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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Construction defect firm Angius & Terry moves office to Roseville
January 09, 2013 —
CDJ STAFFThe law firm Angius & Terry LLP has closed its office on River Park Drive in Sacramento and opened a Roseville office that will allow for growth. The new office at 3001 Lava Ridge Court provides more usable space in a nice area for less money, said Brad Epstein, a local partner with the firm.
Five attorneys and three staff moved to the new space in Roseville on Jan. 2. “It can house three additional attorneys — and we plan to grow,” Epstein said. The firm specializes in construction defect litigation and general corporate work for community associations.
There are about 800 community associations in the Sacramento area and a handful of small firms that divvy up the work.
“Condominium developments and homeowners’ associations never die and always have legal issues,” Epstein said.
Angius & Terry has a total of 20 lawyers in six offices, four in California and two in Nevada.
Besides Roseville, the firm has offices in Walnut Creek, Manteca, Newport Beach, Reno and Las Vegas.
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Recording a Lis Pendens Is Crucial
January 04, 2023 —
David Adelstein - Florida Construction Legal UpdatesIf you are in a construction dispute where you are pursuing a construction lien foreclosure action, recording a lis pendens is crucial. Did I say crucial? “[O]ne purpose of a notice of lis pendens is to alert all others that title to the property is involved in litigation and that ‘future purchasers or encumbrancers of that property’ are at risk of being bound by an adverse judgment.” Henry v. AIM Industries, LLC, 47 Fla.L.Weekly D653b (Fla. 2d DCA 2022). There really is never a reason not to record a
lis pendens when pursing a construction lien foreclosure. Please remember that – don’t forget to record the lis pendens!
There are times a lis pendens is recorded when the lis pendens is NOT based on a duly recorded instrument (e.g., construction lien or mortgage). A
lis pendens, however, is recorded because the dispute is tied to the property in which the lis pendens is being recorded. The lis pendens is recorded to best safeguard the plaintiff’s interest in the real property without fear that the real property will be sold impacting the purpose (and, of course, security) of the lawsuit.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
New York Appeals Court Rekindles the Spark
March 16, 2017 —
Lian Skaf - White and Williams LLPIn John Trimble, et al. v. City of Albany, et al., 2016, 144 A.D.3d 1484; 42 N.Y.S. 3d 432 (N.Y. App. Div.), the Supreme Court of New York, Appellate Division, addressed the issue of governmental immunity for municipal fire companies. The court held that the plaintiff, John Trimble (Trimble), had sufficient evidence related to the four-pronged test for establishing a “special relationship” between a municipality and a citizen for liability to attach. In addition, the court held that the defendants were not entitled to summary judgment on the issue of governmental immunity. Specifically, regarding the latter holding, the court stated that, when there is no actual choice made on the part of the government, the government’s actions cannot be considered discretionary and immunity will not apply.
In the case at hand, a fire occurred at Trimble’s home on the evening of February 2, 2013. Trimble called 911 and the Department of Fire and Emergency Services for the City of Albany (the Department) responded. After extinguishing the fire, the Department conducted an investigation and cleared the home. The Department’s investigators then told Trimble that the fire was extinguished and it was safe to enter the home. Trimble did so, removing some items so that he could stay with relatives that night. Several hours later, there was a rekindle and the rekindled fire destroyed the home.
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Lian Skaf, White and Williams LLPMr. Skaf may be contacted at
skafl@whiteandwilliams.com
Disruption: When Did It Start and Where Will It End?
June 25, 2019 —
Brian Gallagher - Construction ExecutiveIf change is the only constant—as was famously observed by a Greek philosopher circa 500 B.C.—then why single out some changes as “disruption”?
Disruption is about more than just technology; it’s about more, even, than the rapid rollout and development of technology in the past couple of decades. The word disruption refers to processes or products that are fundamentally different from what is currently in use and that render unforeseen, large-scale changes. Early discussions of disruption (the term was coined by Harvard Business School professor Clayton M. Christensen in a 1995 Harvard Business Review article) compared incremental change in existing systems, which are usually supported by established corporations, to innovations that start out as something completely fresh, limited in their appeal and flawed in initial iterations.
The construction industry was—and still is—late to adopt most technologies and late in experiencing overall disruption. It also lags behind other industries when it comes to efficiency and productivity. McKinsey reported that construction is one of the “least digitized industries in the world,” despite employing approximately 7% of the world’s working-age population and representing one of the world economy’s largest sectors. Disruption is likely to be fast approaching now, even for the construction industry. But its delay may confer the benefit of allowing construction companies to learn from other industries’ mistakes.
