The Efficacy And Future Of Liberty Mutual V. Brookfield

Recently, in Gillotti v. Stewart, the Third District Court of Appeal ruled that the Right to Repair Act is the sole remedy for a plaintiff’s construction defect claims. This ruling provides that a plaintiff’s common law negligence claims are barred by the Right to Repair Act.

In Gillotti, Defendant Rick Gerbo/Gerbo Excavating grading sub added soil over tree roots to level the driveway on the Plaintiff/homeowner’s sloped property. Plaintiff sued under the Right to Repair Act alleging that the grading contractor’s work damaged the trees on the property. The jury found that the grader was not negligent, the homeowner appealed arguing that the Right to Repair Act does not bar common law negligence claims against Gerbo and essentially, that the trial court failed to appropriately apply Liberty Mutual.

The Right to Repair Act holds contractors/subs responsible for defects only if it is proven that they were negligent in causing the violation. The jury found that the construction violated standards under the Right to Repair Act, but that the grader was not negligent. In this instance, the grader was not consulted, nor was the grader responsible for obtaining a permit – instead, the grader discovered that the foundation and stem wall systems were not built to the correct length and so to rectify things, the grader backfilled dirt in order to level the driveway. In so doing, tree roots were covered.

The homeowner Plaintiff moved for a judgment notwithstanding the verdict, or a new trial alleging that the court failed to apply the common law negligence theory against the grader. The trial court denied the motions holding that the Right to Repair act is the exclusive remedy – that no other causes of action are valid. The Third District Court of Appeal (Nevada) affirmed.

It held that consistent with the statutory language, the legislative history establishes too that it was intended that the Act cover damages caused by construction defects. The Appellate Court disagreed with the holding of Liberty Mutual. It criticized Liberty Mutual for failing to analyze the language of Civ Code 896 – the language “clearly and unequivocally expresses the legislative intent that the Act apply to all actions seeking recover of damages arising out of, or related to deficiencies in, residential construction, except as specifically set forth in the Act. The Act does not specifically except actions arising from actual damages. To the contrary, it authorizes recover of damages for ‘the reasonable cost of repairing and rectifying any damages resulting from the failure of the home to meet the standards.’ (Civ. Code 944)” The Court also disagreed with Liberty Mutual in its view that that Act does not preclude common law claims for damages pursuant to Civ Code 931 and 943, which acknowledged exceptions to the Right to Repair Act’s statutory remedies. The Third District ruled “Neither list of exceptions, in section 943 or in section 931, includes common law causes of action such as negligence. If the Legislature had intended to make such a wide-ranging exception to the restrictive language of the first sentence of section 943, we would have expected it to do so expressly.” The Court held that the Right to Repair Act bars common law claims for damages due to construction defects within the scope of the Act, subject to specific exclusions such as fraud, personal injury, for example.

The split on the question of the efficacy of Liberty Mutual is likely going to be resolved by the McMillin Albany LLC v. Superior Court (2015) case, which is currently pending in the California Supreme Court. There, the Fifth District Court of Appeal (Fresno) concluded that all claims arising from defects in residential construction (for residences sold on or after 1/1/03) are subject to the standards and requirements of the Right to Repair Act and that claims brought under this Act require notice to the builder and participation in prelitigation procedures outlined in Chapter 4 of the Act before suit is filed.

The homeowner plaintiffs in McMillin did not give notice of the alleged defects before filing suit. They filed suit alleged causes of action in strict products liability, negligence, breach of express and implied warranties, and in the amended complaint, they added a cause of action for violation of the building standards pursuant to Civ. Code 896. The parties attempted to negotiate a stay to proceed under SB800, but Plaintiffs then dismissed their cause of action under the Right to Repair Act. Plaintiffs argued that they are not required to comply with the SB800 prelitigation process as they dropped the Civ. Code 896 claims from their case. The trial court ruled that Plaintiffs are not required to proceed with the prelitigation process where they dropped the causes of action for violation of the Right to Repair Act. The trial court relied on Liberty Mutual in rendering its opinion. The Fifth District Court of Appeal was tasked to review whether McMillin’s motion to stay was properly denied. It ruled, in short, the Legislature intended that all claims involving construction defects in residential construction be subject to the Right to Repair Act, thus homeowners must comply with the prelitigation guidelines (which would allow for a builder to conduct repairs) outlined by the Act. The California Supreme Court noted an irreconcilable conflict between Liberty Mutual and McMillin, thereby ordering that the Fifth District opinion be de-published pending its review by the Supreme Court.

