D.R. Horton, Inc. v. Eighth Jud. Dist. Ct

86,
131 Nev., Advance Opinion
IN THE SUPREME COURT OF THE STATE OF NEVADA
D.R. HORTON, INC., No. 66085 v
Petitioner,
vs.
THE EIGHTH JUDICIAL DISTRICT
COURT OF THE STATE OF NEVADA,
FILED
IN AND FOR THE COUNTY OF Gc.`,I 2 9 2015
CLARK; AND THE HONORABLE
SUSAN JOHNSON, DISTRICT JUDGE,
Respondents,
and
ARLINGTON RANCH HOMEOWNERS
ASSOCIATION, A NONPROFIT
CORPORATION,
Real Party in Interest.
D.R. HORTON, INC., No. 66101
Petitioner,
vs.
THE EIGHTH JUDICIAL DISTRICT
COURT OF THE STATE OF NEVADA,
IN AND FOR THE COUNTY OF
CLARK; AND THE HONORABLE
SUSAN JOHNSON, DISTRICT JUDGE,
Respondents,
and
ARLINGTON RANCH HOMEOWNERS
ASSOCIATION, A NEVADA
NONPROFIT CORPORATION,
Real Party in Interest.
Original petitions for a writ of prohibition or mandamus
challenging district court orders granting an ex parte stay and denying an
NRCP 41(e) motion to dismiss
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Petitions denied.
Wood, Smith, Henning & Berman, LLP, and Joel D. Odou and Victoria L.
Hightower, Las Vegas,
for Petitioner.
Angius & Terry, LLP, and Paul P. Terry, Jr., Scott P. Kelsey, and David
M. Bray, Las Vegas,
for Real Party in Interest.
BEFORE THE COURT EN BANC.'
OPINION
By the Court, HARDESTY, C.J.:
In these original petitions for extraordinary writ relief, we
consider whether the district court erred when it initially granted an ex
parte stay permitting a homeowners' association to complete the NRS
Chapter 40 process and further erred when it denied a motion to dismiss
the underlying complaint pursuant to the five-year rule in NRCP 41(e)
when the NRS Chapter 40 process was still not complete. We conclude
that the district court's order granting a stay was not in error, and the
five-year period was tolled under the Boren exception to NRCP 41(e).
Accordingly, we deny both of these petitions for a writ of prohibition or
mandamus.
'The Honorable Ron D. Parraguirre, Justice, voluntarily recused
himself from participation in the decision of these petitions.
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FACTS AND PROCEDURAL HISTORY
These petitions arise from the same underlying complaint. In
Docket No. 66085, petitioner D.R. Horton, Inc., argues that the district
court abused its discretion in granting real party in interest High Noon at
Arlington Ranch Homeowners Association's 2 ex parte motion to stay the
proceedings until the NRS Chapter 40 prelitigation process for
constructional defect cases was complete. In Docket No. 66101, petitioner
D.R. Horton argues that the district court erred in refusing to dismiss the
case for failure to bring the case to trial within five years pursuant to
NRCP 41(e) because it improperly excluded from the five-year period
certain dates during which the proceedings were stayed.
Facts related to both petitions
Real party in interes't High Noon is a homeowners' association
created pursuant to NRS Chapter 116 that operates and manages the
High Noon at Arlington Ranch community. This community consists of
342 individual units contained within 114 buildings. According to High
Noon, the sales documents for these units contain language that precludes
express and implied warranty actions after two years.
On June 7, 2007, High Noon filed a complaint against D.R.
Horton "in its own name on behalf of itself and all of the High
Noon . . . unit owners," alleging breach of implied warranties of
workmanlike quality and habitability, breach of contract, breach of
express warranties, and breach of fiduciary duty. High Noon obtained
written assignment of the claims of 194 of its individual unit owners.
2The petitions incorrectly identify the homeowners' association as
Arlington Ranch Homeowners Association. We note that the correct name
is High Noon at Arlington Ranch Homeowners Association.
