NEVADA CONSTRUCTION CLAIMS RESOURCES
- 1 Construction Claims
- 2 Damages
- 3 Coverage Issues
- 4 Other Issues
An action upon a contract, obligation or liability founded upon an instrument in writing, except those for the recovery of real property must be brought within six years. NRS 11.190(1)(b). An action upon a contract, obligation or liability not founded upon an instrument in writing must be brought within four years. NRS 11.190(2)(c). Actions for injuries to property must be brought within three years and actions for injuries to a person must be brought within two years. NRS 11.190(3) and (4). “The time in NRS 11.190 shall be deemed to date from the last transaction or the last item charged or last credit given; and whenever any payment on principal or interest has been or shall be made upon an existing contract, whether it be a bill of exchange, promissory note or other evidence of indebtedness if such payment be made after the same shall have become due, the limitation shall commence from the time the last payment was made.” NRS 11.200.
Actions for damages for injury or wrongful death caused by deficiency in construction of improvements to real property against the owner, occupier or any person performing or furnishing the design, planning, supervision or observation of construction, or the construction of an improvement to real property must be brought no more than 10 years after the substantial completion of such an improvement. NRS 11.202. The date of substantial completion is deemed to be the date of whichever occurs later: (a) The final building inspection of the improvement is conducted; (b) A notice of completion is issued for the improvement; or (c) A certificate of occupancy is issued for the improvement.
Nevada’s Right to Repair provisions are set out in NRS 40.600 to 40.695, inclusive. The pre-litigation procedures are called the “Chapter 40 Process.” Before a homeowner can file a residential construction defect action, they must give written notice of the alleged defects. NRS 40.645. They must also allow the builder to inspect and perform repairs if the builder elects to do so. NRS 40.647. Unless agreed to otherwise by the parties, the deadlines for completing repairs are fact specific and either 105 or 150 days depending on number of houses involved. NRS 40.648. Following repairs, if a dispute still remains the parties must participate in mediation before proceeding with the litigation. NRS 40.680. Actions against a design professional have an additional requirement that the attorney consult another expert who must produce a report with failure to comply resulting in dismissal of the action. NRS 40.6884.
Pursuant to NRS 40.652, either party may make a pre-litigation offer of judgment that may ultimately result in allowing/shifting the recovery of attorney’s fees and costs.
Nevada laws allows for indemnification clauses. In 2010, with George Brown Ins. Agency, Inc. v. Star Ins. Co., 237 P.3d 92 (2010), the Nevada Supreme Court adopted the majority rule for interpretation of indemnification clauses requiring an express or explicit reference to the indemnitee’s own negligence to indemnify an indemnitee for his or her own negligence. A year later, the Court took its analysis a step further in Reyburn Lawn & Landscape Designers, Inc. v. Plaster Development Co., Inc., 255 P.3d 268 (2011). This time dealing with a construction contract between a general contractor and a subcontractor, the Court extended the holding in Brown to require express language of indemnification for contributory negligence as well as the sole negligence of the indemnitor. The Court also followed the California Supreme Court’s opinion in Crawford v. Weather Shield Mfg., Inc., 44 Cal.4th 541, 79 Cal.Rptr.3d 721, 187 P.3d 424, 430 (2008), holding that unless specifically otherwise stated in the indemnity clause, an indemnitor’s duty to defend an indemnitee is limited to those claims directly attributed to the indemnitor’s scope of work and does not include defending against claims arising from the negligence of other subcontractors or the indemnitee’s own negligence. In a third case, United Rentals Highway Technologies, Inc. v. Wells Cargo, Inc., 289 P.3d 221 (2012), the Court held “that the ‘to the extent caused’ language in an indemnification clause must be strictly construed as limiting an indemnitor’s liability to cover the indemnitee’s losses only to the extent the injuries were caused by the indemnitor.”
NRS 17.225 governs the right to contribution where two or more persons become jointly or severally liable in tort for the same injury to person or property or for the same wrongful death. It creates a right of contribution among them even though judgment has not been recovered against all or any of them. It exists only in favor of a tortfeasor who has paid more than his or her equitable share of the common liability, and the tortfeasor’s total recovery is limited to the amount paid by the tortfeasor in excess of his or her equitable share. No tortfeasor is compelled to make contribution beyond his or her own equitable share of the entire liability. Finally, a tortfeasor who enters into a settlement with a claimant is not entitled to recover contribution from another tortfeasor whose liability for the injury or wrongful death is not extinguished by the settlement nor in respect to any amount paid in a settlement which is in excess of what was reasonable. To ensure the benefit of this statute, a settling party will file a motion for determination of good faith settlement. See The Drs. Co. v. Vincent, 120 Nev. 644, 650, 98 P.3d 681, 686 (2004) (discussing the interplay between a good-faith ruling in the action below and the merits of the contribution/indemnity action.)
As set forth in NRS 40.693, any provision in a contract entered into on or after February 24, 2015, for residential construction that requires a subcontractor to indemnify, defend or otherwise hold harmless a controlling party from any liability, claim, action or cause of action resulting from a constructional defect caused by the negligence, whether active or passive, or intentional act or omission of the controlling party is against public policy and is void and unenforceable.
