McMILLIN ALBANY v. S.C.Amicus Curiae Brief of Association of Defense Counsel of Northern California and Nevada, and Association of Southern California Defense CounselCal.July 29, 2016SUPREI.. . -vr COPY “FILED JUL 2 9 2016 Case No. 8229762 fsFrank A. MetSuire Clerk eee:Restmeron: In the Deputy SUPREME COURT OF CALIFORNIA McMILLIN ALBANY,LLC,etal. Defendant and Petitioners, V. THE SUPERIOR COURT OF KERN COUNTY, Respondent. Carl Van Tassel, etal. Real Party in Interest. From a Decision of the Court.of Appeal, Fifth Appellate District, Case No. F069370, Vacating the Judgmentofthe Superior Court, County of Kern, Hon. David R. Lampe, Case No. CV279141DRL APPLICATION FOR LEAVETO FILE AMICUS CURIAE BRIEF AND BRIEF IN SUPPORT OF PETITIONER AND DEFENDANT McMILLIN ALBANY, LLC *JILL J. LIFTER, No. 120832 GLENN T. BARGER,No. 155465 * RYAN & LIFTER CHAPMAN, GLUCKSMAN 2000 Crow CanyonP1., #400 DEAN ROEB & BARGER San Ramon CA 94583-1367 11900 W. Olympic Blvd., #800 Telephone: (925) 884-2080 Los Angeles CA 90064 Facsimile (925) 884-2090 Telephone: (310) 207-7722 jlifter@rallaw.com Facsimile (310) 207-6550 gbarger@cgdrblaw.com Attorney for Amicus Curiae Association of Defense Counsel of Attorney for Amicus Curiae Northern California and Nevada Association of Southern California Defense Counsel Table of Contents APPLICATION FOR LEAVETO FILE AMICUS CURIAEBRIEF AMICUS CURIAEBRIEF IN SUPPORT OF PETITIONERS Table of Authorities ............cc::0ccccccessessssscccccecccccceceeneeeecceseeeeeesesteeeeeeeeseeanaaness i I. INTRODUCTION......ecec cece cececeeccececccccccceccnsseeseceseeseeeeeeeeceeeeeeeeeaeeeeres 1 Il. DISCUSSION OF THE ISSUES BEFORE THE COURT............... 3 A. The Act Is Intended to Apply To General Contractors, Subcontractors, Material Suppliers, Individual Product Manufacturers, And Design Professionals, All of Which Benefit From The Act's Prelitigation Notice Requirement.........3 1. The Act Applies To General Contractors, Subcontractors, Material Suppliers, Individual Product Manufacturers, And Design Professionals............cccccccssseesseeessseesesseeeeneenens 5 2. General Contractors, Subcontractors, Material Suppliers, Individual Product Manufacturers, And Design Professionals Are Intended Beneficiaries of the Act’s Prelitigation PLOCECUIES........ccscccsssseessesecesscceeeesnceseseeeeteceecsecssseaeeessueeeeesneees 5 B. The Legislative History Of The Act Reflects The Legislature’s Clear Intent That Title 7 Supplant The Common Law With Respect To Claims For Defects In Residential Construction.....7 C. The Provisions Of The Act makeIt Clear That It Provides The Exclusive Framework for Residential Construction Defect Claitns ........ccccccccccccccsecccceseccesccsesessccssceessssessseceesceeesceres 10 D. Denial Of The Right To Prelitigation Notice Of Claimed Deficiencies and The Right To Repair Would Be Contrary To The Legislative Goal OfMaking Liability Insurance More Available And Affordable...............cc:ccccessscceeeeeeeseeesenereeeennenees 13 Tl. CONCLUSION 1.0.0... eeecceecceseseecesnseeeesesenseresesseseneesieeneesenreseseaeees 14 Word Count Certification ............ccccccccscccscssesscesseeecececeeeeesessestenststteenseeeress 16 TABLE OF AUTHORITIES CASES PAGE NO. Aas v. Superior Court (2000) 24 Cal.4™ 627 ....essccssssessesssesssreseesnnees 2 Crawford v. Weather Shield Mfg. (2008) 44 Cal.4°" 541 veces 13 Presley Homes, Inc. v. American States (2001) 90 Cal.App.4°? 571 cccccsscssscssetscscneeecessntsessneeeeseeesnseeneeeen 13 The McCaffrey Group, Inc. v. Superior Court (2014) Cal.App.4™ 1330, 1342-1343 oo. .eeeeeeeeeeneeteeeeees 3,7 UDC-Universal Development, L.P. v. CH2M Hill (2010) 181 Cal.App.4" 10....ccccceccseccseeesesecessetessseessesstesntesneen 13 STATUTES PAGE NO. California Civil Code §895 et. S€q.....ccccescececieieieieeneeieeneeneneneenenensenens ] California Civil Code $896. .....cccccsecseieenereieneenents 5,10,11,12,15 California Civil Code $897...eeeteneneetsneneenetnsensenees 10,11 California Civil Code $901. ....cccccceccceceseteintnent neneseeeeenenttey 11 California Civil Code $902. ....ccccccccereeieieneeieiiene renee nenseeneseeeeneney 11 California Civil Code $903. ....cccccccccceeeieeteneieneneienee tnt eaaesenee eee 11 California Civil Code $904. ....cccccccccccceeeeietereteneieneneeneneenenetsenesneerens 11 California Civil Code $905. ...ccccccscseceeeetneeieneneensiessesseeenseenenenens 11 California Civil Code $906. ....c.ccccccsceccestetenetenenenienrnststeeneeneneneenens 11 California Civil Code $910. ...ccccccccceccetienennineteen 1,6,11,13 California Civil Code §910(G). .ccccccccereiiiinieieiieneieiennenesiene 11 California Civil Code $916(€) ......ccccccccscccsereresseeeeneeieeienniensneeeeneenes 6 California Civil Code $943(0). ...cccccccccsccsscsesetesesenssecsenssnsensenenseeneeteasens 12 California Civil Code $944. ....ccccccccccscsscsesseseeeieseneneriestesienenenaennneeags 12 OTHER AUTHORITIES PAGE NO. Assembly Committee on Judiciary, August 25, 2002.........:sccsseeeeees 4 Senate Judiciary Committee 2001-20002 Regular Session COmMent..........ccccecccesccceeeseceeseescesseceesessessccessaesesssnsasssasesesesseeaes 4 Senate Republican Commentaries Digest ..........:cccseseseseeeeeteeteteeteenee 9 Senate Rules Committee Analysis, dated 8/28/02 0.0... cece seeeeeeeees 8,9 il Case No. 8229762 In the SUPREME COURT OF CALIFORNIA McMILLIN ALBANY,LLC,et al. Defendant and Petitioners, Vv THE SUPERIOR COURT OF KERN COUNTY, Respondent. Carl Van Tassel,et al. Real Party in Interest. From a Decision of the Court of Appeal, Fifth Appellate District, Case No. F069370, Vacating