Filed 8/4/03
IN THE SUPREME COURT OF CALIFORNIA
HENRY V. LANTZY et al.,
Plaintiffs and Appellants,
S098660
v.
Ct.App. 1/5 A091838
CENTEX HOMES et al.,
Contra Costa County
Defendants and Respondents. )
Super. Ct. No. C99-03025
Depending on the theory of recovery, a lawsuit alleging a latent defect in
the construction of an improvement to real property must be brought within three
or four years after the plaintiff discovers the defect, or should have done so. (See
Code Civ. Proc., §§ 337, subd. 1, 338, subds. (b), (c); Regents of University of
California v. Hartford Acc. & Indem. Co. (1978) 21 Cal.3d 624, 630 (Regents).)1
However, a 1971 statute established a further general rule that no action for latent
construction defects may be commenced more than 10 years after “substantial
completion” of the construction project. (§ 337.15; as enacted by Stats. 1971,
ch. 1569, § 1, p. 3149.)2 This “absolute” 10-year limitations period applies
regardless of when the defect was discovered. (Regents, supra, at p. 631.)
1
All further unlabeled statutory references are to the Code of Civil
Procedure.
2
Section 337.15 continues to apply fully to many construction projects,
including all nonresidential projects, but certain categories of residential
(Footnote continued on next page.)
1
Pre-1971 cases held that the discovery-based limitations period for a latent-
defect suit alleging breach of an express or implied warranty is “tolled”—that is,
halted and suspended in progress—while the defendant’s promises or attempts to
honor the warranty by repairing the defect are pending. Relying heavily on these
earlier authorities, and in suits not confined to warranty theories, two Court of
Appeal cases concluded that the alternate 10-year statute of limitations of section
337.15 is also subject to tolling for repairs. (Grange Debris Box & Wrecking
Co. v. Superior Court (1993) 16 Cal.App.4th 1349 (Grange Debris); Cascade
Gardens Homeowners Assn. v. McKellar & Associates (1987) 194 Cal.App.3d
1252 (Cascade Gardens).) A more recent Court of Appeal decision disagreed.
(FNB Mortgage Corp. v. Pacific General Group (1999) 76 Cal.App.4th 1116
(FNB Mortgage).)
Here the trial court sustained a demurrer without leave to amend and
dismissed the action, concluding that the 10-year limitations period could not be
extended by a defendant’s promises or attempts to repair. The Court of Appeal
reversed this judgment. The appellate court held that section 337.15 is subject
both to equitable tolling during periods of repair and to equitable estoppel if
defendants engaged in conduct that delayed the filing of suit. We granted review
to resolve the extent to which the doctrines of equitable tolling and equitable
(Footnote continued from previous page.)
construction, including (1) common interest developments and (2) residential units
first sold after January 1, 2003, are subject to separate, more recent legislation
affecting the applicable limitations periods for suit upon latent defects in those
projects. (Civ. Code, §§ 895 et seq., 941, 1375; see further discussion, post.) The
homes at issue here were first sold before January 1, 2003, and no party has
suggested they are part of a common interest development. Hence, as the parties
do not dispute, section 337.15 applies to this case.
2
estoppel should apply to the 10-year statute of limitations set forth in section
337.15.
We agree with FNB Mortgage, supra, 76 Cal.App.4th 1116, that section
337.15’s 10-year statute of limitations for latent construction defects is not subject
to a general rule of equitable tolling while promises or attempts to repair are
pending. A broad tolling-for-repairs rule would contravene the Legislature’s clear
intent, at the time it adopted section 337.15, to ensure a generous but firm cutoff
date for latent-defect suits. Moreover, the extraordinary length of the limitations
period set forth in section 337.15 weighs strongly against the need for such a
tolling rule as a matter of fair procedure.
Though we thus find no basis for equitable tolling during any period in
which the defendant’s promises or efforts to repair are pending, we do not
foreclose application of the distinct doctrine of equitable estoppel. A defendant
whose conduct induced plaintiffs to refrain from filing suit within the 10-year
period might be equitably estopped to assert that the statute of limitations had
expired. However, plaintiffs’ first amended complaint alleges no facts sufficient
to establish such an estoppel, and we find no basis upon which to allow a further
opportunity to amend.
We will therefore reverse the Court of Appeal’s judgment. We will also
disapprove the Grange Debris and Cascade Gardens decisions insofar as they
conflict with the views expressed in this memorandum.
FACTS
Plaintiffs filed their original complaint on August 5, 1999, and a first
amended complaint on December 3, 1999, asserting both individual and class
claims. The first amended complaint alleged as follows:
The Eagles Ridge project is a 450-unit development of single-family homes
in Antioch. Defendants—Centex Homes and related entities (collectively Centex),
3
American Consolidated Industries, Inc., and numerous Does—variously designed,
developed, built, and/or sold the Eagles Ridge homes, or designed, manufactured,
sold, and/or installed the windows. The four individual plaintiffs, whose claims
typify those of the other class members, are homeowners within the development
who bought their houses directly from defendants. The Eagles Ridge homes suffer
from design or manufacturing defects, including leaks in the windows and window
systems, that have caused damage to each of the individual residences. These
defects were discovered within three years before the lawsuit was filed. They may
have developed earlier, but could not have been discovered sooner with reasonable
diligence. “[A]s problems resulting from unknown defects were discovered,”
defendants represented to plaintiffs that they would correct all problems, were
experts in the construction field, and would take the steps required to ensure the
quality and integrity of the residences. “[A]t various times [d]efendants have
attempted to make repairs . . . or advised plaintiffs that the . . . windows were not
defective and not to file a lawsuit.” Despite their promises and attempts to repair,
defendants “have not properly completed[,] reconstructed, repaired and/or restored
the windows, interior waterproofing systems, and walls associated therewith.” By
their conduct, defendants are estopped to assert that the statute of limitations has
expired. Damages are recoverable on theories of implied warranty, strict liability,
and negligence.
Defendants demurred on two grounds. They urged the entire action was
barred by section 337.15’s 10-year limitations period for latent construction
defects. They also insisted the complaint’s class allegations were insufficient. In
support of their statute of limitations argument, defendants asked the court to take
judicial notice that the Notices of Completion on the four homes owned by the
individual plaintiffs were recorded in November 1988, some 10 years and 9
months before plaintiffs filed their original complaint.
4
In response, plaintiffs urged that the first amended complaint properly pled
a class action. With respect to the statute of limitations, plaintiffs argued that the
complaint sufficiently alleged both equitable tolling for repairs and equitable
estoppel to assert the statute by virtue of defendants’ conduct that forestalled a
timely lawsuit.
On April 24, 2000, the trial court filed its “Order After Hearing on
Demurrer.” The order sustained the demurrer without leave to amend on grounds
that the action was barred by the statute of limitations. The order reasoned: The
parties “appear to agree” that, unless “tolled” for about 9 months, section 337.15’s
10-year limitations period had expired before the complaint was filed.3 For two
reasons, the allegations of the complaint are not specific enough to establish a
repairs-based “estoppel.” First, plaintiffs allege in the alternative that defendants
either promised and attempted to repair or denied the defects and made demands
not to sue; the latter conduct is insufficient to create an “estoppel.” Second, by
alleging simply that repairs were attempted “at various times,” plaintiffs leave
open the possibility this conduct occurred after November 1998 (when the statute
of limitations expired unless tolled), and thus was not timely to create a “tolling.”
Amendments might cure these factual deficiencies, but amendment would be futile
here, because section 337.15 is a “statute of repose,” and thus is not subject to
“equitable tolling” for repairs.
3
The trial court never expressly ruled on defendants’ request for judicial
notice of the November 1988 completion notices on plaintiffs’ homes. However,
as the trial court indicated, there seems no dispute that plaintiffs’ suit is untimely
under the 10-year statute of limitations except for the possibility of equitable
tolling or equitable estoppel.
5
Plaintiffs appealed, and the Court of Appeal reversed. Unlike the trial
court, the Court of Appeal agreed with those decisions (Grange Debris, supra,
16 Cal.App.4th 1349; Cascade Gardens, supra, 194 Cal.App.3d 1252) that
extended equitable tolling for repairs to section 337.15, and rejected the contrary
reasoning of FNB Mortgage, supra, 76 Cal.App.4th 1116. Moreover, the Court of
Appeal concluded, just as section 337.15 is subject to equitable tolling, the statute
also is not immune from equitable estoppel. The Court of Appeal ruled that
plaintiffs had pled grounds for an equitable estoppel, sufficient to survive
demurrer, by alleging that defendants’ repeated promises to repair had caused
them to delay filing suit.
We granted Centex’s petition for review.4 We now conclude that the Court
of Appeal’s judgment must be reversed.
DISCUSSION
1. Equitable tolling.
Section 337.15, enacted in 1971, provides generally that “[n]o action may
be brought” against those involved in the design, supervision, or construction of
an improvement to real property, or their sureties, for latent defects in the design
or construction, or for injury to property caused by such defects, unless the suit is
filed within 10 years after “substantial completion” of the project. (Id., subd. (a).)
The 10-year period begins to run no later than “[t]he date of recordation of a valid
notice of completion.” (Id., subd. (g)(2).) Section 337.15 “shall [not] be
4
No other defendant has appeared on appeal, either in the Court of Appeal or
in this court. The California Building Industry Association, the National Home
Builders Association, and the Civil Justice Association of California have filed
amicus curiae briefs in this court on behalf of Centex.
6
construed as extending the period prescribed by the laws of this state for bringing
any action.” (Id., subd. (d).)
As we explained in Regents, supra, 21 Cal.3d 624, a suit to recover for a
construction defect generally is subject to limitations periods of three or four
years, depending on whether the theory is breach of warranty (§ 337, subd. 1 [four
years: “action upon any contract, obligation or liability founded upon an
instrument in writing”]) or tortious injury to property (§ 338, subds. (b), (c)
(formerly subds. 2, 3) [three years: trespass or injury to real or personal
property]). However, these periods begin to run only when the defect would be
discoverable by reasonable inspection. (Regents, supra, at p. 630.) On the other
hand, “section 337.15 . . . imposed an absolute requirement that a suit . . . to
recover damages for a [latent] construction defect be brought within 10 years of
the date of substantial completion of construction, regardless of the date of
discovery of the defect.” (Regents, supra, at p. 631, fn. omitted.) “The interplay
between these statutes sets up a two-step process: (1) actions for a latent defect
must be filed within three years . . . or four years . . . of discovery, but (2) in any
event must be filed within ten years . . . of substantial completion.” (North Coast
Business Park v. Nielsen Construction Co. (1993) 17 Cal.App.4th 22, 27.)
Section 337.15 states several situations in which the 10-year limit shall not
apply (see text discussion, post), but it contains no provision for extension of the
limitations period during periods of repair. Nonetheless, plaintiffs urge that the
statute is subject to “equitable tolling” while the defendant’s promises or attempts
to remedy a defect are pending.
