SUMMARY--Revises provisions governing actions resulting from constructional defects. (BDR 3-1393)
FISCAL NOTE: Effect on Local Government: No.
Effect on the State or on Industrial Insurance: No.
EXPLANATION - Matter in italics is new; matter in brackets [ ] is material to be omitted.
AN ACT relating to actions resulting from constructional defects; requiring an unsuccessful claimant in an action against a design professional resulting from a constructional defect to pay the reasonable costs and attorney's fees of the defendant if the claimant fails to file a certificate of merit before filing his claim; revising other provisions governing actions resulting from constructional defects; and providing other matters properly relating thereto.
THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:
Section 1 Chapter 40 of NRS is hereby amended by adding thereto the provisions set forth as sections 2 to 5, inclusive, of this act.
Sec. 2. "Design professional" means a person certified pursuant to chapter 623, 623A or 625 of NRS.
Sec. 3. If the defendant in an action brought to recover damages for a constructional defect is a contractor and the parties do not reach an agreement after participating in mediation pursuant to NRS 40.680, the claimant may:
1. Recover the reasonable costs and fees of the mediation as costs of the action;
2. File a complaint; and
3. Petition the court in which the complaint is filed for the appointment of a special master.
Sec. 4. 1. If the defendant in an action brought to recover damages for a constructional defect is a design professional and the parties do not reach an agreement after participating in mediation pursuant to NRS 40.680, the claimant may:
(a) File a certificate of merit;
(b) File a complaint; and
(c) Petition the court in which the complaint is filed for the appointment of a special master.
2. A certificate of merit filed pursuant to subsection 1 must:
(a) Be executed by the attorney for the claimant;
(b) Declare that:
(1) The attorney for the claimant has consulted with a design professional who is:
(I) Certified in the same field as the defendant;
(II) Reasonably knowledgeable in the issues involved in the pending litigation; and
(III) Not a party to the pending litigation.
(2) It is the opinion of the design professional with whom the attorney for the claimant consulted pursuant to subparagraph (1) that the defendant was negligent in the performance of his professional services.
3. If the defendant does not file a certificate of merit before filing his complaint:
(a) Because the time it would take to obtain the certificate would likely allow a statute of limitations to impair the action, he may file the certificate of merit not more than 60 days after filing the complaint without incurring a penalty.
(b) For any other reason and the claimant does not obtain a judgment in his favor, the defendant must be awarded reasonable costs and attorney's fees.
4. A claimant who files a certificate of merit pursuant to this section:
(a) Need not reveal to the defendant the identity of the design professional consulted to complete the certificate of merit or the content of the consultation; and
(b) Must reveal to the court the identity of the design professional consulted to complete the certificate of merit and the content of the consultation.
Sec. 5. 1. A special master appointed pursuant to section 3 or 4 of this act:
(a) May review all pleadings, papers or documents filed with the court concerning the cause of action.
(b) May coordinate discovery.
(c) May order a party and any consultants or experts to inspect the property that is the subject of the litigation.
(d) May order settlement conferences and attendance at the conferences by a representative of the insurer of a party, but shall not, unless otherwise agreed to by the parties, personally conduct a settlement conference or engage in an ex parte meeting with either party regarding the action.
(e) May require either party to provide statements of legal and factual issues concerning the cause of action.
(f) Shall refer to the judge who appointed him or to the presiding judge of the court in which the cause of action is filed any matter requiring assistance from the court.
2. Upon a petition by either party for judicial review of the decision of the special master, the court in which the complaint is filed may order a trial de novo.
3. A report issued by a special master that indicates that either party has failed to appear before him is admissible in the cause of action.
Sec. 6. NRS 40.600 is hereby amended to read as follows:
40.600As used in NRS 40.600 to 40.695, inclusive, and sections 2 to 5, inclusive, of this act, unless the context otherwise requires, the words and terms defined in NRS 40.605 to 40.630, inclusive, and section 2 of this act have the meanings ascribed to them in those sections.
Sec. 7. NRS 40.630 is hereby amended to read as follows:
40.630"Residence" means a dwelling [designed for not more than four families or a unit in such a dwelling in] for which title [to the individual units] is transferred [to the owners] pursuant to chapter 116 or 117 of NRS.