the Judgment of the Superior Court, County of Kern, Hon. David R. Lampe, Case No. CV279141DRL APPLICATION FOR LEAVE TO FILE AMICUS CURIAE BRIEF IN SUPPORT OF PETITIONER AND DEFENDANT McMILLIN ALBANY, LLC *JILL J. LIFTER, No. 120832 GLENN T. BARGER,No. 155465 RYAN & LIFTER CHAPMAN, GLUCKSMAN 2000 Crow Canyon PI., #400 DEAN ROEB & BARGER San Ramon CA 94583-1367 11900 W. Olympic Blvd., #800 Telephone: (925) 884-2080 Los Angeles CA 90064 Facsimile (925) 884-2090 Telephone: (310) 207-7722 jlifter@rallaw.com Facsimile (310) 207-6550 gbarger@cgdrblaw.com Attorney for Amicus Curiae Association of Defense Counsel of Attorney for Amicus Curiae Northern California and Nevada Association of Southern California Defense Counsel The Association of Defense Counsel of Northern California and Nevada and the Association of Southern California Defense Counsel request leave to file the amicus brief accompanying this Application, based on the following grounds. A. INTEREST OF PROPOSED AMICI CURIAE 1. The Association of Defense Counsel of Northern California and Nevada (“ADC-NCN”)is an association of over 800 attorneys primarily engagedin the defenseofcivil actions. ADC-NCN members havea strong interest in the development of substantive and procedural law in California, and extensive experience with construction defect matters. The Association’s Nevada membersare also interested in the development of California law because Nevada courtsoften follow the law andrules adopted in California. ADC-NCNhas appeared as amicus in numerouscases. 2. The Association of Southern California Defense Counsel (“ASCDC”) is the nation’s largest regional organization of lawyers who specialize in defendingcivil actions. ASCDC counts as members approximately 1,200 attorneys in Southern and Central California. ASCDC is actively involvedin assisting courts on issuesof interest to its members. It has appeared as amicus curiae in numerouscases before this Court and the Courts of Appeal. The two Associations are separate organizations, with separate memberships and governing boards. They coordinate from time to time on a number of matters of shared interest, such as this application and brief. B. WHYTHIS APPLICATION SHOULD BE GRANTED The accompanying proposedbrief could help this Court decide the issues addressed by this case by providing a broader perspective than that offered by the parties themselves within the confines of the record on appeal and issues addressed below. The parties’ briefs discuss the rights of homeownersandbuilders under Title 7 of the Civil Code, Section 895,et seq. (also known as “the Right to Repair Act” or “SB800”), but the Legislative history and various provisions of Title 7 make it clear that SB800 wasalso intended to benefit others involved in the residential construction industry who are frequently named as defendants andcross- defendants in construction defectlitigation, including general contractors, subcontractors, design professionals, product manufacturers, and material suppliers. Members of the Associations representall categories of prospective defendants in residential construction defectlitigation, all of whom havean interest in the determination of the issues of whether SB800 provides the exclusive framework for residential construction defect claims regardless of whether a claimed defect has caused damage, thereby precluding common law causes of action for defects which have caused damage, and whether homeownerscan avoid participation in the statutorily mandated pre- litigation proceduresset forth in Civil Code section 910 et seq. by not specifically pleading a violation ofthe standards for construction set forth in Civil Code section 896. C. NO OTHER PARTY INVOLVED Noother party or its counsel has authoredthis brief in wholeor in part, or has made a monetary contribution to fund the preparation or submission ofthis brief. (Cal. Rules of Court, rule 8.520(£)(4).) D. CONCLUSION Because members of the Associations represent general contractors, subcontractors, design professionals, product manufacturers, and material suppliers, in addition to builders,all of these participants in the residential construction industry have a material interest in the outcomeofthe issues presented to this Court, and the perspectives ofthe participants other than builders are not represented by the parties to this proceeding, the Court should grant this request, and grant the Association of Defense Counsel of Northern California and Nevada and the Association of Southern California Defense Counsel leaveto file the accompanying amicusbrief. Respectfully submitted, Dated: July 15, 2016 Dated: July 15, 2016 RYAN & LIFTER CHAPMAN, GLUCKSMAN < DEAN ROEB & BARGER a By: CUA . Glenn T. Barger Attorney for Amicus Curiae Attorney for Amicus Curiae Association ofDefense Counsel of Association of Southern Northern California and Nevada California Defense Counse l Case No. §229762 In the SUPREME COURT OF CALIFORNIA McMILLIN ALBANY,LLC,et al. Defendant and Petitioners, Vv. THE SUPERIOR COURT OF KERN COUNTY, Respondent. Carl Van Tassel,et al. Real Party in Interest. From a Decision of the Court of Appeal, Fifth Appellate District, Case No. F069370, Vacating the Judgmentofthe Superior Court, County of Kern, Hon. David R. Lampe, Case No. CV279141DRL AMICUS CURIAEBRIEF OF ASSOCIATION OF DEFENSE COUNSEL OF NORTHERN CALIFORNIA AND NEVADAAND ASSOCIATION OF SOUTHERN CALIFORNIA DEFENSE COUNSEL IN SUPPORT OF PETITIONER AND DEFENDANT McMILLIN ALBANY, LLC *JILL J. LIFTER, No. 120832 GLENN T. BARGER,No. 155465 RYAN & LIFTER CHAPMAN, GLUCKSMAN 2000 Crow