Below is a summary of what the Court decided on 14 March, a lay opinion on the significance of the Court's action, as well as the Judge's Conclusion of Law that impacts on the homeowners of Sun City Anthem. For the complete text of the court's Fairness Hearing decision, which is remarkably brief, click here. Fairness Hearing Decision.

In a nutshell, the Court brought Pulte under the construction defect provisions of Chapter 40 of the Nevada Revised Statutes and made certain conclusions of law and entered certain orders that agreed with and had been sought by the Class attorneys.

What is Chapter 40?

Chapter 40 of the Nevada Revised Statutes has become a primary tool to resolve construction defect cases in Nevada. The Nevada State Legislature enacted NRS 40.600 to help protect homeowners and in most cases the largest investment of their lives. This law provides guidelines for both the homeowner and the builder regarding how their dispute must proceed. Specifically, it requires that both parties submit the matter to mediation before initiating a lawsuit. The statute further provides that the builder must pay the costs of the mediation. NRS 40.600 also provides that a homeowner can recover damages for costs, attorney fees, costs of repairs, loss of use of the residence during time of repair, among other similar things. To read NRS Chapter 40.600, click here: Chapter 40.600

What did the Court decide?

1. In broad terms, the Court accepted and agreed with all of the arguments that had been raised by the Class attorneys. In so doing, there were no other or pending issues for the Court to address.
2. More specifically, the Court ruled that it has jurisdiction over Pulte's Offer and Release, as well as ruling on the following:
3. Pulte's offer constitutes "an election to repair" under Chapter 40.
4. Pulte's Release is in violation of Chapter 40. In view of the Court's ruling, the Court declared that an election of repair conditioned upon a release of liability is in violation of NRS 40.648.4.
5. Pulte's offer fails to adequately and fairly address the consequences of acceptance, assignment, and/or rejection.
6. Non-acceptance of Pulte's offer within 35 days will not be considered a rejection of their offer.

What did the Court NOT decide?

The Court made no decision on, and there is no reason to conclude that the Court will be called upon to address, the following matters:

• the fact of payment;
• the amount or fairness of the payment;
• the process of effecting a repair by directing homeowners to an independent plumbing and drywall contractor;
• the process for compensating homeowners; or
• the definition of what constitutes a repair.

Under Chapter 40 and in the absence of the General Release, the Class attorneys, as well as individual homeowners, have the option of concluding that Pulte's monetary offer was sufficient or was not sufficient to bring about a repair of the alleged defect. As an example, the Class attorneys may conclude that repair "Y", consisting of (a), (b) and (c), constitutes the proper repair, while repair "Y" may cost more or less than what Pulte has offered.

What is the significance of the Court's ruling?

1. The Court effectively stripped away the obstacles the homeowner faced by the General Release form. Under the General Release, the homeowner had no rights or recourse other than to accept the terms offered by Pulte.
2. By essentially voiding the terms of the General Release, the Court in effect concluded that Pulte is subject to the terms of NRS 40.6472 and the homeowner protections provided therein relating to an election to repair. For your information, NRS 40.6472 is reproduced at the end of this article.

How will Pulte respond to the Court's decision?

Whether Pulte accepts the judge's decisions is unknown. Given Pulte's past arguments before the Court and the Supreme Court, it would not be unexpected for Pulte to appeal the Court's decision.

Also unknown is how the Court's decision will affect Pulte's future decisions to compensate homeowners for repairs they have already incurred or will incur in the future.

The Judge's Decision

Here, in part, is a verbatim account of what Judge Williams concluded and ordered:

The Court has jurisdiction over Pulte's Offer and Release pursuant to NRCP 23 and Chapter 40.

Pulte's offer in the sum of $7,800, coupled with soliciting bids, arranging repairs by contractor, directing the means and methods of repairs and recommending replacement plumbing fittings results in an election to repair under Chapter 40.

Pulte's Release is in violation of Chapter 40 and attempts to circumvent the oversight of Class claims by the Court pursuant to NRCP 23.

Pulte's offer fails to adequately and fairly address and inform Anthem homeowners of the consequences of acceptance, assignment and/or rejection.

IT IS HEREBY ORDERED that Pulte has voluntarily appeared and injected itself under the general jurisdiction of the Court for the purposes of offers and settlements with Anthem Class members.

IT IS FURTHER ORDERED that Pulte's release is in violation of NRS 40.648.4.

IT IS FURTHER ORDERED that Pulte's offer constitutes an offer to repair under Chapter 40.

IT IS FURTHER ORDERED that Anthem homeowners' failure to accept Pulte's offer within 35 days shall not be considered a rejection pursuant to NRS 40.660.

Ron Johnson, 15 March 2007

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NRS 40.6472  Response to notice of defect: Time for sending; content; effect of election to repair or not to repair.

      1.  Except as otherwise provided in NRS 40.670 and 40.672 and NRS 40.6452, a written response must be sent by certified mail, return receipt requested, to a claimant who gives notice of a constructional defect pursuant to NRS 40.645:

      (a) By the contractor not later than 90 days after the contractor receives the notice; and

      (b) If notice was sent to a subcontractor, supplier or design professional, by the subcontractor, supplier or design professional not later than 90 days after the date that the subcontractor, supplier or design professional receives the notice.

      2.  The written response sent pursuant to subsection 1 must respond to each constructional defect in the notice and:

      (a) Must state whether the contractor, subcontractor, supplier or design professional has elected to repair the defect or cause the defect to be repaired. If an election to repair is included in the response and the repair will cause the claimant to move from his home during the repair, the election must also include monetary compensation in an amount reasonably necessary for temporary housing or for storage of household items, or for both, if necessary.

      (b) May include a proposal for monetary compensation, which may include contribution from a subcontractor, supplier or design professional.

      (c) May disclaim liability for the constructional defect and state the reasons for such a disclaimer.

      3.  If the claimant is a homeowners’ association, the association shall send a copy of the response to each member of the association not later than 30 days after receiving the response.

      4.  If the contractor, subcontractor, supplier or design professional has elected not to repair the constructional defect, the claimant or contractor may bring a cause of action for the constructional defect or amend a complaint to add a cause of action for the constructional defect.

      5.  If the contractor, subcontractor, supplier or design professional has elected to repair the constructional defect, the claimant must provide the contractor, subcontractor, supplier or design professional with a reasonable opportunity to repair the constructional defect.

      (Added to NRS by 2003, 2037)