Las Vegas Construction Team Obtains Supreme Court Affirmation of Summary Judgment of Multi-Million Dollar Construction Defect Claim at Trial Court


November 2020

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 Las Vegas Partner 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.  AB 125 shortened the statute of repose under Nevada Revised Statute (“NRS”) Chapter 40 for all construction defect claims from ten 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.  In Nevada, unlike most other jurisdictions, the statutory offer carries the penalty of the offeree having to pay the offeror’s attorney’s fees in addition to costs and interest thereon 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 established by 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. 

On October 18, 2017, the district court heard oral argument on the Motion.  Walters argued the Motion for Lands West.  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 finding that the statute of limitations had expired before the date plaintiff served its Notice of Constructional Defects, so there was nothing to toll.  The Court’s order disposed of the plaintiff’s entire multimillion dollar construction defect claim as to the firm's client.

Schumacher and Walters subsequently filed a motion for attorneys’ fees and costs.  The Court granted the motion, awarding Lands West $94,662.50 in attorney’s fees and $42,465.07 in costs.

On December 14, 2018, the plaintiff filed a Notice of Appeal to the Nevada Supreme Court.  The plaintiff argued that the one-year grace period contained in AB 125 was its own statute of repose and its Notice of Constructional Defects thereby tolled the repose period, rendering its complaint timely.  The plaintiff also argued that it “commenced” its action by serving its Notice of Constructional Defects during the grace period.  Gordon & Rees Appellate Practice Chair, Don Willenburg, provided his expertise, identifying the key issues for briefing and oral argument.  Walters coordinated the answering brief with the other general contractor and eight subcontractors.  The issue on appeal was one of statutory construction and legislative intent.  In Nevada, where a statute is unambiguous on its face, the court will apply the plain and ordinary meaning of the terms therein.  When a statute is ambiguous, the court will look to the legislative intent and other extrinsic evidence to assist it with interpreting the meaning of the words therein.  

During the height of the pandemic for Nevada, oral arguments before the Nevada Supreme Court took place via videoconference on July 6, 2020.  Schumacher skillfully argued the case for Lands West contending the statute was unambiguous.  He argued that “commencement” of an action meant the filing of a complaint (not service of a Chapter 40 Notice of Constructional Defects), and the plain language of AB 125 required a plaintiff’s action be “commenced” during the grace period, which it was not. 

On October 29, 2020, the Nevada Supreme Court issued its opinion affirming the trial court’s order granting Lands West’s motion for summary judgment.  While the Supreme Court reversed the order granting Lands West’s motion for attorney’s fees, Lands West preserved its judgment for costs in the amount of $42,465.07.

Lands West’s owner and insurance carrier are ecstatic with the result.