Click here for KB Home v. Superior Court
I recently commented on Burch v. Superior Court (Premier Homes, LLC), which weakened the Right To Repair statute by allowing residential construction defect cases to proceed without compliance with the Right To Repair statutes if the defect causes consequential damage. This case had the potential to be the exception that swallows the rule since plaintiffs generally allege claims to encourage carriers to pick up defenses. I use the past tense, however, because the Second District Court of Appeal in KB Home v. Superior Court restored some teeth to the statute.
KB Home involved a homeowner who had a leak in his home. The owner called Allstate, his insurance carrier, which immediately started mitigation efforts. Allstate then commenced a subrogation action against KB Home to recover just over $80,000.00 to repair the leak and to take care of the damaged dry wall and carpet.
KB Home demurred to the complaint, claiming lack of notice and an opportunity to repair. The trial court sustained with leave to amend. Allstate filed an amended complaint that only sought subrogation for property damage. KB Home demurred, again claiming lack of notice. The trial court, instead of ruling on the new demurrer, revived the old one, changed its mind, and overruled the demurrer to the initial complaint, concluding that Right To Repair did not apply to subrogation.
KB Home sought a writ, which the Court of Appeals granted, ordering the trial court to consider the demurrer to the first amended complaint. It did so, sustaining the demurrer with leave to amend.
Allstate filed a second amended complaint, which combined the allegations from the first two. KB Home demurred and the court overruled the demurrer, again concluding that Right To Repair did not apply to subrogation.
KB Home sought another writ, which the Court of Appeals again granted, ordering the trial court to sustain the demurrer on negligence and strict liability and to overrule on the cause of action for violation of the Right To Repair Act.
After much law and motion work, probably involving attorney’s fees for both sides well in excess of the $80,000.00 at issue, KB Home filed for summary judgment based on lack of notice. Allstate filed its own motion for summary judgment. The trial court denied the KB Home motion and granted the Allstate motion.
KB Home sought a third writ, which the Court of Appeal granted, ordering the trial court to grant summary judgment to KB Home and to deny it to Allstate. The trial court declined to comply and the appeal ensued.
Unsurprisingly, the Court of Appeal sided with KB Home. It held that notifying a builder of a defect after it was repaired does not comply with the statute. This failure excuses any liability of KB Home.
It is difficult to see how this case can coexist with Burch, since the leak did cause consequential property damage to the drywall and flooring. A carrier taking immediate action in the event of a covered loss is a noble thing that should be rewarded. Instead…
Three writs, three demurrers, two summary judgment motions, and an appeal. The purpose of the Right To Repair Act is to reduce the amount of construction litigation clogging our courts. KB Home provided enough clogging of its own.