## Facts

- Homeowners bought 37 newly constructed homes in a Kern County development built by a developer/general contractor.
- Homeowners alleged multiple construction defects causing property damage and resulting economic loss (including repair costs and diminished value).
- The complaint pleaded common-law causes of action (including negligence, strict products liability, contract, and warranties) and a statutory cause of action under the Right to Repair Act (California Civil Code §§ 895–945.5, including § 896).
- The developer moved to stay the litigation until homeowners completed the Act’s prelitigation notice and opportunity-to-repair process.
- Homeowners dismissed their statutory Right to Repair Act claim and argued they could proceed immediately on common-law claims because they alleged property damage.
- The trial court denied a stay, reasoning the Act’s procedures applied only to claims for purely economic loss and did not govern actions alleging property damage or personal injury.
- The Court of Appeal granted mandate relief and required a stay pending compliance with the Act; the California Supreme Court granted review.

## Issues

1. Whether the Right to Repair Act’s prelitigation notice-and-opportunity-to-repair procedures apply to homeowner actions alleging construction defects that caused property damage and economic loss.
2. Whether homeowners may avoid the Act’s prelitigation procedures by dismissing statutory claims and pleading only common-law theories.

## Decision

- The California Supreme Court affirmed the Court of Appeal’s mandate decision.
- The Court held the Right to Repair Act was intended to supplant common-law rules governing the method of recovery for covered residential construction-defect claims, including those alleging property damage.
- The Court concluded the homeowners’ suit was subject to the Act’s prelitigation procedures despite pleading common-law theories and dismissing the statutory cause of action.
- The Court approved a stay of the litigation until the Act’s prelitigation process was completed.

## Legal Principles

- The Right to Repair Act (Civ. Code §§ 895–945.5) provides a comprehensive statutory scheme governing claims for construction defects in covered new residential construction.
- For covered defect disputes seeking recovery for property damage and/or economic loss, compliance with the Act’s prelitigation notice, inspection, and opportunity-to-repair process is a mandatory prerequisite to litigation.
- The Act’s prelitigation requirements apply based on the nature of the dispute (covered construction defects), not the plaintiff’s chosen labels or theories of liability (tort, contract, or warranty).
- Plaintiffs cannot bypass the Act’s procedures by omitting or dismissing statutory claims while pursuing common-law claims arising from the same alleged construction defects.

## Conclusion

The court held that covered construction-defect actions—whether framed in tort, contract, or warranty and even when property damage is alleged—must proceed through the Right to Repair Act’s prelitigation notice-and-repair process before litigation may continue, and courts should stay noncompliant actions pending completion of that process.


McMillin Albany LLC v. Superior Court, 4 Cal. 5th 241 (Cal. 2018)