Gunderson v. D.R. Horton, Inc.

130 Nev., Advance Opinion 1
IN THE SUPREME COURT OF THE STATE OF NEVADA
ROBERT GUNDERSON; PHYLLIS No. 56614
GUNDERSON; SHARRON LIBBY;
ROSARIO LAYTON; TOMI DUREN;
LINDA WATERS; JESSICA GRANT;
CLIFFORD COUSER; CHARINA FILED
COUSER; DEANNA DAVIS; RICHARD
FEB 2 7 2014
T. JONES; MESSINA KLEIN;
)77111ort
MELANIE MOORE; JOHN CLET
R
MENICHELLI; BERNADETTE BY
CM DEPUn CLERK
MENICHELLI; SUZANNE ALLEN;
ROBERT WEBER; KAREN KELLISON;
JUAN LOPEZ; HELEN SCUNGIO;
SHONNA MAYFIELD; GUNTHER R.
PAUL; SHARON EPSTEIN; STEPHEN
GREGORY; WENDY MURATA;
VANESSA CASTER; WANDA
BERKHOLTZ; DENNIS WERRA;
AMANUAL ASFAHA; EDIT MOLNAR;
FRANK SUTTON; GAGANATH M.
PYARA; JESSE SAUNDERS; JODI
MARTIN; JOSHUA DAVIS; KRISTI
RODRIGUEZ; LYNN NOWAKOWSKI-
BACON; JOHN NOWAKOWSKI-
BACON; MARGARET DUDLEY;
MICHELLE JOHNSON; MIGUEL
SANTANA; DESIREE SANTANA;
PATRICIA BARRETT; RANDY
FERREN; PATRICK MCGOUGH;
NANCY JANSEN; AND BARBARA
WERRA,
Appellants/Cross-Respondents,
vs.
D.R. HORTON, INC., A DELAWARE
CORPORATION,
Respondent/Cross-Appellant.
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Appeal and cross-appeal from a district court judgment on a
jury verdict in a construction defect action and an appeal from an order
denying a new trial. Eighth Judicial District Court, Clark County;
Kenneth C. Cory, Judge.
Affirmed in part, reversed in part, and remanded.
James R. Christensen, Las Vegas,
for Appellants/Cross-Respondents Robert Gunderson, Phyllis Gunderson,
Linda Waters, Jessica Grant, Clifford Couser, John Menichelli, Bernadette
Menichelli, Robert Weber, Juan Lopez, Helen Scungio, Shonna Mayfield,
Gunther R. Paul, Wendy Murata, Wanda Berkholtz, Lynn Nowakowski-
Bacon, Margaret Dudley, Michelle Johnson, Patricia Barrett, Patrick
McGough, Nancy Jansen, and Barbara Werra.
Sharron Libby, Rosario Layton, Tomi Duren, Charina Couser, Deanna
Davis, Richard T. Jones, Messina Klein, Melanie Moore, Suzanne Allen,
Karen Kellison, Sharon Epstein, Stephen Gregory, Vanessa Caster,
Dennis Werra, Amanual Asfaha, Edit Molnar, Frank Sutton, Gaganath M.
Pyara, Jesse Saunders, Jodi Martin, Joshua Davis, Kristi Rodriguez, John
Nowakowski-Bacon, Miguel Santana, Desiree Santana, and Randy Ferren,
in Proper Person.
Wolfenzon Rolle and Bruno Wolfenzon and Jonathan P. Rolle, Las Vegas;
Marquis Aurbach Coifing and Jack Chen Min Juan and Micah S. Echols,
Las Vegas,
for Respondent/Cross-Appellant.
BEFORE THE COURT EN BANC.'
'The Honorable Michael A. Cherry, Justice, and the Honorable Ron
D. Parraguirre, Justice, voluntarily recused themselves from participation
in this matter.
