Shuette v. Beazer Homes Holdings Corp., No. 41611.

Docket NºNo. 41611.
Citation124 P.3d 530
Case DateDecember 15, 2005
CourtSupreme Court of Nevada
124 P.3d 530
Darwin SHUETTE, Individually; Marc Floyd, Individually; and Diana Todd, Individually, Appellants,
v.
BEAZER HOMES HOLDINGS CORPORATION, a Delaware Corporation; and Beazer Homes Nevada, Inc., a Nevada Corporation, Respondents.
Beazer Homes Holdings Corporation, a Delaware Corporation; and Beazer Homes Nevada, Inc., a Nevada Corporation, Appellants,
v.
Darwin Shuette, Individually; Marc Floyd, Individually; and Diana Todd, Individually, Respondents.
No. 41611.
No. 41768.
Supreme Court of Nevada.
December 15, 2005.

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Robert C. Maddox & Associates and Samuel S. Crano, Nancy A. Cyra and Robert C. Maddox, Las Vegas, for Appellants in No. 41611 and Respondents in No. 41768.

Beckley Singleton, Chtd., and Daniel F. Polsenberg, Las Vegas; Koeller Nebeker Carlson & Haluck, LLP, and Robert C. Carlson Jr. and Megan K. Dorsey, Las Vegas, for Respondents in No. 41611 and Appellants in No. 41768.

Page 535

Bradley Drendel & Jeanney and Thomas E. Drendel, Reno, for Amicus Curiae Nevada Trial Lawyers Association.

Jones Vargas and James L. Wadhams, Las Vegas, for Amici Curiae Southern Nevada Homebuilders Association and Nevada Subcontractors Association.

Before the Court En Banc.

OPINION

HARDESTY, J.


In these consolidated appeals, we determine whether class action certification is appropriate in constructional defect cases. 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. Consequently, the district court erred in granting class action certification in this case, and we reverse the judgment.

We also take this opportunity to address other important issues affecting our constructional defect jurisprudence that may arise on remand. In this, we recognize that attorney fees are damages in constructional defect cases that are nevertheless to be determined by the court and that prejudgment interest should be calculated on repair costs even when those costs have not yet been expended.

FACTS AND PROCEDURAL HISTORY

Beazer Homes Holdings Corp. and Beazer Homes Nevada, Inc. (Beazer Homes) constructed and sold 206 single-family residences between 1994 and 1999 on a 40-acre residential subdivision known as The Villages at Craig Ranch in North Las Vegas, Nevada.

In April 2000, three homeowners, individually and as proposed class representatives, filed a complaint against Beazer Homes alleging constructional defects to their homes. The homeowners claimed that their houses' foundations and concrete slabs were damaged by expansive soils, a condition in which the soils beneath a house expand when exposed to water and contract when the soil dries. This condition can cause a house's foundation and concrete slab to crack and separate. The homeowners also alleged over 30 additional constructional defects unrelated to the soils condition. The complaint asserted breach of express and implied warranties, negligence, and negligent misrepresentation by Beazer Homes as theories of liability. Beazer Homes, in answer, generally denied liability and asserted, among other things, the specific defenses of comparative negligence and mitigation of damages. Four months after the complaint was filed, the homeowners sought class action certification under NRCP 23, relying on the expansive soils claim as the predominant question justifying certification. Beazer Homes objected to class action certification, arguing that (a) the theories of relief and defenses were different depending upon whether the particular homeowner was the original purchaser or merely a current owner; (b) the cause of the expanding soils required individualized proof of the source of the water, thus implicating the comparative negligence and mitigation of damages defenses for each residence; and (c) the additional, unrelated constructional defects were not common or typical to all residences. Without documenting any NRCP 23 analysis, the first district court judge assigned to the case granted class certification, concluding simply that "[t]he court has considerable discretion to fashion a plan or proceedings addressing areas where there are variations in plans, contractors, etc." Although the order granting certification did not identify the members of the class, a subsequent notice of class action declared that the members consisted of the then current owners of homes in The Villages at Craig Ranch.