Equitable tolling is a judge-made doctrine “which operates independently
of the literal wording of the Code of Civil Procedure” to suspend or extend a
statute of limitations as necessary to ensure fundamental practicality and fairness.
(Addison v. State of California (1978) 21 Cal.3d 313, 318-319 (Addison); see also
7
Bollinger v. National Fire Ins. Co. (1944) 25 Cal.2d 399, 411 (Bollinger).) This
court has applied equitable tolling in carefully considered situations to prevent the
unjust technical forfeiture of causes of action, where the defendant would suffer
no prejudice. (E.g., Lambert v. Commonwealth Land Title Ins. Co. (1991)
53 Cal.3d 1072, 1080 (Lambert) [claim against title insurer accrues upon insurer’s
refusal to defend title, but two-year limitations period is equitably tolled until
underlying title action is resolved]; Prudential-LMI Com. Insurance v. Superior
Court (1990) 51 Cal.3d 674, 687-693 (Prudential-LMI) [one-year period to sue on
casualty insurance policy begins upon “inception of the loss,” but is equitably
tolled from timely notice of loss until insurer denies claim]; Addison, supra, at pp.
317-321 [six-month period for state court suit against public agency was equitably
tolled during plaintiffs’ timely federal suit raising both federal and state claims];
Elkins v. Derby (1974) 12 Cal.3d 410, 414-420 (Elkins) [one-year period for
personal injury action was tolled while plaintiff, acting in good faith, pursued
worker’s compensation remedy against defendant]; Bollinger, supra, at pp. 410-
412 [15-month period to sue on fire insurance policy was tolled while timely prior
action, erroneously dismissed as premature, was pending].)
As these cases illustrate, the effect of equitable tolling is that the limitations
period stops running during the tolling event, and begins to run again only when
the tolling event has concluded. As a consequence, the tolled interval, no matter
when it took place, is tacked onto the end of the limitations period, thus extending
the deadline for suit by the entire length of time during which the tolling event
previously occurred.5
5
As the text indicates, tolling extends the limitations period no matter when
the tolling event occurred. This produces generally fair results where, as in the
usual equitable tolling situation, the underlying limitations period itself is quite
(Footnote continued on next page.)
8
The Legislature may preclude equitable tolling by stating its intention “to
disallow tolling under any circumstances not enumerated in the statute.” (Laird v.
Blacker (1992) 2 Cal.4th 606, 618 (Laird) [attorney malpractice limitations statute
(§ 340.6) providing that limitations period shall “in no event” be tolled except as
specified (id., subd. (a))]; see also, e.g., Battuello v. Battuello (1998)
64 Cal.App.4th 842, 847 (Battuello) [special one-year limitations statute (§ 366.2)
for surviving action against deceased person, providing that period “shall not be
tolled or extended for any reason” except as specified (id., subd. (b))].)
Moreover, equitable tolling should not apply if it is “inconsistent with the
text of the relevant statute” (United States v. Beggerly (1998) 524 U.S. 38, 48
[quiet title action must commence within 12 years after discovery of government’s
title claim; generous limitations period, beginning only upon discovery, already
provides for equitable tolling, and further tolling not warranted]; see also Lampf v.
Gilbertson (1991) 501 U.S. 350, 363 [where federal securities fraud action was
subject to limitations of one year from discovery, or three years from violation,
three-year period was “outside” limit not subject to tolling]) or contravenes clear
(Footnote continued from previous page.)
short. (See text discussion, ante and post.) But where a lengthy limitations statute
such as section 337.15 is at issue, automatic tolling bears a far less direct
relationship to fundamental fairness. The facts of Cascade Gardens, supra,
194 Cal.App.3d 1252, demonstrate the point. There, a certificate of completion of
a construction project was recorded on July 13, 1973. If not tolled, the 10-year
limitations period of section 337.15 would thus have expired on July 12, 1983.
However, during the four-month period from January 1974 until April 1974, the
contractor attempted repairs. Plaintiffs finally brought their suit on August 12,
1983. The Court of Appeal deemed the suit timely under section 337.15 because
the 1973-1974 repair efforts had postponed expiration of the 10-year period by
four months, from July to November 1983. (Cascade Gardens, supra, at pp. 1254-
1258.)
9
legislative policy (cf. Abreu v. Svenhard’s Swedish Bakery (1989) 208 Cal.App.3d
1446, 1456 [equitable tolling would violate policy of uniform federal statute of
limitations for suits claiming violations of labor contracts]).
“As with other general equitable principles, application of the equitable
tolling doctrine requires a balancing of the injustice to the plaintiff occasioned by
the bar of his claim against the effect upon the important public interest or policy
expressed by the . . . limitations statute.” (Addison, supra, 21 Cal.3d 313, 321.)
Plaintiffs insist that in construction defect cases, the rule of tolling for
repairs is well established. As they observe, two Court of Appeal decisions,
Grange Debris, supra, 16 Cal.App.4th 1349, 1360, and Cascade Gardens, supra,
194 Cal.App.3d 1252, 1256-1258, have concluded that the 10-year limitations
period of section 337.15 is tolled while the defendant’s promises or attempts to
remedy the defect are pending. For this holding, Grange Debris relied solely on
Cascade Gardens. Cascade Gardens, in turn, invoked the “clear authority” of
several earlier decisions, Aced v. Hobbs-Sesack Plumbing Co. (1961) 55 Cal.2d
573, 585 (Aced), Mack v. Hugh W. Comstock Associates (1964) 225 Cal.App.2d
583, 589 (Mack), and Southern Cal. Enterprises v. Walter & Co. (1947)
78 Cal.App.2d 750, 755 (Southern Cal. Enterprises). (Cascade Gardens, supra, at
p. 1256.)
But Aced, Mack, and Southern Cal. Enterprises are inapposite to the
question before us. They predate the 1971 adoption of section 337.15, and were
narrowly concerned with how to apply the limitations period for express or
implied warranties. These cases simply confirmed that the statute of limitations
for breach of warranty does not begin to run until discovery of the defect, and is
thereafter tolled during periods the warrantor claims he can honor the warranty by
repairing the defect, and attempts to do so. (Aced, supra, 55 Cal.2d 573, 577, 585
[radiant heating system; plaintiff stipulated he was relying solely on a theory of
10
implied warranty]; Mack, supra, 225 Cal.App.2d 583, 585, 589 [radiant heating
system; plaintiff alleged breach of express warranty]; Southern Cal. Enterprises,
supra, 78 Cal.App.2d 750, 752-753, 755 [installed carpet; plaintiff alleged breach
of express warranty].)
Aced, Mack, and Southern Cal. Enterprises did not consider how tolling
should apply to an alternative, overarching limitations period later enacted
specifically for suits alleging defects in the construction of improvements to real
property—a limitations period measured, regardless of discovery, from the date
the work of construction was completed. Contrary to the assumption of Cascade
Gardens, supra, 194 Cal.App.3d 1252, those earlier cases are not persuasive
authority for extending a “tolling for repairs” rule to section 337.15.6
In FNB Mortgage, supra, 76 Cal.App.4th 1116, the Court of Appeal
properly discounted the pre-1971 precedents, rejected the holding of Cascade
6
Although the dissent concedes that Aced, Mack, and Southern Cal.
Enterprises were “warranty cases” (dis. opn., post, at p. __ [p. 5]), it insists
Cascade Gardens, supra, 194 Cal.App.3d 1252, properly cited those early
decisions to support a general “tolling for repairs” rule that applies even against
the later-adopted “absolute” 10-year limitations period of section 337.15. We
disagree. The dissent splices together isolated snippets from the early cases to
suggest that their reasoning on tolling issues extended beyond warranty principles.
But this strained treatment of the early authorities obscures their overall context.
Aced, Mack, and Southern Cal. Enterprises were warranty cases in fact, and they
justified their holdings on the tolling-for-repairs issue by applying warranty law
(Aced, supra, 55 Cal.2d 573, 577, 582-586; Mack, supra, 225 Cal.App.2d 583,
588-590; Southern Cal. Enterprises, supra, 78 Cal.App.2d 750, 758-579) to
statutes of limitations not influenced by the special concerns that prompted
enactment of section 337.15 (see discussion, post).
11
Gardens, and concluded that the 10-year limitations period of section 337.15 is
not equitably tolled for repairs. FNB Mortgage reached the correct result.7
At the outset, the plain language of section 337.15 suggests that the 10-year
limitations period is not subject to extension for reasons not stated in the statute
itself. Unlike subdivision (a) of section 340.6, the attorney malpractice limitations
statute (see Laird, supra, 2 Cal.4th 606, 618; see also, e.g., §§ 340.5 [malpractice
by health care provider], 366.2, subd. (b) [surviving action against deceased
person]), section 337.15 does not ban nonstatutory tolling in so many literal
words. But the structure and tone of section 337.15 do differ markedly from
garden-variety California limitations statutes. The latter simply provide the
various “periods prescribed for the commencement of [specified] actions.” (§ 335;
see also, e.g., §§ 336, 336a, 337, 337.5, 338, 339, 341.) By contrast, section
337.15 declares, in stentorian terms, that “[n]o action [for latent construction
defects] may be brought . . . more than 10 years after the substantial completion of
the development or improvement.” (Id., subd. (a), italics added.)
Section 337.15 itself provides several clear exemptions from the 10-year
limit. The limit does not apply to actions for personal injury. (§ 337.15,
subd. (a)(1), (2); cf. § 337.1, subd. (a)(3) [four-year limitation period for patent
construction defects].) It does not apply to suits based on “willful misconduct or
fraudulent concealment.” (§ 337.15, subd. (f); cf. §§ 340.5, 340.6, subd. (a) [both
permitting “tolling” for “fraud” or “intentional concealment”].) It does not apply
7
In a decision rendered after both Cascade Gardens, supra, 194 Cal.App.3d
1252, and Grange Debris, supra, 16 Cal.App.4th 1349, but before FNB Mortgage,
supra, 76 Cal.App.4th 1116, the court in A & B Painting & Drywall, Inc. v.
Superior Court (1994) 25 Cal.App.4th 349 refused to extend the tolling rule of
Cascade Gardens to a situation in which the repairs were made by someone other
than the defendant. (A & B Painting, supra, at pp. 354-355.)
12
to a cross-complaint for indemnity by one participant in the project against
another, if the cross-complainant himself was sued directly within the 10-year
period. (§ 337.15, subd. (c); Valley Circle Estates v. VTN Consolidated, Inc.
(1983) 33 Cal.3d 604, 608-615 (Valley Circle Estates).) It cannot be asserted by
“any person in actual possession or . . . control . . . of [the] improvement . . . at the
time any deficiency [therein] constitutes the proximate cause” of the damage for
which recovery is sought. (§ 337.15, subd. (e).) An argument thus arises, under
the maxim inclusio unius est exclusio alterius, that the Legislature intended to
omit other exceptions.
