Opinion
D077381
08-31-2021
CHRISTIAN GRIFFIN et al., Plaintiffs and Appellants, v. BLACK MOUNTAIN RANCH, LLC, Defendant and Respondent.
Tatro & Lopez and Timothy John Tatro; Rockwood & Noziska and Neal H. Rockwood, C. Brant Noziska, Shanshan Yu; Coughlin Law Firm and Sean Christopher Coughlin for Plaintiffs and Appellants. Plante Lebovic and Brian C. Plante, Patrick Alan Craig, Gregory M. Golino for Defendant and Respondent.
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of San Diego County, No. 37-2015-00033538-CU-CD-CTL, Ronald L. Styn, Judge.
Tatro & Lopez and Timothy John Tatro; Rockwood & Noziska and Neal H. Rockwood, C. Brant Noziska, Shanshan Yu; Coughlin Law Firm and Sean Christopher Coughlin for Plaintiffs and Appellants.
Plante Lebovic and Brian C. Plante, Patrick Alan Craig, Gregory M. Golino for Defendant and Respondent.
O'ROURKE, J.
Plaintiffs and appellants Christian Griffin and Dominique Griffin, on behalf of a putative class of homeowners in a San Diego neighborhood known as Del Sur, sued defendant and respondent Black Mountain Ranch LLC (LLC) and other defendants for strict products liability and negligence in part on the theory that LLC, or its successors and/or assignees, had supplied, designed or constructed defective products-treated water as well as a reservoir and system of delivery to their homes-and was therefore liable for damages caused by those products. The trial court granted LLC's motion for summary judgment, ruling (1) LLC presented evidence the reservoir was substantially completed as of May 30, 2003, more than 10 years before plaintiffs filed their original complaint, barring the action under Code of Civil Procedure section 337.15's 10-year statute of repose; (2) plaintiffs had not alleged willful misconduct or fraudulent concealment so as to allow them to rely upon the exception to section 337.15, but even if they had, there was no evidence LLC participated in or engaged in willful misconduct regarding the reservoir's design, development and construction; and (3) plaintiffs' evidence did not establish a joint venture with the reservoir's developer so as to permit liability on LLC.
Undesignated statutory references are to the Code of Civil Procedure.
Plaintiffs contend: (1) section 337.15's 10-year period of repose should not apply to a homeowner claim for private property damage where the questionable design work occurred miles away at a public improvement, and homeowners did not notice problems until after passage of the 10-year period; (2) LLC did not meet its burden of disposing all claims, in particular by failing to address the theory of treated/contaminated drinking water as a defective product; and (3) the court erred by finding no triable issue of material fact as to whether LLC was exempt from section 337.15 by virtue of willful misconduct, which fastened to LLC by theories of successor-in-interest or joint venture liability with the other defendants, who cut corners on safety measures to prioritize the project and obtain cost savings. We affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
We state the facts in the light most favorable to plaintiffs as the nonmoving parties, considering the evidence except that to which objections were made and sustained. (Hampton v. County of San Diego (2015) 62 Cal.4th 340, 347; Hensel Phelps Construction Co. v. Superior Court (2020) 44 Cal.App.5th 595, 602.) Many of plaintiffs' facts set out in their separate statement are undisputed, as LLC merely responded to them with argument or objections, which the trial court overruled in total.
In June 2012, plaintiffs purchased a home in the Del Sur neighborhood of Black Mountain Ranch. The development of Black Mountain Ranch is reflected in a series of development agreements between Black Mountain Limited Partnership (LP) and the City of San Diego (City). The development agreements incorporate a City-adopted and voter-approved subarea plan, which depicts a water delivery system including a transmission loop and a potable water reservoir. Under the development agreements, City required the project's developer to ensure adequate infrastructure, including a potable water supply, before the sale of any portion of the property.
In 1998, LP sold the southern portion of the development to Black Mountain Ranch Developers, LLC, which later changed its name to Santaluz LLC (Santaluz). Concurrently with that conveyance, LP assigned all of its duties and obligations under the development agreements with respect to the potable water reservoir, among other things, to Santaluz (the 1998 assignment). Both LP and Santaluz intended to use the reservoir for their respective properties. Because the major “backbone infrastructure” necessary for the Del Sur portion went through Santaluz, LP's prospects and financial success essentially rose and fell on Santaluz's success or failure. Thus, LP negotiated a $30 million mortgage to securitize Santaluz's obligation to build the infrastructure. City imposed a cost-sharing arrangement under a facilities benefit assessment district, and LP and Santaluz also had private cost-sharing arrangements relating to the reservoir's construction costs. LP paid its portion of the reservoir's cost to Santaluz.
The name change to Santaluz did not occur until mid-1999. We refer to Black Mountain Ranch Developers, LLC hereafter as Santaluz for convenience.
While it owned the property, LP began negotiating what later became a participation agreement with City, and LP worked with City as the reservoir design process began. LP entered into a service agreement with Rick Engineering for the reservoir design, and Rick Engineering was the engineer of record for the reservoir. John Powell & Associates (Powell), the reservoir design consultant, was a sub-consultant to Rick Engineering. Rick Engineering worked concurrently for both LP and Santaluz, as did a law firm involved in the project. Powell was responsible for dividing up the costs as between LP and Santaluz, and also worked on behalf of both LP and Santaluz. As early as February 1998, Rick Engineering and Powell were aware of City's position that water quality was an issue given the reservoir's remote distance from the treatment plant. Powell also acknowledged that with a rectangular shaped reservoir, poor water circulation in the tank might be a concern, but that piping, shape and overall water system operation could be configured to optimize flow patterns.
The February 1998 memorandum of City's meeting with representatives from Rick Engineering and Powell contained a chart reflecting that “[s]tagnant corners of a conventional reservoir may present a [lack of] water circulation and therefore a water quality problem.”
