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Reed v. Ferguson & Melvin, Inc.

California Court of Appeals, Second District, Second Division
Jul 23, 2008
No. B198066 (Cal. Ct. App. Jul. 23, 2008)

Opinion

NOT TO BE PUBLISHED

APPEAL from a judgment of the Superior Court of Los Angeles County Los Angeles County Super. Ct. No. LC074682, Richard A. Adler, Judge.

Lisitsa Law Corporation and Yevgeniya Lisitsa for Plaintiff and Appellant.

Hamrick & Evans, David L. Evans and Erin Melody-Rosenfeld for Defendant and Respondent.


ASHMANN-GERST, J.

Appellant Judy Reed (Reed) appeals the dismissal of her third amended complaint following the sustaining of a demurrer filed by respondent Ferguson & Melvin, Inc. (Ferguson). The trial court found that Reed’s action was barred by the two-year contractual limitation in the parties’ contract. Because Reed’s third amended complaint made no attempt to plead around the time bar by alleging that the contractual limitation was unconscionable, alleging that the contractual limitation was longer than two years, or alleging delayed accrual, her pleading is defective. She does not contend that she can ameliorate these problems.

We find no error and affirm.

FACTS

The complaint

This action was filed on September 6, 2006.

The third amended complaint

As alleged, Ferguson submitted a proposal on March 1, 2000, to replace the roof at Reed’s residence. The parties executed a contract, and Ferguson replaced Reed’s roof. The contract contained a 60-year warranty for materials and a five-year warranty for labor. After a year, Reed’s roof began to leak. Ferguson attempted to fix the leaking on two occasions, but the problem persisted. On April 30, 2003, Reed filed a warranty claim, but Ferguson did not respond. Reed sued Ferguson on May 16, 2006.

According to the third amended complaint, Ferguson negligently failed to reinforce Reed’s residence so it would support the tile that was used for the roofing project. The tile was too heavy, which caused tiles to break and the water proof membrane to tear, which caused leaking. Based on these facts, Reed also asserted causes of action for strict liability, breach of warranty, breach of contract, violation of the Magnusson-Moss Act and violation of Business and Professions Code section 17200 et seq.

A limitations provision in the contract provided that “[n]o action arising from or related to this contract or performance thereto shall be commenced by either party against the other after [two] years from the contract signing, or until the written guarantee period ceases, whichever is greater.” The contract provided that Ferguson “guarantees for a period of [two] years following contract signing, unless otherwise stated on the contract, that we will repair free of charge any water leaks occurring on a newly installed roof” contingent upon a showing that the leaks were caused by faulty workmanship or installation.

The demurrer

Ferguson demurred to Reed’s third amended complaint on the grounds that the first, second, third, fourth, fifth and sixth causes of action were time-barred by the contractual limitation period.

In opposition, Reed argued that the trial court should find that the contractual limitation period was unconscionable. Alternatively, Reed argued that the contractual limitation was ambiguous due to the 60-year materials warranty, and that the ambiguity should be construed against Ferguson, the drafter. And, in any event, Reed claimed that the discovery rule tolled the contractual limitations period and thereby defeated it.

The demurrer was sustained without leave to amend.

In its minute order, the trial court noted that the 60-year warranty for materials was not implicated because the action was based on faulty workmanship, not faulty materials. It rejected Reed’s argument that the provision was unconscionable and unenforceable. The trial court determined that the action was barred by the two-year limitation in the guarantee for labor and pointed out that Reed did not properly plead the discovery rule.

The action was dismissed.

This timely appeal followed.

STANDARD OF REVIEW

On appeal from a judgment dismissing an action after a demurrer was sustained without leave to amend, we give the complaint a reasonable interpretation and presume material facts were properly pleaded. But we do not assume the truth of contentions, deductions or conclusions of law. We will affirm if any grounds for the demurrer are valid. We will reverse if the plaintiff has stated a cause of action under any possible legal theory, or if the plaintiff established below that there was a reasonable possibility the defect could be cured. The plaintiff bears the burden of demonstrating the manner in which the complaint can be amended. (Gutkin v. University of Southern California (2002) 101 Cal.App.4th 967, 975–976.)

DISCUSSION

Reed argues that the two-year contractual limitation is unconscionable, the contract should be interpreted as having a 60-year limitation, and delayed accrual of her claims saves this action. She also contends that the trial court abused its discretion by dismissing the action even though the demurrer did not address a nonexistent seventh cause of action.

It is important to acknowledge what Reed requests. She asks that we reverse the trial court’s order and instruct the trial court to overrule the demurrer. In the alternative, she requests that we remand this matter back to the trial court so that she can plead a cause of action under the Song-Beverly Consumer Warranty Act (Song-Beverly Act). She does not contend that she can amend her remaining causes of action if we conclude that they are factually deficient.

We turn to these issues.

1. Preliminary issue: The nature of this action.

The third amended complaint alleges that Ferguson’s labor and materials were defective. The allegations pertaining to labor adequately demonstrate negligence. However, the allegations that the materials were defective amount to contentions and conclusions of law we must ignore. The only specific allegation regarding the materials is that “[Ferguson] used tile too heavy for the structure of the Premises.” The weight of the tiles was not a defect in the materials. If anything, the selection and use of the tiles was defective workmanship. The gravamen of this action is Ferguson’s negligence in replacing Reed’s roof.

