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Trial Court’s Denial of Stipulation to Continue Summary Judgment and Trial to Allow for Discovery was Abuse of Discretion

Hamilton v. Orange County Sheriff’s Dept., 2/7/17 4DCA/3

This decision will help promote professionalism in Orange County litigation culture.  Plaintiff sued defendant for employment discrimination.  Later, Defendant filed for summary judgment and hearing was scheduled to take place after the trial date.  Defendant asked the trial court to continue the trial in order to accommodate summary judgment hearing, and the court granted its request. Plaintiff timely set depositions in order to oppose the summary judgment, but defense counsel was unavailable because of trial. Recognizing the problem that this presented to plaintiff, defense counsel agreed to stipulate to continue the summary judgment and the trial date.  The stipulation was filed 16 days before the hearing. The trial court refused to sign the stipulation for a lack diligence, and granted Defendant’s unopposed motion for summary judgment. Held: Reversed.

There are two ways to continue the hearing on a motion for summary judgment: File a declaration under CCP 437c(h) at leaset 14 days before the hearing, or seek a continuance under the ordinary discretionary standard by making a showing of good cause. Getting a continuance under 437c(h) is liberally granted because of the phrasing of the statute.  If plaintiff had submitted a 437c(h) request, the trial court would have been hard pressed to deny her request for more time. But Plaintiff filed a stipulation for a continuance of the summary judgment and the trial, and didn’t file a 437c(h) declaration.

The stipulation contained various recitals explaining the situation, and the fact the parties were having settlement discussions. The appellate court found that plaintiff had made a showing of good cause, and that the trial court had abused its discretion in refusing to sign the stipulation.  The court said: “While that stipulation was, of course, not binding on the court, principles of encouraging civility, encouraging the settlement discussions that were ongoing, and disposing of cases on their merits counseled in favor of accepting it, absent some good reason for rejecting it.”  The court found that while the plaintiff cold have been more diligent, a “relatively minor lack of diligence did not justify the substantial injustice the court‘s order created.”  The court also noted that the trial court had granted Sheriff’s request to continue the trial to make way for the summary judgment; and the disparate treatment of plaintiff’s counsel “tilted the scales of justice sharply in favor of the Sheriff.” 

The court acknowledged that the Trial Court Delay Reduction Act establishes timelines within which to complete cases.  But the policy of promoting judicial economy is outweighed by the policy of disposing of cases on their merits.
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Right to Repair Act Timing Requirements are Strictly Construed

Blanchetter v. Superior Court, 2/10/17, 4DCA/1

This is a construction defect case under the Right to Repair Act (RRA).  Before it can commence a construction defect case, the RRA requires the owner to provide the builder 14-days notice with a defect list in reasonable detail.  The builder then has 14 days to respond to the notice, another 14 days to inspect the building, and 30 days after that to offer to repair the claimed defects. Here, the owner gave notice on February 2.  The builder responded on February 22, saying that the defect list was not specific enough. The homeowner sued and the trial court stayed the action, agreeing with builder that the defect notice was not specific enough.  The appellate court granted owner’s writ petition.  Held: Writ granted, and stay dissolved.

The RRA states that the notice “shall describe the claim in reasonable detail sufficient to determine the nature and location, to the extent known, of the claimed violation.” Compliance with section 910 is a prerequisite to filing a lawsuit.   Section 913 says that “the builder must acknowledge in writing its receipt of the notice of the claim within 14 days after the claim is received.” Section 915 says that if a “builder fails to acknowledge receipt of the notice of a claim within the time specified . . . this chapter does not apply and the homeowner is released from the requirements of this chapter and may proceed with the filing of an action.” Section 930 says that the “time periods and all other requirements in this chapter are to be strictly construed, and, unless extended by the mutual agreement of the parties in accordance with this chapter, shall govern the rights and obligations under this title.”  

The court held that if the builder wanted more specific notice, it should have responded within the 14-day period.

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Union Members’ Labor Claims Not Subject to CBA Arbitration Agreement Because Waiver of Judicial Forum Not Clear and Unmistakable

Vasserman v. Henry Mayo Newhall Memorial Hospital, 2/8/17, 2DCA/4

A more interesting case about arbitration in the employment class action context, this one in the union context. In bringing this class action, plaintiff nurse alleged the usual potpourri of wage and hour claims.  The union contract in question contained provisions concerning meal/rest, overtime, grievance and arbitration.  Plaintiff said that the CBA arbitration agreement didn’t apply to her statutory claims; hospital said it did.  The trial court denied Hospital’s motion to compel arbitration because the waiver of a judicial forum in the CBA was not “clear and unmistakable.” Held: Affirmed.

