HARP, INDIVIDUALLY; ANDREW
ISENBERG, INDIVIDUALLY; JOHN
AND AURALIE JENSEN,
INDIVIDUALLY; MICHAEL KIDWELL,
INDIVIDUALLY; DON AND DULCIE F.
LILLY, INDIVIDUALLY; ANTOINETE
MARTINEZ, INDIVIDUALLY; DAVID
K. AND CHRISTI MCCLUNG,
INDIVIDUALLY; PAUL D. AND
RHONDA L. MCKENZIE,
INDIVIDUALLY; SILVA M. MENDEZ-
JOVEL, INDIVIDUALLY; NESTOR
ORTIZ, INDIVIDUALLY; ANDREW
PERKINS, INDIVIDUALLY;
GREGORIO RAMIREZ AND MARTHA
AGUIRRE, INDIVIDUALLY; YOLANDA
RAMOS, INDIVIDUALLY; RANDALL
M. AND ANDREA M. ROBINSON,
INDIVIDUALLY; GILBERT J.
RODRIGUEZ, INDIVIDUALLY; MIKE
ROOLEY AND MISTY VALENCIA,
INDIVIDUALLY; DEREK AND BRANDI
RUSSELL, INDIVIDUALLY; JAMES
AND ENRIQUETA S. SERRA,
INDIVIDUALLY; DEAN AND DEBRA
SMITH, INDIVIDUALLY; ELIZABETH
TRUJILLO, INDIVIDUALLY; LUIS R.
VEGA LEMUS, INDIVIDUALLY;
DAMIAN WEBBER, INDIVIDUALLY;
JAMES WINCHELL, INDIVIDUALLY;
CHRISTIANAH A. AKINOLA,
INDIVIDUALLY; IRMA AMARESCO,
INDIVIDUALLY; JOHN BROWNELL,
INDIVIDUALLY; NELIDA E. CHAVEZ
AND NADIA ESQUIVEL,
INDIVIDUALLY; JEFF AND AUDRY
DAVIDSON, INDIVIDUALLY; NATHAN
DUPREE, INDIVIDUALLY; ERIC D.
FROMELIUS AND AMANDA M.
THOMAS, INDIVIDUALLY; PETER
KILONZO, INDIVIDUALLY; GREGORY
AND NANDA KUNDE,
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INDIVIDUALLY; MARTIN R.
LADOUCEUR, INDIVIDUALLY;
CHRISTIAN LAPRAIRIE,
INDIVIDUALLY; JIMMY LOPEZ AND
CATLINA VALDEZ DE L.,
INDIVIDUALLY; JAMES AND
REBECCA MADDUX, INDIVIDUALLY;
JOSEPH AND ANIANDA MCDONALD,
INDIVIDUALLY; ANA LAURA
MENDOZA A., INDIVIDUALLY;
CALVIN AND CRYSTAL MORGAN,
INDIVIDUALLY; ERMINANDO
NAZAIRE AND CLARITA ADLER,
INDIVIDUALLY; VIRGINIA NEILSON,
INDIVIDUALLY; TAMMY
NICKERSON, INDIVIDUALLY;
VIRGINIA OKONVVO, INDIVIDUALLY;
SCOTT AND DARLENE THROWER,
INDIVIDUALLY; REGINALD WALKER,
INDIVIDUALLY; MARK J. AND
CHARLOTTE ANDERSON,
INDIVIDUALLY; YUN AND JEONG
BANK; B. DIETRICK AND SEONG
MCGINNIS, INDIVIDUALLY; JOE AND
SHERI BARAINCA, INDIVIDUALLY;
ANTHONY AND LAURINA BELLUCCI,
INDIVIDUALLY; LORI BERNARDI,
INDIVIDUALLY; BRENT T. AND VICKI
JILL BROOKS, INDIVIDUALLY;
WENCESLAO AND EDITHA
CONCEPCION, INDIVIDUALLY;
ROBERTO CUELLAR AND NANCY E.
STAUFFER, INDIVIDUALLY; LORI
DANIEL, INDIVIDUALLY; FRANK
AND ROXANNE DECARLO,
INDIVIDUALLY; KRISTINA D. GAW,
INDIVIDUALLY; VICTORIA
GHASSEDI-KHOSHKHABAR,
INDIVIDUALLY; EDUARDO AND LUZ
M. GONZALEZ, INDIVIDUALLY; JOEL
AND KELSY GRACE, INDIVIDUALLY;
CHRIS AND CAITLIN HOFMANN,
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INDIVIDUALLY; JAMES AND
CARMEN E. JONES, INDIVIDUALLY;
CURTIS N. AND LESLIE A. LUND,
INDIVIDUALLY; MICHALE P. MIRICH
AND JERILYN HOGEN,
INDIVIDUALLY; ANTONETTE
NIEDLE, INDIVIDUALLY; GARY AND
VICKI PAVONE, INDIVIDUALLY;
SHERRY PEREZ, INDIVIDUALLY;
DOUGLAS W. AND DOLORES A.
PRIHAR, INDIVIDUALLY; MARK
BRANDON AND KATRINA RENE
PRINTUP, INDIVIDUALLY; PATRICIA
T. PUMPHREY, INDIVIDUALLY;
DAVID AND KATRINA RASCHEN,
INDIVIDUALLY; TAI ROSANDER AND
MINDI L. NEUGEBAUER,
INDIVIDUALLY; ROBERT SALVADOR,
INDIVIDUALLY; NEIL STOCCHIO
AND VIRLENE OUANO-STROCCHIO,
INDIVIDUALLY; MYLINH TANG,
INDIVIDUALLY; MARK W. AND
DOTTRIE M. TAYLOR,
INDIVIDUALLY; AND JERRY
WHITNEY, INDIVIDUALLY,
Respondents.
