McMILLIN ALBANY v. S.C.

Amicus Curiae Brief of California Professional Association of Specialty Contractors

Cal.July 29, 2016

SUPREME COURT COPY SUPREMECOURT rien S229762 JUL*2 9 2016 Frank A. McGuire Clerk IN THE sopaly SUPREME COURT OF CALIFORNIA McMILLIN ALBANY,LLC,et al., Petitioners, Vv. SUPERIOR COURT OF KERN COUNTY, Respondent. CARL & SANDRA VANTASSEL,etal., Real Parties in Interest. From the Opinion by the Court of Appeal, Fifth Appellate District, Case No. F069370 After a Decision of the Kern County Superior Court, Case No. S-1500- CV-279141, The Honorable David Lampe, Judge APPLICATION TO FILE AMICUS CURIAE BRIEF AND BRIEF OF AMICUS CURIAE CALIFORNIA PROFESSIONAL ASSOCIATION OF SPECIALTY CONTRACTORS IN SUPPORT OF MCMILLIN ALBANY,LLC,et al. *Robert V. Closson (SBN 125646) (bclosson@hirschclosson.com) Jodi E. Lambert (SBN 166634) HIRSCH CLOSSON, APLC 591 Caminode la Reina, Suite 909 San Diego, California 92108 Telephone: (619) 233-7006; Facsimile: (619) 233-7009 Attorneys for Amicus Curiae, CALIFORNIA PROFESSIONAL ASSOCIATION OF SPECIALTY CONTRACTORS S$229762 IN THE SUPREME COURT OF CALIFORNIA McMILLIN ALBANY,LLC,etal., Petitioners, V. SUPERIOR COURT OF KERN COUNTY, Respondent. CARL & SANDRA VAN TASSEL,et al., Real Parties in Interest. From the Opinion by the Court of Appeal, Fifth Appellate District, Case No. F069370 After a Decision of the Kern County Superior Court, Case No. S-1500- CV-279141, The Honorable David Lampe, Judge APPLICATION TO FILE AMICUS CURIAE BRIEF AND BRIEF OF AMICUS CURIAE CALIFORNIA PROFESSIONAL ASSOCIATION OF SPECIALTY CONTRACTORS IN SUPPORT OF MCMILLIN ALBANY,LLC,et al. *Robert V. Closson (SBN 125646) (bclosson@hirschclosson.com) Jodi E. Lambert (SBN 166634) HIRSCH CLOSSON, APLC 591 Caminode la Reina, Suite 909 San Diego, California 92108 Telephone: (619) 233-7006; Facsimile: (619) 233-7009 Attorneys for Amicus Curiae, CALIFORNIA PROFESSIONAL ASSOCIATION OF SPECIALTY CONTRACTORS o S C R M e e e e e a r o e $229762 IN THE SUPREME COURT OF CALIFORNIA McMILLIN ALBANY,LLC,et al., Petitioners, V. SUPERIOR COURT OF KERN COUNTY, Respondent. CARL & SANDRA VAN TASSEL,etal., Real Parties in Interest. From the Opinion by the Court of Appeal, Fifth Appellate District, Case No. F069370 After a Decision of the Kern County Superior Court, Case No. S-1500- CV-279141, The Honorable David Lampe, Judge APPLICATION TO FILE AMICUS CURIAE BRIEF AND BRIEF OF AMICUS CURIAE CALIFORNIA PROFESSIONAL ASSOCIATION OF SPECIALTY CONTRACTORS IN SUPPORT OF MCMILLIN ALBANY,LLC,et al. *Robert V. Closson (SBN 125646) (bclosson@hirschclosson.com) Jodi E. Lambert (SBN 166634) HIRSCH CLOSSON, APLC 591 Camino de la Reina, Suite 909 San Diego, California 92108 Telephone: (619) 233-7006; Facsimile: (619) 233-7009 Attorneys for Amicus Curiae, CALIFORNIA PROFESSIONAL ASSOCIATION OF SPECIALTY CONTRACTORS TO THE HONORABLE CHIEF JUSTICE AND HONORABLE ASSOCIATE JUSTICES OF THE SUPREME COURT: APPLICATION TO FILE BRIEF OF AMICUS CURIAE CALIFORNIA PROFESSIONAL ASSOCIATION OF SPECIALTY CONTRACTORSIN SUPPORT OF MCMILLIN ALBANY, LLC Pursuant to California Rule ofCourt 8.520, The California Professional Association of Specialty Contractors (““CALPASC”), an association of specialty subcontractors engaged in construction of residential housing in the State of California, respectfully applies for leave to file the accompanying Amicus Curiae Brief in support of McMillin Albany, LLC. CALPASCis familiar with the content ofthe parties’ briefs. The proposed Amicus Curiae Brief was prepared by the undersigned. Counsel for the parties have notparticipated in the drafting ofthe briefnor has any party or counsel for a party made a monetary contribution intendedto fund the preparation or submission of the proposed Brief. CALPASCitself has no interest in or connection with any ofthe parties in this case. CALPASCis an association of specialty contractors which perform specific trade operationsfor residential construction in California. CALPASC membersare the subcontractors who perform the actual physical construction servicesfor residential construction. CALPASCseeks to file this briefsetting forth the perspective of subcontractors relative to the hereinafter referenced Act’s impact on construction defect litigation and the perceived catastrophic impact on the construction industry if the McMillin opinionis notaffirmed. CALPASCbelieves its views will assist the Court in resolving the case by addressing the scope ofthe Act from the perspective ofthe interest oftrade subcontractors who actually perform the physical construction of the residential homes subject to the Act. Respectfully Submitted, Date: July 15, 2016 HIRSCH CLOSSON, APLC lem V. Closson, Esq. Jodi E. Lambert, Esq. Attorneys for Amicus Curiae The California Professional Association of Specialty