Wilshire Westwood Associates v. Atlantic Richfield Co.

• Decision Date: 24 November 1993
• Docket Number: B061959,Nos. B060492,s. B060492
• Citation: 24 Cal.Rptr.2d 562,20 Cal.App.4th 732
• Court: California Court of Appeals Court of Appeals
• Parties: WILSHIRE WESTWOOD ASSOCIATES, et al., Plaintiffs and Appellants, v. ATLANTIC RICHFIELD COMPANY, et al., Defendants and Respondents.

Page 562

24 Cal.Rptr.2d 562

20 Cal.App.4th 732

WILSHIRE WESTWOOD ASSOCIATES, et al., Plaintiffs and Appellants, v. ATLANTIC RICHFIELD COMPANY, et al., Defendants and Respondents.

Nos. B060492, B061959.

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

Nov. 24, 1993.

Rehearing Denied Dec. 22, 1993.

Review Denied March 3, 1994.

Nossaman, Guthner, Knox & Elliott, Thomas D. Long and Mary Lou Byrne, Los Angeles, for plaintiffs and appellants.

McClintock, Weston, Benshoof, Rochefort, Rubalcava & MacCuish, Steven W. Weston, Steven J. Vining and Bren C. Conner, Los Angeles, for defendant and respondent Atlantic Richfield Co.

Sedgwick, Detert, Moran & Arnold, T. Emmet Thornton, Daniel P. Schrader and Tod Zuckerman, Los Angeles, for defendant and respondent Peter J. Ruddock.

EPSTEIN, Associate Justice.

Wilshire Westwood Associates and Platt Development Corporation appeal from summary judgment entered against them in their action seeking damages from former lessees for the costs of abating soil contamination on a parcel of property. They assert error in the court's grant of summary adjudication of two issues: that operation of a gasoline service station is not an ultrahazardous activity giving rise to strict liability; and that no claim for private nuisance can be stated against a former occupant of property by a subsequent purchaser of the same property. They challenge the grant of summary judgment as to the remaining cause of action for negligence, asserting error in the court's holdings regarding lack of duty, implied assumption of the risk, and statute of limitations. Finally, they argue that the court erred in refusing to limit the attorney's fees awarded to respondent Peter Ruddock to those fees attributable to the contract claims.

We conclude that the undisputed facts establish that the causes of action for negligence and strict liability are barred by the statute of limitations, and affirm the judgment on those causes of action. For this reason, we need not reach the questions of ultrahazardous activity, lack of duty and implied assumption of the risk. We find that appellants stated a cause of action for continuing nuisance, and that the statute of limitations does not bar that cause of action. We also conclude that the nuisance statutes are broad enough to include an action by a subsequent purchaser of property against former occupiers of the same property, and reverse the judgment as to the nuisance cause of action. We find no abuse of discretion in the court's refusal to apportion attorney's fees, since the tort and contract claims presented the same issues.

FACTUAL AND PROCEDURAL SUMMARY

John and Thomas Crawford were owners of a parcel of property at the southeast corner of Wilshire and Midvale, in the Westwood Village section of Los Angeles. From 1964 to December of 1983, the Crawfords leased this property to Atlantic Richfield Company (ARCO) for operation of an ARCO gasoline service station. ARCO operated the station in conjunction with Peter J. Ruddock, its sublessee. When ARCO's lease expired in December 1983, Ruddock entered into a month to month lease with the Crawfords and continued to operate the station as an ARCO franchisee.

In November 1982, the Crawfords entered into an agreement to sell the property to Wilshire Westwood Associates and Platt Development Corporation (collectively "Wilshire Westwood"). Wilshire Westwood intended to construct a high-rise office building on the property. One of the express conditions in the purchase agreement was that Wilshire Westwood inspect and approve, within 60 days, "the physical condition of the Property, including but not limited to the buildings and structures thereon, the soil, engineering, compaction and geological conditions thereunder, ..."

Wilshire Westwood engaged a soils consultant, LeRoy Crandall & Associates, to inspect the property. Crandall's initial investigation relied upon soil borings performed in 1979 along the border between the subject property and the adjoining Wilshire Westwood took title to the property in August 1984. Ruddock's lease was assigned to Wilshire Westwood, and he continued to operate the service station until November 1984.

                property.  Although one of those soil borings revealed gasoline odors, Crandall's April 11, 1983 report to Wilshire Westwood did not mention the gasoline odors and did not include the 1979 boring logs.  The letter report concluded that "no unusual difficulties from a soil standpoint would be expected in excavating at the site."   On May 22, 1983, the purchase agreement was amended to reflect that Wilshire Westwood "has satisfied itself with regard to the Soils Contingency set forth in the Agreement."   In that amendment, Wilshire Westwood expressly waived the soil contingency
                

When excavation for construction of the high-rise began on December 9, 1985, gasoline contamination was discovered in the soil. Wilshire Westwood had the contaminated soil removed, in accordance with directives of the California Department of Health Services. According to Wilshire Westwood, its out-of-pocket cost for the clean-up was $3,000,000. It also sustained financial harm from a related delay in completion of the building.

