Practice Overview

In terms of the legal landscape: 

First, the commonly held notion that these Developers can hide behind shell entities is easily dispatched. In California, any LLC member, manager or any officer or director of a corporation who participates in fraud or any negligent act is individually liable, without the need to resort to complex alter ego claims. Simply stated, I identify, name and pursue any individual who participated in the negligent construction or deviation from the building standards, and back this up with asset searches to identify real property assets the individuals own. 

Second, the building standards of the Right to Repair Act (also known as SB800) apply to all sales of new home construction in California and apply to new custom home sales. These building standards, which apply to all components of the structure, particularly the waterproofing, and any resultant damage apply not only to Builders (and subcontractors) but also to the Seller and the Developer. These building standards, with their clear and simple statements of the standards for each component, and the ease of proof, as well as the full array of damages available to Owners, is a powerful weapon that favors Owners immensely, when used to its fullest extent against everyone: Seller, Developer, Builder & Contractors.

Third, many builders (and even many attorneys) mistakenly believe that every builder and contractor has an automatic right to repair any defects before Owner can proceed a lawsuit. That in not the law. Under the Right to Repair Act, the builder’s right of repair is an option that the Builder (or seller-developer) must exercise in the original sale transaction, by complying with a number of specific mandatory notice provisions that are spelled out in Civil Code Section 912. These notice provisions include recording a notice of the pre-litigation procedures in the Title, that is the Grant Deed, providing the name of the agent for service of notice and maintaining that agent with the Secretary of State, as well as having both the buyer and builder’s rep sign and initial a copy of the right to repair act. See specifically, Civil Code § 912(e)(f) and (g). Failure to comply with any one of the notice provisions of 912 results in the builder losing all rights to the pre-litigation procedures and freeing the Owner to proceed with a lawsuit. Civil Code § 912(i). Notably, most Developer-Builders never comply, never record anything on Title and simply assume they have a right to repair. They do not. 

Further, the vast majority of these cases settle with insurance money paid under claims made on the policies written to the general contractor and subcontractors involved. The insurance policies, the coverage and the carrier’s position on the claim is information that is discoverable and can be obtained through discovery at the very outset of the case. And, while there are  substantial limitations on just what insurance covers, typically limited to resulting damage to a component other than the insured/contractor’s own work, the task of identifying resultant damage within the coverage is another matter for an experienced and sophisticated attorney to decipher and present. 

Finally, settlements in construction defect cases tend to occur just before trial, typically in the 50-day range. Certainly, there is a strong psychological element to this. There is also a simple matter of demonstrating a willingness and resolve to  try the matter if it does not settle, evaluating the risks, and having a good viable target for settlement.