But if doubt remains from the language of section 337.15, it is dispelled by
reference to the well-known goal of this special limitations statute. “[T]he
purpose of section 337.15 is to protect contractors and other professionals and
tradespeople in the construction industry from perpetual exposure to liability for
their work. (Regents[, supra,] 21 Cal.3d 624, 633, fn. 2; Wagner v. State of
California (1978) 86 Cal.App.3d 922, 929-930.) The statute reflects a legitimate
concern that ‘expanding concepts of liability could imperil the construction
industry unless a statute of limitations was enacted.’ (Mosely v. Abrams (1985)
170 Cal.App.3d 355, 362.) Such concerns legitimately include the prohibitive
cost of insurance against a perpetual and never ending risk.” (Sandy v. Superior
Court (1988) 201 Cal.App.3d 1277, 1285.)
13
The history of section 337.15 confirms that the statute is the result of
general legislative concern about the economic effects of indefinite “long tail”
defect liability on the construction industry. Section 337.15 was a response to
considerable expansion of California’s common law of construction liability.
Traditionally, a builder’s sole liability for his finished product was on an express
or implied warranty, which required privity between plaintiff and defendant, and
the builder thus owed no duty to third persons once the owner accepted the
improvement. (See, e.g., Kolburn v. P. J. Walker Co. (1940) 38 Cal.App.2d 545,
550.) In the 1950’s and 1960’s, these limitations gave way to the principle that a
builder may be liable to those foreseeably injured or damaged by construction
defects under theories of negligence (Dow v. Holly Manufacturing Co. (1958)
49 Cal.2d 720, 724-728; Oakes v. McCarthy Co. (1968) 267 Cal.App.2d 231, 247-
249 (Oakes)) and, at least in the case of a mass home developer, strict tort liability
(Kriegler v. Eichler Homes, Inc. (1969) 269 Cal.App.2d 224, 226-229).8
8
In recent cases, decided long after adoption of section 337.15, we have
refined the respective purviews of warranty and tort theories as they apply to
construction defects. Under the so-called economic loss rule, tort recovery is
available only insofar as a defect causes personal injury or damage to property
other than the defective product, while “the law of contractual warranty governs
damage to the product itself.” (Jimenez v. Superior Court (2002) 29 Cal.4th 473,
483; Aas v. Superior Court (2000) 24 Cal.4th 627, 639 (Aas).) The applicability
of those theories appears further affected by new legislation applicable to
individual housing units first sold on or after January 1, 2003. (See Civ. Code,
§ 895 et seq., as enacted by Stats. 2002, ch. 722, § 3.) The new law sets detailed
quality and performance standards for new residential construction and provides
that a homeowner may sue for (1) specific violations of the statutory standards
(Civ. Code, § 896) and (2) any other “function or component of [the] structure,” to
the extent inadvertently omitted from the standards, that causes damage (id.,
§ 897).
14
At the same time, courts increasingly recognized ways to extend the
limitations periods for suits on construction defects. As indicated above, 1960’s
decisions confirmed that the time to sue on a construction warranty was tolled
while promises or attempts to repair were pending. (Aced, supra, 55 Cal.2d 573,
585; Mack, supra, 225 Cal.App.2d 583, 589.) Contemporaneous cases held that
the statutes of limitations for the burgeoning theories of construction defect
recovery did not begin to run until the defects were or should have been
discovered (see, e.g., Aced, supra, at p. 583-584 [warranty]; Avner v. Longridge
Estates (1969) 272 Cal.App.2d 607, 616-618 [strict liability]; Oakes, supra,
267 Cal.App.2d 231, 254-255 [negligence]; see also Regents, supra, 21 Cal.3d
624, 630) or while they were fraudulently concealed (e.g., Balfour, Guthrie &
Co. v. Hansen (1964) 227 Cal.App.2d 173, 189).
In 1967, the Legislature responded in part to these developments by
adopting section 337.1. (Stats. 1967, ch. 1326, § 1, p. 3157.) This statute
provides that recovery for death, injury, or damage caused by a “patent
deficiency” (§ 337.1, subd. (a), italics added) in the design, supervision, or
construction of an improvement to realty must be sought within four years after
substantial completion of the improvement. (Id., subds. (a), (c).) A “patent
deficiency” is defined as one “apparent by reasonable inspection.” (Id., subd. (e).)
Notwithstanding the general rule, if an injury to person or property occurs in the
fourth year after completion, suit may be brought within one year after the injury,
but no more than five years after completion. (Id., subd. (b).) The limitations
period provided by section 337.1 cannot be asserted by one who actually
possesses or controls the property at the time the deficiency causes the actionable
damage or injury. (Id., subd. (d).) Owner-occupied single family residences are
exempt from the four-year limit. (Id., subd. (f).)
15
Despite this 1967 legislation, members of the building industry still faced
exposure to liability for all defects in their past projects so long as these defects
remained undiscovered and undiscoverable by reasonable inspection. On April
14, 1970, Assemblyman Powers introduced Assembly Bill No. 2528 (1970 Reg.
Sess.), seeking to limit suits for latent construction defects to an eight-year period
after substantial completion. After numerous amendments in committee, the bill
was placed in the inactive file at the request of Assemblyman Powers, and it died
there on August 21, 1970. (See Assem. Final Hist. (1970 Reg. Sess.) p. 761.)9
In October 1970, the Assembly Interim Committee on Judiciary, chaired by
Assemblyman Hayes, convened a public hearing “to determine if a statute of
limitations can be drafted in actions for hidden (or latent) construction defects.”
(Assem. Judiciary Interim Com. Hearing on Application of the Doctrine of Strict
Tort Liability to Building Construction (Oct. 23, 1970) p. 1 (1970 Committee
Hearing).) Building industry representatives testified at length that the trend
toward expanded and time-extended defect liability was producing a risk for
9
Centex asked us to take judicial notice of various legislative materials,
including documents from the enactment histories of (1) Assembly Bill No. 2528
(1970 Reg. Sess.) (see text discussion, ante), (2) Assembly Bill No. 2742 (1971
Reg. Sess.), which became section 337.15, and (3) Assembly Bill No. 312 (1979-
1980 Reg. Sess.), which amended section 337.15, in response to our decision in
Regents, supra, 21 Cal.3d 624, to provide that the sureties of persons involved in
construction projects are also protected by the 10-year limitations period for latent
construction defects. It is not clear that we must take judicial notice of these
materials in order to consider them. However, they are relevant to the legal
arguments Centex advances, and they appear to be proper subjects of judicial
notice. (Evid. Code, §§ 452, subd. (c) [official acts of legislative, executive, and
judicial departments of the United States or any state], 459.) Plaintiffs did not
object, and we therefore granted the request for judicial notice.
16
which insurance was available only at prohibitive cost, if at all, thus threatening
the industry’s economic health. (1970 Com. Hearing, pp. 4-51.)10
Appended to the 1970 Committee Hearing transcript was a survey of
construction defect limitations periods adopted in other states. According to this
survey, the applicable statutes of limitations ranged from four to twelve years after
substantial completion of the projects in question. (1970 Com. Hearing, appen. B,
pp. 11-12.)
On April 15, 1971, Assemblyman Hayes introduced Assembly Bill No.
2742 (1971 Reg. Sess.) (Assembly Bill No. 2742), which, as amended, became
section 337.15. (See Assem. Final Hist. (1971 Reg. Sess.) p. 873.) As originally
drafted, Assembly Bill No. 2742 provided that suits for latent construction defects,
other than those based on willful misconduct or fraudulent concealment, would be
subject to a limitations period of six years after substantial completion. (Assem.
Bill No. 2742, as introduced Apr. 15, 1971.) A subsequent Assembly amendment
removed personal injury actions from the limitations period, increased the period
to 10 years, and provided for cross-complaints beyond the 10-year period by
10
For example, Jack Barrish, President of the Structural Engineers of
California, testified about “an architect in Sacramento [who] retired some five
years ago and is still having to carry coverage. There is no statute of limitations.
So in order to protect his estate, he is still carrying insurance covering his old
projects.” (1970 Com. Hearing, p. 48.) Barrish further testified that “[i]n my
particular case, I was forced to take out coverage with a new carrier and for half
the coverage I pay more than three times the rate, because of the exposure the
engineer has. [¶] We have been informed by our factors . . . that were the statute
of limitations to be passed, then there would be more coverage at less rate for
more people against possible suits of this nature.” (Ibid.)
17
persons sued directly within that time. (Assem. Amend. to Assem. Bill No. 2742,
July 22, 1971.)11
The above-described survey of the laws of other states was made part of the
legislative record of Assembly Bill No. 2742 in both the Assembly and the Senate.
(See Assem. Com. on Judiciary, Analysis of Assem. Bill No. 2742, appen. B; Sen.
Com. on Judiciary, Analysis of Assem. Bill No. 2742 as amended Oct. 22, 1971,
pp. 1-4.) Analyses of the bill consistently described it as “bar[ring]” or
“[p]rohibit[ing]” latent defect suits brought beyond the proposed limitations
period. (Assem. Com. on Judiciary, Analysis of Assem. Bill No. 2742, p. 1; Sen.
Com. on Judiciary, Analysis of Assem. Bill No. 2742 as amended Oct. 22, 1971,
p. 1; Assemblyman James A. Hayes, letter to Governor Reagan (Nov. 9, 1971)
requesting signature on Assem. Bill No. 2742; Enrolled Bill mem. to Governor on
Assem. Bill No. 2742, Nov. 16, 1971.)
Thus the 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
11
As originally enacted in 1971, section 337.15 measured the limitations
period from the time of “substantial completion” of the improvement, but did not
define “substantial completion.” Subdivision (g), added in 1981 (Stats. 1981,
ch. 88, § 1, pp. 204-205), modified the measurement period to provide that the 10-
year period would commence upon “substantial completion . . . , but not later than
the date of one of the following, 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. [¶] (4) One year after termination or cessation of work on the
improvement.” (Italics added.)
18
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.
Significantly, the adopters of both sections 337.1 and 337.15 knew that the
case law had engrafted a “tolling for repairs” rule onto the four-year discovery-
based limitations period for breach of a construction warranty. Yet, despite the
Legislature’s careful attention to other issues raised by prior court decisions, it did
not provide a “repairs” extension in either section 337.1 or section 337.15.
On the contrary, the Legislature specified in section 337.15 that whatever
limitations periods might otherwise apply, “no action” for injury to property
arising from latent construction defects “may be brought” more than 10 years after
substantial completion of the project. (§ 337.15, subd. (a); see also id., subd. (d);
Regents, supra, 21 Cal.3d 624, 631.) The inference arises that regardless of
whatever tolling rules might otherwise apply within the 10-year period, the
Legislature intended no such extension of the “absolute” (Regents, supra, at p.
631) 10-year limit itself. The legislative failure to ratify tolling for repairs under
these circumstances is another indication that a judicial doctrine extending the 10-
year limitations period for this reason would contravene the intent of section
337.15.
