Leven v. Frey, 123 Nev. Adv. Op. No. 40, October 11, 2007

Cite as: Leven v. Frey

123 Nev. Adv. Op. No. 40

October 11, 2007

IN THE SUPREME COURT OF THE STATE OF NEVADA

No. 41716

ROBERT LEVEN,

Appellant,

vs.

HERBERT FREY AND CY YEHROS,

Respondents.

Proper person appeal from a district court order denying appellant’s motion to declare an expired judgment void due to improper renewal. Eighth Judicial District Court, Clark County; Valorie Vega, Judge.

Reversed and remanded with instructions.

Robert Leven, Las Vegas, in Proper Person.

Deaner, Deaner, Scann, Malan & Larsen and Brent A. Larsen, Las Vegas, for Respondents.

Flangas Law Office and Leo P. Flangas, Las Vegas; Leonard Schwartzer, Las Vegas, for Amici Curiae Leo Flangas and Louise Ruiz.

BEFORE THE COURT EN BANC.[1]

OPINION

By the Court, HARDESTY, J.:

This proper person appeal presents us with an opportunity to clarify the proper procedure for judgment renewal under NRS 17.214 and to address whether judgment creditors are required to strictly comply with the statute’s requirements. We conclude that the statute requires the timely filing of an affidavit, timely recording of the affidavit (if the judgment to be renewed was recorded), and timely service of the affidavit to successfully renew a judgment and that these requirements must be complied with strictly. Since, in this case, respondents did not strictly comply with all of these requirements, the district court improperly denied appellant’s motion to declare void the previous judgment, which had expired. We therefore reverse the district court’s order and remand this matter to the district court.

FACTS AND PROCEDURAL HISTORY

After appellant Robert Leven, a one-time condominium owner, and other plaintiffs sued their condominium owners’ association, its board of directors, officers, property managers, insurance carriers, and legal counsel, and the condominium developers, the district court adjudicated all parties’ claims and entered a judgment against Leven and the other plaintiffs. The original judgment, filed on October 25, 1996, and recorded on October 28, 1996, awarded attorney fees and costs to respondents Cy Yehros, a general contractor, and his business partner, Herbert Frey (collectively Frey).

Between 1996 and 2002, Frey unsuccessfully tried to collect payment from Leven, and as the judgment was due to expire on October 25, 2002,[2] Frey began judgment renewal proceedings in October 2002.

Renewing a judgment generally requires a judgment creditor to file an affidavit of renewal within ninety days of the judgment’s expiration and then record and serve the judgment renewal within three days of the affidavit’s filing.[3] Here, Frey timely filed his affidavit of judgment renewal on October 18, 2002. However, Frey did not serve the affidavit of renewal until October 30, 2002, and did not record the affidavit until November 4, 2002, well beyond the three-day requirement for recording and service.

As a consequence, Leven moved the court to declare void the expired judgment, arguing that Frey failed to strictly comply with NRS 17.214 because his recording and service were late and, therefore, the judgment was not properly renewed. Frey opposed the motion, arguing that the delay in recording and service, caused by his secretary’s vacation, amounted to excusable neglect and oversight. According to Frey, he substantially complied with the statute and thus successfully renewed the judgment. The district court denied Leven’s motion and concluded that Frey’s delay in recording and service did not result in any prejudice to Leven. Leven has appealed.

DISCUSSION

We review issues of statutory construction de novo.[4] Similarly, whether a statute’s procedural requirements must be complied with strictly or only substantially is a question of law subject to our plenary review.[5] Applying these de novo standards, we first discuss what is required to successfully renew the judgment under NRS 17.214 and then address NRS 17.214’s required level of compliance.

Requirements for judgment renewal under NRS 17.214

Under NRS 17.214, timely filing an affidavit, timely recording (if the judgment being renewed was recorded), and timely service are required to successfully renew a judgment.[6] NRS 17.214 expressly refers to these three aspects of judgment renewal—affidavit filing, recording, and service:

1. A judgment creditor or his successor in interest may renew a judgment which has not been paid by:

(a) Filing an affidavit with the clerk of the court where the judgment is entered and docketed, within 90 days before the date the judgment expires by limitation. . . .

. . . .

(b) If the judgment is recorded, recording the affidavit of renewal in the office of the county recorder in which the original judgment is filed within 3 days after the affidavit of renewal is filed pursuant to paragraph (a).

2. The filing of the affidavit renews the judgment to the extent of the amount shown due in the affidavit.

3. The judgment creditor or his successor in interest shall notify the judgment debtor of the renewal of the judgment by sending a copy of the affidavit of renewal by certified mail, return receipt requested, to him at his last known address within 3 days after filing the affidavit.

Under the statute’s express terms, then, a judgment may be renewed by filing an affidavit with the district court within ninety days before the judgment’s expiration, recording the affidavit within three days of filing, and serving the affidavit on the debtor within three days of filing.

Generally, when a statute’s language is plain and its meaning clear, the courts will apply that plain language.[7] Here, NRS 17.214’s mandatory requirements of filing, recording, and service of the affidavit are plainly set forth and must be followed for judgment renewal.

In particular, NRS 17.214(1)(a)’s requirement, that an affidavit of renewal be filed with the court clerk within 90 days before the judgment expires by limitation, is unambiguous. An action on a judgment or its renewal must be commenced within six years under NRS 11.190(1)(a); thus a judgment expires by limitation in six years. The requirement that an affidavit be filed within ninety days of the expiration of this six-year period provides a clear first step in the procedure for renewing judgments.

Similarly, NRS 17.214(1)(b)’s recordation requirement is clear. If the judgment to be renewed is recorded, the affidavit of renewal must be recorded in the county recorder’s office within three days after the affidavit of renewal is filed. The reasoning behind this requirement is clear when it is read together with a related statute, NRS 17.150(2). NRS 17.150(2) creates a lien on a debtor’s real property in a particular county when a judgment is recorded in that county; this lien remains in place for six years from the date that the judgment was docketed and continues automatically “each time the judgment . . . is renewed.”[8] If a previously recorded judgment could be renewed under NRS 17.214 without recordation of the renewal affidavit, then the lien created by NRS 17.150(2) would continue without any recorded notice that the judgment has been renewed and that the lien therefore remains in effect. Instead, requiring recordation of the renewal affidavit for the renewal of a recorded judgment ensures that anyone performing title searches will know that the lien continues.

Further, NRS 17.214(3)’s requisite, that the affidavit of renewal be served on the judgment debtor within three days of filing, is also plain and its meaning clear. Such notice is a necessary part of any statutory procedure involving renewed rights under a judgment.[9]

Unlike NRS 17.214’s provisions for affidavit filing, recordation and notice, however, the meaning of subsection 2 of the statute, which pertains to the effect of filing the affidavit, is not plain and unambiguous. Consequently, we must examine its meaning more closely.

NRS 17.214(2) states that “[t]he filing of the affidavit renews the judgment to the extent of the amount shown due in the affidavit.” This language is susceptible to two different interpretations: either, as argued by amici curiae, the affidavit’s filing alone renews the judgment, or the filing of the affidavit establishes only the judgment amount a creditor can collect from a debtor after the judgment is renewed. Since this language is capable of more than one reasonable interpretation, it is ambiguous,[10] and we necessarily look to legislative history and our rules of statutory interpretation.[11]

Legislative history

NRS 17.214 was enacted in 1985 and amended in 1995.[12] The original, 1985 version directed the judgment creditor to file an affidavit of renewal and provided that the affidavit filing “renew[ed] the judgment to the extent of the amount shown due in the affidavit.”[13] The legislative history indicates that NRS 17.214’s enactment was intended to establish a procedure for judgment renewal to allow judgment creditors additional time to collect payment after the original judgment expired.[14] The 1995 amendment, among other changes, added a recording requirement to the statute, dividing subsection 1 into (a) “filing” and (b) “recording,”[15] but it did not amend subsection 2’s statement that the “filing of the affidavit renews the judgment to the extent of the amount shown due in the affidavit.”[16] The 1995 amendment focused on requiring that affidavits be recorded to ensure that real property liens are apparent in title searches.[17] Although this amendment did not specifically address the meaning of NRS 17.214(2)’s provision regarding the effect of the affidavit’s filing, the amendment demonstrates that the affidavit’s filing, alone, does not renew a previously recorded judgment, as recordation is also necessary.

Statutory construction

When construing an ambiguous statutory provision, this court determines the meaning of the words used in a statute by “examining the context and the spirit of the law or the causes which induced the legislature to enact it. The entire subject matter and policy may be involved as an interpretive aid.”[18] Thus, in interpreting a statute, this court considers the statute’s multiple legislative provisions as a whole.[19] Additionally, statutory interpretation should not render any part of a statute meaningless, and a statute’s language “‘should not be read to produce absurd or unreasonable results.’”[20]

Applying these statutory construction rules, with the legislative history in mind, we conclude that NRS 17.214(2) can only mean that the filing of the affidavit does not, by itself, renew the judgment but instead establishes the amount of the renewed judgment subject to collection by the creditor.[21] Interpreting NRS 17.214(2) as meaning that affidavit filing alone renews a judgment would completely frustrate the legislative intent behind the 1995 amendment, as it would disregard the recording requirement added to the statute in paragraph (b) of subsection 1 and would result in liens automatically continuing under NRS 17.150(2) without any recorded notice. Further, this interpretation would fail to comply with our rules of statutory interpretation, as it would render the statute’s express recording and service requirements meaningless, and thus, produce an unreasonable result.[22]

The only reasonable interpretation of NRS 17.214(2) is that the affidavit simply identifies the judgment amount that a creditor can collect from the debtor after the judgment is successfully renewed. This interpretation gives meaning to all of the statute’s provisions and is consistent with the legislative intent to require creditors to record renewed judgments that previously were recorded.

