Opinion
Whеn a building is constructed with asbestos-containing materials, does a property owner’s cause of action for strict liability or negligence accrue on the owner’s discovery of the mere presence of asbestos in the building or when asbestos contamination occurs? In this case, we hold—consistent with the vast majority of other jurisdictions that have considered this issue—that the owner of a building containing asbestos cannot state a cause of action in tort against an asbestos manufacturer until contamination occurs. Thus, the statute of limitations in an asbestos-in-building case does not commence until there has been damage in the form of contamination.
In our case, respondent W.R. Grace & Company-Connecticut (Grace) obtained a summary judgment and dismissal of an asbestos-in-building action filed by appellant San Francisco Unified School District (SFUSD). The trial court denied SFUSD’s motion for reconsideration of its conclusion that the action was barrеd by the statute of limitations. On appeal from both rulings, 1 SFUSD contends (1) that the trial court erred in finding that the limitations period commenced on discovery of the mere presence of asbestos *1323 in its buildings; (2) the limitations period was tolled during the period in which it was a member of a federal asbestos class action; and (3) when properly requiring contamination before accrual of this asbestos-in-building action, a triable issue of fact existed about when the limitations period commenced. As we agree with SFUSD’s claims, we reverse and remand the judgment.
I. Facts
In July 1988, appellant SFUSD filed an action against respondent Grace and others,* 2 alleging causes of action for strict liability, negligence, breach of implied warranty, fraud and civil conspiracy. 3 In its September 1989 third amended complaint, SFUSD alleged that between 1968 and 1973, six of its schools were constructed using asbestos-containing products. It also alleged that some of these asbеstos-containing products have deteriorated such that immediate removal is necessary. SFUSD alleged that the release of asbestos fibers from these materials caused physical injury to its schools and posed a potential hazard to building users and visitors. It also alleges that as a result of this hazard, it has incurred and will incur costs to inspect its buildings, to determine the extent of damage, to repair that damage, and to implement and maintain a special operations and maintenance program. It also alleges damage resulting from the uninhabitability of its buildings during repair and the notice it must give to all persons who have been exposed to the asbestos in its buildings.
The third amended complaint also alleges that sometime after 1968 and continuing to the present time, asbestos fibers have been released, damaging the schools by contamination that was not and could not have been known until January 17, 1983. On that date, SFUSD became a member of a mandatory federal class action. (See
In re Asbestos School Litigation
(E.D. Pa. 1984)
Grace answered this complaint in November 1989, pleading as an affirmative defense the bar of the statute of limitations. In July 1993, Grace moved for summary judgment on statute of limitations grounds. 4 In September 1993, the trial court granted this motion, finding that the action was barred by the three-year statute of limitations period. (Code Civ. Proc., § 338.) The trial court found that contamination was not required before SFUSD’s causes of action accrued; that SFUSD’s awareness that its schools contained potentially damaging asbestos was sufficiеnt to trigger commencement of the limitations period. It ruled that undisputed evidence established that SFUSD was put on notice of this fact before June 1, 1980. Thus, it reasoned, even if the limitations period was tolled from January 17, 1983, through December 1, 1987, as a result of the federal class action, the July 1988 action was not timely filed. SFUSD moved for reconsideration, which was denied in January 1994 for failure to present new facts or new law. An order granting summary judgment was filed, stating that SFUSD was entitled to recover nothing under this action.
II. Commencement of Limitations Period A. Asbestos-in-building Cases
First, SFUSD contends that the trial court adopted the wrong legal standard for commencing the limitations period in this asbestos-in-building action. It urges that the limitations period for a strict liability or negligence cause of action does not commence until asbestos contamination occurred —or reasonably should have been discovered to have occurred—in its buildings. For its part, Grace argues that the trial court correctly ruled that the statute of limitations began to run when SFUSD suffered appreciable harm resulting from the mere presence of potentially dangerous asbestos in its buildings.
Our resolution of this question lies at the intersection of two lines of California Supreme Court cases. We must be faithful to both principles establishing when a cause of action accrues for purposes of the statute of limitations and those cases defining what constitutes an injury for purposes of a strict liability or negligence cause of action. (See
Jolly
v.
Eli Lilly & Co.
*1325
(1988)
The physical danger to persons occupying a building containing asbestos begins when asbestos fibers become airborne. Respirable asbestos fibers may be released from friable asbestos-containing materials when these materials are disturbed.
(Adams-Arapahoe School Dist. No. 28-J
v.
GAF Corp.