The final reservoir design was for a 25-million-gallon reservoir having two equal basins of 12.5 million gallons each. In a June 1998 presentation to City of its preliminary design, Powell stated the reservoir's size made circulation patterns and water quality a “significant concern, ” and while a specific piping configuration had been proposed, it recommended a circulation study be undertaken to look at alternatives that might provide superior circulation patterns. By the end of 1998, Powell recommended in view of the reservoir's increased size that a circulation modeling study be conducted to determine water quality impacts of the basins' design, and to consider installing baffles to improve circulation. Santaluz representatives pushed back on having to pay for the studies and expressed concern about the timing of their permit process. The study was eventually completed. Powell recommended an alternative without baffles for reduced construction cost; it observed such baffles were expensive to install, required continual maintenance, and impeded other maintenance operations.
Baffles are structures hung inside the tanks that allow the water to flow more fully throughout the tank.
In mid-1999, Santaluz entered into the participation agreement with City for the reservoir's design and construction. It took over the reservoir's development. City thereafter chose the Powell-recommended alternative for the reservoir design. In 2000, Santaluz, Powell and City rejected contractor requests to submit alternate bids for dual round storage tanks.
In about 2002, LLC was formed and acquired the northern portion of the development (Del Sur) from LP.
The reservoir was completed in 2003, and at some point City took over ownership. In June 2003, LP assigned all of its “right, title and interest” under the 1998 assignment to LLC. At the same time, LP, LLC, and Santaluz entered into an assignment agreement in which LP delegated its “duties and obligations” under the development agreements to LLC, with Santaluz's consent.
In 2015, plaintiffs sued LLC and Doe defendants alleging causes of action for strict liability and negligence on behalf of themselves and a putative class of homeowners in Del Sur with copper-plumbed homes. They alleged LLC supplied them with “defective” water, that is, water with elevated levels of copper, damaging their plumbing and causing health concerns.
Following LLC's successful demurrer, plaintiffs filed a first amended complaint. This time, plaintiffs alleged LLC “and its successors and/or assignees designed, distributed, and/or supplied the defective water systems, and distributed and/or supplied the defective water.” According to plaintiffs, the water they received was “defective” and they alleged “its lack of suitability and damaging effects was worsened by the defective water system designed and constructed by [LLC] and its successors and/or assignees.” Plaintiffs alleged “[b]y the time the water reaches the lots the water is corrosive to copper.”
After an unsuccessful demurrer, LLC moved for summary judgment on various grounds. In part, LLC argued it had no liability for either the defective potable water or the reservoir because City treated and sold the water, and LLC built the water system according to “legislative mandate, ” namely the publicly-approved and adopted development agreement and subarea plan. It argued City's water distribution system, assertedly constructed by different parties over many years, was not a product to which strict products liability applies, but even if it was, LLC was not liable for a non-defective component part, that is, the northern transmission loop lines that it had constructed. LLC argued plaintiffs could not establish it owed a duty of care as a matter of law to support their negligence cause of action.
The trial court denied the motion, ruling the evidence permitted reasonable inferences as to whether LLC was required to design and construct the transmission lines with a material other than copper, and thus regardless of plaintiffs' claims about the reservoir or defective water, summary judgment was inappropriate.
During the summary judgment proceedings, plaintiffs amended their operative complaint to add various defendants, including LP and Santaluz. Thereafter, Dominique Griffin served verified responses to Santaluz's special interrogatories in which she stated plaintiffs did not at that time contend the transmission loop lines or the one-inch copper lateral lines carrying potable water from the transmission loop lines were defectively designed or constructed. When asked via special interrogatory to identify the product on which plaintiffs based their strict liability cause of action, Christian Griffin identified just the reservoir.
In response to LLC's renewed summary judgment separate statement concerning these responses, plaintiffs acknowledged that Dominique Griffin responded, “Not at this time” but pointed out she reserved the right to supplement the response. In their opposing separate statement, plaintiffs disputed that the response “suggests [p]laintiffs have forever given up on a claim that the transmission loop lines [or one-inch copper pipes] are defectively designed or constructed.” Plaintiffs also stated: “While the reservoir is the product the [sic] forms the basis of plaintiffs' strict products liability cause of action, this answer does not mean the reservoir is the only product that is defective.” (Some capitalization omitted.) There is no indication in the record that plaintiffs supplemented these responses in response to LLC's summary judgment motion. Plaintiffs did not argue below, as they now do in their reply brief, that these responses were limited only to the particular defendant they were directed to: Santaluz, who plaintiffs say was not part of the Del Sur water distribution chain. As with other arguments (see discussion in Part II, post)plaintiffs forfeited this point by failing to raise it below.
Following that discovery, LLC renewed its motion for summary judgment, arguing that given the new facts and evidence it now had complete defenses to both plaintiffs' strict products liability and negligence causes of action. It asserted plaintiffs were no longer making claims with respect to the main transmission loop and the one-inch lateral supply lines, and that as to the reservoir, there was no triable issue of material fact as to its liability because it did not design or construct it. LLC argued that because the reservoir was completed as of May 30, 2003, the section 337.15 statute of repose barred any claim arising out of its design and construction.
In opposition, plaintiffs challenged LLC's grounds for its motion, arguing there were no new facts or law to warrant renewal. They argued LLC was LP's successor in liability as a mere continuation of LP's business (that is, Del Sur's development, including the obligation to provide an adequate water supply), creating triable issues as to whether LLC was liable for the reservoir's design given LP's asserted obligation to share in the reservoir's cost and its interest in seeing that Santaluz completed the reservoir in a cost-effective manner. They argued there were disputed facts as to whether LP was ever released from its obligation to properly design and construct the reservoir. Plaintiffs argued LP and LLC were joint venturers with Santaluz in building the infrastructure serving the properties: exercising joint control, sharing key employees, and sharing profits, losses and benefits from the reservoir's completion.
The trial court rejected that argument, finding the grounds for its prior summary judgment ruling and the plaintiffs' discovery responses were sufficient to establish newly discovered circumstances. Plaintiffs do not renew this argument on appeal.
