Grange Debris Box & Wrecking Co. v. Superior Court, A060330

• Decision Date: 29 June 1993
• Docket Number: No. A060330,A060330
• Court: California Court of Appeals Court of Appeals
• Parties: GRANGE DEBRIS BOX AND WRECKING CO., INC., et al., Petitioners, v. SUPERIOR COURT of Marin County, Respondent; CITY OF SAN RAFAEL et al., Real Parties in Interest.

Page 515

20 Cal.Rptr.2d 515

16 Cal.App.4th 1349

GRANGE DEBRIS BOX AND WRECKING CO., INC., et al., Petitioners, v. SUPERIOR COURT of Marin County, Respondent CITY OF SAN RAFAEL et al., Real Parties in Interest.

No. A060330.

Court of Appeal, First District, Division 3, California.

June 29, 1993.

Hans W. Herb, Law Offices of Hans W. Herb, Santa Rosa, CA, for petitioners.

Carr, McClellan, Ingersoll Thompson & Horn, Alan Robert Rosin, Burlingame, CA, for amicus curiae.

No appearance for respondent.

Herbert M. Rowland, Jr., Allison D. Daniels, Allison Lane, Bennett & Rowland, San Francisco, CA, for real parties in interest.

WHITE, Presiding Justice.

Code of Civil Procedure section 337.15, ¹ enacted in 1971, imposes "an absolute requirement that a suit against a contractor to recover damages for a construction defect be brought within 10 years of the date of substantial completion of construction, regardless of the date of discovery of the defect." (Regents of University of California v. Hartford Acc. & Indem. Co. (1978) 21 Cal.3d 624, 631, 147 Cal.Rptr. 486, 581 P.2d 197, fn. omitted.) Subdivision (c) of the statute, in "clear, unambiguous, and reasonable" language, states one exception--a transactionally related cross-complaint for indemnity may be filed outside the 10-year limit if the main action has been brought within the 10-year period. (Valley Circle Estates v. VTN Consolidated, Inc. (1983) 33 Cal.3d 604, 609, 189 Cal.Rptr. 871, 659 P.2d 1160.) In the case before us, by overruling a demurrer the court has proposed to extend this exception for an indemnity cross-complaint when both the main action and the cross-complaint were filed outside the 10-year period. We conclude the court erred and we direct issuance of a writ of mandate.

Procedures

Petitioners, Grange Debris Box and Wrecking Co., Inc. and Fred Grange (referred to collectively as Grange hereafter), were brought into this action at the third level of pleading. The original action was against several oil companies, including Exxon Corporation. Exxon cross-complained against the City of San Rafael and others. San Rafael, in turn, cross-complained against Grange and others.

The subject matter of the lawsuit is a piece of property used as the site of a gasoline filling station before being redeveloped for a commercial office building. On September 19, 1990, the building owner, Tri Equities, Inc., brought an action against Exxon and other oil companies claiming they contaminated the site by releasing hydrocarbons into the soil and water table in the 1960's and 1970's. Exxon cross-complained against San Rafael and others, contending when San Rafael purchased the site for redevelopment it agreed to hold Exxon harmless for any claims for damage to the property. Exxon also claimed San Rafael negligently permitted contamination in 1979 while excavating and preparing the site for construction of an office building.

On March 13, 1992, San Rafael cross-complained against Grange and others for indemnity in the event of a recovery against San Rafael. The cross-complaint alleged San Rafael contracted with Grange to demolish the existing structures on the site, remove underground tanks, remove and dispose of debris, cap sewer laterals and undertake minor grading and other miscellaneous work. It further alleged Grange was contractually required to indemnify and hold San Rafael harmless for any liability from the Exxon cross-complaint or the underlying complaint.

Grange demurred to the cross-complaint on statute of limitations grounds and requested judicial notice of a certificate of completion. The certificate showed Grange completed its work on July 24, 1979, more than 11 years before the original complaint and 12 1/2 years before the cross-complaint against Grange. After hearing, the court overruled the demurrer. The court took judicial notice of the "Notice of Completion" but reasoned that because San Rafael was barred by section 337.15, subdivision (e), from asserting the 10-year limitation period against Exxon, Grange was barred from asserting it against San Rafael's claim for indemnity. This petition followed.

