Court Opinion

ID: 6324106
Source: CourtListenerOpinion
Date Created: 2022-03-17 10:06:54.22498+00
Date Added: 2024-06-11T09:20:58.844326
License: Public Domain

IN THE SUPREME COURT OF THE STATE OF NEVADA

                JOSEPH FOLINO, AN INDIVIDUAL;                            No. 81252
                AND NICOLE FOLINO AN
                INDIVIDUAL,
                Appellants,
                vs.
                TODD SWANSON, AN INDIVIDUAL;
                TODD SWANSON, TRUSTEE OF THE                            FILE
                SHIRAZ TRUST; SHIRAZ TRUST, A
                TRUST OF UNKNOWN ORIGIN; AND
                LYONS DEVELOPMENT. LLC, A
                NEVADA LIMITED LIABILITY
                COMPANY,
                Respondents.
                JOSEPH FOLINO, AN INDIVIDUAL;                            No. 81831
                AND NICOLE FOLINO, AN
                INDIVIDUAL,
                Appellants,
                vs.
                TODD SWANSON, AN INDIVIDUAL;
                TODD SWANSON, TRUSTEE OF THE
                SHIRAZ TRUST; SHIRAZ TRUST, A
                TRUST OF UNKNOWN ORIGIN; AND
                LYONS DEVELOPMENT, LLC, A
                NEVADA LIMITED LIABILITY
                COMPANY,
                Respondents.

                                         ORDER OF AFFIRMANCE

                            These are consolidated appeals from a district court order
                granting summary judgment and a post-judgment order granting attorney
                fees and costs in a tort action. Eighth judicial :District Court, Clark County;
                James Crockett, Judge.
                            Joseph and Nicole Folino purchased a residential property in
                Las Vegas from Todd Swanson, the Shiraz Trust, and Lyons Development,
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                LLC (collectively. Swanson) in late 2017. Swanson completed and provided
                the statutorily-required Seller's Real Property Disclosure (SRPD) form to
                the Folinos prior to purchase_
                            Shortly before the scheduled closing of escrow on the property,
                Swanson's assistant discovered a leak in the master bedroom closet area.
                Swanson hired Rakeman Plumbing, which identified that the leak was
                coming from the plumbing system and began repairs under warranty.
                Swanson informed the Folinos about the leak and planned repairs through
                an addendum to the purchase agreement.
                            With this knowledge and understanding that a mold test
                relating to the recent leak was not yet completed, the Folinos decided to
                move forward with purchasing the property and closed escrow on the
                scheduled date. Approximately a week later, the company that completed
                the inspection sent the report to Rakeman, indicating elevated mold levels
                in the master bedroom closet. The warranty company then informed the
                Folinos that it identified a limited manufacturing issue from the tubing
                samples from the property and recommended replacement of plumbing
                tubing throughout the property. Through this communication with the
                warranty company, the Folinos learned there was a prior water leak in the
                same area in the property that Rakeman also repaired under warranty
                earlier that year.
                            The Folinos thereafter sued Swanson, alleging Swanson failed
                to disclose water damage, mold, and systemic plumbing defects in the
                property, including failure to report prior water conditions on the SRPD
                form. The district court dismissed five claims and allowed the Folinos to
                proceed on claims for fraud/intentional misrepresentation and for failing to
                disclose known defects as required by NRS Chapter 113.

