Upland Medical and Dental Owners etc. v. MLD-Medical CA4/2 (2021) · DecisionDepot
Upland Medical and Dental Owners etc. v. MLD-Medical CA4/2
California Court of Appeal May 6, 2021 No. E072257Unpublished
Filed 5/6/21 Upland Medical and Dental Owners etc. v. MLD-Medical CA4/2
NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION TWO
UPLAND MEDICAL AND DENTAL OWNERS ASSOCIATION, E072257 Plaintiff and Appellant, (Super.Ct.No. CIVDS1804931) v. OPINION MLD-MEDICAL, LLC et al.,
Defendants and Respondents.
APPEAL from the Superior Court of San Bernardino County. Judge David Cohn.
Affirmed.
The Naumann Law Firm, William H. Naumann, Loren K. Shiu; Williams Iagmin
and Jon R. Williams for Plaintiff and Appellant.
Lincoln Gustafson & Cercos, Theodore R. Cercos and Richard J. Reese for
Defendants and Respondents.
1
Plaintiff Upland Medical and Dental Owners Association appeals a summary
judgment on their construction defect lawsuit in favor of defendants MLD-Medical, LLC
(MLD) and Fullmer Construction, Inc. (Fullmer). MLD was the developer and original
owner, and Fullmer was the contractor of a suite of commercial medical office units in
Upland (the property), which plaintiff, a condominium association, now owns.
In granting defendants’ motion for summary judgment, the trial court concluded
plaintiff’s lawsuit was time-barred under the 10-year limitations period in Code of Civil
Procedure section 337.15 for latent construction defect actions. That provision prohibits
filing a lawsuit against a developer or contractor for latent construction defects more than
10 years after whichever event occurs first—“substantial completion” of the allegedly 1 defective project or “recordation of a valid notice of completion.” (Code Civ. Proc.,
§ 337.15, subds. (a) & (g), unlabeled statutory citations refer to this code.) The trial court
determined plaintiff’s lawsuit was untimely because it was filed more than 10 years after
MLD recorded a notice of completion for the property.
On appeal, plaintiff argues the trial court misinterpreted the terms “substantial
completion” and “valid notice of completion” in section 337.15, and that, MLD, as the
original owner of the property, is barred from raising the limitations period as a defense
under the “owner exception” in section 337.15, subdivision (e). According to plaintiff,
“substantial completion” occurs when the property can safely be used or occupied for its
1Three events other than recordation—none relevant here—may also trigger the running of the statute of limitations. (§ 337.15, subd. (g).)
2
intended purpose, which they say didn’t occur until almost a year after the notice of
completion was recorded—when the property passed final inspection and the city issued
a certificate of occupancy. Plaintiff argues the notice of completion is “invalid” within
the meaning of the statute because it was recorded before those events.
We find plaintiff’s arguments unpersuasive. First, their definition of “substantial
completion” is not supported by the statute. Second, in any event, the statute lists
recordation of a notice of completion as an event other than substantial completion which
can trigger the limitations period. The controlling event is “whichever first occurs.”
(§ 337.15, subds. (a) & (g), italics added.) Thus, the Legislature envisioned a
circumstance where the notice of completion is recorded before construction is complete
and, in such cases, the statute is clear the recordation triggers the limitations period.
Finally, plaintiff is wrong that the owner exception in section 337.15, subdivision (e)
applies to MLD. The exception applies to the owner of the property at the time the defect
“constitutes the proximate cause” of the injury alleged in the lawsuit, and plaintiff
presented no evidence their claimed damages arose during the brief period MLD owned
the property or the longer period MLD allegedly controlled plaintiff’s board of directors.
We therefore affirm.
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I
FACTS
A. The Complaint
On January 19, 2018, plaintiff served defendants with a notice of commencement
of legal proceedings. (Civ. Code, § 6870.) On February 28, 2018, plaintiff filed a
complaint against defendants, asserting claims for negligence and breach of implied
warranties and seeking damages in excess of $500,000. The complaint alleges the
property suffered defects in its common areas relating to the exterior stucco, drywall,
windows, subterranean wall, roof drain, and refrigerant and air conditioning components.
