Majority
I
Plaintiffs Carl and Sandra Van Tassel and several dozen other homeowners (collectively the Van Tassels) purchased 37 new single-family homes from developer and general contractor McMillin Albany LLC (McMillin) at various times after January 2003. In 2013, the Van Tassels sued McMillin, alleging the homes were defective in nearly every aspect of their construction, including the foundations, plumbing, electrical systems, roofs, windows, floors, and chimneys. The operative first amended complaint included common law claims for negligence, strict product liability, breach of contract, and breach of warranty, and a statutory claim for violation of the construction standards set forth in section 896. The complaint alleged the defects
The Court of Appeal granted the petition and issued the writ, disagreeing with Liberty Mutual and another case that had followed it, Burch v. Superior Court (2014) 223 Cal.App.4th 1411 , 168 Cal.Rptr.3d 81 . The court examined the text and history of the Act and concluded that the Act was meant to at least partially supplant common law remedies in cases where property damage had occurred. In the Court of Appeal's view, "the Legislature intended that all claims arising out of defects in residential construction" involving post-2003 sales of new houses "be subject to the standards and the requirements of the Act." Accordingly, the Court of Appeal held the Act's prelitigation resolution process applied here even though the Van Tassels had dismissed their statutory claim under the Act. The court concluded that McMillin is entitled to a stay pending completion of the prelitigation process.
We granted review.
We turn next to chapter 5 (§§ 941-945.5), which contains key provisions governing the damages recoverable in an action under the Act and the extent to which the Act provides the exclusive vehicle for recovery of such damages. The Legislature was well aware of the main categories of damages involved in construction defect actions (economic loss, property loss, death or personal injury) and their treatment under existing law. The major stakeholders on all sides of construction defect litigation participated in developing the Act. (See Sen. Com. on Judiciary, Analysis of Sen. Bill No. 800 (2001-2002 Reg. Sess.) as amended Aug. 28, 2002, pp. 3, 8.) The Legislature also expressly considered Aas and its rule requiring property damage or personal injury, not just economic loss, for any tort suit alleging a construction defect. (Assem. Com. on Judiciary, Analysis of Sen. Bill No. 800 (2001-2002 Reg. Sess.) as amended Aug. 26, 2002, pp. 2-3; Sen. Com. on Judiciary, Analysis of Sen. Bill No. 800 (2001-2002 Reg. Sess.) as amended Aug. 28, 2002, pp. 1-4.) Informed by the various stakeholders' concerns, the Legislature enacted provisions that reflect a conscious effort to address how and when various categories of damages would be recoverable going forward.
The provisions of chapter 5 make explicit the intended avenues for recouping economic losses, property damages, and personal injury damages. Section 944 defines the universe of damages that are recoverable in an action under the Act. (§ 944 ["If a claim for damages is made under this title, the homeowner is only entitled to damages for" a series of specified types of losses].) In turn, section 943 makes an action under the Act the exclusive means of recovery for damages identified in section 944 absent an express exception: "Except as provided in this title, no other cause of action for a claim covered by this title or for damages recoverable under Section 944 is allowed." (§ 943, subd. (a).) In other words, section 944 identifies what damages may be recovered in an action under the Act, and section 943 establishes that such damages may only be recovered in an action under the Act, absent an express exception.
Section 897, which applies to elements of construction not otherwise addressed in section 896, is also relevant. Although section 896 was intended to be comprehensive, section 897 provides a supplemental standard for any building components that section 896 may have overlooked: Any part not otherwise covered is defective and "actionable if it causes damage." This use of damage to measure defectiveness is not unusual; many of the more specific standards in section 896 likewise use the causation of damage as part of the test for whether a given part is defective. (§ 896, subds. (a)(3), (6), (7), (9), (11), (12), (18), (c)(1).) Thus, a claim under the Act, whether predicated on a violation of section
III
In sum, the legislative history confirms what the statutory text reflects: the Act was designed as a broad reform package that would substantially change existing law by displacing some common law claims and substituting in their stead a statutory cause of action with a mandatory prelitigation process.