Given the required elements of judgment renewal under NRS 17.214, we next consider the extent to which a creditor must comply with the statute’s requirements in order to perfect a judgment renewal.

Strict versus substantial compliance

The parties present opposing views about how exacting a creditor must be in satisfying NRS 17.214’s requirements: Leven argues that a judgment creditor may renew a judgment only by strictly complying with the statute’s provisions, and Frey contends that substantial compliance with the statute is sufficient for judgment renewal, when the creditor demonstrates that his delayed recording and service resulted from excusable neglect or oversight and caused no prejudice to the debtor.

In the present case, Frey filed his affidavit of renewal on October 18, 2002, and was required to record and serve the affidavit within three days under NRS 17.214(1)(b) and NRS 17.214(3), respectively. The service, however, did not occur until twelve days later, on October 30, 2002, and the affidavit was not recorded until seventeen days later, on November 4, 2002. Although Frey concedes that he did not “strictly” comply with NRS 17.214(1)(b) and (3)’s statutory three-day recording and service requirements, he argues that he “substantially” complied with the statute and that the delay in recording and service did not prejudice Leven’s rights.

This court has never addressed how strictly a creditor must comply with NRS 17.214’s judgment renewal provisions and particularly, whether NRS 17.214’s judgment renewal requirements can be satisfied by delayed recording and service.[23]

Generally, in determining whether strict or substantial compliance is required, courts examine the statute’s provisions, as well as policy and equity considerations.[24] Substantial compliance may be sufficient “to avoid harsh, unfair or absurd consequences.”[25] Under certain procedural statutes and rules, however, failure to strictly comply with time requirements can be fatal to a case.[26] In other contexts, a court’s requirement for strict or substantial compliance may vary depending on the specific circumstances.[27] This court, however, has never indicated that substantial compliance with specific timing requirements is sufficient in the context of recording and service under NRS 17.214. To the contrary, since the statute includes no built-in grace period or safety valve provision,[28] its explicit three-day language leaves little room for judicial construction or “substantial compliance” analysis.[29] Although statutes allowing for a “reasonable time” to act are subject to interpretation for substantial compliance, those with set time limitations are not.[30] Our interpretation of the statute’s timing requirements and our conclusion that those requirements must be complied with strictly is consistent with the general tenet that “time and manner” requirements are strictly construed, whereas substantial compliance may be sufficient for “form and content” requirements.[31] Since, here, Frey’s renewal affidavit was timely filed, we only address the timing requirements for recording and service.

As set forth above, the recording requirement’s main purpose is to procure reliability of title searches for both creditors and debtors since any lien on real property created when a judgment is recorded continues upon that judgment’s proper renewal.[32] The statute’s three-day unequivocal requirement for prompt recording accomplishes this purpose in a reasonable and efficient manner. The Legislature did not provide for any deviations from this requirement, and we perceive no reason to extend this period in contravention of the Legislature’s clear and express language.[33] As a practical matter, substantial compliance with the recording requirement is not supportable, as it would undermine the legislative intent that the debtor and third parties be promptly notified that the lien on the debtor’s real property has continued. Substantial compliance could create situations in which a title search would indicate that a judgment lien has terminated when, in fact, it has not. These types of situations were meant to be avoided by the Legislature’s adoption of NRS 17.214(1)(b)’s recording requirement. Consequently, a judgment creditor must strictly comply with this requirement, which Frey concedes that he failed to do.

The final requisite in the judgment renewal process, service of the renewal affidavit, implicates the judgment debtor’s due process rights. As this court stated in Browning v. Dixon, notice is “[a]n elementary and fundamental requirement of due process in any proceeding which is to be accorded finality.”[34] We agree with the Supreme Court of North Dakota that because judgment renewal proceedings are purely statutory in nature and are a measure of rights, a court cannot deviate from those judgment renewal conditions purposefully stated by the Legislature.[35]

Thus, we conclude that a judgment creditor must strictly comply with the timing requirement for service under NRS 17.214(3) in order to successfully renew the judgment. As Frey failed to comply with this service requirement as well as the recordation requirement, the judgment against Leven was not properly renewed and thus, it expired.

CONCLUSION

NRS 17.214 requires a judgment creditor to timely file, record (when the judgment to be renewed is recorded), and serve his or her affidavit of renewal to successfully renew a judgment, and strict compliance with these provisions is required. As Frey did not timely record and serve his affidavit of renewal, he did not comply with NRS 17.214(1)(b) and (3), and thus he failed to successfully renew the judgment. We therefore reverse the district court’s order denying Leven’s motion to declare void the expired judgment and remand this matter to the district court with instructions that it grant the motion.[36]

MAUPIN, C.J, GIBBONS, PARRAGUIRRE, CHERRY and SAITTA, JJ., concur.

**********FOOTNOTES**********

[1] The Honorable Michael L. Douglas, Justice, voluntary recused himself from participating in the decision of this matter.

[2] See NRS 11.190(1)(a) (providing that an action upon a judgment, or the renewal thereof, must be brought within six years); Evans v. Samuels, 119 Nev. 378, 75 P.3d 361 (2003) (providing that actions on judgments’ renewals must be undertaken within six years).

[3] NRS 17.214.

[4] Harris Assocs. v. Clark County Sch. Dist., 119 Nev. 638, 641, 81 P.3d 532, 534 (2003).

[5] See Matter of Petition of Phillip A. C., 122 Nev. ___, ___, 149 P.3d 51, 57 (2006) (stating that “[t]he district court’s conclusions of law are reviewed de novo”).

[6] We note that NRS 17.214 supersedes this court’s decision in Polk v. Tully, 97 Nev. 27, 623 P.2d 972 (1981), and establishes a statutory procedure for judgment renewal that must be followed.

[7] International Game Tech. v. Dist. Ct., 122 Nev. 132, 152, 127 P.3d 1088, 1102 (2006).

[8] See Evans v. Samuels, 119 Nev. 378, 380, 75 P.3d 361, 363 (2003) (noting that “NRS 17.150(2) provides that a lien is continued when the judgment is renewed”). NRS 17.150(2) provides four exceptions to its automatic lien continuation upon the judgment’s renewal: (a) when the enforcement of the judgment is stayed on appeal; (b) when the judgment is for child support arrearages, in which case the lien continues until the judgment is satisfied; (c) when the judgment is satisfied; and (d) when the lien is otherwise discharged. These exceptions are not at issue in this case.

[9] See Browning v. Dixon, 114 Nev. 213, 217, 954 P.2d 741, 743 (1998) (noting that notice is required by due process in any proceeding that is considered final).

[10] See Harris Assocs., 119 Nev. at 641, 81 P.3d at 534.

[11] See Potter v. Potter, 121 Nev. 613, 616, 119 P.3d 1246, 1248 (2005).

[12] 1985 Nev. Stat., ch. 223, § 2, at 699; 1995 Nev. Stat., ch. 475, § 21, at 1525.

[13] NRS 17.214(2) (1985); see also NRS 17.214(2) (1995).

[14] See Hearing on A.B. 500 Before the Senate Judiciary Comm., 63d Leg. (Nev., May 14, 1985).

[15] 1995 Nev. Stat., ch. 475, § 21, at 1525 (codified at NRS 17.214(1)(b)).

[16] Id. at 1526 (codified at NRS 17.214(2)).

[17] Hearing on S.B. 455 Before the Senate Judiciary Comm., 68th Leg., at 11 (Nev., May 23, 1995).

[18] McKay v. Bd. of Supervisors, 102 Nev. 644, 650-51, 730 P.2d 438, 443 (1986) (citation omitted).

[19] International Game Tech., 122 Nev. at 152, 127 P.3d at 1102.

[20] Harris Assocs., 119 Nev. at 642, 81 P.3d at 534 (quoting Glover v. Concerned Citizens for Fuji Park, 118 Nev. 488, 492, 50 P.3d 546, 548 (2002), overruled in part on other grounds by Garvin v. Dist. Ct., 118 Nev. 749, 59 P.3d 1180 (2002)).

[21] We note that NRS 17.214(2) is part of both the statute’s 1985 version and the 1995 amendment.

[22] See Harris Assocs., 119 Nev. at 642, 81 P.3d at 534.

