Filed 5/25/23 Western Riverside Council of Governments v. McKiernan CA2/7

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

WESTERN RIVERSIDE COUNCIL 

OF GOVERNMENTS,

Plaintiff and Appellant,

v.

KIERNAN MCKIERNAN et al.,

Defendants and Respondents.

 B322576

 (Riverside County

 Super. Ct. No. RIC1707201)

CITY OF BEAUMONT,

Cross-Complainant and

Appellant,

v.

KIERNAN MCKIERNAN et al.,

Cross-Defendants and

Respondents.

 

 (Riverside County

 Super. Ct. No. RIC1712042)
2

APPEAL from a judgment of the Superior Court of 

Riverside County, John W. Vineyard, Judge. Reversed and 

remanded with directions.

Best Best & Krieger, Jeffrey V. Dunn and Christopher 

Pisano for Plaintiff and Appellant Western Riverside Council of

Governments.

Slovak Baron Empey Murphy & Pinkney, Shaun M. 

Murphy, John O. Pinkney and Peter Nolan for CrossComplainant and Appellant City of Beaumont.

Procopio, Cory, Hargreaves & Savitch, Kendra J. Hall and 

Laurence J. Phillips for Cross-Defendants and Respondents.

__________________________________

INTRODUCTION

This appeal involves two consolidated actions. In the first, 

the City of Beaumont (City) filed a third amended crosscomplaint alleging Kieran McKiernan and Torcal, LLC (Torcal),

fraudulently caused hundreds of false invoices to be submitted to 

the City for payment from 2012 to early 2016. In the second, 

Western Riverside Council of Governments (WRCOG), as the 

assignee of the City, filed a third amended complaint alleging the 

same. The trial court sustained demurrers to the third amended 

cross-complaint and the third amended complaint, ruling the 

claims were barred by the statute of limitations.

We conclude the pleadings adequately allege McKiernan 

and Torcal were properly substituted in for fictitiously named

Roes and Does. Accepting the allegations as true, as we must on 

demurrer, the claims (with one exception) relate back to the filing 

of the original cross-complaint and complaint in June 2017. 
3

Except for the claims for conflict of interest, we cannot 

conclusively determine from the face of the pleadings that the 

claims are barred by the statute of limitations. We reverse the 

judgment of dismissal and remand with directions to vacate the 

order sustaining McKiernan and Torcal’s demurrers without 

leave to amend and to consider the other grounds for the 

demurrers that McKiernan and Torcal asserted but the trial 

court did not reach. 

FACTUAL AND PROCEDURAL BACKGROUND

A. Initial Pleadings in Urban Logic Consultants, Inc. v. City of 

Beaumont, Case No. RIC1707201

Urban Logic Consultants, Inc. (ULC) sued the City for 

breach of contract and other related causes of action, alleging the 

City failed to pay invoices totaling $880,000. ULC’s complaint 

has been dismissed and is not at issue in this appeal.

On June 19, 2017, the City filed a cross-complaint against 

ULC, its former principals David Dillon, Ernest Egger, and 

Deepak Moorjani, and Roes 1 through 50. The City alleged it 

entered into consulting contracts with ULC in which ULC agreed 

to provide management services to the City. Pursuant to those 

contracts, Dillon, Egger, and Moorjani acted as the City’s 

economic development director, director of planning, and public 

works director, respectively. The City alleged that, while acting 

in their capacity as City public officials, cross-defendants engaged 

in a massive scheme to defraud the City out of millions of dollars.

The Roe cross-defendants allegedly participated in the fraud, 

including by submitting false and fraudulent invoices. The crosscomplaint asserted 15 causes of action for violation of the False 
4

Claims Act, fraud, breach of fiduciary duty, and other related 

claims. The cross-complaint also alleged that the Roe crossdefendants were alter egos of ULC and the other crossdefendants.

Dillon, Egger, and Moorjani were criminally charged with 

corruption and embezzlement arising out of the fraud. They 

pleaded guilty to the charges and, according to the City, paid 

$11 million in restitution. The City subsequently dismissed the 

cross-complaint against them.

On August 19, 2019 and September 6, 2019, the City filed 

amendments to its cross-complaint substituting McKiernan as 

Roe 1 and Torcal as Roe 2. McKiernan and Torcal acknowledged 

service of the summons and cross-complaint as Roes 1 and 2 on 

November 14, 2019.

