By the Court, DOUGLAS, J.:
In this opinion, we address whether the district court abused its discretion by: (1) denying a motion for a new trial based on allegations of attorney misconduct; (2) not granting sanctions under NRS 17.115 and NRCP 68; and/or (3) refusing to consider apportioning sanctions. We conclude that the district court did not abuse its discretion in denying appellants'/cross-respondents' motion for a new trial, but did abuse its discretion regarding the issuance and apportionment of sanctions. We hold that: (1) the district court was statutorily required to issue sanctions under NRS 17.115 and NRCP 68; (2) when a district court issues sanctions against multiple offerees pursuant to NRS 17.115 and NRCP 68, it has and must exercise its discretion to determine whether to apportion those sanctions among the multiple offerees or to impose those sanctions with joint and several liability; and (3) when sanctions are issued against multiple homeowner offerees pursuant to NRS 17.115 and NRCP 68 in a construction defect action, a district court abuses its discretion by imposing those sanctions jointly and severally against the homeowners. Accordingly, we affirm the district court's decision in part, reverse in part, and remand the matter to the district court for further proceedings consistent with this opinion.
Appellants/cross-respondents, homeowners in the High Noon at Boulder Ranch community (the homeowners), retained experts to inspect their homes for construction defects. Based on their experts' findings, the homeowners sent respondent/cross-appellant contractor D.R. Horton, Inc., a written notice detailing alleged architectural, insulation, waterproofing, and other defects. In response, D.R. Horton notified the homeowners of its intent to inspect the alleged defects to determine how to respond to the homeowners' notice. The homeowners then filed a complaint, seeking relief primarily under theories of negligence and breach of warranty.
After receiving the homeowners' complaint, D.R. Horton elected to repair the identified defects. Subsequently, the district court stayed proceedings on the homeowners' complaint to allow D.R. Horton to make repairs. After completing its work, D.R. Horton provided the homeowners with a formal statement of repairs. The district court then lifted the stay, and the homeowners filed an amended complaint. In response, D.R. Horton filed an answer and a third-party complaint against several subcontractors.
Before trial, D.R. Horton served individual offers of judgment on each of the homeowners based on the extent of their respective property's defects; 39 of the 40 homeowners rejected these offers and proceeded to trial.
During closing arguments, counsel for D.R. Horton and counsel for third-party defendant RCR Plumbing made multiple statements that the homeowners' counsel objected
Following the jury's verdicts, the homeowners and D.R. Horton filed motions for costs and attorney fees. The district court determined that D.R. Horton made valid offers of judgment and that no homeowner's award exceeded his or her respective offer. Accordingly, the district court awarded D.R. Horton post-offer costs, but declined to award it attorney fees. Despite awarding D.R. Horton post-offer costs, the district court denied both motions, stating that it was impossible to award apportioned costs and fees under the circumstances. The homeowners then filed a motion for a new trial, or, in the alternative, additur. D.R. Horton opposed the homeowners' motion and filed a countermotion for remittitur, requesting that the district court reduce the verdicts to zero. Again, the district court denied both motions. This appeal and cross-appeal followed.
In their appeal and cross-appeal, the homeowners and D.R. Horton assert a number of arguments. While we conclude that most of these arguments do not warrant specific discussion,
The homeowners argue that the district court should have granted their motion for a new trial because D.R. Horton's counsel repeatedly committed misconduct throughout the trial. Specifically, the homeowners claim that D.R. Horton's counsel violated RPC 3.4(e) and our decision in Lioce v. Cohen, 124 Nev. 1, 174 P.3d 970 (2008), by urging the jurors to "send a message" because this case was driven by attorneys and experts, the homeowners were liars, and the trial was a waste of the jury's time. The homeowners also assert that, even if the specific instances of misconduct were not independently sufficient to warrant a new trial, the cumulative effect of D.R. Horton's counsel's misconduct required the district court to grant the homeowners' motion for a new trial. We disagree.
This court reviews a district court's decision to grant or deny a motion for a new trial for an abuse of discretion. Lioce, 124 Nev. at 20, 174 P.3d at 982. "Whether an attorney's comments are misconduct is a question of law, which we review de novo; however, we will give deference to the district court's factual findings and application of the standards to the facts." Id.
Under NRCP 59(a)(2), the district court may grant a new trial if the prevailing party committed misconduct that affected the aggrieved party's substantial rights. In Lioce, this court discussed the applicable legal standards for reviewing a district court's denial of a motion for a new trial based on attorney misconduct. See Lioce, 124 Nev. at 14-26, 174 P.3d at 978-86. Under Lioce, this court decides whether there was attorney misconduct, identifies the applicable legal standard for determining whether a new trial was warranted, and assesses whether the district court abused its discretion in applying that standard. See id. at 14-26, 174 P.3d at 978-86.