According to the complaint, MLD developed the property and was its original
owner, and Fullmer was the general contractor responsible for its construction. MLD
established a condominium association (plaintiff) in June 2008 to maintain and repair the
property’s common areas. The “Declaration of Covenants, Conditions and Restrictions
for the Upland Medical and Dental Owners Association” (what plaintiff refers to as the
“Condominium Declaration”) requires the owners of the property’s individual units to
serve as members of the association. The owners have an undivided fractional fee interest
in the property’s common areas, in addition to holding fee title to their units. MLD
owned the property for a brief time before transferring title to the association, and,
according to the complaint, MLD controlled representatives on the association’s board of
directors for some unspecified period of time.
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B. Summary Judgment
MLD and Fullmer filed a motion for summary judgment, arguing the complaint
was time-barred under the limitations period in section 337.15 because plaintiff
commenced the litigation more than 10 years after the notice of completion was recorded.
To support their motion, defendants submitted declarations from Fullmer’s chief financial
officer, Gered Yetter, and from James Fullmer (who was a member of MLD when it
developed the property). Both witnesses said construction on the project concluded in late
2007. Defendants also submitted a copy of the notice of completion, which reflects that
MLD recorded it with the San Bernardino County Recorder on December 7, 2007. The
notice of completion identifies MLD as the owner of the property, describes the property
as “One Wood & Steel Framed Two Story Medical Office,” and says Fullmer completed
construction on December 7, 2007.
Plaintiff opposed the motion, arguing there was a factual dispute over the date of
“substantial completion” for purposes of triggering the 10-year limitations period.
Plaintiff submitted emails between defendants and the city inspector regarding final
inspection of the property; emails between defendants and the fire inspector; various
correction notices issued after multiple final inspections; notes obtained from Upland’s
Department of Development Services indicating that the building passed final inspection
on November 13, 2008; a certificate of occupancy for the property (which was issued by
the city on November 13, 2008); and an aerial photograph from Google Earth of the
construction site on October 22, 2007.
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Plaintiff also submitted the declaration of Juan Coria, a licensed general contractor
they had retained as a construction expert. Mr. Coria had reviewed all of the documents
listed above in forming his opinions. Mr. Coria opined that the term “substantial
completion” means “the stage of work is sufficiently complete that the owner can occupy
or utilize the premises for its intended use.” Based on this definition, Mr. Coria further
opined that “the earliest possible date the building would have been substantially
complete and be considered a safe structure to occupy and able to serve its intended
purposes would have been November 13, 2008,”—that is, the date the city completed
final inspection of the property and issued the certificate of occupancy. Finally, Mr. Coria
said his office had confirmed with the office of the San Bernardino County Recorder that
when it reviews a notice of completion it checks for completeness and a “verification
signature by either the owner or an agent of the owner.” In other words, the recorder’s
office does not inquire as to “whether the subject property has passed any inspections or
has been certified to be occupied.”
Plaintiff also argued that section 337.15, subdivision (e) prohibits any party in
possession or control of the property at the time the defect caused actionable harm from
asserting the limitations period as a defense. They argued there was a factual dispute over
when MLD relinquished control of the property, and in support, submitted a grant deed
recorded December 30, 2008, reflecting MLD’s transfer of title to the property to
plaintiff, the condominium association. They also submitted copies of the minutes of their
annual members meetings for the years 2009 through 2013 to support their argument that
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MLD “appointed and maintained control of [plaintiff’s] board of directors from 2009
through January 2013.” Finally, plaintiff asked for a continuance to depose two Fullmer
employees “who were believed to be involved with the day-to-day construction of the
[property]” in the event the court concluded that the evidence they had submitted was
insufficient to create a triable issue of material fact regarding the date of “substantial
completion.”
After reviewing the parties’ submissions and hearing oral argument, the trial court
concluded the 10-year limitations period began on December 7, 2007, when MLD
recorded the notice of completion, and because plaintiff commenced legal proceedings
more than 10 years after that date (on January 19, 2018 at the earliest), the lawsuit was
untimely. Relying on A & B Painting & Drywall, Inc. v. Superior Court (1994) 25
Cal.App.4th 349 (A & B), the court concluded that whether additional construction took
place on the property after December 7, 2007 was immaterial because in this case the
triggering event was the recorded notice, not “substantial completion” of construction.
The court entered judgment in favor of defendants, and plaintiff timely appealed.