B. Initial Pleadings in Western Riverside Council of 

Governments v. ULC, Case No. RIC1712042

On June 30, 2017, WRCOG filed a complaint against ULC, 

Dillon, Egger, Moorjani, and Does 1 through 50 in a separate 

action. The complaint asserted claims nearly identical to those 

asserted by the City in its cross-complaint in the other action. 

The City and WRCOG both alleged that the City had assigned its 

claims to WRCOG, but ULC would not acknowledge the validity 

of the assignment. Therefore, out of an abundance of caution, the 

City filed its cross-complaint. The court consolidated the actions 

on May 3, 2018.

On August 14, 2019 and September 16, 2019, WRCOG filed 

amendments substituting McKiernan as Doe 1 and Torcal as 

Doe 2. On November 14, 2019, counsel for McKiernan and Torcal 
5

executed and returned acknowledgements of service of the 

summons and complaint as Doe defendants.

C. First Round of Demurrers and Motions To Strike and First 

Amended Pleadings

McKiernan and Torcal filed demurrers to the crosscomplaint and complaint and motions to strike the Roe and Doe

amendments.

On March 11, 2020, before the hearings on the motions, 

WRCOG filed a first amended complaint. On March 24, 2020, the 

court granted the City’s ex parte application for leave to file the 

first amended cross-complaint, which the City filed on June 1, 

2020.

Neither WRCOG’s first amended complaint nor the City’s

first amended cross-complaint expressly stated McKiernan and 

Torcal were being named in their capacity as Roe and Doe crossdefendants or defendants. The City’s first amended crosscomplaint included McKiernan and Torcal by name in the 

caption; WRCOG’s first amended complaint asserted claims 

against them without referring to them as Does.

The first amended pleadings alleged Torcal purchased ULC 

in August 2012. McKiernan was the managing member of Torcal 

and became ULC’s chief executive officer after the purchase. In 

accordance with the allegations previously made against the Roes 

and Does, the first amended pleadings alleged McKiernan and 

Torcal submitted false and fraudulent invoices to the City, which 

the City paid. The invoices included inflated charges and charges 

for services that were never provided to the City. The fraudulent 

invoices were approved by ULC’s former principals who had 

stayed at the City as ULC contractors after the sale was 
6

completed. The fraudulent billing continued after Dillion, Egger, 

and Moorjani were terminated. The City and WRCOG did not 

discover McKiernan and Torcal had been involved in the fraud 

until 2019.

The first amended complaint and cross-complaint asserted 

the same claims against McKiernan and Torcal that had 

previously been asserted against Does and Roes 1 and 2: 

violation of the False Claims Act, conflict of interest, intentional 

misrepresentation based on fraudulent billing, civil conspiracy to 

defraud, breach of fiduciary duty, breach of the duty of loyalty, 

accounting, and negligence. The pleadings also asserted a claim 

for breach of contract against McKiernan and Torcal that had not

previously been asserted against the Roes and Does.

D. Second Round of Demurrers and Motions To Strike

McKiernan and Torcal again filed demurrers and motions 

to strike. In the demurrers, McKiernan and Torcal argued the 

claims were not alleged with sufficient particularity and argued 

generally (with scant analysis) that the claims were barred by the 

statute of limitations because they did not relate back to the 

filing of the original cross-complaint and complaint. They also 

argued the City and WRCOG had abandoned the Roe and Doe 

amendments by filing amended pleadings that named McKiernan 

and Torcal directly.

On August 24, 2020, the court sustained the demurrers 

with leave to amend on the ground the claims were barred by the 

statute of limitations. The motions to strike were taken off 

calendar as moot. The court referred to Torcal and McKiernan as 

Doe and Roe defendants and cross-defendants. The court 

considered whether the Doe and Roe amendments were proper 
7

under Code of Civil Procedure section 474, but the court’s 

reasoning and conclusion are not clear. Because the court 

analyzed the issue in the context of the demurrers, the court did 

not make any factual findings. 

The court then ruled the claims were barred by the statute 

of limitations because the City and WRCOG had not sufficiently 

alleged delayed discovery. The court did not explicitly consider 

whether any alleged claims accrued during the statute of 

limitations period with or without the benefit of any delayed 

discovery or tolling. 

E. Second Amended Pleadings and Third Round of Demurrers 

The second amended cross-complaint and second amended 

complaint were filed on September 14, 2020. The pleadings 

alleged in greater detail how the City and WRCOG first learned 

of McKiernan and Torcal’s involvement in the fraudulent scheme 

in March and April 2019, and why they had not discovered the 

wrongdoing earlier.

