Greystone Homes, Inc. v. Midtec, Inc.

I.

INTRODUCTION

In Aas v. Superior Court (2000) 24 Cal.4th 627, 636 [ 101 Cal.Rptr.2d 718 , 12 P.3d 1125 ] (Aas), the California Supreme Court concluded that a group of homeowners could not recover damages in negligence from the developer, contractor or subcontractors who built their homes, for existing construction defects that had not yet caused either property damage or personal injury. In reaching this conclusion, the Aas court explained that while “tort law provides a remedy for construction defects that cause property damage or personal injury” (id. at p. 635), the “economic loss rule” precludes recovery for damages such as “the difference between price paid and value received, and deviations from standards of quality that have not resulted in property damage or personal injury” (id. at p. 636).

In response to the holding in Aas , the Legislature enacted Civil Code section 895 et seq. (the Right to Repair Act or the Act). The Act establishes a set of building standards pertaining to new residential construction, and provides homeowners with a cause of action against, among others, builders and individual product manufacturers for violation of the standards (§§…