Nailing door shut on class action
...the high court's Dec. 15 decision, which reversed Earl's earlier decision granting class action status to about 200 homeowners in the Village at Craig Ranch in North Las Vegas in a lawsuit against Beazer Homes. In that case, a jury sided with homeowners who blamed expansive soils for changes to foundations, defective framing and drywalling and leaking windows...Monday's ruling by Earl prevented a construction-defect lawsuit involving 689 homeowners in Sun City Summerlin from expanding to class action status involving 7,800 residents, he said.
Nailing door shut on class action
More expensive construction suits seen
By Brian Wargo
Las Vegas Sun
Clark County homeowners are finding it more difficult to band together to sue builders in construction-defect cases as judges increasingly force the homeowners to wage tougher, potentially costlier, legal battles.
The recent court decisions, which some lawyers complain could keep many people with flawed houses from pursuing legal remedies, come in response to a state Supreme Court ruling in December that nullified a multimillion-dollar judgment in a North Las Vegas home construction-defect case.
In the past two weeks judges in three separate cases have issued decisions that significantly undercut homeowners' ability to use so-called class action cases to sue builders accused of faulty work.
District Judge Nancy Saitta on Feb. 14 removed the class action status of a 2003 lawsuit involving homeowners at Sun City MacDonald Ranch in their case against homebuilder Del Webb.
Similarly, District Judge Allan Earl on Monday refused to grant class action status to Sun City Summerlin residents in a construction-defect lawsuit against Del Webb.
Also on Monday, District Judge Michael Cherry, drawing from the Supreme Court opinion, ruled that a group of homeowners must individually prove damage to their homes. That decision would effectively end a common practice whereby lawyers for homeowners extrapolate damage for entire subdivisions by testing only a small percentage of homes.
The three rulings reflect judges' compliance with the high court's Dec. 15 decision, which reversed Earl's earlier decision granting class action status to about 200 homeowners in the Village at Craig Ranch in North Las Vegas in a lawsuit against Beazer Homes.
In that case, a jury sided with homeowners who blamed expansive soils for changes to foundations, defective framing and drywalling and leaking windows.
In its opinion, the state Supreme Court said, except for rare cases, because single-family home construction-defect cases raise "diverse, individualized claims and defenses," they should not be lumped together and decided as one in class action lawsuits.
That ruling threw out a judgment that with interest had grown to about $16.4 million in December - the highest in the state's history.
"Class actions are probably not going to be a vehicle used very much in construction-defect lawsuits in Southern Nevada," Earl said. "I think it is going to make it much more difficult in the initial stages to bring the action as a group."
That has some lawyers howling over lost efficiency of residents binding together to go after shoddy homebuilders. If homeowners cannot file class action lawsuits, they say, cases could become much more expensive for individuals, effectively discouraging people with legitimate complaints from going to court.
Las Vegas attorney Francis Lynch, who represents residents of Sun City MacDonald Ranch, said many lawyers would not be able to front the $5,000 or more it might cost to test each home for construction defects and individually prove cases. Currently, tests of 10 percent to 20 percent serve as representative samplings of defects.
"It is bad enough they got rid of class action," Lynch said. "We can survive that.
"What makes it much worse is getting rid of extrapolation. It is going to make it cost-prohibitive to get involved in any case. No attorney will be able to take it.
"This is going to have a chilling effect and not allow many homeowners from ever going to court. This is very anti-consumer, anti-senior and anti-homeowner."
Cherry, who is running for the Supreme Court, dismissed that concern. Noting that home construction-defect cases are lucrative for lawyers, he said the decision may simply force more plaintiffs' attorneys to join a case. Clark County saw 79 home construction-defect lawsuits filed in 2005, up from 64 in 2004, he said.
Las Vegas attorney Bob Carlson, who represents Beazer Homes, Del Webb and other homebuilders, applauded the Supreme Court ruling and the subsequent decisions handed down by the judges.
Monday's ruling by Earl prevented a construction-defect lawsuit involving 689 homeowners in Sun City Summerlin from expanding to class action status involving 7,800 residents, he said.
"It is going to make it more difficult for people without problems to band together," Carlson said. "But it is not going to make it difficult for those with real problems to band together. People with legitimate problems will be addressed, and people without won't get a windfall."
State law allows residents to sue homebuilders and recover not only the cost of repairs, but also attorney fees and other expenses relating to testing homes. But under a law passed in 2003, the owners also must give contractors responsible for the work a chance to make repairs before a lawsuit is filed.
Las Vegas attorney Daniel Polsenberg, who represented Beazer Homes before the Supreme Court, argued it is unfair to pay money to residents who, despite suffering no damage, are automatically lumped into class action lawsuits unless they opt out of the case. It also is unfair, he said, for residents with damage to receive smaller payouts because fortunate neighbors without damage get a cut of the total settlement or judgment.
"When you use extrapolation, it treats everybody the same," Polsenberg said. "It hurts the people who really have leaky windows. The people whose houses are more damaged get shortchanged. That's not fair to homeowners and homebuilders."
That was echoed by Jim Wadhams, an attorney for the Southern Nevada Home Builders Association and Nevada Subcontractors Association, who said the District Court rulings are significant because they show how the Supreme Court ruling is playing out.
"It is still a little bit early to see what is going to happen," Wadhams said. "We are obviously encouraged."
But Las Vegas attorney Tom Mehesan said Cherry's ruling preventing the use of extrapolation in two cases that he is handling against Rhodes Homes has had a chilling effect. He said two related Rhodes cases previously settled for more than $17 million combined, but there is a reluctance to settle now.
"I hear checkbooks slamming shut all over the country," Mehesan said. "Right now, many of the cases on the verge of settlement - those are not going to happen. They believe they have the plaintiffs over a barrel, and they won't be able to prove their case."
Las Vegas attorney Bob Maddox, who was on the losing end of the Supreme Court case, called it "a heartless pro-business decision."
Maddox said he is prepared to go to a second trial to prove damages on an individual basis if Beazer chooses not to settle the case.
Brian Wargo can be reached at 259-4011 or at