SUMMARY OF COURT DECISIONS OF IMPORTANCE TO SENATE JUDICIARY SENATE COMMITTEE ON JUDICIARY FEBRUARY 3, 2015

Transcription

1 SUMMARY OF COURT DECISIONS OF IMPORTANCE TO SENATE JUDICIARY SENATE COMMITTEE ON JUDICIARY FEBRUARY 3, 2015 Prepared by Nicolas C. Anthony Legal Division, Legislative Counsel Bureau In response to Chairman Brower s request, listed below are cases in which a Nevada or Federal court has ruled since the 2013 Legislative Session that a Nevada statute is unconstitutional or preempted by Federal law. Also listed are cases in which such courts have interpreted a statute in a manner which may be contrary to legislative intent. For purposes of this document, staff has selected cases that are relevant to the interests or jurisdiction of the Senate Committee on Judiciary. Copies of the full opinions may be obtained by contacting the Legal Division. NEVADA SUPREME COURT Unconstitutional Statute City of Reno v. Howard (violation of Confrontation Clause) NRS Federal Preemption Federal Deposit Insurance Corporation v. Rhodes (preemption of state statutory time limitation for deficiency judgments) NRS Judicial Interpretation/Legislative Clarification Egan v. Chambers (professional negligence) NRS 41A.071 State of Nevada v. Eighth Judicial District Court (juvenile sex offenders) NRS 62F.200, 179D.035, 179D.095, 179D.441, and 179D.475 Humphries v. Eighth Judicial District Court (joint and several liability of one defendant) NRS Las Vegas Sands Corp. V. Eighth Judicial District Court (production of writings used by a witness to refresh recollection) NRS

2 SFR Investments Pool 1 v. U.S. Bank (superpriority liens) NRS Oxbow Construction v. Eighth Judicial District Court (constructional defects) NRS FEDERAL COURT: UNITED STATES DISTRICT COURT/NINTH CIRCUIT Unconstitutional Constitutional Provision and Statute Latta v. Otter (Sevcik v. Sandoval) (same sex marriage) Nev. Const. Art. 1, 21 NRS Federal Preemption Washington & Sandhill Homeowners Assoc. v. Bank of America (superpriority liens in federally insured loans) NRS E2

3 NEVADA SUPREME COURT City of Reno v. Howard, 130 Nev. Adv. Op. 12, 318 P.3d 1063 (2014) In City of Reno v. Howard, appellant City of Reno charged respondent Cheryl Lee with misdemeanor driving under the influence in municipal court. At trial, the City sought to introduce into evidence the declaration of the phlebotomist who collected Lee s blood for evidentiary testing after Lee s arrest. Lee objected to the admission of the declaration on Confrontation Clause grounds, and the municipal court sustained the objection and excluded the declaration. The City then petitioned the district court to compel the municipal court to admit the declaration into evidence. The district court denied the petition, explaining that the admission of the declaration over Lee s objection would have violated Lee s rights under the Confrontation Clause of the Sixth Amendment to the U.S. Constitution. The City suggested that Lee validly waived her right to confront the witness by failing to show a substantial and bona fide dispute regarding the declaration as required by NRS (6). Alternatively, Lee argued that NRS (6) impermissibly burdens the rights provided by the Confrontation Clause. Although the Nevada Supreme Court had previously addressed the issue in City of Las Vegas v. Walsh, 124 P. 3d 203 (2005), the Court again took up the issue in light of the U.S. Supreme Court s decision in Melendez-Diaz v. Massachusetts, 557 U.S. 305 (2009). In Melendez, the U.S. Supreme Court held that it was a violation of the Sixth Amendment right of confrontation for a prosecutor to submit a chemical drug test report without the testimony of the person who performed the test. Given the guidance provided by the U.S. Supreme Court, the Nevada Supreme Court overruled its prior decision in Walsh, and held that NRS (6) impermissibly burdens confrontation rights because it requires a defendant to establish a substantial and bona fide dispute regarding the facts in a declaration offered as evidence, in order to exercise his or her confrontation rights. Unless this case is appealed to the U.S. Supreme Court and reversed on appeal, subsection 6 of NRS may not be enforced in its current form. If the Legislature decides to amend NRS to make it constitutional in accordance with the reasoning provided by the Nevada Supreme Court, the Legislature may wish to amend the statute to remove the requirement that a defendant must establish a substantial and bona fide dispute regarding the facts in the affidavit or declaration. 3 E3

