Judge: Glenda Sanders, Case: 2020-01146610, Date: 2022-11-17 Tentative Ruling

Defendants TNHC Newport LLC, TNHC Meridian Investors LLC, The New Home Company Southern California LLC, The New Home Company Inc. (collectively, Defendants) seek a stay of this action and all proceedings pending Plaintiff Meridien at Newport Beach Association’s compliance with the Right to Repair Act, Civil Code § 895 et seq. Defendant Vitaulic Company (Vitaulic) joins in the Motion.

The Right to Repair Act applies to “new residential units where the purchase agreement with the buyer was signed by the seller on or after January 1, 2003.” (Civ. Code § 938.) It is undisputed that the Right to Repair Act applies here since Plaintiff made a claim under the statute.

Civil Code § 910 requires that the homeowner “provide written notice via certified mail, overnight mail, or personal delivery to the builder, in the manner prescribed in this section, of the claimant's claim that the construction of his or her residence violates any of the standards set forth in Chapter 2 (commencing with Section 896).” The Right to Repair Act sets forth prelitigation procedures and time frames that the parties must follow unless they mutually agree otherwise. (Civ. Code § 930(a).)

If the Plaintiff fails to comply with the prelitigation procedures under the Right to Repair Act, “the builder may bring a motion to stay any subsequent court action or other proceeding” until the requirements have been met. (Civ. Code §§ 930(b).)

The Plaintiff bears the burden of showing either compliance with Civil Code § 910 or why he or she need not do so. (Standard Pac. Corp. v. Superior Ct. (2009) 176 Cal. App. 4th 828, 831.)

The Court here finds that Plaintiff has not satisfied its burden, and the motion is accordingly GRANTED.

The Gaskets Are Not Part of the Original Notice of Claim. It is undisputed that Plaintiff submitted its Notice of Claim on November 21, 2016. ROA 106, Ex. 1. The Notice of Claim does not include any information about the gaskets at issue here.

The Pre-Litigation Stipulation acknowledges the Notice of Claim in the Recitals and states that it alleges “at least in part, violations of the functionality standards set forth in Civil Code sections 896 and 897 of the Right to Repair Act”. Kaneda Decl., Ex. 2, ¶¶1-2, p. 56. The Stipulation collectively refers to the violations in the Notice, “along with any construction or design defects asserted in Claimant’s defect list pursuant to this Stipulation” as “Alleged Functionality Standards Violations” or “Alleged Violations”. Kaneda Decl., Ex. 2, ¶3, p. 56. The parties then agree that the Stipulation is an agreement “to modify and extend the statutory deadlines … to allow the Parties sufficient time to investigate, evaluate, pursue resolution of the claims, and comply with both the prelitigation procedures of the Right to Repair Act and the Calderon Act.” Kaneda Decl., Ex. 2, ¶1, p. 56. The Stipulation also provides that Plaintiff will provide its defect list “describing the Alleged Functionality Standards Violations in reasonable detail sufficient to determine the nature and location of the Alleged Violations in the Neighborhood” on or before April 17, 2018. Kaneda Decl., Ex. 2, ¶6, p. 58.

Contrary to Plaintiff’s argument, the Stipulation does not state that the Notice will incorporate the Defect List. While the Plaintiff may claim that it is implied since the Stipulation states the parties agreed to modify the statutory deadlines and comply with the prelitigation procedures, the use of the word “claims” rather than the defined terms “Alleged Functionality Standards Violations” or “Alleged Violations” appear to make a distinction between the claims in the Notice and those later identified in the Defect List. This suggests the later identified defects are not encompassed by the Notice.

There are no other provisions in the Stipulation that could be construed to mean that the Notice of Claim encompasses any later identified defects. Further, if the parties had wanted the Notice to include the later identified defects in the Defect List, the Stipulation should have plainly said so instead of using the word “claims”.

