Traub Lieberman Straus & Shrewsberry LLP | October 31, 2014
In Oxbow Constr., LLC v. Eight Judicial Dist. Ct., 2014 Nev. LEXIS 109, 130 Nev. Adv. Rep. 86 (Nev. Oct. 16, 2014), the Nevada Supreme Court considered issues regarding class-action certification and the availability of remedies under Nevada construction defect statutes. The action arose out of the development of a mixed-use community that included twenty buildings with 274 residential units and ten commercial units. Following the completion of construction, the condominium association served the general contractor with notice under Nevada statutes for construction defects in the common elements of the condominiums. When the condominium association obtained the titles to the properties from the developer, 212 of the 246 condominium units were being leased, and many of the buildings contained at least one unoccupied unit. The condominium association eventually sold all of the units to purchasers prior to filing suit for the defects in the common elements.
The general contractor argued that the Nevada construction defect statutes did not apply because several of the units had been previously rented as apartments. Nevada construction defect statutes limit the remedies available under the statutes to development of a “new residence.” The general contractor also argued that the court should conduct a class action analysis under Nevada civil procedure protocols to determine whether the condominium association had standing to raise the claims on behalf the unit owners for the defects in the common elements.
The district court held that the condominium association could pursue remedies under the construction defect statutes for any building that contained at least one “new residence.” Accordingly, the condominium association could only proceed with the construction defect cause of action for defects in the common elements of buildings that contained at least one previously unoccupied unit, which was the case for many of the buildings. The district court also held that a class action analysis was not required because the record did not demonstrate any intent on behalf of the condominium association to proceed in the manner of a class action. The Nevada Supreme Court approved of these decisions, finding that the district court did not act arbitrarily or capriciously in reaching these decisions.