Court Opinion

ID: 9746811
Source: CourtListenerOpinion
Date Created: 2023-08-27 14:39:08.92953+00
Date Added: 2024-06-11T07:25:17.098969
License: Public Domain

PERLUSS, P. J., Dissenting.
Two home buyers filed a lawsuit for negligence and breach of contract against a home inspector 14 months after the inspector allegedly failed to competently inspect the house they had *1438agreed to purchase. The contract signed by the home buyers required any legal action against the home inspector, “including those sounding in tort or contract,” to be initiated within one year from the date of the inspection. I respectfully disagree with the majority’s conclusion that this express, written agreement to shorten the limitations periods otherwise applicable to the home buyers’ causes of action to one year from the date of inspection is unreasonable as a matter of law.1
1. The Parties ’ Agreement to Shorten the Limitations Period
Under the terms of their agreement to purchase a 49-year-old house in Whittier, appellants Armando V. Moreno and Gloria Contreras had the right to have the property inspected and to approve the inspection results as a condition to the close of escrow. They hired respondent Deric Sanchez to conduct the inspection and agreed to pay him a $250 inspection fee.
On the date of the inspection, Sanchez gave Moreno a preprinted home inspection contract to sign. In addition to signing the agreement, Moreno was asked to initial two clauses in the preprinted form contract. The first clause was a liquidated damages provision limiting the liability of the home inspector. The second clause was a modification of the limitations periods governing claims against the home inspector. It provided, “No legal action or proceeding of any kind, including those sounding in tort or contract, can be commenced against Inspector/Inspection Company, or its officers, agents or employees more than one year after the date of the subject inspection. Time is expressly of the essence herein. This time period is shorter than otherwise provided by law.”
Moreno, who is a lawyer, a Los Angeles Superior Court commissioner and a licensed real estate broker, requested that Sanchez eliminate both provisions. After some discussion, Sanchez agreed to strike the liquidated damages clause but refused to delete the limitations clause. Moreno then signed the agreement and initialed the limitations clause.
2. An Agreement to Shorten the Applicable Limitations Period Should Be Enforced Unless Unreasonable as a Matter of Law
Under California law parties may agree to a provision shortening the statute of limitations, “qualified, however, by the requirement that the period fixed is not in itself unreasonable or is not so unreasonable as to show *1439imposition or undue advantage. [Citations.]” (Capehart v. Heady (1962) 206 Cal.App.2d 386, 388 [23 Cal.Rptr. 851, 6 A.L.R.3d 1190]; see Beeson v. Schloss (1920) 183 Cal. 618, 622-623 [192 P. 292]; Hambrecht & Quist Venture Partners v. American Medical Internal, Inc. (1995) 38 Cal.App.4th 1532, 1548 [46 Cal.Rptr.2d 33].) Although other jurisdictions had held that a statute of limitations may not be shortened or waived, “[s]uch is not the rule in this state, where such statutes are regarded as statutes of repose, carrying with them, not a right protected under the rule of public policy, but a mere personal right for the benefit of the individual, which may be waived. [Citations.] We are unable to perceive that any distinction can be made upon the ground of public policy between the right of a party to waive the plea of the statute of limitations as a defense to an action, and his right to waive a portion of the time granted by the statute for the commencement of an action.” (Tebbets v. Fidelity and Casualty Co. (1909) 155 Cal. 137, 139 [99 P. 501] [holding on demurrer that six-month contractual limitations period was not unreasonable]; accord, Beeson v. Schloss, supra, 183 Cal. at p. 622 [contractual provision shortening the statute of limitations “violates no principle of public policy, provided the period fixed be not so unreasonable as to show imposition or undue advantage”].)2
When, as in the instant case, the defendant has demurred to the complaint based on a contractual limitations period, “the real question to be determined here is whether the allegations of the complaint show that the limitation is unreasonable. . . . The question is one of law, namely, is the period of limitation, in itself, unreasonable. [Citation.]” (Capehart v. Heady, supra, 206 Cal.App.2d at p. 388.) If the period is not inherently unreasonable, “California courts accord contracting parties substantial freedom to modify the length of the statute of limitations.” (Hambrecht & Quist Venture Partners v. American Medical Internat., Inc., supra, 38 Cal.App.4th at p. 1548.)
In the case at bar, the one-year limitations provision was clearly stated in the parties’ contract; cautioned that it imposed a time period for filing suit that “is shorter than is otherwise provided by law”; was unambiguous in its application to both contract and tort claims; was the subject of negotiation between Moreno and the home inspector; and, after Moreno failed to obtain the inspector’s agreement to delete the provision, was separately initialed by *1440Moreno. There is no dispute the provision was reasonable in those respects.3 Moreover, California courts have uniformly enforced provisions shortening the four-year statutory limitations period for breach of a written contract (Code Civ. Proc., § 337, subd. 1) to one year (e.g., Capehart v. Heady, supra, 206 Cal.App.2d at p. 388) and to even shorter periods, as well. (E.g., Tebbets v. Fidelity and Casualty Co., supra, 155 Cal. at p. 138 [six months].)
The majority, however, concludes the parties’ agreement is unreasonable as a matter of law because it impliedly required Moreno to waive the benefit of the nonstatutory delayed discovery rule first recognized earlier in its opinion. I respectfully disagree.
No statute prohibits the parties to a hpme inspection contract from agreeing to a shortened limitations period. (Hambrecht & Quist Venture Partners v. American Medical Internat., Inc., supra, 38 Cal.App.4th at p. 1548 [“[E]xcept as restricted by statute, California courts accord contracting parties substantial freedom to modify the length of the statute of limitations.”].) Indeed, permitting the parties to bargain for such a provision is fully consistent with the 1996 legislation governing practices in the home inspection industry. The parties’ agreement does not otherwise offend public policy. (See, e.g., Tebbets v. Fidelity and Casualty Co., supra, 155 Cal. at p. 139 [statutes of limitations are “statutes of repose, carrying with them, not a right protected under the rule of public policy, but a mere personal right for the benefit of the individual, which may be waived”].)
3. Legislative Regulation of the Home Inspection Industry
The Legislature in 1996 adopted legislation to regulate practices for the home inspection industry “to assure that consumers of home inspection services can rely upon the competence of home inspectors.” (Stats. 1996, ch. 338, § 1.) Business and Professions Code section 71964 imposes a standard of care applicable to all home inspectors not otherwise licensed under the code: “It is the duty of a home inspector who is not licensed as a general contractor, structural pest control operator, or architect, or registered as a professional engineer to conduct a home inspection with the degree of care that a reasonably prudent home inspector would exercise.”