As for section 337.15, plaintiffs argued LLC could not invoke the statute if it stood on its position it was not a developer, but that they produced evidence to support an exception to the statute for a developer's willful misconduct. According to plaintiffs, “the developers designed and constructed the reservoir with a positive, active and absolute disregard of its effect on water circulation and, hence, the quality of potable water supplied to the community they were developing”; they “were aware of the City's repeatedly voiced concern about water quality, but chose to untruthfully represent their findings regarding the benefits of baffles to water circulation and water quality and to purposefully dissuade the City from conducting a second water circulation study”; they “rejected any design changes that would either cost them money or delay the reservoir construction schedule”; and they “willingly and knowingly circumvented the safeguards to mitigate the reservoir's defects due to its size and shape, at the expenses [sic]of water quality.” (Some capitalization omitted.)
Finally, plaintiffs asked the court to find section 337.15 inapplicable, pointing to the absence of authority as to whether it should “bar the claim of a non-owner who was financially damaged by an offsite improvement with latent construction defects more than 10 years after its substantial completion” or apply to “an end user who does not own the improvement and has no ability to inspect it or to discover the latent defects, or the right to repair the defects.” Plaintiffs stated they “do not own the reservoir, had no reason to suspect that it was defective, and have never had a reasonable method to inspect it, let alone to make any changes to it.” They pointed out they had no recourse from a public entity with regard to a public improvement and applying 337.15 would deny them a remedy for a wrong, contrary to a maxim of law.
The trial court granted the motion. It ruled even if plaintiffs could establish a theory of liability against LLC based on LP's actions or as a joint venturer with Santaluz, their strict products liability and negligence claims were barred under section 337.15's 10-year statute of repose, which commenced on May 30, 2003, and ran prior to the October 2015 filing date of plaintiffs' original complaint. It found plaintiffs did not challenge LLC's evidence establishing the reservoir was substantially completed as of May 30, 2003, but instead argued the circumstances fell within the willful misconduct exception to section 337.15. However, the court ruled the claim of willful misconduct was beyond the scope of the motion as plaintiffs had not pleaded willful misconduct or fraudulent concealment in their operative complaint. The court further ruled plaintiffs in any event did not present evidence creating triable issues of fact as to whether LLC or LP engaged in willful misconduct; there was no evidence either entity hired persons who engaged in such misconduct (including Santaluz), nor was there evidence establishing a joint venture with any other entity to develop/construct the reservoir so as to impose joint venture liability for willful misconduct. The court rejected plaintiffs' policy argument, observing section 337.15 was an absolute statute of repose by which the Legislature adopted a firm cutoff date for construction defect lawsuits.
Plaintiffs filed this appeal from the ensuing judgment.
Plaintiffs point out that after the filing of their notice of appeal, the trial court granted their motion for leave to file a second amended complaint against Santaluz, Taylor Morrison of California, and LP. Though the trial court ruled that pleading alleges facts sufficient to support a finding of willful misconduct to avoid section 337.15's bar, that post-appeal ruling is not pertinent to plaintiffs' claims against LLC or the issues in this appeal.
DISCUSSION
I. Summary Judgment Principles and Standard of Review
“ ‘A motion for summary judgment “shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” [Citation.] A defendant moving for summary judgment has the initial burden of showing either that one or more elements of the cause of action cannot be established or that there is a complete defense. [Citation.]' [Citation.] ‘The moving party must show that under no possible hypothesis within the reasonable purview of the allegations of the complaint is there a material question of fact which requires examination by trial.' [Citations.] ‘If that initial burden is met, the burden shifts to the plaintiff to show the existence of a triable issue of fact with respect to that cause of action or defense. [Citations.]' [Citations.] ‘When the defendant, as the moving party, makes that showing, the burden of proof shifts to the plaintiff, as the opposing party, to show, by responsive separate statement and admissible evidence, that triable issues of fact exist. [Citations.] “ ‘[An] issue of fact becomes one of law and loses its triable character if the undisputed facts leave no room for a reasonable difference of opinion.' ”' ” (Estuary Owners Assn. v. Shell Oil Co. (2017) 13 Cal.App.5th 899, 911.)
“ ‘ “This court reviews de novo the trial court's decision to grant summary judgment and we are not bound by the trial court's stated reasons or rationales. [Citation.]” [Citation.]' [Citation.] ‘In performing our de novo review, we must view the evidence in a light favorable to plaintiff[s] as the losing party [citation], liberally construing [their] evidentiary submission while strictly scrutinizing defendants' own showing, and resolving any evidentiary doubts or ambiguities in plaintiff[s'] favor. [Citations.]' [Citation.] ‘We accept as true the facts alleged in the evidence of the party opposing summary judgment and the reasonable inferences that can be drawn from them. [Citation.] However, to defeat the motion for summary judgment, the plaintiff[s] must show “ ‘specific facts,' ” and cannot rely upon the allegations of the pleadings.' ” (Estuary Owners Assn. v. Shell Oil Co., supra, 13 Cal.App.5th at pp. 911-912; see also Hensel Phelps Construction Co. v. Superior Court, supra, 44 Cal.App.5th at p. 607.)
II. Claim of LLC's Failure to Dispose of All Liability Theories
We begin with the asserted deficiency in LLC's motion that plaintiffs raise to urge us to reverse the summary judgment. They maintain LLC's summary judgment motion addressed only the defective reservoir theory of strict products liability, and not their alternate theory of corrosive water as a defective product, as to which LLC was in the distribution chain. They argue it was LLC's summary judgment burden to address each theory alleged in their complaint, and its failure to demonstrate a complete defense to this alternate theory requires reversal.
LLC responds that plaintiffs did not make this defective water argument in their opposition below, and we agree they cannot assert this challenge to LLC's summary judgment papers. A party generally may not raise new arguments for the first time on appeal. (Johnson v. Greenelsh (2009) 47 Cal.4th 598, 603; Franz v. Board of Medical Quality Assurance (1982) 31 Cal.3d 124, 143; Doers v. Golden Gate Bridge etc. Dist. (1979) 23 Cal.3d 180, 184-185, fn. 1 [it is fundamental that a reviewing court will ordinarily not consider procedural defects or erroneous rulings where an objection could have been but was not presented to the lower court]; Gruber v. Yelp Inc. (2020) 55 Cal.App.5th 591, 611, fn. 11.) “Considering an issue for the first time on appeal is often unfair to the trial court, unjust to the opposing party, and contrary to judicial economy because it encourages the embedding of reversible error through silence in the trial court.” (In re M.H. (2016) 1 Cal.App.5th 699, 713-714.) Even in connection with a summary judgment, the principles of waiver and “theory of the trial” apply to preclude the point. (North Coast Business Park v. Neilsen Construction Co. (1993) 17 Cal.App.4th 22, 29, disagreed with on other ground in San Diego Watercrafts, Inc. v. Wells Fargo Bank (2002) 102 Cal.App.4th 308, 315.)
