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Equitable Indemnity Claim Did Not Arise Until Claimant Aware of Grounds

In Centex Homes, the Homeowners’ association (HOA) brought action against builder for violations of various statutory building standards. Builder moved for leave to file a cross-complaint against city for, among other things, equitable indemnification. City argued that builder’s claim for equitable indemnity was untimely. The trial court agreed and dismissed the claim against city; the appellate court, however, reversed.

 

The City relied upon Government Code section 901 which provides that “a cause of action for equitable indemnity or partial equitable indemnity accrues shall be the date upon which a defendant is served with the complaint giving rise to the defendant’s claim for equitable indemnity or partial equitable indemnity against the public entity.” As builder had been sued by the HOA long before it brought a claim for equitable indemnity against city, city argued that builder’s claim was barred.

 

The appellate court, however, saw things differently. As stated by the appellate court, while the HOA’s complaint made a number of construction defect claims, it did not specifically “contain any allegations related to defects in the Project’s cast iron waste line” (i.e., the basis for builder’s indemnity claim against city). In fact, as further stated by the court, “the [] complaint does not allege any defects that could be construed as constituting violations of the building standard related more generally to the plumbing or sewer standards.”

 

Accordingly, the court concluded, “Because there is no allegation in the Association’s April 2009 complaint pertaining to plumbing or sewer standards, that complaint does not give rise to Centex’s equitable indemnity claim seeking to apportion potential liability” for the claims brought against it.

 

(It is interesting to note, however, that a claim for equitable indemnity generally requires proof that the parties caused the “same harm.” In the instant case, builder is able to avoid application of the statute of limitations by arguing essentially a different harm caused by the city. Thus, while its argument may have won the battle concerning statute of limitations, it may nonetheless have set itself up to lose the war on liability.)

 

Centex Homes v. City of San Diego (2013) 214 Cal.App.4th 1090