19
In one common circumstance, an equitable tolling rule would directly
undermine the statutory purpose. As we have seen, section 337.15 allows one
sued directly within the statutory period to cross-complain for indemnity against
another project participant, even if the statute of limitations for direct actions has
by then expired, so long as the cross-complaint is filed before a trial date has been
set. (§§ 337.15, subd. (c), 428.10, subd. (b), 428.50, subd. (b); Valley Circle
Estates, supra, 33 Cal.3d 604, 608-615.)12 Thus, potential indemnitors can never
be entirely certain they are safe once the 10-year period passes. But they should
generally be able to assume that any suit which may give rise to cross-complaints
against them was filed within 10 years after substantial completion of the project.
A general rule that the limitations period is tolled for repairs would destroy
such an assumption. As was emphasized in FNB Mortgage, supra,
76 Cal.App.4th 1116, such a rule would allow “[a]n unsuspecting subcontractor
[to] be sued for indemnity, long after the statute’s 10-year limitations period had
passed, and despite the absence of any action alleging defects within the 10-year
period, simply because the indemnitee (the subsequent cross-complainant) was
deemed to have tolled the 10-year period [by offering or attempting to repair] and
was thus subject to subsequent suit.” (Id. at p. 1133.) The “unsuspecting
12
As this court recognized in Valley Circle Estates, supra, 33 Cal.3d 604, the
rule of section 337.15, subdivision (c), allowing cross-complaints for indemnity
beyond the 10-year period, is consistent with the common law rule that an action
for equitable indemnity does not accrue, for purposes of the statute of limitations,
until the indemnitee pays a judgment or settlement that entitles him to indemnity,
and that a tort defendant retains the right to seek equitable indemnity from another
tortfeasor even if the plaintiff’s action against the cross-defendant is barred.
(Valley Circle Estates, supra, at p. 611; see also People ex rel. Department of
Transportation v. Superior Court (1980) 26 Cal.3d 744, 748, 751, and cases there
cited; Watts v. Crocker-Citizens National Bank (1982) 132 Cal.App.3d 516, 524.)
20
subcontractor[s]” caught in this net might include architects and engineers who, as
in the example provided during the 1970 Committee Hearing, had since retired,
but were still forced to maintain expensive errors and omissions coverage to meet
their potential “long tail” liability for alleged defects in projects completed many
years in the past.
Hence, the purpose of section 337.15, as revealed by its history, weighs
against a judicially imposed rule that the 10-year limitations period set forth in this
statute is tolled for repairs. On the other hand, countervailing policies of
practicality and fairness do not compel such a rule. If the defendant’s acts or
promises occurred well before expiration of the 10-year limit, an extension at the
end of the limitations period is unnecessary to protect the plaintiff’s rights.13 And
because the limitations period provided by section 337.15 is so “exceptionally
long” (Aas, supra, 24 Cal.4th 627, 653), it indicates the Legislature’s effort to
provide, within the strict statutory period itself, a reasonable time to discover,
adjust, and, if necessary, sue upon latent defects. Given the particular
considerations that led the Legislature in 1971 to seek a generous but firm cutoff
date for construction defect lawsuits, further extension of the period by judicial
fiat is not warranted.
13
At oral argument, plaintiffs’ counsel made clear their position that the 10-
year limitations period should automatically be tolled, or suspended in progress,
during any time a defendant’s promises or efforts to repair were pending, no
matter when these events occurred. In support of this view, counsel urged that a
homeowner’s “acceptance” of the defendant’s promises or repairs at any time
during the 10-year limitations period is a form of implicit reliance which justifies
a corresponding additional time, at the end of the limitations period, to determine
whether the repairs were successful. But a policy judgment of that magnitude is
for the Legislature, not the courts. For reasons we have detailed, we cannot
conclude the Legislature made such a judgment when it adopted section 337.15.
21
This case contrasts starkly with those in which we found a special need for
equitable tolling. In each prior instance, the brevity of the literal limitations period
would otherwise have caused forfeiture of a cause of action, or other undue
hardship, despite the plaintiff’s diligent efforts to pursue his claim in a correct and
orderly way. In Lambert, supra, 53 Cal.3d 1072, absent equitable tolling, literal
application of the two-year statute of limitations for actions against a title insurer
would have forced the insured “to defend the underlying [title] action, at [his] own
expense, and simultaneously to prosecute—again at [his] own expense—a separate
action against the title company for failure to defend.” (Id. at p. 1078.) In
Prudential-LMI, supra, 51 Cal.3d 674, the insured had only one year after
inception of the loss to sue his insurer for coverage, but that period could easily
run out while the insurer, having received a timely notice of loss, conducted the
investigation necessary to determine whether the claim should be paid or denied.
(Id. at pp. 687-693.)
In Bollinger, supra, 25 Cal.2d 399, the insured did sue within the 15
months allowed by the policy, but that action was dismissed, after the limitations
period had expired, on a false technicality urged by the insurer. (Id. at pp. 404-
411.) Similarly in Addison, supra, 21 Cal.3d 313, the plaintiffs did sue in federal
court within the six-month period for actions against public agencies. Just after
this brief limitations period expired by its literal terms, the government defendant
moved to dismiss the federal action, whereupon plaintiffs immediately filed their
state court complaint. As plaintiffs feared, the federal court subsequently
dismissed their federal causes of action and declined to retain their pendant state
claims, leaving them without a remedy unless equitable tolling was applied. (Id. at
pp. 317-319.)
22
Finally, in Elkins, supra, 12 Cal.3d 410, the plaintiff, acting in good faith,
first pursued a timely worker’s compensation remedy against the defendants,
thereby foreclosing resort to tort litigation. After the one-year statute of
limitations for personal injury actions had expired, the worker’s compensation
referee found that the plaintiff was not the defendant’s “employee” within the
meaning of the worker’s compensation statutes, and was thus not entitled to
benefits. The plaintiff then promptly filed his court action. We applied the well-
established California principle that “the running of the limitations period is tolled
‘[w]hen an injured person has several legal remedies and, reasonably and in good
faith, pursues one.’ [Citations.]” (Id. at p. 414.)
No similar issues are presented here. Because plaintiffs had three or four
years after discovery, and up to ten years after the project’s completion, to bring
their suits for latent construction defects, many of the concerns that might warrant
equitable tolling are ameliorated. Indeed, were we to conclude that the generous
limitations period of section 337.15 is equitably tolled for repairs, despite the
absence of any specific indication that the 1971 Legislature so intended, the
implication would arise that all statutes of limitations are similarly tolled or
suspended in progress while the parties make sincere efforts to adjust their
differences short of litigation. We find no such general principle in California
law.
Plaintiffs and the dissent urge several reasons why section 337.15 should be
equitably tolled for repairs. None is persuasive.
First, it is urged that if the Legislature had intended to disallow equitable
tolling of section 337.15, it would have done so expressly, as in sections 340.5
(health care malpractice) and 340.6, subdivision (a) (attorney malpractice; see
Laird, supra, 2 Cal.4th 606, 618; see also Battuello, supra, 64 Cal.App.4th 842,
847 [§ 366.2; one-year limitations period for surviving action against deceased
23
person]). But an express legislative ban on equitable tolling is not the only
circumstance in which courts will decline to apply this judicially developed
doctrine. As is explained above, they will also do so where, as here, tolling would
contravene the legislative purpose. Of course, the no-tolling result we reach under
section 337.15 is consistent with our construction of the similar but shorter “two-
step” statute of limitations (one year from discovery, or four years from wrongful
act or omission, whichever occurs first) for attorney malpractice. (§ 340.6,
subd. (a); see Laird, supra, 2 Cal.4th 606, 618.)
Next, plaintiffs and the dissent assert that the legislative history of section
337.15 focuses exclusively upon the problem of a statute of limitations that began
only when the plaintiff discovered the defect. There is no indication, plaintiffs
assert, that the Legislature meant to preclude the defendant from tolling the
limitations period, once begun, by his own voluntary action.
But while delayed discovery was an important issue, the legislators’
concerns, as indicated above, were broader. They sought to ensure ample time to
discover and sue upon latent construction defects, while still establishing a
predictable period within which the construction and insurance industries must
make provision for such suits. And though a defendant who promises or
undertakes repairs might be said to “control” the time for suit against him, his
conduct, as we have noted, would have consequences for unsuspecting
coparticipants in the project, whose exposure to indemnity liability would thereby
be extended.
Plaintiffs and the dissent emphasize our statement in Regents, supra,
21 Cal.3d 624, that section 337.15 is not a “substantive limit upon the plaintiff’s
cause of action” (Regents, supra, at p. 640), but merely an “ordinary, procedural
statute of limitations” (id. at p. 641) to which, they assert, equitable tolling may
thus properly apply. However, their reliance on Regents is misplaced. The issue
24
there was whether the surety on a contractor’s bond—then not among the persons
specifically mentioned in the statute—nonetheless could claim the protection of
section 337.15’s 10-year limitations period. The Regents majority answered that
question no. (Id. at pp. 632-643.) The dissenters argued that because section
337.15 was a substantive limit on legal rights and duties, it precluded the plaintiff,
in any suit brought after expiration of the 10-year period, from proving a
contractor’s breach of duty which the surety must make good. (Regents, supra, at
pp. 644-649 (conc. & dis. opn. of Clark, J.); see id. at p. 640 (maj. opn.).) The
majority rejected that contention (id. at pp. 640-642), but nothing in the holding of
Regents compels a conclusion that where section 337.15 does apply, it should be
subject to equitable tolling.14
Plaintiffs and the dissent note that the Legislature has not expressly
disagreed with the equitable tolling rule set forth in Cascade Gardens, supra,
194 Cal.App.3d 1252, and Grange Debris, supra, 16 Cal.App.4th 1349 (but see
FNB Mortgage, supra, 76 Cal.App.4th 1116). Of course, the Legislature has not
revisited section 337.15 at all since 1981, well before these cases were decided.15
There are many reasons why the Legislature fails to address intervening judicial
constructions of a statute, including inattention, press of other business, and trust
in the courts to correct their own errors. (People v. King (1993) 5 Cal.4th 59, 77;
14
The year after Regents, supra, 21 Cal.3d 624, was decided, the Legislature
obviated the holding of that case, at least for the future, by expressly extending the
protection of section 337.15 to sureties. (Stats. 1979, ch. 571, § 1, p. 1797.)
15
Plaintiffs insist that section 337.15 has been amended “on numerous
occasions” since Cascade Gardens, supra, 194 Cal.App.3d 1252, was decided, but
this simply is not so. Section 337.15 was last amended by Statutes 1981, chapter
88, section 1, pages 204-205. Cascade Gardens was decided six years later, in
1987.
25
County of Los Angeles v. Workers’ Comp. Appeals Bd. (1981) 30 Cal.3d 391,
404.) Hence, “ ‘legislative inaction is a “ ‘weak reed upon which to lean.’ ” ’ ”
(Harris v. Capital Growth Investors XIV (1991) 52 Cal.3d 1142, 1156, quoting
Troy Gold Industries, Ltd. v. Occupational Safety & Health Appeals Bd. (1986)
187 Cal.App.3d 379, 391, fn. 6.) Here, mere legislative silence fails to dissuade us
from our conclusion that section 337.15 is not subject to equitable tolling for
repairs.