Additionally, on the face of the Defect List, it appears there were prior iterations dated April 13, 2017, August 9, 2017 and August 31, 2017 and that the gasket defect was only added in the February 26, 2018 defect list. Kaneda Decl., Ex. 3. As Defendants point out, the Defect List was created after they provided their statutory offers of repair. Even if the Stipulation can be interpreted to include in the Notice the defects identified in the April 17, 2017 defect list, there is nothing in the Stipulation about including in the Notice defects identified after April 17, 2017 and after Defendants made their statutory offers of repair. Nor has Plaintiff presented evidence of any such agreement.

Since the gaskets were not part of the Notice of Claim, Civil Codes §§ 920, 925 and 926 do not apply.

In its Supplemental Opposition, Plaintiff argues that the Settlement Agreement provides evidence that the gaskets were intended to be included in the Notice based on the definition of “claim” or “claims” in the Settlement. Although the February 26, 2018 Defect List is included in the definition of “claim” or “claims”, the defect lists are separately identified from the Notice. ROA 106, Kaneda Decl., Ex. 4, ¶2.C. Similarly, the definition of “Action” separately identifies the Notice from the prelitigation procedure in the Stipulation and all amendments. ROA 106, Kaneda Decl., Ex. 4, ¶2.A.

Plaintiff has not identified any specific language in the Settlement that states the parties agreed to deem the Notice to include any subsequently identified defect. Plaintiff has not identified any specific language in the Settlement that states the parties agreed to waive the prelitigation procedure for any defects identified in April 13, 2017, August 9, 2017, August 31, 2017 and February 26, 2018 defect lists. The Settlement fails to support Plaintiff’s claim that the parties agreed the original Notice encompassed the gaskets.

Plaintiff Has Not Adequately Demonstrated that Civil Code § 932 Applies.

Subsequently discovered claims of unmet standards shall be administered separately under this chapter, unless otherwise agreed to by the parties. However, in the case of a detached single family residence, in the same home, if the subsequently discovered claim is for a violation of the same standard as that which has already been initiated by the same claimant and the subject of a currently pending action, the claimant need not reinitiate the process as to the same standard. In the case of an attached project, if the subsequently discovered claim is for a violation of the same standard for a connected component system in the same building as has already been initiated by the same claimant, and the subject of a currently pending action, the claimant need not reinitiate this process as to that standard. (Emphasis added.)

In its Supplemental Opposition, as an alternative to its argument that the Notice includes the gaskets, Plaintiff argues for the first time that the gaskets are subsequently discovered defects that are a “violation of the same standard for a connected component system in the same building”, and therefore, it does not need to reinitiate the prelitigation procedures in the Right to Repair Act pursuant to Civil Code § 932. Plaintiff argues the gaskets are part of the plumbing system, that the initial defect list dated April 13, 2017 included multiple plumbing defects, and that they all violated the same functionality standards, specifically, Civil Code § 896(a)(15) and (e), as the gaskets.

Civil Code § 896(a)(15) provides: “With respect to water issues … Plumbing lines, sewer lines, and utility lines shall not corrode so as to impede the useful life of the systems.” Civil Code § 896(e) provides: “With respect to plumbing and sewer issues: Plumbing and sewer systems shall be installed to operate properly and shall not materially impair the use of the structure by its inhabitants. However, no action may be brought for a violation of this subdivision more than four years after close of escrow.”

Plaintiff contends that the Notice identifies “common area domestic water piping – dissimilar materials lack dielectric protection”. ROA 106, Kaneda Decl., Ex. 1, p. 52. Plaintiff contends the gaskets at issue are part of the domestic water piping so Civil Code § 932 has been met. However, Plaintiff does not explain and presents no evidence of what “dissimilar materials lack of dielectric protection” means, what the connection is to the gaskets, or how this meets the same functionality standard as the alleged deteriorating gaskets. It is also not clear that these issues involve “a connected component system in the same building”.

Based on the above, Plaintiff has not met its burden of demonstrating that it complied with Civil Code § 910 or that the exception under Civil Code § 932 applies.

Defendants’ Motion is GRANTED. The matter is stayed pending completion of the prelitigation procedures in the Right to Repair Act.

The Court sets a status conference for March 24, 2023 at 9:00 a.m. and the parties are ordered to file a joint status report not later than March 17, 2023.

Defendants are ordered to give notice.