Opinion
In general, claims for negligence and breach of contract involving damage to real property must be brought within three years and four years, respectively, of the date when the plaintiff discovers, or should have discovered, the injury and its cause. However, if the damage is caused by a latent defect in the construction of an improvement to the property, the claim cannot be brought any later than 10 years after the construction is substantially completed, regardless of when the plaintiff discovers the injury. Put another way, actions based on a latent construction defect must be filed, at a minimum, within three or four years of discovery of the injury and its cause (depending on the cause of action), but in no event can they be brought more than ten years after substantial completion of the construction.
Under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) (42 U.S.C. § 9601 et seq.), the statute of limitations on a state law claim for damage caused by a hazardous substance cannot begin to run until the plaintiff discovers, or should have discovered, the injury and its cause. In other words, CERCLA controls the commencement of the statute of limitations on such a claim.
The principal question on this appeal is whether the “discovery rule” mandated by CERCLA preempts California’s 10-year limitations period, where the claims are based on a latеnt construction defect that results in the toxic contamination of the plaintiff’s property. We conclude that it does.
Background
Plaintiff Angeles Chemical Company, Inc. (ACC), is a bulk chemical repackaging company. It purchases bulk chemicals from oil and chemical companies, stores them, and then repackages them into smaller containers for resale to customers. ACC was founded in Los Angeles, California, in 1971, but moved to its current location in Santа Fe Springs, California, in 1976.
*118 In August 1975, ACC hired defendant Spencer & Jones (S&J) to build its new plant in Santa Fe Springs, S&J is a general construction company specializing in commercial industrial construction, specifically petrochemical piping systems. The company’s primary work is in the area of tank and pump installations.
In constructing ACC’s new facility, S&J installed a series of underground storage tanks and appurtenant piping systems. It sloped and paved the surface of the plant, so that any chemical spills would flow into a system of drains and catch basins, all оf which were connected to an underground waste tank. At trial, ACC produced evidence that S&J also installed a pump and piping on a concrete truck ramp in order to carry liquids to a catch basin. The construction was completed in December 1975. 1
In September 1981, ACC retained S&J to modify the plant in several respects, and the parties executed a written agreement describing the material terms of the modification. Pursuant to the agreement, S&J removed the cоncrete truck ramp, excavated that area, and installed two more underground storage tanks and appurtenant piping. The entire area was then covered with a concrete slab. Construction was completed no later than January 1982.
In 1985, the Los Angeles County Department of Public Works directed ACC to test the subsurface soils at its facility for possible contamination. ACC retained an environmental consulting firm, SCS Engineers, to conduct the investigation. In 1986, SCS Enginеers discovered contaminants at the site. On April 5, 1990, ACC first learned that the contamination was caused, at least in part, by the severing of a pipe previously used to carry liquids from the truck ramp to a catch basin.
In February 1993, the California Department of Toxic Substances Control issued an “imminent and substantial endangerment” order against ACC. The order set forth a formal protocol for addressing contamination at the site, including a remedial investigation, feаsibility study, and remedial action plan. SCS Engineers estimated the cost of cleaning up the ACC property (excluding off-site damage) to be over $1 million.
On March 13, 1993, ACC filed this action, alleging that S&J caused the contamination of the property by severing a pipe near the truck ramp while *119 performing the 1981 construction work. The verified complaint contained causes of action for breach of contract, negligence, strict liability, and declaratory relief. The trial court granted S&J’s mоtion for judgment on the pleadings as to the strict liability claim and denied ACC’s request for declaratory relief. The remaining claims, for breach of contract and negligence, were tried to a jury in the summer of 1994. The jury returned a verdict in favor of ACC on both claims. Judgment was entered accordingly on September 1, 1994. S&J filed a timely appeal.
Discussion
S&J contends that it is entitled to judgment as a matter of law because ACC’s claims for breach of contract and negligence are barred by the statutes of limitations. Alternatively, S&J seeks a new trial based on alleged procedural irregularities that occurred during the trial. Finally, S&J argues that the trial court improperly clarified the jury’s verdict as to the amount of damages awarded. We reject these contentions and affirm.
