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Azure Manor/Rancho de Paz Homeowners Association v. D.R. Horton, Inc.

United States District Court, D. Nevada

October 17, 2019

AZURE MANOR/RANCHO DE PAZ HOMEOWNERS ASSOCIATION, Plaintiff(s),
v.
D.R. HORTON, INC., Defendant(s).

          ORDER

         Presently before the court is third party defendant Sunrise Mechanical, Inc.'s (“Sunrise”) motion for determination of good faith settlement. (ECF No. 222). No response has been filed, and the time to do so has passed.

         Also before the court is third party defendant Bebout Concrete, Inc's (“Bebout”) motion for determination of good faith settlement. (ECF No. 227). No response has been filed, and the time to do so has passed.

         I. Facts

         The instant action is a construction defect lawsuit brought by the homeowners (“plaintiffs”) of a collection of homes against home developer D.R. Horton, Inc. (“developer”) within the Azure Manor/Rancho De Paz subdivision community (“the project”).

         On November 26, 2014, plaintiff initiated this suit in state court. (ECF No. 1). On December 31, 2014, developer removed the action to federal court. Id. Thereafter, developer filed its answer and third-party complaint against its subcontractors, including Sunrise and Bebout, (collectively, the “subcontractors”) asserting various indemnity claims for the work they produced that contributed to the alleged construction defects. (See generally ECF No. 40).

         Sunrise was “to provide heating, ventilation, and air conditioning (‘HVAC') systems” for the project. (ECF No. 222 at 2-3). Bebout contracted “to provide concrete slabs and flatwork” for the project. (ECF No. 227 at 2).

         After a lengthy period of discovery, developer and each of the subcontractors participated in mediation with a court-appointed mediator to agree upon a fair settlement amount in exchange for release of all claims against the subcontractors. (See ECF Nos. 222, 227).

         The court now considers both of the subcontractors' motions for determination of good faith settlement. Id.

         II. Legal Standard

         Under Nevada law, the determination of whether a settlement is entered in “good faith” under NRS § 17.245 is “left to the discretion of the trial court based upon all relevant facts available.” Velsicol Chemical Corp. v. Davidson, 107 Nev. 356, 811 P.2d 561, 563 (Nev. 1991). The factors discussed in In re MGM Grand Hotel Fire Litigation, 570 F.Supp. 913, 927 (D. Nev. 1983), may be among the relevant facts a court may choose to consider in the exercise of its “considerable discretion.” The Doctors Co. v. Vincent, 120 Nev. 644, 98 P.3d 681, 686-87 (Nev. 2004).

         Such factors include “the amount paid in settlement, the allocation of the settlement proceeds among plaintiffs, the insurance policy limits of settling defendants, the financial condition of settling defendants, and the existence of collusion, fraud or tortious conduct aimed to injure the interests of non-settling defendants.” In re MGM, 570 F.Supp. at 927 (citing Commercial Union Ins. Co. v. Ford Motor Co., 640 F.2d 210 (9th Cir. 1981)). However, Nevada law includes no requirement that a court consider or limit its analysis to the MGM factors or hold a hearing before making a determination of good faith. Velsicol, 811 P.2d at 563.

         III. Discussion

         The court will address each of the subcontractors' motions in turn. a. Sunrise's motion for determination of good faith settlement In its motion, Sunrise has addressed each of the applicable MGM factors. (ECF No. 222). Sunrise submits that it has reached an agreement with developer to settle for $12, 500, which reflects “its proportionate share of the overall value of this case, given the allegations, . . . and the totality of the circumstances.” Id. at 5-6. In exchange, Sunrise “will receive a full release for the homes in this case.” Id. at 3. Sunrise “does not admit any liability in regard to the claims of Greystone or [p]laintiffs.” Id.

         Regarding the MGM factors, Sunrise avers that neither its insurance policy limits nor its financial condition limited the agreed-upon settlement amount. Id. at 6. Instead, the amount in settlement and allocation thereof was predicated on an analysis of the allegation allocated to Sunrise, expected testimony from experts retained by the ...


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