In McMillin Albany, LLC v. Superior Court, real parties, including Carl Van Tassell and 36 other homeowners, filed a first amended complaint alleging eight causes of action against the builder, McMillin Albany, LLC, including strict products liability, negligence, and breach of express and implied warranties. Plaintiffs alleged the homes were defectively constructed and that the alleged construction defects resulted in damage to their homes. The third cause of action of the first amended complaint alleged violation of the building standards set forth in Civil Code Section 896, part of the Right to Repair Act.
Plaintiffs did not give McMillin notice of the alleged defects before filing suit. The parties, in turn, attempted to negotiate a stay of the judicial proceedings to complete the pre-litigation process under SB 800, but plaintiffs subsequently withdrew from these negotiations, dismissed plaintiffs’ third cause of action, and argued that plaintiffs were no longer required to comply with the statutory pre-litigation process under SB 800, as they had dismissed their cause of action alleging violation of the Right to Repair Act. McMillin then filed a motion for a stay of the proceedings, which plaintiffs’ vigorously opposed.
The trial court denied the motion for stay of the proceedings, concluding real parties were entitled to plead common law causes of action in lieu of a cause of action for violation of the building standards set out in Section 896 and they were not required to submit to the pre-litigation process of the Act when the operative complaint did not allege any cause of action for violation of the Right to Repair Act. The court sited Liberty Mutual as the basis for their decision. McMillin, in response to this ruling, filed a petition for a writ of mandate, seeking a writ directing the trial court to vacate its order denying McMillin’s motion for a stay and to enter a new order granting a stay pending completion of the pre-litigation process under SB 800.
In considering McMillin’s writ petition, the 5th District Court of Appeal in Fresno found that the only issue before the court was whether McMillin’s motion for a stay pending completion of the pre-litigation procedures of Chapter 4 of the Act was properly denied. In order to make that determination, the Court of Appeal considered the scope of the Act and whether the Albany McMillin homeowners were required to comply with the SB 800 pre-litigation process before filing suit against McMillin, regardless of whether the plaintiff homeowners were asserting any claims or causes of action reliant upon SB 800.
Ultimately, the 5th District Court of Appeal concluded that the Legislature intended that all claims arising out of defects in residential construction, involving new residences sold on or after January 1, 2003 (Civ. Code § 938), be subject to the standards and the requirements of the Right to Repair Act and that homeowners bringing such claims were required to give notice to the builder and engage in the pre-litigation procedures in accordance with the provisions of Chapter 4 of the Act prior to filing suit in superior court. The court concluded that the plaintiff homeowners did not comply with the requirements of Chapter 4 allowing McMillin the absolute right to attempt repairs. Further, the Court of Appeal held that McMillin was entitled to a stay of the action until the statutory pre-litigation process has been completed.
On December 1, 2015, the California Supreme Court, noting an irreconcilable conflict between Liberty Mutual and McMillin Albany, ordered the 5th District’s McMillin Albany decision de-published pending review by the Supreme Court.
The Supreme Court has now set the case for oral argument on November 7, 2017, and we will see if the court makes the determination that SB 800 is an “exclusive remedy” after all.