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Calloway v. City of Reno2/29/2000
oid situations like this from occurring, I see no problem with letting contract and tort theories of recovery apply to construction defect cases as has been done by several states. See Cosmopolitan Homes, Inc. v. Weller, 663 P.2d 1041 (Colo. 1983); Kristek v. Catron, 644 P.2d 480 (Kan. Ct. App. 1982); Keyes v. Guy Bailey Homes, Inc., 439 So.2d 670 (Miss. 1983); Juliano v. Gaston, 455 A.2d 523 (N.J. Super. Ct. App. Div. 1982); McMillan v. Brune-Harpenau-Torbeck Builders, Inc., 455 N.E.2d 1276 (Ohio 1983); Blake v. Doe, 623 N.E.2d 1229 (Ohio Ct. App. 1993); Moxley v. Laramie Builders, Inc., 600 P.2d 733 (Wyo. 1979). While legal theories of recovery may overlap somewhat in any given construction defect case, I see no practical harm in this. Before recovery can be made, proof that the contractor, subcontractor or supplier was negligent must be established and no plaintiff is entitled to more than one recovery no matter how many theories of recovery may be applicable. See Ambassador Hotel Co. v. Wei-Chuan Inv., 189 F.3d 1017 (9th Cir. 1999); Bradford v. Vento, 997 S.W.2d 713 (Tex. App. 1999). My clear preference is to provide a remedy, be it tort or contract, in all construction defect cases whether the loss is considered the result of a breach of contract or negligent conduct. This can be done simply by refusing to apply the economic loss doctrine to construction defect cases.
Moreover, in its sweeping application of the economic loss doctrine, the majority narrows the long-standing exception to NRS 41.033, Nevada's governmental immunity statute, that this court created in Butler v. Bogdanovich, 101 Nev. 449, 705 P.2d 662 (1985), and reaffirmed in Lotter v. Clark County Board of Commissioners, 106 Nev. 366, 793 P.2d 1320 (1990) and Tahoe Village Homeowners Association v. Douglas County, 106 Nev. 660, 799 P.2d 556 (1990). In the aforementioned cases, we declared that governmental immunity will not bar a tort action against the government if it failed to act reasonably after learning of a hazard. Butler, 101 Nev. at 451, 705 P.2d at 663; Lotter, 106 Nev. at 369, 793 P.2d at 1322; Tahoe Village, 106 Nev. at 662, 799 P.2d at 557-58. In this prior precedent, governmental conduct deemed unreasonable included an inspector's approval of a contractor's work with knowledge of its defective condition. See id. Without explicitly overruling Butler, Lotter, or Tahoe Village, the majority eliminates the very loss sought in these type of cases, property damage. Effectively, this line of authority is eliminated by today's opinion.
The economic loss doctrine is a judicial creation – it is not a statute that we are compelled to follow. It is a principle of law we can adopt or reject depending on what better serves Nevadans. With so much hasty construction taking place in Nevada today, I think the better path would be to arm our home purchasers with all available remedies, when faced with a defectively constructed home, rather than the one taken by the majority today. I respectfully dissent.
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