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Even though High Noon did not specifically allege that its
claims fall under NRS Chapter 40's constructional defect provisions, High
Noon immediately moved, ex parte, for a stay and enlargement of time for
service of the complaint pending completion of prelitigation proceedings
pursuant to NRS 40.647(2)(b), which allows for stays of district court
actions filed before the prelitigation process is completed when the claims
would later be time-barred by statute. In support of this motion, High
Noon argued that it was unclear whether its warranty claims were subject
to NRS Chapter 40, but if not, they faced a possible two-year contractual
limitations period, indicating that "[t]he complaint was filed to preserve
[High Noon]'s claim for breach of express and implied warranties."
Additionally, High Noon stated that, to begin the prelitigation process, it
would "immediately serve [dlefendants with [n]otice of construction
defects pursuant to NRS 40.645, providing detailed information regarding
the construction defect damages claimed." The district court granted High
Noon's motion and stated that the complaint "is hereby stayed until the
completion of the NRS 40.600 et seq. pre-litigation process." 3 In a later
order, the district court determined that this stay commenced on August
13, 2007, and that the case then "remained dormant until April 14, 2008,
when [D.R. Horton] filed various motions." 4 The district court further
3 Two other stays were also granted in the case below, including a
stay by this court in D.R. Horton, Inc. v. Eighth Judicial District Court,
Docket No. 58533, but those stays are not at issue in these writ petitions.
4 Ourreview of the record shows that D.R. Horton only filed one
motion with the court on or around April 14, 2008, and that was a motion
to compel. D.R. Horton's motion sought to compel High Noon "to comply
with NRS 40.6462 and provide access to each unit at the [s]ubject
[p]roperty where construction defects are alleged to exist for inspection by
continued on next page...
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concluded that another stay had been granted on July 30, 2009, as a result
of D.R. Horton's motion for stay. The court determined that this stay
ended on November 5, 2009, when the district court approved the special
master's case management order.°
Based on information from the parties' briefs and appendices,
it appears that as of today, over eight years later, the NRS Chapter 40
process is still not complete.
Docket No. 66085
In this writ petition, D.R. Horton challenges the 2007 district
court order granting High Noon's ex parte motion for a stay and
enlargement of time for service so that High Noon could conduct NRS
Chapter 40 prelitigation activities, including giving notice and
opportunities to inspect and repair, prior to serving process on D.R.
Horton. D.R. Horton claims that the stay is void, as High Noon's breach of
implied and express warranty causes of action allege constructional
defects and are therefore subject to NRS Chapter 40, which requires
dismissal for failure to comply with prelitigation procedures unless certain
conditions are met. NRS 40.645; NRS 40.647. D.R. Horton also argues
...continued
D.R. Horton." D.R. Horton also sought "to toll the statutory deadline to
submit its repair response pending completion of inspections of all units
where defects are alleged to exist"
5Contradictory to the district court's status of the stay, there is
nothing in the record to demonstrate that the court ever lifted the August
13, 2007, stay. And there is no indication in the special master's case
management order that the July 30, 2009, stay was to end on November 5,
2009, upon the district court's approval of that order. These stays appear
to be continuous from August 13, 2007, until now.
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that the void 2007 stay cannot toll the NRCP 41(e) five-year rule, and it
requests that this court direct the district court to vacate the order
denying the motion to dismiss and to dismiss the complaint.
Docket No. 66101
In this petition, D.R. Horton makes an additional argument
that the district court erred in denying a motion to dismiss based on High
Noon's failure to bring the action to trial within five years pursuant to
NRCP 41(e). On January 21, 2014, third-party defendant Firestop, Inc.,
moved to dismiss the underlying case for failure to prosecute, and D.R.
Horton joined in the motion. Firestop contended that the only stay that
tolled the five-year rule was the stay entered by this court in Docket No.
58533 and that the five-year period thus expired on September 14, 2013.
