Orange County Branch Newsletter

February 2014

Law and CE News

Plaintiffs With Actual Damages Can Avoid the Constraints of the Right to Repair Act

Controversy and compromise gave birth to the Right to Repair Act (the Act) in 2002.  After much debate between plaintiffs’ attorneys and builders, the California Legislature enacted the Act to provide builders with the right to inspect and repair construction defects before a homeowner could engage in litigation against the builder.  The Act also imposed a complex set of timelines and prerequisites for plaintiffs to satisfy prior to suing builders.  Since the Act is still quite young, court interpretation of it is still developing.  Earlier this year, the California Court of Appeal narrowed the effect of the Act in deciding Liberty Mutual Insurance Company v. Brookfield Crystal Cove LLC (2013) 219 Cal.App.4th 98. 

In Brookfield, a homeowner suffered actual damage to his newly constructed home after a pipe in the home's sprinkler system burst. Liberty Mutual Insurance Company paid the homeowner's relocation expenses while he vacated his home for the repairs.  Stepping into the homeowner’s shoes, Liberty Mutual subsequently brought a subrogation claim against the builder to recover the relocation expenses.  The trial court determined that Liberty Mutual’s claim was time-barred by an applicable statute of limitations within the Right to Repair Act.

In overruling the trial court, the Fourth District of the Court of Appeal held that the Right to Repair Act is not the exclusive remedy of property owners who suffer actual damages as a result of a construction defect.  Instances of actual damage exist where a defect results in death, bodily injury, or property damage.  The Court reasoned that the Act applies in cases where the owner learned of the defect before incurring actual damage.  After analyzing the Act’s legislative history, the Court concluded that the Act had no intended or other effect on the owner’s common law remedies after he had suffered actual damage. 

The takeaway from this case is that when an owner’s property suffers actual damage, that owner now clearly has the ability to redress his injury through common law causes of action against the builder, rather than solely through the Act.  Such causes of action could include but are not limited to negligence, breach of contract, warranty of merchantability, and fraud.

Notably, this holding is expressly limited to instances where there is actual damage or injury as a result of the defect.  In such situations, the Right to Repair Act protections offered to builders will no longer be applicable where the plaintiff can and chooses to seek redress for actual damage through the common law.  Unfortunately, repercussions of this decision could potentially be seen via an influx of subrogation claims brought by insurance companies in cases involving physical injury or damage to properties. 

Please contact us at the Oakland, South Pasadena, Orange or San Diego offices to discuss further.

Edward J. Riffle
1100 El Centro Street | South Pasadena, CA 91030
 Phone:  (626) 243-1100 | Fax:  (626) 243-1111
[email protected]

Erin I. Reed
1100 El Centro Street | South Pasadena, CA 91030
Phone:  (626) 243-1100 | Fax:  (626) 243-1111
[email protected]

Nothing contained within this article should be considered legal advice.  Anyone who reads this article should always consult with an attorney before acting on anything contained in this or any other article on legal matters, as facts and circumstances will vary from case to case.

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