Echoing an argument made by the Court of Appeal in Liberty Mutual , supra , 219 Cal.App.4th 98 , 163 Cal.Rptr.3d 600 , the Van Tassels contend that the detailed prelitigation procedures and timeliness set out in chapter 4 (§§ 910-938) cannot rationally be applied to defects that create a sudden loss requiring emergency repairs. From this, they infer that the Act and its procedures were never intended to extend to claims for defects resulting in actual damage. We are not presented with a case in which any party had to take emergency action. But the emergency scenario does not give us reason to doubt
A similar principle of reasonableness must be applied to the interpretation of the builder's rights and obligations. Although the Act establishes various maximum time periods in which the builder may respond, inspect,
IV
The Van Tassels voluntarily dismissed without prejudice their cause of action for violation of section 896's standards. Even so, the operative complaint includes claims resting on allegations that McMillin defectively constructed the foundations, plumbing, roofs, electrical conduits, framing, flooring, and walls of the plaintiffs' homes. This suit remains an "action seeking recovery of damages arising out of, or related to deficiencies in, the residential construction" of the plaintiffs' homes (§ 896), and McMillin's liability under the Van Tassels' negligence and strict liability claims depends on the extent
We are asked to decide whether the lawsuit here, a common law action alleging construction defects resulting in both economic
The Van Tassels elected not to stipulate to a stay and instead dismissed their section 896 claim. McMillin moved for a court-ordered stay. (§ 930, subd. (b) ["If the claimant does not conform with the requirements of this chapter, the builder may bring a motion to stay any subsequent court action or other proceeding until the requirements of this chapter have been satisfied."].) In response, the Van Tassels argued that because the complaint now omitted any claim under the Act, the Act's informal prelitigation process did not apply. The Van Tassels cited Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC (2013) 219 Cal.App.4th 98 , 101, 163 Cal.Rptr.3d 600 ( Liberty Mutual ), which held that the Act was adopted to provide a remedy for construction defects causing only economic loss and did not alter preexisting common law remedies in cases where actual property damage or personal injuries resulted.
n deciding whether a statutory scheme alters or displaces the common law, we begin with a presumption that the Legislature did not so intend. ( Fahlen v. Sutter Central Valley Hospitals (2014) 58 Cal.4th 655 , 669, 168 Cal.Rptr.3d 165 , 318 P.3d 833 ( Fahlen ); California Assn. of Health Facilities v. Department of Health Services (1997) 16 Cal.4th 284 , 297, 65 Cal.Rptr.2d 872 , 940 P.2d 323 ( Health Facilities ).) To the extent possible, we construe statutory enactments as consonant with existing common law and reconcile the two bodies of law. ( Verdugo v. Target Corp. (2014) 59 Cal.4th 312 , 326, 173 Cal.Rptr.3d 662 , 327 P.3d 774 ; People v. Ceja (2010) 49 Cal.4th 1 , 10, 108 Cal.Rptr.3d 568 , 229 P.3d 995 .) Only " 'where there is no rational basis for harmonizing' " a statute with the common law will we conclude that settled common law principles must yield. ( Health Facilities , at p. 297, 65 Cal.Rptr.2d 872 , 940 P.2d 323 .)
Although the presumption against displacement of the common law is strong, abrogation of the common law does not require
We begin with the text of the Act, which "comprehensively revises the law applicable to construction defect litigation for individual residential units" within its coverage. ( Lantzy v. Centex Homes (2003) 31 Cal.4th 363 , 382, fn. 16, 2 Cal.Rptr.3d 655 , 73 P.3d 517 .) The Act adds title 7 to division 2, part 2 of the Civil Code. (§§ 895 - 945.5.) That title consists of five chapters. Chapter 1 establishes definitions applicable to the entire title. ( § 895.) Chapter 2 defines standards for building construction. (§§ 896-897.) Chapter 3 governs various builder obligations, including the warranties a builder must provide. (§§ 900-907.) Chapter 4 creates a prelitigation dispute resolution process. (§§ 910-938.) Chapter 5 describes the procedures for lawsuits under the Act. (§§ 941-945.5.)
Section 896, which codifies a lengthy set of standards for the construction of individual dwellings, begins with a preamble describing the intended effect of those standards. As relevant here, the preamble says: "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 ... 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, except as specifically set forth in this title. This title applies to original construction intended to 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 common law." (§ 896.)