Contractors S229762 IN THE SUPREME COURT OF CALIFORNIA McMILLIN ALBANY,LLC,et al., Petitioners, V. SUPERIOR COURT OF KERN COUNTY, Respondent. CARL & SANDRA VAN TASSEL,et al., Real Parties in Interest. From the Opinion by the Court of Appeal, Fifth Appellate District, Case No. F069370 After a Decision of the Kern County Superior Court, Case No. S-1500- CV-279141, The Honorable David Lampe, Judge BRIEF OF AMICUS CURIAE CALIFORNIA PROFESSIONAL ASSOCIATION OF SPECIALTY CONTRACTORS IN SUPPORT OF MCMILLIN ALBANY,LLC,etal. *Robert V. Closson (SBN 125646) (bclosson@hirschclosson.com) Jodi E. Lambert (SBN 166634) HIRSCH CLOSSON, APLC 591 Caminode la Reina, Suite 909 San Diego, California 92108 Telephone: (619) 233-7006; Facsimile: (619) 233-7009 Attorneys for Amicus Curiae CALIFORNIA PROFESSIONAL ASSOCIATION OF SPECIALTY CONTRACTORS TABLE OF CONTENTS PAGE NO. TABLE OF AUTHORITIES 2.0.0... 0.cceee li, ili, 1V I. INTRODUCTION ..... 0...eeeeent een eee I Il. THE ROLE OF TRADE CONTRACTORS.... 6.0. 0cee eee 1 Il. APPLYING THE ACT PURSUANTTO MCMILLIN GIVES TRADE CONTRACTORSAN INCENTIVE TO REDUCE THE SIZE AND COMPLEXITY OF LITIGATION ..... 0.0... cece eee ees 4 IV. THE ACT WAS DESIGNED TO APPLY TO ALL CONSTRUCTION DEFECT CLAIMS INCLUDING THOSE INVOLVING RESULTANT DAMAGES 0... ccctenet teen teen ene tenes 5 A. THE LANGUAGEOF THE ACT SPEAKS TO ITS EXCLUSIVITY 6 B. THE ACT ADDRESSES THE RECOVERY OF “DAMAGES”. ..... 8 C. THE LEGISLATIVE HISTORY SUPPORTS THE EXCLUSIVITY OF THE ACT ...... ceceent e teens 9 V. CONCLUSION 2...ceeeetetn tees 13 CERTIFICATE OF WORD COUNT ... 0.0.00. 0cceeee 15 TABLE OF AUTHORITIES STATE CASES PAGE NO. Aas v. Superior Court (2000) 24 Cal.4™ 627 v.occcceceseecceeteeeeeiereeeeeeeeeierenetensneeeseerrscenneceneeneenn 6 Crawford v. Weather Shield Mfg. (2008) 44 Cal4541 voc cececeeeensceereneeesestsessesessseseescsessseseesenesesseesseeseesaeess 3 Darling v. Superior Court (2012) 211 Cal App.469, 75 w.ccccecceseeseseeeeetssiesssenssssseesesesesnesseeseaeenies 6 Delany v. Superior Court (1990) 50 Cal.3d 785, 798-799 oo eeeeessssssesseeseeeeeseseeseteesesseerestesseeesetens 9 Liberty MutualIns. Co. v. Brookfield Crystal Cove LLC (2013) 219 Cal.App.498 o..ccccccccseeeseeeseststseseseeeeseesiescsseeeseaeessesseseneeseeess 1 McMillin Albany LLC v. Superior Court (Van Tassell) (2015) 239 Cal.App.4™ 1132 cecccceseeseneeersesssssseseessessseeseessessseeeneeeeess 1 Montrose v. Admiral (1995) 10 Cal.4™ 645 ooccceceseeceeteseseeseeesesssestssesceaesessnenesesnesssssssesseceteneeseaes 2 People v. Scott (2014) 58 Cal.4™ 1415, 1424oeeeeeeenseessesesseesssssesensseecssesscesssssessates 10 Presley Homes, Inc. v. American States (2001) 90 Cal.App.4™ 571 o.icccceeseeeseeeeeeeeeeeseeeseeeseestsseesenessacseseaeseeensas 2,3 STATUTES PAGE NO. California Civil Code §4 vicccccccscccssecsessesessssesensessesecsesseessessnsceesseneeneceeeteseaseeseaaesees 6 California Civil Code §895 w..ccicccccssscscccssesessisesesessesseseneenesseenessenseessnaeseneees 1,6 California Civil Code §896 v..cisceescccsssesssssesseseersenesnsssseeseessnessasnesesssenessrenes 6, 7,9 California Civil Code §897 ...ccccscessssscessssseseesessssseenecnsesseeeecssesenesesseseesanenss 6, 7,9 California Civil Code §900 w.cecccccccescccseuscseeseessenesseneenesseeeseeeeseessssestesseereesseessens 6 ii TABLE OF AUTHORITIES (Continued) California Civil Code §907 vecccicsccccescsisscsceseeaciscneeseeneesessenessersneenensectesereneens 6 California Civil Code §910 viceccccccsccssccssseseseessessseseeneeseseneneesesersenestseeeseeeaes 6 California Civil Code §936 wccccceccssecce sess sscuesesseeseeserssiseseeserseesseesseieesenness 7 California Civil Code §938 viiccccssseccsscsccesesssescsseecseeessessscseessseeeeenesteneraeeesenes 6, 12 California Civil Code §94] viicceccceesseseseeseecseneenscnseseesesasnenesnesssnesnesesnesees 6 California Civil Code §943(a) .oiccccccscssesessecsessenesssenecssseenrsenssieniecisneeeecnnenenes 8 California Civil Code §944 viiccccccscecssseseseessssecnsenseeessesssensseceseesastieenerneeenaeeees 8,9 California Civil Code §945.5 .iccccccscccssesscseeesececsesnseesesseseneneseneeessnasieceens 6 OTHER AUTHORITIES PAGE SB800 Leg Hist. at 000118-119eecceceesscsssecsecssceresessesecsessseeesessennecseesenas 10 Id. at §(c); SB800 Leg Hist. at 000119 oocccseeeesesseeneeteeseesseeeeesaeesnneenes 11 SB800 Leg. Hist. At 000173 oieec eseseeeesessscnecesssessesssssessssesereseseneaeessseeateees 11 SB800 Leg. Hist. At 000174 oeeccessesseeeseeseesessesesesssseeesseeeesseeeseeeeeeees 10, 11 SB800 Leg. Hist. At 000199; 000202 ooo.cesceseseseeseseeseseeeeeseseseeeeeeeeeness 11 SB800 Leg. Hist. At 000236 oooicceeeceeceenssessssseessecsssesesseneeseseetseeceteneeserety 10 SB800 Leg. Hist. At 000238ccceseeeseseeeeseeessenessseeseseneeseeeeneeney 11 SB800 