Urban Outfitters, Inc. v. Dermody Operating Co.

• Decision Date: 16 November 2021
• Docket Number: Case No. 3:21-cv-00109-MMD-CLB
• Citation: 572 F.Supp.3d 977
• Parties: URBAN OUTFITTERS, INC., Plaintiff, v. DERMODY OPERATING COMPANY, LLC, et al., Defendants.
• Court: U.S. District Court — District of Nevada

572 F.Supp.3d 977

URBAN OUTFITTERS, INC., Plaintiff,

v.DERMODY OPERATING COMPANY, LLC, et al., Defendants.

Case No. 3:21-cv-00109-MMD-CLB

United States District Court, D. Nevada.

Signed November 16, 2021

Brian K. Walters, Robert E. Schumacher, Gordon Rees Scully Mansukhani, LLP, Las Vegas, NV, for Plaintiff.

Justin H. Pfrehm, Charles L. Burcham, Thorndal, Armstrong, Delk, Balkenbush & Eisinger, Frank Z. LaForge, Matthew B. Hippler, Holland & Hart LLP, Reno, NV, Lars K. Evensen, Holland & Hart, LLP, Las Vegas, NV, for Defendant Dermody Operating Company, LLC.

Mark G. Simons, Kendra J. Jepsen, Simons Hall Johnston PC, Reno, NV, Mari Schaan, Hall Prangle & Schoonveld LLC, Las Vegas, NV, for Defendant United Construction Co.

Nicholas M. Wieczorek, Clark Hill PLLC, Las Vegas, NV, for Defendant GAF Materials Corporation.

AMENDED ORDER

MIRANDA M. DU, CHIEF UNITED STATES DISTRICT JUDGE

I. SUMMARY

This is a breach of contract action involving the construction of a fulfillment and distribution center. Plaintiff Urban Outfitters, Inc., brings claims against Defendants Dermody Operating Company, LLC, the developer of the project, and United Construction Co., the general contractor. (ECF No. 1.) Several motions are before the Court, including: Dermody and United's motions to dismiss (ECF Nos. 10 ("United's Motion"), 12 ("Dermody's Motion")), Plaintiff's motion for leave to amend the complaint (ECF No. 34), Plaintiff's motion to file supplemental briefing in support of its motion for leave to amend (ECF No. 49 ("Plaintiff's First Motion")), and Plaintiff's motion to file supplemental briefing in opposition to Defendants’ motions to dismiss (ECF No. 58 ("Plaintiff's Second Motion")).¹ Plaintiff's motions for leave to file supplemental briefing include notice of two newly decided Nevada Supreme Court cases, which they argue impact the outcome of the other pending motions. See Somersett Owners Ass'n v. Somersett Dev. Co., Ltd. , 492 P.3d 534 (Nev. 2021) ; Dekker/Perich/Sabatini Ltd. v. Eighth Judicial Dist. Ct. in and for Cnty. of Clark , 495 P.3d 519 (Nev. 2021).

As explained further below, the Court first finds that Somersett does not affect the outcome of Plaintiff's motion for leave to amend and will therefore deny the First Motion. However, the Court further finds that Dekker is new authority which does affect the outcome of Defendants’ Motions and Plaintiff's motion for leave to amend, and will therefore grant Plaintiff's Second Motion. Because the parties included their arguments about Dekker ’s applicability to this case, the Court finds further briefing is unnecessary. Having considered the new authority cited in Plaintiff's Second Motion, the Court will deny in part and grant in part Defendants’ motions to dismiss, and will grant Plaintiff leave to file an amended complaint.²

II. BACKGROUND

Plaintiff contracted with Defendants on May 11, 2011, for the construction of a warehouse distribution and fulfilment center (the "Center") in Reno, Nevada. (ECF No. 1 at 2-3.) Plaintiff agreed to pay Defendants $25,540,253.00 for the Center, which would encompass approximately 462,720 square feet, as well as associated driveways, parking areas, on-site utilities, and landscaped areas. (Id. at 3.) The construction was substantially completed on January 31, 2012, and Plaintiff took occupancy on February 2, 2012.³ (ECF Nos. 13-2, 13-3.)

Plaintiff alleges that sometime around September 2019, it became aware that the Center had sustained significant damage, initially believed to be the result of excessive rainfall and the resulting rise of water level in nearby Silver Lake. (ECF No. 1 at 9.) The damage included disruption and cracking of the asphalt and concrete around the truck dock area, structural failure of exterior stairs, and cracking within the interior and exterior docking bay structure. (Id. )

Plaintiff hired Sean Wagner of NewStudio Architecture, LLC, to examine the damage and investigate its cause. (Id. at 6.) Wagner conducted a site visit on September 9-12, 2019, and prepared a report dated October 4, 2019. (ECF No. 1-1 at 44-46 ("Wagner Report").) Wagner concluded that the damage was not in fact caused by a one-time weather event, but rather was attributable to conditions that were either improperly assessed or not taken into consideration in the original design and construction of the Center. (ECF No. 1 at 9-10.)

