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KB Home Greater Los Angeles, Inc. v. Superior Court (Allstate Insurance Co.)

California Court of Appeal, Second District, Fourth Division

February 21, 2014

KB HOME GREATER LOS ANGELES, INC., Petitioner,
v.
The SUPERIOR COURT of Los Angeles County, Respondent; Allstate Insurance Company, Real Party in Interest.

ORIGINAL PROCEEDINGS in mandate. Randolph A. Rogers, Judge. Petition granted. (No. MC022417)

COUNSEL

Lorber, Greenfield & Polito, Thomas F. Olsen and Dane F. Joseph, Poway, for Petitioner.

No appearance for Respondent.

Matthews Law Group, Jason P. Williams for Real Party in Interest.

OPINION

EPSTEIN, P.J.

In this case we hold that the Right to Repair Act (Civ.Code, ยง 895 et seq.[1] (the Act)) requires that notice be given to a builder before repairs are made to a home subject to the Act. KB Home Coastal Inc. (KB Home) [2] has petitioned for a writ of mandate to compel the trial court to vacate an order that denied its motion for summary judgment and granted the summary judgment motion of real party in interest, Allstate Insurance Company (Allstate). We conclude that KB Home is entitled to summary judgment. There was a failure to comply with the notice requirements of the Act, depriving KB Home of its right to inspect and repair a defect in a home subject to the Act. We shall grant the petition, directing the trial court to vacate its order and issue a new order granting KB Home's motion for summary judgment and denying Allstate's motion for summary judgment.

FACTUAL AND PROCEDURAL SUMMARY

Dipak Roy bought a new home from builder KB Home in 2004. The right to repair addendum to the purchase agreement he signed advised of the prelitigation procedures of the Act and listed KB [168 Cal.Rptr.3d 144] Home's corporate address in Los Angeles, where notice of defect claims were to be sent. The limited warranty agreement allowed for telephone notice in cases of emergency, to be followed by a reasonably timely written warranty claim.

In March 2010, the property manager discovered a water leak in the home, which was vacant at the time. The property manager shut off the water and called Roy, who in turn called his insurer, Allstate. A mitigation company was hired to remove excess water, damaged dry wall, and carpet. Allstate inspected the property in April 2010 and completed repairs of the home in June. In July 2010, Allstate sent KB Home a notice of its intent to pursue its subrogation right to recover payment for loss at the subject property, specifically " water damage due to pipe burst ... in master bedroom on 2nd floor. Ceiling damage." The notice was sent to an address in Irvine. In November 2010, Allstate's counsel sent a demand for settlement of the loss in the amount of $80,984.61. The demand was sent to KB Home's corporate address in Los Angeles. KB Home did not respond.

In March 2011, Allstate filed a complaint in subrogation against KB Home, asserting causes of action for negligence, breach of implied warranty, and strict liability. In July 2011, the trial court sustained KB Home's demurrer to the complaint with leave to amend, on the ground that Allstate did not allege compliance with the prelitigation procedures of the Act.

Allstate then filed a first amended complaint that advanced a single cause of action for property damage in subrogation, which alleged a violation of the Act. KB Home demurred on the ground that Allstate had failed to serve a notice of claim that would have allowed KB Home to repair the defect. Instead of ruling on the demurrer to the first amended complaint, the court issued a nunc pro tunc order reviving the original complaint and overruling the demurrer to that pleading, which it previously had sustained. The court specifically ruled that the prelitigation procedure of the Act did not apply to Allstate's subrogation claim. On KB Home's petition, we issued an alternative writ of mandate, directing the court to vacate the nunc pro tunc order and to consider the demurrer to the first amended complaint. The court complied, sustaining that demurrer with leave to amend. We then dismissed KB Home's petition as moot.

In March 2012, Allstate filed a second amended complaint for property damage in subrogation, which combined the causes of action for negligence, strict liability, breach of implied warranty,[3] and violation of the Act from the two previous complaints. In May, the court overruled KB Home's demurrer to that complaint, again ruling that the Act did not apply to subrogation claims. On KB Home's petition, we issued another alternative writ, directing the court to sustain the demurrer to the negligence and strict liability causes of action in the second amended complaint and overrule the demurrer to the cause of action under the Act. The court complied, and we dismissed the petition as moot.

Subsequently, KB Home filed a motion for summary judgment against Allstate and a cross-complaint for indemnity against various entities involved in the construction of the home. The summary judgment motion was based on failure to give KB Home timely notice to allow it to repair the defect, which was asserted as an affirmative defense against Allstate's claim in subrogation. Allstate filed its own motion [168 Cal.Rptr.3d 145] for summary judgment. It argued that KB Home had violated the building standards of the Act and was statutorily liable ...


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