McKiernan and Torcal again filed demurrers, but this time 

they did not file motions to strike. The court again sustained the 

demurrers with leave to amend on the ground the claims were 

barred by the statute of limitations.

F. The Operative Pleadings: The Third Amended Crosscomplaint and the Third Amended Complaint

On January 4, 2021, the City filed a third amended crosscomplaint and WRCOG filed a third amended complaint. These 

are the operative pleadings at issue in this appeal. The City and 

WRCOG allege the following facts.
8

For more than two decades, cross-defendants ULC, Dillon, 

Egger, and Moorjani perpetrated a fraudulent scheme in which, 

among other things, they submitted false invoices for 

unnecessary, overpriced and sometimes non-existent services. 

The City learned of the fraud in May 2016 when prosecutors filed 

felony criminal charges against Dillon, Egger, and Moorjani for 

corruption and embezzlement arising out of their 

misappropriation of City funds while acting as agents of the City.

The City’s relationship with ULC started in 1993. The City

had reduced the number of its full-time employees and replaced 

them with consultants. The City entered into consulting 

contracts with ULC in 1993 whereby ULC was to work with 

another City contractor to administer and manage a financing 

program for development in the City. Pursuant to the contracts, 

Dillon became the City’s economic development director, Egger 

became the City’s director of planning, and Moorjani became the 

City’s public works director. Around the same time, the City 

hired a consultant from another firm to serve as city manager. 

Working in concert with the city manager, assistant city 

manager, and city attorney, Dillon, Egger, and Moorjani engaged 

in extensive self-dealing and diverted millions of dollars of City 

funds to themselves and ULC. Among other things, between 

1993 and 2015, ULC demanded and received payment for nonexistent or unnecessary engineer reports; unnecessary 

engineering and design services; and fraudulently overpriced, 

unnecessary or nonexistent waste-water treatment services.

In August 2012, Dillon, Egger, and Moorjani sold ULC to 

Torcal. McKiernan was the managing member of Torcal, and 

after the 2012 sale, he became the chief executive officer and 

director of ULC. Dillon, Egger, and Moorjani continued to work 
9

for ULC as independent contractors, and, in that capacity, 

continued their wrongful scheme of embezzling money from the 

City. Dillon, Egger, and Moorjani’s embezzlement continued

until mid-2015, when they stopped working for the City.

As the City later discovered, Torcal and McKiernan were 

involved in the wrongful conduct against the City from the time 

Torcal purchased ULC in 2012 to early 2016. During this time, 

Torcal and McKiernan submitted hundreds of invoices for 

payment to the City on behalf of ULC, most if not all of which 

demanded payment for work that was not actually performed or 

that was billed at grossly inflated rates. From 2012 to 2015, 

these invoices were purportedly reviewed and approved for 

payment by Dillon, Egger, and Moorjani in their capacities as 

City officers. In addition to approving false and fraudulent 

invoices for the work of other subcontractors of ULC, the former 

ULC principals would review and approve the invoices submitted 

by ULC for their own work, which was either not performed at all 

or overbilled. In at least one instance, on April 4, 2014,

McKiernan submitted an invoice for construction work performed 

on his own house, which Dillon, Egger, and Moorjani approved for 

payment. McKiernan and Torcal continued the unlawful conduct 

after Dillon, Egger, and Moorjani were terminated.

The third amended cross-complaint and third amended 

complaint also allege ULC and Dillon, Egger, and Moorjani

perpetrated a scheme to avoid paying Transportation Uniform 

Mitigation Fees (TUMF) to WRCOG. McKiernan and Torcal are 

not alleged to have participated in that scheme so those 

allegations are not summarized here.

The FBI and the Riverside County District Attorney’s 

Office raided City Hall in mid-2015 and seized “all City records 
10

dealing with ULC, as well as City computers.” As of mid-2015, 

the City’s management team consisted of the city manager, city 

attorney, city finance director, city economic development 

director, city director of planning, and city director of public 

works, all of whom were criminally charged and later pleaded 

guilty. McKiernan and Torcal took advantage of the lack of 

organization and the lack of institutional knowledge of an all-new 

management team and continued to submit and obtain payment 

based on fraudulent invoices.

The City alleges that before the district attorney’s office

filed the felony criminal complaints in May 2016 against ULC’s 

original principals, the City “was unaware of the embezzlement 

and other wrongdoing,” in part because Dillon, Egger, and 

Moorjani, along with their co-conspirators, “held all of the top 

City management positions” and “controlled all of the information 

presented to the City Council.”

