North Coast Business Park v. Nielsen Construction Co.

• Decision Date: 12 July 1993
• Docket Number: No. D015569,D015569
• Citation: 21 Cal.Rptr.2d 104,17 Cal.App.4th 22
• Court: California Court of Appeals Court of Appeals
• Parties: NORTH COAST BUSINESS PARK, Plaintiff and Appellant, v. NIELSEN CONSTRUCTION COMPANY et al., Defendants and Respondents.

Page 104

21 Cal.Rptr.2d 104

17 Cal.App.4th 22

NORTH COAST BUSINESS PARK, Plaintiff and Appellant, v. NIELSEN CONSTRUCTION COMPANY et al., Defendants and Respondents.

No. D015569.

Court of Appeal, Fourth District, Division 1, California.

July 12, 1993.

Law Offices of Maurile C. Tremblay and Ted Allan Connor, La Jolla, for plaintiff and appellant.

Di Caro, Highman, D'Antony, Dillard, Fuller & Gregor, Roger O. Scouton and Pamela G. Lacey, San Diego, for defendant and respondent Nielsen Const. Co.

Gibbs, Eppsteiner & Stagg and Jane A. Hopper, San Diego, for defendant and respondent Cribwall Corp.

Jensen & Roth and James M. Roth, Escondido, for defendant and respondent Cass Const., Inc.

Murtaugh, Miller, Meyer & Nelson, Michael J. Nelson and Russell A. Lehman, Costa Mesa, for defendant and respondent Architects Orange.

Carrick & Dale, George D. Dale and Donald J. Aberbook, Los Angeles, Shifflet, Walters, Kane & Konoske and Barry M. Vrevich, San Diego, for defendant and respondent Erreca's Inc.

FROEHLICH, Associate Justice.

North Coast Business Park (North Coast) appeals from the judgment entered after the trial court granted the motion for summary judgment filed by Erreca, Inc. (Erreca). Erreca's motion was based on the statute of limitations. The trial court concluded (1) there was no triable issue of fact as to when North Coast first had notice of the defective condition; and (2) the statute of limitations applicable to North Coast's claim had expired.

On appeal, North Coast claims there was a triable issue of fact because the defect of which it had notice was different from the

defect which caused the damage. We conclude this argument was not properly raised below and thus affirm.

1. Facts

The relevant facts are undisputed. In 1981, North Coast's predecessor contracted with Nielsen Construction Company (Nielsen) for the construction of a business park using "tilt up" construction. The project was substantially completed by late 1982.

Part of the construction was a retaining wall (the "crib wall") adjacent to building 9 in the business park. Erreca was the grading contractor on the job.

In January 1984, North Coast hired a registered civil engineer to inspect a crack in the floor slab in building 9. The engineer inspected the crack as well as the crib wall. He stated it was apparent that roof drainage from building 9 had discharged onto the existing fill soil at the top of the crib wall, that provision for adequate soil drainage had not been completed, and that runoff from the roof contributed to the erosion damage of the crib wall cells. He further opined the slab crack resulted from shrinkage and minor lateral movements which were not ongoing, but he addressed the drainage problems between building 9 and the crib wall, recommending North Coast contact the crib wall designer to evaluate its stability and to replace the eroded crib wall backfill.

In December 1988, North Coast filed its complaint against Nielsen for breach of contract, breach of warranty, and negligence, alleging problems with the flooring in some of the buildings. North Coast's second amended complaint, alleging the same causes of action against Nielsen and numerous other defendants, claimed a defect existed in the design and construction of the crib wall. Erreca was joined as a cross-defendant by Nielsen.

2. The Summary Judgment Motion

Erreca moved for summary judgment, arguing that the defect in the design and construction of the crib wall was known to North Coast in early 1984, and therefore the three-year statute of limitations barred the action insofar as it was based on the crib wall defect. Erreca filed its Statement of Undisputed Material Facts, listing as undisputed facts: (1) the 1984 inspection occurred; (2) its purpose was to investigate the crack in the floor slab in building 9; (3) the inspection of the crib wall showed it had sustained major erosion damage; (4) the crib wall inspection showed improper drainage contributed to the erosion; and (5) North Coast was aware that the crack was caused by this defect.

North Coast's opposition to the motion had two aspects. The first and main argument was that, as a legal matter, the defects causing damage in building 9 were latent defects, and hence the applicable statute of limitations was the 10-year statute under CODE OF CIVIL PROCEDURE SECTION 337.15¹, not the 3-year statute under section 338. The second aspect, which consumed one paragraph of a 13-page opposition, argued there were other defects in the project apart from the crib wall problem, and that summary judgment on those aspects would be improper. Indeed, North Coast's separate statement of Disputed Material Facts (the Separate Statement) identified only two disputed facts, both of which claimed summary judgment was improper because there were defects apart from the crib wall problem. ²

The trial court granted the motion for summary judgment, concluding the engineer's report gave notice of soils-related defects, triggering both the three and four-year statutes of limitations. Accordingly, judgment was entered barring any claims insofar as they alleged defects in the crib wall or soils conditions underneath and adjacent to buildings 8 and 9. This appeal followed.

