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November 2017

Las Vegas Construction Team obtains Complete Dismissal with Prejudice of Multi Million Dollar Construction Defect Claim against Developer/General Contractor Client

The case was filed in the Eighth Judicial District, Clark County, Nevada (Las Vegas) and involved alleged construction defects related to an 11,255 square foot custom home located in the ultra-exclusive McDonald Highlands golf course community. The plaintiff is a well known attorney who frequently represents contractors and subcontractors in Nevada, California and Arizona. Gordon Rees Scully Mansukhani Las Vegas Managing Partner Robert Schumacher and Senior Counsel Brian Walters represented Lands West Builders, Inc. (“Lands West”). Lands West was one of two developers/general contractors responsible for building the home.

On February 24, 2015, before the complaint was filed, Nevada Assembly Bill 125 (“AB 125”) was enacted. Among other changes, AB 125 shortened the statute of repose under Nevada Revised Statute (“NRS”) Chapter 40 for all construction defect claims from 10 years to six years. AB 125 included a one year grace period for claims that arose before enactment of AB 125 and that were “commenced” within one year of the effective date of AB 125. AB 125 applies the new six year statute of repose retroactively to actions in which substantial completion of the residence at issue occurred before February 24, 2015 (the effective date of AB 125).

On December 2, 2015, the plaintiff served a Notice of Constructional Defects pursuant to NRS Chapter 40 on Lands West, thereby tolling applicable statutes of limitation and repose. On August 22, 2016, the plaintiff filed the complaint against Lands West and numerous other defendants involved in the development and construction of the residence. The complaint alleged various causes of action for damages based on purported construction defects. The plaintiff demanded $3,555,690.14 from Lands West.

Initial discovery revealed the subject property was substantially completed on May 26, 2009. Recognizing their potential statute of repose defense, but knowing additional discovery would need to be completed before seeking summary judgment, Schumacher and Walters served the plaintiff with a statutory offer of judgment in the amount of $10,001.00. In Nevada, unlike most other jurisdictions, the statutory offer carries with it the penalty of the offeree having to pay the offeror’s attorney’s fees in addition to costs and interest if that offer is rejected and the offeree subsequently obtains a less favorable adjudication. The plaintiff rejected the offer.

After conducting the requisite discovery, Schumacher and Walters filed their motion for summary judgment wherein they argued the plaintiff’s complaint was barred by the new six year statute of repose in AB 125. While the plaintiff acknowledged the new six year statute of repose applied, it opposed the motion arguing that its Notice of Constructional Defects tolled the one year grace period thereby extending the period of repose. The plaintiff also presented the defense of equitable tolling of the statute of repose.

On October 18, 2017, oral argument on the motion took place. Brian Walters argued the motion for Lands West. The Court took the matter under advisement. On November 3, 2017, the Court issued its order granting Lands West’s motion in its entirety. The Court found the statute of repose expired before the plaintiff served its Notice of Constructional Defects and that the plaintiff’s action was not “commenced” within six years of the substantial completion date. The Court rejected the plaintiff’s argument that the AB 125 grace period, which is neither a statute of limitation or repose, could be tolled. The Court’s order disposed of the plaintiff’s entire multimillion dollar construction defect claim.

Schumacher and Walters submitted their motions for costs and attorneys’ fees. Since this is an issue of first impression, it is anticipated the plaintiff will appeal the Court’s order awarding summary judgment to the firm’s developer client.

Robert E. Schumacher
Brian K. Walters