By Kathlynn Smith and Shahirah Salem
The Right to Repair Act was enacted by the California Legislature in 2002 in order to reform the way construction defect disputes were handled. As can be expected with large-scale legal reforms, the boundary-testing of the Right to Repair Act began almost as soon as the ink was dry. Among the most hotly contested issues involving the Right to Repair Act was its application – and the application of its prelitigation procedures – to claims that were previously based on common law. Courts of appeal have grappled with how to apply the Right to Repair Act for years.
This week the California Supreme Court put an end to the decade’s old question of whether common law defect claims are governed by the Right to Repair Act. In a word, yes. The California Supreme Court issued its ruling in McMillan Albany, LLC v Superior Court of Kern County, 2018 WL 456728, approving the court of appeal’s decision that the Right to Repair Act applied broadly to any action relating to construction defects on new residential construction. Additional background information can be found here: “Contractors And Owners Both Win With Right To Repair Act” (September 2015).
In approving this decision, the California Supreme Court analyzed the text and legislative history of the Right to Repair Act and found that both reflect a clear and unequivocal intent to replace common law negligence and strict product liability construction defect actions with a statutory claim under the Right to Repair Act, in addition to permitting property owners to pursue claims for construction defect even if they have suffered only economic losses. And while the Right to Repair Act is the exclusive remedy for property damage claims, the Supreme Court noted that personal injury claims arising from defective construction are not covered by the Right to Repair Act and thus are not subject to the mandatory prelitigation procedures.
With this decision, the Supreme Court has provided property owners and contractors with much needed clarity by resolving conflicting interpretations of the scope of the Right to Repair Act. Nevertheless, the McMillian decision will cause a ripple effect on pending disputes and pending litigation, especially where the prelitigation procedures were skipped. For those just beginning this journey, however, the path to court just got a lot clearer.
Kathlynn Smith is a Shareholder and Shahirah Salem is an Associate with Hunt Ortmann, one of the foremost authorities on California construction law, contracts, dispute resolution and litigation. In addition, the Firm offers a host of complementary legal and business services aimed at assisting clients with employment and labor counseling, insurance, real estate and other commercial issues. For more information, visit www.huntortmann.com.