Filed 8/23/22 Xian v. Sengupta CA1/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for 

publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or 

ordered published for purposes of rule 8.1115. 

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION ONE

BENNY XIAN,

Plaintiff and Appellant,

v.

ARIJIT SENGUPTA,

Defendant and Respondent.

 A162175

 (San Mateo County

 Super. Ct. No. 19-CIV-05937)

Plaintiff Benny Xian was a cofounder and an early investor of 

BeyondCore, Inc. (BeyondCore). After his employment was terminated, he 

recovered investments he had made in the company as cash payments with 

5 percent interest rather than obtaining shares of BeyondCore stock under 

convertible promissory notes and a warrant. Several years later, BeyondCore 

was purchased by Salesforce, Inc. (Salesforce). Plaintiff filed a class action 

lawsuit against Arijit Sengupta, the founder of BeyondCore, and other 

defendants, alleging various causes of action related to the Salesforce 

acquisition, including a fraud claim alleging that Sengupta misrepresented 

and concealed material facts about the early capitalization of the company. 

Xian alleges that had he known those facts, he would have accepted shares in 
2

BeyondCore rather than a cash payout, and would have realized more than 

$7 million in profits after the Salesforce acquisition. 

Xian now appeals from the judgment entered after the trial court 

sustained a demurrer to his third amended complaint without leave to 

amend. The trial court ruled that the three-year statute of limitations barred 

his fraud claim, because the allegations of his third amended complaint 

contradicted earlier allegations in his pleadings and Xian failed to sufficiently 

plead delayed discovery to postpone accrual of his claim to 2019. We conclude 

Xian sufficiently alleged delayed discovery of his fraud claim, and accordingly 

reverse the judgment. 

I.

BACKGROUND1

A. Factual Background

Sengupta started BeyondCore in 2004, while he was earning his master 

of business administration degree from Harvard University. At all relevant 

times, Sengupta was BeyondCore’s majority and controlling shareholder and 

chief executive officer (CEO). Sengupta made no monetary investment in the 

company, but his wife provided a convertible loan of $30,000 in 2004. Two 

years later, Sengupta moved BeyondCore’s location to California. 

Xian was a cofounder, employee, and early investor in BeyondCore. 

Xian invested $100,000 in BeyondCore in 2007 and received a convertible 

promissory note (2007 Note), allowing him to convert the note to BeyondCore 

shares beginning in 2012.2 As part of that transaction, Xian also received a 

1 The facts are taken primarily from the allegations of the third 

amended complaint. 

2 At the time he invested, BeyondCore was out of money and might 

have gone out of business were it not for Xian’s investment. 
3

warrant as a companion instrument to the 2007 Note (Warrant). The 

Warrant entitled Xian to purchase 1,111 BeyondCore shares at the 

conversion price of the 2007 Note ($36 per share). In 2008, Xian invested a 

further $50,000 and received a convertible note (2008 Note), which also 

allowed Xian to convert his investment to shares in BeyondCore. 

In May 2010, Sengupta terminated Xian’s employment with 

BeyondCore via e-mail without notice. By that time, BeyondCore had raised 

$605,000 in total capital investment since its inception in 2004, $405,000 of 

which had been obtained or personally invested by Xian. 

Over two years later, on August 9, 2012, Jeffrey Harrell, counsel for 

BeyondCore, e-mailed Xian to notify him that his 2007 Note was scheduled to 

be “paid out” on October 26, 2012. Harrell outlined two options: (1) Xian 

could do nothing and receive a $125,000 payment, representing his $100,000 

investment plus five years of 5 percent simple interest; or (2) he could convert 

the principal and accrued interest to BeyondCore shares based on the terms 

of the 2007 Note. If he accepted option (1), the Warrant would expire, and if 

he accepted option (2), he would retain the benefit of the Warrant for another 

year. Harrell ended the e-mail by asking Xian to “[p]lease let me know how 

you would like to proceed.” 

Four days later, counsel for Xian, Paul Tauber, e-mailed Harrell, noting 

Xian had forwarded Harrell’s e-mail “regarding the promissory note that will 

mature shortly.” Tauber wrote: “In order to decide how to proceed, is there 

any update regarding the company, fundraising efforts, etc. that can be 

provided?” Harrell responded that he would “reach out to the company for an 

update.” The following week, Harrell wrote another e-mail stating: “I’ve 

confirmed with the company that BeyondCore plans to send out an overall

status update to all investors by the end of the month or early next month. 
4

BeyondCore has been having certain acquisition and fundraising related 

conversations but the details of those conversations are currently 

confidential.” 