4 Federal Deposit Insurance Corporation v. Rhodes, 130 Nev. Adv. Op. 88, 336 P.3d 961 (2014) In Federal Deposit Insurance Corporation v. Rhodes, appellant Federal Deposit Insurance Corporation (FDIC) filed a claim for a deficiency judgment after the 6 month deadline to bring such a claim pursuant to NRS (1). In 2005 Community Bank of Nevada loaned money to Tropicana Durango Ltd., of which respondent Rhodes was a general partner. In 2009, the Nevada Financial Institutions closed and took possession of Community Bank and appointed the FDIC as receiver/liquidator. At that time Tropicana Durango was in default on its 2005 loan, and the FDIC held a trustee s sale at which the FDIC purchased the property for less than what was owed on the note. In 2011, after 6 months but within 6 years after the trustee s sale, the FDIC filed a suit for a deficiency judgment against Rhodes. Rhodes filed a motion to dismiss, asserting that NRS (1) was a statute of repose and that its 6 month time limitation for deficiency judgments barred the FDIC s complaint. The district court granted Rhodes motion and FDIC subsequently appealed. The question on appeal was whether federal law under the so-called FDIC extender statute (12 U.S.C. 1821(d))(14)(A)) preempts the 6 month time limitation under NRS (1). The federal law provides [T]he applicable statute of limitations with regard to any action brought by the FDIC as conservator or receiver shall be (i) in the case of any contract claim, the longer of (I) the 6-year period beginning on the date the claim accrues; or (II) the period applicable under State law. Based on a plain reading of the FDIC extender statute, the Supreme Court held that the federal law expressly preempts any shorter state statutory time limitation, including the limitation provided in NRS (1), regardless of whether the state statute is a statute of limitations or repose. In light of the Nevada Supreme Court s ruling, current law is controlled by case precedent. The Legislature may choose to: (1) let the case law govern and leave the statute unchanged; or (2) amend NRS to mirror the 6 year federal extender statute for purposes of deficiency judgment claims brought by the FDIC. 4 E4

5 Egan v. Chambers, 129 Nev. Adv. Op. 25, 299 P.3d 364 (2013) In Egan v. Chambers, respondent Gary Chambers, a doctor of podiatric medicine employed by respondent Southwest Medical Associates, Inc. (SMA), performed several surgical procedures on appellant Tammy Egan s left foot. After complaints by Egan and several follow-up visits, Chambers discovered gangrene in Egan s foot and referred her to another podiatrist, who performed three more surgeries, including the amputation of her left great toe and part of her left foot. Following the procedures, the podiatrist concluded that Egan was permanently disabled and unable to return to her job as a waitress. In July 2008, Egan filed a complaint for professional negligence against Chambers and SMA. Because podiatrists are not considered physicians under chapter 41A of NRS for medical malpractice claim purposes, Egan filed the complaint without a supporting NRS 41A.071 affidavit of merit. While Egan's case was pending before the district court, the Nevada Supreme Court decided in Fierle v. Perez, 125 Nev. 728 (2009) that the affidavit requirement applied to all professional negligence claims against providers of health care, not just claims of medical malpractice and dental malpractice as the statute appeared to indicate. Egan subsequently amended her complaint, but still failed to submit an affidavit of merit. In 2010, after the applicable statute of limitations had run, Chambers and SMA, relying on Fierle, moved to dismiss Egan's complaint. The district court granted the motion and dismissed Egan's complaint without prejudice. Because the statute of limitation had passed, Egan was unable to file a new complaint. Egan then appealed the dismissal to the Supreme Court. While deciding the merits of this case, the Supreme Court noted our reading of NRS 41A.071 reveals no statutory ambiguity as previously suggested in Fierle. We now recognize that our prior decision conflated medical malpractice with professional negligence when we read NRS 41A.071 to apply to all professional negligence claims. In so doing, our construction of NRS 41A.071 unnecessarily reached beyond its plain language. Applying Fierle to professional negligence claims would be substantially inequitable and contrary to the plain language of the statute. Thus, the Supreme Court unanimously overruled the portion of its decision in Fierle that applied the affidavit requirement to professional negligence claims. NRS 41A.071 provides that the district court shall dismiss, without prejudice, actions for medical malpractice or dental malpractice filed without an affidavit of merit. The Supreme Court noted the plain language of NRS 41A.071 makes no mention of professional negligence. NRS 41A.071 refers expressly to medical malpractice, which in turn is defined by NRS 41A.009 as pertaining to physicians, hospitals, and hospital employees. Physician is defined in NRS 41A.013 as a person licensed under NRS Chapters 630 or 633. The Supreme Court also noted that podiatrists are not licensed pursuant to NRS Chapters 630 or 633; rather, they are licensed pursuant to NRS Chapter 635. Accordingly, the Supreme Court ruled that the affidavit requirement applies only to medical and dental malpractice claims. Because Chambers was a podiatrist and was not a physician under NRS 41A.013 and SMA was not a hospital, the Supreme Court determined the affidavit requirement did not apply to Egan s professional negligence claims and remanded the case to the district court to be decided on its merits. 5 E5

