Travelers Indem. Co. of Illinois v. City of Redondo Beach, BO75769
| Decision Date | 06 October 1994 |
| Docket Number | No. BO75769,BO75769 |
| Citation | 28 Cal.App.4th 1432,34 Cal.Rptr.2d 337 |
| Court | California Court of Appeals Court of Appeals |
| Parties | The TRAVELERS INDEMNITY COMPANY OF ILLINOIS, a corporation, Plaintiff and Appellant, v. CITY OF REDONDO BEACH, et al., Defendants and Respondents. |
Breidenbach, Swainston, Crispo & Way, Thomas A. Kearney, Richard E. Rico, Paul A. Alvarez and Ted H. Luymes, Los Angeles, for plaintiff and appellant.
Dewey Ballantine, David S. McLeod, Jeffrey R. Witham, John P. Flynn, Patrick S. Schoenburg, Los Angeles, Waters, McCluskey & Boehle, Santa Anna, Michael T. Montgomery, Flynn, Delich & Wise, Erich P. Wise, Long Beach, Nicholas Politis, Hanna & Morton, Bela G. Lugosi, Los Angeles, Burkley CROSKEY, Associate Justice.
Greenberg & Fields, Torrance, Dana K. Anderson, Carlsmith, Ball, Wichman, Murray, Case, Mukai & Ichiki and Clark Heggeness, Long Beach, for defendant and respondent Texaco Exploration and Production Inc.
The Travelers Indemnity Company of Illinois ("Travelers") appeals from an order dismissing its first amended complaint after the demurrer of the respondents 1 was sustained without leave to amend.
The pivotal issue in this case relates to the application of the 180-day limitations period set out in Code of Civil Procedure section 349 3/4. We conclude that this special legislation, enacted for expressly stated reasons of public policy to limit the period in which an action can be brought for an "underground trespass, use or occupancy [caused] by means of a well drilled for oil or gas ...," does not apply. We cannot broadly read this statute, as respondents would have us do, to impose on nearly every claim arising from an oil drilling operation a six month limitation period. We therefore reverse the order of dismissal except for the trespass cause of action, which is plainly covered by section 349 3/4, and one other count, which is defective for a separate and independent reason. As to those two counts we affirm the order.
FACTUAL AND PROCEDURAL BACKGROUND 2
On January 17, 1988, a powerful winter storm caused ocean waves to overtop the breakwater in Redondo Beach Harbor. This resulted in substantial damage to the Portofino Inn with an attendant loss to its owners in excess of $10 million. Travelers, the Inn's property insurer, paid this loss and became subrogated to the Inn's rights against any third parties who may have had some legal responsibility for the damage.
In pursuit of its subrogation claim, Travelers, on January 31, 1989, filed suit against the City of Redondo Beach ("City") and a number of Doe defendants alleging that the breakwater had not been constructed high enough to restrain the storm waves. Travelers sought recovery on causes of action for (1) dangerous condition of public property (Gov.Code, § 835), (2) inverse condemnation, (3) breach of lease and (4) negligence (Gov.Code, § 815.2). It is not disputed that, at the time this complaint was filed, Travelers was unaware that respondents' actions and conduct might have contributed to the loss suffered by its insured.
In February 1991, during discovery which it was monitoring in a related case, Travelers learned for the first time that an expert, identified in such related case, 3 was prepared to testify that the breakwater had subsided approximately two feet after its original construction due to the oil drilling activities beneath Redondo Beach Harbor conducted by a number of oil companies pursuant to contracts and lease agreements with the City. Further investigation by Travelers developed information demonstrating that the respondents had, prior to January 17, 1988, been engaged in drilling operations and oil extraction activities from beneath an area of Redondo Beach Harbor which included the breakwater.
