Opinion
As Modified Sept. 16, 1976.
For Opinion or Rehearing, see 148 Cal.Rptr. 215.
E. Arnold Oppenheim, Beverly Hills, for appellants.
Acret & Perrochet, Los Angeles, and James M. Baratta, Beverly Hills, for respondents.
HASTINGS, Associate Justice.
Plaintiffs and Appellants Harry D. Eden and Nina S. Eden appeal from two judgments of dismissal entered following motions for summary judgment by defendant Maro Corporation, dba Western Laboratories (Maro) and Max Van Tine, individually, and doing business as Van Tine Construction Co. (Van Tine). Each of said motions was granted upon the ground that the Edens' causes of action against defendants were barred by the statute of limitations contained in sections 337.1, subdivision (a) and 337.15, subdivision (a) of the California Code of Civil Procedure.
STATEMENTS OF FACTS
Plaintiffs filed their complaint on May 11, 1973. The first cause of action is against defendants Paul and Esther Suskin (sellers) and others, and seeks rescission and damages arising out of plaintiff's purchase of residential property at 30177 Rhone Drive, Palos Verdes Peninsula, California (subject property) on February 21, 1972. This cause of action alleges that at the time of sale, plaintiffs inquired of sellers and their brokers whether any defects existed in the stability of the property and the residence. In response they were told that the real property was stable and that the residence was structurally sound, and that the only defect in the property was a minor crack in the patio which occurred in 1966, which had not changed. Plaintiffs believed and relied on said representations and were induced thereby to purchase the real property.
On or about December 1, 1972, after the purchase had been completed and plaintiffs had taken possession of the premises, they discovered that a substantial section of a patio wall had failed and toppled down a slope, a fact which sellers and brokers had concealed from them. (Plaintiffs alleged this was not seen prior to purchase because of a dense hedge growth.) Upon discovery, plaintiffs employed engineers and geologists who discovered that the land was in fact unstable, and that the residence suffered substantial structural distress requiring considerable reconstruction of the property.
The second cause of action is against respondents Van Tine and Maro, seeking damages against these defendants predicated upon theories of negligence and strict liability in the development and construction
Maro was engaged by Van Tine in 1962 as the soil engineer to perform tests and to supervise and control the compaction of fill on the subject property. In June of 1962, Maro performed these services and prepared and submitted a compaction report and certification.
Van Tine cross-complained for indemnity against Maro and others. Van Tine's cross complaint was dismissed because of the dismissal of plaintiffs' cause of action against Van Tine.
In substance, the minute order of the trial court held that plaintiffs' cause of action was barred by section 337.15, subdivision (a) of the Code of Civil Procedure because the residence was habitable (substantially completed) when the Notice of Completion was recorded on February 5, 1963, and the complaint was filed more than ten years after that date. The trial court also found that the defects were patent rather than latent; therefore, the cause of action was barred by section 337.1 of the Code of Civil Procedure.
Section 337.15, as pertinent here, provides as follows:
The pertinent provisions of section 337.1 are as follows:
ISSUES
Plaintiffs identify the issues as follows:
Section 337.15 of the Code of Civil Procedure is inapplicable for the following reasons:
(1) the meaning of 'substantial completion' in the section refers to date of sale to the first consumer or initial occupancy. That this first occurred on October 14, 1963, when Van Tine and Moore-Griffin Co. conveyed title to the Suskins; therefore, the action was commenced within the ten-year period.
(2) The statute is so vague as to be unconstitutional.
(3) The statute cannot be applied retroactively.
DISPOSITION
(1) Under section 337.15, the ten-year statute of limitation period commences when the construction or improvement is substantially completed. Plaintiffs argue that the legislative history of the section discloses that the Legislature meant the phrase 'substantially completed' to mean the time of sale or delivery of the 'product' (the house) to the buyers. We disagree with plaintiffs that the legislative history of the bill justifies this interpretation of the phrase. If the Legislature had
One argument of plaintiffs is that Assembly Bill 2742, which passed, dropped the definition of 'substantial completion,' while Senate Bill 905 retained the definition but could not pass the first committee. According to plaintiffs, the inference is clear that the Legislature rejected the definition that 'substantial completion' was at a time earlier than the first sale of the product, thereby supporting their meaning of the phrase. The eliminated definition of 'substantial completion' was: 'As used in this section, 'substantial completion' means that point in time when a structure or other work of improvement becomes suitable for the purpose for which it was constructed or its acceptance for occupancy by the owner, whichever occurs first.'