Plaintiffs suggest that equitable tolling for repairs protects homeowners
from unscrupulous builders who might otherwise make false promises or “band-
aid” repairs in order to forestall suit until after the 10-year period had passed.
Tolling for repairs is also good policy, plaintiffs maintain, because it encourages
resolution of construction defect disputes without resort to the courts. But a
tolling rule seems just as likely to discourage a potential defendant from
undertaking voluntary remedial efforts before the limitations period expires. If his
efforts failed, he would only have prolonged the already lengthy period during
which he was exposed to suit.16
16
As evidence that the Legislature supports the principle of tolling for repairs
in construction defect cases, plaintiffs direct our attention to new Civil Code
section 895 et seq., adopted in 2002. (See fns. 2, 8, ante.) This statutory scheme
comprehensively revises the law applicable to construction defect litigation for
individual residential units, other than condominium conversions, first sold after
January 1, 2003. (Civ. Code, §§ 896, 938.) Where it applies, the new scheme
expressly supersedes section 337.15, though it retains the basic premise that suit
may commence no later than 10 years after substantial completion of the project.
(Civ. Code, § 941, subds. (a), (d).) Among other things, the new law requires, as
a prerequisite to suit, elaborate “nonadversarial procedure[s]” to try to resolve the
dispute (id., §§ 910 et seq., 914), including a prelitigation opportunity for the
builder to effect repairs (id., §§ 917-928). Civil Code section 927 states that if the
statute of limitations runs during the repair process, the time for filing a suit for an
actionable defect, or for inadequate repairs, is tolled from the date the claimant
(Footnote continued on next page.)
26
Moreover, if a plaintiff can show, in a particular case, that the defendant’s
promises or attempts to repair prevented a timely suit, the defendant may be
equitably estopped from invoking the protection of the statute of limitations. (See
discussion, post.) Thus, an automatic rule of equitable tolling is not necessary to
counteract fraudulent assurances of repair.
We therefore conclude that the 10-year limitations period set forth in
section 337.15 is not subject to tolling in progress while a potential defendant’s
promises or attempts to repair the defect are pending. The distinct question
remains whether a defendant may nonetheless be equitably estopped to assert this
statute of limitations if he prevented a timely suit by his conduct upon which the
plaintiffs reasonably relied.17
(Footnote continued from previous page.)
originally notified the builder of his claim until 100 days after the repair process is
complete. The new scheme further provides, in cryptic fashion, that “[e]xisting
statutory and decisional law regarding tolling of the statute of limitations shall
apply to the time periods for filing an action . . . under this title,” but that repairs
shall not toll the limitations period except as specifically provided in section 927.
(Civ. Code, § 941, subd. (e).) Civil Code section 895 et seq. demonstrates only
that the Legislature knows how to toll the statute of limitations for repairs when it
wishes to do so. Moreover, a 2002 statute that provides for a limited form of
statutory tolling while mandatory dispute resolution efforts proceed, but otherwise
explicitly excludes tolling for repairs, affords little support for the premise that
equitable tolling should apply under a 1971 statute of limitations to a defendant’s
voluntary efforts to remedy alleged defects. We reach a similar conclusion with
respect to Civil Code section 1375, specially applicable to common interest
developments, which includes somewhat similar express provisions for tolling
while mandatory dispute adjustment procedures go forward in timely fashion.
(Id., subds. (a), (c).)
17
We need not and do not decide here whether section 337.15 is subject to the
several separate statutes that specify when certain limitations periods will be
tolled. (E.g., §§ 351 [defendant’s absence from state], 352 [plaintiff’s minority or
insanity], 352.1 [plaintiff’s incarceration], 352.5 [pending restitution order against
(Footnote continued on next page.)
27
2. Equitable estoppel.
Plaintiffs assert that even if equitable tolling does not apply, their first
amended complaint states facts which should estop these particular defendants
from relying on the limitations period of section 337.15. Plaintiffs invoke the
venerable principle that “ ‘[o]ne cannot justly or equitably lull his adversary into a
false sense of security, and thereby cause his adversary to subject his claim to the
bar of the statute of limitations, and then be permitted to plead the very delay
caused by his course of conduct as a defense to the action when brought.’ ”
(Carruth v. Fritch (1950) 36 Cal.2d 416, 433, quoting Howard v. West Jersey &
S. S. R. Co. (N.J. Ch. 1928) 141 A. 755, 757-758.)
Equitable tolling and equitable estoppel are distinct doctrines. “ ‘Tolling,
strictly speaking, is concerned with the point at which the limitations period
begins to run and with the circumstances in which the running of the limitations
period may be suspended. . . . Equitable estoppel, however, . . . comes into play
only after the limitations period has run and addresses . . . the circumstances in
which a party will be estopped from asserting the statute of limitations as a
defense to an admittedly untimely action because his conduct has induced another
into forbearing suit within the applicable limitations period. [Equitable estoppel]
is wholly independent of the limitations period itself and takes its life . . . from the
equitable principle that no man [may] profit from his own wrongdoing in a court
of justice.’ ” (Battuello, supra, 64 Cal.App.4th 842, 847-848, quoting Bomba v.
W. L. Belvidere, Inc. (7th Cir. 1978) 579 F.2d 1067, 1070; see also Northwest
(Footnote continued from previous page.)
defendant], 354 [plaintiff’s disability by virtue of state of war], 356 [injunction
against commencement of action].)
28
Airlines, Inc. v. Ontario Aircraft Services, Inc. (2002) 104 Cal.App.4th 1053,
1060-1061.) Thus, equitable estoppel is available even where the limitations
statute at issue expressly precludes equitable tolling. (Leasequip, Inc. v. Dapeer
(2002) 103 Cal.App.4th 394, 405-408 [§ 340.6; attorney malpractice statute of
limitations]; Battuello, supra [§ 366.2; special one-year limitations period for
surviving actions against deceased person].)
One aspect of equitable estoppel is codified in Evidence Code section 623,
which provides that “[w]henever a party has, by his own statement or conduct,
intentionally and deliberately led another to believe a particular thing true and to
act upon such belief, he is not, in any litigation arising out of such statement or
conduct, permitted to contradict it.” (See DBG/Beverly Hills, Ltd. v. Chopstix Dim
Sum Cafe & Takeout III, Ltd. (1994) 30 Cal.App.4th 54, 60.) But “ ‘[a]n estoppel
may arise although there was no designed fraud on the part of the person sought to
be estopped. [Citation.] To create an equitable estoppel, “it is enough if the party
has been induced to refrain from using such means or taking such action as lay in
his power, by which he might have retrieved his position and saved himself from
loss.” . . . “. . . Where the delay in commencing action is induced by the conduct
of the defendant it cannot be availed of by him as a defense.” ’ ” (Vu v. Prudential
Property & Casualty Ins. Co. (2001) 26 Cal.4th 1142, 1152-1153 (Vu), quoting
Benner v. Industrial Acc. Com. (1945) 26 Cal.2d 346, 349-350, italics omitted; see
also Ginns v. Savage (1964) 61 Cal.2d 520, 524-525.)18
18
The defendant’s statement or conduct must amount to a misrepresentation
bearing on the necessity of bringing a timely suit; the defendant’s mere denial of
legal liability does not set up an estoppel. (Vu, supra, 26 Cal.4th 1142, 1149-
1153; Neff v. New York Life Ins. Co. (1947) 30 Cal.2d 165, 174-175.)
29
Accordingly, (1) if one potentially liable for a construction defect
represents, while the limitations period is still running, that all actionable damage
has been or will be repaired, thus making it unnecessary to sue, (2) the plaintiff
reasonably relies on this representation to refrain from bringing a timely action,
(3) the representation proves false after the limitations period has expired, and
(4) the plaintiff proceeds diligently once the truth is discovered (cf. Vu, supra,
26 Cal.4th 1142, 1153), the defendant may be equitably estopped to assert the
statute of limitations as a defense to the action.19
The Court of Appeal concluded that plaintiffs’ first amended complaint
adequately pled the prerequisites of equitable estoppel. According to the Court of
Appeal, “[plaintiffs] alleged in their complaint that Centex had repeatedly
promised to repair the damage to their homes. Based on these allegations,
[plaintiffs] argued Centex was equitably estopped to assert the statute of
limitations as a defense because . . . Centex’s promises caused them to delay filing
suit. . . . [T]hese allegations were sufficient to overcome a demurrer based on the
statute of limitations contained in section 337.15.”
We disagree. The complaint’s sole allegation on this issue is “that at
various times Defendants have attempted to make repairs . . . or advised Plaintiffs
that the defective windows were not defective and not to file a lawsuit,” but have
not properly repaired the leaking windows and associated damage, and “are
19
Because equitable estoppel, unlike equitable tolling, operates independently
of the limitations period itself (see text discussion, ante), it is not clear that a
defendant who is directly sued beyond the 10-year period of section 337.15, but is
estopped by his personal conduct from asserting the statutory bar, may thereafter
cross-complain against another project participant for indemnity pursuant to
subdivision (c) of the statute. That issue is not before us, and we do not address it.
30
[therefore] estopped to assert that Plaintiffs have not commenced this action in a
timely fashion.”
This is insufficient. Contrary to the Court of Appeal’s reasoning, the
complaint is devoid of any indication that defendants’ conduct actually and
reasonably induced plaintiffs to forbear suing within the 10-year period of section
337.15. There is no suggestion that the repair attempts alleged, if successful,
would have obviated the need for suit. Moreover, for all that appears, the “various
times” at which defendants’ alleged conduct occurred were times well before the
statute of limitations ran out, or even, as the trial court suggested, after it had
expired. And there is no claim that the inadequacy of these repairs, or the falsity
of defendants’ alleged “no defect” representations, remained hidden until after the
limitations period had passed.20 Hence, plaintiffs have pled no facts indicating
that defendants’ conduct directly prevented them from filing their suit on time.
Accordingly, the first amended complaint establishes no basis to estop defendants
from asserting that plaintiffs’ causes of action are barred by the 10-year statute of
limitations.
3. Amendment of complaint.
As noted above, the trial court sustained defendants’ demurrer to plaintiffs’
first amended complaint without affording plaintiffs an opportunity to amend.
The court found, among other things, that the complaint failed to state facts
sufficient to estop defendants from asserting that the statute of limitations had
20
As indicated above (see fn. 18, ante), to the extent defendants’ alleged
advice that the windows were not defective, and that a lawsuit should not be filed,
was a mere denial of defendants’ liability, rather than a representation of fact, it
was insufficient to establish an estoppel to assert the statute of limitations. (Vu,
supra, 26 Cal.4th 1142, 1149-1153.)
31
expired. The court conceded that amendment might cure the purely factual
deficiencies, but it ultimately reasoned that tolling for repairs was simply not
available, as a matter of law, to extend the limitations period of section 337.15.
