McMillin Albany LLC v. Superior Court of Kern County

Carl and Sandra Van Tassel and others (collectively the Van Tassels) (plaintiffs) purchased 37 new homes from developer and general contractor McMillin Albany LLC (McMillin) (defendant). The Van Tassels sued McMillin, alleging the homes were defective, which caused property damage to the homes and economic loss due to the cost of repairs and lower property values. The complaint included common-law claims for negligence, strict product liability, breach of contract, and breach of warranty, plus a statutory claim for violation of construction standards under Civ. Code § 896, part of California’s Right-to-Repair Act. The act established statewide home-building standards and a prelitigation dispute-resolution process affording builders notice of alleged construction defects and the right to repair. If the notice-and-repair-or-compensate process failed, homeowners could sue for deficiencies even in the absence of property damage or personal injury. Rather than agreeing to stay the litigation to engage in the mandatory resolution process under the act, the Van Tassels dismissed their § 896 claim. Finding that the act applied only to construction defects causing economic loss and not claims alleging property damage or personal injuries, the trial court denied McMillin’s motion for a stay. The appellate court reversed, concluding that the act did require the prelitigation process. The California Supreme Court granted review.