'(a) The occupation or use of a work of improvement by the owner, or his agent, accompanied by cessation of labor thereon.
'(b) The acceptance by the owner, or his agent of the work of improvement. . . .' (Emphasis added.) The section has specifically made 'occupation' or 'acceptance' an alternative to 'actual completion.' The definition of 'substantial performance' is certainly compatible with these two alternatives.
'Excepting when clearly otherwise intended or indicated, words in a statute should be given their ordinary meaning and receive a sensible construction in accord with the commonly understood meaning thereof.' (Gawzner Corp. v. Minier, 46 Cal.App.3d 777, 783, 120 Cal.Rptr. 344, 348, citing County of Los Angeles v. Frisbie, 19 Cal.2d 634, 642, 122 P.2d 526.) (Emphasis added.) 'Legislative enactments are to be construed in accordance with the ordinary meaning of the language used, if the words are not ambiguous and do not lead to an absurdity' (Centinela Valley Secondary Teachers Ass'n v. Centinela Valley Union High Sch. Dist., 37 Cal.App.3d 35, 42-43, 112 Cal.Rptr. 27, 32), and in construing such language the courts may not insert any omitted provision. (See Code Civ.Proc., § 1858.) We are satisfied that the phrase 'substantial completion' refers to a point in time that is easily ascertainable. It is possible that on occasion the date of 'substantial completion' will coincide with first delivery or first occupation of the improvement (as urged by plaintiffs), but for the reasons stated, an earlier date is not precluded.
No evidence was produced by plaintiffs that the 'Notice of Completion' was improperly recorded prior to substantial completion of the residence. We therefore conclude there was 'completion' of the improvement within Civil Code section 3086 and 'substantial completion' under Code of Civil Procedure section 337.15, and the ten-year period commenced no later than February 5, 1963 (the recording date of the 'Notice of Completion').
A notice of completion filed before actual completion of the work of improvement is invalid. (See Scott, Blake & Wynne v. Summit Ridge Estates, Inc., 251 Cal.App.2d 347, 357, 59 Cal.Rptr. 587.) Plaintiffs are in error when they say that a notice of completion is a document by a builder or owner that does not establish completion or habitability. It is the owner or his agent that files the notice, and thus his acceptance of the improvement is acknowledged.
(2) Plaintiffs claim section 337.15 is unconstitutional because (a) there has been no prior judicial construction of its The third argument requires a response. Code of Civil Procedure section 337.15, subdivision (e) provides as follows: '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 such improvement constitutes the proximate cause for which it is proposed to bring an action.' (Emphasis added.)
This section prevents the person in possession or control of the premises at the time a deficiency occurs to escape liability by claiming it was caused by a latent defect traceable to the parties named in section 337.15, if more than 10 years have elapsed. We are assisted in this interpretation by Balido v. Improved Machinery, Inc., 29 Cal.App.3d 633, 105 Cal.Rptr. 890, and the legislative history of the statute. In Balido, the court said on page 642, 105 Cal.Rptr. on page 896:
'In areas where the problem of time, change, and causation has proved particularly troublesome the Legislature has provided the courts with arbitrary mechanical solutions, often in the form of statutes of limitation. These statutes, although couched as procedural limitations on the time within which to bring suit, in effect terminate substantive liability by decreeing that after the passage of a specified time the causal connection between defect and injury will no longer be legally recognized. Examples of recent legislative pronouncements affecting causation are the statute limiting certain malpractice actions against physicians and hospitals to four years from the date of injury (Code Civ.Proc., § 340.5), and the statute limiting actions against developers, contractors, and architects for latent deficiencies in the supervision, construction, and design of an improvement in real property to 10 years. (Code Civ.Proc., § 337.15.)'