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OPINION
By the Court, DOUGLAS, J.:
In this opinion, we address whether the district court abused
its discretion by: (1) denying a motion for a new trial based on allegations
of attorney misconduct; (2) not granting sanctions under NRS 17.115 and
NRCP 68; and/or (3) refusing to consider apportioning sanctions. We
conclude that the district court did not abuse its discretion in denying
appellants'/cross-respondents' motion for a new trial, but did abuse its
discretion regarding the issuance and apportionment of sanctions. We
hold that: (1) the district court was statutorily required to issue sanctions
under NRS 17.115 and NRCP 68; (2) when a district court issues sanctions
against multiple offerees pursuant to NRS 17.115 and NRCP 68, it has
and must exercise its discretion to determine whether to apportion those
sanctions among the multiple offerees or to impose those sanctions with
joint and several liability; and (3) when sanctions are issued against
multiple homeowner offerees pursuant to NRS 17.115 and NRCP 68 in a
construction defect action, a district court abuses its discretion by
imposing those sanctions jointly and severally against the homeowners.
Accordingly, we affirm the district court's decision in part, reverse in part,
and remand the matter to the district court for further proceedings
consistent with this opinion.
FACTS AND PROCEDURAL HISTORY
Appellants/cross-respondents, homeowners in the High Noon
at Boulder Ranch community (the homeowners), retained experts to
inspect their homes for construction defects. Based on their experts'
findings, the homeowners sent respondent/cross-appellant contractor D.R.
Horton, Inc., a written notice detailing alleged architectural, insulation,
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waterproofing, and other defects. In response, D.R. Horton notified the
homeowners of its intent to inspect the alleged defects to determine how to
respond to the homeowners' notice. The homeowners then filed a
complaint, seeking relief primarily under theories of negligence and
breach of warranty.
After receiving the homeowners' complaint, D.R. Horton
elected to repair the identified defects. Subsequently, the district court
stayed proceedings on the homeowners' complaint to allow D.R. Horton to
make repairs. After completing its work, D.R. Horton provided the
homeowners with a formal statement of repairs. The district court then
lifted the stay, and the homeowners filed an amended complaint. In
response, D.R. Horton filed an answer and a third-party complaint against
several subcontractors.
Before trial, D.R. Horton served individual offers of judgment
on each of the homeowners based on the extent of their respective
property's defects; 39 of the 40 homeowners rejected these offers and
proceeded to trial.
During closing arguments, counsel for D.R. Horton and
counsel for third-party defendant RCR Plumbing made multiple
statements that the homeowners' counsel objected to as attorney
misconduct. The district court sustained several of these objections
without admonishing counsel or the jury. At the conclusion of the trial,
the jury awarded verdicts for each homeowner, totaling $66,300 in
damages. No individual homeowner's award exceeded his or her offer of
judgment from D.R. Horton.
Following the jury's verdicts, the homeowners and D.R.
Horton filed motions for costs and attorney fees. The district court
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determined that D.R. Horton made valid offers of judgment and that no
homeowner's award exceeded his or her respective offer. Accordingly, the
district court awarded D.R. Horton post-offer costs, but declined to award
it attorney fees. Despite awarding D.R. Horton post-offer costs, the
district court denied both motions, stating that it was impossible to award
apportioned costs and fees under the circumstances. The homeowners
then filed a motion for a new trial, or, in the alternative, additur. D.R.
Horton opposed the homeowners' motion and filed a countermotion for
remittitur, requesting that the district court reduce the verdicts to zero.
Again, the district court denied both motions. This appeal and cross-
appeal followed.
In their appeal and cross-appeal, the homeowners and D.R.
Horton assert a number of arguments. While we conclude that most of
these arguments do not warrant specific discussion, 2 we take this
opportunity to address the homeowners' argument that the district court
abused its discretion in denying their motion for a new trial based on
attorney misconduct and both parties' contentions that they were entitled
to costs and attorney fees.
2In particular, we have considered the homeowners' arguments
regarding alleged improper ex parte communications, reliance on facts not
in evidence, introduction of excluded evidence, changes to the trial
protocol, acceptance of late-deposited documents, the jury instructions, the
motion to strike a defense expert's testimony, exclusion of certain
evidence, and the denial of additur. With regard to each of these claims,
we have determined that either the homeowners failed to preserve the
argument or the argument lacks merit. We also conclude that by failing to
make an offer of proof, D.R. Horton failed to preserve its argument that
the district court abused its discretion in denying testimony from a
defense witness.
