Thursday, August 29, 2013
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C.A.: Right-to-Repair Act Did Not Limit Homeowner’s Remedies
By KENNETH OFGANG, Staff Writer
A decade-old statute designed to create a remedy for homeowners when construction defects reduce the value of their properties does not limit preexisting remedies for actual damage to the premises, the Fourth District Court of Appeal ruled yesterday.
Div. Three reversed an Orange Superior Court judge’s ruling in favor of a homebuilder, whose position was backed on appeal by the California Building Industry Association. The panel, in an opinion by Justice Richard Fybel, said the Right-to-Repair Act’s four-year statute of limitations—running from close of escrow—on claims regarding “plumbing and sewer issues” does not apply to common-law claims.
The ruling reinstates a subrogation action filed by Liberty Mutual Insurance Company after it paid its insured relocation expenses, as a result of his being forced from his home by significant damage caused when the sprinkler system burst. The builder, Brookfield Crystal Cove LLC, claimed that Liberty Mutual’s suit, filed more than six years after escrow closed, was untimely.
Demurrer Sustained
Judge Gregory Munoz found the Right-to-Repair Act, rather than an older statute prescribing a 10-year limitations period for suits over latent defects, applicable and sustained Brookfield’s demurrer.
Fybel, however, said the Right-to-Repair Act, enacted in 2002, was designed solely to abrogate Aas v. Superior Court (2000) 24 Cal.4th 627—which held that construction defects in residential properties, in the absence of actual property damage, were not actionable in tort—and not to limit or alter remedies in cases where there was actual damage.
He cited the legislative history, which he said contained nothing to support the defense contention that the act was intended to eliminate common law claims. A number of provisions in the act, the justice elaborated, “would make little sense if actual damage had already occurred in the manner alleged in the complaint.”
For example, Fybel noted, the act contains timeframes in which a homeowner must submit a claim to the builder; the builder must acknowledge receipt of the claim, inspect the property, and make an offer to repair; the homeowner must respond to the offer to repair; and the builder must complete the repairs.
The justice wrote:
“In the case of an actual catastrophic loss, the detailed timeframes would be unnecessary and nonsensical. If, as Brookfield argues, the Right to Repair Act applies to all claims involving construction defects regardless of actual damage, a homeowner whose property was severely damaged or destroyed would be required to await a solution during a lengthy process. As noted by the amicus curiae on behalf of Liberty Mutual, enforcement of a requirement of exclusive compliance with the notice provisions of the Act under those circumstances would effectively extinguish the subrogation rights of all homeowners’ insurers who promptly cover their insureds’ catastrophic losses. There is nothing in the Act or in its legislative history that shows the Legislature intended to eliminate those subrogation rights.”
Argument Fails
The argument that the Legislature intended to abrogate the prior statutes of limitations for all defect claims—not just those brought under the act—fails, Fybel went on to say, because lawmakers did not repeal the relevant sections of the Code of Civil Procedure. “Those statutes remain and evidence a legislative intent and understanding that the limitations periods they contain could and would be used in litigation other than cases under the Act,” he wrote.
The justice noted that a legislative analysis specifically stated that the legislation was creating “certain limited exceptions” to the 10-year statute of limitations, and said the law should not be read as eliminating previously existing rights that were not affected by Aas “sub silentio.”
The case is Liberty Mutual Insurance Company v. Brookfield Crystal Cove LLC, 13 S.O.S. 4569.
Copyright 2013, Metropolitan News Company