Del Mar Beach Club Owners Ass'n v. Imperial Contracting Co.

123 Cal. App. 3d 898, 176 Cal. Rptr. 886, 25 A.L.R. 4th 336, 1981 Cal. App. LEXIS 2170
CourtCalifornia Court of Appeal
DecidedSeptember 24, 1981
DocketCiv. 22056
StatusPublished
Cited by43 cases

This text of 123 Cal. App. 3d 898 (Del Mar Beach Club Owners Ass'n v. Imperial Contracting Co.) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Del Mar Beach Club Owners Ass'n v. Imperial Contracting Co., 123 Cal. App. 3d 898, 176 Cal. Rptr. 886, 25 A.L.R. 4th 336, 1981 Cal. App. LEXIS 2170 (Cal. Ct. App. 1981).

Opinion

Opinion

WEINER, J.

Plaintiff, Del Mar Beach Club Owners Association, Inc. (Association) appeals judgments of dismissal in favor of all defendants.

The principal questions are whether the Association, created to acquire and hold title to property included in a planned development pursuant to Business and Professions Code section 11003 has standing to maintain this action, and if so, whether it can state a cause of action for strict liability against defendants as “manufacturers” of retail housing.

As we will explain, we conclude the Association has standing and has stated a cause of action for strict liability against the developer-builder of the project. We also decide the Association cannot state a cause of action for strict liability against the architects and engineers. We dispose of the judgments accordingly.

General and Procedural Background

Before discussing the procedural history, it may be helpful to first identify the participants and to describe the commercial setting giving rise to this litigation.

Association is the managing entity and owner of land and buildings of the Del Mar Beach Club, a planned development (see Bus. & Prof. Code, § 11003), consisting of approximately 192 units located on a scenic bluff overlooking the ocean at Solana Beach, California. The Beach Club was developed and built from about August 1970 through the early part of 1973, pursuant to the terms of Del Mar Venture (Venture), a joint venture agreement between Imperial Contracting Co., Inc. (Imperial), a licensed general contractor, and Rebma California Nine, Inc. *905 (Rebma), a real estate investment company. Imperial was the general contractor for the project; Rebma provided the financial backing. In addition to the living units, the development consists of a clubhouse, swimming pool, parking structure and tennis courts. During the relevant period of planning and construction, Thomas M. Kelly was the president, director, and principal shareholder of Imperial. Tragically, he and his wife were killed in an airplane crash on February 16, 1979. Gary Adcock, a licensed real estate broker, was an officer, director, and shareholder of Imperial and director of the Association until August 1973. William S. Krooskos and Associates (Krooskos), Arevalo and Satino of San Diego, Inc. (Arevalo and Satino), and Wolfe-Woods. and Associates, Inc. (Wolfe-Woods), were respectively the soil engineers, structural engineers and architects on the project.

The Beach Club was built in three phases. In November 1972, after completion of the first two stages, erosion problems began to develop on the sea front bluff, a common area, along the western edge of the project. The Association says that actual disbursements for design and construction to prevent further erosion exceed $1.1 million with total damages to exceed $1.6 million. The Association also claims defects in the third phase of the project, Del Mar Beach Club East, pertaining to the grading, paving and installation of decking, parking structures and tennis courts, have caused damages in excess of $178,000.

When negotiations to amicably resolve the problems proved fruitless, the Association sued Imperial, Rebma and Del Mar Venture. This original complaint, filed on July 8, 1975, alleged three causes of action for negligence, breach of contract and declaratory relief. The procedural metamorphosis of this complaint into a fourth amended complaint filed January 31, 1979, is not particularly relevant. That complaint, the pleading before us, contains the same causes of action as the original complaint plus a cause of action sounding in strict liability regarding the bluff-related defects and negligence and strict liability regarding the additional defects within the third phase of the project. Arevelo and Satino, Wolfe-Woods and Krooskos are also named as defendants and theories of alter ego are now alleged against Kelly and Adcock.

Demurrers and motions to strike by Imperial, Venture, Kelly and Ad-cock were sustained without leave to amend on the grounds the Association lacked standing to sue and could not state a cause of action on strict liability. The remaining defendants successfully moved for judgments on the pleadings. This appeal followed.

*906 Standing

Code of Civil Procedure section 367 requires that “[e]very action must be prosecuted in the name of the real party in interest, except as provided in Sections 369 and 374 of this code.” Generally, “the person possessing the right sued upon by reason of the substantive law is the real party in interest.” (Powers v. Ashton (1975) 45 Cal.App.3d 783, 787 [119 Cal.Rptr. 729]; 3 Witkin, Cal. Procedure (2d ed. 1971) Pleading, § 93, pp. 1768-1770.) In order to state a cause of action for injury to real property, plaintiff’s ownership, lawful possession, or right to possession, of the property must be alleged. (Friendly Village Community Assn. Inc. v. Silva & Hill Constr. Co. (1973) 31 Cal.App.3d 220, 224 [107 Cal.Rptr. 123, 69 A.L.R.3d 1142]; 3 Witkin, Cal. Procedure (2d ed. 1971) Pleading, §§ 499, 500, p. 2159.)

At oral argument defendants admitted the major problem here was not with the theoretical aspect of plaintiff’s standing, but whether standing was properly alleged. Defendants argued that a trial court does not abuse its discretion in sustaining a demurrer without leave to amend where a plaintiff files five different pleadings over a four-year period, each of which is defective.

Defendants correctly acknowledge plaintiff’s theoretical status. Unlike the typical planned development under Business and Professions Code section 11003, the Association here acquired title to not only the customary “common areas,” but pursuant to the declaration of restrictions recorded May 16, 1971, it also acquired title to the real property and structures. In other words, the individual owners only purchased the “air space” units within the apartment buildings and not the buildings and the land underlying them. Clearly, under such circumstances, the Association as owner has standing. 1

In addition to the Association’s standing as owner, we also conclude the Association may maintain this action in a representative capacity on behalf of its members.

*907 Article VI, sections 6.2 and 6.2.13 of the incorporated declarations of restrictions provides:

“6.2 The Association has and shall have the following rights and duties:
“6.2.13 To prosecute or defend, under the name of the Association, any action affecting or relating to the Common Areas or the personal property owned by the Association, or any action which all of the Owners have an interest in the subject of the action or in whom any right to relief in respect to or arising out of the same transaction or series of transactions is alleged to exist.” (Italics supplied.)

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Cite This Page — Counsel Stack

Bluebook (online)
123 Cal. App. 3d 898, 176 Cal. Rptr. 886, 25 A.L.R. 4th 336, 1981 Cal. App. LEXIS 2170, Counsel Stack Legal Research, https://law.counselstack.com/opinion/del-mar-beach-club-owners-assn-v-imperial-contracting-co-calctapp-1981.