*1441In adopting standards for the home inspection industry, the Legislature prohibited certain contractual provisions contained in inspection agreements it considered “contrary to public policy”: “Contractual provisions that purport to waive the duty owed pursuant to Section 7196 [requiring ‘the degree of care that a reasonably prudent home inspector would exercise’], or limit the liability of the home inspector to the cost of the home inspection report, are contrary to public policy and invalid.” (§§ 7198, 7196.) However, the Legislature did not adopt proposed language in section 7198 that would have broadened this provision to prohibit as contrary to public policy all contractual provisions that “unreasonably limit the liability of the home inspector,” thus reserving to the parties the right to define their contractual duties and responsibilities except as specifically prohibited by statute. (Compare Sen. Bill No. 258 (1995-1996 Reg. Sess.) § 2, as amended June 12, 1995, with Sen. Bill No. 258 (1995-1996 Reg. Sess.) § 2, as amended June 20, 1995, and Stats. 1996, ch. 338, § 2.) The majority’s refusal to enforce Moreno’s agreement to a shortened limitations provision is squarely at odds with this legislative recognition of the parties’ freedom to contract.
Moreover, while imposing a duty of reasonable care on home inspectors in section 7196, the Legislature itself did not provide for a rule of delayed discovery, as it did, for example, when establishing the limitations period for professional malpractice actions against health care providers (Code Civ. Proc., § 340.5) and attorneys (Code Civ. Proc., § 340.6, subd. (a)) and actions for damages suffered as a result of domestic violence (Code Civ. Proc., § 340.15, subd. (a)(2)). Rather, section 7199, adopted in 1996, specifies a maximum time period within which a lawsuit must be filed measured from the date of the inspection itself: “The time for commencement of a legal action for breach of duty arising from a home inspection report shall not exceed four years from the date of the inspection.”
The absence of a statutory provision for delayed discovery and the presence of a maximum limitations period measured from the date of the inspection belie the assertion that the parties’ own agreement to a limitations period commencing with the inspection rather than discovery of an alleged breach of duty by the home inspector somehow offends important public policy considerations. Similarly, the Legislature’s election not to prescribe what the limitations period is for a legal action for breach of duty arising from a home inspection report but only to define what it is not (that is, it is not to “exceed four years from the date of the inspection”) and its decision to limit section 7198’s public policy prohibitions to the two contractual provisions identified, taken together, refute the suggestion that four years is the minimum “reasonable” period of time for a homeowner to bring suit, notwithstanding an express agreement to the contrary.
*14424. Public Policy Does Not Compel Invalidation of Contractual Limitations Provisions Simply Because the Delayed Discovery Rule Might Otherwise Apply
Whether or not the delayed discovery rule should be applied to negligence claims against a home inspector in an appropriate case, the majority advances no compelling reason to disregard the parties’ express contractual agreement to limit the home buyers’ right to sue to a one-year period measured from the date of inspection. Indeed, the primary ground advanced for invalidating the parties’ agreement is simply the absence of authority enforcing such a provision, which the majority suggests indicates “an implicit consensus” that such contractual limitations provisions are invalid. Other than dicta in Justice Croskey’s recent opinion for Division Three of our court in Silver v. Boatwright Home Inspection, Inc. (2002) 97 Cal.App.4th 443, 451, footnote 7 [118 Cal.Rptr.2d 475], however, absolutely no appellate decision supports the majority’s conclusion.
The majority does express concern that enforcing a home buyer’s agreement to shorten the limitations period in a contract for a home inspection report would require the courts to enforce similar provisions in retainer agreements between lawyers and their clients or physicians and their patients. Such angst seems unnecessary. Instances in which the Legislature has mandated a delayed discovery rule—as is the case for both lawyers and health care providers—are easily distinguishable from routine commercial agreements with contractors and tradespeople. (See Hambrecht & Quist Venture Partners v. American Medical Internat., Inc., supra, 38 Cal.App.4th at p. 1548.) Similarly, utilizing traditional concepts of unconscionability, as well as the principle of “reasonableness” central to any analysis of contractual limitations provisions, the courts are well-equipped to protect parties from overreaching by fiduciaries without invalidating every provision in any contract in situations in which a delayed discovery rule would otherwise apply. (E.g., West v. Henderson (1991) 227 Cal.App.3d 1578, 1585-1586 [278 Cal.Rptr. 570] [judicial scrutiny of limitation of actions provisions includes “broader analysis of the conscionability of the provision”].)
To be sure, in some situations a previously undetected defect in the house may not be discovered within the time provided by the parties in their agreement—the public policy emphasized by the majority and in the Silver v. Boatwright Home Inspection, Inc., supra, 97 Cal.App.4th 443 dicta.5 Yet nothing guarantees that hidden problems will be discovered within the *1443four-year maximum period provided by the Legislature in section 7199, either. For example, a roofing defect may not be apparent until there is a particularly heavy rainy season, which may not occur in Los Angeles until five or six years after the close of escrow. In no event would a roofing problem of this sort, discovered more than four years after the home inspection, appropriately be the subject of a lawsuit alleging that the inspector breached either his contract with the home buyer or a duty of care under section 7196.
Viewed in retrospect, of course, the one-year provision might work an unfairness to the home buyer in a particular case, as could a two-year or three-year period, as well. However, that hypothetical possibility does not make the provision to which these parties agreed unreasonable as a matter of law. (See Hedging Concepts, Inc. v. First Alliance Mortgage Co. (1996) 41 Cal.App.4th 1410, 1420 [49 Cal.Rptr.2d 191] [“When parties have an actual contract covering a subject, a court cannot . . . substitute the court’s own concepts of fairness regarding that subject in place of the parties’ own contract.”].)
Because no statute restricts the right of the parties to a home inspection agreement to contract for a shorter limitations period, I believe the parties’ “substantial freedom to modify the length of the statute of limitations” (Hambrecht & Quist Venture Partners v. American Medical Internat., Inc., supra, 38 Cal.App.4th at p. 1548) requires that we enforce their agreement. Accordingly, I would affirm the order of the trial court sustaining Moreno’s and Contreras’s demurrer to the second amended complaint.
Respondent’s petition for review by the Supreme Court was denied July 23, 2003. Brown, J., did not participate therein. Chin, J., was of the opinion that the petition should be granted.