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DISCUSSION
L The district court did not abuse its discretion in denying a new trial
for attorney misconduct
The homeowners argue that the district court should have
granted their motion for a new trial because D.R. Horton's counsel
repeatedly committed misconduct throughout the trial. Specifically, the
homeowners claim that D.R. Horton's counsel violated RPC 3.4(e) and our
decision in Lioce v. Cohen, 124 Nev. 1, 174 P.3d 970 (2008), by urging the
jurors to "send a message" because this case was driven by attorneys and
experts, the homeowners were liars, and the trial was a waste of the jury's
time. The homeowners also assert that, even if the specific instances of
misconduct were not independently sufficient to warrant a new trial, the
cumulative effect of D.R. Horton's counsel's misconduct required the
district court to grant the homeowners' motion for a new trial. We
disagree.
This court reviews a district court's decision to grant or deny a
motion for a new trial for an abuse of discretion. Lioce, 124 Nev. at 20,
174 P.3d at 982. "Whether an attorney's comments are misconduct is a
question of law, which we review de novo; however, we will give deference
to the district court's factual findings and application of the standards to
the facts." Id.
Under NRCP 59(a)(2), the district court may grant a new trial
if the prevailing party committed misconduct that affected the aggrieved
party's substantial rights. In Lioce, this court discussed the applicable
legal standards for reviewing a district court's denial of a motion for a new
trial based on attorney misconduct. See Lioce, 124 Nev. at 14-26, 174 P.3d
at 978-86. Under Lioce, this court decides whether there was attorney
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misconduct, identifies the applicable legal standard for determining
whether a new trial was warranted, and assesses whether the district
court abused its discretion in applying that standard. See id. at 14-26, 174
P.3d at 978-86.
When an attorney commits misconduct, and an opposing party
objects, the district court should sustain the objection and admonish the
jury and counsel, respectively, by advising the jury about the impropriety
of counsel's conduct and reprimanding or cautioning counsel against such
misconduct. Id. at 17, 174 P.3d at 980; see also Black's Law Dictionary 55
(9th ed. 2009) (defining "admonition" as "[a]ny authoritative advice or
caution from the court to the jury regarding their duty as jurors or the
admissibility of evidence for consideration," or "[a] reprimand or
cautionary statement addressed to counsel by a judge"). In the event of a
proper objection and admonition, "a party moving for a new trial bears the
burden of demonstrating that the misconduct [was] so extreme that the
objection and admonishment could not remove the misconduct's effect."
Lioce, 124 Nev. at 17, 174 P.3d at 981. If the district court overrules the
objection, the party moving for a new trial must show that the district
court erred in its ruling and that "an admonition to the jury would likely
have affected the verdict in favor of the moving party." Id. at 18, 174 P.3d
at 981.
An attorney's failure to object constitutes waiver of an issue,
unless the failure to correct the misconduct would constitute plain error.
Id. at 19, 174 P.3d at 982. Establishing plain error requires a party to
show that "the attorney misconduct amounted to irreparable and
fundamental error," resulting "in a substantial impairment of justice or
denial of fundamental rights." Id. In other words, plain error exists only
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"when it is plain and clear that no other reasonable explanation for the
verdict exists." Ringle v. Bruton, 120 Nev. 82, 96, 86 P.3d 1032, 1041
(2004).
Finally, if misconduct is persistent or repeated, the district
court must take into account "that, by engaging in continued misconduct,
the offending attorney has accepted the risk that the jury will be
influenced by his misconduct." Lioce, 124 Nev. at 18-19, 174 P.3d at 981.
As a result, the district court must acknowledge that although specific
instances of misconduct alone might have been curable by objection and
admonishment, the effect of persistent or repeated misconduct might be
incurable. See id. at 19, 174 P.3d at 981.
The homeowners argue that D.R. Horton's counsel violated
RPC 3.4(e) by pursuing the theme that the case was driven by the
homeowners' lawyers and experts. Specifically, the homeowners contend
that D.R. Horton's counsel instructed the jury to disregard the evidence,
that the homeowners were liars, and that the alleged defects did not exist.
D.R. Horton claims that it did not violate RPC 3.4(e) and that the
homeowners are precluded from making this argument now because they
failed to object on these grounds at trial.
RPC 3.4(e) prohibits attorneys from:
allud[ing] to any matter that the lawyer does not
reasonably believe is relevant or that will not be
supported by admissible evidence, assert[ind
personal knowledge of facts in issue except when
testifying as a witness, or statfing] a personal
opinion as to the justness of a cause, the
credibility of a witness, [or] the culpability of a
civil litigant ....