Canyon P1., #400 DEAN ROEB & BARGER San Ramon CA 94583-1367 11900 W. Olympic Blvd., #800 Telephone: (925) 884-2080 Los Angeles CA 90064 Facsimile (925) 884-2090 Telephone: (310) 207-7722 jlifter@rallaw.com Facsimile (310) 207-6550 gbarger@cgdrblaw.com Attorney for Amicus Curiae Association of Defense Counsel of Attorney for Amicus Curiae Northern California and Nevada Association of Southern California Defense Counsel I. INTRODUCTION In 2002, the Legislature enacted Title 7 of the Civil Code (Civil Codesection 895 et seq.), commonlyreferred to as the Rightto Repair Act (“the Act”) or SB800, addressing the substance and process of the law governing construction defects with respect to residential units first sold on and after January 1, 2003. This case presents the fundamental question of whether Title 7 of the Civil Codeestablishes the exclusive framework for residential construction defect claims, regardless of whether a claimed defect has caused damage,subject only to the express exceptionsset forth in Title 7 itself. Although the Act’s prelitigation procedures apply in thefirst instance as between only the homeownerandthebuilder,the right to repair clearly inures to the benefit of other parties in the construction industry, including general contractors, subcontractors, material suppliers, individual product manufacturers, and design professionals, which also have an interest in the determination of this issue. This is because a homeowneris required to comply with the prelitigation procedures as a prerequisite to “filing an action against anyparty alleged to have contributed to a violation of the standards set forth in Chapter 2 (commencing with Section 896).” (Civil Code section 910!, emphasis added.) So, while the homeowner is required to give prelitigation notice of claimed violations of the Act’s standards onlyto the builder, the homeowneris precluded from filing an action against these other interested parties to which the standards apply unless such notice has been given. The legislative history of the Act demonstratesthatits provisions werethe result of a compromise between construction industry constituents | All further statutory referencesare to the Civil Code unless otherwise stated. and homeowners’ representatives, with the intent to provide homeowners with the right to seek redress for defects which had not caused damage in exchangefor prospective defendants having the right to repair claimed deficiencies before they could be sued. The Act also addressed the need to define the standards for determining whether a condition amountedto a defect and the procedures for expeditiously resolving claimed deficiencies short oflitigation. Real Parties in Interest would turn the Actonits head by interpreting it to give homeownersthe right to seek redress for defects which have not caused damage while depriving the builder and others involved in the construction ofthe residential structure the right to receive notice and the opportunity to repair where a defect has caused damage. In other words, they would have this court interpret the Act to give homeownersrights they did not have before by virtue of this court’s decision in Aas v. Superior Court (2000) 24 Cal.4" 627, while giving builders and others in the residential construction industry nothing. In addition, Real Parties’ position is wholly inconsistent with the legislative intent to reduce construction defect litigation, increase the availability of liability insurance for those involvedin residential construction, and reduce the cost of suchliability insurance. To the contrary, it would serveto increase suchlitigation and makeliability insurance moredifficult to obtain and more expensive. This is because claimants would notbe required to participate in the statutory prelitigation proceduresintendedto facilitate resolution of construction defect claims short oflitigation insofar as the claims which they already hada right to makeprior to enactment of Title 7 are concerned. In short, Real Parties’ interpretation would mean business as usual for residential construction defect claims as to which there was already a right of recovery underthe commonlaw,with the addition ofthe right to make claimsfor violations of statutory standards established by the Act for which the common law did not provide a right of recovery. Amici curiae respectfully submit that this is entirely inconsistent with the legislative intent in enacting Title 7 and shouldberejected by this court. The Court of Appeal’s decision in this matter shouldbe affirmed. Il. DISCUSSION OF ISSUES BEFORE THE COURT A. The Actis Intended to Apply to General Contractors, Subcontractors, Material Suppliers, Individual Product Manufacturers, And Design Professionals, All of Which Benefit from the Act’s Prelitigation Notice Requirement Asstated by the court in The McCaffrey Group, Inc. v. Superior Court (2014) 224 Cal. App. 4th 1330, 1342-1343: The Legislature enacted the Act to “‘specify the rights and requirements of a homeownerto bring an action for construction defects, including applicable standards for home construction, the statute of limitations, the burden of proof, the damages recoverable, a detailed prelitigation procedure, and the obligations of the homeowner.’ (Legis. Counsel's Dig., Sen. Bill No. 800 (2001-2002 Reg. Sess.).)” (Anders v. Superior Court (201 1) 192 Cal.App.4th 579, 585 [121 Cal. Rptr. 3d 465] (Anders).) The Legislature declared that “prompt andfair resolution of construction defect claimsis in the interest of consumers, homeowners, and the builders of homes _.. [but] undercurrent procedures and standards, homeowners and builders alike are not afforded the opportunity for quick and fair | resolution of claims. Both need clear standards and mechanismsfor the promptresolution of claims.” (Stats. 