Defense Verdict for General Contractor Client in Jury Trial Seeking $13.5M in Damages

This jury trial began in Contra Costa County Superior Court before the Honorable Edward G. Weil on Monday, September 21, 2020.

The case arises from the construction of an apartment complex called Giant Road Apartments located in San Pablo, California. Plaintiff, the developer and owner, hired our client, the general contractor, to build the Giant Road Apartments which consisted of five apartment buildings. The City of San Pablo issued a separate permit and separate certificate of occupancy for each building. The general contractor completed its work on all five buildings in 2007. Ten years later, the developer sued the general contractor for construction-related defects seeking $13.5 million in damages.

The general contractor asserted the 10-year statute of limitations. The statute requires lawsuits for latent defects to be brought within 10 years upon “substantial completion” of the “improvement.” Under the statute, substantial completion occurs on the date of final inspection of the improvement, use or occupation of the improvement, or the recordation of a valid notice of completion of the improvement.

The general contractor asserted that the 10-year statute of limitations should be applied separately to each building because each building constitutes a separate improvement—each building had its own final inspection, certificate of occupancy and certificate of substantial completion—and each building was substantially complete more than 10 years before plaintiff filed its lawsuit. Plaintiff claimed that the statute of limitations began to run upon “substantial completion” of the entire project because the parties executed one contract for the entire project, the contract stated that “substantial completion” occurs when the entire project is final, and one notice of completion was recorded for the entire project.

The trial court bifurcated the trial with the first phase addressing the general contractor’s statute of limitations defense. The trial court required the jury to determine whether the Giant Road Apartments were one improvement or five improvements before determining whether the improvement was substantially complete. During the directed verdict motion, counsel for the developer admitted that if the jury finds that the Giant Road Apartments were five improvements then the lawsuit as to four of the five buildings would be barred by the statute of limitations.

The jury began its deliberations late in the afternoon on September 29th and reached a verdict the next morning. The jury determined that the Giant Road Apartments were five improvements and that each of the five buildings was substantially complete more than 10 years before plaintiff filed its lawsuit. As such, the 10-year statute of limitations bars plaintiff’s entire action.

October 1, 2020