The outcome of McMillin will offer more clarity on the conflicting application of Liberty Mutual and Gillotti.

Update on The Fallout From The Berkeley Balcony Collapse

Approximately one year ago, six people were killed in Berkeley, California when an apartment building balcony collapsed during a party attended by exchange students form Ireland. As we have previously reported on this blog – Berkeley Balcony Collapse Raises Questions; Bill in Response to Berkeley Balcony Collapse; Berkeley Balcony Collapse Update; and Builder Segue Construction’s Temporary Restraining Order, the legal fallout from this tragedy continues to reverberate.

Most recently, the Alameda County District Attorney decided not to press criminal charges because the investigation determined that it would be difficult to establish evidence sufficient to meet the legal threshold for manslaughter resulting from criminal negligence. No evidence could support a finding that any firm or individual involved with construction and design of the balcony acted with gross negligence or reckless conduct “akin to a disregard to human life…” such that there would be reasonably foreseeable deadly consequences.

Meanwhile, the California State License Board has just completed a nine month long investigation into the five construction companies that were involved in building the balcony and apartment complex in which it was located.

The License Board found that the collapse was caused by “…water incursion that caused dry rot” and that the contractors did not perform their work to “trade standards”. Those five companies are Segue Construction, Etter and Sons Construction, R. Brothers Waterproofing, North State Plastering and the Energy Store of California. They were the general, framing, plastering and waterproofing contractors and also the material supplier of ventilation equipment, respectively.

The License Board has decided to forward its results to the California Justice Department for further proceedings. Punishment could range from an infraction to a license suspension. The Justice Department’s investigation results and findings will not be released until or unless charges are formally filed and no further information about those proceedings is available.

Meanwhile the status of Senate Bill 465, a bill initiated in the California State Senate intended to require all contractors to disclose past felonies or lawsuits alleging defects brought against them for negligence or fraud, was being considered by Committee members for potential action, but lacking a consensus, the bill stalled in Committee.

Stay tuned to this blog site for further updates on these proceedings.

Recent Illinois Decision Fortifies Precedent that Construction Defects Fail to Trigger Occurrence under CGL Policies

A recent decision in the United States District Court for the Northern District of Illinois slammed home standing precedent concerning whether a construction defect triggers an “occurrence” that would be covered under a commercial general liability (“CGL”) policy. In Allied Property & Casualty Insurance Co. v. Metro North Condominium Association, Judge Jorge Alonso granted the plaintiff’s motion for summary judgment and denied the defendant’s motion for summary judgment, essentially rejecting the argument that an underlying construction defect claim was covered under a CGL policy.

Allied Property arose from an underlying lawsuit in Cook County, Illinois, where Metro North Condominium Association (“Metro North”) sued the developer and various contractors and subcontractors of its condominium due to several defects in the construction, including, most notably, water infiltration. As part of its complaint, Metro North alleged that a window installation subcontractor breached its implied warranty of habitability when it defectively and improperly installed windows in the building, which led to severe water infiltration following a large rainstorm in October 2006. Allied Property & Casualty Insurance Co. (“Allied”) had issued a CGL policy to the window installer during the effective policy period, and Allied provided the contractor with an independent defense under a reservation of rights.

During the course of litigation, Metro North entered into a settlement with the window installation contractor for $700,000, the amount of which was to be satisfied “solely through the assignment…of all [its] rights to payment, if any, from Allied” under the applicable CGL policy. The policy required Allied to pay any amount its insured becomes legally obligated to pay “as damages because of…’property damage’…caused by an occurrence.” Allied then filed its motion for summary judgment in the Northern District of Illinois, seeking declaration that there was no coverage available with respect to Metro North’s settlement.

In arriving at its opinion, the Northern District had to delve into Illinois precedent. Specifically, the Illinois Appellate Court in 2011 held that “there is no occurrence when a subcontractor’s defective workmanship necessitates removing and repairing work,” but when the defective workmanship results in damage to something other than the construction project itself, there may be an occurrence (see Milwaukee Mutual Insurance Co. v. J.P. Larsen, Inc., 956 N.E.2d 524, 531 (Ill. App. Ct. 2011)).

