Homeowner's Denied Recovery In Strict Liability, Negligence Or For Building Code Violations Absent Bodily Injury Or Property Damage To Other Property
Aas v. Superior Court, (1998) ____ Cal. App. 4th ____ (D.A.R. 6106, June 11, 1998)
In a decision of critical significance to the building industry, Aas v. The Superior Court, 98 Daily Journal, D.A.R. 6106, the Court of Appeal in San Diego, just decided that "homeowners associations and individual homeowners do not have a private right of action in negligence against developers, general contractors and subcontractors for recovery of purely economic losses they sustain as a proximate result of construction defects in mass-produced housing (including but not limited to those involving violations of governing building codes) which have not yet caused personal injury or physical damage to property other than to the defectively constructed portions of the residential structures themselves." The definition of economic loss used by the court, included diminution in value, loss of use, and the cost of repair. In other words, the court held that there must be "resultant damages to other property or bodily injury for a claim to be actionable."
The typical life of a construction defect case begins with the discovery of a defect which has resulted in some damage to the home. Commonly the damage arises out of things such as minor or persistent roof or window leaks. Complaints are made and the association employs an attorney who thereafter employs "hired gun" professional expert witnesses to conduct a forensic autopsy of the building. That forensic study usually involves a limited and focused destructive testing protocol, wherein these experts look for latent deficiencies such as inadequate shear nailing, missing or inadequate firewalls, and other miscellaneous building code deficiencies. From this small sampling, the "experts" typically extrapolate that the defect is replicated in each unit resulting in a scary "the sky is falling" scenario with a huge cost of repair.
Typically a significant number of these claimed defects would be defined as "latent defects" which are not apparent by reasonable inspection and most often have yet to result in any damage to the property or person. The Aas case included single-family residences. It was consolidated with Provencal Community Association v. Superior Court of San Diego, which concerned a 162 unit residential condominium project. Both projects were developed and built by The William Lyon Company. Although the court found that there was a duty of care owed to the property owners to comply with minimum building code safety standards, it concluded that since those building code violations had not yet resulted in physical injuries to persons or other property, the homeowners had not suffered any cognizable recoverable damages and their claim were therefore premature. This holding will limit claims for strict liability, building code violations and performance below the standard of care in the industry, as long as there is no resulting damage to person or other property than to the product itself. The court did note that the homeowners would not go without a remedy if the alleged latent construction defect resulted in physical harm to persons or other property before the 10-year limitation period set by Code of Civil Procedure §337.15 expired.
Aas is the third decision from the Courts of Appeal favorable to homebuilders. Hopefully it will deter the proliferation of construction defect litigation as a major factor in the growing lack of affordable housing. The case also provides guidance to builders in their response to warranty claims and suits.
For a discussion of the implications of the Aas case on such homeowner claims, please contact: Ira James Harris, Esq. at 925-258-5100 or by e-mail at ira@iraharris.com.
These materials should not be considered as, or as a substitute for, legal advice and they are not intended to nor do they create an attorney-client relationship. Because the materials included here are general, they may not apply to your individual legal or factual situation. You should not take (or refrain from taking) any action based on the information you obtain from this document without first obtaining professional counsel and you should not send us confidential information without first speaking to one of our attorneys and receiving explicit authorization to do so.
June 1998
Caveat. Claims may still be asserted against design professionals for their professional negligence. The builder developer may also be liable to the homeowners for those design deficiencies without resulting property damage. The costs of repair would be the measure of those damages. We can expect homeowner attorneys and their experts to focus on errors in design to avoid the impact of this decision. See Zamora v. Shell Oil Company (1997) 55 Cal.App.4th 204 and Fieldstone Co. v. Briggs Plumbing Products, Inc. (1997) 54 Cal.App.4th 357.
