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.