D.R. Horton contends that the district court erred when it relied on the
Boren tolling exception to NRCP 41(e), which permits tolling where "the
parties are prevented from bringing an action to trial by reason of a stay
order." Boren v. City of N. Las Vegas, 98 Nev. 5, 6, 638 P.2d 404, 405
(1982). D.R. Horton argues that this court should clarify the holdings
from Boren and its progeny and require a court to examine the parties'
diligence in bringing an action to trial when determining if the tolling
exception is appropriate. Alternatively, D.R. Horton asks this court to
specifically preclude tolling for all stays imposed to complete the NRS
Chapter 40 process.
DISCUSSION
Writ relief is appropriate
"A writ of mandamus is available to compel the performance
of an act that the law requires as a duty resulting from an office, trust, or
station or to control an arbitrary or capricious exercise of discretion."
Humphries v. Eighth Judicial Dist. Court, 129 Nev., Adv. Op. 85, 312 P.3d
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484, 486 (2013) (quoting Int'l Game Tech., Inc. v. Second Judicial Dist.
Court, 124 Nev. 193, 197, 179 P.3d 556, 558 (2008)); see also NRS 34.160.
Generally, "hAdrit relief is not available. . . when an adequate and speedy
legal remedy exists." Int'l Game Tech., 124 Nev. at 197, 179 P.3d at 558.
"While an appeal generally constitutes an adequate and speedy remedy
precluding writ relief, we have, nonetheless, exercised our discretion to
intervene 'under circumstances of urgency or strong necessity, or when an
important issue of law needs clarification and sound judicial economy and
administration favor the granting of the petition." Cote H. v. Eighth
Judicial Dist. Court, 124 Nev. 36, 39, 175 P.3d 906, 908 (2008) (quoting
State v. Second Judicial Dist. Court, 118 Nev. 609, 614, 55 P.3d 420, 423
(2002)). 6
These petitions merit our consideration as they raise
important issues concerning Nevada's constructional defect law.
Specifically, the petitions present important questions of law—whether
NRS 40.647(2)(b) allows for this type of stay and, if so, whether the stay
tolls the running of the five-year period under NRCP 41(e). Although the
case was filed in 2007, litigation is in the very early stages and the answer
to these questions now would thus promote judicial economy and
6 Inthe alternative, D.R. Horton seeks a writ of prohibition. A writ
of prohibition is appropriate when a district court acts "without or in
excess of [its] jurisdiction." NRS 34.320; see also Club Vista Fin. Servs. v.
Eighth Judicial Dist. Court, 128 Nev., Adv. Op. 21, 276 P.3d 246, 249
(2012). A writ of prohibition is improper in this case because the district
court had jurisdiction to hear and determine the outcome of the motion to
stay and the motion to dismiss. See Goicoechea v. Fourth Judicial Dist.
Court, 96 Nev. 287, 289, 607 P.2d 1140, 1141 (1980) (stating that we will
not issue a writ of prohibition "if the court sought to be restrained had
jurisdiction to hear and determine the matter under consideration").
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administration. See Thran v. First Judicial Dist. Court, 79 Nev. 176, 178,
380 P.2d 297, 298-99 (1963) (entertaining petition for writ relief from a
district court order denying a motion to dismiss under NRCP 41(e)); see
also Smith v. Eighth Judicial Dist. Court, 113 Nev. 1343, 1345, 1345 n.1,
950 P.2d 280, 281, 281 n.1 (1997). Accordingly, we choose to entertain
these writ petitions.
The August 2007 stay
High Noon's complaint alleged four claims for relief: (1) breach
of implied warranties of workmanlike quality and habitability, (2) breach
of contract, (3) breach of express warranties, and (4) breach of fiduciary
duty. In the complaint, High Noon never alleges that the claims for relief
fall under NRS Chapter 40. 7
High Noon based its August 2007 ex parte stay motion on
NRS 40.647(2)(b). The statuteS specifically states that if a plaintiff who
files a constructional defect suit before completing the prelitigation
process would be prevented from filing another suit based on the
expiration of the statute of limitations or repose, then the court must stay
the case rather than dismiss it in order to allow for compliance with the
NRS Chapter 40 requirements. NRS 40.647(2)(b).
