Filed 4/21/21 Mims v. Bank of America, N.A. CA2/4

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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(a). 

This opinion has not been certified for publication or ordered published for purposes of rule 

8.1115(a).

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

JAMES MIMS et. al.,

Plaintiffs and Appellants,

v.

BANK OF AMERICA, N.A.,

Defendant and Respondent.

B308571

Los Angeles County

Super. Ct. No. 

19STCV24305

APPEAL from a judgment of the Superior Court of Los 

Angeles County, Barbara Marie Scheper, Judge. Affirmed.

Terran T. Steinhart for Plaintiffs and Appellants.

Severson & Werson, Kerry W. Franich and Jan T. Chilton 

for Defendant and Respondent.
2

INTRODUCTION

Plaintiffs and appellants James Mims and Bettie Mims1

appeal from a judgment of dismissal entered after the trial court 

granted a motion for judgment on the pleadings brought by 

defendant and respondent Bank of America, N.A. (“the Bank”). 

The Mims’ complaint against the Bank asserted a single claim for 

declaratory relief. Specifically, they sought a judicial declaration 

that no balance was due on a home equity line of credit 

(“HELOC”) they opened with the Bank in 2006. 

In granting the Bank’s motion, the trial court determined 

the Mims’ claim is barred by the statute of limitations. 

Specifically, it found the claim is predicated on the Bank’s alleged 

breaches of the contracts governing the parties’ rights and 

responsibilities pertaining to the Mims’ HELOC account, which 

occurred outside the four-year limitations period set forth in Code 

of Civil Procedure,2 section 337, subdivision (a). 

On appeal, the Mims contend: (1) the trial court erred by 

finding their claim is time-barred, as it is based on a book 

account, and accrued within the limitations period set forth in 

section 337, subdivision (b); (2) even if their claim is governed by 

section 337, subdivision (a), it is not time-barred due to the 

equitable doctrine of setoff; and (3) the trial court abused its 

discretion by denying their request for leave to amend. We affirm. 

1 Because they refer to themselves collectively as the Mims, 

rather than the Mimses, we will do the same.

2 All statutory references are to the Code of Civil Procedure. 
3

BACKGROUND

The Mims co-own a parcel of residential real property 

located in Los Angeles (“the Property”). In July 2004, they opened 

a $95,000 HELOC account with the Bank, which was secured by 

a deed of trust encumbering the Property (“Loan 9199”). Loan 

9199 was allegedly paid in full in 2005. 

In April 2006, the Mims opened a $150,000 HELOC 

account with the Bank, again secured by a deed of trust on the 

Property (“Loan 6799”). Sometime in 2016, the Bank informed 

the Mims they had defaulted on Loan 6799. 

Between October 2017 and January 2019, the parties, 

through their counsel, exchanged written correspondence, in 

which the Mims disputed the accuracy of the Bank’s records 

regarding the amounts owed on their HELOC accounts. In their 

letters, the Mims asserted the Bank improperly: (1) charged them 

for withdrawals they did not make on Loans 9199 and 6799; (2) 

failed to credit them for payments made on both loans; and (3) 

“created a third loan account” without their knowledge or 

consent, and charged them for withdrawals and fees on that 

account. Thus, the Mims argued that rather than owing any 

money to the Bank, they were entitled to a refund for 

overpayments made on the allegedly improper charges related to 

all three loans. In its responses, the Bank stated the Mims failed

to substantiate their claims. Apparently, the parties never 

entered into a tolling agreement. 

While the parties exchanged correspondence, in April 2018, 

the Bank recorded a notice of default under the deed of trust on 

Loan 6799 and commenced foreclosure proceedings. 
4

Subsequently, the Bank recorded a notice of trustee’s sale, which 

was scheduled for July 18, 2019. 

The notice of trustee’s sale prompted the Mims to file their 

complaint against the Bank on July 15, 2019. The complaint 

reiterated the allegations set forth in the Mims’ letters to the 

Bank, as discussed above. Based on those allegations, the Mims 

asserted a single claim for declaratory relief. Specifically, they 

alleged “[a] controversy exists between [the] Bank and the Mims,” 

in that the Bank “contends . . . Loan 6799 went into default [in 

2016,] with a total balance due in the neighborhood of $150,000,” 

while “the Mims contend that they paid off Loan 6799 in full and 

that it did not go into default.” They sought “a judicial 

declaration vindicating [their] contention that Loan 6799 is not in 

default and/or has been paid in full.” 