(10th Cir. 1992)
B. Statute of Limitations
Some background on statutes of limitations is helpful to understanding the issue presented in our case. SFUSD and Grace do not dispute the basic statute of limitations rules to be applied. The statute of limitations for injury to real property is three years. (Code Civ. Proc., § 338, subd. (b);
City of San Diego
v.
U.S. Gypsum Co.
(1994)
The gravamen of SFUSD’s third amended complaint is in tort—specifically, its causes of action for strict liability and negligence. In tоrt actions, the statute of limitations commences when the last element essential to a cause of action occurs.
{City of San Diego
v.
U.S. Gypsum Co., supra,
The common law rule that a cause of action accrued on the date of injury has been modified by the discovery rule.
{Jolly
v.
Eli Lilly & Co., supra,
C. Physical Injury
As the limitations period cannot begin to run until damage occurs, we must consider what constitutes the element of damage for purposes of strict liability and negligence. In a landmark strict liability case that has since achieved nationwide influence, the California Supreme Court ruled that plaintiffs may recover in tort for physical injury to person or property, but not for purely economic losses that may be recovered in a contract action.
(Seely
v.
White Motor Co., supra,
63 Cal.2d at pp. 18-19.) Since
Seely
was announced 30 years ago, other California courts have applied the same reasoning to other tort causes of action, such as negligence. (See
Sacramento Regional Transit Dist.
v.
Grumman Flxible
(1984)
The distinction between contract recovery for economic loss and tort recovery for physical injury is not an arbitrary one, as the
Seely
court explained. It rests on an understanding of the nature of the responsibility that a manufacturer must undertake in distributing products. A manufacturer may properly be held liable for physical injuries caused by defects by requiring
*1328
goods to match a standard of safety defined in terms of conditions that create unreasonable risks of harm. However, it cannot be held liable for the level of performance of products in the customer’s business unless the manufacturer agreed that the product was designed to meet the customer’s demands. A consumer should not be charged with bearing the risk of physical injury when a product is purchased, but can fairly be charged with the risk that the produсt will not match economic expectations unless the manufacturer agrees that it will.
(Seely
v.
White Motor Co., supra,
Seely
has been widely cited in federal, California and other state decisions for this physical injury/economic loss distinction in tort/contract cases. In other jurisdictions, asbestos defendants have argued that plaintiffs bringing tort actions in asbestos-in-building cases should be limited to recovery for economic loss. In many of these cases, the
Seely
distinction between economic loss and physical harm was the basis for the rejection of this argument. (See, e.g.,
T.H.S. Northstar Assoc,
v.
W.R. Grace & Co.
(D.Minn. 1991)
Other jurisdictions that adopt
Seely's
physical injury/economic loss distinction routinely find that asbestos contamination constitutes the physical injury element of strict liability or negligence causes of action in an asbestos-in-building case. The dangerousness that creates a risk of harm alone has been held to be insufficient to support an award of damages—there must be
*1329
physical harm caused by that product.
(Board of Educ.
v.
A, C and S, Inc., supra,
In a case similar to the one before us, the Tenth Circuit of the United States Cоurt of Appeal considered whether a Colorado public school district had suffered an injury for purposes of causes of action for negligence or strict liability, to permit recovery of the cost of removing asbestos-containing floor tile.
(Adams-Arapahoe School Dist. No. 28-J
v.
GAF Corp., supra,
D. Physical Injury in Asbestos-in-building Cases
We have seen that Seely precludes recovery for economic loss in a strict liability or negligence cause of action. Cases from other jurisdictions illustrate the significance of this principle in the context of an asbestos-in-building case—it precludes tort recovery for the loss of economic value of the buildings simply because they contain asbestos. As no cause of action could be stated for strict liability or negligence in an asbestos-in-building case without physical injury to person or property, Seely compels the conclusion that a tort cause of action cannot accrue until physical injury occurs. Once physical injury to property occurs—assuming that damage is the last element of the tort cause of action to occur—the cause of action accrues and the limitations period commences.
*1330 In our case, the trial court based its summary judgment order on its holding that the mere presence of asbestos in SFUSD’s buildings constitutes the injury required in a strict liability or negligence case. However, this conclusion would permit a plaintiff to recover purely economic contract damages in tort, contrary to the command of Seely. As other jurisdictions have noted, the risk of contamination endangering a building’s occupants is not the type of risk that is normally allocated between parties to a contract by agreement. (See, e.g., City of Greenville v. W.R. Grace & Co., supra, 827 F.2d at pp. 976-978 [under South Carolina law, asbestos-in-building plaintiff may state cause of action for negligence].) In order to be consistent with the principles of Seely, it appears that until contamination occurs, the only damages that arise are economic losses that do not constitute physical injury to property recoverable in strict liability or negligence. Physical injury resulting frоm asbestos contamination, not the mere presence of asbestos, must have occurred before a cause of action for strict liability or negligence can accrue in an asbestos-in-building case and the limitations period commence.
