Allen v. Sundean

• Decision Date: 05 November 1982
• Citation: 137 Cal.App.3d 216,186 Cal.Rptr. 863
• Court: California Court of Appeals Court of Appeals
• Parties: Albert L. ALLEN et al., Plaintiffs, Cross-Defendants and Respondents, v. Harold A. SUNDEAN et al., Defendants, Cross-Complainants, Cross-Defendants and Appellants, Anton (Tony) Kram et al., Defendants, Cross-Complainants, Appellants and Respondents, Ruth M. Mallery, Defendant, Cross-Complainant, Cross-Defendant and Respondent, Gordon Palmer, Cross-Defendant, Cross-Complainant and Respondent. Civ. 47862.

Page 863

186 Cal.Rptr. 863

137 Cal.App.3d 216

Albert L. ALLEN et al., Plaintiffs, Cross-Defendants and Respondents, v. Harold A. SUNDEAN et al., Defendants, Cross-Complainants, Cross-Defendants and Appellants, Anton (Tony) Kram et al., Defendants, Cross-Complainants, Appellants and Respondents, Ruth M. Mallery, Defendant, Cross-Complainant, Cross-Defendant and Respondent, Gordon Palmer, Cross-Defendant, Cross-Complainant and Respondent.

Civ. 47862.

Court of Appeal, First District, Division 2, California.

Nov. 5, 1982.

Jeffrey P. Widman, Berliner, Cohen & Biagini, San Jose, for appellants Sundean.

Alan J. Levin, Adams, Levin, Kehoe, Bosso, Sachs & Bates, Santa Cruz, for respondents Allen.

Frederick H. Ebey, Grunsky, Pybrum, Skemp & Ebey, Watsonville, for respondent Mallery.

James G. Van Noy, Jr., Van Noy & Panelli, Salinas, for respondents Kram.

GRODIN, Presiding Justice.

This litigation arises out of property damage caused by a 1974 landslide in Santa Cruz. The trial court, sitting by stipulation without a jury, found that Sundean, the original developer of the lots, was guilty of willful misconduct in placing poor quality fill upon the hillside lots without proper compacting and engineering and of fraudulent concealment in failing to disclose to purchasers the nature and extent of the fill.

Though the development occurred some 20 years prior to the slide, the court rejected Sundean's statute of limitations defense, finding that the claimants, Mallery and Allen, had neither actual nor constructive notice of Sundean's wrongdoing prior to the slide. It also rejected Sundean's contention that Mallery, one of the property owners, contributed to the landslide by failing to take corrective action. And, while it found that Kram, also one of the property owners and a cross-defendant, had contributed to the landslide by the negligent manner in which he conducted excavations on his property, it declined to allocate any portion of the judgment against Kram, indicating doubt as to whether comparative fault principles apply in the context of willful misconduct or intentional tort.

Sundean has appealed, contending (1) that there is insufficient evidence to support the trial court's finding that the lawsuits were timely filed; (2) that the trial court erred in failing to find Mallery's failure to take corrective action was a contributing cause of the landslide; and (3) that Sundean is entitled to a contribution from Kram to the extent Kram was at fault. Kram has also appealed, contending that there was insufficient evidence to support the trial court's finding that any act or omission on his part was a proximate cause of the landslide. We will conclude that there was sufficient evidence to support each of the trial court's disputed findings and that the court was correct in declining to allow Sundean partial indemnity from Kram for damages caused by Sundean's fraudulent concealment but that Sundean is entitled to partial indemnity from Kram for damages caused by Sundean's independent acts of willful misconduct.

Factual and Procedural Background

In 1953, Harold A. Sundean arranged to have a large quantity of fill material deposited on steep, unimproved hillside property which he owned. The trial court found that the material was not compacted or "keyed" into the original soil and that it contained material such as wood objects, rocks, and concrete which made it of poor quality. The placement of the fill was not supervised by an engineer and no provisions were made for drainage.

In 1956, Sundean and another defendant, Palmer (who is not a party to this appeal), entered into a joint venture whereby Palmer built a single family residence on the filled lot owned by Sundean. In 1957, that lot was sold to Ruth Mallery and her husband, now deceased. The Mallerys were told that there was "some fill" on the lot but that the foundation of the residence was anchored into original soil. The court found that Sundean and Palmer concealed from the Mallerys the facts regarding the nature and extent of the fill and the stability of the land even though they were under a duty to make these disclosures, that they did so with the intent to induce the Mallerys to purchase the property, and that the Mallerys would not have purchased the property if they had known the facts.