After the initial class action certification and following considerable discovery, Beazer Homes sought decertification of the homeowners' class action. Beazer Homes reminded the newly assigned district court judge that certification was originally granted with respect to the common question of expansive soils. However, according to Beazer Homes, subsequent discovery demonstrated that a number of houses were not impacted by expansive soils and that individualized proof for the cause of expansive soils was required

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because of grading, landscaping, changes to drainage, lot slopes, grade preparation and retaining walls. Beazer Homes also argued that the class could not maintain a claim for negligent misrepresentation because many members in the class were not original purchasers and Beazer Homes had made no representations to subsequent homeowners. The district judge denied decertification without any NRCP 23 analysis, but he cautioned the homeowners "to make certain their evidence comports with a class action requirement, and we'll kind of see it as it goes."

The case proceeded to trial with the homeowners presenting evidence of essentially three defects: (1) expansive soils causing changes to foundations or concrete flatwork, (2) defective framing and drywalling, and (3) leaking windows caused by defective sealant. The homeowners presented the case using group exhibits and summaries, and because the case was a class action, the district court relaxed normal evidentiary foundations and declined to take evidence of defects in every home. Instead, the homeowners relied on extrapolation or statistical inferences to project that certain defects existent in a few homes were in existence or would manifest in other homes.

The homeowners admitted that expansive soils varied among the lots within the subdivision and proposed four different categories of repair. In defense of the expansive soils claim, Beazer Homes asserted that it had provided warnings to the homeowners in a manual, advising them to keep water away from the foundation and avoid landscaping close to the home. The homeowners' expert testified that landscape irrigation by owners contributed to faulty soil conditions and the drainage varied. Beazer Homes contended, therefore, that the homeowners were comparatively negligent for damages caused by expansive soils.

Beazer Homes also suggested that the defects in framing and drywall were not common or typical to the class, pointing out that the quality of the work by different construction crews varied among the houses. In some houses, shear walls were inadequately supported, and in some houses framing straps were missing. In many houses, construction crews installed the proper number of drywall nails, while other homes were missing drywall nails altogether. Stucco cracks varied among the homes and Beazer Homes claimed that many of those cracks had resulted from normal causes.

The record indicates further that the existence of window leaks was also not common or typical to the class. Evidence of window leaks was provided by extrapolation. Some homes had windows that leaked, while windows in other homes functioned properly. The homeowners' expert estimated that 1319 windows were defective, while Beazer Home's expert acknowledged that approximately 2000 windows needed repair.

During trial, Beazer Homes renewed its motion to decertify. In response, the district court was not persuaded to overturn the first district court judge's decision to certify the class. Once again, no NRCP 23 analysis was conducted. Instead, the district court concluded that while a class action was "certainly not a perfect vehicle and leaves a great deal to be desired," it was the most efficient method for trying the case. At the conclusion of trial, Beazer Homes again sought decertification of the class. The district court acknowledged that "the class action vehicle is awkward for this kind of case," but denied decertification because it would mean losing four months of trial.

The jury returned a verdict, finding that Beazer Homes did not breach any express or implied warranties. However, the jury found that Beazer Homes had been negligent and had negligently misrepresented material facts, and it returned a general damage verdict for the homeowners in the sum of $7,885,500. In addition, the jury found comparative negligence by the class, concluding that Beazer Homes was 93 percent negligent and the class was 7 percent negligent.

The homeowners sought attorney fees pursuant to NRS 40.655, and Beazer Homes objected, claiming that the subject of attorney fees should have been presented to the jury and the district court should permit discovery on the calculation of the fees. Without any documented analysis, the district

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court awarded a 40 percent contingent fee totaling $2,033,406. Judgment was entered for 93 percent of the verdict or $7,333,515 plus attorney fees, homeowners' costs and prejudgment interest. Beazer Homes appeals the final judgment, and the homeowners appeal the district court's order denying their motion for new trial.

DISCUSSION

Class action certification

As a threshold issue, Beazer Homes argues that class action certification of this matter was inappropriate under NRCP 23. We agree.

This court reviews class action certification decisions under an abuse of discretion...