Under what’s called the Wright/Vasquez standard, a CBA may require arbitration of a statutory claim if the waiver is “explicitly stated,” and it is “clear and unmistakable” that the parties intended to waive a judicial forum for statutory claims.  In a case involving alleged statutory violations, the presumption of arbitrability that typically applies to contractual disputes arising out of a CBA is notapplicable.  A CBA is a contract, and wage/hour claims are less about the contract than they are about what the applicable law requires.  A CBA requirement that statutory claims be arbitrated must be particularly clear.  Citing to US Supreme Court precedent, the court suggested this is required because the “right to a . . . judicial forum is of sufficient importance to be protected against less than-explicit union waiver in a CBA.” 

While it is true that a waiver of a judicial forum should be clear, arbitration agreements are supposed to stand on equal footing with other contracts.  There is a policy in favor of arbitration under both state and federal law.  Requiring something in a contract to be “clear and unmistakable” is not a requirement that applies to other contractual provisions.  This standard smacks of a continuing judicial hostility to arbitration agreements.

Oh well.  The hospital could have done a better job protecting itself. Making labor claims subject to the CBA’s arbitration agreement is a negotiation point; but, assuming the parties agree, including the clear waiver language should be straightforward. The CBA provision in question said that grievances had to be arbitrated and the CBA defines a grievance as “any complaint or dispute arising out of the interpretation or application of a specific Article and Section of this Agreement.”  That provision makes no mention of the California Labor Code or any other statute, it does not discuss individual statutory rights, nor does it mention waiver of a judicial forum.
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Plaintiff in Business Dispute Can’t Wait 6 Years to Sue for Issues Disclosed in Partnership Documents, But Wastes DCA’s Time with Weak Appeal Anyway

Stella v. Asset Management Consultants, 2/7/17, 2DCA/7

This appeal was dead on arrival.  Plaintiff invested in multiple limited partnerships with people he had done business with for about twenty years. He received and read the private placement memos.  Things didn’t go to his liking and six years later he sued everyone involved.  He claimed that the real estate commissions weren’t paid by the seller, as is customary; instead the price was negotiated and the commission was added to the price of the properties being acquired — just as the partnership documents said would happen!  The referee granted defendants’ demurrer based on the statute of limitations.  Held: Affirmed.

The partnership agreements contained a judicial reference provision per Code of Civ. Proc. 638, which required the trial judge to refer the matter to a referee to decide all issues of fact and law.  

Plaintiff argued against the statute of limitations defense based on a claim of “delayed discovery.”  The delayed discovery rule says that statute begins to run when the plaintiff suspects or should suspect that someone has done something wrong to him/her.  In other words, suspicion is enough to trigger the statute, even if the plaintiff doesn’t have the specific facts, which is what discovery is for.  

But the private placement memos contained this language:

“Market Value of Property. The purchase price of the Property has been negotiated to include a commission to be paid to Manager of the General Partner of the General Partner’s Manager by the Seller (see ‘General Partner’s Compensation and Fees’) in addition to other brokerage commissions owed by the Seller. Accordingly, the Seller would have sold the Property for a lower Purchase Price if it were not obligated to pay such commission.”

The limited partnership agreements had similar language. 

In granting the demurrer, the referee explained, “It is difficult to discern how Plaintiff could have been more clearly advised of the impact the Seller’s payment of the Commissions would have on the purchase price of the properties than by the statement in the [private placement memorandum] that, ‘Accordingly, the Seller would have sold the Property for a lower Purchase Price if it were not obligated to pay such commission.’” The referee found that disclosure language was clear and unambiguous and triggered the running of the limitations periods as of the date Stella purchased the limited partnership units—more than four years before he filed his original complaint.

Once again, the fact that parties can appeal doesn’t mean they should. RIP.

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Plaintiff Gets Class Certification of RICO Claims Against Bad Actors in Credit Card Leasing Industry


Just Films (Erin Campbell) v. Sam Buono et al., 2/7/17, Ninth Cir.


