Author - David A. Napper

1
Disclosure, Disclosure, Disclosure
2
Contractor License Overview – With a Twist
3
California Supreme Court Denies Petition for Review and Request for Depublication of Recent Appellate Decision that Limited Application of SB 800
4
Sophisticated Parties May Shorten the Statute of Limitations for Construction Defect Claims
5
Riverside County Superior Court To Designate One Courtroom To Handle Complex Litigation
6
An Architect Owes A Duty Of Care To Future Homeowners Where The Architect Is The Principal Design Professional On The Project
7
Salespersons Acting Under the Broker Have the Same Fiduciary Duty to the Buyer and the Seller as the Broker When a Broker is a Dual Agent of Both the Buyer and the Seller in a Real Property Transaction
8
Builder’s Alternative Non-Adversarial Pre-Litigation Procedures Are Enforceable And Homeowner Compliance Is Required Prior To Initiation Of Litigation
9
Important Appellate Decisions Impacting Builder’s Right To Repair Act – SB800
10
An Insurer Cannot Rely Satisfaction of a SIR as a Prerequisite to Defend its Insured Unless the Policy Language Expressly Sets Forth in Clear and Unambiguous Terms that the Defense is Conditional on Satisfaction of the SIR

Disclosure, Disclosure, Disclosure

A Brief Reflection Regarding the Trend Towards Heightened Disclosure Requirements in Real Property Transactions

By: Richard H. Glucksman, Jon A. Turigliatto, and David A. Napper
September 1, 2015
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A brief reflection regarding the trend towards heightened disclosure requirements in real property transactions including the recent case of Wong v. Stoler (2015 WL 3862525), where the seller’s failure to disclose private sewer line resulted in rescission of the contract.

In a very recently published opinion in a real property disclosure case, the First District Court of Appeal in Wayson Wong v. Ira Stoler (2015 WL 3862525), held that the trial court declined to effectuate a rescission of the contract based on incorrect justifications and that its alternative remedy failed to provide the purchasers with the complete relief to which they were entitled.

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Contractor License Overview – With a Twist

By: Richard H. Glucksman, Jon A. Turigliatto, and David A. Napper
September 1, 2015
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The California Contractors State License Board provides licenses to contractors and regulates the state’s construction activity. The California Business and Profession (“B&P”) Code Section 7031 prohibits unlicensed contractors from bringing or maintaining an action to recover compensation in any court in the state of California. Section 7031 also addresses, amongst other issues, recovery from an unlicensed contractor and when proof of licensure is required in a civil suit. In order to recover in a civil action, a contractor must allege that he or she was a duly licensed contractor at all times during the performance of that act or contract, regardless of the merits of the cause of action brought by the person. Section 7031 protects consumers who enter into agreements with contractors and promotes the public policy of having licensed, competent, and honest builders. See Montgomery Sansome LP v. Rezai (2012) 204 Cal.App.4th 786. However as further examined by the recent case of Art Womack v. David Angus Lovell et al. (2015) WL 3658066, Section 7031 also protects the builders and contractors from cagey pleading practices by Plaintiff homeowners.

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California Supreme Court Denies Petition for Review and Request for Depublication of Recent Appellate Decision that Limited Application of SB 800

Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC 2013 WL 4538693 (Cal.App. 4 Dist.)

By: Richard H. Glucksman, Jon A. Turigliatto, and David A. Napper

On December 11, 2013, the California Supreme Court denied Respondent, Brookfield Crystal Cove, LLC’s Petition for Review and Request for Depublication of the recent decision by the Fourth District Court of Appeal in Liberty Mutual Ins. Co.  v. Brookfield Crystal Cove LLC, 2013 WL 4538693 (Cal.App. 4 Dist.) in which the Court of Appeal held that California’s Right to Repair Act (SB 800) is not a homeowner’s exclusive remedy for residential construction defects.