This conclusion applies to plaintiffs' arguments that the corrosive water is the defective product and because it is not a real property “improvement, ” the section 337.15 statute of limitations does not apply. In North Coast, the defendant in moving for summary judgment argued a defective condition relating to drainage was known to the plaintiff, and thus the action was barred by a shorter three-year statute of limitations. (North Coast Business Park v. Neilsen Construction Co., supra, 17 Cal.App.4th at p. 26.) After the lower court granted the motion based on plaintiff's notice of soils-related defects, the plaintiff on appeal argued that even assuming it had discovered that defect, it was not aware of another defect: a defective crib wall footing, and thus its claim did not arise until discovery of that footing problem, raising a triable issue as to whether the statute of limitations had run. (Id. at p. 28.) The Court of Appeal held the footing argument was waived: “The duty of [plaintiff] was to direct the court's attention to any different factual basis of liability on which [it] might rely. [Plaintiff] failed to do this, and waiver is appropriate. [¶] The same policy underlies the principles of ‘theory of the trial.' ‘A party is not permitted to change his position and adopt a new and different theory on appeal. To permit him to do so would not only be unfair to the trial court, but manifestly unjust to the opposing party.' [Citation.] The principles of ‘theory of the trial' apply to motions [citation], including summary judgment motions. [Citation.] Here the summary judgment motion focused on the drainage problem as the relevant defect. The matter was resolved on that theory, with [plaintiff] claiming that despite its knowledge of the drainage problem it was still entitled to recover because the drainage defect fell under the 10-year statute of limitations. It would be manifestly unjust to the opposing parties, unfair to the trial court, and contrary to judicial economy to permit a change of theory on appeal.” (Id. at p. 29.)
As in North Coast Business Park, supra, 17 Cal.App.4th 22, out of these fairness concerns we will not entertain an argument or theory that was not raised by plaintiffs in opposition to LLC's summary judgment motion. LLC grounded its motion on its view that plaintiffs had limited their theory of defective product to the reservoir. Plaintiffs could have in response made their assertion that LLC's motion failed to dispose of all pleaded product liability theories, or their treated-water-as-a-defective-product argument, but did not. They cannot do so now.
III. Application of Section 337.15 Statute of Repose to a Public Reservoir
Section 337.15, subdivision (a), enacted in 1971, provides: “No action may be brought to recover damages from any person... who develops real property or performs or furnishes the design, specifications, surveying, planning, supervision, testing, or observation of construction or construction of an improvement to real property more than 10 years after the substantial completion of the development or improvement for any of the following: [¶] (1) Any latent deficiency in the design, specification, surveying, planning, supervision, or observation of construction or construction of an improvement to, or survey of, real property. [¶] (2) Injury to property, real or personal, arising out of any such latent deficiency.” The statute defines “latent deficiency” as “a deficiency which is not apparent by reasonable inspection.” (§ 337.15, subd. (b).) “The period of repose commences when the specific improvement alleged to be defective is substantially complete even if it is part of a larger development that is completed later, and, as to a particular subcontractor, upon completion of that subcontractor's work, not the total development of which it is part.” (Estuary Owners Assn. v. Shell Oil Co., supra, 13 Cal.App.5th at p. 913.)
In Lantzy v. Centex Homes (2003) 31 Cal.4th 363 (Lantzy), the California Supreme Court referred to section 337.15 as a “special limitations statute” intended to “protect contractors and other professionals and tradespeople in the construction industry from perpetual exposure to liability for their work.” (Lantzy, at p. 374.) Observing the statute was a response to a considerable expansion of common law construction liability, the court stated: “ ‘The statute reflects a legitimate concern that “expanding concepts of liability could imperil the construction industry unless a statute of limitations was enacted.” [Citation.] Such concerns legitimately include the prohibitive cost of insurance against a perpetual and never ending risk.' ” (Ibid.; see also Gundogdu v. King Mai, Inc. (2009) 171 Cal.App.4th 310, 315; Acosta v. Glenfed Development Corp. (2005) 128 Cal.App.4th 1278, 1294 (Acosta).)
Analyzing the legislative history, Lantzy explained: “[T]he Legislature, faced with a developing body of common law on the subject, carefully considered how to provide a fair time to discover construction defects, and to sue upon such defects if necessary, while still protecting a vital industry from the damaging consequences of indefinite liability exposure. For latent deficiencies, the lawmakers rejected shorter periods in favor of a limit in the upper range of those previously adopted by other jurisdictions. Moreover, by placing exemptions in the latent defect statute for personal injury, willful misconduct, and fraudulent concealment, the legislators demonstrated an intent to pick and choose the particular exceptions they wished to allow and those particular aspects of the prior case law they wished to embrace. The implication arises that except as stated, and for important policy reasons, the Legislature meant the generous 10-year period set forth in section 337.15 to be firm and final.” (Lantzy, supra, 31 Cal.4th at p. 377.) Thus, Lantzy described the 10-year period for latent construction defects as “ ‘absolute' ” and applying “regardless of when the defect was discovered.” (Lantzy, supra, 31 Cal.4th at p. 366; see also North Coast Business Park v. Nielsen Construction Co., supra, 17 Cal.App.4th at p. 27 [section 337.15 imposes an absolute 10-year bar regardless of discovery]; Estuary Owners Assn. v. Shell Oil Co., supra, 13 Cal.App.5th at p. 913 [section 337.15 provides “ ‘a “firm and final” outside limitation period for construction suits involving claims for latent defects' ”].)