Leg. Hist. At 000242 ooeectsceeeeseecsecsesseneeseneeseeeseseeresaeesesereny 10 SB800 Leg. Hist. At 000377-387 ove eiccsesscssssecsecessessssssseeeseeenessessesseeeeeseaeenees 4 Real Estate Journal “Jnsurance Woes Plague Western Home Builders” March 6, 2002, SB800 Leg Hist. at 000389 oeeeeeceeeeeeseeceseeesseeseseeseeeeseseaeseaaesasegs 3 ili TABLE OF AUTHORITIES (Continued) Exclusivity of the Act, SB800 ooo. iccccscseceeeseeseeaseseeeeeseseneseessesesenetateasensernees 9 iv BRIEF OF AMICUS CURIAE THE CALIFORNIA PROFESSIONAL ASSOCIATION OF SPECIALTY CONTRACTORS IN SUPPORT OF MCMILLIN ALBANY, LLC. 1. INTRODUCTION There are two contradictory published Appellate Court discussions concerning whether California Civil Code §§ 895 et seq., known as the Right to Repair Act (the “Act’) precludes common law causes of action for construction defects. The Court in Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC (2013) 219 Cal.App.4th 98 (“Liberty Mutual’’) indicated that common law causesofaction are not subject to the Act and therefore, homeowners (and their insurers) may pursue construction defect litigation withoutfirst complying with the Act. The underlying Fifth Appellate District opinion in McMillin Albany LLC v. Superior Court (Van Tassell) (2015) 239 Cal.App.4th 1132 (“McMillin”) took the opposite position, concluding that common law causes ofaction are subject to the Act. CALPASCsubmits the McMillin decision wascorrect in its analysis andthat the LibertyMutual opinionis contrary to the Legislative History ofthe Act, the rationale behind the Act, and its terms. This brief explains, from the perspective oftrade contractors, whyMcMillin analyzed the Act correctly and should be affirmed, and conversely why Liberty Mutual should be overruled. Il. THE ROLE OF TRADE CONTRACTORS The interests of CALPASC membersare directly impacted by the decision in McMillin and the application of the Act. CALPASCis an association of specialty contractors who perform specific trade operations for construction projects, including residential, in California. CALPASC members are the trade or subcontractors who perform the actual physical construction services for residential (and commercial) construction. Trade contractors in general lack the financial resources ofbuilders, andthat relative financial vulnerability explains why CALPASC members haveaninterest in a broad application of the Act. Allowing homeowners to simply “plead around” the requirements of the Act will mean that the expense and effort of implementing the Act will have been essentially wasted, resulting in a detrimental impact on trade contractors. The McMillin opinionprotects the integrity of the Act. It also protects trade contractors from the numerous adverse consequencesofa system which does not give them an opportunity to repair before forcing them intolitigation, includingthe resulting increased businesscosts, insurance premiums,litigation expense, and indemnity obligations. A brief historical summary illustrates why trade contractors will bear a disproportionate share of the increased litigation expense and exposure which will result if McMillin is reversed. It also illustrates the extent that Real Parties’ position will adversely affect not only trade contractors, but also the building industry in general, the public, and the courts. In the 1990's the “continuing damagetrigger” decision in Montrosev. Admiral(1995) 10 Cal.4th 645 impacted the cost, availability and coverage benefits available to trade contractors. In the same time frame, construction litigation involving condominium and commoninterest developmentprojects lead to a dramatic reduction in the production of affordable housing in California. Builder insurance becameprohibitively expensive (or unavailable altogether), which in turn lead to an increasing reliance by builders on “additional insurance” undertrade contractor policies. Ultimately, Presley Homes, Inc. v. American States (2001) 90 Cal.App.4th 571 imposed the full cost of defending builders on the trade contractors’ insurers. Along with unacceptable losses in condominium and commoninterest developmentprojects, Presley was followed by an exodus of “admitted” construction industry liability insurers from California. In the years following Presley, if CALPASC members could find general liability insuranceatall, it was extremely expensive and providedvery little coverage. [See, for example, SB 800 Leg Hist. at 000389, Real Estate Journal, “Insurance Woes Plague Western Home Builders,’ March 6, 2002]. “ The lack of available insurance resulted in an increased builder emphasis on defense and indemnity from trade contractors pursuantto express indemnity principles. Without builder primary insurance or additional insurance from trade contractor insurers, builders