THE CALIFORNIA SUPREME COURT HAS RULED THAT THE RIGHT TO REPAIR ACT (SB800) IS THE EXCLUSIVE REMEDY FOR CONSTRUCTION DEFECT CLAIMS NOT INVOLVING PERSONAL INJURIES WHETHER OR NOT THE UNDERLYING DEFECTS GAVE RISE TO ANY PROPERTY DAMAGE in McMillin Albany LL
January 24, 2018 —
Chapman, Glucksman, Dean, Roeb, & BargerRICHARD H. GLUCKSMAN, ESQ.
GLENN T. BARGER, ESQ.
JON A. TURIGLIATTO, ESQ.
DAVID A. NAPPER, ESQ.
The Construction Industry finally has its answer. The California Supreme Court ruled that the Right to Repair Act (SB800) is the exclusive remedy for construction defect claims alleged to have resulted from economic loss, property damage, or both. Our office has closely tracked the matter since its infancy. The California Supreme Court’s holding resolves the split of authority presented by the Fifth Appellate District’s holding in
McMillin Albany LLC v. Superior Court (2015) 239 Cal.App.4th 1132, which outright rejected the Fourth Appellate District’s holding in
Liberty Mutual Insurance Co. v. Brookfield Crystal Cove LLC (2013) 219 Cal.App.4th 98.
By way of background, the Fourth District Court of Appeal held in
Liberty Mutual that compliance with SB800’s pre-litigation procedures prior to initiating litigation is only required for defect claims involving violations of SB800’s building standards that have not yet resulted in actual property damage. Where damage has occurred, a homeowner may initiate litigation under common law causes of action without first complying with the pre-litigation procedures set forth in SB800. Two years later, the Fifth District Court of Appeal, in
McMillin Albany, held that the California Legislature intended that all claims arising out of defects in new residential construction sold on or after January 1, 2003 are subject to the standards and requirements of the Right to Repair Act, including specifically the requirement that notice be provided to the builder prior to filing a lawsuit. Thus, the Court of Appeal ruled that SB800 is the exclusive remedy for all defect claims arising out of new residential construction sold on or after January 1, 2003.
After extensive examination of the text and legislative history of the Right to Repair Act, the Supreme Court affirmed the Fifth District Court of Appeal’s ruling that SB800 preempts common law claims for property damage. The Complaint at issue alleged construction defects causing both property damage and economic loss. After filing the operative Complaint, the homeowners dismissed the SB800 cause of action and took the position that the Right to Repair Act was adopted to provide a remedy for construction defects causing only economic loss and therefore SB800 did not alter preexisting common law remedies in cases where actual property damage or personal injuries resulted. The builder maintained that SB800 and its pre-litigation procedures still applied in this case where actually property damages were alleged to have occurred.
The Supreme Court found that the text and legislative history reflect a clear and unequivocal intent to supplant common law negligence and strict product liability actions with a statutory claim under the Right to Repair Act. Specifically the text reveals “…an intent to create not merely
a remedy for construction defects but
the remedy.” Additionally certain clauses set forth in SB800 “…evinces a clear intent to displace, in whole or in part, existing remedies for construction defects.” Not surprisingly, the Court confirmed that personal injury damages are expressly not recoverable under SB800, which actually assisted the Court in analyzing the intent of the statutory scheme. The Right to Repair Act provides that construction defect claims not involving personal injury will be treated the same procedurally going forward whether or not the underlying defects gave rise to any property damage.
The Supreme Court further found that the legislative history of SB800 confirms that displacement of parts of the existing remedial scheme was “…no accident, but rather a considered choice to reform construction defect litigation.” Further emphasizing how the legislative history confirms what the statutory text reflects, the Supreme Court offered the following summary: “the Act was designed as a broad reform package that would substantially change existing law by displacing some common law claims and substituting in their stead a statutory cause of action with a mandatory pre-litigation process.” As a result, the Supreme Court ordered that the builder is entitled to a stay and the homeowners are required to comply with the pre-litigation procedures set forth in the Right to Repair Act before their lawsuit may proceed.
The seminal ruling by the California Supreme Court shows great deference to California Legislature and the “major stakeholders on all sides of construction defect litigation” who participated in developing SB800. A significant win for builders across the Golden State, homeowners unequivocally must proceed via SB800 for all construction defect claims arising out of new residential construction sold on or after January 1, 2003. We invite you to contact us should you have any questions.
