As anticipated in a prior CGDRB 2015 Bulletin that discussed the Fifth Appellate District Court’s noteworthy opinion in McMillin Albany LLC v. Super Ct. 2015 F069370 (Cal.App.5 Dist), the California Supreme Court has granted the petition for review of the McMillin Albany decision. The Supreme Court will attempt to resolve the conflict of authority presented by the Fourth Appellate District Court’s opinion in Liberty Mut. Ins. Co. v. Brookfield Crystal Cove LLC (2013) 219 Cal.App.4th 98 and the Fifth Appellate District Court’s rejection of the Liberty Mutual holding in McMillin Albany.
In Liberty Mutual, the Fourth District Court of Appeal held that compliance with SB800’s pre-litigation procedures prior to initiating litigation is only required for defect claims [violations of SB 800’s building standards] that have not yet resulted in actual property damage. Where damage has occurred, a homeowner may initiate litigation under common law causes of action without first complying with the pre-litigation procedures set forth in SB 800.
Two years later, the Fifth District Court of Appeal, in McMillin Albany, held that the California Legislature intended that all construction defect claims arising out new residential construction are subject to the standards and requirements of the Right to Repair Act [SB800], including specifically, the requirement that the claimant provide the builder with notice and an opportunity to repair prior to filing a lawsuit. According to the Court, SB 800 is the exclusive remedy for all defect claims arising out of new residential construction sold on or after January 1, 2003.
The holdings in Liberty Mutual and McMillin Albany present a conflict of authority that the California Supreme Court has appropriately deemed worthy of review. The parties will now be permitted to file briefs on the merits and amicus briefs will certainly be submitted by the defense and plaintiff bars.
Our firm will be closely monitoring this case, the outcome of which will significantly impact pre-litigation construction defect claims going forward. We will provide updates as to further activities and the Supreme Court’s decision.
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