Metro North’s claimed damages constituted approximately $2.1 million in damages caused by water infiltration to the common elements of the building, and just under $200,000 in damages to personal or other property. The court, in issuing its opinion, maintained Illinois’ longstanding precedent that a construction defect is not an “occurrence” that would trigger liability under a CGL policy because, here, the damages were the ordinary consequence of the contractor’s defective window installation. Specifically, the Northern District ruled that the severe bulk of the damages sought were not caused by an “occurrence,” but were rather the natural and ordinary consequence of faulty workmanship. In putting the nail in the coffin, the court held: “When a subcontractor who installs windows performs defective work, the natural and ordinary consequence is water infiltration that will damage the rest of the building. There is no accident, so there is no occurrence, so there is no coverage.”

The Allied Property holding is only the most recent cautionary tale for owners and contractors alike who are parties to a construction project in Illinois and who may not be able to realize coverage under a CGL policy for any resulting defect in the construction.

PIB. And It’s Increased Movement Into Window Defect Claims

Polyisobutylene, or PIB, is a synthetic rubber commonly used as an edge sealant in Insulating Glass Units (IGU’s).  IGU’s consist of multiple glass panes within a window frame (e.g. “double-glazed” and/or “triple-glazed” windows), and serve the purpose of insulating building interiors from both sound and thermal transmission. These IGU’s are typically separated by “spacer bars” and sealed at the outer edges of the panes to the spacer bars between those panes. PIB is the most commonly used primary sealant for this purpose. There are multiple manufacturers of PIB, just as there are many manufacturers of windows/IGU’s which incorporate the PIB edge-sealant into their finished products.

Over the past year or more, we are seeing an increased incidence of “PIB movement” claims arising in construction defect cases. Owners, developers, general contractors, and the window manufacturers themselves, are filing claims in increasing numbers against the manufacturers of PIB products based upon the products migrating from their appropriate placement at the edge of the windows, into and obscuring the IGU’s fields of vision. This is particularly true in the cases of multi-unit, multi-story HOA complexes, where double and triple-glazed windows are becoming commonplace.

As these claims continue to grow in number, further investigations are being performed to determine if the migrating PIB is in fact due to a product defect, if the PIB is being improperly installed, and/or if its use is contraindicated in high-heat environments. The jury is still out on the answer to these questions, but for now, building professionals of all ilks would be well advised to take a hard look at the causes of this growing PIB issue prior to installing PIB-edge-sealed windows into their respective upcoming projects.

Arizona Court of Appeals Addresses Subsequent Homeowner Negligence Claims (Sullivan II)

The Arizona Court of Appeals addressed the question whether a subsequent (i.e., non-original) homeowner may maintain a negligence cause of action against a homebuilder for economic losses arising from latent construction defects unaccompanied by physical injury to persons or other property.

The Court of Appeals in Sullivan v. Pulte Home Corporation, 354 P.3d 424 (July 28, 2015) upheld the dismissal of negligence based claims finding a lack of duty to a subsequent purchaser of a home. This opinion, which is now on appeal to the Arizona Supreme Court, if upheld, will benefit homebuilders, design professionals and contractors in limiting the claims of subsequent purchasers of homes.

History of the Claim

Defendant/Appellee Pulte Home Corporation built homes in a Phoenix hillside community. In 2000, Pulte sold the home at issue in these proceedings to the original homeowners, who, in 2003, sold the property to Plaintiffs/Appellants John and Susan Sullivan. In 2009, the Sullivans discovered problems with the home’s hillside retaining wall. An engineering firm they retained concluded that Pulte had constructed the retaining wall and prepared the home site without proper structural and safety components, including footings, rebar, and adequate drainage and grading. Pulte declined the Sullivans’ request to make repairs.

The Sullivans sued Pulte, alleging eleven separate counts, including several negligence-based claims. Pulte moved to dismiss all counts of the complaint pursuant to Arizona Rule of Civil Procedure 12(b)(6), arguing that the implied warranty claim was barred by the 8 year statute of repose and that the tort claims were impermissible under the economic loss doctrine. The superior court granted Pulte’s motion, and the Sullivans appealed.