A. Statute of Limitations
S&J argues that ACC’s claims are barred by the applicable California statutes of limitations. ACC contends that, while untimely under state law, its claims are saved by CERCLA. We agree that the federal act renders the claims timely filed. 2
1. California Law
Under California law, a contract claim based on a written agreement is governed by a four-year statute of limitations (Code Civ. Proc., § 337, subd. I).
3
The claim accrues when the plaintiff discovers, or could have discovered through reasonable diligence, the injury and its cause.
(April Enterprises, Inc.
v.
KTTV
(1983)
In general, “[c]ivil actions, without exception, can only be commenced within the periods prescribed [by the statutes of limitations], after the cause of action shall have accrued . . . .” (§ 312.) A cause of action ordinarily accrues when, under the substantive law, the wrongful act is done and liability arises, i.e., upon the occurrеnce of the last fact essential to the cause of action.
(Saliter
v.
Pierce Brothers Mortuaries
(1978)
Applying the discovery rule in this case, we find that the statutes of limitations governing contract and negligence claims (§§ 337, 338) began to run in April 1990, when ACC first learned that the contamination of the site was caused by the severing of a pipe near the truck ramp. Given that ACC filed suit in March 1993, the contract claim is timely under section 337, subdivision 1 (four years), and the negligence claim is timely under section 338, subdivision (b) (three years).
However, S&J correctly points out that both of ACC’s clаims arise out of a latetit defect in a construction project, i.e., the severing of a pipe during the 1981 work on the truck ramp. Consequently, sections 337 and 338 are not the only applicable statutes of limitations. Section 337.15 is also pertinent. That section provides that where a plaintiff seeks to recover for damage to real property caused by a latent defect in the construction of an improvement to the property, “[n]о action may be brought. . . more than 10 years after the substantial completion of the . . . improvement.”
The relationship between these three statutes of limitations was recently explained by one Court of Appeal as follows: “When a defect is latent (i.e., not apparent from a reasonable inspection . . .), sections 337 and 338 begin to run only after the damage is sufficiently appreciable to give a reasonable [person] noticе that he has a duty to pursue his remedies. . . .
*121
However, section 337.15 imposes an absolute 10-year bar, based on the date of ‘substantial completion,’
regardless of discovery. . . .
The interplay between these statutes sets up a two-step process: (1) actions for a latent defect must be filed within three years (§ 338) or four years (§ 337) of discovery, but (2) in any event must be filed within ten years (§ 337.15) of substantial completion. . . .”
(North Coast Business Park
v.
Nielsen Construction Co.
(1993)
In applying the first step of this process, we have already found that ACC’s claims werе timely under sections 337 and 338. Applying step two, however, we conclude that the claims are barred under California law. Regardless of whether the claims were timely under sections 337 and 338, section 337.15 required that they be brought no later than 10 years after the construction project was substantially completed. Because the 1981 construction was finished by January 1982, ACC had to file suit by January 1992. The complaint having been filed in March 1993, it is time barred under section 337.15.
2. Federal Law
Enacted in 1980, CERCLA is intendеd to accomplish the prompt cleanup of hazardous waste sites and to impose all cleanup costs on the responsible party.
(Key Tronic Corp.
v.
United States
(1994)
The study group submitted its report to the President and the Congress in July 1982. The report stated in part as follows: “Commencement of the running of the statute of limitаtions can be a barrier to recovery under both common law and statutory remedies. This issue does not arise specifically from the applicable period of limitations which depends on the cause of *122 action; the question is when the statute begins to run—the time when the action accrues. The plaintiff’s ability to recover will often depend on whether a liberal discovery rule is applicable, [f] Exposure to certain hazardous wastеs may result in cancer, neurological damage, and in mutagenic and teratogenic changes. Most of these types of injuries have long latency periods, sometimes 20 years or longer. With long latency periods, a rule which starts the running of the statute from the time of exposure will defeat most actions before the plaintiff knows of his injury.” (Injuries and Damages from Hazardous Wastes—Analysis and Improvement of Legal Remedies: A Report to Congress in Complianсe with Section 301(e) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (Pub.L. No. 96-510) by the Superfund Section 301(e) Study Group, in Senate Com. on Environment and Public Works, 97th Cong., 2d Sess. 28 (1982), fn. omitted.) The study group recommended that “all states . . . adopt the rule that an action accrues when the plaintiff discovers or should have discovered the injury or disease and its cause.” (Id. at p. 241.)
