Albios v. Horizon Communities, Inc.Albios v. Horizon Communities, Inc.
By the Court,
Appellants Dionicio Albios and Kathryn Albios sued respondent Horizon Communities, Inc., for constructional defects in their single-family residence located in Clark County, Nevada. Prior to trial, Horizon served the Albioses with three successive offers of judgment, which the Albioses rejected. Following a jury trial, the jury found in favor of the Albioses and awarded them $100,000, which was reduced by 5 percent for their comparative negligence. The Albioses filed a post-trial motion for attorney fees and costs under
We first conclude that although
FACTS
The Albioses filed a complaint against Horizon, a property developer, alleging constructional defects in their single-family residence located in Clark County, Nevada. Horizon answered the complaint and denied all of the substantive allegations. Horizon then filed a third-party complaint, seeking indemnity and contribution from various subcontractors.
The parties engaged in three mediations. After each of the mediations, Horizon submitted an offer of judgment to the Albioses under NRCP 68 and
The Albioses and Horizon then each sought attorney fees and costs through post-trial motions. Horizon filed a memorandum of costs in the amount of $126,501.56 and a motion for attorney fees in the amount of $233,287.50. Horizon argued that it was entitled to costs and attorney fees under NRCP 68 and
During the hearing on the parties’ motions for attorney fees and costs, the district court stated, “[I]t’s amazing how plaintiffs and defendants are within a token of each other’s fees. So, there’s no way I can say the fees are not fair; fees are fair on both sides [bejcause both sides charged about the same thing.” It also stated,
If I thought somebody had done something wrong or something bothered me, I’d be the first to say, gee, [Albioses], you know, you’re wanting too much.
I think both sides did an admirable job considering this is a one-residence, Chapter 40 case ....
[Albioses], I think you did an admirable job. Congratulations to you and congratulations to the defense in this matter. You did the best you could under the circumstances.
The district court postponed its decision on the motions and ordered the parties to attend
The district court then issued its decision regarding fees and costs. It noted,
This is a tough call. I’ve thought about this case and thought about it, and I think that under — if you — a strict reading of Beatt[ie], that certainly the offer of judgment, whether it be the first, second or third one, was not one that I would consider viable under the facts and — circumstances of this particular case. These are unusual cases, these construction defect, single home, cases.
Horizon asked for clarification regarding the district court’s ruling on the offers of judgment, to which the district court responded,
Under Beatt[ie] they weren’t — they weren’t applicable. They weren’t — they weren’t right. I mean they just weren’t appropriate. There’s no way she could have taken those offers of judgment, not with the costs and the— . . . and the cost of repairs.
The district court granted the Albioses’ motion, awarding them $50,000 in attorney fees and $179,000 in costs. With regard to the $50,000 attorney fees award, the district court stated,
I’m going to give plaintiff $50,000 in attorney’s fees .... So I’ve cut down on the attorney’s fees substantially and I think that it’s one of those situations where having been a flat fee criminal lawyer part of my career, that sometimes we get into cases that we don’t get full value for our services. But I certainly think that $50,000 is a fair amount under the facts and circumstances of this case.
The district court also awarded interest on the judgment but denied interest on the attorney fees and costs and denied the request for post-trial fees and costs. The district court calculated prejudgment interest under
Horizon filed a motion to alter the judgment, arguing that prejudgment interest should be calculated by applying the interest rate provided by the State of Nevada, Division of Financial Institutions. The Albioses opposed the motion and sought to increase
the interest rate used in the court’s calculation, arguing that interest should have been calculated in accordance with
The Albioses argue on appeal that the district court erred by: (1) awarding only $50,000 in attorney fees when the reasonable amount of fees incurred amounted to $234,200; (2) disallowing prejudgment interest on costs; (3) calculating prejudgment interest under
On cross-appeal, Horizon argues that NRS Chapter 40 should not prevail over NRCP 68 and
DISCUSSION
Standard of review
We generally review the district court’s decision regarding attorney fees for
NRS Chapter 40 versus NRCP 68 and
The Albioses asked for attorney fees under
1. Except as otherwise provided inNRS 40.650 , in a claim governed byNRS 40.600 to 40.695, inclusive, the claimant may recover only the following damages to the extent proximately caused by a constructional defect:
(a) Any reasonable attorney’s fees;
2. The amount of any attorney’s fees awarded pursuant to this section must be approved by the court.
Horizon argues that its offers of judgment were more favorable than the verdict obtained by the Albioses, and therefore, NRCP 68 and
“Whenever possible, this court will interpret a rule or statute in harmony with other rules and statutes.”
9
And when possible, we construe statutes such that no part of the statute is rendered nugatory or turned to mere surplusage.
