CA law gives builders the opportunity to avoid being sued by repairing alleged defects claimed by the home buyer. If the defects do exist, the builder must weigh the cost to defend, and possible damages if it loses, against the cost to repair. The builder might also want to factor in what effect its decision could have on other homeowners or plaintiff's lawyers.
If a builder is viewed as a soft touch, that could open the door to lawsuits from other homeowners with the same condition, or predatory lawyers who prey on builders who cave rather than fight. On the other hand, if the builder fights and loses, the legal fees and damages could exceed the cost of repair.
Many construction defect lawsuits have their origins in what initially appeared to be a very small problem that the builder failed to correct. Resolving a buyer's complaints can avoid getting served with a complaint.
Prepare For a Possible CD Action While Construction Is Ongoing
Many conditions and components get covered up during the later stages of construction. As a result, plaintiff's construction defect experts usually take the position that they cannot opine upon the integrity of the construction without doing destructive testing.
If, however, the job is properly documented during the course of construction, the builder may be able to demonstrate, before an action is commenced, that there is nothing hidden beneath the surface that constitutes a construction defect.
Should a lawsuit nonetheless be filed, photographs and videotapes taken during the course of construction, together with detailed job notes, can be invaluable to the defense, assuming, of course, that the job was constructed properly in the first place. One picture is worth at least a thousand words to a judge or jury in a construction defect case.
Defending the CD Action
If the builder purchased an insurance policy, and paid all those big premiums, it is time to start getting the benefits it paid for. The builder does this by tendering the defense of a cd lawsuit to its carrier.
When a builder gets sued in a cd action, it is not the end of the world. But it is time to call in a professional. A builder builds houses. A lawyer defends lawsuits.
Whichever lawyer the builder hires, it should make sure the lawyer knows what he or she is doing, and has the wherewithal and experience to not only defend the action, but to make sure that all responsible parties--the general contractor, the subcontractors, and design professionals--are brought into the action. Why? Because they need to defend their work, and, in addition, to pay their proportionate share of the liability for any construction defects for which they are wholly or partially responsible.
Mediation presents an opportunity to avoid the time and expense, not to mention potential exposure, of litigating a cd case. Select a mediator experienced in cd actions, who has the trust and respect of the parties, counsel, and insurance company adjusters.
In mediation, be prepared, and have a strategy in mind, before walking in. It is difficult to settle a cd case if the builder (or its lawyer) does not have a firm grasp of the alleged defects, the cost of repair, and the potential exposure at trial.
Make sure everyone who has potential exposure attends the mediation with their respective adjuster. This includes the general contractor, subs and design professionals, as applicable. Everyone who attends the mediation should be educated so that they understand the case, the alleged defects, and their potential exposure. Any coverage issues will need to be addressed and resolved.
Any potential settlement should be evaluated on the basis of numbers, not emotion.
In construction defect actions, it is critical to put together a group of experts as early in the case as possible. In cases involving more than one type of defect, there is generally a lead expert, usually a general contractor or architect, who coordinates and directs the work of all other experts.
It is helpful to get experts involved in a case as early as possible. An expert can be better prepared to advise and testify if he or she observes and participates in inspections and testing, reviews the job files, and is kept apprised of the positions taken by the plaintiff's
Litigation is never fun, is usually expensive, and should be avoided if at all possible. A conscientious lawyer can help a business avoid construction defect litigation by eliminating conditions that can invite lawsuits.
If a developer is sued, an attorney can guide his client through the litigation process, and help it decide whether to settle or go to trial. If the decision is made to go to trial, the developer should retain an attorney who has the experience, guile, intelligence, and tenacity to make sure that justice is ultimately served.
More detailed information can be found in the complete unedited version of this article available on my website.
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