Court Opinion

ID: 2739479
Source: CourtListenerOpinion
Date Created: 2014-10-02 19:06:27.035379+00
Date Added: 2024-06-11T13:26:34.091370
License: Public Domain

130 Nev., Advance Opinion   51
                       IN THE SUPREME COURT OF THE STATE OF NEVADA

                 COPPER SANDS HOMEOWNERS                      No. 59934
                 ASSOCIATION, INC., A NEVADA
                 NONPROFIT CORPORATION,
                 Appellant,                                         HLED
                 vs.
                 FLAMINGO 94 LIMITED LIABILITY                      OCT 0 2 2014
                 COMPANY, A NEVADA LIMITED
                 LIABILITY COMPANY; PLASTER
                 DEVELOPMENT COMPANY, INC., A
                 NEVADA CORPORATION; AND
                 INTERSTATE PLUMBING & AIR
                 CONDITIONING, INC.,
                 Respondents.

                 COPPER SANDS HOMEOWNERS                      No. 60483
                 ASSOCIATION, INC., A NEVADA
                 NONPROFIT CORPORATION,
                 Appellant,
                 vs.
                 FLAMINGO 94 LIMITED LIABILITY
                 COMPANY, A NEVADA LIMITED
                 LIABILITY COMPANY; PLASTER
                 DEVELOPMENT COMPANY, INC., A
                 NEVADA CORPORATION;
                 INTERSTATE PLUMBING & AIR
                 CONDITIONING, INC.; REYBURN
                 LAWN & LANDSCAPE DESIGNERS,
                 INC.; KFX BUILDING COMPANY, INC.;
                 EXPERT AIR CONDITIONING &
                 HEATING, INC.; AEC; NEVADA
                 GYPSUM FLOORS, INC.; WILLIS
                 ROOF CONSULTING, INC.; BRADLEY
                 WINDOW CORPORATION; BRANDON,
                 LLC, D/B/A FIRST PREMIER
                 DRYWALL & PAINT; BILL YOUNG'S
                 MASONRY, INC.; AMERICAN
                 ASPHALT & GRADING COMPANY;
                 KUKURIN CONCRETE, INC.;
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                 NICHOLS CONSTRUCTION, INC.;
                 AND CENTRAL VALLEY
                 INSULATION, INC.,
                 Respondents.

                 COPPER SANDS HOMEOWNERS             No. 61039
                 ASSOCIATION, INC., A NEVADA
                 NONPROFIT CORPORATION,
                 Appellant,
                 vs.
                 FLAMINGO 94 LIMITED LIABILITY
                 COMPANY, A NEVADA LIMITED
                 LIABILITY COMPANY; PLASTER
                 DEVELOPMENT COMPANY, INC., A
                 NEVADA CORPORATION;
                 INTERSTATE PLUMBING & AIR
                 CONDITIONING, INC.; REYBURN
                 LAWN & LANDSCAPE DESIGNERS,
                 INC.; KFX BUILDING COMPANY, INC.;
                 EXPERT AIR CONDITIONING &
                 HEATING, INC.; AEC; NEVADA
                 GYPSUM FLOORS, INC.; WILLIS
                 ROOF CONSULTING, INC.; BRADLEY
                 WINDOW CORPORATION; BRANDON,
                 LLC, D/B/A FIRST PREMIER
                 DRYWALL & PAINT; BILL YOUNG'S
                 MASONRY, INC.; AMERICAN
                 ASPHALT & GRADING COMPANY;
                 KUKURIN CONCRETE, INC.;
                 NICHOLS CONSTRUCTION, INC.;
                 AND CENTRAL VALLEY
                 INSULATION, INC.,
                 Respondents.

                 COPPER SANDS HOMEOWNERS             No. 61286
                 ASSOCIATION, INC., A NEVADA
                 NONPROFIT CORPORATION,
                 Appellant,
                 vs.
                 FLAMINGO 94 LIMITED LIABILITY
                 COMPANY, A NEVADA LIMITED
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                LIABILITY COMPANY; PLASTER
                DEVELOPMENT COMPANY, INC., A
                NEVADA CORPORATION;
                INTERSTATE PLUMBING & AIR
                CONDITIONING, INC.; REYBURN
                LAWN & LANDSCAPE DESIGNERS,
                INC.; KFX BUILDING COMPANY, INC.;
                EXPERT AIR CONDITIONING &
                HEATING, INC.; AEC; NEVADA
                GYPSUM FLOORS, INC.; WILLIS
                ROOF CONSULTING, INC.; BRADLEY
                WINDOW CORPORATION; BRANDON,
                LLC; FIRST PREMIER DRYWALL &
                PAINT; BILL YOUNG'S MASONRY,
                INC.; AMERICAN ASPHALT &
                GRADING COMPANY; KUKTJRIN
                CONCRETE, INC.; NICHOLS
                CONSTRUCTION, INC.; AND
                CENTRAL VALLEY INSULATION,
                INC.,
                Respondents.

