STATE FARM FIRE AND CASUALTY COMPANY, Appellant, v. ALL ELECTRIC, INC., and LEWIS BUILDING CO., INC., Respondents; ROYAL GLOBE INSURANCE COMPANIES; CHRIS K. BRANDT and IDA MAE BRANDT, Appellants, v. ARTHUR V. ADAMS, dba ADAMS CONSTRUCTION COMPANY, INC., and NOVIKOFF ENGINEERS, Respondents
State Farm Fire & Casualty Co. v. All Electric, Inc.
Steffen and Gunderson, JJ., and Zenoff, Sr. J., concur.
STATE FARM FIRE AND CASUALTY COMPANY, Appellant, v. ALL ELECTRIC, INC., and LEWIS BUILDING CO., INC., Respondents. ROYAL GLOBE INSURANCE COMPANIES; CHRIS K. BRANDT and IDA MAE BRANDT, Appellants, v. ARTHUR V. ADAMS, dba ADAMS CONSTRUCTION COMPANY, INC., and NOVIKOFF ENGINEERS, Respondents.
STATE FARM FIRE AND CASUALTY COMPANY, Appellant, v. ALL ELECTRIC, INC., and LEWIS BUILDING CO., INC., Respondents. ROYAL GLOBE INSURANCE COMPANIES; CHRIS K. BRANDT and IDA MAE BRANDT, Appellants, v. ARTHUR V. ADAMS, dba ADAMS CONSTRUCTION COMPANY, INC., and NOVIKOFF ENGINEERS, Respondents.
No. 13228
No. 13443
March 31, 1983
[Rehearing in case No. 13443 denied June 20, 1983]
660 P.2d 995
Edwards, Hunt, Pearson & Hale, Las Vegas, for Appellant State Farm Fire and Casualty Company.
Cromer, Barker, Michaelson, Gillock and Rawlings; Michael K. Mansfield; Beckley, Singleton, DeLanoy & Jemison; Lyles and Austin; Las Vegas, for Respondents All Electric, Inc., and Lewis Building Co., Inc.
Galatz, Earl & Biggar, Las Vegas, Amicus Curiae.
Morse-Foley (representing Essex Chemical Corp.), Las Vegas, Amicus Curiae.
Lionel, Sawyer & Collins and Steve Morris (representing MGM), Las Vegas, Amicus Curiae.
Greenman, Goldberg & Raby (representing Royal Globe Insurance Companies); Goodman, Oshins, Brown & Singer (representing Chris K. Brandt and Ida Mae Brandt), Las Vegas, for Appellants.
Cromer, Barker, Michaelson, Gillock & Rawlings and Walter R. Cannon (representing Arthur V. Adams dba Adams Construction Company, Inc.); Beckley, Singleton, DeLanoy & Jemison; Nitz & Schofield; Dickerson, Miles, Pico & Mitchell and Eleissa C. Lavelle (representing Novikoff Engineers), Las Vegas, for Respondents.
The Chief Justice designated The Honorable David Zenoff, Senior Justice, to sit in this case in the place of The Honorable John Mowbray, Justice, who voluntarily disqualified himself. Nev. Const., art. 6, § 19, SCR 10.
OPINION
By the Court,
Manoukian, C. J.:
These consolidated appeals by appellant insurance companies primarily involve the constitutionality of NRS 11.205. That statute essentially provides that six years after substantial completion of a construction project, a party may not sue any person who was engaged in the design, planning, supervision or observation of the construction project or in the construction itself. This protection, however, does not extend to anyone who is also an owner or occupier of the land. See NRS 11.205(3). The statute abolishes certain claims for relief rather than extinguishing a remedy as is the case with the limitation statute. See Nevada Lakeshore Co. v. Diamond Elec., Inc., 89 Nev. 293, 511 P.2d 113 (1973).
The district court granted summary judgment in favor of each respondent on the ground that the suits were barred under NRS 11.205. Appellants, representing the interests of insured property owners, contend that the statute violates the equal protection and due process clauses of the state and federal constitutions. In agreeing, we conclude that the equal protection claim is dispositive, and find it unnecessary to discuss the due process contention.
The Fourteenth Amendment to the United States Constitution forbids enactments that "deny to any person . the equal protection of the laws." Article 4, section 21, of the Nevada Constitution requires that all laws be "general and of uniform operation throughout the State." We have previously held that the standard for testing the validity of legislation under the equal protection clause of the state constitution is the same as the federal standard. See Laakonen v. District Court, 91 Nev. 506, 538 P.2d 574 (1975). Consequently, we believe that the following analysis can be applied equally to the state and federal equal protection challenges.
Although the equal protection clause does not deny the state legislature the power to classify, such classifications must be reasonable. Morey v. Doud, 354 U.S. 457 (1957). And where, as here, no suspect classification or fundamental right is involved, our role is to determine whether the classification bears a rational relationship to the legislative purpose sought to be effected. Dandridge v. Williams, 397 U.S. 471 (1970); Laakonen v. District Court, supra.