6 As a result of the Supreme Court s decision, the Legislature may choose to: (1) leave the statutory scheme of NRS 41A unchanged; or (2) amend NRS 41A.071 to include an affidavit requirement for professional negligence claims. 6 E6

7 State v. Eighth Judicial District Court, 129 Nev. Adv. Op. 52, 306 P.3d 369 (2013) Logan D., real party in interest, was adjudicated delinquent for one count of lewdness with a minor in 2006 when he was 17 years old. At that time, NRS 62F.250 (since repealed by Assembly Bill No. 579 (2007)), gave the juvenile court discretion to determine if a juvenile sex offender was rehabilitated, and if so, whether or not to require, registration and community notification as a sex offender. Logan s hearing to determine whether he would be subject to the registration and notification provisions was scheduled to take place in 2009, when he turned 21. In 2007, however, the passage of A.B. 579 mandated that all juveniles aged 14 and older who were adjudicated delinquent for certain sex offenses register as adult sex offenders and subjected them to community notification. After its passage, but before A.B. 579 was to take effect, Logan and a group of other juveniles challenged the bill s constitutionality in juvenile court. After full briefings and hearing, the juvenile court held A.B. 579 unconstitutional as applied to juvenile sex offenders. The juvenile court found A.B. 579 had no rational relationship to the government s rehabilitation and public safety goals. This proceeding arose out of a petition by the State for a writ of mandamus from the Nevada Supreme Court ordering the juvenile court to vacate its order declaring A.B. 579 unconstitutional as applied to juvenile sex offenders. The events leading up to passage of A.B. 579 are relevant here and were discussed by the Supreme Court in detail. In 2006, Congress passed the Adam Walsh Child Protection and Safety Act. Included in the act was the Sex Offender Registration and Notification Act (SORNA). SORNA mandated that each state: (1) require persons convicted of certain sex offenses to periodically register with authorities and provide certain information, (2) maintain a statewide sex offender registry, (3) implement a community notification program, and (4) provide a criminal penalty for sex offenders that fail to comply. Notably, SORNA specifically defines convicted as including juveniles adjudicated delinquent for certain sex offenses. Any state that failed to pass laws implementing the required provisions would suffer a 10-percent reduction in certain federal funding. Accordingly, Nevada passed A.B Under this law, sex offender is defined to include any person adjudicated delinquent after July 1, 1956, for sexual assault, battery with intent to commit sexual assault, lewdness with a child, or attempt or conspiracy to commit any of these offenses, provided the offender was 14 or older at the time of the offense. The law classifies sex offenders, including juveniles, into three tiers. Tier III offenders must appear every 90 days and allow for fingerprints, palm prints, and a photograph to be taken. Tier II, and I must also do so, though only every 180 days and annually, respectively. Tier III offenders must register for life, Tier II for 25 years, and Tier 1 for 15 years. Tier III and I offenders may apply for early release based on a number of requirements. All offenders must provide authorities with the certain information, all are subject to active and passive community notification, and all have their information available on Nevada s community notification website, even juveniles offenders. Next, the Supreme Court detailed its analysis of Logan s various constitutional claims. Ultimately, the Supreme Court disagreed with Logan and determined retrospective application of the registration and notification requirements to juvenile offenders was constitutional. 7 E7