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            Swanson again moved to dismiss, the Folinos countermoved for
discovery, and the district court granted the Folinos 90 days to conduct
discovery. Shortly thereafter. Swanson made a NRCP 68 offer of judgment
to the Folinos. The Folinos did not accept the offer.
            The Folinos conducted extensive discovery and learned that,
when the home was almost fully built in 2015, Swanson had the property
inspected. The inspection report recommended repairing two recirculation
pumps and identified "a plumbing leak above the ceiling of the basement
bathroom." Swanson's notes on the inspection report indicated the
recirculation pumps were fixed by a plumber. Regarding the leak above the
ceiling of the basement bathroom, Swanson wrote, "They couldn't find it.
I'll monitor." There is no indication from Swanson, the Folinos, or the
Folinos's inspection prior to closing that the leak above the basement
bathroom was observed ever again in the property.
            Following supplemental briefing, the district court granted
Swanson's motion to dismiss, construing the motion as seeking summary
judgment because the parties presented matters outside of the pleadings.
Relying on Nelson v. Heer, 123 Nev. 217, 163 P.3d 420 (2007), the district
court granted summary judgment, finding Swanson was not required to
disclose the prior water leaks pursuant to NRS Chapter 113 because the
prior leaks were fully repaired and did not negatively impact the value or
use of the property.
            Swanson also moved for attorney fees and costs, which the
district court awarded from the time Swanson presented the offer of
judgment.
            The Folinos appeal the summary judgment and post-judgment
orders.

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The district court properly relied on Nelson and granted summary judgment
            On appeal, the Folinos assert the district court incorrectly
applied Nelson and granted summary judgment to Swanson regarding
claims for violations of NRS Chapter 113 and intentional
misrepresentation. The Folinos assert Swanson violated the requirements
of NRS Chapter 113 when Swanson answered "No" in response to the
question on the SRPD form asking, "Are you aware of any of the following?:
I. Structure: (a) Previous or current moisture conditions and/or damage?"
They further argue Swanson engaged in intentional misrepresentation by
answering "No" to this question, as well as the question about previous or
current fungus or mold. To assert these claims, the Folinos contend that
Nelson's interpretation of NRS Chapter 113 does not apply because the
SRPD form language allegedly changed since Nelson was decided to require
additional disclosures. They also contend the district court did not consider
all prior leaks and that the district court improperly relied on an affidavit
from Rakeman regarding prior repairs.
            This court reviews a district court summary judgment order de
novo. Wood v. Safeway, Inc., 121 Nev. 724, 729, 121 P.3d 1026, 1029 (2005).
Summary judgment is proper when no genuine issue of material fact exists
and the moving party is entitled to judgment as a matter of law. Id.; see
also NRCP 56(a). Additionally, all evidence must be viewed in the light
most favorable to the nonmoving party. Wood, 121 Nev. at 729, 121 P.3d at
1029. However, to withstand summary judgment, the nonmoving party
must present specific facts showing a genuine issue of material fact
supporting its claim exists and cannot rely solely on general allegations or
conclusions in the pleadings. Id. at 730-31, 121 P.3d at 1030-31; see also
NRCP 56(e).

                                      4
            Under NRS 113.130, a seller of residential property must
complete a disclosure SRPD form about the property and provide it to the
purchaser at least ten days before the property is conveyed. NRS
113.130(1)(a). A seller must disclose defects, defined as "condition[s] that
materially affect[ ] the value or use of residential property in an adverse
manner." NRS 113.100(1); Nelson, 123 Nev. at 223, 163 P.3d at 425.
            If a seller discovers a new defect before conveying the property,
the seller must disclose the newly-discovered defect to the purchaser "as
soon as practicable after the discovery of that fact but in no event later than
the conveyance of the property to the purchaser." NRS 113.130(1)(b). If the
seller does not agree to remedy the situation, the purchaser may rescind the
purchase agreement or may "[c]lose escrow and accept the property with the
defect as revealed by the seller or the seller's agent without further
recourse." Id.
            Importantly, a seller need not disclose defects of which the
seller is not aware, "[a] completed disclosure form does not constitute an
express or implied warranty regarding any condition" of the property, and
these disclosures do not relieve a purchaser of "the duty to exercise
reasonable care to protect himself or herself." NRS 113.140.
            To establish a claim for intentional misrepresentation, a
plaintiff must prove "(1) a false representation [was] made with either
knowledge or belief that it [was] false or without a sufficient foundation, (2)
an intent to induce another's reliance. and (3) damages that result[ed] from
this reliance." Nelson, 123 Nev. at 225, 163 P.3d at 426. "With respect to
the false representation element, the suppression or omission of a material
fact which a party is bound in good faith to disclose is equivalent to a false
representation." Id. (internal quotation marks omitted).

