Court Opinion

ID: 2779692
Source: CourtListenerOpinion
Date Created: 2015-02-17 19:02:39.513244+00
Date Added: 2024-06-11T10:55:52.067391
License: Public Domain

Filed 2/17/15
                           CERTIFIED FOR PUBLICATION

                IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                            SECOND APPELLATE DISTRICT

                                     DIVISION FIVE

DAVID BELASCO,                                    B254525

        Plaintiff and Appellant,                  (Los Angeles County Super. Ct.
                                                  No. YC067940)
        v.

GARY LOREN WELLS et al.,

        Defendants and Respondents.

        APPEAL from a judgment of the Superior Court of Los Angeles County, Stuart
M. Rice, Judge. Affirmed as to defendants Gary Loren Wells and American Contractors
Indemnity Company, and dismissed as to defendant Glenn Hatch.
        Fruchter & Sgro, W. Randall Sgro, Steve J. Kim, for Plaintiff and Appellant.
        Splinter & Thai, Robert G. Splinter, Min N. Thai, for Defendants and Respondents
Gary Loren Wells and American Contractors Indemnity Company.
        Glenn Hatch, in pro. per., for Defendant and Respondent.
                               ________________________
       Plaintiff David Belasco bought a newly constructed Manhattan Beach residence in
2004 from the builder defendant Gary Loren Wells. In 2006, Belasco filed a complaint
against Wells with the Contractors State License Board (the Board) regarding alleged
construction defects. Belasco and Wells settled the dispute in 2006 by written agreement,
with Wells paying $25,000 and Belasco executing a release and a Civil Code section
15241 waiver of all known or unknown claims. In 2012, Belasco filed this action against
Wells, Wells’s surety American Contractors Indemnity Company (American
Contractors),2 and Glenn Hatch,3 based on an alleged defect in the roof that Belasco
discovered in 2011.
       The trial court granted summary judgment in favor of Wells and American
Contractors, ruling that the action was barred as a matter of law by the 2006 settlement
that included a release and waiver of all claims, known or unknown, in connection with
the construction of the property. Belasco filed a timely notice of appeal, which he served
on all defendants.
       Belasco contends the trial court erred in granting summary judgment because: (1)
the general release and section 1542 waiver in the 2006 settlement agreement for patent
construction defects is not a “reasonable release” of a subsequent claim for latent
construction defects within the meaning of section 929 and the Right to Repair Act (the
Act) (§ 895 et seq.); (2) a reasonable release can only apply to a “particular violation”
and not to a latent defect under the language of section 945.5, subdivision (f), and the

       1   All statutory references are to the Civil Code, unless otherwise indicated.

       2
       American Contractors Indemnity Company was erroneously named in the
complaint as Surety Company of the Pacific.

       3Hatch was substituted into the action as a Doe defendant. The complaint
contains no allegations against him. As discussed more fully below, the record contains
no judgment against Hatch, but Belasco served him with the notice of appeal and listed
Hatch in the civil case information statement on appeal as a party “who will participate in
the appeal.” Belasco’s briefs on appeal were served on Hatch.
                                            2
2006 settlement was too vague to be a valid because it does not reference a “particular
violation;” (3) section 932 specifically authorizes an action on “[s]ubsequently
discovered claims of unmet standards;” (4) public policy prohibits use of a general
release and section 1542 waiver to bar a subsequent claim for latent residential
construction defects; and (5) a genuine issue of material fact exists concerning Belasco’s
fraud and negligence claims that would have voided the settlement pursuant to section
1668.
        We hold the trial court properly granted summary judgment in favor of Wells and
American Contractors based on the express language of the 2006 settlement. Belasco’s
ineffective appeal as to Hatch is dismissed, and Hatch is awarded his costs on appeal.

