California's Fifth Appellate District Enters the Fray On The Enforceability Of The Pre-Litigation Process

Construction Law E-Alert (March 2014)

On March 24, 2014, the Fifth Appellate District waded into the controversy by deciding whether homeowners were required to follow contractual – as opposed to statutory – pre-litigation procedures.  In The McCaffrey Group, Inc. v. Superior Court of California, County of Fresno (Jesus Cital) (Mar. 24, 2014), No. F066080) __ Cal.App.4th __ [2014 WL 1153392] ("McCaffrey"), the Court sided with developers, rejecting arguments that contractual pre-litigation procedures were unconscionable and inapplicable – an argument advanced by the homeowners on the grounds that the procedures failed to track the statutory provisions and were contained in multi-page, single-spaced documents they never read.  The Court enforced the contractual pre-litigation procedures determining that they were fair.  In the end, however, the decision is limited, as the Court was careful to sidestep the issue of whether other contractual provisions, such as one concerning judicial reference, were equally enforceable.