McMILLIN ALBANY v. S.C.

Amicus Curiae Brief of MWI, Inc.

Cal.August 22, 2016

O1PPCME MANIST COPY COPY S229762 IN THE SUPREME COURT FILED SUPREME COURT OF CALIFORNIA AUG 2 2 7016 MCMILLIN ALBANY LLC et al., Frank A. McGuire Clerk Petitioners, main Vv. THE SUPERIOR COURT OF KERN COUNTY, Respondent; CARL VAN TASSELLetal., Real Parties in Interest. AFTER A DECISION BY THE COURT OF APPEAL, FIFTH APPELLATE DISTRICT CASE No. F069370 APPLICATION FOR LEAVE TO FILE AMICUS CURIAE BRIEF AND AMICUS CURIAEBRIEF IN SUPPORT OF REAL PARTIES IN INTEREST HORVITZ & LEVY LLP H. THOMAS WATSON(Bar No. 160277) *DANIEL J. GONZALEZ (BaR NO. 73623) BUSINESS ARTS PLAZA 3601 WEST OLIVE AVENUE 8TH FLOOR BURBANK, CALIFORNIA 91505 (818) 995-0800 > FAX: (844) 497-6592 htwatson@horvitzlevy.com * dgonzalez@horvitzlevy.com ATTORNEYS FOR AMICUS CURIAE MWI, INC. TABLE OF CONTENTS Page TABLE OF AUTHORITIES..........cceccccccccsssssssssseceeeceseseeeeesessssaeees 3 AMICUS CURIAEBRIE...........ccceeccssssssssssesssessssseseecceeeseeeseees 10 INTRODUCTION...........ccccccccsssssceeessaeececeeecceeeeecceeeceeeesesssssnseeeseaeeas 10 ARGUMENT...........ccccscccccsscccccceessseeesesssnesneeecececeeeaseesesecesceseesssessenees 12 I. THE PURPORTED PREEMPTION OF THE COMMON LAW BY SB800 CANNOT BE RECONCILED WITH SECTION 936, WHICH EXPRESSLY REFERS TO STRICT LIABILITY CLAIMS.......cecccccecesssseeeeessseesesseececeessssaeeaeeseeeesesceesesesseeeenees 12 A. The Legislature amended the last sentence of section 936 in 2003 to clarify that the negligence standard of proof for a nonbuilder construction participant’s liability under SB 800 does not change the common law of strict liability for actual harm caused by defective products................ 12 B. The Legislature would not refer to “claims” for “strict liability” in section 936 if SB 800 had preempted CHOM..........ccccccssseessssssssceecceeceeeeeeceeeeeeeeeseeea 15 II. SECTIONS 896, 943, AND 944, DO NOT JUSTIFY PREEMPTION OF COMMON LAW CLAIMG.................... 19 Ill. PREEMPTION OF THE COMMON LAW WAS NOT NECESSARY TO THE LEGISLATIVE GOAL OF REDUCING THE COSTSOF LITIGATION...................04. 25 CONCLUSION..........cccccssssssscccessseesesseeececsseesnaeseeeeeeesssseaseeeseneeaas27 CERTIFICATE OF WORD COUNT.................cccceeseeesessnseseeeeeeeeees 28 TABLE OF AUTHORITIES Page(s) Cases Aas v. Superior Court (2000) 24 Cal.4th 627 ...........cccsssssssssssssssseceeesessseeees 15, 20, 25, 26 Barrett v. Superior Court (1990) 222 Cal.App.3d 1176 ..............ccccccessscceeesssseessssssnsesseesseees 17 Boeken v. Philip Morris USA, Inc. (2010) 48 Cal.4th 788 ..........cccccccssseesesesseesssenseeeeseeeseessseseseessesees 16 Burch v. Superior Court (2014) 223 Cal.App.4th 1411...ccccccessssseeeeeeeesseeceeeeneeees 15 California Assn. of Health Facilities v. Department of Health Services (1997) 16 Cal.4th 284.0... ceccccccsseessssessnseneeeeseseceseeees 19, 21, 22 Carrau v. Marvin Lumber & Cedar Co. (2001) 93 Cal.App.4th 281...........cccccccccccsssssssssssseececeeeeeaeeeeeeeees 15 Greystone Homes, Inc. v. Midtec, Inc. (2008) 168 Cal.App.4th 1194.00... ccccccccsssseseeeeeeteeeeenees 14, 15 Grimshaw v. Ford Motor Co. (1981) 119 Cal.App.3d 757 00.0... .ccccccccccesesssesseeeeeesereeessesseeeseesees 24 Holland v. Assessment Appeals Bd. No. 1 (2014) 58 Cal.4th 482 oo... cccccccccccccccsscesssssssceeeceseeseesesseeveeceees 15 In re Forthmann (1981) 118 CalApp. 882 ......cc ec ccccccccccccccceeeeeeeeeeeeeeeeeeeeeneneeeees 22 Jimenez v. Superior Court (2002) 29 Cal.4th 478 oo... .cccccccessceseeeeecsssssseeeeeeeeseeseess 14, 16, 20 KB Home Greater Los Angeles, Inc. v. Superior Court (2014) 228 Cal.App.4th 1471.0... cccccccccsceeeeseeeceeeeeeeeseeeaeeeess 24 Kriegler v. Eichler Homes, Inc. (1969) 269 Cal.App.2d 224 ooo. ccccsesseeceesssceeeeeesetensnesnnneeees 16 3 Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC (2013) 219 Cal.App.4th 98 ......cceccceessrecessneeeenes 15, 20, 23, 24 Martin v. Szeto (2004) 32 Cal.4th 445 oo... cceccsssesccecccssnceeeeececeeeessseeeesesesseees 16 Murphy v. E. R. Squibb & Sons, Inc. (1985) 40 Cal.3d 672.0... ccceccccssssscccececessseececeessscesceececseneeseenaes 16 Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888 .0.......ccccccessssscessssessesssceeeesssnressseeeesseeees 16 People v. Avanessian (1999) 76 Cal.App.4th 635.000... cccccsccccsseeeeeeseeesssssssssssssesens 22 People v. Barragan (2004) 32 Cal.4th 236 ooo... ccccccccccscccceesssnsseseseeeesssssseeeeesesees 16 Reed v. Wilson (1999) 73 CalApp.4th 439.............cccccccccccsssseececeeesccensaeeeeeseesesees 16 Slater v. Blackwood (1975) 15 Cal.3d 791 o.........ccccccceccssceccceceeeceeeeeeeecesseeuseeessseseeesssens 16 Tarasoff v. Regents of University of California (1976) 17 Cal.3d 425 0... ccccsccesssssseccccessnscssneeeseseesseesessnnsessenes 24 Verdugo v. Target Corp. (2014) 59 Cal.4th 312 oo.cccccccecccessrecssssssneeserenseesssssseeeees 19 Statutes Civil Code § SOB vccceccecccssecssescesssscecssecessecssusssuscsssessssessuessecssesssesseesssuessetesses 13 § 895, subd. (€) .......ceeeeesseesscceecessneecerseesseeesesessseneenessseeverseeeens 18 § 895 et SCG. ....ccccccccssreceesseeeeeesesseeeeeeeesseeeensssseaeeeueneeesseesssaeeees 7,10 § BIG oocccccssceceessesteessetseeeeeseseeeeeees 8, 10, 11, 19, 20, 21, 22, 24 § 896, Sub.(€) .......ceccccceseeeceesscceeeeeeesseeeestsaceeeeeeeaeeessessaaeeeeeesneas 24 § 910 et SOQ... eeeeeeseseeesseeeeeessneneceeceesseescesseeesaeeeaeeesesesseeeeesensaaes 24 § QLD cecceccsesccseecssescsecsssecessecessecesecssusssseeessusessuesaessuessessseessssesseeessee 12 § OB ceccecccecccseccsseeccvcesserecsescssscssuecsusesseesssutessuesssssevsssessseessvesseesaes 22 § 86 oo cccccssseccceessteeeessneceestenseaceeeeetsaeeestscnaneaeensuaeetsessseas passim § 941, SUbA.(€) ou... cecccesssececesssssneeneeeesseeeeecseneenenconeneeesesseaaeeeseees 18 § DAD ooo ceccccsscccesseeccesseeeeseeceeeeeeeeseneeeeaseeseaeeeseeeeesenanesees 17, 18, 20 SST. 8, 10, 11, 19, 22, 23, 24 § 948, SUDA.