So What Is Patent Defect, Anyway?

SO WHAT IS A PATENT DEFECT, ANYWAY?

    The California Court of Appeal has just made this question more difficult to answer in its opinion in Creekside Townhome Owners Association, Inc. v. C. Scott Whitten, (2009) Superior Court Case Number 04AS02481.

    In Creekside, the Homeowner's Association of a townhome development sued a roofer, an inspector and a roofing supplier based on the re-roofing of eleven (11) buildings involving sixty-one (61) units.  The Defendants argued that Creekside failed to file suit prior to the expiration of the four (4) year patent defect statute of limitations (C.C.P. section 337.1).  Defendants brought a Motion for Summary Judgment based on the statute of limitations, arguing that an interrogatory response which referenced a letter sent by one homeowner to the Association's board of directors concerning a water intrusion problem inside one (1) of the unit's bedroom, and reporting several broken roof tiles, evidenced a patent defect condition.  The interrogatory admitted that the letter was discussed in open session at a board meeting.  The Complaint was filed more than four (4) years from the date of the meeting.

    Based on this evidence, the trial court granted Defendants' Motion for Summary Judgment, relying largely on the prior Court of Appeal decision in Landale-Cameron Court, Inc. v. Ahonen, (2007) 155 Cal. App. 4th 1401, wherein another Court of Appeal granted a Motion for Summary Judgment on a similar basis.

    The Court of Appeal reversed the trial court, finding that one (1) reported leak by one (1) of sixty-one (61) homeowners is insufficient to result in a finding that the roof defects were patent and not latent as a matter of law. 

    In finding against the Defendants, the Court considered a declaration filed by an expert for Creekside which stated that there were multiple roof defects which could not have been readily apparent to a lay person.  The Court also noted what it described as a "sharp distinction" between the facts of the instant case, and those in Landale. 

    Specifically, in Landale, the townhome development had eight (8) units, there were roof leaks reported in three (3) of them (including the unit owned by the President of the Association), and roof repairs were attempted.  Basically, the Court of Appeal found the evidence of leaks was more likely to put a Homeowner's Association on notice of the existence of possible construction defects than in the instant case (1 unit leak out of 61 units).

    Finally, the Court stated that finding for Defendants would "force property owner associations across the state to conduct extensive investigations for possible construction defects based on any report of a small problem.  This could prove very expensive for the associations, and would often be futile.  We decline to impose such a burden".

CASE ANALYSIS

    The definition of a patent defect pursuant to C.C.P. section 337.1 is whether the average consumer, during the course of a reasonable inspection, would discover the defect.  Geertz v. Ausonio, (1992) 4 Cal. App. 4th 1363.  While the test is usually a question of fact, it may be determined as a matter of law, such as in Landale.  Other examples include Tomko Woll Group Architects v. Superior Court, (1996) 46 Cal. App. 4th 1326 (cracked concrete causing a person to trip and fall is a patent defect) and Preston v. Goldman, (1986) 42 Cal. 3d 108 (backyard pond built with a one foot wall causing toddler to fall in is a patent defect).

    It is my opinion that the Court in Creekside did not follow the logic in Landale, Tomko and Preston.  In Tomko and Preston, the Court found a patent defect even though there was no formal "inspection".  The alleged defects were visible, and that was enough.  But most interesting is the manner in which the Court of Appeal picked the facts of Landale which supported its opinion, and ignored the rest.
   
    In Landale, virtually all of the complaints at the project concerned leaking roofs.  There was evidence similar to that in the instant case of isolated reports of stairway and deck issues, but the overwhelming number of complaints concerned the roofs.  Yet the court in Landale granted Defendant's Motion for Summary Judgment as to all sources of water intrusion at the complex which concerned Ahonen, who installed the waterproofing, the decks and the roofs.  The Court of Appeal in Landale found that the significant issues pertaining to the roofs put the Association on notice of all potential sources of water intrusion.

    At the oral argument in the Court of Appeal in Landale, this issue was hotly debated amongst counsel and the justices.  I know this because I was there.  Bremer Whyte Brown & O'Meara represented Ahonen and successfully argued that the trial court was justified in granting Summary Judgment as to all waterproofing issues even though the complaints were mainly specific to the roofs.

    I believe that the Court of Appeal in the instant case is confusing actual notice of a defect with whether there is sufficient evidence to warrant an inspection, and whether that inspection would reveal the defect.  Water leaking into a unit is not normal.  Something must have been amiss or the water intrusion would not have happened.  The Association ignored the problem, but then investigated later and, according to the Association's expert, they found "multiple construction defects".

    The burden on the Association to investigate the source of a unit leak would have been minimal.  Yet the Court of Appeal bought the Association's argument that the investigation could involve an "extensive investigation" based on the report of a small problem.

    This case will make obtaining Summary Judgment based on the existence of a patent defect more difficult since the Court of Appeal has blessed the acceptance of declarations from  experts on the issue of whether a defect is patent or latent (thus creating an issue of material fact sufficient to defeat a Motion for Summary Judgment), and creating a blurred line between sufficient inquiry notice (as in Landale) and not enough notice (Creekside).

    I welcome your comments.
Very truly yours,
BREMER WHYTE BROWN & O'MEARA LLP

John V. O'Meara

John O'Meara
jomeara@bremerandwhyte.com
JVO/