Acqua Vista Homeowners Ass'n v. MWI, Inc. (7 Cal. App. 5th 1129, 2017)

Opinion

AARON, J.

I.

INTRODUCTION

Civil Code section 895 et seq. (the Act) establishes a set of building standards pertaining to new residential construction and provides homeowners with a cause of action against, among others, material suppliers, for a violation of the standards (§§ 896, 936). We must determine whether the Act requires homeowners suing a material supplier under the Act to prove that the material supplier “caused, in whole or in part, a violation of a particular standard as the result of a negligent act or omission or a breach of contract.” (§ 936.) We conclude that the Act requires such proof.

Our conclusion is supported by the text, structure, and legislative history of the Act, as well as this court’s prior interpretation of section 936 in Greystone Homes, Inc. v. Midtec, Inc. (2008) 168 Cal.App.4th 1194 [86 Cal.Rptr.3d 196] (Greystone). In Greystone, this court stated that “a product manufacturer is liable [under section 936] only where its ‘negligent act or omission or a breach of contract’ . . . caused a violation of the Act’s standards.” (Id. at p. 1216, italics omitted, quoting § 936.) Section 936 treats product manufacturers and material suppliers identically.

In this case, Acqua Vista Homeowners Association (the HOA) sued MWI, Inc. (MWI), a supplier of pipe used in the construction of the Acqua Vista condominium development. The operative third amended complaint contained a claim for a violation of the Act’s standards in which the HOA alleged that “[d]efective cast iron pipe manufactured in China [was] used throughout the building.” At a pretrial hearing, the HOA explained that it was not pursuing a claim premised on the doctrine of strict liability and that it was alleging a single cause of action against MWI for violations of the Act’s standards.

During a jury trial, near the close of evidence, MWI filed a motion for a directed verdict on the ground that the HOA failed to present any evidence that MWI had caused a violation of the Act’s standards as a result of MWI’s negligence or breach of contract, as required. The trial court denied the motion, concluding that the HOA was not required to prove that any violations of the Act’s standards were caused by MWI’s negligence or breach of contract. In reaching this conclusion, the court relied on the final sentence of section 936, which states in relevant part, ‘“[T]he negligence standard in this section does not apply to . . . material suppliers] . . . with respect to claims for which strict liability would apply.” (§ 936.) After the jury rendered a verdict against MWI, MWI filed a motion for judgment notwithstanding the verdict (JNOV) on the same ground as it had raised in its motion for directed verdict, which the trial court denied for the same reason it provided in denying the motion for a directed verdict.

On appeal, MWI claims that the trial court misinterpreted the Act and, as a result, erred in denying its motion for a directed verdict and motion for JNOV. We agree. The first sentence of section 936 contains an “explicit adoption of a negligence standard for claims” under the Act against material suppliers. (Greystone, supra, 168 Cal.App.4th at p. 1216, fn. 14.) While the final sentence of section 936 is not a model of textual clarity, for the reasons explained below, standard techniques of statutory interpretation make clear that this sentence merely provides that the negligence standard applicable to claims brought against material suppliers under the Act does not apply to common law claims for strict liability against such suppliers. Since it is undisputed that the HOA’s claim was brought under the Act, it was required to prove that MWI “caused, in whole or in part, a violation of a particular standard as the result of a negligent act or omission or a breach of contract.” (§ 936.) We also conclude that because there is no evidence in the record that MWI caused a violation of the Act’s standards through its negligence or breach of contract, the court erred in denying MWI’s motion for a directed verdict and motion for JNOV. Accordingly, we reverse the judgment and the trial court’s order denying MWI’s motion for JNOV and remand the matter to the trial court with directions to grant MWI’s motion for a directed verdict and to enter judgment in favor of MWI.

II.

FACTUAL AND PROCEDURAL BACKGROUND

A. The action

The HOA filed this construction defect action in December 2009. In September 2013, the HOA filed the operative third amended complaint in which it named MWI, and others, as defendants. The third amended complaint alleged a cause of action styled as “Violation of SB800[] Construction Standards, Civil Code § 896” against all defendants, including MWI. (Boldface & italics omitted.) The cause of action contained the following relevant allegation: “The violations of SB800 standards by the defendants, and each of them, alleged herein include, but are not limited to, the following design, construction and/or manufacturing defects at the project: Defective cast iron pipe manufactured in China and used throughout the building.”

B. The trial

The trial court held a jury trial on the HOA’s claims under the Act against MWI, and another iron pipe supplier, Standard Plumbing & Industrial Supply Co. (Standard). At trial, the HOA presented evidence that the pipes supplied by MWI contained manufacturing defects, that they leaked, and that the leaks had caused damage to various parts of the condominium development.

MWI moved for a directed verdict on the ground that the HOA had failed to present evidence that MWI caused a violation of the Act’s standards as a result ofMWI’s negligence or breach of contract. In addition, MWI requested that the trial court instruct the jury that the HOA was required to present such evidence. The trial court denied MWI’s motion for a directed verdict and MWI’s jury instruction requests.

C. The jury’s verdict

The jury rendered a special verdict that responded to four questions. The first question asked the jury, “Have the cast iron pipes supplied by the Defendants at Acqua Vista leaked?” The jury responded in the affirmative with respect to both MWI and Standard. The second question asked the jury, “Have the cast iron pipes supplied by either of the Defendants to Acqua Vista corroded so as to impede the useful life of the plumbing/sewer system?” The jury again responded in the affirmative with respect to both defendants. The third question asked the jury, “If you answered yes as to either Defendant in questions 1 or 2, what is the total amount of Plaintiffs [sic| damages?” The jury found that the HOA had suffered $18.5 million in damages “[f]or the reasonable cost of repairing any violations,” $7.13 million in damages “[f]or reasonable relocation and storage expenses,” and $408,909 “[f]or reasonable investigative costs.” Finally, the jury was asked, “For those Defendants that you answered ‘Yes’ to in Question 1 or Question 2, assuming 100%, what percentage of responsibility is attributable to each of the following for the damages to the Plaintiff identified in Question 3?” The jury responded that MWI was responsible for 92 percent, Standard, 8 percent, the “pipe installer,” 0 percent, and the HOA, 0 percent.

D. The judgment

The trial court entered a judgment against MWI in March 2015 in the amount of $23,955,796.28, reflecting MWI’s 92 percent responsibility for the total damages suffered.

