The California Supreme Court on August 4, 2003 held that the 10-year period for bringing suit on latent construction defects is not extended for periods during which a developer or contractor attempts to repair the alleged defects. Lantzy v. Centex Homes eliminated conflicting decisions of the Court of Appeal. It sided with the real estate industry’s position that Code of Civil Procedure section 337.15 sets an absolute limitation period that starts when a building is completed. Luce Forward appellate partner Charles Bird handled the case for Centex Homes in the Supreme Court.
The plaintiffs in the Lantzy case filed a class action more than 10 years after their homes were completed, claiming that windows in the project failed. They alleged that sometime during the 10-year period, the developer attempted to repair some windows. They contended that the repairs extended the statute of limitations enough to make their suit timely. The trial court granted the developer’s motion to terminate the case under the statute of limitations, but the Court of Appeal reinstated the case in a published precedent. The California Supreme Court accepted the case on its docket in 2001 and heard argument in May 2003.
The Lantzy plaintiffs also claimed the developer was estopped to rely on the statute of limitations. If a developer convinces an owner not to sue by promising to fix a problem, the developer can be estopped from using the statute of limitations as a defense. Most importantly, the owner must show he or she reasonably relied on the developer’s promise as the reason not to sue during the 10-year period. The California Supreme Court threw out the Lantzy suit because the plaintiffs did not plead specific promises and reasonable reliance.
What are the rules now?
Attempting to make repairs, by itself, does not extend the 10-year limitation period of section 337.15, but it does extend other, shorter statutes.
Convincing owners not to sue by promising to fix problems is likely to make section 337.15 unavailable as a defense if the owners rely on the promise as a reason not to sue within 10 years. This most often happens when the promises are made near the end of the 10-year period.
Projects sold after January 1, 2003 are subject to SB 800 (Civil Code § 895, et seq.). Section 337.15 does not apply to those projects. Civil Code section 941 states separate time rules for those projects.