Micah Investment Trust v. Atkinson CA1/2 ( 2015 )

Filed 2/24/15 Micah Investment Trust v. Atkinson CA1/2
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION TWO
MICAH INVESTMENTS TRUST,
Plaintiff and Appellant,
A139573
v.
BRETT ATKINSON et al., (Marin County
Super. Ct. No. CIV1203443)
Defendants and Respondents.
Micah Investments Trust appeals from the dismissal of its second amended
complaint following the trial court’s orders sustaining respondents’ demurrers without
leave to amend. Contrary to the trial court’s findings, appellant contends it is the real
party in interest, its claims are not barred by the applicable statute of limitations, and it
properly alleged causes of action for negligence and nuisance. We affirm.
STATEMENT OF THE CASE AND FACTS
Since December 2009, appellant has been the owner of real property at 3872
Ciarlo Lane in Vacaville, California (the Micah property), which borders real property
owned by Carl Walther (the Walther property). In 2008, when the Micah property was
owned by the now-dissolved Micah Investments, Inc. (Micah), Micah sued Walther,
Gateway Solutions, Inc. (Gateway), and other defendants (collectively the Walther
defendants), alleging they had damaged the Micah property by “trespassing, cutting
roads, and committing other violations, and using it as their own.”
In an effort to resolve the lawsuit, the Walther defendants agreed to perform work
to repair and remediate the damage to the Micah property (the Project). For this purpose,
1
in 2009, the Walther defendants retained Foulk Gomez & Associates, Inc. (Foulk), civil
engineer and surveyor; Materials Testing, Inc., doing business as KC Engineering (MTI),
geotechnical engineer; and Brett Atkinson (Atkinson), construction contractor. The
Project was substantially completed by the end of October 2009 but “numerous patent
defects and deficiencies continued to remain.” These defects allegedly caused flooding,
erosion, diminished lateral and subadjacent support and an unstable hillside, all affecting
the Micah property.
In December 2009, Micah transferred title to the Micah property to appellant.1
Appellant alleged that at this time, “the two entities entered into an oral agreement with
each other through their respective sole shareholder and sole Trustee, A.E. Cox, whereby
it was agreed that the corporation would assign all of its accrued and non-accrued legal
and equitable rights and interest to [appellant].” Micah filed its Certificate of Dissolution
on December 18, 2009.
In February 2010, Micah entered into a settlement agreement with Walther and
Gateway to resolve the 2008 lawsuit. The settlement agreement expressly reserved
Micah’s right to sue the Walther defendants for the work performed in 2009 and provided
that the rights of the parties, including the right to sue, were binding upon the parties’
successors and assigns.
On July 27, 2012, Micah and appellant filed the complaint in the present case,
asserting causes of action for negligence, trespass and private nuisance. On January 18,
2013, before the hearings scheduled on the defendants’ demurrers, Micah and appellant
filed a first amended complaint alleging causes of action for negligence, private nuisance
and unlawful business practices.
On February 19, MTI filed its demurrer to the first amended complaint, on
grounds including that Micah did not have capacity or standing to sue under Nevada
Revised Statutes section 78.585, which bars a corporation from asserting a cause of
action not commenced within two years of corporate dissolution; the cause of action for
1
The deed was signed on December 10, and recorded on December 15.
2
negligence was barred by the two-year statute of limitations for professional negligence
(Code Civ. Proc., § 339, subd. (1)); and all of the causes of action failed to state facts
sufficient to constitute a cause of action. Foulk demurred on February 20, on the basis of
the statute of limitations as to the negligence claim and failure to state a cause of action
as to all the claims. Atkinson’s demurrer, filed on March 7, was based on the grounds
that Micah lacked capacity to sue under Nevada Revised Statutes section 78.585 and that
appellant was not a real party in interest because the causes of action accrued to Micah
before the property was transferred to appellant.
On March 12, 2013, the alleged 2009 oral assignment of rights from Micah to
appellant described above “was memorialized and reduced the parties’ intentions and
agreements of December 10, 2009, to a written assignment,” retroactive to the date of the
original oral assignment agreement on December 10, 2009. The written assignment was
recorded.