sought to pass the expense oflitigating and settling construction defect actions along to trade contractors. Similarly, builders were reluctant to build as much affordable housing (apartments and condominiums) during this time frame, because the unrestrainedlitigation expense and exposure made doing so cost prohibitive. The result was a dramatic decrease in available affordable housing. Between 2001 to 2003, it became apparent that if the California building industry was to survive, homeowners, builders and trade contractors would need to change the construction defectlitigation system, and reach a solution which would reduce both construction defectlitigation and builders’ motivation to pass construction liability on to trade contractors via express indemnity.” Something also needed to be done to lure building industry ‘) The Legislative History References correspond to the bate stamped pages in McMillin Albany’s Request for Judicial Notice filed on June 16, 2016. @) The need to address express indemnity exposure for trade contractors became even more evident in Crawford v. Weather Shield Mfg. (2008) 44 Cal.4th 3 liability insurers to return to the California market, and makeit cost effective for builders to address the shortage of affordable housing. The result was the Act, which was lauded notas an alternative to the prior system of unrestrainedlitigation, but as a replacement of that system. The Legislative History of SB800 includes numeroustestimonials from consumerentities and agencies unrelated to the building industry, supporting the conclusion that a primary purpose of the Act was to reduce construction defect litigation. See, SB 800 Leg Hist. at 000377-387 (various member entities of Job-Center Housing Coalition). The McMillin opinion confirmsthe benefits of the Act and to overturn the decision would essentially destroy all the progress which has been achieved, and ignore the history behind the Act and whyit was enacted in the first place. If Real Parties’ position is followed, the consequences,like the earlier events described above, ultimately flow downhill to trade contractors such as CALPASC members. They will ultimately pay the tab for the predictable increase in construction defect litigation which will result in the form of increased business costs; insurance premiums, deductibles and retentions; litigation expense; and indemnity. The Act, while not a panacea for all the ills of the California construction industry, is effective in reducing the volume, complexity and expenseofconstruction defectlitigation. Ifthe Act is optional as Real Parties advocate,it provideslittle or no benefit to trade contractors. Iii. APPLYING THE ACT PURSUANT TO MCMILLIN GIVES TRADE CONTRACTORS AN INCENTIVE TO REDUCE THE SIZE AND COMPLEXITY OF LITIGATION 541, which held that Weather Shield had a direct duty to defend the builder. Trade contractors had in effect, becomeinsurers. 4 Trade contractors have a unique incentive to resolve construction issues under the Act BEFORE litigation is filed. Homeowners, attorneys, and builders may view compliance with the Act as simply an inconvenient impediment to moving forward with the inevitability oflitigation, based upon skepticism thatALL defect issues can be resolved throughthe process required by the Act. However, trade contractors are involvedin discrete issues based on the scope of their work, and havea distinct incentive to resolve claims under the Act before litigation. Doing so enables them to avoid the adverse consequences and expenseof litigation as outlined above. Provided a trade contractor can resolve its issues, it can avoid being a party in the event litigation eventually follows between the builder, homeowners and trade contractors which did not settle. A trade contractor can resolve issues involving its work and avoid litigation byperformingrepairsto the satisfaction of the homeownerduringthe “right to repair’stage. The benefit is not limited to the trade contractors themselves. For each trade contractor who is eliminated beforelitigation pursuant to the Act, the numberofparties and complexity ofthe subsequentlitigation is reduced by the elimination of that trade contractor’s issues. That reduction benefits the builders, homeowners, and other trades. It also reduces the burden on mediators andtrial courts. Liberty Mutual defeats this intended purpose and benefit of the Act while McMillin encourages this intended and beneficial consequence. IV. THE ACT WAS DESIGNED TO APPLY TO ALL CONSTRUCTION DEFECT CLAIMS INCLUDING THOSE INVOLVING RESULTANT DAMAGES Real Parties assert that homeowners whosuein tort for damage-causing defects are not required to comply with the Act. (Opening Brief at 18.) They further claim the Act was only intendedto apply to situations of defects that have