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The homeowners objected to the following comment made by
third-party defendant RCR's counsel during closing arguments: 3
There's a Special Interrogatory I'm going to ask
you to find whether you still believe if there are
any plumbing repairs out there. I don't believe
there is. I think we repaired anything that was
there.
Applying Lioce's framework, we must first determine whether
RCR's counsel committed attorney misconduct. In this instance, our
review of the record indicates that RCR's counsel did not violate RPC
3.4(e) or commit any other attorney misconduct. Accordingly, this
statement provides no basis for a new trial.
The homeowners also objected to the following statement by
D.R. Horton's counsel:
What did every• homeowner say they wanted?
They wanted a safe house; right? That's what
they all wanted. They learned that from their
expert that their house was somehow unsafe? No.
None of them ever talked to their experts. They
learned it from their attorneys. For what
purpose? For the purpose of litigation. And now
the homeowner is in the middle because Mr.
Gunther is sitting here, and he's listening to our
side of the story, and he's saying, "Oh, gosh. They
tell me my house is unsafe."
3 D.R. Horton argues that because the jury was instructed to decide
the case only as between D.R. Horton and the homeowners, the argument
of RCR's counsel is irrelevant in this appeal. We disagree. Regardless of
the limitations imposed on the scope of the jury's decision, RCR's counsel
made its remarks before the jury deliberated about the issues in this
appeal, and thus, counsel's comments could have influenced that verdict.
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The basis for the homeowners' objection was that D.R.
Horton's attorney improperly claimed to know what Mr. Gunther was
thinking. Applying the Lioce framework again, we first determine
whether D.R. Horton's counsel's statement was attorney misconduct. D.R.
Horton's counsel's statement violates RPC 3.4(e) by implicitly asserting a
personal opinion as to the justness of the homeowners' case based on the
statement's implication that the homeowners' attorneys unilaterally
initiated this action and fabricated its foundations.
Next, we must identify the applicable legal standard. As the
homeowners note, after sustaining their objection to this statement, the
district court failed to admonish counsel or the jury. Lioce does not
directly address this situation. Accordingly, we now clarify that when a
district court sustains an objection to attorney misconduct but fails to
admonish counsel or the jury, if objecting counsel does not promptly
request the omitted admonishments, he or she must, in seeking a new
trial based on the improper conduct, demonstrate that the misconduct was
so extreme that the objection and sustainment could not have removed the
misconduct's effect. Cf. Lioce, 124 Nev. at 17, 174 P.3d at 981. If the
district court fails to admonish counsel or the jury after objecting counsel
requests such admonishment promptly following his or her sustained
objection, a party moving for a new trial must only demonstrate that "an
admonition to the jury would likely have affected the verdict in favor of
the moving party." Cf id. at 18, 174 P.3d at 981.
Here, the homeowners must show that D.R. Horton's counsel's
misconduct was so extreme that its effect could not have been removed by
their objection and the district court's sustainment because their counsel
failed to request admonishments where they were mistakenly omitted by
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the district court. We conclude that the homeowners have not shown that
the misconduct's effect could not have been removed by the objection and
its sustainment. Accordingly, applying the last step in the Lioce analysis,
we determine that the district court did not abuse its discretion in denying
the homeowners' motion for a new trial.
The homeowners separately claim that D.R. Horton's counsel
committed attorney misconduct by encouraging jury nullification. An
attorney's arguments in favor of jury nullification constitute misconduct in
part because they violate RPC 3.4(e). Jury nullification is defined as
[a] jury's knowing and deliberate rejection of the
evidence or refusal to apply the law either because
the jury wants to send a message about some
social issue that is larger than the case itself or
because the result dictated by law is contrary to
the jury's sense of justice, morality, or fairness.
Lioce, 124 Nev. at 20, 174 P.3d at 982-83 (alteration in original) (quoting
Black's Law Dictionary 875 (8th ed. 2004)). An attorney making an
attempt at jury nullification violates RPC 3.4(e) in two ways: (1) the
attorney is either alluding to a matter that is irrelevant given the law or
unsupported by admissible evidence given the facts; and (2) whether
explicit or implicit, the attorney is inherently asserting his or her opinion
as to the justness of a cause.
