Limits on the Relation Back of Dead Plaitiff's PAGA Claims

Hargrove v. Legacy Healthcare, Inc., No. E76240 (July 1, 2022)

This is a PAGA case where the plaintiff died four years into the case. Dead Plaintiff’s lawyers moved to amend and swap in a New Plaintiff, which they viewed as necessary to avoid statute of limitations issues that would arise if they just filed a new case. The trial court denied the motion and dismissed the case. New Plaintiff appealed.

There’s a threshold issue about New Plaintiff’s standing to appeal. Generally appellate standing requires the appellant to be a “party aggrieved.” See Code Civ. Proc. § 902. That has two parts: (1) the appellant needs to be a party. Like, in the caption. So, for instance, unnamed members of a class who object to a class action settlement are not parties. And (2) is aggrieved. As in hurt by the judgment or order being appealed. There is, however, and exception to (1): you can appeal without being a party if you tried to become a party by moving to intervene but were rebuffed in that effort by the trial court. New Plaintiff didn’t officially do that here. But the Court of Appeal exercises its discretion to treat her amendment motion as an unsuccessful effort at permissive intervention. Which resolves the standing question.

On the merits, the Court of Appeal finds that New Plaintiff couldn’t sub in for Dead Plaintiff and her claim wouldn’t relate back. At the time Dead Plaintiff gave notice to the LWDA, New Plaintiff was not even an employee yet, so she wouldn’t have had standing to bring Dead Plaintiff’s PAGA claim. That purportedly distinguishes the facts of this case from. Hutcheson v. Superior Court, 74 Cal.App.5th 932, 935 (2022), which permitted both a substitution and relation back under facts where the new plaintiff would have had standing to bring the original plaintiff’s claim.

Affirmed.

Strong Medicine, Short Clock

S.F. CDC LLC v. Webcor Cosntr. LP, No. A156669 (D1d1 Mar. 19, 2021)

This is a claim under Business & Professions Code § 7031(b) for disgorgement of more than $100 million compensation paid to an allegedly unlicensed construction contractor. The trial court granted a demurrer, finding that the claim was barred by the one-year statute of limitations in Code of Civil Procedure § 340(a), which applies to claims for statutory penalties. 

Plaintiff tries to argue that § 338’s three-year statute for restitution claims should apply instead. But a § 7031 claim isn’t really restitution. It is a super harsh penalty, meant to coerce contractors to keep licensed, that applies regardless of any harm to the plaintiff. That the amount to be disgorged equals what was paid does not make it a form of restitution. 

Similarly, because § 7031 doesn’t require any harm, the discovery rule won’t apply to the accrual of disgorgement claim. A contractor is either licensed or not and its licensure status is a matter of public record. If a customer doesn’t figure out the issue within a year of the completion of the work, they just forego a claim for disgorgement.

The court also affirms an award of contractual attorneys’ fees to the contractor. Whether fees are recoverable depends on the language of the contract—some contracts permit recovery on only contract claims. Others permit recovery for torts too. This isn’t a claim for breach of contract. But the fee provision says that a prevailing party can get fees if an action is commenced “because of the breach by either party.” The court reads “because of” to extend beyond just breach claims to claims with some causal relationship to a breach. Here, the contract included Contractor’s representations that it was properly licensed and the property owner’s complaint repeatedly invoked that provision. That being the case, the Court of Appeal finds an adequate connection between the claim to the contract, and thus affirms the fee award in the contractor’s favor.

Affirmed.

Tolling Statute Violates Dormant Commerce

Arrow Highway Steel, Inc. v. Dubin, No. B303289 (D2d2 Oct. 29, 2020)

Plaintiffs here have a super-old judgment that they never bothered to renew under Code of Civil Procedure § 683.110, 683.120. But they argue that the ten-year limit on time to bring a collections action in § 337.5, should be tolled under § 351, which tolls limitations while the defendant is not present in California. Defendants, however, argue that § 351 is unconstitutional under the dormant commerce clause. The trial court agreed, and so does the Court of Appeal.

Generally, there are three tests that determine whether a state law violates the commerce clause: (1) laws that purposefully discriminate against out of state persons; (2) laws that do so in “practical effect”; and (3) laws that, while not necessarily discriminatory, burden interstate commerce to an extent that can’t be justified by their utility. Nobody here is arguing that § 351 is a (1) or a (2). That is, § 351 applies equally to toll the statute when a Californian leaves as it does when a Nevadan comes here to commit a tort and then leaves the state. So the issue is the balancing test.

Which is not the clearest of tests in the con law casebook. Applying both U.S. Supreme Court and California state precedent, the Court of Appeal holds that § 351 subjects defendants to an unreasonable burden of having to choose between remaining present in California to permit the statute to run and being out of state to conduct their affairs, including interstate commerce. That is particular so given the minimal need for tolling in an era where out of state defendants are readily subject to long arm jurisdiction and out of state service of process.

Affirmed.

