In a recent Nevada Supreme Court decision, MMV Invs. LLC v. Dribble Dunk LLC, the court upheld the enforceability of a contractual waiver of the statute-of-limitations defense in a breach-of-guaranty claim, diverging from the majority approach in other jurisdictions. This ruling, which has significant implications for the construction industry, particularly in contracts involving loan guaranties for projects like arenas or infrastructure, warrants scrutiny. The contractors should carefully review any contracts that increase their liability exposure by waiving the statute of limitations. 

Between 2010 and 2012, MMV Investments LLC extended approximately $12 million in loans to Dribble Dunk LLC and All Net, LLC, for a proposed professional basketball arena in Las Vegas. Jackie L. Robinson, the owner of both companies, personally guaranteed the loans. The guaranty agreement included a provision stating that Robinson would remain liable for repayment, even if claims against the borrowing entities became time-barred. When the borrowers defaulted and MMV filed suit in 2021, the district court dismissed MMV’s breach-of-guaranty claim against Robinson, reasoning that the guaranty was void because the underlying loan obligations were barred by Nevada’s six-year statute of limitations for contract claims (NRS 11.190(1)(b)).

The Nevada Supreme Court reversed this dismissal, holding that a party may contractually waive a statute-of-limitations defense. The court reasoned that, since Nevada law permits waiver of the defense during litigation (NRCP 8(c)(1)(R)), a contractual waiver should be equally permissible. It rejected the majority view—adopted by jurisdictions like Oregon—that such waivers violate public policy, arguing that Nevada’s policy of enforcing contracts as written should prevail absent a legislative prohibition.

1. Public Policy and Stale Claims: Statutes of limitations exist to protect defendants from the burdens of defending stale claims, where evidence may be lost, memories fade, and witnesses become unavailable. In construction projects, which often span years and involve complex documentation, these concerns are amplified. Allowing contractual waivers could lead to a surge in old claims, clogging courts and forcing parties to litigate disputes long after relevant records or personnel may have vanished. The court dismissed this concern as “purely speculative,” but jurisdictions like Washington have recognized that such waivers contravene the public interest in judicial efficiency and fairness (Umpqua Bank v. Gunzel, 483 P.3d 796, 803 (Wash. Ct. App. 2021)).
2. Disparity in Bargaining Power: In construction financing, guarantors like Robinson are often in weaker bargaining positions compared to lenders. Allowing lenders to include broad waiver clauses in guaranty agreements risks exploitation, as guarantors may feel compelled to sign without fully appreciating the long-term implications. This is especially concerning in large-scale projects, where personal guaranties are common to secure funding.
3. Inconsistency with Nevada Law: Although the court analogized contractual waivers to litigation waivers, the two contexts differ significantly. A litigation waiver occurs after a dispute arises, when parties can assess the claim’s merits. A contractual waiver, often signed years before any dispute, binds parties to unforeseen liabilities. The court’s reliance on Nevada’s litigation waiver precedent (Williams v. Cottonwood Cove Dev. Co., 96 Nev. 857, 619 P.2d 1219 (1980)) ignores this distinction.

For construction professionals, this ruling highlights the need for caution when drafting or signing loan guaranties. Contractors, developers, and guarantors should scrutinize agreements for clauses that waive defenses like the statute of limitations, as these could expose them to liability long after a project’s completion. Conversely, lenders may see this as an opportunity to strengthen guaranty agreements, but they should be wary of overreaching, as courts in other jurisdictions may not uphold such waivers.

To mitigate risks, construction stakeholders should:

• Negotiate Clear Terms: Guarantors should push for time limits on waivers or explicit conditions under which they apply.

• Seek Legal Review: Engage counsel to review guaranty agreements, especially for large-scale projects like arenas or infrastructure developments.

• Monitor Legislative Changes: Given Nevada’s minority stance, industry advocates should watch for potential legislative responses that could clarify or restrict such waivers.