In reversing, the Court of Appeal determined that both tolling and estoppel
were available, and that the first amended complaint was sufficient on both
theories. We, on the other hand, have concluded that while section 337.15’s 10-
year limitations period is not tolled for repairs, defendants might be estopped
under particular circumstances to invoke this statute of limitations. However, we
have agreed with the trial court that the current complaint fails to state sufficient
facts to establish such an estoppel.
Without stressing the point, plaintiffs have urged at all stages that if their
complaint is deficient, but could be remedied by additional factual allegations, a
chance should be afforded to assert such facts. The question thus arises whether
plaintiffs should be allowed an opportunity to amend to state facts sufficient to set
forth an equitable estoppel. In the specific circumstances of this case, we
conclude the answer is “no.”
Of course, “[i]t is axiomatic that if there is a reasonable possibility that a
defect in the complaint can be cured by amendment . . . , a demurrer should not be
sustained without leave to amend. [Citations.]” (Minsky v. City of Los Angeles
(1974) 11 Cal.3d 113, 118.) But the particular history of this case persuades us
there is no reasonable possibility plaintiffs can state credible facts to support an
equitable estoppel.
We realize that after the trial court sustained defendants’ demurrer to the
first amended complaint—the ruling at issue here—plaintiffs did offer more
specific estoppel allegations in a proposed second amended complaint. This
proposed complaint made express claims that, from the time plaintiffs purchased
their homes until expiration of the 10-year limitations period, defendants engaged
32
in a pattern of falsely promising repairs, or making sham repairs they knew would
fail, and then refused to respond further once the 10-year period had passed, all
with the purpose and effect of inducing plaintiffs to forbear suing within the
statutory time. The trial court rejected the proposed complaint, both as untimely
and on the incorrect assumption that if section 337.15 could not be tolled for
repairs, equitable estoppel was equally unavailable.
But even if the new allegations of the proposed second amended complaint
were technically sufficient to establish an estoppel, several circumstances negate
any inference that these new assertions had a substantial basis in fact. In the first
place, the gravamen of the new allegations—that defendants’ promises and
attempts to repair continued throughout the entire 10-year period, that plaintiffs
were thereby induced to forbear suing until the period expired, and that defendants
then abruptly refused further cooperation—must have been within plaintiffs’
personal knowledge at the time they filed their lawsuit. No reason appears why
these assertions, if true, were not presented sooner.
Doubt about the credibility of the new allegations is heightened by
developments in this court. During oral argument, plaintiffs’ counsel was asked
what additional facts, not included in the first amended complaint, could be
asserted to support a theory of equitable estoppel. At a minimum, counsel could
have referred us to the claims set forth in the proposed second amended complaint.
He did not do so. Instead, he responded only that repairs promised or attempted
by defendants at any time during the 10-year period gave rise, as a matter of law,
to a form of implicit reliance by plaintiffs that defects in the construction of
plaintiffs’ homes would be remedied. This, counsel argued, should extend the
statute of limitations by a time equivalent to the period during which repairs were
pending. In short, counsel simply reiterated a theory of equitable tolling which we
have rejected in this opinion.
33
Under these circumstances, we are convinced there is no reasonable
possibility plaintiffs can assert new, credible facts suggesting that defendants are
equitably estopped to assert the 10-year statute of limitations for latent
construction defects. Accordingly, no basis appears to allow a remand for
purposes of amendment.21
21
There is no ground to conclude that plaintiffs simply have not understood
the distinction between tolling and estoppel, as they apply to this case. Though
tolling was the principal issue debated in the trial court, and though the parties
sometimes referred to the two theories as one, the record nonetheless suggests
plaintiffs were aware of estoppel as a distinct concept, and understood it was
prudent to allege facts supporting that theory. The first amended complaint
alleged, inter alia, that defendants made promises to repair, assured plaintiffs they
were construction experts and would remedy all defects, and “advised [p]laintiffs
. . . not to file a lawsuit.” As a result, the complaint asserted, defendants were
“estopped” to assert the action was untimely. In opposition to defendants’
demurrer, plaintiffs urged that the first amended complaint sufficiently alleged
plaintiffs’ “[r]eliance” on defendants’ promises and attempts to repair, and that
defendants’ conduct, as alleged, “estopped” them from invoking the statute of
limitations.
In papers supporting their later motion to amend, plaintiffs’ counsel
represented that they had recently learned of defendants’ similar conduct in other
residential developments, whereby defendants “wilfully lulled homeowners into a
sense of security [by promising repairs] until [d]efendants were confident that
these homeowners would refrain from instituting litigation until the applicable
statute of limitations had expired.” This language suggests counsel understood the
essential elements of equitable estoppel, while failing to explain why similarly
relevant allegations within plaintiffs’ personal knowledge were not presented
sooner, if true.
Finally, plaintiffs’ appellate briefs, both in the Court of Appeal and in this
court, indicate their full awareness that tolling and estoppel are distinct theories.
Hence, there could have been no confusion about the import of this court’s
question at oral argument.
34
CONCLUSION
Equitable tolling does not apply to the 10-year statute of limitations set
forth in section 337.15. The Court of Appeal decisions in Grange Debris Box &
Wrecking Co. v. Superior Court, supra, 16 Cal.App.4th 1349, and Cascade
Gardens Homeowners Assn. v. McKellar & Associates, supra, 194 Cal.App.3d
1252, are disapproved to the extent they concluded otherwise. Moreover,
plaintiffs have failed to plead facts that would equitably estop defendants from
asserting this limitations period, and there appears no reasonable possibility the
deficiency can be remedied by credible amendment of the complaint. The trial
court thus correctly sustained defendants’ demurrer to plaintiffs’ first amended
complaint without leave to amend, and dismissed the action. The Court of Appeal
erred by overturning the judgment of dismissal. The judgment of the Court of
Appeal is therefore reversed.
BAXTER, J.
WE CONCUR:
GEORGE, C.J.
CHIN, J.
BROWN, J.
MORENO, J.
35
DISSENTING OPINION BY WERDEGAR, J.
I respectfully dissent. I cannot join the majority in rejecting application of
equitable tolling to the 10-year limitation on actions for latent construction defects
(Code Civ. Proc., § 337.15).1 Accordingly, I would affirm the judgment of the
Court of Appeal. Second, while I agree with the majority that in an appropriate
case a defendant may be equitably estopped to assert that section 337.15’s 10-year
limitation has expired, I disagree that there is no reasonable possibility plaintiffs in
this case can allege sufficient facts to establish such an estoppel. Consequently, I
would allow plaintiffs an opportunity to amend their complaint in order to correct
any deficiencies the majority purports to identify.
Tolling
“Statutes of limitations are not so rigid as they are sometimes regarded.”
(Bollinger v. National Fire Ins. Co. (1944) 25 Cal.2d 399, 411.) It is well
established that statutes of limitation are not to be applied inflexibly where equity
and justice favor the application of equitable tolling, and suspension of the
running of a particular statute will not frustrate its purpose of preventing surprise
through the revival of stale claims. (See Elkins v. Derby (1974) 12 Cal.3d 410,
417-419.) For instance, “[t]he statute of limitations is tolled where one who has
breached a warranty claims that the defect can be repaired and attempts to make
1
All further statutory references are to the Code of Civil Procedure.
1
repairs.” (Aced v. Hobbs-Sesack Plumbing Co. (1961) 55 Cal.2d 573, 585
(Aced).) Another established application of the general principle—today
repudiated by the majority—has been that, “[i]n cases involving construction
defects . . . the statute of limitations is tolled during each period the defendant
attempts to repair the defect.” (3 Witkin, Cal. Procedure (4th ed. 1996) Actions,
§ 684, p. 871.)
The majority argues that “the purpose of section 337.15, as revealed by its
history, weighs against a judicially imposed rule that the 10-year limitations
period set forth in this statute is tolled for repairs. On the other hand,
countervailing policies of practicality and fairness do not compel such a rule.”
(Maj. opn., ante, at p. 21.) I disagree. As Justice Richardson long ago explained
in a unanimous opinion for this court, “the equitable tolling doctrine fosters the
policy of the law of this state which favors avoiding forfeitures and allowing good
faith litigants their day in court.” (Addison v. State of California (1978) 21 Cal.3d
313, 320-321 (Addison).)
As its opinion nowhere specifies the elements of equitable tolling, the
majority leaves the inaccurate impression that, unless we in this case categorically
bar that remedy in construction defect cases, it will appear by judicial “fiat” (maj.
opn., ante, at p. 21) or happen automatically whenever “a potential defendant’s
promises or attempts to repair the defect are pending” (id. at p. 27). The majority
misdescribes the law. Courts do not enjoy unfettered discretion to toll a statute of
limitations. Rather, “application of the doctrine of equitable tolling requires
timely notice, and lack of prejudice, to the defendant, and reasonable and good
faith conduct on the part of the plaintiff.” (Addison, supra, 21 Cal.3d at p. 319.)
According to the majority, “the plain language of section 337.15 suggests
that the 10-year limitations period is not subject to extension for reasons not stated
in the statute itself.” (Maj. opn., ante, at p. 12.) I discern no such suggestion.
2
Section 337.15 does not mention tolling, equitable or otherwise. The omission is
significant; had the Legislature meant to preclude equitable tolling, it easily could
have said so, as it has in other statutes of limitation. (See §§ 340.5 [“no event”
shall toll limit on actions against health care providers except those specified],
340.6 [same for attorney malpractice actions], 366.2, subd. (b) [limit on actions on
liability of a deceased person “shall not be tolled or extended for any reason”
except as specified in certain code sections].)
Thus, contrary to the majority, equitable tolling in this case is not
inconsistent with the text of the statute. (See maj. opn., ante, at p. 9.) The
majority in any event is not actually relying on section 337.15’s plain language,
but, rather, on its perception of that statute’s “structure and tone” (maj. opn., ante,
at p. 12), which the majority characterizes as “stentorian” (ibid.). Such
observations are at best irrelevant, since, as the majority concedes, the tolling
remedy at issue “is a general equitable one which operates independently of the
literal wording of the Code of Civil Procedure.” (Addison, supra, 21 Cal.3d at
p. 318; see maj. opn., ante, at p. 7.)
The majority also advances a legislative intent argument, based on the
Legislature’s asserted failure when enacting section 337.15 to provide an express
repairs extension, despite knowing that case law had earlier “engrafted a ‘tolling
for repairs’ rule onto the four-year discovery-based limitations period for breach
of a construction warranty” and its asserted “careful attention” to other
(unspecified) issues raised by prior court decisions. (Maj. opn., ante, at p. 19.)
But in California it “is established that the running of the statute of limitations may
be suspended by causes not mentioned in the statute itself” (Bollinger v. National
3
Fire Ins. Co., supra, 25 Cal.2d at p. 411),2 and the Legislature is presumed to have
been aware of that principle when it enacted section 337.15 (People v. Seneca Ins.
