Assembly Bill No. 442–Committee on Judiciary

March 10, 1999

____________

Referred to Committee on Judiciary

 

SUMMARY—Revises provisions governing civil actions involving constructional defects and deficiencies. (BDR 3-1065)

FISCAL NOTE: Effect on Local Government: No.

Effect on the State or on Industrial Insurance: No.

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EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. Green numbers along left margin indicate location on the printed bill (e.g., 5-15 indicates page 5, line 15).

 

AN ACT relating to civil actions; revising the provisions governing certain actions involving constructional defects; revising the statutes of limitation and statutes of repose for certain actions involving constructional deficiencies; and providing other matters properly relating thereto.

 

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

1-1 Section 1. Chapter 40 of NRS is hereby amended by adding thereto a

1-2 new section to read as follows:

1-3 If, after complying with the procedural requirements of NRS 40.645

1-4 and 40.680, a claimant commences an action for damages arising from a

1-5 constructional defect:

1-6 1. The claimant and each contractor who is named in the original

1-7 complaint when the action is commenced are not required, while the

1-8 action is pending, to comply with the requirements of NRS 40.645 or

1-9 40.680 for any constructional defect that the claimant includes in an

1-10 amended complaint, if the constructional defect:

1-11 (a) Is attributable, in whole or in part, to such a contractor;

1-12 (b) Is located on the same property described in the original

1-13 complaint; and

1-14 (c) Could not have been discovered through reasonable inspection

1-15 before the action was commenced.

2-1 2. The claimant is not required to give written notice of a defect

2-2 pursuant to subsection 1 of NRS 40.645 to any person who is joined to or

2-3 intervenes in the action as a party after it is commenced. If such a person

2-4 becomes a party to the action:

2-5 (a) For the purposes of subsection 1 of NRS 40.645, the person shall

2-6 be deemed to have been given notice of the defect by the claimant on the

2-7 date on which the person becomes a party to the action; and

2-8 (b) The provisions of NRS 40.600 to 40.695, inclusive, apply to the

2-9 person after that date.

2-10 Sec. 2. NRS 40.600 is hereby amended to read as follows:

2-11 40.600 As used in NRS 40.600 to 40.695, inclusive, and section 1 of

2-12 this act, unless the context otherwise requires, the words and terms defined

2-13 in NRS 40.605 to 40.630, inclusive, have the meanings ascribed to them in

2-14 those sections.

2-15 Sec. 3. NRS 40.645 is hereby amended to read as follows:

2-16 40.645 Except as otherwise provided in this section , section 1 of this

2-17 act and NRS 40.670:

2-18 1. At least 60 days before a claimant commences an action , including,

2-19 but not limited to, a proposed class action, against a contractor for

2-20 damages arising from a constructional defect, the claimant must give

2-21 written notice by certified mail, return receipt requested, to the contractor,

2-22 at the contractor’s last known address, specifying in reasonable detail the

2-23 defects or any damages or injuries to each residence or each unit within a

2-24 multiple-unit residence that is the subject of the claim. The notice must

2-25 describe in reasonable detail the cause of the defects if the cause is known,

2-26 and the nature and extent that is known of the damage or injury resulting

2-27 from the defects. In a complex matter, an expert opinion concerning the

2-28 cause of the defects and the nature and extent of the damage or injury

2-29 resulting from the defects based on a representative sample of the

2-30 residences or of the units of each multiple-unit residence involved in the

2-31 action satisfies the requirements of this section. During the 35-day period

2-32 after the contractor receives the notice, on his written request, the

2-33 contractor is entitled to inspect the property that is the subject of the claim

2-34 to determine the nature and cause of the defect, damage or injury and the

2-35 nature and extent of repairs necessary to remedy the defect. The contractor

2-36 shall, before making the inspection, provide reasonable notice of the

2-37 inspection and must make the inspection at a reasonable time. The

2-38 contractor may take reasonable steps to establish the existence of the

2-39 defect. If a contractor does not inspect a residence pursuant to this

2-40 subsection during the 35-day period, the contractor shall be deemed to

3-1 have waived any right to inspect the residence after the end of the 35-day

3-2 period, unless the contractor makes or provides for repairs to the

3-3 residence pursuant to any other provision of NRS 40.600 to 40.695,

3-4 inclusive.