In support of their jury nullification argument, the
homeowners rely in part on D.R. Holton's counsel's statement during
closing arguments that, "fiff you want to send a message to the
homeowners that their houses are safe, tell them, 'I sat for 12 weeks; I
listened to everything; your house is safe." In Lioce, this court concluded
that the attorney made a jury nullification argument when he encouraged
the jury to find in the defendants' favor regardless of the evidence to send
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the message that lawsuits like the case at issue are a waste of taxpayers'
money and jurors' time. Lioce, 124 Nev. at 21, 174 P.3d at 983. In other
words, the attorney encouraged the jurors to make their decision based on
something other than the law and the evidence. See id. In contrast to
Lioce, D.R. Horton's counsel did not urge the jury to reject the evidence or
the law when making this statement. Instead, D.R. Horton's counsel
asked the jury to find that D.R. Horton was not liable based on the
evidence presented. Thus, regardless of D.R. Horton's counsel's use of the
phrase "send a message," counsel was not improperly encouraging jury
nullification, and this argument does not provide a basis for reversing the
district court's decision denying the homeowners' motion for a new trial.
Finally, the homeowners argue that the cumulative effect of
D.R. Horton's counsel's misconduct justifies a new trial. To obtain a new
trial based on the cumulative effect of attorney misconduct, the appealing
party "must demonstrate that no other reasonable explanation for the
verdict exists." Grosjean v. Imperial Palace, Inc., 125 Nev. 349, 365, 212
P.3d 1068, 1079 (2009). In evaluating whether this has been
demonstrated, we "look at the scope, nature, and quantity of misconduct
as indicators of the verdict's reliability." Id. Grounds for reversing a
district court's decision denying a new trial under the plain error standard
will generally require multiple severe instances of attorney misconduct as
determined by their context. See, e.g., Lioce, 124 Nev. at 8, 24, 174 P.3d at
974-75, 985 (upholding a district court's granting of a motion for a new
trial where the attorney's misconduct included multiple improper
attempts at jury nullification and repeated egregious and inappropriate
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comments during closing arguments). 4 Considering the homeowners'
arguments as a whole, we conclude that they fail to meet Nevada's
standards for reversing a district court's denial of a motion for a new trial.
Accordingly, we affirm the district court's denial of the homeowners'
motion for a new trial.
IL The district court abused its discretion in refusing to issue sanctions
pursuant to NRS 17.115 and NRCP 68 and in failing to apportion
those sanctions among the homeowners
In its order on the issue of costs and attorney fees, the district
court determined that D.R. Horton's individual offers of judgment were
valid pursuant to NRS 17.115 and NRCP 68. The district court also found
that the valid offers of judgment were rejected by the 39 homeowners
involved and that none of them obtained a jury verdict higher than his or
her respective offer of judgment. Based on these findings, the district
court awarded D.R. Horton post-offer costs.
Immediately following this award, the district court stated
that neither the homeowners nor D.R. Horton did or could allocate any
costs or attorney fees, seemingly disposing of the issues once and for all.
After making this statement, the district court revived the issue of D.R.
Horton's attorney fees by conducting a Beattie analysis and concluding
4See also Fineman v. Armstrong World Indus., Inc., 774 F. Supp.
266, 269-76 (D. N.J. 1991) affd, 980 F.2d 171 (3d Cir. 1992) (granting a
new trial where attorney misconduct included (1) pervasive and flagrant
appeals to speculation, sympathy, outrage, and revenge from the jury; (2)
repeated expressions of opinion as to the merits, credibility of witnesses,
and culpability of defendant; and (3) repeated disparaging attacks on
opposing counsel)
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that D.R. Horton was not entitled to attorney fees under NRS 17.115 and
NRCP 68. Beattie v. Thomas, 99 Nev. 579, 588-89, 668 P.2d 268, 274
(1983). The district court also determined that D.R. Horton was not
entitled to attorney fees pursuant to NRS 18.010. Finally, for the second
time, the district court stated that neither the homeowners nor D.R.
Horton allocated or could allocate costs or attorney fees among the
homeowners in this case, making it impossible for it to award any costs or
attorney fees.
The homeowners claim that D.R. Horton's individual offers of
judgment were invalid, preventing D.R. Horton from receiving costs under
NRS 17.115 and NRCP 68. Conversely, the homeowners contend that
they are entitled to costs pursuant to NRS 40.650. In response, D.R.