Two weeks later, on September 3, 2012, Sengupta e-mailed Xian, 

copying both Harrell and Tauber. Sengupta wrote: “I wanted to give you a 

quick update on BeyondCore.” After noting BeyondCore had been selected “a 

Gartner Cool Vendor in Business Process Services” and describing a new 

product, Sengupta wrote: “We are considering raising some money this fall 

and have had some initial discussions with venture capitalists. Please feel 

free to ask me any questions. I will of course keep you updated on any major 

progress on the funding front.” By the end of the week, Tauber responded to 

Harrell that Xian would “go ahead and require payment on the due date.” 

On October 16, 2012, Harrell sent an e-mail to Xian and Tauber with 

the subject line: “BeyondCore Update.” Harrell wrote: “In connection with 

the note you hold, BeyondCore wants to provide you with certain additional 

information.” Harrell explained that (1) BeyondCore’s new product “had 

additional revenue traction in the form of paid POCs but nothing very 

significant yet”; (2) BeyondCore was “having ongoing conversations with 

venture capital investors and potential acquirers though BeyondCore has not 

received any term sheets yet”; (3) “BeyondCore’s CEO fully believes in the 

future of BeyondCore as evidenced by the fact that the wife of BeyondCore’s 

CEO has invested more than $50,000 in the company in the last few months 

and that BeyondCore’s CEO continues to not draw any salary from the 

company”; and (4) BeyondCore had offered to extend the expiration date of 

the 2007 Note by a year, allowing Xian “an additional year to consider [his] 

options and avoid the cancellation of [the Warrant],” but noting that “[b]y 

asking for payment, [Xian was] specifically rejecting this offer.” Harrell 
5

concluded by confirming the note would be repaid if BeyondCore did not hear 

back from Xian by October 19, 2012. 

Xian decided not to convert the promissory note or exercise his rights 

under the Warrant. Based on his “past experience” at BeyondCore, 

“including the inability of the company to pay [Xian] his unpaid wages until 

he signed a release” and the lack of news from BeyondCore, Xian concluded 

the company “was still chronically low on funds” and that “he would be 

fortunate just to get his invested capital returned with 5% interest.” 

Xian alleges that unbeknownst to him, between September 2010 and 

August 2012, BeyondCore had raised $775,000 in investment capital from 

multiple investors. BeyondCore also concealed that within three days of the 

maturity date of the 2007 Note, BeyondCore raised an additional $150,000, 

bringing the latest fundraising efforts to $925,000. He asserts this 

information was material, both “in an absolute sense and relative to what 

took place prior to September 2010,” and represented “[a]ctual and more 

material financial developments” than Sengupta’s wife’s $50,000 investment 

and Sengupta’s salary deferral as reported by Harrell in his October 2012 email. (Underscoring omitted.) At the time of these communications, Xian 

alleges he had no suitable alternative channel for information on 

BeyondCore’s finances. 

The following year, Xian was evaluating whether to redeem or convert 

the 2008 Note. Despite Sengupta’s promise in his September 3, 2012 e-mail

that he would “of course keep [Xian] updated on any major progress on the 

funding front,” Xian received no further updates after Harrell’s October 2012 

e-mail. Having received no further updates, Xian and his attorney “assumed 

there were no material events” at BeyondCore. Xian’s attorney advised him 
6

“that he believed [BeyondCore] was out of money and he should get back his 

invested capital while he still had the chance.” 

Xian alleges that Sengupta again concealed material financial 

information prior to the maturity date of the 2008 Note, including the fact 

that BeyondCore had raised $1 million after Xian left the company, $950,000 

of which was not disclosed to him. In addition, Sengupta concealed that 

BeyondCore was in serious discussions and/or due diligence with Menlo 

Ventures, a Silicon Valley venture capital firm, which culminated in series A 

financing in BeyondCore by Menlo Ventures of $9 million in February 2014. 

Xian alleges that investment was significant in terms of the amount invested, 

the prestige of the venture capital firm, and the significant increase in 

BeyondCore’s valuation as a result of the series A financing.

