Judgment: Murren v Schaeffer
IN THE HIGH COURT OF NEW ZEALAND
I TE KŌTI MATUA O AOTEAROA
 NZHC 3176
JAMES JOSEPH MURREN as trustee of the JAMES
J MURREN SPENDTHRIFT TRUST
5 December 2018
JUDGMENT OF COLLINS J
 The gravamen of this proceeding is whether Mr Schaeffer should be held liable for representations he made to Mr Murren and Mr Lee that they say led them to invest in a vineyard. At all relevant times, Mr Schaeffer owned 80 per cent of the shares in the company that owned the vineyard.
 I have concluded that Mr Schaeffer made negligent misstatements to Mr Murren and Mr Lee for which he is liable. I have also concluded that Mr Schaeffer is liable in relation to causes of action brought under the Fair Trading Act 1986 and the Nevada Deceptive Trade Practices Act. None of the affirmative defences alleged by Mr Schaeffer have merit. Accordingly, I find Mr Schaeffer is liable for the damages sought plus interest. Judgement is entered in favour of Mr Murren for USD 1,600,813.92 plus interest and USD 700,406.96 plus interest for Mr Lee.
 The focal point of this litigation is a vineyard in the Tasman region of the South Island of New Zealand. Originally the vineyard was called “Woollaston Estates”, but in 2015 its name was changed to “Mahana Estates”. For convenience, I will refer to the land and the assets used to produce wine as “the vineyard”.
 At its peak, the vineyard was spread over several sites and comprised more than 100 hectares of land in and around Moutere and Hope. The principal buildings on the vineyard are a four-level gravity-fed winery with a restaurant and reception facility designed by a well-known American architect and a villa, which is described in advertising literature as “featuring seven bedrooms, seven bathrooms, wine cellar, library and art gallery”.
 Mr Murren, Mr Lee and Mr Schaeffer met each other in the 1980s. At the time, Mr Murren was an equity analyst on Wall Street. He moved to Las Vegas in 1998, where he became the Chief Financial Officer, and subsequently the Chairman and Chief Executive Officer, of MGM Grand Casino Inc (MGM). When Mr Lee first met Mr Schaeffer, he was also working on Wall Street, as a research analyst. In 1992, Mr Lee moved to Las Vegas to take up positions as the Chief Financial Officer, Treasurer and Senior Vice President of Finance and Development at Mirage Resorts,
a hotel and casino enterprise. He is currently the President and Chief Executive Officer of Full House Resorts, a public company that operates five casinos, several hotels and other casino related businesses. Mr Schaeffer’s early career was also on Wall Street. He joined the Las Vegas casino company, Circus Circus (later called the Mandalay Bay Group), in the early 1980s and eventually rose to be the Chief Executive Officer and President of that company before it was acquired by MGM in the early 2000s.
 When Mr Lee and his family moved to Las Vegas in 1992, their home was two doors from Mr Schaeffer’s family home. The bonds of friendship between the three men and their respective families continued to flourish during this period. They vacationed together and Mr Murren and Mr Schaeffer jointly pursued art investments, which was a particular passion of Mr Schaeffer.
 In about 1996, Mr Schaeffer purchased a bed and breakfast establishment in Nelson. He and his then wife, Renee Schaeffer, were considering becoming permanent residents in New Zealand. It was about this time Mr Schaeffer met Mr Woollaston, who owned a vineyard at Hope, about 17 kilometres southwest of Nelson. Mr Schaeffer and Mr Woollaston decided they would purchase some land and establish a new vineyard and winery to be called Woollaston Estates.
Full judgment: 2018NZHC3176MurrenvSchaeffer.pdf