Court Opinion

ID: 4104133
Source: CourtListenerOpinion
Date Created: 2016-12-02 19:02:39.815611+00
Date Added: 2024-06-11T07:45:42.323967
License: Public Domain

Filed 12/2/16
                                CERTIFIED FOR PUBLICATION

                IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
                                 THIRD APPELLATE DISTRICT
                                              (Sacramento)
                                                  ----

                                                                    C078122
ELLIOTT HOMES, INC.,
                                                             (Super. Ct. No. 34-2014-
                  Petitioner,                                00164692-CU-CD-GDS)

        v.

THE SUPERIOR COURT OF SACRAMENTO
COUNTY,

                  Respondent;

KEVIN HICKS et al.,

                  Real Parties in Interest.

        ORIGINAL PROCEEDING in mandate. Petition granted. Kevin Culhane, Judge.

     Evans, Wieckowski, Ward & Scoffield, Lindy H. Scoffield, Elizabeth A.
McGinty, and Heather M. Puentes for Petitioner.

       Donahue Fitzgerald, Kathleen F. Carpenter, and Amy R. Gowan for California
Building Industry Association and Leading Builders of America as Amici Curiae on
behalf of Petitioner.

        No appearance for Respondent.

       Lattie Malanga Libertino, Teresa A. Libertino, and Gerald B. Malanga for Real
Party in Interest.

                                                   1
       Real parties in interest, Kevin Hicks et al., filed an action against petitioner Elliott
Homes, Inc. (Elliott), the builder of their homes, seeking damages for construction
defects. Elliott moved to stay the litigation until real parties in interest complied with the
prelitigation procedure set forth in what is commonly referred to as “SB 800” or “Right
to Repair Act” (Act), Civil Code sections 895 through 945.5.1 (§ 930, subd. (b).) Real
parties in interest opposed the motion, arguing that the prelitigation procedure did not
apply because they had not alleged a statutory violation of the Act. The trial court denied
Elliott’s motion for a stay, and Elliott petitioned this court for a writ of mandate
compelling the trial court to vacate its order, and enter a new order granting the motion
for a stay. We issued an alternative writ of mandate and stayed the proceedings in the
trial court. Elliott contends the trial court erred in concluding that real parties in interest
need not comply with the prelitigation procedure set forth in the Act prior to filing the
underlying action and in denying the motion to stay.
       We shall grant the petition.
                   FACTUAL AND PROCEDURAL BACKGROUND2
       Real parties in interest, the owners of 17 single-family homes built by Elliott, filed
a first amended complaint for strict products liability, strict components product liability,
and negligence. Real parties in interest alleged that their homes were in a defective
condition at the time they took possession, and that the defects resulted in physical
damage.

1      Further undesignated statutory references are to the Civil Code.
2       On March 17, 2015, we granted the California Building Industry Association and
Leading Builders of America’s application to file an amicus curiae brief in support of
Elliott. We now grant the California Building Industry Association and Leading Builders
of America’s unopposed request for judicial notice, filed March 17, 2015.

                                               2
       The Act “applies only to new residential units where the purchase agreement with
the buyer was signed by the seller on or after January 1, 2003.” (§ 938.) The purchase
agreements for the homes at issue here were signed by Elliott after January 1, 2003.
       The Act establishes a nonadversarial inspection and repair procedure that allows
builders to attempt to resolve homeowners’ construction defect claims in advance of
litigation. (§§ 910-938.) Pursuant to that procedure, a homeowner must serve the builder
with notice of a construction defect claim, and the builder has the opportunity to repair
the purported defect within a given time period. (§§ 910, 914, 917.) If the homeowner
files a lawsuit before this prelitigation procedure is completed, the builder may obtain a
stay of the lawsuit. (§ 930, subd. (b).)
       It is undisputed that real parties in interest did not give Elliott notice of the alleged
defects or otherwise comply with the Act’s prelitigation procedure before filing suit.
Elliott moved to stay the litigation, which real parties in interest opposed. The trial court
denied the motion, concluding that real parties in interest were not required to comply
with the Act’s prelitigation procedure because they had not pleaded a statutory cause of
action under the Act. The court explained that “[a]lthough the pre-litigation procedures
are mandatory where homeowners plead statutory SB 800 causes of action [citation],
there is no similar mandate where they plead only common law causes of action
encompassing actual damage. (See Liberty Mut. Ins. Co. v. Brookfield Crystal Cove LLC
[“Brookfield”] (2013) 219 Cal.App.4th 98, 104-108; accord Burch v. Superior Court
(2014) 223 Cal.App.4th 1411, 1414-1415, 1418.)”
                                        DISCUSSION
                                              I
                                         Writ Relief
       “A writ of mandate ‘must be issued in all cases where there is not a plain, speedy,
and adequate remedy, in the ordinary course of law.’ (Code of Civ. Proc., § 1086.) Writ
review is deemed extraordinary and appellate courts are normally reluctant to grant it.