(8)........c cc cceessceesesseeeeeeeeeeeeesseaaececeneeeeererenneeeeeeeaees 18 § 944ecccscetceeeessereeeeenneees 8, 10, 11, 18, 19, 20, 22, 23, 24, 26 § QAB5 ccccccceccseccssecsucsssesessccsscecueceuscsscssucsessvesuvsaeesesaeesuvesseesavesseeen 17 Code of Civil Procedure § 837.15, SUDA. (A) «0. cece eeeeecesseeeceeecnnereeeeesacaaaaeuneeseeeeesaeeeeerses 24 § 3837.15, SUD. (fu... eeeeeeeesseeeeeeseeeeteseeseaeeeeeeesesnseeceeesaneesoeeeeees 24 § OTT wecccecccccccsscccsnsnececssceesseeeensnneeceseaneeseasesseeeeseseseseaneesseaeeesenaeeees 16 Rules of Court Cal. Rules of Court Lule 8.52O(£)(1) .......ccccecccccscecccccceeccccenecssceceecececcseusseeeeeeeeseeeeeseeseess 6 LUle 8.52O(f)(A) ......ecceecccccccccccceccesccecccecseseeseeeeececseesseseesesenseesseeeeeees 9 Miscellaneous Assembly Bill 903 (2003-2004 legislative session)................:06 13 Senate Bill Number 800 (SB 800)................ccccccseseceesescceeneseespassim 6 West’s Ann. Civ. Code (2007 ed.) foll. CALIFORNIA CODES,p. XVI .........ceececesssseeneeeceeeeeesenaceeeeeees 22 IN THE SUPREME COURT OF CALIFORNIA MCMILLIN ALBANY LLCetal., Petitioners, v. THE SUPERIOR COURT OF KERN COUNTY, Respondent; CARL VAN TASSELLetal., Real Parties in Interest. APPLICATION FOR LEAVE TO FILE AMICUS CURIAE BRIEF Pursuantto rule 8.520(f)(1) of the California Rules of Court, amicus curiae MWI,Inc. respectfully requests permissiontofile the attached brief. MWI’s proposed amicus brief supports the result soughtby real parties in interest Carl and Sandra Van Tassel (Van Tassel), but advances new arguments andauthorities. Interest ofAmicus Curiae Amicus MWIis the defendant/appellant in a case now pending before the California Court of Appeal, which is captioned Acqua Vista Homeowners Association v. MWI, Inc. (D068406, app. pending) (Acqua Vista). MWI was sued by the Acqua Vista Homeowners Association (the HOA) as a supplier of cast iron pipe for use in a high-rise residential construction project in downtown San Diego. Designed, permitted and substantially constructed as apartments, the 382 dwelling units in the building were then sold as condominiums. The HOAalleged there weredeficiencies in the building’s plumbing system, for which MWIwas lable under Civil Code section 895 et seq., otherwise known as Senate Bill Number 800 (SB 800) and the “Right to Repair Act.” A jury returned a verdict against MWI and awarded the HOA almost $24 million to replace all the sewer and storm drain pipein the building. Oneofthe issuesraised at the trial and on MWI’s appeal from the judgment concernsthe basis for a product distributor’s liability to a homeownerclaimant under SB 800. The first sentence of Civil Code section 936 states that distributors (“material suppliers” or “product manufacturers”) are liable to the extent that they contributed to “a violation of a particular standard[ofconstruction] as a result of a negligent act or omission or a breach of contract.” (Emphasis added.) However, the Acqua Vista trial court ruled that the negligence standard did not apply to MWI dueto the last sentence of section 936, which states: “[t]he negligence standard in this section does not apply to any ... [distributor] . . . with respect » to claims for which strict liability would apply.” The trial court ruled that, because the HOA might have alleged that MWI was strictly liable under the commonlaw for any product defects and the actual harm they caused, the issue of negligence should not be submitted to the jury under SB 800. MWIhas arguedonits appeal that the court misconstrued section 936. MWIand the HOAhaveattributed conflicting meanings to the word “claims” as used in connection with“strict liability” in the last sentence of Civil Code section 936. MWI has argued that “claims” refers to commonlawtort causesofaction for strict product liability, and that the Legislature intended the last sentence to clarify that section 936’s negligence standard did not change the common law, which persists alongside SB 800. Conversely, the HOAcontends that SB 800 completely preempted the commonlaw, so MWI’s position cannot be correct. According to the HOA, the word “claims” must refer to the right to recover under SB 800, and the intent of the last sentence in section 936 was to deny product distributors the benefit ofthe negligence standard ofproofdescribed in the first sentence of section 936. Thus, the issue of statutory preemption that Van Tassel has presented to this Court could be significant to the proper disposition of MWI’s appeal. The briefs of the parties have not heretofore focused on Civil Code section 936. However, as explained in MWI’s proposed amicus brief, section 936 is highly germane to the statutory interpretation issue. In addition, MWI’s amicus brief comments on the proper understanding of Civil Code sections 896, 943 and 944, on which the McMillin Albany Court ofAppealrelied to find preemption. Finally, MWIdispels the McMillin Albany Court ofAppeal’s concern that in the absence ofpreemption of the commonlaw, enactment of SB 800 could not further the Legislature’s goal of reducing the overall costs of new homeconstruction defect litigation. Accordingly, MWI respectfully requests that this Court accept and file its attached brief, because it will assist the Court in deciding the issue presented. No Other Party Involved MWI’s liability insurers are paying for the preparation and submission of this brief. No party or its counsel, or other person or entity, has authored this brief in whole or in part, or made a monetary contribution to fund the preparation or submissionofthis brief. (Cal. Rules of Court, rule 8.520(f)(4).) August 12, 2016 HORVITZ & LEVY LLP H. THOMAS WATSON DANIEL J. GONZALEZ »LFy: O Lo aeJ.G ATTORNEYS FORVan CURIAE MWI, INC. AMICUS CURIAE BRIEF INTRODUCTION MWIL, Inc. submits this brief in support of real parties in interest Carl and Sandra Van Tassel (Van Tassel). MWI’s brief presents new arguments and authority for why this Court should