However, to be valid, our conclusion must also be consistent with those California Supreme Court cases delineating when a cause of action accrues and the statute of limitations period begins to run. (See
Jolly
v.
Eli Lilly & Co., supra,
44 Cal.3d at pp. 1110-1111;
Davies
v.
Krasna, supra,
E. Consistency With California Cases
One published California case has addressed the question of when appreciable harm occurs in an asbestos-in-building case for purposes of commencement of the statute of limitations, coming to a different conclusion
*1331
than we have reached. (See
City of San Diego
v.
U.S. Gypsum Co., supra,
We find the
City of San Diego
analysis to be unsatisfactory, for several reasons. First, the
City of San Diego
court purported not to resolve the contamination issue, while acknowledging that the city’s contamination argument was inconsistent with its ruling. (See
City of San Diego
v.
U.S. Gypsum Co., supra,
In our view, this is where the
City of San Diego
court’s analysis falters. It interprets any moneys spent that constitute more than nominal damages as the appreciable harm that triggers the commencement of the statute of limitations without considering whether any physical injury has yet occurred. A careful reading of the appreciable harm cases reveals that they contrast appreciable harm with nominal damages
or
speculative harm
or
a threat of future harm. (See
Davies
v.
Krasna, supra,
Our holding would also be consistent with other relevant California authority. Neither uncertainty as to the amount of damages nor difficulty in proving damages tolls the limitations period.
(Davies
v.
Krasna, supra,
We see no inconsistency between our holding and the Supreme Court’s decision in
Jolly
v.
Eli Lilly & Co., supra,
The issue presented by our case is distinguishable from that presented in
Jolly.
SFUSD does not ask whether wrongdoing occurred, but what constitutes an injury in the context of an asbestos-in-building case. Injury and wrongdoing are distinct legal issues. (See
Jolly
v.
Eli Lilly & Co., supra,
The California Supreme Court has recognized that in unusual cases, a plaintiff may be aware of wrоngdoing before damage arises. Ordinarily, a plaintiff has already suffered damage by the time the tortious conduct is discovered. Only in an unusual case will the plaintiff discover a defendant’s negligence without having suffered any consequential damage. (See
Budd
v.
Nixen, supra,
F. Consistency With Other Jurisdictions
The contamination rule would have the added benefit of consistency with decisions from most other jurisdictions in the United States. Asbestos in buildings is, after all, a nationwide problem. “. . . [M]ost if not all jurisdictions deciding ‘asbestos in buildings’ cases have ruled contamination constitutes physical injury compensable in tort.”
(Adams-Arapahoe School Dist.
*1334
No. 28-J
v.
GAF Corp., supra,
In cases arising in somewhat different contexts, other states have ruled that the injury in an asbestos-in-building case is the contamination of the building with asbestos fibers.
(Board of Educ.
v. A,
C and S, Inc., supra,
Only two states have found that the cause of action accrues before contamination occurs.
(Detroit Bd. of Educ.
v.
Celotex Corp., supra,
493 N.W.2d at pp. 519-520 [in Michigan, knowledge of potential hazard is sufficient to begin running of limitations period];
Maryland Cas. Co.
v.
W.R. Grace and Co.
(2d Cir. 1993)
G. Conclusion—Contamination Is Appreciable Harm in Asbestos-in-building Cases
A reasoned analysis of the issues posed by our case requires us to weave new cloth in order to be consistent with both statute of limitations/accrual of *1335 cause of action principles enunciated by the California Supreme Court and its landmark case defining what constitutes “injury” for purposes of strict liability and negligence causes of action. In California, no cause of action accrues—i.e., the statute of limitations does not commence—until all elements of the cause of action, including that of damage or injury, have occurred. There must be appreciable harm before the damage element of a cause of action accrues, triggering the commencement of the limitations period. In a strict liability or negligence case, the compensable injury must be physical harm to persons or property, not mere economic loss. Accordingly, we hold that in an asbestos-in-building case, the mere presence of asbestos constitutes only a threat of future harm. Contamination by friable asbestos is the physical injury and the actual, appreciable harm that must exist before a property owner’s strict liability or tort cause of action against an asbestos manufacturer accrues and the limitations period commences.
