Case Name: Luna Owners’ Association v. LB/L-KB Terra Serena LLC, et al.
Case No.: 2015-1-CV-276349

Plaintiff Luna Owners’ Association brings this action against defendants LB/L-KB Terra Serena LLC (“Terra Serena”) and KB Home South Bay, Inc. (“KB Home”), the developers of the residential housing project that Luna now manages. Luna alleges that the following elements of the project are defective in some manner: the building envelope system and its appurtenant components, water resistive barrier systems, the exterior and interior paint systems, the stucco system, the plumbing and sewage systems, the electrical system, the mechanical/HVAC systems, the structural and fire resistive systems, the roofing system, the asphalt roadway and concrete flatwork systems, the podium slab system, the site drainage systems, planter boxes and raised planter systems, entry door and sliding glass door systems, window systems, exterior deck systems, gypsum board systems, building insulation systems, perimeter metal gate systems, utility supply line systems, water heater systems, exterior lighting systems, building foundation/soils compaction systems, swimming pool systems, and other building components. (Complaint, ¶ 39.) Luna also served a notice of claim as required by title 7 of section 896 of the Civil Code (“title 7” or the “Right to Repair Act”), which more specifically describes the violations at issue. (Id., ¶ 34.)

On February 15, 2015, Luna filed this action for (1) breach of functionality standards established by title 7, (2) negligence, (3) strict liability, (4) breach of implied warranty, (5) breach of express warranties, (6) breach of subcontracts, and (7) breach of fiduciary duty and conspiracy to breach fiduciary duty. All claims other than the sixth cause of action for breach of subcontracts are asserted against Terra Serena and KB Home.

Currently at issue is Terra Serena and KB Home’s motion for summary adjudication of the following “issues”: (1) plaintiff’s claims arising out of seven specified components of the project are barred by the statute of limitations for title 7 claims and (2) plaintiff’s claim for attorney fees lacks merit.

I. Requests for Judicial Notice

Defendants’ request for judicial notice of filings in this action and recorded documents is GRANTED. (See Evid. Code § 452, subds. (d) and (h); Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 265 [“[A] court may take judicial notice of the fact of a document’s recordation, the date the document was recorded and executed, the parties to the transaction reflected in a recorded document, and the document’s legally operative language, assuming there is no genuine dispute regarding the document’s authenticity. From this, the court may deduce and rely upon the legal effect of the recorded document, when that effect is clear from its face.”].)

Luna’s request for judicial notice of recorded documents is also GRANTED.

II. Statute of Limitations

Defendants contend that the applicable statutes of limitations bar the following claims: (1.1) claims arising out of the installation and operation of the plumbing and sewer system, (1.2) claims arising out of the electrical system, (1.3) claims related to cracks that display significant vertical displacement or that are excess in the pathways, driveways, hardscape, sidewalls, sidewalks, and patios, (1.4) claims related to interunit noise transmission standards, (1.5) claims related to the irrigation systems and drainage, (1.6) claims related to the application of paint and stains causing deterioration of building surfaces for the length specified by the paint or stain manufacturer’s representations, and (1.7) claims related to the landscaping systems.

Luna opposes this aspect of defendants’ motion on both procedural and substantive grounds.

A. Procedural Issues

Luna contends that defendants’ motion is procedurally improper with respect to this set of issues, because summary adjudication of these issues would not completely resolve any cause of action. Luna urges that its claims arising from the various components of the project are interrelated and do not constitute separate causes of action.

Defendants acknowledge that Luna has grouped the various alleged defects in the project into a series of causes of action in its complaint, each of which addresses the totality of alleged defects. However, they contend that each set of claims identified in their motion’s first issue constitutes a separate cause of action despite the manner in which Luna framed its complaint. (See Code Civ. Proc., § 437c, subd. (p)(2) [“A defendant or cross-defendant has met his or her burden of showing that a cause of action has no merit if that party has shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established, or that there is a complete defense to that cause of action.”], italics added.)

