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SPRING 2002 The last several months have produced some interesting cases which will impact the handling of construction related claims by contractors, attorneys, and claims managers. Below is a summary of a few of the more meaningful cases. Repairs by a Party Toll Statute of Limitations The California Appellate Court, First District, has interpreted California Code of Civil Procedure section 337.15 to allow for tolling of the statute of limitations during times of repair. In doing so, the Court of Appeal disagreed with FNB Mortgage Corp. v. Pacific General Group (1999) 76 Cal.App.4th 1116, which, based on its facts, had held that the ten-year statute of limitations for construction defect cases under C.C.P. section 337.15 was not tolled during the time of repairs. In Jackson Plaza, a condominium project was constructed by Wong Construction. A notice of completion for the project was recorded on October 26, 1985. Shortly thereafter, the homeowners association (HOA) observed some water intrusion problems. During 1986 Wong Construction and other subcontractors performed repairs to correct those problems. In 1995, the HOA discovered that there were serious water intrusion issues throughout the project. An action was filed against Wong Construction on June 12, 1996. Wong Construction then cross-complained against numerous subcontractors. Wong Construction, as well as the subcontractors, filed a motion for summary judgment, contending that the complaint was barred by the ten-year statute of limitations. The trial court granted the motions for summary judgment. On appeal, the court found that the HOA had presented evidence that Wong Construction and other subcontractors performed work during 1986. While acknowledging that there was a split of decisions in the appellate courts, the Jackson Plaza court followed the majority and found that repairs by a party tolled the statute of limitations as to that party. The Jackson Plaza court therefore reversed the trial court's decisions on Wong Construction's motion for summary judgment. However, the court affirmed the ruling on the motion for summary judgment for a subcontractor which had not participated in the 1986 repairs. Because the subcontractor had not participated in the repairs, the ten-year statute of limitations was not tolled as to that subcontractor. The issue of whether the ten-year statute of limitations of section 337.15 is subject to equitable tolling during periods of repair is currently before the California Supreme Court in a case entitled Lantzy v. Centex Homes (2001) 89 Cal.App.4th 1059, review granted August 22, 2001. Parties Cannot Be Ordered to Pay for the Cost of Discovery
they Do Not Wish to Conduct In San Diego Unified Port District v. Douglas E. Barnhart, the Fourth District California Court of Appeal held that a party could not be ordered to contribute to the cost of destructive testing. In this case, plaintiff filed an action for professional negligence and related claims based on alleged defects in the construction of a new terminal at San Diego's international airport. The trial court issued an order requiring the defendant to contribute to the cost of destructive testing on the terminal's stone floor. The court acknowledged the well accepted principle that each party to litigation bears the ordinary burden of financing his or her own suit. The court also acknowledged that, when a party demands discovery involving significant special attendant costs beyond those typically involved in responding to routine discovery, the demanding party should bear those costs. The trial court's rationale for ordering the parties to contribute to the cost of destructive testing was that the parties could potentially benefit from the discovery. The Appellate Court rejected this rationale, primarily on the basis that a "potential benefit" is inherent in the discovery process itself. The potential benefit to a non-participating party is not a valid reason to force the non-participating party to pay for discovery that they choose not to pursue. The court concluded that the trial court's inherent power to exercise reasonable control over discovery matters did not authorize it to order parties to pay for destructive testing they did not want. In Order for Court to Maintain Jurisdiction Over a Settlement,
Parties Must Follow Proper Formalities In Caesar Wackeen v. William Malis, plaintiffs brought a motion to enforce a written settlement agreement pursuant to California Code of Civil Procedure section 664.6. Under section 664.6, the court is permitted to enter judgment pursuant to the terms of the settlement if the settlement is made in writing or made orally before the court. This section also provides that the court, if requested by the parties, may retain jurisdiction over the parties to enforce the settlement. The Court of Appeals ruled that the trial court had no jurisdictional basis for deciding the section 664.6 motions. The court held that in order for a trial court to assert continuing jurisdiction over a settlement, the party's request for retention of jurisdiction must satisfy the same formalities that the courts and the Legislature have imposed generally on section 664.6 motions and the settlement agreements such motions seek to enforce. Requests for retention of jurisdiction must be made prior to a dismissal of the suit. In addition, like the settlement agreement itself, the request for retention of jurisdiction must be made orally before the court or in a signed writing, and it must be made by their parties, not their attorneys or other agents. Because the above formal requirements for retention of jurisdiction were not met by the parties, they were precluded from seeking to enforce the terms of the settlement agreement through a section 664.6 motion. If the parties seek to gain enforcement or relief, they must do so by means of a timely, separate action. If you would like to discuss these or any other construction law matters, please do not hesitate to contact any member of Klinedinst's Construction Law Department (Arthur S. Moreau III, Kurt U. Campbell, Susan S. Kohn, Dayna L. Chmelka, Maurine P. Travis, Mark H. Nys, Kristin M. Johnson, David N. Bregman, Bonnie M. Cloutier-Simonek, and Gabe P. Wright).
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