3 

In September 2016, BeyondCore was acquired by Salesforce. Shares in 

BeyondCore were converted to shares in Salesforce at a conversion rate of 

0.04059, or about 24.64 shares of BeyondCore for each share of Salesforce. 

BeyondCore shareholders were also provided with the opportunity for their

newly converted shares to be sold. Xian alleges that had he exercised his 

rights under the 2007 Note, the 2008 Note, and the Warrant, he would have 

acquired 25,617 Salesforce shares as of September 2016. He further alleges

he was economically damaged in the amount of $7,204,781 by Sengupta’s 

fraudulent concealment of material information, the difference between the 

cost of acquiring the shares and their market value upon conversion to 

Salesforce stock. 

3 A search run by Xian on the web service, Dealroom.co, in 

August 2019, revealed that BeyondCore’s valuation estimate as of 

February 2014 was “$36m-$54m,” a value Xian alleges was “50-100x” the 

value Xian was led to believe was accurate when he evaluated the 2008 Note. 
7

B. Procedural History

Xian filed a class action4 complaint on October 8, 2019, followed by a 

first amended complaint. After the trial court sustained demurrers to the 

first amended complaint with leave to amend, Xian filed a second amended 

complaint (SAC). In his SAC, Xian included allegations specifically 

addressing his discovery of fraud after the Salesforce acquisition. 

Sengupta demurred to the SAC, arguing among other things, that 

Xian’s fraud claim was barred by the three-year statute of limitations under 

Code of Civil Procedure5 section 338. The trial court sustained the demurrer, 

finding that most of Xian’s claims were barred by the settlement agreement 

he entered with BeyondCore in September 2010 and the statute of 

limitations. However, the court allowed Xian leave to amend his causes of 

action for fraud and breach of fiduciary duty to address “alleged fraudulent 

omissions that occurred after September 3, 2010 regarding the sale of the 

note and the warrant, and only as alleged in Paragraphs 218, 219, and 220 of 

the Second Amended Complaint.” The trial court specifically directed Xian to 

“plead with specificity delayed discovery and justifiable reliance” as to those 

two causes of action. 

Xian filed a third amended complaint (TAC), alleging only two causes of 

action for fraud and breach of fiduciary duty. With respect to delayed 

discovery of his claims, the TAC alleged that “[i]n early September 2016,” 

Xian received e-mails from several friends regarding the Salesforce 

acquisition of BeyondCore. He searched and found online a press release 

4 Xian initially filed suit against a number of defendants, including 

BeyondCore and Salesforce, alleging 10 causes of action. Because the only 

claim at issue in this appeal is Xian’s fraud claim against Sengupta, we 

summarize only the procedural facts relevant to that claim. 

5 All further statutory references are to the Code of Civil Procedure. 
8

about the prospective transaction. “On September 8, 2016,” Xian “contacted 

and engaged an attorney (not current counsel) to aid him in evaluating his 

situation vis a vis [BeyondCore] and [Salesforce]. The attorney advised 

[Xian] to compile relevant documents he had from his [BeyondCore] tenure 

and to send them to him for review.” 

Xian alleged he and his wife moved from Silicon Valley to Pasadena in 

September 2016, and he was not able to access his BeyondCore 

documentation for several weeks, but that “[a]fter getting moved into his 

Pasadena residence,” he started compiling BeyondCore documents he had 

stored and forwarded them to his attorney “in November and December 

2016.” Xian’s attorney spent “two months on-and-off” assisting Xian with 

potential claims, but Xian alleged that the “documents compiled by [Xian] 

from his own sources were insufficient to uncover anything about 

[BeyondCore’s] financial situation” after Xian left BeyondCore in 2010 and he 

“was not yet aware of the substantial investments made in BeyondCore from 

September 2010 onward.” Xian “was also unable to determine financial 

details about [BeyondCore] other than what was disclosed in publicly filed 

documents concerning the [Salesforce] Acquisition.” 

Xian alleged he was advised by new counsel in November 2017 to 

obtain Delaware corporate filings for BeyondCore, which led to a discovery 

that Sengupta had improperly issued himself shares of BeyondCore. 