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105 practice notes
  • Albios v. Horizon Communities, Inc., No. 41589.
    • United States
    • Nevada Supreme Court of Nevada
    • April 27, 2006
    ...the wrong reason. Sengel v. IGT, 116 Nev. 565, 570, 2 P.3d 258, 261 (2000). 41. Shuette v. Beazer Homes Holdings Corp., 121 Nev. ___, ___, 124 P.3d 530, 547 42. Sandy Valley Assocs. v. Sky Ranch Estates, 117 Nev. 948, 956, 35 P.3d 964, 969 (2001). 43. 121 Nev. ___, 124 P.3d 530. 44. Id. at ......
  • Hsu v. County of Clark, No. 46461.
    • United States
    • Nevada Supreme Court of Nevada
    • December 27, 2007
    ...Id. at 673-75, 137 P.3d at 1129-30 (quoting 42 U.S.C. § 4654(a) (2000)). 44. Shuette v. Beazer Homes Holdings Corp., 121 Nev. 837, 864, 124 P.3d 530, 548-49 45. See, e.g., Moore v. U.S., 63 Fed.Cl. 781, 789 (2005) (noting that contingent fees could be awarded pursuant to a settlement agreem......
  • 3685 San Fernando Lenders, LLC v. Compass USA SPE LLC (In re U.S. Commercial Mortg. Co.), Case Nos. 2:07–CV–892–RCJ–GWF
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. District of Nevada
    • July 14, 2011
    ...statute authorized a prevailing plaintiff to recover an award of attorneys' fees); Shuette v. Beazer Homes Holdings Corp., 121 Nev. 837, 124 P.3d 530, 549 (2005) (under Nevada law, a court may award attorneys' fees using either a lodestar approach or a contingency fee). Moreover, the Court ......
  • Del Webb Communities Inc. v. Partington, No. 10–15975.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • July 20, 2011
    ...Nevada Revised Statutes, which “governs actions involving constructional defects.” Shuette v. Beazer Homes Holdings Corp., 121 Nev. 837, 124 P.3d 530, 541 (2005). The statute allows a homeowner who has notified his builder of “constructional defects” to sue the builder for damages if the bu......
  • Request a trial to view additional results
105 cases
  • Albios v. Horizon Communities, Inc., No. 41589.
    • United States
    • Nevada Supreme Court of Nevada
    • April 27, 2006
    ...the wrong reason. Sengel v. IGT, 116 Nev. 565, 570, 2 P.3d 258, 261 (2000). 41. Shuette v. Beazer Homes Holdings Corp., 121 Nev. ___, ___, 124 P.3d 530, 547 42. Sandy Valley Assocs. v. Sky Ranch Estates, 117 Nev. 948, 956, 35 P.3d 964, 969 (2001). 43. 121 Nev. ___, 124 P.3d 530. 44. Id. at ......
  • Hsu v. County of Clark, No. 46461.
    • United States
    • Nevada Supreme Court of Nevada
    • December 27, 2007
    ...Id. at 673-75, 137 P.3d at 1129-30 (quoting 42 U.S.C. § 4654(a) (2000)). 44. Shuette v. Beazer Homes Holdings Corp., 121 Nev. 837, 864, 124 P.3d 530, 548-49 45. See, e.g., Moore v. U.S., 63 Fed.Cl. 781, 789 (2005) (noting that contingent fees could be awarded pursuant to a settlement agreem......
  • 3685 San Fernando Lenders, LLC v. Compass USA SPE LLC (In re U.S. Commercial Mortg. Co.), Case Nos. 2:07–CV–892–RCJ–GWF
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. District of Nevada
    • July 14, 2011
    ...statute authorized a prevailing plaintiff to recover an award of attorneys' fees); Shuette v. Beazer Homes Holdings Corp., 121 Nev. 837, 124 P.3d 530, 549 (2005) (under Nevada law, a court may award attorneys' fees using either a lodestar approach or a contingency fee). Moreover, the Court ......
  • Del Webb Communities Inc. v. Partington, No. 10–15975.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • July 20, 2011
    ...Nevada Revised Statutes, which “governs actions involving constructional defects.” Shuette v. Beazer Homes Holdings Corp., 121 Nev. 837, 124 P.3d 530, 541 (2005). The statute allows a homeowner who has notified his builder of “constructional defects” to sue the builder for damages if the bu......
  • Request a trial to view additional results

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