After the criminal charges were filed, the City commenced 

numerous investigations, including against its outside auditors, 

bond attorneys, and bond disclosure counsel. McKiernan and 

Torcal were not among the targets of these investigations because 

McKiernan persuasively presented himself as an innocent buyer 

of ULC and a victim of the former principals’ wrongdoing. The 

district attorney’s office also vouched for McKiernan, telling new 

City officials that McKiernan was a “good guy” who had 

cooperated in the criminal investigations. Further, the FBI and 

the district attorney’s office had seized all documents related to 

ULC, and therefore the City did not have the necessary 

information to investigate individual ULC transactions.

In March and April 2019, while preparing for trial in this 

matter against ULC, the City learned McKiernan and Torcal had 
11

been involved in the illegal billing scheme perpetrated by Dillon, 

Egger, and Moorjani and had continued the scheme until early 

2016. The City conducted interviews with former ULC employees 

and subconsultants, who informed the City’s legal counsel that 

McKiernan had continued the wrongful billing scheme after 

Dillon, Egger, and Moorjani had been terminated. The third 

amended cross-complaint includes detailed allegations regarding 

why the City did not suspect or discover the alleged wrongdoing

of Torcal and McKiernan earlier.

The third amended cross-complaint and third amended 

complaint assert the following causes of action against 

McKiernan and Torcal: violation of the False Claims Act (Gov.

Code, § 2650 et seq.); claim for recovery of funds based on

conflicts of interest; intentional misrepresentation–fraudulent 

billing; civil conspiracy to defraud; breach of fiduciary duty;

breach of the duty of loyalty; breach of written contract; and 

negligence. The City also asserts a claim for violation of the 

Racketeer Influenced and Corrupt Organizations Act (RICO) 

(18 U.S.C. § 1961). 

Except for the claim for recovery of funds based on conflicts 

of interest, each of these causes of action is based on the 

allegations that McKiernan and Torcal caused hundreds of false 

or fraudulent invoices to be presented to the City for payment 

between 2012 and 2016. The conflict-of-interest claim is based on 

an allegation that McKiernan had a conflict of interest in 

facilitating the execution of the contract between ULC and the 

City in 2013.

The operative pleadings also allege that McKiernan and 

Torcal are alter egos of ULC.
12

G. The Demurrers 

McKiernan and Torcal demurred to the third amended 

cross-complaint and third amended complaint. In the demurrers, 

they asserted that all claims were barred by the statute of 

limitations because the claims did not relate back to the filing of 

the original cross-complaint and complaint, and the allegations 

were insufficient to support a claim of delayed discovery. As to 

the relation back, they argued the Doe and Roe amendments 

were defective and again vaguely suggested the Doe and Roe 

claims were abandoned when the City and WRCOG named 

McKiernan and Torcal directly in the first amended crosscomplaint and first amended complaint. They also claimed that 

the allegations were insufficient to support each cause of action, 

primarily because the allegations of fraud were not alleged with 

sufficient particularity.

H. The Hearing and the Court’s Ruling 

A hearing was held on March 15, 2021. The court heard 

arguments and took the matters under submission.

On March 25, 2021, the court issued a written order 

sustaining the demurrers without leave to amend on the ground 

the claims were barred by the statute of limitations. The order

stated: “[B]oth the [third amended complaint] and the [third 

amended cross-complaint] sufficiently plead the late discovery of 

facts supporting the claims alleged. However, both pleadings fail 

to allege facts that establish an inability to discover those facts 

earlier than 2019, or reasonable diligence in investigating the 

potential claims. The [d]elayed [d]iscovery [r]ule requires 

pleading both facts establishing the time and manner of the late 
13

discovery, and the inability to discover based on reasonable 

diligence.”

The court explained: “Significantly, the discovery rule only 

delays discovery until plaintiff has, or should have, inquiry notice 

of the cause of action. [Citation.] The following facts 

demonstrate at least inquiry notice to WRCOG[] and the City 

since they knew: (1) the Dismissed Defendants engaged in 

wrongful conduct as far back as 2010 when WRCOG filed its writ 

of mandate against the City; (2) that Torcal and McKiernan 

acquired Urban in 2012; (3) that Urban signed a new contract 

with the City in 2013; (4) that WRCOG was aware that the 

Dismissed Defendants committed wrongful acts after 2013; 

(5) that WRCOG obtained a judgment in 2014 against the City 

due to the conduct of the Dismissed Defendants; (6) that the FBI 

raided the City’s offices in 2015 due to the conduct of the 

Dismissed Defendants; and (7) that the Dismissed Defendants 

were indicted in 2016.”1

The court further found the City and WRCOG had 

sufficient opportunity to allege delayed discovery and had not

identified any additional facts they could allege to overcome the 

purported defects identified by the court. Accordingly, the court 

denied leave to amend.

