Court Opinion

ID: 3156078
Source: CourtListenerOpinion
Date Created: 2015-11-19 16:07:28.197118+00
Date Added: 2024-06-11T12:12:23.278806
License: Public Domain

HARP, INDIVIDUALLY; ANDREW
                   ISENBERG, INDIVIDUALLY; JOHN
                   AND AURALIE JENSEN,
                   INDIVIDUALLY; MICHAEL KIDWELL,
                   INDIVIDUALLY; DON AND DULCIE F.
                   LILLY, INDIVIDUALLY; ANTOINETE
                   MARTINEZ, INDIVIDUALLY; DAVID
                   K. AND CHRISTI MCCLUNG,
                   INDIVIDUALLY; PAUL D. AND
                   RHONDA L. MCKENZIE,
                   INDIVIDUALLY; SILVA M. MENDEZ-
                   JOVEL, INDIVIDUALLY; NESTOR
                   ORTIZ, INDIVIDUALLY; ANDREW
                   PERKINS, INDIVIDUALLY;
                   GREGORIO RAMIREZ AND MARTHA
                   AGUIRRE, INDIVIDUALLY; YOLANDA
                   RAMOS, INDIVIDUALLY; RANDALL
                   M. AND ANDREA M. ROBINSON,
                   INDIVIDUALLY; GILBERT J.
                   RODRIGUEZ, INDIVIDUALLY; MIKE
                   ROOLEY AND MISTY VALENCIA,
                   INDIVIDUALLY; DEREK AND BRANDI
                   RUSSELL, INDIVIDUALLY; JAMES
                   AND ENRIQUETA S. SERRA,
                   INDIVIDUALLY; DEAN AND DEBRA
                   SMITH, INDIVIDUALLY; ELIZABETH
                   TRUJILLO, INDIVIDUALLY; LUIS R.
                   VEGA LEMUS, INDIVIDUALLY;
                   DAMIAN WEBBER, INDIVIDUALLY;
                   JAMES WINCHELL, INDIVIDUALLY;
                   CHRISTIANAH A. AKINOLA,
                   INDIVIDUALLY; IRMA AMARESCO,
                   INDIVIDUALLY; JOHN BROWNELL,
                   INDIVIDUALLY; NELIDA E. CHAVEZ
                   AND NADIA ESQUIVEL,
                   INDIVIDUALLY; JEFF AND AUDRY
                   DAVIDSON, INDIVIDUALLY; NATHAN
                   DUPREE, INDIVIDUALLY; ERIC D.
                   FROMELIUS AND AMANDA M.
                   THOMAS, INDIVIDUALLY; PETER
                   KILONZO, INDIVIDUALLY; GREGORY
                   AND NANDA KUNDE,
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                     INDIVIDUALLY; MARTIN R.
                     LADOUCEUR, INDIVIDUALLY;
                     CHRISTIAN LAPRAIRIE,
                     INDIVIDUALLY; JIMMY LOPEZ AND
                     CATLINA VALDEZ DE L.,
                     INDIVIDUALLY; JAMES AND
                     REBECCA MADDUX, INDIVIDUALLY;
                     JOSEPH AND ANIANDA MCDONALD,
                     INDIVIDUALLY; ANA LAURA
                     MENDOZA A., INDIVIDUALLY;
                     CALVIN AND CRYSTAL MORGAN,
                     INDIVIDUALLY; ERMINANDO