2. The contractual limitation period.

The first challenge Reed assigns herself is escaping the trial court’s ruling that there is a two-year contractual limitation. The problem is that Reed did not plead around the time bar, which is fatal to her appeal.

a. Requirements of pleading.

If a complaint or judicially noticeable facts reveal the existence of an affirmative defense, “the ‘plaintiff must “plead around” the defense[] by alleging specific facts that would avoid the apparent defense. Absent such allegations, the complaint is subject to demurrer for failure to state a cause of action. . . .’ [Citations.]” (Gentry v. Ebay, Inc. (2002) 99 Cal.App.4th 816, 824–825.) In particular, “when a complaint shows on its face (or with the help of judicially noticed facts) that a . . . cause of action is apparently barred by the statute of limitations, plaintiff must plead facts which show an excuse, tolling, or other basis for avoiding the statutory bar.” (Spray, Gould & Bowers v. Associated Internat. Ins. Co. (1999) 71 Cal.App.4th 1260, 1266, fn. 4.)

b. There are no allegations nullifying the contractual limitation.

To nullify the two-year contractual limitation, Reed was required to plead that it was unconscionable or otherwise unenforceable.

The doctrine of unconscionable contracts has a procedural component and a substantive component. (Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1071 (Little).) Procedural unconscionability “‘concerns the manner in which the contract was negotiated and the circumstances of the parties at that time. [Citation.]’” (Nyulassy v. Lockheed Martin Corp. (2004) 120 Cal.App.4th 1267, 1281 (Nyulassy).) An agreement is substantively unconscionable if it is so one-sided that it shocks the conscience. (Nyulassy, supra, at p. 1281.) A cursory look at the pleading reveals that these concepts are absent. As a result, Reed did not meet her burden of establishing that the pleading was timely.

c. Contract interpretation.

Reed contends that the contractual limitation is ambiguous and should be construed to be 60 years. Reed cites the applicable rule, which is that if a contract is capable of more than one reasonable interpretation, it is ambiguous. (Badie v. Bank of America (1998) 67 Cal.App.4th 779, 798.)

Notably, Reed did not allege the meaning of the contractual limitation. “Ordinarily, a written contract is sufficiently pleaded if it is set out in full or its terms are alleged according to their legal effect. However, if the instrument is ambiguous, the pleader must allege the meaning he or she ascribes to it.” (Hayter Trucking, Inc. v. Shell Western E&P, Inc. (1993) 18 Cal.App.4th 1, 18.) When the meaning is not alleged, we “will construe the language of the contract on its face to determine whether, as a matter of law, the contract is reasonably subject to a construction sufficient to sustain a cause of action for breach.” (Ibid.) But, that said, an appellate court presumes that the judgment appealed from is correct. (Denham v. Superior Court (1970) 2 Cal.3d 557, 564.) We adopt all intendments and inferences to affirm the judgment unless the record expressly contradicts them. (See Brewer v. Simpson (1960) 53 Cal.2d 567, 583.) An appellant has the burden of overcoming the presumption of correctness, even when the appellate court is required to conduct a de novo review. We limit de novo review to “issues which have been adequately raised and supported in [appellant’s] brief.” (Reyes v. Kosha (1998) 65 Cal.App.4th 451, 466, fn. 6.)

The contract states that a party must sue within two years or the guaranty period, whichever is longer. The guaranty for workmanship and installation is two years, unless the contract states otherwise. The only reference to 60 years is the warranty for materials. The contract is not reasonably susceptible to an interpretation that the limitation on labor claims is 60 years.

d. The discovery rule.

According to Reed, she is entitled to the benefit of the discovery rule and her claims are timely. We disagree. We acknowledge that Moreno v. Sanchez (2003) 106 Cal.App.4th 1415 (Moreno) held that parties subject to a contractual limitation still retain the benefits of the discovery rule. (Id. at p. 1433.) But Reed did not adequately plead delayed discovery.

The discovery rule prevents the clock from beginning to run on a limitation period until the plaintiff discovers or, through reasonable diligence, should have discovered all facts essential to her cause of action. (Camsi IV v. Hunter Technology Corp. (1991) 230 Cal.App.3d 1525, 1536.) Actual and appreciable harm is a necessary element of a negligence action; when property is involved, there must be harm to the property itself. (Id. at p. 1534.) “The rule has been applied in tort actions of various kinds, including cases which involve nonobvious (or latent) injuries to real property. [Citations.]” (Id. at p. 1536.) If a plaintiff’s complaint reveals a time bar, she “‘must specifically plead facts which show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence. [Citations.] Mere conclusory assertions that delay in discovery was reasonable are insufficient and will not enable the complaint to withstand general demurrer. [Citation.]’ [Citations.] Arguments that discovery-rule issues are necessarily factual and cannot be resolved on demurrer have been rejected. [Citations.]” (Id. at pp. 1536–1537.)