Co. (2003) 29 Cal.4th 954, 972).
Framing the legislative intent argument somewhat differently, the majority
asserts the Legislature’s silence respecting equitable tolling when enacting section
337.15 bespeaks its intent to bar application of that long-established doctrine in
this context. “We can rarely determine from the failure of the Legislature to pass a
particular [provision] what the intent of the Legislature is with respect to existing
law.” (Ingersoll v. Palmer (1987) 43 Cal.3d 1321, 1349.) For that reason, we
“should not presume the Legislature intended ‘to overthrow long-established
principles of law unless such intention is made clearly to appear either by express
declaration or by necessary implication . . . .’ ” (Juran v. Epstein (1994) 23
Cal.App.4th 882, 896.)
The majority does not deny the Legislature has acquiesced for many years
in Cascade Gardens Homeowners Assn. v. McKellar & Associates (1987) 194
Cal.App.3d 1252 (Cascade Gardens) and Grange Debris Box & Wrecking Co. v.
Superior Court (1993) 16 Cal.App.4th 1349 (Grange Debris), cases confirming
that courts may apply the doctrine of equitable tolling to section 337.15. (See
Cascade Gardens, supra, at p. 1256; Grange Debris, supra, at p. 1360.) Sixteen
years ago, Cascade Gardens held on the basis of “[c]lear authority” that “under
certain circumstances” and where “principles of equity and justice . . . allow,”
section 337.15 is subject to equitable tolling while repairs are undertaken.
2
The majority inferentially acknowledges the point in recognizing the
possibility that “section 337.15 is subject to the several separate statutes [not
mentioned in section 337.15] that specify when certain limitations periods will be
tolled.” (Maj. opn., ante, at p. 27, fn. 17.)
4
(Cascade Gardens, supra, at p. 1256, citing Aced, supra, 55 Cal.2d at p. 585;
Mack v. Hugh W. Comstock Associates (1964) 225 Cal.App.2d 583, 589-590
(Mack); and Southern Cal. Enterprises v. Walter & Co. (1947) 78 Cal.App.2d 750,
755 (Southern Cal. Enterprises).) As the majority concedes, the Legislature has
never expressly disagreed with Cascade Gardens or taken any action to overrule
or limit its holding. (See maj. opn., ante, at p. 25.) Accordingly, it would be
reasonable for us to presume the Legislature is aware of the judicial construction
and approves of it. (See People v. Williams (2001) 26 Cal.4th 779, 789; People v.
Hallner (1954) 43 Cal.2d 715, 720.)
The majority, however, seeks to repudiate Cascade Gardens on grounds
that three cases on which that court relied are inapposite because they were breach
of warranty cases that predate the adoption of section 337.15. (Maj. opn., ante, at
p. 10, discussing Aced, supra, 55 Cal.2d 573; Mack, supra, 225 Cal.App.2d 583;
and Southern Cal. Enterprises, supra, 78 Cal.App.2d 750.) But that Aced, Mack,
and Southern Cal. Enterprises were decided before section 337.15 was enacted is
irrelevant, as Cascade Gardens relied on these cases not for any conclusion
respecting section 337.15’s legislative history or wording, but solely as authority
for the proposition that “repairs, such as those undertaken by [the defendants
there] toll statutes of limitations as a matter of law” (Cascade Gardens, supra, 194
Cal.App.3d at p. 1256). The majority does not dispute that Aced, Mack, and
Southern Cal. Enterprises so held.
The majority characterizes Cascade Gardens’ authorities as “narrowly
concerned with how to apply the limitations period for express or implied
warranties” (maj. opn., ante, at p. 10), but that does not tell the whole story.
While Cascade Gardens cited warranty cases, it did so not for peculiarly
warranty-related principles, but, rather, as “cases involving [or discussing]
construction defects, defective products, and other breaches of warranty [in which]
5
the defendant attempts to repair the defect” (3 Witkin, Cal. Procedure, supra,
Actions, § 684, p. 871). For example, the Mack opinion expressly addressed
tolling of other “Code of Civil Procedure sections . . . relating to the tortious injury
or damage to person or property . . . .” (Mack, supra, 225 Cal.App.2d at p. 589
[considering “the application of these statutes” and concluding “the proper one to
apply” “was tolled during the entire period when the respondents attempted to
repair the heating plant” involved in the case]; see also Cascade Gardens, supra,
195 Cal.App.3d at p. 1257, fn. 4 [analogizing Mack].) In Aced, although we cited
several cases showing that construction contracts “ordinarily . . . give rise to an
implied warranty” (Aced, supra, 55 Cal.2d at p. 582), we also noted the rule that
“[t]he statute of limitations is tolled when one who has breached a warranty claims
that the defect can be repaired and attempts to make repairs.” (Id. at p. 585.) And
the Court of Appeal in Southern Cal. Enterprises actually was at pains to
distinguish the case of the “ ‘typical warranty’ ” (Southern Cal. Enterprises,
supra, 78 Cal.App.2d at p. 757) from the rule governing that case, which it stated
as: “ ‘if the seller promises that something shall happen or shall not happen to the
goods within a specified future time, the promise though it may be called a
warranty cannot be broken until that time has elapsed and until then the statute
will not begin to run’ ” (id. at p. 758; see also id. at p. 757). In sum, the reasoning
of Cascade Gardens and the warranty cases on which it relied—that promises to
repair “extend the limitations periods for suits on construction defects” (maj. opn.,
ante, at p. 14, describing inter alia Aced and Mack)—is fully applicable in this
case.
Pointing to section 337.15’s express exceptions, the majority invokes the
maxim inclusio unius est exclusio alterius, apparently to suggest that, by including
express statutory exceptions, the Legislature meant to displace established,
generally applicable equitable exceptions. (See maj. opn., ante, at p. 13.) The
6
majority does not develop the argument, perhaps realizing that “the [cited] maxim,
while helpful in appropriate cases, ‘is no magical incantation, nor does it refer to
an immutable rule.’ ” (California Fed. Savings & Loan Assn. v. City of Los
Angeles (1995) 11 Cal.4th 342, 351.) As the Court of Appeal pointed out, a
recognized exception to the maxim arises when its application would conflict with
well-established legal principles that the Legislature has not expressly repudiated.
(Juran v. Epstein, supra, 23 Cal.App.4th at p. 896; see also Battuello v. Battuello
(1998) 64 Cal.App.4th 842, 848.) Accordingly, as the Court of Appeal concluded,
the presence of enumerated exceptions in section 337.15 does not imply legislative
intent to exclude equitable tolling.
Confirming trial courts’ discretionary access to equitable tolling, contrary
to the majority, would not undermine the legislative purposes underlying section
337.15. (See maj. opn., ante, at pp. 13-19.) The majority’s lengthy recitation of
section 337.15’s legislative history confirms “the statute is the result of general
legislative concern about the economic effects of indefinite ‘long tail’ defect
liability on the construction industry” (maj. opn., ante, at p. 14), but it ultimately
does not support the majority’s position. Plaintiffs argue persuasively that the
Legislature’s primary aim when enacting section 337.15 was to eliminate
generalized application of the “discovery rule” in construction defect litigation.
Retention of equitable tolling would not undermine section 337.15’s impact on the
perceived evils of that rule, because, as the majority acknowledges, a defendant
who promises or undertakes repairs is generally able to control the time of any suit
against it. (See maj. opn., ante, at p. 24.)
Ultimately, the majority can point to but one circumstance—that involving
the so-called unsuspecting subcontractor—in which it can credibly claim an
equitable tolling rule would undermine the statutory purpose. (See maj. opn.,
ante, at pp. 20-21.) The majority’s objection, however, depends on the
7
questionable assumption that subcontractors responsible for defects generally will
neither participate in nor be informed about repairs contractor defendants might
promise or undertake. Common sense suggests that such a circumstance, if it ever
occurs, is likely to be the exception. In any event, the majority does not persuade
me this theoretical possibility should drive our construction of section 337.15.
As we long have understood, section 337.15 is an “ordinary statute of
limitations, subject to the same rules . . . as other statutes of limitations.” (Regents
of University of California v. Hartford Acc. & Indem. Co. (1978) 21 Cal.3d 624,
642.) One such generally applicable rule has been that statutes of limitations may
be subject to equitable tolling during periods of repair. (Cascade Gardens, supra,
194 Cal.App.3d at p. 1256.) Given the Legislature’s long-standing acquiescence
in Cascade Gardens and its progeny, the absence of an express reference to
equitable tolling in section 337.15 affords no justification for barring that
generally available remedy in construction defect cases. I conclude that equitable
tolling of section 337.15 to protect homeowners from unscrupulous builders and to
encourage amicable resolution of construction defect disputes should remain
available in appropriate cases when plaintiffs can demonstrate the remedy’s
required elements.
Estoppel
I agree with the majority that a defendant whose conduct induces plaintiffs
to refrain from filing suit within the statutory period may, depending on the
circumstances, be equitably estopped to assert that section 337.15’s 10-year
limitation on latent construction defect actions has expired. (Maj. opn., ante, at
p. 3.) The majority concludes that plaintiffs’ first amended complaint alleges
insufficient facts to establish such an estoppel. (Id. at p. 30.) Assuming that
conclusion is correct, I would allow plaintiffs an opportunity to amend their
complaint.
8
The majority correctly notes that “plaintiffs did offer more specific estoppel
allegations in a proposed second amended complaint. This proposed complaint
made express claims that, from the time plaintiffs purchased their homes until
expiration of the 10-year limitations period, defendants engaged in a pattern of
falsely promising repairs, or making sham repairs they knew would fail, and then
refused to respond further once the 10-year period had passed, all with the purpose
and effect of inducing plaintiffs to forbear suing within the statutory time. ” (Maj.
opn., ante, at pp. 32-33.) “It is axiomatic that if there is a reasonable possibility
that a defect in the complaint can be cured by amendment or that the pleading
liberally construed can state a cause of action, a demurrer should not be sustained
without leave to amend.” (Minsky v. City of Los Angeles (1974) 11 Cal.3d 113,
118.)3 The majority acknowledges this axiom (see maj. opn., ante, at p. 32), but
fails to apply it.
Conceding that plaintiff’s proposed allegations may be “technically
sufficient to establish an estoppel,” the majority nevertheless denies plaintiffs that
remedy, partly on the ground that plaintiffs’ belated presentation of the proposed
second amended complaint gives rise to doubt about the credibility of its
allegations. (Maj. opn., ante, at p. 33.) But elsewhere the majority acknowledges
that plaintiffs have urged “at all stages that if their complaint is deficient, but
could be remedied by additional factual allegations, a chance should be afforded to
assert such facts.” (Id. at p. 32, italics added.)
3
As the majority concedes, the trial court found there was a possibility that
amendment could cure any factual deficiencies in plaintiffs’ estoppel allegations.
(See maj. opn., ante, at pp. 31-32.) The majority also concedes amendment
“might cure” any factual deficiencies in plaintiffs’ allegations respecting equitable
tolling. (Id. at p. 5.)