Reprinted courtesy of Chapman Glucksman Dean Roeb & Barger attorneys
Richard Glucksman,
Glenn Barger,
Jon Turigliatto and
David Napper
Mr. Glucksman may be contacted at rglucksman@cgdrblaw.com
Mr. Barger may be contacted at gbarger@cgdrblaw.com
Mr. Turgliatto may be contacted at jturigliatto@cgdrblaw.com
Mr. Napper may be contacted at dnapper@cgdrblaw.com
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Suing a Local Government in Land Use Cases – Part 2 – Procedural Due Process
February 16, 2017 —
Wally Zimolong – Supplemental Conditionsn my last post I discussed suing a local government for a substantive due process violation. In this post, I discuss a the right to procedural due process.
The Fourteenth Amendment of the United States Constitution protects prohibits the government from depriving an individual or business of life (in the case of an individual), liberty, or property without due process of law. Unlike the somewhat abstract and subjective concept of substantive due process, procedural due process is direct and objective. Generally, if an individual or business maintains a property or liberty interest, a local government must afford that individual or business notice that the government intends to deprive them of a liberty or property interest and a reasonable opportunity to be heard to contest the proposed deprivation. Unless there is an emergency, the notice and opportunity to be heard must be given before the government deprives an individual or business of a liberty of property interest. This is known as a pre-deprivation hearing. Because of the clear contours of the right, procedural due process violations are typically easier to prove than substantive due process violations.
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Wally Zimolong, Zimolong LLCMr. Zimolong may be contacted at
wally@zimolonglaw.com
Federal Court Holds That Other Insurance Analysis Is Unnecessary If Policies Cover Different Risks
September 28, 2020 —
Craig Rokuson - Traub Lieberman Insurance Law BlogIn Greater Mutual Insurance Company v. Continental Casualty Company, 2020 WL 5370419 (S.D.N.Y. September 8, 2020), the United States District Court for the Southern District of New York had occasion to consider the “other insurance” provisions of a commercial general liability policy, issued by Greater Mutual Insurance Company (“GNY”), and a directors and officers (“D&O”) policy, issued by Continental, to the same insured. The GNY policy covered, inter alia, property damage caused by an occurrence, as well as “personal advertising injury,” defined to include “[t]he wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor.” The Continental D&O policy covered claims for wrongful acts, including “wrongful entry or eviction, or other invasion of the right to private occupancy. . . .” Unlike the GNY policy, however, the Continental policy expressly excluded coverage for damage to tangible property.
In the underlying action, the plaintiffs alleged that the insured engaged in construction work to fix a leak from a terrace on the seventeenth floor. In doing so, the insured accessed the plaintiffs’ roof terrace. The plaintiffs alleged that the construction workers installed and stored construction materials on the roof terrace, making the plaintiffs unable to access the terrace. Plaintiffs also alleged that their deck furniture may have suffered damage, and that the workers had a “direct line of sight” into their unit, resulting in the plaintiffs having to leave their unit frequently. Causes of action were for property damage, constructive eviction, partial constructive eviction, and invasion of privacy.
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Craig Rokuson, Traub LiebermanMr. Rokuson may be contacted at
crokuson@tlsslaw.com
The One New Year’s Resolution You’ll Want to Keep if You’re Involved in Public Works Projects
January 07, 2015 —
Garret Murai- California Construction Law BlogNew Year’s resolutions are hard to keep.
In fact, studies (which I have a sneaking suspicion may have been paid for by the tobacco, donut and vacation timeshare lobbies) have found that only 8% of New Year’s resolutions are kept.
But, here’s one you’ll want to make sure you keep.
Mandatory Registration and Notice Requirements
If you’re a public works contractor or subcontractor you only have until March 1, 2015 to register through the California Department of Industrial Relations (“DIR”) to bid and enter into public works contracts on state and local public works projects.
And if you’re a state or local public agency you must provide notice of the DIR’s new registration requirements in all call for bids and contract documents beginning January 1, 2015.
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Garret Murai, Wendel Rosen Black & Dean LLPMr. Murai may be contacted at
gmurai@wendel.com
2022 California Construction Law Update
December 27, 2021 —
Garret Murai - California Construction Law BlogIt’s been a trying year as we approach the end of 2021. From the pandemic approaching nearly two years to concerns regarding climate change to the impact of inflation on everything from the cost of groceries to housing affordability.
During the first half of the 2021-2022 legislative session, a total of 2,421 bills were introduced in 2021 of which 836 made it to the Governor’s desk and 770 were signed into law. This is up from the 2,223 bills introduced in 2020 of which 428 bills made it to the Governor’s desk and 372 were signed into law, due in large part, to the fact that legislators were not required to shelter-in-place as they were in 2020.
