How far will litigants stretch Right to Repair Act ruling?

CONSTRUCTION CORNER

The Right to Repair Act (Civil Code sections 895 et seq.), also known as "SB 800" after the bill that established it, applies to construction defects in newly constructed residential units including single-family homes and condominiums (but not condominium conversions) sold after Jan. 1, 2003.

The act establishes minimum construction standards and provides pre-litigation procedures designed to facilitate the voluntary repair of defects by developers and others in the construction chain, collectively referred to under the act as "builders," before a homeowner may file suit. The concept is similar in some ways to the Tort Claims Act which provides for pre-litigation procedures before suit may be filed against a public entity.

The act's pre-litigation procedures are detailed, some might even say cumbersome, and there are plenty of traps for the unwary. Among other things, the act sets forth deadlines by which a builder must respond, or "acknowledge," claims by homeowners. Specifically, the act provides that a builder must acknowledge a homeowner's claim within 14 days of receipt a claim which "describe[s] the claim in reasonable detail sufficient to determine the nature and location, to the extent known, of the claimed violation."

As any litigator will tell you, what is "reasonable" and what is "sufficient" is often in the eyes of the beholder. Which begs the question, is a builder required to acknowledge a homeowner's claim within the 14 day deadline if a claim is less than clear? According to the 4th District Court of Appeal, the answer is yes.

Blanchette v. Superior Court

In Blanchette v. Superior Court, 8 Cal. App. 5th 521 (2017), homeowner William Blanchette brought a class action on behalf of 28 homeowners against GHA Enterprises, Inc. the developer of the homes.

Prior to filing the lawsuit, Blanchette served a notice of claims under the Right to Repair Act. According to the decision, Blanchette's notice of claims was sent by letter "no later than" Febr. 2, 2016. The letter repeated, nearly verbatim, the minimum construction standards under the act (e.g., "A door shall not allow unintended water to pass beyond, around, or through the door or its designed or actual moisture barriers, if any").

Although the Court of Appeal didn't describe what, specifically, was contained in Blanchette's letter, it did state that the letter was "insufficient" under the act, which requires that a claim be described "in reasonable detail sufficient to determine the nature and location, to the extent known, of the claimed violation."

GHA responded to Blanchette's letter on Feb. 23, 2016, 21 days after receiving the letter, and seven days after the 14 day deadline to acknowledge claims under the act. On Feb. 26, 2016, Blanchette responded to GHA, asserting that GHA's response was untimely, and therefore excused the homeowners from the pre-litigation procedures under the act.

The Appeal

On appeal, GHA argued that because Blanchette did not describe the homeowners' claims in "reasonable detail sufficient to determine the nature and location, to the extent known, of the claimed violation," his letter did not comply with the act and was like giving no notice at all.

The Court of Appeal disagreed. While acknowledging that the appeal raised a novel issue -- because, while the Right to Repair Act requires that a claim be reasonably detailed, it is silent as to what happens if a builder contends that a claim is insufficiently detailed -- the act "explicit[ly] provides that "[i]f a builder fails to acknowledge receipt of the notice of a claim within the time specified ... the homeowner is released from the requirements of this chapter and may proceed with the filing of an action":

"Based upon our reading of the applicable statute, we conclude that where, as here, a claimant provides his or her name and address and a statement alleging violation of building standards, service of the notice will trigger the 14-day response time set forth in section 913. If a builder believes the notice is not sufficient to determine the nature and location of the claimed violation, the builder may within that 14-day period, bring the lack of specificity to the claimant's attention. However, the requirement for specificity is not a ground upon which the developer may choose to ignore the notice of a defect and the 14-day time period within which it must respond."

*****

"[A] developer who unilaterally concludes the level of specificity in a notice is insufficient, and therefore concludes that it needs to respond within the 14-day period prescribed by statute, acts at its peril if later, it wishes to imply the inspection and settlement process otherwise mandated by statute."

Thus, while the court itself considered the homeowner's notice of claim to be "insufficient" under the act, between a homeowner's vague claim under the act, for which the act does not provide a remedy, and the act's requirement that a builder respond to a clam within 14 days, the obligation is on the developer to respond to the claim -- even if only to point out that the homeowner's claim is vague and that the builder needs further information.

Conclusion

Blanchette is going to cause builders of newly constructed residential homes to lose some sleep. While most builders, I'm sure, can live with the general proposition laid out in the case, it's the specific language used by the Court of Appeal that is worrisome. According to the Court of Appeal, so long as "a claimant provides his or her name and address and a statement alleging violation building standards, service of the notice will trigger the 14-day response time set forth in section 913." (Emphasis added.)

It seems that a claimant need not even mention that a claim is being brought under the Right to Repair Act or, perhaps, even be required to state generally or specifically what construction standards have allegedly been violated, to trigger the 14-day response deadline. A claimant could just write, "Hey, I think the house you built has a number of building standards violations," and the builder would be required to respond within 14 days, or lose its right to engage in the act's pre-litigation procedures.

Also not addressed in the decision is whether the Court of Appeal would take the same view if a claimant failed to serve his or claim in the proper manner. Under the act, a claimant is supposed to serve a claim by certified mail, overnight delivery, or personal delivery. What if notice is sent by regular mail or even email? A claimant could argue that under Blanchette only certain "explicitly" enumerated actions will result in non-application of the pre-litigation procedures of the act, and that failure to serve a claim in the proper manner isn't one of them, sorry.

We'll have to see how far attorneys for homeowners argue that Blanchette should be applied, but for the time being, builders may need a stiff drink before bed.