                            Consolidated appeals from a district court summary judgment
                in a construction defect action, certified as final under NRCP 54(b), and
                from post-judgment orders awarding attorney fees and costs. Eighth
                Judicial District Court, Clark County; Susan Johnson, Judge.
                           Affirmed in part, reversed in part, and remanded.

                Law Offices of Terry L. Wike and Terry L. Wike and William R. Killip, Jr.,
                Las Vegas,
                for Appellant.

                The Marks Law Group, LLP, and Eileen Mulligan Marks, Las Vegas,
                for Respondents Interstate Plumbing & Air Conditioning, Inc.

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                The Marks Law Group, LLP, and Eileen Mulligan Marks, Las Vegas;
                Brady, Vorwerck, Ryder & Caspino and Lee J. Grant II, Las Vegas,
                for Respondent Reyburn Lawn and Landscape Designers, Inc.

                Bauman, Loewe, Witt & Maxwell and Whitney C. Wilcher, Las Vegas;
                Brown, Bonn & Friedman and Aaron M. Young, Las Vegas; Lincoln,
                Gustafson & Cercos and Nicholas B. Salerno, Shannon G. Splaine, and
                James M. Barrington, Las Vegas; Cisneros & Marias and John D.
                Augenstein, Las Vegas,
                for Respondent Bill Young's Masonry, Inc.

                Brady, Vorwerck, Ryder & Caspino and Lee J. Grant II, Las Vegas;
                Lincoln, Gustafson & Cercos and Nicholas B. Salerno, Shannon G.
                Splaine, and James M. Barrington, Las Vegas,
                for Respondent Brandon, LLC.

                Brown, Bonn & Friedman, LLP, and Kevin A. Brown and Aaron M. Young,
                Las Vegas,
                for Respondents KFX Building Company, Inc.; Expert Air Conditioning &
                Heating, Inc.; AEC; and Central Valley Insulation, Inc.

                Cisneros & Marias and John D. Augenstein, Las Vegas,
                for Respondent American Asphalt & Grading Company.

                Fredrickson, Mazeika & Grant, LLP, and Tomas V. Mazeika and Matthew
                D. Peterdy, Las Vegas,
                for Respondent Kukurin Concrete, Inc.

                Hansen Rasmussen, LLC, and R. Scott Rasmussen, Las Vegas,
                for Respondent Nevada Gypsum Floors, Inc.

                Lincoln, Gustafson & Cercos and Nicholas B. Salerno, Shannon G.
                Splaine, and James M. Barrington, Las Vegas,
                for Respondents Bradley Window Corporation and Willis Roof Consulting,
                Inc.

                Parker, Nelson & Associates and Theodore Parker, III, and Shana D.
                Weir, Las Vegas,
                for Respondent Nichols Construction, Inc.

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                Pengilly Robbins and James W. Pengilly and Craig D. Slater, Las Vegas,
                for Respondents Flamingo 94 Limited Liability Company and Plaster
                Development Company, Inc.

                BEFORE HARDESTY, DOUGLAS and CHERRY, JJ.

                                                OPINION

                By the Court, DOUGLAS, J.:
                            Appellant Copper Sands Homeowners Association (the HOA)
                brought an action against respondents, developer Flamingo 94, LLC, and
                general contractor/sales broker Plaster Development Company, Inc. (the
                Developers), alleging several claims for various construction defects
                present in the Copper Sands common-interest community. The
                Developers impleaded the remaining respondents, subcontractors who had
                performed work on the project, into the action as third-party defendants.
                The district court eventually dismissed all of the HOA's claims against the
                Developers. The district court then awarded the Developers attorney fees
                and costs. Additionally, the court awarded the third-party defendants
                costs against the HOA pursuant to NRS 18.020.
                            Here, we examine whether a third-party defendant can
                recover costs under NRS 18.020, which mandates an award of costs for the
                prevailing party in a case. In resolving this issue, we adopt the Idaho
                Court of Appeals' rationale in Bonaparte v. Neff, 773 P.2d 1147 (Idaho Ct.
                App. 1989), and determine that when a third-party defendant prevails in
                an action and moves for costs pursuant to NRS 18.020, the district court

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                   must determine which party (plaintiff or defendant) is adverse to the
                   third-party defendant and allocate the costs award accordingly.