E. Postjudgment motions

MWI moved for JNOV on several grounds, including that the HOA had failed to present evidence that MWI had caused a violation of the Act’s standards as a result of MWI’s negligence or breach of contract. The trial court denied the HOA’s motion for JNOV, reasoning in part: “MWI argues that judgment should be entered in favor of MWI because Plaintiff failed to prove a prima facie case for liability under ... § 896. Specifically, MWI argues Plaintiffs [sic| must prove negligence and causation and that Plaintiff failed to do so. As this court previously ruled, the last sentence of ... § 936 [‘[hjowever, the negligence standard in this section does not apply to any general contractor, subcontractor, material supplier, individual product manufacturer, or design professional with respect to claims for which strict liability would apply’] removes any negligence/causation requirement in a ... § 896 action against certain defendants, including MWI, a material supplier in this case. The court is not persuaded by MWI’s reliance on Greystonej, supra,] 168 Cal.App.4th 1194 because the issue of the effect of the last sentence of . . . § 936 was not before the Court of Appeal in Greystone.”

MWI also filed a motion for new trial on numerous grounds, including that the trial court had failed to instruct the jury on negligence and causation with respect to the HOA’s claim under the Act and that the special verdict form had not required any findings on these issues. The trial court employed similar reasoning in denying MWI’s motion for new trial as it had used in denying MWI’s motion for JNOV.

F. The amended judgment and appeals

MWI filed an appeal from the judgment and the order denying the motion for JNOV. The trial court entered an amended judgment in the amount of $23,955,796.28 against MWI in July 2015. MWI filed a second notice of appeal from the original and amended judgments and the order denying the motion for JNOV.

III.

DISCUSSION

The trial court erred in denying MWI’s motion for a directed verdict and motion for JNOV

MWI claims that the trial court erred in denying its motions for a directed verdict and for JNOV because there is no evidence in the record that MWI “caused, in whole or in part, a violation of a particular standard as the result of a negligent act or omission or a breach of contract” (§ 936), as is required in order for the HOA to state a claim against MWI for a violation of the Act’s standards.

A. General principles of law governing a motion for a directed verdict and a motion for JNOV, and the applicable standard of review

“ ‘ ‘“[T]he power of the court to direct a verdict is absolutely the same as the power of the court to grant a nonsuit.” [Citation.] “A motion for a directed verdict ‘is in the nature of a demurrer to the evidence, and is governed by practically the same rules, and concedes as true the evidence on behalf of the adverse party, with all fair and reasonable inferences to be deduced therefrom.’ ” ’ ” (Baker v. American Horticulture Supply, Inc. (2010) 186 Cal.App.4th 1059, 1072 [111 Cal.Rptr.3d 695].) “ ‘ “A defendant is entitled to a nonsuit [or directed verdict] if the trial court determines that, as a matter of law, the evidence presented by plaintiff is insufficient to permit a jury to find in his favor.” ’ ” (Ibid.) A trial court must grant a motion for JNOV whenever a motion for a directed verdict for the aggrieved party should have been granted. (Code Civ. Proc., § 629, subd. (a).)

In reviewing a trial court’s ruling on a motion for a directed verdict, ‘“the reviewing court must resolve every conflict in the testimony in favor of the plaintiff and at the same time indulge in every presumption and inference that could reasonably support the plaintiff’s case.” (County of Kern v. Sparks (2007) 149 Cal.App.4th 11, 16 [56 Cal.Rptr.3d 551].) Similarly, when reviewing an order on a motion for JNOV, ‘“an appellate court will use the same standard the trial court uses in ruling on the motion, by determining whether it appears from the record, viewed most favorably to the party securing the verdict, that any substantial evidence supports the verdict. ‘ “ ‘If there is any substantial evidence, or reasonable inferences to be drawn therefrom in support of the verdict, the motion should be denied.’ ” ’ ” (Trujillo v. North County Transit Dist. (1998) 63 Cal.App.4th 280, 284 [73 Cal.Rptr.2d 596] (Trujillo).)

The proper interpretation of the Act and whether there is substantial evidence to support the HOA’s claim under the Act present questions of law that we review de novo. (See, e.g., Yohner v. California Dept. of Justice (2015) 237 Cal.App.4th 1, 7 [187 Cal.Rptr.3d 550] (Yohner) [“Yohner’s claim raises an issue of statutory interpretation, and we therefore apply the de novo standard of review”]; Sweatman v. Department of Veterans Affairs (2001) 25 Cal.4th 62, 68 [104 Cal.Rptr.2d 602, 18 P.3d 29] [stating that where an appeal from the denial of a motion for JNOV raises a legal issue, an appellate court reviews the question de novo].)

B. Section 936 requires a homeowner suing a material supplier for violating a standard under the Act to prove that the material supplier “caused, in whole or in part, a violation of a particular standard as the result of a negligent act or omission or a breach of contract”

1. Principles of statutory interpretation

In Yohner, supra, 237 Cal.App.4th at pages 7-8, this court restated the following well-established rules of statutory interpretation:

“ ‘ “In construing any statute, ‘[w]ell-established rules of statutory construction require us to ascertain the intent of the enacting legislative body so that we may adopt the construction that best effectuates the purpose of the law.’ [Citation.] ‘We first examine the words themselves because the statutory language is generally the most reliable indicator of legislative intent. [Citation.] The words of the statute should be given their ordinary and usual meaning and should be construed in their statutory context.’ [Citation.] If the statutory language is unambiguous, ‘we presume the Legislature meant what it said, and the plain meaning of the statute governs.’ [Citation.]” [Citation.]

“ ‘ “If, however, the statutory language is ambiguous or reasonably susceptible to more than one interpretation, we will ‘examine the context in which the language appears, adopting the construction that best harmonizes the statute internally and with related statutes,’ and we can ‘ “ ‘look to a variety of extrinsic aids, including the ostensible objects to be achieved, the evils to be remedied, the legislative history, public policy, contemporaneous administrative construction, and the statutory scheme of which the statute is a part.’ ” ’ [Citation.]” [Citation.]

