Bill Text: CA AB1963 | 2015-2016 | Regular Session | Chaptered
Bill Title: Common interest developments: construction defects.
Sponsorship: Partisan Bill (Democrat 1)
Status: (Passed) 2016-07-22 - Chaptered by Secretary of State - Chapter 71, Statutes of 2016. [AB1963 Detail]
Download: California-2015-AB1963-Chaptered.html
BILL NUMBER: AB 1963 CHAPTERED
BILL TEXT
CHAPTER 71
FILED WITH SECRETARY OF STATE JULY 22, 2016
APPROVED BY GOVERNOR JULY 22, 2016
PASSED THE SENATE JUNE 30, 2016
PASSED THE ASSEMBLY APRIL 7, 2016
AMENDED IN ASSEMBLY APRIL 4, 2016
INTRODUCED BY Assembly Member Calderon
FEBRUARY 12, 2016
An act to amend Section 6000 of the Civil Code, relating to common
interest developments.
LEGISLATIVE COUNSEL'S DIGEST
AB 1963, Calderon. Common interest developments: construction
defects.
Existing law, the Davis-Stirling Common Interest Development Act,
requires, until July 1, 2017, specified conditions to be met before
an association may file a complaint for damages against a builder,
developer, or general contractor of a common interest development
based upon a claim for defects in the design or construction of the
common interest development.
This bill would delete the inoperative and repeal dates and would,
instead, make these provisions inoperative on July 1, 2024, and
would repeal these provisions as of January 1, 2025, as specified.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 6000 of the Civil Code is amended to read:
6000. (a) Before an association files a complaint for damages
against a builder, developer, or general contractor (respondent) of a
common interest development based upon a claim for defects in the
design or construction of the common interest development, all of the
requirements of this section shall be satisfied with respect to the
builder, developer, or general contractor.
(b) The association shall serve upon the respondent a "Notice of
Commencement of Legal Proceedings." The notice shall be served by
certified mail to the registered agent of the respondent, or if there
is no registered agent, then to any officer of the respondent. If
there are no current officers of the respondent, service shall be
upon the person or entity otherwise authorized by law to receive
service of process. Service upon the general contractor shall be
sufficient to initiate the process set forth in this section with
regard to any builder or developer, if the builder or developer is
not amenable to service of process by the foregoing methods. This
notice shall toll all applicable statutes of limitation and repose,
whether contractual or statutory, by and against all potentially
responsible parties, regardless of whether they were named in the
notice, including claims for indemnity applicable to the claim for
the period set forth in subdivision (c). The notice shall include all
of the following:
(1) The name and location of the project.
(2) An initial list of defects sufficient to apprise the
respondent of the general nature of the defects at issue.
(3) A description of the results of the defects, if known.
(4) A summary of the results of a survey or questionnaire
distributed to homeowners to determine the nature and extent of
defects, if a survey has been conducted or a questionnaire has been
distributed.
(5) Either a summary of the results of testing conducted to
determine the nature and extent of defects or the actual test
results, if that testing has been conducted.
(c) Service of the notice shall commence a period, not to exceed
180 days, during which the association, the respondent, and all other
participating parties shall try to resolve the dispute through the
processes set forth in this section. This 180-day period may be
extended for one additional period, not to exceed 180 days, only upon
the mutual agreement of the association, the respondent, and any
parties not deemed peripheral pursuant to paragraph (3) of
subdivision (e). Any extensions beyond the first extension shall
require the agreement of all participating parties. Unless extended,
the dispute resolution process prescribed by this section shall be
deemed completed. All extensions shall continue the tolling period
described in subdivision (b).
(d) Within 25 days of the date the association serves the Notice
of Commencement of Legal Proceedings, the respondent may request in
writing to meet and confer with the board. Unless the respondent and
the association otherwise agree, there shall be not more than one
meeting, which shall take place no later than 10 days from the date
of the respondent's written request, at a mutually agreeable time and
place. The meeting shall be subject to subdivision (a) of Section
4925 and subdivisions (a) and (b) of Section 4935. The discussions at
the meeting are privileged communications and are not admissible in
evidence in any civil action, unless the association and the
respondent consent in writing to their admission.
(e) Upon receipt of the notice, the respondent shall, within 60
days, comply with the following:
(1) The respondent shall provide the association with access to,
for inspection and copying of, all plans and specifications,
subcontracts, and other construction files for the project that are
reasonably calculated to lead to the discovery of admissible evidence
regarding the defects claimed. The association shall provide the
respondent with access to, for inspection and copying of, all files
reasonably calculated to lead to the discovery of admissible evidence
regarding the defects claimed, including all reserve studies,
maintenance records and any survey questionnaires, or results of
testing to determine the nature and extent of defects. To the extent
any of the above documents are withheld based on privilege, a
privilege log shall be prepared and submitted to all other parties.
