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Centex Homes et al v. the Superior Court of San Diego County

March 25, 2013

CENTEX HOMES ET AL., PETITIONERS,
v.
THE SUPERIOR COURT OF SAN DIEGO COUNTY, RESPONDENT; CITY OF SAN DIEGO, REAL PARTY IN INTEREST.



(San Diego County Super. Ct. No. 37-2009-00087185 CU-CD-CTL) PETITION for writ of mandate from the Superior Court of San Diego County, Luis R. Vargas, Judge.

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

CERTIFIED FOR PUBLICATION

Petition granted.

I.

INTRODUCTION

Government Code section 901*fn1 provides in relevant part, "[T]he date upon which a cause of action for equitable indemnity or partial equitable indemnity accrues shall be the date upon which a defendant is served with the complaint giving rise to the defendant's claim for equitable indemnity or partial equitable indemnity against the public entity." (Italics added.)

In this case, we must determine whether the trial court properly concluded that a homeowners' association's original complaint against Centex Homes (Centex)*fn2 alleging violations of various statutory building standards (Civ. Code, § 896) related to Centex's construction of a multi-story residential building, gave rise to Centex's claim for equitable indemnity against the City of San Diego (City). We conclude that because the original complaint did not encompass the claim for which Centex seeks indemnity from the City, Centex's claim for equitable indemnity did not accrue with the filing of the original complaint. We reverse and remand for further proceedings.

II.

FACTUAL AND PROCEDURAL BACKGROUND

A. The underlying lawsuit against Centex

On April 20, 2009, the Element Owners Association (Association) filed a complaint against Centex related to Centex's construction of an eight-story condominium building in San Diego (the Project). The complaint contained a cause of action alleging violations of various statutory building standards (Civ. Code, § 896), including violations pertaining to the Project's foundation, exterior walls, balconies, exterior decks, common walkways, fire safety systems, windows and doors, and a handicap lift. None of the alleged violations related to the building's plumbing or sewer systems.*fn3

On April 1, 2011, the Association sent Centex a "notice of commencement of legal proceeding" pursuant to Civil Code section 910. "[Civil Code] section 910, establishes a series of prelitigation procedures that a claimant must pursue before filing an action against 'any party alleged to have contributed to a violation of [a] standard[]' [outlined in Civil Code section 896]" (Greystone Homes, Inc. v. Midtec, Inc. (2008) 168 Cal.App.4th 1194, 1211(Greystone)), including notifying the party of the claimed violations of the standards contained in Civil Code section 896 prior to commencing litigation. In the April 1, 2011 notice, the Association identified various alleged defects in the Project's plumbing and sewer systems.

That same day, the Association filed a document entitled "Plaintiff's Preliminary Statement of Claim." This document states that it was being filed pursuant to the "operative CMO"*fn4 and that it "illustrate[s] and support[s] [the Association's] claims arising out of alleged defects and damages alleged in [the Association's] complaint . . . ." Among the defects alleged in the preliminary statement of claim are defects related to the Project's plumbing and sewer systems, including an allegation that the "cast iron waste piping is defective and has leaked."

B. Centex presents a claim to the City

In March 2012, Centex presented the City with a claim pursuant to section 900 et seq. The claim referenced the Association's April 2011 preliminary statement of claim and stated that this document represented the first time that the Association had alleged that the Project's cast iron waste piping was defective. Centex also stated that an inspection of the pipes conducted in February 2012 revealed crystallization on the pipes, and contended that further investigation had revealed that the crystallization was the result of hydrochloric gasses emitting from the City's sewer system. Centex asserted that this was the first time that it had discovered "the grounds for Centex['s] claimed relief against the [City]."