“ ‘ “ ‘We must select the construction that comports most closely with the apparent intent of the Legislature, with a view to promoting rather than defeating the general purpose of the statute, and avoid an interpretation that would lead to absurd consequences.’ ” ’ ”

2. The Act

Section 896 provides a list of standards pertaining to residential construction, including that “[t]he lines and components of the plumbing system, sewer system, and utility systems shall not leak” (§ 896, subd. (a)(14)), and that “[p]lumbing lines, sewer lines, and utility lines shall not corrode so as to impede the useful life of the systems” (§ 896, subd. (a)(15)). Section 896 also specifies the manner by which certain entities involved in the construction process may be liable for failing to meet the standards. (§ 896.) Section 896 provides that a builder shall be liable for a violation of the Act’s standards, and states that other entities, including a material supplier, shall be liable for a violation of the standards to the extent specified in chapter 4 of the Act. Section 896 provides in relevant part: “In any action seeking recovery of damages arising out of, or related to deficiencies in, the residential construction, design, specifications, surveying, planning, supervision, testing, or observation of construction, a builder, and to the extent set forth in Chapter 4 (commencing with Section 910), a general contractor, subcontractor, material supplier,[] individual product manufacturer, or design professional, shall, except as specifically set forth in this title, be liable for, and the claimant’s[] claims or causes of action shall be limited to violation of, the following standards, except as specifically set forth in this title.” (§ 896, italics added.)

Chapter 4 of the Act, beginning with section 910, establishes a series of prelitigation procedures that a claimant must pursue prior to filing an action against “any party alleged to have contributed to a violation of the standards.” (§ 910.) A provision in chapter 4—section 936—also specifies the extent to which a nonbuilder entity may be liable for a violation of the Act’s standards, stating: “Each and every provision of the other chapters of this title apply to general contractors, subcontractors, material suppliers, individual product manufacturers, and design professionals to the extent that the general contractors, subcontractors, material suppliers, individual product manufacturers, and design professionals caused, in whole or in part, a violation of a particular standard as the result of a negligent act or omission or a breach of contract. In addition to the affirmative defenses set forth in Section 945.5, a general contractor, subcontractor, material supplier, design professional, individual product manufacturer, or other entity may also offer common law and contractual defenses as applicable to any claimed violation of a standard. All actions by a claimant or builder to enforce an express contract, or any provision thereof, against a general contractor, subcontractor, material supplier, individual product manufacturer, or design professional is preserved. Nothing in this title modifies the law pertaining to joint and several liability for builders, general contractors, subcontractors, material suppliers, individual product manufacturer, and design professionals that contribute to any specific violation of this title. However, the negligence standard in this section does not apply to any general contractor, subcontractor, material supplier, individual product manufacturer, or design professional with respect to claims for which strict liability would apply.” (§ 936, italics added.)

3. The text and structure of the Act supports the conclusion that a homeowner/claimant suing a material supplier for violating a standard under the Act must prove that the material supplier “caused, in whole or in part, a violation of a particular standard as the result of a negligent act or omission or a breach of contract ” (§ 936)

The first sentence of section 936, when read in context with section 896, clearly and unambiguously states that a homeowner/claimant (such as the HOA) suing a material supplier (such as MWI) for violating a standard under the Act must prove that the material supplier caused, in whole or in part, a violation of a standard as the result of a negligent act or omission or a breach of contract. (See § 936 [stating that provisions of the Act outside of ch. 4, including § 896, apply to “material suppliers, ... to the extent that the . . . material suppliers . . . caused, in whole or in part, a violation of a particular standard as the result of a negligent act or omission or a breach of contract”].) The HOA does not contend otherwise. Rather, the HOA acknowledges that “[a] negligence standard applies to non-builders, according to the first sentence [of section 936].” However, as discussed in part III.B.l.c., post, the HOA argues that, pursuant to the final sentence of section 936, the negligence standard in section 936 does not apply if a plaintiffs claim under the Act is one for which strict liability would have applied at common law. In that instance, the HOA argues that the standard of liability outlined in section 896 applies.

Thus, unless the HOA is correct that the final sentence of section 936 qualifies the standard of liability expressly stated in the first sentence of section 936 in a manner applicable to this case, the HOA was required to prove that MWI “caused, in whole or in part, a violation of a particular standard as the result of a negligent act or omission or a breach of contract.” (§ 936.) Accordingly, we must consider the meaning of the final sentence of section 936.

a. The final sentence of section 936 is most reasonably interpreted as providing that the negligence standard adopted in section 936 does not apply to common law claims for strict liability

We acknowledge that the plain language of the final sentence in section 936, when read in isolation, is ambiguous. (See § 936 [“However, the negligence standard in this section does not apply to any general contractor, subcontractor, material supplier, individual product manufacturer, or design professional with respect to claims for which strict liability would apply”].) Despite such textual ambiguity, for the reasons stated below, an application of the techniques of statutory interpretation demonstrates that the provision should be interpreted as providing that the negligence standard specified in the first sentence of section 936 does not apply to common law strict liability claims against the specified nonbuilder entities.

To begin with, interpreting the final sentence of section 936 as making clear that the negligence standard applicable to claims under the Act does not apply to common law claims is a plausible textual interpretation of the statute. Strict liability is a common law doctrine (see generally Jimenez v. Superior Court (2002) 29 Cal.4th 473, 484 [127 Cal.Rptr.2d 614, 58 P.3d 450] (Jimenez) [outlining the evolution of the doctrine]), and the sentence may reasonably be read as stating that the “negligence standard” contained in section 936 does not apply if the common law doctrine of strict liability “would apply,” (§ 936) because the claim being asserted is a common law claim. This reading is supported by the fact that there is no provision in the Act outlining a claim brought under the Act for which “strict liability would apply.” (§ 936.) Moreover, such an interpretation of the sentence is supported textually by the reference to “claims,” (§ 936) a term commonly used to refer to “causes of action.” (See, e.g., Wallace v. County of Stanislaus (2016) 245 Cal.App.4th 109, 122 [199 Cal.Rptr.3d 462] [using the terms “causes of action” and “claims” interchangeably].) As MWI argues in its brief, “the ‘claims’ described in the last sentence are synonymous with causes of action for strict products liability in tort.”