All other potentially responsible parties shall have the same rights
as the respondent regarding the production of documents upon receipt
of written notice of the claim, and shall produce all relevant
documents within 60 days of receipt of the notice of the claim.
(2) The respondent shall provide written notice by certified mail
to all subcontractors, design professionals, their insurers, and the
insurers of any additional insured whose identities are known to the
respondent or readily ascertainable by review of the project files or
other similar sources and whose potential responsibility appears on
the face of the notice. This notice to subcontractors, design
professionals, and insurers shall include a copy of the Notice of
Commencement of Legal Proceedings, and shall specify the date and
manner by which the parties shall meet and confer to select a dispute
resolution facilitator pursuant to paragraph (1) of subdivision (f),
advise the recipient of its obligation to participate in the meet
and confer or serve a written acknowledgment of receipt regarding
this notice, advise the recipient that it will waive any challenge to
selection of the dispute resolution facilitator if it elects not to
participate in the meet and confer, advise the recipient that it may
seek the assistance of an attorney, and advise the recipient that it
should contact its insurer, if any. Any subcontractor or design
professional, or insurer for that subcontractor, design professional,
or additional insured, who receives written notice from the
respondent regarding the meet and confer shall, prior to the meet and
confer, serve on the respondent a written acknowledgment of receipt.
That subcontractor or design professional shall, within 10 days of
service of the written acknowledgment of receipt, provide to the
association and the respondent a Statement of Insurance that includes
both of the following:
(A) The names, addresses, and contact persons, if known, of all
insurance carriers, whether primary or excess and regardless of
whether a deductible or self-insured retention applies, whose
policies were in effect from the commencement of construction of the
subject project to the present and which potentially cover the
subject claims.
(B) The applicable policy numbers for each policy of insurance
provided.
(3) Any subcontractor or design professional, or insurer for that
subcontractor, design professional, or additional insured, who so
chooses, may, at any time, make a written request to the dispute
resolution facilitator for designation as a peripheral party. That
request shall be served contemporaneously on the association and the
respondent. If no objection to that designation is received within 15
days, or upon rejection of that objection, the dispute resolution
facilitator shall designate that subcontractor or design professional
as a peripheral party, and shall thereafter seek to limit the
attendance of that subcontractor or design professional only to those
dispute resolution sessions deemed peripheral party sessions or to
those sessions during which the dispute resolution facilitator
believes settlement as to peripheral parties may be finalized.
Nothing in this subdivision shall preclude a party who has been
designated a peripheral party from being reclassified as a
nonperipheral party, nor shall this subdivision preclude a party
designated as a nonperipheral party from being reclassified as a
peripheral party after notice to all parties and an opportunity to
object. For purposes of this subdivision, a peripheral party is a
party having total claimed exposure of less than twenty-five thousand
dollars ($25,000).
(f) (1) Within 20 days of sending the notice set forth in
paragraph (2) of subdivision (e), the association, respondent,
subcontractors, design professionals, and their insurers who have
been sent a notice as described in paragraph (2) of subdivision (e)
shall meet and confer in an effort to select a dispute resolution
facilitator to preside over the mandatory dispute resolution process
prescribed by this section. Any subcontractor or design professional
who has been given timely notice of this meeting but who does not
participate, waives any challenge he or she may have as to the
selection of the dispute resolution facilitator. The role of the
dispute resolution facilitator is to attempt to resolve the conflict
in a fair manner. The dispute resolution facilitator shall be
sufficiently knowledgeable in the subject matter and be able to
devote sufficient time to the case. The dispute resolution
facilitator shall not be required to reside in or have an office in
the county in which the project is located. The dispute resolution
facilitator and the participating parties shall agree to a date,
time, and location to hold a case management meeting of all parties
and the dispute resolution facilitator, to discuss the claims being
asserted and the scheduling of events under this section. The case
management meeting with the dispute resolution facilitator shall be
held within 100 days of service of the Notice of Commencement of
Legal Proceedings at a location in the county where the project is
located. Written notice of the case management meeting with the
dispute resolution facilitator shall be sent by the respondent to the
association, subcontractors and design professionals, and their
insurers who are known to the respondent to be on notice of the
claim, no later than 10 days prior to the case management meeting,
and shall specify its date, time, and location. The dispute
resolution facilitator in consultation with the respondent shall
maintain a contact list of the participating parties.