3-5 2. If the residence is covered by a homeowner’s warranty, a claimant

3-6 must diligently pursue a claim under the warranty or contract.

3-7 3. Within 45 days after the contractor receives the notice, the

3-8 contractor [may make] shall provide the claimant with a written response

3-9 that contains an offer of settlement [to the claimant. The offer:] or a

3-10 denial of liability, as appropriate, for each constructional defect set forth

3-11 in the claimant’s notice. The written response:

3-12 (a) Must be served to the claimant by certified mail, return receipt

3-13 requested, at the claimant’s last known address.

3-14 (b) Must respond to each constructional defect set forth in the

3-15 claimant’s notice . [, and]

3-16 (c) Must describe in reasonable detail the cause of [the] each defect, if

3-17 known, the nature and extent of the damage or injury resulting from [the

3-18 defect, and, unless the offer is limited to a proposal for monetary

3-19 compensation,] each defect and the method, adequacy and estimated cost

3-20 of [the proposed repair.

3-21 (c) May include:] repairing each defect.

3-22 (d) Must include for each denial of liability, if any, a statement of all

3-23 grounds for the denial.

3-24 (e) Must include for each offer of settlement, if any, one or more of

3-25 the following:

3-26 (1) A proposal for monetary compensation.

3-27 (2) If the contractor is licensed to make the repairs, an agreement by

3-28 the contractor to make the repairs.

3-29 (3) An agreement by the contractor to cause the repairs to be made, at

3-30 the contractor’s expense, by another contractor who is licensed to make the

3-31 repairs, bonded and insured.

3-32 The repairs must be made within 45 days after the contractor receives

3-33 written notice of acceptance of the offer, unless completion is delayed by

3-34 the claimant or by other events beyond the control of the contractor. The

3-35 claimant and the contractor may agree in writing to extend the periods

3-36 prescribed by this section.

3-37 4. The periods provided in subsections 1 and 3 must be extended by 60

3-38 days if the claim is a complex matter. The parties may stipulate to a further

3-39 extension.

3-40 5. Not later than [15 days before the mediation required pursuant to

3-41 NRS 40.680 and upon providing 15 days’ notice, each] 21 days after

3-42 receiving written notice from the other party, a party shall provide the

3-43 other party, or shall make a reasonable effort to assist the other party to

4-1 obtain, all relevant reports, photos, correspondence, plans, specifications,

4-2 warranties, contracts, subcontracts, work orders for repair, videotapes and

4-3 soil and other engineering reports that are not privileged. Whether or not

4-4 the claimant has commenced an action, if either party fails to comply

4-5 with the provisions of this subsection, the other party may petition the

4-6 court that has or would have jurisdiction over such an action to compel

4-7 compliance with the provisions of this subsection. The court shall award

4-8 the prevailing party in such a proceeding any reasonable attorney’s fees

4-9 and costs incurred by the party in bringing or defending against the

4-10 petition.

4-11 6. If the claimant is a representative of a homeowner’s association, the

4-12 association shall submit any offer of settlement made by the contractor to

4-13 each member of the association.

4-14 Sec. 4. NRS 40.650 is hereby amended to read as follows:

4-15 40.650 1. If a claimant unreasonably rejects a reasonable written

4-16 offer of settlement made pursuant to NRS 40.645 or does not permit the

4-17 contractor or independent contractor a reasonable opportunity to repair the

4-18 defect pursuant to an accepted offer of settlement and thereafter

4-19 commences an action governed by NRS 40.600 to 40.695, inclusive, the

4-20 court in which the action is commenced may:

4-21 (a) Deny the claimant’s attorney’s fees and costs; and

4-22 (b) Award attorney’s fees and costs to the contractor.

4-23 Any sums paid under a homeowner’s warranty, other than sums paid in

4-24 satisfaction of claims that are collateral to any coverage issued to or by the

4-25 contractor, must be deducted from any recovery.