[23] Other courts examining renewal and revival statutes have reached differing results. See, e.g., First Federal Savings & Loan Ass’n v. Liebert, 403 P.2d 183, 184 (Kan. 1965) (stating that, since the procedure for reviving a dormant judgment is purely statutory in its origin, it can only be accomplished in the manner and under the conditions prescribed by the statute); Fay v. Harris, 164 P.2d 860, 861-62 (Ariz. 1945) (stating that in order to renew a judgment, a creditor must strictly follow the code section setting forth the procedure for judgment renewal, but concluding at the same time that a creditor’s arguably substantial compliance is sufficient under practical circumstances).

[24] See 3 Norman J. Singer, Statutes and Statutory Construction § 57:19, at 58 (6th ed. 2001).

[25] Id.

[26] See NRS 11.190 (limitation of actions); NRAP 4(a)(1) (time and location for filing a notice of appeal).

[27] See Van Keppel v. United States, 206 F. Supp. 42, 44 (D. Kan. 1962) (explaining that, in an action by a taxpayer to recover a tax overpayment, if a statutory provision relates to the essence of the directed requirement so that noncompliance will frustrate the legislative intent, it is mandatory, but if a provision relates to a detail of procedure rather than to substance, it is directory only and substantial compliance is sufficient); Jones v. Short, 696 P.2d 665 (Alaska 1985) (deciding that a party “substantially complies” by engaging in conduct that falls short of strict compliance with statutory requirements but nevertheless affords to the public the same protection as would strict compliance); White v. Prince George’s County, 877 A.2d 1129, 1137 (Md. Ct. Spec. App. 2005) (concluding that, in the context of a tort action, under certain circumstances, a litigant may be excused from strict compliance with a notice obligation, so long as he fulfills the statute’s purpose by substantial compliance with the statutory requirements).

[28] See, e.g., The Fabry Partnership v. Christensen, 106 Nev. 422, 425, 794 P.2d 719, 720-21 (1990) (explaining that failure to file a limited partnership certificate with the county recorder was not fatal to the partnership’s formation, since the statute governing limited partnership formation (1) had a built-in “substantial compliance” provision, (2) did not specify a time limit for recording the required certificate, and (3) specifically provided that the general rule that statutes in derogation of the common law are to be strictly construed had no application to NRS Chapter 88 (governing limited partnerships)); cf. Pellegrini v. State, 117 Nev. 860, 869, 34 P.3d 519, 526 (2001) (acknowledging that a court could entertain a petition for post-conviction relief filed after NRS 34.726(1)’s one-year time limit, since the statute itself has a built-in provision allowing the petitioner to file beyond the one-year time limit when good cause is shown for the delay).

[29] NRS 17.214(3) provides that the creditor seeking to renew a judgment “shall” notify the judgment debtor of the renewal by serving a copy of the affidavit of renewal on the debtor within three days after filing the affidavit. As we have previously explained, “shall” is a mandatory term indicative of the Legislature’s intent that the statutory provision be compulsory, thus creating a duty rather than conferring discretion. Washoe Med. Ctr. v. Dist. Ct., 122 Nev. ___, ___, 148 P.3d 790, 793 (2006).

[30] Compare Azevedo v. Minister, 86 Nev. 576, 583-84, 471 P.2d 661, 666 (1970) (analyzing NRS 104.2201(2), which provides that, for contracts governed under the Uniform Commercial Code, a confirming memorandum must be sent within a “reasonable time” after an oral contract is made in order for the contract to become effective, and concluding that appellant’s delay of ten weeks was not unreasonable as a matter of law but must instead be considered under the circumstances presented), with Carrell v. Justice’s Court, 99 Nev. 402, 663 P.2d 697 (1983) (adopting a strict reading of NRS 175.011(2), which required the filing of a jury trial demand within five days before trial (the present version of former NRS 175.011(2) allows the defendant thirty days to file a jury trial demand)).

[31] See Daugherty v. Dearborn County, 827 N.E.2d 34, 36 (Ind. Ct. App. 2005) (explaining that a statute with a built-in 180-day time limit for serving notice of a tort claim was subject to strict compliance, even though other aspects of the statutory scheme were subject to review for substantial compliance); Schooler v. Iowa Dept. of Transp., 576 N.W.2d 604, 607-08 (Iowa 1998) (concluding that failing to serve notice within a statue’s thirty-day time limitation precluded condemnees from appealing an award made in a condemnation proceeding and the condemnees’ argument that they substantially complied with the notice requirement was unavailing since it would require the court to ignore the clear language of the statute); Kirkpatrick v. City of Glendale, 99 S.W.3d 57, 60 (Mo. Ct. App. 2003) (indicating that giving notice of a tort claim within ninety days, as set forth by statute, was a condition precedent to maintaining a tort action, which condition must be complied with strictly, while the statute’s other requirements, governing the form of notice, were subject to review for substantial compliance); Regency Investments v. Inlander Ltd., 855 A.2d 75, 79 (Pa. Super. Ct. 2004) (concluding that the doctrine of substantial compliance does not apply when the timeliness of serving notice is at issue, and thus, the trial court properly struck a mechanics’ lien claim since notice of the claim was not served until one month after the statutory time period allowed for service); American Standard Homes Corp. v. Reinecke, 425 S.E.2d 515, 518 (Va. 1993) (indicating that, unless a lien is perfected within the time outlined by statute, it is lost); Marsh-McLennan Bldg., Inc. v. Clapp, 980 P.2d 311, 313 n.1 (Wash. Ct. App. 1999) (explaining that an unlawful detainer statute’s time requirements for filing a notice must be complied with strictly, while substantial compliance with the statute’s requirements regarding the form and content of the notice was sufficient).

[32] See NRS 17.150(2).

[33] Cf. NRCP 4(i) (allowing a party to file a motion to enlarge time for service and show good cause why the enlargement is warranted); Hardin v. Jones, 102 Nev. 469, 727 P.2d 551 (1986) (stating that the ten-day time period provided by NRS 612.495(1) for appealing from an unemployment benefit determination is extended by application of NRCP 6(e), allowing three extra days when the notice of determination was sent by mail).

[34] 114 Nev. 213, 217, 954 P.2d 741, 743 (1998) (internal quotation marks and citations omitted).

[35] Swanson v. Flynn, 31 N.W.2d 320, 324 (N.D. 1948).

[36] We deny appellant’s request to file a response to the amici curiae brief.

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D.R. Horton v. Dist. Ct., 123 Nev. Adv. Op. No. 45, October 11, 2007

Cite as: D.R. Horton v. Dist. Ct.

123 Nev. Adv. Op. No. 45

October 11, 2007

IN THE SUPREME COURT OF THE STATE OF NEVADA

No. 47654

D.R. HORTON, INC., A NEVADA CORPORATION; RCR COMPANIES; CENTRAL VALLEY INSULATION LAS VEGAS, LLC; AND BUILDER SERVICES GROUP, INC., D/B/A CENTRAL VALLEY INSULATION,

Petitioners,

vs.

THE EIGHTH JUDICIAL DISTRICT COURT OF THE STATE OF NEVADA, IN AND FOR THE COUNTY OF CLARK, AND THE HONORABLE ALLAN R. EARL, DISTRICT JUDGE,

Respondents,

and

FIRST LIGHT AT BOULDER RANCH HOMEOWNERS ASSOCIATION, A NEVADA CORPORATION,

Real Party in Interest.

Original petition for a writ of prohibition and mandamus challenging a district court order denying a motion for declaratory relief during the pre-litigation stage of a constructional defect action.

Petition granted in part.

Marquis & Aurbach and Jack Juan and Micah S. Echols, Las Vegas, for Petitioner D.R. Horton, Inc.

Hansen & Rasmussen and R. Scott Rasmussen, Las Vegas, for Petitioners Central Valley Insulation Las Vegas, LLC, and Builder Services Group, Inc., d/b/a Central Valley Insulation.

Quon Bruce Christensen Law Firm and James R. Christensen, Las Vegas, for Real Party in Interest.

Burris, Thomas & Springberg and Andrew J. Thomas, Las Vegas, for Amicus Curiae Nevada Trial Lawyers Association.

Jeanne Winkler & Associates and Jeanne L. Winkler, Las Vegas, for Amicus Curiae Safe Homes Nevada.

Marquiz Law Office and Craig A. Marquiz, Henderson, for Amicus Curiae Nevada Subcontractors Association.

Snell & Wilmer, LLP, and Leon F. Mead II, Las Vegas, for Amici Curiae Associated General Contractors, Las Vegas Chapter, and Coalition for Fairness in Construction.

BEFORE THE COURT EN BANC.

OPINION

By the Court, GIBBONS, J.:

In this petition, we address the question of how district courts should determine the sufficiency of a pre-litigation notice of constructional defects under NRS 40.645. The parties and amici curaie[1] invite us to examine the reasonableness of a pre-litigation notice that triggers a builder’s right to repair, or a claimant’s right to commence suit. Today, we provide district courts with a test and guidelines to measure the sufficiency of the pre-litigation notice.

