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

Filing 208

ORDER granting 178 Motion; ORDER granting 182 Motion; Signed by Judge James C. Mahan on 8/14/2019. (Copies have been distributed pursuant to the NEF - JM)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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AZURE MANOR/RANCHO DE PAZ
HOMEOWNERS ASSOCIATION,

ORDER
Plaintiff(s),

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v.

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Case No. 2:14-CV-2222 JCM (NJK)

D.R. HORTON, INC.,
Defendant(s).

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Presently before the court is third party defendant Harrison Landscape Company’s

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(“Harrison”) motion for determination of good faith settlement. (ECF No. 178). No response has
been filed, and the time to do so has passed.
Also before the court is third party defendant Majestic Plumbing, Inc’s (“Majestic”) motion

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James C. Mahan
U.S. District Judge

for determination of good faith settlement. (ECF No. 182). 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 Harrison and Majestic,
(collectively, the “subcontractors”) asserting various indemnity claims for the work they produced
that contributed to the alleged construction defects. (See generally ECF No. 40).

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“Harrison was responsible for landscaping and fine ‘finish’ grading at 66 of the 67 subject

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homes.” (ECF No. 178 at 3). Majestic contracted to install plumbing at the project. (ECF No.

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182 at 3).

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After a lengthy period of discovery, developer and each of the subcontractors participated

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in mediation with a court-appointed mediator to agree upon a fair settlement amount in exchange

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for release of all claims against the subcontractors. (See ECF Nos. 178, 182).
The court now considers both of the subcontractors’ motions for determination of good

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faith settlement. Id.

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II.

Legal Standard

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Under Nevada law, the determination of whether a settlement is entered in “good faith”

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under NRS § 17.245 is “left to the discretion of the trial court based upon all relevant facts

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available.” Velsicol Chemical Corp. v. Davidson, 107 Nev. 356, 811 P.2d 561, 563 (Nev. 1991).

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The factors discussed in In re MGM Grand Hotel Fire Litigation, 570 F. Supp. 913, 927 (D. Nev.

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1983), may be among the relevant facts a court may choose to consider in the exercise of its

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“considerable discretion.” The Doctors Co. v. Vincent, 120 Nev. 644, 98 P.3d 681, 686-87 (Nev.

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2004).

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Such factors include “the amount paid in settlement, the allocation of the settlement

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proceeds among plaintiffs, the insurance policy limits of settling defendants, the financial

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condition of settling defendants, and the existence of collusion, fraud or tortious conduct aimed to

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injure the interests of non-settling defendants.”

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Commercial Union Ins. Co. v. Ford Motor Co., 640 F.2d 210 (9th Cir. 1981)). However, Nevada

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law includes no requirement that a court consider or limit its analysis to the MGM factors or hold

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a hearing before making a determination of good faith. Velsicol, 811 P.2d at 563.

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III.

In re MGM, 570 F. Supp. at 927 (citing

Discussion

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The court will address each of the subcontractors’ motions in turn.

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a. Harrison’s motion for determination of good faith settlement

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In its motion, Harrison has addressed each of the applicable MGM factors. (ECF No. 162).

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Harrison submits that it has reached an agreement with developer to settle for $5,000, to be paid

James C. Mahan
U.S. District Judge

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by Harrison’s participating insurance carrier. Id. at 5. In exchange, Harrison will be released of

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all of developer’s “known and unknown claims against Harrison with the exception of additional

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insured obligations (if any).” Id. at 4.

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Harrison asserts that the parties arrived at this amount as the result of an arms-length

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negotiation using a court-appointed mediator. Id. at 5. The parties reviewed plaintiffs’ cost of

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repair and developer’s expert reports, and Harrison represents that—after removing allegations

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that Harrison believes “should have been allocated to others”—their responsibility for the cost of

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repair was $0. Id. at 5–6. Nonetheless, “Harrison has agreed to pay an additional sum to

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compensate [d]eveloper and [p]laintiffs for the Chapter 40 statutory entitlements as well as to

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satisfy Harrison’s contractual obligations.” Id. at 6.

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Regarding the MGM factors regarding allocation of settlement proceeds, Harrison claims

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that it “is not in a position to allocate any settlement proceeds to Plaintiffs.” Id. The court agrees.

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Indeed, because Harrison is a third-party defendant, all the settlement proceeds will be paid directly

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to developer, and no further allocation will be necessary. Moreover, Harrison notes that its

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“defined and limited exposure” means that (1) its insurance policies were never a serious

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consideration, (2) its insurance limits exceed the amount of the settlement, and, as a result, (3) its

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financial condition is not at issue. Id.

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Finally, Harrison asserts that the parties reached a fair settlement through a court-appointed

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mediator and that the arms’ length negotiations were free from collusion, fraud, or tortious

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conduct. Id.

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In light of the foregoing discussion of the relevant MGM factors, and because no party has

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opposed Harrison’s motion, the court finds that the settlement between Harrison and developer

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was made in good faith. Harrison’s motion is granted.

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b. Majestic’s motion for determination of good faith settlement

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Majestic has agreed to settle this matter with developer for a sum of $25,000 in exchange

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for full release of all claims against Majestic. (ECF No. 182 at 3).

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Majestic asserts that this sum was settled upon after a mediation session and several

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negotiation discussions between the parties along with a court-appointed mediator. Id. Majestic

James C. Mahan
U.S. District Judge

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submits that this sum is fair and substantial, and it asserts that developer “agreed to accept the

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proposed settlement as representing a reasonable apportionment of Majestic’s liability for this

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claim.” Id. at 4.

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Majestic asserts that the MGM factors regarding allocation of settlement proceeds,

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insurance policy limits, and Majestic’s financial condition are irrelevant to these proceedings. Id.

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at 4–5.
Finally, Majestic alleges that the mediation and negotiations between counsel, with the

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assistance of the mediator, were free of any collusion, fraud, or tortious conduct. Id. at 5.

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In light of the foregoing discussion of the relevant MGM factors, and because no party has

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opposed Majestic’s motion, the court finds that the settlement between Majestic and developer

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was made in good faith. Majestic’s motion is granted.

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IV.

Conclusion

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Accordingly,

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IT IS HEREBY ORDERED, ADJUDGED, and DECREED that Harrison’s motion for

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determination of good faith settlement (ECF No. 178) be, and the same hereby is, GRANTED.
IT IS FURTHER ORDERED that Majestic’s motion for determination of good faith
settlement (ECF No. 182) be, and the same hereby is, GRANTED.
DATED August 14, 2019.
__________________________________________
UNITED STATES DISTRICT JUDGE

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James C. Mahan
U.S. District Judge

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