Leaf v. City of San Mateo

• Decision Date: 10 April 1980
• Citation: 163 Cal.Rptr. 711,104 Cal.App.3d 398
• Parties: Ron LEAF and Ellen Leaf, Plaintiffs and Appellants, v. CITY OF SAN MATEO, Defendant, Cross-Complainant and Appellant, San Mateo Investment Co., Cross-Defendant and Respondent. Civ. 47191.
• Court: California Court of Appeals Court of Appeals

Page 711

163 Cal.Rptr. 711

104 Cal.App.3d 398

Ron LEAF and Ellen Leaf, Plaintiffs and Appellants, v. CITY OF SAN MATEO, Defendant, Cross-Complainant and Appellant San Mateo Investment Co., Cross-Defendant and Respondent.

Civ. 47191.

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

April 10, 1980.

Peter W. Olson, City Atty., San Mateo, Wayne Luttringer, Jedeikin & Connor, San Francisco, for defendant, cross-complainant and appellant City of San Mateo.

Thomas F. Nelson, Los Altos, for cross-defendant and respondent San Mateo Investment Co.

SMITH, Associate Justice.

This is an appeal from summary judgment entered against plaintiffs in an action in inverse condemnation, continuing nuisance, and dangerous condition of public property, arising form subsidence related damage to real property alleged to be the result of defective sewage and drainage systems of defendant City of San Mateo. Summary judgment was granted on the ground that plaintiffs' suit was barred by the ten-year statute of limitations, Code of Civil Procedure, section 337.15, protecting developers of real estate from unlimited claims for property damage caused by latent construction defects.

The trial court also found that by virtue of a previous lawsuit arising out of the same subsidence problem, plaintiffs knew or should have known the existence of facts giving them a cause of action against the defendant.

Upon granting the summary judgment, the court also granted the demurrer without leave to amend of cross-defendant San Mateo Investment Co. because no cause of action was stated.

In January of 1972 the appellants, Ron and Ellen Leaf, purchased a parcel of real property, which included a duplex in the City of San Mateo. The duplex is believed to have been constructed in 1963, and sold upon completion to the initial owners in June, 1963. Final completion and acceptance of the subdivision is believed to have occurred in 1965.

Shortly after occupying their duplex in June, 1972, the Leafs discovered that some of the floors were not level, and that there were some cracks in the exterior of the building. The Leafs consulted with two different engineering firms, the first in August, 1972 and the second in July, 1973, the consensus being that the structural problems were being caused by differential settlement and subsidence due to movement of the fill on plaintiffs' lot caused by water absorption. The problem was symptomatic on the south side of plaintiffs' duplex, and the only test borings were made on that side of plaintiffs' property. It was recommended that a subsurface drainage system be installed to stop the subsidence and that the structure be restored to a level condition approximately one year after drainage installation.

The Leafs attempted to secure a settlement from San Mateo Investment Co., the developer/builder, and when negotiations failed brought an action (hereinafter referred to as Suit I) in January, 1974 against San Mateo Investment Co., the sellers, and various engineers and contractors. The action sought recovery from the original developers on the basis of defective engineering and manufacture of plaintiffs' lot pad and against the former owners for fraud and nondisclosure. The City of San Mateo was not named in Suit I. A settlement was reached in June, 1976.

With the proceeds of the settlement, plaintiffs began construction of the recommended drainage system in August, 1976. While excavating in the vicinity of City of San Mateo's sewers, a cave-in occurred exposing a previously excavated sewer trench. Subsequent investigation revealed that back-fill in the City of San Mateo's storm and sanitary sewer trenches on and near plaintiffs' property had not been compacted, and that the trenches were acting as subterranean water channels which were funneling water onto plaintiffs' property. Investigation also showed that the section of the sanitary sewer main extending in an easement along the north side of plaintiffs' home was located too close to the foundation, and that its close proximity, combined with lack of compaction of the material in that portion of the trench, was resulting in the north side of the building being deprived of lateral and subjacent support.

When the City of San Mateo refused to take action to correct the alleged defective condition of its property a claim was filed against it on November 5, 1976 and plaintiffs filed this action (hereinafter referred to as Suit II) on January 28, 1977 alleging inverse condemnation, continuing nuisance, and a dangerous and defective condition of public property.

The City first raised the ten-year statute of limitations in June, 1977 by demurrer to the first amended complaint; the demurrer was overruled. Defendant raised the statute again in January, 1979 by way of a motion for summary judgment and the motion was granted.

We are of the opinion, for the reasons we now state, that the judgment should be reversed.

