Steps to Curb Construction Defect Actions for Homebuilders
June 15, 2017 —
Jason Daniel Feld – Kahana & Feld, LLPThe homebuilding and construction industries in California are at a record high in 2017 according to the National Homebuilders Association. While there is finally prosperity and growth for builders, developers and contractors after suffering from the recession of 2008, there is also a growth in construction defect claims. As with every industry and especially with construction, there are several risk prevention methods that can help curb this litigation.
Time Frames for Pursuing Construction Defect Claims
It is important to know and understand the time frames for which construction defect claims can be pursued by homeowners. There is a hard cut-off for construction defect litigation in California known as the Statute of Repose of 10 years. California Code of Civil Procedure (“CCP”) §337.15 provides a statute of repose that bars actions to recover damages for construction defects more than 10 years after substantial completion of the work of improvement. This provision is limited to property damage claims and does not extend to personal injuries (See, Geertz v. Ausonio, 4 Cal.App.4th 1363 (1992) and willful misconduct or fraudulent concealment claims. (See, Acosta v. Glenfed Development Corp., 128 Cal.App. 4th 1278 (2005).
There are also interim statutes of limitations for “patent” and “latent” defects discovered at the home also from the date of substantial completion. CCP §337.1(e) provides for a four year window to bring suit for deficiencies that are apparent by reasonable inspection (patent deficiencies). CCP §337.15(b) provides for deficiencies that are not apparent by reasonable inspection or hidden defects that require invasive testing to become apparent (latent deficiencies). A latent defect can become patent after it “manifests itself” (i.e. becomes observant – for example a roof leak) for which the four year window from the date of discovery would become the applicable statute of limitations.
The discovery rule effectively acts to toll the statute of limitation period on construction defect claims until they become reasonably apparent. (See, Regents of the University of CA v.Harford Accident & Indemnity, Co., 21 Cal.3d 624, 630 (1978). This is similar to a breach of contract claim, also a four year statute of limitation. Finally, the California Right to Repair Statute (SB800) – Civil Code §§895, et seq. specifically Civil Code §896 sets forth the “Functionality Standards” or a list of actionable defect items, including items affecting the component’s “useful life” and a catch-all provision for all items not expressed listed as defects in the statute. (Civil Code §897). The majority of the defects alleged have a 10 year statute of limitations. However, there are shortened statute of limitations for the following items:
| Functionality Standards | Statute of Limitations |
|---|
| Noise Transmission |
1 year from original occupancy of adjacent unit |
| Irrigation |
1 year from close of escrow |
| Landscaping Systems & Wood Posts (untreated) |
2 years from close of escrow |
| Electrical systems, pluming/sewer systems, steel fences (untreated), flatwork cracks |
4 years from close of escrow |
| Paint/Stains |
5 years from close of escrow |
| All other functionality standards (Civil Code §941(a)) |
10 years after substantial completion(date of recordation of valid NOC) |
Preventative Measures to Curb Construction Defect Litigation
Once the builder knows the time frames for construction defect claims, the following are some preventive measures to limit construction defect claims. As a reminder, homeowners are less likely to bring construction defect action if they feel that the builders are taking care of them.
1. Communicate With Homeowners Prior to Claims
It is imperative to communicate with the homeowners throughout the ten years statute of repose period. For example, most builders provide a limited warranty to the homeowners at the time of purchase. Homeowners are generally confused as to the length of the warranty and what the warranty covers. A practical tip to help curb construction defect claims is for the builder to send postcards or letters to the homeowners at the six month, one year and nine-year marks to advise the homeowner of: (1) the existence of the warranty and what is covered at each time frame; (2) the maintenance obligations of the homeowner at the various time frames; and (3) the fact that the home is approaching the ten-year mark. Most builders would rather deal directly with the homeowners through customer service than defend a construction defect litigation action where the costs to defend the claim will vastly exceed the cost to address the individual homeowner issues. The more the builder communicates with the homeowner in advance, the less likely it is that the homeowner engages in litigation against the builder.
2. Timely Response to Homeowner Claims
During the purchase process, provide the homeowners instructions on how to send in a customer service or warranty requests. Provide multiple methods for notification to the builder by the homeowner when issues arise in their home (fax, email, website forms, etc.). The builder should provide a timely response – within 48 hours of the notice if possible. The homeowner wants to receive some notification from the builder that they received their request and, at the very least, will investigate the claim. Even if it is determined to be a maintenance item or homeowner caused damage, the homeowner should receive: (1) an acknowledgement of the claim; (2) an investigation report of the issue; and (3) an action plan or conclusion statement – this can be a declination of repairs with an explanation as to the cause not being the result of original construction. Sometimes even sending a customer service representative to the home to listen to the homeowner claims and explaining that there are not repairs required is sufficient to satisfy the homeowner. The goal is to make sure the homeowner’s claims are acknowledged and that the builder is standing behind its product. In my experience, the fact that the builder failed to respond in a timely fashion to the homeowner is a significant motivating factor as to why the homeowner elected to enter formal litigation against the builder.
