Advice on Handling Construction Defect Suits

By Joe Wheeler

From The Construction Zone: August 2000

As the case against J.A. Black Construction continues in district court, there have been a number of association meetings geared to inform contractors about the issue and what they can do to protect themselves from lawsuits.

Scott Rasmussen spoke to the Nevada Subcontractors Association;

Mark Ferrario spoke to the Southern Nevada Home Builders Association;

Scott Canepa and Terry Riedy spoke at a class on construction law.

Rasmussen and Ferrario do defense work, while Canepa and Riedy are the ones suing J.A. Black in the Rock Springs Vista III case.

From remarks made all over the valley come some pretty good advice:

1) Get your own attorney;

2) Do a complete corporate and insurance check-up;

3) Know who the players are.

Rasmussen spoke at the Nevada Subcontractors Association meeting in July, and said that getting your own attorney to represent your interests may save you many thousands of dollars in the long term. He described how out-of-state defense attorneys aren’t familiar enough with Nevada code issues to really fight allegations of defects and prove that the work is sound and within code.

A Nevada lawyer can do that, and even walk the job with you to see for himself what he’ll be defending. It’s absolutely crucial that your lawyer know what work you did and did not do; the defects in question may not be your work at all.

Mark Ferrario told the SNHBA that in the current environment, contractors should do what he called a complete corporate "check-up." In other words, go through your documents and make sure your corporation is sound. Fighting a lawsuit is no time to discover that you forgot to send in a list of officers or have no meeting minutes for the last eight years... have your attorney do a thorough evaluation of your corporate entity.

He recommended doing the same for your insurance, too. Many contractors are faced with escalating premiums and reduced coverage; know your policy. Ferrario said to get with your insurance professional and make sure you’re protected in that area, too.

Perhaps the most telling remarks came from attorneys Scott Canepa and Terry Riedy, who spoke on construction law at a recent class.

Riedy said it’s important to know who the "players" are when litigating a construction defect suit. By that he meant - who’s at the table? He described the players as being the developer, the contractor, the subs, their attorneys and the insurance company attorneys.

That’s quite a list, and Riedy said that the game plan is to pit the other parties against each other and whittle them down. Finger pointing and blaming the other guy is common in defect suits, according to Riedy, as no one wants to accept responsibility.

Canepa and Riedy expressed that their work is justified by bad building practices and by contractors refusing to confront and correct defects when notified.

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