Rockery Wall Litigation Update (7)

Case-Dismissed-1

Yesterday (August 2nd) the SOA Board President, in a “Somersett Happenings” email distribution to Homeowners, announced that the Nevada Court of Appeals has upheld the District Court’s Summary Judgement dismissal (based on statutes of repose and limitations) of the SOA’s lawsuit against Somersett Development Company et. al. That is, the SOA’s lawsuit for damages (In excess of $4M) associated with the SOA Common Area Rockery Wall failures. This essentially bringing an end to the litigation. Or does it?  Will the SOA be liable for any of the defendants legal fees?

In announcing the appeal decision, the SOA email contained a brief summary of litigation events (initiated in April 2018), implied that the lawsuit was ill advised and will end up costing the SOA in the area of $754K.

Did the SOA Attorneys lead us down the “primrose path” for their own benefit? Many believe so. However, the previous Board did conduct Homeowner Information Meetings on the lawsuit, wherein the SOA Attorneys and  Engineering Firms presented the case for litigation and addressed owner questions. Subsequently, information letters and ballots were distributed to all SOA members (approximately 3000) for ratification of the lawsuit by majority vote as required by Nevada law. The Vote count being 716 for, 205 against, and 36 invalid.  Note that a “majority vote” would constitute approximately 1500 votes. However, the SOA attorney advised that the SOA had conducted a good faith effort and that their interpretation of Nevada Law allowed the SOA to proceed with the litigation without having to extend the voting deadline to obtain a majority vote, which they did, bringing us to the present.

The President’s email contained the following quote from the Court of Appeal’s decision, describing it as a “scathing opinion”.

“NRS 11.202(1); NRS 11.2055, which we clarify in the context of the common law, means sufficiently complete so that the owner can occupy or utilize the improvement. Here, SOA failed to offer anything beyond “gossamer threads of whimsy, speculation, and conjecture” to support its argument that it commenced this action within that six-year period.”

However, for the complete text (13 pages) of the Supreme Court Opinion, the reader is referred to the following legal filing:

Supreme Court Appeal Opinion 21-21960, Case No. 79921

For those interested in reading the “Summary Judgement” issued by the District Court in October 2019, which was he basis for the appeal, the following link is also provided.

Order Granting Defendant’s Motion for Summary Judgement

The SOA President’s email also contained a paragraph about being more judicious in pursuing legal actions. Amen to that. However, Board members are normally not legal experts and have to rely on the Association’s legal team for guidance. Perhaps a new legal firm representing the SOA is warranted!

5 thoughts on “Rockery Wall Litigation Update (7)

    1. Dusty,
      Perhaps you should save your consternation for the previous Board, who voted to proceed with the lawsuit based on ratification by only 716 homeowners, or perhaps the 2000 owners who chose not to submit a ballot. Apathy does not constitute a NO vote.

  1. “Perhaps a new legal firm representing the SOA is warranted!” Agreed Jim, we have been led for years down a path of bad legal advice. Unfortunately, few see it and we continue to pay for this incompetence. $754K in legal fees for something most would say wasn’t a good plan borders on criminal. But hindsight is 20/20.

  2. Vince:
    There is no 20/20 Hindsight with the Wall Litigation issue. Per NRS 116.31088 a vote of the HOA members was needed and a majority of the total members was needed to proceed. The HOA did not get the required number of votes to proceed, so the legal action should have ended. The HOA Board had no authority to proceed with the legal action and spent HOA funds. NRS 116.31088 is clear, a vote is needed to proceed (the action “MUST” be ratified), the statue does not say “Maybe” or “Procced after a good faith Effort”. So how did the HOA Board do what they should not have done, proceed and spend HOA funds without HOA members approval?? Did a HOA Board member comment to the other Boards members “How do we proceed with the legal action when members voted no”. Did a Board member or did the HOA attorney make the recommendation to do a “Extraordinary Interpretation” of NRS 116.31088. The HOA members need full transparency. I’ve been involved in HOA’s for many years and the past HOA Board made the most severe errors a HOA Board can make, they invalided a vote of the homeowners and spent HOA funds without approval. The current HOA Board needs to provide transparency regarding this issue to the HOA members.

    1. R Marment

      Completely agree with your comments, on what the “then” Board should have done!

      It is interesting to note, that the Board was relying on a “novel” legal theory from Shulman & Co.
      to pursue the developer, “the statute of repose”, which we lost. This was not disclosed to the homeowners at the time of the vote. I suspect that if it was possible to challenge in court, the clear violation of NRS 116.31088 would have been upheld.

      The NV legal system requires going through an ombudsman, which seeks compromise, and does not seemingly have the authority to protect ordinary homeowners from flawed “illegal” opinions. Do we have a prima facie case for an excessive legal fees claim via our HOA insurance policy?

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