In response to the study group’s report, Congress passed the Superfund Amendments аnd Reauthorization Act (Pub.L. No. 99-499 (Oct. 17, 1986) 100 Stat. 1613). Title II, section 203(a) of that act became section 309 of CERCLA. It states in pertinent part: “In the case of any action brought under State law for personal injury, or property damages, which are caused or contributed to by exposure to any hazardous substance, or pollutant or contaminant, released into the environment from a facility, if the applicable limitations period for such action (as specified in the State statutе of limitations or under common law) provides a commencement date which is earlier than the federally required commencement date, such period shall commence at the federally required commencement date in lieu of the date specified in such State statute.” (42 U.S.C. § 9658(a)(1), italics added.) CERCLA defines “federally required commencement date” as the “date the plaintiff knew (or reasonably should have known) that the personal injury or property damages . . . werе caused or contributed to by the hazardous substance or pollutant or contaminant concerned.” (Id., § 9658(b)(4)(A), italics added.)
The House Conference Report explained the purpose of section 309 of CERCLA (42 U.S.C. § 9658) as follows: “This section provides for a Federal commencement date for State statutes of limitations which are applicable to harm which results from exposure to a hazardous substance. State statutes of limitations define the time in which an injured party may bring a lawsuit seeking compensation for his injuries against the party alleged to be responsible for those injuries. These statutes usually run from *123 two to four years, depending on the State. In the case of a long-latency disease, such as cancer, a party may be barred from bringing his lawsuit if the statute of limitations begins to run at the time of the first injury—rather than from the time when the party ‘discovers’ that his injury was caused by the hazardous substance or pollutant or cоntaminant concerned, [<][] The study done pursuant to Section 301(e) of CERCLA by a distinguished panel of lawyers noted that certain State statutes deprive plaintiffs of their day in court. The study noted that the problem centers around when the statute of limitations begins to run rather than the number of years it runs, [f] This section addresses the problem identified in the 301(e) study. While State law is generally applicable regarding actions brought under State law for personal injury, or property damage, which [is] caused or contributed to by exposure to any hazardous substances, or pollutant or contaminant, released into the environment from a facility, a Federally-required commencement date for the running of State statutes of limitations is established. This date is the date the plaintiff knew, or reasonably should have known, that the personal injury referred to above was caused or contributed to by the hazardous substance or pollutant or contaminant concerned.” (H.R.Conf. Rep. No. 99-962, 2d Sess., p. 261 (1986).)
In short, section 309 of CERCLA “creates a federally mandated discovery rule for the accrual of state law claims involving releases of hazardous substances that cause or contribute to personal injury or property damage.”
(Bolin
v.
Cessna Aircraft Co.
(D.Kan. 1991)
Where a state does not apply the discovery rule to claims for property damage caused by toxic contamination, CERCLA mandates that the state statute of limitations begin to run when the plaintiff discovers, or should have discovered, the injury and its cause. (See, e.g.,
Buggsi, Inc.
v.
Chevron U.S.A., Inc.
(D.Or. 1994)
Here, S&J does not dispute that ACC’s causes of action satisfy the four statutory elements needed to invoke the federally required commencement date: (1) property damage (2) caused or contributed to by exposure to hazardous substances (3) released into the еnvironment (4) from a “facility.” (See 42 U.S.C. § 9658(a)(1);
American Glue & Resin
v.
Air Products & Chemicals
(D.Mass. 1993)
As stated, California uses a two-step process in applying the statutes of limitations to claims involving property damage caused by a latent defect in a construction project. With respect to the first step, ACC’s claims were timely under the statutes of limitations for breach of contraсt (§ 337, subd. 1) and negligence (§ 338, subd. (b)). (See, ante, pt. A.l.) Both of those statutes of limitations are subject to the discovery rule. (April Enterprises, Inc. v. KTTV, supra, 147 Cal.App.3d at pp. 826-833; CAMSI IV v. Hunter Technology Corp., supra, 230 Cal.App.3d at pp. 1533, 1536-1538.)
However, the second step, which imposes section 337.15’s 10-year filing deadline, does not incorporate the discovery rule. Indeed, the very purpose of section 337.15 is to establish an absolute time limit based on the date when the construction is substantially completed,
regardless of when the plaintiff discovers the injury and its cause. (Regents of University of California
v.