9
The record contains a declaration, submitted to the superior court by one of
plaintiffs’ counsel, stating that only five days after defendants’ demurrer was
granted without leave to amend did counsel became aware, through conversations
with another attorney, of the facts plaintiffs proposed to allege in their second
amended complaint. Moreover, we previously have stated, in a case where “the
defense of estoppel set out in the amendment was known for a considerable time
before the trial,” that the fact “ ‘the new matter set up by the amendment was well
known to the [party] when he filed his original [pleading] was no good reason why
he should not have been permitted to amend.’ ” (Tolbard v. Cline (1919) 180 Cal.
240, 245; see also 49A Cal.Jur.3d (2002) Pleading, § 224, p. 371.) The majority
on the other hand cites no authority for its apparent implication that plaintiffs’
failure to supply a reason why the second amended complaint was not “presented
sooner” (maj. opn., ante, at p. 33) is grounds for denying them an opportunity to
amend their complaint, nor do I know of any such authority. To the contrary,
“[a]ny judge, at any time before or after commencement of trial, in the furtherance
of justice, . . . may allow the amendment of any pleading . . . .” (§ 576.)
The majority also professes doubt about the credibility of the new
allegations for the reason that, when plaintiffs’ counsel was asked at oral argument
what additional facts, not included in the first amended complaint, could be
asserted to support a theory of equitable estoppel, he responded that “repairs
promised or attempted by defendants at any time during the 10-year period gave
rise, as a matter of law, to a form of implicit reliance by plaintiffs,” thus reiterating
a theory of equitable tolling, rather than specifically referring us to the claims set
forth in the proposed second amended complaint. (Maj. opn., ante, at p. 33.) The
majority concludes that this omission and the proposed amendment’s timing
“negate any inference that these new assertions had a substantial basis in fact.”
(Ibid.) The conclusion does not follow. After all, the majority does not claim that
10
plaintiffs abandoned or repudiated the allegations of the proposed second
amended complaint, nor, indeed, did plaintiffs do so.
I am aware of no requirement that an issue or position that has been briefed
before this court must be reiterated at oral argument in order to be preserved, nor
of any principle that counsel who is nonresponsive to the court’s question
concerning a position is deemed to have abandoned that position. In addressing
the topic of reliance before us, plaintiffs certainly were entitled to argue implicit
reliance and even to reiterate their tolling theory, without being deemed to
abandon the alternative, and perfectly consistent, position respecting amendment
that they have urged at all stages of this litigation—viz., “that if their complaint is
deficient, but could be remedied by additional factual allegations, a chance should
be afforded to assert such facts.” (Maj. opn., ante, at p. 32.) In accordance with
our liberal rules respecting amendment of the pleadings (see, e.g., §§ 473, 576),
I would afford plaintiffs that opportunity.
For the foregoing reasons, I dissent.
WERDEGAR, J.
I CONCUR:
KENNARD, J.
11
See next page for addresses and telephone numbers for counsel who argued in Supreme Court.
Name of Opinion Lantzy v. Centex Homes
__________________________________________________________________________________
Unpublished Opinion
Original Appeal
Original Proceeding
Review Granted XXX 89 Cal.App.4th 1059
Rehearing Granted
__________________________________________________________________________________
Opinion No. S098660
Date Filed: August 4, 2003
__________________________________________________________________________________
Court: Superior
County: Contra Costa
Judge: David Bernard Flinn
__________________________________________________________________________________
Attorneys for Appellant:
Duke Gerstel Shearer, Dawn R. Brennan and Alan R. Johnston for Plaintiffs and Appellants.
__________________________________________________________________________________
Attorneys for Respondent:
Luce, Forward, Hamilton & Scripps, Charles A. Bird; Morgan, Miller & Blair, Kenneth M. Miller and
Kathleen M. DeLaney for Defendants and Respondents.
Fred J. Hiestand for the Civil Justice Association of California as Amicus Curiae on behalf of Defendants
and Respondents.
David S. Jaffe; Piper Marbury Rudnick & Wolfe, Jeffrey A. Rosenfeld and Stephen R. Mysliwiec for
National Association of Builders as Amicus Curiae on behalf of Defendants and Respondents.
Dale, Braden & Hinchcliffe, George D. Dale and Dianne M. Costales for the California Building Industry
Association as Amicus Curiae on behalf of Defendants and Respondents.
1
Counsel who argued in Supreme Court (not intended for publication with opinion):
Alan R. Johnston
Duke Gerstel Shearer
101 West Broadway, Suite 1120
San Diego, CA 92101-8296
(619) 232-0816
Charles A. Bird
Luce, Forward, Hamilton & Scripps
600 West Broadway, Suite 2600
San Diego, CA 92101-3391
(619) 236-1414
2
Opinion Information
| Date: | Docket Number: |
| Mon, 08/04/2003 | S098660 |
Parties
| 1 | Lantzy, Henry V. (Plaintiff and Appellant) Represented by Alan R. Johnston Duke, Gerstel, Shearer & Bregante 101 West Broadway, Ste. 1120 San Diego, CA |
| 2 | Lantzy, Henry V. (Plaintiff and Appellant) Represented by Dawn R. Brennan Duke Gerstel Shearer 101 W. Broadway, Suite 1120 San Diego, CA |
| 3 | Centex Homes (Defendant and Respondent) Represented by Charles A. Bird Luce, Forward, Hamilton & Scripps, LLP 600 W. Broadway, Suite 2600 San Diego, CA |
| 4 | Centex Homes (Defendant and Respondent) Represented by Kenneth M. Miller Morgan Miller & Blair 1676 N. California Boulevard, Suite 200 Walnut Creek, CA |
| 5 | Guerra, Mark T. (Pub/Depublication Requestor) Represented by Mark T. Guerra Clapp, Moroney Et Al P.O. Box 8003-8603 Pleasanton, CA |
| 6 | National Association Of Home Builders (Amicus curiae) Represented by Jeffrey Alan Rosenfeld Piper Marbury Rudnick & Wolfe, LLP 9255 Sunset Boulevard, Ste. 710 Los Angeles, CA |
| 7 | California Building Industry Association (Amicus curiae) Represented by George D. Dale Dale, Braden & Hinchcliffe 3415 South Sepulveda Boulevard, Ninth Fl Los Angeles, CA |
| 8 | California Building Industry Association (Amicus curiae) Represented by Dianne Costales Haines Dale, Braden & Hichcliffe 3415 South Sepulveda Boulevard, 9th Fl 801 S Grand Ave 9th Fl Los Angeles, CA |
| 9 | Civil Justice Association Of California (Amicus curiae) Represented by Fred James Hiestand Attorney At Law 1121 L Street, Ste 404 Sacramento, CA |
| Disposition | |
| Aug 4 2003 | Opinion: Reversed |
| Dockets | |
| Jun 28 2001 | Request for Depublication filed (case init.) by non-party residential homebuilders and contractors |
| Jul 2 2001 | Opposition filed By Appellants to Request to Depublish Appellate Decision |
| Jul 17 2001 | Petition for review filed by counsel for resps |
| Jul 23 2001 | Record requested |
| Jul 26 2001 | Received Court of Appeal record file jacket/loose briefs |
| Aug 6 2001 | Answer to petition for review filed by counsel for Henry V. Lantz appellant |
| Aug 22 2001 | VPetition for Review Granted (civil case) |
| Aug 31 2001 | Certification of interested entities or persons filed by Attorney Mark T. Guerra, (non-party Depub. Requestor) |
| Sep 10 2001 | Certification of interested entities or persons filed by Atty Charles Bird counsel for respondent |
| Sep 17 2001 | Application for Extension of Time filed by Respondents to file opening brief on merits to October 22, 2001. ***granted*** order being prepared. |
| Sep 21 2001 | Extension of Time application Granted to Repondents (Centex Homes, et al.,) to October 22, 2001 to file opening brief on merits. |
| Oct 23 2001 | Opening brief on the merits filed by counsel for respondents ( Centex Homes et al.,) rule 40n |
| Oct 23 2001 | Request for Judicial Notice filed by counsel for Respondents (Centex Homes et al.,) rule 40n |
| Nov 15 2001 | Request for extension of time filed Appellants requests extension of time to December 28, 2001. to file response brief. |
| Nov 19 2001 | Extension of Time application Granted Appellants (Henry v. Lantzy, et al.,) time to serve and file appellant's response brief on the merits is extended to and including December 28, 2001. |
| Dec 21 2001 | Answer brief on the merits filed by counsel for (appellant) H. Lantzy et al.,) |
| Jan 10 2002 | Reply brief filed (case fully briefed) counsel for Respondents (Centex Homes, et al.) |
| Feb 8 2002 | Received application to file amicus curiae brief; with brief California Building Industry Assoc. |
| Feb 8 2002 | Received application to file Amicus Curiae Brief By the National Association of Home Builders in support of Respondents. (Application & Brief under same cover) |
| Feb 13 2002 | Received application to file amicus curiae brief; with brief by Civil Justice Assn. of Calif. in support of aplts. (mailed per rule 40n) |
| Feb 14 2002 | Permission to file amicus curiae brief granted Calif. Building Industry Assoc. |
| Feb 14 2002 | Amicus Curiae Brief filed by: Calif. Building Industry Association (non-party) |
| Feb 14 2002 | Permission to file amicus curiae brief granted National Association of Home Builders |
| Feb 14 2002 | Amicus Curiae Brief filed by: National Association of Home Builders (non-party) |
| Feb 22 2002 | Permission to file amicus curiae brief granted Civil Justice Assoc.of Calif. |
| Feb 22 2002 | Amicus Curiae Brief filed by: Civil Justice Assoc. of California (non-party) |
| Jun 3 2002 | Supplemental brief filed by counsel for appellant (Henry V. Lantzy, et al.) |
| Apr 9 2003 | Case ordered on calendar 5-6-03, 9am, S.F. |
| Apr 29 2003 | Order filed The Centex Parties' Request for Judicial Notice, filed on October 23, 2001, is granted. |
| May 6 2003 | Cause argued and submitted |
| Aug 4 2003 | Opinion filed: Judgment reversed OPINION BY: Baxter, J. --- joined by: George, C.J., Chin, Brown, Moreno, JJ. DISSENTING OPINION BY: Werdegar, J. --- joined by : Kennard, J. |
| Aug 27 2003 | Opinion modified - no change in judgment Werdegar, J., was absent and did not participate. |
| Sep 4 2003 | Remittitur issued (civil case) |
| Sep 9 2003 | Received: receipt for remittitur from CA 1/5 |
| Briefs | |
| Oct 23 2001 | Opening brief on the merits filed |
| Dec 21 2001 | Answer brief on the merits filed |
| Jan 10 2002 | Reply brief filed (case fully briefed) |
| Feb 14 2002 | Amicus Curiae Brief filed by: |
| Feb 14 2002 | Amicus Curiae Brief filed by: |
| Feb 22 2002 | Amicus Curiae Brief filed by: |
