Carson City and a local development company are being sued by 381 homeowners seeking "double-digit millions" in compensation.
Robert Maddox, an attorney representing the homeowners, said he may ask for as much as $48 million from the city and Stanton Park Development, although he expects that number to be tightened before the case goes to trial in May 2002.
Filed in April 2000, the lawsuit contends city officials knew about construction defects in homes in the Mountain Park subdivision north and east of Lone Mountain Cemetery, but failed to force Stanton Park, composed of Millard Realty and Construction and Garretson & Furgerson Construction, to correct the defects.
Defects alleged include a severe water drainage problem as well as several other construction complaints affecting everything from windows to toilets.
"Some of the defects are so wrong that it's our opinion that Carson City building department had to know they were approving things that were wrong," Maddox said.
The lawsuit has spawned dozens of counter lawsuits and counterclaims involving subcontractors who built the homes. Dwight Millard, of Stanton Park Development, said the lawsuit is about "financial enrichment at the cost of insurance companies."
"Are there some problems over there?" Millard said. "Probably and perhaps. Should they be repaired? A lot of them are caused by the homeowners. A lot of people don't do routine maintenance."
Millard argues that it is a frivolous lawsuit that has the ability not only to damage contractors and subcontractors, but destroy opportunities to build affordable housing.
"Eventually, the consumer has to get behind legislation that stops this particular type of lawsuit," he said.
Maddox said Stanton Park officials built homes that "are clearly in violation of applicable housing codes."
There are people suffering illnesses that appear to be related to the unhealthy environment," Maddox said. "They're definitely being affected in a big way. This is about people getting homes that are safe, sound and healthy to live in. They don't have those at Mountain Park."
Carson City tried to get out of the lawsuit and was denied by both District Court Judge Michael Griffin and the state Supreme Court.
Deputy District Attorney Mark Forsberg said state law allows local government not to be defendants in cases such as this case and said the district and Supreme Court decisions were "unilluminating" as to why the city was not dismissed from the suit.
"We think that, clearly, the intent of the law is that cities or counties that do inspecting or permitting are not drawn into these cases until such time as the defects and the legitimacy for the claims has been determined by some form of dispute resolution between the homeowners and the builders," Forsberg said. "The very facts of the case show that the dispute is between the builders and the homeowners. The city is peripheral.
"I think what happens in these types of cases is there will be a small number of homeowners that have legitimate complaints. Once it becomes a class action it takes on a life of its own and just spins out of control."
Most complaints in the subdivision involve water problems in nine of 11 units of the subdivision involved in the suit. Attorneys for the homeowners charge water pools under houses, creating harmful molds such as aspergillus, penicillin and stachybotrys. An early test of 15 homes in the subdivision showed five homes with stachybotrys, a potentially toxic mold.
"Fungal contamination carries life safety issues such as adverse heath effects ranging from discomfort to serious debilitating disease in building occupants. Exposure to fungal contaminants has also been linked to exacerbation of health complaints such as asthma," said Linda Stetzenbach, director of the microbiology division of the Harry Reid Center of Environmental Studies at the University of Nevada, Las Vegas. "The 15 residences tested are consistent with reports of indoor fungal contamination associated with adverse health effects and health problems."
The case is headed for mediation talks where it may be settled before it heads to trial. If not, the case will be heard in the legislative Assembly chambers because of the number of attorneys, plaintiffs and defendants involved.