Copper Sands Homeowners v. Flamingo 94

130 Nev., Advance Opinion 51
IN THE SUPREME COURT OF THE STATE OF NEVADA

COPPER SANDS HOMEOWNERS No. 59934
ASSOCIATION, INC., A NEVADA
NONPROFIT CORPORATION,
Appellant, HLED
vs.
FLAMINGO 94 LIMITED LIABILITY OCT 0 2 2014
COMPANY, A NEVADA LIMITED
LIABILITY COMPANY; PLASTER
DEVELOPMENT COMPANY, INC., A
NEVADA CORPORATION; AND
INTERSTATE PLUMBING & AIR
CONDITIONING, INC.,
Respondents.

COPPER SANDS HOMEOWNERS No. 60483
ASSOCIATION, INC., A NEVADA
NONPROFIT CORPORATION,
Appellant,
vs.
FLAMINGO 94 LIMITED LIABILITY
COMPANY, A NEVADA LIMITED
LIABILITY COMPANY; PLASTER
DEVELOPMENT COMPANY, INC., A
NEVADA CORPORATION;
INTERSTATE PLUMBING & AIR
CONDITIONING, INC.; REYBURN
LAWN & LANDSCAPE DESIGNERS,
INC.; KFX BUILDING COMPANY, INC.;
EXPERT AIR CONDITIONING &
HEATING, INC.; AEC; NEVADA
GYPSUM FLOORS, INC.; WILLIS
ROOF CONSULTING, INC.; BRADLEY
WINDOW CORPORATION; BRANDON,
LLC, D/B/A FIRST PREMIER
DRYWALL & PAINT; BILL YOUNG'S
MASONRY, INC.; AMERICAN
ASPHALT & GRADING COMPANY;
KUKURIN CONCRETE, INC.;
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 NICHOLS CONSTRUCTION, INC.;
AND CENTRAL VALLEY
INSULATION, INC.,
Respondents.

COPPER SANDS HOMEOWNERS No. 61039
ASSOCIATION, INC., A NEVADA
NONPROFIT CORPORATION,
Appellant,
vs.
FLAMINGO 94 LIMITED LIABILITY
COMPANY, A NEVADA LIMITED
LIABILITY COMPANY; PLASTER
DEVELOPMENT COMPANY, INC., A
NEVADA CORPORATION;
INTERSTATE PLUMBING & AIR
CONDITIONING, INC.; REYBURN
LAWN & LANDSCAPE DESIGNERS,
INC.; KFX BUILDING COMPANY, INC.;
EXPERT AIR CONDITIONING &
HEATING, INC.; AEC; NEVADA
GYPSUM FLOORS, INC.; WILLIS
ROOF CONSULTING, INC.; BRADLEY
WINDOW CORPORATION; BRANDON,
LLC, D/B/A FIRST PREMIER
DRYWALL & PAINT; BILL YOUNG'S
MASONRY, INC.; AMERICAN
ASPHALT & GRADING COMPANY;
KUKURIN CONCRETE, INC.;
NICHOLS CONSTRUCTION, INC.;
AND CENTRAL VALLEY
INSULATION, INC.,
Respondents.

COPPER SANDS HOMEOWNERS No. 61286
ASSOCIATION, INC., A NEVADA
NONPROFIT CORPORATION,
Appellant,
vs.
FLAMINGO 94 LIMITED LIABILITY
COMPANY, A NEVADA LIMITED
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 LIABILITY COMPANY; PLASTER
DEVELOPMENT COMPANY, INC., A
NEVADA CORPORATION;
INTERSTATE PLUMBING & AIR
CONDITIONING, INC.; REYBURN
LAWN & LANDSCAPE DESIGNERS,
INC.; KFX BUILDING COMPANY, INC.;
EXPERT AIR CONDITIONING &
HEATING, INC.; AEC; NEVADA
GYPSUM FLOORS, INC.; WILLIS
ROOF CONSULTING, INC.; BRADLEY
WINDOW CORPORATION; BRANDON,
LLC; FIRST PREMIER DRYWALL &
PAINT; BILL YOUNG'S MASONRY,
INC.; AMERICAN ASPHALT &
GRADING COMPANY; KUKTJRIN
CONCRETE, INC.; NICHOLS
CONSTRUCTION, INC.; AND
CENTRAL VALLEY INSULATION,
INC.,
Respondents.

