FIRM NEWS:

Benson Legal’s Property Division, which specializes in homeowner and commercial loss recovery, recently merged with Grotefeld Hoffmann LLC (www.GrotefeldHoffmann.com). Susan Benson is the managing attorney of this firm’s new Los Angeles office which specializes in catastrophic property loss subrogation. Benson Legal will continue to devote its practice to the recovery of Automobile Property Damage and Worker’s Compensation Subrogation claims also under the direction of Susan Benson.

 

AMICUS NEWS:

Susan Benson filed an Amicus Brief on behalf of NASP in the Liberty Mutual Insurance Company vs. Brookfield Crystal Cove, LLC. G045831 back in 2013. In this 4th District Appellate case, the California Court of Appeals unanimously ruled that the "Right to Repair Act", commonly known as SB800, did not preclude subrogation claims when an insurer and/or its insured have not strictly complied with the notification requirements set forth in the Act. The Fourth Appellate District ruled in Liberty Mutual that the Act "does not provide the exclusive remedy in cases where actual damage has occurred because of construction defects.” The Court further stated, “Nowhere in the legislative history is there anything supporting a contention that the Right to Repair Act barred common law claims for actual property damage." This ruling was a major blow to new home builders who have vigorously defended subrogation claims throughout the state citing the Act and the insured/carrier's non-compliance with the Act. The lower courts have routinely sided with the home builders on the grounds that the Courts were required to strictly construe the notice requirements of the Act.

Notwithstanding this correct ruling, recently, the Fifth Appellate District had an opposite result in the case involving McMillin Albany, LLC F069370. This Court ruled on the same issue completely ignoring the opinion in the Liberty case. The McMillin court ruled that SB800 has vitiated all common law rights of homeowners and their insurers.

The California Supreme Court was asked to decide whether Liberty Mutual or McMillin’s interpretation of SB800 should stand. With the support of NASP and as a NASP Amici, Susan Benson co-authored a brief on behalf of NASP setting forth the industry’s concern that the interpretation of SB800 by the Fifth District is in direct controversy with the Opinion published in Liberty Mutual.

In McMillin Albany LLC v. Superior Court, 2018 Cal. LEXIS 211 (Jan. 18, 2018), the Supreme Court of California addressed the question of whether a common law action alleging construction defects resulting in both economic loss and property damage is subject to California’s Right to Repair Act’s prelitigation notice and cure procedures set forth in California Civ. Code §§ 895-945.5 (the “Act”). The Court held that based on its’ examination of the legislative history of the Act, it concluded that the Legislature intended the Act to be the exclusive remedy not just for economic loss but also for property damages arising from construction defects. This Court disagreed with the ruling in Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC (2013) 219 Cal.App.4th 98, 101 which held that the Act was adopted to provide a remedy for construction defects causing only economic loss and did not alter preexisting common law remedies in cases where actual property damage or personal injuries resulted.

The McMillin case did note, however, that a failure to give formal written notice before taking any other action might well be excused in circumstances where a homeowner has acted reasonably to mitigate losses and has provided informal notice, and subsequent written notice, in a manner that is as timely and effective as reasonably practicable under the circumstances. The Court further noted that “Although the Act establishes various maximum time periods in which the builder may respond, inspect, offer to repair, and commence repairs…., the builder avails itself of the full time allowed by the Act at its peril.” “The builder is liable for the damages its construction defects cause, and even when a homeowner has acted unreasonably in failing to limit losses, the builder remains liable for “damages due to the untimely or inadequate response of a builder to the homeowner’s claim.”

Insurers are encouraged to contact their counsel in order to implement appropriate procedures for construction defect cases subject to the ACT.

 

PUBLICATION NEWS:

Susan Benson recently authored an article for the Claims Litigation Management Magazine entitled “The Importance of the Insured’s Role in the Investigation of a Subrogation Claim.”