The Bank filed a motion for judgment on the pleadings, 

arguing the Mims’ claim is barred by the statute of limitations. In 

support of this position, the Bank contended “the gravamen of the 

action is that [the Bank] breached the promissory note and/or 

Deed of Trust [securing Loan 6799] by failing to credit payments 

they made to [it] and/or assessing [the Mims] with withdrawals 

that did not actually occur.” Consequently, the Bank argued, the 

four-year limitations period for breach of contract claims set forth 

in section 337, subdivision (a) applies, and the Mims’ claim 

accrued the moment the Bank’s wrongful acts took place. Because 

the improper transactions allegedly occurred no later than 2014, 

the Bank asserted the claim is time-barred. 

In opposition, the Mims contended section 337, subdivision 

(a) does not apply. Instead, they argued, the limitations period for 

claims on book accounts, set forth in section 337, subdivision (b), 

governs their claim, as “the loan history and/or monthly loan 
5

statements provided by [the Bank] c[a]me squarely within the 

definition of a ‘book account’” provided in section 337a. The Mims 

therefore contended their claim is not time-barred, as it did not 

accrue until the date of the last entry on the book account, which 

occurred within four years of their complaint being filed. In the 

alternative, the Mims argued that even if their claim is governed 

by section 337, subdivision (a), it is not time-barred due to “the 

case law equitable rule of set-off, or the statutory application of 

that rule” provided in section 431.70. 

After the Bank filed its reply, the Mims obtained the trial 

court’s permission to file a sur-reply. Among other things, the 

Mims argued that if the trial court were to grant the Bank’s 

motion, it should do so with leave to amend for purposes of 

allowing them to attach a copy of the “Bank of America Equity 

Maximizer Agreement and Disclosure Statement” (“Maximizer 

Agreement”) to the complaint. According to the Mims, the 

Maximizer Agreement demonstrated Loan 6799 is a book account 

within the meaning of section 337a. 

The trial court granted the Bank’s motion. In so doing, the 

court first ruled that, as a matter of law, the Mims’ claim is not 

based on a book account, because it is predicated on “monies 

due . . . under an express contract,” i.e., the deed of trust securing 

Loan 6799.3 Subsequently, the trial court determined the Mims 

could not “save[ ] their claim” through application of section 

3 The trial court referenced only the deed of trust, not the 

Maximizer Agreement, perhaps because the Bank’s motion for 

judgment on the pleadings only attached the deed of trust, and 

contended that the Mims’ claims arose out of breaches of that 

contract. The Maximizer Agreement was attached to the Mims’ 

sur-reply, and on appeal, both parties rely on the Maximizer 

Agreement in support of their respective positions. 
6

431.70 or “case authority allowing for a claim of set-off if equity 

demands.” On this point, the court noted: (1) section 431.70, by 

its terms, may only be used by defendants, not plaintiffs; and (2) 

the primary case on which the Mims relied in support of their 

equitable setoff argument, Plut v. Fireman’s Fund Ins. Co. (2000) 

85 Cal.App.4th 98, was distinguishable, as it involved a 

defendant’s assertion of setoff against a judgment entered in the 

plaintiff’s favor. Lastly, the trial court denied the Mims’ request 

for leave to amend, finding the Maximizer Agreement “would not 

establish an open book account as [the Mims] contend.” The 

Mims appealed from the ensuing judgment. 

DISCUSSION

I. The trial court did not err by granting the Bank’s 

motion for judgment on the pleadings. 

“In an appeal from a motion granting judgment on the 

pleadings, we accept as true the facts alleged in the complaint 

and review the legal issues de novo. ‘A motion for judgment on 

the pleadings, like a general demurrer, tests the allegations of 

the complaint or cross-complaint, supplemented by any matter of 

which the trial court takes judicial notice, to determine whether 

plaintiff or cross-complainant has stated a cause of action. 

[Citation.] Because the trial court’s determination is made as a 

matter of law, we review the ruling de novo, assuming the truth 

of all material facts properly pled.’ [Citation.]” (Angelucci v. 

Century Supper Club (2007) 41 Cal.4th 160, 166.) 
7

The Mims contend the trial court erred by finding their 

declaratory relief claim is time-barred. In support of this position, 

they advance two arguments. We address each in turn below.