2002, ch. 722, § 1, subd. (b), p. 4247.) The Legislature further declared it intended the Act to “improve the procedures for the administration ofcivil justice, including standards and proceduresfor early disposition of construction defects.”(Id., § 1, subd. (c), p. 4247.) The legislative history further reflects that the burden of construction defect litigation on subcontractors was a major consideration in enacting Title 7. The followingis an excerpt from Senate Judiciary Committee 2001-2002 Regular Session Comments: The bill seeks to respond to concerns expressed by a numberof parties. The bill responds to concerns from homeowners and the Consumer Attorneys of California over the consequencesofAasv. Superior Court, (2000) 24 Cal. 4" 627, which held that defects must cause actual damageorpersonal injury prior to being actionable in tort. The bill also responds to concerns expressed bybuilders, subcontractors, and insurers over the costs of construction defect litigation their (sic) impact on housing costs in the state. (Sen. Com.on Judiciary, Analysis of Sen. Bill No. 800 (2001-2002 Reg. Sess.) as amended August28, 2002,p. 3, Exhibit 1 to Petitioners’ Motion for Judicial Notice of Legislative History of SB800, Vol. 1, page SB 800 Leg. Hist. 000174.) And the followingis the synopsis of SB 800 from the Assembly Committee on Judiciary: This bill, the consensus product resulting from nearly a year of intense negotiations amongthe interested parties, proposes two significant reformsin the area of construction defect litigation. First, the bill would establish definitions of construction defects for the first time, in order to provide a measureofcertainty and protection for homeowners, builders, subcontractors, design professionals and insurers. Secondly, the bill requires that claimants alleging a defect give builders notice of the claim, following which the builder would have an absolute right to repair before the homeownercould sue for violation of these standards. If the builder failed to acknowledge the claim within the time specified, elected not to go through the statutory process, failed to request an inspection within the time specified, or declined to makethe offer to repair, or if the repair 1S inadequate, the homeowneris relieved from any furtherpre- litigation process. (Assem. Com.on Judiciary, Analysis of Sen. Bill No. 800 (2001-2002 Reg. Session) as amended August 25, 2002, p.1, Exhibit 1 to Petitioners’ Motion for Judicial Notice of Legislative History of SB800, Vol. 1, page SB 800 Leg. Hist. 000199.) 1. The Act Applies to General Contractors, Subcontractors, Material Suppliers, Individual Product Manufacturers, and Design Professionals In addition to the legislative history leading up to the enactment of Title 7 making it clear that the legislation was intendedto benefitall participants in residential construction, the provisions ofthe Actitself clearly apply to participants other than builders. Section 896 identifies the types of actions andthe prospective defendants to which the Act applies: In anyaction seeking recovery of damagesarising outof, or related to deficiencies in, the residential construction, design, specifications, surveying, planning, supervision, testing, or observation of construction, a builder, and to the extent set forth in Chapter 4 (commencing with Section 910), a general contractor, subcontractor, material supplier, individualproduct manufacturer, or design professional, shall, except as specifically setforth in this title, be liable for, and the claimant's claims or causes ofaction shall be limited to violation of, thefollowing standards, except as specifically setforth in this title. This title applies to original construction intendedto be sold as an individual dwelling unit. As to condominium conversions,this title does not apply to or does not supersede any other statutory or commonlaw. (Civil Code section 896, emphasis added.) 2. General Contractors, Subcontractors, Material Suppliers, Individual Product Manufacturers, and Design Professionals Are Intended Beneficiaries of the Act’s Prelitigation Procedures The applicability of the Act to a general contractor, subcontractor, material supplier, individual product manufacturer, or design professionalis limited “to the extent set forth in Chapter 4 (commencing with Section 910).” (Section 896.) Although the Act does not require claimants to give participants in the construction ofthe residential structure other than the builderthe prelitigation notice of claimed violations of the standardsset forth in Chapter 2 or the right to repair, those participants have an interest in the builder having the right to notice and an opportunity to repair. As noted above, Section 910 requires a claimant to comply with the prelitigation procedures as a prerequisite to “filing an action against any party alleged to have contributed to a violation of the standards set forth in Chapter 2 (commencing with Section 896).” In other words, a claimant may not commencean action seeking recovery for alleged construction defects against general contractors, subcontractors, design professionals, individual product manufacturers or material suppliers unless he or she first provides the requisite notice of the claimed violation and the builderis afforded the opportunity to exercise its right to repair. Chapter 4 sets forth the