II
ANALYSIS
A. General Principles and Standard of Review
A trial court properly grants summary judgment when there are no triable issues of
material fact and the moving party is entitled to judgment as a matter of law. (§ 437c,
subd. (c).) “The purpose of the law of summary judgment is to provide courts with a
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mechanism to cut through the parties’ pleadings in order to determine whether, despite
their allegations, trial is in fact necessary to resolve their dispute.” (Aguilar v. Atlantic
The standard of review for summary judgment is well established. A moving
defendant bears the initial burden to show a cause of action has no merit by establishing
that one or more elements of a cause of action cannot be established or that there is a
complete defense. (§ 437c, subds. (a), (p)(2).) Once the defendant clears this hurdle, the
burden shifts to the plaintiff to demonstrate a triable issue of material fact. (Aguilar,
supra, 25 Cal.4th at pp. 850-851.) We independently review an order granting summary
judgment, viewing the evidence in the light most favorable to the nonmoving party.
(Miller v. Department of Corrections (2005) 36 Cal.4th 446, 460.)
B. Section 337.15’s Special Limitations Period
Section 337.15, which was enacted in 1971, provides that “[n]o action may be
brought to recover damages” for a latent defect from any person who develops real
property or performs the construction of any improvement to real property “more than 10
years after the substantial completion of the development.” (§ 337.15, subd. (a), italics
added.)
In 1981, the Legislature amended the statute to add subdivision (g) and provide
further instruction on when the limitations period begins to run. (Stats. 1981, ch. 88, § 1.)
The new subdivision directs that the limitations period “shall commence upon substantial
completion of the improvement, but not later than the date of one of the following,
8
whichever first occurs: (1) The date of final inspection by the applicable public agency[;]
(2) The date of recordation of a valid notice of completion[;] (3) The date of use or
occupation of the improvement[; or] (4) One year after termination or cessation of work
on the improvement.” (§ 337.15, subd. (g), italics added.) Section 337.15 therefore
specifies five different events which may trigger the limitations period—“substantial
completion” of construction or any of the four other events listed above. The event that
controls, or triggers commencement of the limitations period, is the one that occurs first.
(§ 337.15, subd. (g); see also Nelson v. Gorian & Associates, Inc. (1998) 61 Cal.App.4th
93, 97 (Nelson) [“The trial court correctly ruled that the notice of completion date . . . did
not control if the improvement was substantially completed at an earlier date” (italics
added)].)
As the Nelson court explained, the four events listed in section 337.15, subdivision
(g) “do not define substantial completion.” (Nelson, supra, 61 Cal.App.4th at p. 96.)
Rather, they are alternatives to substantial completion, and whichever event occurs first
starts the 10-year period running.
In Lantzy v. Centex Homes (2003) 31 Cal.4th 363 (Lantzy), the California
Supreme Court described section 337.15 as a “special limitations statute” whose purpose
is to “protect contractors and other professionals and tradespeople in the construction
industry from perpetual exposure to liability for their work.” (Lantzy, at p. 374.) “The
statute reflects a legitimate concern that ‘expanding concepts of liability could imperil the
construction industry unless a statute of limitations was enacted.’ [Citation.] Such
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concerns legitimately include the prohibitive cost of insurance against a perpetual and
never ending risk.” (Ibid.)
After reviewing the legislative history of section 337.15 and the state of the
common law before the statute was enacted, the Lantzy court concluded the 10-year
limitations period was intended to be “absolute.” (Lantzy, supra, 31 Cal.4th at p. 366.)
“[T]he Legislature, faced with a developing body of common law on the subject,
carefully considered how to provide a fair time to discover construction defects, and to
sue upon such defects if necessary, while still protecting a vital industry from the
damaging consequences of indefinite liability exposure. For latent deficiencies, the
lawmakers rejected shorter periods in favor of a limit in the upper range of those
previously adopted by other jurisdictions. Moreover, by placing exemptions in the latent
defect statute for personal injury, willful misconduct, and fraudulent concealment, the
legislators demonstrated an intent to pick and choose the particular exceptions they
wished to allow and those particular aspects of the prior case law they wished to embrace.
The implication arises that except as stated, and for important policy reasons, the
Legislature meant the generous 10-year period set forth in section 337.15 to be firm and
final.” (Id. at p. 377.)
Our high court also held the 10-year limitations period is not “subject to ‘equitable
tolling’ while the defendant’s promises or attempts to remedy a defect are pending.”
