Urban Outfitters, Inc. v. Dermody Operating Co.
| Decision Date | 13 August 2021 |
| Docket Number | 3:21-cv-00109-MMD-CLB |
| Parties | URBAN OUTFITTERS, INC., Plaintiff, v. DERMODY OPERATING COMPANY, LLC, et. al., Defendants. |
| Court | U.S. District Court — District of Nevada |
ORDER GRANTING MOTION TO STAY DISCOVERY [ECF No 31]
Currently pending before the Court is Defendant Dermody Operating Company, LLC's (“Dermody”) motion to stay discovery, (ECF No. 31), which was joined by Defendant United Construction Co. (“United”) (collectively “Defendants”), (ECF No. 32). Plaintiff Urban Outfitters, Inc. (“Urban”), responded to the motion, (ECF No. 35), and Defendants replied. (ECF Nos. 39 40.) The Court has reviewed the relevant pleadings and papers, and, for the reasons set forth below, the motion to stay is granted.
In 2011 Urban contracted with Defendants to build a distribution and fulfillment center located at 12055 Moya Boulevard, Reno, Nevada (“the Site”). (ECF No. 1 at 1-3.) Defendants agreed to develop, design, and construct the center consisting of a building containing approximately 462, 720 square feet, associated driveways, parking areas, landscaped areas, on-site utilities and facilities, and ancillary improvements on the Site. (ECF No. 1-1 at 14.) The building was constructed between 2011 and 2012, and Urban was provided a “Certificate of Occupancy” on February 2, 2012. (Id. at 69.)
Urban claims it later became aware of alleged construction defects on the Site. Starting in April 2019, Urban alleges it experienced problems with the roof and its assembly. (Id. at 50.) Subsequently, Urban claims it identified additional construction defects on the Site, which included: (1) heaving, settlement and cracking of the asphalt and concrete paving in and around the truck dock area; (2) structural failure of the exterior stairs and bollards; and (3) cracking and vertical displacement of the southwest corner of the docking bay structure including interior and exterior cracking of various building components. (ECF No. 1 at 9.) Urban claims the origins of these issues are related to the original construction, and it will have to pay for various repairs. (Id. at 9-11.)
On March 3, 2021-approximately 9 years after the construction was completed- Urban filed a complaint against Defendants. (ECF No. 1.) Urban asserts various claims against Defendants such as breach of contract, breach of covenant of good faith and fair dealing, negligence, and breach of express warranties, which arise from the alleged defective construction of the Site. (Id. at 11-16.)
In response to the complaint, United and Dermody each filed a motion to dismiss for failure to state a claim. (ECF Nos. 10, 12.) In both motions, Defendants argue Urban's claims must be dismissed because: (1) the claims in the complaint are precluded by Nevada's 6-year statute of repose; (2) these claims were not revived by the Nevada Legislature's 2019 amendment to NRS 11.202, which extended the repose period to 10 years; (3) Urban's contract claims are precluded by Nevada's 6-year statute of limitations; and (4) the negligence claim is barred by the economic loss doctrine. (ECF No. 10 at 9-17; ECF No. 12 at 4-15.)
In support of its motion to dismiss, Dermody also filed a “Request for Judicial Notice, ” which appended several public records, which United joined. (ECF Nos. 13, 14, 17.) These documents include: (1) United's building permits for the different elements of construction, dated June 28, 2011, August 2, 2011, May 19, 2011, and July 15, 2011; (2) the “Certificate of Substantial Completion” for the Site issued on February 2. 2012; and (3) the “Certificate of Occupancy” for the Site issued on February 2, 2021. (ECF Nos. 14, 13-2, 13-3.) These documents, if judicially noticed, are critical in that they trigger the “substantial completion date” as defined by Nevada's statute of repose. (ECF No. 10 at 12.)[1]
On April 16, 2021, Urban opposed both motions to dismiss. (ECF Nos. 20, 22.) In response to both motions, Urban argued: (1) the 2019 Amendments to Nevada's statute of repose, which extended the period from 6 to 10 years, retroactively applies to this case and therefore the case was filed within the repose period; (2) the retroactive application of the statute does not deprive Defendants of substantive rights; (3) retroactive application preserves Urban's claims under a rational basis approach; and (4) the economic loss doctrine does not apply to Urban's negligence claim because the Defendants are not design professionals. (ECF No. 20 at 16-22; ECF No. 22 at 11-18.)
In response to United's motion to dismiss, Urban also argued that, in the alternative to dismissal, Urban should be granted leave to amend the complaint to add a new defendant, GAF Materials, Inc. (“GAF”) and additional claims of fraud against United and/or Dermody. (Id. at 22-23.)