NRS 40.655(1) sets forth the limitation on recovery of damages proximately caused by a construction defect:
Except as otherwise provided in NRS 40.650, in a claim 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:
- The reasonable cost of any repairs already made that were necessary and of any repairs yet to be made that are necessary to cure any constructional defect that the contractor failed to cure and the reasonable expenses of temporary housing reasonably necessary during the repair;
- The reduction in market value of the residence or accessory structure, if any, to the extent the reduction is because of structural failure;
- The loss of the use of all or any part of the residence;
- The reasonable value of any other property damaged by the constructional defect;
- Any additional costs reasonably incurred by the claimant, including, but not limited to, any costs and fees incurred for the retention of experts to:
- Ascertain the nature and extent of the constructional defects;
- Evaluate appropriate corrective measures to estimate the value of loss of use; and
- Estimate the value of loss of use, the cost of temporary housing and the reduction of market value of the residence; and
- Any interest provided by statute.
As indicated in NRS 40.655(1)(b), a Plaintiff may recover the reduction in market value of the residence or accessory structure, if any, to the extent the reduction is because of structural failure.
Although not typical in a construction defect case, exemplary and punitive damages are permitted under NRS 42.005.
Nevada’s construction defect laws no longer provide a Plaintiff with automatic recovery of fees upon prevailing. However, there are still ways for a Plaintiff to recover attorney’s fees including offers of judgment and if a contractor fails to comply with the NRS 40 process. Attorney’s fees may also be awarded pursuant to an agreement, or at the discretion of the court if the prevailing party has not recovered more than $20,000 pursuant to NRS 18.010(2).
Unless an action is based on: (a) Strict liability; (b) An intentional tort; (c) The emission, disposal or spillage of a toxic or hazardous substance; (d) The concerted acts of the defendants; or (e) An injury to any person or property resulting from a product which is manufactured, distributed, sold or used in this State; then under NRS 41.141 the liability of apportioned among multiple defendants using comparative negligence as long as the comparative negligence of the Plaintiff is not greater than that of the defendants.
Pursuant to NRS 40.655(1)(e), Plaintiffs are entitled to any additional costs reasonably incurred, including, but not limited to, any costs and fees incurred for the retention of experts to: (1) Ascertain the nature and extent of the constructional defects; (2) Evaluate appropriate corrective measures to estimate the value of loss of use; and (3) Estimate the value of loss of use, the cost of temporary housing and the reduction of market value of the residence.
NRS 40.655(1) provides successful claimant homeowners with certain rights and benefits, including costs, loss of use, and several other types of consequential damages.
“In Nevada, insurance policies treated like other contracts, and thus, legal principles applicable to contracts generally are applicable to insurance policies.” Century Sur. Co. v. Andrew, 134 Nev. 819, 821, 432 P.3d 180, 183 (2018)
Nevada Supreme Court has defined “accident,” as “a happening that is not expected, foreseen, or intended.” Beckwith v. State Farm Fire & Cas. Co., 120 Nev. 23, 83 P.3d 275, 276 (2004).
“The duty to defend is broader than the duty to indemnify. There is no duty to defend “[w]here there is no potential for coverage.” In other words, “[a]n insurer ... bears a duty to defend its insured whenever it ascertains facts which give rise to the potential of liability under the policy.” Once the duty to defend arises, “this duty continues throughout the course of the litigation.” If there is any doubt about whether the duty to defend arises, this doubt must be resolved in favor of the insured. The purpose behind construing the duty to defend so broadly is to prevent an insurer from evading its obligation to provide a defense for an insured without at least investigating the facts behind a complaint.
However, “the duty to defend is not absolute.” A potential for coverage only exists when there is arguable or possible coverage. Determining whether an insurer owes a duty to defend is achieved by comparing the allegations of the complaint with the terms of the policy.”
United Nat'l Ins. Co. v. Frontier Ins. Co., 120 Nev. 678, 686–87, 99 P.3d 1153, 1158 (2004) (internal footnotes omitted, emphasis added).
“In other words, an insurer’s breach of its duty to defend can be determined objectively by comparing the facts alleged in the complaint with the insurance policy. Thus, even in the absence of bad faith, the insurer may be liable for a judgment that exceeds the policy limits if the judgment is consequential to the insurer’s breach. An insurer that refuses to tender a defense for “its insured takes the risk not only that it may eventually be forced to pay the insured’s legal expenses but also that it may end up having to pay for a loss that it did not insure against.” Accordingly, the insurer refuses to defend at its own peril. However, we are not saying that an entire judgment is automatically a consequence of an insurer’s breach of its duty to defend; rather, the insured is tasked with showing that the breach caused the excess judgment and “is obligated to take all reasonable means to protect himself and mitigate his damages.”
Century Sur. Co. v. Andrew, 134 Nev. 819, 826, 432 P.3d 180, 186 (2018) (internal citations omitted, emphasis added).
An additional insured is a person or entity that is covered as an insured under another party’s insurance policy. Typically, additional insured coverage is provided because it is required by a contract. When an additional insured is covered for its liability arising out of the name insured’s operations, it is covered for its own negligence so long as the loss was connected in some way with the named insured’s operations.