On April 4, the trial court sustained MTI’s and Foulk’s demurrers with leave to
amend as to the first two causes of action and without leave to amend as to the third cause
of action. On April 9, the court sustained Atkinson’s demurrer as to Micah without leave
to amend based on lack of capacity to sue and as to appellant with leave to amend based
on lack of standing.
Appellant filed its second amended complaint on April 25, asserting causes of
action for negligence and nuisance. The second amended complaint alleged for the first
time that Micah assigned its rights to appellant at the time it conveyed the Micah
property, as stated above, as well as that damages from the defective work on the Project
occurred “when the 2009 work was substantially completed and the seasonal rains began,
which was after the transfer of the Micah property to [appellant].”
Atkinson demurred to the second amended complaint on the grounds that
appellant was not a real party in interest because the causes of action accrued to Micah,
not appellant, and the allegation of “seasonal rains” after the property transfer did not
constitute a separate cause of action accruing to appellant; the alleged oral assignment of
rights from Micah to appellant was invalid under the statute of frauds; and the claims
3
were barred by the statute of limitations. Foulk also demurred on the grounds that
appellant was not a real party in interest and the alleged assignment of rights was invalid,
as well as that the negligence claim failed to state a cause of action and was barred by the
statute of limitations, and the nuisance claim was in fact a negligence claim. MTI
demurred on the grounds that the complaint failed to state facts sufficient to constitute
either of the causes of action for reasons including the statute of limitations bar and
absence of legal duty.
On June 25, the trial court sustained the demurrers without leave to amend. As to
MTI’s demurrer, the court stated: “The first cause of action for negligence is barred by
the two-year statute of limitations. The second cause of action for nuisance fails because
plaintiff has not alleged facts which show that moving party has engaged in conduct
which is offensive, indecent, injurious to health, or so loud, smelly or obnoxious so as to
interfere with the peaceful enjoyment of the plaintiff’s property, which is a vacant lot.”
As to Foulk’s demurrer, the court ruled, “Plaintiff is not the real party in interest. The
negligence claim is barred by the two-year statute of limitations for professional
negligence. Plaintiff fails to state a valid cause of action for nuisance.” And as to
Atkinson’s demurrer, “Micah Trust has not alleged a fundamentally different cause of
action than those that accrued to Micah Corp. The complaint is barred by the two-year
statute of limitations. Additionally, the court found that “defendants did not owe a duty
to plaintiff.” The second amended complaint was dismissed with prejudice.
Appellant filed a timely notice of appeal on August 20, 2013.
DISCUSSION
We review the trial court’s sustaining of a demurrer de novo. (McCall v.
PacifiCare of California, Inc. (2001) 25 Cal. 4th 412; Barroso v. Ocwen Loan Servicing,
LLC (2012) 208 Cal. App. 4th 1001, 1008.) “ ‘ “We treat the demurrer as admitting all
material facts properly pleaded, but not contentions, deductions or conclusions of fact or
law. [Citation.] We also consider matters which may be judicially noticed.” (Serrano v.
Priest (1971) 5 Cal. 3d 584, 591.) Further, we give the complaint a reasonable
interpretation, reading it as a whole and its parts in their context. (Speegle v. Board of
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Fire Underwriters (1946) 29 Cal. 2d 34, 42.)’ (Blank v. Kirwan (1985) 39 Cal. 3d 311,
318.)” (Evans v. City of Berkeley (2006) 38 Cal. 4th 1, 6.) But a demurrer does not
assume the truth of assertions that are contradicted by judicially noticeable facts or facts
conceded by the plaintiff. (Evans, at p. 20.) “[A]ny inconsistencies with prior pleadings
must be explained; if the pleader fails to do so, the court may disregard the inconsistent
allegations. (Amid v. Hawthorne Community Medical Group, Inc. (1989) 212
Cal. App. 3d 1383, 1390.) Accordingly, a court is ‘not bound to accept as true allegations
contrary to factual allegations in former pleading in the same case.’ (Potter v. Arizona
So. Coach Lines, Inc. (1988) 202 Cal. App. 3d 126, 133, fn. 2.)” (Vallejo Development
Co. v. Beck Development Co. (1994) 24 Cal. App. 4th 929, 946 (Vallejo Development).)
