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or (B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act. 15 U.S.C. § 1125(a) (emphasis added). The Lanham Act expressly states that its makes false advertising actionable in connection with "any goods or services." The Mojave Defendants made false statements of fact in connection with services consisting of providing home inspection services. Therefore, the Mojave Defendants' false statements are actionable under the Lanham Act. In conclusion, there is no genuine issue of material fact that the Mojave Defendants made false statements of fact. C. Interstate Commerce

Aside from the falsity of the Mojave Defendants' statements, the other major issue at dispute is whether the challenged false statements were made in interstate commerce. "The Lanham Act provides civil liability for any person who `uses in commerce' any false or misleading description or representation of fact which in commercial advertising misrepresents the nature, characteristics, or qualities of any person's services or commercial activities." Highmark, Inc. v. UPMC Health Plan, Inc., 276 F.3d 160, 165 (3rd Cir. 2001); 15 U.S.C. § 1125(a)(1)(B). Congress's authority under the interstate commerce clause extends to purely intrastate activity if that activity substantially affects interstate commerce. United States v. Lopez, 514 U.S. 549, 558­59 (1995); Thompson Tank & Mfg. Co., Inc. v. Thompson, 693 F.2d 991, 992-93 (9th Cir. 1982) (stating that the word "commerce" as used in the Lanham Act includes intrastate commerce which affects interstate commerce); see also, Stauffer v. Exley, 184 F.2d 962, 966 (9th Cir. 1950) ("[a]n infringement

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committed in intrastate commerce but affecting interstate commerce could clearly be regulated by Congress and thus would be within the present [Lanham] Act."). The best evidence for Del Webb's case of interstate commerce is that the Mojave Defendants created a website at <mcmclasvegas.com> to advertise their services. (#55, Deposition of John Wilson, Ex. 3, 233:3­236:3). The website advertised that Del Webb had divisions in Phoenix, Southern California, and Northern California, which allegedly were advertised as future divisions. (Id.). Although "[a]s both the means to engage in commerce and the method by which transactions occur, `the Internet is an instrumentality and channel of interstate commerce,'" Del Webb must still prove that the false statements of fact were made in connection with the Mojave Defendants' website. U.S. v. Sutcliffe, 505 F.3d 944, 953 (9th Cir. 2007) (quoting United States v. Trotter, 478 F.3d 918, 921 (8th Cir. 2007)). With the current record, the Court cannot make that conclusion. There is no evidence of the content of the website. The Court has no way of knowing what statements or misrepresentations, if any, were made on that website. According to Mr. Wilson, the Mojave Defendants never got any business contacts from the website and have no way of tracking who accessed the website. (#55, Deposition of John Wilson, Ex. 3, 233:3­ 236:3). Del Webb has created an issue of fact because it is clear that there was a website for the Mojave Defendants' business, and if the Mojave Defendants were advertising that they were licensed to conduct home inspections (which they were clearly doing for Nevada home inspections), in Arizona or California, then such statements would constitute false statements of fact made in interstate commerce. But there still remains a genuine issue of material fact as what representations were made at the Mojave Defendants' website. As to the fliers and placards distributed by the Mojave Defendants, there is no evidence that these ever left the state or were even distributed outside of Del Webb's residential development. Del Webb argues that because the Mojave Defendants depended on potential customers seeing the fliers and placards and then calling the Mojave Defendants, this conduct constitutes interstate Page 25 of 33

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commerce. However, the only people who would have been calling the Mojave Defendants would have been people in Nevada who saw the distributed fliers and placards. Thus, Nevada consumers would have been making calls within Nevada for an inspection of their Nevada home. Del Webb does not explain how such activity reaches interstate commerce. Of course, even if entirely intrastate, such activity could come under the Lanham Act if it substantially affects interstate commerce. Yet, this Court cannot find that home inspections of Nevada homes have a substantial impact on interstate commerce. Any impact would be purely intrastate. Del Webb has not otherwise provided evidence that consumers actually called from outside of Nevada to instigate a business relationship with the Mojave Defendants. In light of the foregoing, there remains a genuine issue of material fact whether the Mojave Defendants made any false statements of fact in interstate commerce. D. Damages

In addition to establishing falsity (either by presumption or through direct proof customers actually were deceived), a plaintiff must prove that he has been or is likely to be injured as a result of the false statement, either by direct diversion of sales from itself to defendant or by a lessening of the goodwill associated with its products. In Southland Sod Farms v. Stover Seed Co., the Ninth Circuit noted that it had previously stated that "actual evidence of some injury resulting from the deception is an essential element" in a suit for damages under § 43(a) but that in a subsequent decision, it had held that "an inability to show actual damages does not alone preclude a recovery under section 1117." 108 F.3d 1134, 1146 (9th Cir. 1997). Under the latter decision, "the preferred approach allows the district court in its discretion to fashion relief, including monetary relief, based on the totality of the circumstances." Id. (citing Lindy Pen Co. v. Bic Pen Corp., 982 F.2d 1400, 1411 (9th Cir. 1993)). The Ninth Circuit further noted that when "a § 43(a) claim involves false advertising rather than `palming off,' courts have been more willing to allow monetary damages even without a showing of actual consumer Page 26 of 33