3. Be Proactive When Litigation Ensues Despite the fact that the homeowner has engaged an attorney and joined a construction defect action, the builder is not precluded from continuing to communicate with its homeowners. Several builders send letters to the non-plaintiff homeowners reminding them to contact the builder should they have issues at their homes rather than join the ongoing construction defect action. Under the law, clients can always talk to clients even if they are represented by counsel. While the attorneys for the builders cannot speak to the represented construction defect homeowners, the builder can communicate directly with its homeowners offering to honor its warranty and customer service procedures in lieu of the homeowner proceeding with the litigation. Both of these builder attempts to communicate with homeowners post-litigation have a dual effect – some homeowners elect to contact the builder to effectupate repairs and drop the litigation; while others elect to continue with the litigation. So proceed cautiously in this regard.
It is noted, there are many motivating factors for homeowners to bring a lawsuit against homebuilders that have nothing to do with the construction practices or customer service and are merely economically driven. However, these small steps in addition to providing solid construction practices should help curb construction defect litigation by homeowners.
Jason Daniel Feld is a founding partner of Kahana & Feld LLP, an AV Preeminent boutique litigation firm in Orange County specializing in construction defect, insurance defense, employment and general business litigation matters. The firm was founded with the goal of providing high-quality legal services at fair and reasonable rates. The firm believes that what defines attorneys is not their billing rates, but their record of success, which speaks for itself. For more information, please visit: www.kahanafeld.com.
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State Audit Questions College Construction Spending in LA
August 17, 2011 —
CDJ STAFFA state audit of the Los Angeles Community College District found many problems with their construction spending. Their report, as described in the Los Angeles Times, found construction money spent for other purposes, such as promotional photography and public relation tours, $28.3 million spent on projects that were later cancelled, and oversight committees that provided no oversight.
Earlier this year, the LA Times ran a series of articles detailing problems with the Los Angles Community College District’s construction program. The LA Times reported that the State Controller’s audit reached many of the same conclusions.
The Community College District disputed the findings.
Read the full story…
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City Development with Interactive 3D Models
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Aarni Heiskanen - AEC BusinessThe Finnish city of Hyvinkää has developed a unique internet service for collaborative 3D city planning. It gives real estate owners, investors, developers, designers, authorities, and citizens easy-to-use tools to publish their 3D plans and ideas for the built city environment.
Participants can comment on the 3D plans directly in the city model. The 3D app is integrated with Facebook, which enables further conversation.
Building the 3D City Model
Päivi Tiihonen is the manager of the information services unit of the city’s technical and environmental sector. The city started building a browser-based 3D city model when Tiihonen assumed her position in 2014.
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Aarni Heiskanen, AEC BusinessMr. Heiskanen may be contacted at
aec-business@aepartners.fi
The Preservation Maze
June 12, 2023 —
Sofya Uvaydov - Kahana & Feld LLPTo appropriately preserve an issue for appeal is frankly confusing to many attorneys due to differing rules depending on the issue or procedural posture (presumably why appellate attorneys are more commonly used during trial). On May 25th, the US Supreme Court handed down Dupree v. Younger, 598 U.S. __ (2023) clarifying preservation requirements from denied summary judgment orders. When a federal court denies summary judgment on sufficiency of evidence grounds, a party must raise the argument again post-trial to preserve it for appeal as per the Court’s prior ruling in Ortiz v. Jordan, 562 U.S. 180 (2011). When a court denies summary judgment on a purely legal issue, the Court unanimously held that the issue is preserved in an appeal from a final judgment without having to raise it again post-trial. The Supreme Court distinguished this from their prior rule in Ortiz by explaining that sufficiency or factual issues which were previously denied at summary judgment must be evaluated based on the totality of the evidence adduced at trial. A purely legal issue decided on summary judgment is not changed by factual evidence at trial.
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Sofya Uvaydov, Kahana & Feld LLPMs. Uvaydov may be contacted at
suvaydov@kahanafeld.com
Client Alert: Expert Testimony in Indemnity Action Not Limited to Opinions Presented in Underlying Matter
February 18, 2015 —
R. Bryan Martin and Kristian B. Moriarty – Haight Brown & Bonesteel, LLPIn National Union Fire Insurance Co. of Pittsburgh Pa. v. Tokio Marine and Nichido Fire Insurance Co. (filed 2/4/2015, B24899 and B247258), the California Court of Appeal, Second District, held that the insurer of Costco Wholesale Corporation, in a subsequent indemnity action, could offer expert opinions which were not developed by the third-party plaintiff’s experts in an underlying dispute.
