The dispute arose from a 2021 trip-and-fall accident in which Pamela Whalen allegedly injured herself while touring a Lennar community. Whalen, then the fiancée of homebuyer Brian Whalen, tripped over a utility box on property not covered by the purchase agreement for Brian's home. She filed a negligence complaint against Lennar and its affiliate Greystone Nevada, LLC, in September 2022.
Writing for a unanimous panel, Justice Bell held that Lennar forfeited its right to arbitrate by acting inconsistently with that right throughout the litigation. The court expressly adopted the totality-of-the-circumstances standard, holding that courts should consider the totality of the circumstances when evaluating whether a party has already litigated an issue it subsequently seeks to arbitrate.
The court held that Lennar's conduct was significant and unequivocally inconsistent with arbitration. Lennar filed an answer, demanded a jury trial, issued and answered interrogatories and document requests, and ordered Whalen to undergo three separate medical examinations under NRCP 35 conducted by an orthopedic surgeon, a plastic surgeon, and a psychiatrist.
Lennar did not request arbitration until March 2024, only after obtaining written discovery and the results of the medical exams. Justice Bell wrote that allowing arbitration after such extensive litigation would permit a party to test the judicial waters, and to do so for as long as he liked, even to the brink of resolution, and then nullify all that has gone before by demanding arbitration.
The district court had originally denied the motion on different grounds, concluding the claim fell outside the scope of the arbitration clause because the accident occurred on property not covered by the purchase agreement. The Nevada Supreme Court held this reasoning to be error, noting the contract contained a clear delegation clause assigning arbitrability decisions to the arbitrator.
Lennar argued that waiver could not be found because it had never filed a dispositive motion before seeking arbitration. The court rejected this, stating that waiver turns on all relevant circumstances and that Lennar failed to assert arbitration as an affirmative defense despite the contract's requirement to submit disputes within a reasonable time.
The court also found prejudice to Whalen, noting that Lennar likely obtained discovery through the NRCP 35 examinations that would not have been available in arbitration. The court left open the question of whether Nevada will eventually abandon the prejudice element entirely, following the U.S. Supreme Court's abrogation of the federal prejudice requirement in Morgan v. Sundance, Inc.
The ruling remanded the case to the district court for further proceedings consistent with the opinion.