reverse the Court ofAppeal andhold that SB 800 (otherwise known as the “Right to Repair Act”) does not preclude a common law cause of action based on a defect in construction of ‘a new homethat caused physical damage to the home,such as a claim for negligence or strict liability. MWI writes separately to discuss the implications of Civil Code section 936 1; to provide some additional perspective on the purpose of sections 896, 943 and 944 (the provisions of SB 800 on which the Court of Appeal principally relied to reach its contrary conclusion); and to dispel the Court of Appeal’s misplaced concern that common law preemption was necessary to further the Legislature’s goal of reducing the costs of new home construction- defect litigation. Specifically, it appears that neither the Court of Appeal nor the parties have heretofore considered the significance of section 936. Section 936 is, however, highly germane to the statutory preemption issue presented in this case, because a finding of preemption of the common law cannot be reconciled with section 936, which expressly contemplates the continued existence of 1 SB 800 has been codified at Civil Code section 895 et seq. All further statutory references are to the Civil Code unless otherwise indicated. 10 “claims for whichstrict liability would apply.” This language was added by an amendmentto section 936 a year after SB 800 was originally enacted. The Legislature would notreferto strict liability claims in that amendment if the common law had already been preempted. Asfor sections 896, 943,and 944, the provisions ofSB 800 that have been briefed by the parties, MWIwill explain why they do not clearly and unequivocally demonstrate the Legislature’s intent to preempt the commonlaw theories of recovery that were already available to new home buyers, which is the test for preemption. Rather, the intent underlying these provisions wasto ensurethat SB 800 is construed as a statute of limited application that is strictly applied accordingto its terms, and that courts refrain from incorporatingits novel obligations and remedies elsewherein the law. Finally, MWI will explain why the Legislature may have believed that SB 800 and the common law can coexist without compromising the goal of reducing the long-term costsoflitigation over new homeconstruction defects. 11 ARGUMENT I. THE PURPORTED PREEMPTION OF THE COMMON LAW BY SB 800 CANNOT BE RECONCILED WITH SECTION 936, WHICH EXPRESSLY REFERS TO STRICT LIABILITY CLAIMS. A. The Legislature amendedthe last sentence of section 936 in 2003 to clarify that the negligence standard of proof for a nonbuilder construction participant’s liability under SB 800 does not change the common law of strict liability for actual harm caused by defective products. The issue before this Court is whether the Legislature intended SB 800 to preclude commonlaw construction defect claims that would otherwise be available to the SB 800 homeowner claimant. Section 936 is compelling authority, in addition to the authorities that have already been briefed, why the Court should conclude that the Legislature did not so intend. The first sentence of section 936 provides: “Each and every provision of the other chapters of this title apply to general contractors, subcontractors, material suppliers, individual product manufacturers, and design professionals’—what we will call “nonbuilders”2—“to the extent that the [nonbuilder] caused, in 2 This is to distinguish the listed construction participants from a statutorily defined “builder.” (§ 911.) 12 whole or in part, a violation of a particular standard [of construction] as a result of a negligent act or omission or a breachof contract.” However, as originally enacted in 2002, the last sentence said that “this section [936] does not apply to any [nonbuilder] to which strict liability would apply.” (See MJN 77-78, emphasis added.) Readliterally, the last sentence exempted a nonbuilder from the scope of section 936 if the nonbuilder fell within the class of persons,like distributors, that were subject at commonlaw tostrict liability in tort for defective products that caused actual harm (e.g., “material suppliers’ or “product manufacturers’). And since section 936 wasthe only basis for a nonbuilder’s statutory liability to a homeowner,the languageeffectively barred SB 800 actions against an exempted nonbuilder. However, that total exemption from SB 800 wasclearly not whatthe Legislature wanted. The next year, it unanimously passed “technical’/“noncontroversial”’/“cleanup” amendments to SB 800, which inter alia added the following (underlined) languageto the last sentence of section 936: “the negligence standard in this section [936] does not apply to any [nonbuilder] with respect to claims for which strict liability would apply.” (MJN 1, 23, 36-40, 66, 78, 85- 89.) 3 “MJN” refers to the legislative history of Assembly Bill 903 (2003-2004 legislative session), which accompaniesthe motion for judicial notice that MWIisfiling along with this brief. 4 Section 895 states that nonbuilders are liable for construction standard violations under SB 800 “to the extent set forth in Chapter 4 (commencing with Section 910)... .” Section 936 is the provision within Chapter 4 that makes nonbuildersliable. 