“In order to prevail on appeal from an order sustaining a demurrer, the appellant
must affirmatively demonstrate error. Specifically, the appellant must show that the facts
pleaded are sufficient to establish every element of a cause of action and overcome all
legal grounds on which the trial court sustained the demurrer. (Cantu v. Resolution Trust
Corp. (1992) 4 Cal. App. 4th 857, 879–880.) We will affirm the ruling if there is any
ground on which the demurrer could have been properly sustained. (Debro v. Los
Angeles Raiders (2001) 92 Cal. App. 4th 940, 946.)” (Scott v. JPMorgan Chase Bank,
N.A. (2013) 214 Cal. App. 4th 743, 751-752.)
When a demurrer is sustained without leave to amend, “ ‘we decide whether there
is a reasonable possibility that the defect can be cured by amendment: if it can be, the
trial court has abused its discretion and we reverse; if not, there has been no abuse of
discretion and we affirm. [Citations.] The burden of proving such reasonable possibility
is squarely on the plaintiff.’ ” (Zelig v. County of Los Angeles (2002) 27 Cal. 4th 1112,
1126, quoting Blank v. Kirwan, supra, 39 Cal.3d at p. 318.)
Here, of the several grounds upon which the trial court sustained the demurrers,
one is dispositive: Appellant lacked capacity to maintain this suit.
“Every action must be prosecuted in the name of the real party in interest, except
as otherwise provided by statute.” (Code Civ. Proc., § 367.) The “real party in interest is
the party who has title to the cause of action, i.e., the one who has the right to maintain
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the cause of action.” (Vaughn v. Dame Construction Co. (1990) 223 Cal. App. 3d 144,
147 (Vaughn).) A “cause of action for damage to real property accrues when the
defendant’s act causes ‘ “immediate and permanent injury” ’ to the property or, to put it
another way, when there is ‘[a]ctual and appreciable harm’ to the property.” (Krusi v.
S.J. Amoroso Construction Co. (2000) 81 Cal. App. 4th 995, 1005 (Krusi), quoting CAMSI
IV v. Hunter Technology Corp. (1991) 230 Cal. App. 3d 1525, 1534.) The cause of action
belongs to the party that owns the property at the time the damage is discovered or ought
to have been discovered. (Siegel v. Anderson Homes, Inc. (2004) 118 Cal. App. 4th 994,
1009 (Siegel).)
A cause of action for damages resulting from injury to property is personal
property that may be assigned or transferred. (Vaughn, supra, 223 Cal.App.3d at p. 148.)
The transfer of real property does not automatically transfer the personal cause of action;
a party may transfer the right to recover for damages to the property without conveying
title to the property, or may convey real property but retain a cause of action for injury
thereto. (Id. at pp. 148-149.)
The second amended complaint alleged that respondents were hired in 2009 to
perform repair and remediation work on the Micah property and were responsible for the
performance of faulty and substandard work on the Project between August and October
of 2009, and that “[b]y the end of October 2009, the defective work on the Project was
substantially completed, but numerous patent defects and deficiencies continued to
remain.” These allegations make clear that a cause of action for injury to the Micah
property accrued by October 2009, as “ ‘[a]ctual and appreciable harm’ to the property”
was apparent at this time. (Krusi, supra, 81 Cal.App.4th at p. 1005.) The cause of action
accrued to Micah, which was then the owner of the property that was allegedly harmed.
(Siegel, supra, 118 Cal.App.4th at p. 1009.)
Appellant argues that Micah orally assigned its causes of action with respect to the
Micah property to appellant when it transferred the property to appellant in December
2009. As described above, this assignment was first mentioned in the second amended
complaint filed on April 25, 2013; neither the original complaint nor the first amended
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complaint contained any reference to an assignment of rights. According to the
allegations of the second amended complaint, the oral assignment that had been agreed
upon in 2009 was reduced to writing on March 12, 2013, and recorded. Atkinson’s
demurrer, which argued that appellant was not a real party in interest because the causes
of action accrued to Micah before the property was transferred to appellant, had been
filed on March 7, 2013.