This is a nationwide class action alleging RICO against certain players in the credit card equipment leasing industry.  Merchants who take credit card payments often lease their equipment.  Leased equipment is personal property and subject to ad valorem property taxes. The merchants pay those taxes through their leases, either through higher lease payments or line items on their bills. Plaintiff said Defendant Lessors collected overstated property taxes from merchants and failed to return the excess amounts collected; and after certain leases expired, certain defendants concocted property taxes that weren’t due, created a bogus company to collect them, and lied to ACH processors in order to collect those bogus amounts from the class members’ bank accounts. Plaintiff wasn’t having any of it! After receiving notice of a bogus amount due, she spent time protecting herself and her account wasn’t debited.  Not everyone was so fortunate. Plaintiff filed a class action alleging RICO on behalf of people harmed by this scheme, including those whose accounts were actually debited. The trial court granted her motion for class certification and defendants obtained permission to appeal. Held: Affirmed.

Defendants argued that Plaintiff didn’t meet the typicality requirement of class certification primarily because her account was not debited: “Leasing Defendants describe it as follows: they made misrepresentations to two third-party ACH processors, and the ACH processors relied on the misrepresentations and debited class members’ bank accounts without authorization.”  Their point: What does that have to do with Plaintiff?  According to 9C — enough to obtain class certification.

They key to typicality was that Plaintiff was impacted by or endured the same, overall scheme and course of conduct.  It is true that her injury was different (time lost rather than account debited) and that her injury flowed from the notice she received (and fought back against) and not from the misrepresentation that defendants made to ACH processors who relied on those representations and debited class members accounts.  Still, she endured and was injured by the same scheme, even if, in RICO parlance, her specific injury flowed from a different “predicate act” than the injuries suffered by other class members.

One final comment: Defendants also argued that the commonality and predominance requirements under Rule 23(b)(3) had not been met.  Those elements concern “the relationship between the common and individual issues” in the case, and “tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation.”  For example, Defendant argued that Plaintiff could not show that damages could be calculated on a class wide basis, and that common questions therefore did not predominate. Calculating the wrongful debited amounts would of course be easy. But for class members like Plaintiff, damages would have to be calculated using a “time and effort” formula. In upholding the trial court’s class certification, 9C used a common refrain on that analysis of damages for purpose of class certification: “That some individualized calculations may be necessary does not defeat finding predominance.”  The court added: “At this stage, Plaintiffs need only show that such damages can be determined without excessive difficulty and attributed to their theory of liability, and have proposed as much here.”



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Former Prosecutor Loses Qui Tam Because Allegations Had Been Publicly Disclosed and He Wasn’t an “Original Source”

Prather v. AT&T, 2/6/17, 9th Cir.

Plaintiff Prather, a long-time prosecutor in New York, worked for the organized crime task force, overseeing hundreds of wire taps. Telecom companies are required by law to help with wiretaps and must be paid their “reasonable expenses.”  Various federal law enforcement agencies we concerned about telecom charges and asked the FCC to review them. The FCC requested comment on the issue, and New York’s AG submitted comments.  Plaintiff thought the government was being overcharged and he was asked to submit affidavits of part of NY AG’s submission. Submitting affidavits to the FCC was not part of his job description, but they were prepared during his work time and in his official capacity.  In 2009, before amendments to the False Claim Act (FCA), he filed a qui tam action against various telecom companies. The trial court granted defendants’ motion to dismiss his amended complaint without leave to amend because the allegations had been public disclosed and Prather didn’t qualify as an original source. Held: Affirmed.

Before 2010 to the FCA, courts lacked jurisdiction to hear a qui tam case based on publicly disclosed allegations unless the person bringing the action was an “original source.”  (The public disclosure bar is now an affirmative defense instead of jurisdictional, and that change doesn’t apply retroactively.)  Prior to 2010, the statute defined an “original source” as “an individual who [1] has direct and independent knowledge of the information on which the allegations are based and [2] has voluntarily provided the information to the Government before filing an action . . . based on the information.”

Prather didn’t have direct knowledge of the allegedly fraudulent overcharges.  He only saw one invoice and didn’t know about the internal cost and pricing structure of the telecoms.  His knowedge was more a vague belief that telecom companies were doing less but charging more.  That was not sufficient to meet the first element.

Second, 9C said his actions were not “voluntary.” He was asked by a colleague in his office to provide affidavits to the FCC in support of the NY AG’s submission to the FCC. As the trial court found: “his disclosure was involuntary because it was prompted by the FCC’s request for comment and submitted in his capacity as Deputy Attorney General in Charge of the Statewide Organized Crime Task Force, in support [of] the official comments of his superior, the Attorney General.”  Finally, 9C has long recognized that a government attorney is not a quintessential qui tam relator, a factor that worked against him.