A. The Mims’ claim is not governed by section 337, 

subdivision (b). 

“A claim for declaratory relief is subject to the same statute 

of limitations as the legal or equitable claim on which it is based. 

[Citation.]” (Bank of New York Mellon v. Citibank, N.A. (2017) 8 

Cal.App.5th 935, 943.) Accordingly, “if declaratory relief is sought 

with reference to an obligation which has been breached and the 

right to commence an action for ‘coercive’ relief upon the cause of 

action arising therefrom is barred by the statute [of limitations], 

the right to declaratory relief is likewise barred.” (Maguire v. 

Hibernia S. & L. Soc. (1944) 23 Cal.2d 719, 734.) 

“To determine the statute of limitations which applies to a 

cause of action it is necessary to identify the nature of the cause 

of action, i.e., the ‘gravamen’ of the cause of action. [Citations.] 

‘[T]he nature of the right sued upon and not the form of action 

nor the relief demanded determines the applicability of the 

statute of limitations . . . .’ [Citation.]” (Hensler v. City of 

Glendale (1994) 8 Cal.4th 1, 22-23.) “What is significant for 

statute of limitations purposes is the primary interest invaded by 

[the] defendant’s wrongful conduct. [Citation.]” (Barton v. New 

United Motor Manufacturing, Inc. (1996) 43 Cal.App.4th 1200, 

1207.) 

Per section 337, subdivision (a), a breach of contract claim 

must be brought within four years of its accrual. (§ 337, subd. (a); 

see also Gilkyson v. Disney Enterprises, Inc. (2016) 244 
8

Cal.App.4th 1336, 1341 (Gilkyson).) “Traditionally, a claim 

accrues ‘“‘when [it] is complete with all of its elements’—those 

elements being wrongdoing [or breach], harm, and causation.”’ 

[Citations.]” (Gilkyson, supra, 244 Cal.App.4th at p. 1341.) 

Pursuant to section 338, subdivision (b), “[a]n action to 

recover . . . upon a book account . . . consisting of one or more 

entries” must be brought within four years of “the date of the last 

item.” Section 337a defines “book account” as follows: “[A] 

detailed statement which constitutes the principal record of one 

or more transactions between a debtor and a creditor arising out 

of a contract or some fiduciary relation, and shows the debits and 

credits in connection therewith, and against whom and in favor of 

whom entries are made, is entered in the regular course of 

business as conducted by such creditor or fiduciary, and is kept in 

a reasonably permanent form and manner . . . .” 

“‘An express contract, which defines the duties and 

liabilities of the parties, whether it be oral or written, is not, as a 

rule, an open account.’ [Citation.]” (Eloquence Corp. v. Home 

Consignment Center (2020) 49 Cal.App.5th 655, 665. (Eloquence).) 

This “general rule,” however, “is subject to the exception that an 

open book account cause of action may lie where the parties had 

agreed to treat money due under an express contract as items 

under open book account. [Citation.]” (Ibid.) Accordingly, “monies 

which become due under an express contract . . . cannot, in the 

absence of a contrary agreement between the parties, be treated as 

items under an open book account so as to allow [a party] to 

evade or extend the statutory limitations period. [Citations.]” 

(Tsemetzin v. Coast Federal Savings & Loan Assn. (1997) 57 

Cal.App.4th 1334, 1343-1344 (Tsemetzin).) 
9

The Mims contend the applicable statute of limitations is 

section 337, subdivision (b), rather than subdivision (a), because 

the account histories and billing statements for Loan 6799 satisfy 

section 337’s definition of “book account.” Relying on Warda v. 

Schmidt (1956) 146 Cal.App.2d 234 (Warda) and In re Roberts 

Farms, Inc. (9th Cir. 1992) 980 F.2d 1248 (Roberts Farms), they 

argue they did not have to show the parties agreed to treat the 

money due on their HELOC account as items in a book account, 

because the Maximizer Agreement “does not set the time and 

amount of payments.” (Bolded text and italics in original.) 

In response, the Bank contends Warda and Roberts Farms 

are distinguishable from this case. Instead, it analogizes this case 

to Eloquence, arguing that because the Maximizer Agreement 

“fixed the time for payment” as “once a month” and “set forth the 

formulas by which the amount of each monthly payment would 

be calculated[,]” the monies due and at issue are governed by a 

contract. Consequently, the Bank asserts, the Loan’s account 

histories and billing statements did not create a book account; 

rather, they illustrated the Bank’s “‘incidental keeping of 

accounts under an express contract[.]’” It therefore argues that 

because the Mims did not plead or otherwise establish the parties 

agreed to treat the monies due on the HELOC account as items 

in a book account, section 337, subdivision (b) does not apply.

