Rockery Wall Litigation Information Meeting

Some Take-away points from the March 10th Information Meeting:

  • The American Geotechnical representative did an excellent job of explaining rockery wall construction techniques, the types of deficiencies associated therewith and how they were pervasive throughout Somersett. This along with actual pictures of some blatant Somersett Rockery Wall defects painted an effective picture to support the SOA’s litigation process against the Somersett developer and its subcontractors.
  • The American Geotechnical representative revealed that he has served as a technical expert in several other SOA Attorney (Wolf, Rifkin, Shapiro, Schulman & Rabkin, LLP) lawsuits (did not address successes or failures). Undoubtedly, as in most lawsuits, if it gets that far, Somersett Development Company et. al. will have their own experts with opposing opinions (whose expert will win out?).
  • It is not possible to determine cost estimates for future rockery wall defect remediation without more detailed inspections, but they will most likely far exceed the $2.5M currently being spent on failed wall and hillside repairs. Since short and long-term repair costs cannot currently be determined, there is no way to estimate the future cost to homeowners or determine how it will be paid for. However, of the 13.5 miles of the 325 rockery walls inspected, The American Geotechnical representative felt that only a small percentage would need near-term remediation.
  • The SOA Attorneys are banking on the six-year statute of limitations for defect claims as starting with Developer Board turnover to homeowners. That is, as opposed to the actual rockery wall substantial completion dates, which have exceeded the six-year statute (good luck with this, as it apparently has not been tested in the courts). The Developer turnover date established the basis for the December 29th, 2017 filing date, which also impacted the discovery process and the inability to obtain more data and background information on the rockery walls prior to filing.
  • No violations of required building codes or standards in effect at the time the rockery walls were constructed have been identified. In the absence of such published codes or standards, the SOA Attorneys will most likely claim that the walls were not constructed in accordance with common local building and industry practices in effect at the time, and that the defendants were aware of such and hid it. The question being what did they know and when did they know it?
  • Current Law prohibits recovery of legal fees in construction defect claims. However, the SOA attorney assured Association members that they will be looking out for the SOA’s best interests (i.e., as opposed to their own pocketbook) and would recommend terminating the lawsuit if it did not make sense to move forward. (Note: in the Attorney litigation letter to homeowners, they estimated $100K – $300K in legal fees and $100K – $250K in testing costs or $200K – $550K total over a 2-4-year period).
  • Recovery amount will most likely be limited to what is available from defendant’s insurance policies, yet to be determined.
  • Many inquired about potential rockery wall deficiencies on their property, marketability impact and related real estate disclosures. Bottom line – you are on your own here.
  • The lawsuit does not include any common area walls within the Sierra Canyon, The Vue and Villages sub-associations.
  • There was no strong reasoning put forth to indicate that the SOA would prevail in winning the lawsuit, basically a crap shoot at this time.
  • No official response had yet been received from the defendants refuting the SOA’s construction defect claim (Per NRS statutes, the defendants have 90 days from the Notice of Claim filing date to provide their response, after which the SOA has 30 days to provide this response to Association members, given the December 29th filing date it does not appear that this response will be made available prior to the March 28th ballot submittal deadline).

Herein lies the dilemma for Association members, even if there is a low probability for success, is the reward worth the cost of moving forward? Assuming the high end legal cost estimate of $550K, this would equate to approximately $176/unit owner, not a huge amount. Estimating future rockery wall repair/replacement costs at this time is problematic. However, if one assumes that these costs will “far exceed” the $2.5M currently being spent, say $8M as an example, the cost would equate to approximately $2600/unit owner (one can do their own math by dividing their assumed values by Somersett’s 3124-unit owners).

The bottom line opinion here is that: given the potential for future failures and SOA liability issues, it makes sense for homeowners to RATIFY the litigation. If future discovery points to not pursuing the litigation, the SOA BOD can then act accordingly.

Comments/Opinions anyone?