Consolidated appeals from a district court summary judgment
in a construction defect action, certified as final under NRCP 54(b), and
from post-judgment orders awarding attorney fees and costs. Eighth
Judicial District Court, Clark County; Susan Johnson, Judge.
Affirmed in part, reversed in part, and remanded.

Law Offices of Terry L. Wike and Terry L. Wike and William R. Killip, Jr.,
Las Vegas,
for Appellant.

The Marks Law Group, LLP, and Eileen Mulligan Marks, Las Vegas,
for Respondents Interstate Plumbing & Air Conditioning, Inc.

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 The Marks Law Group, LLP, and Eileen Mulligan Marks, Las Vegas;
Brady, Vorwerck, Ryder & Caspino and Lee J. Grant II, Las Vegas,
for Respondent Reyburn Lawn and Landscape Designers, Inc.

Bauman, Loewe, Witt & Maxwell and Whitney C. Wilcher, Las Vegas;
Brown, Bonn & Friedman and Aaron M. Young, Las Vegas; Lincoln,
Gustafson & Cercos and Nicholas B. Salerno, Shannon G. Splaine, and
James M. Barrington, Las Vegas; Cisneros & Marias and John D.
Augenstein, Las Vegas,
for Respondent Bill Young's Masonry, Inc.

Brady, Vorwerck, Ryder & Caspino and Lee J. Grant II, Las Vegas;
Lincoln, Gustafson & Cercos and Nicholas B. Salerno, Shannon G.
Splaine, and James M. Barrington, Las Vegas,
for Respondent Brandon, LLC.

Brown, Bonn & Friedman, LLP, and Kevin A. Brown and Aaron M. Young,
Las Vegas,
for Respondents KFX Building Company, Inc.; Expert Air Conditioning &
Heating, Inc.; AEC; and Central Valley Insulation, Inc.

Cisneros & Marias and John D. Augenstein, Las Vegas,
for Respondent American Asphalt & Grading Company.

Fredrickson, Mazeika & Grant, LLP, and Tomas V. Mazeika and Matthew
D. Peterdy, Las Vegas,
for Respondent Kukurin Concrete, Inc.

Hansen Rasmussen, LLC, and R. Scott Rasmussen, Las Vegas,
for Respondent Nevada Gypsum Floors, Inc.

Lincoln, Gustafson & Cercos and Nicholas B. Salerno, Shannon G.
Splaine, and James M. Barrington, Las Vegas,
for Respondents Bradley Window Corporation and Willis Roof Consulting,
Inc.

Parker, Nelson & Associates and Theodore Parker, III, and Shana D.
Weir, Las Vegas,
for Respondent Nichols Construction, Inc.

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 Pengilly Robbins and James W. Pengilly and Craig D. Slater, Las Vegas,
for Respondents Flamingo 94 Limited Liability Company and Plaster
Development Company, Inc.

BEFORE HARDESTY, DOUGLAS and CHERRY, JJ.

OPINION

By the Court, DOUGLAS, J.:
Appellant Copper Sands Homeowners Association (the HOA)
brought an action against respondents, developer Flamingo 94, LLC, and
general contractor/sales broker Plaster Development Company, Inc. (the
Developers), alleging several claims for various construction defects
present in the Copper Sands common-interest community. The
Developers impleaded the remaining respondents, subcontractors who had
performed work on the project, into the action as third-party defendants.
The district court eventually dismissed all of the HOA's claims against the
Developers. The district court then awarded the Developers attorney fees
and costs. Additionally, the court awarded the third-party defendants
costs against the HOA pursuant to NRS 18.020.
Here, we examine whether a third-party defendant can
recover costs under NRS 18.020, which mandates an award of costs for the
prevailing party in a case. In resolving this issue, we adopt the Idaho
Court of Appeals' rationale in Bonaparte v. Neff, 773 P.2d 1147 (Idaho Ct.
App. 1989), and determine that when a third-party defendant prevails in
an action and moves for costs pursuant to NRS 18.020, the district court

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 must determine which party (plaintiff or defendant) is adverse to the
third-party defendant and allocate the costs award accordingly.