                     NAZAIRE AND CLARITA ADLER,
                     INDIVIDUALLY; VIRGINIA NEILSON,
                     INDIVIDUALLY; TAMMY
                     NICKERSON, INDIVIDUALLY;
                     VIRGINIA OKONVVO, INDIVIDUALLY;
                     SCOTT AND DARLENE THROWER,
                     INDIVIDUALLY; REGINALD WALKER,
                     INDIVIDUALLY; MARK J. AND
                     CHARLOTTE ANDERSON,
                     INDIVIDUALLY; YUN AND JEONG
                     BANK; B. DIETRICK AND SEONG
                     MCGINNIS, INDIVIDUALLY; JOE AND
                     SHERI BARAINCA, INDIVIDUALLY;
                     ANTHONY AND LAURINA BELLUCCI,
                     INDIVIDUALLY; LORI BERNARDI,
                     INDIVIDUALLY; BRENT T. AND VICKI
                     JILL BROOKS, INDIVIDUALLY;
                     WENCESLAO AND EDITHA
                     CONCEPCION, INDIVIDUALLY;
                     ROBERTO CUELLAR AND NANCY E.
                     STAUFFER, INDIVIDUALLY; LORI
                     DANIEL, INDIVIDUALLY; FRANK
                     AND ROXANNE DECARLO,
                     INDIVIDUALLY; KRISTINA D. GAW,
                     INDIVIDUALLY; VICTORIA
                     GHASSEDI-KHOSHKHABAR,
                     INDIVIDUALLY; EDUARDO AND LUZ
                     M. GONZALEZ, INDIVIDUALLY; JOEL
                     AND KELSY GRACE, INDIVIDUALLY;
                     CHRIS AND CAITLIN HOFMANN,
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                   INDIVIDUALLY; JAMES AND
                   CARMEN E. JONES, INDIVIDUALLY;
                   CURTIS N. AND LESLIE A. LUND,
                   INDIVIDUALLY; MICHALE P. MIRICH
                   AND JERILYN HOGEN,
                   INDIVIDUALLY; ANTONETTE
                   NIEDLE, INDIVIDUALLY; GARY AND
                   VICKI PAVONE, INDIVIDUALLY;
                   SHERRY PEREZ, INDIVIDUALLY;
                   DOUGLAS W. AND DOLORES A.
                   PRIHAR, INDIVIDUALLY; MARK
                   BRANDON AND KATRINA RENE
                   PRINTUP, INDIVIDUALLY; PATRICIA
                   T. PUMPHREY, INDIVIDUALLY;
                   DAVID AND KATRINA RASCHEN,
                   INDIVIDUALLY; TAI ROSANDER AND
                   MINDI L. NEUGEBAUER,
                   INDIVIDUALLY; ROBERT SALVADOR,
                   INDIVIDUALLY; NEIL STOCCHIO
                   AND VIRLENE OUANO-STROCCHIO,
                   INDIVIDUALLY; MYLINH TANG,
                   INDIVIDUALLY; MARK W. AND
                   DOTTRIE M. TAYLOR,
                   INDIVIDUALLY; AND JERRY
                   WHITNEY, INDIVIDUALLY,
                   Respondents.