Based on this information, Travelers filed a motion on January 8, 1992, in which they sought leave to amend the original complaint to add the respondent oil companies as defendants and to allege six additional theories of recovery: (1) negligence, (2) trespass, (3) Respondents demurred to this pleading, contending that the 180-day statute of limitations of Code of Civil Procedure section 349 3/4 4 barred the four causes of action for trespass, interference with lateral and subjacent support, ultrahazardous activity and the violation of Harbors and Navigation Code section 294. On May 15, 1992, the trial court sustained respondents' demurrers to each of these causes of action without leave to amend. That left the two remaining counts for negligence and nuisance. On June 10, 1992, the respondents filed a demurrer to these counts as well, relying again on section 349 3/4.
absolute liability for interference with lateral and subjacent support, (4) strict liability for ultrahazardous activity, (5) violation of Harbors and Navigation Code section 294, and (6) nuisance. Travelers argued in support of its motion that its recent discovery of this new information, and the fact that the claims would "relate back" to the original filing date, would justify the filing of the amendment. The trial court agreed, the motion was granted and the first amended complaint was filed on January 28, 1992
On October 23, 1992, the trial court overruled this demurrer, holding that section 349 3/4 did not apply. 5 The respondents immediately requested reconsideration arguing that since the trial court in the state court National Union case (see fn. 3, ante ) had sustained this very same demurrer, the ruling in this case was inconsistent and should be changed. Apparently giving little consideration to the possibility that its original ruling was correct (see fn. 5, ante ), and that of the judge in the National Union matter was wrong, the trial court granted the respondents' reconsideration motion and, upon reconsideration, reversed its earlier ruling and sustained the demurrer to the negligence and nuisance counts without leave to amend. On April 1, 1993, the court filed its order dismissing the action as to the respondents. This timely appeal followed.
CONTENTIONS
This appeal is essentially about the timeliness of Travelers' complaint. The central Travelers contends that section 349 3/4 simply has no application to this case. Indeed, Travelers argues, the fundamental thrust of the relevant portion of that statute was directed at actions for unintentional underground trespass caused by "slant" or "whipsaw" drilling activities of an oil driller which succeeded in pumping oil from the property of another. Such a factual scenario has nothing to do with this case. Therefore, respondents' demurrer based on this limitations statute should have been overruled as to all of Travelers' causes of action.
issue presented is whether section 349 3/4 applies to all of Travelers' causes of action. If it does, then the trial court was correct and its order of dismissal must be affirmed. On the other hand, if section 349 3/4 does not apply, then Travelers' pleading was filed in a timely manner and we must reverse
The respondents dispute that argument and contend that section 349 3/4 is to be more broadly applied and does bar all of Travelers' causes of action against them since the statutory limitation period had expired prior to the time when Travelers filed its original complaint. Therefore, they urge, Travelers' argument in regard to the application of the "relation back" doctrine is irrelevant. 6 They also contend that the limitations period of section 349 3/4 aside, there are independent reasons why the trial court's ruling was correct with respect to the counts for (1) interference with lateral and subjacent support, (2) liability for ultrahazardous activity and (3) violation of Harbors and Navigation Code section 294.
DISCUSSION
This is an appeal from a judgment of dismissal entered after demurrers were sustained to plaintiffs' first amended complaints. (Phillips v. Desert Hospital Dist. (1989) 49 Cal.3d 699, 702, 263 Cal.Rptr. 119, 780 P.2d 349.) If the demurrer was sustained, as it was in this case, our function is to determine whether the complaint states sufficient facts to state a cause of action. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318, 216 Cal.Rptr. 718, 703 P.2d 58.)
As we have noted, the parties dispute the application of section 349 3/4 to this case. Respondents argue that the statute applies "broadly to actions for damages occasioned by wells drilled for oil and gas." Travelers insists that the statute has a far more limited purpose. Relying on the language of the statute itself, Travelers urges that it is limited to "causes of action for underground trespass, use or occupancy of the plaintiff's property."
The Legislature enacted section 349 3/4 in 1935 to lessen the burden on oil drillers who had inadvertently trespassed on the property of another through the process of slant-drilling or whipstocking. The techniques of such drilling activities were little understood in the 1920's and early 1930's. (Krueger, State Tidelands Leasing, 5 UCLA L.Rev. 427, 436-437 (1958).) As one court pointed out, within a few years after 1930 (Victory Oil Co. v. Hancock Oil Co. (1954) 125 Cal.App.2d 222, 234, 270 P.2d 604.)
The enactment of section 349 3/4 was the legislative response. In adopting that statute, the Legislature found it necessary to declare the relevant public policy at some length:
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...the Restatement factors must be considered in each individual case. Travelers Indem. Co. of Illinois v. City of Redondo Beach (1994) 28 Cal. App. 4th 1432, 34 Cal. Rptr. 2d 337. However, the issue is a question of law that may be decided by summary judgment. SKF Farms v. Superior Court (198......