Notable 2014 Case Law
Liability for owners, developers, contractors, subcontractors, suppliers and design professionals
This year, California courts decided a variety of cases with important relevance to potential liability for owners, developers, contractors, subcontractors, suppliers and design professionals. In the July 2014 case of Beacon Residential Community Association v. Skidmore, Owings & Merrill,[1] the California Supreme Court held that an architect providing design services for a residential condominium project as the principal architect owed a duty of care to future homeowners and could be sued for construction defects under the common law theories of negligence and strict liability, despite the lack of privity with the future homeowners and even if the architect did not exercise ultimate control over construction decisions. It is unclear how far this recent decision will extend potential liability for design professionals, however, because the Court determined that the duty of care arose because the architect was the principal architect on the project and was not subordinate to other design professionals.
Similarly in Burch v. Superior Court[2] the California Court of Appeal held that a general contractor owed a duty of care supporting negligence liability to future residential home purchasers, and allowed claims by a homeowner directly against a homebuilder for negligence and breach of implied warranty. This affirmed that California’s Right to Repair Act is not the exclusive remedy for construction defects and may not provide procedural protections for suits under common law claims.
These two decisions represent a growing trend towards easing privity requirements, especially in suits against developers, owners, architects, contractors and design professionals in the residential housing arena.
Subrogation Actions
For subrogation actions under the Right to Repair Act, however, the California Court of Appeal determined in KB Home Greater Los Angeles, Inc. v. Superior Court[3] that if a subrogation action is brought under the Right to Repair Act, the statutory requirement of notice must be given before actual property damage repairs are made, even where the repairs are funded by insurance. In KB Home, the insurance company’s lack of notice under the act was ultimately fatal to its claims under the Right to Repair Act.
Patent Defects
Another 2014 construction defect case, Delon Hampton & Associates, Chtd. v. Superior Court,[4] refined the definition of what constitutes a patent defect. The Court of Appeal rejected the argument that only a “technical reading of the applicable building codes” could reveal a construction or design deficiency and determined that the existence of Building Code provisions demonstrates that the defects should have been discovered on reasonable inspection.
Pertinent Statutes, Codes and Regulations for 2014 and 2015
New Energy Efficiency Standards
A new set of energy efficiency standards went into effect on July 1, 2014. The California Energy Commission’s Energy Efficiency Standards (Standards) are periodically updated to allow for consideration and incorporation of new energy efficient technology and advances. The Standards are part of the California Building Standards Code, Title 24 of the California Code of Regulations, and are also known as “The Energy Efficiency Standards for Residential and Nonresidential Buildings.”
Public Contract Code Section 4104(a)
Assembly Bill 44 also took effect on July 1, 2014, amending Section 4104(a) of the Public Contract Code. This bill requires prime contractors to list the contractor license number of subcontractors when bidding on public construction projects. The bill also requires that public agencies include the new requirement placed on prime contractors on their public bid forms.
California Paid Sick Leave
On September 10, 2014, California signed into law the Healthy Workplaces, Healthy Families Act of 2014, with an effective date of July 1, 2015. With the signing of this law, California becomes the second state to mandate that certain employers provide paid sick leave to employees. This law has limited exceptions, and provides that employers with California employees need to provide at least 24 hours of paid sick time per year.
Workplace Bullying Prevention Bill
On September 9, 2014, Governor Brown signed into law Assembly Bill 2053 amending California Government Code § 12950.1. This provision requires an employer, defined as “any person regularly employing 50 or more persons or regularly receiving the services of 50 or more persons providing services pursuant to a contract,” to include prevention of abusive conduct as a component of the sexual harassment training and education required in Subdivision (a) of Government Code § 12950.1.
Serious Injury or Illness or Death Reporting Requirement
There is a new Cal/OSHA “Serious Injury or Illness or Death” reporting requirement starting January 1, 2015. Assembly Bill 326 amended California Labor Code § 6409.1. Subdivision (b), and requires every employer to make an immediate report to the Division of Occupational Safety and Health by telephone or email of every case involving an employee’s serious injury or illness or death.
[4] (2014) 227 Cal.App.4th 250.
