Building toward a solution

Jennifer Shubinski

Monday, Nov. 7, 2005 | 8:17 a.m.

Each day Gary Sturm, president of GMS Concrete, wonders how much longer he can hang on.

Sturm hopes to keep the second-generation family business going for his grown children and eventually their children.

But it continues to be a struggle as insurance premiums rise.

For Sturm they have increased almost 500 percent over the past couple of years, largely the result of construction defect cases that continue to be the bane of Sturm and the construction industry.

"I keep asking myself, can I scrap it out for another 10, 15 years or am I going to be gone next year?" Sturm said.

When the so-called "Right to Repair" law was passed by the Nevada Legislature in 2003 it was hailed as the key to stopping the tide of construction defect laws that many said was slowly killing the industry.

But two years since that law was passed nothing has changed, many in the construction industry said.

"SB (Senate Bill) 241 was a good idea in theory, but it has been unsuccessful in reality," Cindy Nevin, executive director of the Nevada Subcontractors Association (NSA), said at the group's annual luncheon this week.

If anything, construction defect cases haven't decreased since the Right to Repair law was passed.

In 2000 -- three years before the law was passed -- 52 residential and commercial construction defect cases were filed. In 2001 the number of new cases surged to 69, but by 2003 they receded slightly to 51.

But since 2003, 176 new construction defect cases have been filed, 61 of them through Oct. 31 of this year.

"We left ourselves open," said Sturm, president of the NSA for 2005-2006. "The laws that have come into play have given trial lawyers the opportunity to make a lot of money and it is destroying our industry."

By design, the Right to Repair law was never meant to stop lawsuits from being filed. Put simply, it was supposed to give contractors the right to notification and the chance to repair an alleged problem before a lawsuit is filed.

"Our views on the Right to Repair is that it works great in one or two houses, but it doesn't work so well in a subdivision of 500 homes," said Judge Allan Earl, a speaker at the association's luncheon. Earl is one of three Clark County judges that hear construction defect cases.

Even plaintiff's attorneys agree that the law has been a bust.

"I think some changes are needed and the law is not working," said Troy Isaacson, a lawyer at the firm of Robert C. Maddox and Associates.

From a plaintiff's attorney standpoint the law doesn't work because lawsuits still must be filed to get homes fixed.

"I think there needs to be more teeth in the law, it needs to specify to a greater degree what repairs should be done," Isaacson said. "The law gives contractors and subcontractors full discretion and they typically don't make full repairs and repairs are made without input from the homeowner."

Steve Hill, president of Silver State Materials Corp., who led the charge in 2003 to get a law crafted and passed, said he is disappointed that the Right to Repair law hasn't worked.

"The last thing we said at the table is we are going to have to see what happens in the field and in the courts to see if it works and we've found out for the most part it really doesn't," he said.

It is certain the construction industry is gearing up for the 2007 Legislature and is looking to make key changes in the law.

What exactly those changes will be is yet to be determined. Having a third-party mediator whose findings will hold up in court is certain to be something the construction industry will pursue, industry watchers said.

Currently the law allows for homeowners and/or contractors to seek help from the Nevada State Contractors Board, but any rulings made are not enforceable or admissible in court.

And changes in the type of housing built in the Las Vegas Valley -- namely projects that mix residential and commercial -- have created an entire set of new questions and problems that must be addressed.

"Everybody realizes there is a problem here. What to do about it and how we go about doing it, there are different opinions," Hill said.