(2) No later than 10 days prior to the case management meeting,
the dispute resolution facilitator shall disclose to the parties all
matters that could cause a person aware of the facts to reasonably
entertain a doubt that the proposed dispute resolution facilitator
would be able to resolve the conflict in a fair manner. The
facilitator's disclosure shall include the existence of any ground
specified in Section 170.1 of the Code of Civil Procedure for
disqualification of a judge, any attorney-client relationship the
facilitator has or had with any party or lawyer for a party to the
dispute resolution process, and any professional or significant
personal relationship the facilitator or his or her spouse or minor
child living in the household has or had with any party to the
dispute resolution process. The disclosure shall also be provided to
any subsequently noticed subcontractor or design professional within
10 days of the notice.
(3) A dispute resolution facilitator shall be disqualified by the
court if he or she fails to comply with this subdivision and any
party to the dispute resolution process serves a notice of
disqualification prior to the case management meeting. If the dispute
resolution facilitator complies with this subdivision, he or she
shall be disqualified by the court on the basis of the disclosure if
any party to the dispute resolution process serves a notice of
disqualification prior to the case management meeting.
(4) If the parties cannot mutually agree to a dispute resolution
facilitator, then each party shall submit a list of three dispute
resolution facilitators. Each party may then strike one nominee from
the other parties' list, and petition the court, pursuant to the
procedure described in subdivisions (n) and (o), for final selection
of the dispute resolution facilitator. The court may issue an order
for final selection of the dispute resolution facilitator pursuant to
this paragraph.
(5) Any subcontractor or design professional who receives notice
of the association's claim without having previously received timely
notice of the meet and confer to select the dispute resolution
facilitator shall be notified by the respondent regarding the name,
address, and telephone number of the dispute resolution facilitator.
Any such subcontractor or design professional may serve upon the
parties and the dispute resolution facilitator a written objection to
the dispute resolution facilitator within 15 days of receiving
notice of the claim. Within seven days after service of this
objection, the subcontractor or design professional may petition the
superior court to replace the dispute resolution facilitator. The
court may replace the dispute resolution facilitator only upon a
showing of good cause, liberally construed. Failure to satisfy the
deadlines set forth in this subdivision shall constitute a waiver of
the right to challenge the dispute resolution facilitator.
(6) The costs of the dispute resolution facilitator shall be
apportioned in the following manner: one-third to be paid by the
association; one-third to be paid by the respondent; and one-third to
be paid by the subcontractors and design professionals, as allocated
among them by the dispute resolution facilitator. The costs of the
dispute resolution facilitator shall be recoverable by the prevailing
party in any subsequent litigation pursuant to Section 1032 of the
Code of Civil Procedure, provided however that any nonsettling party
may, prior to the filing of the complaint, petition the facilitator
to reallocate the costs of the dispute resolution facilitator as they
apply to any nonsettling party. The determination of the dispute
resolution facilitator with respect to the allocation of these costs
shall be binding in any subsequent litigation. The dispute resolution
facilitator shall take into account all relevant factors and
equities between all parties in the dispute resolution process when
reallocating costs.
(7) In the event the dispute resolution facilitator is replaced at
any time, the case management statement created pursuant to
subdivision (h) shall remain in full force and effect.
(8) The dispute resolution facilitator shall be empowered to
enforce all provisions of this section.
(g) (1) No later than the case management meeting, the parties
shall begin to generate a data compilation showing the following
information regarding the alleged defects at issue:
(A) The scope of the work performed by each potentially
responsible subcontractor.
(B) The tract or phase number in which each subcontractor provided
goods or services, or both.
(C) The units, either by address, unit number, or lot number, at
which each subcontractor provided goods or services, or both.
(2) This data compilation shall be updated as needed to reflect
additional information. Each party attending the case management
meeting, and any subsequent meeting pursuant to this section, shall
provide all information available to that party relevant to this data
compilation.