When an attorney commits misconduct, and an opposing party objects, the district
An attorney's failure to object constitutes waiver of an issue, unless the failure to correct the misconduct would constitute plain error. Id. at 19, 174 P.3d at 982. Establishing plain error requires a party to show that "the attorney misconduct amounted to irreparable and fundamental error," resulting "in a substantial impairment of justice or denial of fundamental rights." Id. In other words, plain error exists only "when it is plain and clear that no other reasonable explanation for the verdict exists." Ringle v. Bruton, 120 Nev. 82, 96, 86 P.3d 1032, 1041 (2004).
Finally, if misconduct is persistent or repeated, the district court must take into account "that, by engaging in continued misconduct, the offending attorney has accepted the risk that the jury will be influenced by his misconduct." Lioce, 124 Nev. at 18-19, 174 P.3d at 981. As a result, the district court must acknowledge that although specific instances of misconduct alone might have been curable by objection and admonishment, the effect of persistent or repeated misconduct might be incurable. See id. at 19, 174 P.3d at 981.
The homeowners argue that D.R. Horton's counsel violated RPC 3.4(e) by pursuing the theme that the case was driven by the homeowners' lawyers and experts. Specifically, the homeowners contend that D.R. Horton's counsel instructed the jury to disregard the evidence, that the homeowners were liars, and that the alleged defects did not exist. D.R. Horton claims that it did not violate RPC 3.4(e) and that the homeowners are precluded from making this argument now because they failed to object on these grounds at trial.
RPC 3.4(e) prohibits attorneys from:
The homeowners objected to the following comment made by third-party defendant RCR's counsel during closing arguments:
Applying Lioce's framework, we must first determine whether RCR's counsel committed attorney misconduct. In this instance, our review of the record indicates that RCR's counsel did not violate RPC 3.4(e) or commit any other attorney misconduct. Accordingly, this statement provides no basis for a new trial.
The basis for the homeowners' objection was that D.R. Horton's attorney improperly claimed to know what Mr. Gunther was thinking. Applying the Lioce framework again, we first determine whether D.R. Horton's counsel's statement was attorney misconduct. D.R. Horton's counsel's statement violates RPC 3.4(e) by implicitly asserting a personal opinion as to the justness of the homeowners' case based on the statement's implication that the homeowners' attorneys unilaterally initiated this action and fabricated its foundations.
Next, we must identify the applicable legal standard. As the homeowners note, after sustaining their objection to this statement, the district court failed to admonish counsel or the jury. Lioce does not directly address this situation. Accordingly, we now clarify that when a district court sustains an objection to attorney misconduct but fails to admonish counsel or the jury, if objecting counsel does not promptly request the omitted admonishments, he or she must, in seeking a new trial based on the improper conduct, demonstrate that the misconduct was so extreme that the objection and sustainment could not have removed the misconduct's effect. Cf. Lioce, 124 Nev. at 17, 174 P.3d at 981. If the district court fails to admonish counsel or the jury after objecting counsel requests such admonishment promptly following his or her sustained objection, a party moving for a new trial must only demonstrate that "an admonition to the jury would likely have affected the verdict in favor of the moving party." Cf. id. at 18, 174 P.3d at 981.
Here, the homeowners must show that D.R. Horton's counsel's misconduct was so extreme that its effect could not have been removed by their objection and the district court's sustainment because their counsel failed to request admonishments where they were mistakenly omitted by the district court. We conclude that the homeowners have not shown that the misconduct's effect could not have been removed by the objection and its sustainment. Accordingly, applying the last step in the Lioce analysis, we determine that the district court did not abuse its discretion in denying the homeowners' motion for a new trial.
The homeowners separately claim that D.R. Horton's counsel committed attorney misconduct by encouraging jury nullification. An attorney's arguments in favor of jury nullification constitute misconduct in part because they violate RPC 3.4(e). Jury nullification is defined as
Lioce, 124 Nev. at 20, 174 P.3d at 982-83 (alteration in original) (quoting Black's Law Dictionary 875 (8th ed. 2004)). An attorney making an attempt at jury nullification violates RPC 3.4(e) in two ways: (1) the attorney is either alluding to a matter that is irrelevant given the law or unsupported by admissible evidence given the facts; and (2) whether explicit or implicit, the attorney is inherently asserting his or her opinion as to the justness of a cause.