(Lantzy, supra, 31 Cal.4th at pp. 370, 373.) However, there are some limited exceptions
to the statute’s application. The statute does “not apply to actions based on willful
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misconduct or fraudulent concealment.” (§ 337.15, subd. (f).) And, under subdivision (e)
of section 337.15, the statute of limitations may “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 the improvement constitutes the proximate
cause for which it is proposed to bring an action.” (This is sometimes called the “owner
exception,” and we discuss plaintiff’s claim as it applies to MLD in part II.E, infra.)
Finally, the limitations period in section 337.15 is “the outside limit” for an action
against a contractor or developer for latent defects.” (A & B, supra, 25 Cal.App.4th at
p. 355.) “If a latent defect is discovered, an action must be filed within three years (§ 338)
or four years (§ 337) of discovery, but in any event must be filed within ten years
(§ 337.15) of substantial completion. . . . ‘[S]ection 337.15 imposes an absolute 10-year
bar . . . regardless of discovery.’” (Ibid.)
C. Plaintiff Failed to Demonstrate a Triable Issue of Fact as to When the Limitations Period Began
Plaintiff argues the trial court misinterpreted the phrases “substantial completion”
and “valid notice of completion” in section 337.15 and, as a result, erroneously concluded
they hadn’t demonstrated a triable issue of material fact about when the limitations period
began. According to plaintiff, a notice of completion is not “valid” under section 337.15,
subdivision (g) if it is recorded before construction is “substantially complete,” and that
did not occur in this case until the property was certified for occupation by the city. We
disagree with plaintiff’s interpretation of the statute.
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The first problem with their argument is it assumes that “substantial completion”
is the only triggering event. But as we’ve seen, the statute is not set up that way. Instead,
it lists four alternatives to substantial completion and says the limitations period
commences upon whichever event occurs first. (§ 337.15, subd. (g).) In other words, the
items in section 337.15, subdivision (g) are easily ascertainable events that may trigger
the limitations period on their own, without proof the construction was substantially
complete. (Nelson, supra, 61 Cal.App.4th at p. 96.) Put differently, the Legislature has
determined that any of the listed events are sufficient stand-ins for substantial
completion, and the one to occur first begins the limitations period. The events
themselves support this interpretation, as at least two of them are not obviously tied to the
status of construction. A building can be used or occupied before construction is
complete (§ 337.15, subd. (g)(3)) and construction can terminate or pause before it’s
complete (§ 337.15, subd. (g)(4)).
A & B, the case the trial court relied on in granting defendants’ motion for
summary judgment, is instructive. There, the owner of a mall brought a construction
defect action against two contractors 10 years and four months after the notice of
completion for the project was recorded (in September 1982). The contractors filed
motions for summary judgment on the ground the lawsuit was barred by the 10-year
limitations period in section 337.15. (A & B, supra, 25 Cal.App.4th at p. 353.) In
opposing the motions, the owner argued the contractors had continued to perform
“substantial work” on the project “long after” the notice of completion was recorded. (Id.
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at p. 356.) The owner submitted evidence of this later work “in the form of checks,
invoices and proposal estimates” to “show that [the contractors’] work was not completed
until well into 1983.” (Ibid.) The appellate court concluded the trial court had properly
sustained the contractors’ objections to this evidence because, so long as it occurs before
substantial completion of the project, “the notice of completion is the event that
commences the 10-year statute of limitations,” not substantial completion. (Ibid.)
The trial court found plaintiff’s argument essentially identical to the argument
rejected in A & B. That is, plaintiff was contending the notice of completion should not
trigger the limitations period because Fullmer performed additional construction work
after recordation in order to obtain final inspection approval and the certificate of
occupancy. The court found A & B directly on point and dispositive. “The parties spend a
lot of time in the moving and opposition papers talking about when the construction was
actually complete. All of that is irrelevant. The notice of completion is what governs
here.” “[A & B,] that’s this case. What’s important here is that the party who filed the
notice of completion was MLD [], which was the owner of the property at that time,
designating Fullmer [] as the contractor. [¶] . . . [T]his notice of completion was an
acknowledgment by the owner of the property that the work of improvement was
complete. The owner filed that. [¶] Later on the owner transferred the property to the
plaintiff but that notice of completion had already been recorded. So regardless of what
was or was not happening out at the project—and by the way, I can’t really tell from the
evidence that was submitted what work was going on, if any, after that date. [¶] It doesn’t
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matter. It’s irrelevant. Because the plaintiff purchased the property with notice that the
improvements were done and notice of [completion] was already of record.” The trial
court’s reasoning and conclusion is sound, and we see no reason to depart from the
holding of A & B.