In its stay motion, High Noon alleged that, pursuant to NRS
116.4116(1), D.R. Horton "attempted to limit the implied [and express]
warranties in their sales documents to [a] two [-1 year period." High Noon
alleged that D.R. Horton began selling units on August 31, 2004, and High
Noon filed its complaint on June 7, 2007, more than two years later. For
7 The parties' briefs do not dispute whether the stay applied to all
claims for relief.
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that reason, some of High Noon's claims would face a contractual
limitations defense if a stay was not granted under MRS 40.647(2)(b).
Further, MRS 40.635(3) provides that NRS Chapter 40 does not "bar or
limit any defense otherwise available, except as otherwise provided in
those sections." Since NRS Chapter 40 does not prevent any defense
otherwise available, D.R. Horton could argue a shorter limitations period
based on its sales contracts. If the NRS Chapter 116 limitation period for
warranties was contractually modified to two years, as permitted by NRS
116.4116(1), this shorter period should allow the district court to enter a
stay under NRS 40.647(2)(b), just as it would for a statutory limitation
period, so that High Noon could undertake the prelitigation process
without jeopardizing its claims. 8 Thus, based on High Noon's argument
that it may or may not have MRS Chapter 40 claims, it would have been
appropriate for the district court to extend the time to allow completion of
the prelitigation process. 9
8 We recognize that NRS 40.695 generally tolls statutes of limitation
or repose for constructional defect claims during the prelitigation process.
However, High Noon sought a stay because it was unclear whether that
statute would apply to preserve its claims, given that they were brought
under NRS Chapter 116 and the existence of a contractual limitations
period.
9 NRS 40.645 requires that a claimant provide prelitigation notice
before a claimant can amend a complaint to add a cause of action for a
constructional defect. And, under NRS 40.603(2),
"Amend a complaint to add a cause of action for a
constructional defect" means any act by which a
claimant seeks to:
2. Amend the pleadings in such a manner
that the practical effect is the addition of a
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The August 2007 stay tolled the five-year rule
D.R. Horton claims that the district court erred in finding that
the August 2007 stay precluded the parties from litigating as the parties
were actually engaged in the NRS Chapter 40 process. We disagree.
Where a motion to dismiss under NRCP 41(e) is improperly
denied, the district court lacks any further jurisdiction, rendering its
subsequent orders going to the merits of the action void. Cox v. Eighth
Judicial Dist. Court, 124 Nev. 918, 924-25, 193 P.3d 530, 534 (2008).
Therefore, if we determine that dismissal was required under NRCP 41(e),
any subsequent orders entered by the district court would necessarily be
void.
NRCP 41(e) states, in pertinent part, that:
Any action heretofore or hereafter commenced
shall be dismissed by the court in which the same
shall have been commenced or to which it may be
transferred on motion of any party, or on the
court's own motion, after due notice to the parties,
unless such action is brought to trial within 5
years after the plaintiff has filed the action, except
where the parties have stipulated in writing that
the time may be extended. ... A dismissal under
this subdivision (e) is a bar to another action upon
the same claim for relief against the same
defendants unless the court otherwise provides.
•..continued
constructional defect that is not otherwise
included in the pleadings.
The term does not include amending a complaint
to plead a different cause for a constructional
defect which is included in the same action.
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In addressing NRCP 41(e), we have concluded that it "is clear and
unambiguous and requires no construction other than its own language."
Thran v. First Judicial Dist. Court, 79 Nev. 176, 181, 380 P.2d 297, 300
(1963). Additionally, where a case has not been brought to trial after five
years, dismissal is mandatory, affording the district court no discretion.
Morgan v. Las Vegas Sands, Inc., 118 Nev. 315, 320, 43 P.3d 1036, 1039
(2002). Notably, though, this court has recognized exceptions to the
mandatory nature of NRCP 41(e).
