For over forty years, California contractors and tradesmen have been protected from perpetual exposure to liability for their work. Code of Civil Procedure section 337.15 was clear: with rare exceptions, there is no liability for construction defects beyond 10 years after substantial completion of a project. A recent California Court of Appeal decision re-affirmed that limitation, but refused to apply the 10-year rule where the crux of a party’s claim is not based on defective work.
In Estuary Owners Association v. Shell Oil Co., the California Court of Appeal ruled on whether the 10-year statute of repose applied to nuisance and negligence claims arising out of alleged property contamination. There, plaintiffs and appellants were owners of condominiums built on property that was once owned and used by defendant and respondent, Shell Oil, as a fuel distribution terminal.
The Court of Appeal reversed the trial court’s decision that the 10-year statute of repose barred plaintiffs’ claims. Instead, the Court of Appeal found that plaintiffs’ claims were based on Shell Oil’s contamination of the property and failure to remediate that contamination (in other words, Shell Oil’s operation of the fuel distribution center), rather than as a result of any defect in the construction of the fuel distribution terminal. Thus, because plaintiffs’ claims were not for latent construction defects, section 337.15 did not apply.
Although refusing to expand the breadth of section 337.15, the Court of Appeal reaffirmed the legislature’s original intent: to protect construction professionals, in particular, from perpetual exposure to liability for their work.