234 Cal. App. 4th 409
Cal. Ct. App.2015Background
- Plaintiff David Belasco bought a new Manhattan Beach home from builder Gary Wells in 2004 and filed a Contractors State License Board complaint in 2006 alleging construction defects.
- Belasco and Wells (both represented) settled the 2006 dispute for $25,000; the written settlement included a broad general release of “any and all claims” for known and unknown construction defects and an express Civil Code §1542 waiver.
- In 2011 Belasco discovered a roof defect and in 2012 sued Wells, Wells’s surety American Contractors Indemnity Company, and Glenn Hatch (a former agent). Causes included breach of statutory warranty under the Right to Repair Act, surety liability, fraud, and license revocation.
- Wells and American Contractors moved for summary judgment, arguing the 2006 release/§1542 waiver barred the 2012 action; Hatch did not join the motion and the judgment did not reference him.
- The trial court granted summary judgment for Wells and American Contractors; the Court of Appeal affirmed, holding the cash settlement with a §1542 waiver constituted a reasonable release under the Right to Repair Act and no triable fraud issues were shown.
- The appeal was dismissed as to Hatch for lack of an appealable judgment; Hatch was awarded costs on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a cash settlement with a general release and §1542 waiver can bar later claims for latent construction defects under the Right to Repair Act (Civ. Code §895 et seq.) | Belasco: §929’s "reasonable release" cannot encompass latent defects; statutory warranty and public policy prevent waiving unknown latent-defect claims. | Wells: §929 expressly permits a reasonable release in exchange for cash; parties may contractually release known and unknown claims; §926 (prohibiting releases for repairs) is inapplicable because this was a cash settlement. | Court: Affirmed — the 2006 cash settlement with a §1542 waiver was a "reasonable release" under §929 and barred the 2012 claims. |
| Whether Civil Code §932 allows suit on subsequently discovered defects despite an earlier release | Belasco: §932 mandates separate administration of subsequently discovered claims and thus permits the 2012 action. | Wells: §932 applies "unless otherwise agreed"; §929 controls where parties agreed to a release for cash. | Court: Held §932 does not override a valid, agreed release; settlement controlled. |
| Whether the 2006 release was too vague to bar the roof claim | Belasco: Release did not specifically reference the roof; thus it’s ambiguous/overbroad for latent defects. | Wells: The release unambiguously covered "any and all" known and unknown construction defects and included an express §1542 waiver. | Court: Held the release was clear and enforceable; not vague. |
| Whether fraud/ nondisclosure or other facts create a triable issue voiding the release | Belasco: Wells misidentified the roofing contractor on the permit and concealed that the roof was "in-house," supporting fraud or negligent concealment to void the release. | Wells: No evidence he made misrepresentations to Belasco, no scienter, and Belasco admitted he relied on his own judgment when executing the release. | Court: Held no triable issue of fraud/ nondisclosure; release stands. |
Key Cases Cited
- San Diego Hospice v. County of San Diego, 31 Cal.App.4th 1048 (court enforced broad release including unknown claims)
- Aas v. Superior Court, 24 Cal.4th 627 (legislative reaction to Aas led to the Right to Repair Act)
- Greystone Homes, Inc. v. Midtec, Inc., 168 Cal.App.4th 1194 (explains Act’s remedial scheme and standards)
- Salehi v. Surfside III Condominium Owners’ Assn., 200 Cal.App.4th 1146 (enforcement of §1542 waivers in settlement context)
- Winet v. Price, 4 Cal.App.4th 1159 (presumption that counsel explained §1542 waiver; general releases can bar unknown claims)