McMillin Albany LLC v. Superior Court, No. S229762, 2018 Cal. LEXIS 211 (Jan. 18, 2018)

Several homeowners (Plaintiffs) brought suit against developer/general contractor McMillin Albany LLC (McMillin) for alleged defective construction of new homes. Plaintiffs alleged the defects caused property damage and economic loss in the form of repair costs and reduced property values, and asserted common law claims for negligence, strict product liability, breach of contract, and breach of warranty, and a statutory claim for violation of the construction standards outlined in the Right to Repair Act (Civ. Code §§ 895–945.5, the Act). The Act defines standards for the construction of individual dwellings; governs various builder obligations, including provision of warranties; creates a prelitigation dispute resolution process; and describes mandatory procedures for lawsuits under the Act. McMillin sought a stay of proceedings so that the parties could proceed through the Act’s prelitigation dispute process, which includes notice to the builder of defects and an opportunity to cure. Plaintiffs refused to stipulate to the stay and instead, dismissed their statutory claim. McMillin then sought a court-ordered stay which Plaintiffs contested, arguing that their suit now omitted any claim under the Act, and therefore, was not subject to its procedures.

The Supreme Court identified the issue on appeal as whether Plaintiffs’ common law action for construction defects resulting in both economic loss and property damage was subject to the Act’s prelitigation procedures. This issue implicated two previous California appellate decisions.