Judge: John J. Kralik, Case: 22BBCV00472, Date: 2022-10-14 Tentative Ruling

Case Number: 22BBCV00472    Hearing Date: October 14, 2022    Dept: NCB

Superior Court of California

County of Los Angeles

North Central District

Department B

BACKGROUND

A.    Allegations

            Plaintiff Massachusetts Educational Financing Authority (“Plaintiff”) alleges that Defendant Katherine P. Sullivan (“Plaintiff”) entered into 3 loan agreements with Plaintiff.  Plaintiff alleges Defendant entered the first agreement on July 4, 2005, breached the first agreement on November 1, 2010, and that $33,493.62 is due and owing.  (Compl., Exs. A-B.)  Plaintiff alleges Defendant entered the second agreement on June 2, 2006, breached the second agreement on March 1, 2010, and that $42,120.57 is due and owing.  (Id., Exs. C-D.) Plaintiff alleges Defendant entered the third agreement on July 3, 2007, breached the third agreement on March 1, 2010, and that $42,664.52 is due and owing.  (Id., Exs. E-F.)

            The complaint, filed June 30, 2022, alleges causes of action for: (1) breach of contract; (2) breach of contract; and (3) breach of contract based on three separate breaches of various contracts.

B.     Demurrer on Calendar

On August 17, 2022, Defendant filed a demurrer to the 1^st, 2^nd, and 3^rd causes of action in the complaint. 

On October 3, 2022, Plaintiff filed an opposition brief.

On October 11, 2022, Defendant filed an untimely reply brief.

DISCUSSION

            Defendant demurs to each cause of action alleged in the complaint, arguing that the causes of action are barred by the statute of limitations and the contracts were entered by an incompetent minor.

            With respect to Defendant’s argument regarding whether she is a minor, the declaration supporting her date of birth and the accompanying arguments are outside the pleading.  The Court has reviewed the complaint and its exhibits.  It appears that her date of birth was redacted from the documents.  The demurrer tests the pleading alone and not the evidence or other extrinsic matters which do not appear on the face of the pleading or cannot be properly inferred from the factual allegations of the complaint.  (Executive Landscape Corp. v. San Vicente Country Villas IV Assn. (1983) 145 Cal.App.3d 496, 499.)  As such, the demurrer will not be sustained on this basis.

            Next, the statute of limitations under California law for a breach of contract cause of action is 4 years.  (See CCP § 337.)  Defendant argues that each of the causes of action are time barred because Plaintiff alleges that Defendant breached the first agreement on November 1, 2010 and the second and third agreements on March 1, 2010.  The filing of the complaint on June 30, 2022 is over 4 years from the dates of breach in 2010. 

            In opposition, Plaintiff argues that the promissory notes each contain a choice of law clause designating Massachusetts law for the settlement of disputes.  (Compl., Ex. A at Item 10 on page 9 of the Terms and Conditions; Ex. C at Item 10 on page 17 of the Terms and Conditions; Ex. E at Item 10 on page 25 of the Terms and Conditions.)  For example, the first agreement states:

You are located in Massachusetts. This Note will be entered into in Massachusetts. Your decision on whether to lend me money will be made in Massachusetts. Either the Borrower or one of the Co-Signers as a legal resident of Massachusetts or the institution is located in Massachusetts. Consequently, the provisions of this Note will be governed by the law of The Commonwealth of Massachusetts, without regard to conflict of law rules. I agree that any suit I bring against you (or against any subsequent holder of this Note) must be brought in a court of competent jurisdiction in the county in which you maintain your (or the county in which such subsequent holder maintains its) principal place of business.

(Compl., Ex. A at Item 10 on page 9.) 

