Oxbow Constr., LLC v. Eighth Judicial Dist. Court of State

• Decision Date: 16 October 2014
• Docket Number: Nos. 61558,61941.,s. 61558
• Citation: 130 Nev. Adv. Op. 86,335 P.3d 1234
• Parties: OXBOW CONSTRUCTION, LLC, A Nevada Limited Liability Company, Petitioner, 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 The Regent at Town Centre Homeowners' Association, A Nevada Nonprofit Corporation, Real Party in Interest. The Regent at Town Centre Homeowners' Association, A Nevada Nonprofit Corporation, Petitioner, v. The Eighth Judicial District Court of the State of Nevada, in and for the County of Clark; and the Honorable Allan R. Earl, Respondents, and Oxbow Construction, LLC, A Nevada Limited Liability Company, Real Party in Interest.
• Court: Nevada Supreme Court

335 P.3d 1234

130 Nev. Adv. Op. 86

OXBOW CONSTRUCTION, LLC, A Nevada Limited Liability Company, Petitioner

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

The Regent at Town Centre Homeowners' Association, A Nevada Nonprofit Corporation, Real Party in Interest.

The Regent at Town Centre Homeowners' Association, A Nevada Nonprofit Corporation, Petitioner

v.

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

and the Honorable Allan R. Earl, Respondents

and

Oxbow Construction, LLC, A Nevada Limited Liability Company, Real Party in Interest.

Nos. 61558

61941.

Supreme Court of Nevada.

Oct. 16, 2014.

Koeller Nebeker Carlson & Haluck, LLP, and Robert C. Carlson, Jr., and Megan K. Dorsey, Las Vegas, for Oxbow Construction, LLC.

Feinberg Grant Mayfield Kaneda & Litt, LLP, and Bruce Mayfield and Daniel H. Clifford, Las Vegas, for The Regent at Town Centre Homeowners' Association.

BEFORE THE COURT EN BANC.

OPINION

By the Court, DOUGLAS, J.:

In this opinion, we consider several issues raised by consolidated writ petitions arising out of a construction-defect action. Specifically, we address whether the district court acted arbitrarily or capriciously by failing to perform an NRCP 23 class-action analysis, determining that previously occupied units in a common-interest community do not qualify for NRS Chapter 40 remedies,¹ and allowing claims seeking NRS Chapter 40 remedies to proceed for alleged construction defects in limited common elements assigned to multiple units in a building containing at least one “new residence.” We conclude that the district court's order was not arbitrary or capricious, and therefore, we deny both petitions.

FACTS AND PROCEDURAL HISTORY

These consolidated writ petitions arise from a construction-defect action initiated by The Regent at Town Centre Homeowners' Association against Oxbow Construction, LLC. El Capitan Associates, the original developer of The Regent at Town Centre mixed-use community (Town Centre), hired Oxbow as its general contractor. Town Centre includes 20 buildings containing 274 residential units and 10 commercial units, as well as an office and recreation building. After each building's completion, El Capitan obtained a certificate of occupancy from the Department of Building and Safety so that the building's units could be leased out as apartments.

After Town Centre's completion, El Capitan submitted a condominium plan for the complex, which the City of Las Vegas approved. After this approval, El Capitan entered into an agreement to sell Town Centre to Regent Group II, LLC (Regent II), which recorded Covenants, Conditions and Restrictions (CC & Rs) for Town Centre, As relevant here, section 5.1 of the CC & Rs, entitled “Assigned Limited Common Elements,” defines certain elements as limited common elements assigned to a particular unit or units.

Adhering to their agreement, El Capitan transferred titles to Town Centre's units to Regent II in groups over a period of four months. When Regent II received the final group of titles, lessees occupied between 212 and 246 units in the complex,² and multiple buildings contained at least one unoccupied unit. Over a period of nine months, Regent II sold all of its condominiums to individual purchasers. The average lease to sale occupancy of the community's units was 7.7 months, and the average unit age was 11.4 months.

Pursuant to NRS 40.645, the Association, on behalf of itself and the condominium unit-owners, served Oxbow with an NRS Chapter 40 notice, alleging construction defects in exterior walls and openings, entry decks/exterior stairs, interior walls and ceilings, and sloped roofs, among other things. After receiving the notice, Oxbow filed a complaint for declaratory relief in district court seeking a determination that NRS Chapter 40 does not apply to Oxbow because the Town Centre units did not qualify as residences after being rented as apartments. In response, under NRS 116.3102(1)(d), the Association, on behalf of itself and the unit-owners, filed an answer and counterclaims for, inter alia, construction defects. Oxbow then filed a motion to dismiss the Association's counterclaims for construction defects. The district court denied Oxbow's motion, ordering limited discovery to determine which units were occupied before the title transfers from El Capitan to Regent II.

