Hyatt v. Franchise Tax Board: Nevada Supreme Court Reinforces Detailed Documentation for Discovery-Related Travel Costs and Confirms Broad Judicial Discretion for Enhanced Expert Fees

1. Introduction

Gilbert P. Hyatt, a long-time litigant against the Franchise Tax Board of the State of California (“FTB”), returned to the Supreme Court of Nevada following remand of a post-judgment cost award. The underlying litigation—spanning more than two decades and three visits to the United States Supreme Court—concerned Hyatt’s allegation that the FTB committed intentional torts during a California tax audit. After the FTB ultimately prevailed on liability, the Nevada district court awarded $2.26 million in costs, prompting Hyatt’s initial appeal. In Hyatt IV (2023), the Nevada Supreme Court affirmed most of the award but vacated expert-fee and travel-cost components, requiring more specific findings. On remand, the district court again granted those costs, leading to the instant appeal (Hyatt V, 2025). The core questions before the Court were:

Whether the district court abused its discretion in awarding expert witness fees in excess of the statutory presumptive cap under NRS 18.005(5).
Whether the district court properly awarded travel and lodging expenses under NRS 18.005(15) for depositions and discovery-related activities.

2. Summary of the Judgment

The Supreme Court of Nevada affirmed the enhanced expert-fee award but reversed in part the travel-cost award, remanding with instructions to reduce costs lacking adequate documentation. Specifically, it held:

Expert Fees: Upholding the district court’s determination that the experts’ testimony was of such necessity as to warrant fees exceeding the statutory cap, the Court found no abuse of discretion.
Travel & Lodging Costs: Because the FTB failed to link $26,499.60 in travel expenses to identifiable discovery events, the Court found an abuse of discretion and ordered the award reduced accordingly, leaving $84,099.57 intact.

3. Analysis

3.1 Precedents Cited

The Court’s reasoning heavily relied on a line of Nevada authority governing cost awards:

Nevins v. Martyn, 140 Nev. Adv. Op. 66, 557 P.3d 965 (2024) – Confirms that cost awards are reviewed for abuse of discretion.
Khoury v. Seastrand, 132 Nev. 520, 377 P.3d 81 (2016) – Requires the district court to provide a written explanation when awarding fees beyond statutory limits.
Bobby Berosini, Ltd. v. PETA, 114 Nev. 1348, 971 P.2d 383 (1998) – Establishes that costs must be “actual and reasonable,” not mere estimates.
Gibellini v. Klindt, 110 Nev. 1201, 885 P.2d 540 (1994) – Clarifies documentation requirements for taxable costs.
Village Builders 96 v. U.S. Laboratories, Inc., 121 Nev. 261, 112 P.3d 1082 (2005) – Provides further guidance on travel-cost recoverability.
Hyatt IV, Docket No. 84707, 2023 WL 4362562 (Nev. Jul. 5, 2023) – The immediate predecessor decision outlining the remand instructions now at issue.

Collectively, these cases shape two controlling themes: (1) the trial court’s broad—but not unfettered—discretion in cost matters; and (2) the necessity for precise, contemporaneous documentation to justify such costs.

3.2 Legal Reasoning

3.2.1 Enhanced Expert Fees under NRS 18.005(5)

NRS 18.005(5) permits recovery of expert fees for up to five experts, subject to a presumptive dollar limit unless “the expert’s testimony was of such necessity as to require the larger fee.” The parties disputed whether the 1989 or 2023 version of the statute governed, but the Court sidestepped that conflict, holding the district court’s findings satisfied either version. Key points of the Court’s reasoning include:

Necessity Standard Met: The district court found the experts’ work critical to rebutting Hyatt’s liability and damages assertions, noting extensive document review, report preparation, depositions, and trial readiness.
Factor-Based Analysis: The lower court weighed the experts’ time, expertise, education, and the central importance of their testimony—mirroring Khoury’s recommended factors.
Written Explanation: Because the district court articulated specific reasons for exceeding the cap, the Supreme Court deemed the statutory “larger fee” condition satisfied.
Outcome-Determinative Weight Not Required: The Court rejected Hyatt’s argument that the district court must place greater emphasis on whether the expert testimony altered the outcome, holding that the necessity inquiry is broader and flexible.

3.2.2 Travel & Lodging Costs under NRS 18.005(15)

Subsection 15 authorizes “reasonable costs for travel and lodging incurred taking depositions and conducting discovery.” The Supreme Court scrutinized the FTB’s proof under the trilogy of Berosini, Gibellini, and Village Builders, each demanding that costs be (1) actually incurred, (2) reasonable, and (3) adequately documented. Applying these benchmarks, the Court found:

The FTB’s supplemented exhibit did not tie $26,499.60 of travel between June 2000–Nov 2003 and Oct 2004–Jun 2005 to any specified deposition or discovery task.
Washington, D.C. travel entries in early 2003 lacked invoices or declarations linking them to concrete discovery events; mere generalized statements were insufficient.
Accordingly, the district court erred in accepting entries absent “the required specificity,” mandating reversal of that portion of the cost award.

3.3 Impact of the Judgment

This decision solidifies two practical rules for Nevada litigants:

Enhanced Expert Fees: Trial courts retain broad discretion to exceed statutory caps when expert testimony is vital, but they must generate detailed written findings. Parties resisting enhanced fees face an uphill battle on appeal.
Discovery-Related Travel Costs: The ruling elevates the documentation threshold. Parties must maintain contemporaneous, item-by-item records that identify what discovery event occurred, when, where, and why the travel was necessary. Vague affidavits and lump-sum receipts will no longer suffice.

Because cost disputes arise post-trial in nearly every complex civil case, the Court’s clarification will reverberate across Nevada practice, especially in high-dollar litigation where travel and expert fees constitute substantial sums. Expect district courts to require detailed cost schedules and, conversely, expect prevailing parties to compile meticulous proof throughout discovery rather than retroactively.

4. Complex Concepts Simplified

“Abuse of Discretion” Review: An appellate court overturns a discretionary decision only if the lower court made a clear error in judgment—meaning the decision is arbitrary, capricious, or exceeds applicable legal standards.
NRS 18.005: Nevada’s statute enumerating taxable costs. Each subsection lists a category—e.g., witness fees, travel, copying—and sets conditions or limits for reimbursement.
Presumptive Cap: A default monetary ceiling set by statute. A court may exceed it when statutory criteria (such as “necessity”) are met and supported by findings.
Contemporaneous Documentation: Records created at or near the time the cost was incurred (e.g., receipts, invoices, deposition notices) rather than reconstructed later.

5. Conclusion

The Supreme Court of Nevada’s decision in Hyatt v. Franchise Tax Board (2025) crystallizes two vital principles: (1) district courts may award expert fees above statutory limits when they expressly detail why the testimony was indispensable; and (2) travel and lodging expenses under NRS 18.005(15) demand meticulous, event-specific documentation. In doing so, the Court balances deference to trial-level discretion with safeguards against unsupported cost inflation. For future litigants, the message is clear: maintain granular cost records from day one, and, when pursuing enhanced expert fees, furnish the court with a comprehensive, factor-based rationale. The decision thus serves as a roadmap—and a cautionary tale—for cost-shifting practice in Nevada’s civil courts.