FACTS

Flamingo 94 and Plaster Development constructed the
Catalina Shores project (later renamed Copper Sands) in April 1997. The
project was used as an apartment complex until Copper Sands Realty,
LLC, purchased it in 2004. Copper Sands Realty converted the
apartments into condominiums and sold each unit
In October 2008, the HOA commenced a suit against the
Developers, asserting six claims, all tied to various construction defects in
the individual units and the community's common elements. The HOA
sought recovery under NRS Chapters 40 and 116. The Developers filed a
third-party complaint to bring the various subcontractors who worked on
the project into the action. The district court eventually dismissed all of
the HOA's claims through numerous summary judgment orders and
awarded the third-party defendants costs under NRS 18.020.
On appeal, the HOA asserts nine issues for this court's review,
but after full consideration, we conclude that only one of these issues
warrants an extended discussion: whether the district court had authority
to award the third-party defendants costs.'

"The district court did not commit reversible error as to any of the
other eight issues the HOA raised on appeal. In particular, we conclude
that the district court correctly determined that the HOA's NRS Chapter
40 and 116 construction defect claims were untimely under NRS 11.203.
And this conclusion renders the HOA's arguments that Chapter 40 applied
to this action and that the district court erred by dismissing the Chapter
116 claims on other grounds moot. Additionally, we conclude that the
HOA failed to demonstrate a genuine issue of material fact as to whether
continued on next page...
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 DISCUSSION
We generally review a court's award of costs for an abuse of
discretion. Bobby Berosini, Ltd. v. PETA, 114 Nev. 1348, 1352, 971 P.201
383, 385 (1998). Questions of law, however, are reviewed de novo. Valley
Elec. Ass'n v. Overfield, 121 Nev. 7, 9, 106 P.3d 1198, 1199 (2005).
Authority to award costs
Under NRS 18.020(3), the prevailing party in an action "where
the plaintiff seeks to recover more than $2,500" is entitled to recover his or
her costs "against any adverse party against whom judgment is rendered."
NRS 18.005 enumerates several allowable costs, also allowing recovery of
"any other reasonable and necessary expense incurred in connection with
the action." The district court retains discretion in determining which
expenses are recoverable costs. Bergmann v. Boyce, 109 Nev. 670, 679,
856 P.2d 560, 565-66 (1993).

...continued
the Developers' willful misconduct caused any of the defects or whether
the Developers had fraudulently concealed any defects. See Wood v.
Safeway, Inc., 121 Nev. 724, 731, 121 P.3d 1026, 1030-31 (2005).
Moreover, the district court correctly determined that the HOA did not
have standing to bring the misrepresentation or fraud claims on the
homeowners' behalf because those claims did not affect the common-
interest community. See NRS 116.3102(1)(d). Further, the district court
also correctly denied the HOA's peremptory challenge, as such challenges
are not permitted with regard to a judge assigned by the chief judge to sit
in a construction defect action. See EDCR 1.65(b). And although the
district court erred in granting the Developers an order to shorten time,
this error does not warrant reversal, as it did not prejudice the HOA. See
Cheek v. FNF Constr., Inc., 112 Nev. 1249, 1251, 924 P.2d 1347, 1349
(1996). Finally, the district court did not abuse its discretion in awarding
the Developers attorney fees and costs. See NRS 18.020; NRCP 68; Wynn
v. Smith, 117 Nev. 6, 13, 16 P.3d 424, 428-29 (2001).

