D.R. Horton, Inc. v. Eighth Judicial Dist. Court of State

• Decision Date: 29 October 2015
• Docket Number: 66101.,Nos. 66085,s. 66085
• Citation: 358 P.3d 925,131 Nev. Adv. Op. 86
• Parties: D.R. HORTON, INC., Petitioner, v. The EIGHTH JUDICIAL DISTRICT COURT Of The State Of Nevada, in and for the County of Clark; and the Honorable Susan Johnson, District Judge, Respondents, and Arlington Ranch Homeowners Association, A Nonprofit Corporation, Real Party in Interest. D.R. Horton, Inc., Petitioner, v. The Eighth Judicial District Court of the State Of Nevada, in and for the County of Clark; and the Honorable Susan Johnson, District Judge, Respondents, and Arlington Ranch Homeowners Association, A Nevada Nonprofit Corporation, Real Party in Interest.
• Court: Nevada Supreme Court

358 P.3d 925

131 Nev. Adv. Op. 86

D.R. HORTON, INC., Petitioner

v.The EIGHTH JUDICIAL DISTRICT COURT Of The State Of Nevada, in and for the County of Clark;

and the Honorable Susan Johnson, District Judge, Respondents

and

Arlington Ranch Homeowners Association, A Nonprofit Corporation, Real Party in Interest.

D.R. Horton, Inc., Petitioner

v.

The Eighth Judicial District Court of the State Of Nevada, in and for the County of Clark;

and the Honorable Susan Johnson, District Judge, Respondents

and

Arlington Ranch Homeowners Association, A Nevada Nonprofit Corporation, Real Party in Interest.

Nos. 66085

66101.

Supreme Court of Nevada.

Oct. 29, 2015.

Wood, Smith, Henning & Berman, LLP, and Joel D. Odou and Victoria L. Hightower, Las Vegas, for Petitioner.

Angius & Terry, LLP, and Paul P. Terry, Jr., Scott P. Kelsey, and David M. Bray, Las Vegas, for Real Party in Interest.

Before the Court En Banc.¹

OPINION

By the Court, HARDESTY, C.J.:

In these original petitions for extraordinary writ relief, we consider whether the district court erred when it initially granted an ex parte stay permitting a homeowners' association to complete the NRS Chapter 40 process and further erred when it denied a motion to dismiss the underlying complaint pursuant to the five-year rule in NRCP 41(e) when the NRS Chapter 40 process was still not complete. We conclude that the district court's order granting a stay was not in error, and the five-year period was tolled under the Boren exception to NRCP 41(e). Accordingly, we deny both of these petitions for a writ of prohibition or mandamus.

FACTS AND PROCEDURAL HISTORY

These petitions arise from the same underlying complaint. In Docket No. 66085, petitioner D.R. Horton, Inc., argues that the district court abused its discretion in granting real party in interest High Noon at Arlington Ranch Homeowners Association's² ex parte motion to stay the proceedings until the NRS Chapter 40 prelitigation process for constructional defect cases was complete. In Docket No. 66101, petitioner D.R. Horton argues that the district court erred in refusing to dismiss the case for failure to bring the case to trial within five years pursuant to NRCP 41(e) because it improperly excluded from the five-year period certain dates during which the proceedings were stayed.

Facts related to both petitions

Real party in interest High Noon is a homeowners' association created pursuant to NRS Chapter 116 that operates and manages the High Noon at Arlington Ranch community. This community consists of 342 individual units contained within 114 buildings. According to High Noon, the sales documents for these units contain language that precludes express and implied warranty actions after two years.

On June 7, 2007, High Noon filed a complaint against D.R. Horton “in its own name on behalf of itself and all of the High Noon ... unit owners,” alleging breach of implied warranties of workmanlike quality and habitability, breach of contract, breach of express warranties, and breach of fiduciary duty. High Noon obtained written assignment of the claims of 194 of its individual unit owners.

Even though High Noon did not specifically allege that its claims fall under NRS Chapter 40's constructional defect provisions, High Noon immediately moved, ex parte, for a stay and enlargement of time for service of the complaint pending completion of prelitigation proceedings pursuant to NRS 40.647(2)(b), which allows for stays of district court actions filed before the prelitigation process is completed when the claims would later be time-barred by statute. In support of this motion, High Noon argued that it was unclear whether its warranty claims were subject to NRS Chapter 40, but if not, they faced a possible two-year contractual limitations period, indicating that “[t]he complaint was filed to preserve [High Noon]'s claim for breach of express and implied warranties.” Additionally, High Noon stated that, to begin the prelitigation process, it would “immediately serve [d]efendants with [n]otice of construction defects pursuant to NRS 40.645, providing detailed information regarding the construction defect damages claimed.” The district court granted High Noon's motion and stated that the complaint “is hereby stayed until the completion of the NRS 40.600 et seq. pre-litigation process.”³ In a later order, the district court determined that this stay commenced on August 13, 2007, and that the case then “remained dormant until April 14, 2008, when [D.R. Horton] filed various motions.”⁴ The district court further concluded that another stay had been granted on July 30, 2009, as a result of D.R. Horton's motion for stay. The court determined that this stay ended on November 5, 2009, when the district court approved the special master's case management order.⁵

Based on information from the parties' briefs and appendices, it appears that as of today, over eight years later, the NRS Chapter 40 process is still not complete.