4-26 2. If a contractor fails to:

4-27 (a) Make , in good faith, an offer of settlement [;

4-28 (b) Make a good faith response to the claim asserting no liability;

4-29 (c)] or a denial of liability in accordance with the provisions of NRS

4-30 40.645;

4-31 (b) Complete, in a good and workmanlike manner, the repairs specified

4-32 in an accepted offer;

4-33 [(d)] (c) Agree to a mediator or accept the appointment of a mediator

4-34 pursuant to NRS 40.680; [or

4-35 (e)] (d) Participate , in good faith, in mediation [,] ; or

4-36 (e) Provide or disclose to the claimant any documentation or

4-37 information required by the provisions of subsection 5 of NRS 40.645 or

4-38 subsection 2 of NRS 40.687 or otherwise fails to comply with those

4-39 provisions,

4-40 the limitations on damages and defenses to liability provided in NRS

4-41 40.600 to 40.695, inclusive, do not apply and the claimant may commence

4-42 an action without satisfying any other requirement of NRS 40.600 to

4-43 40.695, inclusive.

5-1 3. If coverage under a homeowner’s warranty is denied by an insurer

5-2 in bad faith, the homeowner and the contractor have a right of action for

5-3 the sums that would have been paid if coverage had been provided, plus

5-4 reasonable attorney’s fees and costs.

5-5 Sec. 5. NRS 40.655 is hereby amended to read as follows:

5-6 40.655 1. Except as otherwise provided in NRS 40.650 [,] and

5-7 40.670, in a claim governed by NRS 40.600 to 40.695, inclusive, the

5-8 claimant may recover only the following damages to the extent

5-9 proximately caused by a constructional defect:

5-10 (a) Any reasonable attorney’s fees;

5-11 (b) The reasonable cost of any repairs already made that were necessary

5-12 and of any repairs yet to be made that are necessary to cure any

5-13 constructional defect that the contractor failed to cure and the reasonable

5-14 expenses of temporary housing reasonably necessary during the repair;

5-15 (c) The reduction in market value of the residence or accessory

5-16 structure, if any, to the extent the reduction is because of [structural

5-17 failure;] the constructional defect;

5-18 (d) The loss of the use of all or any part of the residence;

5-19 (e) The reasonable value of any other property damaged by the

5-20 constructional defect;

5-21 (f) If the constructional defect renders the residence uninhabitable,

5-22 reasonable compensation for emotional distress;

5-23 (g) Any additional costs reasonably incurred by the claimant, including,

5-24 but not limited to, any costs and fees incurred for the retention of experts

5-25 to:

5-26 (1) Ascertain the nature and extent of the constructional defects;

5-27 (2) Evaluate appropriate corrective measures [to] and estimate the

5-28 [value of loss of use;] cost of repairs; and

5-29 (3) Estimate the value of loss of use, the cost of temporary housing

5-30 and the reduction of market value of the residence; and

5-31 [(g)] (h) Any interest provided by statute.

5-32 2. The court shall determine the amount of any attorney’s fees

5-33 awarded pursuant to this section . [must be approved by the court.]

5-34 3. If a contractor complies with the provisions of NRS 40.600 to

5-35 40.695, inclusive, the claimant may not recover from the contractor, as a

5-36 result of the constructional defect, anything other than that which is

5-37 provided pursuant to NRS 40.600 to 40.695, inclusive.

5-38 [4. As used in this section, "structural failure" means physical damage

5-39 to the load-bearing portion of a residence or appurtenance caused by a

5-40 failure of the load-bearing portion of the residence or appurtenance.]

6-1 Sec. 6. NRS 40.665 is hereby amended to read as follows:

6-2 40.665 1. In addition to any other method provided for settling a

6-3 claim pursuant to NRS 40.600 to 40.695, inclusive, a contractor may,

6-4 pursuant to a written agreement entered into with a claimant, settle a claim

6-5 by repurchasing the claimant’s residence and the real property upon which

6-6 it is located. The agreement may include provisions which reimburse the

6-7 claimant for:

6-8 [1.] (a) The market value of the residence as if no constructional defect

6-9 existed, except that if a residence is less than 2 years of age and was

6-10 purchased from the contractor against whom the claim is brought, the

6-11 market value is the price at which the residence was sold to the claimant;

6-12 [2.] (b) The value of any improvements made to the property by a

6-13 person other than the contractor;

6-14 [3.] (c) Reasonable attorney’s fees and fees for experts; and

6-15 [4.] (d) Any costs, including costs and expenses for moving and costs,

6-16 points and fees for loans.