                                               3
[Citations.] The Supreme Court has identified general criteria for determining the
propriety of writ review. ‘These criteria include circumstances in which “the party
seeking the writ lacks an adequate means, such as a direct appeal, by which to attain
relief” or “the petitioner will suffer harm or prejudice in a manner that cannot be
corrected on appeal.” [Citation.]’ [Citation.]” (Baeza v. Superior Court (2011) 201
Cal.App.4th 1214, 1220-1221.)
       Elliott claims it is entitled to the benefits of the prelitigation procedure that permits
it to attempt to repair the claimed defects before real parties in interest may bring an
action against it in court, but the trial court’s order denies them that opportunity. If
Elliott may not appeal that ruling until after judgment, the benefits of the prelitigation
procedure will be lost, even if it does prevail on appeal. We conclude Elliott does not
have “a plain, speedy, and adequate remedy, in the ordinary course of law.” (Code Civ.
Proc., § 1086.)
                                            II
                                    Overview of the Act
       The Act is comprised of five Chapters. Chapter 1 defines several terms not
relevant here. (§ 895.) Chapter 2 sets forth standards for residential construction, the
violation of which constitutes an actionable defect. (§§ 896, 897.) Chapter 3 imposes
obligations on the builder, including the obligation to furnish a minimum one-year
express limited warranty. (§§ 900-906.) Chapter 3 also imposes obligations on the
homeowner, including the obligation to follow all reasonable maintenance obligations
and schedules. (§ 907.) Chapter 4 prescribes a nonadversarial prelitigation procedure
that allows builders to attempt to resolve homeowners’ construction defect claims in
advance of litigation. (§§ 910-938.) It requires a homeowner to serve the builder with
notice of a construction defect claim, and gives the builder an opportunity to repair the
purported defect within a given time period. (§ 912.) If the homeowner files a lawsuit
before the prelitigation procedure is completed, the builder may obtain a stay of the

                                               4
lawsuit. (§ 930, subd. (b).) Chapter 5 sets out the procedure for claims brought under the
Act, including the applicable statute of limitations (§ 941), the burden of proof (§ 942),
the exclusiveness of the Act (§ 943), the damages that may be recovered (§ 944), and the
affirmative defenses that may be asserted (§ 945.5). It also provides that the Act’s
“provisions, standards, rights, and obligations . . . are binding upon all original purchasers
and their successors-in-interest.” (§ 945.)
                                             III
                                     The Scope of the Act
       The question before us is whether the trial court properly denied Elliott’s request
for a stay of the litigation until real parties in interest comply with the prelitigation
procedure set forth in chapter 4. To answer this question, we must determine whether
real parties in interest are required to comply the Act’s requirements, including its
prelitigation procedure, when they have not alleged a statutory violation under the Act.
As we shall explain, the answer lies in the statutory language, which is clear and
unambiguous.
       “When construing a statute, a court seeks to determine and give effect to the intent
of the enacting legislative body.” (People v. Braxton (2004) 34 Cal.4th 798, 810.) “ ‘We
first examine the words themselves because the statutory language is generally the most
reliable indicator of legislative intent. [Citation.] The words of the statute should be
given their ordinary and usual meaning and should be construed in their statutory
context.’ [Citation.] If the plain, commonsense meaning of a statute’s words is
unambiguous, the plain meaning controls.” (Fitch v. Select Products Co. (2005) 36
Cal.4th 812, 818.) If, however, the statute is susceptible to more than one interpretation,
we “may consider various extrinsic aids, including the purpose of the statute, the evils to
be remedied, the legislative history, public policy, and the statutory scheme
encompassing the statute. [Citation.]” (Torres v. Parkhouse Tire Service, Inc. (2001) 26
Cal.4th 995, 1003.)