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 The HOA argues that the third-party defendants were not
prevailing parties entitled to costs because they did not affect the case's
outcome. The HOA admits that a third-party defendant may defend itself
against both third-party claims and a plaintiffs claims. But the HOA
maintains that a third-party defendant is entitled to costs under NRS
18.020 only if he or she vigorously contested the plaintiffs claims in a
manner that contributed to the defendant's victory. The HOA contends
that the third-party defendants in this matter did not meet this standard.
This is an issue of first impression in Nevada; thus, we look to
outside jurisdictions for guidance. Other jurisdictions have not
established a formulaic rule; rather, they have examined the record to
determine which party was primarily responsible for spurring the third-
party defendant's costs. See Tejas Dev. Co. v. McGough Bros., 167 F.2d
268, 269 (5th Cir. 1948) (determining that the defendant was liable for the
third-party defendant's costs on appeal because the majority of the third-
party defendant's costs resulted from the third-party complaint); see also
Am. State Bank v. Pace, 124 F.R.D. 641, 650-51 (D. Neb. 1987)
(determining that the plaintiff was responsible for the third-party
defendant's costs because the third-party defendant incurred the costs in
asserting defenses against the plaintiffs claims). In Idaho, the district
court has discretion to determine which party is responsible for a third-
party defendant's costs. Bonaparte v. Neff, 773 P.2d 1147, 1156 (Idaho Ct.
App. 1989). There, the district court must determine which issues are
common to the main and third-party actions to determine which parties
are functionally adverse, and then the court may award the prevailing
party costs and fees relating to those issues. Id. Any award must be

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 proportional "to the third-party defendant's actual and reasonable
participation in litigating the common issues." Id.
In light of NRS 18.020's statutory language allowing costs
against any adverse party and NRCP 14's recognition that third-party
defendants may participate in defending against the plaintiffs claims, we
find the approach the court set forth in Bonaparte persuasive and adopt it
to determine whether a third-party defendant is a prevailing party
entitled to costs under NRS 18.020. When making such a determination,
the district court must determine which party is the third-party
defendant's adversary. See id. at 1155. If the court's judgment on an
issue simultaneously favors the third-party defendant and disfavors the
adverse party, the third-party defendant should be considered a prevailing
party for NRS 18.020's purposes.
Applying the Bonaparte method to this case, we determine
that the district court did not abuse its discretion in determining that the
third-party defendants were prevailing parties and thus entitled to costs
pursuant to NRS 18.020. The HOA and the third-party defendants were
adverse parties because the third-party defendants' liability was
contingent on the HOA's claims against the Developers. The third-party
defendants were the Developers' subcontractors and essentially built the
Copper Sands project; thus, all of the construction defect claims directly
impacted the third-party defendants. Accordingly, the third-party
defendants dedicated a large amount of resources to contest those claims.
Further, the court's dismissal favored the third-party defendants because
the dismissal absolved them of any liability in the action for construction
defects and precluded the BOA from recovering any damages. Under
Bonaparte, the third-party defendants prevailed against the HOA and

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 were entitled to costs they incurred in opposing the HOA's construction
defect claims. However, the amount of costs is still at issue.
Amount of costs
The HOA argues that the district court erred in awarding the
third-party defendants all of their requested costs because some costs were
unnecessary. The HOA maintains that the district court should not have
awarded the third-party defendants any costs incurred after the date the
court dismissed the willful misconduct claims because, at that point, all of
the construction defect claims were dismissed and the Developers no
longer had an indemnity claim against any of the third-party defendants—
as only the misrepresentation and fraud claims, which only related to the
Developers, remained. Thus, the third-party defendants could have
removed themselves from the action, but chose not to do so.
Therefore, further action from the district court is required to
resolve this issue. The district court awarded costs for expenses the third-
party defendants paid after the district court dismissed the willful
misconduct claims. Unfortunately, the record does not reflect whether the
third-party defendants incurred these expenses before or after the
dismissal of the last remaining construction defect claims. Further, if any
of the expenses were incurred after the dismissal of the construction defect
claims, the district court must determine whether the expenses were
connected to the fraud and misrepresentation claims.
Accordingly, we affirm the district court's summary judgment
and post-judgment orders with respect to everything besides the third-
party defendants' costs, reverse the costs award to the third-party

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 defendants, and remand this matter to the district court for further
proceedings consistent with this opinion.

We concur:

ic-L—essat,s
Hardesty

Ckit.
Cherry

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