6-17 [Any]

6-18 2. Except as otherwise provided in subsection 3, any offer of

6-19 settlement made that includes the items listed in [this section] subsection 1

6-20 shall be deemed reasonable for the purposes of subsection 1 of NRS

6-21 40.650.

6-22 3. Any offer of settlement made that includes the items listed in

6-23 subsection 1 shall be deemed not reasonable for the purposes of

6-24 subsection 1 of NRS 40.650 if the claimant reasonably demonstrates that

6-25 he has been unable to finance or otherwise purchase another residence

6-26 that has a market value equal to the market value of the claimant’s

6-27 residence as if no constructional defect had existed.

6-28 Sec. 7. NRS 40.670 is hereby amended to read as follows:

6-29 40.670 1. A contractor who receives written notice of a

6-30 constructional defect resulting from work performed by the contractor or

6-31 his agent, employee or subcontractor which creates an imminent threat to

6-32 the health or safety of the inhabitants of the residence shall take reasonable

6-33 steps to cure the defect as soon as practicable. The contractor shall not cure

6-34 the defect by making any repairs for which he is not licensed or by causing

6-35 any repairs to be made by a person who is not licensed to make those

6-36 repairs. [If]

6-37 2. Except as otherwise provided in subsection 3, if the contractor fails

6-38 to cure the defect in a reasonable time [, the] :

6-39 (a) The owner of the residence may have the defect cured and may

6-40 recover from the contractor the reasonable cost of the repairs plus

6-41 reasonable attorney’s fees and costs in addition to any other damages

6-42 recoverable under any other law [.

6-43 2. A contractor who] ;

7-1 (b) The limitations on damages and defenses to liability provided in

7-2 NRS 40.600 to 40.695, inclusive, do not apply to the defect and the

7-3 claimant may commence an action for damages arising from the defect

7-4 without satisfying any of the requirements of NRS 40.600 to 40.695,

7-5 inclusive; and

7-6 (c) Evidence of the written notice to the contractor and the failure of

7-7 the contractor to cure the defect in a reasonable time is admissible in any

7-8 such action.

7-9 3. If a contractor does not cure a defect pursuant to this section

7-10 because he has determined, in good faith and after a reasonable inspection,

7-11 that there is not an imminent threat to the health or safety of the inhabitants

7-12 , the contractor is not liable for attorney’s fees and costs [pursuant to this

7-13 section, except that if] in any action for damages arising from the defect

7-14 unless a building inspector employed by a governmental body with

7-15 jurisdiction certifies that there [is] was an imminent threat to the health and

7-16 safety of the inhabitants of the residence . [, the contractor is subject to the

7-17 provisions of subsection 1.]

7-18 Sec. 8. Chapter 11 of NRS is hereby amended by adding thereto the

7-19 provisions set forth as sections 9 and 10 of this act.

7-20 Sec. 9. 1. Except as otherwise provided in subsection 2, for the

7-21 purposes of this section and NRS 11.202 to 11.206, inclusive, the date of

7-22 substantial completion of an improvement to real property shall be

7-23 deemed to be the date on which:

7-24 (a) The final building inspection of the improvement is conducted;

7-25 (b) A notice of completion is issued for the improvement; or

7-26 (c) A certificate of occupancy is issued for the improvement,

7-27 whichever occurs later.

7-28 2. If none of the events described in subsection 1 occurs, the date of

7-29 substantial completion of an improvement to real property must be

7-30 determined by the rules of the common law.

7-31 Sec. 10. 1. In any action which is described in NRS 11.203, 11.204

7-32 or 11.205 and which is commenced against a person who performed or

7-33 furnished the design, planning, supervision or observation of

7-34 construction of, or the construction of, an improvement to real property

7-35 that is part of a common interest community, the applicable period of

7-36 repose set forth in NRS 11.203, 11.204 or 11.205 must be tolled during

7-37 any period in which the person:

7-38 (a) Owned or otherwise controlled the improvement or the common

7-39 interest community; or

7-40 (b) Performed or furnished repairs to the improvement, or promised to

7-41 perform or furnish such repairs but failed to do so, whether or not the

7-42 person owned or otherwise controlled the improvement or the common

7-43 interest community at the time.