I. The Appeal

The City and WRCOG filed notices of appeal on May 13, 

2021, purporting to appeal from the March 25, 2021 order 

sustaining the demurrers without leave to amend. That is not an 

1 This portion of the court’s reasoning was contained in the 

tentative ruling that was incorporated by reference in the court’s 

final ruling.
14

appealable order. However, on August 24, 2021, the court 

entered judgment of dismissal in favor of McKiernan and Torcal 

and against the City and WRCOG. We treat the appeal as being 

from the appealable judgment. (See Vibert v. Berger (1966) 

64 Cal.2d 65, 68-69.) 

DISCUSSION

A. Standard of Review

A demurrer tests the legal sufficiency of the factual 

allegations contained in the operative complaint. “We 

independently review the superior court’s ruling on a demurrer 

and determine de novo whether the complaint alleges facts 

sufficient to state a cause of action or discloses a complete 

defense.” (Stella v. Asset Management Consultants, Inc. (2017) 

8 Cal.App.5th 181, 190; accord, Ivanoff v. Bank of America, N.A.

(2017) 9 Cal.App.5th 719, 725.) “We assume the truth of properly 

pleaded factual allegations, facts that reasonably can be inferred 

from those expressly pleaded, and matters that are judicially 

noticeable.” (Genis v. Schainbaum (2021) 66 Cal.App.5th 1007, 

1015; accord, Ivanoff, at p. 725.) “‘“We treat the demurrer as 

admitting all material facts properly [pleaded], but not 

contentions, deductions or conclusions of fact or law.”’” (Mize v. 

Mentor Worldwide LLC (2020) 51 Cal.App.5th 850, 858.)

Further, “[w]e liberally construe the pleading with a view to 

substantial justice between the parties.” (Stella, at p. 190, citing 

Code Civ. Proc., § 452.) ‘“[A] demurrer based on an affirmative 

defense will be sustained only where the face of the complaint 

discloses that the action is necessarily barred by the defense.’”

(Stella, at p. 191.) 
15

If we conclude a demurrer was properly sustained, we 

review the decision to deny leave to amend under the abuse of 

discretion standard. (Smith v. County of Kern (1993) 

20 Cal.App.4th 1826, 1830.) “Ordinarily it is an abuse of 

discretion to sustain a general demurrer to a complaint without 

leave to amend if there is a reasonable possibility the defect in 

the complaint can be cured by amendment.” (Ibid.)

B. It Is Not Apparent from the Face of the Complaint That the 

Claims Are Barred by the Statute of Limitations

“A complaint showing on its face that the cause of action is 

barred by the statute of limitations is subject to general 

demurrer.” (Basin Construction Corp. v. Department of Water & 

Power (1988) 199 Cal.App.3d 819, 823.) “‘A demurrer based on a 

statute of limitations will not lie where the action may be, but is 

not necessarily, barred. [Citation.] In order for the bar . . . 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.”’ (Committee for 

Green Foothills v. Santa Clara County Bd. of Supervisors (2010)

48 Cal.4th 32, 42.)

Here, again, the third amended pleadings allege 

McKiernan and Torcal engaged in wrongdoing from 2012 to early 

2016. The original cross-complaint and complaint were filed in 

June 2017. The Roe and Doe amendments were filed in August 

and September 2019. The first amended cross-complaint and 

complaint were filed in June 2020 and March 2020, respectively; 

the second amended cross-complaint and complaint in September 

2020; and the third amended cross-complaint and complaint in 

January 2021. 
16

The statutes of limitations are as follows: for the False 

Claims Act, six years for violations occurring after January 1, 

2013 (Gov. Code, § 12654); for fraud, conspiracy to commit fraud, 

breach of fiduciary duty, and breach of the duty of loyalty, three

years (Code Civ. Proc., § 338, subd. (d)); for breach of written 

contract, four years (id., § 337); for negligence based on an 

alleged breach of a professional duty, two years (id., § 339, 

subd. 1); for conflicts of interest under Government Code 

section 1090 et seq., four years (Gov. Code, § 1092, subd. (b)); and 

for civil claims under the Racketeer Influenced and Corrupt 

Organizations Act (RICO) (18 U.S.C. § 1961 et seq.), four years

(Agency Holding Corp. v. Malley-Duff & Associates, Inc. (1987) 

483 U.S. 143, 156).

The six-year statute of limitations for violations of the 

False Claims Act runs from the date of violation. (Gov. Code, 

§ 12654.) For all other claims, the delayed discovery rule 

postpones accrual under some circumstances.2 

“Under the statute of limitations, a plaintiff must bring a 

cause of action within the limitations period applicable thereto 

after accrual of the cause of action.” (Norgart v. Upjohn Co.