yet to cause damage to abrogate the decision in Aas v. Superior Court (2000) 24 Cal.4th 627 (“Aas”). However, they claim that if the Act was intendedto apply to damage causing defects - it is only those defects stemming from violation ofthe standardsset forth in §896 - leaving damage from defects unrelated to the enumerated standards open to a common law claim. The actual language of the Act clearly shows a contrary intent as does its Legislative History. Further, the provisions of the Civil Code are to be liberally construed with a view to effect its objects and to promote justice. Civil Code §4. As set forth below, that can only be achievedifthe McMillin decision is affirmed. A. The Language of The Act Speaks To Its Exclusivity. The Act has five chapters. “Chapter 1 provides definitions. (§ 895.) Chapter 2 describes actionable construction defects by setting forth standards for residential construction. (§§ 896, 897.) Chapter 3 requires the builder to provide an express limited warranty covering the fit and finish of specified building components, and addressesthe builder's obligationsifit offers greater protection to the homeownerthrough an enhancedprotection agreement. (§§ 900-907.) Chapter 4 ... sets forth a prelitigation procedure designed to give a builder the opportunity, before litigation commences, to repair defects broughtto its attention by a homeowner's claim. (§§ 910-938.) Chapter 5 refers to litigation matters in case the prelitigation procedure does not resolve the claim, such as the deadline for filing a lawsuit, the burden of proof, damages that may be recovered, and defenses the builder mayassert. (§§ 941-945.5.)” Darling v. Superior Court (2012) 211 Cal.App.4th 69, 75. Section 896 entitled “Building standards for original construction 6 intendedto be sold as an individual dwelling unit”is quite direct and explicit: In any action seeking recovery of damagesarising out of, or related to deficiencies in, the residential construction, design, specifications, surveying, planning, supervision, testing, or observation of construction, a builder, and ...a general contractor, subcontractor... shall, except as specifically set forth in this title, be liable for, and the claimant’s claims or causes of action shall be limited to violation of, the following standards... Civil Code §896 (emphasis added). The plain and obvious meaning of the above language is that homeowners haveno causeofaction for loss or harm “arising outofor relating to” conditions ofnew housing except as provided(or specifically excluded) in the Act. Clearly, the Act was meant to include both claims for defects that have yet to damage the property and those that already have damagedthe property. Had the Legislature wished to exempt commonlaw claims ofresultant damages, it certainly was aware of how to do so as the Actrefers to the common law more than once. Section 896 states: “As to condominium conversions, this title does not apply to or does not supersede any other statutory or common law”. Similarly, §936 states: “In addition to the affirmative defenses set forth in Section 945.5, a general contractor, subcontractor...or other entity may also offer common law and contractual defenses as applicable to any claimed violation of a standard.” If the Legislature wanted to preserve a homeowner’s “commonlaw”right to sue for construction defects not amongthoselisted in §896, it knew howto do so and would have done so. It did not. Therefore, except for those specifically excluded by the Act’s own terms, all claims for construction defects are subject to the Act. Furthermore, §897 speaks to the breadth of the Act, stating that: The standards set forth in this chapter are intended to address every function or componentofa structure. To the extent that a function or componentofa structure is not addressed by these standards,it shall be actionable if it causes damage. Clearly, this language was intended to mean that if the unaddressed function or component causes damages,it is actionable under the Act, and therefore requires compliance with the provisions of the Act. Finally, §943(a) eliminates any doubt as to the Act’s exclusivity. The section, aptly entitled “Exclusivenessof title; exceptions”states: Exceptas providedin this title, no other cause of action for a claim coveredbythistitle or for damages recoverable under Section 944 is allowed. (emphasis added.) If, as Real Parties argue, a commonlaw claim for damagesfalls outside of the Act, the above section is meaningless as it permits the same recovery that would be afforded under a common law negligence claim. This is so because §944 (see below) permits recovery of damages caused by defective construction. The Act expressly provides the exclusive remedy for construction defects whetheror not they