Acqua Vista Homeowners Assn. v. MWI, Inc.

Filed 1/26/17
CERTIFIED FOR PUBLICATION
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
ACQUA VISTA HOMEOWNERS D068406
ASSOCIATION,
Plaintiff and Respondent,
(Super. Ct. No. 37-2009-00104348-
v. CU-CD-CTL)
MWI, INC.,
Defendant and Appellant.
APPEAL from a judgment and orders of the Superior Court of San Diego
County, Ronald L. Styn, Judge. Reversed and remanded with directions.
Horvitz & Levy, H. Thomas Watson, Daniel J. Gonzalez; White, Oliver &
Amundson, White, Amundson, Kish & Sweeney, Daniel M. White, Steven G.
Amundson and Heather N. Catron for Defendant and Appellant.
Morris, Sullivan & Lemkul, Shawn D. Morris, Matthew J. Yarling; Peters &
Freedman, David M. Peters and Kyle E. Lakin for Plaintiff and Respondent.
I.
INTRODUCTION
Civil Code section 8951 et seq. ("the Act") establishes a set of building
standards pertaining to new residential construction and provides homeowners with a
cause of action against, among others, material suppliers, for a violation of the
standards (§§ 896, 936). We must determine whether the Act requires homeowners
suing a material supplier under the Act to prove that the material supplier "caused, in
whole or in part, a violation of a particular standard as the result of a negligent act or
omission or a breach of contract." (§ 936.) We conclude that the Act requires such
proof.
Our conclusion is supported by the text, structure, and legislative history of the
Act, as well as this court's prior interpretation of section 936 in Greystone Homes, Inc.
v. Midtec, Inc. (2008) 168 Cal. App. 4th 1194 (Greystone). In Greystone, this court
stated that "a product manufacturer is liable [under section 936] only where its
'negligent act or omission or a breach of contract' . . . caused a violation of the Act's
standards." (Id. at p. 1216, quoting § 936, italics omitted.) Section 936 treats product
manufacturers and material suppliers identically.2
1 Unless otherwise specified, all subsequent statutory references are to the Civil
Code.
2 (See § 936 ["Each and every provision of the other chapters of this title apply to
general contractors, subcontractors, material suppliers, individual product
manufacturers, and design professionals to the extent that the general contractors,
subcontractors, material suppliers, individual product manufacturers, and design
2
In this case, Acqua Vista Homeowners Association ("the HOA") sued MWI,
Inc. ("MWI"), a supplier of pipe used in the construction of the Acqua Vista
condominium development. The operative third amended complaint contained a claim
for a violation of the Act's standards in which the HOA alleged that "[d]efective cast
iron pipe manufactured in China [was] used throughout the building." At a pretrial
hearing, the HOA explained that it was not pursuing a claim premised on the doctrine
of strict liability3 and that it was alleging a single cause of action against MWI for
violations of the Act's standards.
During a jury trial, near the close of evidence, MWI filed a motion for a
directed verdict on the ground that the HOA failed to present any evidence that MWI
had caused a violation of the Act's standards as a result of MWI's negligence or breach
of contract, as required. The trial court denied the motion, concluding that the HOA
was not required to prove that any violations of the Act's standards were caused by
MWI's negligence or breach of contract. In reaching this conclusion, the court relied
on the final sentence of section 936, which states in relevant part, "[T]he negligence
standard in this section does not apply to . . . material suppliers . . . with respect to
professionals caused, in whole or in part, a violation of a particular standard as the
result of a negligent act or omission or a breach of contract" (italics added)].)
3 The third amended complaint does not contain a cause of action separately
styled as a cause of action for strict liability. However, the HOA had stated in its trial
brief that it was pursuing a claim for strict liability and referred to allegations in its
third amended complaint that it contended adequately alleged a strict liability claim.
3
claims for which strict liability would apply." (§ 936.)4 After the jury rendered a
verdict against MWI, MWI filed a motion for judgment notwithstanding the verdict
(JNOV) on the same ground as it had raised in its motion for directed verdict, which
the trial court denied for the same reason it provided in denying the motion for a
directed verdict.
On appeal, MWI claims that the trial court misinterpreted the Act and, as a
result, erred in denying its motion for a directed verdict and motion for JNOV. We
agree. The first sentence of section 936 contains an "explicit adoption of a negligence
standard for claims" under the Act against material suppliers. (Greystone, supra, 168
Cal.App.4th at p. 1216, fn. 14.) While the final sentence of section 936 is not a model
of textual clarity, for the reasons explained below, standard techniques of statutory
interpretation make clear that this sentence merely provides that the negligence
standard applicable to claims brought against material suppliers under the Act does not
apply to common law claims for strict liability against such suppliers. Since it is
undisputed that the HOA's claim was brought under the Act, it was required to prove
that MWI "caused, in whole or in part, a violation of a particular standard as the result
of a negligent act or omission or a breach of contract." (§ 936.) We also conclude that
because there is no evidence in the record that MWI caused a violation of the Act's
4 As with the first sentence of section 936, the final sentence of section 936 treats
product manufacturers and material suppliers identically. (§ 936 ["However, the
negligence standard in this section does not apply to any general contractor,
subcontractor, material supplier, individual product manufacturer, or design
professional with respect to claims for which strict liability would apply" (italics
added)].)
4
standards through its negligence or breach of contract, the court erred in denying
MWI's motion for a directed verdict and motion for JNOV. Accordingly, we reverse
the judgment and the trial court's order denying MWI's motion for JNOV and remand
the matter to the trial court with directions to grant MWI's motion for a directed
verdict and to enter judgment in favor of MWI.5
II.
FACTUAL AND PROCEDURAL BACKGROUND
A. The action
The HOA filed this construction defect action in December 2009. In September
2013, the HOA filed the operative third amended complaint in which it named MWI,
and others, as defendants.6 The third amended complaint alleged a cause of action
styled as "Violation of SB800[7] Construction Standards, Civil Code § 896" against all
defendants, including MWI. (Boldface & italics omitted.) The cause of action
contained the following relevant allegation:
"The violations of SB800 standards by the defendants, and each
of them, alleged herein include, but are not limited to, the
following design, construction and/or manufacturing defects at
5 In light of our disposition, we need not consider MWI's other arguments in
support of reversal of the judgment and/or the court's order denying its motion for
JNOV.
6 The complaint also named as defendants several entities that were responsible
for building and developing the project. The HOA entered into a settlement with these
entities before trial.
7 The Act was initially adopted in 2002 pursuant to Senate Bill No. 800 (Stats.
2002, ch. 722, § 3.) Thus, references to "SB800" in this opinion are references to the
Act.
5
the project: Defective cast iron pipe manufactured in China and
used throughout the building."
B. The trial
The trial court held a jury trial on the HOA's claims under the Act against MWI,
and another iron pipe supplier, Standard Plumbing & Industrial Supply Co.
("Standard"). At trial, the HOA presented evidence that the pipes supplied by MWI
contained manufacturing defects, that they leaked, and that the leaks had caused
damage to various parts of the condominium development.
MWI moved for a directed verdict on the ground that the HOA had failed to
present evidence that MWI caused a violation of the Act's standards as a result of
MWI's negligence or breach of contract. In addition, MWI requested that the trial
court instruct the jury that the HOA was required to present such evidence. The trial
court denied MWI's motion for a directed verdict and MWI's jury instruction requests.
C. The jury's verdict
The jury rendered a special verdict that responded to four questions. The first
question asked the jury, "Have the cast iron pipes supplied by the Defendants at Acqua
Vista leaked?" The jury responded in the affirmative with respect to both MWI and
Standard. The second question asked the jury, "Have the cast iron pipes supplied by
either of the Defendants to Acqua Vista corroded so as to impeded the useful life of
the plumbing/sewer system?"8 The jury again responded in the affirmative with
8 The two questions tracked two of the Act's standards for residential
construction (§ 896, subds. (a)(14), (15)). (See pt. III.B.2, post.)
6
respect to both defendants. The third question asked the jury, "If you answered yes as
to either Defendant in questions 1 or 2, what is the total amount of Plaintiffs [sic]
damages?" The jury found that the HOA had suffered $18,500,000 in damages "[f]or
the reasonable cost of repairing any violations," $7,130,000 in damages "[f]or
reasonable relocation and storage expenses," and $408,909 "[f]or reasonable
investigative costs."9 Finally, the jury was asked, "For those Defendants that you
answered 'Yes' to in Question 1 or Question 2, assuming 100%, what percentage of
responsibility is attributable to each of the following for the damages to the Plaintiff
identified in Question 3[?]" The jury responded that MWI was responsible for 92%,
Standard, 8%, the "pipe installer," 0%, and the HOA, 0%.10
D. The judgment
The trial court entered a judgment against MWI in March 2015 in the amount of
$23,955,796.28, reflecting MWI's 92 percent responsibility for the total damages
suffered.11
E. Postjudgment motions
MWI moved for JNOV on several grounds, including that the HOA had failed
to present evidence that MWI had caused a violation of the Act's standards as a result
9 The jury's verdict totaled $26,038,909 in damages.
10 As part of its defense, MWI presented evidence that some of the pipe had been
improperly installed.
11 Prior to the entry of judgment, the HOA and Standard entered into a settlement.
MWI is the only appellant.
7
of MWI's negligence or breach of contract. The trial court denied the HOA's motion
for JNOV, reasoning in part:
"MWI argues that judgment should be entered in favor of MWI
because Plaintiff failed to prove a prima facie case for liability
under . . . § 896. Specifically, MWI argues Plaintiff's [sic] must
prove negligence and causation and that Plaintiff failed to do so.
