Court Opinion

ID: 1032894
Source: CourtListenerOpinion
Date Created: 2013-07-09 19:14:26.643831+00
Date Added: 2024-06-11T09:19:30.141792
License: Public Domain

Robert Dillon Framing, Inc. (RDF), appeals the district court's
                     final judgment awarding damages for breach of implied warranty of
                     workmanship (Docket No. 55897). Canyon Villas Apartments cross-
                     appeals from the same judgment and separately appeals the district
                     court's partial awards of costs and attorney fees (Docket Nos. 57122 and
                     57927). We affirm in Docket No. 55897 and affirm in part and reverse and
                     remand in part in Docket Nos. 57122 and 57927.
                     1.    Standing
                                 RDF argues that Canyon Villas should not have received
                     damages because Canyon Villas did not have standing to sue RDF.
                     Specifically, RDF argues that Canyon Villas lacks standing because it was
                     not an intended third-party beneficiary of the subcontract between RDF
                     and the general contractor, Olen Development. Standing is a question of
                     law that this court reviews de novo. Arguello v. Sunset Station, Inc., 127
                     Nev. , 252 P.3d 206, 208 (2011). Construction of a contract is also
                     a question of law subject to de novo review. Fed. Ins. Co. v. Am. Hardware
                     Mut. Ins. Co., 124 Nev. 319, 322, 184 P.3d 390, 392 (2008).
                                 An intended third-party beneficiary must show that the
                     parties to the contract clearly intended to benefit him. Lipshie v. Tracy
                     Inv. Co., 93 Nev. 370, 379-80, 566 P.2d 819, 824-25 (1977). Third-party
                     beneficiary status requires more than the receipt of incidental benefits. 9
                     John E. Murray Jr., Corbin on Contracts § 44.9, at 73 (rev. ed. 2007).
                                 Here, the subcontract explicitly lists the owner as one of the
                     beneficiaries of the contract. Most important is paragraph 17, which
                     states: "[t]his Agreement shall inure to the benefit of the Contractor and
                     the Owner and to all successors, assigns or others claiming under or
                     through them. . . ." (emphasis added). The meaning of the word "inure" is
                     "to come into use," Black's Law Dictionary 900 (9th ed. 2009), and so it
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                follows that the agreement is "to come into use' for the benefit of' the
                owner. It is also meaningful that paragraph 17 gives the owner a right to
                assign his interest because the owner could not assign rights if he did not
                have rights under the subcontract in the first place.
                             Several other provisions of the subcontract similarly establish
                that the owner is an intended beneficiary of the subcontract. For example,
                paragraph 8 reads: "Subcontractor hereby guarantees contractor and
                owner of the project, against any loss or damage due to defects in
                workmanship or materials furnished under this subcontract"; if the
                subcontractor does not correct defects, "contractor or      owner may, at
                subcontractor's expense, furnish materials and/or labor to bring the work
                and materials up to the required standard" (emphasis added). And
                paragraph 18 indicates that the owner has standing because he may
                recover reasonable attorney fees or court costs incurred "in the prosecution
                of any suit or suits against the Subcontractor."
                             Accordingly, the district court did not err when it accorded
                standing to Canyon Villas. Indeed, the district court had a responsibility
                to honor the parties' intentions as plainly written, and it did so
                appropriately. See Renshaw v. Renshaw, 96 Nev. 541, 543, 611 P.2d 1070,
                1071 (1980) (explaining that courts must honor party intentions where a
                contract is clear on its face).
                2.    Economic loss doctrine
                             RDF argues that the economic loss doctrine bars Canyon
                Villas from recovering damages for breach of the implied warranty of
                workmanship because implied warranties sound in tort, not contract.
                RDF did not raise this issue, however, until after the jury returned a
                verdict.