Though Lantzy did not refer to the statute as such, other courts, including this one, hold that section 337.15 is a statute of repose. (San Diego Unified School Dist. v. County of San Diego (2009) 170 Cal.App.4th 288, 308; Inco Development Corp. v. Superior Court (2005) 131 Cal.App.4th 1014, 1021; Chevron U.S.A Inc. v. Superior Court (1994) 44 Cal.App.4th 1009, 1017; see also Hensel Phelps Construction Co. v. Superior Court, supra, 44 Cal.App.5th at p. 606 [acknowledging authorities so holding].) As a result, the date of injury is not at issue nor is the accrual date for a particular construction defect; rather, the statute “ ‘bars all suits after the expiration of a specified time from the manufacture or delivery of a product or transaction. [Citations.] It does not cut off an existing right of action, but rather provides that nothing which happens thereafter can be a cause of action.' ” (San Diego Unified, at p. 308.)
Section 337.15's fixed temporal limit on liability bars many different types of claims and causes of action, as long as they involve injury caused by latent construction defects. (See Estuary Owners Assn. v. Shell Oil Co., supra, 13 Cal.App.5th at p. 915 [statute does not bar other claims based on a different legal basis than latent construction defects].) In Lantzy, the court held the 10-year period is not “subject to ‘equitable tolling' while the defendant's promises or attempts to remedy a defect are pending.” (Lantzy, supra, 31 Cal.4th at pp. 370, 373; Saint Francis Memorial Hospital v. State Department of Public Health (2020) 9 Cal.5th 710, 720 [reaffirming Lantzy's holding].) There is no “pollution exception” in the statute. (See San Diego Unified School Dist. v. County of San Diego, supra, 170 Cal.App.4th at p. 309, citing Chevron U.S.A. Inc. v. Superior Court (1994) 44 Cal.App.4th 1009, 1018, fn. 4.) The continuing nature of a nuisance does not extend section 337.15's 10-year limit. (San Diego Unified, at p. 304.) The statute applies to strict product liability claims. (Stoneson Development Corporation v. Superior Court (1987) 197 Cal.App.3d 178, 180-181 [nothing in the language of section 377.15 suggests that product liability actions are exempt from its scope]; San Diego Unified, at p. 303, [citing Lantzy, involving design and manufacturing defects in leaking window systems].) The term “improvement” in the statute has been broadly construed such that a negligently planned or designed landfill constructed by a county is an improvement within the meaning of section 337.15. (Gaggero v. County of San Diego (2004) 124 Cal.App.4th 609, 617; San Diego Unified, at p. 305.)
There are, as Lantzy acknowledged (Lantzy, supra, 31 Cal.4th at p. 377), exceptions to the statute's application. It does “not apply to actions based on willful misconduct or fraudulent concealment.” (§ 337.15, subd. (f).) Section 337.15 cannot be asserted as a defense if a trier of fact determines “(1) there was willful misconduct involved in the construction [of the improvement]..., (2) such willful misconduct resulted in the alleged latent construction defects and (3) such willful misconduct was committed by the defendants or the facts and circumstances are such that the willful misconduct of others is appropriately chargeable to them.” (Acosta, supra, 128 Cal.App.4th at p. 1286.) “ ‘ “[W]illful misconduct implies the intentional doing of something either with knowledge, express or implied, that serious injury is a probable, as distinguished from a possible, result, or the intentional doing of an act with a wanton and reckless disregard of its consequences.”' ” (Id. at p. 1293.)
A. Section 337.15 Applies to Bar Plaintiffs' Strict Products Liability and Negligence Claims
Plaintiffs do not dispute evidence that the reservoir was substantially completed in May 2003. Their argument against applying section 337.15 to their claims is policy based. They maintain we must decide whether the statute “was ever intended to bar recovery for private property damage linked to a defective design in a remote municipal structure where it would have been virtually impossible for [them] to file a claim within 10 years of the completion of that structure (Reservoir).” They argue the statute of repose “cannot preclude a homeowner claim for damages stemming from a poorly designed reservoir several miles away that [they were] never permitted to inspect, and which was never disclosed to [them] prior to moving into the Del Sur development.” According to plaintiffs, none of the legislative concerns about limitless liability for contractors arise here, where “master developers have complete control over how much time passes after completing the Reservoir before home construction even begins.” They argue that if LLC is correct, they would have had to prophylactically file suit against an unknown entity and allege unknown damages based on an unknown mechanism, shortly after closing escrow. They argue in cases of public utilities, applying the statute to home developers would “reward developers for strategically running the clock out on future claimants.” Citing Siegel v. Anderson Homes, Inc. (2004) 118 Cal.App.4th 994 which quotes Leaf v. City of San Mateo (1980) 104 Cal.App.3d 398 (disapproved on other grounds in Trope v. Katz (1995) 11 Cal.4th 274, 292), plaintiffs say it is contrary to public policy to require them to file a lawsuit at a time when the evidence available to them failed to indicate a cause of action. They point out that the City in this case is immune from liability so their only remedy lies with the developer, and in their view, leaving a damaged homeowner without recourse “violates a central tenet of our civil justice system, ” namely that no wrong should go without a remedy.
These arguments do not appreciate the policies behind a statute of repose. Though like statutes of limitation they require plaintiffs to bring actions in a timely manner, they “effect a legislative judgment that a defendant should ‘be free from liability after the legislatively determined period of time.' ” (CTS Corp. v. Waldburger (2014) 573 U.S. 1, 9.) They “ ‘reflect legislative decisions that as a matter of policy there should be a specific time beyond which a defendant should no longer be subjected to protracted liability.' ” (Ibid., citing School Board of Norfolk v. United States Gypsum Co. (1987) 234 Va. 32, 37 .) “[A] statute of repose can be said to provide a fresh start or freedom from liability.” (CTS Corp., at p. 9.) As our state's high court in Lantzy recognized (Lantzy, supra, 31 Cal.3d at pp. 370, 373), it generally may not be tolled, even in cases of extraordinary circumstances beyond a plaintiff's control. (CTS Corp., at p. 9.) Given the nature of such statutes, they may run before a cause of action even becomes fully into existence. (Id. at p. 13, quoting Rest.2d Torts, § 899, com. g.)