The Boren exception
Under current Nevada law, "[ably period during which the
parties are prevented from bringing an action to trial by reason of a stay
order shall not be computed in determining the five-year period of [NRCP]
41(e)." Boren, 98 Nev. at 6, 638 P.2d at 405. The holding in Boren was
based on the fact that the district court prohibited the parties from going
to trial and then dismissed their action for failure to bring it to trial,
circumstances that were unarguably "unfair and unjust." Id. at 5-6, 638
P.2d at 404. In Boren, our short opinion provided no facts from the case,
but we indicated that the district court had stayed the proceedings for
more than four years. Id. at 5, 638 P.2d at 404. Boren had argued that
the plaintiffs "had some kind of duty of diligence in seeking vacation of the
stay order [and to bring the case to trial]." Id. at 6, 638 P.2d at 404.
However, we disagreed and determined that the plaintiffs' lack of
diligence was "immaterial," as "we would be hard-pressed to formulate a
rule describing the degree of diligence required under such
circumstances." Id. at 6, 638 P.2d at 404-05.
D.R. Horton argues that, unlike in Boren, the parties here
were not prevented from bringing the action to trial because of the stay
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order. It claims that High Noon intentionally prolonged the stay by not
immediately filing its NRS Chapter 40 notice and denying D.R. Horton
access to properties containing alleged constructional defects.
While High Noon may have prolonged the process, prompting
D.R. Horton to file several motions to compel, 1° the matter was "stayed
until the completion of the NRS 40.600 et seq. pre-litigation process."
Because the stay prevented the case from proceeding," Boren's rule
applies, and the court-ordered August 2007 stay tolls the prescriptive
period under NRCP 41(e) while the district court-ordered stay is in effect.
Boren and its progeny do not require a district court to evaluate the
diligence of the parties before determining if a court-ordered stay
tolls the prescriptive period under NRCP 41(e)
D.R. Horton also argues that a court must evaluate the
circumstances and the parties' diligence in bringing a matter to trial
before determining that a stay tolls the prescriptive period. We disagree.
While some of our holdings post-Boren cite diligence requirements and
consider the resulting unfairness to the plaintiff, unlike the circumstances
1 °Thedistrict court also stated that it shared part of the blame for
the length of the August 2007 stay for not imposing any end or sunset
provision.
"We have maintained that litigation should conclude within a
reasonable amount of time. See, e.g., Massey v. Sunrise Hosp., 102 Nev.
367, 369, 724 P.2d 208, 209 (1986). "Rule 41(e) accomplishes this end by
requiring counsel's diligence in pursuing claims." Id. While D.R. Horton
alleges that High Noon did not pursue the matter swiftly, it appears from
the record that D.R. Horton shares in the blame for the delay of this case
as it did not seek any remedy until now. For example, the record does not
include any motions that D.R. Horton might have filed seeking to vacate
the August 2007 stay or challenging the validity of the stay before
bringing the instant writ petition.
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here, those cases did not involve a court-ordered stay. For example, D.R.
Horton cites Baker v. Noback, 112 Nev. 1106, 1110-11, 922 P.2d 1201,
1203-04 (1996), for the proposition that an evaluation is required to look at
the unique facts of the case and resulting unfairness to the plaintiff.
However, Baker did not involve a court-ordered stay, and this court
examined the circumstances of the case, which involved a statutory
requirement to first proceed through a medical malpractice screening
panel. 112 Nev. at 1110, 922 P.2d at 1203. D.R. Horton also cites to
Morgan v. Las Vegas Sands, Inc., 118 Nev. 315, 43 P.3d 1036 (2002),
arguing that we determined that a mandatory arbitration period was not
an exception to NRCP 41(e), and the plaintiffs lack of diligence ultimately
contributed to proper dismissal under the five-year rule. However,
Morgan also did not involve a court-ordered stay. 118 Nev. at 317-18, 43
P.3d at 1037-38. Finally, for further support, D.R. Horton cites to
Edwards v. Ghandour, 123 Nev. 105, 112-13, 159 P.3d 1086, 1091 (2007)
(holding that the district court's stay, based on misinformation and later
rescinded, did not toll NRCP 41(e) when plaintiff knew the stay was
invalid and he "did not take appropriate action to move his case forward
and set aside the stay"), rejected on other grounds by Five Star Capital
Corp. v. Ruby, 124 Nev. 1048, 1053-54, 194 P.3d 709, 712-13 (2008).
