hb2553 intr

H. B. 2553
(By Mr. Speaker, Mr. Kiss, and Delegates Kominar, Cann,
Border, Webb, Amores and Pino)

[Introduced January 23, 2003; referred to the

Committee on the Judiciary.]

A BILL to amend chapter twenty-one of the code of West Virginia, one thousand nine hundred thirty-one, as amended, by adding thereto a new article, designated article eleven-a, relating to construction defect claims in dwellings asserting property loss and damage.

Be it enacted by the Legislature of West Virginia:

That chapter twenty-one of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended by adding thereto a new article, designated article eleven-a, to read as follows:

ARTICLE 11A. NOTICE AND OPPORTUNITY TO CURE CONSTRUCTION DEFECTS.

§21-11A-1. Legislative declaration.

The legislature finds, declares, and determines that West Virginia needs an alternative method to resolve legitimate construction disputes that would reduce the need for litigation while adequately protecting the rights of homeowners. The legislature declares that an effective alternative dispute resolution mechanism in certain construction defect matters should involve the claimant filing a notice of claim with the construction professional that the claimant asserts is responsible for the defect, and providing the construction professional with the opportunity to resolve the claim without litigation.
§21-11A-2. Applicability of definitions.

For the purposes of this article, the words or terms defined in this article, and any variation of those words or terms required by the context, have the meanings ascribed to them in this article. These definitions are applicable unless a different meaning clearly appears from the context.

(a) "Action" means any civil lawsuit or action or arbitration proceeding for damages or indemnity asserting a claim for injury or loss to a dwelling or personal property caused by an alleged defect arising out of or related to the design, construction, condition or sale of the dwelling or a remodel of a dwelling.

(b) "Association" means a unit owner's association organized under section one hundred one, article three, chapter thirty-six-b of this code.

(c) "Claimant" means a homeowner, including a subsequent purchaser, or association who asserts a claim against a construction professional concerning a defect in the design, construction, condition or sale of a dwelling or in the remodel of a dwelling.

(d) "Construction defect" means a deficiency in, or a deficiency arising out of, the design, specifications, surveying, planning, supervision, or observation of construction, or construction of residential improvements that results from any of the following:

(1) Defective material, products, or components used in the construction of residential improvements.

(2) Violation of the applicable codes in effect at the time of construction of residential improvements.

(3) Failure of the design of residential improvements to meet the applicable professional standards of care at the time of governmental approval of the design of residential improvements.

(4) Failure to construct residential improvements in accordance with accepted trade standards for good and workmanlike construction at the time of construction. Compliance with the applicable codes in effect at the time of construction shall conclusively establish construction in accordance with accepted trade standards for good and workmanlike construction, with respect to all matters specified in those codes.

(e) "Contractor" means any person, firm, partnership, corporation, association or other organization that is engaged in the business of designing, developing, constructing or selling dwellings.

(f) "Design Professional" means a person licensed in the state as an architect, interior designer, landscape architect, engineer, or surveyor.

(g) "Dwelling" means a single-family house, duplex, or multifamily unit designed for residential use in which title to each individual unit is transferred to the owner under a condominium or cooperative system and shall include common areas and improvements that are owned or maintained by an Association or by members of an Association. A Dwelling includes the systems, other components and improvements that are part of a single or multifamily unit at the time of construction.

(h) "Service" means personal service or delivery by certified mail, return receipt requested, to the last known address of the addressee.

(i) "Subcontractor" means a contractor who performs work on behalf of another contractor in the construction of a dwelling.

(j) "Supplier" means a person who provides materials, equipment, or other supplies for the construction of dwelling.

(k) "Written notice" means a required notice under this article, served by personal service or by certified mail, return receipt requested.
§21-11A-3. Dwelling action; dismissal without prejudice.

If a claimant files a dwelling action without first complying with the provisions of this article, on application by a party to the action, the court shall dismiss the action, without prejudice, and the action may not be refiled until the claimant has complied with the requirements of this article.
§21-11A-4. Article not applicable to personal injury or death claims.

Nothing in this article shall apply to actions arising out of claims for personal injury or death.
§21-11A-5. Notice and opportunity to repair.

(a) In every action brought against a contractor arising out of the construction of a dwelling, the claimant shall, no later than ninety days before filing an action, serve written notice of claim on the contractor. The notice of claim shall state that the claimant asserts a construction defect claim and the notice of claim shall describe the claim or claims in reasonable detail sufficient to determine the general nature of any alleged construction defects and a description of the results of the defects, if known.

