City of San Diego v. U.S. Gypsum Co.

• Decision Date: 29 November 1994
• Docket Number: No. B064835,B064835
• Court: California Court of Appeals Court of Appeals
• Parties: CITY OF SAN DIEGO, Plaintiff and Appellant, v. U.S. GYPSUM, et al., Defendants and Respondents.

Page 876

35 Cal.Rptr.2d 876

30 Cal.App.4th 575

CITY OF SAN DIEGO, Plaintiff and Appellant, v. U.S. GYPSUM, et al., Defendants and Respondents.

No. B064835.

Court of Appeal, Second District, Division 6, California.

Nov. 29, 1994.

Review Denied Feb. 23, 1995.

Casey, Gerry, Casey, Westbrook, Reed & Schenk and T. Michael Reed and Thomas D. Penfield, San Diego, John Witt, City Atty. and Deborah Berger, Deputy City Atty., for plaintiff and appellant.

Thelen, Marrin, Johnson & Bridges and W. Glenn Cornell, Los Angeles, Humphrey, Farrington & McClain and Kenneth B. McClain, Independence, MO, as amici curiae on behalf of plaintiff and appellant.

Freilich, Kaufman, Fox & Sohagi and Benjamin Kaufman, as amici curiae on behalf of plaintiff and appellant.

Neil, Dymott, Perkins, Brown & Frank and Roger G. Perkins and James A. McFall, for defendant and respondent Thorpe Insulation Co.

Breidenback, Swainston, Crispo & Way and Thomas C. Corless, Randi S. Lewis and Kendall Caudry, for defendant and respondent U.S. Gypsum Co.

Walsworth, Franklin & Bevins and Michael T. McCall, Nicholas A. Cipiti and James A. Anton, for defendants and respondents Hamilton Materials, Inc. and Proko Industries, Inc.

Seltzer Caplan Wilkins & McMahon and Gerald L. McMahon and James B. Franklin, for defendant and respondent W.R. Grace & Co.--Conn.

Christopher M. Micheli, as amicus curiae on behalf of defendants and respondents.

GILBERT, Associate Justice.

A city sues various defendants for damages stemming from installation of asbestos in its buildings. The statute of limitations for injury to city's real property is three years. (Code Civ.Proc., § 338, subd. (b).) The statute of limitations begins to run when city suffers an appreciable and actual harm.

Here we hold, among other things, appreciable harm is not limited to the existence of an actual health hazard. As pleaded, City's knowledge of deterioration to its buildings caused by asbestos constitutes the infliction of an appreciable harm that begins the statute of limitations running.

Plaintiff City of San Diego appeals a judgment in favor of defendants who are manufacturers and distributors of asbestos-containing building materials. The trial court's ruling was based upon the three-year statute of limitations of Code of Civil Procedure section 338, subdivision (b), and a failure to state a cause of action for nuisance and equitable indemnification. We affirm.

FACTS

On May 25, 1988, plaintiff City of San Diego ("City") brought an action against 31 defendants who manufactured, distributed or otherwise were involved with asbestos-containing building materials. City alleged it owned or leased more than 1,000 public buildings that contained these materials. In its second amended complaint, City alleged asbestos particles, fibers and dust have contaminated city-owned and city-leased buildings due to "normal wear, aging, abrasions, and impacts, as well as routine maintenance and repair." City seeks recovery for, among other things, money it spent and will spend to identify and abate the asbestos danger, and for loss of use and decline in value of its property.

City alleged the asbestos-containing building materials included insulation, gaskets, backings, tape, floor and ceiling tile, acoustical materials, plaster, textiles, boilers, ventilating materials and fireproofing. (See Mullen v. Armstrong World Industries, Inc. (1988) 200 Cal.App.3d 250, 256-257, 246 Cal.Rptr. 32, fn. 7, describing the primary, secondary and consumer uses of asbestos and the physical properties of the six asbestos minerals used in building products.)

The five defendants involved with this appeal are: W.R. Grace & Co.--Conn., a manufacturer of fireproofing insulation and acoustical plaster; United States Gypsum Company, a manufacturer of acoustical plaster; Thorpe Insulation Company, a distributor of thermal system insulation; Hamilton Materials, Inc., a manufacturer and supplier of decorative ceiling compounds; and Proko Industries, Inc., also a manufacturer and supplier of decorative ceiling compounds. In the 1960s and 1970s, City purchased and installed asbestos-containing building materials manufactured or distributed by these defendants.

Initially, City alleged causes of action for negligence, strict liability, breach of express and implied warranties, restitution, nuisance, fraud, punitive damages, successor liability and conspiracy. Defendants challenged these causes of action, upon grounds of the statute of limitations and failure to state a cause of action, by demurrer, judgment upon the pleadings and summary judgment. The trial court granted these motions.

