sb440 sub1 eng

ENGROSSED
COMMITTEE SUBSTITUTE
FOR

Senate Bill No. 440
(By Senators Rowe, White, Chafin and Guills)
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[Originating in the Committee on the Judiciary;
reported February 27, 2003.]
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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 establishing the contractors notice and opportunity to cure act.

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. CONTRACTORS NOTICE AND OPPORTUNITY TO CURE ACT.
§21-11A-1. Definitions.
(1) "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.

(2) "Association" means a partnership, limited partnership or any other form of unincorporated enterprise owned or conducted by two or more persons.

(3) "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.

(4) "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:

(i) Defective material, products or components used in the construction of residential improvements;

(ii) Violation of the applicable codes in effect at the time of construction of residential improvements;

(iii) 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;

(iv) 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.

(5) "Contractor" means any person, firm, partnership, corporation, association or other organization that is licensed under article eleven of this chapter and engaged in this state in the business of designing, developing, constructing or selling dwellings.

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

(7) "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 includes 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.

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

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

(10) "Supplier" means a person who provides materials, equipment or other supplies for the construction of a dwelling.
§21-11A-2. 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-3. Article not applicable to personal injury/death claims.
Nothing in this article applies to actions arising out of claims for:

(1) Personal injury;

(2) Death; or

(3) Consequential damages arising from a construction defect.
§21-11A-4. Notice and opportunity to repair.

(a) In every action brought against a contractor arising out of the construction of a dwelling, the claimant shall serve written notice of claim on the contractor no later than ninety days before filing an action. 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 applicable evidentiary rules.

(d) Within thirty days after service of the notice of claim by the 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 subdivision (2), subsection (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 the 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 subdivision (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 professional for the claim described in the initial notice of claim required by subsection (a) or (b) of this section 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 the 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 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

(2) 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) of this section 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-5. 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 four 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 four of this article; and

(2) A reasonable opportunity to repair the alleged construction defect in the manner provided in section four of this article.
§21-11A-6. Insurance; performance requirements.
(a) A contractor, subcontractor, supplier or design professional who receives notice of a constructional defect pursuant to section four 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 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-7. Contract of sale; provisions.

(a) Upon entering into a contract for sale, construction or substantial remodeling 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. The 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 Code §21-11A

{State Law} 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.

(c) 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;

(2) A brief description of the work performed by each subcontractor identified pursuant to this section.
§21-11A-8. Actions of associations.
(a) A person may 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 may not accept anything of value, given to him or her in exchange for encouraging or discouraging the association that he or she manages, to file a claim for damages arising from a construction defect.

(c) A member or officer of an association's executive board may not accept anything of value, given to him or her in exchange for encouraging or discouraging the association of which he or she 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 subsection (a), (b) or (c) of this section is guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than five hundred dollars or confined in the county or regional jail not more than one year, or both fined and confined.

(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 known;

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

(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 owners would be required to disclose upon the sale of the property.

(g) An association or an attorney for an association may 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 as required by the division of labor;

(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 the 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 the 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 the tests and to repair any damage resulting from the tests.

(h) An association may commence an action only upon a vote or written agreement of the owners of the units, where at least a majority of the votes of the members of the association are allocated. In this case, the association shall provide written notice to the owner of each unit of the meeting where 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' owners, employ a contractor and other persons that are necessary to make 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.