As an initial matter, defendants did not frame their motion as a motion for summary adjudication of causes of action; rather, they seek summary adjudication of the “issue” that “plaintiff has made claims that are time barred pursuant to Civil Code §896,” and the sub-issues set forth above. These are not the sort of “issues” that may be summarily adjudicated, and defendants’ motion fails for that reason alone. (See Code Civ. Proc., § 437c, subd. (f)(1) [summary adjudication available as to “issues of duty” only], italics added; Schmidlin v. City of Palo Alto (2007) 157 Cal.App.4th 728, 743-744 [“A motion for summary adjudication tenders only those issues or causes of action specified in the notice of motion, and may only be granted as to the matters thus specified.”].) Notably, because of the way their motion is framed, it is unclear whether defendants seek relief with respect to portions of Luna’s first cause of action only, or with respect to all six causes of action asserted against them in the complaint (which would be improper under the law discussed below). This ambiguity is fatal to the motion under Schmidlin. (At p. 744 [noting that the opposing party must be fairly appraised of the scope of a request for summary judgment or adjudication].)

Setting this problem aside for the moment, defendants are correct that “a party may present a motion for summary adjudication challenging a separate and distinct wrongful act even though combined with other wrongful acts alleged in the same cause of action.” (Lilienthal & Fowler v. Superior Court (Karr) (1993) 12 Cal.App.4th 1848, 1854-1855; but see Bagley v. TRW, Inc. (1999) 73 Cal.App.4th 1092, 1095, fn. 2 [questioning Lilienthal, particularly in the context of a motion seeking summary adjudication of voluminous “issues”].) Winston Square Homeowner’s Assn. v. Centex West, Inc. (1989) 213 Cal.App.3d 282 held that separate construction defects may give rise to separate claims under the primary rights theory for defining a cause of action, which California follows. (At pp. 287-298.) Although Luna correctly notes that Winston arose in the context of a judgment entered following trial, there is no reason to disregard it on that ground since the primary rights theory also determines what constitutes a separate cause of action for purposes of summary adjudication. (See Quiroz v. Seventh Ave. Center (2006) 140 Cal.App.4th 1256, 1277, fn. 25 [court may enter summary adjudication based on the statute of limitations following the primary rights theory]; Hindin v. Rust (2004) 118 Cal.App.4th 1247, 1256-1257 [discussing Lilienthal in the context of the primary rights theory].)

Consequently, defendants could obtain summary adjudication of claims arising from separate construction defects under appropriate circumstances. However, as discussed below, here, defendants present inadequate evidence of the specific factual basis for Luna’s claims, as opposed to their general subject matter. Thus, it is impossible to determine whether one or several claims have actually been asserted by Luna under the primary rights theory, a theory which defendants do not even discuss in their moving papers. Defendants accordingly do not establish that the issues they identify are appropriate for separate resolution on summary adjudication.

On reply, defendants change their approach and argue that their motion pertains to separate “claims for damages.” This argument also fails because a motion for summary adjudication is properly addressed to a claim for punitive damages only. (See Code Civ. Proc., § 437c, subd. (f)(1) [a party may move for summary adjudication of a claim for damages if it contends that “there is no merit to a claim for damages, as specified in Section 3294 of the Civil Code”]; DeCastro West Chodorow & Burns, Inc. v. Superior Court (Initial Amalgamation Ltd.) (1996) 47 Cal.App.4th 410, 421 [“The reference to ‘one or more claims for damages’ … is … qualified by, and limited to, punitive damages.”].)

Defendants’ motion consequently fails on procedural grounds, as well as on the substantive grounds discussed below.

B. The Right to Repair Act

The Right to Repair Act applies to individual housing units first sold on or after January 1, 2003. (Lantzy v. Centex Homes (2003) 31 Cal.4th 363, 374, fn. 8.) In Burch v. Superior Court (Premier Homes, LLC) (2014) 223 Cal.App.4th 1411, the Court of Appeal explained the impetus for and impact of the Act:

The California Supreme Court in Aas v. Superior Court (2000) 24 Cal.4th 627, 647, 652–653, 101 Cal.Rptr.2d 718, 12 P.3d 1125 (Aas ), held that deficiencies in residential construction were actionable in tort only if they caused property damage or personal injury. The Legislature enacted the Right to Repair Act in 2002 abrogating the holding in Aas by allowing the recovery of damages for specified defects resulting in only economic loss. [Citations.] The act sets forth construction standards the violation of which constitutes a deficiency in construction for which a “builder,” as defined in the act, and to some extent a general contractor and others, can be held liable to a homeowner without the need to show property damage or other injury. (Civ. Code, §§ 896, 897, 942.)
(At p. 1417.) As recognized by Burch, “the act does not provide an exclusive remedy and does not limit or preclude common law claims for damages for construction defects that have caused property damage.” (Id. at p. 1418, citing Liberty Mutual Insurance Company v. Brookfield Crystal Cove LLC (2013) 219 Cal.App.4th 98, 105.)

