Judge: Melvin D. Sandvig, Case: 23CHCV00128, Date: 2023-08-17 Tentative Ruling

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Case Number: 23CHCV00128    Hearing Date: August 17, 2023    Dept: F47

Dept. F47

Date: 8/17/23

Case #23CHCV00128

 

DEMURRER & MOTION TO STRIKE

TO THE

ORIGINAL COMPLAINT

 

Demurrer filed on 4/24/23.

 

MOVING PARTY: Defendant Aren Kalustian

RESPONDING PARTY: Plaintiff Kingdom of Sweden

NOTICE: ok

 

Demurrer is to the entire complaint:

            1.  Breach of Contract

            2.  Common Count for Money Lent

            3.  Common Count for Money Had and Received

 

RELIEF REQUESTED IN MOTION TO STRIKE: An order striking the following portions of the complaint: (1) p.4:26 (Prayer No.3): “For costs of suit incurred herein incurred;” and (2) p.4:27 (Prayer No.4): “For reasonable attorneys’ fees.”

 

RULING: The demurrer is overruled.  The motion to strike is denied.  Answer is due within 20 days. 

 

SUMMARY FACTS & PROCEDURAL HISTORY

 

This action arises out of Defendant Aren Kalustian’s (Defendant) alleged failure to pay back student loan money provided by Plaintiff Kingdom of Sweden (Plaintiff).  Plaintiff alleges that the Swedish Board of Student Finance (CSN) and Defendant entered into a contractual agreement beginning in 1997 where CSN would provide Defendant with several student loans in exchange for Defendant’s promise to repay with interest.  Plaintiff further alleges that Defendant breached the terms of the contract by not paying any Swedish Crowns to CSN.

 

On 1/17/23, Plaintiff filed this action against Defendant for: (1) Breach of Contract, (2) Common Count for Money Lent and (3) Common County for Money Had and Received.  On 3/22/23, Plaintiff filed a Request for Judicial Notice, requesting that this Court take judicial notice of certain statutory, regulatory, and decisional laws of Sweden, including Sweden's 25-year statute of limitations on claims for repayment of student loans; and that this Court also take judicial notice of recent decisions by federal District Courts in California which hold that, under California choice of law rules, Sweden's statute of limitations applies to student loan collection cases brought by Plaintiff in California courts.

 

After meet and confer efforts failed to resolve the issues Defendant had with the Complaint, on 4/24/23, Defendant filed and served the instant demurrer to the entire complaint on the ground that Plaintiff’s claims are barred by the applicable statute of limitations.  Although not a basis for the demurrer, Defendant also argues in the memorandum of points and authorities in support of the demurrer that the case should be dismissed based on forum non conveniens.  Defendant also filed and served a motion to strike seeking an order striking the following portions of the complaint: (1) p.4:26 (Prayer No.3): “For costs of suit incurred herein incurred;” and (2) p.4:27 (Prayer No.4): “For reasonable attorneys’ fees.”  Plaintiff has opposed the demurrer and motion to strike and Defendant has filed replies to the oppositions. 

 

ANALYSIS

 

Plaintiff’s Requests for Judicial Notice are granted.

 

DEMURRER

 

When deciding choice-of-law questions as they pertain to the applicable statute of limitations, California applies a three-part governmental interest test.  McCann (2010) 48 C4th 68, 87-97.  First, the court determines whether the relevant law of each of the potentially affected jurisdictions with regard to the particular issues in question is the same or different.  McCann, supra.  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.  McCann, supra.  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 and then ultimately applies the law of the state whose interest would be more impaired if its law were not applied.  McCann, supra; See also Deirmenjian (9th Cir. 2013) 548 Fed.Appx. 461; Averbach (N.D. Cal. 2003) 280 F.Supp.2d 945.

 

With regard to the first factor, there is a difference between the four-year statute of limitations applied to claims for breach of written contract in California and Sweden’s 25-year statute of limitations applicable to claims for repayment of student loans.  See CCP 337(a); (RJN filed 3/22/23, Ex.B, C, D). 