Statute of Limitations

Section 337.15, subdivision (a) states the statute of limitations for latent construction defects in the following terms: "No action may be brought to recover damages from any person, or the surety of a person, who develops real property or performs or furnishes the design, specifications, surveying, planning, supervision, testing, or observation of construction or construction of an improvement to real property more than 10 years after the substantial completion of the development or improvement for any of the following: (1) Any latent deficiency in the design, specification, surveying, planning, supervision, or observation of construction or construction of an improvement to, or survey of, real property. (2) Injury to property, real or personal, arising out of any such latent deficiency."

The statute does not define a development or an improvement, but decisional law has imported definitions from other statutes. In Liptak v. Diane Apartments, Inc. (1980) 109 Cal.App.3d 762, 167 Cal.Rptr. 440, defendants were involved in the grading, filling, and maintenance of slopes in a residential housing tract 11 years before the action was brought. The plaintiffs contended defendants could be sued if the complaint was filed within 10 years of completion of the particular plaintiffs' home. Liptak disagreed.

The Liptak court examined definitions of "development" and "improvement" and concluded that, as used in section 337.15, " 'an improvement' is in the singular and refers separately to each of the individual changes or additions to real property that qualifies as an 'improvement' irrespective of whether the change or addition is grading and filling, putting in curbs and streets, laying storm drains or of other nature. [p] A developer has the overall control over the development of a 'tract of raw land' and the myriad of improvements to the land which eventually complete the development. A person contributing to 'an improvement' carries out only one of many steps towards completion of the development." (Liptak v. Diane Apartments, Inc., supra, 109 Cal.App.3d at p. 771, 167 Cal.Rptr. 440.) Based upon this interpretation, Liptak concluded the 10-year statute began to run as to grading and filling defendants when they completed their phase of the development: "The 10-year period commences to run in respect to a person who has contributed towards 'an improvement' when such improvement has been substantially completed irrespective of whether or not the improvement is part of a development." (Id., at p. 772, 167 Cal.Rptr. 440.)

Application of the Statute of Limitations

The original action by Tri Equities against Exxon and others alleges contamination of the soil and water, not construction defects. Thus, section 337.15 does not apply to Tri Equities' complaint. However, Exxon's cross-complaint against San Rafael and its redevelopment agency, filed in late 1991 or early 1992, alleges negligent contamination in 1979 while excavating and preparing the site for construction of an office building.

Section 337.15 appears to bar the Exxon cross-complaint because it alleges a latent defect during improvement of the property more than 12 years before filing of the complaint. However, subdivision (e) of section 337.15 prevents San Rafael from asserting the statute of limitations: "The limitation prescribed by this section shall not be asserted by way of defense by any person in actual possession or the control, as owner, tenant or otherwise, of such an improvement, at the time any deficiency in the improvement constitutes the proximate cause for which it is proposed to bring an action."

The superior court, citing Martinez v. Traubner (1982) 32 Cal.3d 755, 187 Cal.Rptr. 251, 653 P.2d 1046, concluded that because San Rafael could not assert the statute neither could Grange. In Martinez, a worker was injured in 1978 when he fell from the roof of a house on which he was working. He sued the builder of the house, alleging that the roof collapsed due to a latent defect in construction completed in 1959. The Martinez court concluded section 337.15 did not govern actions seeking damages for personal injuries, but was limited to actions "for damages for (1) the deficient work or property itself and (2) damage to other real or personal property arising from such deficiency." (Martinez, supra, at p. 759, 187 Cal.Rptr. 251, 653 P.2d 1046.)

Martinez disapproved a contrary holding in Ernest W. Hahn, Inc. v. Superior Court (1980) 108 Cal.App.3d 567, 166 Cal.Rptr. 644, and suggested Hahn 's interpretation "leaves the owner or possessor of property in a position where he or she can be held liable to a person injured as the result of a latent defect without the right to any redress against the contractor or developer who created the latent deficiency (by virtue of the provisions of subd. (e) of § 337.15, which bars the person in possession from asserting the defense of this 10-year limitation). Such a result turns reason upside down." (Martinez v. Traubner, supra, 32 Cal.3d, at p. 760, 187 Cal.Rptr. 251, 653 P.2d 1046.)

If section 337.15 were silent about the application of the 10-year statute to indemnity cross-complaints, the Martinez dictum might encourage us to sustain the superior court's ruling. However, subdivision (c) of the statute specifically addresses the issue: "As used in this section, 'action' includes an action for indemnity brought against a person arising out of that person's performance or furnishing of services or materials referred to in this section, except that a cross-complaint for indemnity may be filed pursuant to subdivision (b) of Section 428.10 [which authorizes transactionally related cross-complaints] in an action which has been brought within the time period set forth in subdivision (a) of this section." (Emphasis...