American West sues LV homeowners over defect claims

Published Tuesday, June 2, 2009 | 11:04 a.m.

Updated Tuesday, June 2, 2009 | 5:45 p.m.

Homeowners allege construction defects in lawsuits (5-20-09)
Del Webb responds to defect suit, says inspectors misled (5-12-09)

American West says on its Web site that American West has been providing homes for the families of Southern Nevadans since 1984.

But in a newly filed lawsuit against 45 homeowners, American West Homes Inc. says that since Jan. 29, 2004, it has no longer existed as a corporation and therefore should not have to deal with construction defect claims filed against it since 2008 by those homeowners.

American West Homes Inc. sued the homeowners in the Classics Development last week in Clark County District Court, claiming they have been improperly asserting defect claims against American West and asking the court for a declaration that it has no obligation to respond to those claims or otherwise participate in the construction defect resolution process spelled out in Nevada law.

The homes at issue are in northwest Las Vegas in the area of Alexander Road and Durango Drive.

American West says that in 2008 it started receiving notices alleging defects in the design, construction, or both, of the homes. These notices were not filed within the two-year period the homeowners were allowed to assert such claims, the lawsuit against the homeowners says.

The claims also failed to comply with a state law requiring the homeowners to detail the alleged defects or damages to each home and when the damage or injury to each home was first noticed, the lawsuit says.

American West, headed by President Larry Canarelli, continues to build homes through his American West Development Inc. company.

Builder Magazine's 2008 list of the nation's largest homebuilders listed American West Development as tied at No. 79, down from No. 48 in 2007. The magazine said American West Development had 383 home closings in 2008 and revenue of $146 million.

Complicating the corporate ownership issue is that while the old American West Homes Inc. was dissolved, state records show a new one exists. The current American West Homes Inc. is headed by President Mark Dunford, a longtime Canarelli lieutenant. Dunford continues to work for Canarelli at a company called Development Management Inc.

Dunford said Tuesday that he has owned the currently incorporated American West Homes Inc. for several years and uses that company for land investments in Arizona and Utah.

Discussion: 9 comments so far…

By afveteran

6/2/09 at 11:30 a.m.

Suggest removal

Anyone familiar with the pastime grifter trick "bait and switch"?
By DennisMyers

6/2/09 at 1:26 p.m.

Suggest removal

So all they have to do is disincorporate and then they're relieved of all their obligations and liabilities?
By vp

6/2/09 at 4:46 p.m.

Suggest removal

No, that's not all they have to do. The homeowners didn't abide by Nevada law and file their claims within two years. If they changed the name of their company six months after the homes were built, but the owners filed defect claims twelve months after they were built ... the company would still be liable under Nevada law ... even with their new name.

It is not a bait and switch scheme at all. This is the fault of the home owners for not filing the claims in the proper manner as set forth my Nevada law. That's why you purchase a home warranty people. The builder is only liable for two years after construction.
By LasVegasLawyerGal

6/2/09 at 4:50 p.m.

Suggest removal

What's truly goofy about this is that it's not uncommon for the wrong entity to be sued when the same group of defendants do business under multiple corporate entities. Usually, this gets resolved by the aggreived entity filing a motion to dismiss in the action it was named in. Suing the homeowners for having the temerity to complain about construction defects seems to border on an abuse of the legal process, unless there are specific facts which justify such an approach which weren't mentioned in the article.
By rverp

6/2/09 at 5:05 p.m.

Suggest removal

I don't think that the construction defect thing is a Nevada law...I think it is just a corporate warranty. If this was pursuant to a law, all of these lawyers would never had taken the case...
By mcmc_john

6/2/09 at 9:03 p.m.

Suggest removal

American West is usually the first to honor home owners complaints. This actions makes we wonder what claims the homeowners are alleging.

I guess time will tell...
By LV1Team

6/3/09 at 8:51 a.m.

Suggest removal

John your right. They are a very good builder. Have always taken care of the true problems. What they have to do now is protect themselves from the friviolus and unscrupulous whom do not follow the rules. Good for them!!! Maybe they know the law better than the CD Lawyers whom are raping the Homeowners!
By Cindy

6/3/09 at 10:44 a.m.

Suggest removal

Someone wrote, "That's why you purchase a home warranty people." Let me tell you about my experience with a home warranty, and I've confirmed this is a typical response from a warranty co thru my work with a consumer org. First, there is a difference between the policy on a new home and a used home. On new, the builder buys the policy and the buyer typically gets it after closing. The buyer has no option to negotiate the terms of the warranty but in all but a tiny percentage of cases is entirely bound by the warranty co's terms. The builder can be more or less out of the loop then, the real purpose of such warranties. Getting a claim paid by a warranty co is a lot of work and you have to have a great lawyer, or learn how to fight it yourself, (or both!). Warranties sold for used homes--and your home is 'used' if you're living in it, even if you bought it new--are purchased either by the owner, or if it's a sales transaction of a used home, purchased by a seller or real estate agent. Warranties on used homes typically cover appliances, or claim to. On new homes they don't, because the appliances are presumably new wtih their own manufacturer warranties.

That said, they operate similarly. The policy invariably contains many exceptions to coverage, plus an arbitration clause that prevents the home owner from suing anyone over claims. The warranty co usually names who the arbitration firm will be. The potential for bias is great. Go to fairarbitrationnow.org and read their recent report on problems with arbitration and home warranties.

As for the builder operating under different names that's an old trick that's still going on. Dissolve a company and absolve one's self of obligations. Most state's laws are not so simple as having only two years to report defects. For one thing, many serious defects only show up after that amount of time, and laws about when a defect is discovered can change things. No new house should be falling apart in such a short time.

It's also not a new tactic for a builder to sue his customers. Another term for it is often SLAPP lawsuit, (Strategic Lawsuit Against Public Participation). It's intent is to silence and intimidate critics and it's a type of frivolous suit.