In May 2012, the City denied Centex's claim on the ground that the claim had not been "presented within the 6 (six) months after the event or occurrence as required by law."*fn5

C. Centex's motion for relief from the Government Code claims requirement and for

leave to file a cross-complaint against the City

In August 2012, Centex filed a motion for relief from the Government Code claims requirement and for leave to file a cross-complaint against the City. In its motion, Centex noted that "[a] cause of action for equitable indemnity . . . accrues on the date on which a defendant is served with the complaint giving rise to the Defendant's claim for equitable indemnity . . . against the public entity." (Citing § 901.) Centex argued that it had presented its claim with the City on March 28, 2012, which was within one year of the accrual of its equitable indemnity cause of action against the City on April 1, 2011. Centex reasoned:

"[The Association's] original complaint was filed on April 20, 2009. That complaint, however, did not contain any allegation of defects or damage to any part of the plumbing system in general, or the cast iron waste lines specifically. [Citation.] On April 1, 2011, [the Association] served a Preliminary Statement of Claim [citation] alleging, for the first time, plumbing defects in the Project, including defective and leaking cast iron waste pipes. [Citation.] Since a Notice of Claim has the same effect as the commencement of a lawsuit, [Centex's] cause of action against the City did not begin to accrue until April 1, 2011. [Citation.] Thus, the deadline for making a claim against the City was April 1, 2012."

Centex further argued that its cross-complaint against the City was timely under section 945.6, which required Centex to commence its suit against the City within six months of the presentation of its claim to the City.

With respect to the nature of its proposed cross-complaint against the City, Centex argued that its "claim asserted against the City arises out of the same transactions and occurrences currently being pursued by [the Association] against [Centex]." More specifically, Centex maintained that the Association was alleging "premature deterioration in the [Project's] cast iron pipes," and that "[t]esting to date indicates that the deterioration, if any, is the result of hydrochloric gas improperly emitting from the City's sewer system."

Centex supported its motion with a declaration from its counsel and various exhibits, including its proposed cross-complaint, the Association's April 2011 Preliminary Statement of Claim, and documents related to Centex's March 2012 claim presented to the City.

In its proposed cross-complaint, Centex included the following allegation:

"On or about April 20, 2009, [the Association] filed their Complaint against [Centex] for, among other things, violation of building standards as set forth in California Civil Code, [section] 896, breach of warranty and negligence in connection with the condominium and commercial mid-rise project known as "Element" . . . ("the Property"). This cross-complaint pertains to the alleged defects and damage in the Property, specifically claims related to the cast-iron waste line."*fn6

Centex's proposed cross-complaint contained causes of action for equitable indemnification, contribution and repayment, and declaratory relief as to the City's duty to indemnify.

The City filed an opposition in which it argued that section 901 provides that Centex's equitable indemnity claim against the City accrued upon the Association's service of the original April 20, 2009 complaint on Centex. The City noted that in Greyhound Lines, Inc. v. County of Santa Clara (1986) 187 Cal.App.3d 480, 485 (Greyhound), the court rejected a defendant's argument that its claim for equitable indemnity had not accrued against a public entity until the time the defendant discovered the underlying facts giving rise to the indemnity claim. The City reasoned that under Greyhound, the Association's original April 2009 complaint gave rise to Centex's equitable indemnity claim against the City, even if Centex did not discover the City's potential liability until much later.

Based on its contention that the filing of the original complaint in April 2009 "gave rise" to Centex's equitable indemnity claim, the City maintained that Centex's claim accrued no later than June 20, 2009. The City reasoned that although it was unaware of the precise date on which the Association served Centex with the April 20, 2009 complaint, even assuming that the Association waited the maximum 60 days after the filing of the complaint to serve Centex (Cal. Rules of Court, rule 3.110), Centex's claim accrued no later than June 20, 2009. Because Centex was required to present its claim to the City no later than one year after accrual of its equitable indemnity cause of action (§ 911.2, subd. (a)), the City argued that Centex would have had to present its claim to the City no later than June 20, 2010. The City further argued that since Centex did not present its claim to the City until March 28, 2012, Centex had failed to timely present its claim to the City.

Centex filed a reply in which it argued that the Association's original April 20, 2009 complaint did not contain a "single allegation relating to plumbing or cast iron waste pipes," and that given this fact, "the complaint does not, in any conceivable way, give rise to [Centex's] claim for equitable indemnity against the City." (Italics omitted.)

The trial court issued a tentative ruling denying Centex's motion and held oral argument on the motion. At the conclusion of oral argument, the court confirmed its tentative ruling, as follows:

"A cause of action for equitable indemnity or partial equitable indemnity against a public entity begins to accrue once a defendant has been served with the complaint giving rise to the defendant's claim for equitable indemnity or partial equitable indemnity. ([Section 901].) [Section] 901 is to be strictly construed even where a defendant does not have any reason to anticipate that a ...


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