D.R. Horton v. Dist. Ct.
| Citation | 168 P.3d 731 |
| Decision Date | 11 October 2007 |
| Docket Number | No. 47654.,47654. |
| Parties | D.R. HORTON, INC., A Nevada Corporation; RCR Companies; Central Valley Insulation Las Vegas, LLC; and Builder Services Group, Inc., d/b/a Central Valley Insulation, Petitioners, v. The EIGHTH JUDICIAL DISTRICT COURT of the State of Nevada, In and For the COUNTY OF CLARK, and The Honorable Allan R. Earl, District Judge, Respondents, and First Light at Boulder Ranch Homeowners Association, A Nevada Corporation, Real Party in Interest. |
| Court | Supreme Court of Nevada |
In this petition, we address the question of how district courts should determine the sufficiency of a pre-litigation notice of constructional defects under NRS 40.645. The parties and amici curiae1 invite us to examine the reasonableness of a pre-litigation notice that triggers a builder's right to repair, or a claimant's right to commence suit. Today, we provide district courts with a test and guidelines to measure the sufficiency of the pre-litigation notice.
Real party in interest First Light at Boulder Ranch Homeowners Association utilized a "representative sample" of constructional defects in a small number of homes as a basis for giving notice of constructional defects common throughout a development of 414 residences. According to petitioners, First Light's extrapolated notice was inadequate because it failed to provide the "reasonable detail" of defects and their location necessary to preserve for petitioners a meaningful opportunity to repair the alleged defects before suit is brought. We conclude that adequate extrapolated pre-litigation notice must have a reasonable statistical basis to describe the alleged defects and their locations in reasonable detail sufficient to afford contractors a meaningful opportunity to repair the alleged defects. Therefore, we articulate below a test to guide district courts in making written findings on whether a pre-litigation notice satisfies that threshold. So long as an extrapolated notice meets that requirement, district courts have wide discretion to determine the adequacy of a pre-litigation notice on a case-by-case basis.
Since we have adopted a test to be used by the district courts, we grant this petition in part and direct the district court to reconsider the notice and make factual findings as discussed herein.
The First Light at Boulder Ranch Community is located in Henderson, Nevada. Petitioner D.R. Horton, Inc., built and sold the community in twenty-six releases. The community consists of 138 buildings with three residential units in each building, totaling 414 residences. The community has three floor plans, each with two possible elevations, for a total of six different types of homes. Approximately 40 contractors and subcontractors from various trades, some of which used several work crews, were involved in constructing the community. At times, more than one subcontractor from each trade was employed at the community.
Believing that numerous constructional defects may exist in each residence in the community, First Light hired experts to assist it in preparing an NRS 40.645 pre-litigation notice of constructional defects. Those experts formulated the notice after using visual and invasive testing in a small representative sampling of the homes in the community. But they did not provide D.R. Horton with the addresses or the expert report of the homes they had tested. Based on the occurrence of each defect they found, the experts extrapolated the percentage of homes in which they believed each defect existed throughout the entire community. The defects First Light alleges are categorized into several major groups, many of which have multiple subcategories. According to First Light's notice, approximately 160 defects may exist in various combinations in each of the 414 homes. First Light's experts estimate that anywhere from 2 to 100 percent of the 414 homes in the community have any combination of each of the 160 defects. In its notice, First Light did not specify the floor plans, elevations, or addresses of the homes in which it alleges that a particular defect may exist. Unsatisfied with D.R. Horton's response to its notice, First Light filed a constructional defect action with the district court.
In response to First Light's pre-litigation notice and action, D.R. Horton moved the district court for a declaratory judgment, stating that First Light's NRS 40.645 notice was unreasonable and thus statutorily insufficient. The district court denied that motion, expressing dissatisfaction with the statutory constraints when it comes to cases involving a significant number of homes.2 The district court further refused to declare First Light's NRS 40.645 notice statutorily insufficient. In its written order, the district court found that First Light "properly relied upon expert opinion and representative sampling pursuant to NRS 40.645(3)[and] (4)" to prepare its notice.3
D.R. Horton then filed this petition challenging the district court's order denying its motion for declaratory relief.4 Through this petition, D.R. Horton challenges the district court's order, arguing that First Light's prelitigation notice does not give it notice with the "reasonable detail" required by NRS 40.645(2). D.R. Horton further argues that the inadequacy of First Light's notice frustrates its opportunity to repair under NRS 40.647. In its answer, First Light contends that its notice is sufficient and that D.R. Horton bears the burden of finding and repairing the defects noticed or allow the litigation to proceed.
D.R. Horton seeks a writ of prohibition restraining the district court from allowing First Light to ignore the requirements of NRS 40.645(2). Additionally, D.R. Horton seeks a writ of mandamus directing the district court to (1) vacate the order denying D.R. Horton's motion for declaratory relief with respect to First Light's duty to provide adequate pre-litigation notice and (2) order First Light to disclose additional information concerning the defects it alleges in its homes.
Availability of writ relief
Writs of mandamus and prohibition are extraordinary remedies and are available when the petitioner has no "plain, speedy and adequate remedy in the ordinary course of law."5 The right to immediately appeal or even to appeal in the future, after a final judgment is ultimately entered, will generally constitute an adequate and speedy legal remedy precluding writ relief.6 Whether a future appeal is sufficiently adequate and speedy necessarily turns on the underlying proceedings' status, the types of issues raised in the writ petition, and whether a future appeal will permit this court to meaningfully review the issues presented.
In this case, which has already existed below in a pre-litigation stage for more than two and one-half years, and which involves a pre-litigation notice of constructional defects designed to prevent litigation altogether, an eventual appeal from any final judgment would be neither a speedy nor adequate remedy. Consequently, writ relief is not precluded by other means of review.
Standards for granting writ relief
Under NRS 34.160, a writ of mandamus is available "to compel the performance of an act which the law . . . [requires] as a duty resulting from an office, trust or station." Mandamus is also available to control a manifest abuse or an arbitrary or capricious exercise of discretion.7 A writ of prohibition may likewise issue to arrest the performance of an act outside the trial court's discretion.8 This court has broad discretion in deciding whether to consider a petition seeking relief in the form of mandamus or prohibition.9
Although this court infrequently decides to exercise its discretion to consider issues presented in the context of a petition for extraordinary relief, we have elected to exercise our discretion in this instance to consider the issues raised. In doing so, we recognize that in large community-wide constructional defect cases, a fundamental disagreement exists regarding the interpretation of NRS 40.645. The interpretation of this statute is of great importance to both claimants and contractors. Our review of NRS 40.645's application in these constructional defect cases will aid the district courts in managing them.
Having reviewed D.R. Horton's petition, First Light's answer, the amici curiae's briefs, and the parties' supporting documentation, we grant the petition, in part. In doing so, we address the application of NRS 40.645 and establish a "reasonable threshold test" to aid district courts in managing constructional defect cases, thereby avoiding the fate of this case, which has wallowed in a prelitigation quagmire while the parties litigate the level of detail required in a notice that is intended to prevent litigation.
Nevada's constructional defect law
The provisions of NRS Chapter 40, concerning constructional defect actions, reveal that the Legislature intended to provide contractors with an opportunity to repair constructional defects in order to avoid litigation.10...
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