10
Under
In contrast, NRCP 68 and
Validity of Horizon’s offers of judgment
Next, we must determine whether Horizon’s offers of judgment were valid and, thus, precluded the Albioses from recovering attorney fees if their verdict was less favorable than Horizon’s offers of judgment. The Albioses argue that Horizon’s offers of judgment were invalid to trigger the penalty provisions of NRCP 68 and
The pertinent provisions of NRCP 68(c)(3) state,
An offer made to multiple plaintiffs will invoke the penalties of this rule only if (A) the damages claimed by all the of-feree plaintiffs are solely derivative, such as that the damages claimed by some offerees are entirely derivative of an injury to the others or that the damages claimed by all offerees are derivative of an injury to another, and (B) the same entity, person or group is authorized to decide whether to settle the claims of the offerees.
Under
(b) An offer of judgment made to multiple plaintiffs unless the same person is authorized to decide whether to settle the claims of all the plaintiffs to whom the offer is made and:
(1) There is a single common theory of liability claimed by all the plaintiffs to whom the offer is made;
(2) The damages claimed by one or more of the plaintiffs to whom the offer is made are entirely derivative of an injury to the remaining plaintiffs to whom the offer is made; or
(3) The damages claimed by all the plaintiffs to whom the offer is made are entirely derivative of an injury to another person.
(Emphases added.)
The Albioses argue that the offers of judgment do not fall within the scope of NRCP 68 and
Addressing first the derivative damages argument, the Albioses are correct that under NRCP 68, an unapportioned offer of judgment made to multiple plaintiffs is invalid unless the damages are
derivative; here the Albioses’ damages are not derivative.
“[Ajpparent conflicts between a court rule and a statutory provision should be harmonized and both should be given effect if possible.”
19
We have previously addressed differences between NRCP 68 and
Under NRCP 68, the defendant must show that the plaintiffs’ damages are derivative.
Horizon was also required to demonstrate that the same person was authorized to decide whether to settle the claims of all plaintiffs. The Albioses owned their property in joint tenancy, and they argue that, therefore, each had a separate interest in the property and that one joint tenant cannot act on behalf of the other joint tenant in controlling the other’s interest.
22
However, if it can be shown
that one plaintiff is authorized to decide whether to settle the claims for all plaintiffs, joint tenancy will not preclude service of an unapportioned offer of judgment under NRCP 68 and
In situations such as the case at bar, when a married couple jointly brings a claim under the same common theory of liability, concerning jointly owned property, we hold that as a matter of law, one plaintiff spouse is presumed to have authority to settle the claims for both plaintiff spouses. Thus, Horizon has satisfied the second requirement for serving an unapportioned offer, and its offers to the Albioses were valid. 23
Accordingly, we must next examine whether the Albioses’ verdict exceeded Horizon’s offers.
Successive offers of judgment
Horizon served the Albioses with three successive offers of judgment, all of which the Albioses rejected. Horizon argues that its second and third offers of judgment were more favorable than the Albioses’ verdict and, therefore, the Albioses are not entitled to attorney fees under NRCP 68 and
Both NRCP 68 and
California adopts the position that successive offers extinguish previous offers. California’s theory is that the ‘ ‘process of settlement and compromise is a contractual one, and the applicable principles are those relating to contracts in general.” 27 The general contractual rule on offers is that “any new offer communicated prior to a valid acceptance of a previous offer, extinguishes and replaces the prior one.” 28 Further,
there is an evolutionary aspect to lawsuits and the law, in fairness, must allow the parties the opportunity to review their respective positions as the lawsuit matures. The litigants should be given a chance to learn the facts that underlie the dispute and consider how the law applies before they are asked to make a decision that, if made incorrectly, could add significantly to their costs of trial. 29
Most importantly, California concludes that the legislative purpose of offers of judgment statutes “is generally better served by a bright line rule in which the parties know that any judgment will be measured against a single valid statutory offer — i.e., the statutory offer most recently rejected — regardless of offers made earlier in the litigation.” 30 And interpreting the offer of judgment rule otherwise encourages a party to
maintain a higher settlement demand on the eve of trial and refuse to settle a case that should otherwise be settled if the [party] finds comfort in the knowledge that, even if [the party] receives an award less than his or her last demand, [the party] might still enjoy the cost reimbursement benefits ... so long as the award exceeded a lower demand made by the [party] some time during the course of the litigation. . . . “Rolling the dice’ ’ then becomes somewhat less risky and we note that lawsuits are not often settled by reducing the risk of trial. 31
Notably, California’s offer of judgment rule, California Code of Civil Procedure section 998, contains two important differences from NRCP 68 and
Thus, we adopt the reasoning of our sister state California and hold that the most recent offer of judgment extinguishes all prior offers of judgment and is controlling for purposes of NRCP 68 and
The Albioses were awarded $100,000, reduced by 5 percent for comparative negligence, resulting in a judgment of $95,000. Although this amount does not exceed Horizon’s third offer of judgment, we recently held that “pre-offer prejudgment interest must be added to the judgment when comparing it to the offer of judgment, unless the offeror clearly intended to exclude prejudgment interest from its offer.” 37 When, as here, the offer is silent regarding prejudgment interest and the intent of the offeror cannot be determined, we will presume that the offer includes prejudgment interest. 38 Although Horizon’s offer excluded attorney fees and costs, this exclusion was insufficient to alert the Albioses to the fact that prejudgment interest would also be excluded. However, because Horizon expressly excluded attorney fees and costs, only pre-offer prejudgment interest awarded on the $95,000 damages awarded can be considered.