Real party in interest First Light at Boulder Ranch Homeowners Association utilized a “representative sample” of constructional defects in a small number of homes as a basis for giving notice of constructional defects common throughout a development of 414 residences. According to petitioners, First Light’s extrapolated notice was inadequate because it failed to provide the “reasonable detail” of defects and their location necessary to preserve for petitioners a meaningful opportunity to repair the alleged defects before suit is brought. We conclude that adequate extrapolated pre-litigation notice must have a reasonable statistical basis to describe the alleged defects and their locations in reasonable detail sufficient to afford contractors a meaningful opportunity to repair the alleged defects. Therefore, we articulate below a test to guide district courts in making written findings on whether a pre-litigation notice satisfies that threshold. So long as an extrapolated notice meets that requirement, district courts have wide discretion to determine the adequacy of a pre-litigation notice on a case-by-case basis.

Since we have adopted a test to be used by the district courts, we grant this petition in part and direct the district court to reconsider the notice and make factual findings as discussed herein.

FACTS

The First Light at Boulder Ranch Community is located in Henderson, Nevada. Petitioner D.R. Horton, Inc., built and sold the community in twenty-six releases. The community consists of 138 buildings with three residential units in each building, totaling 414 residences. The community has three floor plans, each with two possible elevations, for a total of six different types of homes. Approximately 40 contractors and subcontractors from various trades, some of which used several work crews, were involved in constructing the community. At times, more than one subcontractor from each trade was employed at the community.

Believing that numerous constructional defects may exist in each residence in the community, First Light hired experts to assist it in preparing an NRS 40.645 pre-litigation notice of constructional defects. Those experts formulated the notice after using visual and invasive testing in a small representative sampling of the homes in the community. But they did not provide D.R. Horton with the addresses or the expert report of the homes they had tested. Based on the occurrence of each defect they found, the experts extrapolated the percentage of homes in which they believed each defect existed throughout the entire community. The defects First Light alleges are categorized into several major groups, many of which have multiple subcategories. According to First Light’s notice, approximately 160 defects may exist in various combinations in each of the 414 homes. First Light’s experts estimate that anywhere from 2 to 100 percent of the 414 homes in the community have any combination of each of the 160 defects. In its notice, First Light did not specify the floor plans, elevations, or addresses of the homes in which it alleges that a particular defect may exist. Unsatisfied with D.R. Horton’s response to its notice, First Light filed a constructional defect action with the district court.

In response to First Light’s pre-litigation notice and action, D.R. Horton moved the district court for a declaratory judgment, stating that First Light’s NRS 40.645 notice was unreasonable and thus statutorily insufficient. The district court denied that motion, expressing dissatisfaction with the statutory constraints when it comes to cases involving a significant number of homes.[2] The district court further refused to declare First Light’s NRS 40.645 notice statutorily insufficient. In its written order, the district court found that First Light “properly relied upon expert opinion and representative sampling pursuant to NRS 40.645(3) [and] (4)” to prepare its notice.[3]

D.R. Horton then filed this petition challenging the district court’s order denying its motion for declaratory relief.[4] Through this petition, D.R. Horton challenges the district court’s order, arguing that First Light’s pre-litigation notice does not give it notice with the “reasonable detail” required by NRS 40.645(2). D.R. Horton further argues that the inadequacy of First Light’s notice frustrates its opportunity to repair under NRS 40.647. In its answer, First Light contends that its notice is sufficient and that D.R. Horton bears the burden of finding and repairing the defects noticed or allow the litigation to proceed.

DISCUSSION

D.R. Horton seeks a writ of prohibition restraining the district court from allowing First Light to ignore the requirements of NRS 40.645(2). Additionally, D.R. Horton seeks a writ of mandamus directing the district court to (1) vacate the order denying D.R. Horton’s motion for declaratory relief with respect to First Light’s duty to provide adequate pre-litigation notice and (2) order First Light to disclose additional information concerning the defects it alleges in its homes.

Availability of writ relief

Writs of mandamus and prohibition are extraordinary remedies and are available when the petitioner has no “plain, speedy and adequate remedy in the ordinary course of law.”[5] The right to immediately appeal or even to appeal in the future, after a final judgment is ultimately entered, will generally constitute an adequate and speedy legal remedy precluding writ relief.[6] Whether a future appeal is sufficiently adequate and speedy necessarily turns on the underlying proceedings’ status, the types of issues raised in the writ petition, and whether a future appeal will permit this court to meaningfully review the issues presented.

In this case, which has already existed below in a pre-litigation stage for more than two and one-half years, and which involves a pre-litigation notice of constructional defects designed to prevent litigation altogether, an eventual appeal from any final judgment would be neither a speedy nor adequate remedy. Consequently, writ relief is not precluded by other means of review.

Standards for granting writ relief

Under NRS 34.160, a writ of mandamus is available “to compel the performance of an act which the law . . . [requires] as a duty resulting from an office, trust or station.” Mandamus is also available to control a manifest abuse or an arbitrary or capricious exercise of discretion.[7] A writ of prohibition may likewise issue to arrest the performance of an act outside the trial court’s discretion.[8] This court has broad discretion in deciding whether to consider a petition seeking relief in the form of mandamus or prohibition.[9]

Although this court infrequently decides to exercise its discretion to consider issues presented in the context of a petition for extraordinary relief, we have elected to exercise our discretion in this instance to consider the issues raised. In doing so, we recognize that in large community-wide constructional defect cases, a fundamental disagreement exists regarding the interpretation of NRS 40.645. The interpretation of this statute is of great importance to both claimants and contractors. Our review of NRS 40.645’s application in these constructional defect cases will aid the district courts in managing them.

Having reviewed D.R. Horton’s petition, First Light’s answer, the amici curiae’s briefs, and the parties’ supporting documentation, we grant the petition, in part. In doing so, we address the application of NRS 40.645 and establish a “reasonable threshold test” to aid district courts in managing constructional defect cases, thereby avoiding the fate of this case, which has wallowed in a pre-litigation quagmire while the parties litigate the level of detail required in a notice that is intended to prevent litigation.

Nevada’s constructional defect law

The provisions of NRS Chapter 40, concerning constructional defect actions, reveal that the Legislature intended to provide contractors with an opportunity to repair constructional defects in order to avoid litigation.[10] To ensure that contractors are given an opportunity to repair, the Legislature requires a claimant to give the contractor notice in “reasonable detail”[11] and, based on that notice, to allow the contractor time and the opportunity to inspect and make repairs when a defect is verified.[12] A claimant’s failure to comply with those requirements before filing a constructional defect action results in the dismissal or postponement of that action until the claimant complies with those requirements.[13]

NRS 40.645 sets forth the requirements for a pre-litigation constructional defect notice and requires that a notice of constructional defects specify in “reasonable detail” the defects, any known causes, and the defects’ locations. The question of what constitutes “reasonable detail” under NRS 40.645 is one of first impression in this court and a matter of statutory interpretation.

This court reviews de novo a district court’s interpretation of a statute, even when the issue is raised in a petition for extraordinary writ relief.[14] When a statute’s language is clear and unambiguous, it must be given its plain meaning, unless doing so “violates the spirit of the act.”[15] A statute is ambiguous if it is capable of being understood in two or more senses by reasonably well-informed persons.[16] When construing an ambiguous statute, “[t]he meaning of the words used [in the statute] may be determined by examining the context and the spirit of the law or the causes which induced the legislature to enact it.”[17] Moreover, we read legislative enactments as a whole in order to understand the Legislature’s intent.[18] However, “no part of a statute [may] be rendered meaningless and its language ‘should not be read to produce absurd or unreasonable results.’”[19]

With these rules in mind, we turn to the statute at issue in this case, NRS 40.645, which states, in pertinent part,

2. The notice given pursuant to subsection 1 [of NRS 40.645] must:

. . . .

(b) Specify in reasonable detail the defects or any damages or injuries to each residence or appurtenance that is the subject of the claim; and

(c) Describe in reasonable detail the cause of the defects if the cause is known, the nature and extent that is known of the damage or injury resulting from the defects and the location of each defect within each residence . . . to the extent known.

3. [The notice may include] expert opinion concerning the cause of the constructional defects and the nature and extent of the damage or injury resulting from the defects which is based on a valid and reliable representative sample of the components of the residences or appurtenances . . . as notice of the common constructional defects within the residences . . . to which the expert opinion applies.

4. [O]ne notice may be sent relating to all similarly situated owners of residences . . . within a single development that allegedly have common constructional defects if:

. . . .

(b) [Among other things,] it is the opinion of the expert that those similarly situated residences . . . may have . . . common constructional defects.[20]

Although the parties contend that NRS 40.645 is clear and unambiguous, each party advances a different interpretation. D.R. Horton contends that although extrapolation evidence may be used under NRS 40.645(3) and (4) to formulate a pre-litigation notice, NRS 40.645(2) requires the claimant to specify in “reasonable detail” the defects that exist within each residence in the development. First Light contends that NRS 40.645(2) describes what the contents of the notice should include, but extrapolation evidence under NRS 40.645(3) and (4) can satisfy the “reasonable detail” requirement. We conclude that NRS 40.645 is ambiguous based on the number of differing, yet reasonable, interpretations proffered by the parties and amici curiae. While the statute sets forth requirements for a pre-litigation notice, we are unable to determine from the statute’s plain language the exact meaning of each of those requirements. Therefore, we examine the legislative history to ascertain the Legislature’s intent when it drafted the statute.