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             In this mater, it is undisputed that Swanson filled out the
SRPD form at least ten days before the property was conveyed and provided
it to the Folinos, as NRS 113.130(1)(a) required. Additionally, it is
undisputed that Swanson provided an addendum before conveyance
disclosing the newly-discovered defect, satisfying NRS 113.130(1)(b).
Finally, it is undisputed that the Folinos decided to close escrow, aware of
the new leak under repair and pending mold testing. However, the Folinos
contend Swanson was required to disclose all prior water leaks in the
property, regardless of whether they were repaired.
             To begin, regarding the Folinos's contention that the SRPD
language changed, even if the SRPD form language changed, the underlying
statutes and regulations governing the SRPD form have not changed since
Nelson. See NRS 113.120; 1995 Nev. Stat., ch. 334, § 3, at 842 (establishing
process for regulations for format and content of SRPD form; added in 1995);
see also NAC 113.150; Adopted Regulation of the Real Estate Div. of the
Dep't of Bus. & Indus., LCB File No. R132-96 (1998) (detailing the contents
and format for SRPD form; last amended in 1998). Furthermore, none of
the relevant statutes in NRS Chapter 113 related to the form and required
disclosures have changed. See NRS 113.100-.150.1 Accordingly, the Folinos
have not shown any changes to the underlying law warranting
reconsideration of Nelson. See Miller v. Burk, 124 Nev. 579, 597, 188 P.3d

      1NRS  113.135 (regarding soil reports) was amended in 2015 but is not
relevant here. See 2015 Nev. Stat., ch. 2, § 19, at 18. Additionally, NRS
113.130 (regarding completion and service of the form and discovery of new
defects) was amended in 2011, and again twice in 2021, but the
amendments are not relevant here. See 2021 Nev. Stat., ch. 232, § 1, at
1081-82; 2021 Nev. Stat., ch. 209, § 3, at 961; 2011 Nev. Stat., ch. 456, § 34,
at 2832-33.

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1112, 1124 (2008) (explaining that prior "decisions now hold positions of
permanence in this court's jurisprudence" under stare decisis); see also
Payne v. Tennessee, 501 U.S. 808, 828 (1991) (noting that, "[c]onsiderations
in favor of stare decisis are at their acme in cases involving property and
contract rights, where reliance interests are involvecr).
            Nelson involved the sale of a residential property where there
was previous water damage stemming from a leak in the property that
required extensive repairs. Nelson, 123 Nev. at 219-20, 163 P.3d at 422-23.
The seller did not disclose the leak, damage, or repairs on the SRPD form
when she sold the property four years later. Id. at 220, 163 P.3d at 422-23.
After the sale of the property, the purchaser discovered mold and learned
about the prior water damage, and brought claims against the seller for
breach of contract under NRS Chapter 113 and intentional
misrepresentation, among other claims. Id. at 220-21, 163 P.3d at 423.
            On appeal, this court determined the seller complied with NRS
Chapter 113 because there were no water or mold defects the seller was
aware of and required to disclose on the SRPD form at the time of sale. ld.
at 225, 227, 163 P.3d at 425-27. The seller did not have a duty to disclose
the prior water problems because the damage was repaired and the prior
leak was no longer a condition that materially adversely impacted the value
or use of the property. Id. at 224-25, 163 P.3d at 425.
            Additionally, the purchaser's claim for intentional
misrepresentation failed because the seller was not required to disclose the
prior water damage and the purchaser did not establish that the mold was
proximately caused by the prior water damage. Id. at 226, 163 P.3d at 426.
Regarding intentional misrepresentation, this court explained that because
"[the purchaser] did not offer any evidence to establish that [the seller]