ORDER OF REVERSAL AND REMAND
This is an appeal from a district court order denying a motion
to compel arbitration in a construction defect action. Second Judicial
District Court, Washoe County; Brent T. Adams, Judge.
Respondents owned houses built by appellant Lennar Reno,
LLC From November 2009 to April 2011, respondents served Lennar
with NRS Chapter 40 notices. In November 2011, the parties conducted
an NRS Chapter 40-mandated mediation. On January 4, 2012,
respondents filed their first amended complaint asserting breach of
contract and construction defect causes of action. Lennar answered on
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January 26, 2012. Over the next approximately 23 months, the parties
actively participated in litigation of the case by complying with a special
master's case management order; submitting answers to interrogatories,
repair reports, and expert reports; and participating in several mediation
sessions. In October 2013, the special master amended the case agenda,
which, among other things, recommended a trial date in June 2015. On
November 5, 2013, the district court filed a pretrial order stating general
guidelines regarding pretrial motions, discovery, trial statements, and
jury instructions.
On December 3, 2013, approximately 23 months after
respondents filed their first amended complaint, Lennar moved to compel
arbitration under the house purchase agreements. The district court
denied Lennar's motion. The district court found that Lennar waived its
right to arbitrate by allowing litigation to proceed for nearly two years
before filing a motion to compel, and that this delay prejudiced
respondents. This appeal followed.
We conclude that the district court erred in denying Lennar's
motion to compel arbitration. See Masto v. Second Judicial Dist. Court,
125 Nev. 37, 44, 199 P.3d 828, 832 (2009) ("Whether a dispute arising
under a contract is arbitrable is a matter of contract interpretation, which
is a question of law that we review de novo."); see also Nev. Gold &
Casinos, Inc. v. American Heritage, Inc., 121 Nev. 84, 89, 110 P.3d 481,
484 (2005) (explaining that arbitration waiver is generally a question of
fact, but may be determined as a matter of law when the determination
rests on the legal implications of uncontested facts); see also Tallman v.
Eighth Judicial Dist. Court, 131 Nev., Adv. Op. 71, P.3d (2015)
(noting that interlocutory district court orders denying motions to compel
are appealable pursuant to NRS 38.247).
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Under Nevada Gold, respondents must demonstrate the
following to show that Lennar waived its right to arbitrate: (1) Lennar
knew of its right to arbitrate, (2) Lennar acted inconsistently with that
right, and (3) Lennar prejudiced respondents by its inconsistent acts. 121
Nev. at 90-91, 110 P.3d at 485. To demonstrate prejudice, respondents
must show (1) the parties had used discovery not available in arbitration,
(2) the parties litigated substantial issues on the merits, or (3) compelling
arbitration would require a duplication of efforts. Id. We conclude that
the record supports that respondents satisfied the first two prongs of the
Nevada Gold test. However, the district court erred because Lennar's
delay did not sufficiently prejudice respondents to satisfy the third prong
of Nevada Gold.
Before reaching the prejudice prong, we address Lennar's
argument that it did not act inconsistently with its right to arbitrate, i.e.,
by filing two years later than necessary, because NRS Chapter 40-
mandated pre-litigation procedures did not terminate until an October
2013 mediation. We disagree. NRS 40.647 and 40.680 state that NRS
Chapter 40-mandated pre-litigation procedures end, and litigation begins,
when respondents file a complaint asserting construction defect causes of
action and the district court does not dismiss the complaint for failure to
comply with NRS Chapter 40. This occurred in January 2012. Thus, the
district court correctly concluded that Lennar moved to compel arbitration
two years later than necessary.
We conclude, however, that the district court erred in finding
that this approximate two-year delay prejudiced respondents. In Nevada
Gold, prior to a party moving to compel arbitration, the parties had
already "litigated substantial issues on the merits," which would have had
to be duplicated in arbitration. In this case, the parties only engaged in
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limited discovery, much of which may be used during the arbitration
proceedings. 121 Nev. at 91, 110 P.3d at 485; see also Gonski v. Second
Judicial Dist. Court, 126 Nev. 551, 557, 245 P.3d 1164, 1168 (2010)
("Nevada .. . public policy favors arbitration, and arbitration clauses are
generally enforceable.").
Further, the district court largely based its prejudice finding
on the faulty premise that about 40 percent of respondents would remain
in the district court because Lennar could not compel them to arbitrate.
We conclude, however, that all of the respondents must go to arbitration
because "[u]nder a theory of estoppel, [a] nonsignatory is estopped from
refusing to comply with an arbitration clause when it receives a direct
benefit from a contract containing an arbitration clause." Truck Ins. Exch.
v. Palmer J. Swanson, Inc., 124 Nev. 629, 636, 189 P.3d 656, 661 (2008)
(internal quotations omitted). Here, respondents received a direct benefit
from a contract containing an arbitration clause when they asserted
breach of contract causes of action under said contract. Thus,
nonsignatory respondents are estopped from refusing to comply with the
house purchase agreements' arbitration clauses.' See also Tallman, 131
Nev., Adv. Op. 71, P.3d at (noting that while arbitration
agreements must be in writing, they need not be signed). Accordingly, we
'Additionally, we conclude that the district court's application of the
doctrine of laches was also error and does not warrant denial of Lennar's
motion to compel arbitration.
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ORDER the judgment of the district court REVERSED AND
REMAND this matter to the district court for proceedings consistent with
this order. 2
Saitta
J.
Gibbons
cc: District Judge, Department 6
Debbie Leonard, Settlement Judge
Gordon & Rees, LLP
Shinnick, Ryan & Ransavage P.C.
Washoe District Court Clerk
2We have considered the parties' remaining arguments and conclude
that they are without merit.
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