In Liberty Mutual Insurance Co. v. Brookfield Crystal Cove, LLC, the Court held that the Right to Repair Act (SB 800) is not the exclusive remedy for plaintiffs in cases where the alleged defect caused damage. In the case, a sprinkler pipe at a home in the Brookfield development burst, causing damages that were partially paid by Liberty Mutual, the homeowner’s insurance carrier. Liberty Mutual then pursued a subrogation action against Brookfield.
The builder filed a demurrer, arguing the claim was barred by the SB 800 statute of limitations. Specifically, Brookfield argued that Civil Code § 896(e) applied to the plumbing claims, and that such claims must be brought within four years of the close of escrow.
The Court found that SB 800 was not the exclusive remedy for property owners where defects caused actual damage. Rather, the Court interpreted SB 800 as only providing an exclusive remedy in cases where a defect violates one of the standards set forth in Civil Code § 896, but does not cause damage.
As a result, the Court held that because the sprinkler leak caused actual damage, the plaintiff was not limited to SB 800 claims and their associated statutes of limitation. Instead, the plaintiff could file a common law negligence claim, with a statute of limitation that runs from the date of incident, not close of escrow.
This holding could have broad implications. At the very least, a plaintiff can likely avoid SB 800 defenses in cases where a defect causes damage. Potentially, such a plaintiff might be able to avoid all aspects of SB 800, including the mandatory pre-litigation repair procedures, by alleging damage caused by a defect.