have resulted in property damage, subject only to specified exemptions which were not applicable to McMillin. B. The Act Addresses the Recovery of “Damages.” The Act permits the recovery ofall types of “damages,” including resultant property damage that would betraditionally available for a common law negligence claim. Section 944 states: If a claim for damages is made underthis title, the homeowner is only entitled to damagesfor the reasonable value ofrepairing any violation of the standards set forth in this title, the reasonable cost of repairing any damages caused by the repair efforts, the reasonable cost of repairing and rectifying any damagesresulting from the failure of the hometo meet the standards, the reasonable cost of removing and replacing any improperrepairbythe builder, reasonable relocation and storage expenses...reasonable investigative costs for each established violation, and all other costs or fees recoverable by contract or statute. (emphasis added). There would be no reasonto include this language if the Act was not intendedto apply to defects that have resulted in physical damage. Further, the language of §944 above and the reference in §897 permitting a claim stemming from an unlisted standard which causes damage can only be reconciled to mean the Act was intendedto include resulting damage (whether or not the defects causing that damageare includedin the §896list). Becausedefects that cause damageare actionable subject to §897, and the damagesthey cause are addressed by §944, commonlaw resulting damage claims must be subject to the Act. To hold otherwise would beto treat the above damages language of §944 as surplusage which would lead to an impermissible and absurd result. See, Delaney v. Superior Court (1990) 50 Cal.3d 785, 798-799. C. The Legislative History Supports The Exclusivity Of The Act. The exclusivity of the Act (sometimes referred to as SB800) andits abrogation ofcommonlaw in the context ofMcMillin is well supported by the applicable legislative history. To hold that the Act did not limit or preclude a homeownerfrom asserting common law causes ofaction would effectively eliminate the benefits it was intended to provide to the building industry, consumers, and courts. Further, it defies logic that the building industry 9 agreed to legislation expandingliability for defects that had not caused damage without getting any substantive corresponding benefit. Legislators are not only presumed to be awareof the contents of their enactments, they are “deemed to be aware ofstatutes and judicial decisions already in existence, and to have enacted or amended a statute in light thereof.” People v. Scott (2014) 58 Cal.4th 1415, 1424. There is no question that when the Act was passed, the Legislature was well aware of the significance of commonlaw construction defect claims as well as the Aas holding requiring actual damages. Therefore, it logically follows that the Legislature intended the Act to apply to all construction defect claims - including common law claims involving resulting damage- except for the specific exceptions which were inapplicable in McMillin. Thebill was consideredto be “groundbreaking reform for construction defect litigation” (SB 800 Leg. Hist. 000174); a “significant departure from to the substance and processofthe law governing construction defects” (SB 800 Leg. Hist. 000242). None ofthe above could be accurate if homeowners are allowedto simplyplead around the Act by alleging commonlaw claimsfor resultant damage. In addition, the declaration of the Act’s intent states: The prompt andfair resolution of construction defect claims is in the interest of consumers, homeowners,and the builders of homes,andis vital to the state’s continuing growth andvitality. However, under current procedures and standards, homeowners and buildersalike are not afforded the opportunity for quick and fair resolution of claims. Both need clear standards and mechanismsfor the prompt resolution ofclaims. (Stats.2002, ch.722, §1, subd.(b).) (SB 800 Leg.Hist. 000118-119). The declaration further indicates: 10 It is the intent of the Legislature that this act improve the procedures for the administration of civil justice, including standards and procedures for early disposition of construction defects. Id. at §(c); SB 800 Leg. Hist. 000119. The Act was notintended to be limited to the issues raised by Aas. It was also intended to address the problems of all with an interest in the residential construction community, including homeowners. (SB 800 Leg. Hist. 000238.) The Act “responds to the concerns expressed by builders, subcontractors, and insurers over the costs of construction defect litigation their [sic] impact on housingcosts in the state.” (SB 800 Leg. Hist. 000174.) The Act therefore was