8-1 2. As used in this section, "common interest community" means any

8-2 real property that is subject to any provision of chapter 116 or 117 of

8-3 NRS.

8-4 Sec. 11. NRS 11.202 is hereby amended to read as follows:

8-5 11.202 1. An action may be commenced against the owner, occupier

8-6 or any person performing or furnishing the design, planning, supervision

8-7 or observation of construction [,] of, or the construction of , an

8-8 improvement to real property at any time after the substantial completion

8-9 of such an improvement, for the recovery of damages for:

8-10 (a) Any deficiency in the design, planning, supervision or observation

8-11 of construction of, or the construction of , such an improvement which is

8-12 the result of his willful misconduct or which he fraudulently concealed;

8-13 (b) Injury to real or personal property caused by any such deficiency; or

8-14 (c) Injury to or the wrongful death of a person caused by any such

8-15 deficiency.

8-16 2. The provisions of this section do not apply in an action brought

8-17 against:

8-18 (a) The owner or keeper of any hotel, inn, motel, motor court,

8-19 boardinghouse or lodginghouse in this state on account of his liability as an

8-20 innkeeper.

8-21 (b) Any person on account of a defect in a product.

8-22 Sec. 12. NRS 11.203 is hereby amended to read as follows:

8-23 11.203 1. Except as otherwise provided in this section, NRS

8-24 [11.202,] 11.206 and section 10 of this act, no action may be commenced

8-25 against the owner, occupier or any person performing or furnishing the

8-26 design, planning, supervision or observation of construction [,] of, or the

8-27 construction of , an improvement to real property more than 10 years after

8-28 the substantial completion of such an improvement, for the recovery of

8-29 damages for:

8-30 (a) Any deficiency in the design, planning, supervision or observation

8-31 of construction of, or the construction of , such an improvement which is

8-32 known or through the use of reasonable diligence should have been known

8-33 to him;

8-34 (b) Injury to real or personal property caused by any such deficiency; or

8-35 (c) Injury to or the wrongful death of a person caused by any such

8-36 deficiency.

8-37 2. [Notwithstanding the provisions of NRS 11.190 and subsection 1 of

8-38 this section, where] If an injury occurs in the [tenth] 10th year after the

8-39 substantial completion of such an improvement, an action for damages for

8-40 injury to property or person, damages for wrongful death resulting from

9-1 such injury or damages for breach of contract may be commenced within 2

9-2 years after the date of such injury, irrespective of the date of death, but in

9-3 no event may an action be commenced more than 12 years after the

9-4 substantial completion of the improvement.

9-5 3. If the provisions of this section apply to an action:

9-6 (a) The action is subject only to the period of repose set forth in this

9-7 section; and

9-8 (b) No other period of limitation or repose set forth in this chapter

9-9 applies to the action.

9-10 4. The provisions of this section do not apply to:

9-11 (a) An action that is based upon any deficiency described in

9-12 subsection 1 if the provisions of NRS 11.202 otherwise apply to the

9-13 deficiency; or

9-14 (b) A claim for indemnity or contribution.

9-15 Sec. 13. NRS 11.204 is hereby amended to read as follows:

9-16 11.204 1. Except as otherwise provided in this section, NRS [11.202

9-17 and 11.203,] 11.206 and section 10 of this act, no action may be

9-18 commenced against the owner, occupier or any person performing or

9-19 furnishing the design, planning, supervision or observation of construction

9-20 [,] of, or the construction [,] of , an improvement to real property more

9-21 than 8 years after the substantial completion of such an improvement, for

9-22 the recovery of damages for:

9-23 (a) Any latent deficiency in the design, planning, supervision or

9-24 observation of construction of, or the construction of , such an

9-25 improvement;

9-26 (b) Injury to real or personal property caused by any such deficiency; or

9-27 (c) Injury to or the wrongful death of a person caused by any such

9-28 deficiency.

