Facts: A property owner purchased a new home from the builder. The purchase agreement included a right to repair addendum requiring the builder to repair or pay for any defect on the property on notice of the defect from the owner. The owner later discovered water damage from a leak in the home and submitted a claim to their home insurer to repair it. After the insurer completed the repairs, the insurer sent notice to the builder of the defect and of the insurer’s intent to recover costs from the builder.

Claim: The builder sought to avoid liability for the cost of repairs, claiming the insurer was not entitled to reimbursement since it failed to comply with the right to repair addendum by not giving the builder notice to inspect and correct the defect before the insurer performed the repairs.

Counter claim: The insurer claimed the builder was liable for the cost of repairs since the addendum did not specify the notice must be sent prior to completing repairs and, thus, the notice the insurer sent after it completed the repairs was sufficient.

Holding: A California court of appeals held the insurer was not entitled to reimbursement from the builder for the cost of repairs since the insurer’s failure to provide the builder with timely notice of the defect and an opportunity to resolve it before the insurer completed the repairs was not in compliance with the sequential order of the right to repair addendum. [KB Home Greater Los Angeles Inc. v. Superior Court of Los Angeles County (2014) _CA4th_]