Allegations of Belasco’s 2012 Complaint

        Belasco’s complaint included causes of action for breach of contract, complaint on
Contractor’s License Bond, fraud, and revocation/suspension of contractor’s license.4
Belasco alleged that his 2006 complaint against Wells with the Board was resolved by
Wells agreeing to pay a sum of money to repair the property. A defect in the roof was
unknown at the time of the settlement.
        The first cause of action alleged that the defective roof breached the statutory
warranty on new construction under section 896. The second cause of action alleged
American Contractors is liable as Wells’s surety. The third cause of action, for fraud,
alleged Wells falsely represented that the roof was installed by a competent, licensed
roofer (Action Roofing), and that Wells intended to mislead Belasco, who justifiably
relied on the representations when he agreed to buy the home. The fourth cause of action

        4
        Although the caption of the complaint indicates a cause of action for negligent
misrepresentation, the body of the complaint instead contains a cause of action for
negligent construction without regard to negligent misrepresentation.
                                            3
sought suspension or revocation of Wells’s contractor’s license under Business and
Professions Code section 7106.

Answers to the Complaint

       Wells entered a general denial of the allegations, and asserted 17 affirmative
defenses. The ninth affirmative defense asserted that Belasco’s claims are barred by the
2006 release and waiver.
       Hatch, representing himself, also filed an answer, including a general denial and
ten affirmative defenses.

The Motion for Summary Judgment

       Wells and American Contractors5 moved for summary judgment on the basis that
Belasco’s 2012 action was barred by a 2006 settlement of Belasco’s prior complaint
about Wells to the Board. In the prior settlement, Belasco signed a release and waiver of
all known or unknown construction defects in the home in return for a cash settlement of
$25,000.
       Wells cited San Diego Hospice v. County of San Diego (1995) 31 Cal.App.4th
1048 (San Diego Hospice) for the proposition that Belasco’s 2006 release and waiver of
any and all claims, known or unknown, is valid and bars this action. The clear and
unambiguous waiver and release were not negated by fraud, because there was no
fraudulent misrepresentation by Wells or reliance by Belasco. Belasco, an attorney who
was represented by counsel, expressly acknowledged his understanding of the scope of
the agreement.
       As a surety, American Contractors liability is no greater than that of Wells.
American Contractors is entitled to summary judgment for the reasons argued by Wells.

       5   Hatch did not join in the motion for summary judgment.
                                               4
       Wells and American Contractors relied on the following as undisputed facts.
Wells holds a Class B General Building Contractor license issued by the Board. Wells
built a new residence in Manhattan Beach, which he sold to Belasco in 2004. His surety
was American Contractors. Belasco had the premises inspected before the sale, and
several corrections were made at the suggestion of the inspector.
       After escrow closed, Belasco gave Wells’s agent, Glenn Hatch, a list of
approximately 150 items improperly built on the property. Belasco filed a complaint
against Wells with the Board regarding construction defects.
       An arbitration began in 2006 between Belasco and Wells, with both parties
represented by counsel. Belasco is a patent attorney, licensed since 1995, whose practice
includes a small amount of litigation. Three hours into the arbitration, and before a
decision was reached, Wells offered to settle the dispute for $25,000, which Belasco
accepted.
       The settlement was memorialized in a writing signed by Belasco and his attorney.
Belasco read and understood the agreement.
       Under the terms of the agreement, claims were defined as follows:
              “CLAIMS as used herein shall refer to any and all claims, demands,
              lawsuits, complaints, causes of action and/or petitions for damages
              (economic and non-economic; general and special; compensatory and
              punitive) sustained by result of any and all known and unknown
              construction defects, design defects, product defects, property damage, loss
              of use, relocation costs, loss of services, attorney’s fees, expert’s fees,
              investigation costs, litigation costs, interest, employee expenses, loss-of-
              rent, business losses, lost profits, stigma, and diminution in value, personal
              injury, bodily injury, emotional distress, pain and suffering, death,
              dismemberment, loss of earnings, loss of earning capacity, loss of
              consortium, occurring at any time in the past, present and/or future and