III. Triable Issue of Fact
SFUSD also contends that—applying the correct legal standard for commencement of an action—a triable issue of fact existed about whether it knew or should have known that three schools were damaged by the release of asbestos fibers before June 1980. As we have found, a strict liability or negligence cause of action accrues in an asbestos-in-building case when the building becomes contaminated or the plaintiff should have known that contamination had occurred. Contamination constitutes injury—when injury is the last element of the cause of action for strict liability or negligence to occur, the cause of action accrues and the statute of limitations begins to run when contamination occurs. (See pt. II, ante.)
Clearly, a different result might have been reached on the motion for summary judgment had the trial court applied a contamination rather than a mere presence of asbestos standard for commencement of the limitations period. What is not cleаr to us on this record is whether or not Grace’s statute of limitations defense may be resolved as a matter of law. Certain facts are established. The original complaint in this action was filed on July 29, 1988. The parties agreed to toll the limitations period for 60 days between May 2 and July 2, 1988. The three-year limitations period applies. (Code Civ. Proc., § 338, subd. (b).) SFUSD also contends that the limitations period was tolled from January 17, 1983, through December 1, 1987, during the time when it was a member of the class in the federal asbestos class action. (See pt. IV, post.)
SFUSD claims that the evidence is undisputed that there was no unacceptable contamination before May 28, 1985. However, the dates of actual *1336 contamination of each school 6 are issues of fact for a jury to resolve, unless the trial court finds that these factual issues may be resolved as a matter of law. As the trial court erroneously focused on when SFUSD was put on notice that its schools contained potentially dangerous asbestos, we think it prudent to remand this matter to the trial court for a determination of when contamination occurred at each school or when SFUSD should reasonably have discovered that each school’s contamination occurred. If the issue can be resolved as a matter of law, the trial court shall make the appropriate summary judgment order. 7 If the matter cannot be resolved as a matter of law, the trier of fact shall determine any unresolved issues.
IV. Federal Preclusion
A. Facts
As this matter is to be remanded to the trial court (see pt. Ill, ante), we deem it appropriate to address one other substantive legal issue. Grace contends that the federal asbestos class action did not toll the statute of limitations period during SFUSD’s membership in the class. For its part, SFUSD argues that the limitations period was tolled from the inception of the federal class action until it opted out of the class.
Grace does not dispute the facts alleged in SFUSD’s complaint. On January 17, 1983, SFUSD became a member of a mandatory federal class action. (See
In re Asbestos School Litigation, supra,
B. Applicable Law
The United States Supreme Court has held that the filing of a class action tolls the applicable statute of limitations for all class members.
(Crown, Cork & Seal Co.
v.
Parker
(1983)
One appellate decision discusses
Jolly
in the context of tolling limitations periods. (See
Becker
v.
McMillin Construction Co.
(1991)
C. Lack of Notice
On a number of grounds, Grace urges that the limitations period was not tolled for the time during which SFUSD was a member of the class in the national asbestos class action. SFUSD protests that Grace waived its challenge for lack of notice by failing to raise it in the trial court. SFUSD claims that Grace never asserted as one of its undisputed material facts that it lacked notice of SFUSD’s claims, such that there is no evidence to support Grace’s lack of notice argument. It also argues that it has been prejudiced by Grace’s raising this “fact-based claim” on appeal after the time to conduct discovery about Grace’s notice has passed. Thus, SFUSD contends that Grace waived its attack on class action tolling by failing to dispute the extent of Grace’s knowledge of SFUSD’s claims. The trial court did not rule on tolling only because it found that the action was untimely even if the limitations period was tolled as SFUSD alleged that it was. Given our remand of this matter, the tolling issue will have to be resolved in order for the trial court to rule on the remaining issues. Thus, we find it appropriate to address the merits of this question.
Grace first argues that the federal class action did not provide it with meaningful notice of SFUSD’s claims against Grace. It emphasizes language in Jolly suggesting that mass tort actions are often inappropriate for class action certification and do not lend themselves to tolling. (See Jolly v. Eli Lilly & Co., supra, 44 Cal.3d at pp. 1121, 1123.) In Jolly, the California Supreme Court explained that “[t]he major elements in tort actions for personal injury—liability, causation, and damages—may vary widely from claim to claim . . . .” {Id. at p. 1123.) “. . . [Pjersonal-injury mass-tort class-action claims can rarely meet the community of interest requirement in that each member’s right to recover depends on facts peculiar to each particular case,” these claims being held to be “presumptively incapable of apprising defendants of ‘the substantive claims being brought against them’.” {Id. at p. 1125.) It is presumed that the lack of commonality of interest will defeat certification and preclude application of the United States Supreme Court cases requiring tolling of the limitations period. {Ibid.)
