Building their cases

Thursday, March 9, 2006 | 7:18 a.m.

The fight over home construction defect litigation in Nevada is turning from the courtroom to the Legislature.

More than two months after the Nevada Supreme Court nullified a multimillion-dollar judgment in a North Las Vegas home construction defect case, homeowners' lawyers are lobbying for a law that would strengthen their arsenal in court.

On the other side of the volatile issue, representatives of the home construction industry are gearing up to stop that effort and to push for legislation that would extend them even more legal protection from broad - and potentially expensive - class action lawsuits in defect cases.

"I know it is going to be a big fight," said Assemblyman Bernie Anderson, D-Sparks, chairman of the Judiciary Committee, who said he has been contacted by about a dozen people on both sides of the issue.

"It is going to take a great deal of time in the Legislature to get to the point where we can find a solution."

In its December opinion, the Supreme Court said that except for rare cases, single-family home construction defect suits cannot be lumped together because the damage claims are so diverse. That means that homeowners' lawyers sometimes would have to prove hundreds of cases instead, lengthening the time and cost of trials.

Anderson has asked that the Legislative Counsel Bureau analyze the court's decision, which overturned a verdict that, with interest, had grown to about $16.4 million - the highest in the state's history.

He said the review - and its assessment of the ruling's potential effect on homeowners, contractors and courts - will serve as a starting point for any legislation.

"Until we have an interpretation of what this means in the long run, I am not going to try and figure out the warring parties," Anderson said.

Robert Maddox, a member of the Nevada Trial Lawyers Association who was on the losing end of the Supreme Court case, does not expect his group to seek any legislation permitting class action status for home construction defect cases. Instead, lawyers want legislation allowing them to estimate damages for entire subdivisions by testing only a small percentage of homes.

In its ruling, the Supreme Court said there is "no reasonable basis" for extrapolating damage in instances where only some homes are inspected in developments exhibiting various kinds of damage.

Recent District Court rulings in Las Vegas sided with the Supreme Court and forbade that practice in home defect cases.

"Extrapolation is used in almost every area of the law," Maddox said. "Imagine if police had to test every grain of white powder in a kilogram bag of cocaine. That would be ridiculous."

Home builders have applauded the Supreme Court ruling, arguing that class action suits make it possible for residents whose homes have suffered no damage to receive money - thereby lowering the payments to neighbors whose houses are flawed.

Jim Wadhams, an attorney for the Southern Nevada Home Builders Association and Nevada Subcontractors Association, said he had hoped the court ruling would guide future cases, but that's apparently not going to occur.

"There is way too much money moving in this process because of the use of extrapolation in class action lawsuits," Wadhams said. "It is not surprising that the battle lines are forming on the issue. It is not about getting repairs done. It's about getting money."

Sen. Warren Hardy, R-Las Vegas, president of the Associated Builders and Contractors of Las Vegas, said home builders will fight legislation that could expand extrapolation. The home building industry may push for its own legislation aimed at avoiding lawsuits by focusing on repairs instead, he said.

"I expect it to be a major issue," Hardy said. "I think this Supreme Court decision is troublesome to the trial attorneys, and there will be an effort to resolve it."