                                              5
             arising out of or related to or manifesting to the acts or omissions by any of
             the RELEASEES.”
      Section 3 of the settlement contained a section 1542 waiver and release, as
follows:
             “It is understood and agreed that I and all future purchasers hereby
             EXPRESSLY WAIVE all rights under section 1542 of the Civil Code of
             California, which provides as follows: [¶] Certain Claims Not Affected by
             General Release . . . A GENERAL RELEASE DOES NOT EXTEND TO
             CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
             TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
             RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
             AFFECTED HIS SETTLEMENT WITH DEBTOR.”
      Finally, section 4 provided that Belasco entered into the agreement based on his
own judgment, and without influence by any representations:
             “4.1. I hereby declare and represent that the damages sustained are
             permanent and progressive and that recovery therefrom is uncertain and
             indefinite, and in making this release and agreement it is understood and
             agreed that I rely wholly upon my judgment, belief, and knowledge of the
             nature, extent, and duration of said damages, and that I have not been
             influenced to any extent whatsoever in making this Release of All Claims
             by any representations or statements regarding said injuries, or regarding
             any other matters, made by any of the RELEASEES, or by any person or
             persons representing any of the RELEASEES, or by any physician or
             surgeon employed by any of the RELEASEES.”
      In December 2011, Belasco tried to identify the roofing contractor on the property
after he noticed a problem with his entryway, which he thought was caused by a leaking
roof. Records on file with the City of Manhattan Beach showed that Action Roofing was
the contractor, but Belasco learned from Action Roofing that it had bid on the job but did

                                            6
not perform the work. Wells never gave Belasco a list of subcontractors who worked on
the property, nor had he made any representations regarding subcontractors. Belasco
believes that Wells intentionally misled him to sign the release by including in the
building permit the name of a roofer who did not do the job. Wells did not disclose to
Belasco that Wells installed the roof “in-house.”
       Wells testified in deposition that the permit reflecting Action Roofing as the
subcontractor for the roof was the result of a secretarial error. The house, including the
roof, was approved by the City of Manhattan Beach before the sale to Belasco, and it
would not have passed inspection if not built to code.
       Belasco paid approximately $17,500 for repair of the roof and approximately
$1,400 to fix the entryway.

Opposition to Summary Judgment by Belasco

       Belasco raised the following arguments in opposition to summary judgment. The
section 1542 waiver entered in 2006 cannot be applied to latent defects under section 929
of the Act. A cash settlement that includes a section 1542 waiver of unknown claims is
unreasonable as a matter of law under section 929. Wells had a statutory duty to warrant
that the home was built in a workmanlike manner for a period of 10 years, and Belasco’s
right to that protection was not waivable. Wells had tried to correct the error regarding
the roofing contractor on the permit, but left the city’s office before making the
correction.
       San Diego Hospice, supra, 31 Cal.App.4th 1048, relied upon by Wells, is
distinguishable on its facts, because Wells and Belasco were not on equal footing at the
time of the 2006 settlement. Only Wells knew who installed the roof, Wells mislead the
City of Manhattan Beach in the permit, and he did not inform Belasco that the roof was
not installed by a roofing contractor. Additionally San Diego Hospice did not deal with a
statutory warranty, while the Act specifically provides for a 10-year warranty on the

                                             7
workmanship of a roof of new residential construction, as does Code of Civil Procedure
section 337.15.
       Section 926 prohibits a release or waiver in exchange for repair work; a builder
may not obtain a release or waiver of any kind in exchange for the repair work mandated
by the Act. There is no evidence that the 2006 settlement contemplated a problem with
the roof. The settlement was for the known defects, Belasco had no knowledge of the
roof defects at that time, and had no way at that time to discover them as they were latent
defects. Wells had a duty to disclose to Belasco who performed the work on the project
and he committed fraud when he named Action Roofing as the contractor to the City of
Manhattan Beach when he applied for the permit.

The Reply to the Opposition to Summary Judgment

       Wells and American Contractors argued in reply that the issue is whether the 2006
release bars Belasco’s 2012 claim. Although a release in exchange for repairs is
prohibited under the Act, section 929, expressly allows a builder to “. . . obtain a
reasonable release in exchange for the cash payment. The builder may negotiate the
terms and conditions of any reasonable release in terms of scope and consideration in
conjunction with a cash payment under this chapter.” (§ 929, subd. (b).) In addition, a
builder may assert a defense to a claim under the act if the builder has obtained a valid
release. (§ 945.5, subd. (f).)
       The 2006 release was the reasonable result of an arms-length negotiation, with
counsel on both sides, that settled Belasco’s 2006 claim and all other potential claims in
return for a $25,000 payment by Wells. Belasco, an attorney, testified that he read and
understood the terms each of the three sections in the release referring to broad waivers
of claims before signing the agreement.