                                                      FACTS

                               Flamingo 94 and Plaster Development constructed the
                   Catalina Shores project (later renamed Copper Sands) in April 1997. The
                   project was used as an apartment complex until Copper Sands Realty,
                   LLC, purchased it in 2004. Copper Sands Realty converted the
                   apartments into condominiums and sold each unit
                               In October 2008, the HOA commenced a suit against the
                   Developers, asserting six claims, all tied to various construction defects in
                   the individual units and the community's common elements. The HOA
                   sought recovery under NRS Chapters 40 and 116. The Developers filed a
                   third-party complaint to bring the various subcontractors who worked on
                   the project into the action. The district court eventually dismissed all of
                   the HOA's claims through numerous summary judgment orders and
                   awarded the third-party defendants costs under NRS 18.020.
                               On appeal, the HOA asserts nine issues for this court's review,
                   but after full consideration, we conclude that only one of these issues
                   warrants an extended discussion: whether the district court had authority
                   to award the third-party defendants costs.'

                          "The district court did not commit reversible error as to any of the
                   other eight issues the HOA raised on appeal. In particular, we conclude
                   that the district court correctly determined that the HOA's NRS Chapter
                   40 and 116 construction defect claims were untimely under NRS 11.203.
                   And this conclusion renders the HOA's arguments that Chapter 40 applied
                   to this action and that the district court erred by dismissing the Chapter
                   116 claims on other grounds moot. Additionally, we conclude that the
                   HOA failed to demonstrate a genuine issue of material fact as to whether
                                                                       continued on next page...
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                                                    DISCUSSION
                                   We generally review a court's award of costs for an abuse of
                    discretion. Bobby Berosini, Ltd. v. PETA, 114 Nev. 1348, 1352, 971 P.201
                    383, 385 (1998). Questions of law, however, are reviewed de novo. Valley
                    Elec. Ass'n v. Overfield, 121 Nev. 7, 9, 106 P.3d 1198, 1199 (2005).
                    Authority to award costs
                                   Under NRS 18.020(3), the prevailing party in an action "where
                    the plaintiff seeks to recover more than $2,500" is entitled to recover his or
                    her costs "against any adverse party against whom judgment is rendered."
                    NRS 18.005 enumerates several allowable costs, also allowing recovery of
                    "any other reasonable and necessary expense incurred in connection with
                    the action." The district court retains discretion in determining which
                    expenses are recoverable costs.     Bergmann v. Boyce, 109 Nev. 670, 679,
                    856 P.2d 560, 565-66 (1993).

                    ...continued
                    the Developers' willful misconduct caused any of the defects or whether
                    the Developers had fraudulently concealed any defects.           See Wood v.
                    Safeway, Inc., 121 Nev. 724, 731, 121 P.3d 1026, 1030-31 (2005).
                    Moreover, the district court correctly determined that the HOA did not
                    have standing to bring the misrepresentation or fraud claims on the
                    homeowners' behalf because those claims did not affect the common-
                    interest community. See NRS 116.3102(1)(d). Further, the district court
                    also correctly denied the HOA's peremptory challenge, as such challenges
                    are not permitted with regard to a judge assigned by the chief judge to sit
                    in a construction defect action. See EDCR 1.65(b). And although the
                    district court erred in granting the Developers an order to shorten time,
                    this error does not warrant reversal, as it did not prejudice the HOA. See
                    Cheek v. FNF Constr., Inc., 112 Nev. 1249, 1251, 924 P.2d 1347, 1349
                    (1996). Finally, the district court did not abuse its discretion in awarding
                    the Developers attorney fees and costs. See NRS 18.020; NRCP 68; Wynn
                    v. Smith, 117 Nev. 6, 13, 16 P.3d 424, 428-29 (2001).

