December 7, 2012 – (RealEstateRama) — Senate Bill 800, commonly known as the “Right to Repair,” became effective January 1, 2003 and establishes a mandatory process prior to the filing of certain types of construction defect claims against homebuilders. This law, codified as Title 7 of the California Civil Code, applies whenever there are defects alleged by a homeowner in new residential construction. The legislative intent of this law is to afford both homeowners and homebuilders the opportunity for quick and fair resolution of claims so that homebuilders can work with their homeowners to ensure that they are content with the construction of their home.
The “Right to Repair” law has gone largely untested in the judicial system, leaving the parties to dispute almost every aspect of the statutory framework. Indeed, since this law was enacted in 2003, there have been less than a handful of published cases interpreting the framework of the statute and the handling of these claims.
Under current California law, prior to filing a lawsuit against a homebuilder for construction deficiencies, a homeowner must first provide written notice to the builder that the construction of his or her residence violates current California Construction standards. Once this claim is received by the builder, a series of events unfold which place certain requirements on a builder. One such requirement is that within 30 days, a builder must provide all relevant plans, specifications and reports that pertain to the residence. But when must these documents be produced? Can a homeowner simply request documents at any time prior to filing a Notice of Claim? The answers to these questions are critical to builders facing a lawsuit, because non-compliance can mean a complete release from the Right to Repair statute allowing a homeowner to immediately file a lawsuit.
Since the statutory scheme was enacted, plaintiff firms have attempted to “game the system” by making document requests to the homebuilder which are burdensome, harassing and otherwise constitute an unabated fishing expedition, in the search for construction defect claims. Fortunately, the California Court of Appeal provided guidance to homeowners and builders alike on this very issue recently in its decision in the case of Armundo Darling, et al. v. Superior Court, (Western Pacific Housing, Inc., Real Parties in Interest) A135747 November 16, 2012. This case provides powerful language and guidance for all parties. Wood, Smith, Henning & Berman has represented Western Pacific Housing, Inc. (“WPH”) since the inception of this matter and through the appellate process.
In Darling, the Court definitively stated that homeowners must serve a Notice of Claim under Civil Code section 910(a) before a builder is obligated to respond to any document demand under section 912(a) (all statutory references are to the Civil Code). This decision provides much needed clarity to the “Right to Repair” law and also puts an end to efforts by homeowners who try to “game the system” by issuing extensive document demands on builders without first providing a Notice of alleged deficiencies. This is an excellent result for all California homebuilders, who can now proceed with their statutory rights to repair homes which are truly suffering from legitimate damages as intended by the legislature.
The Darling Decision
Darling involves 86 homeowners of single family homes in Solano County. All homes are subject to California’s “Right to Repair” law. Darling’s attorneys sent a letter to the builder of the homes, Western Pacific Housing (WPH), demanding various documents connected to the construction of the homes. However, this demand for documents was served prior to any homeowners filing a Notice of Claim to the Builder that there were any construction deficiencies to the homes. Western Pacific did not produce documents in response to the premature demand. The Darling homeowners then filed a complaint for damages against WPH.
After the trial court sustained WPH’s demurrers, the Darling homeowners filed a Second Complaint. WPH moved to stay the entire action, arguing that the homeowners never advised it of any defects to the homes prior to demanding the documents. In response, the homeowners argued that they served a demand for documents on WPH, that the demand was not satisfied, and that this resulted in a complete release from the “Right to Repair” procedures.
However, the homeowners provided no rationale for their premature request to obtain documents at any time. The only purpose of such a request would be to allow homeowners to evade the intent of the legislature, which is to provide the builder with notice and an opportunity to inspect and repair any alleged deficiencies in order to avoid costly and lengthy litigation. If a builder were required to produce documents before a notice of claim is served, it would be analogous to requiring a party to litigation to comply with discovery before a complaint is filed. This is unjust.
The trial court agreed with WPH and ruled that homeowners must serve a Notice of Claim before they are entitled to seek documents. Therefore, the court granted WPH’s Motion and stayed the action. The Darling homeowners appealed. The Court of Appeal agreed with WPH and the trial court, holding, “Based on the language of the statute and the statutory scheme, as well as the statutory purpose and relevant legislative history, we conclude that a homeowner must serve notice of a construction defect claim under section 910, subdivision (a) to commence the statutory prelitigation procedure, and until such service the builder has no obligation to respond to a request for documents under section 912, subdivision (a).”
The Court looked at four key areas of intent surrounding the statute. First, the Court looked at the plain language of the document provision, which states that “[w]ithin 30 days of a written request by a homeowner . . . the builder shall provide copies” of certain documents. (§ 912, subd. (a).) The Court noted that the statute is silent, however, as to whether the homeowner may make this request without serving notice of a claim: there is no express requirement that the homeowner precede his or her document request with notice of a claim, but there is also no express indication that the homeowner may request documents – or that the builder must comply with the request – before the homeowner has served notice of the claim.
As such, the Court next examined the statutory scheme. The Court observed that the “Right to Repair” law begins with the Notice of Claim provision at section 910. The Court also observed that the document demand provision – section 912 – appears later. Importantly, the court noted that section 910 “initiates” the pre-litigation procedure and has the same force and effect as a “notice of commencement of a legal proceeding.”
The Court also noted, “Because the document request is part of the prelitigation procedure, and the prelitigation procedure does not begin until the homeowner has served notice of a claim, it follows that there can be no prelitigation obligation to produce documents under section 912, subdivision (a) unless the homeowner has commenced the prelitigation procedure by serving notice of a claim.”
Third, the Court looked at the Statutory Purpose of the “Right to Repair” law, namely, that the purpose is to give a builder the opportunity to resolve a homeowner’s construction defect claim in an expeditious and nonadversarial manner. The Court found, “More precisely, the point is to help resolve defect claims that the homeowner already has, not to open up the builder’s document files to homeowners who have no claim and perhaps never will.”
As such, the Court found that “Requiring the homeowner to serve notice of a construction defect claim before obtaining documents from the builder under section 912, subdivision (a) is consistent with the statute’s evident purpose.”
Finally, the Court looked at the Legislative history of the “Right to Repair” law, which was utterly devoid of any language which supported the position taken by the Darling homeowners.
What this Decision Means for California Homebuilders
This holding strengthens the absolute right to repair that was intended by the “Right to Repair” law in California. California Homebuilders will not be required to open their books to unlimited homeowners who may have no legitimate claim for construction defects. As the court noted, the purpose of SB 800 was not to “empower homeowners to get documents from builders whether they have a defect claim or not.” Instead, homeowners must first articulate and provide notice of legitimate claims. Then, builders have the ability to decide the best way to move forward and respond. If the claims appear meritorious, a builder can proceed with an inspection of the home and potential repairs. If not, they can enter litigation and fight the fight. This ruling protects the builder’s right to make this determination based on the initial Notice of Claim. As such, the ruling will encourage the prompt and efficient resolution of construction defect claims in the manner intended.
By Wood, Smith, Henning & Berman LLP
mmacnee (at) cbia (dot) org