Respondents argue that the alleged assignment should be disregarded as a sham,
noting both the “convenient” timing of appellant’s first mention of the assignment—just
after respondents’ demurrers urged Micah was not a real party in interest and lacked
capacity to sue—and the claim that the 2013 writing memorialized a 2009 oral agreement
“between” Cox, as sole shareholder of Micah, and himself, as appellant’s sole trustee.
Further, respondents point out that the allegations of the second amended
complaint concerning the assignment are inconsistent with other allegations in the same
pleading, as well as prior pleadings in this case. As discussed above, a court is not
required to accept as true allegations that are contrary to those in a prior pleading, and
may disregard inconsistent allegations that are unexplained. (Vallejo Development,
supra, 24 Cal.App.4th at p. 946.) The original complaint in this case alleged that Micah
was suing as “a dissolved corporation winding up its affairs for the benefit of its
shareholder” and appellant was the current owner of the property, thereby asserting that
each entity had a claim against respondents. The first amended complaint further
elaborated that Micah, although dissolved, “continue[d] to exist for the purpose of
winding up its affairs, prosecuting and defending actions by or against it, and enabling it
to collect on its obligations,” and that in February 2010, Micah entered a settlement
agreement in the 2008 litigation which “excepted the work done between August 2009
through October 2009 and suits against third parties for damages.” The second amended
complaint similarly alleged that the February 2010 settlement agreement “expressly
reserve[d] the right of Micah Corp. to bring a lawsuit against the Walther Defendants for
the faulty work performed in 2009” and added that the agreement made the parties’
rights, including the right to sue, “binding upon the parties’ successors and assigns.” All
7
these allegations—which assert that Micah possessed a cause of action for injury to the
Micah property as of February 2010—are patently inconsistent with the new allegations
of the second amended complaint that Micah assigned “all its accrued and non-accrued
legal and equitable rights and causes of action in the Micah Property” to appellant in
December 2009. If Micah was still pursuing its interests in the property in February
2010, it could not have assigned away “all” its rights and interests several months before,
and if it assigned “all” its rights and interests to appellant in December 2009, there was
nothing for it to “reserve” in February 2010.
Even aside from these points, however, the alleged assignment could not have
given appellant a viable cause of action. When a cause of action is assigned, “ ‘ “[t]he
assignee ‘stands in the shoes’ of the assignor, taking his rights and remedies, subject to
any defenses which the obligor has against the assignor prior to notice of the
assignment.” ’ (Johnson v. County of Fresno (2003) 111 Cal. App. 4th 1087, 1096; see
[also] Bliss v. California Cooperative Producers (1947) 30 Cal. 2d 240, 250 [‘an assignee
of a chose in action is subject to all equities and defenses existing at or before the notice
of the assignment’]; Teater v. Good Hope Dev. Corp. (1942) 55 Cal. App. 2d 459 [‘an
assignee of a chose in action ordinarily acquires all of the rights and remedies possessed
by the assignor for its enforcement, subject, however, to the defenses which may be
urged against the assignor’].) This principle is also codified in Code of Civil Procedure
section 368, which provides, in pertinent part, that ‘[i]n the case of an assignment of a
thing in action, the action by the assignee is without prejudice to any set-off, or other
defense existing at the time of, or before, notice of the assignment.’ ” (Cal-Western
Business Services, Inc. v. Corning Capital Group (2013) 221 Cal. App. 4th 304, 310-311
(Cal-Western).)
In Cal-Western, a corporation assigned its rights and interests in a judgment to the
plaintiff, which filed suit to enforce the judgment four years later. At the time of the
assignment, the assignor’s corporate powers and privileges had been suspended for
failure to pay taxes, and this remained the case when the suit was filed. Upholding the
trial court’s dismissal of the action, the Cal-Western court explained that “because a
8
defense based on lack of capacity to sue existed at the time of notice of the assignment
and could have been asserted against Pacific West One had it brought the action itself,
Cal-Western was subject to the same defense in suing to enforce the Judgment as Pacific
West One’s assignee.” (Cal-Western, supra, 221 Cal.App.4th at p. 312.)