3. The Trial Court Correctly Ruled that the Discovery-Based Statute of Limitations Applied to Bar the Drainage Defect

We first address the issue which consumed the parties and court below: Which statute of limitations applies? North Coast argues that when the claim is based on a defect originally latent in nature, the lawsuit is timely so long as it is filed within the 10-year statute of limitations under section 337.15, even though the lawsuit is filed more than 3 years after the defect becomes manifest and is discovered. We disagree.

In Regents of University of California v. Hartford Acc. & Indem. Co. (1978) 21 Cal.3d 624, 147 Cal.Rptr. 486, 581 P.2d 197 and Liptak v. Diane Apartments, Inc. (1980) 109 Cal.App.3d 762, 167 Cal.Rptr. 440, the courts explained the interplay between section 337.15 and sections 337 and 338. When a defect is latent (i.e., not apparent from a reasonable inspection (see Geertz v. Ausonio (1992) 4 Cal.App.4th 1363, 1368, 6 Cal.Rptr.2d 318)), sections 337 and 338 begin to run only after the damage is sufficiently appreciable to give a reasonable man notice that he has a duty to pursue his remedies. (Liptak, supra, 109 Cal.App.3d at p. 769, 167 Cal.Rptr. 440.) However, section 337.15 imposes an absolute 10-year bar, based on the date of "substantial completion," regardless of discovery. (Regents of University of California, supra, 21 Cal.3d at pp. 640-641, 147 Cal.Rptr. 486, 581 P.2d 197.) The interplay between these statutes sets up a two-step process: (1) actions for a latent defect must be filed within three years (§ 337) or four years (§ 338) of discovery, but (2) in any event must be filed within ten years (§ 337.15) of substantial completion. (Ibid.)

The trial court correctly ruled that the three and four-year statutes applied based on the 1984 discovery of the drainage problem. There was no triable issue of fact because North Coast's expert advised it of the damage and the source thereof (i.e., improper drainage causing major erosion of the fill in the crib wall), and further advised North Coast to contact the crib wall's designer to evaluate the crib wall's stability and to replace the eroded backfill. Summary judgment based on the statute of limitations is appropriate. (See Love v. Fire Ins. Exchange (1990) 221 Cal.App.3d 1136, 1143, 271 Cal.Rptr. 246 [where plaintiff notes damage, hires expert to inspect, and expert describes cause of damage, cause of action accrues].)

4. North Coast Cannot Identify a New Defect As the Basis for the Claim for the First Time on Appeal

The primary argument raised by North Coast on appeal is that, even assuming it discovered the drainage defect in 1984, it was not aware of a different alleged "defect," i.e., that the footing of the crib wall was defectively designed or constructed. ³ Since notice of one defect is not necessarily notice of distinct defects (Chu v. Canadian Indemnity Co. (1990) 224 Cal.App.3d 86, 97-98, 274 Cal.Rptr. 20), North Coast urges its claim did not arise until discovery of the footing problem, and the date of that discovery raises at least a triable issue of fact as to whether the statute of limitations has run.

The difficulty with North Coast's claim is that this issue was never raised below. No mention of "defective footings" was made in North Coast's points and authorities filed in opposition to the summary judgment motion; North Coast's Separate Statement of Disputed Material Facts contained no hint that the date of discovery of

this "defect" was a disputed fact material to the statute of limitations issue; North Coast's oral argument was silent on this issue; and, it appears, there was no motion for reconsideration or request for relief under section 473 to bring this issue to the trial court's attention. We conclude the failure to raise or argue this "defect" below bars North Coast from obtaining reversal thereon, both under general principles of "waiver" and "theory of the trial," and under the more particularized statutory provisions applicable to summary judgment motions.

A. Waiver and Theory of the Trial

Under general principles of "waiver" and "theory of the trial," the "footing" argument was waived. Ordinarily the failure to preserve a point below constitutes a waiver of the point. (Menefee v. County of Fresno (1985) 163 Cal.App.3d 1175, 1182, 210 Cal.Rptr. 99.) This rule is rooted in the fundamental nature of our adversarial system: The parties must call the court's attention to issues they deem relevant. " 'In the hurry of the trial many things may be, and are, overlooked which could readily have been rectified had attention been called to them. The law casts upon the party the duty of looking after his legal rights and of...