Our interpretation of the final sentence of section 936 is also strongly supported by the similarity of that sentence to other provisions in the Act that clearly reflect the Legislature’s intent to limit the Act’s effect on the common law. The Act repeatedly refers to common law claims—often within the final sentence of a section as in section 936—to state that the Act does not displace the common law in areas in which the Act does not apply. (See §§ 896 [“As to condominium conversions, this title does not apply to or does not supersede any other statutory or common law”], 941, subd. (e) [“Causes of action and damages to which this chapter does not apply are not limited by this section”], 945.5, subd. (h) [“As to any causes of action to which this statute does not apply, all applicable affirmative defenses are preserved”].) The final sentence of section 936 is most reasonably read as a similar such provision, i.e., one that makes clear that the common law is not affected by a particular statutory provision.

Further, this interpretation is consistent with the basic structure of the statute. (See Yohner, supra, 237 Cal.App.4th at p. 8 [in interpreting an ambiguous statute courts may “ ‘ “ ‘examine the context in which the language appears’ ” ’ ”].) Section 896, a provision outside of chapter 4 of the statute, clearly sets forth a standard of liability applicable to builders. Section 896 also states that nonbuilders will be liable to the “extent set forth in Chapter 4.” The first sentence of section 936, a provision in chapter 4, sets forth a clear standard of liability applicable to a series of nonbuilcler entities. Interpreting the final sentence of section 936 as providing that the negligence standard applicable to statutory claims against nonbuilders under the Act does not apply to certain common law claims (i.e., those “claims for which strict liability would apply” (§ 936)), is entirely consistent with the statute’s specification of a standard of liability for builders in section 896 (see § 896 [“In any action seeking recovery of damages arising out of, or related to [construction defects] ... a builder . . . shall, except as specifically set forth in this title, be liable for, ... [a] violation of . . . the following standards” (italics added)]) and nonbuilders in section 936. (See § 896 [stating that a nonbuilder is liable under the Act “to the extent set forth in Chapter 4 [in section 936]” (italics added)].) In contrast, the HOA’s construction of the statute, which it acknowledges “places a supplier ‘on par,’ with a builder under [the Act],” is entirely inconsistent with such text and structure.

b. The HO A’s criticisms of this interpretation of the Act are unpersuasive

The HOA contends that this interpretation of the Act, which MWI urged in the trial court, is flawed for several reasons. However, none of the HOA’s contentions is persuasive. First, the HOA argues that the term “claim” in the final sentence is most reasonably read as “claim[] under SB800.” While the HOA acknowledges that the term “claim” often “refers to a cause of action for damages,” the HOA contends that the Act uses the term “claim” to refer to claims brought pursuant to the Act and the terms “action” or “causes of action,” to refer to claims brought outside of the Act. However, the Act is not as consistent as the HOA suggests with respect to its use of the terms “claim,” “action,” and “cause of action.” For example, section 941 refers to an “action” when it is clear from context that the statute is referring to a claim brought pursuant to the Act. (See § 941, subd. (a) [“Except as specifically set forth in this title, no action may be brought to recover under this title” (italics added)].) In contrast, section 931 refers to “claim” and “claims” when it is clear that the statute is referring to a claims brought outside the Act. (See § 931 [“If a claim combines causes of action or damages not covered by this part, including, without limitation, personal injuries, class actions, other statutory remedies, or fraud-based claims,” and referring to “any fraud-based claim,” and “any class action claims” (italics added)].) Thus, the HOA’s contention that we should interpret the term “claim” in section 936 to mean claim brought pursuant to the Act is not supported by the manner in which the Act uses the terms “claim,” “action,” and “cause of action.” We decline to adopt an interpretation of the statute that requires us to insert words into the statute under the guise of interpretation. (9) (See, e.g., Kovacevic v. Avalon at Eagles’ Crossing Homeowners Assn. (2010) 189 Cal.App.4th 677, 685 [117 Cal.Rptr.3d 53] [“ ‘ “We may not insert words into a statute under the guise of interpretation [citation]” ’ ”].)

The HOA also maintains that interpreting “the last sentence of section 936 as referring to common law claims outside of [the Act] is . . . inconsistent with the rest of the . . . statute, in that no other provisions comment on the preservation of common law construction defect claims.” (Italics added.) We disagree. As discussed above, the Act repeatedly refers to the preservation of common law construction defect claims. (See §§ 896 [“As to condominium conversions, this title does not apply to or does not supersede any other statutory or common law”], 931 [“If a claim combines causes of action or damages not covered by this part, including, without limitation, personal injuries, class actions, other statutory remedies, or fraud-based claims”], 941, subd. (e) [“Causes of action and damages to which this chapter does not apply are not limited by this section”], 945.5, subd. (h) [“As to any causes of action to which this statute does not apply, all applicable affirmative defenses are preserved”].) Indeed, even another provision within section 936 specifies that the Act does not displace the common law. (See § 936 [“All actions by a claimant or builder to enforce an express contract, or any provision thereof, against a general contractor, subcontractor, material supplier, individual product manufacturer, or design professional is preserved”].) Thus, far from providing an interpretation of the final sentence that is inconsistent with other provisions in the Act, our interpretation fosters the “ ‘ “ ‘apparent intent of the Legislature’ ” ’ ” (Yohner, supra, 237 Cal.App.4th at p. 8) with respect to the manner by which the Act relates to the common law.

Citing sections 896 and 943, the HOA also argues that ‘“a construction of section 936 as referring to common law strict liability claims outside of [the Act] makes no sense because under the clear language of the statute, such construction defect claims do not exist outside of [the Act].” (Italics added.) We disagree, for the following reasons.

Section 896 provides in relevant part that a ‘“claimant’s claims or causes of action shall be limited to violation of . . . the following standards . . . except as specifically set forth in this title.” (Italics added.) Section 943, subdivision (a) provides, ”[e]xcept as provided in this title, no other cause of action for a claim covered by this title or for damages recoverable under Section 944 is allowed.” (Italics added.) The HOA notes that the California Supreme Court is currently considering whether, in light of sections 896 and 943, the Act provides the exclusive remedy for “construction defect claims that are actionable under [the Act\.” (Italics added.) (See McMillin Albany LLC v. Superior Court (2015) 239 Cal.App.4th 1132 [192 Cal.Rptr.3d 53], review granted Nov. 24, 2015, S229762 (McMillin)]) The HOA argues that in deciding McMillin, the Supreme Court is likely to disapprove Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC (2013) 219 Cal.App.4th 98, 102 [163 Cal.Rptr.3d 600] (Liberty Mutual), in which the Court of Appeal held that, notwithstanding sections 896 and 943, the Act ‘“does not eliminate a property owner’s common law rights and remedies, otherwise recognized by law, where . . . actual damage has occurred.” (Liberty Mutual, at p. 101; but see Elliott Homes, Inc. v. Superior Court (2016) 6 Cal.App.5th 333, 345 [210 Cal.Rptr.3d 889] (Elliott) [disagreeing with Liberty Mutual and stating, “The Act does not specifically except actions arising from actual damages”].)