During a legislative hearing discussing the 2003 amendments to NRS 40.645, a representative of the contractors’ lobby, which advocated for the contractors’ opportunity to repair, explained the contractors’ view of that opportunity.[21] From the legislative history, it is apparent that the Legislature discussed the contractors’ approach, accepted it, and approved the current version of NRS 40.645 based on that approach. During their discussion, the contractors’ representative testified that the contractors’ lobby envisioned a process through which claimants with similarly situated homes, who found a defect they believed to be common throughout their homes, could hire an expert to conduct a representative sampling of their homes. He explained that the expert should be allowed to use the results of that sampling to extrapolate the percentage of houses within a group of homes that the expert estimated were affected by that common defect. The claimants would then be required to provide the contractor notice of the defect in compliance with the requirements of NRS 40.645 and the opportunity to repair.

The contractors’ representative further explained that once a contractor receives a pre-litigation notice, “he has . . . [the] opportunity to make a business decision.”[22] Some contractors, he explained, having received notice of a defect, will “avail [themselves] of the opportunity to notify all the other claimants who could have [that] problem, according to the expert’s report, and deal with them directly.”[23] If the contractor decides not to notify the claimants of the alleged defect, the claimants would then have the right to initiate a constructional defect action.

The contractors’ representative stated that the process would apply to defects that were common throughout many houses. The intent was that a contractor, having received a notice that either a workmanship or design defect existed, would send a letter to every claimant who, according to its records, might be affected.[24] In that letter, the contractor would notify the claimants, according to the expert’s extrapolation, that a defect might exist in their homes. As the contractors’ representative envisioned, the contractor would invite each claimant to “[p]lease call us and we will come out, inspect, repair, or replace [the defect].”[25] He then explained that if the contractor decided not to avail himself of the opportunity to repair, the claimant would have the right to sue and petition “the court [to] exact the appropriate penalty.”[26] During that discussion, the contractors’ representative also clearly stated that the burden of verifying a defect is on the contractor, not the claimant.

It is clear from the legislative history that the Legislature intended to preserve an opportunity for contractors to repair the homes they construct. It is also clear that contractors are entitled to reasonable notice of alleged defects in their homes so that they can verify and repair those defects in lieu of litigation. If the contractors decide to verify and repair, they are responsible for the costs to do so. However, this responsibility on the contractors’ part does not relieve the claimant of the duty to provide reasonable notice of what defects exist and a reasonable approximation of the location of those defects.[27]

When multiple homes are believed to contain a common defect, the Legislature intended to allow owners of those homes to formulate a pre-litigation notice using expert opinion and extrapolation,[28] so long as their notice satisfies the “reasonable detail” requirement of NRS 40.645(2). Because of the variety of constructional defects that can occur, no universal formula exists for use in measuring whether every pre-litigation notice that comes before a district court is reasonable. Thus, the district courts have wide discretion to make that determination. To guide the district courts in the exercise of that discretion, this court now establishes a “reasonable threshold test,” which every pre-litigation notice must satisfy, but only if challenged by the contractor.

Extrapolation is defined as “[t]he process of estimating an unknown value or quantity on the basis of the known range of variables.”[29] Extrapolation encompasses the statistical use by an expert witness of a valid and reliable representative sample to formulate an opinion that similarly situated residences and appurtenances may have common constructional defects.[30] The scope of the extrapolated notice must be narrow. Homes included within the scope of an extrapolated notice typically will be similarly situated only if they are part of a subset of homes within the development. In some cases, a subset of homes for extrapolation purposes may be those of a particular floor plan. In other cases, depending on the nature or location of the defect, the subset of homes to which the extrapolated notice applies may be even narrower, such as homes of a particular elevation within a particular floor plan. Likewise, a valid extrapolated notice may be limited to a subset of homes in which a particular product or type of construction was used. In all cases, an extrapolated notice is valid only if it identifies the subset or characteristics of the subset to which it applies. In order to achieve the minimum statistical basis that the reasonable threshold test requires, we suggest that the district court require the claimants’ expert to test and verify the existence of the alleged defect in at least one of the homes in each subset of homes included within the scope of the extrapolated notice. Additionally, the claimants must provide the address of each home tested and clearly identify the subset of homes to which the pre-litigation notice applies.

In order to provide valid pre-litigation notice, that group of claimants must narrow the scope of their extrapolated notice. They should investigate further and identify a subset of homes within the community that has the purported defect. If they genuinely believe that every home in the community may have the alleged defect, then the claimants should test and verify the defect in at least one home from each subset of homes in the community and extrapolate the percentage of homes within each subset that they believe are likely to contain the defect. The district courts must then employ their wide discretion in determining whether a valid and representative sample has been used for the size and make-up of each subset. In exercising their discretion, the district courts may determine that a notice is not reasonable unless a defect is confirmed in more than one home in each subset. These guidelines merely set the minimum threshold that an extrapolated pre-litigation notice must satisfy. Once the district court determines that a notice is reasonable, the contractor bears the burden of verifying and repairing the alleged defects in every home in the subset of homes identified in the extrapolated notice.[31]

We establish the reasonable threshold test because of the benefits and protections it provides for Nevada’s contractors and claimants. It allows a contractor who chooses to repair to focus on testing and verifying defects in homes that are truly “similarly situated” and therefore more likely to contain an alleged defect. The rule increases the likelihood that a contractor who chooses to verify and repair defects can do so within the time constraints set out in the provisions of NRS Chapter 40. It also reduces the number of subcontractors a contractor must involve in investigating an alleged defect and who may be included as defendants in a lawsuit if an alleged defect is not repaired.

Consumers and claimants will also benefit from the reasonable threshold test. The test prevents the contractor from having to inconvenience all claimants in a community with invasive testing in their homes unless it is statistically likely that their homes actually contain the defect alleged. The test may also reduce the costs each Nevada contractor has to add into the cost of new homes in anticipation of community-wide constructional defect disputes. We emphasize that the Legislature intended NRS 40.645 to provide Nevada contractors an opportunity to inspect and repair defects in the homes they construct. To that end, a pre-litigation notice must contain reasonable detail that a contractor who makes the business decision to inspect and repair can do so in compliance with all of the provisions of NRS 40.600 though NRS 40.675, which govern constructional defect cases.

We further conclude that pre-litigation notices are presumed valid under NRS 40.645. A contractor who wishes to challenge the adequacy of a pre-litigation notice bears the burden of doing so with specificity. Because each case is factually distinct, the district courts have wide discretion to consider each contractor’s challenge to the reasonableness of each pre-litigation notice. With the assistance, expertise, and recommendations of the capable special masters appointed to assist in these matters, the district courts are well suited to determine whether a notice preserves a contractor’s opportunity to repair.

In determining the reasonableness of a notice, a district court should keep in mind the judiciary’s policy of maintaining judicial economy,[32] the particular requirements and limitations set out in NRS Chapter 40, and the policy considerations discussed above. Although the district court has the discretion to hold an evidentiary hearing to determine the reasonableness of the notice, the district court may also make such a determination after examining the affidavits of the parties, witnesses, and expert witnesses.

We conclude that a claimant cannot utilize the phrase “to the extent known” in NRS 40.645(2)(c) to justify withholding pertinent information from a pre-litigation notice. By the same token, the district court should use its wide discretion to ensure that a contractor is not utilizing NRS 40.645 as a shield for the purpose of delaying the commencement of repairs or legitimate litigation. Additionally, when multiple constructional defects are alleged in a single notice, the district court may conclude that the notice is adequate as to some of the defects and not as to others. The district court may sever the defects in the notice. The district court may then approve the notice as to some of those defects and allow the repair or litigation process to immediately commence as to those defects. Furthermore, because a district court’s decisions may ultimately be subject to our review, the district courts shall make specific written findings as to the reasons why a pre-litigation notice of defects is reasonable or unreasonable. The district court’s findings must also note how the notice preserves for the contractor an opportunity to repair.

In this case, it was permissible for First Light to formulate its pre-litigation notice using expert opinion and extrapolation. However, the district court did not have an opportunity to apply the reasonable threshold test and to determine whether First Light’s extrapolated notice provided the “reasonable detail” necessary under NRS 40.645. Therefore, we grant D.R. Horton’s petition in part so that the district court can determine whether First Light’s notice provided the reasonable detail required as discussed herein.

We further conclude that NRS 40.645(4)(c) requires a claimant to disclose the expert opinions and reports in his possession that were used to prepare his pre-litigation notice. Accordingly, we grant D.R. Horton’s petition to the extent that it asks us to require that First Light disclose its supporting expert reports concerning the alleged defects in the homes at First Light at Boulder Ranch Community.

With respect to petitioners’ other requests that First Light produce other information such as job files, notes, and photographs, the requirement to produce this information is within the district court’s wide discretion. If the district court determines that First Light’s pre-litigation notice provides the detail necessary to preserve D.R. Horton’s opportunity to repair, it should make specific findings supporting this conclusion and that the disclosure of this additional information is not necessary.

