## Facts

- California’s Right to Repair Act (Civ. Code §§ 895–945.5) sets a statutory, nonadversarial prelitigation process for residential construction-defect claims, generally requiring notice and an opportunity to inspect and repair before a lawsuit.
- The Act also permits a builder to replace the statutory procedures with contract-based procedures, so long as the builder’s procedures are “fair and enforceable.” (Civ. Code § 914.)
- Homebuyers purchased houses from The McCaffrey Group, Inc. (McCaffrey), a residential builder.
- The purchase contracts included McCaffrey’s own prelitigation dispute-resolution provisions intended to replace the Act’s default procedures.
- McCaffrey’s contractual process generally required (1) written notice of claimed defects and an opportunity for the builder to meet, inspect, and address repairs, and (2) nonbinding mediation if the claim was not resolved informally; only after mediation could a lawsuit proceed.
- Compared with the Act’s statutory scheme, McCaffrey’s contractual process was broadly similar but did not mirror the statute’s step-by-step timelines. The contract instead used “reasonable time” language and included an outside limit for an initial meeting (not to exceed 60 days after receipt of the claim notice).
- The homeowners sued McCaffrey alleging construction defects.
- McCaffrey moved in the trial court to require the homeowners to participate in the contract’s prelitigation process and to stay the litigation while those steps were completed.
- The superior court denied the motion, ruling the contractual process was substantively unconscionable.
- McCaffrey filed a petition for writ of mandate in the Court of Appeal seeking an order compelling enforcement of the contractual prelitigation provisions.

## Issues

1. Whether a builder’s contract-based prelitigation procedures under Civil Code § 914 were “fair and enforceable” and therefore had to be completed before the homeowners could proceed with litigation.
2. Whether the trial court erred in finding McCaffrey’s contractual procedures substantively unconscionable because they differed from the Act’s statutory timelines and could allegedly delay suit.

## Decision

- The Court of Appeal granted writ relief in part.
- The court directed the superior court to vacate its order denying McCaffrey’s motion and to enter a new order requiring the homeowners to comply with the contractual prelitigation procedures and staying the action pending completion of that process, consistent with the appellate opinion.
- The court held McCaffrey’s contractual procedures qualified as “fair and enforceable” under Civil Code § 914 even though they did not track every statutory deadline, because they largely resembled the Act’s structure and required action within a reasonable time, including an express outside limit for an initial meeting.
- The court rejected the trial court’s substantive unconscionability finding based on the grounds identified, concluding the contractual notice/repair and nonbinding mediation requirements were not so one-sided or harsh as to be unenforceable.

## Legal Principles

- The Right to Repair Act creates default prelitigation procedures for residential construction-defect claims, but Civil Code § 914 allows a builder to use contract-based procedures instead, provided they are “fair and enforceable.”
- When a builder elects contract-based procedures under § 914, the statutory prelitigation procedures do not apply to that builder’s disputes; the contract governs the prelitigation process.
- “Fair and enforceable” under § 914 does not require the builder’s contract process to be identical to the Act’s default scheme; differences in timing terms do not, by themselves, make the process unenforceable.
- A requirement of nonbinding mediation as a condition precedent to litigation may be enforceable where it functions as part of a balanced dispute-resolution process rather than as a device that effectively prevents suit.
- Substantive unconscionability focuses on whether the terms are overly harsh or unduly one-sided; using “reasonable time” standards, especially with some outer time limits, does not automatically create an improper delay mechanism.

## Conclusion

McCaffrey Group, Inc. v. Superior Court held that a builder may require homeowners to complete contract-based SB 800 prelitigation steps—including notice, an opportunity to inspect and repair, and nonbinding mediation—when those procedures are fair and enforceable under Civil Code § 914, and the trial court must stay the case until that process is completed.


McCaffrey Group, Inc. v. Superior Court, 169 Cal. Rptr. 3d 766 (2014)