Even assuming, strictly for the sake of argument, that the HOA is correct that the Act provides the exclusive remedy for construction defect claims that are actionable under the Act, that would not mean that “strict liability . . . construction defect claims do not exist outside of [the Act].” That is because, as demonstrated by the italicized portions of sections 896 and 943 in the previous paragraph, the Act preserves, at a minimum, common law claims that are not actionable under the Act. Further, the Act expressly enumerates numerous claims related to construction defects that are not actionable under the Act. (See, e.g., §§ 931 [stating that cause of action for “personal injuries, class actions, other statutory remedies, or fraud-based claims,” are “not covered” by the Act], 897 [“To the extent that a function or component of a structure is not addressed by these standards, it shall be actionable if it causes damage”]; accord, Elliott, supra, 6 Cal.App.5th at p. 340 [noting that certain “claims [are] excepted from the Act,” and citing §§ 896, 943, 931].) In addition, there are no provisions in the Act that expressly preclude common law claims premised on the doctrine of strict liability.

In light of these provisions, it is clear that construction defect claims exist outside of the Act. For example, it is clear that the Act does not preclude common law strict liability construction defect claims based on products that cause personal injury. (§ 931.) It is also clear that the Act does not preclude common law strict liability construction defect claims based on products that are not addressed by the Act’s standards, but that cause damage. (§ 897.) Accordingly, we reject the HOA’s contention that interpreting the last sentence of section 936 as referring to common law claims “makes no sense” given the Act’s purported preclusion of all common law strict liability construction defect claims.

c. The HO A’s interpretation of the final sentence of section 936 is not supported by the text or structure of the Act

The HOA argues that in interpreting the last sentence of section 936, this court need not “look past the plain language of section 936,” and offers the following interpretation of section 936: “A negligence standard applies to non-builders, according to the first sentence; however[,] that negligence standard does not apply to nonbuilders ‘with respect to claims for which strict liability would apply,’ [§ 936] according to the last sentence. The sentence simply means what it says. If the claim is one to which strict liability would apply at common law—e.g. a claim based on supplying a defective product— then the negligence standard does not apply to that claim under [the Act].”

We are not persuaded by the HOA’s ‘“plain language” argument. To begin with, the plain language of the last sentence of section 936 states only that the “negligence standard in this section does not apply.” (Italics added.) The last sentence does not state that the causation or breach of contract provisions in the first sentence of section 936 do not apply. Thus, if the HOA’s argument that the final sentence of section 936 qualifies the standard of liability to be applied to claims brought against nonbuilders pursuant to the Act were correct, applying the plain language of the final sentence of section 936 would not, as the HOA suggests, mean that a material supplier’s liability would be “ ‘on par’ ” with a builder’s liability under section 896.

Rather, since the last sentence of section 936 states that the “negligence standard in this section does not apply” (§ 936, italics added), a homeowner would be required to establish that a nonbuilder caused a violation of a standard as a result of a breach of contract. That is because, if the term ‘“negligence standard” of section 936 were removed from the statute, the plain language of the first sentence of section 936 would read, ‘“Each and every provision of the other chapters of this title apply to [nonbuilders] to the extent that the [nonbuilders] caused, in whole or in part, a violation of a particular standard as the result of ... a breach of contract.”

We can conceive of no public policy reason why the Legislature would have intended that the statute be interpreted in such a fashion. More specifically, it would be absurd to think that the Legislature intended that claims that would have been strict liability tort claims at common law be actionable under the Act only if caused by a breach of contract. Thus, we are unpersuaded by the HOA’s argument that the ‘“plain language” of the final sentence of section 936 demonstrates that the final sentence of section 936 qualifies the standard of liability outlined in the first. (See John v. Superior Court (2016) 63 Cal.4th 91, 96 [201 Cal.Rptr.3d 459, 369 P.3d 238] [statutes are to be interpreted so as to avoid absurd results].)

In the trial court, the HOA argued that the phrase “ ‘negligence standard in this section’ ” (italics added) in the last sentence of section 936 ‘“is referring to the entire additional negligence//;/rac7/ of contract requirement, discussed in the first sentence.” (Italics added.) The HOA does not offer this argument, which is entirely inconsistent with the plain language of section 936, on appeal. Given that the text of the final sentence of section 936 does not refer to a ‘“breach of contract” (§ 936), the statute’s text does not support the conclusion that the Legislature intended that the statute remove the entire ‘“negligence/breach of contract requirement” contained in the first sentence for claims brought under the Act against nonbuilders. Nor does the text of the Act evince the Legislature’s intent to “'placel | a [material] supplier ‘on par’ with a builder,” since a builder’s liability is specified under section 896. Instead, section 896 states that a nonbuilder is liable under the Act ‘“to the extent set forth in Chapter 4” (§ 896), and there is no provision outside of the first sentence in section 936 in chapter 4 that outlines the standard of liability applicable to claims against nonbuilders under the Act.

In addition, to interpret the statute in the manner that the HOA suggests would mean that the standard of liability for a claim brought pursuant to the Act would be determined by the standard of liability that would have applied if the claim had been brought at common law. Or, as the HOA argues in its brief, ‘“[The Legislature] wrote that the negligence standard does not apply to ‘claims for which strict liability would apply’—meaning SB800 claims to which strict liability ‘would apply’ outside of SB800.” (Quoting § 936.) The HOA presents no argument as to why the Legislature would have wanted the standard for statutory liability under the Act to turn on the conceptually difficult question of how a claim might be characterized if brought at common law.