The legislative history of the statute clearly demonstrates that the legislative action was substantially motivated by the uninsurability (or high cost of insurance, if available) of the liability of the builder many years after completion of the improvements. On the other hand, one who owns the property or controls it at the time of the accident (i.e. at the time the defect constitutes the proximate cause of the damage or injury) is likely to have insurance.
In 1969 the doctrine of strict liability was applied to the home development industry. Tied to this doctrine was the problem of indefinite liability exposure. See Avner v. Longridge Estates, 272 Cal.App.2d 607, 77 Cal.Rptr. 633 and Kriegler v. Eichler Homes, Inc., 269 Cal.App.2d 224, 74 Cal.Rptr. 749.
Plaintiffs argue that subsection (e) applies to the contractor (and others named) who are in possession or control of the premises at the time the defective latent condition is designed, installed, or built into the improvement. This interpretation would defeat the intent of the statute. All contractors, developers, etc. are in control of the project at some stage of its development and plaintiffs' application of the subsection would deny them the defense intended. Plaintiffs' interpretation strains the language of the subsection. It does not refer to the person in possession or control at time of construction, but to the person in possession or control at the time that the deficiency becomes the proximate cause of the damage. All presumptions and intendments favor the validity of a statute. (In re H., 2 Cal.3d 513, 519, 86 Cal.Rptr. 76, 468 P.2d 204.) Statutes must be upheld unless their unconstitutionality clearly, positively and unmistakably appears. The fact that it is susceptible of different interpretations will not render it nugatory. (People v. Anderson, 29 Cal.App.3d 551, 561, 105 Cal.Rptr. 664.) We (3) Plaintiffs' final contention is that a statute is presumed to be prospective only in operation and will not be retroactively applied unless such intention clearly appears from language of the statute itself. (People ex rel. City of Bellflower v. Bellflower County Water Dist., 247 Cal.App.2d 344, 350-351, 55 Cal.Rptr. 584; Di Genova v. State Board of Education, 57 Cal.2d 167, 174, 18 Cal.Rptr. 369, 367 P.2d 865.) This issue, as it applies to plaintiffs' case, has in part been recently decided by Regents of University of California v. Hartford Acc. & Indem. Co., 59 Cal.App.3d 675, 131 Cal.Rptr. 112, where the work was substantially completed on September 2, 1962. Plaintiff first discovered the latent defects, upon which it brought its action for damages, in January 1972. Therefore, if the statute acted retroactively, plaintiff had approximately 9 months to bring the action. The court held that section 337.15 did act retroactively, saying on page 699, 131 Cal.Rptr. on page 125: 'The statute may be considered as retroactive or retrospective if it is construed to operate on matters which have occurred or rights or obligations which existed before the law went into effect. [Citations.] It is clear, however, that no one has a vested interest in the time fixed for the commencement of a civil action, and that the Legislature may alter the period of limitation with respect to the assertion of acrued rights provided that adequate means of enforcing those rights remain. 'It is settled that the Legislature may enact a statute of limitations 'applicable to existing causes of action or shorten a former limitation period if the time allowed to commence the action is reasonable.' [Citations.]' [Citations.]' (Emphasis added.)
The court further stated on pages 705-706, 131 Cal.Rptr. on page 129-130: 'The question is one of law to be determined by the court. The circumstances referred to in the case on which the owners rely, are the facts concerning whether the new limitation cuts off all right to sue, and, if not, the time remaining in which an action may be commenced. Those facts are not disputed. Support for this view is found in Rosefield Packing Co. v. Superior Court, supra, [4 Cal.2d 120, 47 P.2d 716] where the court stated with respect to an earlier case [Shoemaker v. Superior Court, 4 Cal.App.2d 586, 41 P.2d 343]: 'It is clear that the Shoemaker case proceeds upon an erroneous interpretation of the principle considered in the [Coleman v. Superior Court, 135 Cal.App. 74, 26 P.2d 673] case. Whether there was a reasonable time in these cases is not a matter committed to the discretion of the trial court. The question is one of constitutionality of the statute which in terms applies to the pending case; and if it appears that there was a reasonable time for exercise of the remedy before the statutory bar became fixed, the lower court cannot consider individual hardship or other circumstances, but must give effect to the express provisions of the law. On this point the case of Shoemaker v. Superior Court, supra, must be disapproved.' [Citations.] [p] We have no hesitancy in holding that the nine-month period in which the owner could have filed an action against the contractor and its surety was as a matter of law a reasonable period. [Citations.]'