Horton argues that it is entitled to costs and attorney fees under NRCP 68
and NRS 17.115 because the offers of judgment were valid, and that for
the same reason, the homeowners are precluded from recovering either
costs or attorney fees after they rejected the valid offers. Additionally,
D.R. Horton asserts that the homeowners cannot recover costs because
they failed to file the required memorandum of costs under NRS 18.110(1).
D.R. Horton alternatively maintains that it is the prevailing party entitled
to costs and attorney fees under NRS 18.020. The homeowners reply that
D.R. Horton was not a prevailing party and therefore cannot recover
under NRS 18.020.
A. Sanctions
This court generally reviews a district court's decision
awarding or denying costs or attorney fees for an abuse of discretion. See
Miller v. Jones, 114 Nev. 1291, 1300, 970 P.2d 571, 577 (1998). "[Where a
trial court exercises its discretion in clear disregard of the guiding legal
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principles," it "may constitute an abuse of discretion." Bergmann v. Boyce,
109 Nev. 670, 674, 856 P.2d 560, 563 (1993).
Because we determine that the district court's order was
unclear and erroneous, we offer the following guidance. In a construction
defect action, the claimant generally may only recover attorney fees and
specified costs that are proximately caused by a construction defect. See
NRS 40.655(1). Alternatively, "the court may make an allowance of
[attorney] fees to a prevailing party." NRS 18.010(2). And "[c]osts must
be allowed. . . to the prevailing party against any adverse party against
whom judgment is rendered . . . Mu an action for the recovery of money or
damages, where the plaintiff seeks to recover more than $2,500." NRS
18.020(3).
However, "NRS 40.655 does not preclude application of the
penalty provisions of NRCP 68 and NRS 17.115." Albois v. Horizon
Communities, Inc., 122 Nev. 409, 418, 132 P.3d 1022, 1028 (2006).
Similarly, NRS 18.010 and 18.020 do not preclude the application of the
penalty provisions of NRCP 68 and NRS 17.115. See id. Thus, when an
offeree rejects a valid offer and does not obtain a more favorable judgment,
NRS 17.115(4)(a) and (b) and NRCP 68(0(1) preclude the offeree from
recovering any costs, attorney fees, or interest for the period after the
service of the offer and before the judgment. In such a situation, the
district court must order the offeree to pay the post-offer costs incurred by
the party who made the offer. 5 See NRS 17.115(4)(c); NRCP 68(0(2).
5AlthoughNRCP 68(0(2) requires an award of "post-offer costs" and
NRS 17.115(4)(c) requires an award of "taxable costs," we follow our
precedent and harmonize these seemingly conflicting provisions to mean
continued on next page . . .
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Additionally, the district court may order the offeree to pay the offeror's
reasonable attorney fees pursuant to NRS 17.115(4)(d)(3) and I\TRCP
68(f)(2).
In determining whether to award attorney fees in the offer of
judgment context, a district court must consider and weigh the following
factors:
(1) whether the plaintiffs claim was brought in
good faith; (2) whether the defendanifs] offer of
judgment was reasonable and in good faith in both
its timing and amount; (3) whether the plaintiffs
decision to reject the offer and proceed to trial was
grossly unreasonable or in bad faith; and (4)
whether the fees sought by the offeror are
reasonable and justified in amount.
Beattie, 99 Nev. at 588-89, 668 P.2d at 274. In considering the fourth
Beattie factor, whether the fees sought by the offeror are reasonable and
justified in amount, the district court must consider the Brunzell factors.
See Shuette v. Beazer Homes Holdings Corp., 121 Nev. 837, 864-65, 124
P.3d 530, 548-49(2005). The Brunzell factors include:
(1) the qualities of the advocate: his ability, his
training, education, experience, professional
standing and skill; (2) the character of the work to
be done: its difficulty, its intricacy, its importance,
. continued
"post-offer costs." See McCrary v. Bianco, 122 Nev. 102, 106-07, 131 P.3d
573, 576 (2006) (stating that regarding NRCP 68 and NRS 17.115, "the
court construes the rules in harmony with the statute"); In re Resort at
Summerlin Litig., 122 Nev. 177, 185, 127 P.3d 1076, 1081 (2006)
(determining that "where a general statutory provision and a specific one
cover the same subject matter, the specific provision controls").