After a claim of loss was filed, Zurich Insurance retained an outside consulting firm—Madsen, Kneppers & Associates, Inc. ("MKA")—to evaluate the roof. (ECF No. 1 at 8.) MKA performed two site visits in December 2019 and January 2020, and issued a report dated January 29, 2020 ("MKA Report"). (ECF No. 1-1 at 67.) MKA concluded that the damage to the roof was "not the result of adverse weather conditions or elevated wind speeds, but rather original design and construction." (Id. at 69.) The MKA Report also notes that "there have been ongoing issues with the roof since original construction," and details invoices for repairs ranging from November 2018 to March 2019. (Id. at 73-74.)

However, Defendants assert that the Center's roof sustained damage as early as 2011, before any time mentioned in the Complaint. (ECF No. 10 at 16.) Sometime in November 2011, before the substantial completion of construction, Defendants claim the Center's roof was damaged by high wind and moisture, which caused the roof fasteners to pull out of the roofing deck. (Id. )

Plaintiff filed suit on March 3, 2021, nine years after the substantial completion of construction. (ECF No. 1.) Defendants now claim that Nevada's statutes of repose and limitations bar Plaintiff from pursuing its breach of contract claims. (ECF Nos. 10, 12.) Plaintiff opposes Defendants’ Motions, and seeks to file an amended complaint that adds claims and parties to this action. (ECF Nos. 20, 22, 34.)

Shortly after the parties filed their motions to dismiss and amend, the Nevada Supreme Court issued two decisions that address Nevada's statute of repose. Plaintiff subsequently filed a motion for leave to file supplemental briefing after each decision was issued. (ECF Nos. 49, 58.) Defendants opposed both of Plaintiff's motions and included in their briefing arguments not only against granting supplemental briefing, but directly addressing the applicability of the Somersett and Dekker decisions to this action. (ECF Nos. 50, 52, 59.) The Nevada Supreme Court summarily denied a petition for rehearing in Dekker on October 28, 2021.⁴

III. LEAVE TO FILE SUPPLEMENTAL BRIEFING

Plaintiff filed two motions for leave to file supplemental briefing. In the First Motion, Plaintiff argued that the Nevada Supreme Court recently indicated in Somersett Owners Ass'n v. Somersett Dev. Co., Ltd. , 492 P.3d 534 (Nev. 2021), that a qualifying fraud claim may justify equitable tolling of the statute of repose, and therefore requested leave to file supplemental briefing in support of its motion for leave to amend the complaint. (ECF No. 49.) In the Second Motion, Plaintiff argued that the Nevada Supreme Court in Dekker/Perich/Sabatini Ltd. v. Eighth Judicial Dist. Ct. in and for Cnty. of Clark , 495 P.3d 519 (Nev. 2021), conclusively found that the 2019 amendments to NRS § 11.202 revives claims which otherwise would have expired under the 2015 version of the statute, and therefore requested leave to file supplemental briefing in support of its opposition to Defendants’ motions to dismiss. (ECF No. 58.) "A party may not file supplemental pleadings, briefs, authorities, or evidence without leave of court granted for good cause." LR 7-2(g). "Good cause may exist either when the proffered supplemental authority controls the outcome of the litigation, or when the proffered supplemental authority is precedential, or particularly persuasive or helpful." Alps Prop. & Casualty Ins. C. v. Kalicki Collier, LLP , 526 F. Supp. 3d 805, 812 (D. Nev. 2021). As further explained below, the Court finds good cause only as to the Second Motion.

A. First Motion (Somersett )

The Court finds good cause does not exist to grant the First Motion. While the Nevada Supreme Court did recently decide a case that involves Nevada's statute of repose for construction defect actions, Somersett Owners Ass'n v. Somersett Dev. Co., Ltd. , 492 P.3d 534 (Nev. 2021), that case did not introduce a new development in Nevada law. The Nevada Supreme Court acknowledged in Somersett that whether the statute of repose could be equitably tolled when a plaintiff alleges fraud was an open question of law. Id. at 539-40. However, the Court refrained from directly answering that open question. Id. at 540 ("We therefore leave the question of the existence and scope of any such exceptions open for when that question is actually at issue.").

Plaintiff argues that the dicta in Somersett suggests a qualifying claim for fraud might justify equitable tolling of the statute of repose. (ECF No. 49 at 3.) In fact, though the Nevada Supreme Court refrained from ruling on the issue as it was not properly alleged, the court's reasoning indicated that equitable tolling arguments, even for fraud, are disfavored because the statute of repose mechanism differs from that of the statute of limitations. See id. at 539. Accordingly, this Court finds that Somersett expressly declines to address whether a fraud claim would justify equitable tolling of the statute of repose, and that therefore supplemental briefing based on its issuance would be neither helpful nor persuasive.

B. Second Motion (Dekker )

In the Second Motion, Plaintiff argues that the Nevada Supreme Court also recently addressed whether the amended ten-year statute of repose could revive claims that otherwise would have been extinguished under the former six-year statute of repose. See Dekker/Perich/Sabatini Ltd. v. Eighth Judicial Dist. Ct. in and for Cnty. of Clark , 495 P.3d 519 (Nev. 2021). Plaintiff asserts that the holding in Dekker is both conclusive and dispositive, and that the Court should refer to that...