necessarily intended to be comprehensive, subject only to specific delineated exceptions. To infer a broad exception for common law claims would be contextually inappropriate and would defeat its very purpose. Further, the solution to the concerns of homeowners and the construction communitywas not solely limited to abrogating the damagesrule ofAas as Real Parties contend. The Act goes further, creating a right to repair whichis part of a “mandatory procedure” that a homeownermustfollow prior to filing a construction defect lawsuit. (SB 800 Leg. Hist. 000173.) The reference to such detailed “mandatory” requirements supports the conclusion that Act was intended to preempt commonlaw with respect to “any action” seeking recovery of “damages” arising out of or related to deficiencies in residential construction. Another purpose of the Act was to provide a measure of certainty in construction defectlitigation. (SB 800 Leg.Hist. 000199; 000202.) Before the Act, there was no clear definition of what constituted a “defect” under California law. Therefore, the Legislature crafted over 45 detailed 11 “functionality” standards, a uniform set ofconstruction performance standards that must be metfor all residential homes sold after January 1, 2003. Civil Code §938. The purpose of enumerating detailed and specific standards was to increase certainty, facilitate agreement, and streamline construction defect disputes - a purpose which would largely be defeated by creating an implied exception for commonlaw claims. The conclusion that the Act was intended to apply to both resultant damage and defects which have not caused damageis a matter of common sense. The typical construction defect matter involving allegations ofmultiple categories of defects (such as McMillin), involves both damage and defects, and in manycasesthe twocategories are integrated. For example, a defective roof(defect) will often result in water intrusion damagingthe structure interior (resultant damage). It would be extraordinarily inefficient and a waste of resources to have the Act apply only to the defect category. The obvious and logical intent was to allow builders and trade contractors and opportunity to address homeowner complaints of BOTH categories pursuant to the Act, before proceeding with litigation. Finally, the Act was intended to be invoked by homeowners, who may not be represented by counsel, and who may not want to proceed with litigation. More often than not homeownerswill simply wantaproblem fixed, andwill not appreciate the nuancesofthe Actorthe legal distinctions between a defect and resultant damage. The intent of the Act was clearly not to force homeowners into litigation because of such distinctions. Resolving a homeowner complaint pursuant to the Act occurs relatively quickly in comparisonto litigation, which may take years. From the perspective of the average homeowner, having repairs made quickly is muchbetter than waiting for those repairs after years oflitigation. In order for homeownersto obtain 12 the full benefit ofthe Act, it must be construed to incorporate both defects and resultant damage. The Legislative Intent of the Actis clear: the Act, with limited narrow exceptions, preempts common law construction defect claims. To conclude otherwise encourages evasion of the Act by the simple expedientofpleading commonlaw claims. It is absurd to concludethat the efforts and resources of the legislative process was intendedto create an easily circumvented optional procedure, based upon an exception not even specifically enumerated by the Actitself. A realistic perspective of the legislative history, like a realistic perspective of the Act itself supports only one conclusion: the Act was intended to apply to commonlaw claims. The McMillin decision should be affirmed and the Liberty Mutual decision overturned. Vv. CONCLUSION The Act was intended to change the world of construction defect litigation. It did, for the better, by creating a comprehensive set of standards for certainty and providing builders with a statutory right to repair alleged defects before having to becomea party to a lawsuit. As discussed above,that is clearly what the Act says and what the Legislature intended.It is also the result the Legislature expected would have the greatest benefit for builders, trade contractors, consumers, and California courts. CALPASC therefore respectfully requests that this Court affirm the decision ofthe Court ofAppeal in McMillin. 