by Joe Wheeler

Forced to pay higher and higher settlements in construction defect cases, Nevada’s subcontractors announced legislation that would give them a chance to perform repairs.

The proposed legislation seeks to address lack of notification that leaves a subcontractor unaware of complaints that later lead to a lawsuit. The bill calls for subs to be informed about such complaints in a timely matter, and gives them an opportunity to work directly with the homeowner to rectify concerns with their work.

Attorney R. Scott Rasmussen introduced the provisions of the bill, and fielded questions from the roomful of contractors seeking relief from lawsuits which can, in many cases, be avoided by simple repairs.

The main provisions are the right to cure defects; timely notification of a lawsuit; the licensing of experts; the right of a contractor to choose his own attorney; and the removal of what is called "preferential trial setting" for construction defect cases.

The new law also seeks to define the terms ‘subcontractor,’ ‘supplier,’ and ‘design professional’ throughout Chapter 40, the area of the Nevada Revised Statutes which address construction defects.

Gifts or money paid to property managers would be restricted. Rasmussen said that plaintiff’s lawyers have given money and gifts to property managers in order to get before a homeowner’s association board of directors to "pitch" a lawsuit. In many cases, few or no actual complaints exist and the legal process is begun in hope of monetary gain.

The NSA’s Proposed Legislation Highlights:

The Right to Repair

Perhaps the most vital part of the proposed law is identification of subcontractors to homeowners and the right of a subcontractor to effect repairs. The "right to repair" provision is one called for by the subcontractors, who have long said that most defect lawsuits involve matters which could, and should, be handled through the repair process.

According to Rasmussen, the NSA’s bill would mandate that the homeowner be informed which subcontractors performed work on the property, and allow the homeowner to talk directly to those contractors when seeking repairs or customer service.

"Builders have customer service departments," Rasmussen said. "Sometimes they call the subs, sometimes they don’t. This way, the homeowner can call the subcontractor directly instead of calling a lawyer." The new law would require subs to offer a one year warranty on all repair work performed. "Whose power are you taking away?" Rasmussen said. "You’re taking away the attorney’s power. You’re eliminating me."

Expert Must be Licensed

One of the most vehement complaints from contractors concerns "expert" testimony about construction from individuals with little or no knowledge of Nevada code or practices. The bill requires that all experts who would offer testimony in depositions, affidavits or court be licensed in the speciality trade in which they testify.

Right to Independent Counsel

Contractors are defended in defect cases by their insurance carriers. The insurance company has long held that since they are the entity paying the claim, they have the obligation and right to offer a defense and make whatever settlement is best. The proposed legislation would demand that in construction defect cases, the contractor has the right to chose his own attorney at the insurance company’s expense.

Time Restrictions

The builder or general contractor initially named in a lawsuit must bring the subcontractors into the suit within 60 days. According to Rasmussen, the need for this provision comes out of cases in which a builder or developer was named in a suit and failed to bring in the subcontractors until years later at which time adequate discovery and the ability to even defend against the charges was impossible.

The provision recognizes that sometimes there are legitimate reasons for delay, and allows for such conditions.

No Preferential Trial Setting

The legislation would omit statutory language allowing homeowners to ask the district court for a trial date 45 days after the cut-off for discovery as determined by the special master. This would allow the court to set a trial date according to it’s calender, and give preference to those cases which deserve it.

"This will be a fight," Rasmussen said. "The judges hate this preferential trial setting for these cases. They report bumping cases for personal injury, cases where people have been really hurt, for these construction defect cases."

Rasmussen said that the trial lawyers use the preferential trial setting to effectively deny discovery of the true extent and nature of the properties involved in litigation

Other Important Provisions

Defines the terms ‘subcontractor,’ ‘supplier,’ and ‘design professional;’

Identifies to the homeowner the subcontractors who performed the work;

Provides a one-year warranty from the subcontractor for any repair work performed;

Restricts gifts or money to property managers.

From The Construction Zone: February 2001