The California Supreme Court’s decision to uphold a San Diego court ruling has some developers believing more affordable housing is on its way to San Diego.
The court’s 5-2 ruling in the Aas vs. Superior Court case said developers, contractors and subcontractors were not negligent for building-code violations that did not result in property damage or personal injury.
The Dec. 4 decision reaffirmed a decision in San Diego Superior Court.
“As to the degree of certainty that plaintiffs suffered injury, construction defects that have not ripened into property damage do not comfortably fit the definition of appreciable harm , an essential element of a negligence claim,” the majority opinion said.
However, the state justices said the “considerations of social policy this case implicates are better left to the Legislature.”
Still, the decision had developers clicking their heels and homeowner associations pounding their fists.
“It says homeowners have to pay for builder’s negligence and that’s a bad precedent,” said the plaintiff’s attorney, Douglas Grinnell of the San Diego-based law firm Epstein & Grinnell. He represented Tierrasanta’s Provencal Community Homeowners Association. “The upshot in the Aas decision is that builders can get away with code violations.”
– Decision Clarifies Rules For Builders
Nancy T. Scull, a partner at Luce, Forward, Hamilton & Scripps LLP, said the decision would clarify some of the confusion in the building industry. Scull leads the law firm’s real estate department.
“I think it will focus a lot more attention on warranties and contract provisions for developers and consumers,” she said.
The ruling could lead to a return of the condominium, said Lew Sichelman, a Washington, D.C.-based real estate journalist.
“In California, where condos once accounted for half the state’s housing supply, they now represent less than 20 percent, and (the) state’s housing prices are the highest in the country,” Sichelman wrote in a Jan. 8 article for Realty Times.
Single families, according to several building industry officials, are the primary tenants of condominiums.
In San Diego, condominiums represent 34 percent of all residential re-sales, according to DataQuick Information Systems.
– Building Condos Seems Less Risky
Shortly after the ruling was made, several developers, including Barratt American Inc. announced they were getting back into the condominium business. The Carlsbad-based developer has projects under way in La Costa and Temecula.
“We’re a company that used to build a lot of condominiums and we got out of the business completely in the mid-1990s because of the litigation problems,” firm President Mick Pattison said. “We’re now re-entering the market in an experimental way.”
Pattison said his firm’s cautious attitude was a result of the court’s unwillingness to completely close the book on this chapter.
Paul Tryon, executive vice president of the Building Industry Association of San Diego, said the decision isn’t the silver bullet for increased construction of affordable homes.
“I think it has the potential to contain the scope of litigation, and that’s a big part of the problem for insurers and those involved in building,” he said.
In an open letter to the editor of the San Diego Union-Tribune written shortly after the ruling, the BIA said violation of the building code was not the main issue. Rather, it said, frivolous lawsuits were.