8 The Supreme Court went on, however, to urge the Legislature to reconsider A.B. 579 and its application to juvenile sex offenders. To the point, the Supreme Court stated: We agree that the prior statutory scheme, which left the decision to subject juvenile sex offenders to adult registration and community notification requirements to the discretion of the juvenile court based on specified factors, was a superior method of protecting the various interests at stake, including public safety, the welfare of juvenile sex offenders, and conservation of public resources. The juvenile court, relying on extensive information specific to the juvenile and the offense, is in the best position to determine whether adult registration and community notification is necessary in a given case. Moreover, the Supreme Court noted that Nevada did not appear to risk any loss of federal funding, because subsequent to the passage of A.B. 579, the United States Attorney General exercised his statutory authority [to remove the] requirement under SORNA that jurisdictions engage in any form of public disclosure or notification regarding juvenile delinquent sex offenders. Thus, the Supreme Court noted that it appears that Nevada would suffer no loss of funding if the Legislature removed the provisions of A.B. 579 requiring all juvenile sex offenders to submit to community notification. In light of the policy decision highlighted by the Supreme Court, the Supreme Court upheld A.B. 579 as currently written and applied retrospectively to juvenile sex offenders. In light of the Nevada Supreme Court s ruling, a juvenile court must impose registration and community notification requirements for all juveniles adjudicated delinquent for certain sexual crimes since July 1, 1956, including offenders who were 14 years or older at the time of the offense. The Legislature may choose to: (1) let the case upholding existing law stand and leave the current statutory scheme unchanged; or (2) amend the relevant statutes to remove the Adam Walsh sex offender registration and notification provisions as they apply to juvenile offenders. 8 E8

9 Humphries v. Eighth Judicial District Court, 129 Nev. Adv. Op. 85, 312 P.3d 484 (2013) In Humphries v. Eighth Judicial District Court, Carey Humphries and Lorenza Rocha were involved in an altercation with Erik Ferrell on the casino floor of the New York-New York Hotel in Las Vegas, Nevada. Mr. Ferrell was subsequently criminally convicted of attempted battery with substantial bodily harm. Petitioners Humphries and Rocha filed a suit in district court against New York-New York alleging negligence based on its duty to protect. The petitioners did not pursue an action against any other parties. As the Nevada Supreme Court indicated, they have recognized in Café Moda and Warmbrodt, that the Legislature has supplanted the traditional common-law rule of joint and several liability by enacting NRS As the Court reasoned, the statutory scheme in NRS (4) only applies several liability where there is more than one defendant. The Court held that under NRS , where the plaintiff has sued one tortfeasor amongst multiple co-tortfeasors and the statute does not change the result reached under the traditional joint and several liability analysis: the defendant is still jointly and severally liable for the entire judgment against it. In a footnote, the Supreme Court invited the Legislature to address the underlying policy issue, Although the Legislature enacted several liability for negligent defendants to prevent the deeppocket doctrine, Café Moda, (quoting Hearing on A.B. 249 Before the Senate Judiciary Comm., 65th Leg. (Nev., March 8, 1989)), the Legislature did not indicate that several liability should be applied in cases such as this where the plaintiff sued only one defendant. We decline New York- New York's invitation to construe NRS (4) as doing so, and we leave it to the Legislature to consider the policies behind Nevada's comparative negligence statute and alter the law if they deem it advisable to do so. In light of the apportionment of fault under NRS (4) and the limitation on assignment of fault to parties to the action under NRS (2)(b)(2), the Supreme Court concluded that the district court's order compelling joinder of Ferrell as a necessary party under NRCP 19(a) was in error. Thus, the Supreme Court held that complete relief was afforded between Humphries and Rocha and New York- New York without the joinder of Ferrell, and that the defendant can pursue any apportionment of fault pursuant to NRS (1) and NRCP 14. Based on the Supreme Court s decision, the Legislature may choose to: (1) let the case law govern; or (2) amend NRS to address whether several liability should be applied where the plaintiff sued only one defendant among multiple possible defendants. 9 E9