“Throughout 2018 and through August 2019, [Xian] sought additional 

documents on [BeyondCore].” Xian alleged that “[w]hile researching online 

during at [sic] dealroom.co circa August 26, 2019 [Xian] discovered a listing 

in a schedule referring to a Series A investment of $9,000,000 in 

February 2014 from Menlo Ventures, venture capital firm.” 
9

He further alleged that in July 2019, he “met with a prior investor” in 

BeyondCore. Xian had “attempted to meet with the investor a year earlier, 

but was unsuccessful because the investor was reluctant to discuss 

[BeyondCore] or provide any disclosure about [BeyondCore] until their own 

dealings were concluded with [BeyondCore].” The investor provided Xian 

with BeyondCore’s “capitalization table listing all investments made in 

[BeyondCore] through December 2012.” Xian attached the capitalization 

table to the TAC, and alleged “[t]his was the first time [Xian] was able to 

discover the existence and extent of investments” made in BeyondCore after 

he left. 

Finally, Xian alleged he “was unable to discover the occurrence and 

nature of the causes of action alleged herein until the period of November 

2017–August 2019 due to the non-public nature of the 2012 Cap Table and 

the Menlo Ventures Series A investment. The statute of limitations period 

for the fraud-based causes of action alleged herein did not start until [Xian’s] 

discoveries in July–August 2019 that tipped him off to the fraudulent 

concealment and misrepresentations” by Sengupta and BeyondCore. 

Sengupta demurred to the TAC. Sengupta argued that Xian had failed 

to allege delayed discovery of his fraud claim because the allegations of the 

TAC did not show reasonable diligence. In particular, Sengupta focused on 

the fact that the TAC omitted allegations contained in the verified SAC 

regarding “anomalies in the press release” that Xian had noticed when 

reading in September 2016 about the Salesforce acquisition of BeyondCore.6

6 In the verified SAC, Xian alleged that he noticed “some anomalies in 

the press release about the personnel involved at BeyondCore; the press 

release listed as co-founders Rahul Pathak and Griffin Chronis” but omitted 

Xian. “[Xian] thought this unusual, as well as insulting, because [Xian] never 

met either one during his three-year tenure at BeyondCore . . . . The press 
10

(Boldface and italics omitted.) Sengupta argued that “[b]ased upon these 

alleged misgivings, Xian immediately contact[ed] and engage[d] an attorney

on September 8, 2016 (over three years before filing the complaint),” but then 

moved and proceeded to wait a year before accessing public documents from 

BeyondCore’s corporate filings, then waited two more years to file suit. 

(Boldface, italics, and underscoring omitted.) Because “Xian was on inquiry 

notice as of September 2016” and “had publicly available documents 

accessible to him the entire time,” Sengupta argued he failed to demonstrate 

reasonable diligence and his claims should be dismissed. Xian opposed the 

demurrer, arguing he had adequately alleged delayed discovery and the fact 

that he had publicly available documents was irrelevant because the basis of 

the fraud cause of action was discovered only once he received the nonpublic 

capitalization table in July 2019. 

Following briefing and a hearing, the trial court sustained the

demurrer without leave to amend. The court concluded Xian had “not 

sufficiently pled delayed discovery to postpone accrual of the fraud and 

breach of fiduciary duty causes of action to 2019 when he obtained a copy of 

the BeyondCore 2012 Year-End Capitalization Table.” Observing that 

delayed discovery “does not postpone accrual of a cause of actual [sic] 

discovery of all facts, but earlier to when ‘[a] plaintiff has reason to discover a 

cause of action when he or she has reason at least to suspect a factual basis 

for its elements,’ ” the trial court concluded Xian had not sufficiently pled 

delayed discovery because his allegations in the TAC “contradict[ed]” his 

release was also at odds with the Teknos valuation report dated 

February 2010 that only showed [Xian] and [Sengupta] as co-founders. 

Further, [Sengupta] made no mention of Pathak or Chronis to prospective 

investors while [Xian] was at BeyondCore.” 
11

allegations in the SAC, and he had not sufficiently pled around the prior 

allegations. 

Specifically, the trial court focused on the allegations that Xian “read 

the press release regarding the Salesforce acquisition in September 2016 and 

noticed the identification of two co-founders, Pathak and Chronis, whom he 

had never met and were never mentioned as prospective investors during his 

three-year tenure at BeyondCore.” The court observed that “[g]iven the 

allegations of the [SAC] the Court finds that [Xian] would have had ‘reason to 

at least suspect that a type of wrongdoing has injured him’ in 

September 2016 when he read the press release that identified Pathak and 

Chronis as co-founders who had not been mentioned as potential investors 

and as evidenced by his retention of counsel that same month.” 

