Liberty Mutual Insurance v. Brookfield Crystal Cove LLC
219 Cal. App. 4th 98
| Cal. Ct. App. | 2013Background
- Buyer Eric Hart purchased a newly constructed home from Brookfield Crystal Cove LLC in 2004; in January 2008 a fire‑sprinkler/pipe burst flooded the home.
- Brookfield acknowledged liability and repaired the damage; Hart relocated to a hotel for several months.
- Liberty Mutual, Hart’s insurer, paid Hart’s relocation expenses and filed this subrogation action in August 2011 to recover those costs from Brookfield.
- Brookfield demurred, arguing the claim fell under the Right to Repair Act (Civ. Code §895 et seq.) and was time‑barred; the trial court sustained the demurrer and entered judgment for Brookfield.
- The Court of Appeal reversed, holding the Right to Repair Act does not displace common‑law remedies for actual property damage and therefore Liberty Mutual’s subrogation claims were not barred by the Act.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Right to Repair Act provides the exclusive remedy for construction defect claims when actual property damage has occurred | Liberty Mutual: Act does not eliminate common‑law claims for actual damages; insurer as subrogee may pursue Hart’s remedies | Brookfield: Act governs “any action” arising from construction deficiencies, so Liberty’s claim is controlled by the Act and time‑barred | Court: Act was designed to address defects before actual damage and does not abolish common‑law remedies for actual damage; demurrer was wrongly sustained |
| Whether subrogation rights are extinguished by the Act | Liberty Mutual: Subrogation steps into insured’s rights for actual damages; rights survive outside the Act | Brookfield: Act’s scheme and damages provisions encompass such claims, implying exclusivity | Court: Legislative history and statutory text do not show intent to eliminate subrogation rights; insurer’s subrogation stands |
| Whether the Act’s procedures/timelines apply to catastrophic/actual‑damage situations | Liberty Mutual: Prelitigation, timing, and inspection framework presume pre‑damage remediation and would be nonsensical for actual catastrophic loss | Brookfield: Act applies broadly to construction deficiencies regardless of damage | Court: Numerous provisions (inspection, repair offers, no need to prove causation) indicate the Act targets pre‑damage defect remediation, not exclusive remedy for actual damage |
| Whether the Act repealed or displaced existing statutes of limitations and common law remedies | Liberty Mutual: Legislature did not repeal other statutes (e.g., CCP §§337.1, 337.15) or common law remedies | Brookfield: Act’s limitations and remedies supplant prior schemes | Court: Legislature adjusted statutes of limitations within the Act for specified circumstances but did not impliedly repeal or eliminate other remedies or subrogation rights |
Key Cases Cited
- Aas v. Superior Court, 24 Cal.4th 627 (2000) (Supreme Court held construction defects absent actual property damage are not actionable in tort)
- Rossmoor Sanitation, Inc. v. Pylon, Inc., 13 Cal.3d 622 (1975) (discusses insurer subrogation principles)
- Plut v. Fireman’s Fund Ins. Co., 85 Cal.App.4th 98 (2000) (describes insurer’s subrogation right to step into insured’s shoes)
- Century Surety Co. v. Crosby Ins., Inc., 124 Cal.App.4th 116 (2004) (statutory remedy does not necessarily displace common‑law remedies)