Plaintiff attempts to distinguish this case from A & B by arguing that, unlike the
plaintiff in that case, they are making a textual argument about the interpretation of the
phrase “date of recordation of a valid notice of completion” in section 337.15,
subdivision (g). Plaintiff contends the Legislature’s inclusion of the word “valid” means a
notice of completion filed before construction is complete must be deemed invalid for
purposes of triggering the limitations period. (§ 337.15, subd. (g).) We are not persuaded
that is what the Legislature meant by “valid notice of completion.” To interpret the term
this way would mean the recording of a notice of completion could never be the event
that occurs first under section 337.15, subdivision (g). It would, by definition, always
occur after “substantial completion,” and there would be no reason to list it as a separate
triggering event. In our view, “valid,” as used in this provision, refers to the document
itself and the act of recordation, not the status of the underlying construction. In other
words, to be valid, the notice of completion must be properly recorded in the correct
county (so that any subsequent potential buyers can find it in the public record), refer to
the correct property or improvement, and be recorded by the proper party (the current
owner or the contractor or their agent). (See Eden v. Van Tine (1978) 83 Cal.App.3d 879,
14
885, fn. 6 [“It is the owner or his agent that files the notice, and [in doing so] his
acceptance of the improvement is acknowledged”].)
As they did in the trial court, plaintiff relies on Scott v. Summit Ridge Estates, Inc.
(1967) 251 Cal.App.2d 347 (Scott) as authority for their interpretation of the word
“valid” in Code of Civil Procedure section 337.15, subdivision (g). But the trial court
found Scott inapt, and we do too. That case involved former Civil Code section 1193.1,
which established the limitations period for a contractor who performed work on a
project and was not fully paid under their contract to file a mechanic’s lien against the
underlying property. The provision at issue stated that a contractor had 90 days from
“completion” of their contract work to file the lien, unless the original owner of the
property recorded a notice of completion “within 10 days after the completion of the
[contractor’s] work,” in which case the limitations period was shortened to 60 days (from
the recordation date). (Scott, at p. 357, italics added.) In Scott, the court held that the
notice of completion the owner defendant had recorded did not shorten the plaintiff
contractor’s limitations period because the notice related to a different contractor’s work
on the property. (Ibid.) In so holding, the court observed that “[a] notice of completion
filed by the owner before actual completion of the work of improvement is premature and
does not limit the time within which claims of lien must be filed.” (Ibid.)
Plaintiff seizes on this sentence and would have us apply it in the context of
section 337.15. We decline to do so because unlike the mechanic’s lien statute at issue in
Scott, section 337.15 does not make “completion” of the work the triggering event, nor
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does it state that the notice of completion must be filed “after” completion of the work.
(See Forsgren Associates, Inc. v. Pacific Golf Community Development LLC (2010) 182
Cal.App.4th 135, 145-146 [“The purpose of a mechanic’s lien is to secure payment to a
person who benefits another’s property, by giving the person a lien on the real property
that has increased in value from the improvement. . . . To preserve a mechanic’s lien, the
lien claimant must record a claim of lien within certain time periods following the
completion or cessation of work” (italics added)].) As one court has already explained,
the statutory provision establishing the limitations period for mechanic’s liens “does not
define ‘substantial completion’” for purposes of latent defect lawsuits and is therefore
“inapposite to the proper construction of section 337.15, subdivisions (a) and (g).”
(Nelson, supra, 61 Cal.App.4th at p. 98.)
Plaintiff points out that Eden v. Van Tine, supra, 83 Cal.App.3d 879 (Eden), a case
involving section 337.15, cited Scott for the proposition that the notice of completion
must be filed after completion of construction to trigger the limitations period. When
Eden was decided, section 337.15 provided only that the limitations period commenced
upon “substantial completion” of construction. Because that phrase was not defined, the
plaintiffs in Eden argued the phrase meant “sale or delivery” of the property (which, in
that case, was a single-family residence) to a buyer. (Eden, at p. 883.) The trial court
concluded that “substantial completion” occurred when the notice of completion of the
property was recorded (which occurred well before the plaintiffs’ purchased the
property), and the appellate court agreed, reasoning that defendants had provided no
16
evidence to suggest the notice of completion was filed before the substantial completion
of construction. (Id. at p. 885.) In a footnote, the court cited Scott for the proposition that
“[a] notice of completion filed before actual completion of the work of improvement is
invalid.” (Eden, at p. 885, fn. 6, citing Scott, supra, 251 Cal.App.2d at p. 357.)
