Nevada’s residential construction defect law – NRS 40.600 through 40.695, inclusive – was enacted in order to avoid costly litigation by providing all contractors and subcontractors with a notice of and an opportunity to repair alleged construction defects before litigation commences. While this purpose is widely recognized by Nevada’s Supreme Court, that court has now determined that a supplier has no such right.
In Barrett, et al., v. Dist. Ct., 130 Nev.Adv.Op. 65 (2014), the Nevada Supreme Court determined that on its face, Nevada’s residential construction defect law does require that either homeowners or general contractors provide notice of a construction defect claim before bringing a lawsuit against them. Moreover, the law does not require that a subcontractor who may have purchased the material from the involved suppler does not need to provide that supplier with notice either. The court’s reasoning is based on the complete omission of the term “supplier” from the mandatory notification language in NRS 40.645. Given such a plain omission, the Court was not compelled to look beyond the statutory language into the legislative intent to make this determination. As a result, a supplier is effectively excluded from any right to make a repair or supply a replacement for its allegedly defective materials before being sued for construction defects in Nevada.
This raises a huge potential liability for material suppliers and their distributors in Nevada. Ordinarily protected by the limitations on sales of goods under the Uniform Commercial Code (adopted in Nevada at NRS Chapter 104), material suppliers now are exposed to claims of construction defect, including liability for attorney’s fees, costs, expert fees, and supposed damage even if such materials cause no personal injury. This also raises the specter that manufacturers who have no locations or operations in Nevada may be exposed to liability having never had any direct connection to the homeowners or even intending their material to be used in the construction of the particular residence or in Nevada itself, if putting their products into “the stream of interstate commerce” is sufficient to give Nevada courts personal jurisdiction.