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                            The HOA argues that the third-party defendants were not
                prevailing parties entitled to costs because they did not affect the case's
                outcome. The HOA admits that a third-party defendant may defend itself
                against both third-party claims and a plaintiffs claims. But the HOA
                maintains that a third-party defendant is entitled to costs under NRS
                18.020 only if he or she vigorously contested the plaintiffs claims in a
                manner that contributed to the defendant's victory. The HOA contends
                that the third-party defendants in this matter did not meet this standard.
                            This is an issue of first impression in Nevada; thus, we look to
                outside jurisdictions for guidance. Other jurisdictions have not
                established a formulaic rule; rather, they have examined the record to
                determine which party was primarily responsible for spurring the third-
                party defendant's costs.   See Tejas Dev. Co. v. McGough Bros., 167 F.2d
                268, 269 (5th Cir. 1948) (determining that the defendant was liable for the
                third-party defendant's costs on appeal because the majority of the third-
                party defendant's costs resulted from the third-party complaint); see also
                Am. State Bank v. Pace,        124 F.R.D. 641, 650-51 (D. Neb. 1987)
                (determining that the plaintiff was responsible for the third-party
                defendant's costs because the third-party defendant incurred the costs in
                asserting defenses against the plaintiffs claims). In Idaho, the district
                court has discretion to determine which party is responsible for a third-
                party defendant's costs. Bonaparte v. Neff, 773 P.2d 1147, 1156 (Idaho Ct.
                App. 1989). There, the district court must determine which issues are
                common to the main and third-party actions to determine which parties
                are functionally adverse, and then the court may award the prevailing
                party costs and fees relating to those issues.    Id.   Any award must be

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                 proportional "to the third-party defendant's actual and reasonable
                 participation in litigating the common issues." Id.
                             In light of NRS 18.020's statutory language allowing costs
                 against any adverse party and NRCP 14's recognition that third-party
                 defendants may participate in defending against the plaintiffs claims, we
                 find the approach the court set forth in Bonaparte persuasive and adopt it
                 to determine whether a third-party defendant is a prevailing party
                 entitled to costs under NRS 18.020. When making such a determination,
                 the district court must determine which party is the third-party
                 defendant's adversary.   See id. at 1155. If the court's judgment on an
                 issue simultaneously favors the third-party defendant and disfavors the
                 adverse party, the third-party defendant should be considered a prevailing
                 party for NRS 18.020's purposes.
                             Applying the Bonaparte method to this case, we determine
                 that the district court did not abuse its discretion in determining that the
                 third-party defendants were prevailing parties and thus entitled to costs
                 pursuant to NRS 18.020. The HOA and the third-party defendants were
                 adverse parties because the third-party defendants' liability was
                 contingent on the HOA's claims against the Developers. The third-party
                 defendants were the Developers' subcontractors and essentially built the
                 Copper Sands project; thus, all of the construction defect claims directly
                 impacted the third-party defendants. Accordingly, the third-party
                 defendants dedicated a large amount of resources to contest those claims.
                 Further, the court's dismissal favored the third-party defendants because
                 the dismissal absolved them of any liability in the action for construction
                 defects and precluded the BOA from recovering any damages. Under
                 Bonaparte, the third-party defendants prevailed against the HOA and

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                    were entitled to costs they incurred in opposing the HOA's construction
                    defect claims. However, the amount of costs is still at issue.
                    Amount of costs
                                The HOA argues that the district court erred in awarding the
                    third-party defendants all of their requested costs because some costs were
                    unnecessary. The HOA maintains that the district court should not have
                    awarded the third-party defendants any costs incurred after the date the
                    court dismissed the willful misconduct claims because, at that point, all of
                    the construction defect claims were dismissed and the Developers no
                    longer had an indemnity claim against any of the third-party defendants—
                    as only the misrepresentation and fraud claims, which only related to the
                    Developers, remained. Thus, the third-party defendants could have
                    removed themselves from the action, but chose not to do so.
                                Therefore, further action from the district court is required to
                    resolve this issue. The district court awarded costs for expenses the third-
                    party defendants paid after the district court dismissed the willful
                    misconduct claims. Unfortunately, the record does not reflect whether the
                    third-party defendants incurred these expenses before or after the
                    dismissal of the last remaining construction defect claims. Further, if any
                    of the expenses were incurred after the dismissal of the construction defect
                    claims, the district court must determine whether the expenses were
                    connected to the fraud and misrepresentation claims.
                                Accordingly, we affirm the district court's summary judgment
                    and post-judgment orders with respect to everything besides the third-
                    party defendants' costs, reverse the costs award to the third-party

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                  defendants, and remand this matter to the district court for further
                  proceedings consistent with this opinion.

                  We concur:

                   ic-L—essat,s
                  Hardesty

                    Ckit.
                  Cherry

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