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Brisbane Lodging, L.P. v. Webcor Builders, Inc.

California Court of Appeals, First District, Fourth Division

June 3, 2013

BRISBANE LODGING, L.P., Plaintiff and Appellant,
v.
WEBCOR BUILDERS, INC. et al., Defendants and Respondents.

CERTIFIED FOR PARTIAL PUBLICATION[*]

Trial Court: San Mateo County Superior Court No. 473170 Trial Judge: Hon. Joseph C. Scott

Counsel for Appellant: Fieldslaw, Gary D. Fields, Arlette B. Bolduc Esner, Chang & Boyer, Stuart B. Esner, Holly N. Boyer

Counsel for Respondents: Gordon & Rees, S. Mitchell Kaplan, Don Willenburg, Gregory J. Gangitano

RUVOLO, P. J.

I.

Introduction

In this action concerning a latent construction defect, Brisbane Lodging, L.P. (Brisbane) appeals from a summary judgment entered in favor of respondents Webcor Builders, Inc. and Webcor Builders (collectively, Webcor). The construction contract executed by the parties included a clause which provided that all causes of action relating to the contract work would accrue from the date of substantial completion of the project. This contract provision clearly and unambiguously abrogated the so-called delayed discovery rule, which would otherwise delay accrual of a cause of action for latent construction defects until the defects were, or could have been, discovered. The trial court concluded the clause was valid and enforceable, noting that the agreement “was one between sophisticated parties seeking to define the contours of their liability.” Summary judgment was then granted for Webcor after finding that Brisbane’s action for latent construction defects was time-barred.

In the published portion of this opinion, we conclude that public policy principles applicable to the freedom to contract afford sophisticated contracting parties the right to abrogate the delayed discovery rule by agreement. Under the clear language of the parties’ contract, Brisbane’s action was untimely. The time for bringing Brisbane’s claims against Webcor started to run upon substantial completion of the project, and Brisbane’s lawsuit was brought more than four years after the agreed-upon accrual date, which was outside the applicable limitations period. (Code Civ. Proc., §§ 337, 337.1.)[1] Accordingly, we affirm.

In the nonpublished portion of the opinion, we consider Brisbane’s alternative arguments: (1) the trial court’s interpretation of the disputed clause was in direct conflict with other provisions of the contract; (2) Webcor’s acceptance of responsibility for making repairs to its defective work more than four years after substantial completion of the project raised a triable issue of fact as to whether Webcor itself believed that the parties had not waived the delayed discovery rule; (3) even if the delayed discovery rule was abrogated by contract, Webcor’s post-completion conduct indicated it waived its right to rely on this provision; and (4) a new statute of limitations period began from the point in time when Webcor participated in making repairs after the project had been completed. We reject these alternative arguments as well.

II.

Factual Background

On July 12, 1999, Brisbane and Webcor entered into a contract for the design and construction of a 210-room, eight-story hotel, to be known as the Sierra Pointe Radisson Hotel (the Radisson). Before execution, the agreement had been extensively negotiated between the parties. For example, on March 8, 1999, Brisbane wrote to Webcor: “It is understood and agreed that negotiation of contract documents and satisfaction of customary closing conditions and due diligence must be satisfactory in form and substance to the parties and their respective counsel.” Revisions were made by both parties to early contract drafts by striking out unacceptable provisions and by inserting additional terms. The form of agreement with “mutually acceptable language, ” was approved by Brisbane.

The final contract contained the 1997 American Institute of Architects [AIA] “Standard Form of Agreement Between Owner and Contractor (Cost Plus Fee), the AIA Document A201 General Conditions” (AIA A201), and several attachments relating to design requirements, construction allowances, the “Radisson Hotel Design Standards, ” and standard specifications required by Brisbane’s parent company.

One of the provisions of the AIA A201 addressed the commencement of the statutory limitations period for work completed prior to substantial completion of the project:

“13.7 Commencement of Statutory Limitation Period

“13.7.1 As between the Owner and Contractor:

“.1 Before Substantial Completion. As to acts or failures to act occurring prior to the relevant date of Substantial Completion, any applicable statute of limitations shall commence to run and any alleged cause of action shall be deemed to have accrued in any and all events not later than such date of Substantial Completion....” (AIA A201, Article 13.7.1.1 (Article 13.7.1.1), original bolding, capitalization omitted.)

It is undisputed that the Radisson was substantially completed on July 31, 2000.

In early 2005, Brisbane learned that there was a kitchen sewer line break which caused waste to flow under the Radisson. It notified Webcor of the problem and undertook temporary repairs to address the issue. By late March 2005, Webcor visited the site. It determined that the plumbing problem was a latent defect, and that Therma Corporation (Therma), the plumbing contractor, was responsible for the problem. Therma made repairs to the kitchen sewer line in July 2005.

About two years later, additional problems with the plumbing system arose. In October 2007, Brisbane again informed Webcor and Therma of the situation. Both Webcor and Therma returned to the Radisson to inspect the problem. Webcor thereafter notified Brisbane that it preferred to have Therma perform the necessary exploratory work to identify the source of the leakage in the kitchen sewer system. Therma did not make repairs, but did run a camera through a different portion of the kitchen drainage pipe. The camera fell out of the pipe, indicating the pipe had become disconnected. Therma failed to provide this information to Brisbane. In January 2008, Webcor notified Brisbane that both Webcor and Therma considered the issue closed. Brisbane took issue with that statement and responded that the matter “is certainly not closed.” Ultimately, Brisbane discovered, among other things, that Therma had used ABS pipe material rather than cast iron pipe for the sewer line, in violation of the Uniform Plumbing Code.

In May 2008, Brisbane filed a complaint against Webcor for breach of contract, negligence, and breach of implied and express warranties. Webcor moved for summary judgment contending that the action was barred by Article 13.7.1.1. It argued that, pursuant to that provision, the statute of limitations for Brisbane’s causes of action began to run on the date of substantial completion. Brisbane opposed the motion, contending: (1) it had never agreed to waive its right to sue for latent defects; (2) Article 13.7.1.1 was too vague to be interpreted as a waiver of the provisions of section 337.15, which sets a maximum 10-year period to sue for latent defects; and, (3) a clause purporting to abrogate the discovery rule would be against public policy.

The trial court ruled as a matter of law that Article 13.7.1.1 clearly and unambiguously abrogated the delayed discovery rule and the provisions of section 337.15 which apply to claims arising out of latent construction defects. Under Article 13.7.1.1, the latest date upon which Brisbane could have commenced suit on its claims against Webcor was July 31, 2004, four years after substantial completion of the project (§§ 337, 337.1). Brisbane commenced its action on May 27, 2008, nearly four years later, making Brisbane’s action untimely as a matter of law, and subject to dismissal on summary judgment.

III.

Discussion


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