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knew or should have known that the water damage, which was repaired by
a licensed contractor, was a material factor [the purchaser] would have
considered when purchasing the cabin[,] . . . [the purchaser] failed to
establish that [the seller] was bound in good faith to disclose the repaired
water damage or that she intended for him to rely on her omission." Id. at
226 n.25, 163 P.M at 426 n.25.
            Accordingly, in this matter, Swanson only needed to disclose a
defect—a condition materially adversely affecting the value or use of the
property—if Swanson was aware of it before conveyance.            See NRS
113.100(1); NRS 113.140; Nelson, 123 Nev. at 220, 163 P.3d at 422. And,
"[o]nce water damage was repaired . . . it no longer constituted a condition
that materially lessened the value or use of the [property]." Nelson, 123
Nev. at 224, 163 P.3d at 425. Put simply, Swanson did not need to disclose
the repaired prior water damage or any remediated mold. Id. at 224-25,
163 P.3d at 425.
            While the Folinos contend the prior issues may not have been
fully repaired because subsequent issues occurred, the inquiry regarding
what Swanson had to disclose addresses what defects Swanson was aware
of when the SRPD form was completed. See id. at 223-25, 163 P.3d at 425-
26; see also NRS 113.140(1). Even if there were issues with the repairs or
Rakeman's ability to provide proper evidence about the repairs, Swanson's
awareness was that the leaks were repaired.
            Regarding the ceiling leak observed once in 2015, the Folinos
did not present evidence that this was an ongoing issue impacting the value
or use of the property. Wood, 121 Nev. at 730-31, 121 P.3d at 1030-31
(explaining that a party may not rely on mere allegations to survive
summary judgment).

                                     8
                                   Therefore, Swanson did not violate NRS Chapter 113 by not
                      disclosing prior, repaired leaks. Furthermore, Swanson did not engage in
                      intentional misrepresentation because Swanson was not "bound in good
                      faith to disclose the prior issues in the property. Id. at 225, 163 P.3d at
                      426 (internal quotation marks omitted). The Folinoes claim is solely based
                      on Swanson's answers on the SRPD form. We conclude the intentional
                      misrepresentation claim fails because Swanson was not required to disclose
                      repaired issues that no longer amounted to a condition materially impacting
                      the use or value of the property. See Nelson, 123 Nev. at 224, 163 P.3d at
                      425. To determine otherwise would require every residential property
                      owner to keep extensive records of any issue that ever occurs in their
                      property, no matter how minor, or be subject to litigation over even a drip
                      observed one time. That is not what the statute behind the SRPD form,
                      which has not changed since this court decided Nelson, requires from
                      sellers.   See NRS 113.120. And the SRPD form itself directs sellers to
                      "disclose any and all known conditions and aspects of the property which
                      materially affect the value or use of the residential property in an adverse
                      manner.. . ." Because we determine the claim fails on the first element of
                      intentional misrepresentation, we need not analyze the other elements, as
                      summary judgment on a claim is proper if one essential element is missing.
                      See Bulbman, Inc. v. Nevada Bell, 108 Nev. 105, 111, 825 P.2d 588, 592
                      (1992) (Where an essential element of a claim for relief is absent, the facts,
                      disputed or otherwise, as to other elements are rendered immaterial and
                      summary judgnient is proper.").
                                   Accordingly, the district court properly granted summary
                      judgment in this matter because there were no outstanding issues of
                      material fact and Swanson was entitled to judgment as a matter of law. See