CONCLUSION

In a constructional defect case, the district court has wide discretion to determine whether a pre-litigation notice is reasonable. This wide discretion should be informed by the reasonable threshold test. As the district court did not have the benefit of this test in ruling on D.R. Horton’s motion for declaratory relief, we grant D.R. Horton’s petition in part and direct the clerk of this court to issue a writ of mandamus directing the district court to vacate its declaratory relief order. The writ shall further direct the district court to reconsider the motion in accordance with the reasonable threshold test and to make written findings with respect to the adequacy of First Light’s pre-litigation notice, including, but not limited to, whether First Light’s notice preserves D.R. Horton’s statutory opportunity to inspect and repair, pursuant to NRS Chapter 40.[33]

MAUPIN, C.J., HARDESTY, PARRAGUIRRE, DOUGLAS, CHERRY and SAITTA, JJ., concur.

**********FOOTNOTES**********

[1] Supporting this petition as amici curiae are the Associated General Contractors, Las Vegas Chapter; the Coalition for Fairness in Construction; and the Nevada Subcontractors Association. Additionally, the Nevada Trial Lawyers Association and Safe Homes Nevada each filed amicus curiae briefs supporting the real party in interest’s position.

[2] In the April 24, 2006, hearing, the district court stated, “that’s the problem with this statute that works perfectly for one house, or a group of five. Let’s say a builder builds a cul-de-sac and there are five homes there. Works perfect for that.” The district court further stated that “[i]t doesn’t work nearly as well in a project that has 414 units; and I don’t think there’s a solution that a [c]ourt can create given the boundaries of the statute.” Having said that, the district court denied D.R. Horton’s motion asking it to declare First Light’s notice statutorily deficient. The district court then simultaneously encouraged D.R. Horton to petition this court for a writ instructing it on how to make these cases workable.

[3] The record shows that the district court was reluctant to reach its holding because, while it could not determine that First Light’s notice was technically insufficient under the statute, the district court recognized and expressed its concern that First Light’s notice did not adequately notify D.R. Horton of which defects existed in each house.

[4] The remaining petitioners, subcontractors in the First Light community, later joined in the petition.

[5] NRS 34.170; NRS 34.330; see also State of Nevada v. Dist. Ct. (Ducharm), 118 Nev. 609, 614, 55 P.3d 420, 423 (2002).

[6] Pan v. Dist. Ct., 120 Nev. 222, 225, 88 P.3d 840, 841 (2004).

[7] Round Hill Gen. Imp. Dist. v. Newman, 97 Nev. 601, 603-04, 637 P.2d 534, 536 (1981).

[8] NRS 34.320; Houston Gen. Ins. Co. v. District Court, 94 Nev. 247, 248, 578 P.2d 750, 751 (1978).

[9] Ducharm, 118 Nev. at 614, 55 P.3d at 423; Smith v. District Court, 107 Nev. 674, 677, 818 P.2d 849, 851 (1991).

[10] Shuette v. Beazer Homes Holdings Corp., 121 Nev. 837, 853-54, 124 P.3d 530, 542 (2005).

[11] NRS 40.645(2).

[12] NRS 40.647(1).

[13] NRS 40.647(2).

[14] Marquis & Aurbach v. Dist. Ct., 122 Nev. ___, ___, 146 P.3d 1130, 1136 (2006).

[15] McKay v. Bd. of Supervisors, 102 Nev. 644, 648, 730 P.2d 438, 441 (1986).

[16] Thompson v. District Court, 100 Nev. 352, 354, 683 P.2d 17, 19 (1984).

[17] McKay, 102 Nev. at 650-51, 730 P.2d at 443.

[18] Diamond v. Swick, 117 Nev. 671, 676, 28 P.3d 1087, 1090 (2001).

[19] Harris Assocs. v. Clark County Sch. Dist., 119 Nev. 638, 642, 81 P.3d 532, 534 (2003) (footnote omitted) (quoting Glover v. Concerned Citizens for Fuji Park, 118 Nev. 488, 492, 50 P.3d 546, 548 (2002), overruled in part on other grounds by Garvin v. Dist. Ct., 118 Nev. 749, 59 P.3d 1180 (2002)).

[20] After its amendment in 2003, NRS 40.635(1) states that “NRS 40.600 to 40.695, inclusive: [a]pply to any claim that arises before, on or after July 1, 1995, as the result of a constructional defect.”

[21] Hearing on S.B. 241 Before the Assembly Comm. on the Judiciary, 72d Leg. (Nev., May 16, 2003).

[22] Id. at 32.

[23] Id.

[24] Id. at 34.

[25] Id.

[26] Id.

[27] NRS 40.655(f) provides that claimants may recover the reasonable costs they incur in the preparation of their pre-litigation notice if the defects alleged are verified.

[28] The parties agree that NRS 40.645(3) and (4) contemplate the use of extrapolation evidence even though the term “extrapolation” is not specifically used.

[29] Black’s Law Dictionary 625 (8th ed. 2004).

[30] NRS 40.645(4)(b).

[31] Because of the contractor’s burden during pre-litigation, we recognize that there are instances when it may be within the contractor’s best interest to opt not to repair. If the contractor opts not to exercise its opportunity to repair, the claimant can commence litigation. At that point, the claimant bears the burden of proving the existence of each defect and the extent of damages resulting from those defects in each residence as part of its damages presentation. See Shuette v. Beazer Homes Holdings Corp., 121 Nev. 837, 855-57, 124 P.3d 530, 543-44 (2005).

[32] See State v. Dist. Ct. (Riker), 121 Nev. 225, 234-35, 112 P.3d 1070, 1076 (2005) (holding that in the interest of promoting judicial economy, it was appropriate for the court to grant the relief requested).

[33] We have considered the parties’ other arguments and conclude that they lack merit.

*****************************

Horgan v. Felton, 123 Nev. Adv. Op. No. 53, November 21, 2007

Cite as: Horgan v. Felton

123 Nev. Adv. Op. No. 53

November 21, 2007

IN THE SUPREME COURT OF THE STATE OF NEVADA

No. 45551

JOHN P. HORGAN, III, AND DOROTHY L. HORGAN; ANDREW M. SPIEKER AND GAIL S. SPIEKER; CATHY J. MCAULIFFE; CHARLES J. WILSON AND DEBRA S. WILSON,

Appellants/Cross-Respondents,

vs.

D. D. FELTON AND PAUL J. FELTON, PARTNERS OF THE DIANNE DAISS FELTON FAMILY LIMITED PARTNERSHIP OF 1997, A NEVADA LIMITED PARTNERSHIP; JANE THORNTON DAISS, AS TRUSTEE OF THE ROBERT M. DAISS AND JANE THORNTON DAISS 1981 TRUST NO. 1; JEPSEN PROPERTIES, INC., A NEVADA CORPORATION; AND EDWARD F. BIGGS AND CHARLOTTE L. BIGGS, AS TRUSTEES OF THE BIGGS FAMILY TRUST DATED AUGUST 12, 1986,

Respondents/Cross-Appellants.

Appeal and cross-appeals from a district court judgment resolving property rights and awarding attorney fees. Ninth Judicial District Court, Douglas County; David R. Gamble, Judge.

Affirmed in part and reversed in part.

Lionel Sawyer & Collins and Dan C. Bowen and Janet S. Bessemer, Reno, for Appellants/Cross-Respondents Horgans and Spiekers.

Michael B. Springer, Reno, for Appellants/Cross-Respondents McAuliffe and Wilsons.

Richard Glasson, Lake Tahoe, for Respondents/Cross-Appellants Feltons and Daiss.

Hale Lane Peek Dennison & Howard and Patricia C. Halstead and Richard L. Elmore, Reno, for Respondents/Cross-Appellants Biggs and Jepsen Properties.

BEFORE THE COURT EN BANC.

OPINION

By the Court, CHERRY, J.:

In this case, we primarily reexamine our decision in Sandy Valley Associates v. Sky Ranch Estates,[1] which states that attorney fees as damages are available in cases clarifying or removing a cloud on title to property. We now retreat from that statement and hold that in cases concerning title to real property, attorney fees are only allowable as special damages in slander of title actions, not merely when a cloud on the title to real property exists.

FACTS

The underlying litigation in this case involves the property rights of seven neighboring homeowners in the Lake Tahoe community of Glenbrook, Nevada. Respondents/cross-appellants Jane Thornton Daiss, as trustee for the Robert M. Daiss and Jane Thornton Daiss 1981 Trust No. 1, Jepsen Properties, Inc., and Edward and Charlotte Biggs, as trustees of the Biggs Family Trust, own residences that abut a beach in Glenbrook. Appellants/cross-respondents John and Dorothy Horgan, Andrew and Gail Spieker, Cathy McAuliffe, and Charles and Debra Wilson own residences east of those beachfront properties, separated from them by Golf Links Road. Respondents/cross-appellants Dianne and Paul Felton own the remaining residence. The Feltons’ residence, like that of the appellants/cross-respondents, is located to the east of Golf Links Road and does not abut the beach.

