Brian K. Walters | Gordon Rees Scully Mansukhani
Does a legislative extension of a statute of repose for construction and design defect claims allow a claim to proceed even if the repose period in effect when the claim was filed barred that claim?
On October 28, 2021, the Nevada Supreme Court answered this question in the affirmative when it denied the appellants’ petition for rehearing in Dekker/Perich/Sabatini Ltd. v. Eighth Jud. Dist. Ct. in & for Cty. of Clark, 137 Nev. Adv. Op. 53 (2021) (“Dekker”).
Dekker was the culmination of an evolution of Nevada Revised Statute (“NRS”) 11.202, Nevada’s statute of repose for claims based on construction and design deficiencies. Prior to 2015, a claimant had from 6 to 10 years from the date of substantial completion of a property to file a construction or design defect action, depending upon the type of defect (6 years for “patent” defects, 8 years for “latent” defects, 10 years for “known” defects with no repose period for fraud).
However, on February 24, 2015, Nevada Assembly Bill 125 (“AB 125”) went into effect. AB 125 did away with the different repose periods for different types of defects in favor of a single six-year repose period for all defects (including claims for fraud) commencing from the date of substantial completion of a property. AB 125 dramatically shortened the time in which a claimant could bring a construction or design defect claim in Nevada.
Attorneys representing contractors and design professionals took advantage of the shorter statute of repose. For example, attorneys in GRSM’s Las Vegas office obtained dismissal of a $3,555,690.14 construction defect claim for a general contractor client based on a claimant’s failure to bring an action within 6 years based on the new statute of repose.1
However, on October 1, 2019, Nevada Assembly Bill 421 (“AB 421”) went into effect, extending the statute of repose back to ten years. AB 421 also made the 10-year limitation period retroactive to actions in which the substantial completion of the property occurred before October 1, 2019.
The new, longer statute of repose and its retroactive nature created some uncertainty. Did retroactivity mean that a claim that had already expired under the previous six-year repose period comes back to life after passage of AB 421?
The Dekker Court addressed this specific question. In Dekker, the City of North Las Vegas (“CNLV”) brought an action for construction defects against a contractor that built a fire station for the City. The fire station was substantially completed on July 13, 2009. On July 11, 2019, after the AB 125 six-year repose period had expired, but before the 10-year repose period (AB 421) went into effect, CNLV brought an action against the contractor for construction defects.
The Contractor moved to dismiss the action, arguing that CNLV’s claims were time-barred under the six-year repose period. The district court heard the motion on September 30, 2019, the day before A.B. 421’s amendment to the repose period took effect. On October 14, 2019, the court issued an order dismissing CNLV’s complaint based on the six-year statute of repose.
CNLV moved to alter the judgment under NRCP 59(e), arguing that the ten-year statute of repose was now in effect and governed its claims. The Contractor countered that the claims were statutorily barred when the complaint was filed and thus void ab initio and could not be revived. The Contractor also asserted that granting CNLV’s motion would violate its due process rights.
The district court granted CNLV’s motion to alter the judgment, determining that NRS 11.202 applied retroactively and constitutionally, and reinstated CNLV’s claims. The Contractor filed a writ of mandamus or, alternatively, prohibition with the Nevada Supreme Court challenging the district court’s order.
The Nevada Supreme Court framed the issue as follows:
[W]hether NRS 11.202’s 2019 amendment extending the repose period allows a claim to proceed even if the repose period in effect when the claim was filed barred that claim.
The Nevada Supreme Court held that such a claim may proceed:
[A]s amended [in 2019], the plain language of NRS 11.202 allows a claim to be brought so long as it was filed within ten years after the date of substantial completion of the construction work, regardless of whether the claim would have been barred under the previous six-year statute of repose at the time the complaint was filed.
In other words, an otherwise time-barred claim may be brought back to life based on the retroactive nature of the new 10-year statute of repose. The Court observed that the Nevada Legislature lengthened the statute of repose because the shorter repose period prejudiced Nevada residents, and the Legislature clearly intended the amendment to apply retroactively.
Dekker provides some much-needed clarity to the recently evolving nature of Nevada’s statute of repose for construction and design defect claims.
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