This Court affirmed the dismissal of all counts of the Sullivans’ complaint except the negligence claims. Sullivan v. Pulte Home Corp., 231 Ariz. 53, 60 (App. 2012), vacated in part, 232 Ariz. 344, 306 P.3d 1 (2013). The Court held that because the Sullivans were not in privity with Pulte and had no contract with the homebuilder, the economic loss doctrine did not bar their negligence claims. The Arizona Supreme Court vacated the portion of the Court of Appeals opinion discussing the economic loss doctrine, but nevertheless agreed that it did not bar the Sullivans’ negligence claims. Sullivan v. Pulte Home Corp., 232 Ariz. 344, 345-47, ¶¶ 7, 11, 15, 306 P.3d 1, 2-4 (2013) (“Sullivan I”). Sullivan I held that the economic loss doctrine “protects the expectations of contracting parties, but, in the absence of a contract, it does not pose a barrier to tort claims that are otherwise permitted by substantive law.” Id. at 346, ¶ 11, 306 P.3d at 3. Instead, courts must “consider the applicable substantive law to determine if non-contracting parties may recover economic losses in tort.” Id. at 347, ¶ 14, 306 P.3d at 4.

On remand to the superior court, Pulte moved to dismiss the negligence claims pursuant to Rule 12(b)(6), arguing “a homebuilder such as Pulte does not owe a duty of care to a subsequent purchaser (such as plaintiffs) to prevent them from economic harm.” The superior court granted Pulte’s motion, and the Sullivans again timely appealed.

Sullivan II

The Court of Appeals accepted jurisdiction to determine whether a subsequent homeowner could maintain a negligence action against a homebuilder for latent construction defects resulting in purely economic losses.

On appeal, the Sullivans argued that Pulte’s duty arose out of public policy principles based in the municipalities’ building codes, Arizona statutes and the Arizona Administrative Code governing contractors. In determining that neither the Building Code, nor Arizona’s statutory or administrative schemes supported the imposition of a public policy-based duty for purely economic loss, the Court of Appeal found that the codes and statutes did not provide a sufficient basis for holding that homebuilders owe public policy-based tort duties to subsequent homeowners for economic loss. The statutes and codes do not delineate a specific class of persons they seek to protect distinguishable from the public. The Court stated that the governance of licensed contractors has a broad, general purpose: “to protect the public health, safety and welfare by licensing, bonding and regulating contractors engaged in construction,” but because the Sullivans had no contract with Pulte, the regulatory provisions did not support imposing a public policy-based tort duty in favor of subsequent property owners asserting only economic loss. As the Sullivans’ claims did not arise out of personal injury or damage to other property, the Court of Appeals found that there was no duty on the part of Pulte to repair a subsequent purchaser’s retaining wall.

Significance of the Ruling

Although Sullivan II is now on appeal to the Supreme Court of Arizona, the Court of Appeals ruling is certainly a positive step toward limiting the liability of homebuilders, contractors, subcontractors and design professionals for claims by subsequent homeowners. The ruling in Sullivan II, if upheld, will limit the bases that plaintiffs can rely on to create a duty.  The hope is that Arizona courts will continue to be active in limiting the liability of homebuilders, design professionals and contractors.

California Appellate Court Rejects Liberty Mutual and Requires Plaintiff to Follow the Right to Repair Act’s Pre-Litigation Procedures

On August 26, 2015, in McMillin Albany LLC et al. v. Superior Court (Van Tassell et al.) F069370, the California Court of Appeal, Fifth Appellate District, held that the Right to Repair Act (Cal. Civ. Code §895 et seq.) provides the exclusive remedy for homeowners seeking damages for certain claims for construction defect, regardless of whether or not the defects resulted in property damage. The McMillian Albany LLC (“McMillin”) court explicitly rejected the Fourth Appellate District’s decision in Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC (2013) 219 Cal.App.4th 1194, 212, which reached the opposite conclusion just two years prior. The McMillian decision represents a possible step forward for builders that stand to benefit from the Act’s pre-litigation procedures, which include the right to repair alleged defects prior to the start of litigation.

In McMillin, the plaintiff homeowners filed an action against the builders of their homes for alleged construction deficiencies. The builder petitioners moved to stay the litigation until the homeowners complied with the prelitigation 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 common law claims and did not allege a violation of the Right to Repair Act. The trial court denied the stay and petitioners filed a writ of mandate.

