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San Diego Unified School Dist. v. County of San Diego

January 20, 2009


APPEAL from a judgment of the Superior Court of San Diego County, Richard E. L. Strauss, Judge. Reversed. (Super. Ct. No. GIC840390).

The opinion of the court was delivered by: Huffman, J.


Plaintiff and appellant, the San Diego Unified School District (the District), brought this action on numerous contractual and equitable theories against defendant and respondent the County of San Diego (the County), in the factual context of environmental problems and remediation costs incurred at District property, due to the ongoing effects of an inactive landfill that was operated in the 1960's by the County, which leased the District property. The District seeks reimbursement of a share of its expenses for remedial work at the landfill site that was required to be performed by several regulatory agencies, pursuant to environmental legislation enacted in the 1980's. (Wat. Code, § 13000 et seq., the Porter-Cologne Water Quality Control Act (the Act); Health & Saf. Code, § 41805.5 [regulating nonvehicular air pollution].)

The District appeals a summary judgment that was granted in favor of the County on the ground that all causes of action in the District's amended complaint (filed in 2004) are barred by the statute of limitations applicable to latent construction defects. (Code Civ. Proc.,*fn1 §§ 337.15, 437c.) The trial court reasoned that all the District's theories, including breach of contract, equitable indemnity, declaratory relief, nuisance, and so forth, were based on the underlying premise that the landfill is an improvement on the District's property, constructed by the County within the meaning of section 337.15, subdivision (a), and therefore any action seeking damages for latent defects in the property had to be brought against the County within 10 years of completion of the improvement, which occurred in 1967.

On appeal, the District contends the trial court erred in its application of section 337.15, because the District is not suing upon any claim for damages based on defective construction, design or operation of the landfill, but instead is seeking monetary reimbursement of costs incurred by the District, as a property owner, in achieving compliance with environmental regulations of groundwater and other substances affected on an ongoing basis by the closed landfill. The District points out that the County was designated by a regulatory agency, the San Diego Regional Water Quality Control Board (the Regional Board), as an "operator" of the landfill, but the County has refused to perform certain allocated tasks to remedy some of the environmental problems of the landfill (mainly groundwater monitoring).*fn2

In response, the County argues that section 337.15 protects landfill improvers such as the County from long-tail defect liability, and that such protection should not be lost where a plaintiff, such as the District, is seeking repayment of modernization costs for a 40-year old landfill, to meet current maintenance standards as now set forth in environmental regulation.(Gaggero v. County of San Diego (2004) 124 Cal.App.4th 609(Gaggero).)

Our review of the 12 causes of action of the operative complaint persuades us that the trial court erred as a matter of law in deciding that the latent construction defect limitations period, as set forth in section 337.15, was dispositive of all the District's contractual and indemnification theories. The District is relying on the language of the lease between the parties and their 1999 "sharing agreement," which they entered into for allocation of their expenses for environmental regulatory compliance, and the District seeks breach of contract damages. It also relies on claims of statutory duties that the County has violated, to its damage, and these theories are distinct from construction defect allegations.

Further, triable issues of fact remain on alternative grounds on which the County sought summary judgment, the different limitations bars of section 337, subdivision (1) and Government Code section 911.2. The trial court did not reach those issues, and it cannot now be determined as a matter of law whether the complaint was timely filed based on the relief sought, as "money or damages" within the purview of the Government Tort Claims Act (Gov. Code, § 810), or the contractual claims against the County. (Gov. Code, §§ 905, 911.2.)

We also conclude that other non-contractual causes of action by the District, such as nuisance and trespass, are not subject to the bar of section 337.15. The District pled sufficient grounds and supplied a sufficient factual showing to allow it to pursue proceedings on the merits on its requests for declaratory and other relief under theories of nuisance, trespass, or inverse condemnation, and summary judgment was improperly granted on limitations grounds. We reverse the judgment for further proceedings in accordance with the views expressed in this opinion.


A. Background; Lease and Sharing Agreement

A subsidiary portion of this dispute was previously before this court in San Diego Unified School District v. San Diego Regional Water Quality Control Board (Sept. 18, 2006, D047432 [nonpub. opn.], hereafter prior opn.), an appeal by the District of a demurrer ruling in favor of the Regional Board on the only cause of action pled against the Regional Board (i.e., declaratory relief regarding the manner in which the Regional Board carried out its regulatory functions). (Prior opn. [finding no error by the trial court in declining to entertain requests for declaratory relief regarding the rights and duties between the Regional Board and these parties].) We now adopt the relevant factual background as set forth in that prior opinion, although those issues did not deal directly with the rights of the District versus the County:

"The amended complaint generally alleges numerous disputes between the School District and the County about their respective responsibilities for remediation of environmental problems at the landfill site. These problems stemmed from a 1961 lease by the School District to the County, allowing the County to open a sanitary landfill on the subject property. The landfill remained in operation until 1967. In 1968, the School District constructed Bell Junior High School on the property.

