San Francisco Unified School Dist. v. W.R. Grace & Co.

• Decision Date: 21 August 1995
• Docket Number: COMPANY-CONNECTICU,No. A064739,D,A064739
• Court: California Court of Appeals Court of Appeals
• Parties: , 102 Ed. Law Rep. 705, 95 Cal. Daily Op. Serv. 6672, 95 Daily Journal D.A.R. 11,290 SAN FRANCISCO UNIFIED SCHOOL DISTRICT, Plaintiff and Appellant, v. W.R. GRACE &efendant and Respondent.

Page 305

44 Cal.Rptr.2d 305

37 Cal.App.4th 1318, 102 Ed. Law Rep. 705,

95 Cal. Daily Op. Serv. 6672,

95 Daily Journal D.A.R. 11,290

SAN FRANCISCO UNIFIED SCHOOL DISTRICT, Plaintiff and Appellant, v. W.R. GRACE & COMPANY-CONNECTICUT, Defendant and Respondent.

No. A064739.

Court of Appeal, First District, Division 4, California.

Aug. 21, 1995.

Review Denied Dec. 14, 1995.

Speights & Runyan, C. Alan Runyan, Hampton, SC, Law Offices of Thomas J. Brandi, Thomas J. Brandi, Mylene L. Reuvekamp, San Francisco, Daniel U. Smith, Kentfield, for appellant.

George A. Manfredi, David T. Biderman, Stacy Allen, Perkins Coie, Los Angeles, for respondent.

REARDON, Associate Justice.

When a building is constructed with asbestos-containing materials, does a property owner's cause of action for strict liability or negligence accrue on the owner's discovery of the mere presence of asbestos in the building or when asbestos contamination occurs? In this case, we hold--consistent with the vast majority of other jurisdictions that have considered this issue--that the owner of a building containing asbestos cannot state a cause of action in tort against an asbestos manufacturer until contamination occurs. Thus, the statute of limitations in an asbestos-in-building case does not commence until there has been damage in the form of contamination.

In our case, respondent W.R. Grace & Company-Connecticut (Grace) obtained a summary judgment and dismissal of an asbestos-in-building action filed by appellant San Francisco Unified School District (SFUSD). The trial court denied SFUSD's motion for reconsideration of its conclusion that the action was barred by the statute of limitations. On appeal from both rulings, ¹ SFUSD contends (1) that the trial court erred in finding that the limitations period commenced on discovery of the mere presence of asbestos in its buildings; (2) the limitations period was tolled during the period in which it was a member of a federal asbestos class action; and (3) when properly requiring contamination before accrual of this asbestos-in-building action, a triable issue of fact existed about when the limitations period commenced. As we agree with SFUSD's claims, we reverse and remand the judgment.

I. FACTS

In July 1988, appellant San Francisco Unified School District filed an action against respondent W.R. Grace & Company-Connecticut and others, ² alleging causes of action for strict liability, negligence, breach of implied warranty, fraud and civil conspiracy. ³ In its September 1989 third amended complaint, SFUSD alleged that between 1968 and 1973, six of its schools were constructed using asbestos-containing products. It also alleged that some of these asbestos-containing products have deteriorated such that immediate removal is necessary. SFUSD alleged that the release of asbestos fibers from these materials caused physical injury to its schools and posed a potential hazard to building users and visitors. It also alleges that as a result of this hazard, it has incurred and will incur costs to inspect its buildings, to determine the extent of damage, to repair that damage, and to implement and maintain a special operations and maintenance program. It also alleges damage resulting from the uninhabitability of its buildings during repair and the notice it must give to all persons who have been exposed to the asbestos in its buildings.

The third amended complaint also alleges that sometime after 1968 and continuing to the present time, asbestos fibers have been released, damaging the schools by contamination that was not and could not have been known until January 17, 1983. On that date, SFUSD became a member of a mandatory federal class action. (See In re Asbestos School Litigation (E.D.Pa.1984) 104 F.R.D. 422, affd. in part and revd. in part (1986) 789 F.2d 996.) As a result of the filing of this federal action, SFUSD allegedly discovered the damage that before this time was not perceptible by reasonable means and of which it was blamelessly ignorant. On December 1, 1987, SFUSD opted out of the federal class action. It alleges that the limitations period was tolled until that date as a result of that action.

Grace answered this complaint in November 1989, pleading as an affirmative defense the bar of the statute of limitations. In July 1993, Grace moved for summary judgment on statute of limitations grounds. ⁴ In September 1993, the trial court granted this motion, finding that the action was barred by the three-year statute of limitations period. (Code Civ.Proc., § 338.) The trial court found that contamination was not required before SFUSD's causes of action accrued; that SFUSD's awareness that its schools contained potentially damaging asbestos was sufficient to trigger commencement of the limitations period. It ruled that undisputed evidence established that SFUSD was put on notice of this fact before June 1, 1980. Thus, it reasoned, even if the limitations period was tolled from January 17, 1983, through December 1, 1987, as a result of the federal class action, the July 1988 action was not timely filed. SFUSD moved for reconsideration which was denied in January 1994 for failure to present new facts or new law. An order granting summary judgment was filed, stating that SFUSD was entitled to recover nothing under this action.