The same is true in the present case. As the trial court correctly determined, when
the present case was filed on July 27, 2012, Micah lacked capacity to sue pursuant to
Nevada Revised Statutes section 78.585. A foreign corporation’s capacity to sue or be
sued after dissolution is determined according to the law of the state of incorporation.
(Greb v Diamond Internat. Corp. (2013) 56 Cal. 4th 243, 245-246.) Nevada Revised
Statutes section 78.585 bars a dissolved corporation from commencing an action more
than two years after dissolution on facts it knew or should have known of prior to
dissolution.2 Micah’s Certificate of Dissolution was filed on December 18, 2009, more
than two years prior to the filing of the present lawsuit.3 Because Micah lacked capacity
to file suit in July 2012, appellant also lacked capacity to sue.
2
Nevada Revised Statutes section 78.585, subdivision 1, provides: “The
dissolution of a corporation does not impair any remedy or cause of action available to or
against it or its directors, officers or stockholders commenced within 2 years after the
date of the dissolution with respect to any remedy or cause of action in which the plaintiff
learns, or in the exercise of reasonable diligence should have learned of, the underlying
facts on or before the date of dissolution, or within 3 years after the date of dissolution
with respect to any other remedy or cause of action. Any such remedy or cause of action
not commenced within the applicable period is barred. The corporation continues as a
body corporate for the purpose of prosecuting and defending suits, actions, proceedings
and claims of any kind or character by or against it and of enabling it gradually to settle
and close its business, to collect its assets, to collect and discharge its obligations, to
dispose of and convey its property, to distribute its money and other property among the
stockholders, after paying or adequately providing for the payment of its liabilities and
obligations, and to do every other act to wind up and liquidate its business and affairs, but
not for the purpose of continuing the business for which it was established.”
3
Neither Micah nor appellant appealed the trial court’s ruling granting the
demurrers to the first amended complaint on the basis that Micah lacked capacity to sue,
thereby forfeiting any claim of error in the trial court’s ruling on this issue. (Aubry v. Tri-
City Hospital Dist. (1992) 2 Cal. 4th 962, 966, fn. 2.)
9
Appellant argues that Nevada Revised Statutes section 78.585 is inapplicable
because the present action is not “by” or “against” a dissolved Nevada corporation but
rather by appellant, to whom Micah assigned its right to sue while the corporation was
active and within the statutory winding down period. This argument, of course, assumes
the truth of the allegations that Micah assigned its rights to appellant in December 2009,
when Micah could still have asserted the claims itself. But, as indicated above, an
assignee takes a cause of action “ ‘ “subject to any defenses which the obligor has against
the assignor prior to notice of the assignment.” ’ ” (Cal-Western, supra, 221 Cal.App.4th
at p. 311, quoting Johnson v. County of Fresno, supra,111 Cal.App.4th at p. 1096, italics
added; Code Civ. Proc., § 368.) Even accepting appellant’s allegations that an oral
assignment was made in December 2009, appellant has not alleged that respondents had
notice of the assignment prior to March 2013, at which time Micah clearly lacked
capacity to sue. Nor does appellant suggest any such allegation could be made.
