ENCELL v. STEWART

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Court of Appeal, Second District, Division 6, California.

Steve ENCELL and Celeste Encell, Plaintiffs and Respondents, v. Daniel J. STEWART, Individually and dba Daniel J. Stewart & Associates, Defendants and Appellants.

Civ. 69537.

Decided: August 08, 1984

Lee V. Cunningham, Atascadero, for defendants and appellants. Carl E. Hayes of Burke, Smith, Helenius & Hayes, San Luis Obispo, for plaintiffs and respondents.

Defendant Daniel J. Stewart appeals from a judgment for $9,000 plus costs in favor of plaintiffs Stephen and Celeste Encell.   The Encells' complaint for negligence was based on a breach of an oral agreement by Stewart to obtain an extension of approval of a map for subdivision.   Stewart contends that plaintiffs' cause of action is barred by the two year statute of limitations pursuant to Code of Civil Procedure section 339(1).

We affirm the trial court and hold that plaintiffs' action was timely because it was filed within three years as required by Code of Civil Procedure section 338(2).

FACTS

Sometime in 1976, the Encells hired Stewart, a civil engineer to obtain a subdivision for their land in San Luis Obispo county.   Their oral agreement with Stewart required him to draw and prepare plans and specifications in order to obtain a lot division.

Stewart's tentative map of the proposed subdivision, together with his application for lot division, was ultimately approved by the County Board of Supervisors on January 24, 1977.   The county approval of the plan, which expired one year later, was subject to certain conditions.   Stewart orally agreed to apply for an extension of time prior to the expiration of the approval, but he neglected to do so, resulting in termination of the approval on January 24, 1978.

Although Stewart was still able to obtain another approval for the subdivision, new and more restrictive conditions were imposed by the board of supervisors.   This increased the cost of subdividing.   It was not until December 29, 1980, nearly three years after Stewart's negligent failure to file an extension, that the Encells filed their action.

With unabashed persistence Stewart urged the trial court to dismiss the Encells' action on the ground that it was barred by the statute of limitations pursuant to Code of Civil Procedure section 339(1).   His motions for dismissal were denied whether presented by way of demurrer, motion for summary judgment or motion for non-suit at the conclusion of plaintiffs' case.

Nowhere in the record does the judge give his reasons for overruling the demurrer or denying the motion for summary judgment.   At trial when the statute of limitations question was once again decided the trial judge ruled that the applicable statute of limitations was controlled by Code of Civil Procedure section 337.1 which provides for a four year statute of limitations concerning construction or improvement to real property.   This achieved the right result for the wrong reason.

DISCUSSION

Code of Civil Procedure section 339(1) provides for a two year statute of limitations on an action based on a contract not founded upon an instrument in writing.   It also governs actions for negligent injury to intangible property interests.  (Neel v. Magana, Olney, Levy, Cathcart & Gelfand (1971) 6 Cal.3d 176, 182, 98 Cal.Rptr. 837, 491 P.2d 421.)   Stewart argues that here the parties orally contracted for his services.   As a result of his negligence the Encells suffered an injury to an intangible property interest.   Thus, he argues, under the facts of this case, whether characterized as giving rise to contract or tort liability, a two year statute of limitations controls.

In Neel, defendants were sued for legal malpractice.   The “intangible property interest” at issue was a wrongful death action which, due to defendants' negligence, was dismissed.  Neel relies on several cases in support of the proposition that section 339(1) applies to intangible property interests, but, none of the cases in support of the Neel holding deal with intangible interests in real property.  (Italiani v. Metro-Goldwyn-Mayer Corp. (1941) 45 Cal.App.2d 464, 114 P.2d 370 (plagiarism of screenplay);  Stark v. Pioneer Casualty Co. (1934) 139 Cal.App. 577, 34 P.2d 731 (negligent non-issuance of an insurance policy.) )

A third case cited in Neel, Lattin v. Gillette (1892) 95 Cal. 317, 30 P. 545, involved real property.   The complaint alleged negligence in the performance of a title search.   The land, however, was not owned by plaintiffs at the time of the breach, and therefore no real property rights were involved in the determination of the statute of limitations question.

Code of Civil Procedure section 338(2) provides a three year statute of limitations for “[a]n action for trespass upon or injury to real property.”   Case law holds that section 338(2) applies to property interests such as easements, Roth v. Cottrell (1952) 112 Cal.App.2d 621, 246 P.2d 958;  San Francisco v. Main (1913) 23 Cal.App. 86, 137 P. 281.   The section also applies to riparian rights, Moore v. California Oregon Power Co. (1943) 22 Cal.2d 725, 140 P.2d 798;  Martin v. Western States Gas & Elec. Co. (1935) 8 Cal.App.2d 226, 47 P.2d 522.   These rights have long been characterized as “intangible” see, e.g., Collier v. Merced Irrigation District (1931) 213 Cal. 554, 571, 2 P.2d 790;  Colberg, Inc. v. State of California ex rel Dept. Pub. Wks. (1967) 67 Cal.2d 408, 429, 62 Cal.Rptr. 401, 432 P.2d 3 (Peters, J. dissenting);  62 Ops.Cal.Atty.Gen. 87 (1979);  yet they unquestionably are controlled by the three year statute of limitations provided by 338(2).

The right to subdivide one's land cannot be characterized as tangible, but, it is more clearly analogous to intangible real property interests such as easements than to those intangible interests covered by section 339 and elucidated in Neel v. Magana, Olney, Levy, Cathcart & Gelfand, supra, 6 Cal.3d 176, 98 Cal.Rptr. 837, 491 P.2d 421.   As the Encells point out, the right to subdivide land may increase the value of the land to which the right pertains.   It is a property right, and appurtenant to the land, just as an easement or a riparian interest is.   While Stewart's negligence resulted in no physical injury to the Encells' land, section 338(2) does not require a physical injury, merely an injury.  (Cf. Polin v. Chung Cho (1970) 8 Cal.App.3d 673, 676, 87 Cal.Rptr. 591.)   In the context of section 338(2), “injury” is defined as an “invasion or violation of a legally protected interest or property right of another.”  (Roth v. Cottrell, supra, 112 Cal.App.2d at 624, 246 P.2d 958.)   In Roth, this included the loss of use of an easement on property adjoining plaintiffs' property, resulting in a commensurate decrease in the property value, a situation not unlike what the Encells find themselves in now.

The negligence of Stewart directly caused an intangible injury to the land owned by the Encells, in that greater restrictions were placed on the use of the land.   This constituted an invasion of the Encells' right to subdivide.   The action was therefore governed by section 338(2), and the Encells brought the action within the three year statute of limitations.

Why Code of Civil Procedure Sections337 and 337.1 which provide fora four year statute of limitationsdo not apply.1

The judgment is affirmed.

FOOTNOTES

1.   This portion of the opinion was not certified for publication.

GILBERT, Associate Justice.

STONE, P.J., and ABBE, J., concur.

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