10 Las Vegas Sands Corp. v. Eighth Judicial District Court, 130 Nev. Adv. Op. 13, 319 P.3d 618 (2014) In Las Vegas Sands v. Eighth Judicial, the Nevada Supreme Court considered the issue of whether a witness review of documents prior to testifying constitutes a waiver of any privilege under NRS This case arose when Steven Jacobs filed an action against Las Vegas Sands Corp. and other parties for breach of an employment contract. As a result of Sands conduct during the jurisdictional discovery process, the district court ordered a sanctions hearing to determine whether Sands breached its duty of candor to the court. During the sanctions hearing, a former Sands attorney was cross-examined as to whether the attorney had printed copies of s from Jacobs but did not retain the copies. On cross-examination the Sands attorney admitted that he had reviewed his billing records and s prior to coming to court to refresh his recollection. NRS provides for the production and introduction of writings used to refresh a witness memory and specifically provides, [i]f a witness uses a writing to refresh his or her memory, either before or while testifying, an adverse party is entitled: (a) to have it produced at the hearing; (b) to inspect it; (c) to cross-examine the witness thereon; and (d) to introduce in evidence those portions which relate to the testimony of the witness for the purpose of affecting the witness s credibility. Jacobs argued that NRS lacks the discretionary prong that its federal counterpart contains in Federal Rule of Evidence (FRE) 612. Thus, Jacobs argued that any document used to refresh a witness recollection before or during testimony must be disclosed. Sands argued that NRS and NRCP 26(b)(3) guarantee that the work product doctrine and the attorney-client privilege apply at all stages of the proceedings, and thus the documents are not subject to disclosure. Based on an analysis of FRE 612, and a comparison with NRS , the Supreme Court agreed with Jacobs. The Supreme Court noted that FRE 612 contains a discretionary prong, whereby the production of writings used by a witness to refresh recollection before testifying [is] subject to the discretion of the court in the interests of justice, as is the case under existing federal law. As such, the Supreme Court found that no such discretionary language exists in NRS , and thus Nevada courts lack the discretion to halt the disclosure of privileged documents when a witness uses the privileged documents to refresh his or her recollection prior to testifying. Although the Supreme Court ultimately ruled that Jacobs request for production of the documents was not timely, it did find that NRS mandates the production of documents use by a witness to refresh his or her recollection prior to testifying, regardless of privilege. In light of the Supreme Court s decision, the Legislature may wish to: (1) let the case law govern and leave the statute unchanged; or (2) amend NRS to include a discretionary prong to make the production of writings used by a witness to refresh recollection before testifying subject to the discretion of the court. 10 E10

11 SFR Investments Pool 1 v. U.S. Bank, 130 Nev. Adv. Op. 75, 334 P.3d 408 (2014) In SFR Investments Pool 1 v. U.S. Bank, the Nevada Supreme Court addressed the issue of whether NRS provides a true superpriority lien such that its foreclosure extinguishes a first deed of trust on the property. The Supreme Court also considered whether such a lien could be foreclosed nonjudicially. This case arose out of a residence located in a common-interest community. The property was subject to CC&Rs recorded in 2000, and was then further encumbered by a first deed of trust in favor of US Bank. After the property owners became delinquent on their association dues and mortgage payments, the Southern Highlands Homeowners Association (HOA) and U.S. Bank each separately began nonjudicial foreclosure proceedings on the delinquent property. The appellant, SFR Investments Pool 1 (SFR) purchased the property from the HOA s trustee s sale in September SFR filed an action to quiet title and enjoin US Bank s trustee sale on the property that was to take place in December 2012, maintaining that the HOA trustee s deed terminated U.S. Bank s deed. The district court granted U.S. Bank s motion to dismiss because the district court held that the HOA must foreclose judicially. SFR subsequently appealed to the Supreme Court. In their discussion, the Supreme Court noted that an HOA lien is split into two parts by NRS , a superpriority portion and a subpriority portion. The superpriority part of the HOA lien consists of 9 months of unpaid dues, maintenance, and nuisance-abatement charges. The subpriority part consists of any other fees or assessments owed to the HOA. U.S. Bank argued that NRS (2) merely creates a payment priority between an HOA lien and a first deed of trust. Under U.S. Bank s position, the dues, maintenance, and nuisanceabatement portion of an HOA lien would not become a superpriority lien until after the beneficiary of the first deed of trust forecloses, and the buyer would have to pay the HOA lien to receive clear title. The Supreme Court found that the superpriority aspect of NRS (2) does not simply create a payment priority for delinquent payments, but instead creates a true priority lien. The Supreme Court noted the Uniform Law Commission policy comments regarding the rationale for a superpriority lien as being that, when a homeowner walks away from the property and the first deed of trust holder delays foreclosure, the HOA has to either increase the assessment burden on the remaining unit/parcel owners or reduce the services the association. As to whether such a lien could be foreclosed nonjudicially, the Supreme Court stated that NRS allows an HOA to foreclose its lien by sale, which, under NRS (1), includes an HOA foreclosing on a property through a nonjudicial sale. U.S. Bank argued that the word action in the phrase institution of an action to enforce the lien in NRS (2) means a civil action and a lawsuit. U.S. Bank also argued that judicial foreclosure is necessary to provide notice and an opportunity to be heard, among other safeguards. 11 E11