prelitigation procedures. Section 916(e), whichis included in Chapter 4, provides: If a builder intends to hold a subcontractor, design professional, individual product manufacturer, or material supplier, including an insurance carrier, warranty company, or service company,responsible for its contribution to the unmet standard, the builder shall provide notice to that person or entity sufficiently in advance to allow them to attend the initial, or if requested, second inspection of any alleged unmet standard andto participate in the repair process. The claimant andhis or her legal representative, if any, shall be advised in a reasonabletimepriorto the inspection as to the identity ofall personsor entities invited to attend. This subdivision does not apply to the builder's insurance company. Except with respect to any claims involving a repair actually conducted underthis chapter, nothing in this subdivision shall be construed to relieve a subcontractor, design professional, individual product manufacturer, or material supplier of anyliability under an action brought by a claimant. The import ofthis provisionis that parties other than the builder which were involved in the construction of the residential structure which is the subject of a claimed unmetstandard cannotbe held responsible for the cost of addressing the unmetstandard unless they have been given sufficient notice and an opportunity to participate in the repair process. Thisis extremely important because participation in the repair processis likely to be the most cost effective means of addressing the claimant’s claims and availing oneself of the opportunity to do so is the only viable means of avoiding litigation—theprimary goalof the Act. It is also important because those parties are consistently named as defendantsand cross- defendants whenlitigation ensues.” Denial ofthe right to prelitigation notice and the right to repair to the builder effectively assures not only litigation against the builder, butalso litigation against these other interested parties. And this meansthat there is no reductionin litigation, contrary to the intent of the Act. B. The Legislative History Of The Act Reflects The Legislature’s Clear Intent That Title 7 Supplant The Common Law With Respect To Claims For Defects In Residential Construction There can be no question that the Legislature intended that the Act would supplant the commonlaw with respectto claims for defects in residential construction, rather than simply creating a statutory scheme applicable only to defects which have not caused damage. The following 2 The attomey forreal parties in interest declared that in construction defect cases, his firm's custom andpracticeis to file a complaint against the developer for all construction defects foundin the plaintiffs’ homes. Once they learn the identities of the subcontractors and manufacturers involved, they bring thoseparties into the lawsuit. As of January 2012, real parties in interest had amended the complaint to add as defendants 28 manufacturers and subcontractors involved in the construction oftheir homes. (The McCaffrey Group, Inc. v. Superior Court, 224 Cal. App. 4th 1330, 1339-1340 (Cal. App. 5th Dist. 2014), involving the samefirm that represents Real Parties in Interest in this case.) 7 excerpts from the Senate Rules Committee Analysis dated 8/29/02 are telling: This bill reforms construction defect law in order to promote safe and affordable residential housing for California. Specifically, this bill: 1. Defines construction defects to ensure performance with specified standards. 2. Requires claimants to provide notice to builders regarding alleged violations. 3. Gives builders an absolute right to repair alleged defects before a claimant may sue. 4. Preserves the right of homeowners to pursue remediesif the repair is not madeoris inadequate. In a significant departurefrom existing law,the bill imposes a procedure that a homeowner mustfollow before bringing suit against a builder. In summary, the homeowner must send a written notice to the builder setting out the nature of the claim. The builder must acknowledge the claim in writing. The builder may then elect to conductinspection and testing ofthe alleged defect within a specified period, and must providecertain documentation to the homeowneron request regarding building plans and specifications. Most importantly, the builder may then offer to repair the alleged violation within a prescribed period. Such an offer to repair must also compensate the homeowner for all applicable damages recoverable. Upon receipt of the offer to repair, the homeownerhasa prescribed period in which to authorize the builder to proceed with the repair. The offer to repair must also be accompanied by an offer to mediate the dispute if the homeownerso chooses. (Sen. Rules Committee Analysis of SB 800, as amended 8/28/02, pp. 2 and 4, Exhibit 1 to Petitioners’ Motion for Judicial Notice of Legislative History of SB800, Vol. 1, pages SB 800 Leg. Hist. 000236, 238, emphasis added.) The following excerpts from the Senate Republican Commentaries Digest summarizing Assembly amendments, also pertaining to the August 28, 2002 versionofthe bill, are instructive: Governs any action against a builder, subcontractor, individual product manufacturer, or design professional, seeking recovery of damagesarising outof,or related to deficienciesin, residential construction, design, specifications, surveying, planning, supervision,testing, or observation of construction. Requires certain proceduresbefollowedbeforefiling a construction