San Diego Legal Personal Injury And Construction News

CC & R’s Not Sufficient To Require Homeowners To Arbitrate Construction Defect Claims Against Condominium Developer

An important decision regarding the rights of Homeowner Associations to pursue claims for construction defect claims was recently published by the California Fourth District Court of Appeal. The case of Villa Vicenza Homeowners Association v. Nobel Court Development, LLC. Concerned whether an arbitration provision in the Association CC & R’s could compel the association to resolve its claims against a developer by binding arbitration. These types of provisions have become very common in recent years as developers have attempted to combat construction defect lawsuits involving residential developments by attempting to compel the association to waive its right to a jury trial, and instead resolve these disputes through arbitration. Accordingly, developers have included the binding arbitration provision in the initial CC &R’s of the association. When problems develop down the road, the developer would seek to avoid the comparatively unfavorable forum of Superior Court and a jury, for the typically more favorable forum of arbitration before a panel of lawyers or retired Judges.

The Villa Vicenza decision holds that a binding arbitration clause recorded by a condominium developer prior to selling the condo units was insufficient to require the unit owners to arbitrate construction defect claims against the developer. The court reasoned that although arbitration provisions are typically looked upon favorably when the parties had the opportunity to review and negotiate such provisions, the fact that the CC & R’s containing this provision was in place before the project was built of the association formed demonstrated that there was no “negotiation” regarding this provision. The members of the association had no opportunity to object to this provision. The court concluded that the purpose of CC & R’s was to regulate the relationship of the unit owners among themselves, and not with the project developer.

The decision that a developer cannot impose a binding arbitration provision on homeowners through the CC & R’s is a significant victory for consumers and homeowners throughout California.

Call Bryan today for all your construction legal and litigation matters at 619-752-1102 or 800-611-2581.

$2.1 Million Settlement

A settlement was recently reached by Bryan in a case called XX Self Storage v. San Diego Contracting. XX Self Storage is a complex of over 1,000 self storage units in four buildings in north San Diego County. Three of the buildings were built partially below grade. Water seeped into these buildings through retaining walls and up through the building slabs. Bryan represented the building owners, and obtained a settlement in excess of $2.1 million from the general contractor and sub-contractors to repair this defective construction.

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