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                              Citing Landmark Hotel v. Moore, 104 Nev. 297, 299, 757 P.2d
                361, 362 (1988), Canyon Villas argues that RDF cannot raise issues for the
                first time on appea1. 1 Although Canyon Villas acknowledges that RDF
                raised economic loss in its post-verdict NRCP 50(b) motion, it maintains
                that the motion did not preserve the issue because RDF had not discussed
                economic loss in its pre-verdict NRCP 50(a) motion. RDF responds that a
                waiver is an intentional relinquishment of a known right, Mahban v.
                MGM Grand Hotels, Inc., 100 Nev. 593, 596, 691 P.2d 421, 423 (1984), and
                here it was not reasonably to be anticipated 2 that the jury would find
                breach of the implied warranty without finding breach of contract
                                Canyon Villas is correct that a point not urged in the trial
                court is deemed waived and will not be considered on appeal.        Britz v.
                Consolidated Casinos Corp., 87 Nev. 441, 447, 488 P.2d 911, 915 (1971).
                Canyon Villas is also correct that RDF's NRCP 50(a) motion did not
                discuss the economic loss doctrine. Under NRCP 50(b) a party may
                "   renew its request for judgment as a matter of law" (emphasis added).
                From the rule's plain text, a party is allowed to renew, i.e., repeat, the
                same arguments made in its initial NRCP 50(a) motion. There is no

                        1 RDFfiled joinders to pretrial motions filed by other parties that
                addressed the economic loss doctrine. The district court did not decide
                these motions because the filing parties settled and RDF did not
                separately press the economic loss issue prior to trial.

                        2Afterclosing arguments, two theories went to the jury for
                consideration: breach of contract and breach of implied warranty of
                workmanship. The contract required RDF to perform "the highest quality"
                work. The implied warranty of workmanship required RDF to perform
                ‘`reasonably skillful" work. In an unusual outcome, the jury found that
                RDF provided work of "the highest quality" but somehow failed to achieve
                the "reasonably skillful" work required by the implied warranty. Of note,
                the jury was not asked to clarify its verdict.
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                indication that new arguments are permissible. See 9B Charles Alan
                Wright & Arthur R. Miller, Federal Practice and Procedure § 2537, at 606-
                16 (2008) ("Since the post-submission motion is nothing more than a
                renewal of the earlier motion made at the close of the presentation of the
                evidence, the case law makes it quite clear that the movant cannot assert
                a ground that was not included in the earlier motion."). Accordingly,
                RDF's NRCP 50(b) motion did not preserve its economic loss argument.
                            Nonetheless, even accepting for purposes of discussion that no
                waiver occurred, RDF's economic loss doctrine challenge still fails.
                            The economic loss doctrine precludes recovery of economic
                losses in tort actions when the plaintiff has not suffered personal injury or
                damage to his property other than damage to the defective item or
                condition itself. Calloway v. City of Reno, 116 Nev. 250, 262, 993 P.2d
                1259, 1267 (2000), overruled in part by Olson v. Richard, 120 Nev. 240,
                244, 89 P.3d 31, 33 (2004) (explaining that economic loss doctrine does not
                bar recovery for negligence claims brought under NRS Chapter 40). The
                economic loss doctrine does not, however, preclude a party from recovering
                purely economic losses under a contract because contract law seeks to
                enforce the expectancy interests, including standards of quality, created
                by agreement between parties. Id. at 260, 993 P.2d at 1265. And so when
                a party seeks purely economic damages as recompense for unmet
                expectations, the economic loss doctrine does not bar the claim. Similarly,
                this court does not apply the economic loss doctrine to warranty cases
                because warranties are intimately connected to contracts. Id. at 257, 993
                P.2d at 1264.
                            Calloway's logic precludes application of the economic loss
                doctrine here. An implied warranty of workmanship accompanies a