Liberty Mutual is now citable decisional authority in California and holds that homeowners may assert common law causes of action for construction defects that have resulted in actual property damage.  For construction defect that have caused actual property damage, homeowners are no longer required to comply with SB 800’s statutory pre-litigation procedures which provide builders with the opportunity to make repairs prior to the homeowner’s initiation of litigation.  Additionally, the decision permits homeowners to circumvent the shortened limitations periods for certain types of construction defects under the Right to Repair Act.

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Sophisticated Parties May Shorten the Statute of Limitations for Construction Defect Claims

Brisbane Lodging L.P. v. Webcor Builders, Inc. (2013) 216 Cal.App.4th 1249

By: Jon A. Turigliatto and David A. Napper
November 19, 2014

The recent decision by the First District Court of Appeal in Brisbane Lodging L.P. v. Webcor Builders, Inc. (2013) 216 Cal.App.4th 1249 is now final and is citable authority in California as the appellant did not petition the decision for review by the California Supreme Court. The decision is noteworthy for contractors and builders across the State as the Court has held that parties can contractually agree to limit the statutory limitations period for construction defect claims and the date on which the limitations period commences. Despite some limitations set forth below, the Court established important precedent by enforcing certain contract language in a standard AIA form general contract to shorten the statute of limitations for construction defect claims to four (4) years from the date of substantial completion of the project. A brief synopsis of the facts, court’s reasoning, and impact is set forth below.

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Riverside County Superior Court To Designate One Courtroom To Handle Complex Litigation

By: Richard H. Glucksman and David A. Napper
November 12, 2014

Riverside County Superior Court expects to consolidate complex civil litigation into one courtroom by early 2015. Many other counties, including Los Angeles, Orange, San Francisco, Sacramento, Alameda, and Santa Clara already have designated complex civil litigation courtrooms. Riverside Court Superior Court currently distributes the complex cases among 10 civil judges, most of which are handled by seven judges at the Main St. Riverside courthouse location.

Riverside Judge Sharon Waters stated that “[i]t’s been something that I personally have felt has been long overdue” and that “[t]he idea is that put it with one judge and let him or her develop the expertise.” Judge Waters believes “[t]he potential value of establishing a complex litigation courtroom [is that] it allows the judge to focus on the cases full time.”1

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An Architect Owes A Duty Of Care To Future Homeowners Where The Architect Is The Principal Design Professional On The Project

Beacon Residential Community Association v. Skidmore, Ownigs, & Merrill LLP 2014 No. S208173 (Cal. Sup. Ct)

By: Richard H. Glucksman, Jon A. Turigliatto and David A. Napper
July 10, 2014

In a seminal ruling the California Supreme Court issued its decision on July 3, 2014 that an architect owes a duty of care to future homeowners where the architect is the principal architect on the project. The Court further held that the duty of care exists even when the architect does not actually build the project or exercise ultimate control over construction.

Design professionals Skidmore, Owings & Merrill LLP and HKS Inc. (collectively “Design Professionals”) provided architectural and engineering services for construction of The Beacon residential condominiums in San Francisco, California (“Project”). The Beacon Residential Community Association (“Association”) eventually brought a construction defect action against various entities including the Design Professionals. The Design Professionals were the only architects on the Project and played an active role throughout the construction process, coordinating the design and construction teams, conducting weekly site visits and inspections, recommending design revisions as needed, and monitoring compliance with design plans. The Design Professionals demurred, contending they owed no duty of care to the Association. They further contended that even if the architect initiated the substitutions, changes, and other elements of design, so long as the final decision rested with the owner there is no duty owed by the design professionals to the future condominium owners.

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Salespersons Acting Under the Broker Have the Same Fiduciary Duty to the Buyer and the Seller as the Broker When a Broker is a Dual Agent of Both the Buyer and the Seller in a Real Property Transaction

Horiike. v. Coldwell Banker Residential Brokerage Co. 2014 WL 1384226 (Cal.App. 2 Dist.)