Absent an assignment or transfer of the cause of action, a subsequent owner of real
property has no right to assert a cause of action that previously accrued in favor of a prior
owner. (Krusi, supra, 81 Cal.App.4th at p. 1005.) There are situations in which a
subsequent owner may have a cause of action without an assignment from the original
owner, because “ ‘a tort duty runs from an architect, designer, or contractor to not only
the original owner for whom real property improvement services are provided, but also to
subsequent owners of the same property.’ ” (Standard Fire Ins. Co. v. Spectrum
Community Assn. (2006) 141 Cal. App. 4th 1117, 1143, quoting Krusi, at p. 1005.) But, as
we explained in Krusi, this “does not mean that, in a case implicating damage to such
property, once a cause of action in favor of a prior owner accrues, another cause of action
against the same defendant or defendants can accrue to a subsequent property owner—
unless, of course, the damage suffered by that subsequent owner is fundamentally
different from the earlier type. Thus, if owner number one has an obviously leaky roof
and suffers damage to its building on account thereof, a cause of action accrues to it
against the defendant or defendants whose deficient design or construction work caused
the defect. But, if that condition goes essentially unremedied over a period of years,
10
owners two and three of the same building have no such right of action against those
defendants, unless such was explicitly (and properly) transferred to them by owner
number one. But owners two and three could well have a cause of action against those
same defendants for, e.g., damage caused by an earthquake if it could be shown that
inadequate seismic safeguards were designed and constructed into the building. Such is,
patently, a new and different cause of action.” (Krusi, at p. 1006.) In Krusi, we affirmed
the trial court’s determination that the cause of action for damage to a building asserted
by its fourth owners in fact accrued to prior owners because the leaks that formed the
basis of the claims were “a continuation, in increased form, of the same problems extant
during the prior ownership,” (id. at p. 1007) as evidenced by the property manager’s
declaration that tenants had reported leaks and “since the date of [the subsequent
owners’] purchase of the building, ‘the frequency and magnitude of the reported leaks . . .
have increased[.]’ ” (Ibid.)
Here, appellant attempts to preserve its cause of action by pointing to the
allegations of the second amended complaint that in addition to the claims assigned from
Micah to appellant, “[w]hen the 2009 work was substantially completed and the seasonal
rains began, which was after the transfer of the Micah Property to Micah Trust, other
damages from Defendants’ defective work on the Project occurred which included, but
are not limited to: 1) the velocity and volume of the uncontrolled flow of downstream
water has caused substantial erosion and an unstable and dangerous condition of the
hillside and increased the deposition of sediment, scouring and undercutting; 2) the
alteration of the natural water flow through Plaintiff’s Property has left portions of the
land exposed and unprotected; 3) storm water continues to percolate in the underlying
substrates; 4) the flow of runoff has created pooling on Plaintiff’s Property; and 5) the
lateral support has been damaged due to earth movement and improper design.”
But this alleged damage is no different in kind from that alleged to have caused
injury to the land prior to appellant’s ownership. The second amended complaint alleged
that respondents’ negligence in performing their work on the Project in 2009 included
“excavating on the Micah Property setbacks which cut away the lateral support and
11
created an unstable and dangerous hillside,” “failing to use reasonable code-required
structures to support the land both above and below the Micah Property line,” “altering
the natural water flow through the Micah Property leaving land exposed and unprotected
when [respondents] knew or should have known that the faulty work would result in
continued erosion, instability, disintegration of the surface structure, slipping, and loose
soil and subsidence,” “damming the flow of runoff which created pooling on the Micah
Property,” “failing to install keyways and interceptor drains which would allow for the
controlled flow of water and prevent the hillside from collapsing, and the soil from
eroding and subsiding,” and “failing to properly revegetate the soil which could have
helped to control the erosion and subsidence.” By the end of October 2009—when
Micah still owned the property—respondents’ work was “substantially completed” but
“patent defects and deficiencies” remained. As in Krusi, supra, 81 Cal. App. 4th 995, the
damages that were alleged to have occurred subsequently, when the seasonal rains began,
were a continuation of the same type that had been present and known to Micah before
appellant took ownership of the property.
Appellant relies upon Stanford Fire, supra, 141 Cal. App. 4th 1117, for the
proposition that a subsequent owner may have a cause of action against a contractor even
without an assignment from the prior owner. In that case, a homeowners association
brought a construction defect action against the developer of a condominium project.
The developer’s insurer argued it had no duty to defend because the association did not
own any interest in the property, and had not even yet been formed, during the insurance
policy period, and therefore could not have suffered damage during the covered period.
(Id. at p. 1122.)
Damage to the property, however, had occurred during the policy period.
