James F. Regan | Low, Ball & Lynch | August 26, 2015
Civil Code section 896 (§ 896) is part of a statutory scheme commonly referred to as the Right to Repair Act (§§ 895 et seq.; the “Act”). Under the Act, before a homeowner who claims defective residential construction can file an action against the builder in court, the homeowner must give notice of the claimed defects to the builder and engage in a non-adversarial pre-litigation procedure, which affords the builder an opportunity to attempt to repair the defects. (§ 910.) If the homeowner files suit without giving the required notice, the builder may obtain a stay of the litigation, pending completion of the pre-litigation process. (§ 930, subd. (b).) In this case, the court considered whether the Act still applied, even after plaintiffs dismissed their original cause of action alleging violation of the building standards set forth in § 896.
The owners of 37 homes constructed by McMillin Albany LLC (“McMillin”) filed a first amended complaint alleging eight causes of action, including strict products liability, negligence, breach of express and implied warranty. They alleged the homes were in a defective condition at the time they purchased them, and the defects had resulted in damage to their homes and their component parts. The owners did not give McMillin notice of the alleged defects before filing suit. After dismissing the cause of action alleging violation of the Act, the owners believed they were no longer required to comply with the statutory pre-litigation process. McMillin filed a motion for stay, which the owners opposed. The trial court denied the motion, concluding the owners were entitled to plead common law causes of action in lieu of a cause of action for violation of the building standards set out in section 896, and they were not required to submit to the pre-litigation process of the Act when their complaint did not allege any cause of action for violation of the Act. McMillin filed this petition for a writ of mandate, seeking a writ directing the trial court to vacate its order denying McMillin’s motion for a stay and to enter a new order granting a stay pending completion of the pre-litigation process. The Appellate Court granted the writ, and stayed the litigation until the parties satisfied the requirements of the Act.
In 2002, the Legislature enacted the Act “to ‘specify the rights and requirements of a homeowner to bring an action for construction defects, including applicable standards for home construction, the statute of limitations, the burden of proof, the damages recoverable, a detailed pre-litigation procedure, and the obligations of the homeowner.’” (Anders v. Superior Court (2011) 192 Cal.App.4th 579, 585.) Chapter 4 of the Act (Chapter 4) prescribes non-adversarial pre-litigation procedures a homeowner must initiate prior to bringing a civil action against the builder seeking recovery for alleged construction deficiencies. (§§ 910–938.) These are the procedures McMillin contends the owners were required to follow prior to filing suit against them. The procedures require the homeowner to give the builder written notice of the claim that the builder violated any of the standards of the Act. They set time limits for the builder to inspect the alleged defects and make an offer to repair them or compensate the homeowner in lieu of repair. (§§ 910, 916, 917, 929.) If the builder declines to attempt repairs or fails to meet any of the deadlines, the homeowner is released from the requirements of Chapter 4 and may file an action against the builder in court. (§§ 915, 916, subd. (d), 920, 925, 930, subd. (a).) The homeowner may also file an action against the builder if he is dissatisfied with the repairs. (§ 926.).
The Appellate Court expressly rejected a recent appellate decision which interpreted the Act and was cited by both parties. It noted that…