Statute of Limitations for Filing Equitable Indemnity Claim Accrues Only When Party Seeking Indemnity Has Been Served a Complaint Giving Rise to the Indemnity Claim

A homeowner association sued a contractor, alleging numerous construction defects and code violations.  Two years later, the association filed an amended complaint adding a new allegation that the contractor installed defective plumbing and sewer systems. Based on the amended complaint, the contractor sought to file a complaint against the City of San Diego for equitable indemnification and contribution for its potential losses in the homeowner suit.   The city argued that the accrual of the one year statute of limitations period began when the original homeowner suit was filed two years earlier. The court rejected the city’s argument and held that, only when the homeowner complaint was amended to add allegations concerning plumbing, did the contractor’s action against the city accrue. Centex Homes v. Superior Court of San Diego, 214 Cal.App.4^th 1090 (2013).

The court held in favor of the contractor, finding that the action was not time barred.  This is because the relevant code stated, “The date upon which 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 indemnity against the public entity.”   In this case, the court found that the original complaint said nothing about plumbing or sewer system defects. It was only with the amended complaint that these allegations arose and that the contractor knew of a basis for making an indemnity claim against the city based on its belief that crystallization in the pipes was the result of hydrochloric gasses emitting from the City’s sewer system.

About the author: Article written by J. Kent Holland, Jr.,  a construction lawyer located in Tysons Corner, Virginia,  with a national practice (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners.  He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects.  He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932.  This article is published in ConstructionRisk.com Report, Vol. 15, No. 8 (Aug 2013).

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