California’s Right to Repair Act (Cal. Civ. Code § 895 et seq.) is designed to provide homeowners with exclusive remedy for damages arising out of certain construction defect claims. Originally, California courts in Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC (2013) 219 Cal.App.4th 1194, had ruled that homeowners could file common law claims outside of the Right to Repair Act if they could prove that property damage occurred because of the defect. This ruling would allow homeowners to bypass the Act and therefore not comply with the procedures mandated by the Right to Repair Act. A new ruling just stopped that.
Rejecting the Ruling
In McMillin Albany LLC et al. v. Superior Court (Van Tassell et al.) F069370, the California appellate court for the Fifth Appellate District rejected the decision in Liberty Mutual. The court had a similar fact pattern where the homeowners filed a suit against the builder of their home for alleged construction defects. The builder filed a stay of the litigation in order to initiate the pre-litigation procedures the Right to Repair Act explicitly allows. Despite being initially denied a stay by the trial court, the appellate court came to the rescue.
The McMillin court reasoned that the Liberty Mutual court erred in its decision by not considering Civil Code §943 of the Right to Repair Act. This section reads
Except as provided in this title, no other cause of action for a claim covered by this title or for damages recoverable under Section 944 is allowed. In addition to the rights under this title, this title does not apply to any action by a claimant to enforce a contract or express contractual provision, or any action for fraud, personal injury, or violation of a statute. Damages awarded for the items set forth in Section 944 in such other cause of action shall be reduced by the amounts recovered pursuant to Section 944 for violation of the standards set forth in this title.
Through this provision and legislative comments, the McMillin court found that it was clear the Act was intended to cover all construction defect claims in residential construction. Accordingly, all construction defect claims must be adhere to the pre-litigation requirements. That is a win for this builder because the pre-litigation procedure allows builders the right to repair the alleged defects before starting litigation.
Won the Battle, but Not the War
Although this is a step in the right direction for construction parties involved in these construction defect claims, the decision does not create a definitive ruling. There is plenty of conflicting case law out there about whether or not homeowners can bypass the pre-litigation procedures required by the Right to Repair Act by proving property damage. Until California Supreme Court resolves the conflict, the lower courts are free to choose either outcome.