 

With regard to the second factor, both California and Sweden have legitimate interests in the application of their own laws.  California has a strong interest in applying its four-year statute of limitations to protect residents from being subjected to stale claims and Sweden has a strong interest in having its 25-year statute of limitations apply to actions to collect student loans so that it will have sufficient time to enforce such claims to help ensure that Sweden can continue to provide financial support for study abroad programs.  (See RJN filed 3/22/23, Ex.J - Kingdom of Sweden v. Nowacki 2015 WL 5165293 *6, *7, Ex.K – Kingdom of Sweden v. Melius CV 14-04492 RSWL)).  As such, a true conflict exists. 

 

With regard to the third factor, the Court finds that Sweden has a stronger interest in having its statute of limitations applied than California has in having its statute of limitations applied.  As noted above, Sweden’s longer statute of limitations allows it enough time to identify student loan debtors living abroad and to collect on such debts which ensures that Sweden can continue its student loan program for students studying abroad.  If California’s four-year statute of limitations is applied, Sweden’s interest would be significantly impaired.  See Nowacki, supra. 

Based on the foregoing, the Court finds that Sweden’s 25-year statute of limitations applies.  Under Swedish law, a claim for repayment of student loans or for recovery of study support becomes time-barred 25 years after it was made, unless the limitation is disrupted.  (RJN filed 3/22/23, Ex.D - Swedish Study Support Act SFS 1999:1395, Transitional Provisions note 21 (applicable to the Student Loans 8 9 made to Kalustian); and Chapter 6, § 12 (applicable to the Annuity Loans made to Kalustian)).  A student's study obligation shall be considered to have been made when the entire loan has been paid out.   (RJN filed 3/22/23, Ex.H - Judgment of Administrative Court of Appeal in Goteborg, Case No. 8242-8244-11, October 3, 2012).

 

Sweden's 25-year statute of limitations for claims for the repayment of loans applies to all loans whenever made, unless the claim was time barred prior to 7/1/11.  (RJN filed 3/22/23, Ex.D -Swedish Study Support Act SFS 1999:1395, Transitional Provisions Note 21 (applicable to Student Loans made 16 to Kalustian); and Chapter 6, § 12, and Transition Provisions 2011 :859(3) (applicable to Annuity 17 18 19 20 21 22 23 24 25 26 27 Loans made to Kalustian).  Under Swedish law prior to 7/1/11, a claim became time barred 10 years after it was made, unless the limitation was interrupted before that.  (RJN filed 3/22/23 Ex.B - Swedish Limitations Act SFS 1981:130, § 2).  The statute of limitations is disrupted if the borrower undertook payment, acknowledged the debt, or received a written demand or a written reminder from the creditor regarding the claim.  (Id. - Swedish Limitations Act SFS 1981:130, §5).  If the statute of limitations is disrupted, a new statute of limitations takes effect on the day of disruption.  (Id. Swedish Limitations Act SFS 1981:130, §6). 

 

It cannot be determined as a matter of law that Plaintiff’s claims in this action are time-barred under Sweden’s 25-year statute of limitations.  The Account Debt attached to the Complaint as Exhibit F shows that the statute of limitations began to run in this case on 7/3/03, when the last loan disbursement was made by Plaintiff to Defendant.  Based on the foregoing, Plaintiff’s claims were not time-barred by the previous 10-year statute of limitations on 7/1/11.  Therefore,  the new 25-year statute of limitations took effect at that time.  Since this case was filed within that 25-year period, the claims appear timely under Swedish law. 

 

It also appears that applying Sweden’s 25-year statute of limitations comports with public policy as there is no statute of limitations at all to collect on federal student loans in the United States.  Under the Higher Education Technical Amendments of 1991 to Section 484A(a) of the Higher Education Act of 1965, all statutes of limitation were eliminated for lawsuits brought to collect defaulted federal student loans.  See 20 U.S.C. § 1 091a(a).  The law has also been held to revive actions to collect unpaid student loans that had previously been barred by the statute of limitations that existed before the enactment of that legislation.  See U.S. v. Glockson (11th Cir. 1993) 998 F.2d 896. 