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The Winter that Never Ends — Assault on Arbitration Agreements Continues

Poublon v. CH Robinson, 2/3/17, 9th Cir.

Another in a seemingly unending, mind-numbing stream of opinions concerning the enforceability of arbitration agreements in the employment class-action context.  Here, every year plaintiff was made to sign an agreement in order to get her bonus; every year the document had an arbitration agreement.  The agreement had provisions waiving PAGA representative claims, allowing the employer (but not employee) to go to court for certain claims (aka a “judicial carve-out”); putting venue in a different state, limiting discovery; making the arbitration confidential, and authorizing attorney’s fees for frivolous claims and bad faith litigation tactics. The trial court denied employer’s motion to enforce the arbitration agreement, citing unconscionability. Held: Reversed

Every couple of days we are told by another appellate court that the Federal Arbitration Act puts arbitration contracts on the same footing as other contracts, that inferences must be drawn in favor of enforceability and the party opposing the agreement carries the burden of proving the agreement is not enforceable.  Sounds and feels like lip-service — Parties and courts continue to put arbitration agreements under an electron microscope, and no other type of contract receives the same degree of scrutiny.  

The court said that adhesion contracts are not necessarily procedurally unconscionable.  That should go without saying.  Today most contracts are form contracts drafted by lawyers and offered on a “take-it-or-leave-it” basis. Attorneys draft and revise contracts because of the unending, often confusing and at times oppressive legal and regulatory requirements and pitfalls, not to mention the need to comply with federal and state laws. It is way more consistent and way more efficient for companies to use form contracts that has been vetted by the legal department.  And it would be impossible for big employers or companies to have a bunch of different contracts for the same product or class of employee — Who is going to draft, review, negotiate and keep track of all the changes?  And if companies can offer their contracts on a take-it-or-leave-it basis then, per the FAA, they can do the same exact thing with arbitration contracts.  Don’t like it, tell Congress.

In reviewing each of the the terms of the agreement that were allegedly substantively unconscionable, the court explained why none of them should prevent enforcement of the arbitration agreement:

  • The employer apparently conceded that the judicial carve-out was unconscionable.  But why concede that!? The fact that there is not 100% mutuality in the arbitration agreement doesn’t “shock the conscience,” and there is no general rule that other contractual terms have to be 100% mutual.  War, murder, torture, lying, fraud etc. “shock the conscience,” and the fact tht a company may have to rush to court to save its IP doesn’t fall in the same category. In any case, 9C simply said this term could be excised from the agreement.
  • The waiver of representative PAGA claims was unenforceable; but that also didn’t make the waiver unconscionable.  It’s a simple solution: The PAGA claim stays in court, and the remaining claims go to arbitration.
  • Per 9C precedent, a forum selection clause also does not render the arbitration agreement unconscionable; in fact, venue selection clauses are, subject to certain limits, enforceable. Moreover, the agreement here allows the arbitrator to order a different venue if it makes sense to do so. (This is the one part of the opinion that causes concern — California employees should not be made to travel to a different state to protect to their rights!)
  • The fact that the arbitrator was given the authority to award attorney’s fees for frivolous claims, counterclaims and bad faith litigation tactics merely echoes Cal. Code Civ. Pro. 128.7, our counterpart to Rule 11.  That term does not rewrite the attorney’s fees statutes related to wage and hour claims, all of which are probably one-way fee shifting statutes.
  • On the issue of limited discovery, the California Supreme Court has already said that limited discovery in arbitration is okay. Limited discovery helps preserve the simplicity, informality and expedition of arbitration.  Moreover, the agreement allows the arbitrator to order more discovery upon a showing of good cause. 
  • The term making the arbitration confidential was also not unconscionable, a conclusion supported by a California Court of Appeal opinion.  And the provision would not prevent the employee from conducting discovery.


Even though this opinion makes one hope there is light at the end of the tunnel, right now it feels that this winter is never going to end!

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For TCPA, Consent to Marketing Calls Is Not Consent to All Calls Regardless of Purpose

Van Patten v. Vertifical Fitness Group, 1/30/17, 9th Cir.