"Pursuant to environmental legislation enacted in 1986, the Regional Board designated the County to be the operator of the landfill site, which was now inactive, and in 1987, required the County to prepare a 'solid waste air quality assessment test ("SWAT")'. (Health & Saf. Code, § 41805.5.) This was not done [at the time]. The Regional Board also required the County to conduct wastewater tests also entitled SWAT, 'solid wastewater quality assessment tests.'

"As further background here, we note that under section 13273, subdivision (a), the State Board, before January 1986, was required to rank all solid waste disposal sites, based upon the threats they posed to water quality. It then required the operators of such sites, including this one, to submit a SWAT to the appropriate regional board for its examination pursuant to subdivision (d). Under that subdivision (d), the regional boards then examined the reports submitted and determined whether the test wells and soil testing had detected any hazardous waste conditions. The regional board could then order a monitoring program and take corrective action at the solid waste disposal site, regarding water safety, pursuant to Chapter 5 (commencing with § 13300).

"In 1999, the City of San Diego's Solid Waste Local Enforcement Agency (LEA), issued a notice of violation to both the County (operator) and the School District (owner) for the lack of monitoring or cleanup at the site. The School District and the County entered into a "sharing agreement," attached as an exhibit to the amended complaint, providing for their division of responsibilities for such tasks. Further requirements were imposed by the Regional Board in 2000 on both the County and the School District. The School District carried out repairs and improvements at considerable expense. The County did so also, and allegedly caused further damage to the School District property.

"In 2004, the School District filed this action against the County, seeking damages of $1.4 million and injunctive relief."*fn3

B. First Amended Complaint

The operative first amended complaint (amended complaint) was filed in May 2005 and pleads several sets of allegations. In the first three causes of action, the District is pursuing breach of contract theories under both the lease and the sharing agreement (attached as exhibits), to seek damages of $1.4 million, for breach of contractual duties or quantum meruit recovery. The lease included a "hold harmless" clause as follows:

"County, so far as it may lawfully do so, shall hold District harmless from any or all liability for injury to person or damage to property arising directly or indirectly from any act or omission of any employee or officer of County or any person occupying the demised premises under or pursuant to this agreement."

In the November 1999 sharing agreement, the parties agreed to a reservation of rights as follows:

"The terms of this agreement are intended to facilitate responsible management of the property in accord with all environmental regulatory requirements. However, nothing in this agreement is intended to and shall not be construed to relieve either party from any legal duties or liabilities each may or may not have under state or federal law, or under any hold harmless or indemnification provisions contained in any lease or other written agreement between School District and County."

Although the District had filed a governmental tort claim against the County in 1999, requesting that the County take corrective action pursuant to a notice of violation of orders issued by the LEA, the parties apparently did not pursue the claim, because they entered into the sharing agreement. Under that agreement, the County agreed to maintain and pay for the landfill gas control and monitoring system, while the District agreed to maintain the surface of the playground and "slopes and drainage structures on the property in accord with directives from all environmental regulatory agencies," such as the LEA. They also agreed to split the facility fees and site security costs and obligations, such as fencing. However, the obligations to monitor and treat the groundwater at the site, which is affected by gas migration, remain in dispute in this action. In 2003, the County proposed an amendment to the sharing agreement that would have addressed that groundwater issue, but the District did not accept it, instead bringing another claim against the County and then this action.

In the contract claims, the District further alleges that both the Regional Board and the LEA have designated the County as an "operator" of the site, within the meaning of the environmental regulations, and the agencies have sought to impose duties upon the County to install groundwater monitoring wells and complete a SWAT investigation. (Wat. Code, § 13273; Health & Saf. Code, § 41805.5.) Although notices of violations were issued, the County has refused to perform these duties, causing the District to incur expenses, which it seeks to recover in several ways, in reliance on the lease or sharing agreement, or on its statutory obligations as a property owner in light of those contractual arrangements.

Next, in the fourth through sixth causes of action, theories of express and implied indemnity and contribution are pled, based on the 1961 lease agreement's "hold harmless" provision, and based on obligations allegedly owed by the County to the District under the sharing agreement, and based on its obligations to comply with environmental regulations. The District has incurred expenses and sought reimbursement, which has not been paid despite demands.

In the seventh through ninth causes of action, damages for nuisance, trespass, and inverse condemnation are sought for the County's alleged interference with the District's use and benefit of the site as a school and playground. The condition of the site required installation of monitoring wells and equipment for ...

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