Jack Daer filed suit against Costco and Yokohama Tire Corporation, alleging a tire manufactured by Yokohama (and sold by Costco), was defective and caused an accident resulting in Mr. Daer’s injuries. The case proceeded through expert discovery and depositions. On the first day of trial, Costco settled with Daer for $5.5 million, and Yokohama settled for $1.1 million.
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R. Bryan Martin, Haight Brown & Bonesteel LLP and
Kristian B. Moriarty, Haight Brown & Bonesteel LLP
Mr. Martin may be contacted at bmartin@hbblaw.com, Mr. Moriarty may be contacted at kmoriarty@hbblaw.com
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Client Alert: Absence of a Court Reporter at a Civil Motion Hearing May Preclude Appellate Review
November 26, 2014 —
Angela S. Haskins & Blythe Golay - Haight Brown & Bonesteel LLPA California Court of Appeal expressed its concern over the due process implications of reviewing a trial court's decision that incorporated reasons that were not documented due to the absence of a court reporter. In Maxwell v. Dolezal (No. B254893, filed 11/4/14), the court cautioned that although the lack of a transcript did not preclude its review of an order sustaining a demurrer, the case was an exception because the operative complaint and demurrer were sufficient to permit effective appellate review.
The plaintiff in Maxwell, acting in pro per, had filed an action for invasion of privacy and breach of contract. The plaintiff alleged that the defendant had used his photograph and website without his consent and that he did not receive the money, food and housing in exchange for the intellectual property rights per their agreement. The defendant demurred on the grounds that the complaint was uncertain and it could not be ascertained from the pleading whether the contract was written, oral, or implied. At the hearing on the demurrer, no court reporter was present. Nonetheless, the trial court's minute order explicitly sustained the demurrer "[f]or the reasons stated in open court," without further elaborating. The trial court also denied the plaintiff further leave to amend on the ground that he was unable to articulate in open court a reasonable basis for any additional allegations that would remedy the deficiencies. The court of appeal noted that it was "profoundly concerned about the due process implications of a proceeding in which the court, aware that no record will be made, incorporates within its ruling reasons that are not documented for the litigants or the reviewing court."
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Angela S. Haskins, Haight Brown & Bonesteel LLP and
Blythe Golay, Haight Brown & Bonesteel LLP
Ms. Haskins may be contacted at ahaskins@hbblaw.com; Ms. Golay may be contacted at bgolay@hbblaw.com
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OSHA Extends Temporary Fall Protection Rules
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CDJ STAFFOSHA announced that its current rules on fall protection for residential construction will remain in place until September 15, 2012. The current measures became effective in June 2011. Under the new rules, falls must be prevented by fall protection measures unless the measures can be shown to be unfeasible or even hazardous.
Under the extension of the temporary enforcement measures, contractors who ask for compliance assistance with OSHA are given top priority and penalties can be reduced. OSHA has conducted more than 1,000 outreach sessions on the new rules.
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Construction Law Client Alert: California’s Right to Repair Act (SB 800) Takes Another Hit, Then Fights Back
February 25, 2014 —
Steven M. Cvitanovic and Whitney L. Stefko - Haight Brown & Bonesteel, LLPLast week, the California appellate courts decided two cases with ramifications under the Right to Repair Act. The first case, Burch, addresses whether the Right to Repair Act is the exclusive remedy for the homeowner. The second case, KB Home, addresses a situation where a homeowner or the homeowner's insurer fails to follow the procedures under the Right to Repair Act.
Last August, the Fourth Appellate District announced its decision in Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC (2013) 219 Cal.App.4th 98 holding that SB 800 is not a homeowner’s exclusive remedy in situations where defects cause actual damage. Many lawyers believed that Liberty Mutual would be a one-off because of its facts – it was a subrogation case brought by an insurance company. So much for that.
Now the Second Appellate District is getting into the act.
In Burch v. The Superior Court of Los Angeles County, et al., the Second Appellate District overturned an order granting summary adjudication in favor of a developer, general contractor, and their respective owners, in a construction defect action brought by a residential homeowner. The trial court found that the Right to Repair Act precluded the homeowner’s negligence and implied warranty claims but the Court of Appeal reversed.
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Steven M. Cvitanovic, Haight Brown & Bonesteel, LLP and
Whitney L. Stefko, Haight Brown & Bonesteel, LLP
Mr. Cvitanovic may be contacted at scvitanovic@hbblaw.com, Ms. Stefko may be contacted at wstefko@hbblaw.com
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