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Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC

California Court of Appeals, Fourth District, Third Division

August 28, 2013

LIBERTY MUTUAL INSURANCE COMPANY, Plaintiff and Appellant,
v.
BROOKFIELD CRYSTAL COVE LLC, Defendant and Respondent.

Appeal from a judgment of the Superior Court of Orange County, No. 30-2011-00498089 Gregory Munoz, Judge.

Law Offices of Brian J. Ferber, Brian J. Ferber, Jeffrey K. Jayson; Benedon & Serlin, Gerald M. Serlin and Wendy S. Albers for Plaintiff and Appellant.

Susan M. Benson & Associates and Susan M. Benson for National Association of Subrogation Professionals as Amicus Curiae on behalf of Plaintiff and Appellant.

Ulich & Terry, Andrew K. Ulich, Donald W. Fisher, Ivette Kincaid and Jonathan C. Terry for Defendant and Respondent.

Liner Grode Stein Yankelevitz Sunshine Regenstreif & Taylor, John M. Kennedy and Allen Lohse for Comstock Crosser & Associates as Amicus Curiae on behalf of Defendant and Respondent.

Nick Cammarota for California Building Industry Association as Amicus Curiae on behalf of Defendant and Respondent.

OPINION

FYBEL, J.

Introduction

Eric Hart bought a newly constructed home from Brookfield Crystal Cove LLC (Brookfield). A pipe in the home’s sprinkler system burst, causing significant damage. Brookfield repaired the damage. Hart’s homeowners insurer, Liberty Mutual Insurance Company (Liberty Mutual), paid Hart’s relocation expenses, incurred while Hart was out of his home during the repair period. Liberty Mutual sued Brookfield in subrogation to recover those expenses. The trial court found Liberty Mutual’s complaint was time-barred under the Right to Repair Act, Civil Code section 895 et seq. (the Right to Repair Act or the Act), and, sustaining a demurrer, dismissed it. We reverse.

The Right to Repair Act was enacted to provide remedies where construction defects have negatively affected the economic value of a home, although no actual property damage or personal injuries have occurred as a result of the defects. We hold the Act does not eliminate a property owner’s common law rights and remedies, otherwise recognized by law, where, as here, actual damage has occurred. Accordingly, Liberty Mutual’s complaint in subrogation, based on Hart’s right to recover actual damages, states causes of action. As our conclusion requires a reversal of the judgment, we need not address additional arguments raised by Liberty Mutual.

Statement of Facts and Procedural History

In 2004, Hart purchased a single-family home developed and built by Brookfield. The grant deed transferring the property was executed in November 2004, and recorded a month later. According to the complaint in subrogation, in January 2008, “a fire sprinkler and/or pipe suddenly burst and failed, ” flooding Hart’s home. Brookfield acknowledged its liability for, and repaired, the damage to Hart’s home.

Hart moved into a hotel for several months while Brookfield repaired the damage to the house. Liberty Mutual paid for Hart’s hotel and other relocation expenses during that time.

In August 2011, Liberty Mutual filed a complaint in subrogation against Brookfield to recover the relocation expenses it incurred on Hart’s behalf. Liberty Mutual later filed a first amended complaint, to which Brookfield demurred. Following briefing and a hearing, the trial court sustained the demurrer with leave to amend. Liberty Mutual did not amend its complaint within the time specified by the court; Brookfield therefore filed an ex parte application for an order of dismissal and ...


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