The Court of Appeal reversed the trial court’s decision and mandated that the court grant a stay pending completion of the pre-litigation process. The McMillin court explicitly rejected the court’s decision in Liberty Mutual, which held that plaintiffs could pursue common law claims for construction defect if they could show evidence of actual property damage. The McMillin court found that the Liberty Mutual court improperly neglected to consider certain provisions of the Act, including Civil Code §943, which provides that “no other cause of action for a claim covered by this title or for damages recoverable under Section 944 is allowed,” in rendering its decision. The McMillian court also looked to the legislative comments, which professed that the bill would make major changes to the substance and process of the law governing construction defects. As such, the court concluded that the legislature intended that all claims arising out of certain defects in residential construction be subject to the pre-litigation requirements of the Act.

The McMillin court’s diversion from the holding in Liberty Mutual and the cases that followed creates conflicting legal ground. Until further word from the legislature or review by the California Supreme Court, California courts are free to choose whether to follow the Liberty Mutual line of case law or the McMillin court’s decision and require homeowners to follow the prelitigation procedures set forth in the Right to Repair Act.

Builder Segue Construction’s Temporary Restraining Order Against The Alameda County District Attorney’s Office Denied

Segue Construction, the builder of the apartments where the balcony collapsed in Berkeley, CA killing six people, sought to obtain a temporary restraining order against the Alameda County District Attorney’s office from investigating the condition of the collapsed deck without Segue’s participation. The Alameda County District attorney is investigating the remnants of the collapsed deck, and another one similar to it, located on the same building and immediately underneath it, as part of a criminal investigation into the accident. Segue’s attorneys argued that crucial evidence in the collapse would be jeopardized by any “destructive testing” of the decks’ remnants and requested that its team be given access to any testing that the Alameda County District attorney’s investigators perform.

In its moving papers Segue argued that allowing it access to observe the deck materials and remnants would not prevent the district attorney from performing its investigations. Segue contended that it was merely requesting the opportunity for its own consultants to be present during any testing of the deck materials and remnants. The district attorney argued that the proposed temporary restraining order would violate section 526 of the California Code of Civil Procedure because it would interfere with the execution of the district attorney’s investigation and prosecution of potential criminal activity. The district attorney further offered that the evidence gathered as part of an ongoing criminal investigation is by its nature confidential and that such confidentiality of the investigation would be destroyed and would compromise the “integrity and viability of the investigative process.”

The district attorney argued that Segue failed to demonstrate that it had any rights with regard to this balcony because it did not own the balcony, and was not part of any formal lawsuit filed against it. The district attorney also contended that if such a temporary restraining order were granted by the court, it could impede future criminal investigations, setting a precedent that would allow “a bank robber …to participate in the fingerprinting of a teller’s station.” The balcony was not its property and other third parties would be denied the same opportunities as Segue would get if it were allowed to participate in the investigation.

More legislative and legal activity is sure to follow.

Berkeley Balcony Collapse Update: New, Stricter City Ordinances; State Bill Narrowly Defeated

As expected, the response to the tragic balcony collapse in Berkeley, California that killed six people has been swift but with mixed results. On the local level, the Berkeley City Council voted Tuesday to make several immediate changes to their local building requirements. First, all new balconies must be made of corrosion-resistant materials and be ventilated to prevent the buildup of moisture. While the investigation into the cause of the collapse is still ongoing, investigators have been pointing to the lack of any venting mechanism on these balconies as a potential cause for the alleged dry rot that is believed to be the cause of the collapse. As well, the council mandated that all balconies in Berkeley be inspected within the next six months and every three years after that. No details were given as to what those inspections would entail (visual or destructive) or who would be conducting the inspections. It will be interesting to see whether the city puts the onerous on the owners or whether this will be a city-run initiative.

Meanwhile, on the state level, a bill that would require contractors to disclose past felonies or lawsuits alleging defects, negligence, or fraud to the California State License Board (SB465) died in committee by a vote of 7-3. Only 8 votes were required for the bill to leave committee and be brought to the floor of the state senate for debate. Four of the committee members abstained from voting citing their concerns that the bill was “half-baked” and that there had not been enough time given to work out the specific details with the state licensing board. Supporters of the bill believe that this defeat in committee likely means that the bill has no chance of passing this year.

While there is mounting public pressure for the legislature to do something in response to this tragedy, passing a “half-baked” bill is not the solution. While there may be some logic in reporting requirements for contractors in certain situations, some significant thought must be given into exactly how that will happen and how the CSLB will treat such reports. Simply reporting the total value of a settlement in a construction defect case does not tell the whole story as to the quality of construction or the negligence of the parties involved. Given the relative ease with which construction defect cases are filed in California and the low threshold required for making allegations of negligence and even fraud, some thought has to be given to how the claims will be treated once they are reported to the CSLB and whether the CSLB has the resources available to conduct an evaluation of each claim for purposes of determining which cases warrant any action against a given contractor. It will be interesting to see how this bill evolves over the next few months before it is brought to the floor for debate.