Here, the legislative policies of preventing potentially infinite liability in the building industry, even when there is delayed discovery of a claim or an injury has not yet occurred, underlie section 337.15. These policies govern, and it is not our role to question the Legislature's wisdom in this regard. (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 492, conc. opn. of J. Kennard; accord, People v. Perez (2018) 19 Cal.App.5th 818, 828; Walker v. Physical Therapy Bd. of California (2017) 16 Cal.App.5th 1219, 1230.) We decline to find public utility projects such as a potable water reservoir, which is an improvement to real property, outside the scope of section 337.15. Indeed, the statute has been held to bar claims for inverse condemnation involving a county-permitted road with underlying fill allegedly causing a landslide, where the road was substantially completed more than 10 years before the plaintiff filed suit. (Magnuson-Hoyt v. City of Contra Costa (1991) 228 Cal.App.3d 139, 144.) “There is nothing in the words of [section 337.15] that suggests a public or governmental entity which has engaged in one of the specified activities is precluded from asserting the statute as a defense.” (Id. at pp. 143-144.)
Neither Siegel v. Anderson Homes, Inc., supra, 118 Cal.App.4th 994 nor Leaf v. City of San Mateo, supra, 104 Cal.App.3d 398 persuade us to reach a different result. Siegel does not involve section 337.15; the question was whether a latent defect construction claim accrued when the structure suffered physical damage or when the owner suffered a resulting compensable injury from the defect. (Id. at p. 996.) In Leaf, the Court of Appeal ruled a city could not invoke the 10-year period of repose because it remained in possession and control of a storm and sanitary sewer easement, and the statute “does not protect persons in actual possession or control, as owner or otherwise, of the offending property at the time of the proximate cause of the injury.” (Leaf, at p. 405, citing § 337.15, subd. (e).) The cited discussion in Leaf occurred after the court concluded its discussion of section 337.15; it turned to whether the plaintiffs' claim was “barred by some other applicable statute of limitations ....” (Id. at pp. 405-406, italics added.) That question was dependent on a determination of when the cause of action accrued. (Id. at p. 406.) As stated, the date of accrual is irrelevant to application of section 337.15's period of repose. (San Diego Unified School Dist. v. County of San Diego, supra, 170 Cal.App.4th at p. 308 [section 337.15 “does not apply ‘traditional concepts of accrual of a claim, but is tied to an independent, objectively determined and verifiable event, i.e., the date of substantial completion of the improvement' ”].)
B. Plaintiffs' Complaint Does Not Plead Willful Misconduct or Fraudulent Concealment So As to Come Within the Statutory Exception to Section 337.15's Time Bar
It is fundamental that in the summary judgment context, the pleadings “ ‘set the boundaries of the issues to be resolved....' ” (Conroy v. Regents of University of California (2009) 45 Cal.4th 1244, 1250 [complaint serves as the “outer measure of materiality” in a summary judgment proceeding]; Orange County Water Dist. v. Sabic Innovative Plastics US, LLC (2017) 14 Cal.App.5th 343, 367.) A plaintiff opposing summary judgment cannot defeat the motion by proffering new, unpleaded theories or issues. (Ignat v. Yum! Brands, Inc. (2013) 214 Cal.App.4th 808, 820.) Thus, this court has held that where an affirmative defense contains an exception, a defendant moving for summary judgment on that defense must also negate the exception as part of its initial summary judgment burden, but only if the complaint alleges facts triggering the exception's potential applicability. (County of San Diego v. Superior Court (2015) 242 Cal.App.4th 460, 469; Varshock v. Department of Forestry & Fire Protection (2011)194 Cal.App.4th 635, 651.)
Notably, plaintiffs did not plead a fraud cause of action against LLC. However, that is not dispositive; we will liberally construe plaintiffs' pleadings to determine whether they are sufficient to make the exception for willful misconduct/fraudulent concealment potentially applicable. (Accord, Varshock v. Department of Forestry & Fire Protection, supra, 194 Cal.App.4th at pp. 651-652; § 452 [to determine legal effect of complaint, allegations must be liberally construed].)
In Acosta, supra, 128 Cal.App.4th 1278, the Court of Appeal addressed in more detail the nature of “willful misconduct” under the section 337.15, subdivision (f) exception. There, the plaintiff homeowners alleged that the defendants, who acted both as developers and general contractors, improperly prepared and constructed the soil and concrete foundations for their homes. (Acosta, at p. 1287.) They further alleged that the structural framing in the houses was so negligently constructed as to constitute defective and dangerous conditions, and as a result, substantial latent defects existed in their homes. (Ibid.) They alleged the acts and omissions that caused the defects were the result of the defendants' willful misconduct. (Ibid.)
The trial court granted summary judgment in the defendants' favor, but the Court of Appeal reversed. (Acosta, supra, 128 Cal.App.4th at pp. 1286, 1291-1292.) It held the plaintiff homeowners had presented evidence raising a triable issue of fact regarding the application of the willful misconduct exception because they had submitted expert declarations opining that the defects were not negligently caused, but “appeared to be the result of willful misconduct by defendants in that they were ‘so serious and prevalent that they were either the result of [a] deliberate decision to “cut corners” for cost savings or the result of a near total, virtually reckless, failure by the developer to adequately supervise subcontractors.' ” (Id. at p. 1289.) They “expressed the view that it was not reasonably possible for the builder, and the builder's contractors, agents and employees, to have failed to observe or been aware of the defects.” (Ibid.)