Docket No. 66085

In this writ petition, D.R. Horton challenges the 2007 district court order granting High Noon's ex parte motion for a stay and enlargement of time for service so that High Noon could conduct NRS Chapter 40 prelitigation activities, including giving notice and opportunities to inspect and repair, prior to serving process on D.R. Horton. D.R. Horton claims that the stay is void, as High Noon's breach of implied and express warranty causes of action allege constructional defects and are therefore subject to NRS Chapter 40, which requires dismissal for failure to comply with prelitigation procedures unless certain conditions are met. NRS 40.645 ; NRS 40.647. D.R. Horton also argues that the void 2007 stay cannot toll the NRCP 41(e) five-year rule, and it requests that this court direct the district court to vacate the order denying the motion to dismiss and to dismiss the complaint.

Docket No. 66101

In this petition, D.R. Horton makes an additional argument that the district court erred in denying a motion to dismiss based on High Noon's failure to bring the action to trial within five years pursuant to NRCP 41(e). On January 21, 2014, third-party defendant Firestop, Inc., moved to dismiss the underlying case for failure to prosecute, and D.R. Horton joined in the motion. Firestop contended that the only stay that tolled the five-year rule was the stay entered by this court in Docket No. 58533 and that the five-year period thus expired on September 14, 2013. D.R. Horton contends that the district court erred when it relied on the Boren tolling exception to NRCP 41(e), which permits tolling where “the parties are prevented from bringing an action to trial by reason of a stay order.” Boren v. City of N. Las Vegas, 98 Nev. 5, 6, 638 P.2d 404, 405 (1982). D.R. Horton argues that this court should clarify the holdings from Boren and its progeny and require a court to examine the parties' diligence in bringing an action to trial when determining if the tolling exception is appropriate. Alternatively, D.R. Horton asks this court to specifically preclude tolling for all stays imposed to complete the NRS Chapter 40 process.

DISCUSSION

Writ relief is appropriate

“ ‘A writ of mandamus is available to compel the performance of an act that the law requires as a duty resulting from an office, trust, or station or to control an arbitrary or capricious exercise of discretion.’ ” Humphries v. Eighth Judicial Dist. Court, ––– Nev. ––––, 312 P.3d 484, 486 (2013) (quoting Int'l Game Tech., Inc. v. Second Judicial Dist. Court, 124 Nev. 193, 197, 179 P.3d 556, 558 (2008) ); see also NRS 34.160. Generally, “[w]rit relief is not available ... when an adequate and speedy legal remedy exists.” Int'l Game Tech., 124 Nev. at 197, 179 P.3d at 558. “While an appeal generally constitutes an adequate and speedy remedy precluding writ relief, we have, nonetheless, exercised our discretion to intervene ‘under circumstances of urgency or strong necessity, or when an important issue of law needs clarification and sound judicial economy and administration favor the granting of the petition.’ ” Cote H. v. Eighth Judicial Dist. Court, 124 Nev. 36, 39, 175 P.3d 906, 908 (2008) (quoting State v. Second Judicial Dist. Court, 118 Nev. 609, 614, 55 P.3d 420, 423 (2002) ).⁶

These petitions merit our consideration as they raise important issues concerning Nevada's constructional defect law. Specifically, the petitions present important questions of law—whether NRS 40.647(2)(b) allows for this type of stay and, if so, whether the stay tolls the running of the five-year period under NRCP 41(e). Although the case was filed in 2007, litigation is in the very early stages and the answer to these questions now would thus promote judicial economy and administration. See Thran v. First Judicial Dist. Court, 79 Nev. 176, 178, 380 P.2d 297, 298–99 (1963) (entertaining petition for writ relief from a district court order denying a motion to dismiss under NRCP 41(e) ); see also Smith v. Eighth Judicial Dist. Court, 113 Nev. 1343, 1345, 1345 n. 1, 950 P.2d 280, 281, 281 n. 1 (1997). Accordingly, we choose to entertain these writ petitions.

The August 2007 stay

High Noon's complaint alleged four claims for relief: (1) breach of implied warranties of workmanlike quality and habitability, (2) breach of contract, (3) breach of express warranties, and (4) breach of fiduciary duty. In the complaint, High Noon never alleges that the claims for relief fall under NRS Chapter 40.⁷

High Noon based its August 2007 ex parte stay motion on NRS 40.647(2)(b). The statute specifically states that if a plaintiff who files a constructional defect suit before completing the prelitigation process would be prevented from filing another suit based on the expiration of the statute of limitations or repose, then the court must stay the case rather than dismiss it in order to allow for compliance with the NRS Chapter 40 requirements. NRS 40.647(2)(b).

In its stay motion, High Noon alleged that, pursuant to NRS 116.4116(1...