As discussed below, we agree with the Bank that this case 

is more analogous to Eloquence than Warda and Roberts Farms. 

Accordingly, we conclude the trial court correctly found the Mims’ 

claim is based on the Bank’s alleged breaches of the contracts 

governing Loan 6799, rather than a book account, and is subject 

to the limitations period provided in section 337, subdivision (a). 
10

In Warda, the plaintiff entered into a written contract with 

the defendant to perform plastering work on 171 homes in a 

subdivision the defendant was developing. (Warda, supra, 146 

Cal.App.2d at p. 235.) The contract set the plaintiff’s rate of pay, 

and stated payment was to be made in three installments based 

on his completion of various stages in the plastering process. (Id. 

at pp. 235-236.) Subsequently, however, deviations from the 

defendant’s building plans required the plaintiff to do more 

plastering than originally anticipated. (Id. at p. 236.) Thus, the 

parties entered into an oral agreement, whereby the defendant 

agreed to compensate the plaintiff for the extra work. (Ibid.) The 

parties did not agree on payment terms. (Ibid.) Later, the 

plaintiff billed the defendant for the additional plastering. (Ibid.) 

Several years later, the plaintiff sued the defendant to 

recover the balance due for the work performed. (Warda, supra, 

146 Cal.App.2d at p. 236.) Following a bench trial, the trial court 

entered judgment in the plaintiff’s favor, finding he had proven a 

book account existed between the parties, on which the defendant 

owed $23,592.64. (Ibid.) On appeal, the defendant contended the 

plaintiff’s loose-leaf ledger book did not, as a matter of law, 

constitute a book account within the meaning of section 337. (Id. 

at p. 237.) The defendant argued the plaintiff’s claim arose out of 

the parties’ oral and written contracts, and therefore was barred 

by the statute of limitations. (Id. at pp. 236-237) 

The Court of Appeal affirmed. (Warda, supra, 146 

Cal.App.2d at p. 240.) In support of its holding, the Court of 

Appeal first acknowledged that, in general, “[t]he mere recording 

in a book of transactions or the incidental keeping of accounts 

under an express contract does not itself create a book account. 

[Citations.] Such memoranda cannot be utilized under the guise 
11

of a book account as a device to extend the statute of limitations 

beyond the time it would run on the contractual obligation. 

[Citation.]” (Id. at p. 237.) It further noted, “[h]owever, the 

parties to a written or oral contract may, by agreement or 

conduct, provide that monies due under such contract shall be the 

subject of an account between them. [Citations.] In that event a 

cause of action arising therefrom is on the account and not on the 

underlying contract. [Citation.]” (Ibid.)

Applying these principles, the Court of Appeal held the 

evidence at trial showed the parties agreed to treat payments for 

the plastering work as monies due on an account between them, 

as opposed to being governed by their contracts. (See Warda, 

supra, 146 Cal.App.2d at pp. 237-238.) Specifically, the Court of 

Appeal observed: (1) the plaintiff and his foreman, who was also 

his bookkeeper, testified “the installment-payment provisions of 

[the parties’ written] contract were never followed and that all 

payments made by [the] defendant to [the] plaintiff were on 

account”; (2) the defendant’s bookkeeper likewise testified that 

payments to the plaintiff “were on account”; and (3) the parties’ 

oral contracts did not contain any payment provisions. (Ibid.) 

In Roberts Farms, a law firm and a corporation entered into 

an oral contract, in which the law firm agreed to defend the 

corporation against a lawsuit in exchange for timely payment for 

services rendered. (Roberts Farms, supra, 980 F.2d at p. 1250.) 

Under that contract, the firm represented the corporation from 

April 1985 to January 1987, and billed for its services by mailing 

monthly statements. (Ibid.) The corporation failed to pay for 

services rendered from July 1985 through January 1987. (Ibid.) 