defect lawsuit. This procedure would provide the builder with a right to attempt a repair of the defect prior to litigation, inspections and exchanges of documentation under certain circumstances, and mediation at variouspoints,all pursuantto various timeframesset forth in the bill. The bill would providethatif the builder fails to follow any of the procedures, the homeowneris entitled to proceed with the filing of an action. (Senate Republican Commentaries on SB 800, version date 8/28/02, pp. 35- 36, Exhibit 1 to Petitioners’ Motion for Judicial Notice of Legislative History of SB800, Vol. 1, pages SB 800 Leg. Hist. 000240-241, emphasis added.) These comments unequivocally reflect the Legislature’s intent that the Act andits prelitigation procedures would apply acrossthe board to “any action” seeking recovery of damages related to construction deficiencies against a party involvedin residential construction. They do not make any references to exceptionsfor, or limitationsto, certain types of deficiencies. C. The Provisions Of The Act Make It Clear That It Provides The Exclusive Framework For Residential Construction Defect Claims Regardless of Whether a Claimed Defect Has Caused Damage, Subject Only to the Express Exceptions Set Forth in the ActItself As noted above, Section 896 specifically applies “in any action” seeking recovery of damagesfor deficiencies in residential construction from the participants in the construction and, except as specifically set forth in Title 7, the claimant's claimsor causesof action shall be limitedto violation of the standardsset forth in Chapter 2. Real Parties incorrectly assert that Section 897 doesnotitself constitute a standard, but simply maintains the commonlaw right to sue for damages where a deficiency has caused damage. (OpeningBrief, pp. 28-31 and Reply Brief, pp. 12-14.) Section 897 provides: The standards set forth in this chapter are intended to address every function or component ofa structure. To the extent that a function or componentofa structure is not addressed by these standards,it shall be actionableifit causes damage. Section 897 makesit abundantly clear that the Legislature intended the standardsspecifically set forth in section 896to beall-inclusive by using the words “every function or componentofa structure” in describing the scope to which the standards were intendedto apply. Section 897 recognizes the possibility that some function or component was unintentionally overlooked in enumerating the standardsin section 896. Instead ofleaving it to the imaginationof claimants to conjure up some such function or component, the Legislature determinedthat the standard for determining whether a claimant would have a cause of action and a party involvedin residential construction would haveliability for an unspecified function or component would be whether it causes damage. 10 While section 897 could have been more explicit in stating that a function or component whichis not enumerated in section 896, but nonetheless causes damage,is considered a violation of the statutory construction standards, other provisions ofthe Actcertainly leadto this conclusion. For example, numeroussections in Chapter 3, which largely addressesoptional enhancedprotection agreements,refer to the “protection”or “provisions” “set forth in Chapter 2 (commencing with Section 896).” (See sections 901, 902, 903, 904, 905, and 906.) Section 942 similarly provides: “In order to makea claim for violation of the standards set forth in Chapter 2 (commencing with Section 896)...” And while Real Parties state that “Section 910(a) requires the claimantto give notice of his or her “claim that the construction of his or her residence violates any ofthe standardsset forth in Chapter 2” (Opening Brief, p. 31), they neglect to includetherest of the sentence, which reads “(commencing with Section 896)”. They also omit the prefatory language in section 910, which reads: “Priorto filing an action against any party alleged to have contributed to a violation ofthe standardsset forth in Chapter 2 (commencing with Section 896), the claimant shall initiate the followingprelitigation procedures.” Chapter 2 contains only sections 896 and 897. If section 897 did not establish a construction standard underTitle 7, there would be no needto refer to “Chapter 2 (commencing with Section 896)”, as opposed to limiting the references to section 896 alone. To say that section 897 preserves a commonlaw rightto sue without complying with the Act’s prelitigation proceduresas longas there is resulting damage ignores the very distinct possibility—indeed likelihood— that unmet standards enumerated in section 896 would result in damage and that section 897 clearly does not applyto those standards. It also reads into section 897 far more than it says and would makeit inconsistent with other provisions of the Act. 1] Section 943(a) provides: Except as providedin thistitle, no other cause of action for a claim coveredbythis title or for damages recoverable under Section 944 is allowed. In addition to the rights underthis title, this title does not apply to any action by a claimant to enforce a contract or express contractual provision, or any action for fraud, personal injury, or violation ofa statute. Damages awardedfor the itemsset forth in Section 944 in such other causeofaction shall be reduced by the amounts recovered pursuant to Section 944 forviolation of the standards set forth in thistitle. The damagesrecoverable undersection 944 expressly include damage caused by a violation of the standards. Section 944 provides: If