(1999) 21 Cal.4th 383, 397). The timeliness of a claim is thus 

2 See, e.g., Code of Civil Procedure section 338, 

subdivision (d) (delayed discovery rule applies to fraud-based 

claims); Goverment Code section 1092, subdivision (b) 

(incorporating delayed discovery principles for conflict-of-interest 

claims); April Enterprises, Inc. v. KTTV (1983) 147 Cal.App.3d

805, 830 (delayed discovery rule applies to contract claims 

involving fraud); Samuels v. Mix (1999) 22 Cal.4th 1, 9 (delayed 

discovery rule applies to professional negligence claims under 

some circumstances); Pincay v. Andrews (9th Cir. 2001) 238 F.3d 

1106, 1109 (RICO).
17

generally determined by counting forward from the date of 

accrual. In order to conclude from the face of the pleading that a 

claim is barred by the statute of limitations, however, we would 

have to conclude, as a matter of law, that no portion of the claim 

accrued within the statute of limitations period, as measured 

backward from the relevant filing date. (See, e.g., Cansino v. 

Bank of America (2014) 224 Cal.App.4th 1462, 1472 [stating 

plaintiff must plead that he did not discover and could not have 

discovered the fraud at issue within three years prior to filing the 

complaint].)

We first consider what the relevant filing date is for statute 

of limitations purposes, that is, whether the claims in the third 

amended pleadings relate back to an earlier filing date. We then 

analyze each claim in turn to determine whether it is clear from 

the face of the complaint that no portion of the claim accrued 

during the statute of limitations period, as measured backward 

from the filing date.

1. As alleged, the claims relate back to the original 

pleadings

The parties disagree as to the operative filing date for 

purposes of the statute of limitations analysis. The City and 

WRCOG contend the claims relate back to the filing of the 

original cross-complaint and complaint in June 2017; McKiernan 

and Torcal contend the operative date is the filing of the first 

amended pleadings in March and June 2020, or the thirdamended pleadings in January 2021.

3

3 McKiernan and Torcal’s position on this issue has not been 

consistent. 
18

As with any demurrer, we accept as true the factual 

allegations in determining whether the claims relate back to the 

filing of the City’s original cross-complaint and WRCOG’s original 

complaint.

Code of Civil Procedure section 474 provides: “When the 

plaintiff is ignorant of the name of a defendant, he must state 

that fact in the complaint . . . and such defendant may be 

designated in any pleading or proceeding by any name, and when 

his true name is discovered, the pleading or proceeding must be 

amended accordingly.” “If the statute’s requirements are 

satisfied, the amendment relates back[,] and the substituted 

defendant is considered to have been a party from the action’s 

start.” (Hahn v. New York Air Brake LLC (2022) 77 Cal.App.5th

895, 898.)

For claims in an amended complaint to relate back to the 

filing of the original complaint under Code of Civil Procedure 

section 474, the original complaint must name a Doe defendant in 

the caption; allege the plaintiff is ignorant of the true name and 

capacity of the Doe; and state a cause of action against the Doe.

4 

(Fireman’s Fund Ins. Co. v. Sparks Construction, Inc. (2004) 

114 Cal.App.4th 1135, 1143.) Each of these elements is met here. 

Further, the amended complaint must “(1) rest on the same 

general set of facts, (2) involve the same injury, and (3) refer to 

the same instrumentality, as the original one.” (Norgart v. 

Upjohn Co., supra, 21 Cal.4th at p. 409; accord, Pointe San Diego 

Residential Community, L.P. v. Procopio, Cory, Hargreaves & 

Savitch, LLP (2011) 195 Cal.App.4th 265, 276.) 

4 The same rules apply to cross-complaints and fictitiously 

named Roe cross-defendants.
19

Here, the City and WRCOG sufficiently allege they were 

genuinely ignorant of McKiernan’s and Torcal’s identities at the 

time the original cross-complaint and complaint were filed. 