In December 1987, the corporation filed a voluntary 

Chapter 11 petition pursuant to 11 U.S.C. § 1121(a). (Roberts 
12

Farms, supra, 980 F.2d at p. 1250.) In February 1988, the law 

firm filed a claim in the bankruptcy proceeding, asserting the 

corporation was indebted to it in the amount of $144,898.14 for 

legal services. (Ibid.) The corporation objected to the claim, 

arguing it was barred by the statute of limitations. (Ibid.) The 

bankruptcy court determined the law firm’s claim was not timebarred because the firm’s records constituted an open book 

account under section 337a. (Id. at p. 1251.) The Bankruptcy 

Appellate Panel (BAP) affirmed the trial court’s decision. (Ibid.) 

The Ninth Circuit affirmed the trial court’s and the BAP’s 

decisions, holding the law firm’s ledger cards, time sheets, and 

billing statements constituted an open book account. (Roberts 

Farms, supra, 980 F.2d at pp. 1252-1253.) In so doing, the Ninth 

Circuit rejected the corporation’s argument that “both the 

creditor and debtor must expressly intend to be bound by the 

book account before a book account is created.” (Id. at p. 1252, fn. 

3.) The Ninth Circuit observed: “California courts only require 

that the parties expressly intend to be bound by an open book 

account when there is an express contract that sets the time and 

amount of payment. [Citations.]” (Ibid.) The Ninth Circuit held 

that, on the facts before it, no such intention was required, 

because the parties’ “oral contract . . . did not fix a time for 

payment or a monthly amount payable,” and “[t]he amount owing 

and the time for payment depended on what services [were] 

performed and on what dates these services were rendered[.]” 

(Ibid.) Consequently, the law firm’s record keeping “was not the 

mere incidental recording of debts accruing from an entirely 

independent source,” as those records “were the only source 

available to determine what and when [the corporation] owed 

payment.” (Ibid.) 
13

In Eloquence, two consigners agreed to consign jewelry and 

loose diamonds to a consignee for resale. (Eloquence, 49 

Cal.App.5th at p. 658.) The agreement required the consignee to 

provide the consignors with a monthly sales report, showing the 

items sold. (Ibid.) Upon receiving the report, the consignors 

prepared an invoice setting forth the payment due, which, per the 

agreement, the consignee was required to pay within 30 days. 

(Ibid.) The agreement also provided for a biannual reconciliation 

of the inventory of consigned goods, and required the consignee to 

pay any invoice stemming from the reconciliation within 30 days. 

(Id. at p. 659.) The agreement was amended once while it was in 

place to reflect the consignors’ merger into a single entity. (Ibid.) 

Subsequently, the consignor sued the consignee and its 

general partners to recover monies due on two unpaid invoices 

following a reconciliation, asserting claims for breach of contract 

and recovery on an open book account. (Eloquence, 49 

Cal.App.5th at p. 659.) The defendants moved for summary 

judgment, arguing: (1) both claims were barred by the statute of 

limitations; and (2) the consignor failed to show the existence of 

an open book account between the parties. (Ibid.) The trial court 

agreed and granted the defendants’ motion. (Id. at p. 660.) 

The Court of Appeal affirmed. (Eloquence, supra, 49 

Cal.App.5th at p. 667.) With respect to the consignor’s open book 

account claim, the Court of Appeal determined “the [a]greement 

is an express contract that specifically defines [the consignee’s] 

obligation to pay the specified amount of each invoice within a 

specified time period[.]” (Id. at p. 665.) Thus, the Court of Appeal 

determined the consignor was required to demonstrate the 

parties agreed to treat money due under the agreement as items 

on an open book account. (See ibid.) Subsequently, the Court of 
14

Appeal held the consignor failed to “show agreement or conduct 

evidencing an open book account[.]” (Id. at p. 666.) Specifically, it 

concluded the documents submitted by the consignor were 

“merely secondary or incidental records” that “serv[ed] to track 

the status” of the unpaid invoices issued under the agreement, 

which could not be used to “attempt[ ] an end-run around the 

statute of limitations for written contract. [Citations.]” (Ibid.) 

Here, the parties do not dispute that the Maximizer 

Agreement governs the Mims’ HELOC account. That account is 

defined as “a revolving credit arrangement in which [the Bank] 

make[s] loans to [the Mims] by advancing funds (‘Advances’) at 

[their] direction [and] allow[s] [them] to repay those 

Advances . . . subject to the terms of [the Maximizer Agreement].” 