Acosta found a dearth of case law on what constituted willful misconduct under the statute, so it undertook an analysis based on California Supreme Court authority: “The Supreme Court... did recently discuss generally the issue of liability for willful or wanton behavior. [Citation.] It noted that the case law appears relatively uniform on the following points. ‘First, it is generally recognized that willful or wanton misconduct is separate and distinct from negligence, involving different principles of liability and different defenses. [Citations.] Unlike negligence, which implies a failure to use ordinary care, and even gross negligence, which connotes such a lack of care as may be presumed to indicate a passive and indifferent attitude toward results, willful misconduct is not marked by a mere absence of care. Rather, it “ ‘involves a more positive intent actually to harm another or to do an act with a positive, active and absolute disregard of its consequences.' ” [Citations.] So, for example, a person who commits an assault and battery may be guilty of willful misconduct [citations], but a person who fails to perform a statutory duty, without more, is not guilty. [Citations.] While the word “willful” implies an intent, the intention must relate to the misconduct and not merely to the fact that some act was intentionally done. [Citations.] Thus, even though some cases of negligence may involve intentional actions, the mere intent to do an act which constitutes negligence is not enough to establish willful misconduct. [Citations.] [¶] Second, willfulness generally is marked by three characteristics: (1) actual or constructive knowledge of the peril to be apprehended; (2) actual or constructive knowledge that injury is a probable, as opposed to a possible, result of the danger; and (3) conscious failure to act to avoid the peril. [Citations.] As the foregoing suggests, willful misconduct does not invariably entail a subjective intent to injure. It is sufficient that a reasonable person under the same or similar circumstances would be aware of the highly dangerous character of his or her conduct.' ” (Acosta, supra, 128 Cal.App.4th at pp. 1294-1295.)
The Acosta court also reviewed the holding of Felburg v. Don Wilson Builders (1983) 142 Cal.App.3d 383, in which plaintiffs sued a builder for subsidence damage to their home, which had been built over an oil sump. (Acosta, supra, 128 Cal.App.4th at p. 1295; Felburg, at p. 390.) In response to the defendant's summary judgment motion raising section 337.15's statute of repose (the plaintiffs sued 12 years after substantial completion of their home), plaintiffs presented an expert declaration stating “ ‘it would have been impossible to pour the foundation of the homes without seeing the evidence, in plain view, that the lot was over an oil sump.' ” (Acosta, at p. 1295.) According to the expert, the evidence “ ‘was so clear... that it ma[de him] of the opinion that there was a conscious effort to ignore th[e] condition.' ” (Ibid., quoting Felburg, at p. 390.) Acosta observed that Felburg illustrated the proposition that a “contractor or developer cannot avoid application of section 337.15, subdivision (f), by a claim of ignorance of the existence of a serious latent defect where the evidence permits the reasonable inference he knew or should have known otherwise.” (Acosta, at p. 1296.) Acosta noted that Felburg observed a developer could possibly persuade a jury that a subcontractor was the actual culprit, but “ ‘the issue of whether the subcontractor's knowledge could be reasonably imputed to [the developer] is also a question of fact.' ” (Acosta, at p. 1296, fn. 14, quoting Felburg, at p. 392.) In Acosta, because the general contractor was liable for damages caused by a subcontractor's work given its nondelegable supervisory role over the construction (Acosta, at pp. 1297-1300), and because the action in Acosta was based on allegations of willful misconduct by either the defendants or the parties hired by them to construct the residential building project, summary judgment was improperly granted. (Id. at pp. 1301, 1302.)
The Acosta court observed that Felburg had stated willful misconduct included “ ‘negligence of such a character as to constitute reckless disregard for the rights of others' ” but pointed out that court's use of the word “negligence” was inadvertent, because California Supreme Court authority made clear that “more [than negligence] is required.” (Acosta, supra, 128 Cal.App.4th at p. 1296 & fn. 13.)
More specifically, Acosta stated: “There is evidence in this record, if believed by a trier of fact, that would support findings that (1) willful misconduct had occurred in the construction of plaintiffs' homes and that such misconduct had caused the construction defects of which plaintiffs complain, and (2) defendants, as the developer/general contractor for the project where plaintiffs' homes were constructed, (a) had at least constructive knowledge of the peril created by the construction activity and the resulting defects, (b) had at least constructive knowledge that injury or damage to future homebuyers (such as plaintiffs) was a probable, as opposed to a possible, result of the defects created by the construction activity, and (c) consciously failed to take action to avoid such injury or damage.... [S]uch findings would support the conclusion that willful misconduct had occurred in the construction of plaintiffs' homes and had caused plaintiffs' damages and that defendants were liable therefore.” (Acosta, supra, 128 Cal.App.4th at p. 1302.)
In the context of LLC's invocation of section 337.15, plaintiffs' complaint must allege that with respect to the reservoir, LLC engaged in some intentional or conscious acts either with express or constructive knowledge that serious injury was a probable result, or with positive, active and absolute disregard of their perilous consequences. (Acosta, supra, 128 Cal.App.4th at p. 1294.) Here, plaintiffs allege that one of the express purposes of the requirement that LLC construct a satisfactory reservoir was to preserve the health, safety, and welfare of the community, including the end user homebuyers. They allege LLC agreed to and was obligated to follow City facility design guidelines, and also agreed to “conduct water studies to analyze the nature, quality and actual and potential corrosiveness of the water.” They allege that through those water studies, LLC “knew, or should have known of the actual and potential corrosiveness of the water it would be supplying and delivering through its infrastructure.” They allege LLC “understood, or should have understood, the actual and potential chemical makeup and nature of the water, including but not limited to the amount of chloramine, including chlorine and ammonia levels, present in the water that [it] received” and LLC “and its successors and/or assignees acquired superior knowledge about treated water and potential hazards from their work in the design and construction of the water delivery system.” As for the reservoir's design and construction, plaintiffs allege: “The design and installation of the potable water reservoir (which was ultimately built to hold 25 million gallons) by [LLC] and its successors and/or assignees created an environment that caused and/or contributed, and causes and/or contributes to the defective corrosive water. Disinfectant levels within the storage facility dissipate as evaporation takes place. All or most of the potable water entering the Del Sur community passes through the reservoir. In the design of the water storage facility, [LLC] and its successors and/or assignees failed to address, or accurately address, the potential hazards and damaging effects of the corrosive water. [LLC] knew or should have known of the potential for corrosive water based on its water studies, but failed to confront or remedy the problem in a reasonable manner, and continues to fail to do so.”
