Judge: Gary I. Micon, Case: 23CHCV02732, Date: 2024-04-24 Tentative Ruling

Case Number: 23CHCV02732    Hearing Date: April 24, 2024    Dept: F43

Dept. F43

Date: 4-24-24

Case #23CHCV02732, Carol Harmell vs. Larry L. Nash

Trial Date: N/A

DEMURRER TO COMPLAINT

MOVING PARTY: Defendant Larry L. Nash

RESPONDING PARTY: Plaintiff Carol Harmell

RELIEF REQUESTED

Demurrer to the Complaint

·         Entire Complaint – Statute of Limitations

·         3^rd Cause of Action: Fraud

RULING: Sustained without leave to amend for the First, Second, Fourth, and Fifth Causes of Action; overruled for the Third Cause of Action.

SUMMARY OF ACTION

Plaintiff Carol Harmell (Plaintiff) filed this action on September 11, 2023. In her complaint, Plaintiff alleges that she hired former attorney Larry L. Nash (Defendant) to handle matters related to certain trusts and the loss of Plaintiff’s house. Unbeknownst to Plaintiff, at the conclusion of those matters in 2017, Plaintiff was found to be entitled to $181,295.84 from a partition action. This amount was ordered by the court to be held in a trust account by Defendant.

Plaintiff alleges that she never received this money. She further alleges that she did not even know about the order entitling her to this sum of money until it was discovered by her current attorney, Robert L. Scott, when he reviewed the files for those previous matters in January 2021.

Plaintiff’s complaint alleges five causes of action against Defendant: (1) breach of contract; (2) breach of fiduciary duty; (3) fraud; (4) conversion; and (5) money had and received.

Defendant, in pro per, filed a demurer on December 7, 2023. Defendant demurs to the entire complaint on the basis that it is uncertain and barred by the statute of limitations. Defendant also demurs to Plaintiff’s Third Cause of Action for fraud on the basis that it fails to state a cause of action.

Plaintiff opposes Defendant’s demurrer, arguing that her causes of action are sufficiently pled and that the statute of limitations has not run. Defendant’s only argument in his reply is that there were no legal grounds for tolling alleged in Plaintiff’s complaint.

ANALYSIS

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (CCP § 430.30(a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (CCP § 452.) The court “ ‘ “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law…” ’ ” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525.) In applying these standards, the court liberally construes the complaint to determine whether a cause of action has been stated. (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 733.)

            Statute of Limitations

Defendant argues that because his representation of Plaintiff ended in 2017, then the statute of limitations would bar Plaintiff’s causes of action.

For the breach of contract, breach of fiduciary duty, conversion, and for money had and received causes of action, Defendant argues that they would be subject to a one-year statute of limitations. CCP § 340.6 governs the statute of limitations for wrongful acts of attorneys, other than fraud, and provides for a limitations period of one year from the time Plaintiff “discovers, or through use of reasonable diligence should have discovered, the facts constituting the wrongful act or omission, or four years from the date of the wrongful act or omission, whichever occurs first.” (CCP § 340.6.)

Plaintiff’s complaint alleges that Plaintiff discovered the wrongful acts on or about January 29, 2021. (Comp., ¶ 48.) This action was filed September 11, 2023. Plaintiff’s opposition argues that the statute of limitations is tolled until discovery of the fraud where breach of contract is accomplished through fraudulent means. (See Acme Paper Co. v. Goffstein (1954) 125 Cal.App.2d 175.) However, based on this reasoning, if Plaintiff discovered the fraud on January 29, 2021, then the one-year statute of limitations for the breach of contract, breach of fiduciary duty, conversion, and for had and received causes of action would have begun running on that date. The one year statute of limitations would have been up in January 2022. Plaintiff did not file this action until September 2023. Those causes of action are still barred by the one-year statute of limitations, even with the tolling. Without the tolling, they would be barred by the four year statute of limitations in CCP § 340.6, as the alleged wrongful acts occurred in 2017.

As for the fraud cause of action with a three-year statute of limitations, it is not deemed accrued until the discovery, by the aggrieved party, of the facts constituting the fraud. (CCP § 338(d).) If a complaint alleges facts supporting a tolling of the limitations period due to delayed discovery, the allegations establish the timeliness of the action under CCP § 338(d). (Aaroe v. First Am. Title Ins. Co. (1990) 222 Cal.App.3d 124, 128–129.)

Defendant argues in his opposition that Plaintiff should have discovered the alleged wrongdoing at the end of his representation of her in 2017. However, Plaintiff alleges in her complaint that she first discovered the alleged fraud in January 2021 when her new attorney was looking over the previous case files. (Comp., ¶ 48.) This action was filed in September 2023. That is within the three-year statute of limitations for discovery of fraud actions. Therefore, the fraud cause of action is not barred by the statute of limitations based on what is alleged in Plaintiff’s complaint.

Defendant’s demurrer to the First, Second, Fourth, and Fifth causes of action is sustained without leave to amend based on the one-year statute of limitations. The Court need not reach the other ground of uncertainty for these causes of action.

Third Cause of Action for Fraud

Because the fraud cause of action is not barred by the statute of limitations, the Court will address whether Plaintiff has alleged facts sufficient to constitute this cause of action.

A fraud cause of action requires a Plaintiff to plead and prove: “(a) [a] misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or “scienter”); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Lazar v. Superior Court (1996) 12 Cal 4th 631, 638.) Fraud causes of action must be pled with specificity. “…This particularity requirement necessitates pleading facts which ‘show how, when, where, to whom and by what means the representations were tendered.’” (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73, quoting Hills Trans. Co. v. Southwest (1968) 266 Cal.App.2d 702, 707.)

Plaintiff’s complaint alleges that in March 2017, Defendant knowingly hid from her that she was entitled to receive 50% of the proceeds of her partition matter, amounting to $181,295.84, and that Defendant intended to keep these funds for himself. (Comp., ¶¶ 81-84.) Furthermore, Plaintiff alleges that she reasonably relied on Defendant’s representations because he was her attorney and was a licensed professional, and she had no way of knowing that his representations to her were false. (Comp., ¶ 85.) Plaintiff alleges that she was damaged by Defendant’s actions in the amount of $181,295.84. (Comp., ¶ 94.)

While this cause of action is not necessarily well pled, it is sufficiently clear that it is based on the allegations that Defendant concealed his receipt and retention of the trust funds. Therefore, Plaintiff’s allegations are sufficient to maintain a cause of action for fraud. Defendant’s demurrer to Plaintiff’s Third Cause of Action for Fraud is overruled.

CONCLUSION

Defendant’s demurrer is sustained without leave to amend for Plaintiff’s First, Second, Fourth, and Fifth Causes of Action. Defendant’s demurrer is overruled for Plaintiff’s Third Cause of Action.

Moving party to give notice.