                                              8
       The fact that Wells was aware that the roof subcontractor was listed incorrectly in
the permit is not relevant. Wells had no evidence the roof was allegedly defective in
2006, and the condition of the roof is unrelated to the identity of the roofing contractor.
       Because the law permits a release and waiver of unknown claims, there was no
need for the parties to have contemplated an issue with the roof in 2006 when the
settlement was signed. Belasco knowingly assumed the risk of unidentified construction
by releasing Wells of all liability in return for $25,000.

Ruling of the Trial Court

       Summary judgment was granted in favor of Wells and American Contractors. The
comprehensive nature of the release, which includes a section 1542 waiver,
unequivocally provides that Belasco expressly waives any and all claims he may have
now or in the future. This agreement was an arms-length settlement negotiated while
Belasco was represented by counsel. Belasco and his attorney agreed to the language in
the release and did not insist that the Section 1542 waiver be stricken in order to preserve
his claims to unknown defects. The executed release of all claims provides a complete
defense to this action and is enforceable against claims which are later discovered by the
releaser under the holding in San Diego Hospice, supra, 31 Cal.App.4th 1048.
       The court rejected Belasco’s reliance on section 926, which states, “The builder
may not obtain a release or waiver of any kind in exchange for the repair work mandated
by this chapter.” Here, the release was not in exchange for repair work but was in
exchange for a cash settlement, rendering section 926 inapplicable because the release
here was in exchange for a cash settlement of $25,000. Belasco also waived the 10-year
warranty provided by Code of Civil Procedure section 337.15 by signing the 2006
agreement.
       The court disagreed with Belasco’s argument that section 932 allowed him to file
a subsequent claim for newly discovered defects after a settlement. Section 932 specifies

                                              9
that such claims may be filed “unless otherwise agreed to by the parties.” Here, there
was a settlement offer negotiated and executed in exchange for a full release of liability
that included a section 1542 waiver.
       While section 932 is a statutory protection for buyers of new construction, buyers
also have the freedom to contract away that protection. Pursuant to section 929, a builder
may offer a reasonable release in exchange for a cash settlement without repair, the
homeowner may accept or reject the offer, and if rejected, the action may proceed.
       The trial court rejected Belasco’s contention that the release was not “reasonable.”
The court also found Belasco failed to show the release was unenforceable, void, or
against public policy. The incorrect information on the building permit with the City of
Manhattan Beach was not material to the applicability and enforceability of the fully
executed release negotiated in an arms-length transaction. Belasco offered no factual
support for the contention that Wells knew of the alleged defect on the roof prior to
executing the release agreement.
       The court ruled that Belasco failed to establish that a release and section 1524
waiver is against public policy under the Act. To the contrary, section 945.5, subdivision
(f), provides that a builder “may be excused, in whole or in part, from any obligation,
damage, loss, or liability if the builder . . . can demonstrate” that “the builder has
obtained a valid release” as an affirmative defense to a claimed violation of the Act.

                                       DISCUSSION

       Belasco raises various challenges to application of the 2006 settlement as a bar to
his 2012 claim. None of the challenges have merit. In addition, we conclude that
Belasco has caused Hatch to become a party to this appeal, the appeal against Hatch must
be dismissed for want of an appealable judgment, and Hatch is entitled to costs on appeal.

                                              10
Standards of Review

       Summary Judgment

       “A trial court properly grants summary judgment where no triable issue of
material fact exists and the moving party is entitled to judgment as a matter of law.
(Code Civ. Proc., § 437c, subd. (c).) We review the trial court’s decision de novo,
considering all of the evidence the parties offered in connection with the motion (except
that which the court properly excluded) and the uncontradicted inferences the evidence
reasonably supports. (Artiglio v. Corning Inc. (1998) 18 Cal.4th 604, 612.) In the trial
court, once a moving defendant has ‘shown that one or more elements of the cause of
action, even if not separately pleaded, cannot be established,’ the burden shifts to the
plaintiff to show the existence of a triable issue; to meet that burden, the plaintiff ‘may
not rely upon the mere allegations or denials of its pleadings . . . but, instead, shall set
forth the specific facts showing that a triable issue of material fact exists as to that cause
of action . . . .’ (Code Civ. Proc., § 437c, subd. (o)(2); see Aguilar v. Atlantic Richfield
Co. (2001) 25 Cal.4th 826, 854-855.)” (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465,
476-477.)

