{"id":886322,"date":"2016-01-06T12:23:40","date_gmt":"2016-01-06T19:23:40","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=886322"},"modified":"2016-01-06T12:23:40","modified_gmt":"2016-01-06T19:23:40","slug":"5-california-homeowners-can-release-future-unknown-claims-against-builders","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/5-california-homeowners-can-release-future-unknown-claims-against-builders\/","title":{"rendered":"#5 – California Homeowners Can Release Future, Unknown Claims Against Builders"},"content":{"rendered":"

Edward A. Jaeger, Jr. and William L. Doerler | White and Williams LLP | June 3, 2015<\/p>\n

In Belasco v. Wells<\/em>, 183 Cal. Rptr.3d 840, 234 Cal. App. 4th<\/sup> 409 (2015), the California Court of Appeals for the Second District addressed the question of whether a homeowner, when settling an administrative complaint against a licensed homebuilder, can release future, unknown claims. Despite the presence of a California statute, Cal. Civ. Code \u00a7 1542, stating that a general release does not extend to claims that the releasor does not know about, the court held that the homeowner\u2019s express release of future claims was enforceable. Thus, the\u00a0 homeowner\u2019s release – signed as part of a 2006 settlement of the homeowner\u2019s construction defect claims<\/a> against the defendant, a homebuilder – barred the homeowner\u2019s 2012 claims against the builder based on latent defects in the roof of the home that the homeowner discovered in 2011.<\/p>\n

Background<\/strong><\/h6>\n

The plaintiff, David Belasco, a patent attorney, bought a newly-constructed home from the defendant-builder, Gary Wells, in 2004. Wells holds a Class B General Building Contractor license issued by the Contractors State License Board (the Board). In 2006, Belasco filed a complaint against Wells with the Board based on alleged construction defects in the home.<\/p>\n

As a result of Belasco\u2019s complaint to the Board, the parties engaged in arbitration<\/a>. At the arbitration, both parties were represented by counsel. Wells offered to settle the dispute for the sum of $25,000 and Belasco accepted Wells\u2019 offer.<\/p>\n

The parties memorialized their 2006 settlement agreement in a writing signed by both Belasco and his attorney. Under the terms of the agreement, a general release, Belasco released \u201cany and all claims . . . sustained by result of any and all known and unknown construction defects . . . occurring at any time in the past, present and\/or future and arising out of or related to or manifesting to the acts or omissions by any of the [released parties].\u201d Belasco affirmed that he \u201cunderstood and agreed\u00a0 . . . and EXPRESSLY WAIVE[D] all rights under section 1542 of the Civil Code of California, which provides . . . [that] A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST . . . .\u201d<\/p>\n

In 2011, Belasco discovered defects in the roof of his home, defects that he did not know about in 2006. Despite the terms of the release, Belasco filed suit against Wells alleging, among other things, causes of action based on breach of contract and breach of California\u2019s statutory warranty – section 896 of the Civil Code – on new construction.<\/p>\n

In his answer to Belasco\u2019s complaint, Wells alleged, among other things, that Belasco\u2019s claims were barred by the 2006 release and waiver. Subsequently, Wells filed a motion for summary judgment relying on these defenses.<\/p>\n

The trial court granted Wells\u2019 motion, finding that the comprehensive nature of the release, including the section 1542 waiver, unequivocally provided that Belasco expressly waived any and all claims he had or may have in the future. Belasco appealed the trial court\u2019s decision.<\/p>\n

Analysis<\/strong><\/h6>\n

On appeal, Belasco argued, among other things, that, although section 929\u00a0of California\u2019s Right to Repair Act allows a builder to obtain a \u201creasonable release\u201d in exchange for a cash payment and no repairs, in order to be a reasonable release, the release can only apply to a specific, obvious violation of the Act. The Court of Appeal disagreed.<\/p>\n

Although the court acknowledged that the Act imposes building standards on builders and provides homeowners with a cause of action against builders who fail to meet the standard, the court found that the Act allows builders to resolve complaints by agreeing to a cash settlement. The court also found that section 929 expressly allows builders to negotiate a reasonable release.\u00a0 In addition, the court noted that Belasco was represented by an attorney, he understood the release and the release was explicit. Thus, the court held that \u201cthe 2006 cash settlement, with a release and Section 1524 waiver, was a \u2018reasonable release\u2019 under the language of section 929.\u201d<\/p>\n

In addition to finding that the release was a reasonable release, the court addressed Belasco\u2019s argument that \u201cpublic policy prohibits a general release and 1524 waiver as to subsequently discovered latent defects.\u201d The court rejected Belasco\u2019s argument, finding that section 929 specifically allows parties to negotiate a reasonable settlement in exchange for a cash payment, Belasco was under no compulsion to enter into the release and waiver in 2006 and the release, on its face, contained express language referencing section 1524.<\/p>\n

The Court of Appeal\u2019s holding establishes that, despite the prohibition against the release of unknown claims set forth in section 1524 and the protections provided to homeowners by the Right to Repair Act<\/a>, California homeowners can, in fact, release or waive claims against homebuilders for future, latent construction defects<\/a>. To release or waive such claims, the language of any settlement agreement should be unequivocal.<\/p>\n

Because insurers seeking…<\/p>\n

To finish reading this article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Edward A. Jaeger, Jr. and William L. Doerler | White and Williams LLP | June 3, 2015 In Belasco v. Wells, 183 Cal. Rptr.3d 840, 234 Cal. App. 4th 409 (2015), the California Court of Appeals for the Second District addressed the question of whether a homeowner, when settling an administrative complaint against a licensed… Continue reading #5 – California Homeowners Can Release Future, Unknown Claims Against Builders<\/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":[3],"tags":[88,11],"class_list":["post-886322","post","type-post","status-publish","format-standard","hentry","category-insurance-claims","tag-california","tag-insurance-claim","entry"],"jetpack_publicize_connections":[],"yoast_head":"\n#5 - 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