As this court previously ruled, the last sentence of . . . § 936
['[h]owever, the negligence standard in this section does not apply
to any general contractor, subcontractor, material supplier,
individual product manufacturer, or design professional with
respect to claims for which strict liability would apply'] removes
any negligence/causation requirement in a . . . § 896 action
against certain defendants, including MWI, a material supplier in
this case. The court is not persuaded by MWI's reliance on
Greystone[, supra,] 168 Cal. App. 4th 1194 because the issue of
the effect of the last sentence of . . . § 936 was not before the
Court of Appeal in Greystone."
MWI also filed a motion for new trial on numerous grounds, including that the
trial court had failed to instruct the injury on negligence and causation with respect to
the HOA's claim under the Act and that the special verdict form had not required any
findings on these issues. The trial court employed similar reasoning in denying MWI's
motion for new trial as it had used in denying MWI's motion for JNOV.
F. The amended judgment and appeals
MWI filed an appeal from the judgment and the order denying the motion for
JNOV. The trial court entered an amended judgment in the amount of $23,955,796.28
8
against MWI in July 2015.12 MWI filed a second notice of appeal from the original
and amended judgments and the order denying the motion for JNOV.13
III.
DISCUSSION
The trial court erred in denying MWI's motion
for a directed verdict and motion for JNOV
MWI claims that the trial court erred in denying its motions for a directed
verdict and for JNOV because there is no evidence in the record that MWI "caused, in
whole or in part, a violation of a particular standard as the result of a negligent act or
omission or a breach of contract" (§ 936), as is required in order for the HOA to state a
claim against MWI for a violation of the Act's standards.
A. General principles of law governing a motion for a directed verdict and a motion
for JNOV, and the applicable standard of review
" ' "[T]he power of the court to direct a verdict is absolutely the same as the
power of the court to grant a nonsuit." [Citation.] "A motion for a directed verdict 'is
12 The amendments related to issues not relevant to the issue addressed on appeal.
13 While this appeal was pending, the HOA filed a motion for sanctions for MWI's
failure to timely procure the record. (See Cal. Rules of Court, rule 8.140.) In its
motion, the HOA acknowledged that the superior court clerk had not sent MWI a
notice of default, which would have triggered a 15-day period during which MWI
could cure the default. (See Cal. Rules of Court, rule 8.140(a).) In its opposition,
MWI demonstrated that it had cured the default within 15 days of the HOA's motion.
Under these circumstances, California Rules of Court, rule 8.140(c) specifies that the
motion for sanctions must be denied. (See Cal. Rules of Court, rule 8.140(c) ["If the
superior court clerk fails to give a notice required by (a), a party may serve and file a
motion for sanctions under (b) in the reviewing court, but the motion must be denied if
the defaulting party cures the default within 15 days after the motion is served" (italics
added)].) Accordingly, the HOA's motion for sanctions is denied.
9
in the nature of a demurrer to the evidence, and is governed by practically the same
rules, and concedes as true the evidence on behalf of the adverse party, with all fair
and reasonable inferences to be deduced therefrom.' " ' " (Baker v. American
Horticulture Supply, Inc. (2010) 186 Cal. App. 4th 1059, 1072.) " ' "A defendant is
entitled to a nonsuit [or directed verdict] if the trial court determines that, as a matter
of law, the evidence presented by plaintiff is insufficient to permit a jury to find in his
favor." ' " (Ibid.) A trial court must grant a motion for JNOV whenever a motion for a
directed verdict for the aggrieved party should have been granted. (Code Civ. Proc.,
§ 629, subd. (a).)
In reviewing a trial court's ruling on a motion for a directed verdict, "the
reviewing court must resolve every conflict in the testimony in favor of the plaintiff
and at the same time indulge in every presumption and inference that could reasonably
support the plaintiff's case." (County of Kern v. Sparks (2007) 149 Cal. App. 4th 11,
16.) Similarly, when reviewing an order on a motion for JNOV, "an appellate court
will use the same standard the trial court uses in ruling on the motion, by determining
whether it appears from the record, viewed most favorably to the party securing the
verdict, that any substantial evidence supports the verdict. ' " 'If there is any
substantial evidence, or reasonable inferences to be drawn therefrom in support of the
verdict, the motion should be denied.' " ' " (Trujillo v. North County Transit Dist.
(1998) 63 Cal. App. 4th 280, 284 (Trujillo).)
The proper interpretation of the Act and whether there is substantial evidence to
support the HOA's claim under the Act, present questions of law that we review de
10
novo. (See, e.g., Yohner v. California Dept. of Justice (2015) 237 Cal. App. 4th 1, 7
(Yohner) ["Yohner's claim raises an issue of statutory interpretation, and we therefore
apply the de novo standard of review"]; Sweatman v. Department of Veterans Affairs
(2001) 25 Cal. 4th 62, 68 [stating that where an appeal from the denial of a motion for
JNOV raises a legal issue, an appellate court reviews the question de novo].)
B. Section 936 requires a homeowner suing a material supplier for violating a
standard under the Act to prove that the material supplier "caused, in whole or in
part, a violation of a particular standard as the result of a negligent act or
omission or a breach of contract"
1. Principles of statutory interpretation
In Yohner, supra, 237 Cal.App.4th at pages 7-8, this court restated the
following well-established rules of statutory interpretation:
" ' "In construing any statute, '[w]ell-established rules of statutory
construction require us to ascertain the intent of the enacting
legislative body so that we may adopt the construction that best
effectuates the purpose of the law.' [Citation.] 'We first examine
the words themselves because the statutory language is generally
the most reliable indicator of legislative intent. [Citation.] The
words of the statute should be given their ordinary and usual
meaning and should be construed in their statutory context.'
[Citation.] If the statutory language is unambiguous, 'we presume
the Legislature meant what it said, and the plain meaning of the
statute governs.' [Citation.]" [Citation.]
" ' "If, however, the statutory language is ambiguous or
reasonably susceptible to more than one interpretation, we will
'examine the context in which the language appears, adopting the
construction that best harmonizes the statute internally and with
related statutes,' and we can ' " 'look to a variety of extrinsic aids,
including the ostensible objects to be achieved, the evils to be
remedied, the legislative history, public policy, contemporaneous
administrative construction, and the statutory scheme of which the
statute is a part.' " ' [Citation.]" [Citation.]
11
" ' " 'We must select the construction that comports most closely
with the apparent intent of the Legislature, with a view to
promoting rather than defeating the general purpose of the statute,
and avoid an interpretation that would lead to absurd
consequences.' " ' "
2. The Act
Section 896 provides a list of standards pertaining to residential construction,
including that "[t]he lines and components of the plumbing system, sewer system, and
utility systems shall not leak," (§ 896, subd. (a)(14)) and that "[p]lumbing lines, sewer
lines, and utility lines shall not corrode so as to impede the useful life of the systems."
(§ 896, subd. (a)(15)). Section 896 also specifies the manner by which certain entities
involved in the construction process may be liable for failing to meet the standards.
(§ 896.) Section 896 provides that a builder14 shall be liable for a violation of the
14 The Act defines "builder" as follows:
"(a) For purposes of this title, except as provided in subdivision
(b), 'builder' means any entity or individual, including, but not
limited to a builder, developer, general contractor, contractor, or
original seller, who, at the time of sale, was also in the business of
selling residential units to the public for the property that is the
subject of the homeowner's claim or was in the business of
building, developing, or constructing residential units for public
purchase for the property that is the subject of the homeowner's
claim.
"(b) For the purposes of this title, 'builder' does not include any
entity or individual whose involvement with a residential unit that
is the subject of the homeowner's claim is limited to his or her
capacity as general contractor or contractor and who is not a
partner, member of, subsidiary of, or otherwise similarly affiliated
with the builder. For purposes of this title, these nonaffiliated
general contractors and nonaffiliated contractors shall be treated
12
Act's standards, and states that other entities, including a material supplier, shall be
liable for a violation of the standards to the extent specified in Chapter 4 of the Act.
Section 896 provides in relevant part:
"In any action seeking recovery of damages arising out of, or
related to deficiencies in, the residential construction, design,
specifications, surveying, planning, supervision, testing, or
observation of construction, a builder, and to the extent set forth
in Chapter 4 (commencing with Section 910), a general
contractor, subcontractor, material supplier,[15] individual
product manufacturer, or design professional, shall, except as
specifically set forth in this title, be liable for, and the
claimant's[16] claims or causes of action shall be limited to
violation of, the following standards, except as specifically set
forth in this title." (§ 896, italics added.)
Chapter 4 of the Act, beginning with section 910, establishes a series of
prelitigation procedures that a claimant must pursue prior to filing an action against
"any party alleged to have contributed to a violation of the standards." (§ 910.) A
provision in Chapter 4—section 936—also specifies the extent to which a nonbuilder
entity may be liable for a violation of the Act's standards, stating:
"Each and every provision of the other chapters of this title apply
to general contractors, subcontractors, material suppliers,
individual product manufacturers, and design professionals to the
extent that the general contractors, subcontractors, material
the same as subcontractors, material suppliers, individual product
manufacturers, and design professionals." (§ 911.)
15 Although "material supplier" is not defined in the Act, it is undisputed that
MWI is a material supplier under the Act.
16 Claimant is defined in the Act as follows: " 'Claimant' or 'homeowner' includes
the individual owners of single-family homes, individual unit owners of attached
dwellings and, in the case of a common interest development, any association as
defined in Section 4080." (§ 895, subd. (f).) It is undisputed that the HOA is a
claimant under the Act.