12 However, the Supreme Court concluded that the word action does not exclude nonjudicial foreclosure proceedings because foreclosure proceedings can be instituted both judicially and nonjudicially. The Supreme Court also noted that if the Legislature intended action to mean only civil action or judicial action, it would not have used the broader term action. In conclusion, the Supreme Court stated, the choice of foreclosure method for HOA liens is the Legislature s, and the Nevada Legislature has written NRS Chapter 116 to allow nonjudicial foreclosure of HOA liens, subject to the special notice requirements and protections handcrafted by the Legislature in NRS through NRS In light of the foregoing, the Supreme Court held that: (1) an HOA receives a true superpriority lien pursuant to NRS , which is prior to all other liens and encumbrances on the property, including first deeds of trust recorded before the dues became delinquent; and (2) an HOA lien may be foreclosed nonjudicially. In response to the Supreme Court s decision, the Legislature may wish to: (1) let the statutory scheme stand as interpreted by the Supreme Court; or (2) amend chapter 116 of NRS to provide that first deeds of trust are not extinguishable and/or that certain HOA liens must be foreclosed judicially. 12 E12

13 Oxbow Construction v. Eighth Judicial District Court, 130 Nev. Adv. Op. 86, 335 P.3d 1234 (2014) In Oxbow Construction v. Eighth Judicial District Court, the Nevada Supreme Court considered two consolidated writ petitions, and the interpretation of a district court s order, arising from a construction defect action initiated by The Regent at Town Center Homeowners Association (Association) against Oxbow Construction. In the first writ petition, the Supreme Court examined whether the failure of the district court abused its discretion by failing to conduct a NRCP 23 class-action analysis. In the second writ petition, the Association asked the Supreme Court to direct the district court to amend its order denying the Association s initial motion to include NRS Chapter 40 remedies for all 274 condominiums at Town Centre. Thirdly, the Supreme Court considered the issue of whether the Association may seek construction-defect remedies for limited common elements assigned to multiple units in a common building containing at least one new residence. As to the NRCP 23 issue, Oxbow argued that the district court abused its discretion by allowing the Association to bring a representative construction-defect action on behalf of unit-owners without conducting an NRCP 23 analysis as required by D.R. Horton, Inc. v. Eighth Judicial District Court (First Light II), 215 P.3d 697 (2009). The Supreme Court noted, [t]hat argument, however, conflicts with our decision in Beazer Homes Holding Corp. v. Eighth Judicial District Court, P.3d 128 (2012), where we clarified that when a homeowners association litigates construction-defect claims on behalf of its members under NRS (1)(d), a [f]ailure to meet any additional procedural requirements, including NRCP 23 s class action requirements, cannot strip a common-interest community association of its standing to proceed on behalf of its members.... In clarifying First Light II, we explained that when a homeowners' association seeks to proceed in a class-action format, the district court must, upon either party's request, analyze NRCP 23 s factors to determine how the action should proceed. Thus, the Supreme Court held that although Oxbow requested an NRCP 23 analysis, the district court was not required to conduct that analysis at this point in the litigation because nothing in the record indicated that the Association sought to proceed as a class action. As to the second writ and the new residence issue, Oxbow contended that Town Centre's units, having been leased as apartments, are neither residences per NRS nor new under NRS , and thus do not qualify for NRS Chapter 40 remedies. In contrast, the Association claimed that the units are residences and that, for the purposes of determining whether a residence is new under NRS , courts should apply a sliding-scale approach that considers factors such as a residence's chronological age and the duration of any occupancy. Acknowledging that it was nearly impossible to define in strict chronological terms, the Supreme Court defined new in terms of original construction, lack of occupancy, and the point of original sale. Accordingly, the Supreme Court reaffirmed their earlier definition of new and concluded that the district court correctly determined that the Town Centre units occupied before their original sale cannot be classified as new and therefore do not independently qualify for NRS Chapter 40 remedies. 13 E13