(Stanford Fire, supra, 141 Cal.App.4th at pp. 1122-1123.) Relevant to the present case is
the Standard Fire court’s rejection of the insurer’s claim that the association did not even
have a cause of action against the developer. (Id. at p. 1139.) Standard Fire followed the
conclusion of Siegel, supra, 118 Cal. App. 4th 996, that “ ‘absent proof the original owners
suffered actual economic injuries as a result of the construction defects . . . , they
12
possessed no causes of action against [the builder] that precluded [the subsequent
owners] from maintaining their present claims.’ ” (Standard Fire, at p. 1145, quoting
Siegel, at p. 996.) Siegel held, as indicated above, that “ ‘the cause of action belongs to
the owner who first discovered, or ought to have discovered, the property damage. It is
only then that some entity capable of maintaining a legal claim will have suffered a
compensable injury, e.g., the cost of repair and/or the loss in the property’s value
(inasmuch as the owner then has a duty to disclose the damage to potential buyers).’ ”
(Standard Fire, at p. 1145, quoting Siegel, at p 1009.) In the situation presented in
Standard Fire, the court explained, “Who could have held a cause of action against the
developers for construction defects before the Association acquired its interests in the
Project? . . . If we were to adopt Standard Fire’s arguments and hold that the
Association, as a subsequent owner of interests in the Project, held no cause of action
against the developers, then we would have to conclude either that the developers held a
cause of action as against themselves, or that no one at all held a cause of action for
construction defects. As the court stated in Siegel: ‘A cause of action cannot have
accrued before there was someone in a position to actually assert it.’ (Id. at p. 1014.) It
would appear that the Association was the first entity capable of maintaining a legal
claim against the developers for the construction defects at issue and must, necessarily,
hold a cause of action for the same.” (Standard Fire, at pp. 1145-1146.) 4
4
Standard Fire took issue with part of our discussion in Krusi. After agreeing that
“a tort cause of action may run in favor of a subsequent owner of property under certain
circumstances,” the Standard Fire court continued, “Query, however, whether some of
the limiting language of Krusi may be imprecise or overbroad. (See Siegel, supra, 118
Cal.App.4th at p. 1009 [cause of action accrues in favor of prior owner on discovery of
damages].)” (Standard Fire, supra, 141 Cal.App.4th at pp. 1143-1144.) The court found
it unnecessary to resolve this question because, under Krusi, “the original owner of the
property may have a cause of action against an architect, engineer or contractor for
damage that original owner suffered, and a subsequent owner of the property may have a
cause of action against that third party as well, for different damage that subsequent
owner suffered. Applied to the facts before us, Krusi does not exclude the possibility that
the Association, as a subsequent owner, could have a cause of action against a third party
architect, engineer, or contractor. [¶] More importantly, however, Krusi, supra, 81
13
The circumstances of the present case are manifestly different. As we have said,
the injuries to the Micah property now asserted by appellant were apparent and known to
Micah during its ownership of the property, and no injuries of a fundamentally different
nature (Krusi, supra, 81 Cal.App.4th at p. 1006) were alleged to have occurred after
appellant became the owner.
The conclusion that appellant is not a real party in interest is fatal to the entire
second amended complaint. Accordingly, it is unnecessary for us to consider whether the
trial court was also correct in finding that appellant’s cause of action for negligence was
barred by the two-year statute of limitations for professional negligence; the cause of
action for nuisance failed because appellant did not allege facts showing respondents had
engaged in conduct constituting nuisance; and respondents did not owe a duty to
appellant.
DISPOSITION
The judgment is affirmed. Appellant is to pay costs of appeal.
_________________________
Kline, P.J.
We concur:
_________________________
Richman, J.
_________________________
Stewart, J.
Cal.App.4th 995, does not exclude the possibility that the Association, as a subsequent
owner, may have a cause of action against the prior owner and related entities, which
developed the property.” (Standard Fire, at p. 1144.) The Standard Fire court’s
criticism of Krusi appears to be that Krusi suggests a subsequent owner can never have a
cause of action for damage that occurred before its ownership. Any such suggestion
arose only from Krusi’s failure to expressly except the situation where the damage is not
discovered until after the change of ownership, a situation that was not presented on the
facts of that case.
14