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Right to Repair Act, (SB 800) Not Exclusive Remedy In California For Construction Defects in Residential Housing

Since the Right to Repair Act, (SB 800) was passed in California, builders have hoped the laws would reduce the frequency and cost of defending claims for construction defects. In Liberty Mutual Insurance Company v. Brookfield Crystal Cove LLC, --- Cal.Rptr.3d————, 219 Cal.App.4th 98, 2013 WL 5494673 (Cal.App. 4 Dist.), a California appellate court addressed the applicability of SB 800, the California Right to Repair act, and found it was not a claimant’’s exclusive remedy for construction defects.

Eric Hart bought a newly constructed home from Brookfield Crystal Cove LLC (Brookfield). A pipe in the home's sprinkler system burst, causing significant damage. Brookfield repaired the damage.

Hart's homeowners insurer, Liberty Mutual Insurance Company (LibertyMutual), paid Hart's relocation expenses, incurred while Hart was out of his home during the repair period. Liberty Mutual sued Brookfield to recover those expenses. The trial court found Liberty Mutual's complaint was time-barred under the Right to Repair Act, Civil Code section 895 et seq. (the Right to Repair Act or the Act), and, sustaining a demurrer, dismissed it. The appellate court reversed.

The appellate court held that Civil Code section 896 did not provide an exclusive remedy, as Brookfield had argued. By creating a remedy for a particular cause of action, the Right to Repair Act did not expressly or impliedly support an argument that it mandated an exclusive remedy, and certainly did not eliminate common law claims otherwise recognized by law.

The appellate court held the Act does not provide the exclusive remedy in cases where actual damage has occurred because of construction defects. Therefore, Liberty Mutual's subrogation claims were not time-barred for failing to comply with the Act. The appellate court rejected Brookfield's arguments that the Legislature by its silence eliminated common law actions for actual damages for construction defects, eliminated subrogation rights, and repealed Code of Civil Procedure sections 337.1 and 337.15, and held that the demurrer should have been overruled by the trial court, so the case was allowed to go forward.