For example, the HOA asserts in its brief that all common law claims based on a defendant’s supply of a defective product are based on strict liability. However, that is not the case. A claim based on a defective product may be brought at common law under either a negligence theory or a strict liability theory. (See, e.g., Johnson v. United States Steel Corp. (2015) 240 Cal.App.4th 22, 30-31 [192 Cal.Rptr.3d 158] [“ ‘ ‘“Products liability is the name currently given to the area of the law involving the liability of those who supply goods or products for the use of others to purchasers, users, and bystanders for losses of various kinds resulting from so-called defects in those products.” ’ [Citation.] One may seek recovery in a products liability case on theories of both negligence and strict liability” (italics added)]; Brady v. Calsol, Inc. (2015) 241 Cal.App.4th 1212, 1218 [194 Cal.Rptr.3d 243] [‘“A products liability case may rest on either a theory of strict liability or negligence. ... In asserting a claim for negligence, the plaintiff must prove the defect in the product was due to the defendant’s negligence” (citation omitted)].) Thus, determining whether a claim brought under the Act would have been one for which strict liability would have applied if the claim had been brought at common law, would not be as simple as determining whether the claim was “based on supplying a defective product,” as the HOA suggests.

In addition, while the HOA argues that the Act should be interpreted to provide that a claim pursuant to the Act against a material supplier premised on a defective product should be governed by the same standard of liability as applies to a builder under section 896, a common law claim for strict products liability has elements not present in a statutory claim under section 896, namely, a defective product and resulting damage other than economic loss. (See Jimenez, supra, 29 Cal.4th at p. 484.) The HOA fails to explain why the Legislature would have wanted to subject material suppliers to statutory liability without requiring proof of these elements merely because a plaintiff could allege a common law strict liability claim against the supplier. Moreover, this case shows the difficulties of applying such an interpretation of the Act in determining the standard of proof to be applied at trial to a party’s claims. As noted in part I., ante, the HOA abandoned its strict liability claim on the eve of trial. Under these circumstances, it is far from clear that the HOA’s statutory claim under the Act can be fairly characterized as being a claim “for which strict liability would apply” (§ 936) at common law, even assuming that we agreed with the HOA’s interpretation of the statute.

d. The legislative history

The Act’s legislative history fully supports our interpretation of the Act. Section 936 was initially adopted as part of the original enactment of the Act through Senate Bill No. 800 in 2002. The first sentence of section 936 in the original enactment is identical in all material respects to the current version of the statute. (See Stats. 2002, ch. 722, § 3, p. 4249; former § 936 [“Each and every provision of the other chapters of this title apply to subcontractors, material suppliers, individual product manufacturers, and design professionals to the extent that the subcontractors, material suppliers, individual product manufacturers, and design professionals caused, in whole or in part, a violation of a particular standard as the result of a negligent act or omission or a breach of contract”].) However, as initially adopted in 2002, the final sentence of former section 936 stated, “However, this section does not apply to any subcontractor, material supplier, individual product manufacturer, or design professional to which strict liability would apply.” (Italics added; see Stats. 2002, ch. 722, § 3, p. 4249.)

Although, as both MWI and the HOA agree, the plain language of the final sentence of former section 936 as originally adopted could be read, as the HOA states, to ‘“completely exempt[] nonbuilders [such as material suppliers] from section 936 . . . whenever strict liability would apply,” the legislative history of Senate Bill No. 800 supports the conclusion that the Legislature intended for the standard of liability specified in the first sentence of section 936 to apply to claims brought pursuant to the Act against nonbuilders such as material suppliers. (See, e.g., Sen. Com. on Judiciary, Rep. on Sen. Bill No. 800 (2001-2002 Reg. Sess.) as amended Aug. 28, 2002, p. 5 [‘“the standards are intended to apply to . . . material suppliers ... to the extent that they cause, in whole or in part, a violation of a particular standard as a result of their negligent acts or omissions, or breach of contract”].) In contrast, we have located nothing in the legislative history that would support the conclusion that the Legislature intended to entirely exempt material suppliers, or any other nonbuilders, from statutory liability under section 936 whenever ‘“strict liability would apply.” (§ 936.) Such an exemption would have been extremely significant because it would have had the effect of exempting nonbuilder entities from any liability to claimants under the Act whenever ‘“strict liability would apply,” because there were (and are) no other provisions in the Act defining the liability of such entities. The absence of any mention of such an exemption suggests that the Legislature did not intend for the final sentence to exempt nonbuilders from liability under section 936 whenever “strict liability would apply.” (§ 936.)

In 2003, the Legislature amended the final sentence of section 936 to its present form. (Stats. 2003, ch. 762, § 5, p. 5732.) The statute amended the last sentence of section 936 in relevant part as follows, “However, the negligence standard in this section does not apply to any . . . material supplier . . . [to] with respect to claims for which strict liability would apply.” (Stats. 2003, ch. 762, § 5, p. 5732 [showing additions to the statute in italics and deletions in strike-through].) Numerous legislative committee reports support the conclusion that the Legislature viewed the 2003 amendments to the Act as “technical cleanup” of the original statute adopting the Act the previous year. (Sen. Rules Com., Off. of Sen. Floor Analyses, 3d reading analysis of Assem. Bill No. 903 (2003-2004 Reg. Sess.) as amended Sep. 4, 2003, p. 1.)

The HOA argues that “the [Legislature’s 2003 amendment of Section 936 to clarify removing [s/c] the negligence standard for manufacturers and suppliers (and any strictly liable defendant) may well have been a response to Jimenez[, supra, 29 Cal.4th 473].” In Jimenez, the California Supreme Court concluded that, under the common law, product manufacturers may be held strictly liable in tort for construction defects that cause physical damage to other parts of a house. (Jimenez, supra, 29 Cal.4th at p. 476.) Stated differently, the HOA argues that the Legislature “may” have been motivated by the Jimenez decision to amend section 936 so as to “place[] a [material] supplier ‘on par’ with a builder,” under the Act. The HOA’s argument is unpersuasive.

To begin with, the HOA fails to explain why the Legislature would intend to make material suppliers liable under the Act for a violation of the Act’s standards irrespective of whether they supplied a defective product that resulted in damage other than economic loss merely because the Jimenez court concluded that a manufacturer may be liable where these elements are proven through a common law claim (Jimenez, supra, 29 Cal.4th at p. 476). The HOA’s interpretation of the amendments is also directly contrary to our discussion of the Act and Jimenez in Grey stone. (See Greystone, supra, 168 Cal.App.4th at p. 1216, fn. 14 [“The Legislature’s decision not to apply a strict liability standard[] to product manufacturers is consistent with the holdings [of two cases disapproved in Jimenez]. The common law has expanded the liability of product manufacturers in this regard, albeit subject to the economic loss rule, beyond that provided in section 936” (italics added)].)

