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LasVegasBusinessPress-Dueling Over Defects - Lawyers line up to go after developer

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					Dueling
Over
Defects
­
Lawyers
line
up
to
go
after
developer



Ken
Ward,
Las
Vegas
Business
Press



April
13­19,
1998
‐
A
new
wave
of
litigation
is
crashing
into
Southern
Nevada.
Following

the
housing
boom
from
California
to
the
Silver
State,
lawyers
specializing
in
home
defect

cases
are
setting
up
shop
in
Las
Vegas.



Their
goal,
as
one
attorney
bluntly
puts
it:
"To
bring
developers
and
insurance
companies

to
their
knees."



Like
personal
injury
lawyers,
these
attorneys
work
on
contingency.
They
sign
up

homeowners
who
have
been
frustrated
in
their
efforts
to
get
builders
to
repair
structural

and
mechanical
problems.
Disputes
range
from
minor
complaints
over
cracked
stucco
to

multimillion‐dollar
claims
involving
soil
subsidence
and
faulty
foundations.



To
avoid
logjams
in
court,
the
Legislature
established
a
pretrial
arbitration
program.



"Builders
found
they
were
being
sued
without
being
given
a
chance
to
correct
the

problem,"
said
Jim
Wadhams,
a
local
attorney
who
represents
a
number
of
home

contractors.



But
plaintiffs'
attorneys
such
as
Thomas
Miller
say
the
mediation
process
has
its
own
flaws.

He
says
it
does
not
allow
sufficient
time
to
gather
the
necessary
facts
in
cases
that
can

become
complicated
and
contentious.



Furthermore,
he
notes
that
insurance
companies
will
not
consider
paying
claims
unless
a

suit
is
formally
filed
in
court.



"The
bill
was
a
quick
fix,
knee‐jerk
reaction
to
what
(builders)
knew
would
be
a
tidal
wave

of
complaints,"
Miller
said.



If
California's
experience
is
any
guide,
the
results
may
be
disappointing
to
developers.
Only

5
percent
of
the
cases
are
settled
through
mediation
there.



The
crux
of
home
defect
disputes
comes
down
to
two
questions:
"What
is
specific?
and

"What
is
a
defect?"
Aside
from
obvious
and
egregious
problems,
builders
say
there
is
a

large
gray
area.
Concerns
over
"chipped
tile"
may
be
too
generic
to
be
identified.
Hairline

stucco
cracks
are
inevitable
in
a
climate
that
has
80‐degree
temperature
swings.
And

reasonable
people
can
disagree
on
whether
mismatched
paint
qualifies
as
a
"defect."



Particularly
vulnerable
targets
are
condominium
and
town
home
communities,
where

homeowner
associations
representing
hundreds
of
owners
can
lump
all
units
into
what

amounts
to
a
class
action.
Complaints
range
from
sprinklers
that
spray
on
walls
to
ill‐fitting

doors
and
poor
air
conditioning.



Wadhams,
and
even
some
homeowners,
have
likened
the
associations
to
"little

dictatorships."
But
Miller
says
these
rapidly
growing
community
organizations
are
just

standing
up
for
the
consumer.
"Property
managers
are
better
educated
these
days.
They

know
their
rights,"
says
Miller,
who
has
taught
consumer
law
classes
at
UNLV.



To
press
their
cases,
plaintiffs'
attorneys
hire
firms
known
as
destructive
testing
companies

to
take
housing
units
apart
piece
by
piece.



For
example,
they
will
measure
the
distance
between
studs
in
walls.
Any
deviation
from
the

building
plans
is
added
to
the
complaint.
Once
one
unit
has
been
analyzed,
lawyers
file
a

lawsuit
covering
all
dwellings
in
the
community.



Defect
cases
in
California
have
typically
been
settled
for
$20,000
to
$40,000
per
unit.

Locally,
no
cases
have
been
decided
and,
thus,
no
damages
have
been
awarded.
But

builders
maintain
that
defect
attorneys
are
overreaching
when
they
try
to
extend
their

claims
from
association‐controlled
common
areas
into
individual
units.



Builders
also
warn
that
homeowners,
even
if
they
prevail
in
court,
stand
to
lose.
Defects,
no

matter
how
minor,
must
be
disclosed
to
potential
buyers.
But
as
long
as
insurers
won't

open
their
wallets
without
a
lawsuit,
most
cases
seem
destined
for
court.
Observers
of
the

home‐defect
field
predict
that
the
20
or
30
cases
currently
winding
their
way
through
the

system
could
triple
in
the
next
year.



The
construction
industry
may
ask
the
1999
Legislature
to
tweak
the
mediation
law
to

include
a
couple
of
builder‐friendly
provisions.



The
first
would
require
builders
to
pay
only
for
the
loss
of
fair
market
value
instead
of

actual
repair
costs.
While
costs
of
repair
are
usually
clear,
fair
market
value
is
subject
to

widely
varying
interpretations.



The
second
would
shorten
the
term
of
"latent
defects."
Currently,
state
law
says
latent

defects
are
covered
for
eight
years
and
known
defects
for
10.
"They
might
want
to
cut
this

to
two
and
four
years,"
Miller
speculates.




				
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