By Borton Petrini, LLP
On August 26, 2015, the Fifth District Court of Appeal held that SB800 provides the exclusive remedy for residential construction defect claims for newly constructed homes purchased after January 1, 2003. Consequently, homeowners cannot avoid SB800’s pre-litigation inspection and repair procedures by pleading only common law causes of action.
SB800’s Chapter 4 requires homeowners to engage in an inspection and repair procedure before they sue the homebuilder if the builder has complied with certain notice and recording requirements. If a homeowner files a lawsuit without engaging in the pre-litigation procedures, the builder has the right to bring a motion to stay the case until the procedures are completed.
The Petition for Writ of Mandate in
Van Tassel, et al. v. McMillin Albany, LLC et al. to the Fifth District Court of Appeal was brought by McMillin’s counsel Borton Petrini, LLP. The writ was argued in July, 2015.
In a 2013 Fourth District Court of Appeal case,
Liberty Mutual Insurance Company v. Brookfield Crystal Cove LLC,
Liberty held that the violations of construction standards set out in SB800 didnt “provide the exclusive remedy in cases where actual damage has occurred because of construction defects" and that SB800 "does not eliminate a property owner's common law rights and remedies, otherwise recognized by law, where, as here, actual damage has occurred," and won the case.
In the recent case, the
Van Tassel plaintiffs relied on the outcome of the
Liberty case, asserting to the court that they do not have to go through SB800's pre-litigation procedures because they pleaded only common law causes of action for their claimed construction defects. However, Borton Petrini argued that SB800 was intended to be, and explicitly states that it is, the exclusive remedy for plaintiffs who claim there are construction defects in newly constructed residential homes.
The Fifth District Court of Appeal accepted Borton Petrini’s argument and as a result, trial courts across California will be free to enforce what has been held to be the builder’s “absolute right” to engage in the pre-litigation inspection and repair procedures.
The significance of this to insurers of builders and subcontractors is that they will again be able to use the more favorable statutes of limitations in SB 800. There is also an increased likelihood of earlier resolution of some of the claims through the repair or payment in lieu of repair options in the statute. Additionally it provides certainty for insurers as to what the applicable law is with respect to these claims and enables them to more accurately adjust the risks at issue in these lawsuits.
