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BURCH vs. PREMIER HOMES, LLC, et al. (2/19/14)

Posted on 02/19/15 Articles

FACTS: Custom Home Builders, a general contractor, built a single-family residence in Pacific Palisades area of Los Angeles pursuant to a written construction contract with Premier Homes, the developer. The residence was not built specifically for plaintiff Burch, but instead was built to be marketed to the general public. After the construction was completed and the home was put on the market, Burch purchased it from Premier Homes pursuant to a written sales contract. Defendants Warren and Sahar are the principals and owners of both Custom Home Builders and Premier Homes.

CLAIMANT’S CONTENTIONS: Claimant’s primary allegations were that (a) her home had construction defects, (b) defendants breached their duty of care in construction, (c) defendants impliedly represented to her, as a 3rd party beneficiary (of the contract between Custom Home and Premier), that they had used reasonable skill in construction, (d) they breached such “implied” warranty, and (e) Custom and Premier were the alter egos of Warren and Sahar (thus imposing liability on them as individuals).

RESPONDENT’S CONTENTIONS: The defendants argued that the Right to Repair Act (Civ. Code, § 895 et seq.) provides the exclusive remedy for a homeowner seeking damages for construction defects and precludes common law causes of action for negligence and breach of implied warranty. Custom Home Builders, Warren, and Sahar also argued that they owed Burch no duty of care and that they could not be liable for breach of implied warranty because they were not parties to any contract with plaintiff.

COURT HOLDING: The Right to Repair Act does not provide the exclusive remedy for a homeowner seeking damages for construction defects that have resulted in property damage. In addition, the Court of Appeal held that Custom Home Builders, Warren, and Sahar failed to negate a duty of care owed to Burch as a prospective purchaser and failed to negate an implied warranty in favor of Burch as a third party beneficiary of the construction contract. The appellate court reversed the trial court’s order adjudicating the claims for negligence and breach of implied warranty in favor of the defendants, and held in favor of the homeowner. The homeowner was awarded her costs for the appeal.

APPLICATION FOR YOU: This case is important for both homeowners and builders/developers. As a homeowner experiencing defects with your home, you may have multiple remedies (besides repairs) against multiple parties, even parties that don’t have a contractual relationship with you. [Note: Our firm has represented numerous homeowners, and has successfully litigated homeowner damage claims. Currently, we represent several Ladera Ranch homeowners experiencing copper piping leaks.] Conversely, builders/developers can reduce their liability exposure by properly forming LLC’s, executing indemnity agreements, insuring against risk and establishing warranty/repair programs with home buyers. BG&A has represented Lennar, City Ventures, Techspace, Koll, Ahmanson and other developers.

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