By: Richard H. Glucksman, Jon A. Turigliatto, and David A. Napper
June 4, 2014

The Second District Court of Appeal held that when a broker is the dual agent of both the buyer and the seller in a real property transaction, the salespersons acting under the broker have the same fiduciary duty to the buyer and the seller as the broker.

In 2006, a salesperson at Coldwell Banker Residential Brokerage Company (“Coldwell Banker”) listed a Malibu property on a multiple listing service. The salesperson stated the home offered approximately 15,000 square feet of living areas and created a flier stating the same. In March of 2007, a couple made an offer to purchase the property. The salesperson provided a letter from the architect stating the size of the house was approximately 15,000 square feet and suggested the couple hire a qualified specialist to verify the square footage. The deal eventually fell through when the seller would not extend the time for an inspection of the property. The salesperson subsequently changed the approximate square footage of the living areas to be “0/O.T.” meaning zero square feet and other comments.

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Builder’s Alternative Non-Adversarial Pre-Litigation Procedures Are Enforceable And Homeowner Compliance Is Required Prior To Initiation Of Litigation

The McCaffrey Group, Inc. v. Fresno County Sup. Ct. 2014 WL 1153392 (Cal.App.5 Dist.)

By: Jon A. Turigliatto and David A. Napper
April 14, 2014

There have recently been several appellate decisions avoiding the application and enforcement of the Right to Repair Act, California Civil Code §895 et seq. (“SB800”). Generally, SB 800 applies to all new residential construction sold after January 1, 2003. SB 800 provides builders with the right to inspect and repair construction defects before homeowners are permitted to initiate litigation. Similarly, SB 800 allows homeowners to seek repairs by a builder without having to initiate litigation.

The Fifth District Court of Appeal held that homeowners must comply with the builder’s alternative non-adversarial pre-litigation procedures prior to initiating construction defect litigation. , which include providing notice of the claim, giving McCaffrey an opportunity to repair and correct, and participating in nonbinding mediation.

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Important Appellate Decisions Impacting Builder’s Right To Repair Act – SB800

By: Jon A. Turigliatto and David A. Napper
March 17, 2014

EXECUTIVE SUMMARY:

As an update to our recent article regarding the Fourth District Court of Appeal’s decision in Liberty Mut. Ins. Co. v. Brookfield Crystal Cove LLC (2013), within the period of two days, two separate divisions of the Second District Court of Appeal issued opinions regarding the application of the Builder’s Right to Repair Act commonly referred to as SB800, and examining the Liberty Mutual decision. In Liberty Mutual, the Fourth District Court of Appeal held that SB800 is not a homeowner’s exclusive remedy for construction defects and that the statutory scheme does not eliminate a property owner’s common law rights and remedies where actual property damage has occurred.

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An Insurer Cannot Rely Satisfaction of a SIR as a Prerequisite to Defend its Insured Unless the Policy Language Expressly Sets Forth in Clear and Unambiguous Terms that the Defense is Conditional on Satisfaction of the SIR

American Safety Indemnity Co. v. Admiral Ins. Co. 2013 WL 5397890 (Cal.App.4 Dist.)

By: Jon A. Turigliatto and David A. Napper
October 15, 2013

The Fourth District Court of Appeal held that a self-insured retention (“SIR”) in a commercial general liability policy does not necessarily excuse the insurer from providing a defense to an insured that had not first satisfied the SIR through payment of defense costs. The Court once again applied the well-establish principle that any limitation on the coverage provided by a liability insurance policy must be express and consistent with the reasonable expectations of the insured.

Following a landslide alleged to have resulted from grading deficiencies, homeowners sued several defendants, including the developer and the grading contractor. The developer was insured by Admiral Insurance Company (“Admiral”) and the grader was insured by American Safety Indemnity Company (“ASIC”). The developer was named as an additional insured on the ASIC policy and tendered its defense to ASIC. ASIC initially declined to defend. But after the developer sued for bad faith, ASIC agreed to defend the developer and its related entities (collectively “Developer”).

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