The trial court further noted that Xian omitted from his TAC 

allegations contained in the SAC that he and his counsel had communicated 

his misgivings to Sengupta in early 2017.

7 The court observed that Xian did 

not “allege the substance or result of any of those communications.” 

“Instead,” the trial court wrote, Xian’s TAC now alleged that his counsel 

“spent two months on-and-off until providing [Xian] with assistance 

concerning potential claims” against BeyondCore and Salesforce; that the 

documents compiled by Xian from his own sources were insufficient to 

uncover anything about BeyondCore’s financial situation after he left; that 

Xian “was not yet aware of the substantial investments made in 

[BeyondCore] from September 2010 onward”; and that he was unable to 

determine “financial details” about BeyondCore other than “what was 

7 Xian alleged that “[d]uring January to April 2017 [Xian] or his thencounsel exchanged several letters with [Sengupta and Salesforce] attempting 

to resolve potential legal issues brewing between them and [Xian] related to 

the [Salesforce] Acquisition.” 
12

disclosed in publicly filed documents” concerning the Salesforce acquisition.8 

The court found these allegations “contradict[ed] his knowledge and actions 

as pled” in the SAC. Concluding Xian had failed to allege delayed discovery 

and consequently that his claims were barred by the three-year statute of 

limitations, the trial court sustained the demurer without leave to amend. 

This appeal followed. 

II.

DISCUSSION

A. Standard of Review

“On appeal from a judgment dismissing an action after sustaining a 

demurrer without leave to amend, the standard of review is well settled. The 

reviewing court gives the complaint a reasonable interpretation, and treats 

the demurrer as admitting all material facts properly pleaded. [Citations.] 

The court does not, however, assume the truth of contentions, deductions or 

conclusions of law. [Citation.] . . . ‘ . . . [I]t is error for a trial court to sustain 

a demurrer when the plaintiff has stated a cause of action under any possible 

legal theory.’ ” (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966–

967; Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 810 (Fox).) We 

review the legal sufficiency of a complaint de novo. (Kahan v. City of 

Richmond (2019) 35 Cal.App.5th 721, 730.) 

8 We note substantially similar allegations were pled in the SAC, which 

stated: “[Xian’s] then-counsel spent two months on-and-off until providing 

[Xian] with assistance concerning potential claims against BeyondCore and 

[Salesforce]. The documents compiled by [Xian] from his own sources were 

insufficient to uncover or conclude about BeyondCore’s financials and 

investors since [Xian] left BeyondCore in 2010 and many material 

transactions occurred thereafter. [Xian] was not yet aware of the existence of 

substantial investments made in BeyondCore from 2011 onward. [Xian] was 

also unable to determine financial details of the [Salesforce] Acquisition other 

than what was disclosed in publicly filed documents.” 
13

B. Delayed Discovery

Xian contends the trial court erred in determining his fraud claim is 

barred by the three-year statute of limitations under section 338, 

subdivision (d). Sengupta disagrees, and asserts Xian’s cause of action 

accrued at the latest in September 2016, when Xian learned of the Salesforce 

acquisition and hired a lawyer to explore his claims vis-à-vis BeyondCore and 

Sengupta. 

The statute of limitations for a fraud claim is three years. (§ 338, 

subd. (d).) Under the delayed discovery rule, accrual of a cause of action for 

fraud is postponed until the plaintiff discovers, or has reason to discover, the 

cause of the action. (E-Fab, Inc. v. Accountants, Inc. Services (2007) 

153 Cal.App.4th 1308, 1318 (E-Fab).) The rule is expressly incorporated in 

the statute. (§ 338, subd. (d) [“The cause of action in that case is not deemed 

to have accrued until the discovery, by the aggrieved party, of the facts 

constituting the fraud or mistake.”].) 

“[U]nder the delayed discovery rule, a cause of action accrues and the 

statute of limitations begins to run when the plaintiff has reason to suspect 

an injury and some wrongful cause, unless the plaintiff pleads and proves 

that a reasonable investigation at that time would not have revealed a factual 

basis for that particular cause of action. In that case, the statute of 

limitations for that cause of action will be tolled until such time as a 

reasonable investigation would have revealed its factual basis.” (Fox, supra, 

35 Cal.4th at p. 803, italics added.) 

“In order to rely on the discovery rule for delayed accrual of a cause of 

action, ‘[a] plaintiff whose complaint shows on its face that his claim would be 

barred without the benefit of the discovery rule must specifically plead facts 

to show (1) the time and manner of discovery and (2) the inability to have 
14

made earlier discovery despite reasonable diligence.’ ” (Fox, supra,

35 Cal.4th at p. 808.) “In assessing the sufficiency of the allegations of 

delayed discovery, the court places the burden on the plaintiff to ‘show 

diligence’; ‘conclusory allegations will not withstand demurrer.’ ” (Ibid.) 

