Shifting Fees and Costs in Nevada Construction Defect Cases
November 26, 2014 —
Casey J. Quinn - Newmeyer & Dillion LLPIn Nevada, homeowners who sue a builder for residential constructional defects may recover attorneys’ fees and costs caused by the defect. Many times, the request for attorneys’ fees can outpace the size of the actual claim for defects. However, Nevada provides builders with two ways to potentially shift the right to recover attorneys’ fees and costs away from the homeowner and to the builder.
The first arises during the Nevada Revised Statutes (NRS) Chapter 40 process (Nevada’s Right to Repair law). After a builder receives notice of construction defects, it is required to provide the claimant with a written response to each defect, which may include a proposal for monetary compensation (including contribution from a subcontractor, supplier, or design professional). See NRS 40.6472. If a claimant unreasonably rejects a reasonable written offer of settlement included in the response and decides to commence litigation, the court may deny the claimant’s attorneys’ fees and costs and award attorneys’ fees and costs to the builder. See NRS 40.650. Thus, by including a reasonable offer of monetary compensation in a Chapter 40 response, a builder could possibly avoid paying any fees and costs and even recover its own fees in defending against the claim.
A second method for shifting fees and costs is through a written offer of judgment (OOJ). See NRS 17.115 and NRCP 68. Not limited solely to construction defect matters, an OOJ is a useful tool in all kinds of litigation. OOJs are designed to facilitate and encourage pre-trial settlement by incentivizing parties to make reasonable settlement offers that—when unreasonably rejected—have the consequence of shifting the right to recover attorneys’ fees. Basically, when a party rejects an OOJ and fails to obtain a more favorable judgment, the court cannot award any attorneys’ fees and costs to the rejecting party and may award attorneys’ fees incurred from the date of the offer to the entry of judgment, as well as all reasonable costs, to the party who made the offer. In a recent decision, the Nevada Supreme Court affirmed that when a homeowner rejects an OOJ and fails to obtain a more favorable judgment, it can wipe out that homeowner’s right to Chapter 40 fees and costs. See Gunderson, et al. v. D.R. Horton, 130 Nev. Adv. Op. 9 (Feb. 27, 2014). In other words, “While NRS Chapter 40 permits an award of reasonable attorney fees proximately caused by a construction defect, it does not guarantee it.” Id.
Because of the potentially harsh consequences of rejecting an OOJ, there are specific requirements that must be met to trigger them. An offer of judgment must be made in writing, can be made at any time at least 10 days before trial, and is irrevocable for 10 days with no provision for withdrawal before the 10 days expire. See Nava v. Second Judicial Dist. Court, 118 Nev. 396, 46 P.3d 60 (2002). A party may make successive offers of judgment, but the most recent offer extinguishes previous offers and is controlling for determining the date from which attorneys’ fees may be awarded. See Albios v. Horizon Communities, Inc. 132 P.3d 1022 (2006).
In Beattie v. Thomas, 99 Nev. 579, 668 P.2d 268, 274 (1983), the Nevada Supreme Court explained that the purpose of OOJs are not to cause plaintiffs to unfairly forego legitimate claims. However, when a valid offer of judgment is made, the offer is rejected, and the party rejecting the offer fails to obtain a more favorable judgment, a court must evaluate whether the plaintiff's claim was brought in good faith; whether the offer of judgment was reasonable and in good faith in both its timing and amount; whether the plaintiff's decision to reject the offer and proceed to trial was grossly unreasonable or in bad faith; and whether the fees sought by the offer are reasonable and justified. “After weighing the foregoing factors, the district judge may, where warranted, award up to the full amount of fees requested.” Id.
It is worth noting that in Albios v. Horizon Communities, Inc. 132 P.3d 1022 (2006), the Nevada Supreme Court held that when a party rejects a reasonable OOJ and is foreclosed from recovering fees and costs, the party is likewise foreclosed from an award of fees and costs under Chapter 40. This means that even if a builder fails to include a monetary settlement offer as part of a Chapter 40 response, it may still avoid paying the claimant’s fees and costs with a reasonable and timely OOJ.
Finally, it is important to remember that OOJs are a powerful tool that can cut both ways. If an OOJ is not reasonable and timely, or if it fails to contemplate all the potential recovery of an offeree, the OOJ may have no effect on the outcome of a case. Moreover, if a party rejects an OOJ and fails to obtain a more favorable judgment, that party could end up paying the offeror’s costs and attorney’s fees incurred from the date of the offer. Given this powerful impact, OOJs should be an integral part of pre-litigation planning and overall litigation strategy.
About the Author
Casey J. Quinn is an associate in the Las Vegas office of
Newmeyer & Dillion LLP. His practice focuses on complex commercial, construction, and insurance litigation and appellate work. Casey can be reached by email at Casey.Quinn@ndlf.com.