(b) Within fifteen days after the initial service of the notice of claim required in subsection (a) of this section, the contractor shall forward a copy of the notice to each subcontractor, supplier, and design professional who the contractor reasonably believes is responsible for a defect specified in the notice and include with the notice the specific defect for which the contractor believes the subcontractor, supplier, or design professional is responsible.

(c) On the request of the contractor, subcontractor, supplier or design professional who has received a notice pursuant to subsection (a) or (b) of this section, the claimant shall provide to the contractor, subcontractor, supplier or design professional any evidence that depicts the nature and cause of the defect and the nature and extent of repairs necessary to remedy the defect, including expert reports, photographs, and videotapes, if that evidence would be discoverable under the West Virginia rules of civil procedure.

(d) Within thirty days after service of the notice of claim by claimant required in subsection (a) or (b) of this section, each contractor, subcontractor, supplier, or design professional that has received a notice of claim shall serve a written response on the claimant by registered mail or personal service. The written response shall:

(1) Offer to compromise and settle the claim by monetary payment without inspection;

(2) Propose to inspect the dwelling that is the subject of the claim; or

(3) State that the contractor, subcontractor, supplier, or design professional disputes the claim and will neither remedy the alleged construction defect nor compromise and settle the claim.

(e) If the contractor, subcontractor, supplier, or design professional disputes the claim pursuant to subdivision(3), Subsection (d) of this section, and will neither remedy the alleged construction defect nor compromise and settle the claim, or does not respond to the claimant's notice of claim within the time stated in subsection (d) of this section, the claimant may bring an action against the contractor, subcontractor, supplier, or design professional for the claim described in the notice of claim, without further notice.

(f) If the claimant rejects the inspection proposal or the settlement offer made by the contractor, subcontractor, supplier, or design professional pursuant to subsection (d) of this section, the claimant shall serve written notice of the claimant's rejection on the contractor, subcontractor, supplier, or design professional. The notice shall include the basis for the claimant's rejection of the contractor, subcontractor, supplier, or design professional's proposal or offer.

(g) After service of the rejection required by subsection (f) of this section, the claimant may bring an action against the contractor, subcontractor, supplier, or design professional for the claim(s) described in the initial notice of claim required by subsection (a) or (b) of this section, without further notice.

(h) If the claimant elects to allow the contractor, subcontractor, supplier, or design professional to inspect the dwelling in accordance with the contractor, subcontractor, supplier, or design professional's proposal pursuant to subsection (2), section (d) of this section, the claimant shall provide the contractor, subcontractor, supplier, or design professional and its contractors or other agents reasonable access to the claimant's residence during normal working hours to inspect the premises and the claimed defect to determine the nature and cause of the alleged defects and the nature and extent of any repairs or replacements necessary to remedy the alleged defects.

(i) Within fourteen days following completion of the inspection, the contractor, subcontractor, supplier, or design professional shall serve on the claimant:

(1) A written offer to remedy the construction defect at no cost to the claimant, including a report of the scope of the inspection, the findings and results of the inspection, a description of the additional construction necessary to remedy the defect described in the claim, and a timetable for the completion of such construction;

(2) A written offer to compromise and settle the claim by monetary payment; or

(3) A written statement that the contractor, subcontractor, supplier, or design professional will not proceed further to remedy the defect.

(j) If a claimant accepts a contractor, subcontractor, supplier, or design professional's offer made pursuant to subdivisions (1) or (2), subsection (i) of this section, and the contractor, subcontractor, supplier, or design professional does not proceed to make the monetary payment or remedy the construction defect within the agreed timetable, the claimant may bring an action against the contractor, subcontractor, supplier, or design professional for the claim described in the initial notice of claim required by subsection (a) or (b) of this section without further notice.

(k) If a claimant receives a written statement that the contractor, subcontractor, supplier, or design professional will not proceed further to remedy the defect, the claimant may bring an action against the contractor, subcontractor, supplier, or design profession for the claim described in the initial notice of claim required by subsection A or subsection B without further notice.