“ ‘Resolution of a statute of limitations issue is normally a question of 

fact.’ [Citation.] More specifically, as to accrual, ‘once properly pleaded, 

belated discovery is a question of fact.’ [Citation.] As our state’s high court 

has observed: ‘There are no hard and fast rules for determining what facts or 

circumstances will compel inquiry by the injured party and render him 

chargeable with knowledge. [Citation.] It is a question for the trier of fact.’ 

[Citation.] ‘However, whenever reasonable minds can draw only one 

conclusion from the evidence, the question becomes one of law.’ [Citation.] 

Thus, when an appeal is taken from a judgment of dismissal following the 

sustention of a demurrer, ‘the issue is whether the trial court could determine 

as a matter of law that failure to discover was due to failure to investigate or 

to act without diligence.’ ” (E-Fab, supra, 153 Cal.App.4th at p. 1320, italics 

added.) 

This is not a case where reasonable minds could draw only one 

conclusion from the allegations of the TAC and the facts subject to judicial 

notice. As stated earlier, to successfully plead delayed discovery, Xian “ ‘must 

specifically plead facts to show (1) the time and manner of discovery and

(2) the inability to have made earlier discovery despite reasonable diligence.’ ” 

(Fox, supra, 35 Cal.4th at p. 808.) We are satisfied that standard is met here. 

Xian alleges that he first became aware that Sengupta concealed material 

facts about substantial investments in the company between 2010 and 2013 

when he received a copy of BeyondCore’s capitalization table in July 2019.

He also alleges that the following month (August 2019) he learned that Menlo 
15

Ventures had invested $9 million in 2014. These allegations successfully 

plead specific facts regarding the time and manner of discovery of the 

misrepresentations and omissions on which his fraud claims are based. (See, 

e.g., E-Fab, supra, 153 Cal.App.4th at p. 1325 [plaintiff sufficiently pled time 

and manner of discovery where allegations showed plaintiff learned 

something it did not know before].) 

As far as the inability to have made earlier discovery despite 

reasonable diligence, Xian pleads that he first learned that Salesforce had 

acquired BeyondCore in September 2016, and began investigating potential 

claims he might have. He hired a lawyer and began gathering documents 

from his time at BeyondCore, which he sent to his lawyer in November and 

December 2016. But the documents he compiled were insufficient to uncover 

anything about BeyondCore’s financial situation after he left, and he was 

unable to “determine financial details about [BeyondCore] other than what 

was disclosed in publicly filed documents” concerning the Salesforce 

acquisition. Xian continued to work with his lawyer and seek legal advice, 

and “throughout 2018 and through August 2019” sought additional 

documents on BeyondCore, finally obtaining the capitalization table in 

July 2019 and information about the series A financing the following month. 

Xian pleads he was unable to discover his fraud claim earlier “due to the nonpublic nature of the 2012 Cap Table and the Menlo Ventures Series A 

investment.” These are not mere conclusory allegations that he was 

reasonably diligent, but plead specific facts about the steps Xian took to 

discover his claims, and that he was unable to discover the facts supporting 

his fraud claim because of the nonpublic nature of the information. We must 

accept these allegations as true at this stage of the litigation; whether he will 
16

be able to prove them must be resolved another day. (Fox, supra, 35 Cal.4th 

at p. 811.) 

Sengupta asks us to conclude, as did the trial court, that Xian was on 

inquiry notice because he learned of the Salesforce acquisition in 

September 2016 and had knowledge of an injury and probable wrongdoing as 

of that time. But our Supreme Court has instructed that injury and 

suspicion of wrongdoing triggers the statute of limitation, “unless the plaintiff 

pleads and proves that a reasonable investigation at that time would not 

have revealed a factual basis for that particular cause of action.” (Fox, supra, 

35 Cal.4th at p. 803, italics added.) Here, that is what Xian has done. As 

explained above, whether those allegations are true or whether a reasonable 

investigation would have earlier revealed a factual basis for his fraud claim 

are questions we cannot determine at the pleading stage. 