13 Thus, as originally worded, the phrase “strict liability” in section 936 related back to the listed nonbuilders, but after the amendment“strict liability” related back to “claims.” This technical amendmentclarified that section 936 was neverintended to exempt a product distributor from SB 800 and its remedies for a purely economic loss, and the section was likewise not intendedto alter the distributor’s commonlawstrict liability for actual harm resulting from product defects. That is understandable. A few months after SB 800 was originally enacted, this Court decided Jimenez v. Superior Court (2002) 29 Cal.4th 473, 479-481 (Jimenez), holding that distributors are strictly liable for defective products that cause actual harm in the context of new home construction. The proof of negligence required by section 936 would be irrelevant to such a common law theory of liability. The amendmentto the last sentence clarified that the negligence requirementfor the purpose of SB 800 did not extend to any commonlawstrict liability claim that could also be asserted. In Greystone Homes, Inc. v. Midtec, Inc. (2008) 168 Cal.App.4th 1194 (Greystone), the Court of Appeal explained the trade-off the Legislature made. (Id. at pp. 1213-1216.) Under SB 800, a product distributor can be held lable for a homeowner claimant’s otherwise non-compensable economic losses, but only if the claimant proves the supplier acted negligently (or in breach of contract) in a way that contributed to construction deficiencies. (Id. at pp. 1216-1217; § 936.) In other words, the greater damages recoverable from the distributor under SB 800 (economic losses) 14 were balanced by the greater burden of proof on the claimant seeking to recover them (negligence). However, at commonlaw,the supplier remainsstrictly liable for defects in the manufacture or design of its products—butonly to the extent the claimant suffered actual harm. (See Aas v. Superior Court (2000) 24 Cal.4th 627, 636 (Aas); see also Carrau v. Marvin Lumber & CedarCo. (2001) 93 Cal.App.4th 281, 292-295 [property owner wasnot entitled to recover the costs to repair and replace defective windowson strict liability theory, because that was an economic loss to the owner, not actual harm].) Indeed, “[t]he commonlaw[ofstrict liability] has expanded theliability ofproduct manufacturers in this regard, albeit subject to the economic loss rule, beyond that provided in section 936.” (Greystone, supra, 168 Cal.App.4th at p. 1216, fn. 14.) Where SB 800 and the common law overlap, the claimant may pursueeither or both claims, which is consistent with the holding in Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC (2013) 219 Cal.App.4th 98, 109 (Liberty Mutual). (See also Burch v. Superior Court (2014) 223 Cal.App.4th 1411, 1414 [“We hold that the Right to Repair Act does not provide the exclusive remedy for a homeownerseeking damagesfor construction defects that have resulted in property damage,as here”]; id. at pp. 1417-1418.) B. The Legislature would not refer to “claims” for “strict liability” in section 936 ifSB 800 had preempted them. Courts interpret statutory language in light of its usual meaning. (Holland v. Assessment Appeals Bd. No. 1 (2014) 58 15 Cal.4th 482, 490.) The phrase “strict liability” is a shorthand expression for the commonlaw concept that a distributoris strictly liable in tort for defects in its product and for the injuries the defective product causes. (Jimenez, supra, 29 Cal.4th at pp. 479- 481, 484; Murphy v. E. R. Squibb & Sons, Inc. (1985) 40 Cal.3d 672, 676; Kriegler v. Eichler Homes, Inc. (1969) 269 Cal.App.2d 224, 227- 229.) “[T]he term ‘claims’ appearsto refer to a claim ofliability. In the context of litigation, a claim of liability against another party generally connotes a causeofaction for damages.”5 (Reed v. Wilson (1999) 73 Cal.App.4th 439, 444 [construing Code of Civil Procedure section 877].) The reference to “claims” in connection with “strict liability” in the last sentence of section 936 shows the Legislature contemplated that this common law theory of recovery would continueto be available alongside SB 800 in the context of defective new home construction. Indeed, when urging Governor Davis to sign his bill with the 2003 amendments, Assembly MemberDarrell Steinberg wrote that the amendmentclarified that SB 800 “did not change the law regarding... strict liability....”7 (MJN 89.) 5 See, e.g., Boeken v. Philip Morris USA, Inc. (2010) 48 Cal.4th 788, 803; People v. Barragan (2004) 32 Cal.4th 236, 253; Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 897; Slater v. Blackwood (1975) 15 Cal.3d 791, 795. 6 This was the only place the Legislature used the phrase “strict liability” in SB 800. 7 Courts may look to such communications from authors of legislation when ascertaining legislative intent. (See Martin v. Szeto (2004) 32 Cal.4th 445, 450-451 [“to the extent they constitute ‘a reiteration oflegislative discussion and eventsleading to adoption (continued...) 16 Preempting the common law would obviously have been an enormouschangein the law. It follows that none was intended. One unconvincing response, asserted by the HOA in the AcquaVista case, is that the word “claims” in the last sentence of section 936 means claims under SB 800, not the commonlaw. According to the HOA,therationale for this use of the word in the 2003 amendments wasto exclude certain types of nonbuilders from section 936’s negligence standardin an action under SB 800—e.g., those, like distributors, who are within the class of persons traditionally subject at commonlaw to “strict liability” for product defects and the actual harm thedefects cause. Under the HOA’s construction of section 936, product distributors are stripped of the protection of the negligence standardin section 936, andeffectively put on par with builders in terms of their absolute liability under SB 800.8 What thefirst sentence of section 936 gives to distributors by way of the (...continued) [of legislation] rather than merely an expression of personal opinion’ ”].) 8 We say that a builder’s liability under SB 800 is “absolute” because all the homeownerclaimant hasto prove is a violation of the applicable statutory construction standard. (§ 942.) Unless the builder carries its burden of proof on an affirmative defense, the homeowneris entitled to all the remedies that the statute allows withoutproofoffault (if fault can be equated with the responsibility for placing a defective product into the stream of commerceas well as with negligence). (Ibid.; § 945.5; see Barrett v. Superior Court (1990) 222 Cal.App.3d 1176, 1188-1189.) 