The problem with relying on Eden for an interpretation of what “valid” means in
section 377.15, subdivision (g) is the case “predates the enactment of section 337.15,
subdivision (g)” in 1981. (Nelson, supra, 61 Cal.App.4th at p. 98.) Because “substantial
completion” was the only triggering event in the version of section 337.15 in effect at the
time, it makes sense to ensure that any notice of completion was filed at the same time as
or after construction was substantially complete.
The second problem with plaintiff’s argument is even if they were correct that a
notice of completion’s validity under section 337.15 depends on the status of
construction, the definition of substantial completion they offered to the trial court is not
supported by the statute or the case law. Plaintiff argued in their opposition that
substantial completion means the property can be safely occupied. They also argued that
didn’t occur until November 13, 2008, when the city completed final inspection and
issued a certificate of occupancy. The evidence they submitted to demonstrate a triable
issue of material fact on this point was Mr. Coria’s opinion about what substantial
completion means, a copy of the November 13, 2008 certificate of occupancy for the
property, and a series of computer printouts that appear to be inspection items and notes
taken by the inspector. One of those computer printouts contains an entry for “Bldg Final
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Building” and a corresponding approval date of November 13, 2008. Even if we assume
this evidence shows the property was not cleared for occupancy by city regulators until
the fall of 2008, nothing in the statute supports the interpretation that substantial
completion does not occur until the property can be occupied. The statute does not define
the term substantial completion, and the “date of use or occupancy” of the property is one
of the events that can trigger the limitations period but, again, only if it occurs before the
others.
Importantly, even if we assume a notice of completion is invalid if issued when
any amount of construction work remains to be done, the expert opinion and evidence
plaintiff presented to the trial court did not create a triable issue of material fact about
whether additional construction in fact took place after December 7, 2007. The court had
before it declarations from a Fullmer witness and an MLD witness saying that
construction was complete by the end of 2007 and documents reflecting the building was
certified for occupancy about a year later after multiple attempts at final inspection. But
none of the documents plaintiff submitted suggest any additional construction in fact
occurred between December 7, 2007 and November 13, 2008, when the certificate of
occupancy was issued. The only evidence plaintiff submitted to show additional
construction work occurred after December 7, 2007 was Mr. Coria’s opinion that an
aerial photograph of the construction site taken by satellite on October 22, 2007—46 days
before the notice of completion was recorded—depicted an incomplete project. Based on
the photograph, Mr. Coria compiled a list of 20 “tasks . . . still remaining to be
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completed,” which included “interior stairs and railing,” “interior rough plumbing,” and
“interior doors and partitions.” We have reviewed the copy of the aerial photo in the
appellate record, and we note the only aspect of the project that is visible from the
photograph is the roof and the parking lot. Given that Mr. Coria was not involved in the
construction, we conclude his review of an aerial photograph taken almost two months
before the notice of completion was recorded is too speculative a basis to support an
opinion about the status of construction on the date of recordation. (See, e.g., Doe v.
Salesian Society (2008) 159 Cal.App.4th 474, 481 [evidence submitted to support or
oppose summary judgment must be based on more than “speculation, . . . guesswork, or
mere possibilities”].)
We conclude the trial court properly determined the notice of completion triggered
the limitations period.
D. Plaintiff Is Not Entitled to a Continuance
Plaintiff argues the trial court erred in failing to rule on their request for a
continuance to depose two additional witnesses from Fullmer who may know specific
details regarding the timing of the construction work. In granting defendants’ summary
judgment motion, the court implicitly denied plaintiff’s request. We conclude the court
did not err, as the record shows plaintiff did not comply with the requirements of section
437c, subdivision (h) in requesting the continuance. (See, e.g., Combs v. Skyriver
Communications, Inc. (2008) 159 Cal.App.4th 1242, 1270 (Combs) [affirming denial of
continuance request on same ground].)
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Section 437c, subdivision (h) requires a court to grant a continuance to a summary
judgment hearing “[i]f it appears from the affidavits submitted in opposition . . . that facts
essential to justify opposition may exist but cannot, for reasons stated, be presented.”