Legislative classifications must apply uniformly to all who are similarly situated, and the distinctions which separate those who are included within a classification from those who are not must be reasonable, not arbitrary. See Pacific Indem. Co. v. Thompson-Yaeger, Inc., 260 N.W.2d 548 (Minn. 1977). The statute in question singles out architects and contractors, and insulates them from liability on the expiration of six years. The same statute excludes from its protection, those similarly situated, such as owners and material suppliers. The question, then, is whether there is a reasonable basis for treating architects and contractors engaged in the improvement of real property as a distinct and separate class for the purpose of granting immunity from suit.
A review of the cases involving the constitutionality of statutes similar to Nevada's, demonstrate that the several jurisdictions deciding the question are about evenly split. Respondents argue that a legitimate distinction exists between those included and those excluded from the statute's protection, i.e., those who own or occupy land. They essentially argue that control over the property is the crucial factor. Specifically, they assert that a tenant or landowner may fail to maintain the property adequately or may materially alter the existing improvements. They state that those within the statute's protective shield, such as architects and contractors, are entitled to such protection because they have no control over a project once it is completed and have no opportunity to prevent an abuse by the occupier.
Respondents place great reliance on the Arkansas Supreme Court decision of Carter v. Hartenstein, 455 S.W.2d 918 (Ark. 1970), appeal dismissed, 401 U.S. 901 (1971). There, the Arkansas court stated that: "[p]art of acceptance [of completed construction] is to accept some future responsibility for the condition of the premises . To say that there can be no limitation in perpetuity against a designer or erector of a structure would be in effect to discriminate against professional builders and designers." Id. at 920. We remain unpersuaded by Carter, Although an act of the legislature is presumed to be constitutional, State ex rel. Tidvall v. Eighth Judicial District Court, 91 Nev. 520, 539 P.2d 456 (1975), our usual deference to legislative declarations cannot be given where the evidence of discrimination is so clear, as it is in the present case.
After-thoroughly considering this important question, we are satisfied that the better reasoned cases are those which have struck such statutes as being constitutionally infirm because they improperly grant immunity from suit to a certain class of defendants, without a reasonable basis for that classification. See McClanahan v. American Gilsonite Co., 494 F.Supp. 1334 (D.Colo. 1980); Fujioka v. Kam, 514 P.2d 568 (Hawaii 1973); Skinner v. Anderson, 231 N.E.2d 588 (Ill. 1967); Pacific Indem. Co. v. Thompson-Yaeger, Inc., 260 N.W.2d 548 (Minn. 1977); Loyal Order of Moose, Lodge 1785 v. Cavaness, 563 P.2d 143 (Okla. 1977); Broome v. Truluck, 241 S.E.2d 739 (S.C. 1978); Kallas Millwork Corporation v. Square D Co., 225 N.W.2d 454 (Wis. 1975); Phillips v. ABC Builders, Inc., 611 P.2d 821 (Wyo. 1980).
The Illinois Supreme Court was the first to declare a statute, similar to the one in question, unconstitutional on equal protection grounds. See Skinner v. Anderson, supra. The rationale in Skinner has been relied upon heavily in subsequent decisions in other jurisdictions. In discussing the discriminatory impact of the statute upon others similarly situated, the court in Skinner stated:
If, as the defendant suggests, the objective of the statute is to require trials of actions based upon defects in construction to be held within a relatively short time after the work is completed, that objective is achieved . in a discriminatory fashion.
[0]f all those whose negligence in connection with the construction of an improvement to real estate might result in damages to property or injury to persons more than four years after construction is completed, the statute singles out the architect and contractor and grants them immunity. It is not at all inconceivable that the owner or person in control of such an improvement might be held liable for damage or injury that results from a defective condition for which the architect or contractor is in fact responsible. Not only is the owner or person in control given no immunity; the statute takes away his action for indemnity against the architect or contractor.
The arbitrary quality of the statute clearly appears when we consider that architects and contractors are not the only persons whose negligence in the construction of a building or other improvement may cause damage to property or injury to persons. If, for example, four years after a building is completed a cornice should fall because the adhesive used was defective, the manufacturer of the adhesive used is granted no immunity. And so it is with all others who furnish materials used on constructing the improvement. But if the cornice fell because of defective design or construction, for which an architect or contractor was responsible, immunity is granted. It cannot be said that the one event is more likely than the other to occur within four years after construction is completed.
Id. at 590-91.
Similarly, the Hawaii Supreme Court struck down a statute similar to NRS 11.205. See Fujioka v. Kam, supra. In addressing what it considered to be an irrational statutory classification, the Fujioka court concluded that the statute grants immunity to those who, but for the statute, would or could be primarily responsible for the losses, while the owners are exposed to liability for the damages caused by the negligence of the engineer and contractor. That court went on to state:
The cause of the injuries is the same, the plaintiff is the same and the injuries are the same — but under the statute the plaintiff may not recover from the engineer and the contractor even though the negligence of the engineer and the contractor may have been the sole proximate cause of the injuries suffered by the plaintiff. However, the plaintiff may recover damages from the owners, and the owners will have no right to have the engineer and the contractor reimburse or contribute to them the amount of damages they are required to pay the plaintiff. We are unable to see any rational basis for treating the engineer and the contractor differently from the owners under the same circumstances. (Emphasis supplied.)