17 heightened negligence standard of proof on the claimant in an SB 800 action, the last sentence takes away.? Yet when the Legislature meant to refer to SB 800 claimsor actions elsewherein the statute, it used the phrase “underthistitle” or something equivalent, unless that was already clear from the context. (See, e.g., §§ 895, subd. (e), 941, subd. (e), 942, 943, subd. (a), 944.) There is no discernible reason whythe Legislature would make theliability of conceivably remote product distributors under SB 800identical to that ofbuilders (who possessnearly totalcontrol over the construction project), while making other nonbuilders much closer to the project (e.g., contractors/design professionals) liable under SB 800 only if their negligence contributed to a construction deficiency. Hadthe Legislature really intended the 2003 amendmentto exclude product distributors from the negligence standardofsection 936, there would have been a much simpler way to achieve that result. All the Legislature would have had to do was add the four new wordsnearthe beginningofthe last sentence, so it would read: “However, the negligence standard in this section [936] does not apply to any [nonbuilder] to which strict liability would apply.” In this way, the amended statute would have excluded product distributors as a class from the negligence standardinstead of the entire section 936. But the Legislature did not enact that simple amendmentto section 936. Instead, it also added the (underlined) words “with 9 This effectively rewrites the first sentence of section 936 to say: “Rach andevery provision of the other chaptersofthis title apply to product distributors”—period. 18 H S A A M A S G y e B Q respect to claimsfor whichstrict liability would apply” at the end of the sentence, somethingit could have stated more expansively as “claims [of product defects causing actual harm] for which strict liability would apply [against the product distributor].” These changes made clear that the negligence standard that applies against nonbuilders in SB 800 actions does not apply to strict liability “claims” against nonbuilders, which continueto exist as commonlaw causesof action separate and distinct from SB 800. To uphold the Court of Appeal’s decision, one must reconcile its rationale for preemption of the common law with the ongoing reference to commonlawstrict liability claims in the last sentence of section 936. That cannot be done. Il. SECTIONS 896, 943, AND 944, DO NOT JUSTIFY PREEMPTION OF COMMON LAW CLAIMS. “A statute will be construedin light of commonlaw decisions, unless its language clearly and unequivocally discloses an intention to departfrom,alter, or abrogate the common-law rule concerning the particular subject matter.” (California Assn. ofHealth Facilities v. Department of Health Services (1997) 16 Cal.4th 284, 297 (California Assn.), internal quotation marks omitted.) There is a presumption that a statute does not, by implication, repeal the common law. (Ibid.; see also Verdugo v. Target Corp. (2014) 59 Cal.4th 312, 326.) Enacted in 2002, SB 800 was groundbreakinginsofarasit set forth specific standards for new residential construction intended for sale. (§ 896.) It required builders to meet those standards and 19 gave homeownersa causeof action for violation of the standards without regard to fault (e.g., a product defect or negligence) or causation. (§ 942.) It also provided new remediesfor economicloss without proof of actual harm, something this Court had just held was not compensable at common law. (§ 944; see Aas, supra, 24 Cal.4th at pp. 632, 636.) Though SB 800effected dramatic changes in the context of construction defect litigation, this Court has characterized a claim underthe statute as a “limited new cause of action ....” (Jimenez, supra, 29 Cal.4th at p. 483, fn. 2.) Consistent with that observation, the Legislature defined the scope of the statute narrowly. Its obligations and remedies apply only to “original construction intendedto be sold as an individual dwelling unit,” and they do not apply to “condominium conversions.” (§ 896.) Here, the Court of Appeal relied on the wording of certain sections ofSB 800 to conclude the Legislature intended that, where it applies, SB 800 provides the exclusive remedy for construction defects. However, the language of those sections does not support that conclusion. Properly understood, it merely confirms the Legislature’s intent that the novel provisions of SB 800 should not extend beyond the newlegislation itself. Specifically, the Court ofAppeal construed section 896 to say that SB 800 preempts any otherwise overlapping common law. (Typed opn. 9, 14-15.) However, Liberty Mutualgot it right whenit described as “circular” the interpretation of section 896 that the builder in that case said compelled preemption. (Liberty Mutual, supra, 219 Cal.App.4th at p. 108 [the “argumentis essentially that any action arising out of the Act is an action under the Act”].) 20 Section 896 is neither clear nor unequivocal with respect to preemption. (See California Assn., supra, 16 Cal.4th at p. 297.) Rather, reducedto its essentials, the pertinent language of section 896states: In any action seeking recovery of damagesarising out of, or related to [construction] deficiencies ..., the claimant’s claims or causesofaction shall be limited to violation of [SB 800’s construction] standards... . [1 The Court of Appeal read this as an express statement by the Legislature that commonclaims were preempted by SB 800ifthey werefactually based on a construction defect that would also qualify as a construction deficiency under SB 800. However, a different and more sensible reading of the statutory language is that an action under SB 800 must be based on violation of the construction standardsdescribedin the statute and not on other perceived deficiencies—such as a deviation from an expert-declared or building code requirement that, while arguably a defect in construction, will not adversely affect a function or component of the structure. Because there is nothing in this reasonable interpretation to compel the conclusion that a claim 10 The full text of the quoted language reads asfollows: “In any action seeking recovery of damages arising out of, 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 (commencingwith Section 910), a general contractor, subcontractor, material supplier, individual product manufacturer, or design professional, shall, except as specifically set forth in thistitle, be liable for, and the claimant’s claims or causes of action shall be limited to violation of, the following standards, exceptas specifically set forth in this title.” (§ 896.) . 