(Bolded text in original.) The Maximizer Agreement specifies the 

maximum total amount the Mims could borrow on their account, 

and permits the Mims to take Advances during the 120-month 

period commencing from the date the account was opened, known 

as the “Draw Period.” 

Similar to the consignment agreement in Eloquence, and in 

contrast with the oral contracts in Warda and Roberts Farms, the 

Maximizer Agreement defines the Mims’ payment obligations. 

During the Draw Period, the Maximizer Agreement required the 

Mims to make a “Minimum Payment” each month they had an 

outstanding balance on their account. After the Draw Period 

ended, the Maximizer Agreement required them to make a 

Minimum Payment (as defined) “each month.” The Maximizer 

Agreement then set forth, in detail, the various formulas used to 

calculate the Minimum Payments, which depended on when 

payments were due (i.e., during or after the Draw Period) and the 

payment option the Mims selected. According to the Maximizer 
15

Agreement, Minimum Payments were due as shown on “Billing 

Statements” sent by the Bank. 

Through these terms, the Maximizer Agreement, like the 

consignment agreement in Eloquence, “specifically defines [the 

Mims’] obligation to pay the specified amount of each [Billing 

Statement],” and delineates when those payments were required. 

(Eloquence, supra, 49 Cal.App.5th at p. 665.) Thus, the monies 

due on the Mims’ HELOC account do not, as a matter of law, 

constitute items in a book account unless the record reflects the 

parties agreed—either expressly or by their conduct—to treat 

them in that manner. (See id. at pp. 665-666; Tsemetzin, supra, 

57 Cal.App.4th at pp. 1343-1344.)

As the Bank correctly points out, however, none of the 

documents in the record reflect the parties expressly agreed to 

treat the payments due on Loan 6799 as items in a book account. 

Moreover, the Mims do not plead any facts establishing the 

parties made such an agreement through their conduct. For 

example, in contrast with Warda, the Mims do not allege (or 

argue they could allege) the parties did not follow the provisions 

defining the Mims’ payment obligations under their written 

contract, i.e., the Maximizer Agreement, and instead made 

payments and credits on an independent account. (See Warda, 

supra, 146 Cal.App.2d at pp. 237-238.) Thus, Loan 6799’s account 

history and billing statements reflect the Bank’s “incidental 

keeping of [an] account[ ] under an express contract,” which “do[ ] 

not . . . create a book account” and “cannot be utilized . . . as a 

device to extend the statute of limitations beyond the time it 

would run on the contractual obligation. [Citation.]” (Id. at p. 

237.) 
16

Accordingly, we conclude the Mims’ claim for declaratory 

relief is not predicated on a book account. Rather, the claim is 

based upon the Bank’s alleged failure to comply with its 

obligations under Maximizer Agreement and the deed of trust 

securing Loan 6799, which required it to credit the Mims for 

payments made, and enumerated the circumstances in which it 

could issue advances on the HELOC account. Consequently, 

section 337, subdivision (b) does not apply, and the proper statute 

of limitations is section 337, subdivision (a). 

B. The Mims have not shown the equitable 

doctrine of setoff saves their claim. 

Next, the Mims argue that even if their claim is governed 

by section 337, subdivision (a), their claim is not time-barred due 

to the equitable doctrine of setoff. Specifically, they appear to 

contend: (1) unlike the statutory right of setoff codified in section 

431.70, the equitable doctrine of setoff is not limited to use by 

defendants, and can be invoked by plaintiffs; and (2) the 

equitable doctrine of setoff operates in the same manner as 

statutory setoff, and therefore permits the Mims to rely on timebarred breach of contract claims to seek declaratory relief 

discharging any balance owed on Loan 6799. As discussed below, 

we are not persuaded by the Mims’ argument. 

At the outset, we note the Bank does not appear to dispute 

the equitable doctrine of setoff may be utilized by plaintiffs. 

Moreover, caselaw appears to be in accord with the Mims’ 

position on this point. (See, e.g., Harrison v. Adams (1942) 20 

Cal.2d 646, 647 [plaintiff filed original action in equity seeking to 

set off the amount of a judgment against him and in favor of 
17

defendant by the amount of a promissory note by defendant, 

which plaintiff had been assigned for purposes of collection].) 

Therefore, we turn to consider whether the Mims have shown the 

doctrine applies to save their claim from being time-barred. 

Although the Mims concede it does not apply to them, we 

begin our discussion with section 431.70 because, as discussed 

above, they still rely on the statute in support of their argument. 