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confusion." Id. Therefore, the Ninth Circuit recognizes that legal damage, as opposed to actual damage giving rise to an award of damages, is cognizable under the Lanham Act. See Star-Kist Foods, Inc. v. P.J. Rhodes & Co., 735 F.2d 346, 349 (9th Cir. 1984) ("The lack of any actual damage requirement renders irrelevant Rhodes's argument that Star-Kist can, at most, suffer only nominal damages . . . Even if true, that claim ignores the fact that a party can still have a reasonable belief that he will be legally damaged."). This result is different from what the Court can do under NRS 41.600, which indicates that the party seeking relief under NRS 41.600 must show actual damages sustained. Here, one could reasonably conclude, based on the evidence submitted by Del Webb, that the Mojave Defendants' false advertisement claims were deliberately false within the meaning of § 43(a), creating a presumption of actual consumer deception and reliance. The Mojave Defendants have not rebutted that presumption. See U-Haul Int'l, Inc. v. Jartran, Inc., 793 F.2d 1034, 1041 (9th Cir. 1986) ("He who has attempted to deceive should not complain when required to bear the burden of rebutting a presumption that he succeeded."). Furthermore, Del Webb has produced deposition testimony that certain homeowners did rely upon their misrepresentations that they were licensed or working in conjunction with Del Webb to allow the Mojave Defendants to conduct the inspections. As a result of allowing those inspections and initiating Chapter 40 claims against Del Webb, Del Webb has shown that their customers put themselves in breach of their warranties with Del Webb, precluding Del Webb from communicating with them and repairing their customer's homes under the warranties. (#64, Ex. 22, 82:22­25; Ex. 23, 83: 8­24; Ex. 24, 47: 7­15; Ex. 25, 49: 2­5). Therefore, Del Webb has shown injury and carried its burden on summary judgment that it was injured by the Mojave Defendants' Lanham Act violations. Because proving actual damages in a false advertising case can be a challenge, the Lanham Act permits a court, "subject to the principles of equity," to award damages based on the defendant's profits on an unjust enrichment theory. 15 U.S.C. § 1117(a); Lindy Pen Co., Inc., 982 F.2d at 1407. Page 27 of 33

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Del Webb, however, has not spoken to the proper measure of damages. Therefore, the Court holds that there is no genuine issue of material fact that the Mojave Defendants have injured Del Webb with their deceptive trade practices, but that Del Webb must still explain at trial the basis for an award of monetary relief. Del Webb must also establish that the Mojave Defendants made false statements in interstate commerce. In light of the foregoing, the Court must DENY both Del Webb's and the Mojave Defendants' summary judgment motions on the Lanham Act cause of action. V. TORTIOUS INTERFERENCE WITH CONTRACT Del Webb argues that the Mojave Defendants intentionally disrupted their contractual relationship with Del Webb's homeowners. In an action for intentional interference with contractual relations, a plaintiff must establish (1) a valid and existing contract; (2) the defendant's knowledge of the contract; (3) intentional acts intended or designed to disrupt the contractual relationship; (4) actual disruption of the contract; and (5) resulting damage. Sutherland v. Gross, 105 Nev. 192, 196, 772 P.2d 1287, 1290 (1989). Only the Mojave Defendants have moved for summary judgment as to Del Webb's tortious interference with contract cause of action. The Mojave Defendants contend that Del Webb cannot show that they intentionally disrupted Del Webb's warranties with Del Webb's buyers. Del Webb is required to demonstrate that the Mojave Defendants knew of the warranties, "or at the very least, establish `facts from which the existence of the contract can reasonably be inferred.'" Id. (quoting Nat. Right to Life P.A. Com. v. Friends of Bryan, 741 F.Supp. 807, 813 (D.Nev. 1990)). Del Webb has pointed to several e-mails between the Mojave Defendants and the Angius & Terry law firm that confirm that the Mojave Defendants had knowledge of the Del Webb warranties. (#64, Exs. 20, 21). Regardless, "mere knowledge of the contract is insufficient to establish that the defendant intended or designed to disrupt the plaintiff's contractual relationship; instead, the plaintiff must demonstrate that the defendant intended to induce the other party to breach the contract with the plaintiff." Id. at 276. Del Webb has created a genuine issue of material fact that the Mojave Page 28 of 33

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Defendants intended to induce a breach of the warranty agreement between Del Webb and its homeowners. The Mojave Defendants were aware of the warranties, yet they were going door-todoor and suggesting or encouraging Del Webb's customers to use the Mojave Defendants' services to obtain an inspection so that the homeowners could then file a claim against Del Webb. Such conduct evinces an intent on the Mojave Defendants' part to induce the homeowners to breach their warranties with Del Webb. One weakness in Del Webb's claim goes to damages. A plaintiff "who proves a claim of intentional interference with contractual relations is entitled to recover damages for the pecuniary loss of the benefits of the contract; damages for actual harm to reputation, if they are reasonably to be expected to result from the interference; and consequential losses for which the interference is a legal cause." National Right To Life Political Action Committee v. Friends of Bryan, 741 F.Supp. 807, 812 (D.Nev. 1990) (citing Restatement (Second) of Torts § 774A (1979)). Del Webb is not required to prove the resulting damages "to a mathematical