       Statutory Interpretation

       “In construing statutes, we aim ‘to ascertain the intent of the enacting legislative
body so that we may adopt the construction that best effectuates the purpose of the law.’
(Hassan v. Mercy American River Hospital (2003) 31 Cal.4th 709, 715; accord, Chavez v.
City of Los Angeles (2010) 47 Cal.4th 970, 986; Coachella Valley Mosquito and Vector
Control District v. Cal. Public Employment Relations Bd. (2005) 35 Cal.4th 1072, 1087.)
We look first to the words of the statute, ‘because the statutory language is generally the
most reliable indicator of legislative intent.’ (Hassan v. Mercy American River Hospital,

                                              11
supra, at p. 715; accord, Chavez v. City of Los Angeles, supra, at p. 986; People v. Toney
(2004) 32 Cal.4th 228, 232.)” (Klein v. U.S. (2010) 50 Cal.4th 68, 77.)
       “When the statutory text is ambiguous, or it otherwise fails to resolve the question
of its intended meaning, courts look to the statute’s legislative history and the historical
circumstances behind its enactment. (Mejia v. Reed (2003) 31 Cal.4th 657, 663.)
Finally, the court may consider the likely effects of a proposed interpretation because
‘“[w]here uncertainty exists consideration should be given to the consequences that will
flow from a particular interpretation.”’ (Ibid., quoting Dyna–Med, Inc. v. Fair
Employment & Housing Com. (1987) 43 Cal.3d 1379, 1387.)” (Klein v. U.S., supra, 50
Cal.4th at p. 77.)

       Interpretation of a Settlement Agreement

       “In interpreting the settlement agreement, we apply the general rules of contract
interpretation. (Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, 953 [].) ‘The
goal of contractual interpretation is to determine and give effect to the mutual intention of
the parties. [Citations.]’ (Safeco Ins. Co. v. Robert S. (2001) 26 Cal.4th 758, 763.)”
(Khavarian Enterprises, Inc. v. Commline, Inc. (2013) 216 Cal.App.4th 310, 318.)
“Because the parties do not rely on extrinsic evidence in construing the settlement
agreement, we review the trial court’s decision de novo. (See Davies Machinery Co. v.
Pine Mountain Club, Inc. (1974) 39 Cal.App.3d 18, 23-24.)” (In re Mission Ins. Co.
(1995) 41 Cal.App.4th 828, 835.)

“Reasonable Release” Under the Right to Repair Act

       Belasco’s first argument focuses on the language of section 929, subdivision (b),
which allows a builder to obtain a “reasonable release” in return for a cash payment and
no repair. Belasco reasons that a reasonable release may only apply to a specific patent

                                              12
violation, as reflected in subdivision (f) of section 945.5. An unknown, latent defect
cannot be the subject of a reasonable release. Because the 2006 release pertained to
patent defects, and had nothing to do with the later-discovered roof defects, the 2006 cash
settlement was not a reasonable release of his 2011 claim for a defective roof.
         “In response to the holding in Aas [v. Superior Court (2000) 24 Cal.4th 627
(Aas)], the Legislature enacted Civil Code [fn. omitted] section 895 et seq. (‘the Right to
Repair Act’ or ‘the Act’). The Act establishes a set of building standards pertaining to
new residential construction, and provides homeowners with a cause of action against,
among others, builders and individual product manufacturers for violation of the
standards (§§ 896, 936). The Act makes clear that upon a showing of violation of an
applicable standard, a homeowner may recover economic losses from a builder without
having to show that the violation caused property damage or personal injury (§§ 896,
942). In such an instance, the Act abrogates the economic loss rule, thus legislatively
superseding Aas.” (Greystone Homes, Inc. v. Midtec, Inc. (2008) 168 Cal.App.4th 1194,
1202.)
         A builder (as defined in § 911) is liable under the Act in original residential
construction for failure to follow standards, inter alia, with respect to water issues that
involve roofs and roofing systems. (§ 896, subd. (a)(4).) The Act has several procedural
components, such as written notice of a claim (§ 910), acknowledgement by the builder
of the claim (§ 913), the builder’s right to inspect (§ 916), agreements to repair (§§ 917-
918) and alternative dispute resolution (§ 928).
         One form of resolution of disputes under the Act is repair by the builder. By
statute, repair satisfies only the defect involved and cannot be the basis for release of
liability for other defects. “The builder may not obtain a release or waiver of any kind in
exchange for the repair work mandated by this chapter. At the conclusion of the repair,
the claimant may proceed with filing an action for violation of the applicable standard or
for a claim of inadequate repair, or both, including all applicable damages available under