13
suppliers, individual product manufacturers, and design
professionals caused, in whole or in part, a violation of a
particular standard as the result of a negligent act or omission or
a breach of contract. In addition to the affirmative defenses set
forth in Section 945.5, a general contractor, subcontractor,
material supplier, design professional, individual product
manufacturer, or other entity may also offer common law and
contractual defenses as applicable to any claimed violation of a
standard. All actions by a claimant or builder to enforce an
express contract, or any provision thereof, against a general
contractor, subcontractor, material supplier, individual product
manufacturer, or design professional is preserved. Nothing in this
title modifies the law pertaining to joint and several liability for
builders, general contractors, subcontractors, material suppliers,
individual product manufacturer, and design professionals that
contribute to any specific violation of this title. However, the
negligence standard in this section does not apply to any general
contractor, subcontractor, material supplier, individual product
manufacturer, or design professional with respect to claims for
which strict liability would apply." (§ 936, italics added.)
3. The text and structure of the Act supports the conclusion that a
homeowner/claimant suing a material supplier for violating a standard
under the Act must prove that the material supplier "caused, in whole or in
part, a violation of a particular standard as the result of a negligent act or
omission or a breach of contract" (§ 936)
The first sentence of section 936, when read in context with section 896, clearly
and unambiguously states that a homeowner/claimant (such as the HOA) suing a
material supplier (such as MWI) for violating a standard under the Act must prove that
the material supplier caused, in whole or in part, a violation of a standard as the result
of a negligent act or omission or a breach of contract. (See § 936 [stating that
provisions of the Act outside of Chapter 4, including section 896, apply to "material
suppliers, . . . to the extent that the . . . material suppliers . . . caused, in whole or in
part, a violation of a particular standard as the result of a negligent act or omission or a
14
breach of contract"].) The HOA does not contend otherwise. Rather, the HOA
acknowledges that "[a] negligence standard applies to non-builders, according to the
first sentence [of section 936]." However, as discussed in part III.B.1.c, post, the HOA
argues that, pursuant to the final sentence of section 936, the negligence standard in
section 936 does not apply if a plaintiff's claim under the Act is one for which strict
liability would have applied at common law. In that instance, the HOA argues that the
standard of liability outlined in section 896 applies.17
Thus, unless the HOA is correct that the final sentence of section 936 qualifies
the standard of liability expressly stated in the first sentence of section 936 in a manner
applicable to this case, the HOA was required to prove that MWI "caused, in whole or
in part, a violation of a particular standard as the result of a negligent act or omission
or a breach of contract." (§ 936.) Accordingly, we must consider the meaning of the
final sentence of section 936.
a. The final sentence of section 936 is most reasonably interpreted as
providing that the negligence standard adopted in section 936 does
not apply to common law claims for strict liability
We acknowledge that the plain language of the final sentence in section 936,
when read in isolation, is ambiguous. (See § 936 ["However, the negligence standard
in this section does not apply to any general contractor, subcontractor, material
supplier, individual product manufacturer, or design professional with respect to
17 For example, the HOA argues in a supplemental brief (see fn. 38, post), "The
trial court correctly ruled . . . that, even if the first sentence of Section 936 imposed a
negligence or breach of contract standard, the final sentence of Section 936 removed
that requirement with respect to claims to which strict liability would apply."
15
claims for which strict liability would apply"].) Despite such textual ambiguity, for
the reasons stated below, an application of the techniques of statutory interpretation
demonstrates that the provision should be interpreted as providing that the negligence
standard specified in the first sentence of section 936 does not apply to common law
strict liability claims against the specified nonbuilder entities.
To begin with, interpreting the final sentence of section 936 as making clear
that the negligence standard applicable to claims under the Act does not apply to
common law claims is a plausible textual interpretation of the statute. Strict liability is
a common law doctrine (see generally Jimenez v. Superior Court (2002) 29 Cal. 4th
473, 484 (Jimenez) [outlining the evolution of the doctrine]), and the sentence may
reasonably be read as stating that the "negligence standard" contained in section 936
does not apply if the common law doctrine of strict liability "would apply," (§ 936)
because the claim being asserted is a common law claim. This reading is supported by
the fact that there is no provision in the Act outlining a claim brought under the Act for
which "strict liability would apply." (§ 936.) Moreover, such an interpretation of the
sentence is supported textually by the reference to "claims," (§ 936) a term commonly
used to refer to "causes of action." (See, e.g., Wallace v. County of Stanislaus (2016)
245 Cal. App. 4th 109, 122 [using the terms "causes of action" and "claims"
interchangeably].) As MWI argues in its brief, "the 'claims' described in the last
sentence are synonymous with causes of action for strict products liability in tort."
Our interpretation of the final sentence of section 936 is also strongly supported
by the similarity of that sentence to other provisions in the Act that clearly reflect the
16
Legislature's intent to limit the Act's effect on the common law. The Act repeatedly
refers to common law claims—often within the final sentence of a section as in section
936—to state that the Act does not displace the common law in areas in which the Act
does not apply. (See § 896 ["As to condominium conversions, this title does not apply
to or does not supersede any other statutory or common law"]; § 941, subd. (e)
["Causes of action and damages to which this chapter does not apply are not limited by
this section"]; § 945.5, subd. (h) ["As to any causes of action to which this statute does
not apply, all applicable affirmative defenses are preserved"].) The final sentence of
section 936 is most reasonably read as a similar such provision, i.e., one that makes
clear that the common law is not affected by a particular statutory provision.18
Further, this interpretation is consistent with the basic structure of the statute.
(See Yohner, supra, 237 Cal.App.4th at p. 8 [in interpreting an ambiguous statute
courts may " ' " 'examine the context in which the language appears' " ' "].) Section
896, a provision outside of Chapter 4 of the statute, clearly sets forth a standard of
liability applicable to builders. Section 896 also states that nonbuilders will be liable
to the "extent set forth in Chapter 4." The first sentence of section 936, a provision in
Chapter 4, sets forth a clear standard of liability applicable to a series of nonbuilder
18 In other words, rather than leaving the effect of the Act's adoption of a
negligence standard for statutory claims on the common law to implication, the final
sentence of section 936 is reasonably interpreted as the Legislature's expression of its
intent on this subject. (See 2B Sutherland Statutory Construction, § 50:5 (7th ed.)
["Where common law principles associated with a statute are not expressly affirmed or
denied, the extent to which the common law is altered or changed is left to
implication"].)
17
entities. Interpreting the final section of 936 as providing that the negligence standard
applicable to statutory claims against nonbuilders under the Act does not apply to
certain common law claims (i.e., those "claims for which strict liability would apply,"
§ 936), is entirely consistent with the statute's specification of a standard of liability for
builders in section 896 (see § 896 ["In any action seeking recovery of damages arising
out of, or related to [construction defects] . . . a builder . . . shall, except as specifically
set forth in this title, be liable for, . . . [a] violation of[ ] the following standards"
(italics added)]) and nonbuilders in section 936. (See § 896 [stating that a nonbuilder
is liable under the Act "to the extent set forth in Chapter 4 [in § 936]" (italics added)].)
In contrast, the HOA's construction of the statute, which it acknowledges "places a
supplier 'on par,' with a builder under [the Act]," is entirely inconsistent with such text
and structure.
b. The HOA's criticisms of this interpretation of the Act are
unpersuasive
The HOA contends that this interpretation of the Act, which MWI urged in the
trial court, is flawed for several reasons. However, none of the HOA's contentions is
persuasive. First, the HOA argues that the term "claim" in the final sentence is most
reasonably read as "claim[ ] under SB800." While the HOA acknowledges that the
term "claim" often "refers to a cause of action for damages," the HOA contends that
the Act uses the term "claim" to refer to claims brought pursuant to the Act and the
terms "action" or "causes of action," to refer to claims brought outside of the Act.
However, the Act is not as consistent as the HOA suggests with respect to its use of
18
the terms "claim," "action," and "cause of action." For example, section 941 refers to
an "action" when it is clear from context that the statute is referring to a claim brought
pursuant to the Act. (See § 941, subd. (a) ["Except as specifically set forth in this title,
no action may be brought to recover under this title" (italics added)].) In contrast,
section 931 refers to "claim" and "claims" when it is clear that the statute is referring
to a claims brought outside the Act. (See § 931 ["If a claim combines causes of action
or damages not covered by this part, including, without limitation, personal injuries,
class actions, other statutory remedies, or fraud-based claims," and referring to "any
fraud-based claim," and "any class action claims" (italics added)].) Thus, the HOA's
contention that we should interpret the term "claim" in section 936 to mean claim
brought pursuant to the Act is not supported by the manner in which the Act uses the
terms "claim," "action," and "cause of action." We decline to adopt an interpretation
of the statute that requires us to insert words into the statute under the guise of
interpretation. (See, e.g., Kovacevic v. Avalon at Eagles' Crossing Homeowners Assn.
(2010) 189 Cal. App. 4th 677, 685 [" ' "We may not insert words into a statute under the
guise of interpretation [citation]" ' "].)
The HOA also maintains that interpreting "the last sentence of section 936 as
referring to common law claims outside of [the Act] is . . . inconsistent with the rest of
the . . . statute, in that no other provisions comment on the preservation of common law
construction defect claims." (Italics added.) We disagree. As discussed above, the
Act repeatedly refers to the preservation of common law construction defect claims.
(See § 896 ["As to condominium conversions, this title does not apply to or does not
19
supersede any other statutory or common law"]; § 931 ["If a claim combines causes of
action or damages not covered by this part, including, without limitation, personal
injuries, class actions, other statutory remedies, or fraud-based claims"]; § 941, subd.
(e) ["Causes of action and damages to which this chapter does not apply are not
limited by this section"]; § 945.5, subd. (h) ["As to any causes of action to which this
statute does not apply, all applicable affirmative defenses are preserved"].) Indeed,
even another provision within section 936 specifies that the Act does not displace the
common law. (See § 936 ["All actions by a claimant or builder to enforce an express
contract, or any provision thereof, against a general contractor, subcontractor, material
supplier, individual product manufacturer, or design professional is preserved"].)