Thus, when $12,983.46 in pre-offer prejudgment interest 39 is added to the $95,000 verdict, the Albioses’ trial recovery was more favorable than Horizon’s third offer of judgment. As such, the Albioses were entitled to their attorney fees and costs. 40
Award of attorney fees
The Albioses argue that the district court abused its discretion when awarding them attorney fees because the actual fees they incurred were much higher than the amount awarded by the district court. We agree.
However, we recently stated in
Shuette v. Beazer Homes Holdings Corp.
43
that recovery of attorney fees under
When determining the amount of fees to award, the district court has great discretion, to be “ ‘tempered only by reason and fairness.’ ” 46 The district court is not limited in its approach for determining the amount of attorney fees to award, but it must conduct its analysis in light of the Brunzell v. Golden Gate National Bank 47 factors, “namely, the advocate’s professional qualities, the nature of the litigation, the work performed, and the result.” 48
The district court abused its discretion by failing to consider the Brunzell factors in awarding the Albioses only $50,000 in attorney fees. The district court commented that the Albioses’ counsel had performed admirably in litigating the case. The district court also noted the difficulty of the case, considering that it was the first constructional defect case to be brought by a single homeowner. It noted how remarkable it was that each side had charged a similar amount in fees and concluded that the fees were fair considering the time expended on litigation. Finally, the Albioses’ counsel produced a favorable result. Although the district court made those observations, it failed to consider them when determining the amount of attorney fees to award, setting an amount far below that actually incurred. The district court abused its discretion, and we therefore reverse that portion of the district court’s judgment that pertains to attorney fees.
Prejudgment interest
Award of prejudgment interest on entire verdict
Horizon argues that the district court abused its discretion by awarding the Albioses prejudgment interest on the entire verdict because the general verdict form used did not distinguish.between past and future damages, and the Albioses did not object to the use of this form. We review challenges to prejudgment interest awards for error.
49
Under
Horizon argues that the future damages the Albioses sought included move-out expenses such as motel rooms, food expenses, moving expenses, storage expenses, and kennel expenses for their dogs. The Albioses argue that these damages are not future damages but, instead, stem from past injuries that have already occurred but have yet to be cured. We agree.
Our recent decision in Shuette provides analytical assistance. There, we stated that an award of prejudgment interest on an entire verdict in a constructional defect case could be proper because “the award represented] only past damages[ ] . . . because the damages occurred when the homes were built, regardless of when the homeowners actually made or will make necessary repairs.” 52 Further, we opined that “unexpended costs to repair constructional defects, which necessarily occurred early on, should be treated as past damages, even though the defects will be repaired in the future. Thus, prejudgment interest should be applied to past ‘abatement’ damages.” 53 To repair a home’s constructional defects, it will often be necessary for the homeowners to first move out of the home and into temporary housing. Thus, move-out expenses, such as those sought by the Albioses, are a part of the abatement damages. Although the homeowners might not have yet repaired the home and, thus, not yet incurred move-out expenses, these damages “should be treated as past damages.” The district court did not err in awarding the Albioses prejudgment interest on the entire verdict.
Prejudgment interest on costs and attorney fees
The district court denied the Albioses prejudgment interest on their costs and attorney fees. We conclude that the denial of both was error. Under the plain language of
The parties do not raise an issue regarding whether the Albioses were entitled to prejudgment interest on attorney fees. However, we conclude that the failure to award prejudgment interest on attorney fees in this case was plain error, and we will address this issue sua sponte. 56
This court has not yet addressed whether prejudgment interest is recoverable
The Albioses also argue that prejudgment interest should have been awarded under
The Albioses asserted two theories of liability — breach of contract and negligence. In reaching its general verdict, the jury did not differentiate between the two claims, but found that the Al-bioses had 5 percent comparative fault and reduced the verdict accordingly. This suggests that the jury based its award on negligence rather than on the breach of contract claim. Further,
However, Horizon argues that the district court erred by calculating the prejudgment interest at a flat rate of 11.5 percent per year. In determining the applicable rate, district courts are to use the base prime interest rate “as ascertained by the commissioner of
Financial Institutions on January 1 or July 1, as the case may be, immediately preceding the date of judgment, plus 2 percent.”
