California Court of Appeals, Second District, Fifth Division
APPEAL from a judgment of the Superior Court of Los Angeles County, No. YC067940 Stuart M. Rice, Judge. Affirmed as to defendants Gary Loren Wells and American Contractors Indemnity Company, and dismissed as to defendant Glenn Hatch.
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
Fruchter & Sgro, W. Randall Sgro and Steve J. Kim, for Plaintiff and Appellant.
Splinter & Thai, Robert G. Splinter and Min N. Thai, for Defendants and Respondents Gary Loren Wells and American Contractors Indemnity Company.
Glenn Hatch, in pro. per., for Defendant and Respondent.
Plaintiff David Belasco bought a newly constructed Manhattan Beach residence in 2004 from the builder defendant Gary Loren Wells. In 2006, Belasco filed a complaint against Wells with the Contractors State License Board (the Board) regarding alleged construction defects. Belasco and Wells settled the dispute in 2006 by written agreement, with Wells paying $25, 000 and Belasco executing a release and a Civil Code section 1524 waiver of all known or unknown claims. In 2012, Belasco filed this action against Wells, Wells’s surety American Contractors Indemnity Company (American Contractors),  and Glenn Hatch,  based on an alleged defect in the roof that Belasco discovered in 2011.
The trial court granted summary judgment in favor of Wells and American Contractors, ruling that the action was barred as a matter of law by the 2006 settlement that included a release and waiver of all claims, known or unknown, in connection with the construction of the property. Belasco filed a timely notice of appeal, which he served on all defendants.
Belasco contends the trial court erred in granting summary judgment because: (1) the general release and section 1542 waiver in the 2006 settlement agreement for patent construction defects is not a “reasonable release” of a subsequent claim for latent construction defects within the meaning of section 929, subdivision (b), and the Right to Repair Act (the Act) (§ 895 et seq.); (2) a reasonable release can only apply to a “particular violation” and not to a latent defect under the language of section 945.5, subdivision (f), and the 2006 settlement was too vague to be a valid because it does not reference a “particular violation;” (3) section 932 specifically authorizes an action on “[s]ubsequently discovered claims of unmet standards;” (4) public policy prohibits use of a general release and section 1542 waiver to bar a subsequent claim for latent residential construction defects; and (5) a genuine issue of material fact exists concerning Belasco’s fraud and negligence claims that would have voided the settlement pursuant to section 1668.
We hold the trial court properly granted summary judgment in favor of Wells and American Contractors based on the express language of the 2006 settlement. Belasco’s ineffective appeal as to Hatch is dismissed, and Hatch is awarded his costs on appeal.
Allegations of Belasco’s 2012 Complaint
Belasco’s complaint included causes of action for breach of contract, complaint on Contractor’s License Bond, fraud, and revocation/suspension of contractor’s license. Belasco alleged that his 2006 complaint against Wells with the Board was resolved by Wells agreeing to pay a sum of money to repair the property. A defect in the roof was unknown at the time of the settlement.
The first cause of action alleged that the defective roof breached the statutory warranty on new construction under section 896. The second cause of action alleged American Contractors is liable as Wells’s surety. The third cause of action, for fraud, alleged Wells falsely represented that the roof was
installed by a competent, licensed roofer (Action Roofing), and that Wells intended to mislead Belasco, who justifiably relied on the representations when he agreed to buy the home. The fourth cause of action sought suspension or revocation of Wells’s contractor’s license under Business and Professions Code section 7106.
Answers to the Complaint
Wells entered a general denial of the allegations, and asserted 17 affirmative defenses. The ninth affirmative defense asserted that Belasco’s claims are barred by the 2006 release and waiver.
Hatch, representing himself, also filed an answer, including a general denial and ten affirmative defenses.
The Motion for Summary Judgment
Wells and American Contractors moved for summary judgment on the basis that Belasco’s 2012 action was barred by a 2006 settlement of Belasco’s prior complaint about Wells to the Board. In the prior settlement, Belasco signed a release and waiver of all known or unknown construction defects in the home in return for a cash settlement of $25, 000.
Wells cited San Diego Hospice v. County of San Diego (1995) 31 Cal.App.4th 1048 [37 Cal.Rptr.2d 501] (San Diego Hospice) for the proposition that Belasco’s 2006 release and waiver of any and all claims, known or unknown, is valid and bars this action. The clear and unambiguous waiver and release were not negated by fraud, because there was no fraudulent misrepresentation by Wells or reliance by Belasco. Belasco, an attorney who was represented by counsel, expressly acknowledged his understanding of the scope of the agreement.
As a surety, American Contractors liability is no greater than that of Wells. American Contractors is entitled to summary judgment for the reasons argued by Wells.
Wells and American Contractors relied on the following as undisputed facts. Wells holds a Class B General Building Contractor license issued by the Board. Wells built a new residence in Manhattan Beach, which he sold to Belasco in 2004. His surety was American Contractors. Belasco had the premises inspected before the sale, and several corrections were made at the suggestion of the inspector.
After escrow closed, Belasco gave Wells’s agent, Glenn Hatch, a list of approximately 150 items improperly built on the property. Belasco filed a complaint against Wells with the Board regarding construction defects.
An arbitration began in 2006 between Belasco and Wells, with both parties represented by counsel. Belasco is a patent attorney, licensed since 1995, whose practice includes a small amount of litigation. Three hours into the arbitration, and before a decision was reached, Wells offered to settle the dispute for $25, 000, which Belasco accepted.
The settlement was memorialized in a writing signed by Belasco and his attorney. Belasco read and understood the agreement.
Under the terms of the agreement, claims were defined as follows: “CLAIMS as used herein shall refer to any and all claims, demands, lawsuits, complaints, causes of action and/or petitions for damages (economic and non-economic; general and special; compensatory and punitive) sustained by result of any and all known and unknown construction defects, design defects, product defects, property damage, loss of use, relocation costs, loss of services, attorney’s fees, expert’s fees, investigation costs, litigation costs, interest, employee expenses, loss-of-rent, business losses, lost profits, stigma, and diminution in value, personal injury, bodily injury, emotional distress, pain and suffering, death, dismemberment, loss of earnings, loss of ...