Whether a plaintiff was genuinely ignorant of the name and 

capacity of the Doe defendant is a question of fact that can be 

determined on demurrer only if it is apparent from the face of the 

complaint that the plaintiff actually knew of the facts giving rise 

to a cause of action against the defendant at the time the original 

complaint was filed. “The phrase ‘ignorant of the name of a 

defendant’ [in Code of Civil Procedure section 474] is broadly 

interpreted to mean not only ignorant of the defendant’s identity, 

but also ignorant of the facts giving rise to a cause of action 

against that defendant. [E]ven though the plaintiff knows of the 

existence of the defendant sued by a fictitious name, and even 

though the plaintiff knows the defendant’s actual identity (that 

is, his name) the plaintiff is ‘ignorant’ within the meaning of the 

statute if plaintiff lacks knowledge of that person’s connection 

with the case or with [plaintiff’s] injuries.” (Fuller v. Tucker

(2000) 84 Cal.App.4th 1163, 1170 (Fuller), italics added.)

It does not matter for purposes of Code of Civil Procedure 

section 474 whether the plaintiff could have discovered the 

identity of the defendant and the role he or she played through 

the exercise of due diligence. “‘The fact that the plaintiff had the 

means to obtain knowledge is irrelevant.’” (Fuller, supra,

84 Cal.App.4th at p. 1170.) A plaintiff is entitled to the benefit of 

section 474 even when the plaintiff’s ignorance arises from the 

plaintiff’s own negligence. (Ibid.)

Here, the City and WRCOG allege in the original complaint 

and cross-complaint that they were unaware of the true names 

and capacities of the cross-defendants sued under the fictitious 
20

names. In the Roe and Doe amendments substituting McKiernan 

and Torcal, the City and WRCOG alleged that they were ignorant 

of the true names at the time of filing the original pleading and 

that they subsequently discovered the true name. In the third 

amended cross-complaint and third amended complaint, the City 

and WRCOG alleged they did not learn McKiernan and Torcal 

were involved in the billing fraud until 2019. 

At the demurrer stage, we accept the allegations in the 

pleadings as true. We cannot determine from the face of the 

pleadings that the City and WRCOG actually knew of McKiernan 

and Torcal’s involvement in the billing fraud at the time the 

original pleadings were filed. Further, with the exception of the 

conflict-of-interest claim, all the claims alleged in the third 

amended cross-complaint and complaint arise out of the alleged 

billing fraud.

Moreover, the allegations against McKiernan and Torcal in 

the third amended pleadings arise out of the same general set of 

facts as were alleged against the Roes and Does in the original 

cross-complaint and complaint. The allegations in the new 

pleadings involve the same injuries and instrumentalities as 

were alleged in the original pleadings, that is, damage from the 

payment of invoices for fraudulently inflated charges or for 

services that were never provided at all. In the original 

pleadings, the City and WRCOG allege the cross-defendants, 

including the Roes and Does, submitted false and fraudulent 

invoices through mid-2015. For example, the City’s original 

cross-complaint alleged that cross-defendants and defendants 

“facilitated the payment of City funds to ULC for grossly inflated 

and fraudulent charges” and “caused ULC to seek and receive 

payments for services which were not only unnecessary, but 
21

which the City believes were never actually rendered despite the 

fact that ULC was paid for such services.” The City also alleged 

the cross-defendants “intentionally and knowingly submitted 

false work reports and requests for payment to the City for work 

with cross-defendants knew to be false and in excess of the actual 

work performed.” Further, cross-defendants submitted “false 

invoices and work reports to the City for non-existent services, 

and . . . grossly overcharge[ed] the City for those professional 

services that were actually rendered by cross-defendants.” The 

same allegations are made against McKiernan and Torcal in the 

third amended pleadings.

