Implications of “Repair Act” Decision on Developers

Hutter: “Exposure for construction defect is still there, and the standards spelled out in SB800 are still there, but this creates a clear procedural path for how that lawsuit is going to proceed.”

SAN DIEGO— A recent California Supreme Court affirmation upholding SB800 as a “virtually exclusive remedy” in certain construction-defect cases gives a clear pathway to developers, whether they follow the provisions in the legislation or not, Allen Matkins’ senor counsel, San Diego, Tim Hutter tells GlobeSt.com.

On January 18, the Court affirmed an earlier appellate-court decision holding that SB800 (Civil Code sections 895 through 945.5, also known as the “Right to Repair Act”) is the “virtually exclusive remedy” available to a plaintiff in new for-sale-residential construction-defect cases. According to Allen Matkins, the Court’s decision in McMillin Albany, LLC v. Superior Court (opinion here) restores the clarity that many in the development industry thought they had secured when the Right to Repair Act was originally negotiated by stakeholder groups and became law on January 1, 2003. The opinion affirms the 2015 decision from the Fifth Appellate District of the California Court of Appeal (covered here). It also rejects the reasoning and holding in Liberty Mutual Insurance Co. v. Brookfield Crystal Cove, LLC, a 2013 decision from the Fourth Appellate District that permitted property-damage claims for construction defects based on commo- law theories, even though those claims would have been time-barred under SB800. The decision carves out and allows common-law claims for defects causing personal injury or death, but that was understood by all parties based on the clear terms of the Act.