Bill in Response to Berkeley Balcony Collapse Dies in Committee

Legislation written in response to last month’s deadly balcony collapse in Berkeley failed to advance July 14th in the Assembly Business and Professions Committee and is therefore stalled until next year. It fell one vote short of passage. Senate Bill 465 would have required contractors, and their insurers, to report to the Contractors State License Board settlements in excess of $50,000, or a binding arbitration resulting in an award of more than $25,000 involving cases of defects, fraud, negligence or incompetence. The bill would have made the provisions operative only if the Legislature appropriated money and granted hiring authority to the board for the purpose of acting on the information. The bill was opposed by the California Building Industry Association.

Berkeley Balcony Collapse Raises Questions About Reporting Requirements for Contractors

In the wake of the recent balcony collapse that killed six people in Berkeley, California, questions have been raised regarding past claims made against the general contractor of that building, Segue Construction, particularly those regarding improperly waterproofed balconies at previous projects. Several news stories have discussed past lawsuits from personal injury lawyer firms and settlements involving Segue in which allegations of improperly waterproofed balconies were made on several projects in the bay area. While it is difficult to draw any conclusions as to what occurred in Berkeley from any of these past claims, the question that is now being raised in the media is whether the California State License Board (CSLB) should be tracking claims made against contractors in an effort to keep events like these from occurring in the future.

Currently, there are no reporting requirements in California for contractors who are named as defendants in construction defect litigation matters. The only construction-related entities who have reporting requirements in California are architects (settlements, arbitration awards, or civil judgments in excess of $5,000; California Business and Professions Code section 5588, et seq.) and engineers (settlements in excess of $50,000, or judgments/arbitration awards in excess of $25,000; California Business and Professions Code sections 6770, et seq, and 8776, et seq.).

The real question is whether reporting requirements for all contractors will have the desired effect of reducing defective construction on future projects. Unlike design professionals whose design, if defective, could be used/repeated on multiple, future projects, contractors are generally faced with an entirely new set of circumstances on each new project. From location, to design drawings, to the subcontractors utilized to perform the work, to the materials used and/or specified, each project presents an entirely new set of facts to work within. For general contractors in particular, who more often than not do not self-perform any of the work on a given project, the question is whether a reporting requirement will have the desired effect of deterring defective workmanship when they are not the party actually performing the work.

For the subcontractors who actually perform the work, it’s possible that a reporting requirement may be justified, particularly if a given subcontractor is shown to have a history of defective workmanship. From a practical standpoint, however, one issue will be exactly what each subcontractor is required to report. Unlike design professionals, most contractors do not have a consent clause in their insurance policies, and therefore the insurance carrier defending the claim can resolve the case anyway it sees fit, which may mean paying more money to resolve a case to avoid the uncertainties of trial. As well, there may be numerous non-defect related components to a given settlement such as contractual defense and indemnity obligations as well as the potential threat of joint and several liability with other joint tortfeasors who may have no assets and no insurance. As such, the amount a subcontractor pays to resolve a case may have little correlation to the overall quality of their work. Given the complexity of any potential contractor reporting requirement, for such a requirement to be effective and not negatively impact the building industry, significant resources would need to be added to CLSB to allow the degree of investigation that would be necessary to assure that contractors are treated fairly.

The question has also been posed regarding how confidentiality provisions that appear in many settlement agreements in construction defect cases may affect potential reporting requirements for contractors where the terms of the settlement are to remain confidential. In light of the tragedy that occurred in Berkeley, the media has questioned whether the legislature should ban such confidentiality provisions under to the guise of a greater public safety concern. However, unlike in the narrow situations where the legislature has taken such a drastic step (i.e. medical device claims), it is the rarest of circumstances where construction defects result in significant personal injury, and therefore the public safety argument may not be as strong. In the event the legislature or CSLB does take action to require reporting requirements for contractors, however, a simple carve out in the confidentiality provision allowing the contractor to report only the information required may still allow for the use of such provisions.

Given the international attention the Berkeley balcony collapse has received, the debate is just beginning on this subject and it is likely that the state legislature will have the final say on whether reporting requirements will be extended to contractors.