Arizona Supreme Court Rules on Contract Provisions Capping Damages

Professional service contracts often include provisions that limit the service providers’ liability to the amount received under the contract.  In a decision earlier this year, the Arizona Court of Appeals ruled that, under the Arizona constitution, the decision whether and how to enforce such provisions must be made by the jury, rather than the judge.  1800 Ocotillo, LLC v. The WLB Group, Inc., No. 1 CA-CV 07-0037. In reaching this conclusion, the Court of Appeals analogized the provision to the defense of “assumption of risk,” which, under the Arizona Constitution, must be submitted to the jury.Fennemore Craig addressed this decision in a litigation update on February 25, 2008.  In that update we noted that, “[i]t will be challenging for defendants, seeking to rely upon such provisions, to persuade juries to apply them in situations where the injured party’s damages greatly exceed the limit in the contract.”

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Posted by Christopher L. Callahan at 12:08 PM | Email Post | 0 comments
Categories: Construction

Bovis Strikes Back - Nevada Supreme Court Takes Mulligan On Pay-if-Paid

In June, the Nevada Supreme Court released its opinion in Bovis v. Bullock, 124 Nev. Adv. Op. 39, 185 P.3d 1055 (June 2008).  See this blog post on the case for details of the facts.  In the Court's June opinion, it held that pay-if-pay provisions in subcontract agreements violate Nevada public policy.  Although the subcontract at issue was entered into before the 2001 amendments to NRS Chapter 624, the Court declared in Footnote 33 that the prompt payment sections included in the 2001 amendments render pay-if-paid provisions unenforceable for contracts entered into after the amendments.

Now, the Supreme Cout has withdrawan its June opinion and replaced it with Bovis v. Bullock, 124 Nev. Adv. Op. 92 (Oct. 30, 2008). 

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Posted by Anthony Golden at 4:02 PM | Email Post | 0 comments
Categories: Construction | Lien | Nevada | Pay-if-Paid | Pay-when-Paid

Is a Lien Claimant Entitled to Post-Judgment Attorney Fees?

In Carl B. Barney v. Mt. Rose Heating & Air Conditioning, 124 Nev. Adv. Op. 71 (Sept. 18, 2008), the Nevada Supreme Court addressed, among other things: (1) whether NRS 108.237(1), which allows for recovery of attorney’s fees in a mechanic’s lien action, covers all fees incurred to enforce the mechanic’s lien, including those post-judgment attorney fees incidental to the lien’s enforcement through foreclosure; and (2) whether the district court erred in denying a post-judgment motion to enter satisfaction of the judgment because not all of the attorney fees were paid.  Carl B. Barney (“Barney”) contracted with Reno Construction, Inc. (“RCI”) to renovate his house.  RCI subcontracted with Mt. Rose Heating & Air Conditioning (“Mt. Rose”) to provide equipment and services as part of the renovations.  Barney refused to pay for the work, which he determined was defective, and RCI and Mt. Rose filed mechanic’s liens against the property.  Both RCI and Mt. Rose obtained judgments and decrees of foreclosure against Barney.  Mt. Rose, prior to any foreclosure sale, garnished funds Barney held in a bank, and attempted to execute upon Barney’s personal property.  Barney filed and won a motion to exempt his bank account from execution and to quash the garnishment.  Mt. Rose sought supplemental attorney fees and costs (“First Mt. Rose Motion”); the court granted their request.  Later, Mt. Rose filed a supplemental motion (“Second Mt. Rose Motion”), seeking fees for post-judgment matters, including the judgment’s execution, the garnishment, and the release of Barney’s bank funds.

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Posted by Jeffrey Steffen at 12:31 PM | Email Post | 0 comments
Categories: Construction | Lien | Nevada

Nevada Supreme Court Clarifies its Definition of a "New Residence" for NRS Chapter 40

In ANSE, Inc., d/b/a Nevada State Plastering v. The Eighth Judicial District Court, 124 Nev. Adv. Op. 74 (Sept. 25, 2008), the Nevada Supreme Court clarified whether their definition of a “new residence”, as decided in Westpark Owners’ Ass’n v. District Court (123 Nev. ___, 167 P.3d 421 (2007); see blog post from June 27, 2008), precluded a homeowner who is not the home’s first purchaser from seeking remedies available under NRS Chapter 40 for constructional defects.  In Westpark, the Court interpreted “new residence” as a product of original construction that has been unoccupied as a dwelling from the completion its construction until its sale.  In this case, approximately 700 of the residences at issue in the constructional defect case were occupied as dwellings before the residences’ subsequent owners obtained title to the homes.  Relying on Westpark, petitioners sought summary judgment as to their NRS Chapter 40 liability on claims related to those residences.

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Posted by Jeffrey Steffen at 10:52 AM | Email Post | 0 comments
Categories: New Residence | NRS Chapter 40 | Nevada

Contractor's License is Intangible Personal Property that is Subject to a Claim for Conversion

In M.C. Multi-Family Dev. v. Crestdale Assoc., 124 Nev. Adv. Op. No. 77 (Oct. 2, 2008), the Nevada Supreme Court concluded that a contractor's license is the personal property of the entity or individual named on the license.  Therefore, it is subject to a claim of conversion if another entity or individual exercises "wrongful dominion" over the license.  The qualifying employee of Walter Homes, Ltd. used Walter Homes' contractor's license to develop real property under a separate company, Crestdale Associates, Ltd., without the permission of the majority interest owners of Walter Homes.  During trial, after the plaintiff's case in chief, the district court entered a directed verdict against the plaintiff's conversion claim.  The district court found that Crestdale Associates had not "taken" the license.

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Posted by Anthony Golden at 7:54 AM | Email Post | 0 comments
Categories: Construction | Nevada

Court Holds Discretionary Immunity Protects Governmental Entity from Tort Liability in Accepting or Rejecting Bids for Public Works Projects

Contractor Liability Under Implied Warranties in Residential Construction

Contractors Must use E-Verify to Verify Workers Employment Eligibility for all Future Federal Contracts

Nevada Supreme Court Decides Enforceability of Contractual Lien Waiver Provisions