In Burch v Superior Court (Premier Homes et al.) 2014 DJDAR 1991 (decided February 19, 2014) plaintiff Burch, a Pacific Palisades homeowner, sued defendants Premier Homes, the developer, and Custom Home Builders, the general contractor, for construction-defect related property damage. The trial court granted summary judgment for the defendants. The Court of Appeal reversed.

The Court ruled that the homeowner’s claims for negligence and breach of implied warranty against the general contractor and developer for construction defects that caused property damage on her newly constructed home could proceed to trial (1) even if the homeowner never entered into a contract with the contractor or developer and (2) even if the homeowner failed to follow the Right to Repair Act. The Court held that the Right to Repair Act (Civ. Code §895 et. seq.) aka SB 800 was not the exclusive remedy for a homeowner seeking damage for construction defects. Rather, a duty of care can be independently owed to the homeowner as a prospective purchaser. The Court also rejected the argument that a lack of privity of contract barred a claim for breach of an implied warranty of quality and fitness. The homeowner as a buyer could qualify as a third party beneficiary of the construction contract between the developer and the general contractor. The Court relied on another recent decision, Liberty Mutual Ins. Co. v Brookfield Crystal Cove LLC, 219 Cal.App.4th 98 (2013), which similarly held (but in a subrogation claim context) that the Right to Repair Act does not limit or preclude common law claims for damages for construction defects that have caused property damage.

There is no safe harbor for builders under the Right to Repair Act. And builders cannot expect to defeat defect claims just because they are downstream from the sale. Recent pro-consumer decisions demonstrate how in light of current legal doctrine a builder should act proactively to address alleged defects to avoid litigation.