The State of California implemented the “Calderon Process” almost two decades ago.  The hope was this pre-litigation “mediation” process would lower the cost, and increase the likelihood of early settlement, of construction defect disputes.  The Calderon Process requires a homeowners’ association (“HOA”) to notify the developer or contractor that a lawsuit regarding the alleged construction defect(s) will be filed.  The developer or contractor has 60 days to respond to the notice.  The Calderon Process requires the parties to exchange all documents relevant to the dispute.  They must also select a “dispute resolution facilitator” to preside over the mandatory dispute resolution process.  The parties must generate a “data compilation” detailing: (1) the scope of work performed, (2) who performed the work, (3) what units/properties were affected by the alleged defect(s), and (4) whether the parties agree to invasive testing of the affected properties.  The end goal of this process is for the parties to resolve any dispute within six months.  An HOA that fails to follow the Calderon Process may be barred from any future suit.

While the public policy goal of having parties resolve their differences before a civil action is commenced is noble, after nearly two decades of use, the jury is still out as to how effective the Calderon Process is in achieving this goal.  Many attorneys laud the Calderon Process because they find the mediation efforts and document exchange helpful in clarifying the nature of the construction defects and in achieving an early resolution of the dispute.  However, other attorneys have found the Calderon Process to be overly burdensome, time-consuming, and ineffective.  The chief complaint is that plaintiffs’ attorneys have no incentive to mediate in good faith.  Plaintiffs’ attorneys sometimes make initial settlement offers and then refuse to negotiate knowing that there is always the option of filing suit later.  As a result, what is supposed to be an interactive give-and-take process devolves into a “my way or the highway” monologue.  

While the efficacy of the Calderon Process is debatable, it will remain a staple of the California construction-defect litigation landscape for the foreseeable future.   As a result, any contractor or developer confronted with the specter of a construction defect action needs to be very familiar with Calderon Process and aware of its advantages and its pitfalls.  Nossaman’s construction attorneys can guide parties through the Process and help them achieve the best results possible.