Thus, far from providing an interpretation of the final sentence that is inconsistent with
other provisions in the Act, our interpretation fosters the "apparent intent of the
Legislature" (Yohner, supra, 237 Cal.App.4th at p. 8) with respect to the manner by
which the Act relates to the common law.
Citing sections 896 and 943, the HOA also argues that "a construction of
section 936 as referring to common law strict liability claims outside of [the Act]
makes no sense because under the clear language of the statute, such construction
defect claims do not exist outside of [the Act]." (Italics added.) We disagree, for the
following reasons.
Section 896 provides in relevant part that a "claimant's claims or causes of
action shall be limited to violation of . . . the following standards . . . except as
specifically set forth in this title." (Italics added.) Section 943, subd. (a) provides,
20
"[e]xcept as provided in this title, no other cause of action for a claim covered by this
title or for damages recoverable under Section 944 is allowed." (Italics added.) The
HOA notes that the California Supreme Court is currently considering whether, in
light of sections 896 and 943, the Act provides the exclusive remedy for "construction
defect claims that are actionable under [the Act]." (Italics added.) (See McMillin
Albany LLC v. Superior Court (2015) 239 Cal. App. 4th 1132, review granted Nov. 24,
2015, S229762 (McMillin).) The HOA argues that in deciding McMillin, the Supreme
Court is likely to disapprove Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC
(2013) 219 Cal. App. 4th 98, 102 (Liberty Mutual), in which the Court of Appeal held
that, notwithstanding sections 896 and 943, the Act "does not eliminate a property
owner's common law rights and remedies, otherwise recognized by law, where . . .
actual damage has occurred."19 (Liberty Mutual, at p. 101; but see Elliott Homes, Inc.
v. Superior Court (2016) 6 Cal.App.5th 333, 345 (Elliott) [disagreeing with Liberty
Mutual and stating, "The Act does not specifically except actions arising from actual
damages"].)
Even assuming, strictly for the sake of argument, that the HOA is correct that
the Act provides the exclusive remedy for construction defect claims that are
19 The Liberty Mutual court reasoned that the Act "was enacted to provide
remedies where construction defects have negatively affected the economic value of a
home, although no actual property damage or personal injuries have occurred."
(Liberty Mutual, supra, 219 Cal.App.4th at p. 101, italics added.) Thus, according to
the Liberty Mutual court, where "actual damage has occurred," the Act does "not
eliminate a property owner's common law rights and remedies." (Ibid., italics added.)
21
actionable under the Act,20 that would not mean that "strict liability . . . construction
defect claims do not exist outside of [the Act]." That is because, as demonstrated by
the italicized portions of sections 896 and 943 in the previous paragraph, the Act
preserves, at a minimum, common law claims that are not actionable under the Act.
Further, the Act expressly enumerates numerous claims related to construction defects
that are not actionable under the Act. (See, e.g., § 931 [stating that cause of action for
"personal injuries, class actions, other statutory remedies, or fraud-based claims," are
"not covered" by the Act]; § 897 ["To the extent that a function or component of a
structure is not addressed by these standards, it shall be actionable if it causes
damage"]; accord Elliot, supra, 6 Cal.App.5th at p. 340 [noting that certain "claims
[are] excepted from the Act," and citing §§ 896, 943, and 931].) In addition, there are
no provisions in the Act that expressly preclude common law claims premised on the
doctrine of strict liability.
In light of these provisions, it is clear that construction defect claims exist
outside of the Act. For example, it is clear that the Act does not preclude common law
strict liability construction defect claims based on products that cause personal injury.
(§ 931.) It is also clear that the Act does not preclude common law strict liability
construction defect claims based on products that are not addressed by the Act's
standards, but that cause damage. (§ 897.)21 Accordingly, we reject the HOA's
20 We emphasize that we express no opinion on the issue.
21 The Department of Housing and Community Development's enrolled bill report
for SB800, which recommended that the Governor sign SB800, is fully consistent with
22
contention that interpreting the last sentence of section 936 as referring to common
law claims "makes no sense" given the Act's purported preclusion of all common law
strict liability construction defect claims.
c. The HOA's interpretation of the final sentence of 936 is not
supported by the text or structure of the Act
The HOA argues that in interpreting the last sentence of section 936, this court
need not "look past the plain language of section 936," and offers the following
interpretation of section 936:
"A negligence standard applies to non-builders, according to the
first sentence; however[,] that negligence standard does not apply
to nonbuilders 'with respect to claims for which strict liability
would apply,' [§ 936] according to the last sentence. The
sentence simply means what it says. If the claim is one to which
strict liability would apply at common law − e.g. a claim based on
supplying a defective product − then the negligence standard does
not apply to that claim under [the Act]."
We are not persuaded by the HOA's "plain language" argument. To begin with,
the plain language of the last sentence of section 936 states only that the "negligence
standard in this section does not apply." (Italics added.) The last sentence does not
state that the causation or breach of contract provisions in the first sentence of section
936 do not apply. Thus, if the HOA's argument that the final sentence of section 936
the plain language of the statute with respect to this issue. (Department of Housing
and Community Development, Enrolled Bill Rep. on Sen. Bill No. 800 (2001-2002
Reg. Sess.) Aug. 13, 2002, p. 5.) [stating that SB800 "[p]rovide[s] that any defect not
listed in this bill shall be actionable in tort only if it causes actual property or bodily
damage" (italics added)].) We may rely on this report in interpreting the statute. (See
Elsner v. Uveges (2004) 34 Cal. 4th 915, 934, fn. 19 [the California Supreme Court has
"routinely found enrolled bill reports, prepared by a responsible agency
contemporaneous with passage and before signing, instructive on matters of legislative
intent"].)
23
qualifies the standard of liability to be applied to claims brought against nonbuilders
pursuant to the Act were correct, applying the plain language of the final sentence of
section 936 would not, as the HOA suggests, mean that a material supplier's liability
would be " 'on par' " with a builder's liability under section 896.
Rather, since the last sentence of section 936 states that the "negligence
standard in this section does not apply," (§ 936, italics added) a homeowner would be
required to establish that a nonbuilder caused a violation of a standard as a result of a
breach of contract. That is because, if the term "negligence standard" of section 936
were removed from the statute, the plain language of the first sentence of section 936
would read, "Each and every provision of the other chapters of this title apply to
[nonbuilders] to the extent that the [nonbuilders] caused, in whole or in part, a
violation of a particular standard as the result of . . . a breach of contract."22
We can conceive of no public policy reason why the Legislature would have
intended that the statute be interpreted in such a fashion. More specifically, it would
be absurd to think that the Legislature intended that claims that would have been strict
liability tort claims at common law be actionable under the Act only if caused by a
breach of contract.23 Thus, we are unpersuaded by the HOA's argument that the
"plain language" of the final sentence of section 936 demonstrates that the final
22 The HOA recognized as much in its brief opposing MWI's motion for JNOV in
the trial court, arguing, "It may be noted that the last sentence of . . . [section] 936 only
states that the 'negligence standard in this section does not apply.' It does not refer to
the alternative breach of contract requirement."
23 In the trial court, the HOA acknowledged that it would be " 'absurd' " to
interpret the statute in such a fashion.
24
sentence of section 936 qualifies the standard of liability outlined in the first. (See
John v. Superior Court (2016) 63 Cal. 4th 91, 96 [statutes are to be interpreted so as to
avoid absurd results].)
In the trial court, the HOA argued that the phrase " 'negligence standard in this
section' " (italics added) in the last sentence of section 936 "is referring to the entire
additional negligence/breach of contract requirement, discussed in the first sentence."
(Italics added.) The HOA does not offer this argument, which is entirely inconsistent
with the plain language of section 936, on appeal. Given that the text of the final
sentence of section 936 does not refer to a "breach of contract," (§ 936) the statute's
text does not support the conclusion that the Legislature intended that the statute
remove the entire "negligence/breach of contract requirement" contained in the first
sentence for claims brought under the Act against nonbuilders. Nor does the text of
the Act evince the Legislature's intent to "place[ ] a [material] supplier 'on par' with a
builder," since a builder's liability is specified under section 896. Instead, section 896
states that a nonbuilder is liable under the Act "to the extent set forth in Chapter 4,"
(§ 896) and there is no provision outside of the first sentence in section 936 in Chapter
4 that outlines the standard of liability applicable to claims against nonbuilders under
the Act.
In addition, to interpret the statute in the manner that the HOA suggests would
mean that the standard of liability for a claim brought pursuant to the Act would be
determined by the standard of liability that would have applied if the claim had been
brought at common law. Or, as the HOA argues in its brief, "[The Legislature] wrote
25
that the negligence standard does not apply to 'claims for which strict liability would
apply' − meaning SB800 claims to which strict liability 'would apply' outside of
SB800." (Quoting § 936, first emphasis added in the HOA's brief.) The HOA presents
no argument as to why the Legislature would have wanted the standard for statutory
liability under the Act to turn on the conceptually difficult question of how a claim
might be characterized if brought at common law.
For example, the HOA asserts in its brief that all common law claims based on
a defendant's supply of a defective product are based on strict liability.24 However,
that is not the case. A claim based on a defective product may be brought at common
law under either a negligence theory or a strict liability theory. (See, e.g., Johnson v.
United States Steel Corp. (2015) 240 Cal. App. 4th 22, 30-31 [" ' "Products liability is
the name currently given to the area of the law involving the liability of those who
supply goods or products for the use of others to purchasers, users, and bystanders for
losses of various kinds resulting from so-called defects in those products." '
[Citations.] One may seek recovery in a products liability case on theories of both
negligence and strict liability" (italics added)]; Brady v. Calsol, Inc. (2015) 241
Cal. App. 4th 1212, 1218 ["A products liability case may rest on either a theory of strict
liability or negligence. . . . In asserting a claim for negligence, the plaintiff must prove
the defect in the product was due to the defendant's negligence"].) Thus, determining
whether a claim brought under the Act would have been one for which strict liability
24 The HOA argues, "If the claim is one to which strict liability would apply at
common law − e.g. a claim based on supplying a defective product."