                                               5
       Real parties in interest contend that we need look no further than section 910 to
determine whether they were required to comply with the statutory prelitigation
procedure before filing the underlying action. Section 910 provides in relevant part:
“Prior to filing an action against any party alleged to have contributed to a violation of
the standards set forth in Chapter 2 (commencing with Section 896), the claimant shall
initiate the following prelitigation procedures: . . .” Real parties in interest assert that
“[t]he plain and ordinary meaning of the phrase ‘an action against any party alleged to
have contributed to a violation of the standards set forth in Chapter 2’ is that an action is
for violation of the SB800 building standards,” and thus, it was “the Legislature’s intent
that the Pre-Litigation Procedures are only to be applied where a party alleges violation
of the SB800 standards enumerated in Civil Code [section] 896 et seq.”
       As detailed above, section 910 is part of a statutory scheme, and must be construed
with reference to the entire statutory scheme of which it is a part. (Smith v. Superior
Court (2006) 39 Cal.4th 77, 83.) Of particular significance here is section 896, which
sets forth the basic scope of the claims to which the Act applies. It provides in pertinent
part: “In any action seeking recovery of damages arising out of, or related to deficiencies
in, the residential construction, . . . a builder . . . shall, except as specifically set forth in
this title, be liable for, and the claimant’s claims or causes of action shall be limited to
violation of, the following standards, except as specifically set forth in this title.” Thus,
the Act applies broadly to “any action seeking recovery of damages arising out of, or
related to deficiencies in, the residential construction,” and in such an action, a
homeowner’s “claims or causes of action shall be limited to violation of” the standards
set forth in section 896, except as otherwise specified in the Act. (§ 896, italics added.)
Section 896 makes an exception for condominium conversions, “As to condominium
conversions, this title does not apply to or does not supersede any other statutory or
common law.” Section 943 also contains an exception, “[T]his title does not apply to any
action by a claimant to enforce a contract or express contractual provision, or any action

                                                 6
for fraud, personal injury, or violation of a statute.” (§ 943, subd. (a).) Section 931
provides, “If a claim combines causes of action or damages not covered by this part,
including, without limitation, personal injuries, class actions, other statutory remedies, or
fraud-based claims, the claimed unmet standards shall be administered according to this
part . . . .” Common law causes of action related to single-family homes, like those
asserted by real parties in interest, are not among the claims excepted from the Act.
       Section 897 confirms that the Legislature intended to create a comprehensive set
of standards, and for those standards to be actionable under the Act. It provides, “The
standards set forth in this chapter are intended to address every function or component of
a structure. To the extent that a function or component of a structure is not addressed by
these standards, it shall be actionable if it causes damage.” (§ 897.)
       Section 943 confirms that the Legislature intended to strictly limit causes of action
and claims seeking to recover damages arising out of, or related to deficiencies in,
residential construction. It provides in pertinent part: “Except as provided in this title, no
other cause of action for a claim covered by this title or for damages recoverable under
Section 944 is allowed.” (§ 943, subd. (a).) Section 944 authorizes recovery of damages
for “the reasonable value of repairing any violation of the standards set forth in this title,
the reasonable cost of repairing any damages caused by the repair efforts, [and] the
reasonable cost of repairing and rectifying any damages resulting from the failure of the
home to meet the standards . . . .” Thus, the Act encompasses actions seeking to recover
for repair of a defect itself or for repair of any damage caused by the defect.
       Having considered the entire statutory scheme, we conclude that the Legislature
intended that all claims arising out of deficiencies in residential construction, involving
new residential units where the purchase agreement was signed on or after January 1,
2003 (§ 938), with limited exceptions not relevant here, be subject to the standards and
requirements of the Act; homeowners bringing such claims must give notice to the
builder and engage in the prelitigation procedure set forth in chapter 4 of the Act prior to