Moreover, there is nothing in the legislative history of the 2003 amendments that would support the HOA’s speculation that the Legislature intended such a significant substantive change in the Act by way of the 2003 amendments. Such a change would have been entirely incompatible with the Legislature’s characterization of the amendments as constituting a “technical cleanup.” (Sen. Rules Com., Off. of Sen. Floor Analyses, 3d reading analysis of Assem. Bill No. 903 (2003-2004 Reg. Sess.) as amended Sep. 4, 2003, p. 1.)

Further, the sponsor of Assembly Bill No. 903 (2003-2004 Reg. Sess.), Assemblymember Darrell S. Steinberg, sent a letter to Governor Gray Davis urging the signing of the bill, in which he described the legislation as a “non-controversial bill” that made “various technical changes,” including ‘\c\larify[ing\ that SB 800 did not change the law regarding . . . strict liability.” (Italics added.) (Assemblymember Darrell S. Steinberg, letter to Governor Gray Davis, Sept. 16, 2003.) The Steinberg letter is entirely consistent with our interpretation of the final sentence of section 936 as evincing the Legislature’s intent that the negligence standard specified in the first sentence of section 936 does not apply to common law strict liability claims against material suppliers. Thus, we reject the HOA’s suggestion that the Legislature amended the Act in 2003 with the intention of “placing] a [material] supplier ‘on par’ with a builder.”

e. Greystone

In light of the text, structure, and legislative history of the Act discussed above, we adhere to our conclusion in Greystone that a nonbuilder entity is liable under the Act “only where its ‘negligent act or omission or a breach of contract’ . . . caused a violation of the Act’s standards.” (Greystone, supra, 168 Cal.App.4th at p. 1216, italics omitted.) In Greystone, in reversing a summary judgment in favor of a product manufacturer, this court considered, among other issues, whether the common law economic loss rule precluded a builder from seeking equitable indemnification under the Act from a jointly liable product manufacturer for the cost of repairing damage caused by the manufacturer’s violation of the Act’s standards. (Greystone, at pp. 1213-1220.) We explained that in determining this issue, we first were required to address whether the economic loss rule would preclude a homeowner from collecting such damages in an action against the product manufacturer, since the builder’s ability to pursue an indemnity action against the manufacturer was contingent on the manufacturer and the builder sharing a joint legal obligation to the homeowners. (Id. at p. 1213.) After citing sections 896 and 936, we concluded, “a homeowner may recover economic losses from a product manufacturer[] for a violation of the Act’s standards that is caused by the manufacturer’s negligence or breach of contract.” (Greystone, at pp. 1213-1214, italics added.)

The Greystone court also rejected the manufacturer’s argument that section 936’s reference to the preservation of “common law . . . defenses” permitted the manufacturer to defeat the builder’s claim by assertion of the economic loss doctrine. (See Greystone, supra, 168 Cal.App.4th at pp. 1214-1215.) In rejecting this argument, we stated: “A more reasonable interpretation of section 936 [i.e., one that excluded the economic loss doctrine as a defense that could be asserted in an action premised on § 936] follows from the fact that, while under sections 896 and 942 a builder is strictly liable[] for any violation of the Act’s standards, pursuant to the first sentence of section 936, a product manufacturer is liable only where its ‘negligent act or omission or a breach of contract’ . . . , caused a violation of the Act’s standards. The reference to ‘common law and contractual defenses,’ in the second sentence of section 936 parallels the scope of duty articulated in the first sentence of the section. Thus, for example, in a suit premised on a manufacturer’s negligent act or omission, the manufacturer may assert traditional common law defenses to negligence actions, such as comparative negligence and primary assumption of risk, to the extent that such defenses are ‘applicable’ (§ 936) to the plaintiff’s claim.” (Greystone, supra, at pp. 1216-1217, italics added & omitted, fns. omitted.)

We also relied on the “Act’s explicit adoption of a negligence standard for claims against product manufacturers” (Greystone, supra, 168 Cal.App.4th at p. 1216, fn. 14) in rejecting the manufacturer’s argument that concluding that the economic loss rule did not bar the builder’s indemnity claim “would ‘expand the law of strict product liability beyond tolerable limits’ ” (ibid.). Ultimately, “[w]e conclude[d] that the . . . Act abrogates the economic loss rule in actions brought by homeowners against individual product manufacturers for a violation of the Act’s standards based upon the manufacturer’s negligence or breach of contract.” (Id. at p. 1217, italics added.)

Despite the fact that the Greystone court, on no fewer than four occasions, articulated the standard of liability to be applied to a claim against a nonbuilder brought under the Act (i.e., one premised on a negligence or a breach of contract) (Greystone, supra, 168 Cal.App.4th at pp. 1213-1214, 1216 & fn. 14, 1217), the HOA contends that Greystone is “not authoritative or even applicable here.” In support of this contention, the HOA argues that “Greystone was a[n] equitable indemnity action by a developer[] against its supplier, not a claim by an SB800 ‘claimant.’ ” This argument is entirely unpersuasive because, as the Greystone court explained, whether the builder could assert an indemnity action against the nonbuilder turned in the first instance on whether a homeowner/claimant could state such a claim (Greystone, at p. 1213), and the Greystone court expressly described the standard of liability applicable to a claim by a ‘'homeowner' (ibid., italics added).

The HOA also contends that “Greystone’s comment on the negligence standard in section 936 is dictum, and was not integral to the decision.” “Statements by appellate courts ‘responsive to the issues raised on appeal and . . . intended to guide the parties and the trial court in resolving the matter following . . . remand’ are not dicta.” (Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1158 [163 Cal.Rptr.3d 269, 311 P.3d 184] (Sonic-Calabasas).) Our statements in Greystone on this issue were clearly responsive to the issues presented on appeal, and were intended to guide the proceedings on remand in light of our reversal of a summary judgment. The statements were not dicta. (See Sonic-Calabasas, at pp. 1158-1159.)