9-29 2. [Notwithstanding the provisions of NRS 11.190 and subsection 1 of

9-30 this section, where] If an injury occurs in the eighth year after the

9-31 substantial completion of such an improvement, an action for damages for

9-32 injury to property or person, damages for wrongful death resulting from

9-33 such injury or damages for breach of contract may be commenced within 2

9-34 years after the date of such injury, irrespective of the date of death, but in

9-35 no event may an action be commenced more than 10 years after the

9-36 substantial completion of the improvement.

9-37 3. If the provisions of this section apply to an action:

9-38 (a) The action is subject only to the period of repose set forth in this

9-39 section; and

9-40 (b) No other period of limitation or repose set forth in this chapter

9-41 applies to the action.

10-1 4. The provisions of this section do not apply to:

10-2 (a) An action that is based upon any latent deficiency described in

10-3 subsection 1 if the provisions of NRS 11.202 or 11.203 otherwise apply to

10-4 the latent deficiency; or

10-5 (b) A claim for indemnity or contribution.

10-6 5. For the purposes of this section, "latent deficiency" means a

10-7 deficiency which is not apparent by reasonable inspection.

10-8 Sec. 14. NRS 11.205 is hereby amended to read as follows:

10-9 11.205 1. Except as otherwise provided in this section, NRS [11.202

10-10 and 11.203,] 11.206 and section 10 of this act, no action may be

10-11 commenced against the owner, occupier or any person performing or

10-12 furnishing the design, planning, supervision or observation of construction

10-13 [,] of, or the construction of , an improvement to real property more than 6

10-14 years after the substantial completion of such an improvement, for the

10-15 recovery of damages for:

10-16 (a) Any patent deficiency in the design, planning, supervision or

10-17 observation of construction or the construction of such an improvement;

10-18 (b) Injury to real or personal property caused by any such deficiency; or

10-19 (c) Injury to or the wrongful death of a person caused by any such

10-20 deficiency.

10-21 2. [Notwithstanding the provisions of NRS 11.190 and subsection 1 of

10-22 this section, where] If an injury occurs in the sixth year after the

10-23 substantial completion of such an improvement, an action for damages for

10-24 injury to property or person, damages for wrongful death resulting from

10-25 such injury or damages for breach of contract may be commenced within 2

10-26 years after the date of such injury, irrespective of the date of death, but in

10-27 no event may an action be commenced more than 8 years after the

10-28 substantial completion of the improvement.

10-29 3. If the provisions of this section apply to an action:

10-30 (a) The action is subject only to the period of repose set forth in this

10-31 section; and

10-32 (b) No other period of limitation or repose set forth in this chapter

10-33 applies to the action.

10-34 4. The provisions of this section do not apply to:

10-35 (a) An action that is based upon any patent deficiency described in

10-36 subsection 1 if the provisions of NRS 11.202 or 11.203 otherwise apply to

10-37 the patent deficiency; or

10-38 (b) A claim for indemnity or contribution.

10-39 5. For the purposes of this section, "patent deficiency" means a

10-40 deficiency which is apparent by reasonable inspection.

11-1 Sec. 15. NRS 11.206 is hereby amended to read as follows:

11-2 11.206 The [limitations respectively prescribed by] periods of repose

11-3 set forth in NRS 11.203, 11.204 and 11.205 are not a defense in an action

11-4 brought against:

11-5 1. The owner or keeper of any hotel, inn, motel, motor court,

11-6 boardinghouse or lodginghouse in this state on account of his liability as an

11-7 innkeeper.

11-8 2. Any person on account of a defect in a product.

11-9 Sec. 16. 1. The amendatory provisions of sections 1 to 11, inclusive,

11-10 and 15 of this act do not apply to an action that was commenced before

11-11 October 1, 1999.

11-12 2. The amendatory provisions of sections 12, 13 and 14 of this act do

11-13 not apply to an action if any period of limitation set forth in chapter 11 of

11-14 NRS that was applicable to the action, other than a period of repose set

11-15 forth in NRS 11.203, 11.204 or 11.205, commenced to run before October

11-16 1, 1999.

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