During 1960 and 1961, Sundean subdivided and developed the property immediately downhill from the Mallery property and this became known as the Sunny Slopes Court subdivision. Lot number five of the subdivision was contiguous to the Mallery lot and was a continuation of the downward slope on the same hill as that of the Mallery property. In 1967, Sundean sold lot number five to Anton Kram and his wife. Again, Sundean concealed from the buyer the facts regarding the nature and extent of the fill on the Mallery property and the court found that Kram would not have purchased it if disclosure had been made.

Kram was a licensed building contractor and purchased the lot for the purpose of constructing a residence for himself and his family. During the course of construction, Kram did some further excavation into the toe of the slope of the filled hillside. The court found that in doing so Kram failed to exercise the degree of care generally exercised by a general contractor under similar conditions.

In April 1972, Kram sold lot number five and the house to Albert Allen and his wife. While Kram failed to disclose the condition of the hillside to the Allens, the trial court found no fault on Kram's part in that respect since Kram was not aware of the condition himself.

The April 1, 1974, landslide resulted in damage to both the Allen and Mallery properties. Allen initiated the action below by filing suit on May 28, 1975, against Mallery, Kram and Sundean. Mallery cross-complained against Kram and Sundean for indemnity and comparative contribution, and later added Palmer as a cross-defendant. Sundean filed a cross-complaint for indemnity and comparative contribution against Mallery and Kram on December 17, 1975. After the trial court rejected Sundean's theories for imposing liability on Mallery, Sundean filed a second cross-complaint for indemnity and comparative contribution against Kram and Allen. Finally, Kram cross-complained against Sundean for indemnity. In short, everyone sued everyone else.

In addition to the facts already recited, the trial court found that neither Mallery nor Kram was aware of the nature and extent of the hillside fill material prior to the slide and that the loss which ultimately occurred could not have been avoided except by the measures which were taken after the slide. It allocated 80 percent of the fault to Sundean's action in placing uncompacted and unengineered fill on the lots, 10 percent to the fraudulent concealment by Sundean at the time of the sale to Kram and the concealment by the joint venture at the time of the sale to Mallery, and 10 percent to the negligent excavation by Kram. Believing that partial indemnity was not appropriate, however, it ordered that the entire judgment in favor of Allen be paid by Sundean and the judgment in favor of Mallery by Sundean and Palmer. Palmer has not appealed.

I. Statute of Limitations

Code of Civil Procedure section 338 establishes a three-year statute of limitations for fraud actions (subdivision 4) and for actions for trespass upon or injury to real property (subdivision 2). "In cases involving fraud or mistake the statute commences to run when the plaintiff discovers he has a cause of action or, through the use of reasonable diligence, should have discovered it." (Bennett v. Hibernia Bank (1956) 47 Cal.2d 540, 559, 305 P.2d 20; Code Civ.Proc., § 338, subd. 4.) Similarly, a plaintiff's cause of action for property damage caused by latent construction defects accrues "from the point in time when plaintiffs became aware of defendant's negligence as a cause [of damage to the property], or could have become so aware through the exercise of reasonable diligence." (Leaf v. City of San Mateo (1980) 104 Cal.App.3d 398, 408, 163 Cal.Rptr. 711.) It is plaintiff's burden to establish "facts showing that he was not negligent in failing to make the discovery sooner and that he had no actual or presumptive knowledge of facts sufficient to put him on inquiry." (Hobart v. Hobart Estate Co. (1945) 26 Cal.2d 412, 437, 159 P.2d 958.) "[W]hether the plaintiff exercised reasonable diligence is a question of fact for the court or jury to decide." (Enfield v. Hunt (1979) 91 Cal.App.3d 417, 419, 154 Cal.Rptr. 146.)

With these legal principles in mind, we turn to the record, viewing it, as we must, in a light most favorable to the judgment. Mr. and Mrs. Mallery purchased their residence from Sundean in March 1957. Ruth Mallery was 74 years old at the time of trial. Her husband died in 1967. Since marrying her husband in 1932, she had not been employed outside of the home. Neither she nor Mr. Mallery had any education, training, or experience, in the field of construction or in soil mechanics.

Shortly after they purchased the house, Mrs. Mallery was advised by her friend, Ida Edwards, that the soil contained eucalyptus logs. She asked Sundean about that and he admitted there were logs but said he did not think they were under her lot. During the first two years of occupancy, the Mallerys noticed minor problems of soil settlement each rainy season, along the hillside foundation and in the garage: the garage floor had a crack, and the living room floor seemed a bit uneven but there was no cracking of plaster or sticking of doors. In 1960 or 1961, the Mallerys hired a contractor who placed "shims" between the top of the foundation and the floor to level the foundation, but the contractor testified that all of the foundations other than the rear foundation on the south side were in good condition. He noted no abnormalities with the back yard and he was unaware that there was fill under the house.

There...