(h) At the case management meeting, the parties shall, with the
assistance of the dispute resolution facilitator, reach agreement on
a case management statement, which shall set forth all of the
elements set forth in paragraphs (1) to (8), inclusive, except that
the parties may dispense with one or more of these elements if they
agree that it is appropriate to do so. The case management statement
shall provide that the following elements shall take place in the
following order:
(1) Establishment of a document depository, located in the county
where the project is located, for deposit of documents, defect lists,
demands, and other information provided for under this section. All
documents exchanged by the parties and all documents created pursuant
to this subdivision shall be deposited in the document depository,
which shall be available to all parties throughout the prefiling
dispute resolution process and in any subsequent litigation. When any
document is deposited in the document depository, the party
depositing the document shall provide written notice identifying the
document to all other parties. The costs of maintaining the document
depository shall be apportioned among the parties in the same manner
as the costs of the dispute resolution facilitator.
(2) Provision of a more detailed list of defects by the
association to the respondent after the association completes a
visual inspection of the project. This list of defects shall provide
sufficient detail for the respondent to ensure that all potentially
responsible subcontractors and design professionals are provided with
notice of the dispute resolution process. If not already completed
prior to the case management meeting, the Notice of Commencement of
Legal Proceedings shall be served by the respondent on all additional
subcontractors and design professionals whose potential
responsibility appears on the face of the more detailed list of
defects within seven days of receipt of the more detailed list. The
respondent shall serve a copy of the case management statement,
including the name, address, and telephone number of the dispute
resolution facilitator, to all the potentially responsible
subcontractors and design professionals at the same time.
(3) Nonintrusive visual inspection of the project by the
respondent, subcontractors, and design professionals.
(4) Invasive testing conducted by the association, if the
association deems appropriate. All parties may observe and photograph
any testing conducted by the association pursuant to this paragraph,
but may not take samples or direct testing unless, by mutual
agreement, costs of testing are shared by the parties.
(5) Provision by the association of a comprehensive demand which
provides sufficient detail for the parties to engage in meaningful
dispute resolution as contemplated under this section.
(6) Invasive testing conducted by the respondent, subcontractors,
and design professionals, if they deem appropriate.
(7) Allowance for modification of the demand by the association if
new issues arise during the testing conducted by the respondent,
subcontractor, or design professionals.
(8) Facilitated dispute resolution of the claim, with all parties,
including peripheral parties, as appropriate, and insurers, if any,
present and having settlement authority. The dispute resolution
facilitators shall endeavor to set specific times for the attendance
of specific parties at dispute resolution sessions. If the dispute
resolution facilitator does not set specific times for the attendance
of parties at dispute resolution sessions, the dispute resolution
facilitator shall permit those parties to participate in dispute
resolution sessions by telephone.
(i) In addition to the foregoing elements of the case management
statement described in subdivision (h), upon mutual agreement of the
parties, the dispute resolution facilitator may include any or all of
the following elements in a case management statement: the exchange
of consultant or expert photographs; expert presentations; expert
meetings; or any other mechanism deemed appropriate by the parties in
the interest of resolving the dispute.
(j) The dispute resolution facilitator, with the guidance of the
parties, shall at the time the case management statement is
established, set deadlines for the occurrence of each event set forth
in the case management statement, taking into account such factors
as the size and complexity of the case, and the requirement of this
section that this dispute resolution process not exceed 180 days
absent agreement of the parties to an extension of time.
(k) (1) At a time to be determined by the dispute resolution
facilitator, the respondent may submit to the association all of the
following:
(A) A request to meet with the board to discuss a written
settlement offer.
(B) A written settlement offer, and a concise explanation of the
reasons for the terms of the offer.
(C) A statement that the respondent has access to sufficient funds
to satisfy the conditions of the settlement offer.
(D) A summary of the results of testing conducted for the purposes
of determining the nature and extent of defects, if this testing has
been conducted, unless the association provided the respondent with
actual test results.
(2) If the respondent does not timely submit the items required by
this subdivision, the association shall be relieved of any further
obligation to satisfy the requirements of this subdivision only.
(3) No less than 10 days after the respondent submits the items
required by this paragraph, the respondent and the board shall meet
and confer about the respondent's settlement offer.
(4) If the board rejects a settlement offer presented at the
meeting held pursuant to this subdivision, the board shall hold a
meeting open to each member of the association. The meeting shall be
held no less than 15 days before the association commences an action
for damages against the respondent.
(5) No less than 15 days before this meeting is held, a written
notice shall be sent to each member of the association specifying all
of the following:
(A) That a meeting will take place to discuss problems that may
lead to the filing of a civil action, and the time and place of this
meeting.
(B) The options that are available to address the problems,
including the filing of a civil action and a statement of the various
alternatives that are reasonably foreseeable by the association to
pay for those options and whether these payments are expected to be
made from the use of reserve account funds or the imposition of
regular or special assessments, or emergency assessment increases.