This appeal concerns the negligence, strict liability, nuisance and equitable indemnification causes of action alleged in City's second and third amended complaints.

The parties to this litigation agree that the three-year statute of limitations for "[a]n action for ... injury to real property" applies here. (Code Civ.Proc., § 338, subd. (b).) May 25, 1985, is the day three years before City filed this lawsuit against these asbestos manufacturers and distributors. Evidence offered in support of defendants' summary judgment motions contending City's lawsuit is precluded by the three-year limitations period of section 338, subdivision (b), established this:

Before May 25, 1985, City conducted an extensive investigation and evaluation of asbestos-containing materials in many city buildings. City's Safety Director, Rick Cumming III, directed this investigation. Dr. Kenneth S. Cohen, a certified industrial hygienist, toxicologist and safety engineering consultant, assisted Cumming in an evaluation of city buildings, including bulk sampling and air testing. Between 1978 and 1985, two professional testing labs conducted 500 air quality tests and analyses in city buildings.

Also before May 25, 1985, Dr. Cohen trained approximately 200 city maintenance personnel concerning the health dangers of disturbing in-place asbestos and held asbestos training sessions for other city custodial employees. In 1983, City prepared an eight-minute videotape entitled "Understanding Asbestos," that was shown to many city employees who worked in city buildings constructed with asbestos-containing building materials. City also printed 500 posters stating "CAUTION. ASBESTOS DUST HAZARD. Certain Construction Materials within this building have been identified as containing asbestos fibers. AVOID CREATING DUST. BREATHING ASBESTOS FIBERS MAY CAUSE SERIOUS BODILY HARM." These signs were posted in city buildings.

City also formed an "Asbestos Containment Team," known as "The Tiger Team." Team members received special training in dealing with asbestos, wore protective clothing, including respirators, received health screening, including chest X-rays and pulmonary function tests, and were paid a premium hourly rate in their duties.

Before May 25, 1985, there were instances of degrading or deterioration of asbestos-containing building materials in city buildings. In 1983, for example, the San Diego Police Headquarters building contained an asbestos boiler blanket that was "in very poor condition and ... ripped." In 1984, asbestos insulation covering piping in the men's restroom at Brown Field became damaged. Full day air sampling at that time disclosed, however, that airborne asbestos fibers fell below current health standards.

In 1982, a ceiling at the Mission Beach Plunge collapsed when a transient living in the ceiling crawl space stepped through the ceiling. The ceiling collapse apparently produced " 'high' " asbestos fiber counts similar to "a controlled rip-out of insulation in the hold of a Naval Vessel," according to Dr. Cohen. In 1984, a city employee wrote city officials and informed them the lube area of the city service station in which he worked had "[asbestos] coming off of overhead pipes and fall[ing] all over the place."

In 1980, Safety Director Cumming wrote the deputy City Manager concerning asbestos exposure to 400 to 500 city employees. He stated: "These exposures are encountered when asbestos-cement water pipe is cut; when making brake and clutch repairs; when cutting dry wall impregnated with asbestos; and when doing maintenance/repair work in crawl spaces, on ceiling tiles or on pipe insulation impregnated with asbestos." In 1983, Cumming noted "there is no safe level of exposure [to asbestos]."

On January 31, 1985, City filed a claim for $50 million damages in the United States Bankruptcy Court proceeding concerning the bankruptcy of Johns-Manville Corporation and its related entities. City claimed the $50million damages were "[b]elieved to be the cost of repair of the city buildings and damages sustained by employees, past, present and future," due to the presence of asbestos-containing building materials in city-owned and city-leased buildings. City alleged it was "presently" performing encapsulation, enclosure and removal of friable ¹ asbestos-containing material and was "presently ... investigat[ing]" future encapsulation, enclosure and removal of such material.

Prior to May 25, 1985, many newspapers and technical journals published articles documenting the human health hazards presented when asbestos-containing building materials degraded, releasing asbestos fibers and dust into the air. On April 5, 1984, the United States Environmental Protection Agency promulgated its "National Emission Standards for Hazardous Air Pollutants: Amendment to Asbestos Standards," concerning equipment and workplace requirements regarding asbestos-containing building materials. (40 C.F.R. § 61.01 et. seq.)

In its opposition to defendants' motion for summary judgment, City acknowledged and admitted that it knew before May 25, 1985 that city-owned and city-leased buildings contained asbestos-containing building materials that posed a human health hazard. City offered to stipulate "it knew asbestos was a dangerous and defective product well before 1984 [and]...