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time and skill required, the responsibility imposed
and the prominence and character of the parties
where they affect the importance of the litigation;
(3) the work actually performed by the lawyer: the
skill, time and attention given to the work; (4) the
result: whether the attorney was successful and
what benefits were derived.
Brunzell v. Golden Gate Nat'l Bank, 85 Nev. 345, 349, 455 P.2d 31, 33
(1969).
As a threshold matter for our analysis, we determine that the
district court properly concluded that D.R. Horton's offers of judgment
were valid. Although the homeowners sought costs and attorney fees
under NRS 18.010, 18.020, and 40.655, each of them failed to obtain a
judgment greater than his or her rejected valid offer of judgment.
Accordingly, NRS 17.115 and NRCP 68 preclude those homeowners from
recovering any costs or attorney fees, and we affirm the district court's
denial of costs or attorney fees to the homeowners. 6 See Sengel v. IGT, 116
Nev. 565, 570, 2 P.3d 258, 261 (2000) (affirming a district court's correct
result reached for the wrong reason).
We now consider the district court's order as it relates to D.R.
Horton's motion for costs and attorney fees. At the outset, we note that
the district court was required to award D.R. Horton post-offer costs under
NRS 17.115(4)(c) and NRCP 68(f)(2). Additionally, in considering whether
to award D.R. Horton reasonable attorney fees pursuant to NRS
6 Even
if the homeowners were not precluded from recovering costs
by NRS 17.115 and NRCP 68, they would be for their failure to file a
memorandum of costs pursuant to NRS 18.110(1).
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17.115(4)(d)(3) and NRCP 68(1)(2), the district court properly identified the
Beanie factors. The district court's analysis did not, however, consider the
required Brunzell factors in its Beattie analysis. To the extent that the
district court failed to apply the full, applicable legal analysis, it abused its
discretion. See Beattie, 99 Nev. at 589, 668 P.2d at 274. On remand, the
district court must award D.R. Horton post-offer costs and reconsider its
attorney fees analysis as to D.R. Horton by properly applying the Beattie
and Brunzell factors. 7 Additionally, the district court must follow our
guidance below in determining whether to apportion issued sanctions
among the homeowners or impose the sanctions with joint and several
liability.
B. Apportionment of sanctions issued under NRS 17.115 and
NRCP 68
Although a district court's decision regarding an award of
attorney fees is generally reviewed for an abuse of discretion, where, as
here, the decision implicates a question of law, the appropriate standard of
review is de novo. See Thomas v. City of N. Las Vegas, 122 Nev. 82, 90,
127 P.3d 1057, 1063 (2006). Whether a district court can apportion
sanctions awarded under NRS 17.115 and NRCP 68 is a question of law
that this court has not addressed. In considering this question, we
preliminarily acknowledge that a district court's discretion includes "Mlle
7 The district court correctly ruled that D.R. Horton had no right to
attorney fees under NRS 18.010 because D.R. Horton failed to obtain a
monetary judgment. Smith v. Crown Fin. Servs. of Am., 111 Nev. 277,
285, 890 P.2d 769, 774 (1995) (holding "that the recovery of a money
judgment is a prerequisite to an award of attorney fees pursuant to NRS
18.010(2)(a)").
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power . . . to determine questions to which no strict rule of law is
applicable but which, from their nature, and the circumstances of the case,
are controlled by the personal judgment of the court." Goodman v.
Goodman, 68 Nev. 484, 487, 236 P.2d 305, 306 (1951) (internal quotation
omitted). With this in mind, we hold that when a district court issues
sanctions against multiple offerees pursuant to NRS 17.115 and NRCP 68,
it has and must exercise its discretion to determine whether to apportion
those sanctions among the multiple offerees or impose those sanctions
with joint and several liability.