Three aspects of this text are instructive. First, the provision applies to "any action" seeking damages for a construction defect, not just any action under the title. (§ 896.) This suggests an intent to create not merely a remedy for construction defects but the remedy. Second, "the claimant's claims or causes of action shall be limited to violation of[ ] the following standards, except as specifically set forth in this title." ( Ibid. ) This express language of limitation means that a party seeking damages for a construction defect may sue for violation of these standards, and only violation of these standards, unless the Act provides an exception. This clause evinces a clear intent to displace, in whole or in part, existing remedies for construction
Economic Loss . As noted, before the Act, tort recovery of purely economic losses occasioned by construction defects was forbidden by this court's decision in Aas . ( Aas , supra , 24 Cal.4th at p. 632, 101 Cal.Rptr.2d 718 , 12 P.3d 1125 .) Section 944 now specifies that various forms of economic loss are recoverable in an action under the Act. (§ 944 [listing among recoverable damages "the reasonable value of repairing 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 removing and replacing any improper repair by the builder, reasonable relocation and storage expenses, lost business income if the home was used as a principal place
To sum up this portion of the statutory scheme: For economic losses, the Legislature intended to supersede Aas and provide a statutory basis for recovery. For personal injuries, the Legislature preserved the status quo, retaining the common law as an avenue for recovery. And for property damage, the Legislature replaced the common law methods of recovery with the new statutory scheme. The Act, in effect, provides that construction defect claims not involving personal injury will be treated the same procedurally going forward whether or not the underlying defects gave rise to any property damage.
As with section 896, the Van Tassels argue that section 943, subdivision (a) should be read to make the Act the exclusive remedy only for claims concerning defects that have yet to cause damage. But this view cannot be reconciled with the portion of section 943, subdivision (a) making the Act the exclusive means of recovering any of the categories of damages listed in section 944-categories that, as noted, include resulting damages from construction defects, not just economic loss. Moreover, if the only purpose of the Act's creation of a statutory claim was to abrogate the Aas rule for negligence claims and provide for recovery of economic losses, the Act's provisions would have had no effect on actions for breach of contract, fraud, or personal injury. Had that been the limit of the Legislature's intent, the inclusion of an exception expressly preserving
Against these textual inferences, the Van Tassels point to other portions of the Act that purportedly preserve common law claims and confine the Act's prelitigation procedures to statutory claims under the Act. (See §§ 910, 914, subd. (a), 942.) Central to their argument is section 910, which says: "Prior 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), the claimant shall initiate the following prelitigation procedures ...." The Van Tassels contend that this passage limits the applicability of the Act's prelitigation procedures to cases where the complaint formally "allege[s]" the defendant has "contributed to a violation of the standards" set forth in the Act. A common law
Finally, the Van Tassels argue that the presumption against abrogation of the common law requires an express statement that the Legislature intended to displace existing remedies. It does not. ( Ante , at p. 227 Cal.Rptr.3d at pp 195-196, 408 P.3d at pp. 800-801.) Moreover, both sides agree that the Legislature in passing the Act sought to abrogate the common law, even though the text contains no express statement of that intent. They differ only in degree: The Van Tassels contend that the Legislature sought only to overrule the common law limits on recovery identified in Aas , whereas McMillin contends that the Legislature went further in supplanting certain common law claims with statutory ones. As explained above, we agree with McMillin's reading of the Act.
B.
The legislative history of the Act confirms that displacement of parts of the existing
Third, although there is no doubt that the Act had the intended effect of overriding Aas 's limits on construction defect actions, that effect was treated in both the Assembly and Senate as one consequence
The Van Tassels highlight section 930, subdivision (a), which requires "[t]he time periods ... in this chapter ... to be strictly construed, ... unless extended by the mutual agreement of the parties." But this directive simply ensures that the time periods
In holding that claims seeking recovery for construction defect damages are subject to the Act's prelitigation procedures regardless of how they are pleaded, we have no occasion to address the extent to which a party might rely upon common law principles in pursuing liability under the Act. Nor does our holding embrace claims such as those for breach of contract, fraud, or personal injury that are expressly placed outside the reach of the Act's exclusivity. (§ 943, subd. (a).) That limit does not help the Van Tassels' position here, for while the complaint includes breach of contract and breach of warranty claims, it also includes claims for strict liability and negligent failure to construct defect-free homes, to which no statutory exception applies. Accordingly, the Van Tassels must comply with the Act's prelitigation procedures before their suit may proceed. Because the Van Tassels have not yet done so, McMillin is entitled to a stay. (§ 930, subd. (b).)
CONCLUSION
We affirm the judgment of the Court of Appeal and remand for further proceedings not inconsistent with this opinion.
WE CONCUR:
CANTIL-SAKAUYE, C. J.
CHIN, J.
CORRIGAN, J.
CUÉLLAR, J.
KRUGER, J.