14 The third issue before the Supreme Court was whether the Association may seek construction defect remedies for limited common elements assigned to multiple units in a common building containing at least one new residence. Oxbow argued that a construction-defect action cannot be maintained because the assigned limited common elements at issue are appurtenances and must be new under NRS Conversely, the Association asserted that NRS does not require appurtenances to be new, but also maintains that it is entitled to pursue NRS Chapter 40 remedies for construction defects in these elements regardless of whether the building in which they are located contains a new residence because the limited common elements should be classified as pure common elements and not as part of the units to which they are assigned. In reading the plain language of NRS , the Supreme Court noted that new only precedes residence, raising the question of whether it modifies any other elements in the phrase. Therefore the Supreme Court concluded that an appurtenance is not required to be new under NRS to qualify for NRS Chapter 40 remedies. The Supreme Court then found it necessary to explain that NRS Chapter 40 remedies for construction defects in limited common elements that are assigned solely to an individual unit and that fall within the purview of NRS would only be available when the individual unit qualifies as a new residence. The Supreme Court also noted this is because these elements, whether by NRS s or the CC&Rs assignments, are exclusively allocated to the individual residence that they benefit. However, this is not the case for limited common elements that are assigned to and benefit multiple units in a common building. The Supreme Court therefore concluded, that to pursue NRS Chapter 40 remedies for construction defects in limited common elements assigned to multiple units in a common building, a plaintiff needs only to establish that the building in question contains at least one unit that is a new residence. Based on the Supreme Court s decision in Oxbow, the Legislature may: (1) follow the Supreme Court opinion which allows NRS Chapter 40 remedies for limited common elements assigned to multiple units where at least one unit is a new residence; or (2) consider whether NRS should be amended so that NRS Chapter 40 claims for common element improvements would only apply to common elements that are new or require that more than one unit must be determined to be a new residence. 14 E14

15 FEDERAL COURT: UNITED STATES DISTRICT COURT/NINTH CIRCUIT Latta v. Otter (Sevcik v. Sandoval, 911 F. Supp. 2d 996 (D. Nev. 2012)), 771 F.3d 456 (2014) On October 7, 2014, the United States Court of Appeals for the Ninth Circuit issued an opinion on the same-sex marriage issue. The case arose out of similar consolidated cases from Idaho and Nevada. Both Idaho and Nevada had earlier passed statutes and enacted constitutional amendments preventing same-sex couples from marrying and refusing to recognize same-sex marriages validly performed elsewhere. Specifically at issue in this case were Nev. Const. Art. 1, 21, which reads Only a marriage between a male and female person shall be recognized and given effect in this state and NRS (1) which in relevant part provides, [A] male and female person... may be joined in marriage. The plaintiffs were same-sex couples who resided in Idaho and Nevada and either sought to marry there or to have their marriage entered into in another state recognized in their home states. In response, Governor Otter, Recorder Rich, and the State of Idaho, along with the Nevada intervenors, the Coalition for the Protection of Marriage, argued that their laws survive heightened scrutiny, primarily because the states have a compelling interest in sending a message of support for the institution of opposite-sex marriage. It should also be noted that Governor Sandoval and Clerk-Recorder Glover initially defended Nevada s laws in the district court; however, they withdrew their answering briefs from consideration by the Ninth Circuit, in light of the Ninth Circuit s decision in SmithKline Beecham Corp. v. Abbott Labs.,, 740 F.3d 471, at (holding heightened scrutiny applicable). Governor Sandoval agreed that United States v. Windsor, 133 S. Ct (2013), signifies that discrimination against same-sex couples is unconstitutional, and that [a]ny uncertainty regarding the interpretation of Windsor was... dispelled by SmithKline. In Sevcik v. Sandoval, 911 F. Supp. 2d 996 (D. Nev. 2012) the federal district court applied a rational basis review and upheld Nevada s laws. On appeal, the Ninth Circuit applied a heightened scrutiny standard and held that the Idaho and Nevada laws violate the Equal Protection Clause of the Fourteenth Amendment because they deny lesbians and gays who wish to marry persons of the same sex a right they afford to persons who wish to marry persons of the opposite sex. In light of the Ninth Circuit opinion, the provisions of Nev. Const. Art. 1, 21 and NRS are unenforceable. In remanding Sevcik v. Sandoval, the Ninth Circuit instructed the district court to issue an injunction permanently enjoining the state from enforcing any constitutional provision, statute, regulation or policy preventing same-sex couples from marrying, or denying recognition to marriages celebrated in other jurisdictions. On January 9, 2015, the Ninth Circuit issued an order denying the petitions for rehearing en banc. On December 30, 2014, the Governor of Idaho, C.L. Otter, filed a petition for writ of certiorari to the United States Supreme Court. In the meantime, the United States Supreme Court recently agreed to hear a similar combined case on this issue. The justices indicated they will review the 15 E15