(l) If the claimant rejects the offer made by the contractor, subcontractor, supplier, or design professional to either remedy the construction defect or to compromise and settle the claim by monetary payment, the claimant shall serve written notice of the claimant's rejection on the contractor, subcontractor, supplier, or design professional. The notice shall include the basis for the claimant's rejection of the contractor, subcontractor, supplier, or design professional's offer. After service of the rejection the claimant may bring an action against contractor, subcontractor, supplier, or design professional for the claim described in the notice of claim without further notice.

(m) If a claimant unreasonably rejects an offer made as provided by this section or does not permit the contractor, subcontractor, supplier, or design professional a reasonable opportunity to repair the defect pursuant to an accepted offer of settlement, the claimant may not recover an amount in excess of:

(1) The reasonable cost of the offered repairs which are necessary to cure the construction defect and which are the responsibility of the contractor, subcontractor, supplier, or design professional; or

(2) the amount of the monetary settlement offered by the contractor, subcontractor, supplier, or design professional.

(n) Any claimant accepting the offer of the contractor, subcontractor, supplier, or design professional to remedy the construction defects shall do so by serving the contractor, subcontractor, supplier, or design professional with a written notice of acceptance within a reasonable period of time after receipt of the offer but no later than thirty days after receipt of the offer.

(o) If a claimant accepts a contractor, subcontractor, supplier, or design professional's offer to repair a defect described in an initial notice of claim, the claimant shall provide the contractor, subcontractor, supplier, or design professional and its contractors or other agents reasonable access to the claimant's residence during normal working hours to perform and complete the construction by the timetable stated in the offer.

(p) A claimant's failure to do either or both of the following is admissible in any dwelling action and creates a rebuttable presumption that the claimant's damages could have been mitigated:

(1) Allow a reasonable inspection requested by the contractor, subcontractor, supplier, or design professional; or

(3) Provide a good faith, written response to a contractor, subcontractor, supplier, or design professional's offer

(q) Absent good cause, the contractor, subcontractor, supplier, or design professional's failure to respond in good faith to the claimant's notice pursuant to subsection A shall preclude the contractor, subcontractor, supplier, or design professional from asserting that the claimant did not comply with the provisions of this article.

(r) A claimant's written notice pursuant to subsection (a) of this section tolls the applicable statute of limitations until ninety days after the contractor, subcontractor, supplier, or design professional receives the notice.

§21-11A-6. Additional construction defects; additional notice and opportunity to repair required.

A construction defect which is discovered after a claimant has provided a contractor with the claim notice required in section five of this article may not be alleged until the claimant has given the contractor, subcontractor, supplier, or design professional who performed the original construction:

(1) Written notice of the alleged defect required by section five of this article; and

(2) A reasonable opportunity to repair the alleged construction defect in the manner provided in section five of this article.

§21-11A-7. Insurance; performance requirements.

(a) A contractor, subcontractor, supplier, or design professional who receives notice of a constructional defect pursuant to section five of this article may present the notice to an insurer who issued a policy of insurance covering all or part of the conduct or business of the contractor, subcontractor, supplier, or design professional.

(b) A notice provided to an insurer pursuant to subsection A of this section:

(1) Constitutes the making of a claim under the policy; and

(2) Requires the contractor, subcontractor, supplier, or design professional and the insurer to perform any obligations or duties required by the policy upon the making of a claim.
§21-11A-8. Contract of sale; provisions.

(a) Upon entering into a contract for sale, construction, or substantial remodel of a dwelling, the contractor, subcontractor, supplier, or design professional shall provide notice to the owner of the dwelling of the contractor, subcontractor, supplier, or design professional's right to offer to cure construction defects before a claimant may commence litigation against the contractor, subcontractor, supplier, or design professional. Such notice shall be conspicuous and may be included as part of the underlying contract.

(b) The notice required by subsection (a) of this section shall be in substantially the following form:
WEST VIRGINIA STATE LAW, AS SET FORTH IN CHAPTER 21, ARTICLE 11A OF THE WEST VIRGINIA CODE, CONTAINS IMPORTANT REQUIREMENTS YOU MUST FOLLOW BEFORE YOU MAY FILE A LAWSUIT FOR DEFECTIVE CONSTRUCTION AGAINST THE CONTRACTOR WHO CONSTRUCTED YOUR HOME. NINETY DAYS BEFORE YOU FILE YOUR LAWSUIT, YOU MUST DELIVER TO THE CONTRACTOR A WRITTEN NOTICE OF ANY CONSTRUCTION CONDITIONS YOU ALLEGE ARE DEFECTIVE AND PROVIDE YOUR CONTRACTOR AND ANY SUBCONTRACTORS, SUPPLIERS, OR DESIGN PROFESSIONALS THE OPPORTUNITY TO MAKE AN OFFER TO REPAIR OR PAY FOR THE DEFECTS. YOU ARE NOT OBLIGATED TO ACCEPT ANY OFFER MADE BY THE CONTRACTOR OR ANY SUBCONTRACTORS, SUPPLIERS, OR DESIGN PROFESSIONALS. THERE ARE STRICT DEADLINES AND PROCEDURES UNDER STATE LAW, AND FAILURE TO FOLLOW THEM MAY AFFECT YOUR ABILITY TO FILE A LAWSUIT
§21-11A-9. Contractor notification requirements.

