The California Court of Appeals, in State Farm General Insurance Company v. Oetiker, Inc., has recently (filed December 18, 2020) provided much-needed guidance on the scope of the Right to Repair Act. That 2002 Act, codified in Civil Code section 895 et. seq., statutorily permits homeowners to recover for construction defects which have not yet ripened into actual property damage. The quid pro quo for the construction industry was the requirement that homeowners comply with the Act’s strictures, including pre-litigation notice to enable the builder to correct the alleged defect. The Act also contains a 10-year statute of repose to file suit for alleged latent construction defects.
In Oetiker, the subrogating carrier sought recovery from a manufacturer for water damage caused by a leak from a defective stainless steel ear clamp on a PEX fitting. The operative complaint plead causes of action for negligence, strict products liability and breach of implied warranty. The Defendant manufacturer, Oetiker, successfully moved for summary judgment, contending the action was time-barred, as it was filed 14 years after substantial completion of the home. On appeal, State Farm argued the Act was inapplicable to the strict liability and implied warranty causes of action. The Court of Appeals rejected State Farm’s argument that the “manufactured product exception” under Section 896(g)(3)(E) applied, as the action did not seek recovery solely for the cost of the defective ear clamp. The Oetiker court concluded, however, that common law causes of action such as strict liability and breach of implied warranty against non-builders (such as product manufacturers) were not inconsistent with the Right to Repair Act.
The upshot of the Oetiker decision is the Right to Repair Act is inapplicable to property damage caused by defective products, even if they are incorporated in the home during construction. A common law cause of action for strict products liability is, in fact, expressly reserved under section 936 of the Act.
