Appellate Court Upholds Release Pertaining to Future Claims

In Belasco v. Wells, a California Appellate Court recently barred construction defect claims against a home builder where a buyer had previously signed a settlement agreement containing a release. In Belasco, plaintiff David Belasco, an attorney, purchased a home from defendant in 2004. In 2006, Belasco filed a construction defect claim against Wells with the State Contractors Board. The parties settled the dispute by written agreement. Wells paid compensation to Belasco in lieu of repairs and executed a release containing a Civil Code §1542 waiver. A waiver of Civil Code §1542 prohibits future and unknown claims.

In 2012, Belasco sued Wells and Wells’ surety claiming alleged defects in the home’s roof. Belasco alleged that Wells installed the roof “in-house,” but later misled him by including on the building permit the name of the roofer who had unsuccessfully bid on the project. The court granted summary judgment in favor of the defendants on the ground that the 2006 settlement, which included an arm’s length, comprehensive release and waiver of all claims, known and unknown, barred Belasco’s subsequent suit as a matter of law. The court of appeal affirmed, in part, holding that the trial court properly granted summary judgment based on the express language of the 2006 settlement.

This case emphasizes the importance of preparing and structuring an appropriate release of liability. If a release is properly drafted, it can effectively include known and unknown claims.

Shannon B. Jones, Partner, sbj@sbj-law.com