The Arizona Court of Appeals recently addressed the issue of
whether a trial court was required to consider apportioning sanctions
among multiple offerees in the offer of judgment context. See Flood
Control Dist. of Maricopa Cnty. v. Paloma Inv. Ltd. P'ship, 279 P.3d 1191,
1209-10 (Ariz. Ct. App. 2012). In Maricopa County, the offeror made offers
of judgment to two offerees in the amount of 46 percent and 8 percent of
its total offer to a larger group of offerees. Id. at 1209. Because the two
offerees failed to obtain a judgment greater than their respective offers,
Arizona's offer of judgment rule permitted sanctions. Id. at 1208-10. The
two offerees argued that their share of any sanction should be proportional
to their percentage of the allocated offer of judgment. Id. at 1209. The
trial court disagreed. Id. In reviewing the issue, the appellate court in
Maricopa County recognized that Arizona's offer of judgment rule did not
require or prohibit the apportionment of sanctions between offerees. See
Id. Based on this finding, the court reversed and remanded the case so
that the trial court could exercise its discretion to determine whether
sanctions should be apportioned based on the individual allocated offers of
judgment. Id. at 1210.
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We note that similar to Arizona's rule, our offer of judgment
rule does not speak to apportionment based on allocated offers of judgment
among multiple offerees. See NRS 17.115; NR,CP 68. Like the Maricopa
County court, we conclude that the decision of whether to apportion
sanctions under NRS 17.115 and NRCP 68 among multiple offerees or to
impose joint and several liability falls within the purview of the district
court's discretion based on the circumstances before it. In exercising this
discretion, the district court should consider factors, including but not
limited to: (1) whether different offerees raise distinct issues justifying
segregating the costs and attorney fees associated with the litigation; and
(2) in the case of a prevailing party, whether the party entitled to costs
and/or attorney fees would otherwise not likely be able to recover a
substantial portion of his or her judgment. Concord Boat Corp. v.
Brunswick Corp., 309 F.3d 494, 497 (8th Cir. 2002). 8 We emphasize that
these two factors are not exhaustive and that the district court can and
should consider other relevant factors where appropriate. Having
established that the district court must exercise its discretion to determine
whether to apportion sanctions or impose them jointly and severally, we
8 Seealso White v. Sundstrand Corp., 256 F.3d 580, 585-86 (7th Cir.
2001) (holding eight class representatives jointly and severally liable for
costs where the other class members were not given notice and
opportunity to opt out of the case); Walker v. U.S. Dep't of Housing and
Urban Dev., 99 F.3d 761 (5th Cir. 1996) (upholding a district court's
imposition of joint and several liability of attorney fees where the parties
had a joint legal team and shared witnesses).
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conclude that the district court abused its discretion by failing to make
such a determination in this case.
Additionally, we take this opportunity to hold that when
sanctions are issued against multiple homeowner offerees pursuant to
NRS 17.115 and NRCP 68 in a construction defect action, a district court
abuses its discretion by imposing those sanctions jointly and severally
against the homeowners. When an individual brings a construction defect
action, litigation costs will often exceed the recoverable amount for the
defects in that individual's home. While NRS 40.655 permits an award of
reasonable attorney fees proximately caused by a construction defect, it
does not guarantee it. See NRS 40.655(1)(a). Thus, absent egregiously
costly defects, a homeowner will be chilled from bringing an individual
lawsuit to exercise his or her right to be compensated for less costly
defects. Based on this kind of cost-benefit analysis, construction defect
actions tend to be brought in groups by multiple homeowners from the
same community.
One of the primary purposes of our construction defect
statutory scheme is "to protect the rights of homebuyers by providing a
process to hold contractors liable for defective original construction or
alterations." Westpark Owners' Ass'n v. Eighth Judicial Dist. Court, 123
Nev. 349, 359, 167 P.3d 421, 428 (2007). Our analysis has shown that
homeowners already face much uncertainty in bringing individual
construction defect actions, placing great importance on preserving the
reasonableness of bringing a group lawsuit for construction defects. By
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requiring the apportionment of sanctions under NRS 17.115 and NRCP 68
in this context, we are seeking to ensure that group homeowner
construction defect actions will not be chilled by the threat of crippling
joint and several sanctions. We also note that apportionment is logical
and feasible in these circumstances because each home has distinctive
defects and juries issue individual homeowner verdicts. Accordingly, we
determine that on remand the district court must apportion sanctions
issued against the homeowners based on their individual offers of
judgment.
Based on the foregoing analysis, we affirm the district court's
order denying the homeowners' motion for a new trial, but we reverse the
district court's order regarding the issuance of sanctions and remand the
matter to the district court for further proceedings consistent with this
opinion.
J.
C.J.
Gibbons A
rietA , J.
Pickering
J.
Hai-des:0—
)11
Saitta
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