7 Cal. App. 5th 1129
Cal. Ct. App.2017Background
- Acqua Vista HOA sued MWI (a pipe/material supplier) under the California construction-defect statute (SB 800; Civ. Code §§ 895–945.5), alleging defective cast iron pipe used in a condominium project.
- The operative claim alleged violation of the Act's standards (e.g., no leaks, no premature corrosion) and the jury found the pipes leaked and corroded and apportioned 92% fault to MWI, awarding ~ $26 million.
- Near the close of evidence MWI moved for a directed verdict and later for JNOV, arguing the Act (Civ. Code § 936) requires a homeowner suing a material supplier to prove the supplier caused the statutory-standard violation by negligence or breach of contract; the HOA disavowed reliance on strict products-liability at trial.
- The trial court denied MWI’s motions, interpreting § 936’s last sentence to eliminate the negligence/causation requirement for material suppliers when strict liability would apply, and entered judgment for the HOA.
- On appeal, the Fourth District reviewed § 936 de novo, held § 936 requires proof that a nonbuilder (including material suppliers) "caused, in whole or in part, a violation of a particular standard as the result of a negligent act or omission or a breach of contract," and found no substantial evidence that MWI caused the violations by negligence or breach.
- The court reversed and remanded with directions to grant directed verdict and enter judgment for MWI; it explained the final sentence of § 936 preserves common-law strict-liability claims but does not eliminate the statutory negligence/breach-of-contract causation requirement for claims brought under the Act.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Civ. Code § 936 require a homeowner suing a material supplier under the Act to prove the supplier "caused" the standards violation by negligence or breach of contract? | HOA: § 936's last sentence removes the negligence standard for nonbuilders when a claim is one "for which strict liability would apply," so plaintiffs need not prove supplier negligence/causation under the statutory claim. | MWI: § 936's text, structure, legislative history, and precedent (Greystone) show the Act adopts a negligence/breach-of-contract causation standard for nonbuilders; the last sentence only preserves common-law strict-liability claims outside the Act. | Held: § 936 requires proof that the nonbuilder "caused, in whole or in part, a violation... as the result of a negligent act or omission or a breach of contract." The last sentence preserves common-law strict-liability claims but does not eliminate the Act's negligence/breach requirement for statutory claims. |
| Was there substantial evidence that MWI caused the statutory violations by negligence or breach? | HOA: Evidence of leaking/corroded pipes, jury fault allocation, and purported warranties or facts about MWI's involvement support inference MWI was negligent or breached warranties. | MWI: Record lacks evidence that MWI (as supplier) acted negligently or breached contract/warranty; manufacturer (not MWI) was source of defects; warranty evidence was not admitted. | Held: No substantial evidence that MWI caused the Act violations by negligence or breach; the directed verdict/JNOV should have been granted for MWI. |
| How should § 936's final sentence be read as to its effect on common law? | HOA: The final sentence brings any claim that "would be" strict-liability at common law into non-negligence statutory treatment (i.e., supplier liability equal to builders'). | MWI: The sentence preserves common-law strict-liability actions outside the Act; it does not convert statutory claims into strict-liability or eliminate the Act's negligence/breach requirement. | Held: The final sentence preserves common-law strict-liability claims (outside the Act) and is a clarifying, non-substantive amendment; it does not make statutory SB 800 claims strict liability or remove the negligence/breach requirement. |
| Is reversal with judgment for defendant appropriate where plaintiff had prior notice and chance to offer the requisite evidence? | HOA: Trial court error was harmless; HOA lacked reason to present negligence evidence because of trial rulings; alternatively, HOA argues trial uncertainty. | MWI: HOA had full and fair opportunity (motions, instruction conference, directed-verdict motion) to present such evidence; lack of evidence requires judgment for MWI without retrial. | Held: HOA had adequate notice/opportunity; insufficiency of evidence requires reversal and direction to enter judgment for MWI (no new trial). |
Key Cases Cited
- Greystone Homes, Inc. v. Midtec, Inc., 168 Cal.App.4th 1194 (Cal. Ct. App.) (explaining § 936 adopts a negligence/breach-of-contract standard for product manufacturers under SB 800)
- Jimenez v. Superior Court, 29 Cal.4th 473 (Cal. 2002) (describing common-law strict products liability for manufacturers where physical damage occurs)
- Frank v. County of Los Angeles, 149 Cal.App.4th 805 (Cal. Ct. App.) (direction to enter judgment when plaintiff had full opportunity and evidence is legally insufficient)