In support of their jury nullification argument, the homeowners rely in part on D.R. Horton's counsel's statement during closing arguments that, "[i]f you want to send a message to the homeowners that their houses are safe, tell them, `I sat for 12 weeks; I listened to everything; your house is safe.'" In Lioce, this court concluded that the attorney
Finally, the homeowners argue that the cumulative effect of D.R. Horton's counsel's misconduct justifies a new trial. To obtain a new trial based on the cumulative effect of attorney misconduct, the appealing party "must demonstrate that no other reasonable explanation for the verdict exists." Grosjean v. Imperial Palace, Inc., 125 Nev. 349, 365, 212 P.3d 1068, 1079 (2009). In evaluating whether this has been demonstrated, we "look at the scope, nature, and quantity of misconduct as indicators of the verdict's reliability." Id. Grounds for reversing a district court's decision denying a new trial under the plain error standard will generally require multiple severe instances of attorney misconduct as determined by their context. See, e.g., Lioce, 124 Nev. at 8, 24, 174 P.3d at 974-75, 985 (upholding a district court's granting of a motion for a new trial where the attorney's misconduct included multiple improper attempts at jury nullification and repeated egregious and inappropriate comments during closing arguments).
In its order on the issue of costs and attorney fees, the district court determined that D.R. Horton's individual offers of judgment were valid pursuant to NRS 17.115 and NRCP 68. The district court also found that the valid offers of judgment were rejected by the 39 homeowners involved and that none of them obtained a jury verdict higher than his or her respective offer of judgment. Based on these findings, the district court awarded D.R. Horton post-offer costs.
Immediately following this award, the district court stated that neither the homeowners nor D.R. Horton did or could allocate any costs or attorney fees, seemingly disposing of the issues once and for all. After making this statement, the district court revived the issue of D.R. Horton's attorney fees by conducting a Beattie analysis and concluding that D.R. Horton was not entitled to attorney fees under NRS 17.115 and NRCP 68. Beattie v. Thomas, 99 Nev. 579, 588-89, 668 P.2d 268, 274 (1983). The district court also determined that D.R. Horton was not entitled to attorney fees pursuant to NRS 18.010. Finally, for the second time, the district court stated that neither the homeowners nor D.R. Horton allocated or could allocate costs or attorney fees among the homeowners in this case, making it impossible for it to award any costs or attorney fees.
The homeowners claim that D.R. Horton's individual offers of judgment were invalid, preventing D.R. Horton from receiving costs under NRS 17.115 and NRCP 68. Conversely,
This court generally reviews a district court's decision awarding or denying costs or attorney fees for an abuse of discretion. See Miller v. Jones, 114 Nev. 1291, 1300, 970 P.2d 571, 577 (1998). "[W]here a trial court exercises its discretion in clear disregard of the guiding legal principles," it "may constitute an abuse of discretion." Bergmann v. Boyce, 109 Nev. 670, 674, 856 P.2d 560, 563 (1993).
Because we determine that the district court's order was unclear and erroneous, we offer the following guidance. In a construction defect action, the claimant generally may only recover attorney fees and specified costs that are proximately caused by a construction defect. See NRS 40.655(1). Alternatively, "the court may make an allowance of [attorney] fees to a prevailing party." NRS 18.010(2). And "[c]osts must be allowed ... to the prevailing party against any adverse party against whom judgment is rendered... [i]n an action for the recovery of money or damages, where the plaintiff seeks to recover more than $2,500." NRS 18.020(3).
However, "NRS 40.655 does not preclude application of the penalty provisions of NRCP 68 and NRS 17.115." Albios v. Horizon Communities, Inc., 122 Nev. 409, 418, 132 P.3d 1022, 1028 (2006). Similarly, NRS 18.010 and 18.020 do not preclude the application of the penalty provisions of NRCP 68 and NRS 17.115. See id. Thus, when an offeree rejects a valid offer and does not obtain a more favorable judgment, NRS 17.115(4)(a) and (b) and NRCP 68(f)(1) preclude the offeree from recovering any costs, attorney fees, or interest for the period after the service of the offer and before the judgment. In such a situation, the district court must order the offeree to pay the post-offer costs incurred by the party who made the offer.
In determining whether to award attorney fees in the offer of judgment context, a district court must consider and weigh the following factors:
Beattie, 99 Nev. at 588-89, 668 P.2d at 274. In considering the fourth Beattie factor, whether the fees sought by the offeror are reasonable and justified in amount, the district court must consider the Brunzell factors. See Shuette v. Beazer Homes Holdings Corp., 121 Nev. 837, 864-65, 124 P.3d 530, 548-49 (2005). The Brunzell factors include:
Brunzell v. Golden Gate Nat'l Bank, 85 Nev. 345, 349, 455 P.2d 31, 33 (1969).