26
would have applied if the claim had been brought at common law, would not be as
simple as determining whether the claim was "based on supplying a defective
product," as the HOA suggests.
In addition, while the HOA argues that the Act should be interpreted to provide
that a claim pursuant to the Act against a material supplier premised on a defective
product should be governed by the same standard of liability as applies to a builder
under section 896, a common law claim for strict products liability has elements not
present in a statutory claim under section 896, namely, a defective product and
resulting damage other than economic loss.25 (See Jimenez, supra, 29 Cal.4th at
p. 484.) The HOA fails to explain why the Legislature would have wanted to subject
material suppliers to statutory liability without requiring proof of these elements
merely because a plaintiff could allege a common law strict liability claim against the
supplier. Moreover, this case shows the difficulties of applying such an interpretation
of the Act in determining the standard of proof to be applied at trial to a party's claims.
As noted in part I, ante, the HOA abandoned its strict liability claim on the eve of trial.
Under these circumstances, it is far from clear that the HOA's statutory claim under
the Act can be fairly characterized as being a claim "for which strict liability would
25 "Damages available under strict products liability do not include economic loss,
which includes ' " 'damages for inadequate value, costs of repair and replacement of
the defective product or consequent loss of profits—without any claim of personal
injury or damages to other property.' " ' " (Jimenez, supra, 29 Cal.4th at p. 482.) The
unavailability of such damages is commonly referred to as the "economic loss rule."
(See Greystone, supra, 168 Cal.App.4th at p. 1202.)
27
apply" (§ 936) at common law, even assuming that we agreed with the HOA's
interpretation of the statute.
d. The legislative history
The Act's legislative history fully supports our interpretation of the Act.
Section 936 was initially adopted as part of the original enactment of the Act through
Senate Bill No. 800 in 2002. The first sentence of section 936 in the original
enactment is identical in all material respects to the current version of the statute. (See
Stats. 2002, ch. 722, § 3 ["Each and every provision of the other chapters of this title
apply to subcontractors, material suppliers, individual product manufacturers, and
design professionals to the extent that the subcontractors, material suppliers, individual
product manufacturers, and design professionals caused, in whole or in part, a
violation of a particular standard as the result of a negligent act or omission or a breach
of contract"].) However, as initially adopted in 2002, the final sentence of section 936
stated, "However, this section does not apply to any subcontractor, material supplier,
individual product manufacturer, or design professional to which strict liability would
apply." (Stats. 2002, ch. 722, § 3, italics added.)
Although, as both MWI and the HOA agree, the plain language of the final
sentence of section 936 as originally adopted could be read, as the HOA states, to
"completely exempt[ ] nonbuilders [such as material suppliers] from section 936 . . .
28
whenever strict liability would apply,"26 the legislative history of Senate Bill No. 800
supports the conclusion that the Legislature intended for the standard of liability
specified in the first sentence of section 936 to apply to claims brought pursuant to the
Act against nonbuilders such as material suppliers. (See, e.g., Sen. Com. on Judiciary,
Rep. on Sen. Bill No. 800, (2001-2002 Reg. Sess.) as amended Aug. 28, 2002, p. 4
["the standards are intended to apply to . . . material suppliers . . . to the extent that
they cause, in whole or in part, a violation of a particular standard as a result of their
negligent acts or omissions, or breach of contract"].) In contrast, we have located
nothing in the legislative history that would support the conclusion that the Legislature
intended to entirely exempt material suppliers, or any other nonbuilders, from statutory
liability under section 936 whenever "strict liability would apply." (§ 936.) Such an
exemption would have been extremely significant because it would have had the effect
of exempting nonbuilder entities from any liability to claimants under the Act
whenever "strict liability would apply," because there were (and are) no other
provisions in the Act defining the liability of such entities. The absence of any
mention of such an exemption suggests that the Legislature did not intend for the final
sentence to exempt nonbuilders from liability under section 936 whenever "strict
liability would apply." (§ 936.)
26 Discussing the final sentence of the initial version of section 936, MWI argues,
"Read literally, this language effectively excluded a whole class of nonbuilders from
potential liability under SB 800, i.e., those like MWI that were subject to the usual
rules of strict liability in tort for distributing products that were defective in design or
manufacture."
29
In 2003, the Legislature amended the final sentence of section 936 to its present
form. (Stats. 2003, ch. 762, § 5, p. 5732.) The statute amended the last sentence of
section 936 in relevant part as follows, "However, the negligence standard in this
section does not apply to any . . . material supplier to with respect to claims for which
strict liability would apply." (Stats. 2003, ch. 762, § 5, p. 5732 [showing additions to
the statute in italics and deletions in strikethrough, italics added].) Numerous
legislative committee reports support the conclusion that the Legislature viewed the
2003 amendments to the Act as "technical cleanup" of the original statute adopting the
Act the previous year. (Sen. Rules Com., Off of Sen. Floor Analyses, 3d reading
analysis of Assem. Bill No. 903 (2003-2004 Reg. Sess.) as amended Sep. 4, 2003,
p. 2.)
The HOA argues that "the [L]egislature's 2003 amendment of Section 936 to
clarify removing [sic] the negligence standard for manufacturers and suppliers (and
any strictly liable defendant) may well have been a response to Jimenez[, supra, 29
Cal.4th at 473]." In Jimenez, the California Supreme Court concluded that, under the
common law, product manufacturers may be held strictly liable in tort for construction
defects that cause physical damage to other parts of a house. (Jimenez, supra, 29
Cal.4th at p. 476.)27 Stated differently, the HOA argues that the Legislature "may"
have been motivated by the Jimenez decision to amend section 936 so as to "place[ ] a
27 Jimenez, which involved windows in housing developments completed prior to
the Act's adoption, did not involve a claim under the Act. (See Jimenez, supra, 29
Cal.4th at p. 483, fn. 2 [citing the Act and noting that the Legislature has "established a
limited new cause of action for certain specified housing defects"].)
30
[material] supplier 'on par' with a builder," under the Act. The HOA's argument is
unpersuasive.
To begin with, the HOA fails to explain why the Legislature would intend to
make material suppliers liable under the Act for a violation of the Act's standards
irrespective of whether they supplied a defective product that resulted in damage other
than economic loss merely because the Jimenez court concluded that a manufacturer
may be liable where these elements are proven through a common law claim (Jimenez,
supra, 29 Cal.4th at p. 476). The HOA's interpretation of the amendments is also
directly contrary to our discussion of the Act and Jimenez in Greystone. (See
Greystone, supra, 168 Cal.App.4th at p. 1216, fn. 14 ["The Legislature's decision not
to apply a strict liability standard[28] to product manufacturers is consistent with the
holdings [of two cases disapproved in Jimenez]. The common law has expanded the
liability of product manufacturers in this regard, albeit subject to the economic loss
rule, beyond that provided in section 936" (italics added)].)
Moreover, there is nothing in the legislative history of the 2003 amendments
that would support the HOA's speculation that the Legislature intended such a
28 As MWI points out in its brief, to avoid confusion with the common law of
strict liability, it may have been preferable for the Greystone court to have stated that,
in section 936, the Legislature decided not to apply to product manufacturers the form
of " 'absolute' " statutory liability that the Legislature specified in section 896 as
applicable to claims against builders. However, the point that the Greystone court was
making is clear—the Legislature adopted a fault based standard of liability for product
manufacturers under the Act, notwithstanding that the common law provided for the
liability of product manufacturers without fault, albeit subject to the limitations of the
economic loss rule. (See Greystone, supra, 168 Cal.App.4th at p. 1216, fn.14.)
31
significant substantive change in the Act by way of the 2003 amendments. Such a
change would have been entirely incompatible with the Legislature's characterization
of the amendments as constituting a "technical cleanup." (Sen. Rules Com., Off of
Sen. Floor Analyses, 3d reading analysis of Assem. Bill No. 903 (2003-2004 Reg.
Sess.) as amended Sep. 4, 2003, p. 2.)
Further, the sponsor of Assembly Bill No. 903, Assembly member Darrell S.
Steinberg, sent a letter to Governor Gray Davis urging the signing of the bill, in which
he described the legislation as a "non-controversial bill" that made "various technical
changes," including "[c]larify[ing] that SB 800 did not change the law regarding . . .
strict liability." (Italics added.) (Assembly member Darrell S. Steinberg, letter to
Governor Gray Davis, Sept. 16, 2003.)29 The Steinberg letter is entirely consistent
with our interpretation of the final sentence of 936 as evincing the Legislature's intent
that the negligence standard specified in the first sentence of section 936 does not
apply to common law strict liability claims against material suppliers. Thus, we reject
the HOA's suggestion that the Legislature amended the Act in 2003 with the intention
of "plac[ing] a [material] supplier 'on par' with a builder."
29 The letter also states, "The provisions of AB 903 were suggested by building
industry representatives, the consumer attorneys, legislative counsel, and Assembly
and Senate staff familiar with SB 800. All of the changes are non-controversial,
consensus changes." (Assembly member Darrell S. Steinberg, letter to Governor Gray
Davis, Sept. 16, 2003.) The letter may be considered in ascertaining legislative intent
since it reflects " 'a reiteration of legislative discussion and events leading to adoption
of proposed amendments rather than merely an expression of personal opinion.' "
(Martin v. Szeto (2004) 32 Cal. 4th 445, 450-451.)