Each contractor who constructs a new residential dwelling shall, within thirty days after the close of the sale, provide in writing to the initial purchaser of the residence:

(1) The name, license number, business address, and telephone number of each subcontractor or design professional who performed any work related to the design or construction of the dwelling; and

(2) A brief description of the work performed by each subcontractor identified pursuant to this section
§21-11A-10. Actions of associations.

(a) A person shall not provide or offer to provide anything of monetary value to a property manager of an association or to a member or officer of an executive board to induce the property manager, member or officer to encourage or discourage the association to file a claim for damages arising from a construction defect.

(b) A property manager shall not accept anything of value given to him in exchange for encouraging or discouraging the association that he manages to file a claim for damages arising from a construction defect.

(c) A member or officer of an executive board shall not accept anything of value given to him in exchange for encouraging or discouraging the association of which he is a member or officer of the executive board to file a claim for damages arising from a constructional defect

(d) A person who willfully violates subsections (a), (b) or (c) of this section shall be guilty of a misdemeanor.

(e) An association may bring an action to recover damages resulting from construction defects in any of the units, common elements or limited common elements of the common-interest community only:

(1) If the association first obtains the written approval of each unit's owner whose unit or interest in the common elements or limited common elements will be the subject of the action or claim;

(2) Upon a vote of the units' owners to which at least a majority of the votes of the members of the association are allocated; and

(3) Upon a vote of the executive board of the association.

(f) If an action is brought by an association to recover damages resulting from construction defects in any of the units, common elements or limited common elements of the common-interest community, the attorney representing the association shall provide to the executive board of the association and to each unit's owner a statement that includes, in reasonable detail:

(1) The defects and damages or injuries to the units, common elements or limited common elements;

(2) The cause of the defects, if the cause is known;

(3) The nature and the extent that is known of the damage or injury resulting from the defects;

(4) The location of each defect within the units, common elements or limited common elements, if known;

(5) A reasonable estimate of the cost of the action or mediation, including reasonable attorney's fees;

(6) An explanation of the potential benefits of the action or mediation and the potential adverse consequences if the association does not commence the action or submit the claim to mediation or if the outcome is not favorable to the association; and

(7) All disclosures that the unit owner's is required to make upon the sale of the property.

(g) An association or an attorney for an association shall not employ a person to perform destructive tests to determine any damage or injury to a unit, common element or limited common element caused by a constructional defect unless:

(1) The person is licensed as a contractor pursuant to article eleven, chapter twenty-one of this code;

(2) The association has obtained the prior written approval of each unit's owner whose unit or interest in the common element or limited common element will be affected by such testing;

(3) The person performing the tests has provided a written schedule for repairs;

(4) The person performing the tests is required to repair all damage resulting from such tests in accordance with state laws and local ordinances relating thereto; and

(5) The association or the person so employed obtains all permits required to conduct such tests and to repair any damage resulting from such tests.

(h) An association may commence an action only upon a vote or written agreement of the owners of the units to which at least a majority of the votes of the members of the association are allocated. In such a case, the association shall provide written notice to the owner of each unit of the meeting at which the commencement of an action is to be considered or action is to be taken within twenty-one calendar days before the meeting.

(i) The executive board of an association may, without giving notice to the units' owner's, employ a contractor and such other persons as are necessary to make such repairs to a unit or common element within the common-interest community as are required to protect the health, safety and welfare of the units' owners.

NOTE: The purpose of this bill is to establish a procedure to resolve disputes over construction defects prior to commencing litigation. It provides for notice and an opportunity to cure a defect prior to bringing suit.

This section is new; therefore, strike-throughs and underscoring have been omitted.