Golf Links Road is a roadway easement providing access to the homeowners’ respective residences. The recreational beach easement is comprised of the “sand” of the beach area, the “slope” from the beach area up to the residences above, and the “bluff,” which is the area above the slope and the sand just west of the property lines of Daiss, Jepsen Properties, and the Biggs. All of the parties’ parcels are benefited by the recreational beach easement, except for the Feltons’. Daiss currently owns the recreational easement, which is referred to by the parties as Parcel 7.

The Horgans initiated this litigation by filing a complaint for declaratory relief and to quiet title, naming as defendants only two other property owners. By the time of trial, the owners of all affected parcels were involved in the litigation.

In the litigation before the district court, the appellants/cross-respondents, collectively referred to as the Horgan group, sought a declaration that they were the owners of Golf Links Road, an order that Daiss and the Feltons remove improvements that the Horgan group alleged impeded their use of the road, and an order requiring that Daiss and the Feltons re-grade and repave the road. The Horgan group also sought declaratory relief regarding the extent of both their use of the recreational beach easement and the boundaries thereof.

Jepsen Properties and the Biggs counterclaimed against the Horgan group for declaratory relief as to the road easement and for adverse possession as to the recreational easement. Jepsen Properties and the Biggs also cross-claimed against Daiss and the Feltons for adverse possession as to the recreational easement.

After the trial concluded, the district court entered its judgment, finding that the Horgan group and their predecessors have continuously used the recreational easement. Thus, their right to the recreational easement (whether by prescription, adverse possession, abandonment, or any other theory under which ownership to real property can change without a deed) had not been extinguished. In its judgment, the district court concluded that the original grantor’s reservation of the recreational easement and the right to prescribe reasonable regulations necessary for the safe and proper enjoyment of the easement “runs with the land.” Further, the district court concluded that this reservation of the recreational easement provided a sufficient basis on which the court could fashion new rules effectuating the equitable resolution of the parties’ disputes over the easement’s use. The district court then promulgated rules pertaining to the easement’s use and awarded attorney fees jointly and severally against respondents/cross-appellants, collectively referred to as the Daiss group, in favor of the Horgan group as follows: $187,814.82 to the Horgans; $20,031 to the Spiekers; and $12,978.50 to McAuliffe and the Wilsons. The parties’ appeal and cross-appeals followed.

DISCUSSION

While the parties raised numerous issues below, on appeal and cross-appeal, we primarily address whether Jepsen Properties and the Biggs extinguished a portion of the recreational easement; whether the right to promulgate rules concerning the reasonable use of the recreational easement under the deed survived the grantor and vested in the servient tenant; whether the district court has rulemaking authority under the deed; and whether attorney fees are appropriate in this case.

Standard of review

The district court’s findings of fact will be upheld unless they are not supported by substantial evidence or are clearly erroneous.[2] Substantial evidence is evidence that “‘a reasonable mind might accept as adequate to support a conclusion.’”[3] Such evidence need not be voluminous and may be inferentially shown by a lack of certain evidence in the record.[4] Pure legal issues are reviewed de novo.[5]

Extinguishment of the easement

On cross-appeal, Jepsen Properties and the Biggs argue that they extinguished a portion of the recreational easement by adverse use. We disagree.

An easement may be extinguished by, among other ways, prescription, provided the use is adverse to the easement’s owner and such adverse use is, for the period of prescription, continuous and uninterrupted.[6] Based on the lack of evidence in the record showing that Jepsen Properties and the Biggs adversely, continuously used any portion of the recreational easement over the required five-year prescription period, we conclude that substantial evidence supports the district court’s determination that Jepsen Properties and the Biggs failed to extinguish any part of it.[7]

Specifically, the district court found that until recently most of the residences situated on the parties’ parcels were vacation homes and not occupied on a year-round basis. Because each owner occupied his property only part of the time, the owners, or their predecessors in interest, of the parcels closer to the bluff could act, and to some extent did act, with a full intention to exclude the backlot owners from using the recreational easement. In particular, some of the Daiss group installed sprinkler systems and landscaping on those parts of the bluff and slope between their respective parcels and the sand. Likewise, some of the Daiss group erected fences on or across the bluff.

However, because the Horgan group was able to climb over or walk around the fences erected near the bluff, their access to the bluff area of the recreational easement was not completely obstructed. Likewise, evidence adduced at trial indicated that the Horgan group and their predecessors had made use of the recreational easement including strolling, sitting, reading, walking, picnicking, swimming, boating, and hitting golf balls. Based on the above evidence, we conclude that substantial evidence supports the district court’s finding that Jepsen Properties and the Biggs failed to demonstrate that the easement was extinguished.

Rulemaking authority of the servient landowner

The parties dispute whether Jane Thornton Daiss, as the owner of the servient estate, has authority to make reasonable rules for the recreational easement’s use. The Horgan group argues that the language of the easement grant itself is clear and unambiguous in its failure to provide for a right of rulemaking in the grantor’s successors and assigns. The grant provides, in part,

[S]aid easement is . . . subject to the right of the First Party to prescribe any and all reasonable regulations necessary for the safe and proper enjoyment of the easement hereby granted to the Second Parties . . . .

Jepsen and the Biggs argue that the grantor’s reservation of the rulemaking authority was clearly reserved to only “the First Party,” i.e., the original grantor, and was a personal right that was not intended to pass to the grantor’s heirs, successors, and assigns. We disagree.

The burden of an easement is appurtenant, so that the rights or obligations of servitude are tied to ownership or occupancy of a particular parcel of land and not tied to an individual.[8] Here, Jane Thornton Daiss owns the servient estate and, therefore, has the right to prescribe any and all reasonable regulations necessary for the safe and proper enjoyment of the easement.[9]

While we conclude that the right to promulgate rules concerning the reasonable use of the recreational easement under the deed survived the grantor and vested in the servient tenant, the clear language of the deed does not provide the district court with rulemaking authority under the deed. Accordingly, the district court erred in promulgating specific rules for the easement’s use. We therefore reverse the portion of the district court’s order that promulgated specific rules for the recreational easement’s use. While the district court may determine whether the servient tenant’s rules are reasonable, the district court has no rulemaking authority under the deed in the first instance.

Attorney fees as special damages

The district court ordered the Daiss group to jointly and severally pay the Horgan group’s attorney fees as special damages. Generally, attorney fees are not recoverable absent a statute, rule, or contractual provision to the contrary.[10] As an exception to the general rule, a district court may award attorney fees as special damages in limited circumstances.

Here, the Horgan group members argue that they successfully removed a cloud upon the title to their easement rights over the bluff portion of the recreational easement and therefore the district court had the authority to award attorney fees as special damages. To support that contention, they cite to this court’s statement in Sandy Valley Associates v. Sky Ranch Estates that “[a]ttorney fees may . . . be awarded as damages in those cases in which a party incurred the fees . . . in clarifying or removing a cloud upon the title to property.”[11] We take this opportunity to clarify the language in Sandy Valley and other cases as to when attorney fees may be awarded as special damages in cloud of title cases.

In making the above quoted statement in Sandy Valley, this court cited Michelsen v. Harvey, which held that an award of attorney fees is permissible, but not mandatory, when a property owner litigates to remove a cloud on title.[12] Michelsen, in turn, relied upon this court’s original decision in Summa Corp. v. Greenspun (Summa I).[13]

In Summa I, appellant Summa Corp. made a loan to Herman and Barbara Greenspun that was secured by a promissory note and deed of trust.[14] Summa backed out of the deal and agreed to return those two securing instruments.[15] Despite that agreement, however, Summa recorded the deed of trust and effectively encumbered two thousand acres of the Greenspuns’ property.[16] Subsequently, the Greenspuns sued Summa for slander of title and breach of contract, ultimately obtaining a judgment in the district court that included an award of punitive damages and attorney fees.[17]

On appeal, this court determined that the Greenspuns’ slander of title claim was not supported by the evidence.[18] Yet in spite of this conclusion, this court affirmed the award of attorney fees because the Greenspuns filed their cause of action to remove a cloud upon title.[19] In doing so, we indicated that “[i]n an action to remove a cloud upon the title to real property[,] it is permissible to assess as damages the attorneys’ fees incurred incident to that action.”[20]

The cases cited in Summa I for this proposition, however, actually hold that in an action for slander of title, the plaintiff may recover as damages the expense of legal proceedings necessary to remove a cloud on the plaintiff's title.[21] These holdings are based on the Restatement (Second) of Torts, which provides the circumstances under which one becomes liable for slander of title. Specifically, section 633 of the Restatement defines “recoverable pecuniary loss” as

(a) the pecuniary loss that results directly and immediately from the effect of the conduct of third persons, including impairment of vendibility or value caused by disparagement, and

(b) the expense of measures reasonably necessary to counteract the publication, including litigation to remove the doubt cast upon vendibility or value by disparagement.[22]

The clear majority rule is that attorney fees incurred in removing spurious clouds from a title qualify as special damages in an action for slander of title.[23] As stated by the Washington Supreme Court, attorney fees are permissible as special damages in slander of title actions because “the defendant . . . by intentional and calculated action leaves the plaintiff with only one course of action: that is, litigation. . . . Fairness requires the plaintiff to have some recourse against the intentional malicious acts of the defendant.”[24] However, no authority appears to support the proposition that attorney fees are available as special damages in a case to remove a cloud upon title when no claim for slander of title has been alleged, and in fact, authority to the contrary exists.[25]

