The California Court of Appeal recently issued a decision analyzing the application of the Right to Repair Act1 as applied to a company that provided an allegedly defective product in a residential construction project. In State Farm General Insurance Co. v. Oetiker, Inc., 58 Cal.App.5th 940 (2020), the court concluded that the Act's statute of repose barred the plaintiff's negligence claim but not its strict liability and breach of implied warranty claims because those claims were not subject to the Act.
Summary of the Act
The Act, which was enacted in 2002, "codifies a comprehensive reform to construction defect litigation applicable to residential dwellings in California."2 The Act establishes certain standards a dwelling's components must satisfy, requires pre-litigation notices of defect with an opportunity to cure, allows for homeowners to file lawsuits even absent property damage or personal injury, and establishes a 10-year statute of repose for latent construction defect claims.
The plaintiff sued the manufacturer of a plumbing product used in a new home's construction. The plaintiff claimed the product caused a leak that damaged the home.
The plaintiff filed claims for negligence, strict liability, and breach of implied warranty. The trial court granted the manufacturer's motion for summary judgment as to all claims on the ground that they were barred by the Act's statute of repose.
The Court of Appeal's Decision
The Court of Appeal agreed that the negligence claim was barred but disagreed as to the strict liability and implied warranty claims because those claims were not subject to the Act. To determine whether a claim is subject to the Act, the court stated it must first look to see whether the alleged defect would violate the building standards in Section 896 of the Act. The court readily concluded that it did, as the alleged defect was to a component of the plumbing system.
Next, the court addressed the plaintiff's argument that the "manufactured product" exception in Section 896(g)(3)(E) applied and excluded its claims from the Act. That section excludes "any action seeking recovery solely for a defect in a manufactured product located within or adjacent to a structure." The court rejected the plaintiff's argument, concluding that the exception only applies if a plaintiff's claim alleges that a product is defective but that the defect does not violate a Section 896 standard. Because the plaintiff alleged a Section 896 violation, the Act applied.
Finally, the court analyzed to which claims the Act applied. The court held that the Act applies to product manufacturers only to the extent the plaintiff alleges the manufacturer's negligence or breach of contract caused a violation of the Section 896 standards. Thus, the Act applied to the plaintiff's negligence claim, and it was barred by the 10-year statute of repose. The Act did not apply to the strict liability and breach of implied warranty claims, however, so they were not barred by the statute of repose.
The Right to Repair Act is very broad and provides exclusive remedies for many actions relating to residential new construction, so anyone involved in residential construction should familiarize themselves with the Act.
However, at least as to claims against product manufacturers (whether by the homeowner or by the contractor that used the part in the construction), the Act covers only negligence and breach of contract claims and does not cover strict liability and implied warranty claims. This can be significant where, like in Oetiker, the latent defects were not discovered until after the 10-year statute of repose in the Act had already passed.