Statutory Provisions

Code of Civil Procedure sections 337.1 and 337.15, are statutes of repose. (See Mills v. Forestex Co. (2003) 108 Cal.App.4th 625, 644.)

Section 337.15, subdivision (a), provides: “No action may be brought to recover damages from any person, or the surety of a 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 express language of section 337.15 is that the 10-year limitations period begins to run upon “the substantial completion of the development or improvement” (Code Civ. Proc., § 337.15(a)) and “not later than” the earliest of four dates: “final inspection by the applicable public agency,” “recordation of a valid notice of completion,” “use or occupation of the improvement,” or “[o]ne year after termination or cessation of work on the improvement.” (Code Civ. Proc., § 337.15(g).)

Whereas a statute of limitations begins to run at the time the injury is discovered, a statute of repose “is a bar on all suits brought more than a specified period after the date of manufacture.” (Burroughs v. Precision Airmotive Corp. (2000) 78 Cal.App.4th 681, 689.) It is a legal recognition that after a certain amount of time a product or construction has demonstrated its safety and quality, and it is not reasonable to hold a manufacturer or contractor legally responsible for accident or injury occurring after that time. (See Id.)

Code of Civil Procedure section 337.1 establishes a four year statute of repose for injuries resulting from patent construction defects while section 337.15 sets a 10-year statute of repose for injuries resulting from latent construction defects. (Mills v. Forestex Co. (2003) 108 Cal.App.4th 625, 644.) Thus, which section applies turns on whether a defect is latent or patent. (Id.)

Difference Between "Patent" and "Latent" Defects

Whether a defect is patent or latent “depends on whether it is ‘apparent by reasonably inspection.’” (Mills v. Forestex Co. (2003) 108 Cal.App.4th 625, 644, citing Code Civ. Proc., §§ 337.1(e), 337.15(b).) A patent defect is “one which can be discovered by such an inspection as would be made in the exercise of ordinary care and prudence” while a latent defect is “one which is hidden and which would not be discovered by a reasonably careful inspection.” (Ibid, citations omitted.)

A suit to recover damages for a latent construction defect must be brought within 10 years of the date of substantial completion of construction, regardless of the date of discovery of the defect. (Code Civ. Proc., 337.15; Gundogdu v. King Mai, Inc. (2009) 171 Cal.App.4th 310, 314.) The faulty installation of fuel storage tanks is the type of defective construction affecting real property subject to the limitation. (See Chevron U.S.A. Inc. v. Superior Court (1994) 44 Cal.App.4th 1009.)

However, the statute does not apply to causes of action based on willful misconduct or fraudulent concealment. (Code of Civil Procedure, § 337.15(f).) Willful misconduct is distinguished from negligence in that it is not marked by a mere absence of care. (Acosta v. Glenfed Development Corp. (2005) 128 Cal.App.4th 1278, 1294.) “[W]illfulness generally is marked by three characteristics:

1. actual or constructive knowledge of the peril to be apprehended;
2. actual or constructive knowledge that the injury is probable as opposed to a possible result of the danger; and
3. conscious failure to act to avoid the peril.”

(Id. at 1294-1295.)

Alternative Statutes of Limitations

Ordinarily a cause of action based on a construction defect must be brought within three years if based upon negligence (see Code Civ. Proc., § 338) or four years if based upon contract (Code Civ. Proc., § 337), unless the statute of limitations is tolled by the discovery rule. (Mills v. Forestex Co. (2003) 108 Cal.App.4th 625, 646.) Discovery occurs, and the statutes begin to run, “‘only after the damage is sufficiently appreciable to give a reasonable man notice that he has a duty to pursue his remedies.’” (Id., citing North Coast Business Park v. Nielsen Construction Co. (1993) 17 Cal.App.4th 22, 27.)