a claim for damages is made underthistitle, the homeowneris only entitled to damages for the reasonable value of repairing any violation of the standardsset forth in this title, the reasonable cost of repairing any damages caused bythe repair efforts, the reasonable cost ofrepairing and rectifying any damages resultingfrom thefailure ofthe hometo meet the standards, the reasonable cost of removing and replacing any improperrepair by the builder, reasonable relocation and storage expenses, lost business incomeifthe homewasusedasa principal place of a business licensed to be operated from the home,reasonable investigative costs for each established violation, and all other costs or fees recoverable by contract or statute. (Civil Code Section 944, emphasis added.) Section 944 does not refer to section 896;rather, it refers to claims for damages “under this title” a nd “violation of the standardsset forth in thistitle.” Thus, the applicability of Title 7 is not limited to claims for unmet standards which have not caused damage. Thereis no provisionin Title 7 which gives a claimantthe right to file an “action seeking recovery of damagesarising outof, or related to deficiencies in, the residential construction, design, specifications, surveying, planning, supervision,testing, or observation of construction” against a builder, general contractor, subcontractor, material supplier, 12 individual product manufacturer, or design professional without complying with the prelitigation procedures set forth in Chapter 4 of the Act, commencing with section 910. D. Denial Of The Right To Prelitigation Notice Of Claimed Deficiencies And The Right To Repair Would Be Contrary To The Legislative Goal Of Making Liability Insurance MoreAvailable And Affordable Theprevalenceofconstruction defectlitigation and the lack of available insurance coverageare ofparticular concern to subcontractors, whichare often required by contract to defend, indemnify, and hold harmless the builders who hire them to constructthe residential structures and whoseinsurancecarriers are often required to defend all claims asserted against the builders, regardless of the subcontractor’s limited scope of work. (See, e.g. Crawford v. Weather Shield Mfg. (2008) 44 Cal.4" 541and UDC-Universal Development, L.P. v. CH2MHill (2010) 181 Cal.App.4" 10, which held that a subcontractor and a consultant, respectively, had a direct duty to defend the builder. See, also, Presley Homes, Inc. v. American States (2001) 90 Cal.App.4" 571, which imposed the full cost of defending the builder on the subcontractor’s insurer which had namedthe builder as an additional insured.) These defense obligations often drive cases more sothanthe actualliability and damages issues. Allowingsuits to recoverfor defects which have caused damagewithout requiring the claimants to engagein the statutory prelitigation procedure and affording the builder the right to repair will do nothing to alleviate this endemic problem whichis a key factorin the limited availability of insurance coverage, the high cost of the coverage thatis available, and the cost of housing. Real Parties provide no logical explanation of how denying builders the right to prelitigation notice of claimed violation of the standardsset 13 forth in Chapter 2 of the Act and theright to repair would “lessen th e need for traditional construction defectlitigation, reduce the cost ofliability insurance, and ultimately reduce the cost of new homes.” (Reply Brief, page 4.)It is not at all clear how giving claimants the right to mak eclaims for “identifiable but non-damage-causing defects” withoutalso elimi nating the “commonlaw right to recover in tort for damage-causing defe cts” (Reply Brief, pages 3-4) wouldserve any of the stated purposes of t he Act. Giventhat traditional liability insurance does not provide coverag e for defective workmanship and defective products, as opposed to d amage caused by defective workmanship and defective products, allowing suits to recover resulting damage to continue unabatedis unlikely to make such insurance more available or more affordable. The means by whic hthe amountoftraditional construction defectlitigation could be lessen ed, the cost of liability insurance could be reduced, and the cost of new ho mes could ultimately be reduced wouldbeto require claimants to give notice of claimed violations which have caused damageandto allow the bui lder (and thereby the other parties which the builder would seek to hold res ponsible) the opportunity to repair them before a claimant couldfile an actio n. If the Actallowed claimants to continueto file actions to recover for v iolations which have caused damage without complying with the statutory prelitigation process, it would accomplish nothing to reduce constr uction defectlitigation. Ill. CONCLUSION The legislative history of the Act and its express provisions makeit abundantly clear that the Act was intended to supplant the commonl aw with respect to claims for defects in residential construction and it w as not intendedto simply create a statutory scheme applicable only to d efects 14 which have not caused damage. Real Parties’ interpretation would mean business as usual for residential construction defect claims as to which there was alreadya right of recovery under the commonlaw, with the addition of the right to make claimsfor violations of statutory standards established by the Act for which the common law did notprovidea right of recovery. This is entirely inconsistent with the legislative intent in enacting Title 7 and should berejected by this