32
e. Greystone
In light of the text, structure, and legislative history of the Act discussed above,
we adhere to our conclusion in Greystone that a nonbuilder entity is liable under the
Act "only where its 'negligent act or omission or a breach of contract' . . . caused a
violation of the Act's standards." (Greystone, supra, 168 Cal.App.4th at p. 1216,
italics omitted.) In Greystone, in reversing a summary judgment in favor of a product
manufacturer, this court considered, among other issues, whether the common law
economic loss rule30 precluded a builder from seeking equitable indemnification
under the Act from a jointly liable product manufacturer for the cost of repairing
damage caused by the manufacturer's violation of the Act's standards. (Id. at pp. 1213-
1220.) We explained that in determining this issue, we first were required to address
whether the economic loss rule would preclude a homeowner from collecting such
damages in an action against the product manufacturer, since the builder's ability to
pursue an indemnity action against the manufacturer was contingent on the
manufacturer and the builder sharing a joint legal obligation to the homeowners. (Id.
at p. 1213.) After citing sections 896 and 936, we concluded, "a homeowner may
recover economic losses from a product manufacturer[31] for a violation of the Act's
standards that is caused by the manufacturer's negligence or breach of contract."
(Greystone, at pp. 1213-1214, italics added.)
30 See footnote 25 for a definition of the economic loss rule.
31 As noted previously (see pt. I, ante), product manufacturers and material
suppliers are treated identically with respect to this issue under the Act.
33
The Greystone court also rejected the manufacturer's argument that section
936's reference to the preservation of "common law . . . defenses," (italics added)
permitted the manufacturer to defeat the builder's claim by assertion of the economic
loss doctrine.32 (Greystone, supra, 168 Cal.App.4th at pp. 1214-1215.) In rejecting
this argument, we stated:
"A more reasonable interpretation of section 936 [i.e., one that
excluded the economic loss doctrine as a defense that could be
asserted in an action premised on section 936] follows from the
fact that, while under sections 896 and 942 a builder is strictly
liable[33] for any violation of the Act's standards, pursuant to the
first sentence of section 936, 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. The
reference to 'common law and contractual defenses,' in the second
sentence of section 936 parallels the scope of duty articulated in
the first sentence of the section. Thus, for example, in a suit
premised on a manufacturer's negligent act or omission, the
manufacturer may assert traditional common law defenses to
negligence actions, such as comparative negligence and primary
assumption of risk, to the extent that such defenses are 'applicable'
(§ 936) to the plaintiff's claim." (Greystone, supra, at p. 1216,
italics altered, footnotes omitted.)
We also relied on the "Act's explicit adoption of a negligence standard for
claims against product manufacturers," (Greystone, supra, 168 Cal.App.4th at p. 1216,
32 The Greystone court noted that the product manufacturer was relying on the
second sentence of section 936, which states in relevant part, " 'In addition to the
affirmative defenses set forth in Section 945.5, a[n] . . . individual product
manufacturer . . . may also offer common law and contractual defenses as applicable to
any claimed violation of a standard.' " (Greystone, supra, 168 Cal.App.4th at p. 1215,
italics omitted, quoting § 936.)
33 As discussed in footnote 28, to avoid confusion with the common law of strict
liability, it may be preferable to refer to a builder's statutory liability under the Act as a
form of " 'absolute' " liability rather than stating that a builder is "strictly liable" for a
violation of the Act's standards. (Greystone, supra, 168 Cal.App.4th at p. 1216.)
34
fn. 14) in rejecting the manufacturer's argument that concluding that the economic loss
rule did not bar the builder's indemnity claim "would 'expand the law of strict product
liability beyond tolerable limits.' " (Ibid.) Ultimately, "[w]e conclude[d] that the . . .
Act abrogates the economic loss rule in actions brought by homeowners against
individual product manufacturers for a violation of the Act's standards based upon the
manufacturer's negligence or breach of contract." (Id. at p. 1217, italics added.)
Despite the fact that the Greystone court, on no fewer than four occasions,
articulated the standard of liability to be applied to a claim against a nonbuilder
brought under the Act (i.e., one premised on a negligence or a breach of contract)
(Greystone, supra, 168 Cal.App.4th at pp. 1213-1214, 1216, 1216, fn. 14, 1217),34 the
HOA contends that Greystone is "not authoritative or even applicable here." In
support of this contention, the HOA argues that "Greystone was a[n] equitable
indemnity action by a developer[35] against its supplier, not a claim by an SB800
'claimant'." This argument is entirely unpersuasive because, as the Greystone court
explained, whether the builder could assert an indemnity action against the nonbuilder
turned in the first instance on whether a homeowner/claimant36 could state such a
34 On one of these occasions, the Greystone court referred to the standard as a
"negligence standard" (Greystone, supra, 168 Cal.App.4th at p. 1216, fn. 14) rather
than one premised on negligence or breach of contract because the court was
contrasting the tort doctrines of strict liability and negligence. (Ibid.)
35 The plaintiff in Greystone was described as a "builder" (Greystone, supra, 168
Cal.App.4th at p. 1207), rather than a developer.
36 As noted previously (see fn. 16, ante), the Act uses the term "claimant" and
"homeowner" interchangeably. (§ 895, subd. (f).)
35
claim (Greystone, at p. 1213), and the Greystone court expressly described the
standard of liability applicable to a claim by a "homeowner." (Ibid., italics added.)
The HOA also contends that "Greystone's comment on the negligence standard
in section 936 is dictum, and was not integral to the decision." "Statements by
appellate courts 'responsive to the issues raised on appeal and . . . intended to guide the
parties and the trial court in resolving the matter following . . . remand' are not dicta."
(Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal. 4th 1109, 1158-1559 (Sonic-
Calabasas).) Our statements in Greystone on this issue were clearly responsive to the
issues presented on appeal,37 and were intended to guide the proceedings on remand
in light of our reversal of a summary judgment. The statements were not dicta. (See
Sonic-Calabasas, at pp. 1158-1159.)
Finally, while the Greystone court quoted the entirety of section 936, including
the final sentence on which the HOA bases its argument (Greystone, supra, 168
Cal.App.4th at pp. 1211-1212.), the HOA is correct to note that the Greystone court
did not discuss the final sentence of section 936. However, for the reasons stated
above, an analysis of the final sentence, together with the remaining provisions of the
Act, reinforces the correctness of our conclusion in Greystone that a nonbuilder entity
is liable under the Act "only where its 'negligent act or omission or a breach of
37 The HOA acknowledges as much, noting that the Greystone court discussed the
standard of liability applicable to nonbuilders under the Act in response to an
argument raised by the product manufacturer.
36
contract' . . . caused a violation of the Act's standards." (Greystone, at p. 1216, quoting
§ 936, italics omitted.)
C. There is no evidence in the record that MWI caused, in whole or in part, a
violation of a standard in the Act as the result of its negligent act or omission or a
breach of contract
In light of our interpretation of the Act provided in part III.B, ante, we must
consider whether there is sufficient evidence in the record to support a verdict that
MWI caused, in whole or in part, a violation of a standard in the Act as the result of its
negligent act or omission or a breach of contract. (See pt. III.A, ante [outlining
standard of review applicable to the review of order denying motion for a directed
verdict and order denying motion for JNOV].)
We begin by observing that, until this court's request for supplemental briefing
on this issue,38 it appeared to be undisputed that the record lacked such evidence.
MWI repeatedly argued in the trial court that the Act required that the HOA prove that
MWI caused, in whole or in part, a violation of a standard in the Act as the result of its
negligent act or omission or a breach of contract. MWI raised this argument in a jury
instruction conference, in its motion for a directed verdict, and in its motion for JNOV.
In responding to MWI's contentions, the HOA never argued in the trial court that it
had presented sufficient evidence under this interpretation of the Act. Instead, the
38 Our request for supplemental briefing stated in relevant part, "If this court were
to agree with [MWI] that [section 936] requires [the HOA] to have established that
MWI's 'negligent act' 'caused, in whole or in part, a violation of a particular standard'
(§ 936) in order to prevail on the first cause of action in its third amended complaint
styled 'Violation of SB800 Construction Standards, Civil Code § 896,' what is the
proper disposition of this appeal?"
37
HOA argued only that the Act did not require it to present such evidence.39 The jury
was not instructed that the HOA was required to prove that MWI's negligence or
breach of contract caused a violation of the Act's standards and the jury did not render
any findings on these issues.
At the hearing on the motion for JNOV, MWI's counsel argued that in
Greystone, this court outlined the applicable standard of proof and that the HOA's
"proof failed." MWI's counsel stated that there was thus no reason to revisit MWI's
statutory interpretation argument with respect to its new trial motion. The trial court
responded, "If you're right, the JNOV is granted and you never get to the new trial. I
agree with that."
In its opening brief in this court, after presenting its statutory interpretation
argument, MWI argued that the trial court erred in denying its motion for a directed
verdict and motion for JNOV due to the HOA's failure of proof. In its respondent's
brief, the HOA offered only the statutory interpretation argument that we have rejected
in part III.B, ante, and presented no argument that the record contained the evidence of
a negligent act or omission or breach of contract by MWI that MWI argued is required.
39 The HOA did not file an opposition to MWI's motion for a directed verdict and
the trial court denied the motion without the HOA's counsel presenting oral argument.
38
However, in its supplemental brief, the HOA contends that the record does
contain sufficient evidence to support the verdict. We consider each of the HOA's
arguments pertaining to this issue.40
The HOA argues that "the record . . . supports a strong inference of a 'negligent
act or omission' by MWI."
" ' "Negligence is either the omission of a person to do something which an
ordinarily prudent person would have done under given circumstances or the doing of
something which an ordinarily prudent person would not have done under such
circumstances. It is not absolute or to be measured in all cases in accordance with
some precise standard but always relates to some circumstance of time, place and
person." ' " (Minnegren v. Nozar (2016) 4 Cal.App.5th 500, 507, boldface omitted.)
