California Appellate Court Strictly Construes Time Limits Set Forth in Right to Repair Act (SB 800)

The Fourth Appellate District of the California Court of Appeal in Blanchette v. Superior Court (GHA Enterprises et al.) 2017 DJDAR 1302, ruled that the time limits set out in the Right to Repair Act (California Civil Code section 895 et seq.) are intended to be strictly construed. As such, the service of a proper notice under the Right to Repair Act (“the Act”) triggers the builder’s 14 day response time. Moreover, a builder’s failure to timely respond to such a notice relieves a homeowner from complying with the requirements set forth in the Act.

In Blanchette, the claimants/homeowners served a Notice of Claim on the builder. The builder acknowledged receipt of the claim 21 days after service (Civil Code section 913 requires that the builder acknowledge receipt of the claim within 14 days.) In its acknowledgement, the builder stated that the defects claimed in the notice lacked the requisite detail as required by Civil Code section 910. Additionally, the builder requested inspection per the Act. Following receipt of the acknowledgement, the claimants asserted that the builder’s acknowledgement was untimely, and subsequently filed a complaint in Imperial County Superior Court. The builder successfully moved to stay the proceeding pending compliance with the Act. The homeowners petitioned for a writ of mandate following the trial Court’s order to stay the action.

The writ requested that the Fourth District vacate the order staying the action because the homeowners’ compliance with the Act was relieved due to the builder’s failure to timely acknowledge receipt of the claim. The Fourth District agreed with the homeowners. The Fourth District reasoned that the builders’ untimely response is contrary to the Act’s goal of promptly resolving claims without litigation. This goal cannot be achieved by permitting builders the serve untimely responses.

The Fourth District considered whether the lack of specificity in the notice of claim impacts the builder’s response obligations. After consideration, the Court determines that the Act sets out minimum requirements for the notice of claim notably: name, address and a statement of the alleged violations. Proper service of the notice of claim then triggers the 14 day response time. The Court expands that if the builder believes that the statement of the alleged violations is insufficient, the builder should raise the issue in its acknowledgment. As such, the purported lack of specificity in the claim is not grounds to ignore the notice.

The Blanchette decision confirms that the timelines set out in the Right to Repair Act are to be strictly construed. Failure to comply with the timelines in the Act, absent agreement among the parties, will likely relieve compliance with the remainder of the Act. As seen here, if the builder believes that there are deficiencies in the notice of claim, it is important for the builder to keep the time constraints in mind in order to avoid a waiver argument.

California Residential Right to Repair Act Update: Liberty Mutual rejected. Homeowner Plaintiffs Required to Follow Pre-Litigation Requirements

On December 2, 2016, the Third Appellate District of the California Court of Appeal in Elliott Homes, Inc. v. Superior Court (Hicks et al.) 2016 DJDAR 11930, held that a homeowner must comply with the Right to Repair Act (Cal. Civ. Code §895 et seq.) even in cases where the homeowners do not allege statutory violations set forth in the Right to Repair Act. This decision is in sharp contrast to that of the Fourth Appellate District’s decision in Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC (2013) 219 Cal.App.4^th 1194. The Fourth District Court in Liberty Mutual determined that the Right to Repair Act does not provide exclusive remedy in cases where actual damage occurred. The result of the Liberty Mutual decision permitted homeowners to sidestep the notice requirements set forth in the Right to Repair Act in cases where only common law causes of action are pled.

In Elliott Homes, the plaintiff homeowners filed an action against the builders of their homes for alleged construction deficiencies. The complaint did not allege statutory violations set forth in the Right to Repair Act, but rather alleged only common law causes of action. The builder petitioners moved to stay the litigation until the homeowners complied with the pre-litigation procedures of the Right to Repair Act. The homeowners opposed the motion, contending that the Act’s requirements did not apply because their complaint alleged only common law claims and did not allege violations of the Right to Repair Act. The trial court denied the stay relying on the Fourth Appellate District’s holding in Liberty Mutual. The builders then filed a writ of mandate.

In its review, the Third District addresses in cases where plaintiff homeowners only pled common law cases of action, are the homeowners required to complete the pre-litigation requirements set forth in the Right to Repair Act prior to litigating the common law causes of action? The Elliott Homes Court directly rejects the Fourth Appellate District’s decision in Liberty Mutual Ins. In rejecting Liberty Mutual, the Court concludes that the Right to Repair Act applies to any action seeking recovery of damages arising out of, or related to deficiencies in residential construction. The Court reasons that the statutory language and legislative intent is clear that the Right to Repair Act is intended to apply to all actions seeking recovery of damages. Therefore, the Court concludes that if a homeowner fails to give the builder notice under the Right to Repair Act, the builder may bring a motion to stay the action, pending completion of the pre-litigation requirements. This decision sets up a conflict between the Third and Fourth Appellate Districts and the applicability of the Right to Repair Act to cases where only common law causes of action are pled. Given the conflict, it is likely that the California Supreme Court will take up this matter in the near future.  In the meantime, builders will likely continue to see these divergent issues arise.