Section 431.70 provides, in relevant part: “Where cross-demands 

for money have existed between persons at any point in time 

when neither demand was barred by the statute of limitations, 

and an action is thereafter commenced by one such person, the 

other person may assert in the answer the defense of payment in 

that the two demands are compensated so far as they equal each 

other, notwithstanding that an independent action asserting the 

person’s claim would at the time of filing the answer be barred by 

the statute of limitations.” This statute “provide[s] partial relief 

from the statute of limitations” by allowing a defendant to “assert 

[an] expired claim defensively” to “defeat [a] plaintiff’s claim in 

whole or in part.” (Construction Protective Services, Inc. v. TIG 

Specialty Ins. Co (2002) 29 Cal.4th 189, 195, 198.) 

As noted above, the Mims suggest the equitable doctrine of 

setoff is, for all intents and purposes, identical to statutory setoff, 

except that it is not limited to use by defendants. Therefore, they 

argue that by invoking the doctrine, they may rely on their 

expired breach of contract claims to seek declaratory relief from 

the debt owed on Loan 6799. 

The Mims, however, do not cite, and we could not locate, 

any California appellate court decisions demonstrating the 

equitable doctrine of setoff operates in the manner they contend. 

Rather, cases applying the doctrine, including the two cited in the 
18

Mims’ opening brief,4 reflect it generally applies where a party 

against whom judgment has been entered seeks to reduce the 

amount owed thereunder by using a judgment or claim that party 

held against the other, which is valid at the time setoff was 

sought. (See, e.g., Harrison v. Adams, supra, 20 Cal.2d at pp. 647-

648 [plaintiff sought to set off judgment by promissory note]; Wm. 

R. Clarke Corp. v. Safeco Ins. Co. of Am. (2000) 78 Cal.App.4th 

355, 357-358 [defendant sought to set off judgment by creditors’ 

claims owed by plaintiff, which defendant acquired by 

assignment]; Margott v. Gem Properties, Inc. (1973) 34 

Cal.App.3d 849, 852 [defendant sought to set off judgment by 

another judgment]; Keith G. v. Suzanne H. (1998) 62 Cal.App.4th 

853, 856 [same].) So far as we can tell, there do not appear to be 

any cases to support the Mims’ contention. Accordingly, we 

conclude the Mims’ argument on this point is unavailing, as they 

have not shown it is supported by legal authority. 

In sum, the Mims’ claim for declaratory relief is not based 

on a book account; instead, it is predicated on the Bank’s alleged 

breaches of the contracts pertaining to Loan 6799. Consequently, 

the claim is governed by section 337, subdivision (a). The parties 

do not appear to dispute the alleged breaches occurred between 

2006 and 2014. Thus, because the complaint was not filed until 

2019, the claim is time-barred, and the Mims have not shown the 

equitable doctrine of setoff applies to rescue their claim. We 

therefore conclude the trial court correctly granted the Bank’s 

motion for judgment on the pleadings. 

4 The Mims do not cite any authority in support of their main 

argument on this point in their reply brief. 
19

II. The trial court did not abuse its discretion by 

denying the Mims’ request for leave to amend. 

“We review the trial court’s denial of leave to amend after 

granting a motion for judgment on the pleadings for abuse of 

discretion. [Citation.]” (Travelers Property Casualty Co. of 

America v. Engel Insulation, Inc. (2018) 29 Cal.App.5th 830, 838.) 

“To show abuse of discretion, [the] plaintiff must show in what 

manner the complaint could be amended and how the 

amendment would change the legal effect of the complaint, i.e., 

state a cause of action. [Citations.]” (Buller v. Sutter Health 

(2008) 160 Cal.App.4th 981, 992.) 

The Mims contend they should have been afforded leave to 

amend to attach a copy of the Maximizer Agreement to their 

complaint because it would establish Loan 6799 is a book 

account. As discussed in section I.A, supra, however, the 

Maximizer Agreement does not demonstrate their claim is based 

on a book account; indeed, it actually refutes the Mims’ 

contention. Accordingly, we conclude the trial court did not abuse 

its discretion by denying their request for leave to amend. 
20

DISPOSITION

The judgment is affirmed. Respondent shall recover its 

costs on appeal. 

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

CURREY, J. 

We concur: 

WILLHITE, Acting P.J. 

COLLINS, J.