21 under SB 800is the only action that may be brought, the common law must be presumed to have survived enactmentof the statute. (California Assn., supra, 16 Cal.4th at p. 297.) The Court of Appeal also referred to section 943, which provides that “[e]xcept as providedinthis title, no other cause of action for a claim coveredby thistitle or for damages recoverable underSection 944 is allowed.”!1 (Typed opn. 10-11, 13, 15; see also typed opn. 12, 19.) The court believed this was another expression of the Legislature’s intent to preempt the common law whereit overlapped with SB 800. But once more, the court read too much into the quoted language. Section 943 says that SB 800is the exclusive source for the kind of construction deficiency claim that the statute created, one that (so far as builders are concerned) amountsto absoluteliability for breach of what is the equivalent of a statutorily created warranty. Thus, section 943 prohibits courts from grafting SB 800’s novel provisions onto other theories ofrecovery. However, that does 11 McMillin Albanyrefers the Court to the “heading”for section 943 that appearsin certain publicationsofthe Civil Code, including the West annotations: “Exclusivenessoftitle; exceptions.” (ABOM 18; see also ABOM 17 [§ 896: “Building standards for original construction intendedto be sold as an individual dwelling unit”], 49 [§ 931: “Causesof action or damages exceeding scopeof actionable defects; applicability of standards”].) However, the heading was not part of SB 800asit wasoriginally enacted or amended. (Contrast In re Forthmann (1931) 118 Cal.App.332, 336.) As explained in the forward to the Westseries, “section headings for West’s Codes are prepared by the West editorial staff, except for certain headings which are supplied by the Office of Legislative Counsel.” (6 West’s Ann.Civ. Code (2007 ed.) foll. CALIFORNIA CODES,p. XVI.) Asa result, the heading cannot be considered to ascertain legislative intent. (See People v. Avanessian (1999) 76 Cal.App.4th 635, 641.) 22 not mean the Legislature intended the statute to preempt existing common law where they mayoverlap. The items of damages recoverable for an owner’s economic losses that are enumeratedin section 944 are likewise uniqueto the SB 800 cause of action. Section 943 forbids courts from incorporating them elsewhere. As Liberty Mutual observed, section 944 does allow a homeownerclaimant to recover the “reasonable cost of repairing and rectifying any damagesresultingfrom thefailure ofthe home to meet [SB 800’s construction] standards.” (Liberty Mutual, supra, 219 Cal.App.4th at p. 107, emphasis added.) However,that is only “lilfa claim . .. is made under[SB 800]” (§ 944), in which event the claimant can recover the resulting damages from the builder without proof of fault. In that respect, the right to recover such damages remains unique to an SB 800 action. Including that single item ofdamages within thelongerlist of SB 800 remedies did not signal the Legislature’s intent to preempt the common law where there is proof of fault and the injured homeownerhas reason not to proceed under SB 800. Such reason could include a catastrophic loss requiring immediate attention that allows no time for the homeowner to comply with SB 800’s mandatory prelitigation notice/inspection/repair process.!2 (See 12 McMillin Albanyinterprets this argument to meanthat “the best andfastestfix for sudden catastrophic damage in a homeisto file a commonlawaction in Superior Court... .” (ABOM 28.) Not true. The “best and fastest fix” is for the homeowneror its insurer to immediately repair the damage to make the homelivable again, after which engaging in the SB 800 notice/inspection/repair process may beneither feasible nor useful. . 23 § 910 et seq.; KB Home Greater Los Angeles, Inc. v. Superior Court (2014) 223 Cal.App.4th 1471, 1478; Liberty Mutual, supra, 219 Cal.App.4th at pp. 105-106.) Alternatively, there may-be a statute of limitations problem that precludes an action under SB 800 that would still be timely under the common law. (See, e.g., Liberty Mutual, at pp. 101-103.13) Or the homeowner may wantto claim punitive damages, which are not recoverable under SB 800. (§ 944.)14 In sum, sections 896, 943, and 944 do not compel the conclusion that SB 800 isa homeowner’s only theory of recovery in the context of new home construction defect litigation. In the absence of the clear and unequivocal indication of such a legislative intent that would be required to find preemption, this Court should hold that the common law survived SB 800’s enactmentintact. 13 Under SB 800, aclaim that a plumbing or sewer system wasnot installed properly or materially impaired useofthe structure by its inhabitants must be brought within four yearsafter close of escrow on the property. (§ 896, subd.(e).) At commonlaw,such a claim for a latent deficiency may be brought as late as 10 years after substantial completion of the home. (Code Civ. Proc., § 337.15, subd.(a).) Actions based on willful misconduct may be brought even later than that. (Id. at § 337.15, subd.(f).) 14 Section 944 describes the “only” items of damages that a homeowner mayclaim under SB 800. Those items do not include punitive damages, whichare therefore not recoverable as part ofthe statutory cause of action. (Cf. Tarasoff v. Regents of University of California (1976) 17 Cal.3d 425, 450 [wrongful death]; Grimshaw v. Ford Motor Co. (1981) 119 Cal.App.3d 757, 824-829 [same].) 