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BOOK CLUB SERIES: Everything You Want to Know About Construction Arbitration But Were Afraid to Ask
October 30, 2023 —
Marissa L. Downs - The Dispute ResolverI recently had the pleasure of speaking with construction law notables John Foust and Andy Ness to discuss the release of their new book—
Construction Arbitration: The Advocate’s Practical Guide. The goal of their book: to teach attorneys what they need to know to maximize their effectiveness in the arbitration context. To that end, the book covers every aspect of the arbitration process including motion practice, conduct as an advocate, presentation of the case, and post-hearing submissions. Read on for Andy and John’s candid, behind-the-scenes take on how this book came to be and why you should get your copy now, while supplies last!
Q: Who is the target audience for this book?
Andy: In the editing process (and in writing my own chapter on Navigating an International Construction Arbitration) I pretended that I was speaking with a construction lawyer who was a few years out of law school, with some litigation experience, who was getting ready to take on a significant and complex construction arbitration for the first time. The book presupposes knowledge of the basics and tries to anticipate the questions that would be asked when you are trying to think through the whole arbitration process from start to finish. What should my pleadings look like? How much discovery am I likely to be able to obtain? How should my demeanor be different from what I would do in a courtroom? How much should I object during the hearing? In a nutshell, it’s “What do I need to know to maximize my chances of success in the arbitration setting?”
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Marissa L. Downs, Laurie & Brennan, LLPMs. Downs may be contacted at
mdowns@lauriebrennan.com
Virginia Civil Engineers Give the State's Infrastructure a "C" Grade
December 13, 2022 —
American Society of Civil Engineers (ASCE)VIRGINIA BEACH, Va. — The Virginia Section of the American Society of Civil Engineers (ASCE) released the 2022 Report Card for Virginia's Infrastructure today, with 11 categories of infrastructure receiving an overall grade of a 'C'. That means Virginia's infrastructure is in mediocre condition and requires attention. Virginia is a step ahead of the national average of 'C-' given in the 2021 Report Card for America's Infrastructure. Nine of the 11 categories ranked higher than the national grades, as only rail ('C-' compared to the national 'B' grade) and wastewater (tied with the national grade of 'D+') ranked the same or lower, a testament to the state's prioritization of its built environment. Virginia has implemented ambitious plans to improve each of its infrastructure systems and additional resources from the state level and the bipartisan infrastructure law will help these efforts. Civil engineers graded bridges (B), dams (C+), drinking water (C+), public parks (C), rail (C-), roads (C-), schools (C-), solid waste (B-), stormwater (C-), transit (C-), and wastewater (D+).
Virginia's transportation sector has performed better than the national average. Roughly 3% of the state's bridges are in poor condition – less than half the national average of 7.5% -- and the percentage of roads in 'good' condition rose from 48% in 2018 to 51% in 2022. Virginia is also a regional leader in transit services with connection to the Washington, D.C. Metro system and with 41 transit systems across the state, some of which have already surpassed pre-pandemic ridership levels. However, wastewater systems, despite making progress by reducing sewage overflows, face more than $6 billion in needs over 20 years and will need significantly more resources to improve systems and protect water quality for communities and the natural environment.
The Report Card was created as a public service to citizens and policymakers to inform them of the infrastructure needs in their state. Civil engineers used their expertise and school report card-style letter grades to condense complicated data into an easy-to-understand analysis of Virginia's infrastructure network. ASCE State and Regional Infrastructure Report Cards are modeled after the national Infrastructure Report Card, which gave America's infrastructure an overall grade of 'C-' in 2021.
To view the report card and all five categories, visit https://infrastructurereportcard.org/state-item/Virginia/.
ABOUT THE AMERICAN SOCIETY OF CIVIL ENGINEERS
Founded in 1852, the American Society of Civil Engineers represents more than 150,000 civil engineers worldwide and is America's oldest national engineering society. ASCE works to raise awareness of the need to maintain and modernize the nation's infrastructure using sustainable and resilient practices, advocates for increasing and optimizing investment in infrastructure, and improve engineering knowledge and competency. For more information, visit www.asce.org or www.infrastructurereportcard.org and follow us on Twitter, @ASCETweets and @ASCEGovRel.
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Bill Taylor Co-Authors Chapter in Pennsylvania Construction Law Book
October 26, 2017 —
William Taylor - White and Williams LLPBill Taylor, Co-Chair of the Construction and Surety Group, co-authored a chapter in the recently released third edition of Pennsylvania Construction Law: Getting Started, Getting Covered, Getting Paid. The book, published by the Pennsylvania Bar Institute, follows the development of a construction project through contracts, insurance and bonding, performance, claims, warranties and completion, and for troubled projects, termination. Bill's chapter focuses on surety bonds on construction projects in Pennsylvania.
