By Glen Hansen
When governmental agencies force owners of real property to remediate contaminated soil and groundwater, the owners will invariably attempt to recover the remediation costs from those persons or entities responsible for the contamination. That may include former owners of the property or former operators of facilities on the property. If the contamination has been present in the soil and groundwater for many years, a lawsuit to recover remediation costs from the responsible parties may be barred by the 3-year statute of limitations in Code of Civil Procedure section 338, subdivision (b). However, if the contamination is still migrating through the soil or groundwater, the plaintiff may be able to avoid the bar of the 3-year statute of limitations by alleging a continuing nuisance or trespass.
But will an action based on a continuing trespass or nuisance ever be time-barred? Several courts have answered “yes” if the 10-year statute in Code of Civil Procedure section 337.15 applies. That statute generally applies to construction defects. Recently, the Court of Appeal, Fourth Appellate District examined how that 10-year statute in section 337.15 may apply to cases where the contamination has been in the soil or groundwater for over a decade.
In San Diego Unified School Dist. v. County of San Diego (2009) 170 Cal.App.4th 288, the San Diego Unified School District (the “District”), brought an action on numerous contractual and equitable theories against the County of San Diego (the “County”), for environmental remediation costs incurred at District property due to the ongoing effects of an inactive sanitary landfill that was operated in the 1960’s by the County, which leased the District property. The District sought 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. The District brought claims under the lease and a sharing agreement to recover breach of contract damages. Those contract claims were based on a “hold harmless” clause in the County’s lease and on the County’s failure to comply with orders from the Solid Waste Local Enforcement Agency who directed to the County to install groundwater monitoring wells and to investigate the site. The District also brought tort claims to recover indemnity, contribution nuisance, trespass and inverse condemnation, as well as injunctive and declaratory costs incurred for governmentally mandated environmental cleanup.
The County filed a motion for summary judgment on several grounds, including the bar of the statute of limitations for latent construction defects under section 337.15. The trial court granted the motion because it found that, as a matter of law, all of the District’s claims for expenditures resulted from actions to address physical defects of the landfill. The District appealed.
On appeal, the key issue was whether the rights asserted by the District were based solely on a latent construction defect. The court of appeal relied on Chevron USA, Inc. v. Superior Court (1994) 44 Cal.App.4th 1009. In Chevron, the court held that the 10-year statute in section 337.15 barred continuing nuisance and trespass claims for reimbursement of environmental cleanup costs against the installer of underground fuel storage tanks, where the contamination from the tanks was alleged to have been caused by defective installation of the tanks 19 years earlier.
The appellate court in San Diego Unified distinguished Chevron. Section 337.15 did not bar actions for property damage filed more than 10 years after the improvement was completed, where recovery is sought on some legal basis other than construction or latent defects. In this case, the Court pointed out that the District’s contractual claims were not merely relying on the manner of the landfill’s construction. The type of contamination at the landfill, together with the circumstances of later enacted environmental legislation and regulation, made it inappropriate to view the District’s allegations as equivalent to a latent defect in a completed improvement. The District alleged that its injury was proximately caused by breaches of arrangements reached by the parties in dealing with the property, regardless of how the contamination was originally created.
Therefore, the trial court erred as a matter of law in deciding that the 10-year latent construction defect limitations period in section 337.15 was dispositive of all the District’s claims.
Thus, in any case in which the contamination has existed on the property for more than 10 years, attention must be given as to the cause of the contamination. If the contamination was caused solely by a defect in construction of an improvement on the property, then the 10-year statute in section 337.15 may bar an action even if the contamination constitutes a continuing nuisance of trespass.
Glen Hansen is a senior associate at Abbott & Kindermann, LLP. For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, LLP at (916) 456-9595.
The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.