Accordingly, our statement in Sandy Valley that attorney fees are available in a case “of clarifying or removing a cloud upon the title to property” and similar statements in Summa I and Michelsen inadvertently expanded the scope of real property cases in which attorney fees are available as special damages. Therefore, we retreat from these statements and now clarify that attorney fees are only available as special damages in slander of title actions and not simply when a litigant seeks to remove a cloud upon title.[26] Because the district court never found that the Daiss group slandered title to real property, no attorney fees were available in this case. Accordingly, we reverse that portion of the district court’s order that awarded attorney fees to the Horgan group.[27]

CONCLUSION

We conclude that the district court did not err in determining that the Daiss group failed to show that they acquired a portion of the recreational easement through adverse use and that Jane Thornton Daiss, as the servient tenant, may promulgate rules for the reasonable use of the recreational easement. We thus affirm those portions of the district court’s judgment. However, we conclude that the district court had no authority to promulgate rules in the first instance. Additionally, we retreat from our statement in Sandy Valley v. Sky Ranch Estates and earlier cases that attorney fees as damages may be recovered in actions to quiet or clarify title to real property. Such attorney fees are available in real property matters only for slander of title. Thus, attorney fees as damages were not available in this case.[28] Accordingly, we reverse those portions of the district court’s judgment pertaining to the creation of rules for the recreational easement and the award of attorney fees as damages.

GIBBONS, HARDESTY, PARRAGUIRRE, DOUGLAS and SAITTA, JJ., concur.

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[1] 117 Nev. 948, 955, 35 P.3d 964, 968-69 (2001).

[2] Jordan v. Bailey, 113 Nev. 1038, 1044, 944 P.2d 828, 832 (1997).

[3] Yamaha Motor Co. v. Arnoult, 114 Nev. 233, 238, 955 P.2d 661, 664 (1998) (quoting State, Emp. Security v. Hilton Hotels, 102 Nev. 606, 608, 729 P.2d 497, 498 (1986)).

[4] Wright v. State, Dep’t of Motor Vehicles, 121 Nev. 122, 125, 110 P.3d 1066, 1068 (2005).

[5] Las Vegas Downtown Redev. v. Crockett, 117 Nev. 816, 822, 34 P.3d 553, 557 (2001).

[6] Brooks v. Jensen, 87 Nev. 174, 177, 483 P.2d 650, 652-53 (1971).

[7] See NRS 11.150.

[8] Seven Lakes Development Co. v. Maxson, 144 P.3d 1239, 1245 (Wyo. 2006).

[9] Boydstun Beach Ass’n v. Allen, 723 P.2d 914, 920 (Idaho Ct. App. 1986) (citing Restatement (First) of Prop.: Servitudes § 486 cmt. a (1944)); New York Cent. R. Co. v. Ayer, 136 N.E. 364, 365 (Mass. 1922); Shingleton v. State, 133 S.E.2d 183, 187-88 (N.C. 1963).

[10] Rowland v. Lepire, 99 Nev. 308, 315, 662 P.2d 1332, 1336 (1983).

[11] 117 Nev. 948, 957, 35 P.3d 964, 970 (2001) (emphasis added).

[12] 110 Nev. 27, 30, 866 P.2d 1141, 1142 (1994).

[13] 96 Nev. 247, 607 P.2d 569 (1980), modified on reh'g, 98 Nev. 528, 655 P.2d 513 (1982).

[14] Id. at 250-51, 607 P.2d at 570-71.

[15] Id.

[16] Id.

[17] Id. at 250-55, 607 P.2d at 571-74.

[18] Id. at 254, 607 P.2d at 573.

[19] Id. at 255, 607 P.2d at 573-74.

[20] Id. (citing Wright v. Rogers, 342 P.2d 447 (Cal. Dist. Ct. App. 1959); Dowse v. Doris Trust Co., 208 P.2d 956 (Utah 1949); Restatement (Second) of Torts § 633(1)(b) (1977)). On rehearing in 1982, this court ultimately determined that the Greenspuns’ slander of title action was supported by the evidence and attorney fees incurred in removing the cloud from the title qualify as special damages in an action for slander of title. Summa Corp. v. Greenspun (Summa II), 98 Nev. 528, 655 P.2d 513 (1982). However, Michelsen, which was decided in 1994, cited the 1980 decision in Summa I for the proposition that in an action to remove a cloud upon title, it is permissible to assess as damages attorney fees, regardless of whether the plaintiff made out a claim for slander of title. 110 Nev. at 29-30, 866 P.2d at 1142.

[21] Wright, 342 P.2d at 457; Dowse, 208 P.2d at 957-59.

[22] Restatement (Second) of Torts § 633(1) (1977).

[23] Rayl v. Shull Enterprises, Inc., 700 P.2d 567, 573 (Idaho 1984); Paulson v. Kustom Enterprises, Inc., 483 P.2d 708, 715-16 (Mont. 1971); Den-Gar Enterprises v. Romero, 611 P.2d 1119, 1124 (N.M. Ct. App. 1980); Peckham v. Hirschfeld, 570 A.2d 663, 668 (R.I. 1990). Nevertheless, although the prevailing party in a slander of title action may recover as special damages those attorney fees and expenses incurred to remove the cloud on the title, the costs incurred to prosecute the slander of title action itself do not constitute the required special damages and are not recoverable. It is only the costs of actions taken to clear a plaintiff's title and such other expenses that are reasonably necessary to counteract the disparagement that are appropriately characterized as “special damages” for which the tortfeasor should bear liability. See Colquhoun v. Webber, 684 A.2d 405, 411, 413 (Me. 1996) (remand necessary where trial court erroneously computed its award of special damages based on the legal cost of prosecuting the slander of title action, instead of based on the expense of measures reasonably necessary to counteract the publication of the slander caused by the defendant’s filing of spurious quitclaim deed); Gillmor v. Cummings, 904 P.2d 703, 708-09 (Utah Ct. App. 1995) (landowners could recover attorney fees incurred to quiet title as special damages for slander of title, but remand was necessary to determine amount of damages to which landowners were entitled).

[24] Rorvig v. Douglas, 873 P.2d 492, 497 (Wash. 1994) (reversing an 85-year-old precedent disallowing attorney fees as special damages in slander of title cases and adopting Restatement position).

[25] Price v. Tyler, 890 So. 2d 246, 250-51 (Fla. 2004) (holding that attorney fees as damages, although permissible in slander of title actions, were not allowed in a quiet title case); Jemez Properties, Inc. v. Lucero, 608 P.2d 157, 162 (N.M. Ct. App. 1979) (disallowing slander of title remedies, such as attorney fees as special damages, when no slander of title claim asserted).

[26] We affirm our holding in Sandy Valley that attorney fees as damages must be specially pleaded under NRCP 9(g). We acknowledge that the cases cited by Sandy Valley for the proposition that attorney fees must be specially pleaded do not directly address NRCP 9(g) and when attorney fees must be specially pleaded under this rule. See International Indus. v. United Mtg. Co., 96 Nev. 150, 606 P.2d 163 (1980) (holding that when a lessor did not recover compensatory damages nor attorney fees as damages, an award of attorney fees was improper); City of Las Vegas v. Cragin Industries, 86 Nev. 933, 478 P.2d 585 (1970) (award of attorney fees not proper when the complaint only alleged the necessity for the services of counsel and simply requested attorney fees); Brown v. Jones, 5 Nev. 374 (1870) (complaint must allege with distinctness fees resulting only from dissolution of injunction). However, the plain language of NRCP 9(g) requires that “[w]hen items of special damages are claimed, they shall be specifically stated.” See also Conservative Club of Washington v. Finkelstein, 738 F. Supp. 6 (D.D.C. 1990) (recognizing in dictum that attorney fees as special damages in a slander of title action must be pleaded with particularity); Spencer v. Harmon Enterprises, Inc., 44 Cal. Rptr. 683 (Dist. Ct. App. 1965) (implicitly acknowledging that attorney fees as special damages for a slander of title claim must be specifically pleaded, and holding that pleading in that case met the required standard). Since attorney fees are items of special damages in a slander of title case, it follows that they must be specially pleaded under NRCP 9(g).

[27] We have considered the parties’ other arguments and conclude that they lack merit.

[28] We note that it is not clear from the record whether attorney fees may be permissible on some other basis. The district court remains free to consider such an award, if appropriate.

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MAUPIN, C.J., concurring:

I concur in the result reached by the majority.

I want to stress that the clarification of Sandy Valley Associates v. Sky Ranch Estates[1] does not preclude the prosecution of claims for attorney fees as damages in other contexts; e.g., in connection with actions for malicious prosecution, abuse of process, wrongful attachment, trademark infringement, false imprisonment or arrest.

**********FOOTNOTES**********

[1] 117 Nev. 948, 955-60, 35 P.3d 964, 968-69 (2001).

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