13 Respectfully Submitted, Date: July 15, 2016 HIRSCH CLOSSON,APLC_ 14 a a Robert V. Closson, Esq. Jodi E. Lambert, Esq. Attorneys for Amicus Curiae The California Professional Association of Specialty Contractors CERTIFICATE OF WORD COUNT (California Rules ofCourt, Rule 8.204(c)(1).) The undersignedcertifies that the enclosed brief was produced using 13-point Times New Romantype and including footnotes consists of 4,056 words. Counselrelies on the word count ofthe WordPerfect Version 12 word processing program used to generate this brief. HIRSCH CLOSSON, APLC Dated: July 15, 2016 By: CEC obert V. Closson, Esq. Jodi E. Lambert, Esq. Attorneys for Amicus Curiae The California Professional Association of Specialty Contractors 15 SUPREME COURT OF CALIFORNIA FOR COURT USE ONLY FIFTH APPELLATE DISTRICT TITLE OF CASE(Abbreviated) FILE NAME/NO.: CalPASC/MeMillan Albany [68037] McMillan Albany, LLC v. Superior Court (Van Tassel) ATTORNEY(S) NAME AND ADDRESS TELEPHONE Robert V. Closson, Esq. HIRSCH CLOSSON, APLC (619) 233-7006 591 Camino de la Reina, Suite 909 San Diego, California 92108 ATTORNEY(S) FOR: HEARING: DATE-TIME-DEPT CASE NUMBER California Professional x / He / HK Supreme Court Case No. 8229762 Association ofSpecialty Fifth Appellate District: F069370 Contractors (CalPASC) DECLARATION OF SERVICE [Code Civ. Proc. §§ 1013A and 2015.5] I, the undersigned, declare: 1 am, and wasat the time ofservice of the papers herein referred to, over the age of 18 years, and not a party to this action. My business addressis 591 Camino de la Reina, Suite 909, San Diego, CA 92108. I served the following document(s): APPLICATION TO FILE AMICUS CURIAE BRIEF AND BRIEF OF AMICUS CURIAE CALIFORNIA PROFESSIONAL ASSOCIATION OF SPECIALTY CONTRACTORSIN SUPPORT OF MCMILLIN ALBANY, LLC ET AL.ontheparties in this action addressed as follows: See attached servicelist. x BY FIRST CLASS MAIL- [C.C.P. §§ 1013, 1013(a)(1) & (3)]: I placed a true copy ina sealed envelope addressed as indicated above, on July 15, 2016. I am readily familiar with the firm's practice ofcollection and processing correspondencefor mailing. It is deposited with the U.S. Postal Service on that same day in the ordinary course of business. | am aware that on motionofparty served, service is presumedinvalid if postal cancellation date or postage meter date is more than one day after date of deposit for mailing in affidavit. BY HAND DELIVERY- : I caused theoriginal and 14 copies ofthe documentsto be collected by Knox Attorney Services and hand deliveredfor filing to the Supreme Court of California on July 15, 2016. BY FAX TRANSMISSION- [C.C.P. §§ 1013, 1013a]: Based on an agreementofthe parties to accept service by fax transmission,I faxed the documentsto the personsat the fax numberslisted in the attached service list. No error was reported by the fax machine that I used. A copy of the record of the fax transmission, which I printed out, is attached. BY PERSONALSERVICE- [C.C.P. §415.10]: I personally delivered the documentsto the individual, or the attorney for that individual at the following address by leaving the document(s) in an envelope clearly labeled to identify the person being served. I declare underpenalty of perjury under the laws ofthe State of California that the foregoingis true and correct and that this declaration was executed on July 15, 2016, at San Diego, California. Ytthy J. dett: G:ARVCcases\CalPASC\McMillin Albany\!! POS.wpd / KatHy L.Plati 1 DECLARATION OF SERVICE 't Service List.wpd McMILLANALBANY, LLC v. SUPERIOR COURT(Van Tassel) Supreme Court Case No. S229762 Fifth Appellate District Case No. F069370 File Name/No.: CalPASC/McMillan Albany [68037] SERVICE LIST Mark A. Milstein, Esq. Fred M. Adelman,Esq. Mayo L. Makarezyk, Esq. MILSTEIN ADELMAN JACKSON FAIRCHILD AND WEDE LLP 10250 Constellation Blvd., Suite 1400 Los Angeles, CA 90067 TEL (310) 396-9600 / FAX (310) 396-9635 Counsel for Real Parties in Interest CARL & SANDRA VANTASSEL,etal. Kathleen F. Carpenter, Esq. AmyR. Gowan, Esq. DONAHUEFITZGERALD Growers Square 1646 N.California Blvd., Suite 250 Walnut Creek, CA 94596 Attorneys for Amicus Curiae CALIFORNIA BUILDING INDUSTRY ASSOCIATION Clerk of the Court of Appeal FIFTH APPELLATEDISTRICT 2424 Ventura Street Fresno, CA 93721 Fifth Appellate District Case No. F069370 SupremeCourt of California 350 McAllister Street San Francisco, CA 94102 Supreme Court Case No. S229762 Served Via Handdelivery by Knox Attorney Services l Andrew M.Morgan,Esq. Calvin R. Stead, Esq. BORTONPETRINI, LLP 5060 California Ave., Suite 700 Bakersfield, CA 93309 Attorneys for Petitioners McMILLIN ALBANY, LLC; and McMILLIN PARK AVENUE, LLC Alan H.Packer, Esq. NEWMEYER ANDDILLION LLP 1333 North California Blvd., Suite 600 Walnut Creek, CA 94596 Attorneys for Pub/Depublication Requestor LEADING BUILDERS OF AMERICA; CALIFORNIA BUILDING INDUSTRY ASSOCIATION; BUILDING INDUSTRY LEGAL DEFENSE FOUNDATION Clerk of the Superior Court SUPERIOR COURT OF KERN COUNTY 1415 Truxtun Ave., #212 Bakersfield, CA 93301 Respondent Honorable David R. Lampe Kern County Superior Court Case No. S-1500-CV-279141 SERVICE LIST