Still Dreaming of a Unified Theory of Equitable Estoppel

Doe v. Marten, No. A153427 (D1d3 Jun. 4, 2020)
 
Almost seven (!) years ago I wrote a post discussing how an overly rigid, elements-based test for equitable estoppel was causing a lot of confusion. Equitable estoppel encompasses several different things with a common theme of justifiable reliance. The exact requirements for its application depend on context. This is another one of those cases. 

Plaintiff sued a doctor who allegedly botched a surgery. She filed an arbitration demand only a couple of months after her claims accrued. Doctor responded, and the parties proceeded to putz around in arbitration for three years. But it ultimately came out that the inscrutable signature on the arbitration agreement actually belonged to some other doctor. So Doctor got the arbitration stayed and Plaintiff filed suit a couple of days later.

So the question is whether Doctor is equitably estopped from claiming that the one year statute of limitations for medmal in Code of Civil Procedure § 340.5 bars the case. After the jury gave a $6.6 million verdict, the trial judge decided the case was time-barred and that equitable estoppel didn’t apply. The trial court found, among other things, that Plaintiff was a sophisticated party, unlikely to be misled, and—looking to our old friend the four-element test’s false assertion element—that Doctor’s decision to respond to the arb petition was not a false statement or concealment. 

But that misses the point, as the Court of Appeal here explains. Doctor participated in the arbitration proceedings for three years. That participation doesn’t need to be false or a lie or fraudulent to be the basis of an estoppel to claim the running of the statute. It just needs to be something that Doctor deliberately did, and which Plaintiff reasonably relied upon in deciding to wait to file a lawsuit. If, for example, Doctor truthfully asked Plaintiff to forebear bringing suit while they tried to mediate, that would create an estoppel. The Court of Appeal here struggles somewhat to reconcile the various conflicting lines of precedent and tests, but it gets to the right point by the end.

Reversed.

California Agrees: Only One Hit on the American Pipe

Montoya v. Ford Motor Co., No. G045752 (D4d3 Mar. 12, 2020)

In 2018’s China Agritech v. Resh, the U.S. Supreme Court held that so-called American Pipe tolling tolls a class member’s statute of limitations only for the time a first filed class action remains pending. An absent plaintiff can’t stack together tolling periods from a bunch of different class actions to achieve an even longer tolling period. So once the first class action is dismissed, class cert denied, or the plaintiff opts out of a certified or settlement class, the plaintiff’s clock restarts without further tolling.

Here, the Court of Appeal adopts the rationale China Agritech as a matter of California state procedural law.

Reversed.

CCP § 340.6 Applies to Malicious Prosecution Claims Against Attorneys

Connelly v. Bornstein, No. A152375 (D1d5 Mar. 28, 2019)

Code of Civil Procedure § 340.6 sets the statute of limitations for “[a]n action against an attorney for a wrongful act or omission, other than for actual fraud, arising in the performance of professional services.” There was a lengthy split of authority as to whether § 340.6 applied to claims other than attorney malpractice. That split was largely resolved in Lee v. Hanley in which the Supreme Court said the statute goes beyond malpractice, but only to cases based on an attorney’s breach of a duty that exists by virtue of being an attorney. So if, for instance, an attorney punches a witness after a heated deposition, the ordinary battery statute of limitations will apply.

Class Action Tolls Only Individual Claims

Fierro v. Landry’s Restaurant, No. D071904A (D4d1, Feb. 15, 2019)

When this case was first decided last year, I noted that the opinion seemed sideways with the U.S. Supreme Court’s very recent decision in China Agritech. That case held that although under the so-called American Pipe doctrine, a pending class action tolls the statute of limitations for class members’ individual claims, but it does not do so for other class actions. The California Supreme Court granted review and transferred the case back to the 4/1, ordering it to reconsider in light of China Agritech. 

Post-transfer, the Court of Appeal agrees that the rule in China Agritech should also be adopted as a matter of California state class action procedure. So no tolling for the prior class action. The Court, however still can’t tell what’s time barred from the face of the complaint, so it remands for the trial court to deal with that issue. 

In getting there, the Court decides an alternative issue. Apparently, the prior class action was dismissed after a class was certified for failure to bring it to trial within five years under Code of Civil Procedure §§ 583.310 and 583.360. Defendant claims that the current class claims are barred from the res judicata effect of that dismissal. But they aren’t. A dismissal under the five-year rule is not with prejudice and thus not preclusive. Practically, since five years is longer than most statutes of limitations, a plaintiff dismissed under the five-year rule won’t be able to refile. But it is nonetheless theoretically possible, particularly if some post-filing tolling like American Pipe is in the mix.

Reversed.

Too Many Hits on the American Pipe

Fierro v. Landry’s Restaurant Inc., No. D071904 (D4d1 May 14, 2018)

Plaintiff brings a wage an hour class action against his employer. But a prior class action with identical claims had apparently been previously dismissed for failure to bring the case timely to trial under the five-year rule in Code of Civil Procedure §§ 583.310 and 583.360. The trial court granted a demurrer to the class claims on that basis. It did, however, permit plaintiff’s individual claims to proceed because statute of limitations issues raised by Defendant weren’t evident from the face of the complaint. Plaintiff took an appeal under the death knell doctrine.

