Blanchette v. Superior Court  (2017 WL 541939)

Holding

In the continuing development of law in the interpretation of the California Right to Repair Act (California Civil Code sections 895, et seq (“SB 800”), the Fourth District Court of Appeal held on February 10, 2017, that a homebuilder must acknowledge a homeowner’s notice of claim within the 14 day period provided in the statute, even if the Notice of Claim is insufficient under California Civil Code section 910. If the builder fails to provide a written response within this time, the homeowner is released from the requirements of the Act and can proceed directly to litigation.

Practice Pointer

The Appellate Court’s holding in Blanchette is a reminder that the courts will strictly enforce the stringent timeframes set forth in the Right to Repair Act. Upon receipt of a notice of claim, builders must be circumspect and ensure that they properly comply with the procedures and deadlines. Otherwise, they will lose their rights under the Act, including but not limited to, the right to challenge the sufficiency of a deficient notice of claim. Builders should start to plan accordingly: have an action plan in place to review and provide a response to any Notice of Claim under SB 800 within 14 days of its receipt. This may mean that notices to all insurance companies or other parties may not be feasible. It also means that the rest of the aggressive timeline for investigation and offer of repair will begin to run. Therefore, all builders are encouraged to have someone appointed – whether it be a staff person or outside counsel – to ensure that the timelines are met, that objections to insufficient Notices of Claims are timely sent, and that an overall strategy is in place to respond to Notices of Claims that are vague and not detailed enough to provide a description of the nature and extent of the alleged deficiencies.

It also means that the rest of the aggressive timeline for investigation and offer of repair will begin to run. Therefore, all builders are encouraged to have someone appointed – whether it be a staff person or outside counsel – to ensure that the timelines are met, that objections to insufficient Notices of Claims are timely sent, and that an overall strategy is in place to respond to Notices of Claims that are vague and not detailed enough to provide a description of the nature and extent of the alleged deficiencies.

Background

In the underlying action, Claimants served the Builder with a Notice of Claim, which set forth a laundry list of alleged building standards violations; however, the Notice was largely simply a verbatim restatement of the building standards as set forth in Civil Code section 896. Attached to the notice was a list of the names and addresses of each of the owners of the homes in the development. The builder did not respond to the Notice until 21 days later, when it responded and objected to Claimants’ Notice, asserting that the alleged defects were not set forth with reasonable detail as required by section 910. Claimants disagreed, asserted that the Builder’s response was untimely, and thus excused Claimants from any further obligations under the Right to Repair Act. Claimants filed a complaint, to which the builder submitted a motion to stay and enforce the pre-litigation requirements, starting with a reasonably descriptive Notice.

In response, the trial court agreed with the Builder that Claimants’ notice lacked detail sufficient to trigger the Builder’s obligations under the Act. Accordingly, the trial court stayed the action pending completion of the notice and inspection procedures required by the Act and ordered that Claimants serve a new notice of claim. Claimants filed a petition for a writ of mandate challenging the trial court’s order.

While the Appellate Court agreed that the notice was insufficient, as it failed to comply with the requirements set forth in Civil Code section 910, the Builder’s failure to timely acknowledge the Claimants’ notice relieved Claimants of any further obligations under the Act. The Court explained that if a builder believes there is insufficient specificity, it is obliged to respond to that effect within the time prescribed by the Act. The Appellate Court reasoned that the Act’s alleged purpose, to promptly resolve homeowner construction defect claims without resort to litigation, cannot be achieved by permitting homebuilders to submit a tardy response to a notice of claim, despite its deficiencies.

During oral argument, the Appellate Court wrestled extensively with the conflict between the balance of requiring a reasonable notice and the need to encourage resolution of claims.  The justices were clearly bothered that the legislature did not further define the level of detail that should be included in a Notice of Claim.  The decision showed that the Court believes claimants will work with the Builder if there is an objection to the Notice of Claim; however, the Court did not address how enforcement would or could occur.  It seems a builder would have to decide between two equally undesirable options: (1) Either take the risk of simply objecting, waiting for the lawsuit to be filed, and then arguing unreasonableness; or (2) Object but investigate in an hunt-and-peck manner to see if the Builder can determine the issues a homeowner may be trying to assert.  Either option seems less likely to encourage prompt resolution of claims or reduction of litigation – the stated goals of the statute.