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California’s Third Appellate District Holds that Homeowners with Common Law Construction Defect Claims Must First go through SB 800 Pre-litigation Procedures

December 2, 2016

Elliott Homes v. Superior Court, California Court of Appeal, Third Appellate District, Filed December 02, 2016

Why this Case is Important

This decision clearly recognizes that homeowners cannot abrogate a builder’s right to repair their home simply by omitting a cause of action for violation of the Act. The court recognized that a builder has the absolute right to repair. This ruling furthers the right of builders throughout the state to repair homes to avoid litigation. There is no question that homeowners must first give notice of any defect related claims to the builder, and must afford the builder a reasonable opportunity to remedy the defects before they can file suit.

Facts of the Case

The owners of 17 single-family homes filed an action against their builder, Elliott Homes, Inc. (Elliott), claiming strict products liability, strict components product liability, and negligence. Elliott moved to stay the litigation until the homeowners complied with the pre-litigation procedure set forth in what is commonly referred to as “SB 800” or “Right to Repair Act” (Act). The Act establishes a non-adversarial inspection and repair procedure that allows builders to attempt to resolve homeowners’ construction defect claims in advance of litigation. The trial court denied Elliott’s motion to stay the litigation, concluding that the homeowners were not required to comply with the Act’s pre-litigation procedure because they had not pled a statutory cause of action under the Act. Elliott appealed the trial court’s decision to deny its motion to stay.

Holding

The Appellate Court reversed the trial court’s decision holding that, regardless of the theory of liability asserted in the complaint, a homeowner who brings a claim arising out of deficiencies in new residential construction must comply with the pre-litigation procedures set forth in the Act. The Appellate Court expressly disagreed with the decision in Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC, 219 Cal. App. 4th 104-108 (Liberty Mutual), where it was held that common law causes of action were not subject to the Act’s pre-litigation procedures. The Appellate Court explained that the Liberty Mutual decision misinterpreted the statutory language of Civil Code section 896. The language in section 896 clearly and unequivocally expresses the legislative intent that the Act apply to all actions seeking recovery of damages arising out of, or related to, deficiencies in residential construction.

 

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