                                               7
filing suit in court; and where the complaint alleges deficiencies in construction that
constitute violations of the standards set out in chapter 2 of the Act, the claims are subject
to the Act, and the homeowner must comply with the prelitigation procedure, regardless
of the theory of liability asserted in the complaint.
       The legislative history is consistent with our interpretation of the Act’s scope. The
analysis by the Senate Judiciary Committee states: “This bill would make major changes
to the substance and process of the law governing construction defects. It is the product
of extended negotiations between various interested parties. Among other things, the bill
seeks to respond to concerns expressed by builders and insurers over the costs associated
with construction defect litigation, as well as concerns expressed by homeowners and
their advocates over the effects of a recent Supreme Court decision that held that defects
must cause actual damage prior to being actionable in tort. [Aas v. Superior Court (2000)
24 Cal.4th 627].” (Sen. Com. on Judiciary, Analysis of Sen. Bill No. 800 (2001-2002
Reg. Sess.) as amended Aug. 28, 2002, p. 1.) “This bill would provide that any action
against a builder . . . seeking recovery of damages arising out of, or related to deficiencies
in, residential construction, . . . shall be governed by detailed standards set forth in the
bill relating to the various functions and components of the building.” (Id. at p. 2.) “This
bill would establish a mandatory procedure prior to the filing of a construction defect
lawsuit. This procedure would provide the builder with the right to attempt a repair of
the defect prior to litigation . . . .” (Id. at pp. 2-3.) “This bill would set detailed standards
. . . . Except in certain specified circumstances, the bill would provide that these
standards govern any action seeking recovery of damages arising out of or related to
construction defects. The bill would provide that any function or component not
specifically addressed by the standards shall be actionable if it causes damage. As a
result, the bill would preserve homeowners’ ability to recover for defects that cause
damage that are not otherwise covered by the standards. [¶] In addition, except where
explicitly specified otherwise, liability would accrue under the standards regardless of

                                                8
whether the violation of the standard had resulted in actual damage or injury.” (Id. at p.
4.) Describing the prelitigation procedure and the builder’s right to repair, the analysis
provides: “The bill establishes a mandatory process prior to the filing of a construction
defect action. The major component of this process is the builder’s absolute right to
attempt a repair prior to a homeowner filing an action in court.” (Id. at p. 5.)
       In Aas v. Superior Court, supra, 24 Cal.4th 627, referenced in the legislative
history quoted above, our Supreme Court held that construction defects in residential
properties that did not result in actual property damage were not actionable in tort. (Id. at
p. 632.) Thus, after Aas, homeowners could not recover in tort for costs of repair or the
diminution in value of the homes arising from construction defects that had not caused
property damage. (Id. at pp. 632-633.) Needless to say, Aas represented a substantial
victory for the building industry. Under the construction urged by real parties in interest,
the Act created new statutory causes of action for defects that have not yet caused
damage, while leaving intact the common law causes of action available once property
damage has occurred. Under such a construction, the building industry gained nothing
under the Act. To the contrary, it lost. It defies common sense to think that building
groups would have negotiated such a result. Moreover, the construction urged by real
parties in interest fails to respond to concerns expressed by builders and insurers over the
costs associated with construction defect litigation, which the legislative history indicates
the bill sought to address.
       Consistent with the statutory language itself, the legislative history establishes that
the Legislature intended that any action against a builder seeking to recover damages
arising out of, or related to deficiencies in, residential construction is subject to the Act’s
prelitigation procedure.
       The trial court relied on Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC,
supra, 219 Cal.App.4th at pages 104-108 (Liberty Mutual) as the basis for its conclusion
that real parties in interest were not required to engage in the Act’s prelitigation