court. Because RealParties complaint alleged construction defects which were encompassed in the standards set forth in Chapter 2 (commencing with Section 896), they were required to comply with the prelitigation proceduresset forth in Chapter 4, which they did not do. The Court ofAppeal’s decision in this matter granting writ relief to McMillin should therefore be affirmed. Dated: July 15, 2016 RYAN & LIFTER By: yf J. Lifter [ Attorney for Amicus Curiae Association ofDefense Counsel of Northern California and Nevada Respectfully submitted, Dated: July 15, 2016 CHAPMAN, GLUCKSMAN DEAN ROEB & BARGER By: CA . Glenn T. Barg Attorney for Amicus Curiae Association of Southern California Defense Counsel 15 CERTIFICATE OF WORD COUNT I, JILL J. LIFTER,certify pursuant to California Rule of Court 8.204(c)(1), that the word count on the foregoing Amicus Curiae Brief including footnotesis 4,466, as counted by Microsoft Word, the word processing program usedto generate the brief. Dated: July 15, 2016 RYAN & LIFTER A Professional Corporation AZ "5t/IFTER 16 PROOF OF SERVICE Case No. $229762 McMillin Albany LLC v. Superior Court of Kern County 1. Iam a resident of the State of California, over the age of eighteen years andnot a party to the within action. My business address is: Ryan & Lifter, 2000 Crow CanyonPlace, Suite 400, San Ramon, CA 94583. 2. On July 15, 2016 I caused a true andcorrect copy ofthe Application to File Amicus Curiae Brief and Brief in Support of Petitioner and Defendant McMillin Albany, LLC. submitted on behalf of the Association of Defense Counsel ofNorthern California and Nevada andthe Association of Southern California Defense Counsel to be electronically submitted to the Supreme Court of California using the e-submission portal on the Court’s website: www.courts.ca.gov/supremecourt.htm. 3. On July 15, 2016 I caused an Original and 8 hardcopies of the Application to File Amicus Curiae Brief and Brief in Support of Petitioner and Defendant McMillin Albany, LLC. submitted on behalf of the Association of Defense Counsel ofNorthern California and Nevada andthe Association of Southern California Defense Counsel to be submitted for filing via Overnight Mail by Federal Expressto: Supreme Court of California 350 McAllister Street San Francisco CA 94102-7303 (415) 865-7000 4. On July 15, 2016, I caused true and correct copies of the Application to File Amicus Curiae Brief and Brief in Support of Petitioner and Defendant McMillin Albany, LLC. submitted on behalf of the Association of Defense Counsel ofNorthern California and Nevada and the Association of Southern California Defense Counselto be enclosed in a sealed envelope, addressedto the partieslisted below.I am readily familiar with the firm’s business practice for collection and processing of envelopes and packages for mailing with the U.S. Postal Service. Underthe firm's practice, mail is deposited in the ordinary course of business with the United States Postal Service at San Ramon, California, that same day, with postage thereon fully prepaid: Respondent: Hon. David R. Lampe Dept. 11, Metropolitan Division Kern County Superior Court 1415 Truxtun Avenue Bakersfield CA 93301 T: 661-868-5393 Attorneys for Petitioners McMillin Albany, LLC; and McMillin Park Avenue, LLC Andrew M. Morgan,Esq. Borton Petrini LLP 5060 California Avenue, Suite 700 Bakersfield CA 93301 T: 661-322-3051 F: 661-322-4628 amorgan@bortonpetrini.com Attorneys for Real Parties-in-Interest Carl Van Tassell and Sandra Van Tassel Aaron Michael Gladstein, Esq. Mayo Lawrence Makarczyk, Esq. Milstein Adelman Jackson Fairchild & Wade LLP 10250 Constellation Blvd., Suite 1400, Los Angeles, CA 90067 T: 310-396-9600 F: 310-396-9635 mmakarczyk@milsteinadelman.com Civil Clerk ofthe Court Fifth District Court of Appeal 2424 Ventura Street Fresno CA 93721 T: 559-445-5491 Attorneys for Amicus Curiae California Building Industry Association Kathleen F. Carpenter, Esq. DonahueFitzgerald LLP 1646 N. California Blvd., Suite 250, Walnut Creek CA 94596 T: 925-746-7770 F: 925-746-7776 kcarpenter@donahue.com Attorneys for Amicus Curiae Leading Builders of America; California Building Industry Association; Building Industry Legal Defense Foundation Alan H.Packer, Esq. Newmeyer & Dillon LLP 1333 North California Blvd., Suite 6, Walnut Creek, CA 94596 T: 925-988-3200 F: 925-988-3290 Alan.packer@ndlf.com Attorneys for Amicus Curiae of Ulich Ganion Balmuth Fisher & Feld LLP Donald William Fisher, Esq. Ulich Ganion Balmuth Fisher and Feld LLP 4041 MacArthur Blvd., Suite 300 Newport Beach, CA 92660 T: 949-250-9797 F: 949-250-9777 dfisher@ulichlaw.com Attorneys for Amicus Curiae ofMWI, Inc.Daniel Joseph GonzalezHorvitz and Levy LLP15760 Ventura Blvd., 18" FloorEncino CA 91436-3000T: 818-995-0800 F: 818-995-3157dgonzalez@horvitzlevy.com Attorneys for Amicus Curiae of Consumer Attorneys of California Anne Lorentzen Rauch, Esq. Epsten Grinnell and Howell APC 10200 Willow Creek Road, Suite 100 San Diego CA 92131 T: 858-527-0111 F: 858-527-1531 arauch@epsten.com Tyler P. Berding Berding and Weil 2175 North California Blvd., Suite 500 Walnut Creek CA 94596 T: 925-838-2090 F: 925-820-5592 tberding@berding-weil.com Attorneys for Amicus Curiae of Kasdan Lippsmith Weber Turner LLP Bryan M.Zuetel, Esq. Kasdan Weber Turner LLP 19900 MacArthur Blvd., Suite 850 Irvine CA 92612 T: 949-851-9000 F: 949-833-9455 bzuetel@kasdancdlaw.com I declare under penalty of perjury underthe lawsofthe State of California that the above is true and correct. Executed on July 15, 2016 at San Ramon, California. AypanrntDd.,ho~) Marianne Dundon