24 Ill. PREEMPTION OF THE COMMON LAW WAS NOT NECESSARY TO THE LEGISLATIVE GOAL OF REDUCING THE COSTSOF LITIGATION. The Court of Appeal reasoned that unless it preempted the common law, SB 800 could not achieve the Legislature’s goal of reducing thecosts of litigation over new homeconstruction defects. “I]t is unlikely the Legislature or the bill supporters would have expected that creating a new statutory cause of action for defects that have not yet caused damage, and leaving the common law causes of action available once property damage has occurred, would significantly reduce the cost of construction defect litigation and make housing more affordable.” (Typed opn. 19; see also ABOM13,46 [McMillin Albanyagrees].) The court took too narrow and shortsighted a view of the anticipated cost-saving effect of SB 800. The trigger for SB 800 wasthe Aasdecision,insofarasit held that homeowners who becameawareofconstruction defects had no recourse for a known economicloss until the defects caused actual harm. (Aas, supra, 24 Cal.4th at pp. 632, 639, 647.) The defects in Aas included shear andfire walls that allegedly violated building safety code requirements intendedto protect health and safety. (d. at p. 633, fn. 1.) Indissent, ChiefJustice George questioned why an owner had to wait until the home collapsed or was gutted byfire to collect the costs to repair the problems. (/d. at p. 653 (dis. opn. of George, C.J.).) SB 800 provided the solution: the owner could make an immediateclaim for repairs, and having doneso, would avoid the potentially much greater losses to person and property if disaster 25 struck, for which the owner would have had the right to sue the builder under the commonlaw.!5 Thus, creating the new statutory cause of action did not require preemption of the commonlawto reducethe overallcosts of litigation. Providing the alternative means to claim and compel repair of constructions defects before they caused actual harm would avoid more expensive lawsuits in the long term. (See Aas, supra, 24 Cal.4th at p. 649 [“to require builders to pay to correct defects as soon as they are detected rather than after property damage or personalinjury has occurred might be less expensive”].) Stated differently, the Legislature may have expected that the more construction deficiencies that were resolved pursuant to SB 800 (with or without litigation), the fewer negligence or strict liability actions would haveto be filed in the future with damage claims for actual harm in addition to repair costs. Allowing owners the option to pursue their common law remedies whenit is too late to avoid actual harm does not defeat that expectation. Ofcourse, the owner may have a mixed SB 800 claim: a claim for the costs to repair deficiencies, plus compensationfor any actual harm that the deficiencies may havealready caused. SB 800 allows the owner to claim both types of damages in the sameaction. (§ 944; see typed opn. 12.) Furthermore, SB 800 allows the ownerto recoverthe repair costs and compensation without having to prove fault on the part of the builder for either. The trade-off is 15 [t’s analogous to an automobile recall. Manufacturerspayto fix the defects in their cars today in order to avoid the greater expense of personal injuries and property damagein the future. 26 compliance with SB 800’s prelitigation notice/inspection/repair process—whichis itself designed to reduce or avoid litigation. However, when complianceis not realistic, as in the case of substantial actual harm requiring immediate attention,or there is other reason why the homeownercannotor does not wantto rely exclusively on SB 800, then the commonlaw should be available. So long as the ownerhastheproofoffault that the commonlaw but not SB 800 requires—i.e., a product defect or negligence—the commonlaw can provide a remedyto the ownerwithoutsacrificing any legislative goal. CONCLUSION For the foregoing reasons andthose stated by Van Tassel and other amici curiae, the Court should reverse the Court of Appeal and hold that, where it applies, SB 800 does not preclude a new home buyer from pursuing common law causes of action for defective conditions that resulted in physical damageto the home. August 12, 2016 HORVITZ & LEVY LLP H. THOMAS WATSON DANIEL J. GONZALEZ By: Lo Déniel JtPonsaler ATTORNEYS FOR AMICUS CURIAE MWI, INC. 27 CERTIFICATE OF WORD COUNT (Cal. Rules of Court, rule 8.520(c)(1).) The text of this brief consists of 4,715 words, as counted by the Microsoft Word version 2010 word processing program used to generateit. August 12, 2016 iel J. Gonzalez 28 PROOF OF SERVICE STATE OF CALIFORNIA, COUNTY OF LOS ANGELES At the time of service, I was over 18 years of age and nota party to this action. Iam employed in the County of Los Angeles, State of California. My business address is Business Arts Plaza, 3601 W.Olive Ave., 8th Floor, Burbank, California 91505-4681. On August 12, 2016, I served true copies of the following document(s) described as APPLICATION FOR LEAVE TO FILE AMICUS CURIAE BRIEF AND AMICUS CURIAE BRIEF IN SUPPORT OF REAL PARTIES IN INTERESTonthe interested parties in this action as follows: SEE ATTACHED SERVICE LIST BY MAIL:I enclosed the document(s) in a sealed envelope or package addressed to the persons at the addresses listed in the Service List and placed the envelope for collection and mailing, following our ordinary business practices. I am readily familiar with Horvitz & Levy LLP’s practice for collecting- and processing correspondence for mailing. On the same day that the correspondenceis placed for collection and mailing, it is deposited in the ordinary course of business with the United States Postal Service, in a sealed envelope with postagefully prepaid. BY E-MAIL OR ELECTRONIC TRANSMISSION: Based on a court order or an agreementofthe parties to accept service by e-mail or electronic transmission via Court’s Electronic Filing System (EFS) operated by ImageSoft TrueFiling (TrueFiling) as indicated on the attachedservicelist: I declare under penalty ofperjury underthe lawsofthe State of California that the foregoing is true and correct. Executed on August 12, 2016, at Burbank, California. Kathy Turner 29 SERVICE LIST McMillin Albany v. Superior Court ofKern County (Van Tassel) Fifth District Case No.: F069370 « Supreme Court Case No. S229762 Individual / Counsel Served Party Represented Andrew M.Morgan, Esq.