In Greystone Homes, Inc. v. Midtec, Inc., Greystone Homes, a home builder, sued a product manufacturer, Midtec, Inc., for negligence and indemnity and contribution after failures with Midtec’s fittings caused leaks in the plumbing systems of homes built by Greystone. Greystone had contracted with a subcontractor who installed an RTI Plum-Pex system that contained Midtec fittings. As a result of the leaks, Greystone replaced all the fittings, including those which had not yet failed, and then sued RTI and Midtec to recover the costs. Greystone and RTI settled for an amount that exceeded the cost to repair, but was less than the cost to replace the fittings. Midtec moved for summary judgment based on the economic loss rule, arguing that Greystone could not recover in tort for economic losses unrelated to property damage or bodily injury, as Greystone had already recovered the costs associated with property damage in the settlement with RTI. Greystone opposed the motion, arguing that the Right to Repair Act abrogates the economic loss rule in residential construction defect litigation. The trial court granted Midtec’s motion for summary judgment, and Greystone appealed.  

On appeal, the court found in favor of Greystone on the equitable indemnity claim. Under the act, a homeowner may recover economic losses from both a product manufacturer and home builder for violations of the Act’s standards even in the absence of property damage or personal injury. The Court found that Greystone and Midtec were joint tortfeasors, permitting Greystone to bring a derivative equitable indemnity action against Midtec premised on the homeowners’ losses. The court, however, ruled against Greystone on its negligence claims, finding that the act provides rights to homeowners only, not a homebuilder like Greystone. Since Greystone was not one of the class of persons for whose protection the act was adopted, it had no right to assert a claim for negligence per se, based on the act. Greystone’s standard negligence cause of action also failed because no duty exists for purely economic losses in the absence of either (1) a special relationship between the parties or (2) resulting property damage or personal injury.

Greystone Homes, Inc. v. Midtec, Inc., 168 Cal.App.4th 1194, 86 Cal.Rptr.3d 196 (2008)