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William Taylor, White and Williams LLPMr. Taylor may be contacted at
taylorw@whiteandwilliams.com
Musk’s Cousins Battle Utilities to Make Solar Rooftops Cheap
April 15, 2015 —
John Lippert and Christopher Martin – BloombergIn September 2013, Hawaiian Electric Co. told thousands of customers they couldn’t connect their new solar panels to its distribution grid. In some neighborhoods, HECO said, its system couldn’t absorb any more unused energy from home solar arrays. The moratorium, which lasted 13 months, made Hawaii a central battleground in the effort by utilities to control the rapid growth of independent solar companies across the U.S. And it was a big deal to people such as Robert Gould, a retired Northwest Airlines pilot living near Honolulu. He’d just paid $53,000 to have solar panels installed.
Gould and other customers protested loudly to state officials. They finally got help from Lyndon Rive, the CEO of SolarCity. The San Mateo, California, company is the biggest installer of rooftop solar panels in the U.S. and has 10,000 Hawaiian customers, Bloomberg Markets magazine reports in its May issue. Rive studied the situation and zeroed in on a key fact: HECO had never directly measured how much solar its grid could handle, relying on computer simulations instead. “Because the technology is brand-new, no one had ever done this in the field before,” says Colton Ching, HECO’s vice president for energy delivery.
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John Lippert, Bloomberg and
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Hilti Partners with Canvas, a Construction Robotics Company
April 03, 2023 —
Aarni Heiskanen - AEC BusinessHilti announced a strategic partnership with Canvas, a construction robotics company that has developed a robotic drywalling solution. The partnership allows Canvas to scale globally.
Hilti launched its
Jaibot, the world’s first semi-autonomous ceiling-drilling robot, in 2020. As part of the partnership, Hilti will assume the manufacturing responsibilities for future Canvas systems. They will be based on the Jaibot platform, giving Canvas a reliable and scalable global supply to meet the huge demand for its finishing robots.
The partnering companies share a common vision: that robotic tools will unlock vastly untapped potential and drive a new era of productivity and safety for skilled trade workers.
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Aarni Heiskanen, AEC BusinessMr. Heiskanen may be contacted at
aec-business@aepartners.fi
Eighth Circuit Remands to Determine Applicability of Collapse Exclusion
January 06, 2012 —
Tred R. Eyerly - Insurance Law HawaiiThe Eighth Circuit determined a jury instruction regarding the applicability of the "all-risk" policy’s exclusion for "collapse" was inadequate. See KAAPA Ethanol, LLC v. Affiliated FM Ins. Co., 2011 U.S. App. LEXIS 22158 (8th Cir. Nov. 3, 2011).
KAAPA had nine large, cylindrical, stainless steel tanks fabricated at its location. Soon after operations began in 2003, some of the tanks experienced unusual movement and began to shift. A geotechnical engineer found "silty clay" had been used for infill instead of compacted granular fill called for in engineering drawings. A year long plan to repair all nine tanks was implemented.
Affiliated’s "all-risk" policy excluded damage caused by faulty workmanship. It also excluded damage caused by settling or cracking. The settling exclusion went on to provide, "This exclusion will not apply to loss or damage resulting from collapse of: a building or structure; or material part of a building or structure." Affiliated denied coverage because of the faulty workmanship and settling exclusions.
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
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California Commission Recommends Switching To Fault-Based Wildfire Liability Standard for Public Utilities
June 25, 2019 —
Lawrence J. Bracken II, Sergio F. Oehninger, Paul T. Moura & Alexander D. Russo - Hunton Insurance Recovery BlogA state-appointed panel advised last week that California should change the standard for determining whether utilities are liable for wildfires. Under the current system, California’s Public Utilities Code § 2106 provides a private right of action by any person or entity that has suffered loss, damages, or injury caused by prohibited or unlawful acts of a public utility. Relying on this statute, property owners have asserted wildfire-related claims directly against allegedly culpable electric utility companies. Public utilities in California also face inverse condemnation claims arising out of wildfires. Under inverse condemnation, where private property is taken for public use and later damaged by the state or its agency, the state or agency is strictly liable to the property owner.
In an effort to reduce the financial impact on public utilities resulting from wildfires—as exemplified by Pacific Gas and Electric Co.’s recent filing for Chapter 11 protection in January—the California Commission on Catastrophic Wildfire Cost and Recovery recommended changing the current laws to reflect a fault-based standard. According to the panel, this change would reduce the risk of bankruptcy and decrease the cost of capital. The commission also recommended establishing a wildfire victims’ fund and setting up an electric utility wildfire board to handle the prevention and mitigation of utility-related wildfires.
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Lawrence J. Bracken II,
Sergio F. Oehninger,
Paul T. Moura and
Alexander D. Russo
Mr. Bracken may be contacted at lbracken@HuntonAK.com
Mr. Oehninger may be contacted at soehninger@HuntonAK.com
Mr. Paul may be contacted at pmoura@HuntonAK.com
Mr. Alexander may be contacted at arusso@HuntonAK.com
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