Or, stated similarly, " 'Negligence is the failure to use reasonable care to prevent harm
to oneself or to others. [¶] A person can be negligent by acting or by failing to act. A
person is negligent if he or she does something that a reasonably careful person would
not do in the same situation or fails to do something that a reasonably careful person
would do in the same situation.' " (Ibid., quoting CACI No. 401.)
40 The HOA presented these arguments in their most complete form in arguing
that any error committed by the trial court on this issue was harmless. The HOA then
incorporated those arguments in addressing whether there is "evidence in the record
that the SB800 violations were caused by 'a negligent act or omission or breach of
contract' by MWI." Accordingly, in order to fully address the HOA's contentions, we
consider the arguments presented by the HOA in that section of its supplemental brief
entitled, "Any Trial Court Error in Not Requiring a 'Negligent Act' Under Section 936
Was A Harmless Error." (Boldface & underscore omitted.)
39
The HOA offers two arguments in support of its contention that the record
contains evidence of MWI's negligent acts or omissions sufficient to support the
verdict. First, the HOA cites evidence supporting a finding that the pipes supplied by
MWI leaked and that the pipes contained "manufacturing . . . defects."41 The HOA
maintains that "[d]rain pipes do not leak their contents into the walls of a structure
within a few years of construction in the absence of negligence." Even assuming that
the record would support a finding that the manufacturer of the pipes was negligent,
the question we must determine is whether there is evidence that MWI, a supplier of
the pipes, was negligent. On this question, the HOA does not identify any evidence
that MWI failed to supply the type of pipe that was ordered, acted unreasonably in
failing to detect any manufacturing defects present in the pipe, or damaged the pipe in
transporting it. In sum, the HOA makes no persuasive argument that the record
contains evidence that MWI's negligence as a supplier was responsible for the
41 After we issued our request for supplemental briefing, the HOA filed a motion
to augment the record with exhibits offered in evidence at trial consisting of
photographs of the pipes. (See Cal. Rules of Court, rule 8.155.) In the alternative, the
HOA requested that this court grant permission to allow a late transmission of exhibits
to this court on the ground that the exhibits became relevant upon our request for
supplemental briefing. (See Cal. Rules of Court, rule 8.224(d).)
Since the exhibits were offered in evidence at trial, they are already part of the
record on appeal, and there is no need to augment the record to include them. (Cal.
Rules of Court, rule 8.124(b)(4) ["All exhibits admitted in evidence, refused, or lodged
are deemed part of the record, whether or not the appendix contains copies of them"].)
However, we grant the HOA's request for a late transmittal of exhibits in light of our
supplemental briefing request. Accordingly, we deny the HOA's request that we
augment the record with pages 1 through 21 attached to its motion to augment, but
grant the HOA's alternative request for transmittal of the exhibits to this court.
40
"manufacturing . . . defects" that the HOA refers to in its supplemental brief.42
(Italics added.)
The only other evidence43 in the record that the HOA cites in support of its
contention that MWI was negligent is the testimony of John Morally, MWI's founder.
The HOA notes that Morally testified that in 1998 or 1999, he traveled to China and
went to a foundry where the type of pipe used in the project (Wanze pipe) was
manufactured, and that in 2002, MWI began importing Wanze pipe into the United
States. This testimony clearly is not sufficient to support a finding that MWI "caused,
in whole or in part, a violation of a particular standard as the result of a negligent act
or omission." (§ 936.) Accordingly, we reject the HOA's contention that there is
sufficient evidence in the record to support a verdict that MWI caused, in whole or in
part, a violation of a standard in the Act as the result of its negligence.
42 Noting that the jury did not ascribe any responsibility to the pipe installer or to
the HOA for the HOA's damages, the HOA contends that "[t]he jury's fault findings
establish that no party other than MWI can have responsibility for that negligence,
satisfying any negligence requirement under Section 936." We disagree that the jury's
findings constitute evidence of MWI's negligence as a supplier of the pipes,
particularly since the manufacturer of the pipes was not a defendant in the case.
43 The HOA also cites MWI's counsel's statements to the court, outside the
presence of the jury, concerning MWI's efforts in obtaining the necessary certification
to sell the type of pipe used in the project in the United States. Such statements clearly
do not constitute evidence that may be relied upon to support the verdict. (See In re
Zeth S. (2003) 31 Cal. 4th 396, 414, fn. 11 ["It is axiomatic that the unsworn statements
of counsel are not evidence"].) We also grant MWI's motion to augment the record
with the HOA's motion in limine to exclude evidence of MWI's certification efforts
and MWI's opposition to such motion. The trial court granted the HOA's motion and
thus, the jury did not hear the evidence. Under these circumstances, the HOA's
attempted reliance on MWI's counsel's statements to support the verdict is clearly
unfair, since it was the HOA that successfully precluded the jury from considering this
evidence.
41
The HOA also contends that "[t]he record supports [a finding] that the SB800
violation was caused, at least in part, by MWI's breach of a contract – namely its
express and implied warranties." With respect to the HOA's implied warranty theory,
the HOA contends that MWI breached the implied warranty of fitness under California
Commercial Code section 2314, subdivision (2)(c). The HOA never presented this
theory of liability in the trial court or in its initial briefing on appeal. "[N]ew theories
of liability, may not be asserted for the first time on appeal." (Bardis v. Oates (2004)
119 Cal. App. 4th 1, 13-14, fn. 6.) Further, in its supplemental brief, the HOA fails to
outline the elements of such a claim or to demonstrate how the evidence presented at
trial was sufficient to prove each element. (See CACI No. 1231 ["Implied Warranty of
Merchantability - Essential Factual Elements," listing six elements, including that the
goods "w[ere] not fit for the ordinary purposes for which such goods are used"].)
Under these circumstances, we conclude that the HOA has not demonstrated that the
record contains sufficient evidence to support the judgment on a theory that was never
presented in the trial court. (See Brandwein v. Butler (2013) 218 Cal. App. 4th 1485,
1519 [" 'Bait and switch on appeal not only subjects the parties to avoidable expense,
but also wreaks havoc on a judicial system too burdened to retry cases on theories that
could have been raised earlier' "]; 14859 Moorpark Homeowner's Assn. v. VRT Corp.
(1998) 63 Cal. App. 4th 1396, 1403 [applying theory of case doctrine to preclude
respondent from asserting theory raised "[f]or the first time on appeal and in a cursory
fashion"].)
42
The HOA's express warranty theory fails for an even more fundamental reason.
The HOA bases its express warranty argument on a warranty that MWI purportedly
gave to Sherwood Mechanical, MWI's customer for the pipes used in the project. The
HOA filed a motion in this court to augment the record with the warranty. (See Cal.
Rules of Court, rule 8.155 [stating that a "reviewing court may order the record
augmented to include," (id. at (a)(1)), "[a]ny document filed or lodged in the case in
superior court," (id. at (a)(1)(A))].) However, as the HOA concedes in a declaration
offered by its counsel in support of its motion, the warranty was "not admitted into
evidence." (Italics added.) Thus, even assuming that the warranty was "lodged with
the court for trial," (italics added) as the HOA's counsel represents in his
declaration,44 because the warranty was concededly "not admitted into evidence,"
(italics added) it clearly does not constitute "substantial evidence," upon which the
verdict may be supported. (Trujillo, supra, 63 Cal.App.4th at p. 284.)45
44 Aside from counsel's declaration, the HOA does not cite to anything in the
record demonstrating that this exhibit was ever even lodged with the trial court.
45 Assuming that the warranty was lodged as an exhibit in the trial court, it is
deemed part of the record (See Cal. Rules of Court, rule 8.124(b)(4)) and
augmentation is unnecessary. However, as discussed in the text, even assuming that
the warranty is in the record, it is clear that because the warranty was not offered in
evidence, it may not be relied upon to support the verdict. Accordingly, we deny the
HOA's motion to augment insofar as it seeks to augment the record with the warranty.
In light of our conclusion that the warranty may not be used to support the
verdict, we also deny the HOA's request to augment the record with an excerpt of
Morally's deposition, which was not offered as evidence at trial nor lodged in the trial
court, which the HOA seeks to offer "as foundation for the written warranty having
been issued to the plumbing installer at the subject Acqua Vista project."
We also deny the HOA's requests that we augment the record with a "pre-
marked trial exhibit . . . an [i]nvoice," and a "[p]urchase [o]rder . . . which was
43
Accordingly, we reject the HOA's contention that the record contains evidence
to support the verdict on the ground that MWI breached an express or implied
warranty.46
Finally, the HOA argues that it presented sufficient evidence to establish MWI's
liability under a "common law strict products liability standard." (Formatting
omitted.) Even assuming, strictly for the sake of argument, that this is so
(notwithstanding that the HOA indicated on the eve of trial that it was not pursuing a
common law strict liability claim),47 we need not decide whether the HOA presented
evidence sufficient to demonstrate the elements of a common law claim premised on
admitted into evidence," in order to show the date of delivery of the pipe for purposes
of determining the applicability of the warranty. Neither document has any relevance
to the issues on appeal, given that the warranty was not offered in evidence. Further,
the HOA fails to demonstrate that the invoice was ever lodged in the trial court and
that it is therefore a proper subject for augmentation (Cal. Rules of Court, rule 8.155),
and the purchase order is already part of record since, according to the HOA, it was
admitted in evidence (Cal. Rules of Court, rule 8.124(b)(4)). Thus, we deny the
HOA's request to augment the record with pages 22 through 37 of the documents
attached to its motion to augment.
46 In its opposition to the HOA's motion to augment, MWI raises a series of
"questions of statutory interpretation," that it contends this court would have to address
before concluding that a warranty constitutes sufficient evidence to support the verdict.
Among these questions are the "HOA's standing to assert a warranty violation for the
purpose of . . . section 936," since MWI allegedly gave the warranty to Sherwood
Mechanical, and not to the HOA. In light of our conclusion in the text, we need not
address these issues.