Not surprisingly, for the construction industry, many of the bills were focused on the hot topics of the year including housing affordability and climate change. However, there were also the typical changes to project delivery methods and a few changes to the Licensing Law.
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Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
Insurer Cannot Abandon Defense Agreement on Underlying Asbestos Claims Against Insured
June 12, 2023 —
Tred R. Eyerly - Insurance Law HawaiiThe court found that the insurer continued to be bound by a defense agreement entered with the insured who merged with another company. Continental Ins. Co. v. Neles-Jamesbury, Inc., 2023 U.S. Dist. LEXIS 52521 (D. Mass. March 28, 2023).
In 1990, Neles-Jamesbury became the sucessor by merger to the liabilities of Jamesbury Corp. and Neles, Inc. The companies were both in the business of manufacturing and selling valves.
Continental issued two primary CGL policies to Neles, Inc. from 1986 to 1988. After the merger, Neles-Jamesbury was involved in numerous lawsuits that alleged bodily injury from asbestos exposure. Due to the continuing question of whether the policies created duties for Continental, the parties entered into a 2007 Cost Sharing Agreement, which served to clarify and define their respective obligations and coverage in the lawsuits. The agreement noted that Continental wanted to avoid the expense and uncertainties of litigation over defense obligations.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Filing Motion to Increase Lien Transfer Bond (Before Trial Court Loses Jurisdiction Over Final Judgment)
May 15, 2023 —
David Adelstein - Florida Construction Legal UpdatesIf a construction lien is recorded against real property, the lien can be transferred to a lien transfer bond. This transfers the security or collateral of the construction lien from the real property to the lien transfer bond. The lien transfer bond can be a bond posted by a surety company or it can be cash. This is governed by Florida Statute s. 713.24. The amount of the lien does not dictate the amount of the lien transfer bond. Rather, the lien transfer bond needs to be in the amount of the lien, plus interest on that amount for three years, plus $1,000 or 25% of the amount of the lien (whichever is greater so factor in the 25%) to cover attorney’s fees. Fla. Stat. 713.24(1).
If you are looking to transfer a construction lien to a lien transfer bond, make sure to consult with counsel.
Keep in mind there is a statutory mechanism for a lienor to increase the lien transfer bond to cover attorney’s fees and costs and notice the word “must” in the statute below. Pursuant to Florida Statute s. 713.24(3):
Any party having an interest in such security or the property from which the lien was transferred may at any time, and any number of times, file a complaint in chancery in the circuit court of the county where such security is deposited, or file a motion in a pending action to enforce a lien, for an order to require additional security, reduction of security, change or substitution of sureties, payment of discharge thereof, or any other matter affecting said security. If the court finds that the amount of the deposit or bond in excess of the amount claimed in the claim of lien is insufficient to pay the lienor’s attorney’s fees and court costs incurred in the action to enforce the lien, the court must increase the amount of the cash deposit or lien transfer bond. Nothing in this section shall be construed to vest exclusive jurisdiction in the circuit courts over transfer bond claims for nonpayment of an amount within the monetary jurisdiction of the county courts.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
2019 California Construction Law Update
January 15, 2019 —
Garret Murai - California Construction Law BlogThe California State Legislature introduced 2,637 bills during the second year fo the 2017-2018 Legislative Session. Of these, 1,016 were signed into law.
It was last official bill signing for Governor Jerry Brown who ends not only his second term as Governor but a colorful political career spanning nearly 50 years during which he has dated pop stars, practiced Zen meditation, kicked it with radical ex-nuns and an Apollo astronaut and, at 80, has sparred regularly with President Trump on issues ranging from climate change to immigration to net neutrality.
For those in the construction industry it wasn’t quite as exciting, unless of course you count SCR 120, which officially makes April “California Safe Digging Month.” Hooray!
Each of the bills discussed below took effect on January 1, 2018, except as otherwise stated.
Building Codes
SB 721 – Requires the inspection of exterior elevated elements, including balconies, decks, porches, stairways, walkways, and elevated entry structures, of multifamily buildings with three or more dwelling units by an architect, engineer or contractor with a Class A, B or C-5 license by January 1, 2025 and by January 1st every six years thereafter. Elements posing an immediate threat to the safety of occupants, or which prevent occupant access or emergency repairs, are required to be repaired immediately. Elements not posing an immediate threat to the safety of occupants, or which do not prevent occupant access or emergency repairs, are required to be repaired within 180 days.
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Garret Murai, Wendel RosenMr. Murai may be contacted at
gmurai@wendel.com