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Brian Gallagher, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Construction Case Alert: Appellate Court Confirms Engineer’s Duty to Defend Developer Arises Upon Tender of Indemnity Claim
January 27, 2010 —
Steven M. CvitanovicIn the recent case of UDC-Universal Development, L.P. v. CH2M Hill, 2010 Cal.App.LEXIS 47 (filed January 15, 2010), the Sixth District Court of Appeal provided a stunning illustration of the far-reaching effects of the California Supreme Court’s holding in Crawford v. Weather Shield Manufacturing Inc. (2008) 44 Cal.4th 541. In Crawford, the Court held the duty to defend under an indemnity agreement arose upon the mere tender of defense of a claim covered by the indemnity.
In the UDC case, CH2M Hill provided engineering and environmental planning services to developer UDC on a project that ultimately wound up in a construction defect lawsuit by the homeowners association ( HOA ). UDC tendered its defense to CH2M Hill, the tender was rejected, and UDC filed a cross-complaint for negligence, breach of contract and indemnity against CH2M Hill and others. After the HOA’s construction defect claims were settled, UDC proceeded to trial against CH2M Hill. The jury found in favor of CH2M Hill on the claims for negligence and breach of contract. At the request of the parties prior to trial, the trial court ruled on the application of the indemnity agreement in light of Crawford and, in so doing, found that the defense obligation arose upon the tender and that CH2M Hill breached that duty despite the jury finding in favor of CH2M Hill.
The Court of Appeal affirmed, noting that the defense obligation arose as soon as the defense was tendered and did not depend on the outcome of the litigation, and that the HOA’s general description of the defects along with an allegation that Doe engineers were negligent triggered the duty to defend.
Although this case did not expand the crushing impact of Crawford’s holding, it is
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The Importance of Providing Notice to a Surety
October 21, 2015 —
Craig Martin – Construction Contractor AdvisorA recent case out of Missouri emphasizes the importance of providing notice to a surety when a bonded subcontractor is in default. When the question of whether a surety will be obligated under the bond is in the balance, notice is crucial.
In CMS v. Safeco Insurance Company, Safeco provided a performance bond to a subcontractor for the benefit of CMS. The bond specifically provided:
“PRINCIPAL DEFAULT. Whenever the Principal [Subcontractor] shall be, and is declared by the Obligee [CMS] to be in default under the Subcontract, with the Obligee having performed its obligations in the Subcontract, the Surety [Safeco] may promptly remedy the default, or shall promptly:
4.1 COMPLETE SUBCONTRACT. . . .
4.2 OBTAIN NEW CONTRACTORS. . . .
4.3 PAY OBLIGEE. . . .
4.4 DENY LIABILITY. . .”
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Craig Martin, Lamson, Dugan and Murray, LLPMr. Martin may be contacted at
cmartin@ldmlaw.com
Colorado House Bill 17-1279 – A Misguided Attempt at Construction Defect Reform
March 29, 2017 —
David McClain - Colorado Construction LitigationOn March 17th, House Bill 17-1279, concerning the requirement that a unit owners’ association obtain approval through a vote of unit owners before filing a construction defect action, was introduced and assigned to the House State, Veterans, and Military Affairs Committee. The bill is currently scheduled for its first committee hearing on March 29th, at 1:30 in the afternoon. While, on its face, this appears to be a step in the right direction towards instituting “informed consent” before an HOA can file a construction defect action, the bill actually restricts the ability of developer to include more stringent requirements in the declaration of covenants, conditions, and restrictions for an association, thereby lowing the threshold of “consent” required to institute an action.
House Bill 17-1279 would amend C.R.S. § 38-33.3-303.5 to require an association’s executive board to mail or deliver written notice of the anticipated commencement of a construction defect action to each unit owner and to call a meeting of the unit owners to consider whether to bring such an action. Any construction professional against which a claim may attend the unit owners’ meeting and have an opportunity to address the unit owners and may include an offer to remedy any defect in accordance with C.R.S. § 13-20-803.5(3). The conclusion of the meeting would initiate a 120-day voting period, during which period the running of any applicable statutes of limitation or repose would be tolled. Pursuant to this bill, an executive board may only institute a construction defect action only if authorized by a simple majority of the unit owners, not including: 1) any unit owned by any construction professional, or affiliate of a construction professional, involved in the design, construction, or repair of any portion of the project; 2) any unit owned by a banking institution; 3) any unit owned in which no defects are alleged to exist, and/or 4) any unit owned by an individual deemed “nonresponsive.”
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David M. McLain, Higgins, Hopkins, McLain & Roswell, LLCMr. McLain may be contacted at
mclain@hhmrlaw.com