(C) The complete text of any written settlement offer, and a
concise explanation of the specific reasons for the terms of the
offer submitted to the board at the meeting held pursuant to
subdivision (d) that was received from the respondent.
(6) The respondent shall pay all expenses attributable to sending
the settlement offer to all members of the association. The
respondent shall also pay the expense of holding the meeting, not to
exceed three dollars ($3) per association member.
(7) The discussions at the meeting and the contents of the notice
and the items required to be specified in the notice pursuant to
paragraph (5) are privileged communications and are not admissible in
evidence in any civil action, unless the association consents to
their admission.
(8) No more than one request to meet and discuss a written
settlement offer may be made by the respondent pursuant to this
subdivision.
(l) All defect lists and demands, communications, negotiations,
and settlement offers made in the course of the prelitigation dispute
resolution process provided by this section shall be inadmissible
pursuant to Sections 1119 to 1124, inclusive, of the Evidence Code
and all applicable decisional law. This inadmissibility shall not be
extended to any other documents or communications which would not
otherwise be deemed inadmissible.
(m) Any subcontractor or design professional may, at any time,
petition the dispute resolution facilitator to release that party
from the dispute resolution process upon a showing that the
subcontractor or design professional is not potentially responsible
for the defect claims at issue. The petition shall be served
contemporaneously on all other parties, who shall have 15 days from
the date of service to object. If a subcontractor or design
professional is released, and it later appears to the dispute
resolution facilitator that it may be a responsible party in light of
the current defect list or demand, the respondent shall renotice the
party as provided by paragraph (2) of subdivision (e), provide a
copy of the current defect list or demand, and direct the party to
attend a dispute resolution session at a stated time and location. A
party who subsequently appears after having been released by the
dispute resolution facilitator shall not be prejudiced by its absence
from the dispute resolution process as the result of having been
previously released by the dispute resolution facilitator.
(n) Any party may, at any time, petition the superior court in the
county where the project is located, upon a showing of good cause,
and the court may issue an order, for any of the following, or for
appointment of a referee to resolve a dispute regarding any of the
following:
(1) To take a deposition of any party to the process, or subpoena
a third party for deposition or production of documents, which is
necessary to further prelitigation resolution of the dispute.
(2) To resolve any disputes concerning inspection, testing,
production of documents, or exchange of information provided for
under this section.
(3) To resolve any disagreements relative to the timing or
contents of the case management statement.
(4) To authorize internal extensions of timeframes set forth in
the case management statement.
(5) To seek a determination that a settlement is a good faith
settlement pursuant to Section 877.6 of the Code of Civil Procedure
and all related authorities. The page limitations and meet and confer
requirements specified in this section shall not apply to these
motions, which may be made on shortened notice. Instead, these
motions shall be subject to other applicable state law, rules of
court, and local rules. A determination made by the court pursuant to
this motion shall have the same force and effect as the
determination of a postfiling application or motion for good faith
settlement.
(6) To ensure compliance, on shortened notice, with the obligation
to provide a Statement of Insurance pursuant to paragraph (2) of
subdivision (e).
(7) For any other relief appropriate to the enforcement of the
provisions of this section, including the ordering of parties, and
insurers, if any, to the dispute resolution process with settlement
authority.
(o) (1) A petition filed pursuant to subdivision (n) shall be
filed in the superior court in the county in which the project is
located. The court shall hear and decide the petition within 10 days
after filing. The petitioning party shall serve the petition on all
parties, including the date, time, and location of the hearing no
later than five business days prior to the hearing. Any responsive
papers shall be filed and served no later than three business days
prior to the hearing. Any petition or response filed under this
section shall be no more than three pages in length.
(2) All parties shall meet with the dispute resolution
facilitator, if one has been appointed and confer in person or by
telephone prior to the filing of that petition to attempt
to resolve the matter without
requiring court intervention.
(p) As used in this section:
(1) "Association" shall have the same meaning as defined in
Section 4080.
(2) "Builder" means the declarant, as defined in Section 4130.
(3) "Common interest development" shall have the same meaning as
in Section 4100, except that it shall not include developments or
projects with less than 20 units.
(q) The alternative dispute resolution process and procedures
described in this section shall have no application or legal effect
other than as described in this section.
(r) This section shall become operative on July 1, 2002, however
it shall not apply to any pending suit or claim for which notice has
previously been given.
(s) This section shall become inoperative on July 1, 2024, and, as
of January 1, 2025, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2025, deletes or
extends the dates on which it becomes inoperative and is repealed.
