Document Type

Case Summary

Publication Date

1-1-2005

Case Synopsis

Beazer Homes constructed and sold 206 single-family residences between 1994 and 1999 on a 40-acre residential subdivision. In April 2000, three homeowners, individually, and as proposed class representatives, filed a complaint against Beazer Homes alleging constructional defects to their homes. The complaint alleged that their houses’ foundations and concrete slabs were damaged by expansive soils, a condition in which the soils beneath a house expand when exposed to water and contract when the soil dries. This condition can cause a house’s foundation and concreted slab to crack and separate. The plaintiffs also alleged over 30 additional constructional defects unrelated to the soils condition. Four months after the complaint was filed the first district court judge granted class certification without conducting a NRCP 23 analysis. Following considerable discovery, Beazer Homes sought decertification of the homeowners’ class action. Beazer Homes argued that certification was granted with respect to the common question of expansive soils, however, subsequent discovery demonstrated that a number of houses were not impacted by expansive soils and that individualized proof for the cause of expansive soils was required because of grading, landscaping, changes to drainage, lot slopes, grade preparation and retaining walls. The district court judge denied decertification. During trial, Beazer renewed its motion to decertify. Again, the district court judge denied the motion with no NRCP 23 analysis. A jury returned a verdict for the homeowners in the sum of $7,885,500. Thereafter, the homeowners sought attorney fees pursuant to NRS 40.655. Beazer Homes objected claiming that the subject of attorney’s fees should have been presented to the jury. The district court awarded attorney fees and prejudgment interest. The Supreme Court agreed with Beazer Homes and held that class action certification was inappropriate under NRCP 23. NRCP 23(a) and (b) specify the circumstances under which a case is appropriately designated and maintained as a class action. Under NRCP 23(a), plaintiffs seeking class action certification must satisfy four prerequisites: (1) numerosity, (2) commonality, (3) typicality, (4) adequacy.2 In addition to meeting NRCP 23(a), plaintiffs must meet one of the three conditions set forth in NRCP 23(b): (1) that separate litigation by individuals in the class would create a risk that the opposing party would be held to inconsistent standards of conduct or that nonparty members interests might be unfairly impacted by the other members’ individual litigation; (2) that the party opposing the class has acted or refused to act against the class in a manner making appropriate classwide injunctive or declaratory relief; or (3) that common questions of law or fact predominate over individual questions , and a class action is superior to other methods of adjudication. Here, the homeowners advanced their class action based upon the third condition of NRCP 23(b) The district court abused its discretion by not conducting a thorough NRCP 23 analysis. First, individualized proof of the cause and defenses to the expansive soils claims was necessary. Second, the district court allowed other claims to be adjudicated even though the class action certification only applied to the expansive soils issue. And third, the court failed to conduct a thorough NRCP 23 analysis even when it became apparent that class action certification was problematic. A thorough NRCP 23 analysis would have demonstrated that class action was inappropriate. Additionally, the Nevada Supreme Court held that claimants may recover attorney fees as an item of damages under NRS 40.655(1)(a). “Thus, any time that a case is tried by legal counsel and a jury determines that the claimant is entitled to recover damages proximately caused by a constructional defect, a court can presume that the claimant is entitled to the recovery of attorney fees, whether or not the jury verdict explicitly so states.”3 The method for determining the fees to be awarded is at the discretion of the court which is tempered by reason and fairness. However, the court must use the factors enumerated in Brunzel v. Golden Gate National Bank:4 the advocate’s professional qualities, the nature of the litigation, the work performed, and the result. Finally, the Supreme Court held that prejudgment interest was properly awarded on the entire verdict because the award represented only past damages. Prejudgment interest may not be awarded on an entire verdict where it is impossible to determine what part of the verdict represents past damages and what part represents future damages. Here, all the damages were past damages “because the damages occurred when the homes were built, regardless of when the homeowners actually made or will make necessary repairs.”

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