                                               13
Section 944.” (§ 926.) Section 926 has no application here, because it is undisputed that
the 2006 dispute was resolved with a cash settlement without repair.
       Another form of dispute resolution recognized by the act is cash settlements
agreed to by the parties. (§ 929.) Noticeably absent from section 929 is a prohibition
against a release in return for a cash settlement; instead, a cash settlement expressly
permits the builder to negotiate a reasonable release. Section 929 provides as follows:
“(a) Nothing in this chapter prohibits the builder from making only a cash offer and no
repair. In this situation, the homeowner is free to accept the offer, or he or she may reject
the offer and proceed with the filing of an action. If the latter occurs, the standards of the
other chapters of this title shall continue to apply to the action. [¶] (b) The builder may
obtain a reasonable release in exchange for the cash payment. The builder may negotiate
the terms and conditions of any reasonable release in terms of scope and consideration in
conjunction with a cash payment under this chapter.”
       We conclude that the 2006 cash settlement, with a release and section 1524
waiver, was a “reasonable release” under the language of section 929. Belasco, himself
an attorney and also represented by counsel, signed the 2006 settlement agreement. He
admitted in deposition testimony that he read and understood the agreement. The
agreement was explicit—in return for cash payment of $25,000, Belasco released Wells
of “any and all claims” due to “any and all known and unknown construction defects.”
Belasco expressly waived “all rights under section 1542 of the Civil Code of California,”
and acknowledged that “in making this release and agreement it is understood and agreed
that I rely wholly upon my judgment, belief, and knowledge of the nature, extent, and
duration of said damages, and that I have not been influenced to any extent whatsoever in
making this Release of All Claims by any representations or statements regarding said
injuries, or regarding any other matters, made by any of the RELEASEES, or by any
person or persons representing any of the RELEASEES, or by any physician or surgeon
employed by any of the RELEASEES.”

                                              14
       A release and section 1542 waiver is enforceable under these circumstances.
(Salehi v. Surfside III Condominium Owners’ Assn. (2011) 200 Cal.App.4th 1146, 1160
(Salehi); San Diego Hospice, supra, 31 Cal.App.4th at p. 1053; Winet v. Price (1992) 4
Cal.App.4th 1159, 1173.) “In the absence of evidence to the contrary, we presume that
counsel explained to Salehi ‘the import of the release in general and of the waiver of
section 1542 in particular.’ (Winet v. Price, supra, 4 Cal.App.4th at p. 1168.)” (Salehi,
supra, at p. 1160.) Because Belasco is “an attorney in [his] own right, [he] should have
understood the import of the section 1542 waiver.” (Ibid.)
       Belasco’s argument ignores his right to reject the terms of the agreement and
proceed under the provisions of the Act. (§ 929, subd. (a).) When a cash offer is rejected
by the homeowner, he may “proceed with the filing of an action” and “the standards of
the other chapters of this title shall continue to apply to the action.” (Ibid.) We agree
with the trial court that Belasco and Wells agreed to a reasonable settlement with explicit
terms negotiated between two parties, both represented by counsel.

Purported Vagueness of the 2006 Agreement

       Belasco argues the 2006 release and section 1524 waiver are too vague to bar
Belasco’s claim 2012 claim regarding the roof. The argument is devoid of merit, because
the language of the 2006 agreement could not have been more clear. It left no doubt that
Belasco’s acceptance of $25,000 was in return for his release and waiver of all claims of
construction defect, known or unknown. “[A] general release can be completely
enforceable and act as a complete bar to all claims (known or unknown at the time of the
release) despite protestations by one of the parties that he did not intend to release certain
types of claims. (Winet v. Price[, supra,] 4 Cal.App.4th [at p.] 1173.)” (San Diego
Hospice, supra, 31 Cal.App.4th at p. 1053.)
       Belasco argues that the 2006 agreement does not apply to his 2012 claim for
defective roof because that potential defect was not specifically mentioned in the prior

                                              15
agreement. This contention amounts to nothing more than an assertion that section 1542
waivers of unknown claims are invalid. As set forth in the above-cited authorities, this
type of waiver is enforceable.

