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Plaintiffs will still be able to sue the building industry over toxic mold and shoddy home construction — but within new statutory limits and not without allowing builders to fix the problems first. Gov. Gray Davis signed legislation Friday that sets up new rules on construction defect litigation, defining for the first time the very concept of “construction defect” under state law. The bill also includes a pretrial procedure that gives builders a chance to make repairs before a suit can be filed — a concession long sought by the building industry. But plaintiffs lawyers won on a few issues too: They were able, for example, to block industry efforts to protect subcontractors from suits. Consumer attorneys and the construction industry have been battling over defects legislation for at least seven years, and both sides touted the new law as a compromise that allows homeowners recourse in the courts for shoddy construction, while protecting builders from frivolous suits. But the legislation is not without its critics. The lobbying group for defense counsel says the law is part of a political horse trade. The group contends that in exchange for a concession on construction defects, plaintiffs lawyers won an extension of the statute of limitations on civil suits and a new time advantage on summary judgment motions. Legislation to that effect was signed by Davis last week. “Clearly, the message to legislators is, ‘you want construction defect [reform]?; we want summary judgment,’” said Michael Belote, a lobbyist for the California Defense Counsel, which represents about 3,500 lawyers in the state. Robert Cartwright Jr., president of the Consumer Attorneys of California, denies there was a deal. But the construction defects legislation was clearly a high political priority for legislative leaders: SB 800 was sponsored by Senate President Pro Tem John Burton, D-San Francisco, and marshaled through the Assembly by Speaker Herb Wesson, D-Culver City. Both houses voted it through with no opposition. In response to bill-trading claims, Cartwright said: “It’s crazy. It just doesn’t hold water.” Belote’s accusation is easy to make because the two issues used to be in the same bill, said Cartwright, a San Francisco solo practitioner. Cartwright acknowledges that some members of his group were upset that the new law does not allow homeowners to win attorneys fees for pre-litigation work. But in his view the legislation was “about as good a bill as you can get in a compromise situation.” The legislation was crafted by Cartwright’s group and the California Building Industry Association. For their part, builders hope the law will revitalize homebuilding and help increase the availability of affordable housing. Builders, especially those that make condominiums, have a hard time getting projects off the ground because they cannot get insurance, said Kimberley Dellinger, legislative advocate for the builders group. If the new legislation cuts down on the number of lawsuits, as intended, insurers will come back to California, reducing the cost for builders and homeowners, Dellinger said. Though Dellinger said the defense bar’s interests were represented because the association relied on its attorneys to help craft the legislation, Belote said his group was not asked to be a part of the negotiations — even though members of his group represent builders. “We didn’t see the language on the bill until Tuesday and Wednesday of that week,” Belote said. SB800 passed the Assembly on Aug. 29, a Thursday, and passed the Senate on Aug. 31. Under the new guidelines, most defects will have to cause actual damages in order for homeowners to sue. But, in a provision that speaks to Chief Justice Ronald George’s dissent in 2000′s Aas v. Superior Court (William Lyon Co.), 24 Cal.4th 627, claims over structural or fire-related defects will be allowed, even if no one is actually hurt, Dellinger said. In Aas, the Supreme Court ruled that homeowners cannot sue for economic losses in construction defect cases where no property damage or personal injury has yet occurred. George dissented, ridiculing the notion that “a negligently constructed home must first collapse or be gutted by fire before a homeowner may sue in tort to collect costs necessary to repair negligently constructed shear walls or fire walls.” In its definitions of what constitutes actionable construction defects, the new law attempts to clarify the provisions of Aas and goes a step further. It takes an approach that is different from existing codes and other engineering standards because it doesn’t define the materials or the measurements of the components of a house. Rather, it lays out what is expected of the finished product. For example, under the section titled water issues: “A door shall not allow unintended water to pass beyond, around or through the door or its designed or actual moisture barriers, if any.” Foundations, roofs, chimneys and other components get similar, functional definitions. Water issues take up much of the bill, but the new law also covers structural, soil, fire protection, electrical and plumbing. The new law also puts a 10-year statute of limitations on defects and makes builders provide at least one-year warranties. All of the definitions are designed to place limits on the plaintiffs bar’s ability to sue — but Cartwright, of the consumer’s group, said he’s not sure the number of suits will actually be reduced. “I don’t think anybody knows,” Cartwright said. “Conceivably, [there could be] less suits, it could be argued. But the lawsuits will be better, more clear.”

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