47 During a pretrial hearing, the court stated, "So there are two causes of action
that are being pursued: SB 800 [i.e. one under the Act] and strict liability?" The
HOA's counsel responded, "Actually, Your Honor, we've discussed it, and I think
we're prepared to forego the strict liability and just pursue the case under [section]
896[, subdivision] (a)(14) and (15)." The HOA's counsel then clarified that, in light of
the HOA's decision not to pursue a cause of action premised on the doctrine of strict
liability, the court would not be required to address various legal issues that arise
during the litigation of such a claim.
44
the doctrine of strict liability. It is axiomatic that "[t]he doctrine of strict liability
imposes legal responsibility, without proof of negligence." (Carlin v. Superior Court
(1996) 13 Cal. 4th 1104, 1149, italics added.) Thus, even assuming that the HOA were
correct that it presented evidence that would "support the verdict and judgment under a
common law strict product liability theory,"48 such evidence would not support the
verdict and judgment in this case,49 since we have concluded that the Act required the
HOA to prove that MWI "caused, in whole or in part, a violation of a particular
standard as the result of a negligent act or omission or a breach of contract." (§ 936,
italics added.)
Accordingly, we conclude that there is not sufficient evidence in the record to
support a finding that MWI caused, in whole or in part, a violation of a standard in the
Act as the result of its negligent act or omission or a breach of contract.50
48 We emphasize that we express no opinion on whether the evidence in the
record would be sufficient to support a verdict on a common law claim premised on
the doctrine of strict liability.
49 As outlined in footnote 47, ante, the record is clear that the only claim that the
HOA brought was a claim under the Act and the HOA indicated that it was not
pursuing a common law strict liability claim. Since MWI did not defend against a
common law claim premised on the doctrine of strict liability, the jury was not
instructed on such a claim, and the jury did not render any findings on such a claim,
we reject the HOA's argument that "[a]ny trial court error is . . . harmless because
MWI's liability could have been established applying a strict products liability theory
to the same . . . facts." (Italics added.)
50 In light of our conclusion that there is no evidence in the record that MWI
caused, in whole or in part, a violation of a standard in the Act as the result of its
negligent act or omission or a breach of contract, we necessarily reject the HOA's
argument raised in its supplemental letter brief that any error committed by the trial
court in failing to instruct the jury on this issue was harmless.
45
D. The judgment must be reversed and the matter remanded to the trial court with
directions to grant MWI's' motion for a directed verdict and to enter judgment in
favor of MWI
In Frank v. County of Los Angeles (2007) 149 Cal. App. 4th 805 (Frank), the
court discussed the proper disposition for an appellate court to direct in case in which a
reversal is "based on insufficiency of the evidence." (Id. at p. 833.) The Frank court
stated:
" ' "When the plaintiff has had full and fair opportunity to present
the case, and the evidence is insufficient as a matter of law to
support plaintiff's cause of action, a judgment for defendant is
required and no new trial is ordinarily allowed, save for newly
discovered evidence. . . . Certainly, where the plaintiff's evidence
is insufficient as a matter of law to support a judgment for
plaintiff, a reversal with directions to enter judgment for the
defendant is proper. . . . [¶] . . . [A] reversal of a judgment for the
plaintiff based on insufficiency of the evidence should place the
parties, at most, in the position they were in after all the evidence
was in and both sides had rested." ' " (Id. at. pp. 833-834; accord
Code Civ. Proc., § 629, subd. (c) ["If the motion for judgment
notwithstanding the verdict is denied . . . the appellate court shall,
if it appears that the motion for judgment notwithstanding the
verdict should have been granted, order judgment to be so entered
on appeal from the judgment or from the order denying the
motion for judgment notwithstanding the verdict"].)
In its supplemental brief, the HOA suggests that it did not have a "full and fair
opportunity" to present its case. (Frank, supra, 149 Cal.App.4th at p. 833.) The HOA
argues, "Here, the issue of 'a negligent act or omission or breach of contract, by MWI
was not presented to the jury, and [the HOA] had no reason or opportunity to present
such evidence because it was not relevant to the SB800 statute as it was being
construed by the trial court." This argument might have had some force if the trial
court had issued a ruling prior to the trial that obviated the need for the HOA to
46
present evidence of an element of its claim. However, that is not the case. The HOA
points to no ruling by the trial court nor to any argument by MWI upon which it relied
in failing to present sufficient evidence to prove its claim.
On the contrary, the HOA was placed "on notice of the potential importance of
such evidence through the motions of defendants," (Cassista v. Community Foods, Inc.
(1993) 5 Cal. 4th 1050, 1066), including a motion for a directed verdict that MWI filed
near the end of the trial.51 In filing a motion for directed verdict in the trial court on
the ground of insufficiency of the evidence, MWI afforded the HOA the opportunity to
attempt "to introduce whatever further and additional evidence [it] may have at hand to
overcome the grounds of the motion." (Estate of Easton (1931) 118 Cal. App. 659,
662.)52 Notwithstanding such notice, the HOA never requested the opportunity to
51 The HOA was put on notice of the potential insufficiency of its evidence by
way of a jury instruction conference, MWI's motion for a directed verdict, and MWI's
supplemental briefing on the issue. On each occasion, MWI contended that the HOA
had failed to present evidence that MWI's negligence or breach of contract had caused
a violation of the Act's standards, as required.
52 In 1963, Code of Civil Procedure section 629 was amended to eliminate the
requirement that a party file a motion for a directed verdict as a prerequisite to
obtaining an order granting JNOV. (Compare Stats. 1963, ch. 205, § 1, p. 944
[directing the court to grant JNOV "whenever a motion for a directed verdict for the
aggrieved party should have been granted had a previous motion been made"] with
Stats. 1961, ch. 604, § 1, p. 1752 [directing the court to grant JNOV "[w]hen a motion
for a directed verdict, which should have been granted, has been denied"]; see
7 Witkin, Cal. Procedure (5th ed. 2008) Trial, § 438 [describing change].)
Thus, MWI provided the HOA with more notice of the insufficiency of its
evidence than was statutorily required in order for it to obtain a judgment in its favor
on the ground of such insufficiency.
47
present additional evidence to meet the claimed insufficiency.53 Under these
circumstances, fairness does not require that the HOA be given a second chance to
prove its claim. (See Cardinal Health 301, Inc. v. Tyco Electronics Corp. (2008) 169
Cal. App. 4th 116, 153 [concluding that party had "full and fair opportunity" to present
evidence in support of its claims and noting that "defendants brought several
potentially dispositive motions challenging the sufficiency of the evidence," and that
defendants moved for "judgment notwithstanding the verdict on the basis that the
evidence was insufficient"].)
Simons, supra, 213 Cal. App. 4th 1035, on which the HOA relies for the
proposition that the power to grant a directed verdict "presupposes the directed verdict
is sought on an issue that was presented at trial and on which the opposing party had
an opportunity to present evidence," is clearly distinguishable. (Id. at p. 1051.) In
Simons, the trial court granted a plaintiff's motion for JNOV on an issue that was "not
alleged in plaintiff's complaint," was "not . . . litigated at trial," (id. at p. 1038) and on
which the defendant contended it would have presented evidence if the issue had been
raised at trial. (Id. at p. 1043.) In this case, we conclude that the trial court erred in
denying a defendant's motion for a directed verdict and motion for JNOV because the
plaintiff failed to present evidence sufficient to prove the claim alleged in its
complaint.
53 A trial court has discretion to permit a party opposing a motion for directed
verdict the opportunity "to reopen for further evidence upon showing of good cause."
(Simons v. Ware (2013) 213 Cal. App. 4th 1035, 1051 (Simons).)
48
Simons does not constitute authority that a court may not grant a directed
verdict where a plaintiff fails to carry its burden of proof on an element of its claim.
On the contrary, that is the very purpose of a motion for a directed verdict and motion
for JNOV. (Cooper v. Takeda Pharmaceuticals America, Inc. (2015) 239 Cal. App. 4th
555, 572 [" 'Typically, if a defendant believes that the plaintiff has not presented
substantial evidence to establish a cause of action, the defendant may move for a
nonsuit if the case has not yet been submitted to the jury, a directed verdict if the case
is about to be submitted, or a [JNOV] following an unfavorable jury verdict. . . . The
function of these motions is to prevent the moving defendant from the necessity of
undergoing any further exposure to legal liability when there is insufficient evidence
for an adverse verdict' "].)
Finally, the HOA argues that the trial court's order denying the JNOV should be
affirmed "given the lack of precedent construing Section 936." We disagree. The
statute expressly states the standard of proof that we hold the Act requires and the sole
relevant precedent interpreting section 936 stated "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." (Greystone, supra, 168 Cal.App.4th at p. 1216, quoting § 936,
italics omitted.) In any event, to the extent that there was uncertainty in the law, the
HOA had a "full and fair opportunity" to present evidence of a negligent act or
omission or breach of contract by MWI, in case the HOA's interpretation of the statute
was later deemed incorrect. (Frank, supra, 149 Cal.App.4th at p. 833.) No more is
49
required. MWI should not be required to undergo the burden of a second trial because
the HOA interpreted the statute in a manner that proved erroneous.
Accordingly, we conclude that MWI is entitled to judgment because the HOA
did not present sufficient evidence to establish MWI's liability under the Act.
IV.
DISPOSITION
The amended judgment and the trial court's order denying MWI's motion for
JNOV are reversed. The matter is remanded to the trial court with directions to grant
MWI's motion for a directed verdict, to enter judgment in favor of MWI, and to
conduct any other necessary ancillary proceedings. MWI is entitled to costs on appeal.
AARON, J.
WE CONCUR:
HUFFMAN, Acting P. J.
NARES, J.
50