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McMillin Albany LLC v. Superior Court

Filed 1/18/18 IN THE SUPREME COURT OF CALIFORNIA MCMILLIN ALBANY LLC et al., ) ) Petitioners, ) ) S229762 v. ) ) Ct.App. 5 F069370 THE SUPERIOR COURT OF KERN ) COUNTY, ) ) Kern County Super. Ct. Respondent; ) No. S-1500-CV-279141 ) CARL VAN TASSEL et al., ) ) Real Parties in Interest. ) ____________________________________) In Aas v. Superior Court (2000) 24 Cal.4th 627, 632 (Aas), this court held that the economic loss rule bars homeowners suing in negligence for construction defects from recovering damages where there is no showing of actual property damage or personal injury. We explained that requiring a showing of more than economic loss was necessary to preserve the boundary between tort and contract theories of recovery, and to prevent tort law from expanding contractual warranties beyond what home builders had agreed to provide. (Id. at pp. 635–636; see Seely v. White Motor Co. (1965) 63 Cal.2d 9, 18.) We emphasized that the Legislature was free to alter these limits on recovery and to add whatever additional homeowner protections it deemed appropriate. (Aas, at pp. 650, 653.) Two years later, spurred by Aas and by lobbying from homeowner and construction interest groups, the Legislature passed comprehensive construction defect litigation reform. (Stats. 2002, ch. 722, principally codified at Civ. Code, §§ 895–945.5 (commonly known as the Right to Repair Act, hereafter the Act); all further unlabeled statutory references are to the Civil Code.) The Act sets forth detailed statewide standards that the components of a dwelling must satisfy. It also establishes a prelitigation dispute resolution process that affords builders notice of alleged construction defects and the opportunity to cure such defects, while granting homeowners the right to sue for deficiencies even in the absence of property damage or personal injury. We are asked to decide whether the lawsuit here, a common law action alleging construction defects resulting in both economic loss and property damage, is subject to the Act’s prelitigation notice and cure procedures. The answer depends on the extent to which the Act was intended to alter the common law — specifically, whether it was designed only to abrogate Aas, supplementing common law remedies with a statutory claim for purely economic loss, or to go further and supplant the common law with new rules governing the method of recovery in actions alleging property damage. Based on an examination of the text and legislative history of the Act, we conclude the Legislature intended the broader displacement. Although the Legislature preserved common law claims for personal injury, it made the Act the virtually exclusive remedy not just for economic loss but also for property damage arising from construction defects. The present suit for property damage is therefore subject to the Act’s prelitigation procedures, and the Court of Appeal was correct to order a stay until those procedures have been followed. 2 I. Plaintiffs Carl and Sandra Van Tassel and several dozen other homeowners (collectively the Van Tassels) purchased 37 new single-family homes from developer and general contractor …
Original document
Source: California Supreme Court