In this TCPA class action, consumer signed an application for gym membership that included his cell phone as his contact number.  He almost immediately canceled the membership.  A few years later, the gym hired a marketing company that sent two “come-back” text messages to former members.  Consumer received two such messages and found them “aggravating.” He rushed to court, filing a class action three days after receiving the last message.  (So much for American toughness.) The trial court granted class certification, and then granted defendant’s motion for summary judgment.  Held: Affirmed.

TCPA makes it “unlawful for any person within the United States . . . to use any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement . . . .” 47 U.S.C. § 227(b)(1)(C).  The TCPA has a laundry list of do’s and don’ts, applies to advertising calls for property, goods and services, applies to automatically dialing systems and pre-recorded messages, and also applies to both calls and texts.  There is no TCPA claim where the consumer has given consent—which is an affirmative defense.

The court discussed whether consumer’s aggravation claim gave him Article III standing, which requires ‘an invasion of a legally protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical.’”  In a recent Supreme Court case (Spokeo), the court held that mere violation of a statute doesn’t automatically lead to injury in fact that satisfies Article III standing, although intangible injuries can satisfy the concrete element.  Some courts have conflated the concrete and particularized elements, and the Supreme Court emphasized that a plaintiff cannot “allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III.”  

Here 9C held that violation of the TCPA is a concrete, de facto injury, likening the violation of TCPA to traditional torts that involve an invasion of privacy.  As interesting as all of this is, it seems strange that a court would need to analyze whether rights conferred by Congress, including a private right of action, are sufficient to create Article III standing.  To me, it almost goes without saying. But who am I?

As to consent, the FCC has regulations on what prior express consent means.  One regulation provides: “[P]ersons who knowingly release their phone numbers have in effect given their invitation or permission to be called at the number which they have given, absent instructions to the contrary.”  9C rejected the argument that providing a telephone number operates as a consent to any and all contact, and instead examined whether consumer’s consent and the subsequent text messages “related to the same subject matter” and suggested that it must “relate to the type of transaction that evoked it.”  This matches FCC’s 2008 rules on this issue which suggested that providing a cell number does not evoke consent to be contacted for any purpose.  For example, the FCC has “conclude[d] that the provision of a cell phone number to a creditor, e.g., as part of a credit application, reasonably evidences prior express consent by the cell phone subscriber to be contacted at that number regarding the debt.”

In 2012, the FCC imposed further restrictions on telemarketing calls and required prior express written consent for texts and calls that “include[] or introduce[] an advertisement” or “constitute[]telemarketing.” See 47 C.F.R. § 64.1200(a)(2).  Here, the contact took place before that rule went into effect.

9C held that consumer provided his number on his gym application and that was related to subsequent “come-back” texts inviting him to reconsider membership.  Finally, cancelling gym membership does not by itself operate to revoke consent for purposes of TCPA.  TCPA does not explicitly allow consumers to revoke their consents, but the trend is to allow consumers to do so, a position with which the FCC agrees.   But revocation must be clearly made and consumer failed to tell defendants to stop calling him. 

His claims under California’s UCL (unfair competition law) also failed: UCL standing is more restrictive than Article III standing, and requires economic injury.  Apparently, aggravation wasn’t enough (thankfully!).

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CCP section 1281.4 Does Not Require Stay Of Action Pending Appeal Of Denial of Motion To Compel Arbitration

Montano v. Wet Seal, 1/30/17, 2DCA/4

Plaintiff brought a putative class action against Wet Seal alleging violations of California’s Labor Code, and she also included a PAGA claim. The parties had an arbitration agreement that contained a waiver of the right to join claims or bring an action as a private attorney general – i.e., both a class action and PAGA waiver.  However, the agreement also provided: “If either party initiates or joins in a lawsuit or arbitration against the other party in violation of this waiver and the waiver is found to be unenforceable for any reason by a court or arbitrator, then this entire arbitration agreement is void and unenforceable by the parties.”  This is the opposite of a “severability” provision. The trial court denied the motion to compel arbitration, and then granted plaintiff’s motion to compel discovery.  Wet Seal appealed.  Held: Affirmed. 

First, the non-severability language is clear and Wet Seal didn’t put up much of a fight on that point.  And why would they: Who would want potentially staggering class claims decided in arbitration without any right to appeal? 