 

Even if California’s four-year statute of limitations applied, Defendant has not shown, as a matter of law, that Plaintiff’s claims would be time-barred.  Under California law, a cause of action based on breach of contract accrues at the time of breach.  E.O.C. Ord, Inc. (1988) 200 CA3d 1194.  However, where, as here, the loan repayments are due in a series of installments, the cause of action on each installment accrues on the day following the date that each installment is due.  White (1993) 15 CA4th 1290; Bank of America v. McLaughlin (1957) 152 CA2d Supp. 911, 915. 

 

Defendant argues that a breach first occurred "around 2004" or "at the latest, in 2004", and that California's four-year statute of limitations began to run at that time.  (See Demurrer, p.3:18, p.4:24).  However, Defendant has not addressed the dates later installment payments were due and not paid (i.e., later dates of breach), and has failed to show the amounts that were owing on each of those unspecified dates of breach.  As such, it cannot be determined as a matter of law whether any portion of Plaintiff’s claims would be time-barred under California law, if it applied.   

 

Defendant’s argument based on forum non conveniens is improperly included in the demurrer.  Such grounds are not set forth as a basis for demurrer, nor could they be.  (See Notice of Demurrer/Demurrer, p.1:23-p.2:8); CCP 430.10.  If Defendant wanted to make a motion to dismiss this action pursuant to CCP 410.30, he should have filed a separate motion which properly noticed such relief.  See CCP 410.30(a); CRC 3.1110(a).  Regardless, Defendant has failed to establish that Sweden provides a more suitable forum for Plaintiff’s claims under the circumstances of this case. 

 

MOTION TO STRIKE

 

Defendant argues that Plaintiff’s prayers for costs of suit and attorney's fees should be stricken because Plaintiff has not cited any contract between the parties which provides for the recovery of attorney fees. 

 

CCP 1021 provides:

 

“Except as attorney's fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties; but parties to actions or proceedings are entitled to their costs, as hereinafter provided.”

 

CCP 1033.5(a)(10) allows for the recovery of attorney’s fees, when authorized by contract, statute or law.  See also Real Property Services Corp. (1994) 25 CA4th 375, 379.

 

Civil Code 1646 provides:

 

“A contract is to be interpreted according to the law and usage of the place where it is to be performed; or, if it does not indicate a place of performance, according to the law and usage of the place where it is made.”

 

A contract indicates a place of performance within the meaning of Civil Code 1646 if the intended place of performance can be discerned from the nature of the contract and its surrounding circumstances.  Frontier Oil Corp. (2007) 153 CA4th 1436, 1450.  The place of payment is to be regarded as the place of performance of a lending agreement.  Ury (1964) 227 CA2d 11, 16; Peterson (1945) 68 CA2d 706, 710.

 

Sweden is clearly the place of payment for the student loans which it issues.  The foregoing is supported by the Repayment Regulations attached as Exhibit C to the Complaint.  (See Complaint, Ex.C, pp.3-4 of the 1997 Repayment Regulations, under the title "Payment Of Student Loans", it is stated that "(y)ou send the check with the payment slip to CSN's headquarter, S-851 52 Sundsvall".).

 

Since the contract documents indicate that Sweden is the place for performance, Swedish law governs Plaintiff’s claims.  Under Swedish law, the prevailing party is entitled to recovery attorney’s fees.  (See RJN filed 8/1/23).  Further, Defendant has cited no authority which provides that the statutes and laws referenced in CCP 1021 and 1033.5(a)(10), which would allow for the recovery of attorney’s fees, must be California laws or statutes. 

 

Defendant fails to explain why striking Plaintiff’s prayer for costs generally is warranted. 

 

CONCLUSION

 

Based on the foregoing, the demurrer is overruled and the motion to strike is denied.  Answer is due within 20 days.