“Therefore, without concrete evidence of a different intent, when the term “arising out of the operations” of a named insured is included in an additional insured provision, that term must be read to include coverage for acts arising from the additional insured's own negligence. Accordingly, here, given that the language used in the endorsement does not allocate fault, and in light of our rule to broadly construe insurance policies in favor of coverage, it seems objectively reasonable that the additional insured would have expected that the endorsement provides coverage for liability connected to the named insured's operations, regardless of who was at fault. * Thus, we conclude that, when an additional insured endorsement simply covers liabilities arising out of operations of the named insured performed for the additional insured, that endorsement includes coverage for liabilities caused by the additional insured's direct negligent acts, so long as those acts are connected to the named insured's operations performed for the additional insured.”
“In sum, Nevada, like California, recognizes that the insurer and the insured are dual clients of insurer-appointed counsel. Where the clients' interests conflict, the rules of professional conduct prevent the same lawyer from representing both clients. California's Cumis rule is well-adapted to this scenario. It requires insurers to fulfill their duty to defend by allowing insureds to select their own counsel and paying the reasonable costs for the independent counsel's representation. Cumis Ins. Society, Inc., 162 Cal.App.3d 358, 208 Cal.Rptr. 494, 506. We find this approach more workable than the alternatives presented by amici. Therefore, we answer the first certified question in the affirmative: When a conflict of interest exists between an insurer and its insured, Nevada law requires the insurer to satisfy its contractual duty to provide representation by permitting the insured to select independent counsel and by paying the reasonable costs of such counsel.
We conclude that the California approach, that a reservation of rights does not create a per se conflict, is most compatible with Nevada law. Courts must inquire, on a case-by-case basis, whether there is an actual conflict of interest. This approach follows Nevada law: We have held that dual-representation is appropriate as long as there is “no actual conflict.” See Nev. Yellow Cab, 123 Nev. at 51, 152 P.3d at 741. And we have approvingly cited opinions holding that “joint representation is permissible as long as any conflict remains speculative.” Id. Moreover, because the Cumis rule derives from rules of professional conduct, see MBL, 160 Cal.Rptr.3d at 920, it follows that the appropriate standard is whether there is an actual conflict under RPC 1.7. Therefore, an insurer is obligated to provide independent counsel of the insured's choosing only when an actual conflict of interest exists. A reservation of rights does not create a per se conflict of interest.
Reservation of rights letters set forth a company’s assumption of defense, subject to coverage reservations. The letters inform the insured of coverage and policy defenses, thereby preserving the insurer’s right to assert such defenses in litigation. “Therefore, even when (1) there is a reservation of rights and (2) insurer-provided counsel has control over an issue in the case that will also decide the coverage issue, courts must still determine whether there is an actual conflict of interest. “ State Farm Mut. Auto. Ins. Co. v. Hansen, 131 Nev. 743, 750, 357 P.3d 338, 343 (2015)
NRS 40.6884 requires an attorney to consult an expert, submit an affidavit, and include an expert report that can serve as the basis for demonstrating that a claim against a design professional has a reasonable basis in law and fact.
“We conclude that, in commercial construction defect litigation, the economic loss doctrine applies to bar claims against design professionals for negligent misrepresentation where the damages alleged are purely economic.”
Halcrow, Inc. v. Eighth Jud. Dist. Ct., 129 Nev. 394, 402, 302 P.3d 1148, 1154 (2013), as corrected (Aug. 14, 2013)
The state of Nevada has statewide licensing requirements which are codified in NRS 624. Licensing and discipline of contractors is overseen by the Nevada State Contractors Board.
NRS 40.675 provides, “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.”
Nevada tends to follow the Restatement (Second) of Conflict of Laws (1971) in determining choice-of-law questions involving contracts… Nevada's choice-of-law principles permit parties “within broad limits to choose the law that will determine the validity and effect of their contract.” “The situs fixed by the agreement, however, must have a substantial relation with the transaction, and the agreement must not be contrary to the public policy of the forum,” or other interested state.”
Progressive Gulf Ins. Co. v. Faehnrich, 130 Nev. 167, 171, 327 P.3d 1061, 1063–64 (2014) (internal citations omitted).
There is no Nevada case law directly on point, but there is a good chance Nevada would follow California which does not follow the targeted tender, or selective tender, doctrine which allows an insured with multiple policies to select which insurer should defend. The rule is inconsistent with California law that “the right to equitable contribution exists independently of the rights of the insured… and where multiple insurers… share equal contractual liability for the primary indemnification of a loss or the discharge of an obligation, the selection of which indemnitor is to bear the loss should not be left to the often arbitrary choice of the loss claimant.” Fireman’s Fund Ins. Co. v. Maryland Casulaty Co., 65 Cal. App. 4th 1279 (1998).
“A consent judgment should be strictly construed to preserve the bargained for position of the parties.” Van Cleave v. Osborne, Jenkins & Gamboa, Chtd., 108 Nev. 885, 888, 840 P.2d 589, 591 (1992)