Second, Code of Civil Procedure section 1281.4 requires a trial court to stay an action until a motion to compel arbitration is determined.  Wet Seal argued that 1281.4 also requires a trial court to stay the case while a party appeals the denial of a motion to compel arbitration.  The court noted that it had already rejected that proposition in Berman v. Renart Sportswear Corp. (1963) 222 Cal.App.2d 385.  As importantly, no statute authorizes an appeal of orders compelling discovery and the court rejected Wet Seal’s request to treat its appeal as a writ petition. 

Hard to really see the value in pursuing this appeal.

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Disaster Ensues When HOA Puts all Chips on Right to Repair Act

Acqua Vista Homeowners Assn. v. MWI, Inc. 1/26/17, CA4/1

HOA sued supplier of pipes alleging a single count under the Right to Repair Act (Civil Code section 896 et seq).  HOA proved to the jury that the pipes installed in the condominium project contained manufacturing defects, had leaked and caused damage.  The jury awarded $18.5 million to repair the pipes and $7.13 million for relocation and storage expenses while repairs were made. However, HOA failed to prove that supplier had been negligent or breached its contract, and apparently didn’t even try.  The trial court rejected supplier’s motion for JNOV (a demurrer to the evidence), holding that the Right to Repair Act does not require HOA to prove negligence on claims where strict liability would apply.  The celebration was on! But then, supplier appealed and 4DCA/1 reversed.

A dangerously brief background on the Right to Repair Act.  In Aas v. Superior Court (2000) 24 Cal.4th 627, the California Supreme Court held that construction defects in residential properties, in the absence of actual property damage, were not actionable in tort.  In 2002, the California Legislature enacted the Right to Repair Act, overruling Aas.  The Act contains enumerated building standards and liability attaches regardless of whether the violation of the standard had resulted in actual damage or injury.  That is, the Act provides remedies where construction defects have negatively affected the economic value of a home. The Act can of course also be used to recover for defects that have in fact caused damage. Still, according to Miller & Starr, the Act was not meant to eliminate a property owner’s common law rights and remedies arising from defects resulting in actual property damage.  And some courts have rejected the contention that the Right to Repair Act barred common law claims of negligence, including strict liability, for actual property damage.  

In Acqua Vista, therefore, the HOA could have alleged common law claim for strict liability, but didn’t.  Instead, it put all its hope in the Act and in the last sentence of Civil Code 936, which seemed to suggest that the HOA could rely on strict liability in making its claim against the supplier.  Section 936 provides in part:
“Each and every provision of the other chapters of this title apply to general contractors, subcontractors, material suppliers, individual product manufacturers, and design professionals to the extent that the general contractors, subcontractors, material suppliers, individual product manufacturers, and design professionals caused, in whole or in part, a violation of a particular standard as the result of a negligent act or omission or a breach of contract . . . . However, the negligence standard in this section does not apply to any general contractor, subcontractor, material supplier, individual product manufacturer, or design professional with respect to claims for which strict liability would apply.”

The Court nonetheless agreed with supplier’s argument that claims made against material suppliers under the Act still required a showing of negligence: “The first sentence of section 936 contains an “explicit adoption of a negligence standard for claims” under the Act against material suppliers.”  While the final sentence of that same section suggests the exact opposite, the court reasoned: “that this sentence merely provides that the negligence standard applicable to claims brought against material suppliers under the Act does not apply to common law claims for strict liability against such suppliers.  Since it is undisputed that the HOA’s claim was brought under the Act” it was required to prove that the supplier breached a duty, under a negligence theory or contract.  For more on the court’s analysis, you’ll have to go to the opinion, which is long (50 pages) and often hard to follow.

For reasons that are not clear, the Court does not discuss section 942, which suggests that a claim can be made under the Act merely by showing that standards listed in the Act have not been met.  That section provides:

“In order to make a claim for violation of the standards set forth in Chapter 2 (commencing with Section 896), a homeowner need only demonstrate, in accordance with the applicable evidentiary standard, that the home does not meet the applicable standard, subject to the affirmative defenses set forth in Section 945.5. No further showing of causation or damages is required to meet the burden of proof regarding a violation of a standard set forth in Chapter 2 (commencing with Section 896), provided that the violation arises out of, pertains to, or is related to, the original construction.”

Litigants don’t usually put all their eggs in one basket, or, in this case, one egg in one basket.  The HOA should have included a strict liability claim; but hopefully it seeks review of this decision. The HOA has the better argument: In light of the history and purpose of the Act, why would the Act make it harder to recover for claims that historically could be based on a strict liability theory?  The decision is hard to reconcile with the language of section 936, the language of section 942, and the purpose of the Act.