I agree Freeman & Mills, Inc. v. Belcher Oil Co. (1995) 11 Cal.4th 85 [44 Cal.Rptr.2d 420, 900 P.2d 669] does not limit the home buyers to a cause of action for breach of contract against the inspector.

As the majority observes, the leading cases recognizing the parties’ right to shorten the limitations period for filing a lawsuit involve contract-based claims. It is, of course, not surprising that cases enforcing contractual provisions to shorten the limitations period invariably involve duties arising from contract—as does the case at bar. However, contractual limitations clauses have also been applied to bar tort claims based on an alleged breach of duty arising from contract. (E.g., CBS Broadcasting Inc. v. Fireman’s Fund Ins. Co. (1999) 70 Cal.App.4th 1075, 1086 [83 Cal.Rptr.2d 197].)

The limitations provision in the inspection agreement obviously did not advise Moreno of his inchoate right to the delayed discovery rule—a right not recognized prior to the decision in this case. However, Moreno was expressly informed that the one-year limitations period to which he agreed was “shorter than is otherwise provided by law.” I fail to understand how the majority can conclude this was anything but a “knowing waiver” by Moreno, who is not only a lawyer but also a real estate broker. (Maj. opn., ante, at p. 1429, fn. 45.)

All further statutory references are to the Business and Professions Code unless otherwise indicated.

Significantly, this is not such a case. Moreno’s second amended complaint alleged that “several months after the purchase of the subject property"—that is, well within the contractually agreed one-year limitations period—Moreno “learned that the house contained the following defects: The air conditioning system in the basement contained asbestos; one of the *1443air conditioning ducts was [improperly] vented . . . causing dust, debris, and mites to enter the air supply; a northwest yard drain was inoperable, causing water to pond under the structure; and the property was built on expansive soil causing interior and exterior walls to crack. Additionally, 21 windows were nailed and/or painted shut, thereby preventing plaintiffs from opening them to get rid of the dust, debris, and mite problems.” Although Moreno also alleges that the full extent of the problems at the house was not discovered until a new inspection of the residence found asbestos in September 1999, it is simply not correct, as the majority suggests, that the limitations clause in the parties’ agreement required Moreno’s lawsuit to be filed “prior to any accrual of a cause of action.”