Sec. 8. NRS 40.635 is hereby amended to read as follows:
40.635NRS 40.600 to 40.695, inclusive [:] , and sections 2 to 5, inclusive, of this act:
1. Apply to a claim or cause of action to recover damages resulting, directly or indirectly, from a constructional defect, except a claim for personal injury or wrongful death, and prevail over any conflicting law otherwise applicable to the claim or cause of action.
2. Do not bar or limit any defense otherwise available except as otherwise provided in those sections.
Sec. 9. NRS 40.640 is hereby amended to read as follows:
40.640In a claim or cause of action to recover damages resulting from a constructional defect, a contractor or design professional is liable for his acts or omissions or the acts or omissions of his agents, employees or subcontractors and is not liable for any damages caused by:
1. The acts or omissions of a person other than the contractor or design professional or his agent, employee or subcontractor;
2. The failure of a person other than the contractor or design professional or his agent, employee or subcontractor to take reasonable action to reduce the damages or maintain the residence;
3. Normal wear, tear or deterioration;
4. Normal shrinkage, swelling, expansion or settlement; or
5. Any constructional defect disclosed to an owner before his purchase of the residence, if the disclosure was provided in a language that is understandable and was written in underlined and boldfaced type with capital letters.
Sec. 10. NRS 40.645 is hereby amended to read as follows:
40.645Except as otherwise provided in this section and NRS 40.670:
1. At least 60 days before a claimant brings a cause of action against a contractor or design professional for damages arising from a constructional defect, the claimant must give written notice by certified mail, return receipt requested, to the contractor [,] or design professional at the [contractor's] last known address [,] of the contractor or design professional, specifying in reasonable detail the defects or any damages or injuries that are the subject of the complaint. During the 35-day period after the contractor or design professional receives the notice, on his written request, the contractor or design professional is entitled to inspect the property that is the subject of the complaint to determine the nature and cause of the defect, damage or injury and the nature and extent of repairs necessary to remedy the defect. The contractor or design professional may take reasonable steps to establish the existence of the defect. If the residence is covered by a warranty or contract of insurance issued by an insurer authorized by this state to issue such a warranty or contract, a claimant must diligently pursue a claim under the warranty or contract.
2. Within 45 days after the contractor or design professional receives the notice, the contractor or design professional may make a written offer of settlement to the claimant. The offer:
(a) Must be served to the claimant by certified mail, return receipt requested, at the claimant's last known address.
(b) Must respond to each constructional defect set forth in the claimant's notice, and describe in reasonable detail the cause of the defect, if known, the nature and extent of the damage or injury resulting from the defect, and, unless the offer is limited to a proposal for monetary compensation, the method, adequacy and estimated cost of the proposed repair.
(c) May include:
(1) A proposal for monetary compensation.
(2) If the contractor is licensed to make the repairs, an agreement by the contractor to make the repairs.
(3) An agreement by the design professional to make the repairs.
(4) An agreement by the contractor or design professional to cause the repairs to be made, at the [contractor's expense,] expense of the contractor or design professional, by another contractor or design professional who is licensed to make the repairs, bonded and insured.
The repairs must be made within 45 days after the contractor or design professional receives written notice of acceptance of the offer, unless completion is delayed by the claimant or by other events beyond the control of the contractor [.] or design professional. The claimant and the contractor or design professional may agree in writing to extend the periods prescribed by this section.
Sec. 11. NRS 40.650 is hereby amended to read as follows:
40.6501. If a claimant unreasonably rejects a reasonable written offer of settlement made pursuant to NRS 40.645 or does not permit the contractor or [independent contractor] design professional a reasonable opportunity to repair the defect pursuant to an accepted offer of settlement and thereafter files a cause of action governed by NRS 40.600 to 40.695, inclusive, the court in which the cause of action is filed may:
(a) Deny the claimant's attorney's fees and costs; and
(b) Award attorney's fees and costs to the contractor [.] or design professional.
Any sums paid under a homeowner's warranty, other than sums paid in satisfaction of claims that are collateral to any coverage issued to or by the contractor [,] or design professional, must be deducted from any recovery.
2. If a contractor or design professional fails to make a reasonable offer of settlement pursuant to NRS 40.645 or fails to complete, in a good and workmanlike manner, the repairs specified in an accepted offer, the limitations on damages and defenses to liability provided in NRS 40.600 to 40.695, inclusive, do not apply.