(Italics added.) When the party requesting a continuance does not satisfy these
requirements, we review the trial court’s denial of a continuance request for abuse of
discretion. (Combs, supra, 159 Cal.App.4th at p. 1270.)
Here, plaintiff’s counsel did not explain in their declaration why the additional
depositions were essential to opposing defendants’ motion or why they needed additional
time to take them. (See A & B, supra, 25 Cal.App.4th at p. 357 [concluding a continuance
was not warranted under § 437c, subd. (h) because plaintiff counsel’s declaration stating
he had not been able to take depositions did not describe “what efforts were made to take
the necessary depositions or why they could not have been taken earlier”].) Instead,
plaintiff simply argued in their opposition that they had only “just recently” taken the
deposition of MLD’s “Person Most Knowledgeable,” Bryan Marshall, and he wasn’t able
to provide any specific information about the construction timeline.
In response, defendants’ counsel submitted a declaration with their reply papers
that provided the court with a sound basis for denying the continuance. Counsel
explained that defendants had identified both of the Fullmer employees plaintiff wanted
to depose in their special interrogatory responses as individuals who were “involved in
the construction or supervision of construction” of the project and that one of them
(James Fullmer) had even submitted a declaration in support of the motion for summary
20
judgment; that they had made Mr. Marshall available for a deposition months before
plaintiff’s opposition was due; and that it was plaintiff who asked to postpone Mr.
Marshall’s deposition to just before their opposition was due. Thus, the record reveals the
relevant information about the two Fullmer employees was available to plaintiff months
in advance of their deadline for opposing the summary judgment motion and that plaintiff
was responsible for the late date of Mr. Marshall’s deposition. On this record, the court
could reasonably conclude a continuance was not warranted.
Procedural requirements aside, another ground for affirming the trial court’s
refusal to grant a continuance is that the information plaintiff seeks to discover from the
additional depositions—whether Fullmer performed additional construction work after
the notice of completion was recorded—is immaterial. (Ace American Ins. Co. v. Walker
(2004) 121 Cal.App.4th 1017, 1025 [court did not abuse its discretion in denying request
because “[t]he discovery for which [the plaintiff] sought a continuance was not essential
to her opposition to the motion”].) The trial court followed the holding of A & B in
concluding that additional construction work performed after the notice of completion
would not affect the commencement of the limitations period, and, as we’ve stated, we
see no reason to depart from that case.
E. The “Owner Exception” in Section 337.15, Subdivision (e) Does Not Apply to MLD
Plaintiff argues the trial court erred by not applying section 337.15, subdivision (e)
to MLD to prohibit it from raising the limitations period as a defense. That provision
says: “The limitation prescribed by this section shall not be asserted by way of defense by
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any person in actual possession or the control, as owner, tenant or otherwise, of such an
improvement, at the time any deficiency in the improvement constitutes the proximate
cause for which it is proposed to bring an action.” (§ 337.15, subd. (e).) Plaintiff argues
MLD was effectively the owner of the property from December 2008 (when it transferred
title to plaintiff) to January 2013 because during that time MLD exercised “control and
domination” of plaintiff’s board of directors. We find plaintiff’s argument unpersuasive.
As the court explained in Eden, the owner exception “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.” (Eden, supra, 83 Cal.App.3d at pp. 885-886, italics
added.) This provision is intended to deny current property owners (in this case plaintiff)
from the protection of the limitations period. Defendants argue this provision would
apply, for example, if a pipe leak at the property caused water damage to a vehicle in the
parking lot 15 years after they had recorded the notice of completion. Section 337.15,
subdivision (e) would prevent plaintiff, the current owner of the property, from asserting
the 10-year limitations period, but MLD and Fullmer, as the developer and contractor,
would be protected by the limitations period.
We agree with defendants. As the Eden court also explained, there is a good
reason for treating current owners differently than builders and developers. ‘“A
contractor is in the business of constructing improvements and must devote his capital to
that end; the need to provide reserves against an uncertain liability extending indefinitely
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into the future could seriously impinge upon the conduct of his enterprise.’ 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.” (Eden, supra, 83 Cal.App.3d at p. 886, quoting Regents of University of
California v. Hartford Acc. & Indem. Co. (1978) 21 Cal.3d 624, 632, italics added.)
