{"id":886267,"date":"2015-12-30T12:09:03","date_gmt":"2015-12-30T19:09:03","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=886267"},"modified":"2015-12-30T12:09:03","modified_gmt":"2015-12-30T19:09:03","slug":"sb-800-can-builders-enforce-it-or-not","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/sb-800-can-builders-enforce-it-or-not\/","title":{"rendered":"SB 800 \u2013 Can Builders Enforce It, Or Not?"},"content":{"rendered":"<p>Steven M. Cvitanovic, David A. Harris and Theresa M. Wynne | Haight Brown &amp; Bonesteel LLP | December 18, 2015<\/p>\n<p>Story #7 of 10 in Haight\u2019s series of Top Ten Stories in California Construction for 2015<\/p>\n<p>15 years ago, the California Supreme Court held in <em>Aas v. Superior Court<\/em>, 24 Cal.4th 627 (2000), that homeowners could not recover for construction defects unless the defects caused consequential damages to the building. In other words, a homeowner could not sue for windows that were installed incorrectly, unless the defect caused secondary problems such as water damage to the interior of the house.<\/p>\n<p>In response to the <em>Aas<\/em> decision, the California legislature enacted California Senate Bill 800, known as \u201c<a href=\"https:\/\/www.myconstructionexpert.com\/blog\/construction-defect-litigation-right-to-repair-act-sb-800-does-not-eliminate-common-law-remedies-for-actual-damage-to-residences\/\" target=\"_blank\">The Right to Repair Act<\/a>\u201d (\u201cthe Act\u201d). SB 800 overturned <em>Aas<\/em> and provided homeowners who purchased homes after January 1, 2003, with a statutory cause of action to recover purely economic damages related to construction defects even if there was no consequential property damage. Under SB800, litigation was stayed while the parties worked on a potential fix to the claimed defects. The Act\u2019s stated purpose was to limit the number of court cases by allowing a builder to resolve construction defect claims by agreeing to repair the homeowners\u2019 residence. The hope was that by allowing builders to fix problems homeowners would be able to avoid suing. For almost a decade, the construction bar followed the Act\u2019s statutory scheme.<\/p>\n<p>In 2013, the Act was upended when the Court of Appeal for the Fourth Circuit ruled in<em>Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC<\/em> (2013) 219 Cal.App.4th 98, that homeowners did <em>not<\/em> have to follow <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/sb800-is-now-optional-to-the-homeowner\/\" target=\"_blank\">SB800<\/a> if they only brought common law construction defect tort causes of action. Under the holding, homeowners could avoid the act\u2019s prelitigation requirements, including the right to repair, and proceed straight to litigation, if they only brought tort causes of action. The decision was viewed by many in the builder community as gutting the statutory intent of the Act.<\/p>\n<p>In August 2015, the Court of Appeal for the Fifth District repudiated the holding of <em>Liberty Mutual<\/em>, and held that plaintiffs in construction defect actions must comply with the statutory prelitigation inspection and repair procedures mandated by the Act regardless of whether they plead a cause of action for violation of the Act.<\/p>\n<p>In <em><a href=\"https:\/\/www.myconstructionexpert.com\/blog\/pre-litigation-procedures-of-the-right-to-repair-act\/\" target=\"_blank\">McMillin<\/a><\/em>, 37 homeowners filed a lawsuit against the builder of their homes, alleging eight causes of action, including strict products liability, negligence, and breach of express and implied warranty. Plaintiffs\u2019 third cause of action alleged SB800 violations. The plaintiffs did not follow the Act\u2019s notification procedures and filed their lawsuit without providing the builder with an opportunity to repair the alleged defects.<\/p>\n<p>Plaintiffs and the builder attempted to negotiate a stay of the lawsuit to complete the Act\u2019s prelitigation procedures. When talks broke down, plaintiffs dismissed their <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/ca-court-of-appeal-holds-design-professionals-owe-a-duty-of-care-to-condo-homeowners-for-professional-negligence\/\" target=\"_blank\">SB800<\/a> cause of action and contended they were no longer required to follow the Act\u2019s prelitigation procedures. McMillin filed a motion to stay with the trial court.<\/p>\n<p>The trial court denied McMillin\u2019s motion concluding that under <em>Liberty Mutual<\/em>, \u201c[plaintiffs] 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 [the Act], and they were not required to submit to the prelitigation process of the Act when their complaint did not allege any cause of action for violation of the Act.\u201d<\/p>\n<p>McMillin filed a writ petition seeking to reverse the trial court\u2019s holding. The Court of Appeal granted the writ, and held that all homeowners must comply with the Act\u2019s prelitigation procedures even if their complaint only alleges common law causes of action. The Court writes:<\/p>\n<p>\u201c[W]e conclude the Legislature intended that all claims arising out of defects in residential construction, involving new residences sold on or after January 1, 2003 (\u00a7938)\u2019, be subject to the standards and the requirements of the Act; the homeowner bringing such a claim must give notice to the builder and engage in the prelitigation procedures in accordance with the provisions of Chapter 4 of the Act prior to filing suit in court. Where the complaint alleges deficiencies in construction that constitute violations of the standards set out in Chapter 2 of the Act, the claims are subject to the Act, and the homeowner must comply with the prelitigation procedures, regardless of whether the complaint expressly alleges a cause of action under the Act.\u201d (Emphasis added).<\/p>\n<p>The Court\u2019s conclusion was based on its finding that the holding of <em>Liberty Mutual<\/em> was contrary to the Legislature\u2019s stated intent of reducing construction defect litigation, and encouraging builders to take responsibility for basic building functionality standards. The Court found that the Legislature did not intend to allow a plaintiff to \u201cplead around\u201d the Act, or avoid its mandatory prelitigation provisions by only pleading tort causes of action. The Court writes:<\/p>\n<p>We doubt the Legislature would have viewed the legislation as \u2018groundbreaking reform\u2019 or a \u2018major change[]\u2019 in the law of construction defects if its provision were mandatory only when the defect had not yet caused damage, and the homeowner could still sue for damages under any common law theory once property damage occurred, without being subject to the [Act\u2019s] statutory prelitigation procedures.<\/p>\n<p>The <em>McMillin<\/em> decision is remarkable in that&#8230;<\/p>\n<p><a href=\"http:\/\/www.hbblaw.com\/SB-800--Can-Builders-Enforce-It-Or-Not-12-18-2015\/\" target=\"_blank\">To finish reading this article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Steven M. Cvitanovic, David A. Harris and Theresa M. Wynne | Haight Brown &amp; Bonesteel LLP | December 18, 2015 Story #7 of 10 in Haight\u2019s series of Top Ten Stories in California Construction for 2015 15 years ago, the California Supreme Court held in Aas v. Superior Court, 24 Cal.4th 627 (2000), that homeowners&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/sb-800-can-builders-enforce-it-or-not\/\">Continue reading <span class=\"screen-reader-text\">SB 800 \u2013 Can Builders Enforce It, Or Not?<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[4],"tags":[434,435],"class_list":["post-886267","post","type-post","status-publish","format-standard","hentry","category-construction-defects","tag-right-to-repair-act","tag-sb-800","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>SB 800 \u2013 Can Builders Enforce It, Or Not? 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