However, this too is distinguishable, as here, the district court issued a
valid stay.
D.R. Horton also argues that courts consider the diligence of
parties in determining other motions related to NRCP 41(e), citing to
Carstarphen v. Milsner, 128 Nev., Adv, Op. 5, 270 P.3d 1251, 1254 (2012),
for support. There, we held that when a district court evaluates a motion
for a preferential trial date to circumvent the five-year rule, it "must
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consider the time remaining in the five-year period when the motion is
filed and the diligence of the moving party and his or her counsel in
prosecuting the case." Id. at 1252. This case is also distinguishable, as a
court-ordered stay prevents parties from prosecuting the case, while a
motion for a preferential trial date in a case presumptively has no such
impediment.
As a result of the court-ordered stay in this case, the district
court was not required to evaluate the parties' diligence. However, given
the lapse of time in this matter, neither the parties nor the district court
have been diligent in monitoring the status of the NRS Chapter 40
prelitigation process, which was the subject of the stay order.
We do not adopt a new exemption to the Boren rule excepting
constructional defect stays from tolling
Finally, D.R. Horton argues, in the alternative, that this court
should hold that a stay imposed to complete the NRS Chapter 40 process
should not toll the NRCP 41(e) five-year period because the statutes
provide ample time for a claimant to complete the process without risking
a statute of limitations issue. 12 D.R. Horton also argues that the purpose
of NRS Chapter 40 is to ensure a quick and fair resolution to construction
defect disputes, and that premature complaints and tolling all counter the
purpose behind the statutes. We conclude that these arguments also lack
merit.
D.R. Horton also argues that High Noon knew that the stays did
12
not toll the five-year rule and that the district court warned of this on
multiple occasions. However, in the hearing on the motion to dismiss, the
district court stated that it erred in that analysis.
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Certainly, NRS Chapter 40's mechanisms provide
opportunities to repair and otherwise resolve constructional defects before
a claimant can pursue litigation. See D.R. Horton, Inc. v. Eighth Judicial
Dist. Court, 123 Nev. 468, 476, 168 P.3d 731, 737 (2007). But D.R.
Horton's argument fails to consider the purpose behind NRS 40.647(2)(b).
In that statute, the Legislature recognizes the importance of completing
the prelitigation process before a claimant can pursue a case even where a
suit has been filed to avoid the expiration of a limitation period. 13 Surely
the prelitigation purposes of NRS Chapter 40 of repair, mediation, and
settlement are furthered by court-ordered stays under NRS 40.647(2)(b)
while parties complete the constructional defect prelitigation process.
Excluding an NRS 40.647(2)(b) stay from the full period allowed by NRCP
41(e) would be unfair, and we see no reason to exclude NRS Chapter 40
litigants from the Boren exception.
CONCLUSION
We choose to exercise our discretion and entertain the writ
petitions in these cases. We deny the writ petition in Docket No. 66085,
concluding that the August 2007 stay is valid. Similarly, we deny the writ
13 NRS Chapter 40's only reference to a "stay" is in NRS 40.647(2)(b),
and this subsection has remained unchanged with the recent
constructional defect amendments enacted by the Legislature and
subsequently approved by the Governor. See A.B. 125, 78th Leg. (Nev.
2015) (effective Feb. 24, 2015).
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petition in Docket No. 66101, as the court-ordered stay tolled the five-year
prescriptive period under NRCP 41(e), pursuant to Boren. Accordingly, we
deny both writ petitions.
7 .-At., tee..42ti , C.J.
Hardesty
We concur:
J.
Douglas
Gibbons
Pickering
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