Finally, while the Greystone court quoted the entirety of section 936, including the final sentence on which the HOA bases its argument (Greystone, supra, 168 Cal.App.4th at pp. 1211-1212), the HOA is correct to note that the Greystone court did not discuss the final sentence of section 936. However, for the reasons stated above, an analysis of the final sentence, together with the remaining provisions of the Act, reinforces the correctness of our conclusion in Greystone that a nonbuilder entity is liable under the Act “only where its ‘negligent act or omission or a breach of contract’ . . . caused a violation of the Act’s standards.” (Greystone, at p. 1216, italics omitted, quoting § 936.)

C. There is no evidence in the record that MWI caused, in whole or in part, a violation of a standard in the Act as the result of its negligent act or omission or a breach of contract

In light of our interpretation of the Act provided in part III.B., ante, we must consider whether there is sufficient evidence in the record to support a verdict that MWI caused, in whole or in part, a violation of a standard in the Act as the result of its negligent act or omission or a breach of contract. (See pt. III.A., ante [outlining standard of review applicable to the review of order denying motion for a directed verdict and order denying motion for JNOV].)

We begin by observing that, until this court’s request for supplemental briefing on this issue, it appeared to be undisputed that the record lacked such evidence. MWI repeatedly argued in the trial court that the Act required that the HOA prove that MWI caused, in whole or in part, a violation of a standard in the Act as the result of its negligent act or omission or a breach of contract. MWI raised this argument in a jury instruction conference, in its motion for a directed verdict, and in its motion for JNOV. In responding to MWI’s contentions, the HOA never argued in the trial court that it had presented sufficient evidence under this interpretation of the Act. Instead, the HOA argued only that the Act did not require it to present such evidence. The jury was not instructed that the HOA was required to prove that MWI’s negligence or breach of contract caused a violation of the Act’s standards and the jury did not render any findings on these issues.

At the hearing on the motion for JNOV, MWI’s counsel argued that in Greystone, this court outlined the applicable standard of proof and that the HOA’s “proof failed.” MWI’s counsel stated that there was thus no reason to revisit MWI’s statutory interpretation argument with respect to its new trial motion. The trial court responded, “If you’re right, the JNOV is granted and you never get to the new trial. I agree with that.”

In its opening brief in this court, after presenting its statutory interpretation argument, MWI argued that the trial court erred in denying its motion for a directed verdict and motion for JNOV due to the HOA’s failure of proof. In its respondent’s brief, the HOA offered only the statutory interpretation argument that we have rejected in part III.B., ante, and presented no argument that the record contained the evidence of a negligent act or omission or breach of contract by MWI that MWI argued is required.

However, in its supplemental brief, the HOA contends that the record does contain sufficient evidence to support the verdict. We consider each of the HOA’s arguments pertaining to this issue.

The HOA argues that “the record . . . supports a strong inference of a ‘negligent act or omission’ by MWI.”

“ ‘ “Negligence is either the omission of a person to do something which an ordinarily prudent person would have done under given circumstances or the doing of something which an ordinarily prudent person would not have done under such circumstances. It is not absolute or to be measured in all cases in accordance with some precise standard but always relates to some circumstance of time, place and person.” ’ ” (Minnegren v. Nozar (2016) 4 Cal.App.5th 500, 507 [208 Cal.Rptr.3d 655].) Or, stated similarly, “ ‘Negligence is the failure to use reasonable care to prevent harm to oneself or to others. [¶] A person can be negligent by acting or by failing to act. A person is negligent if he or she does something that a reasonably careful person would not do in the same situation or fails to do something that a reasonably careful person would do in the same situation.’ ” (ibid., quoting CACI No. 401.)

The HOA offers two arguments in support of its contention that the record contains evidence of MWI’s negligent acts or omissions sufficient to support the verdict. First, the HOA cites evidence supporting a finding that the pipes supplied by MWI leaked and that the pipes contained “manufacturing . . . defects.” The HOA maintains that “[djrain pipes do not leak their contents into the walls of a structure within a few years of construction in the absence of negligence.” Even assuming that the record would support a finding that the manufacturer of the pipes was negligent, the question we must determine is whether there is evidence that MWI, a supplier of the pipes, was negligent. On this question, the HOA does not identify any evidence that MWI failed to supply the type of pipe that was ordered, acted unreasonably in failing to detect any manufacturing defects present in the pipe, or damaged the pipe in transporting it. In sum, the HOA makes no persuasive argument that the record contains evidence that MWI’s negligence as a supplier was responsible for the “manufacturing . . . defects” that the HOA refers to in its supplemental brief. (Italics added.)

The only other evidence in the record that the HOA cites in support of its contention that MWI was negligent is the testimony of John Morally, MWI’s founder. The HOA notes that Morally testified that in 1998 or 1999, he traveled to China and went to a foundry where the type of pipe used in the project (Wanze pipe) was manufactured, and that in 2002, MWI began importing Wanze pipe into the United States. This testimony clearly is not sufficient to support a finding that MWI ‘“caused, in whole or in part, a violation of a particular standard as the result of a negligent act or omission.” (§ 936.) Accordingly, we reject the HOA’s contention that there is sufficient evidence in the record to support a verdict that MWI caused, in whole or in part, a violation of a standard in the Act as the result of its negligence.

The HOA also contends that ‘“[t]he record supports [a finding] that the SB800 violation was caused, at least in part, by MWI’s breach of a contract—namely its express and implied warranties.” With respect to the HOA’s implied warranty theory, the HOA contends that MWI breached the implied warranty of fitness under California Uniform Commercial Code section 2314, subdivision (2)(c). The HOA never presented this theory of liability in the trial court or in its initial briefing on appeal. ‘“[N]ew theories of liability, may not be asserted for the first time on appeal.” (Bardis v. Oates (2004) 119 Cal.App.4th 1, 13-14, fn. 6 [14 Cal.Rptr.3d 89].) Further, in its supplemental brief, the HOA fails to outline the elements of such a claim or to demonstrate how the evidence presented at trial was sufficient to prove each element. (See CACI No. 1231 [‘“Implied Warranty of Merchantability— Essential Factual Elements,” listing six elements, including that the goods ”w[ere] not fit for the ordinary purposes for which such goods are used”].) Under these circumstances, we conclude that the HOA has not demonstrated that the record contains sufficient evidence to support the judgment on a theory that was never prese