Newmeyer Dillion Defends National Homebuilder From Purchase Contract Cancellation in Las Vegas

Overview

Newmeyer Dillion defended a national homebuilder against purchasers seeking to cancel the purchase contract for a new home in Las Vegas in the middle of construction. Based on claims that the home’s construction was insufficient and contained various “problem” items, the claimants demanded a refund of deposits originally made nonrefundable under the terms of the contract. The deposits were for specially-ordered design options and upgrades that would not have been included in the construction of the home had claimants not ordered them, and that were unlikely to be recouped upon eventual sale to another buyer with different tastes.

Our Analysis

ND’s team, led by partner Aaron Lovaas, built a case around the client’s Nevada-specific contract, which ND drafted before this dispute. ND applied a tailored approach to drafting the homebuilder’s contracts in various jurisdictions, resulting in a Nevada-specific purchase agreement that removed the limitations on liquidated damages and retention of deposits that may be applicable under California law but not under Nevada law. This forward-looking approach to contract drafting was intended to position the client for ongoing success and protect the client in the event of litigation. In this case, it allowed the ND team to effectively argue the purpose of the various nonrefundability provisions in the purchase agreement and the protections these provisions afforded both the purchaser and the homebuilder.

Outcome

A month after arbitration hearings, the arbitrator issued a total defense arbitration award to ND’s client, denying all of the claimants’ claims. The arbitrator found that the claimants did not prove that the construction of the Las Vegas home was insufficient and agreed with ND’s client that the construction problems alleged by the claimants would have been resolved had the client been allowed to complete the construction process. ND’s client was neither required to provide a refund nor issue a credit to the claimants for a future purchase.