Emergent partner Johnny Yeh focuses on real estate litigation, and actively canvasses the California appellate court decisions for developments in that area. Here, he analyzes a recent opinion on the statute of limitations for property claims. To learn more about how Johnny and Emergent can help you with your real estate dispute, contact us.
On April 6, 2017, the Court of Appeal for the Third Appellate District issued its opinion in Scholes v. Lambirth Trucking Co., which discusses several interesting real estate principles, most of which relate to the statute of limitations – i.e., the time period in which a lawsuit has to be commenced to be timely.
In Scholes, the defendant had a storage site next to the plaintiff’s property, which it used to grind wood products and to store wood chips, sawdust, and rice hulls. which would blow over onto the plaintiff’s property. (OK, Google, what are rice hulls?) Following warnings from local authorities that the storage site created a fire hazard, a fire broke out on the defendant’s property on May 21, 2007, which then spread to the plaintiff’s land.
The plaintiff filed a complaint on May 21, 2010, three years to the day of the fire. The original complaint simply indicated that it concerned a “dispute compensation on insurance claim.” The plaintiff otherwise alleged he had suffered general and property damages arising from the fire. The plaintiff later filed an amended complaint, which was dismissed with leave to amend after the defendant moved for judgment on the pleadings.
On August 9, 2011, the plaintiff filed a second amended complaint and, for the first time, asserted causes of action for trespass, based on the fact that combustible materials had trespassed onto his property from defendant’s property and fueled the subsequent fire. The defendant demurred to this complaint on the basis that it was barred by the statute of limitations, and the trial court sustained the demurrer with leave to amend.
On November 10, 2011, the plaintiff filed a third amended complaint alleging counts for negligent trespass, intentional trespass, and strict liability. The plaintiff alleged that the fire had destroyed personal property, growing crops, other growth, motor vehicles, other mechanical equipment, and a walnut orchard. He also requested triple damages under Civil Code section 3346 for the damage to the orchard. Defendant demurred against the third amended complaint on the basis that it was barred by the statute of limitations. This time, the court sustained the demurrer without leave to amend.
On appeal, the Scholes court explored a variety of issues, including the points below.
Trespass by Fire
The court first looked at which statute of limitations applied to the dispute. The defendant argued that the two-year statute of limitations in Code of Civil Procedure (“CCP”) section 339(1) should apply, whereas the plaintiff argued that the three-year statute of limitations in CCP 338(b) – which deals with injuries to property – should apply.
In arguing for a two-year statute of limitations, the defendant reasoned that there wasn’t an actual entry onto the plaintiff’s property or a direct injury amounting to trespass. Citing to case law over a century old, the defendant argued that the consequential damage created by the fire could not be classified as a trespass under CCP 338(b). The court didn’t accept this argument, noting that newer case law reflected a more recent trend allowing trespass actions where the injury is consequential and indirect, such as where a fire moves from one property to a neighboring property.
The Relation-Back Doctrine
Finding that the three-year statute of limitations applied did not fully resolve whether plaintiff’s action was timely, however. The fire happened on May 21, 2007, and the plaintiff only first mentioned his trespass theory in his second amended complaint, which had been filed on August 2011, over four years after the fire occurred. To avoid this timing problem, the plaintiff argued that his trespass claims related back to his original complaint under the so-called “relation-back doctrine.”
In examining this argument, the court noted that “[u]nder the relation-back doctrine, in order to avoid the statute of limitations, the amended complaint must: rest on the same general set of facts as the [original] complaint, refer to the same same accident and same injuries as the original complaint, and refer to the same instrumentality as the original complaint.”
Upon comparing the facts alleged in the original complaint and the second amended complaint, the court found that the original complaint was “devoid of factual allegations” and failed to meet even the “minimal fact pleading requirement.” There was no identification of the property at issue or specification of the damages suffered; nor did the original complaint provide factual information relating to the fire. It also did not specify any causes of action. In other words “[n]othing in the original complaint set forth any factual basis for [plaintiff’s] subsequent claims for [trespass].” Since the original complaint failed to put the defendant on notice of the cause of action that would ultimately be asserted against it – i.e., trespass – the plaintiff could not rely on the relation-back doctrine to make its trespass claims timely.
Injuries to Trees
In a bid to keep his claims alive, the plaintiff then raised another interesting argument. The plaintiff argued that, since his orchard had been damaged, the five-year statute of limitations set forth in Civil Code 3346(c) applied to his action, which would render the trespass claims in his second amended complaint timely.
The Scholes court, citing Gould v. Madonna, 5 Cal. App. 3d 404 (1970), rejected this argument on the basis that Civil Code 3346(c) did not apply to property damage from fires that had been negligently set. Rather, Gould held that Health and Safety Code sections 13007 and 13008 applied to damages arising from negligent fires and observed that the legislature had set up an entirely different statutory scheme to address those types of cases.
Based on the above, the court decided that the plaintiff had failed to demonstrate how his third amended complaint could be amended to avoid the statute of limitations.
While Scholes articulates a variety of interesting points of law, the lesson is clear. Parties and their lawyers should invest time and energy to fully analyze their claims before commencing suit. Moreover, the analysis should be performed well before the statute of limitations has run to make sure that the limitations period is not a bar to the action.