At the hearing on summary judgment the defendant City of San Mateo urged, and the court held, that Code of Civil Procedure, section 337.15 barred this action because it was brought more than ten years after the date of completion of the construction of the duplex. ¹ The purpose of the ten-year statute is to protect developers of real estate against liability extending indefinitely into the future. (Regents of University of California v. Hartford Acc. & Indem. Co. (1978) 21 Cal.3d 624, 633, fn. 2, 147 Cal.Rptr. 486, 581 P.2d 197.) Section 337.15 does not protect persons in actual possession or control, as owner or otherwise, of the offending property at the time of the proximate cause of the injury. (Code Civ.Proc., § 337.15, subd. (e); Regents of University of California, supra, at 632, 147 Cal.Rptr. 486, 581 P.2d 197; Eden v. Van Tine (1978) 83 Cal.App.3d 879, 885-886, 148 Cal.Rptr. 215.) Defendant City was in possession and control of the storm and sanitary sewer easements on and near plaintiffs' property. Therefore, City of San Mateo was not within the protected class, specifically developers, which was intended by this statute.

The trial court was in error in holding that the City of San Mateo, and owner in possession and control, was insulated from liability by section 337.15.

Defendant, while not completely abandoning the theory that section 337.15 insulates it from liability, urges that, even if the trial court erred in its reasoning, it made the correct decision, and therefore should be affirmed, citing Smith v. Walter E. Heller & Co. (1978) 82 Cal.App.3d 259, 147 Cal.Rptr. 1, and cases cited therein; 6 Witkin, California Procedure (2d ed. 1971) Appeal, section 226, pages 4215-4216. Defendant contends that summary judgment was proper because either: 1) other applicable statutes of limitations bar plaintiffs from maintaining Suit II; or 2) Suit I and Suit II are identical and therefore "fundamental rules of pleading" bar Suit II; or 3) the releases executed by plaintiffs in Suit I acted to release defendant City of San Mateo.

Whether or not plaintiffs' claim is barred by some other applicable statute of limitations ² is dependent upon a determination of when the cause of action accrued. The question of when plaintiffs' cause of action accrued is a mixed question of law and fact. (Avner v. Longridge Estates (1969) 272 Cal.App.2d 607, 617, 77 Cal.Rptr. 633; Oakes v. McCarthy Co. (1968) 267 Cal.App.2d 231, 255, 73 Cal.Rptr. 127.

Defendant in this action takes the position that plaintiffs' cause of action accrued when plaintiffs became aware of the damage to their property, i.e., when they noticed the unlevel floors and cracks in the building exterior. Plaintiffs, on the other hand, urge the "rule of discovery," which would start a statute running only when plaintiffs not only were aware of the damage, but became aware of its negligent cause, i.e., at the time of the cave-in.

The traditional rule in tort cases is that the statute of limitations begins to run upon the occurrence of the last fact essential to the cause of action. Although sometimes harsh, the fact that plaintiff is neither aware of his cause of action nor of the identity of a wrongdoer will not toll the statute. (Saliter v. Pierce Brothers Mortuaries (1978) 81 Cal.App.3d 292, 296, 146 Cal.Rptr. 271; Neel v. Magana, Olney, Levy, Cathcart & Gelfand (1971) 6 Cal.3d 176, 187, 98 Cal.Rptr. 837, 491 P.2d 421; Howe v. Pioneer Mfg. Co. (1968) 262 Cal.App.2d 330, 340, 68 Cal.Rptr. 617.)

The harshness of this rule has been ameliorated in some cases where it is manifestly unjust to deprive plaintiffs of a cause of action before they are aware that they have been injured. This modified rule has been applied to latent defects in real property and improvements. (Regents of University of California v. Hartford Acc. & Indem. Co., supra, 21 Cal.3d 624, 147 Cal.Rptr. 486, 581 P.2d 197; Mehl v. People ex rel. Dept. Pub. Wks., supra, 13 Cal.3d 710, 119 Cal.Rptr. 625, 532 P.2d 489; Oakes v. McCarthy Co., supra, 267 Cal.App.2d 231, 73 Cal.Rptr. 127; Aced v. Hobbs-Sesack Plumbing Co. (1961) 55 Cal.2d 573, 12 Cal.Rptr. 257, 360 P.2d 897.) In the case of such latent defects the statute of limitations begins to run only when "noticeable damage occurs." (Oakes, supra, 267 Cal.App.2d at 254, 73 Cal.Rptr. 127.)

Oakes, a case specifically dealing with consequential damages resulting from underground trespass, held that a cause of action accrues when the surface damage is "sufficiently appreciable to a reasonable man." (Oakes, supra, at 255, 73 Cal.Rptr. at 142.) This standard was adopted by Regents of University of California v. Hartford Acc. & Indem. Co., supra; Mehl v. People ex rel. Dept. Pub. Wks., supra; and Amador Valley Investors v. City of Livermore (1974) 43 Cal.App.3d 483, 117 Cal.Rptr. 749, all involving negligent injury to realty, and by Aced v. Hobbs-Sesack Plumbing Co., supra, involving a breach of warranty for leaky tubing installed in a concrete slab floor. It is the standard...