Subsequently Discovered Claims Permitted by Civil Code Section 932

       Belasco argues that section 932 specifically authorized him to bring his
subsequent claim regarding the alleged defect in the roof in a separate action after the
2006 settlement. The introductory sentence of section 932 provides that “[s]ubsequently
discovered claims of unmet standards shall be administered separately under this chapter,
unless otherwise agreed to by the parties.” Had Belasco not entered into the 2006
settlement containing a release and section 1524 waiver, his 2006 claim would not bar his
2012 action for alleged roof defects. But section 932 must be read in conjunction with
the express language of section 929 approving a reasonable release in return for a cash
settlement. Belasco availed himself of the statutory remedy of a cash settlement under
section 929 with his express agreement that he would not bring any future claims
regarding known or unknown defects. Belasco’s argument would render meaningless the
bulk of the terms of the 2006 settlement expressly agreed to by the parties. Section 929,
not section 932, controls in this situation, and the 2006 settlement bars all subsequent
actions.

Violation of Public Policy

       Belasco next argues that public policy prohibits a general release and section 1524
waiver as to subsequently discovered latent defects. Belasco reasons that allowing a
release and section 1524 waiver allows a builder, such as Wells, to circumvent the
purpose of the Act, which is to protect purchasers of new single family residences from
patent and latent defects. The point does not require extended discussion. Section 929

                                             16
specifically allows the parties to negotiate a reasonable settlement in return for a cash
payment. Having specifically provided for negotiation of reasonable settlements in the
context of cash payments, as opposed to the prohibition against releases in the context of
repairs to settle a claim under the Act, it is apparent that there is no state policy that
would prohibit a release and section 1524 waiver.
       We again emphasize that Belasco was under no compulsion in 2006 to enter into
the broadly worded release and section 1524 waiver. As the trial court pointed out in its
ruling granting summary judgment, Belasco and his attorney could have rejected the
agreement to the extent it included a waiver of unknown claims, and their failure to do so
in the face of express language referencing section 1542 establishes Belasco’s willful
acceptance of the waiver. (Jefferson v. California Dept. of Youth Authority (2002) 28
Cal.4th 299, 306-307.)

Disputed Evidence of Fraud/Negligence

       Belasco’s final argument is that there is a disputed issue of material fact regarding
whether Wells committed fraud by submitting permit information to Manhattan Beach he
knew to be false and by failing to disclose to Belasco that the roof was not installed by a
roofing contractor, but instead was built “in-house” by Wells. Although couched in
terms of fraud and negligence, Belasco makes no specific argument on the negligence
theory, which we deem abandoned. As to fraud, the record contains no evidence of a
misrepresentation by Wells at any time to Belasco as to who installed the roof, nor is
there evidence of reliance by Belasco on a misrepresentation as to that fact.
       “‘The necessary elements of fraud are: (1) misrepresentation (false representation,
concealment, or nondisclosure); (2) knowledge of falsity (scienter); (3) intent to defraud
(i.e., to induce reliance); (4) justifiable reliance; and (5) resulting damage.’ (Molko v.
Holy Spirit Assn. (1988) 46 Cal.3d 1092, 1108; see Seeger v. Odell (1941) 18 Cal.2d 409,

