As many are aware, the Right to Repair Act, codified in California Civil Code Section 895, et seq. (the "Act" or "Right to Repair Act"), applies to residential units in California which were sold pursuant to a purchase agreement entered into on or after January 1, 2003. The Right to Repair Act provides that general contractors, subcontractors, and/or design professionals shall be liable for violations of standards set forth in Civil Code Section 896 so long as there is negligence or breach of contract (abrogating the economic loss rule as to those claims). Civil Code Section 936.1 The Act also applies in the same way to material suppliers and individual product manufacturers. Id.
Counsel for product manufacturers have seized on the language in Civil Code Section 936 and insisted that, absent evidence of negligence or breach of contract on the part of the manufacturer (which is often difficult to demonstrate or prove), there can be no liability under the Act for purely economic loss. In that regard, the Court of Appeal in Greystone Homes, Inc. v. Mid-Tec, Inc. (2008) 168 Cal.App.4th 1194, 1216 ruled that a product manufacturer is liable only where its “negligent act or omission or a breach of contract” caused a violation of the Act's standards.
A question has still existed, however, as to whether claims against material suppliers under the Act require evidence of a negligent act or a breach of contract. That question has now been answered in the case of Acqua Vista Homeowners Association v. MWI, Inc. (2017) WL 371379 ("Acqua Vista Case").
In the Acqua Vista Case, an owners association for a condominium development filed suit in 2009 against, among others, MWI, Inc., a supplier of cast iron pipe. In 2013, the operative Complaint was amended to assert one, lone cause of action under the Right to Repair Act against MWI. The claim against MWI was that it had supplied defective cast iron pipe manufactured in China that had caused damages throughout the development.
1 Builders are strictly liable for a violation of a standard. Civil Code Section 942.