Death Shall Not Quiet My Title

Cnty. Line Holdings, LLC v. McClanahan, No. B278790 (D2d6 May 2, 2018)

Debtor owns some real property in Ventura that is subject to two judgment liens. After Debtor dies, the junior lienholder executes against the property and Collector purchases it in the sheriff’s sale. But the senior lien is still out there. So Collector files a quiet title action to extinguish the senior lien. It argues that Code of Civil Procedure § 366.2(a)’s one-year statute of limitations on causes of action against dead people had run and thus that any enforcement of the senior lien was time-barred. 

But § 366.2(a) applies to “causes of action.” The right to execute on a judgment lien is a creditor’s remedy, not a cause of action. It survives so long as the judgment does. And since—for a bunch of complicated probate reasons that I don’t really care to wade into—the lien survives Debtor’s death, the property remains subject to the senior lien. 

Reversed.

Ninety Days of Tolling

Selvidge v. Tang, No. C083427 (D3 Mar. 5, 2018)

Under Code of Civil Procedure § 340.5, the statute of limitations for med-mal is one year or three years after discovery of the injury. The patient in this case died, so it’s a one year clock. Plaintiff—patient’s next of kin—sued almost three months after the year and run, so she’s too late under § 340.5.

SOL Is Not OTM

Boyd v. Freeman, No. B279246 (D2d4 Dec. 20, 2017)

When a case is brought to judgment, res judicata bars litigation of all claims that were brought or could have been brought in the first action. But it applies only when the first judgment is “on the merits.” Interestingly, a demurrer granted on statute of limitations grounds is not, for claim preclusion purposes, on the merits. Not sure why that is the case, but the case law seems pretty clear on the point.

Which means no res judiciata in this case. Of course, given that the prior case was dismissed on the statute of limitations, and that this case was filed three years after that, it’s hard to conceive of how this case isn’t also time-barred. But that’s apparently a problem for the superior court on remand.

Reversed.

Bankruptcy Stay Does Not Toll Service Time on Non-Bankrupt Defendants

Higgins v. Superior Court, No. D071353 (D4d1 Sept. 28, 2017)

P filed a complaint in May 2012. She named D1 and a bunch of Does, serving D1 soon thereafter. D1 proceeded to go Chapter 7, staying P’s case. Two-and-a-half years later, the bankruptcy case was discharged, lifting the stay. Based on stuff she claims to have learned during the BK case, P subbed in D2 for a Doe and served her in August 2016.

Repose Never Goes

PGA W. Residential Assoc. v. Hulven Int’l, Inc., No. E064270 (D5 Aug. 23, 2017)

Debt collection action where the Debtor alleges that a fraudulent transfer claim is time-barred under the Uniform Fraudulent Transfer Act. But while Debtor raised the issue on a demurrer, he did not address it at trial. According to the Court, that doesn’t matter. 

As the substantive discussion in the case explains, the UTFA doesn’t just have a statute of limitations; it has a statute of repose. Once the period has run, any unfiled cause of action ceases to exist. As such it isn’t subject to tolling. Moreover, although it’s a question of first impression in California, the Court follows the majority rule to hold that the benefits of a statute of repose can’t be forfeited. So the failure to raise the defense at trial doesn’t preclude the court from holding that the trial court erred by not granting Debtor’s demurrer on timeliness grounds.

Reversed.

Nothing to Relate Back to

Sholes v. Lambreth Trucking Co., No. C070770 (D3 Apr. 6, 2017)

Plaintiff is a pro per suing a neighbor over a fire that damaged his property. The Neighbor successfully demurred to a series of complaints, with Plaintiff obtaining leave to amend. As a result, Plaintiff’s complaints alleged a series of ever-evolving legal theories, beginning with a claim based on an insurance dispute but ultimately landing on a trespass theory. But by the time the trespass theory was raised, the statute of limitations had long run. And because the trial court held that it didn’t relate back to the original complaint, the case was dismissed as time-barred.

The Court of Appeal affirms. Problem is that Plaintiff’s timely original complaint was basically devoid of facts.  Owing that defect, the court holds that there was “nothing to which the first amended complaint can be  compared to or to which they can relate back.” The allegations were simply too sparse to put defendant on notice of the nature of the claim that plaintiff later pleaded in subsequent iterations.

Affirmed.

No Tolling Under § 340.6 Post Attorney’s Motion to Withdraw

Flake v. Neumiller & Beardslee, No C079790 (D3 Mar 2, 2017)

Under Code of Civil Procedure § 340.6, the statute of limitations on an attorney malpractice claim is tolled while the attorney continues to represent a client. In this case, the attorney sought leave of court to withdraw before the SOL had run, but that permission wasn’t granted till a year later, by which time the SOL had run. So for Plaintiff’s claims to survive, § 340.6 tolling needs to continue apace even after the attorney took steps to withdraw. That, however, is not consistent with § 340.6, which is based on the idea that a client shouldn’t have to investigate the performance of his own lawyer while an attorney client relationship still exists. Once the lawyer moved to withdraw—a fact known to the client—client has no basis to think that the relationship is ongoing. So no tolling from the time the withdrawal was filed.

Affirmed.