Hartford Acc. & Indem. Co.
(1978)
In sum, although the discovery rule renders ACC’s claims timely under sections 337 and 338, the 10-year limitations period in section 337.15 *125 precludes those claims as time barred. In other words, the operation of the discovery rule under the former sections is nullified by the 10-year bar. Section 337.15 effectively trumps any benefits conferred by the discovery rule.
This result is patently at odds with section 309 of CERCLA, a remedial statute we must broadly construe to avoid frustrating congressional intent.
(U.S.
v.
Carolina Transformer Co.
(4th Cir. 1992)
Given thаt section 337.15 is inconsistent with CERCLA, we must decide how best to implement CERCLA’s imposition of the discovery rule in cases involving latent construction defects. (See
Dalton
v.
Little Rock Family Planning Services
(1996)_U.S._,_[
Hcywever,-we need not view section 337.15 in isolation. Together, sections 337, 338, and 337.15 create a two-step process "for determining the timeli- „ ness- of a claim. "Only the second step, whiсh involved section 337.15, in *126 inconsistent with the discovery rule. Consequently, we conclude that section 309 of CERCLA is properly served by basing the statute-of-limitations analysis on the first step alone, i.e., whether the claims are timely under sections 337 and 338. CERCLA preempts the second step in the process, thereby eliminating the 10-year bar of section 337.15 in this category of cases.
Our conclusion is supported by
Kowalski
v.
Goodyear Tire and Rubber Co.
(W.D.N.Y. 1994)
The state statute of limitations was three years. (
Ms. Kowalski’s claim was untimely under state law. She had learned of her injury in 1984, when she was diagnosed with bladder cancer, but she did not discover the cause of the injury within the five-year period prescribed by New York law. In fact, she did not learn of the causal connection between her illness and her husband’s employment until April 1992, more than eight years after discovering the injury itself. Nevertheless, in applying section 309 of CERCLA, the federal district court concluded that the claim was timely. New York had established a three-year statute of limitations for such a claim, and Ms. Kowalski hаd filed suit within three years of discovering the cause of her injury. (841 F.Supp. at pp. 106-108.) 6 It did not matter that she had failed to satisfy New York’s five-year requirement for discovering the cause of her injury. (Ibid.)
*127 As in Kowalski, it does not matter here that ACC failed to satisfy the 10-year limitations period of section 337.15. It is sufficient that ACC brought its claims for breach of contract and negligence within four years (§ 337) and three years (§ 338), respectively, of discovering the cause of the property damage. Accordingly, the trial court properly found that ACC’s claims were timely filed.
B., C *
Disposition
The judgment is affirmed.
Ortega, Acting P. J., and Vogel (Miriam A.), J., concurred.
Appellant’s petition for review by the Supreme Court was denied July 10, 1996.
Notes
Chemicals stored at the plant include acetone, methyl ethyl ketone, methylene chloride, and tetrachloroethane, which are “hazardous substances” under federal law (40 C.F.R. § 302.4 (1995)) and therefore subject to regulation under CERCLA (id., § 302.1).
Because the relevant facts are not in dispute, we independently review the trial court’s ruling that the statutes of limitations did not bar ACC’s claims. (See
International Engine Parts, Inc.
v.
Feddersen & Co.
(1995)
Unless otherwise indicated, all further statutory references are to the Code of Civil Procedure.
A “facility” is defined as either (1) “any building, structure, installation, equipment, pipe or pipeline (including any pipe into a sewer or publicly owned treatment works), well, pit, pond, lagoon, impoundment, ditch, landfill, storage container, motor vehicle, rolling stock, or aircraft” or (2) “any site or area where a hazardous substance has been dеposited, stored, disposed of, or placed, or otherwise come to be located.” (42 U.S.C. § 9601(9), italics added.)
There can be no doubt that section 337.15 is a procedural statute of limitations, not a substantive limit on a plaintiff’s cause of action. (Regents of University of California v. Hartford Acc. & Indem. Co., supra, 21 Cal.3d at pp. 639-642.) As our Supreme Court has stated, “We . . . view section 337.15 as an ordinary statute of limitations, subject to the same rules ... as other statutes of limitations.” (Id. at p. 642.)
Ms. Kowalski filed suit in June 1992, two months after learning the cause of her illness. (
See footnote, ante, page 112.