Judge: Douglas W. Stern, Case: 23STCV01348, Date: 2023-09-21 Tentative Ruling

Case Number: 23STCV01348    Hearing Date: September 21, 2023    Dept: 68

Motion for Judgment on the Pleadings

Christopher L. Boggs vs. Cetera Financial Group, Inc., et al., 23STCV01348

Moving Parties: Defendants and Cross-Complainants Cetera Financial Group, Inc. and First Allied Securities, Inc.

Background

Plaintiff filed this lawsuit seeking a declaratory judgment that he has no liability on 4 promissory notes that he gave in favor of Defendants.  He claims that the 4 year statute of limitations ran.  He also seeks injunctive relief.

Plaintiff’s complaint pleads that he was personally responsible for four promissory notes as part of a forgivable advance with Defendants. Under the terms of the promissory notes, if Plaintiff left Defendants’ broker-dealer group, this would result in an acceleration of the notes with the lump sum of any debt remaining being due immediately. On or about November 23, 2018, Boggs resigned. Defendants sent him a demand for the amounts due and owing on the promissory notes on December 12, 2018.

Plaintiff argues in his complaint, filed on January 20, 2023, that he is entitled to declaratory judgment because the notes provided for a four year statute of limitations upon acceleration. Whether November 23, 2018, or December 12, 2018, is used as the date for the acceleration, four years have passed.

Defendants and Cross-Complainants Cetera Financial Group, Inc. and First Allied Securities, Inc. filed this motion for judgment on the pleadings on August 23, 2023. In Defendants’ motion, they argue that Plaintiff and Cross-Defendant Christopher L. Boggs (Plaintiff) cannot maintain his complaint because no controversy exists that would allow him declaratory judgment.

Defendants’ motion for judgment on the pleadings is premised on their contention that the statute of limitations would have been tolled from April 6, 2020, to October 1, 2020, under the tolling provision of California Emergency Rule 9, issued during the COVID-19 pandemic. They argue that this means that four years would not yet have passed at the time they filed the Cross-Complaint on January 31, 2023, because they would have had an extra 178 days past the four year statute of limitations period. Defendants argue that this tolling means that no actual controversy would exist for Plaintiff’s complaint because the statute of limitations would not yet have run when Defendants filed their Cross-Complaint.

The Court agrees with Defendants that Emergency Rule 9 extended the statute of limitations.

“The Advisory Committee comment on Emergency rule 9 states that “Emergency rule 9 is intended to apply broadly to toll any statute of limitations on the filing of a pleading in court asserting a civil cause of action.”  Committee for Sound Water & Land Development v. City of Seaside (2022) 79 Cal.App.5th 389, 402.

““A tolling provision suspends the running of a limitations period.”  (Shalabi v. City of Fontana (2021) 11 Cal.5th 842, 845, 280 Cal.Rptr.3d 597, 489 P.3d 714.)  In other words, “the limitations period stops running during the tolling event, and begins to run again only when the tolling event has concluded. As a consequence, the tolled interval, no matter when it took place, is tacked onto the end of the limitations period, thus extending the deadline for suit by the entire length of time during which the tolling event previously occurred.”  (Lantzy v. Centex Homes (2003) 31 Cal.4th 363, 370–371, 2 Cal.Rptr.3d 655, 73 P.3d 517.)”  Committee for Sound Water & Land Development v. City of Seaside (2022) 79 Cal.App.5th 389, 403.

Defendants have filed a Cross Complaint within the statute of limitations as extended.

The Court disagrees with Plaintiff’s contention that the Emergency Rule was an improper exercise of authority that only the Legislature could exercise.

Order

The Court declares that Plaintiff is not entitled to a declaration that Defendants claims on the identified promissory notes are time barred.  Further, Plaintiff is not entitled to injunctive relief precluding the Defendant attempts to recover on the promissory notes.

Given the status of this case with the Cross Complaint, no judgment shall be entered at this time as this ruling does not resolve all issues between the parties.