The Act sets forth building standards for various enumerated functions and components of a structure. (See Civ. Code, § 896.) As discussed, violations of these standards are actionable whether or not they cause property damage or personal injury. While the standards set forth in section 896 “are intended to address every function or component of a structure,” “[t]o the extent that a function or component of a structure is not addressed by these standards, it shall be actionable [under the Act] if it causes damage.” (Civ. Code, § 897; Lantzy v. Centex Homes, supra, 31 Cal.4th at p. 374, fn. 8 [a homeowner may sue under the Act “for (1) specific violations of the statutory standards (Civ. Code, § 896) and (2) any other ‘function or component of [the] structure,’ to the extent inadvertently omitted from the standards, that causes damage (id., § 897)”].) Section 896 establishes statutes of limitations specific to several of the functions and components discussed therein; where a specific statute does not apply, “no action may be brought to recover under this title more than 10 years after substantial completion of the improvement but not later than the date of recordation of a valid notice of completion.” (Civ. Code, § 941, subd. (a).)

Where it applies, the Act expressly supersedes the statutes of limitations applicable to other construction defect claims. (Civ. Code, § 941, subd. (d) [“Sections 337.15 and 337.1 of the Code of Civil Procedure do not apply to actions under this title.”]; Lantzy v. Centex Homes, supra, 31 Cal.4th at p. 382, fn. 16 [“Where it applies, the new scheme expressly supersedes section 337.15, though it retains the basic premise that suit may commence no later than 10–years after substantial completion of the project.”].)

C. Analysis

Defendants urge that the various claims at issue in this motion are subject to certain statutes of limitations established by section 896 of the Act, which range from one to five years in length. They do not contend that Luna’s claims would be barred by the default statute of “10 years after substantial completion of the improvement but not later than the date of recordation of a valid notice of completion.” The parties agree that the statutes at issue run from the “close of escrow,” but disagree regarding when escrow closed for purposes of this action. The Court need not resolve their dispute on this point, however, because defendants’ motion suffers from a more fundamental problem.

To show which of the various statutes of limitation established by the Act apply to the claims at issue in their motion, defendants rely on three pieces of evidence: Luna’s notice of claim; a declaration by Tim Fitzpatrick, a construction litigation consultant; and a declaration by R. Scott Diaz, their attorney. In his declaration, Mr. Fitzpatrick identifies groups of claims set forth in the notice of claim and then states in conclusory fashion, “[b]ased upon my experience, review, and observations made of the property, knowledge of Plaintiff’s claims and allegations, and review of information provided thus far by Plaintiffs, these claims involve” a particular component of the project and are consequently subject to the statute of limitations corresponding to that component. Similarly, in his declaration, Mr. Diaz states that “[b]ased upon my knowledge of the claims asserted by Plaintiff in its Notice of Claim, Complaint, and review of the information provided by Plaintiff,” Luna is or is not making certain claims.

Luna objects the statements in Mr. Fitzpatrick’s declaration on various grounds, including that they lack foundation and constitute improper expert testimony. (Evid. Code, §§ 801-803.) These objections have merit. “[W]hen an expert’s opinion is purely conclusory because unaccompanied by a reasoned explanation connecting the factual predicates to the ultimate conclusion, that opinion has no evidentiary value.” (Jennings v. Palomar Pomerado Health Systems, Inc. (2003) 114 Cal.App.4th 1108, 1117.) Similarly, Mr. Diaz’s conclusory statements based on his knowledge of Luna’s claims and review of unspecified “information” provided by Luna lack an adequate foundation. Defendants do not identify or provide to the Court the “information” from Luna that they rely on in characterizing its claims, although evidence of the factual basis for Luna’s claims could obviously be obtained through discovery.

