The Estuary Owners Assn. v. Shell Oil Co.
A145516
| Cal. Ct. App. | Jul 26, 2017Background
- Site was a Shell-operated bulk fuel terminal (1925–1980); later owners (Simmons, Weber/ICONCO, then Signature) discovered long‑standing petroleum contamination in soil and groundwater.
- Signature purchased the site (2003), prepared cleanup plans, excavated contaminated soil, installed monitoring wells, recorded deed restrictions and disclosed contamination in project documents; Signature settled remediation-costs with Shell in 2005 but reserved other claims.
- Condominiums were built 2004–2006; residual contamination (soil, soil gas, groundwater) remained; Water Board amended cleanup orders in 2011 and later named Shell a responsible party for investigation/cleanup actions.
- Plaintiffs (Estuary Owners Association and individual owners) sued multiple defendants, including Shell, alleging negligence, negligence per se, private and public nuisance (Shell was sued as a prior owner/user, not a developer). Complaints alleged contamination, inadequate remediation, and construction defects that allowed vapor intrusion.
- Shell moved for summary judgment, arguing (a) all claims were barred by the 10‑year statute of repose for latent construction defects (Cal. Code Civ. Proc. § 337.15), and (b) negligence claims were barred by the 3‑year statute of limitations (Cal. Code Civ. Proc. § 338(b)) and failed for lack of duty. Trial court granted summary judgment on those grounds; plaintiffs appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of § 337.15 (10‑year repose for latent construction defects) | Plaintiffs: claims target Shell’s operational contamination and failure to remediate, not construction defects, so § 337.15 does not apply | Shell: site development/operation constituted an "improvement" and repose bars claims filed >10 years after completion | Court: § 337.15 bars only claims based on latent construction defects; because plaintiffs’ allegations against Shell were based on operational contamination (not construction defects), § 337.15 did not bar nuisance or related claims against Shell |
| Statute of limitations for negligence (§ 338(b), 3 years) | Plaintiffs: injury to condos and new topsoil is a new/different harm that accrued later (post‑remediation/after construction), so claims are timely | Shell: prior owner Signature knew of contamination well before plaintiffs, so negligence claims accrued earlier and are time‑barred | Court: affirmed — negligence claims barred. Prior owner (Signature) had knowledge of contamination; subsequent damage is not a fundamentally different type of property injury to restart limitations |
| Continuing nuisance/continuing accrual doctrine | Plaintiffs: Shell’s ongoing failure to remediate created a continuing nuisance and recurring harm, so some claims survive limitations | Shell: no distinct recurring breaches; primary injury traceable to pre‑1980 activity | Court: did not resolve viability of continuing nuisance at summary judgment; but negligence claims based on pre‑1980 contamination accrue to prior owners and are barred; nuisance claims reversed for further proceedings |
| Pleading/drafting ambiguity and scope of relief | Plaintiffs: complaints were misread by trial court and incorrectly lumped defendants; plaintiffs did not allege construction‑defect theory against Shell | Shell: complaints lumped defendants and included latent‑defect language, supporting repose defense | Court: complaints were ambiguously drafted but reasonably read as alleging Shell’s liability for operational contamination (not construction defects); ambiguity did not save negligence claims from limitations bar but required reversal on repose for nuisance claims |
Key Cases Cited
- Lantzy v. Centex Homes, 31 Cal.4th 363 (Cal. 2003) (purpose of § 337.15 is to limit indefinite liability for latent construction defects)
- Gaggero v. County of San Diego, 124 Cal.App.4th 609 (Cal. Ct. App. 2004) (landfill treated as an "improvement" for repose analysis where construction and operation were inherent to the improvement)
- San Diego Unified School Dist. v. County of San Diego, 170 Cal.App.4th 288 (Cal. Ct. App. 2009) (§ 337.15 bars latent construction defect claims but not claims independent of construction defects)
- Krusi v. S.J. Amoroso Constr. Co., 81 Cal.App.4th 995 (Cal. Ct. App. 2000) (property‑damage claim accrues when actual and appreciable harm occurs; prior owner’s discovery bars later owners)
- CAMSI IV v. Hunter Technology Corp., 230 Cal.App.3d 1525 (Cal. Ct. App. 1991) (discovery rule governs accrual for latent property damage)
- Chevron U.S.A. Inc. v. Superior Court, 44 Cal.App.4th 1009 (Cal. Ct. App. 1996) (analyzing when § 337.15 applies to contamination claims tied to construction activity)
- Alexander v. Exxon Mobil, 219 Cal.App.4th 1236 (Cal. Ct. App. 2013) (distinguishing accrual for personal‑injury claims from accrual for property‑damage claims where notice of contamination may not imply notice of personal‑injury risk)
- Aryeh v. Canon Bus. Solutions, Inc., 55 Cal.4th 1185 (Cal. 2013) (continuous accrual doctrine: recurring breaches can each trigger their own limitations period)