California Courts of Appeal
Dec. 14, 2016
More litigation over Right to Repair Act
The 3rd District Court of Appeal recently issued a writ of mandate ordering a stay of pending litigation until plaintiffs satisfied the pre-litigation procedures mandated by the act. By Mark S. Roth
Mark S. Roth
Member, Cozen O'Connor
Email: mroth@cozen.com
Mark is a former office managing partner of the Los Angeles office of Cozen O'Connor, which he opened when he joined the firm in 1995.
The Right to Repair Act has reared its ugly head again. In Elliott Homes, Inc. v. Superior Court (Hicks), 2016 DJDAR 11930 (Dec. 2, 2016), the 3rd District Court of Appeal issued a writ of mandate ordering a stay of pending litigation until plaintiffs satisfied the pre-litigation procedures mandated by the act.
Senate Bill 800, codified in Civil Code Sections 895-945.5, requires that prior to litigation homeowners must provide notice to the builder of any construction defect claims. The builder is then permitted an opportunity to remedy the defects within a prescribed time period. The clear purpose of SB 800 is to resolve construction defect cases without litigation.
The plaintiffs in Elliott Homes brought a construction defect action against the builder of 17 single-family homes. Their operative complaint alleged common law causes of action for strict products liability, strict components product liability, and negligence. No statutory violations were alleged under the Right to Repair Act. The plaintiffs, therefore, did not provide the builder with pre-litigation notice of the alleged defects.
The trial court, relying Liberty Mutual Ins. Co. v. Brookfield Crystal Cove, 219 Cal. App. 4th 98 (2013), and Burch v Superior Court, 223 Cal. App. 4th 1411 (2014), ruled that the Right to Repair Act did not require a stay, as only common law causes of action were pled.
The Court of Appeal, however, held that the statutory scheme was intended to apply to both claims for defects that had not yet caused damages (economic damages) as well as those seeking actual damages. The court said the Legislature intended that all claims alleging defects in residential housing, including new units where the purchase agreement was signed on or after Jan. 1, 2003, are subject to the Right to Repair Act. Accordingly, pre-litigation notice of such defects must be provided to the builder regardless of the liability theory alleged in the complaint.
As the Court of Appeal noted, SB 800 was enacted in response to Aas v. Superior Court, 24 Cal. 4th 627 (2000). The Supreme Court in Aas held that construction defects that did not result in actual property damage were not actionable in tort. The Right to Repair Act was intended to fill this loophole by permitting homeowners to recover economic damages for diminution in value of their property in cases where actual damages had not yet manifested.
The Elliott Homes court took exception with the Liberty Mutual court's analysis of SB 800, as it was inconsistent with the statutory language which did not exempt actions for actual damages. In so holding, the Elliott court concluded that the Right to Repair Act "clearly and unequivocally expresses the legislative intent that the Act apply to all actions 'seeking recovery of damages arising out of, or related to deficiencies in, ... residential construction.'"
The threshold question - whether the Right to Repair Act precludes a homeowner from bringing common law causes of action for defective conditions resulting in physical damage - will soon be answered. That issue is pending before the California Supreme Court in McMillin Albany, LLC v. Superior Court, 239 Cal. App. 4th 1132 (2015). That decision will definitively explain the scope of the Right to Repair Act, once and for all. Until then, homeowners would be well-advised to provide builders with pre-litigation notice of construction defects as mandated by the Right to Repair Act.
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