However, as SFUSD argues, its asbestos claims are more similar to the property damage claims for which tolling was allowed in
Becker
than the prescription drug personal injury claims in
Jolly.
(See
Becker
v.
McMillin
*1339
Construction Co., supra,
D. Federal Effect on State Limitations Periods
Next, Grace contends that it is unwise for California to permit federal courts to dictate a tolling effect on state statutes of limitations. The asbestos class action of which SFUSD was a member was filed in federal court. (See
In re Asbestos School Litigation, supra,
California has adopted somewhat different state class action rules and thus only considers federal decisions about federal rules to be persuasive to the extent that state and federal rules parallel each other and state policy *1340 considerations are similar to those underlying the federal rules. (See Jolly v. Eli Lilly & Co., supra, 44 Cal.3d at pp. 1118-1119 [use federal procedures in absence of controlling state authority].) However, in both Jolly and Becker, the underlying class actions and the subsequent individual actions were brought in state court. (See id. at pp. 1106, 1118; Becker v. McMillin Construction Co., supra, 226 Cal.App.3d at pp. 1496-1497.) Thus, SFUSD’s case is distinguishable from these state class action cases.
E. Certification
Grace also argues that a plaintiff who opts out of a certified class is not entitled to tolling. In our case, the class was certified in the federal action on September 28, 1984. (See
In re Asbestos School Litigation, supra,
F. Equitable Grounds
Finally, Grace urges that tolling the limitations period is an equitable doctrine and that it would be inequitable to do so in the instant case. The
*1341
application of the doctrine of equitable tolling of statutes of limitations requires lack of prejudice to the defendant and good faith conduct on the part of the plaintiff.
(Addison
v.
State of California
(1978)
This argument is specious. If SFUSD reasonably suspected that its schools might be contaminated by asbestos, it had a duty to its students, employees and visitors to determine whether asbestos was present and to remove any health hazard. The discharge of this duty suggests no bad faith on the SFUSD’s part. As long as there is reliable evidence establishing that Grace sold the materials to SFUSD and that the materials contained asbestos— evidence that SFUSD would have to provide in order to meet its burden of proof of causation—Grace cannot be prejudiced by removal of the сontaminated materials.
As Grace’s arguments are unavailing, we conclude that SFUSD is entitled to have the limitations period for this action tolled during the period that it was a member of the class of plaintiffs in the federal asbestos class action. On remand, the trial court shall toll the limitations period for the applicable time when determining whether SFUSD’s action was timely filed.
V. Conclusion
The trial court erred in granting summary judgment to Grace because it based its ruling on a finding that the limitations period commenced before contamination occurred. Accordingly, we find it appropriate to remand this matter to the trial court to determine whether the action was filed within the limitations period, applying the principles enunciated in our decision. If the trial court can make this determination as a matter of law, it shall rule on the motion for summary judgment. If it determines that there are factual issues *1342 pertaining that must await determination by the trier of fact, the motion for summary judgment shall be denied. 9
The judgment is reversed and the matter remanded to the trial court for redetermination of whether the action was filed within the limitations period, consistent with the principles expressed in this decision.
Anderson, P. J., and Poché, J., concurred.
Respondent’s petition for review by the Supreme Court was denied December 14, 1995.
Notes
SFUSD appeals both the order granting summary judgment and the order denying reconsideration of the order granting summary judgment. An order granting summary judgment is not an appealable order.
(Islander Yachts, Inc.
v.
One Freeport 36-Foot Vessel
(1985)
Flintkote Corporation and Fibreboard Corporation were also named as defendants. They are not parties to this appeal.
The action was originally filed in the City and County of San Francisco, but appears to have been moved to Sonoma County in August 1990.
The statute of limitations for an action for injury to real property is three years. (Code Civ. Proc., §§ 335, 338, subd. (b).) The parties do not appear to dispute this issue, but argue only about when that limitations period begins to run.
“Economic loss” as enunciated in
Seely
has been defined as the diminution in value of the product because it is inferior in quality and does not work for the general purposes for which it was manufactured and sold.
(City of Manchester
v.
National Gypsum Co.
(D.R.I. 1986)
SFUSD alleges that each of the six schools in which asbestos was installed were built at different times, with construction beginning between 1968 and 1973. Thus, the factual question of when contamination occurred must be resolved on a building-by-building basis.
Code of Civil Procedure section 437c—as recently amended—will apply on remand.
The California Supreme Court denied a petition for review in
Becker. {Becker
v.
McMillin Construction Co., supra,
In light of this ruling, we need not address the collateral estoppel issue raised by SFUSD in its letter brief.