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414; § 1709.)” (Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1239, fn.
omitted.)
       “We ‘independently construe the writing to determine whether the release
encompasses the present claim[s]’ for negligent misrepresentation and fraud. (Winet v.
Price, supra, 4 Cal.App.4th at p. 1166.)” (Salehi, supra, 200 Cal.App.4th at p. 1159.)
“A party seeking rescission based on fraudulent nondisclosure must show (1) the
defendant failed to disclose a material fact which he knew or believed to be true; and (2)
the defendant had a duty to disclose that fact. (Welch v. State of California (1983) 139
Cal.App.3d 546, 556.) The duty to disclose arises when two elements are present: (1)
the material fact is known to (or accessible only to) the defendant; and (2) the defendant
knows the plaintiff is unaware of the fact and cannot reasonably discover the undisclosed
fact. [Fn. omitted] (Reed v. King (1983) 145 Cal.App.3d 261, 265; Karoutas v. HomeFed
Bank (1991) 232 Cal.App.3d 767, 771.) [¶] Since the second prong giving rise to an
affirmative obligation to disclose rests on the defendant’s knowledge of significant facts
the plaintiff needs but does not have, we conclude the duty cannot arise when, as here,
such significant facts are not actually known to the defendant.” (San Diego Hospice,
supra, 31 Cal.App.4th at p. 1055.)
       Belasco presented no evidence of a misrepresentation made to him by Wells.
Wells never represented the names of subcontractors to Belasco. We agree with the trial
court that the name of the roofing contractor on the permit is not a material issue, because
Belasco does not suggest he purchased the residence in reliance on the information in the
permit.
       Belasco also did not establish the element of scienter. The record contains no
evidence that Wells knew at the time of sale or in 2006 that the roof was defective.
       Finally, Belasco has not presented evidence that he bought the house in reliance on
a false representation that a roofing contractor had installed the roof. Belasco specifically
admitted his decision to enter into the 2006 settlement was a product of his own judgment
and not influenced by any statement by Wells: “[I]t is understood and agreed that I rely

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wholly upon my judgment, belief, and knowledge of the nature, extent, and duration of
said damages, and that I have not been influenced to any extent whatsoever in making
this Release of All Claims by any representations or statements regarding said injuries, or
regarding any other matters, made by any of the RELEASEES, or by any person or
persons representing any of the RELEASEES, or by any physician or surgeon employed
by any of the RELEASEES.”
       Belasco’s claim of fraud in connection with the 2006 release and section 1542
waiver was properly rejected by the trial court.

Resolution of the Appeal as to Hatch

       Hatch, representing himself, filed an answer to the complaint. He did not join in
the motion for summary judgment filed by Wells and American Contractors. The
judgment makes no reference to Hatch. However, the notice of appeal was served by
Belasco on Hatch.
       Belasco made no argument in his briefs on appeal regarding Hatch. Hatch filed a
respondent’s brief on appeal, essentially joining in the arguments of Wells and American
Contractors. This court requested the parties to address whether Hatch was a party to the
appeal, and if not, whether the appeal should be dismissed as to Hatch and whether he
should be awarded costs on appeal.
       In response to our request, counsel for Belasco wrote that because Hatch was not a
party to the summary judgment motion, “Appellant did not believe it was necessary to
include Mr. Hatch as a respondent in this appeal. . . .” Counsel’s letter further stated,
“Mr. Hatch immersed himself in this appeal by filing his respondent’s brief” and if the
court dismisses the appeal as to Hatch, costs should not be awarded.
       Our review of the record reveals a different explanation for how Hatch became
“immersed” in this appeal. Belasco served Hatch with the notice of appeal. More

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importantly, Belasco filed a civil case information statement on appeal6 identifying Hatch
as a party “who will participate in the appeal.” Belasco’s briefs on appeal were served on
Hatch. The clerk of this court served orders and notices on Hatch in reliance on
Belasco’s representation that Hatch is a party to the appeal. Belasco has treated Hatch as
a respondent on appeal. We conclude that Hatch participated in this appeal in direct
response to actions taken by Belasco.
         The appeal is dismissed as to Hatch, who is entitled to costs on appeal.

                                       DISPOSITION

         The judgment is affirmed as to Wells and American Contractors. The appeal is
dismissed as to Hatch. Costs on appeal are awarded to Wells, American Contractors, and
Hatch.

                KRIEGLER, J.

We concur:

                MOSK, Acting P. J.                        GOODMAN, J. *

        We take judicial notice of Belasco’s civil case information statement on appeal.
         6
(Evid. Code, §§ 452, subd. (d), 459, subds. (a) & (c).)

         *
        Judge of the Los Angeles County Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.
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