Nor do the allegations of the TAC “contradict” the allegations of the 

SAC so as to bar Xian’s claim. Sengupta contends Xian “alleged other facts 

that put him on inquiry notice, such as the identification [in the SAC] of two 

investors he supposedly did not know and other ‘anomalies.’ ” (Italics added.)

But the TAC did not allege the 2016 press release named two investors; it 

identified two individuals as cofounders.

9 The alleged “anomalies” were 

“about the personnel involved at BeyondCore.” Sengupta does not explain 

9 As noted above, the SAC alleges that Xian “noticed some anomalies in 

the press release about the personnel involved at BeyondCore; the press 

release listed as co-founders Rahul Pathak and Griffin Chronis but omitted 

listing [Xian]. [Xian] thought this was unusual, as well as insulting, because 

[Xian] never met either one during his three-year tenure at BeyondCore . . . .

The press release was also at odds with the Teknos valuation report dated 

February 2010 that only showed [Xian] and [Sengupta] as co-founders. 

Further, [Sengupta] made no mention of Pathak or Chronis to prospective 

investors while [Xian] was at BeyondCore.” (Italics added.)
17

how the listing of two unknown individuals as cofounders in the 2016 press 

release suggests Xian should have been on notice regarding monetary 

investments made in the company between 2010 and 2013. The TAC does 

not allege Pathak and Chronis were also investors or potential investors, nor 

are they listed among the investors on the capitalization table. These 

allegations do not compel a conclusion that Xian had a factual basis for his 

fraud claim. As our Supreme Court has explained, “It would be contrary to 

public policy to require plaintiffs to file a lawsuit ‘at a time when the evidence 

available to them failed to indicate a cause of action.’ [Citations.] . . . Indeed, 

it would be difficult to describe a cause of action filed by a plaintiff, before 

that plaintiff reasonably suspects that the cause of action is a meritorious 

one, as anything but frivolous. At best, the plaintiff’s cause of action would 

be subject to demurrer for failure to specify supporting facts [citation].” (Fox, 

supra, 35 Cal.4th at p. 815.) 

In addition, as Xian argues, the mere fact that he hired a lawyer is not 

dispositive. Although Sengupta contends the fact that Xian engaged an 

attorney to advise him about his rights immediately after the Salesforce 

acquisition “reinforces the conclusion that Xian suspected something was 

wrong in September 2016,” the act of hiring counsel alone does not show Xian 

knew or suspected a factual basis for a fraud claim, particularly when Xian 

subsequently filed a class action against multiple defendants alleging 10 

causes of action. (See, e.g., E-Fab, supra, 153 Cal.App.4th at p. 1323 [claims 

based on independent legal theories can accrue at different times]; Snow v. 

A.H. Robins Co. (1985) 165 Cal.App.3d 120, 131, 134–135 [patient’s 

awareness her contraceptive device failed her barred her personal injury 

claim but not her fraud claim, which accrued when she learned of the 
18

defendant’s misrepresentations].) As pleaded, the allegations indicate Xian 

first learned of facts to support his fraud claim in July 2019. 

Finally, Sengupta’s attack on Xian’s delayed discovery allegations do 

not persuade us they are insufficient as a matter of law. Sengupta 

summarizes Xian’s “excuses for why he dragged his feet” and notes “none [of 

them] are particularly illuminating,” but the question of whether his

investigation was diligent and reasonable may be decided as a matter of law 

only where one inference is possible. The allegations that Xian learned 

Salesforce had acquired BeyondCore, read a press release mentioning two 

cofounders he had never heard of, and hired a lawyer in September 2016 do 

not, standing alone, establish as a matter of law that he should have 

suspected fraud occurred in 2012 and 2013 with respect to investments he 

alleges he first learned about in 2019. (Geneva Towers Ltd. Partnership v. 

City and County of San Francisco (2003) 29 Cal.4th 769, 781 [“ ‘In order for 

the bar of the statute of limitations to be raised by demurrer, the defect must 

clearly and affirmatively appear on the face of the complaint; it is not enough 

that the complaint shows that the action may be barred.’ ”].)