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                service contract as a matter of law. In this covenant, the performing party
                promises he will perform with care, skill, reasonable expediency, and
                faithfulness. 23 Richard A. Lord, Williston on Contracts § 63:25, at 525
                (4th ed. 2002). And because the warranty of workmanship addresses the
                quality of workmanship expected of a promisor, the warranty sounds in
                contract.
                             We therefore reject RDF's economic loss doctrine challenge.
                3.    Expert evidence
                             Next, RDF contends that the district erred by denying its
                motions to exclude extrapolation evidence and allowing Dr. Lorden to give
                an expert opinion during trial. Its contentions are twofold: first,
                extrapolation is inappropriate where multiple units are involved because
                of the potential for variance, and second, Dr. Lorden's testimony did not
                satisfy the requirements 3 articulated in Hallmark v. Eldridge, 124 Nev.
                492, 498, 189 P.3d 646, 650 (2008), because it was unreliable and
                unhelpful to the jury. Both claims are without merit.
                             This court has not prohibited extrapolation evidence except
                where it was used in a pre-litigation notice of constructional defects or to
                certify a class.   See D.R. Horton v. Dist. Ct., 123 Nev. 468, 472, 168 P.3d
                731, 735 (2007); Shuette v. Beazer Homes Holdings Corp., 121 Nev. 837,
                859, 124 P.3d 530, 545 (2005). In both of these cases, the discussion
                centered on whether the subset of homes that plaintiff had sampled was
                representative—an issue that was particularly problematic because these

                      3 InHallmark v. Eldridge, 124 Nev. 492, 189 P.3d 646 (2008), this
                court explained that expert testimony must satisfy three requirements: (1)
                the expert must be qualified, (2) the expert's specialized knowledge must
                assist the jury, and (3) the expert must limit his testimony to matters
                within the scope of his knowledge. 124 Nev. at 498, 189 P.3d at 650.
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                cases involved separate single-family homes with varied defects. D.R.
                Horton, 123 Nev. at 479-80, 168 P.3d at 739-40; Shuette, 121 Nev. at 859,
                124 P.3d at 545; see Beazer Homes Holding Corp. v. Dist. Ct., 128 Nev.
                     , 291 P.3d 128, 135-36 (2012). Here, Canyon Villas is not suing in
                a representative capacity. Unlike D.R. Horton and Shuette, it is not
                necessary to determine the exact damages each individual owner is
                entitled to and there is no risk that certain plaintiffs will receive a
                windfall while others would be undercompensated or unfairly precluded.
                            Further, the district court did not abuse its discretion when it
                deemed Dr. Lorden's testimony reliable and helpful. RDF does not dispute
                Dr. Lorden's qualifications in the field of statistics. Although the sample
                he examined was small compared to the number of apartments in the
                complex, Dr. Lorden testified that his list of properties to inspect included
                approximately equal numbers of one-, two-, and three-bedroom
                apartments, as well as an equal number of apartments on the first and
                second stories. Moreover, the list of apartments of each type was
                generated by a random-number formula to ensure that the sample was
                random. And as an added level of randomness, experts in the field used
                random numbers to determine which window to test in each apartment.
                Because the sample was random, Dr. Lorden testified that it was
                statistically insignificant that the field experts only examined 2% of the
                windows. In fact, according to Dr. Lorden, a survey of larger or smaller
                size would have yielded the same result and the same margin of error. As
                such, data based on the small sample was reliable and provided the jurors
                with helpful information.
                            Thus, the district court did not abuse its discretion by
                admitting Dr. Lorden's testimony.

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     Attorney fees and costs
            Canyon Villas argues that it has a contractual right to all of
its requested attorney fees, not just the fees incurred after its offer of
judgment. Additionally, Canyon Villas argues that the district court erred
in refusing to award paralegal fees as part of attorney fees. This court
reviews a district court's determination as to the reasonableness of an
attorney fee claim for an abuse of discretion. Albios v. Horizon
Communities, Inc., 122 Nev. 409, 417, 132 P.3d 1022, 1027-28 (2006).
However, whether a statute or contract legally authorizes a fee award
presents a question of law, which we review de novo. See id.; Davis v.
Beling, 128 Nev. „ 278 P.3d 501, 515 (2012).
            Attorney fees were not allowed at common law, Jensen v.
Pradere, 39 Nev. 466, 471, 159 P. 54, 55 (1916), and can only be recovered
when "authorized. . . by a statute, rule or contract." Davis, 128 Nev. at
,278 P.3d at 515 (quoting U.S. Design & Constr. v. I.B.E.W. Local 357,
118 Nev. 458, 462, 50 P.3d 170, 173 (2002)). "Where a contract provision
purports to allow attorney's fees in an action arising out of the terms of
the instrument,' conventional rules of construction apply. Dobron v.
Bunch, 125 Nev. 460, 464, 215 P.3d 35, 37-38 (2009) (quoting Campbell v.
Nocilla, 101 Nev. 9, 12, 692 P.2d 491, 493 (1985)). Thus, "[e]very word
must be given effect if at all possible," and a court should avoid an
interpretation that makes a contract provision meaningless. Musser v.
Bank of America, 114 Nev. 945, 949, 964 P.2d 51, 54 (1998) (alteration in
original) (quoting Royal Indem. Co. v. Special Serv., 82 Nev. 148, 150, 413
P.2d 500, 502 (1966)).
            Paragraph 18 of the contract broadly provides that the owner
is entitled to "any and all reasonable attorneys' fees and court costs which
may be paid or incurred, growing out of or caused by the Agreement or