Thus, the only evidence properly before the Court regarding the scope of Luna’s claims is the complaint—which defendants do not contend shows on its face that any claims are time-barred—and the notice of claim. As with the complaint, it is simply not self-evident from the face of the notice of claim which of the various statutes of limitation established by the Right to Repair Act apply to the claims listed therein. For example, defendants contend that the four-year statute for violations of subdivision (e) of section 896 applies to the following claims from the notice of claim:

32. Rust from boiler adversely affects roof materials and may adversely affect roof warranty;
…

46. Defective design, materials, construction and installation of:
t. Defective design, materials, construction and installation of drain, waste and vent systems;
u. Defective design, materials, construction and installation of plumbing systems and plumbing lines, …;
v. Defective design, materials, construction, and installation of hot water heaters ….

Subdivision (e) of section 896 provides that “[p]lumbing and sewer systems shall be installed to operate properly and shall not materially impair the use of the structure by its inhabitants.” Taking the claims identified by defendants in order, the source of “[r]ust from [a] boiler” is not clear; while it could arise from improper installation of the plumbing and sewer systems, it could also arise from a problem subject to the default statute under the Act, such as corrosion or leaks in the plumbing, sewer, and utility lines (Civ. Code, § 896, subd. (a)(14)-(15)) or other “water issues” set forth in subdivision (a). It is not apparent that “drain, waste and vent systems” have anything to do with plumbing and/or sewer systems. While the remaining items do include a reference to defective installation of the plumbing system, depending on the specific issue with that system, the longer statute applicable to corrosion or leaks may apply. Returning to the sub-“issue” identified by defendants’ motion, it is consequently not established that any and all of Luna’s “claims arising out of the installation and operation of the plumbing and sewer system” are subject to the four-year statute.
Defendants similarly fail to meet their initial burden as to the remaining six sub-issues. The Court need not address each of these sub-issues in detail given that defendants’ motion is procedurally improper in the first instance. Significantly, Mr. Fitzpatrick and Mr. Diaz declare that they do not even believe Luna is making claims related to the majority of the sub-issues identified by defendants’ motion, but such claims could be encompassed by the broad descriptions set forth in the notice of claim. (See Decl. of Tim Fitzpatrick ISO Mot., ¶¶ 16, 18, 20, 22-24, 26, 28-29; Decl. of R. Scott Diaz ISO Mot., ¶¶ 23, 26-32.) Defendants’ request for summary adjudication of such hypothetical issues is wholly improper. (See State ex rel. Wilson v. Superior Court (Bristol-Myers Squibb Co.) (2014) 227 Cal.App.4th 579, 592, fn. 14 [even where the parties stipulate to such a result, the summary adjudication procedure should not “serve as a mechanism for obtaining advisory rulings and appellate review on hypothetical issues”].)

Limitations issues may be resolved on summary judgment only where the facts are uncontradicted and susceptible of only a single legitimate inference. (San Diego Unified School Dist. v. County of San Diego (2009) 170 Cal.App.4th 288, 300.) Here, defendants have introduced inadequate evidence regarding the factual basis for Luna’s claims, and the Court is unable to determine which statutes of limitations will ultimately apply.

Consequently, the motion for summary adjudication is DENIED as to issue 1, on both procedural and substantive grounds.
Luna’s objections to Mr. Fitzpatrick’s declaration (objection nos. 1-15) are SUSTAINED. (Evid. Code, §§ 801-803.) The Court does not rule on Luna’s objections to Mr. Diaz’s declaration or defendants’ objections to Luna’s evidence, as these objections are not material to its holding. (See Code Civ. Proc., § 437c, subd. (q).)

III. Request for Attorney Fees

While Luna did not raise a procedural challenge to this aspect of defendants’ motion, the motion for summary adjudication of Luna’s request for attorney fees in this action is procedurally improper and premature. A request for attorney fees is not a cause of action or a request for damages that may be resolved on summary adjudication. (Code Civ. Proc., § 437c, subd. (f)(1); DeCastro West Chodorow & Burns, Inc. v. Superior Court, supra, 47 Cal.App.4th at p. 421.)

Defendants’ motion is consequently DENIED as to issue 2.