§ 12-1362 — Dwelling action; notice of intent to repair or replace; jurisdictional prerequisite; insurance; bifurcated trial; legislative intent

A. Except with respect to claims for alleged construction defects involving an immediate threat to the life or safety of persons occupying or visiting the dwelling, a purchaser must first comply with this article before filing a dwelling action.

B. A seller and the seller's construction professional who receive a written notice of claim pursuant to section 12-1363 have a right pursuant to section 12-1363 to repair or replace any alleged construction defects after sending or delivering to the purchaser a written notice of intent to repair or replace the alleged construction defects. The seller and the seller's construction professional do not need to repair or replace all of the alleged construction defects. A purchaser may not file a dwelling action until the seller and the seller's construction professional have completed all intended repairs and replacements of the alleged construction defects.

C. If a seller or a seller's construction professional presents a notice received pursuant to section 12-1363 to an insurer that has issued an insurance policy to the seller or the seller's construction professional that covers the seller's or the seller's construction professional's liability arising out of a construction defect or the design, construction or sale of the property that is the subject of the notice, the insurer must treat the notice as a notice of a claim subject to the terms and conditions of the policy of insurance. An insurer must work cooperatively and in good faith with the insured seller or the seller's construction professional within the time frames specified in this article to effectuate the purpose of this article. This subsection does not affect the coverage available under the policy of insurance or create a cause of action against an insurer whose actions were reasonable under the circumstances, notwithstanding its inability to comply with the time frames specified in section 12-1363.

D. Subject to Arizona rules of court, the identified construction professionals shall be joined as third-party defendants, if feasible. Subject to Arizona rules of court, for each construction defect found to exist, the trier of fact in any dwelling action filed pursuant to this article shall first determine if a construction defect exists and the amount of damages caused by the defect and identify each seller or construction professional whose conduct, whether by action or omission, may have caused, in whole or in part, any construction defect. The purchaser has the burden of proof to demonstrate the existence of a construction defect and the amount of the damages caused by the construction defect. The trier of fact shall thereafter determine the relative degree of fault of any defendant or third-party defendant. The trier of fact shall allocate the pro rata share of liability based on relative degree of fault. The seller has the burden to prove the pro rata share of liability of any third-party defendant. The determination of whether a construction defect exists, the amount of damages caused by the construction defect and who may have caused, in whole or in part, the construction defect shall be bifurcated from and take place in a separate phase of the trial or alternative dispute resolution process from the determination of the relative degree of fault of any defendant or third-party defendant, unless the court finds that bifurcation is not appropriate.

E. The legislature finds and determines that given the complexity and multiparty nature of dwelling actions, it is important to provide a streamlined process for the resolution of construction defect claims and indemnification claims between the seller and the construction professionals that is efficient, economical and convenient for the parties involved. The legislature further finds and determines that for the majority of dwelling actions, bifurcation of the issues of the existence of a defect and causation from the issue of apportionment of fault is more efficient, fair and convenient for the parties. It is the legislature's intent that the bifurcation process prescribed in subsection D of this section does not alter the seller's liability under the seller's implied warranty to the purchaser. It is the legislature's intent that the bifurcation process prescribed in subsection D of this section be used and that the issues of existence of a construction defect, damages, causation and apportionment of fault be tried in one trial unless the court finds that the circumstances of the particular case at issue render bifurcation inappropriate.