In our present case, the date of 'substantial completion' was February 5, 1963. On December 1, 1972, plaintiffs allege, they discovered a section of the original wall had failed and toppled down a slope, a fact concealed from them by the selles (allegedly, heavy hedge growth prevented plaintiffs on inspection from seeing it). On this date, only two months and 5 In Regents of University of California v. Hartford Acc. & Indem. Co.,
This fact is hard to believe, however, plaintiffs are not suing Van Tine and Maro for a new wall. They are alleging they were not put on notice of a possible latent defect until discovery of the fallen wall,--a question for the trier of fact. See Comment, fn. 9, infra.)
We cannot stop at this point in the opinion, however, and remand for trial without commenting on another problem raised by plaintiffs' complaint. The trial court also dismissed the complaint under section 337.1 (fn. 2, supra) under the theory that the defect was patent. This section requires filing of the cause of action on less than fours years after substantial completion of the improvement. The finding of the trial court on this point was: 'Those cases cited by plaintiff holding that the question of the effect of the Statute of Limitations is a question of fact are not controlling for here Plaintiff alleged in his first cause of action that the Defendant Original Purchasers and Defendant Broker concealed the defects involved, some having been discovered in 1966; and Plaintiff incorporated all of those allegations in the cause of action relating to this Moving Defendant. Therefore, the defect was, by plaintiff's own allegations, patent, rather than latent, in 1966.'
The finding of the trial court was in error. The allegations in plaintiffs' complaint were: 1. '. . . Sellers and Brokers, and each of them, assured Plaintiffs that . . . the only defect in the property was a minor crack in the patio which occurred in 1966, and since that date had not changed' and 2. 'Defendant Sellers, and each of them, at the time they agreed to sell said property to Plaintiffs, knew or should have known of the defects in said property as hereinabove alleged, concealed the true facts from Plaintiffs and misrepresented to Plaintiffs that said ground was stable and the residence structurally sound.'
Plaintiffs are alleging that their predecessors in interest knew or should have known of the latent defects that developed long after construction but they concealed this information from plaintiffs. Under the allegations of the complaint, section 337.1 is inapplicable. However, the facts alleged could conceivably defeat plaintiffs' cause of action at trial. If, as alleged, plaintiffs' sellers knew or should have known of the latent defect, there was adequate time to bring a cause of action against Maro and Van Tine before the action was outlawed by section 337.15. Plaintiffs stand in the shoes of their predecessors and the period of the seller's knowledge must be added to theirs. In other words, the time to sue after knowledge of the defect exceeded substantially the nine-month period held to be more than a reasonable time to sue in the
In view of the fact that we are remanding the action for trial, the dismissal of Van Tine's cross-complaint against Maro must be reversed and the cross-complaint reinstated.
The judgments of dismissal of plaintiffs' cause of action against Van Tine and Maro, and the judgment of dismissal of Van Tine's cross complaint against Maro, are all reversed.
'Van Tine and Maro at oral argument moved to strike certain portions of Plaintiffs Reply Brief and plaintiffs at the same time moved to augment its record on appeal. The motions (both in written form) were submitted. The motion of Van Tine and Maro is denied. Plaintiffs motion to augment the record is granted.'
STEPHENS, Acting P.J., and ASHBY, J., concur.
'(a) No action may be brought to recover damages from any 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 such 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.'
'(a) Except as otherwise provided in this section, no action shall be brought to recover damages from any person performing or furnishing the design, specifications, surveying, planning, supervision or observation of construction or construction of an improvement to real property more than four years after the substantial completion of such improvement for any of the following: (1) Any patent deficiency in the design, specification, surveying, planning, supervision or observation of construction or construction of an improvement to, or survey of, real property.'