GOP payback: Trial lawyers ‘all alone’ on construction defect proposal

By Kyle Roerink

Friday, Feb. 13, 2015 | 2:58 p.m.

Payback is a powerful stimulant for Republicans in the Nevada Legislature.

With the chutzpah of an underdog team now on top, the GOP, contractors, lobbyists and others gathered in a joint-chamber hearing Wednesday to halt what they’ve deemed “a gravy train for trial lawyers.”

At issue were proposed changes in a law giving consumers an avenue to force builders to foot the cost of construction defects. The law was the subject of a decades-long battle between Democrats who defended it as a consumer-protection measure and Republicans who claimed it left builders and developers vulnerable to frivolous legal claims of shoddy construction work and has led to higher insurance premiums for homeowners, loss of contractor jobs and millions of dollars in fees for attorneys.

This week, the Republicans not only took a big step toward winning out, they steamrolled their opposition. Having gained a majority in the Legislature for the first time in 30 years in the November elections, Republicans sent proposed changes on their way to Gov. Brian Sandoval’s desk.

Wednesday’s hearing on their proposal, which would raise the bar for homeowners and trial lawyers to accuse contractors of shoddy work, drew around 300 supporters. Only one group testified in opposition: The Nevada Justice Association, which represents the state’s trial lawyers.

Assemblyman Ira Hansen made sure to point out the GOP’s enormous advantage on the issue. He asked onlookers in Carson City and at a simulcast in Clark County to stand if they were in favor. The lopsided results provoked a roar of laughter.

In a comment to Terry Reidy, a lobbyist representing the justice association, Hansen rubbed in his point.

“Mr. Reidy you’re all alone,” he said. You may be all alone in other respects. Is there any other firm or business that’s made over $200 million in construction defects wishing to testify? I don’t see any. You’re all alone.”

But while Republicans and contractors celebrated, critics say the bill’s title — the Homeowner Protection Act — doesn’t offer all that it implies.

Reidy testified the bill would burden consumers with new costs and impede their right to a trial. He disclosed that his firm has won $700 million in construction defect cases — with around 30 percent going to homeowners.

The bill strips homeowners of the right to collect attorney fees in a court settlement while forcing them to hire lawyers, Reidy said.

If homeowners have a problem, the proposed law calls for them to make a settlement offer -- a complex tort known as an offer of judgment -- before going to court. It would also require homeowners to make a warranty claim before litigating, and cuts the warranty limit from 10 to six years. It changes the definition of a construction defect, narrowing the scope of what contractors would be required to fix.

With the threat of perjury, another provision requires homeowners to outline and assess the specific problems in their home.

Reidy suggested the GOP ambushed its opponents, giving them inadequate time to prepare for Wednesday’s hearing.

“We got (the bill) last week,” Reidy said. “And here we are in an extraordinary joint hearing. The message that sends to Nevada homeowners respectively is not really one of cooperative or open government. It basically seems the intent of the bill is to make it harder, more expensive and time consuming for homeowners to make claims while stripping them of their rights.”

Sen. Greg Brower, R-Reno, called Reidy’s testimony “a one-hour soliloquy of exaggerated hyperbole” and scoffed at the idea that the trial lawyers didn’t have enough time to prepare.

Noting the crowd in the room and his inbox full of constituent emails supporting the bill, Brower said “the world” has known a construction defect bill was coming.

Josh Hicks, a lobbyist for the Nevada Homebuilders Association, panned the current law as the grounds for creating a $2 billion cottage industry for attorneys. He said provisions requiring settlement offers and warranties would make litigation a last resort, which would help save insurance companies hundreds of millions.

He couldn’t say whether insurance premiums would decrease for businesses.

Builders say the law would remove a threat of litigation. Many contractors in the state have staff dedicated to construction-defect notices.

“I’ve got three people in my office who do nothing but chapter 40s,” said Darren Wilson, lobbyist for the Nevada Subcontractors Association, referring to the legal name of the construction-defect process. “It’s not a productive part of any business.”

Related info: Who's funding whom?

The 2014 election cycle saw the influence of both groups.

Nevada’s trial lawyers’ PAC, Citizens for Justice, spent approximately $172,000 on Democratic legislative races and partisan committees, while just under $13,000 was contributed to Republican candidates and committees, according to research from the group Sick Of Lawsuits Nevada, an arm of a nationwide non-profit dedicated to tort reform.

Nevada Democrats said construction groups donated $542,700 to Republican Sen. Michael Roberson, the senate’s majority leader, and PACs from which he's benefited.