The Association filed its own motion requesting that all units, irrespective of prior occupancy, be declared “new residence[s]” under NRS 40.615 based on their chronological age and the duration of their occupancy. The district court also denied this motion. The Association then filed a second motion, this time seeking a determination that NRS Chapter 40 remedies are available for all common elements, including those contained within “building envelopes.”³ In its opposition to that motion, Oxbow argued that the Association was precluded from bringing a representative action for construction defects in common elements, and that the district court was required to conduct an NRCP 23 class-action analysis to determine whether the Association had standing to bring claims for defects in limited common elements. The district court granted the Association's motion, in part, determining that the Association could seek, on behalf of itself or two or more unit-owners, NRS Chapter 40 remedies for construction defects in the common elements of buildings containing a “new residence.”

After that ruling, Oxbow filed a writ petition requesting that this court vacate the district court's order because the district court abused its discretion by failing to conduct an NRCP 23 analysis. The Association filed its own writ petition, asking this court to direct the district court to amend its order denying the Association's initial motion to state that NRS Chapter 40 remedies are available for all 274 condominiums at Town Centre.

DISCUSSION

Writ relief

A writ of mandamus is available to, among other things, “control an arbitrary or capricious exercise of discretion.”⁴ Int'l Game Tech., Inc. v. Second Judicial Dist. Court, 124 Nev. 193, 197, 179 P.3d 556, 558 (2008). When seeking such extraordinary relief, the petitioners bear the burden of demonstrating that an exercise of this court's discretion to that end is warranted. See Westpark Owners' Ass'n v. Eighth Judicial Dist. Court, 123 Nev. 349, 356, 167 P.3d 421, 426 (2007) ; Pan v. Eighth Judicial Dist. Court, 120 Nev. 222, 228, 88 P.3d 840, 844 (2004).

Generally, writ relief is available only when there is no “plain, speedy and adequate remedy in the ordinary course of law.” NRS 34.170 ; Westpark, 123 Nev. at 356, 167 P.3d at 426. Because an appeal from a final judgment or order is ordinarily an adequate remedy, Int'l Game Tech., 124 Nev. at 197, 179 P.3d at 558 ; Westpark, 123 Nev. at 356, 167 P.3d at 426, in most cases, we decline to exercise our discretion to consider writ petitions challenging interlocutory district court orders. Smith v. Eighth Judicial Dist. Court, 113 Nev. 1343, 1344, 950 P.2d 280, 281 (1997). Nevertheless, we will exercise our discretion to consider such writ petitions when “an important issue of law needs clarification and considerations of sound judicial economy and administration militate in favor of granting the petition,” Int'l Game Tech., 124 Nev. at 197–98, 179 P.3d at 559.

NRS 40.615 limits NRS Chapter 40 construction-defect remedies for residences to defects in “new residence[s]” or in alterations or additions to existing residences. We have construed “new residence” to mean “a product of original construction that has been unoccupied as a dwelling from the completion of its construction until the point of its original sale. ” ANSE, Inc. v. Eighth Judicial Dist. Court, 124 Nev. 862, 872, 192 P.3d 738, 745 (2008) ; Westpark, 123 Nev. at 360, 167 P.3d at 429. The consolidated writ petitions address whether we should broaden our definition of “new residence” under NRS 40.615 and whether we should extend NRS Chapter 40 remedies for construction defects to limited common elements assigned to multiple units in a building containing at least one “new residence.” These issues are important questions of law, the resolution of which could cabin the underlying litigation and potentially affect other similarly situated persons living in common-interest communities throughout Nevada. We therefore conclude that sound judicial economy and administration favor our consideration of these important legal issues, and we exercise our discretion to address the consolidated writ petitions. Our review of the questions of law raised by these writ petitions is de novo.

Int'l Game Tech., 124 Nev. at 198, 179 P.3d at 559.

NECP 23 analysis

As a threshold matter, Oxbow argues that the district court abused its discretion by allowing the Association to bring a representative construction-defect action on behalf of unit-owners without conducting an NRCP 23 analysis as required by D.R. Horton, Inc. v. Eighth Judicial District Court (First Light II ), 125 Nev. 449, 215 P.3d 697 (2009). That argument, however, conflicts with our decision in Beazer Homes Holding Corp. v. Eighth Judicial District Court, 128 Nev. ––––, 291 P.3d 128 (2012),⁵ where we clarified that when a homeowners' association litigates construction-defect claims on behalf of its members under NRS 116.3102(1)(d), a “[f]ailure to meet any additional procedural requirements, including NRCP 23's class action requirements, cannot strip a common-interest community association of its standing to proceed on behalf of its members....” Id. at ––––, 291 P.3d at 134. In clarifying First Light II, we explained that when a homeowners' association seeks to proceed in a class-action format, the district court must, upon either party's request, analyze NRCP 23's factors to determine how the action should proceed. Id. at ––––, 291 P.3d at 136.

Here, the...