On May 19, 2021, Dermody filed a Motion to Stay Discovery, which United joined. (ECF Nos. 31, 32.) Dermody argues discovery should be stayed because: (1) the pending motions to dismiss are dispositive of the entire case; (2) ruling on the motions does not require discovery; and (3) a “preliminary peek” of the motions demonstrates Defendants' motions to dismiss will likely be granted. (ECF No. 31 at 5-6.)
In response to the motion to stay, Urban filed two documents. (ECF Nos. 34, 35.) First, Urban filed a motion for leave to amend the complaint. (ECF No. 34.) Urban claims it filed the motion for two reasons: (1) to comply with the Local Rules for requesting leave to file an amended complaint; and (2) to further explain and elaborate on the basis for the requested amendment it previously asserted in its opposition to United's motion to dismiss. (Id. at 1, 4.) Urban's requested amendment seeks to add claims for: (1) fraud, deceptive trade practices and civil conspiracy against United and GAF; (2) civil aiding and abetting against GAF; and (3) to expand its allegations related to its breach of contract claim against United. (Id. at 5-8.)
In addition, Urban filed an opposition to the motion to stay. (ECF No. 35.) In the opposition, Urban argues the motion to amend moots Defendants' motion to stay. According to Urban, if the motion to amend is granted, the new claims for deceptive trade practices, fraud, civil conspiracy, and civil aiding and abetting claims are not precluded by the statute of repose and therefore a stay is not warranted. (Id. at 2.)
Dermody replied on May 28, 2021, which United also joined. (ECF Nos. 39, 40.) Defendants argue the motion to stay should be granted because: (1) Urban failed to oppose the motion to stay because it failed to address any of the substantive arguments raised in the motion; and (2) the motion to amend does not “moot” the motion to stay as to Dermody because none of the new claims in the proposed amended complaint are asserted against Dermody and thus all the claims asserted against Dermody remain subject to dismissal pursuant to the statute of repose. (ECF No. 39 at 2-4.)
To determine if a stay is appropriate pending the ruling on a motion to dismiss, the court considers the following factors: (1) whether the pending motion is potentially dispositive of the case; (2) whether the motion can be decided without additional discovery; and (3) whether the court is convinced that the plaintiff cannot state a claim for relief. Tradebay, LLC v. eBay, Inc., 278 F.R.D. 597, 603 (D. Nev. 2011); Kor Media Group, LLC v. Green, 294 F.R.D. 579, 581 (D. Nev. 2013); First Am. Title Ins. Co. v. Commerce Assocs., LLC, No. 2:15-cv-832-RFB-VCF, 2015 WL 7188387, at *2 (D. Nev. Nov. 13, 2015). The court must take a “preliminary peek” at the merits of the underlying dispositive motion in order to find whether the plaintiff can state a claim. Tradebay, 278 F.R.D. at 603. The “preliminary peek” does not prejudge the outcome of the motion; it merely evaluates whether an order staying discovery is warranted. Id.
In conducting its review, the court also considers the goal of Federal Rule of Civil Procedure 1, which provides that the Rules should “be construed, administered, and employed by the court and the parties to secure the just, speedy, and inexpensive determination of every action.” Fed.R.Civ.P. 1. With Rule 1 as its prime directive, the court must decide whether it is more just to speed the parties along in discovery while a dispositive motion is pending or to delay discovery to accomplish the inexpensive determination of the case. See Big City Dynasty v. FP Holdings, L.P., 336 F.R.D. 507, 512 (D. Nev. 2020).
Pursuant to the Tradebay factors, the Court must first determine whether Defendants' motions to dismiss are potentially dispositive. Here, each motion primarily seeks dismissal of the claims asserted against Defendants on the basis that the claims are precluded by the applicable statute of repose. Nevada law imposes specific time limitations on claims arising from alleged construction defects pursuant to a statute of repose. Somersett Owners Ass'n v Somersett Dev. Co., Ltd., --- P.3d ---, 2021 WL 3237184, at *1-2 n.4 (Nev. July 29, 2021). Unlike a statute of limitation, a statute of repose runs whether “a litigant has pursued his rights diligently, but some extraordinary circumstance prevents him from bringing a timely action.” Lozano v. Montoya Alvarez, 572 U.S. 1, 10 (2014). Thus, the statute of repose continues to run no matter when the cause of action is discovered. FDIC v. Rhodes, 130 Nev. 893, 899 (2014). If a litigant does not bring a claim within the proscribed time-period, the statute of repose extinguishes the claim as a matter of law. Albano v....
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