16 decision of the Unites States Court of Appeals for the Sixth Circuit to uphold the bans on samesex marriage in Ohio, Tennessee, Michigan and Kentucky. These four states are among the 14 current states that ban same-sex marriage. The justices indicated that they will consider two questions: (1) whether the constitutional guarantee to equal protection of the law renders invalid state bans on same-sex marriage; and (2) whether it requires states to recognize such marriages when licensed by other states. It is anticipated that oral arguments will likely occur in April, with a decision sometime in June. Based on the foregoing, the Legislature may wish to amend NRS to remove the provisions providing that only a male and female may be joined in marriage, or wait for the possible United States Supreme Court decision later this year before enacting any statutory changes. 16 E16

17 Washington & Sandhill Homeowners Assoc. v. Bank of America, 2:13-cv (D. Nev. Sep. 25, 2014) This case decided in the United States District Court for the District of Nevada arose out of a dispute over the effects of a homeowners association foreclosure on its superpriority lien interest in real property pursuant to NRS In May 2008, Emiliano and Matha Renteria purchased a residence in the Washington & Sandhill Homeowners Association (Association). The purchase was secured by a deed of trust, which was insured by the United States Department of Housing and Urban Development (HUD) under the Single Family Mortgage Insurance Program (commonly known as FHA insurance). The Renterias failed to pay their mortgage and their homeowners assessments. Subsequently, the Association foreclosed on the property and purchased the property at a foreclosure sale. The Association then recorded a notice of default for payment of past assessments against Bank of America and HUD s title in the property. Following its demand for payment, the Association changed its position and determined it was the true holder of title on the property, based upon its earlier foreclosure. The Association then brought this action to quiet title and for slander of title. The District Court noted that the Ninth Circuit has previously held that federal rather than state law applies in cases involving FHA-insured mortgages to assure the protection of the federal program against loss, state law to the contrary notwithstanding. The District Court reasoned that in situations where a mortgage is insured by a federal agency, state laws cannot operate to undermine the federal agency s ability to obtain title after foreclosure and resell the property. Because a homeowners association s foreclosure on property insured under the FHA insurance program would have the effect of limiting the effectiveness of the remedies available to the United States, the District Court held that the Supremacy Clause of the U.S. Constitution renders such foreclosures invalid. As such, the District Court dismissed the Association s claims for quiet title and slander of title. In light of the District Court s ruling, the superpriority lien provided in NRS is currently preempted by the Supremacy Clause of the United States Constitution and is unenforceable against federally insured mortgages. The case has been appealed to the United States Court of Appeals for the Ninth Circuit, and is currently pending (Docket # ). As such, the Legislature may decide to: (1) await the outcome the pending appeal; (2) let the district court decision govern as to the enforceability of superpriority liens against federally insured loans; or (3) amend NRS to exempt or otherwise protect federally insured loans. 17 E17