             As stated by the Supreme Court in Chen v. Los Angeles Truck Centers, LLC (2019) 7 Cal.5th 862, 867–868:

To determine which jurisdiction's law will govern, a trial court applies the governmental interest test, which sets out a three-step inquiry: “First, the court determines whether the relevant law of each of the potentially affected jurisdictions with regard to the particular issue in question is the same or different. Second, if there is a difference, the court examines each jurisdiction's interest in the application of its own law under the circumstances of the particular case to determine whether a true conflict exists. Third, if the court finds that there is a true conflict, it carefully evaluates and compares the nature and strength of the interest of each jurisdiction in the application of its own law ‘to determine which state's interest would be more impaired if its policy were subordinated to the policy of the other state’ [citation], and then ultimately applies ‘the law of the state whose interest would be the more impaired if its law were not applied.’ ”

(Chen v. Los Angeles Truck Centers, LLC (2019) 7 Cal.5th 862, 867–868.) “The party seeking to enforce the choice-of-law provision bears the burden to establish a sufficient relationship to the state whose law the parties chose, but the party opposing the provision's enforcement bears the burden to establish a fundamental conflict in the states’ laws and the nondesignated state's materially greater interest in the determination of the particular issue.”  (Colaco v. Cavotec SA (2018) 25 Cal.App.5th 1172, 1188.)  Based on the parties’ papers, it appears that the parties do not dispute that Massachusetts law applies for the purposes of this demurrer.  

            In the opposition brief, Plaintiff argues that under Massachusetts General Laws, part III, title V, chapter 260, section 1, there is a 20-year statute of limitations for actions upon a contract, such that the breach of contract causes of action would be timely.  (See Opp. at p.6.)  In reply, Defendant argues that Massachusetts General Laws, chapter 260, section 2 provides for a 6-year statute of limitations period for actions of contract. 

            Sections 1 and 2 states:

Section 1. The following actions shall be commenced only within twenty years next after the cause of action accrues:

First, Actions upon contracts under seal.

Second, Actions upon bills, notes or other evidences of indebtedness issued by a bank.

Third, Actions upon promissory notes signed in the presence of an attesting witness, if brought by the original payee or by his executor or administrator.

Fourth, Actions upon contracts not limited by the following section or by any other law.

Fifth, Actions under section thirty-two of chapter one hundred and twenty-three to recover for the support of inmates in state institutions.

Section 2. Actions of contract, other than those to recover for personal injuries, founded upon contracts or liabilities, express or implied, except actions limited by section one or actions upon judgments or decrees of courts of record of the United States or of this or of any other state of the United States, shall, except as otherwise provided, be commenced only within six years next after the cause of action accrues.

(Mass. General Laws, part III, title V, ch. 260, §§ 1 and 2.)  As delineated in section 1, this is not: (1) an action upon a contract under seal; (2) an action upon bills/indebtedness issued by a bank (the complaint alleges that Plaintiff is a nonprofit state authority, but makes no allegations that it is a bank); (3) an action upon a promissory note signed in the presence of an attesting witness; (5) an action involving inmates; and (4) an action upon contracts that is not limited by section 2.  Section 2’s 6-year statute of limitations applies for actions of express or implied contract (other than for personal injuries and that was not limited by section 1 or other courts). Thus, if applying Massachusetts law, it appears that the statute of limitations period of section 2 applies, which is a statute of limitations period of 6 years. 

            According to the complaint, Plaintiff alleges that Defendant breached the first agreement (entered July 4, 2005) on November 1, 2010; breached the second agreement (entered June 2, 2006) on March 1, 2010; and breached the third agreement (entered July 3, 2007) on March 1, 2010.  This action was filed on June 30, 2022.  Applying either the 4-year statute of limitations pursuant to California law or the 6-year statute of limitations period pursuant to Massachusetts law, the action would be time-barred. 

            Thus, the demurrer to the complaint is sustained.  As this is Plaintiff’s first attempt at the pleading, the Court will allow leave to amend so that Plaintiff may attempt to plead facts to show that the action is not time-barred.

CONCLUSION AND ORDER

Defendant Katherine P. Sullivan’s demurrer to the complaint is sustained with 20 days leave to amend.

Defendant shall provide notice of this order.