C. Other Bases for Demurrer

In the demurrer to the TAC, Sengupta raised several additional 

arguments regarding Xian’s inability to state a claim upon which relief could 

be granted, none of which the trial court addressed, and none of which 

Sengupta reasserts on appeal. Because we review the trial court’s ruling de 

novo, however, we will briefly address them.10

Sengupta argued in the trial court that he owed no duty to disclose the 

allegedly concealed financial information to Xian because he owed him no 

fiduciary duty. But a duty of disclosure can arise in transactional 

10 Xian addressed the arguments in his opening brief on appeal. 
19

relationships even where there is no fiduciary or confidential relationship 

between the parties. (See, e.g., Nissan Motor Acceptance Cases (2021) 

63 Cal.App.5th 793, 826 [cause of action for nondisclosure of material facts 

may arise where the defendant makes representations but fails to disclose 

facts which materially qualify those disclosed, the facts are known or 

accessible only to the defendant and defendant knows they are not known or 

discoverable by the plaintiff, or the defendant actively conceals discovery 

from the plaintiff]; Marketing West, Inc. v. Sanyo Fisher (USA) Corp. (1992) 

6 Cal.App.4th 603, 613 [if one undertakes to speak despite not having duty to 

do so, one is bound to make a full and fair disclosure].) Here, regardless of 

whether Sengupta owed Xian a fiduciary duty, Xian alleges that Sengupta 

made misrepresentations and concealed material information about 

BeyondCore’s fundraising efforts, failed to respond fully and truthfully to his 

inquiries despite a promise to “keep [him] updated on any major progress on 

the funding front,” and was in possession of information not discoverable by 

Xian due to the nonpublic nature of the capitalization table and series A 

financing information. 

Sengupta also asserted in his demurrer that Xian had not adequately 

pled concealment because the e-mail sent by Xian’s lawyer asking for an 

update on “ ‘fundraising efforts, etc.’ ” was a clearly a request regarding 

current efforts to raise future funds as opposed to past fundraising results, 

and Sengupta’s response fully answered the questions that were asked. But 

we do not think the meaning of the question is so clear. Nor can we say 

Sengupta’s response that “We are considering raising some money this fall 

and have had some initial discussions with venture capitalists,” together with 

an invitation to “Please feel free to ask me any questions,” forecloses a cause 

of action for fraudulent concealment. Simply put, this argument raises 
20

questions of fact not amenable to resolution on demurrer. (See, e.g., 

TracFone Wireless, Inc. v. County of Los Angeles (2008) 163 Cal.App.4th 1359, 

1368 [“Questions of fact may be resolved on demurrer only when there is only 

one legitimate inference to be drawn from the allegations of the complaint.”].) 

Finally, Sengupta argued that the TAC did not adequately allege 

justifiable reliance because (1) Sengupta and Xian were in an adversarial 

position in 2012, when the alleged concealment took place; (2) Xian could not 

have relied on Sengupta’s statements because he asked for his investment

back in cash soon after receiving Sengupta’s e-mail; and (3) Xian’s counsel 

wrote in an e-mail rejecting the conversion option that Xian had “ ‘other 

projects that he is much closer to and he’d like to allocate those funds to those 

projects.’ ” (Boldface and underscoring omitted.) While all of these 

arguments suggest inferences that can be drawn from the allegations of the 

complaint, and while further discovery may reveal additional support for 

them, we cannot determine as a matter of law that Xian’s reliance was 

unreasonable at this stage of the litigation. (Alliance Mortgage Co. v. 

Rothwell (1995) 10 Cal.4th 1226, 1239 [“ ‘Except in the rare case where the 

undisputed facts leave no room for a reasonable difference of opinion, the 

question of whether a plaintiff’s reliance is reasonable is a question of 

fact.’ ”].) 

In sum, we conclude Xian has adequately pled delayed discovery so as 

to survive demurrer. Because we cannot determine as a matter of law that 

Xian’s claim is barred by the statute of limitations, and none of Sengupta’s 

other arguments raised in the trial court defeat Xian’s fraud cause of action,

the demurrer should have been overruled. 
21

III.

DISPOSITION

The judgment is reversed and the action is remanded to the trial court 

for further proceedings consistent with this opinion. Xian is to recover costs 

on appeal. 

MARGULIES, J.

WE CONCUR:

HUMES, P. J.

WISS, J.

A162175

Xian v. Sengupta

 Judge of the San Francisco Superior Court, assigned by the Chief 

Justice pursuant to article VI, section 6 of the California Constitution.