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                performance hereunder."        This language gave Canyon Villas the
                contractual right to recover all reasonable fees that it incurred in
                litigating this dispute with RDF—regardless of whether the underlying
                cause of action sounded in tort or contract. See Santisas v. Goodin, 951
                P.2d 399, 405 (Cal. 1998) ("If a contractual attorney fee provision is
                phrased broadly enough. . . it may support an award of attorney fees to
                the prevailing party in an action alleging both contract and tort claims".).
                For the same reason, it was error, given Canyon Villas' contract right to
                fees, for the district court to limit the award to the fees incurred after the
                offer of judgment. Rather, as in Davis, Canyon Villas should have been
                awarded reasonable fees dating back to the inception of the litigation with
                RDF. Davis, 128 Nev. at , 278 P.3d at 515. We therefore reverse and
                remand for the district court to augment its fee award consistent with this
                order and our decision in Davis.
                            The district court also abused its discretion to the extent that
                it excluded paralegal fees from the attorney fees award because reasonable
                attorney fees, which are recoverable under paragraph 18 of the
                subcontract, include paralegal fees. Paralegals provide essential, cost-
                effective services that help attorneys represent clients. See Missouri v.
                Jenkins, 491 U.S. 274, 285, 288 (1989). Limiting fee recovery to members
                of the bar, who bill at a substantially higher rate, would cost everyone,
                including the nonprevailing party, more money. Id.
                            Canyon Villas also argues that the district court erred in
                denying it the full $369,000 in costs that it requested. 4 The determination

                       4 Canyon Villas does not press the argument on appeal that it is
                entitled to costs under paragraph 18 of the contract. Hence, we need not
                address that issue. See Edwards v. Emperor's Garden Rest., 122 Nev.
                317, 333 n.38, 130 P.3d 1280, 1288 n.38 (2006).
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                of allowable costs is within the sound discretion of the trial court, and this
                court will not disturb the district court's decision absent an abuse of that
                discretion. Bergmann v. Boyce, 109 Nev. 670, 679, 856 P.2d 560, 565-66
                (1993).
                               In Schouweiler v. Yancey Co., this court explained that when
                evidence on which the lower court's judgment rests is not included in the
                record on appeal, it is assumed that the record supports the district court's
                findings. 101 Nev. 827, 831, 712 P.2d 786, 789 (1985). Here, the basis for
                the determination of allowable costs is unclear and the record contains no
                findings of fact or conclusions of law that decisively show which theory of
                recovery the district court used. Accordingly, we must presume that the
                district court did not abuse its discretion in limiting the costs awarded to
                Canyon Villas, and we therefore affirm the costs award. In light of the
                foregoing, we
                               ORDER the judgment of the district court AFFIRMED IN
                PART AND REVERSED IN PART AND REMAND this matter to the
                district court for proceedings consistent with this order as to attorney and
                associated paralegal fees

                                                                                       , J.
                Gibbons                                     Hardesty

                                                                          )4-C         ,J
                Parr aguirre                                Douglas

                                                            Saitta

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                cc: Ara H. Shirinian, Settlement Judge
                     Lewis & Roca, LLP/Las Vegas
                     Parker & Edwards
                     Berding & Weil, LLP
                     Thomas D. Harper, Ltd.
                     Springel & Fink
                     Lemons, Grundy & Eisenberg
                     Maddox, Isaacson & Cisneros, LLP
                     Eighth District Court Clerk

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