3. If coverage under a warranty or contract of insurance is denied by an insurer in bad faith, the homeowner and the contractor or design professional have a right of action for the sums that would have been paid if coverage had been provided, plus reasonable attorney's fees and costs.
Sec. 12. NRS 40.655 is hereby amended to read as follows:
40.6551. Except as otherwise provided in NRS 40.650, in a claim or cause of action governed by NRS 40.600 to 40.695, inclusive, the claimant may recover only the following damages to the extent proximately caused by a constructional defect:
(a) Any reasonable attorney's fees;
(b) The reasonable cost of repairs necessary to cure any constructional defect that the contractor or design professional failed to cure and the reasonable expenses of temporary housing reasonably necessary during the repair;
(c) The reduction in market value of the residence or accessory structure, if any, to the extent the reduction is because of structural failure;
(d) The loss of the use of the residence during the time of the repair;
(e) The reasonable value of any other property damaged by the constructional defect;
(f) Any additional costs incurred by the claimant, including any costs and fees incurred for hiring experts reasonably necessary to ascertain the nature and extent of the constructional defect; and
(g) Any interest provided by statute.
2. As used in this section, "structural failure" means physical damage to the load-bearing portion of a residence or appurtenance caused by a failure of the load-bearing portion of the residence or appurtenance.
Sec. 13. NRS 40.665 is hereby amended to read as follows:
40.665In addition to any other method provided for settling a claim pursuant to NRS 40.600 to 40.695, inclusive, a contractor or design professional may, pursuant to a written agreement entered into with a claimant, settle a claim by repurchasing the claimant's residence and the real property upon which it is located. The agreement may include, without limitation, provisions which reimburse the claimant for:
1. The value of any improvements made to the property by a person other than the contractor [;] or design professional;
2. Reasonable attorney's fees and fees for experts; and
3. Any costs, including costs and expenses for moving and costs, points and fees for loans.
Sec. 14. NRS 40.670 is hereby amended to read as follows:
40.670A contractor or design professional who receives written notice of a constructional defect resulting from work performed by the contractor or design professional or [his] the agent, employee or subcontractor of the contractor or design professional which creates an imminent threat to the health or safety of the inhabitants of the residence shall take reasonable steps to cure the defect as soon as practicable. The contractor or design professional shall not cure the defect by making any repairs for which he is not licensed or by causing any repairs to be made by a person who is not licensed to make those repairs. If the contractor or design professional fails to cure the defect in a reasonable time, the owner of the residence may have the defect cured and may recover from the contractor or design professional the reasonable cost of the repairs plus reasonable attorney's fees and costs in addition to any other damages recoverable under any other law.
Sec. 15. NRS 40.675 is hereby amended to read as follows:
40.6751. A contractor or design professional who makes or provides for repairs under NRS 40.600 to 40.695, inclusive, may take reasonable steps to prove that the repairs were made and to have them inspected.
2. The provisions of NRS 40.600 to 40.695, inclusive, regarding inspection and repair are in addition to any rights of inspection and settlement provided by common law or by another statute.
Sec. 16. NRS 40.680 is hereby amended to read as follows:
40.6801. Before a complaint in a cause of action governed by NRS 40.600 to 40.695, inclusive, may be filed in court, the matter must be submitted to mediation, unless mediation is waived in writing by the contractor and the claimant.
2. The claimant and contractor must select a mediator by agreement. If the claimant and contractor fail to agree upon a mediator within 45 days after a mediator is first selected by the claimant, either party may petition the American Arbitration Association, the Nevada Arbitration Association, Nevada Dispute Resolution Services or any other mediation service acceptable to the parties for the appointment of a mediator. A mediator so appointed may discover only those documents or records which are necessary to conduct the mediation. The mediator shall convene the mediation within 60 days after the matter is submitted to him, unless the parties agree to extend the time. The contractor shall deposit with the mediator before mediation begins the entire amount estimated by the mediator as necessary to pay the salary and expenses of the mediator, and shall deposit additional amounts demanded by the mediator as incurred for that purpose. The total fees for each day of mediation and the mediator must not exceed $750 per day.
3. [If, after undergoing mediation pursuant to subsection 2, the parties do not reach an agreement concerning the matter, the claimant may file his complaint and:
(a) The reasonable costs and fees of the mediation are recoverable as costs of the action.
