Supreme Court of California Justia
Docket No. S098660
Lantzy v. Centex Homes

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, 08/04/2003S098660

Parties
1Lantzy, Henry V. (Plaintiff and Appellant)
Represented by Alan R. Johnston
Duke, Gerstel, Shearer & Bregante
101 West Broadway, Ste. 1120
San Diego, CA

2Lantzy, Henry V. (Plaintiff and Appellant)
Represented by Dawn R. Brennan
Duke Gerstel Shearer
101 W. Broadway, Suite 1120
San Diego, CA

3Centex Homes (Defendant and Respondent)
Represented by Charles A. Bird
Luce, Forward, Hamilton & Scripps, LLP
600 W. Broadway, Suite 2600
San Diego, CA

4Centex Homes (Defendant and Respondent)
Represented by Kenneth M. Miller
Morgan Miller & Blair
1676 N. California Boulevard, Suite 200
Walnut Creek, CA

5Guerra, Mark T. (Pub/Depublication Requestor)
Represented by Mark T. Guerra
Clapp, Moroney Et Al
P.O. Box 8003-8603
Pleasanton, CA

6National Association Of Home Builders (Amicus curiae)
Represented by Jeffrey Alan Rosenfeld
Piper Marbury Rudnick & Wolfe, LLP
9255 Sunset Boulevard, Ste. 710
Los Angeles, CA

7California Building Industry Association (Amicus curiae)
Represented by George D. Dale
Dale, Braden & Hinchcliffe
3415 South Sepulveda Boulevard, Ninth Fl
Los Angeles, CA

8California 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

9Civil Justice Association Of California (Amicus curiae)
Represented by Fred James Hiestand
Attorney At Law
1121 L Street, Ste 404
Sacramento, CA


Disposition
Aug 4 2003Opinion: Reversed

Dockets
Jun 28 2001Request for Depublication filed (case init.)
  by non-party residential homebuilders and contractors
Jul 2 2001Opposition filed
  By Appellants to Request to Depublish Appellate Decision
Jul 17 2001Petition for review filed
  by counsel for resps
Jul 23 2001Record requested
 
Jul 26 2001Received Court of Appeal record
  file jacket/loose briefs
Aug 6 2001Answer to petition for review filed
  by counsel for Henry V. Lantz appellant
Aug 22 2001VPetition for Review Granted (civil case)
 
Aug 31 2001Certification of interested entities or persons filed
  by Attorney Mark T. Guerra, (non-party Depub. Requestor)
Sep 10 2001Certification of interested entities or persons filed
  by Atty Charles Bird counsel for respondent
Sep 17 2001Application for Extension of Time filed
  by Respondents to file opening brief on merits to October 22, 2001. ***granted*** order being prepared.
Sep 21 2001Extension of Time application Granted
  to Repondents (Centex Homes, et al.,) to October 22, 2001 to file opening brief on merits.
Oct 23 2001Opening brief on the merits filed
  by counsel for respondents ( Centex Homes et al.,) rule 40n
Oct 23 2001Request for Judicial Notice filed
  by counsel for Respondents (Centex Homes et al.,) rule 40n
Nov 15 2001Request for extension of time filed
  Appellants requests extension of time to December 28, 2001. to file response brief.
Nov 19 2001Extension 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 2001Answer brief on the merits filed
  by counsel for (appellant) H. Lantzy et al.,)
Jan 10 2002Reply brief filed (case fully briefed)
  counsel for Respondents (Centex Homes, et al.)
Feb 8 2002Received application to file amicus curiae brief; with brief
  California Building Industry Assoc.
Feb 8 2002Received application to file Amicus Curiae Brief
  By the National Association of Home Builders in support of Respondents. (Application & Brief under same cover)
Feb 13 2002Received application to file amicus curiae brief; with brief
  by Civil Justice Assn. of Calif. in support of aplts. (mailed per rule 40n)
Feb 14 2002Permission to file amicus curiae brief granted
  Calif. Building Industry Assoc.
Feb 14 2002Amicus Curiae Brief filed by:
  Calif. Building Industry Association (non-party)
Feb 14 2002Permission to file amicus curiae brief granted
  National Association of Home Builders
Feb 14 2002Amicus Curiae Brief filed by:
  National Association of Home Builders (non-party)
Feb 22 2002Permission to file amicus curiae brief granted
  Civil Justice Assoc.of Calif.
Feb 22 2002Amicus Curiae Brief filed by:
  Civil Justice Assoc. of California (non-party)
Jun 3 2002Supplemental brief filed
  by counsel for appellant (Henry V. Lantzy, et al.)
Apr 9 2003Case ordered on calendar
  5-6-03, 9am, S.F.
Apr 29 2003Order filed
  The Centex Parties' Request for Judicial Notice, filed on October 23, 2001, is granted.
May 6 2003Cause argued and submitted
 
Aug 4 2003Opinion 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 2003Opinion modified - no change in judgment
  Werdegar, J., was absent and did not participate.
Sep 4 2003Remittitur issued (civil case)
 
Sep 9 2003Received:
  receipt for remittitur from CA 1/5

Briefs
Oct 23 2001Opening brief on the merits filed
 
Dec 21 2001Answer brief on the merits filed
 
Jan 10 2002Reply brief filed (case fully briefed)
 
Feb 14 2002Amicus Curiae Brief filed by:
 
Feb 14 2002Amicus Curiae Brief filed by:
 
Feb 22 2002Amicus Curiae Brief filed by:
 
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