As a threshold matter for our analysis, we determine that the district court properly concluded that D.R. Horton's offers of judgment were valid. Although the homeowners sought costs and attorney fees under NRS 18.010, 18.020, and 40.655, each of them failed to obtain a judgment greater than his or her rejected valid offer of judgment. Accordingly, NRS 17.115 and NRCP 68 preclude those homeowners from recovering any costs or attorney fees, and we affirm the district court's denial of costs or attorney fees to the homeowners.
We now consider the district court's order as it relates to D.R. Horton's motion for costs and attorney fees. At the outset, we note that the district court was required to award D.R. Horton post-offer costs under NRS 17.115(4)(c) and NRCP 68(f)(2). Additionally, in considering whether to award D.R. Horton reasonable attorney fees pursuant to NRS 17.115(4)(d)(3) and NRCP 68(f)(2), the district court properly identified the Beattie factors. The district court's analysis did not, however, consider the required Brunzell factors in its Beattie analysis. To the extent that the district court failed to apply the full, applicable legal analysis, it abused its discretion. See Beattie, 99 Nev. at 589, 668 P.2d at 274. On remand, the district court must award D.R. Horton post-offer costs and reconsider its attorney fees analysis as to D.R. Horton by properly applying the Beattie and Brunzell factors.
Although a district court's decision regarding an award of attorney fees is generally reviewed for an abuse of discretion, where, as here, the decision implicates a question of law, the appropriate standard of review is de novo. See Thomas v. City of N. Las Vegas, 122 Nev. 82, 90, 127 P.3d 1057, 1063 (2006). Whether a district court can apportion sanctions awarded under NRS 17.115 and NRCP 68 is a question of law that this court has not addressed. In considering this question, we preliminarily acknowledge that a district court's discretion includes "[t]he power ... to determine questions to which no strict rule of law is applicable but which, from their nature, and the circumstances of the case, are controlled by the personal judgment of the court." Goodman v. Goodman, 68 Nev. 484, 487, 236 P.2d 305, 306 (1951) (internal quotation omitted). With this in mind, we hold that when a district court issues sanctions against multiple offerees pursuant to NRS 17.115 and NRCP 68, it has and must exercise its discretion to determine whether to apportion those sanctions among the multiple offerees or impose those sanctions with joint and several liability.
The Arizona Court of Appeals recently addressed the issue of whether a trial court was required to consider apportioning sanctions among multiple offerees in the offer of judgment context. See Flood Control Dist. of
We note that similar to Arizona's rule, our offer of judgment rule does not speak to apportionment based on allocated offers of judgment among multiple offerees. See NRS 17.115; NRCP 68. Like the Maricopa County court, we conclude that the decision of whether to apportion sanctions under NRS 17.115 and NRCP 68 among multiple offerees or to impose joint and several liability falls within the purview of the district court's discretion based on the circumstances before it. In exercising this discretion, the district court should consider factors, including but not limited to: (1) whether different offerees raise distinct issues justifying segregating the costs and attorney fees associated with the litigation; and (2) in the case of a prevailing party, whether the party entitled to costs and/or attorney fees would otherwise not likely be able to recover a substantial portion of his or her judgment. Concord Boat Corp. v. Brunswick Corp., 309 F.3d 494, 497 (8th Cir.2002).
Additionally, we take this opportunity to hold that when sanctions are issued against multiple homeowner offerees pursuant to NRS 17.115 and NRCP 68 in a construction defect action, a district court abuses its discretion by imposing those sanctions jointly and severally against the homeowners. When an individual brings a construction defect action, litigation costs will often exceed the recoverable amount for the defects in that individual's home. While NRS 40.655 permits an award of reasonable attorney fees proximately caused by a construction defect, it does not guarantee it. See NRS 40.655(1)(a). Thus, absent egregiously costly defects, a homeowner will be chilled from bringing an individual lawsuit to exercise his or her right to be compensated for less costly defects. Based on this kind of cost-benefit analysis, construction defect actions tend to be brought in groups by multiple homeowners from the same community.
One of the primary purposes of our construction defect statutory scheme is "to protect the rights of homebuyers by providing a process to hold contractors liable for defective original construction or alterations." Westpark Owners' Ass'n v. Eighth Judicial Dist. Court, 123 Nev. 349, 359, 167 P.3d 421, 428 (2007). Our analysis has shown that homeowners already face much uncertainty in bringing individual construction defect actions, placing great importance on preserving the reasonableness of bringing a group lawsuit for construction defects. By requiring the apportionment of sanctions under NRS 17.115 and NRCP 68 in this context, we are seeking to ensure that group homeowner construction defect actions will not be chilled
Based on the foregoing analysis, we affirm the district court's order denying the homeowners' motion for a new trial, but we reverse the district court's order regarding the issuance of sanctions and remand the matter to the district court for further proceedings consistent with this opinion.