Id. at 571.
We find the rationale of Skinner and Fujioka both persuasive and applicable to our interpretation of NRS 11.205. Although respondents contend that a legitimate distinction exists between architects and contractors as opposed to owners and manufacturers, we conclude that there is no rational basis for making such a distinction so as to justify granting immunity to one group while at the same time denying it to another.
Although a tenant, landowner or other occupier may allow the property to fall into disrepair or may materially alter existing improvements, the difficulty of defending such a suit after the expiration of the six year period is largely theoretical. For instance, the plans and specifications of architects, engineers, general contractors and most subcontractors are approved by governmental agencies and become public records. See Nevada Administrative Code § 239.050.(1982). Therefore, rarely would the modification of an existing building be so substantial within the six year period as to preclude the tracing of liability to the party or parties who should assume responsibility for injuries or loss. Additionally, builders and contractors are usually corporate bodies with a continuity of existence. As such, the concerns of proof and tracing are virtually unfounded since these entities would normally be easily located. Conversely, material-men and suppliers are often disadvantaged because their materials and workmanship become an integral part of the structure, concealed from view and vulnerable to the elements. These persons are at the mercy of others who handle the construction, or who may be responsible for the ongoing maintenance of the building. Moreover, as recognized in Skinner and Fujioka, if we were to uphold the statute, we envision too many inequities and hardships to those who are left uninsulated from liability, because of the statute's inherent unfairness. If we were to uphold the statute, any tort action against designers, architects, suppliers and subcontractors would be barred after six years irrespective of whether or not the defect was apparent, or could have been discovered with reasonable diligence. See Loyal Order of Moose, Lodge 1785 v. Cavaness, 563 P.2d 143 (Okla. 1977).
The legislature has the power to create statutory classifications; however, to survive constitutional challenge, any discrimination must satisfy important legislative objectives and, of course, be reasonable. Loyal Order of Moose, Lodge 1785, supra; Reed v. Reed, 404 U.S. 71 (1971). In the instant case, we believe it is clear that NRS 11.205 arbitrarily discriminates against a certain class of individuals, i.e., owners and material suppliers. Public policy reasons may exist to justify precluding legitimate claims from being litigated after the lapse of a certain number of years. If, as here, however, one class of defendants is arbitrarily excluded from this protection, the equal protection clauses of the state and federal constitutions are violated.
The equal protection question is dispositive of this appeal. We therefore decline to consider the other issues or contentions raised by the parties. Accordingly, the judgment of the lower court is reversed and the case remanded for further proceedings consistent with this holding.
Steffen and Gunderson, JJ., and Zenoff, Sr. J., concur.
NRS 11.205 provides as follows:
Actions for damages for injury to person or property or wrongful death caused by deficiency in design, planning, supervision of construction or construction of improvements to real property.
1. No action in tort, contract or otherwise shall be commenced against any person performing or furnishing the design, planning, supervision or observation of construction, or the construction, of an improvement to real property more than 6 yeárs after the substantial completion of such an improvement, for the recovery of damages for:
(a) Any deficiency in the design, planning, supervision or observation of construction or construction of such an improvement; or
(b) Injury to real or personal property caused by any such deficiency; or
(c) Injury to or wrongful death of a person caused by any such deficiency.
2. Notwithstanding the provisions of NRS 11.190 and subsection 1 of this section, where injury occurs in the sixth year after substantial completion of such an improvement, an action for damages for injury to property or person, damages for wrongful death resulting from such injury or damages for breach of contract may be commenced within 1 year after the date of such injury, irrespective of the date of death, but in no event may an action be commenced more than 7 years after the substantial completion of the improvement.
3. Where an action for damages for wrongful death or injury to person or property caused by any deficiency in an improvement to real property is brought against a person in actual possession or control as owner, tenant or otherwise of such improvement, the limitation prescribed by this section shall not be a defense for such person.
The statute in Carter was similar to that in issue in the immediate case and the equal protection challenge was similar as well. The Arkansas Supreme Court upheld the validity of the statute and appeal was taken to the United States Supreme Court. There, the appeal was dismissed for lack of a substantial federal question. While such a dismissal has limited precedential value, the dismissal is generally a binding adjudication of the merits. Hicks v. Miranda, 422 U.S. 332 (1975). Nevertheless, at least six jurisdictions have held similar statutes to be unconstitutional since the Carter dismissal in 1971. Obviously, those jurisdictions do not believe the summary disposition in Carter is binding. We agree. Although Cartermay be very persuasive, we do not believe it is dispositive of this appeal. See Justice Brennan's concurrence in Mandel v. Bradley, 432 U.S. 173 (1977), (state courts should give appropriate but not conclusive weight to summary dispositions).
It should be noted that other courts, in addition to those cited, have held similar statutes unconstitutional; however, they have done so on grounds other than equal protection. See, e.g., Bagby Elevator and Electric Company, Inc. v. McBride, 291 So.2d 306 (Ala. 1974); Saylor v. Hall, 497 S.W.2d 218 (Ky. 1973).
The Illinois statute contained a four year limitation period as opposed to the six year period of NRS 11.205.