                                   ORDER OF REVERSAL AND REMAND

                              This is an appeal from a district court order denying a motion
                   to compel arbitration in a construction defect action. Second Judicial
                   District Court, Washoe County; Brent T. Adams, Judge.
                              Respondents owned houses built by appellant Lennar Reno,
                   LLC From November 2009 to April 2011, respondents served Lennar
                   with NRS Chapter 40 notices. In November 2011, the parties conducted
                   an NRS Chapter 40-mandated mediation. On January 4, 2012,
                   respondents filed their first amended complaint asserting breach of
                   contract and construction defect causes of action. Lennar answered on
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                  January 26, 2012. Over the next approximately 23 months, the parties
                  actively participated in litigation of the case by complying with a special
                  master's case management order; submitting answers to interrogatories,
                  repair reports, and expert reports; and participating in several mediation
                  sessions. In October 2013, the special master amended the case agenda,
                  which, among other things, recommended a trial date in June 2015. On
                  November 5, 2013, the district court filed a pretrial order stating general
                  guidelines regarding pretrial motions, discovery, trial statements, and
                  jury instructions.
                              On December 3, 2013, approximately 23 months after
                  respondents filed their first amended complaint, Lennar moved to compel
                  arbitration under the house purchase agreements. The district court
                  denied Lennar's motion. The district court found that Lennar waived its
                  right to arbitrate by allowing litigation to proceed for nearly two years
                  before filing a motion to compel, and that this delay prejudiced
                  respondents. This appeal followed.
                              We conclude that the district court erred in denying Lennar's
                  motion to compel arbitration.   See Masto v. Second Judicial Dist. Court,
                  125 Nev. 37, 44, 199 P.3d 828, 832 (2009) ("Whether a dispute arising
                  under a contract is arbitrable is a matter of contract interpretation, which
                  is a question of law that we review de novo."); see also Nev. Gold &
                  Casinos, Inc. v. American Heritage, Inc., 121 Nev. 84, 89, 110 P.3d 481,
                  484 (2005) (explaining that arbitration waiver is generally a question of
                  fact, but may be determined as a matter of law when the determination
                  rests on the legal implications of uncontested facts); see also Tallman v.
                  Eighth Judicial Dist. Court, 131 Nev., Adv. Op. 71,          P.3d (2015)
                  (noting that interlocutory district court orders denying motions to compel
                  are appealable pursuant to NRS 38.247).
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                              Under Nevada Gold,        respondents must demonstrate the
                  following to show that Lennar waived its right to arbitrate: (1) Lennar
                  knew of its right to arbitrate, (2) Lennar acted inconsistently with that
                  right, and (3) Lennar prejudiced respondents by its inconsistent acts. 121
Nev. at 90-91, 110 P.3d at 485. To demonstrate prejudice, respondents
                  must show (1) the parties had used discovery not available in arbitration,
                  (2) the parties litigated substantial issues on the merits, or (3) compelling
                  arbitration would require a duplication of efforts.    Id.   We conclude that
                  the record supports that respondents satisfied the first two prongs of the
                  Nevada Gold test. However, the district court erred because Lennar's
                  delay did not sufficiently prejudice respondents to satisfy the third prong
                  of Nevada Gold.
                              Before reaching the prejudice prong, we address Lennar's
                  argument that it did not act inconsistently with its right to arbitrate, i.e.,
                  by filing two years later than necessary, because NRS Chapter 40-
                  mandated pre-litigation procedures did not terminate until an October
                  2013 mediation. We disagree. NRS 40.647 and 40.680 state that NRS
                  Chapter 40-mandated pre-litigation procedures end, and litigation begins,
                  when respondents file a complaint asserting construction defect causes of
                  action and the district court does not dismiss the complaint for failure to
                  comply with NRS Chapter 40. This occurred in January 2012. Thus, the
                  district court correctly concluded that Lennar moved to compel arbitration
                  two years later than necessary.
                              We conclude, however, that the district court erred in finding
                  that this approximate two-year delay prejudiced respondents. In Nevada
                  Gold, prior to a party moving to compel arbitration, the parties had
                  already "litigated substantial issues on the merits," which would have had
                  to be duplicated in arbitration. In this case, the parties only engaged in
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                   limited discovery, much of which may be used during the arbitration
                   proceedings. 121 Nev. at 91, 110 P.3d at 485; see also Gonski v. Second
                   Judicial Dist. Court, 126 Nev. 551, 557, 245 P.3d 1164, 1168 (2010)
                   ("Nevada .. . public policy favors arbitration, and arbitration clauses are
                   generally enforceable.").
                               Further, the district court largely based its prejudice finding
                   on the faulty premise that about 40 percent of respondents would remain
                   in the district court because Lennar could not compel them to arbitrate.
                   We conclude, however, that all of the respondents must go to arbitration
                   because "[u]nder a theory of estoppel, [a] nonsignatory is estopped from
                   refusing to comply with an arbitration clause when it receives a direct
                   benefit from a contract containing an arbitration clause."   Truck Ins. Exch.

                   v. Palmer J. Swanson, Inc., 124 Nev. 629, 636, 189 P.3d 656, 661 (2008)
                   (internal quotations omitted). Here, respondents received a direct benefit
                   from a contract containing an arbitration clause when they asserted
                   breach of contract causes of action under said contract. Thus,
                   nonsignatory respondents are estopped from refusing to comply with the
                   house purchase agreements' arbitration clauses.'     See also Tallman, 131
                   Nev., Adv. Op. 71, P.3d at (noting that while arbitration
                   agreements must be in writing, they need not be signed). Accordingly, we

                         'Additionally, we conclude that the district court's application of the
                   doctrine of laches was also error and does not warrant denial of Lennar's
                   motion to compel arbitration.

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                                ORDER the judgment of the district court REVERSED AND
                REMAND this matter to the district court for proceedings consistent with
                this order. 2

                                                   Saitta

                                                                                J.
                                                   Gibbons

                cc:   District Judge, Department 6
                      Debbie Leonard, Settlement Judge
                      Gordon & Rees, LLP
                      Shinnick, Ryan & Ransavage P.C.
                      Washoe District Court Clerk

                      2We have considered the parties' remaining arguments and conclude
                that they are without merit.

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