58
Under
Award of costs
The Albioses argue that the district court improperly refused to award all their costs. The court awarded them $179,985 in costs, but they sought $192,708 in costs. They argue that the district court should have awarded them costs for facsimile transmissions, out-of-pocket paralegal expenses, postage, hiring a special runner, and other items.
Under
CONCLUSION
For the above reasons, we affirm the decision of the district court regarding the Albioses’ entitlement to attorney fees and costs, but we reverse in part and remand for a recalculation of attorney fees and prejudgment interest.
Notes
McCrary v. Bianco,
The Albioses also challenge the district court’s refusal to assert jurisdiction and address Horizon’s motion to amend the judgment and the Albioses’ motion for additional time to file a motion to alter or amend the judgment to correct the prejudgment interest. As we conclude that the district court incorrectly calculated prejudgment interest, this issue is moot.
Allianz Ins. Co.
v.
Gagnon,
State, Dep’t of Human Resources v. Fowler,
NRCP 68(f);
Banks v. Sunrise Hospital,
Allianz Ins. Co.,
Paramount Ins. v. Rayson & Smitley,
Additionally, we note that “[t]he judiciary, of course, has the inherent power to govern its own procedures; and that power includes the right to adopt and promulgate rules of procedure.”
Whitlock
v.
Salmon,
Dillard Department Stores v. Beckwith,
General Motors v. Jackson,
Additionally, although not applicable in this action, the Legislature amended NRS Chapter 40 in 2003 to address offers of judgment.
See Bowyer v. Taack,
The district court did not address whether Horizon’s offers of judgment were invalid because they were joint, unapportioned offers. Instead, the district court mistakenly addressed the validity of the offers of judgment under
Beattie
v. Thomas,
Horizon relies on our decision in
Uniroyal Goodrich Tire v. Mercer,
Bowyer,
Id.
at 628,
Paramount Ins. v. Rayson & Smitley,
See Fick
v.
Fick,
We view this case as distinguishable from our decision in
Lentz v. I.D.S. Financial Services,
Although this court has never directly addressed this issue, in
Pombo v. Nevada Apartment Ass’n,
NRCP 68(e);
Distefano v. Hall,
Id.
Wilson
v.
Wal-Mart Stores, Inc.,
Id.
Id.
T.M. Cobb Co., Inc. v. Superior Court,
Nava v.
Dist. Ct.,
Kaufman
v.
Smith,
E.g., Dickenson
v.
Regent of Albuquerque, Ltd.,
Our holding today applies only to the post-trial determination of which offer is controlling for purposes of whether a party received a more favorable verdict at trial. It does not change or affect the fact that offers of judgment are irrevocable within the statutory ten-day period.
State Drywall
v.
Rhodes Design & Dev.,
State Drywall,
This figure was calculated solely for purposes of whether the Albioses recovered a more favorable verdict and does not represent the actual prejudgment interest the Albioses are entitled to. This figure represents prejudgment interest calculated at 6.25 percent (applicable period of interest is January 1, 2003, which is the period immediately preceding the judgment), for 798 days — the period between July 13, 2000 (service of the summons and complaint) and September 19, 2002 (service of Horizon’s third offer of judgment).
Although the district court’s reasoning in awarding the Albioses attorney fees and costs was erroneous, we will affirm the decision of the district court when it reaches the correct result, even if based on the wrong reason.
Sengel
v.
IGT,
Shuette
v.
Beazer Homes Holdings Corp.,
Sandy Valley Assocs. v. Sky Ranch Estates,
M.
at 863,
Id.
Id.
at 864,
Shuette,
See Hazelwood v. Harrah’s,
Id.; see also Stickler
v.
Quilici,
Farmers Home Mutual Ins. v. Fiscus,
Shuette,
Id.
Gibellini
v.
Klindt,
Bobby Berosini, Ltd.
v.
PETA,
114 Nev 1348, 1355-56,
See McNair
v.
Rivera,
BHY Trucking
v.
Hicks,
Lee
v.
Ball,
Bergmann v. Boyce,
Id.
at 679,
Id.
Additionally, upon review of the record and consideration of the parties’ arguments, we conclude that the district court likewise did not abuse its discretion by denying the Albioses’ request for post-trial attorney fees and costs.