As an initial point, plaintiff has not provided any allegations or evidence as to
when the alleged construction defects became the proximate cause of their claimed
damages. The record contains the preliminary report of findings that plaintiff’s consultant
prepared and plaintiff submitted an opposition to summary judgment, but that report only
notes the existence of property damage (such as water intrusion) and does not indicate
when it occurred. However, plaintiff argues that the owner exception applies to MLD
because the defects that allowed for the water intrusion to occur arose during
construction, when MLD owned the property. We find Gundogdu v. King Mai, Inc.
(2009) 171 Cal.App.4th 310 instructive on this point. In that case, the plaintiffs (the
current owners of a single-family residence) argued that the developer should be
prohibited from asserting the 10-year limitations period because the defects occurred
during construction and the developer owned the property for 16 months after
construction was complete. (Id. at pp. 314-315.) The court disagreed, concluding “such
an interpretation of section 337.15 subdivision (e) would be contrary to the purpose of the
statute.” (Id. at p. 315.) “[P]laintiffs’ complaint for construction defects is premised on
[the developer’s] conduct as the developer of the property, not on liability incurred as a
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landowner. Absent any allegation that [the developer’s] conduct following completion of
the home caused plaintiffs’ damages, there is no reason why [it] should be denied the
protection that section 337.15 extends to developers.” (Ibid., italics added.)
Such is the case here. Plaintiff alleges the defects for which they seek damages
occurred during construction. They do not allege that MLD’s conduct as owner of the
property (for the short period it owned the property before transferring it to plaintiff, as
the condominium association), caused their damages. Nor do they allege that MLD
caused their damages during the time it allegedly controlled plaintiff’s board of directors.
Like the plaintiffs’ claims against the developer/owner in Gundogdu, plaintiff’s claims
against MLD “are premised on its liability for defects in the construction of [the property]
that occurred more than 10 years ago.” (Gundogdu, supra, 171 Cal.App.4th at p. 316.)
Finally, plaintiff argues that if the owner exception does not apply to MLD, the
limitations period as to MLD should be tolled (or should not start to run) until MLD gave
up its control over plaintiff’s board of directors, in January 2013. This argument was also
made and rejected in Gundogdu. The plaintiffs asserted the 10-year limitations period
should not run during “that period of time [the developer] retained actual possession or
control of the improvement.” (Gundogdu, supra, 171 Cal.App.4th at p. 316.) The court
found this argument “contrary to both the plain language of the statute and substantial
case law,” both of which make clear that the limitations period begins to run on the
occurrence of any of the triggering events in section 337.15 regardless of when the
property is finally sold to a purchaser. (Ibid.) The only authority plaintiff cites for their
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tolling/delayed accrual argument is El Escorial Owners’ Assn. v. DLC Plastering, Inc.
(2007) 154 Cal.App.4th 1337, and that case has no bearing here because it involves the
shorter limitations periods in sections 337 and 338 for patent defects (which accrue upon
discovery) and a tolling agreement between the parties. (El Escorial, at pp. 1354-1357.)
In contrast, the “generous” 10-year limitations period in section 337.15 is the outside
limit for bringing an action and it applies regardless of discovery. (Lantzy, supra, 31
Cal.4th at p. 367 [“the extraordinary length of the limitations period set forth in section
337.15 weighs strongly against the need for . . . a tolling rule as a matter of fair
procedure”].)
III
DISPOSITION
We affirm the judgment. Defendants shall recover their costs on appeal.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
SLOUGH J.
We concur:
CODRINGTON Acting P. J.
FIELDS J.
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AI Brief
AI-generated · verify before citing
Holding. The court held that the 10-year statute of limitations for latent construction defects under Code of Civil Procedure section 337.15 is triggered by the earliest of several events, including the recordation of a valid notice of completion, regardless of whether construction was fully completed at that time. Because the notice of completion was recorded more than 10 years before the lawsuit was filed, the action was time-barred.
Issues
Whether the 10-year limitations period in Code of Civil Procedure section 337.15 is triggered by the recordation of a notice of completion even if construction is not yet substantially complete.
Whether the 'owner exception' in Code of Civil Procedure section 337.15, subdivision (e) applies to the developer in this case.
Disposition. Affirmed.
Quotations verified verbatim against the opinion
“The statute lists recordation of a notice of completion as an event other than substantial completion which can trigger the limitations period. The controlling event is “whichever first occurs.””
“The Legislature envisioned a circumstance where the notice of completion is recorded before construction is complete and, in such cases, the statute is clear the recordation triggers the limitations period.”