California’s SB800 Pre-litigation procedures enforced by Appeals Court

In California, claims of construction defects involving residential properties purchased after January 1, 2003 are subject to a law that is known as SB800, the “Right to Repair Act” or by any number of names. (Depending on who you talk to, some of the names may not be considered very polite…) The law is codified under the state’s Civil Code beginning in Section 896 under Title 7, Part 2.

Numerous attempts have been made to bring clarity to the awkwardly worded code through various trials and appeals. Most recently, the Fifth Appellate District heard the case of The McCaffrey Group Inc. v. Superior Court of California, County of Fresno. The decision is now available in PDF format. Here is an excerpt:

In this case, we are asked to determine the enforceability of provisions in home purchase contracts that require the homeowners to submit their construction defect claims to nonadversarial prelitigation procedures before proceeding with a lawsuit. Those procedures include providing the builder with notice of the claimed defect, giving the builder the right to inspect and correct it, and, if the homeowner is still unsatisfied, engaging in non-binding mediation. In contrast to the trial court, we find the provisions enforceable and grant the relief the petitioner seeks.

In particular, I found the following interesting:

Real parties argue they are disadvantaged because the notice provision requires the notice of claim to “describe the nature and location of the Claim in reasonable detail.” Real parties assert this is a different standard than the Right to Repair Act, which states that the notice “shall describe the claim in reasonable detail sufficient to determine the nature and location, to the extent known, of the claimed violation.” (§ 910, subd. (a).) Real parties reason that instead of being required to state what they know, the contractual provision requires them to “provide an objectively reasonable amount of detail in describing the nature and location of the defects in their home.” Real parties claim the contractual standard is problematic because it is more stringent and invites litigation of the meaning of what is “reasonable.”

There is nothing unfair, however, in requiring the homeowner to describe the nature and location of the claim in reasonable detail. The absence of the term “to the extent known” in the contractual provision does not mean the homeowner must provide anything other than the information about the nature and location of the defect that the homeowner knows. The notice requirement does not render the contractual procedure unconscionable.

Ultimately, the Court found in favor of the pre-litigation procedures outlined in McCaffrey’s contracts:

In sum, all of the real parties must comply with the contractual procedures in their contracts with McCaffrey, which include providing notice of the claim, giving McCaffrey an opportunity to repair and correct, and participating in nonbinding mediation. Since we are ordering compliance with the contractual procedures, we do not decide whether the judicial reference clause is enforceable against any of the real parties, as some or all of the real parties may resolve their complaints with McCaffrey.

I’m sure we’ll be hearing more about this in the coming months…

Source: McCaffrey v. Super. Ct., F066080 (Cal. Ct. App. 2014) [PDF]