                                               9
procedure because “they plead only common law causes of action encompassing actual
damage.”3 In that case, Eric Hart purchased a new home built by Brookfield. (Liberty
Mutual, at pp. 100-101.) A few years later, a pipe in the home’s sprinkler system burst,
causing extensive damage. (Id. at p. 101.) Brookfield acknowledged its liability for, and
repaired, the damage to Hart’s home. (Ibid.) Hart moved into a hotel for a few months
while the repairs were made, and its insurer Liberty Mutual paid for the hotel and other
relocation expenses. (Ibid.) Liberty Mutual then filed a subrogation action against
Brookfield to recover the expenses it paid. (Ibid.) The operative complaint alleged
causes of action for strict liability, negligence, breach of contract, breach of warranty,
equitable estoppel, and declaratory relief. (Id. at pp. 101-102.) Brookfield demurred to
the complaint, arguing it was time-barred under the Act. (Liberty Mutual, at p. 100.) The
trial court sustained the demurrer and dismissed the complaint. (Ibid.) The Court of
Appeal reversed, holding that “the Act does not eliminate a property owner’s common
law rights and remedies, otherwise recognized by law, where, as here, actual damage has
occurred,” and thus, “Liberty Mutual’s complaint in subrogation, based on Hart’s right to
recover actual damages, states causes of action.” (Id. at p. 101.)
       In their return to the petition for writ of mandate, real parties in interest assert that
Liberty Mutual is “immaterial,” and we need not consider whether it was correctly
decided because unlike Liberty Mutual, whether real parties are precluded under the Act
from pursuing their common law causes of action is not before us. According to real
parties in interest, “It could have been, but Elliott did not demur to these causes of action.
Instead, it brought forth a Motion to Stay. [¶] Accordingly, the question before the trial

3      The trial court also cited Burch v. Superior Court, supra, 223 Cal.App.4th at pages
1414-1415, 1418. The court in Burch agreed with Liberty Mutual’s holding without any
independent analysis of the issue. (Burch, at p. 1418.) Accordingly, we shall limit our
discussion to Liberty Mutual.

                                               10
court was, as follows: given that [real parties in interest] only pled common law causes
of action and not an SB800 cause of action, were [they] required to complete the SB800
statutory pre-litigation procedures before litigating the common law causes of action?”
We agree that we need not determine whether real parties in interest can pursue their
common law causes of action in the first instance; rather, the issue before us is: assuming
that real parties in interest can pursue their common law causes of action, were they
required to comply with the Act’s prelitigation procedure before initiating the underlying
lawsuit. We disagree, however, with real parties in interest claim that Liberty Mutual is
immaterial to our analysis of that issue.4 In concluding that “the Act does not provide the
exclusive remedy in cases where actual damage has occurred,” (Liberty Mutual, supra,
219 Cal.App.4th at p. 109) the Liberty Mutual court found that “the statutory language
shows Liberty Mutual’s subrogation claims [(common law causes of action arising from
actual damages)] are not covered by the Right to Repair Act,” and thus, Hart was not
subject to the time limitations set forth therein. (Id. at pp. 104-105.) Here, real parties in
interest assert and the trial court found that common law claims arising from actual
damages are not covered by the Act, and thus, they were not subject to the prelitigation
procedure set forth therein. Moreover, the trial court cited Liberty Mutual as the basis for
its decision. Thus, we shall consider Liberty Mutual’s finding that common law claims
arising from actual damages are not covered by the Act and explain why we respectfully
disagree with it.
       In interpreting the scope of the Act, the Liberty Mutual court relied on the
“ ‘general rule’ ” that statutes should not be interpreted to alter or abrogate the common

4      Whether the Act precludes a homeowner from bringing common law causes of
action for defective conditions that resulted in physical damage to the home is currently
pending before our Supreme Court in McMillin Albany, LLC v. Superior Court (2015)
239 Cal.App.4th 1132, review granted November 24, 2015, S229762.

