Court gives Right-to-Repair law new teeth
State Supreme Court KOs class-action defect suits
BY TONY ILLIA
BUSINESS PRESS
Friday, February 10, 2006
A recent appeals court ruling gives bite to the state's 2003 right-to-repair law, spelling trouble for future construction-defect cases, legal experts contend.
The Nevada Supreme Court, in a defining moment, ruled in favor of a homebuilder on a class-action construction-defect case Dec. 15. The suit was between 200 homeowners at Craig Ranch Village in North Las Vegas and Beazer Homes. The trial, which began in 2002 and lasted for three months, was one of the Nevada's longest and largest defect cases.
Homeowners sought $23.7 million to repair cracks in foundations, walls and driveways allegedly caused by expansive soil. Beazer countered that the homes, built between 1994 and 1999, would cost just $3.4 million to fix.
JURY SIDED WITH HOMEOWNERS
A Clark County jury awarded the homeowners $7.8 million in damages in February 2003, but Beazer appealed the case to the state Supreme Court in December, arguing that the plaintiffs shouldn't have been granted class-action status. The Supreme Court agreed.
"Because single-family residence constructional defect litigation often raises diverse, individualized claims and defenses, we conclude that, generally, the requirements for class-action certification cannot be met," Justice Jim Hardesty wrote in the unanimous opinion.
The ruling calls for new trials on all issues in the case. Beazer attorneys have said a retrial of each case would be best for both the court system and the individuals with claims.
"It's a watershed case," said Leon Mead, a construction attorney at Mead Pezzillo LLP. "The ruling sets a precedent no longer allowing attorneys to take construction defects from a few homes and apply them to an entire development without first investigating each one."
The decision, as a result, is expected to give the state's right-to-repair law more significance. Senate Bill 241, enacted in August 2003, requires that homeowners give builders a chance to repair defects before filing a lawsuit. The law was intended to reduce the number of defect cases and shotgun claims overloading courtroom dockets.
Additionally, it was intended to relieve soaring builder insurance premiums, which had doubled or tripled in recent years because of lawsuits.
"The ruling was correct, and it's the basic point that we've been trying to make for years," said Steve Hill, chairman of the Coalition for Fairness in Construction, which lobbied to pass SB 241. "Lumping a bunch of homeowners together in a lawsuit, because they live close together, is not a good way to resolve these issues."
SPECIFIC DEFECTS
The state high court ruling makes it far more difficult and costly for homeowners to pursue class-action suits since the owners of each residence must now prove the specific defects of their house.
And while it could result in more claims being filed, the claim amounts will be much smaller. Legal experts, however, feel that construction-defect attorneys will now be unwilling to take on cases that require more work for smaller payouts.
"There are some very good construction-defect attorneys who have been successful because they have been able to utilize the class action," said George Ogilvie, a construction lawyer with McDonald Carano Wilson LLP. "The Beazer decision makes it almost impossible for plaintiffs to now certify a class, which is going to buttress the impacts of SB 241."
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