Las Vegas contractors helped defeat construction-defect proposal

Builders fought hard to reform the state construction defect law during the 2011 Nevada legislative session. So why did Las Vegas contractors, among others, oppose a bill shortening the time allowed for homeowners to sue for compensation for building flaws?

The legislation that the Coalition for Fairness in Construction turned against, Assembly Bill 401, would have cut the time most homeowners have to file a claim because of construction defects from 10 years to six years.

Had the bill passed, Nevada would have the nation's second-shortest statute of repose. But contractors said the reforms didn't go far enough and, worse, made it easier for homeowners to sue.

"Reforms of construction defect attorney fees and expert witness fees are our 'hills to die for,' and AB401 offered no meaningful reforms," said Mandi Lindsay, the Associated General Contractors Las Vegas chapter's director of government affairs.

The coalition made the decision to try to kill AB401, which was introduced by Assembly Speaker John Oceguera, D-North Las Vegas, in hopes of a more favorable bill in 2013.

"Our declining economy has put more pressure on our lawmakers, and the reality is we can't keep going to them and asking for changes and changes," she said. "You have to ask for what you want and not something that will make your position worse.''

SB401 died on a 12-9 vote in the session's closing hours on June 6. All 10 Republican state senators and two Democrats voted against it.

That defeat leaves construction defect attorney Scott Canepa astonished.

"That bill was all for contractors. There was absolutely nothing in it for homeowners," he said. "I am standing here stunned."

Canepa and other defect attorneys "stayed neutral" on the bill, because they believed its passage was critical to funding education in the state. AB401 was seen as a bargaining chip to get Republicans to agree to a budget compromise.

Builders, and their Republican supporters in the Legislature, had fought for tougher reforms, including shortening the statute to file defect claims from 10 years to only three.

"They also wanted to make the statute retroactive to existing homes, and eliminate attorney fees for homeowners," Canepa said.

Sen. Greg Brower, R-Reno, was among those voting against AB401. He echoed the complaints of builders that the Oceguera bill offered little in the way of relief for contractors.

"I think going again in two years was really just the only chance (contractors) had, given the Democratic opposition to real reform," he said.

Rising attorney fees, which must be paid even if a case doesn't reach a courtroom, are killing contractors' livelihoods, the building industry maintained. Buyout fees for subcontractors wrongly included in a lawsuit are generally a minimum of $500 or $1,000, Lindsay added.

AB401 wouldn't have limited legal fees, as builders had wanted. The prevailing party in a construction defects lawsuit would be entitled to attorneys' fees, as current law allows.

Over the past decade, Nevada jury awards against builders have totaled about $1 billion, Lindsay said.

Paul Georgeson, the lawyer representing the Associated General Contractors in Northern Nevada, said language in the proposed law might have ultimately given homeowners more time to claim defects after discovery, because it wouldn't compel due diligence.

Wait until the next session, he said.

"We have been trying for two sessions to get meaningful reform, and we'll try again."

Canepa called the builders' strategy "asinine," but he isn't complaining.

"The statute of limitation of construction defects in Nevada stays the same 10 years," he said. "And I am not looking a gift horse in the mouth. It might bite you."

Contact reporter Valerie Miller at vmiller@lvbusinesspress.com or 702-387-5286.