California Supreme Court Clarifies That “Right to Repair Act” is Exclusive Remedy for Both Economic Loss and Property Damage Arising From Construction Defects

McMillin Albany LLC v. Superior Court, No. S229762, 2018 Cal. LEXIS 211 (Jan. 18, 2018)

Several homeowners (“Plaintiffs”) brought suit against developer/general contractor McMillin Albany LLC (“McMillin”) for alleged defective construction of new homes.  Plaintiffs alleged the defects caused property damage and economic loss in the form of repair costs and reduced property values, and asserted common law claims for negligence, strict product liability, breach of contract, and breach of warranty, and a statutory claim for violation of the construction standards outlined in the Right to Repair Act (Civ. Code §§ 895–945.5, the “Act”).  The Act defines standards for the construction of individual dwellings; governs various builder obligations, including provision of warranties; creates a prelitigation dispute resolution process; and describes mandatory procedures for lawsuits under the Act.  McMillin sought a stay of proceedings so that the parties could proceed through the Act’s prelitigation dispute process, which includes notice to the builder of defects and an opportunity to cure.  Plaintiffs refused to stipulate to the stay and instead, dismissed their statutory claim.  McMillin then sought a court-ordered stay which Plaintiffs contested, arguing that their suit now omitted any claim under the Act, and therefore, was not subject to its procedures. Continue reading “California Supreme Court Clarifies That “Right to Repair Act” is Exclusive Remedy for Both Economic Loss and Property Damage Arising From Construction Defects”

In Dismissing Homebuyer’s Defective Construction Suit Against Contractor for Lack of Privity, Supreme Court of Utah Cautions Future Homebuyers to Obtain Express Assignment of All Available Warranties at Time of Acquiring Home

Tomlinson v. Douglas Knight Constr., Inc., 2017 Utah Lexis 132 (August 29, 2017)

This case arises out of the construction of a residential property.  Lot 84 Deer Crossing (“Lot 84”) purchased the property and contracted with Douglas Knight Construction, Inc. (“DKC”) to build a house on it.  The parties’ contract included a one-year construction warranty.  Lot 84 then assigned to Outpost Development, Inc. (“Outpost”) all of its rights in the property and the construction agreement.  As the home neared completion, Outpost noticed defects in its construction and, pursuant to the warranty, directed DKC to fix the deficiencies.  Despite DKC’s efforts, the defects remained.  Outpost then sold the home to Joseph Tomlinson, but did not assign to Tomlinson its interests in the DKC construction agreement.  Tomlinson subsequently noticed defects in the home and filed suit against Outpost and DKC.

Shortly thereafter, Outpost declared bankruptcy and was dismissed from the case.  During the bankruptcy proceedings, Tomlinson was assigned an interest in any claims that Outpost had asserted or may assert against DKC.  Tomlinson maintained that this assignment encompassed claims for breach of the DKC construction agreement and amended his complaint to include claims for breach of express and implied warranties.  Tomlinson sought to assert these claims as an assignee of rights of parties in privity with DKC: first, through the assignment made when Outpost purchased the property from Lot 84, and second, through the assignment in Outpost’s bankruptcy proceedings.  The district court rejected these theories and dismissed Tomlinson’s claims, holding that they were barred because Tomlinson had never acquired a direct interest in the DKC construction agreement. Continue reading “In Dismissing Homebuyer’s Defective Construction Suit Against Contractor for Lack of Privity, Supreme Court of Utah Cautions Future Homebuyers to Obtain Express Assignment of All Available Warranties at Time of Acquiring Home”