II. COMMENCEMENT OF LIMITATIONS PERIOD

A. Asbestos-in-Building Cases

First, SFUSD contends that the trial court adopted the wrong legal standard for commencing the limitations period in this asbestos-in-building action. It urges that the limitations period for a strict liability or negligence cause of action does not commence until asbestos contamination occurred--or reasonably should have been discovered to have occurred--in its buildings. For its part, Grace argues that the trial court correctly ruled that the statute of limitations began to run when SFUSD suffered appreciable harm resulting from the mere presence of potentially dangerous asbestos in its buildings.

Our resolution of this question lies at the intersection of two lines of California Supreme Court cases. We must be faithful to both principles establishing when a cause of action accrues for purposes of the statute of limitations and those cases defining what constitutes an injury for purposes of a strict liability or negligence cause of action. (See Jolly v. Eli Lilly & Co. 1988) 44 Cal.3d 1103, 245 Cal.Rptr. 658, 751 P.2d 923; Seely v. White Motor Co. (1965) 63 Cal.2d 9, 45 Cal.Rptr. 17, 403 P.2d 145.) Our analysis is further complicated by the practical difficulties presented in applying these generally accepted principles within the context of an asbestos-in-building case. As other courts around the country have noted, asbestos cases are unique in the law. (Detroit Bd. of Educ. v. Celotex Corp. (1992) 196 Mich.App. 694, 493 N.W.2d 513, 518.) The nature of the defect and the damage caused by asbestos differs from the defects and damages found in most other strict liability and negligence cases. (Board of Educ. v. A, C and S, Inc. (1989) 131 Ill.2d 428, 137 Ill.Dec. 635, 643, 546 N.E.2d 580, 588.) In most cases in which delayed discovery of a cause of action arises, the injury is clear but the causation or the identity of the tort-feasor is not known. By contrast, in the typical asbestos-in-building case, the identity of the tort-feasor is known as is the fact that the building materials contain asbestos. What the plaintiff does not know is when the asbestos will become harmful--when it might injure those who occupy the building.

The physical danger to persons occupying a building containing asbestos begins when asbestos fibers become airborne. Respirable asbestos fibers may be released from friable asbestos-containing materials when these materials are disturbed. (Adams-Arapahoe School Dist. No. 28-J v. GAF Corp. (10th Cir.1992) 959 F.2d 868, 870.) Friable asbestos material, "when dry, may be crumbled, pulverized, or reduced to powder by hand pressure, and includes previously nonfriable material after such previously nonfriable material becomes damaged to the extent that when dry it may be crumbled, pulverized, or reduced to powder by hand pressure." (40 C.F.R. § 763.83 (1990); Adams-Arapahoe School Dist. No. 28-J v. GAF Corp., supra, at p. 870.) Thus, the timing problem unique to asbestos cases leads us to the unusual inquiry posed by this appeal--when does "injury" occur such that a strict liability or negligence cause of action accrues and the limitations period commences in an asbestos-in-building case?

B. Statute of Limitations

Some background on statutes of limitations is helpful to understanding the issue presented in our case. SFUSD and Grace do not dispute the basic statute of limitations rules to be applied. The statute of limitations for injury to real property is three years. (Code Civ.Proc., § 338, subd. (b); City of San Diego v. U.S. Gypsum Co. (1994) 30 Cal.App.4th 575, 578, 35 Cal.Rptr.2d 876.) The resolution of a statute of limitations defense is typically a factual question for the trier of fact. However, summary judgment is proper if the court can draw only one legitimate inference from uncontradicted evidence about the limitations issue. (See Jolly v. Eli Lilly & Co., supra, 44 Cal.3d at p. 1112, 245 Cal.Rptr. 658, 751 P.2d 923; City of San Diego v. U.S. Gypsum Co., supra, at p. 582, 35 Cal.Rptr.2d 876; see also Leaf v. City of San Mateo (1980) 104 Cal.App.3d 398, 406, 163 Cal.Rptr. 711.)

The gravamen of SFUSD's third amended complaint is in tort--specifically, its causes of action for strict liability and negligence. In tort actions, the statute of limitations commences when the last element essential to a cause of action occurs. (City of San Diego v. U.S. Gypsum Co., supra, 30 Cal.App.4th at p. 582, 35 Cal.Rptr.2d 876; Leaf v. City of San Mateo, supra, 104 Cal.App.3d at p. 406, 163 Cal.Rptr. 711.) The statute of limitations does not begin to run and no cause of action...