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                NRCP 56(a). Swanson was not required to disclose the prior water leaks or
                mold issues that were repaired because they no longer constituted defects
                materially adversely impacting the property. See Nelson, 123 Nev. at 220,
                163 P.3d at 422. And Swanson properly informed the Folinos about the leak
                that occurred before the close of escrow, including a plan to repair the issue,
                and the Folinos chose to move forward with closing on the property. See
                NRS 113.130(1)(b). We therefore conclude the district court did not err in
                granting summary judgment.
                The district court did not abuse its discretion in awarding Swanson attorney
                fees and costs
                            The Folinos argue that the district court abused its discretion
                in awarding Swanson attorney fees and costs, asserting that the district
                court disregarded controlling law in granting summary judgment.
                            This court generally reviews an award for attorney fees and
                costs for an abuse of discretion. Logan v. Abe, 131 Nev. 260, 266-67, 350
                P.3d 1139, 1143-44 (2015). "An abuse of discretion occurs if the district
                court's decision is arbitrary or capricious or if it exceeds the bounds of law
                or reason." Skender v. Brunsonbuilt Constr. & Dev. Co., LLC, 122 Nev.
                1430, 1435, 148 P.3d 710, 714 (2006) (internal quotation marks omitted).
                            Under NRCP 68(f)(1), if an offeree rejects an offer and does not
                obtain a more favorable judgment, the offeree must pay the costs, expenses,
                and reasonable attorney fees incurred post-offer by the offerer. In awarding
                fees and costs, the district court must evaluate the Beattie factors, including
                whether (1) the plaintiff brought its claims in good faith; (2) the defendant's
                offer, in timing and amount, was reasonable and in good faith; (3) the
                plaintiffs decision to reject the offer "was grossly unreasonable or in bad
                faitY; and (4) the fees sought by the defendant are reasonable and justified.
                Beattie v. Thomas, 99 Nev. 579, 588-89, 668 P.2d 268, 274 (1983). The court
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                may award up to the full amount requested where warranted, after
                weighing these factors. Id. at 589, P.2d at 274; see also Yamaha Motor Co.,
                U.S.A. v. Arnoult, 114 Nev. 233, 252 n.16, 955 P.2d 661, 673 n.16 (1998)
                ("[N]o one factor under Beattie is determinative and [the district court] has
                broad discretion to grant the request so long as all appropriate factors are
                considered."). To determine a reasonable amount of attorney fees—the
                fourth Beattie factor—the district court must consider the four Brunzell
                factors, including (1) the attorney's professional qualities and experience,
                (2) the complexity and nature of the litigation, (3) the work performed by
                the attorney, and (4) the result. Brunzell v. Golden Gate Nat'l Bank, 85
                Nev. 345, 349, 455 P.2d 31, 33 (1969).
                             Following its summary judgment, the district court entertained
                Swanson's motion for fees and costs, and ultimately awarded Swanson
                $39.447 in attorney fees and $5,840 in costs after fully analyzing the
                required factors. The court awarded attorney fees and costs incurred, under
                NRCP 68, since the date Swanson made an offer of judgment to the Folinos
                in the amount of $150,000.2
                             The Folinos argue the district court erred in determining the
                second Beattie factor regarding the timing of Swanson's offer because they
                contend the settlement offer came too early. The Folinos assert that they
                were not able to fairly assess their claims because Swanson made the
                settlement offer during the discovery period and Swanson had not yet filed
                an answer.

                      2A1though   the district court also analyzed attorney fees and costs
                under NRS 18.010 and NRS 18.020, the court expressly limited its award to
                fees and costs under NRCP 68.
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            We conclude the district court did not err when it determined
the timing of Swanson's offer was reasonable and made in good faith to
settle the case. NRCP 68(a) states, "At any time more than 21 days before
trial, any party may serve an offer in writing to allow judgment . . . ."
(Emphasis added). Because Swanson made the offer of judgment at least
21 days before trial, a year after the Folinos filed the initial complaint, and
the Folinos had conducted some discovery before the offer was made, we
conclude the district courfs decision was not arbitrary or capricious.
Schouweiler v. Yancey Co., 101 Nev. 827, 833, 712 P.2d 786, 790 (1985)
("Unless the trial court's exercise of discretion [in evaluating the Beattie]
factors is arbitrary or capricious, this court will not disturb the lower court's
ruling on appeal."). Accordingly, because Swanson was the prevailing party
and the Folinos did not accept Swanson's offer, the district court did not
abuse its discretion when it awarded Swanson fees and costs incurred since
the time of the offer under NRCP 68. Accordingly, we
             ORDER the judgments of the district court AFFIRMED.

                                                                       J.
                                     Parraguirre

                                              AleZgy:44-.0
                                     Stiglich

                                     Silver

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                     cc:   Chief Judge, Eighth Judicial District Court
                           James A. Kohl, Settlement Judge
                           Black & Wadhams
                           Christopher M. Young, PC
                           The Galliher Law Firm
                           Eighth District Court, Department 24

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