                                              11
law unless its language clearly and unambiguously evidences an intention to do so.
(Liberty Mutual, supra, 219 Cal.App.4th at p. 105.) As previously discussed, section 896
states that the Act broadly applies to “any action seeking recovery of damages arising out
of, or related to deficiencies in, . . . residential construction,” and in such an action, a
homeowner’s “claims or causes of action shall be limited to violation of” the standards
set forth in section 896, except as otherwise specified in the Act. (Italics added.) In
determining that Brookfield’s claims were not covered by the Act, the Liberty Mutual
court failed to analyze the language of section 896. (Liberty Mutual, at p. 108.) Instead,
it analyzed Brookfield’s argument, which it rejected as “circular.” (Ibid.) “Brookfield
argues the language ‘any action’ means that the present case must fall within the Right to
Repair Act. Brookfield’s argument, however, is circular; Brookfield’s argument is
essentially that any action arising out of the Act is an action under the Act.” (Ibid.)
Section 896 does not provide that “any action arising out of the Act is an action under the
Act.” To the contrary, it provides that “[i]n any action seeking recovery of damages
arising out of, or related to deficiencies in, the residential construction, . . . a builder . . .
shall, except as specifically set forth in this title, be liable for, and the claimant’s claims
or causes of action shall be limited to violation of, the following standards, except as
specifically set forth in this title.” (§ 896.)
       The statutory language contained in section 896 as well as the code sections
previously discussed, i.e. sections 897, 931, 943, 944, clearly and unequivocally
expresses the legislative intent that the Act apply to all actions “seeking recovery of
damages arising out of, or related to deficiencies in, . . . residential construction,” (§ 896)
except as specifically set forth in the Act. The Act does not specifically except actions
arising from actual damages. To the contrary, it authorizes recovery of damages for,
among other things, “the reasonable cost of repairing and rectifying any damages
resulting from the failure of the home to meet the standards . . . .” (§ 944.)

                                                  12
                                             IV
             Real Parties in Interests’ Claims Fall Within the Scope of the Act
       Here, the operative first amended complaint alleged residential construction
defects in components or functions for which standards have been established in section
896.5 Thus, real parties in interests’ claims fall within the scope of the Act. Section 910
provides that before a homeowner files “an action against any party alleged to have
contributed to a violation of the standards set forth in Chapter 2,” the homeowner must
give written notice to the builder of the claim that the construction of the residence
violates any of the standards in that chapter. If a homeowner fails to provide such notice
or otherwise comply with the prelitigation procedure, the builder may bring a motion to
stay any subsequent court action until the homeowner complies with that procedure.
(§ 930, subd. (b).) Because real parties in interest did not notify Elliot of their claims or
otherwise comply with the statutory prelitigation procedure, Elliott is entitled to a stay of
the action until the statutory prelitigation process has been completed. Accordingly, we
will grant Elliott the relief sought in the petition.
                                        DISPOSITION
       Let a peremptory writ of mandate issue directing the respondent court to vacate its
order of November 6, 2014, denying Elliott’s motion to stay the litigation, and enter a
new order granting the motion and staying the litigation until the parties have satisfied the
requirements of the statutory prelitigation procedure set forth in chapter 4 of the Act
(§§ 910-938). The stay previously issued by this court shall be dissolved as of the date

5       According to real parties in interest, the “deficiencies manifested as, but are not
limited to, the following items: [¶] waterproofing defects; window and door defects;
framing defects; tub and shower door defects; roofing and sheet metal defects; stucco
defects; general deviation from building plans and specifications; general deviation and
non compliance with applicable building codes and standards and building practices.”
Section 896 sets forth standards for such functions and components. (§ 896, subds.
(a)-(g).)

                                               13
this opinion is filed. The parties shall bear their own costs on appeal. (Cal. Rules of
Court, rule 8.493(a)(1)(B).)

                                                    /s/
                                                  Blease, Acting P. J.

We concur:

  /s/
Nicholson, J.

 /s/
Murray, J.

                                             14