As many are aware, the California Court of Appeal, Fourth District, in Liberty Mutual Insurance Co. v. Brookfield Crystal Cove LLC (2013) 219 Cal.App.4th 98, 103-104 held that the Right to Repair Act, See Civil Code Section 895, et seq., does not provide an exclusive remedy for construction defect claims and therefore does not limit or preclude common law claims for damages for construction defects that have caused actual property damage.
Since the issuance of the Liberty Mutual decision in September 2013, there have been two very recent decisions which further shed light on the reach of the Right to Repair Act.
First, in an opinion filed February 19, 2014 by the California Court of Appeal, Second District in Burch v. Superior Court (2014) WL640707 ("Burch"), the Court of Appeal ruled in a construction defect action involving a high end single family residence in the Pacific Palisades area of Los Angeles that the Right to Repair Act did not limit common law claims for damages for construction defects that have caused damage and that the general contractor, which was not in privity with the plaintiff purchaser, owed a duty of care supporting a negligence liability claim to a future purchaser such as the plaintiff and that the plaintiff purchaser's alleged status as a third party beneficiary of a construction contract was a proper basis to impose liability for breach of implied warranty.
Second, in an opinion filed February 21, 2014 also by the California Court of Appeal, Second District, the Court of Appeal ruled in KB Home Greater Los Angeles, Inc. v. Superior Court (2014) WL667368 ("KB Home Greater Los Angeles") that, in a subrogation action by a homeowner insurance company, Allstate Insurance Company, the Right to Repair Act required that the insurer provide advance notice to the builder before repairing the insured's home and, under the facts of that case, the claim under the Right to Repair Act was barred.
The Morrison Law Journal
February 2014
Volume IX, Edition 2
Beyond Liberty Mutual Insurance Company: Two California Court Of
Appeal Decisions Affirm And Define The Impacts And Reach Of The
Right To Repair Act
By: Edward F. Morriso
n, Jr., Esq.
Larry A. Schwartz, Esq.
1
With respect to the Burch decision, that holding appears to provide credence for the position that a purchaser of a single family residence may pursue the developer and general contractor for common law tort and contract claims in addition to claims under the Right to Repair Act.. The Burch decision will certainly have impacts in that purchasers of single family residences will continue to assert claims in addition to those under the Right to Repair Act. As for the KB Home Greater Los Angeles case, that decision may be somewhat limited based on its facts given that the only cause of action that was before the Court of Appeal in that case was the insurer's claim in subrogation based on the Right to Repair Act.
The Liberty Mutual, Burch and KB Home Greater Los Angeles cases certainly demonstrate that the Right to Repair Act will be subject to further scrutiny and analysis by the Courts of Appeal. However, and in the meantime, there does appear to be some consensus that the Right to Repair Act is not an exclusive remedy for construction defect claims at least involving actual property damage.
About the Authors: Edward F. Morrison, Jr. is the founding partner and Larry A. Schwartz is Of Counsel to The Morrison Law Group, a professional corporation. Their biographies can be viewed at www.morrisonlawgroup.com.
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