(b) The claimant may petition the court in which the complaint is filed for the appointment of a special master.
4. A special master appointed pursuant to subsection 3 may:
(a) Review all pleadings, papers or documents filed with the court concerning the cause of action.
(b) Coordinate the discovery of any books, records, papers or other documents by the parties, including the disclosure of witnesses and the taking of the deposition of any party.
(c) Order any inspections on the site of the property by a party and any consultants or experts of a party.
(d) Order settlement conferences and attendance at those conferences by any representative of the insurer of a party.
(e) Require any attorney representing a party to provide statements of legal and factual issues concerning the cause of action.
(f) Refer to the judge who appointed him or to the presiding judge of the court in which the cause of action is filed any matter requiring assistance from the court.
The special master shall not, unless otherwise agreed by the parties, personally conduct any settlement conferences or engage in any ex parte meetings regarding the action.
5. Upon application by a party to the court in which the cause of action is filed, any decision or other action taken by a special master appointed pursuant to this section may be appealed for a trial de novo.
6.] A report issued by a mediator [or special master] that indicates that either party has failed to appear before him or to mediate in good faith is admissible in the cause of action, but a statement or admission made by either party in the course of mediation is not admissible.
Sec. 17. NRS 40.685 is hereby amended to read as follows:
40.6851. Except as otherwise provided in subsection 2, a written waiver or settlement agreement executed by a claimant after a contractor or design professional has corrected or otherwise repaired a constructional defect does not bar a cause of action for the constructional defect if it is determined that the contractor or design professional failed to correct or repair the defect properly.
2. The provisions of subsection 1 do not apply to any written waiver or settlement agreement described in subsection 1 unless:
(a) The claimant has obtained the opinion of an expert concerning the constructional defect;
(b) The claimant has provided the contractor or design professional with a written notice of the defect pursuant to NRS 40.645 and a copy of the expert's opinion; and
(c) The claimant and the contractor or design professional have complied with the requirements for inspection and repair as provided in NRS 40.600 to 40.695, inclusive.
3. If a claimant does not prevail in any cause of action which is not barred pursuant to this section, the court may:
(a) Deny the claimant's attorney's fees, fees for an expert witness or costs; and
(b) Award attorney's fees and costs to the contractor [.] or design professional.
Sec. 18. NRS 40.690 is hereby amended to read as follows:
40.690No claim or cause of action governed by NRS 40.600 to 40.695, inclusive, may be brought by a claimant , [or] contractor or design professional against any third parties, including a government, governmental agency or political subdivision of a government, during the period in which a claim or cause of action for a constructional defect is being settled, mediated or otherwise resolved pursuant to NRS 40.600 to 40.695, inclusive. The settlement of such a claim or cause of action does not affect the rights or obligations of any person who is not a party to the settlement, and the failure to reach such a settlement does not affect the rights or obligations of the claimant , [or] contractor or design professional in any action brought by the claimant , [or] contractor or design professional against a third party.
Sec. 19. NRS 40.695 is hereby amended to read as follows:
40.695Any statutes of limitation or repose applicable to a claim or cause of action governed by NRS 40.600 to 40.695, inclusive, are tolled from the time a claimant provides notice of the claimed defect, damage or injury to the contractor or design professional pursuant to NRS 40.645 until 30 days after mediation is concluded or waived in writing pursuant to NRS 40.680.
Sec. 20. Section 9 of chapter 661, Statutes of Nevada 1995, at page 2540, is hereby amended to read as follows:
Sec. 9. Sections 2 to 20, inclusive, of this act:
1. Apply to a claim or cause of action to recover damages resulting, directly or indirectly, from a constructional defect, except a claim for personal injury or wrongful death, and prevail over any conflicting law otherwise applicable to the claim or cause of action.
2. Do not bar or limit any defense otherwise available except as otherwise provided in those sections.
Sec. 21. Chapter 661, Statutes of Nevada 1995, at page 2546, is hereby amended by adding thereto a new section to be designated as section 23.5, immediately following section 23, to read as follows:
Sec. 23.5. The amendatory provisions of this act apply to claims or causes of action that arise after July 1, 1995.
Sec. 22. The amendatory provisions of this act apply to claims or causes of action that arise on or after October 1, 1997.