Reed alleged that about a year after Ferguson completed work, the roof began to leak next to the chimney, by the front door, and through the skylight in the master bedroom. Ferguson came on two occasions to fix the leaks. The leaking persisted. On April 30, 2003, Reed filed a warranty claim. Ferguson did not respond. According to Reed, Ferguson breached its duty of care in replacing Reed’s roof. At paragraph 25 of the third amended complaint, Reed alleged: “Only now, [Reed] found out that [Ferguson] used tile too heavy for the structure of the Premises. In addition, the lay out of the framing supporting the sheeting on the roof was not uniform. . . . Thus, the weight of the tiles and the different framing patter[n] caused a significant deflection of rafters and sheeting on the roof. As a result of the deflection, several tiles broke. At this time, there are approximately 150 tiles broken. Also, the deflection of the rafters and sheeting caused the tearing of the paper water proofed membrane below the tiles, which in turn is causing leaking in the house.” As a result, “the roof at the Premises has cracked, leaked and has been rendered hazardous, has permitted the infiltration of water from rain into the Premises, and [has created] a condition of continuous and progressively deteriorating damage, manifested by constant leaks in the master bedroom, living room, through the skylight, and in the front door of the Premises, and other as yet undetermined damage.”

The pleading is defective. Reed did not allege when she discovered Ferguson’s negligence. She alleged that “[o]nly now” did she discover the tile was too heavy. What is the date? When the original complaint was filed? When the third amended complaint was filed? More importantly, she did not plead why she was unable to discover Ferguson’s negligence until some time after the roof started leaking. Regardless, we conclude that once the roof began leaking, and at least by April 30, 2003, she could have discovered Ferguson’s negligence with reasonable diligence. As a result, her negligence cause of action accrued no later than April 30, 2003, the date of her warranty claim, and her complaint was not filed within two years. Reed does not suggest that there is any way she can cure this pleading defect.

Reed offers two alternative arguments in service of this appeal.

First, she argues that this claim was timely pursuant to the three-year limitation in Code of Civil Procedure section 338, subdivision (b) for injury or trespass to real property and the 10-year limitation in Code of Civil Procedure section 337.15 for a latent deficiency in construction. But this claim is controlled by the contractual limitation, so the statutory limitation is irrelevant. (Fageol T & C Co. v. Pacific Indemnity Co. (1941) 18 Cal.2d 748, 753 [a covenant shortening the limitation period is valid so long as it is not so unreasonable as to show imposition or undue advantage]; Hambrecht & Quist Venture Partners v. American Medical Internat., Inc. (1995) 38 Cal.App.4th 1532, 1547 [“In general, California courts have permitted contracting parties to modify the length of the otherwise applicable California statute of limitations, whether the contract has extended or shortened the limitations period”].)

Second, Reed argues that she has a claim for continuing nuisance. But she did not plead this claim, and she did not discuss and apply the elements of nuisance to show that her roof constitutes a nuisance. Nor did she explain why a continuing nuisance can defeat the contractual limitation. Importantly, it “is not our responsibility to develop an appellant’s argument.” (Alvarez v. Jacmar Pacific Pizza Corp. (2002)100 Cal.App.4th 1190, 1206, fn. 11.)

3. The purported seventh cause of action.

In stating the issues on appeal, Reed suggests that the trial court dismissed the seventh cause of action based on the contractual limitation even though the demurrer did not address the seventh cause of action. A perusal of Reed’s opening brief reveals that this issue is never discussed. This is fatal to the contention, and the issue need not be discussed a moment longer.

Despite the waiver, we wish to clarify the record. It should be noted that the third amended complaint contains six causes of action, each of which was attacked by Ferguson’s demurrer. The caption page of the third amended complaint lists the six causes of action, the last of which is the claim for violation of Business and Professions Code section 17200 et seq. In the body of the pleading, however, that claim is mislabeled. Instead of being labeled as the sixth cause of action, it is labeled as the seventh cause of action. Perhaps this is the source of Reed’s apparent confusion. In sum, the demurrer addressed all six causes of action, and we cannot conclude the trial court’s order was in any way improper.

4. Reed cannot amend.

Reed seeks a remand so she can amend her pleading to state a claim that Ferguson made misrepresentations in the sale of its goods and services and therefore violated the Song-Beverly Act. This request must be denied. She knew or should have known of those misrepresentations by mid-2003 at the latest. Consequently, it is not possible for her to avoid the contractual limitation.

DISPOSITION

The dismissal is affirmed.

Ferguson shall recover its costs on appeal.

We concur: BOREN, P. J., DOI TODD, J.


Summaries of

Reed v. Ferguson & Melvin, Inc.

California Court of Appeals, Second District, Second Division
Jul 23, 2008
No. B198066 (Cal. Ct. App. Jul. 23, 2008)
Case details for

Reed v. Ferguson & Melvin, Inc.

Case Details

Full title:JUDY REED, Plaintiff and Appellant, v. FERGUSON & MELVIN, INC., Defendant…

Court:California Court of Appeals, Second District, Second Division

Date published: Jul 23, 2008

Citations

No. B198066 (Cal. Ct. App. Jul. 23, 2008)