LUI, J.[1]
* Presiding Justice of the Court of Appeal, Second Appellate District, Division Two, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
Two years later, spurred by Aas and by lobbying from homeowner and construction interest groups, the Legislature passed comprehensive construction defect litigation reform. (Stats. 2002, ch. 722, principally codified at
McMillin approached the Van Tassels seeking a stipulation to stay the litigation so the parties could proceed through the informal process contemplated by the Act. (§§ 910-938.) That process begins with written notice from the homeowner to the builder of allegations that the builder's construction
As explained below, the statute here leaves the common law undisturbed in some areas, expressly preserving actions for breach of contract, fraud, and
Personal Injury . In contrast, personal injury damages are not listed as a category recoverable under the Act. (§ 944.) This omission places personal injury claims outside the scope of section 943, subdivision (a), which makes an action under the Act the exclusive remedy for those damages listed in section 944. To make the point even clearer, the Legislature also included personal injury claims in a list of claims that are exempt from the exclusivity of the Act. (§§ 931 [listing any action for "personal injuries" among the causes of action not covered by the Act], 943, subd. (a) ["this title does not apply to ... any action for ... personal injury ..."].) Thus, common law tort claims for personal injury are preserved.
Property Damage . As with economic losses, the Act expressly includes property damages resulting from construction defects among the categories of damages recoverable under the Act. (§ 944 [a homeowner may recover "the reasonable cost of repairing and rectifying any damages resulting from the failure of the home to meet the standards"]; see § 896 [the Act applies to "recovery of damages arising out of, or related to" construction defects].) This places claims involving property damages within the purview of section 943, subdivision (a), which makes a claim under the Act the exclusive way to recover such damages. And unlike personal injury claims, negligence and strict liability claims for property damages are not among the
The Van Tassels read section 897 as providing that any defect covered by that section can form the basis of a suit under the common law rather than
First, language in the Legislature's analyses of the Act's effects reflects an intent that the Act would govern not only no damage cases, but cases where property damage had resulted. The Act's standards were designed so that "except where explicitly specified otherwise, liability would accrue under the standards regardless of whether the violation of the standard had resulted in actual damage or injury." (Sen. Com. on Judiciary, Analysis of Sen. Bill No. 800 (2001-2002 Reg. Sess.) as amended Aug. 28, 2002, p. 4.) Both halves of this intended application are significant: Liability under the standards would attach even in the absence of actual damage, thus effectively abrogating Aas . And liability under the standards would also attach in cases of actual damage; in other words, the Legislature anticipated that passage of the Act would result in standards that governed liability even when violation of the standards had resulted in property damage. The Legislature thus recognized and intended that claims under the Act would cover territory previously in the domain of the common law.
Second, the Act "establishes a mandatory process prior to the filing of a construction defect action," with the "major component of this process" being "the builder's absolute right to attempt a repair prior to a homeowner filing an action in court." (Sen. Com. on Judiciary, Analysis of Sen. Bill No. 800 (2001-2002 Reg. Sess.) as amended Aug. 28, 2002, p. 5.) These purposes, the creation of a mandatory prelitigation process and the granting of a right to repair, would be thwarted if we were to read the Act to permit homeowners to
Because this case does not involve a catastrophic occurrence or emergency repairs, we need not decide definitively how the Act would apply on such facts. But our review of the Act's provisions reveals enough play in the joints to suggest that the Act can be adapted well enough to extreme circumstances. The tension between the Act's timeliness and the occasional need for expeditious action in exigent circumstances does not provide a sufficiently compelling reason to disregard
Cases cited
- Burch v. Superior Court 223 Cal.App.4th 1411 p. 195, p. 203
- Liberty Mutual Insurance v. Brookfield Crystal Cove LLC 219 Cal.App.4th 98 p. 201, p. 203, p. 248
- Lewis v. Superior Court of Los Angeles County 175 Cal.App.3d 366 p. 202
- KB Home Greater Los Angeles, Inc. v. Superior Court 223 Cal.App.4th 1471 p. 202, p. 257
- Fahlen v. Sutter Central Valley Hospitals 58 Cal.4th 655 p. 249
- California Ass'n of Health Facilities v. Department of Health Services 16 Cal.4th 284 p. 249
- Verdugo v. Target Corp. 59 Cal.4th 312 p. 249
- People v. Ceja 49 Cal.4th 1 p. 249
- Lantzy v. Centex Homes 31 Cal.4th 363 at 382 p. 250
- Gillotti v. Stewart 11 Cal.App.5th 875 p. 254
- Elliott Homes, Inc. v. Superior Court of Sacramento County 6 Cal.App.5th 333 p. 259
- Aas v. Superior Court of San Diego Cty. 24 Cal.4th 627 p. 799
- Seely v. White Motor Co. 63 Cal.2d 9 p. 799
- Martinez v. Combs 49 Cal.4th 35 p. 801