Plaintiffs allege LLC, as LP's successor, agreed to assume duties to assure the design and construction of appropriate water facilities as identified in the water studies in exchange for the benefit of City's commitment for certainty in the development process. They allege City mandated that LLC adhere to its standards and guidelines for facility design, which imparted to LLC “superior knowledge about the problems of corrosivity and corrosion of water” and “required [it] to take into account the nature and quality of the water when designing and constructing reservoir systems, transmission loops, and other components of the distribution system so that appropriate linings and materials can be selected to prevent damage to the lines through which the water flows.” According to the operative complaint, LLC “not only expressly agreed to and was obligated to follow these standards and guidelines, but expressly agreed to, and was required to (as a condition to its right to develop the community) conduct water studies to analyze the nature, quality and actual and potential corrosiveness of the water.” Plaintiffs allege the City requirements put [LLC] in a position of superior knowledge to use information from them and the water studies to ensure the reservoir, transmission loops, and other pipe connections were appropriately designed and constructed in order to protect the eventual homeowners.
In their strict products liability cause of action, plaintiffs allege LLC “and its successors and/or assignees designed, distributed and/or supplied the defective water systems, and distributed and/or supplied the defective water.” They allege the water they receive is defective and “its lack of suitability and damaging effects was worsened by the defective water system designed and constructed by [LLC] and its successors and/or assignees. By the time the water reaches the lots the water is corrosive to copper.” They allege the risks of insufficiently-treated water resulting in corrosion were well known in literature, and “industry knowledge must... be taken into account when designing improvements for use in a subdivision.... There were alternative designs and materials available that could have been used, which would not have subjected the plumbing systems to degradation....” Plaintiffs allege defendants failed to warn guest builders and class members of the defective quality of the water, “which was known or should have been known due to the studies [LLC] was required to undertake” but LLC “implicitly indicated that copper would be a sufficient material to use because [LLC], itself, used 1[-inch] copper piping to stub out the water lines (it also constructed) to the residential lots.” They allege they suffered property damage to the plumbing system because of degradation of the pipes, and “[a]dditionally, corrosive water presents potential health risks to members of the Class resulting from high levels of copper in the water....”
These allegations do not make out the sort of willful misconduct that would exempt LLC from operation of section 337.15. Though LLC need not necessarily have subjective intent actually to harm the future Del Sur homeowners (Acosta, supra, 128 Cal.App.4th at p. 1295), these allegations do not establish it took actions “with a positive, active and absolute disregard of its consequences.” (Id. at p. 1294.) There are limited allegations with regard to the reservoir's design. Accepting those allegations and even viewing them liberally, they merely state that water studies revealed corrosive water, but LLC did not address or accurately address the potential harms and damaging effects of that water. These allegations do not establish LLC possessed “actual or constructive knowledge that injury [to the homeowners was] a probable, as opposed to a possible, result of the danger.” (Id. at pp. 1294-1295; compare Pine Terrace Apartments, L.P. v. Windscape, LLC (2009) 170 Cal.App.4th 1, 15-16 [complaint alleged exception to section 337.15 by pleading that contractors negligently and defectively developed, constructed, and provided services “as to directly cause numerous and pervasive defects and damages throughout the property”; that their “conduct... was of a quality amounting to reckless disregard and/or willful misconduct”; and that they “intentionally performed acts of an unreasonable character in disregard of risks known to them and/or so obvious that they must have been aware of them, and so great as to make it highly probable that harm in the nature of the deficiencies would follow”; some capitalization omitted].)
Plaintiffs allege elsewhere in their pleading that some of the questions common to the class were “[w]hether [LLC] knew that the water it would be delivering to the Del Sur community was potentially hostile to, and reactive with, copper plumbing” and also “[w]hether [LLC] had a duty to disclose to merchant builders and/or class members that the water it would be delivering to the Del Sur community was potentially hostile to, and reactive with, copper plumbing.” (Italics added.)
Nor does plaintiffs' operative complaint plead fraudulent concealment of probable damage or harm. A claim of fraudulent concealment must include all the elements of fraud. (See Persson v. Smart Inventions, Inc. (2005) 125 Cal.App.4th 1141, 1168.) The elements of fraud are misrepresentation, (including false representation, concealment, or nondisclosure), with knowledge of falsity, intent to induce reliance on the misrepresentation, justifiable reliance, and resulting damage. (Conroy v. Regents of University of California (2009) 45 Cal.4th 1244, 1255.) Usually, plaintiffs must allege a factual basis for each of the elements of fraud with specificity, even in the face of the general policy favoring liberal construction of pleadings. (See, e.g., Goldrich v. Natural Y Surgical Specialties, Inc. (1994) 25 Cal.App.4th 772, 782-783.) “ ‘ “ ‘This particularity requirement necessitates pleading facts which ‘show how, when, where, to whom, and by what means the representations were tendered.' ”' ” (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 993.) This applies equally to a cause of action for fraud and deceit based on concealment. (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1472.)
Again, plaintiffs' operative complaint nonspecifically alleges that LLC knew corrosive water coming from the reservoir would potentially damage copper pipes and result in “potential health risks to members of the Class” but that LLC did not act reasonably to remedy the problem. There are no allegations suggesting that LLC actively sought to conceal defects in the reservoir's construction and its probable harms. Setting aside the pleading does not allege who remained silent, when and in what context, there are no allegations concerning detrimental reliance on the silence or any causal connection between the reliance and the alleged injury or damage. (See Lesperance v. North Am. Aviation, Inc. (1963) 217 Cal.App.2d 336, 345 [asserted injury or damage must not only be directly alleged but also its causal connection with reliance on defendant's representation/concealment].)
As stated, plaintiffs cannot proffer new, unpleaded theories to oppose summary judgment. (Ignat v. Yum! Brands, Inc., supra, 214 Cal.App.4th at p. 820; California Public Records Research, Inc. v. County of Yolo (2016) 4 Cal.App.5th 150, 181, fn. 16.) Plaintiffs having failed to include allegations raising the possible application of section 337.15's exception, we conclude the trial court correctly granted summary judgment in LLC's favor based on that statute's time bar.
DISPOSITION
The judgment is affirmed.
WE CONCUR: HALLER, Acting P.J., AARON, J.