In October 1986, Wilshire Westwood filed suit against ARCO and Ruddock in U.S. District Court to recover its costs of cleanup pursuant to the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 United States Code sections 9601 et seq. and 9607(a)(2)(B). That action was dismissed based on the petroleum exclusion in 42 United States Code section 9601(14). (See Wilshire Westwood Assoc. v. Atlantic Richfield (9th Cir.1989) 881 F.2d 801.)

Wilshire Westwood then filed this action in superior court, setting forth claims against ARCO and Ruddock for ultrahazardous activity, nuisance and negligence, and claims against Ruddock for breach of his lease. The Crawfords were named as defendants in this action, but they reached a settlement with Wilshire Westwood and were dismissed from the case. Wilshire Westwood's separate action against Crandall for professional malpractice was consolidated with this case, and later was settled and dismissed.

ARCO and Ruddock moved for summary adjudication of the issues of liability for ultrahazardous activity and nuisance. That motion was denied based on procedural grounds. The motion was modified and renewed. This time, the trial court granted summary adjudication as to Wilshire Westwood's causes of action for nuisance and strict liability.

ARCO then moved for summary judgment on the remaining claim against it for negligence. ARCO presented three theories, each of which, it claimed, was sufficient to warrant the relief it sought: that as a prior occupier of land, ARCO owed no duty of care to a subsequent purchaser; that Wilshire Westwood's claim was barred by the three-year statute of limitations; and that the claim was barred by express or implied assumption of the risk. The trial court granted summary judgment based on the first and second of these grounds.

Ruddock then moved for summary judgment on the negligence and breach of lease claims against him. The trial court granted summary judgment, and also awarded him approximately $175,000 in attorney's fees pursuant to a provision in his lease agreement with Wilshire Westwood. Wilshire Westwood appeals from the judgments.

DISCUSSION

I Statute of Limitations

Respondents assert that the undisputed facts demonstrate that all of appellants' claims are barred by the statute of limitations. The parties agree that the statute of limitations for injury to real property is three years. (Code Civ.Proc., § 338, subd. (b).) The question presented is when that three-year period began to run.

In tort cases, the statute of limitations generally begins to run upon the Where the harm at issue is a tortious injury to property, the injury is considered to be to the property itself, rather than to the property owner. (CAMSI IV v. Hunter Technology Corp. (1991) 230 Cal.App.3d 1525, 1534-1535, 282 Cal.Rptr. 80.) "Thus once the sewer line has been improperly located on the property [citation], or the lot preparation and foundation construction have been improperly done [citation], or the encroaching buildings are constructed [citation], the tort is complete and the statute of limitations (unless forestalled by the 'discovery rule' or some other special doctrine) begins to run: An owner must bring its claim to court within the statutory period or the claim will be barred for that and all subsequent owners. Normally a subsequent owner will not be personally harmed by the tort until he or she becomes the owner, but no case has held that each new owner thus becomes entitled to a new statute of limitations against the tortfeasor. Such a rule would wholly disregard the repose function of statutes of limitations." (Id. at p. 1535, 282 Cal.Rptr. 80, emphasis omitted.)

                occurrence of the last event essential to the cause of action, even if the plaintiff is unaware that a cause of action exists.  (Leaf v. City of San Mateo (1980) 104 Cal.App.3d 398, 406, 163 Cal.Rptr. 711.)   The infliction of actual and appreciable harm will commence the limitations period.  (Davies v. Krasna (1975) 14 Cal.3d 502, 514, 121 Cal.Rptr. 705, 535 P.2d 1161.)
                

The discovery rule to which the CAMSI IV case refers assumes that all conditions for accrual of the action exist, but postpones commencement of the limitation period until the plaintiff discovers or should have discovered the facts essential to his cause of action. (Leaf v. City of San Mateo, supra, 104 Cal.App.3d 398, 406, 163 Cal.Rptr. 711.) Under this rule, "[p]ossession of 'presumptive' as well as 'actual' knowledge will commence the running of the statute." (Sanchez v. South Hoover Hospital (1976) 18 Cal.3d 93, 101, 132 Cal.Rptr. 657, 553 P.2d 1129.) A plaintiff is charged with "presumptive" knowledge so as to commence the running of the statute once he or...