* Calvin R. Stead, Esq. BORTON PETRINI, LLP 5060 California Avenue, Suite 700 Bakersfield, California 93309 (661) 322-3051 + FAX: (661) 322-4628 E-mail: amorgan@bortonpetrini.com Defendants and Petitioners MCMILLIN ALBANY, LLC AND MCMILLIN PARK AVENUE, LLC VIA U.S. MAIL ONLY MayoL. Makaczyk, Esq.* MarkA.Milstein, Esq. Fred M. Adelman, Esq. Aaron Michael Gladstein MILSTEIN, ADELMAN, JACKSON, FAIRCHILD & WADE, LLP 10250 Constellation Boulevard, 14th Floor Los Angeles, California 90067 (310) 396-9600 » FAX: (310) 396-9635 E-mail: mmakaczyk@milsteinadelman.com Plaintiffs and Real Parties in Interest CARL VAN TASSEL AND SANDRA VAN TASSEL VIA U.S. MAIL ONLY Robert V. Closson, Esq. HIRSCH CLOSSON, APLC 591 Caminode la Reina, Suite 909 San Diego, California 92108 (619) 233-7006 * FAX: (619) 233-7009 E-mail: bclosson@hirschclosson.com Amicus Curiae in Support of Petitioners CALIFORNIA PROFESSIONAL ASSOCIATION OF SPECIALTY CONTRACTORS VIA U.S. MAIL ONLY Alan H. Packer, Esq.* J. Nathan Owens, Esq. Jeffrey R. Brower, Esq. NEWMEYER & DILLION LLP 895 DoveStreet, Fifth Floor Newport Beach, CA 92660 (949) 854-7000 * FAX: (949) 8540-7099 E-mail: alan.packer@ndlf.com Amicus Curiae in Support of Petitioners LEADING BUILDERS OF AMERICA VIA U.S. MAIL ONLY Amy Rae Gowan, Esq.*Kathleen F. Carpenter, Esq.DONAHUEFITZGERALD LLP1646 N. California Boulevard, Suite 250Walnut Creek, California 94596(925) 746-7770 + FAX: (925) 746-7776E-mail: agowan@donahue.com Amicus Curiae in Supportof PetitionersCALIFORNIA BUILDING INDUSTRYASSOCIATION; BUILDINGINDUSTRY LEGAL DEFENSEFOUNDATION; CALIFORNIA INFILLFEDERATIONVIA U.S. MAIL ONLY 30 Individual / Counsel Served Party Represented Donald W.Fisher, Esq. ULICH GANION BALMUTH FISHER & FELD LLP 4041 MacArthur Boulevard, Suite 300 Newport Beach, California 92660 (949) 250-9797 » FAX: (949) 250-9777 E-mail: dfisher@ulichlaw.com Amicus Curiae ULICH GANION BALMUTH FISHER AND FIELD, LLP VIA U.S. MAIL ONLY Bryan M.Zuetel, Esq.* Kenneth S. Kasdan, Esq. Michael D. Turner, Esq. Derek J. Scott, Esq. KASDAN, LIPPSMITH WEBER TURNER LLP 19900 MacArthur Boulevard, Suite 850 Irvine, California 92612 (949) 851-9000 + FAX: (949) 833-9455 E-mail: bzuetel@kasdancdlaw.com Amicus Curiae in Support of Real Parties in Interest KASDAN LIPPSMITH WEBER TURNER LLP VIA U.S. MAIL ONLY AnneL. Rauch, Esq. EPSTEN GRINNELL & HOWELL, APC 10200 Willow Creek Road, Suite 100 San Diego, California 92131 (858) 527-0111 * FAX: (858) 527-1531 E-mail: arauch@epsten.com Amicus Curiae in Support of Real Parties in Interest CONSUMER ATTORNEYS OF CALIFORNIA VIA U.S. MAIL ONLY Tyler P. Berding, Esq. BERDING & WEIL 2175 N. California Boulevard, Suite 500 Walnut Creek, California 94596 (925) 838-2090 * FAX: (925) 820-5592 E-mail: therding@berding-weil.com Amicus Curiae in Support of Real Parties in Interest CONSUMER ATTORNEYS OF CALIFORNIA VIA U.S. MAIL ONLY Susan Mary Benson, Esq.BENSON LEGAL, APC6345 Balboa Boulevard, Suite 365Encino, California 91316(818) 708-1250 + FAX:(818) 708-1444E-mail: sbenson@bensonlegal.net Amicus Curiae Amicus Curiae inSupport of Real Parties in InterestNATIONAL ASSOCIATION OFSUBROGRATION PROFESSIONALSVIA U.S. MAIL ONLY 31 Individual / Counsel Served Party Represented Jason P. Williams, Esq. WILLIAMS | PALECEK LAW GROUP, LLP 3170 4th Avenue, Suite 400 San Diego, California 92103-5850 (619) 346-4263 * FAX: (619) 346-4291 E-mail: jwilliams@wplgattorneys.com Amicus Curiae Amicus Curiae in Support of Real Parties in Interest NATIONAL ASSOCIATION OF SUBROGRATION PROFESSIONALS VIA U.S. MAIL ONLY Brian J. Ferger, Esq. LAW OFFICES OF BRIAN J. FERBER,INC. 5611 Fallbrook Avenue Woodland Hills, California 91367 (818) 888-0820 * FAX: (888) 6107 E-Mail: bferberesq@aol.com Amicus Curiae Amicus Curiae in Support of Real Parties in Interest LAW OFFICES OF BRIAN J. FERBER, INC. AND BENEDON & SERLIN LLP VIA U.S. MAIL ONLY Gerald M. Serlin, Esq.* WendyS. Albers, Esq. BENEDON & SERLIN LLP 22708 Mariano Street Woodland Hills, California 91367 (818) 340-1950 * FAX:(818) 340-1990 E-Mail: gerald@benedonserlin.com Amicus Curiae Amicus Curiae in Support of Real Parties in Interest LAW OFFICESOF BRIAN J. FERBER, INC. AND BENEDON & SERLIN LLP VIA U.S. MAIL ONLY Jill J. Lifter, Esq. RYAN & LIFTER 2000 Crow Canyon Place, Suite 400 San Ramon, California 94583-13678 (925) 884-2080 * FAX: (925) 884-2090 E-Mail: jlifter@rallaw.com Amicus Curiae in Support of Petitioners ASSOCIATION OF DEFENSE COUNSEL OF NORTHERN CALIFORNIA AND NEVADA VIA U.S. MAIL ONLY Glenn T. Barger, Esq. CHAPMAN, GLUCKSMAN DEAN ROEB & BARGER 11900 W. Olympic Boulevard, Suite 800 Los Angeles, California 90064 (310) 207-7722 » FAX:(310) 207-6550 E-Mail: gbarger@cgdrblaw.com Amicus Curiae in Support of Petitioners ASSOCIATION OF SOUTHERN CALIFORNIA DEFENSE COUNSEL VIA U.S. MAIL ONLY Hon. David R. LampeKern County Superior CourtSuperior Courts Building, Dept. 111415 Truxtun AvenueBakersfield, California 93301-4172 Case No. S-1500-CV-279141VIA U.S. MAIL ONLY 32 Individual / Counsel Served Party Represented California Court of Appeal Fifth Appellate District 2424 Ventura Street Fresno, California 93721 (559) 445-5491 Case No. F069370 Electronic Service Copy via Court’s Electronic Filing System (EFS) operated by ImageSoft TrueFiling (TrueFiling) Clerk of the Court Supreme Court of California 350 McAllister Street San Francisco, California 94102-3600 (415) 865-7000 Electronic Submission Copy http://www.courts.ca.gov/24590.htm Original + 8 to follow by Federal Express $229762_ACB_MWI 33