The third amended complaint and cross-complaint also 

allege McKiernan and Torcal continued to submit fraudulent bills 

after Dillon, Egger, and Moorjani were terminated in 2015 until 

early 2016. These allegations fall within the scope of the general 

allegations in the original pleadings. We cannot conclude, from 

the face of the pleadings, that claims arising from allegedly 

fraudulent acts from mid-2015 to 2016 do not also relate back to 

the original cross-complaint and complaint.5 

The third amended complaint and cross-complaint also 

allege McKiernan and Torcal are alter egos of ULC, and further 

allege the City and WRCOG learned of this only after they 

5 To the extent any portion of the claims against McKiernan 

and Torcal do not relate back, the relevant filing date for statute 

of limitations purposes would be the date the Doe and Roe 

amendments were filed. (Davis v. Marin (2000) 80 Cal.App.4th 

380, 901 [treating the filing of a defective Doe amendment as the 

filing of an amended complaint, thereby suggesting the date of 

filing the Doe amendment is the operative date from which the 

statute of limitations is calculated].) The Doe and Roe 

amendments were filed in August and September 2019.
22

reviewed ULC’s financial disclosures in bankruptcy court. ULC 

filed for bankruptcy in April 2019, and ULC filed its schedule of 

assets and liabilities on May 6, 2019. The City and WRCOG 

sufficiently allege they did not know McKiernan and Torcal were 

alter egos of ULC at the time the original cross-complaint and 

complaint were filed. The alter ego allegations also arise out of 

the same facts as were alleged in the original pleadings; those 

pleadings alleged the Roes and Does were alter egos of ULC. 

Claims based on alter ego therefore also relate back. 

The one exception to the conclusion that the claims (as 

alleged) relate back to the original filing date is the claim based 

on a conflict of interest under Government Code section 1090. 

The City and WRCOG allege McKiernan and Torcal violated 

section 1090 because they were “responsible for designing and 

developing the 2013 Contract” between ULC and the City and for 

promoting the contract’s approval and execution by the City. The 

City and WRCOG contend this was unlawful because McKiernan 

and Torcal were financial beneficiaries under the contract.

Although it is not entirely clear what the City and WRCOG mean 

by the term “financial beneficiary” in this context, it is plain from 

the face of the original cross-complaint and complaint that the 

City and WRCOG knew of McKiernan’s involvement in that 

contract because he signed it on behalf of ULC. The City and 

WRCOG have provided no explanation for why this claim would 

relate back; they have not, for example, specifically alleged they 

learned of McKiernan’s and Torcal’s financial interest in the 

contract after the original cross-complaint was filed. This claim 

was alleged against ULC in the original pleadings; it is apparent 

from the face of the contract that the City and WRCOG knew of 
23

McKiernan’s role as a signatory to the contract at the time the 

original pleadings were filed. 

For purposes of the conflict-of-interest claim, we therefore 

conclude the relevant date for determining the timeliness of the 

claim is the date the Doe and Roe amendments were filed in 

August and September 2019. (See fn. 5.) 

Except as to the conflict-of-interest claim, McKiernan and 

Torcal’s arguments for why the claims do not relate back are not 

persuasive. They incorrectly assert “[t]he general ignorance of 

identity requirement for a complaint to relate back is reviewed 

for substantial evidence.” The substantial evidence standard 

applies to the review of factual findings; it does not apply here. 

All the trial court’s rulings at issue in this appeal were on 

demurrers. The court could not make, and did not purport to 

make, any factual findings as to what the City or WRCOG 

actually knew about McKiernan and Torcal’s alleged involvement 

in the fraud at the time their original cross-complaint and 

complaint were filed. The court was required to accept the 

allegations of the third amended complaint and cross-complaint 

as true. 

McKiernan and Torcal also contend the City and WRCOG 

forfeited the ability to rely on the Roe and Doe amendments 

because after the Roe and Doe amendments were filed and 

served, the City and WRCOG filed first amended pleadings that 

did not specifically state that McKiernan and Torcal continued to 

be sued in their capacity as Roes and Does. McKiernan and 

Torcal repeatedly argued in the trial court that the Roe and Doe 

amendments had been abandoned, but the trial court implicitly 

rejected the argument by continuing to refer to them as Roes and 

Does 1 and 2 in its written orders. 
24

We find no error in the trial court’s implicit conclusion that 

the Roe and Doe amendments had not been abandoned. The lack 

of clarity in the first amended cross-complaint and complaint is 

at worst a minor procedural defect that does not affect the 

substantial rights of the parties. (See Code Civ. Proc., § 475

[“[t]he court must, in every stage of an action, disregard any . . . 

defect[] in the pleadings . . . which . . . does not affect the 

substantial rights of the parties”]; see also Woo v. Superior Court

(1999) 75 Cal.App.4th 169, 176-177 [allowing defect to be 

corrected even when party wholly failed to comply with 

procedures for substituting in a Doe defendant].) McKiernan and 

Torcal were served with the summonses and cross-complaint and 

complaint in their capacity as Roe and Doe cross-defendants and 

defendants, and the City and WRCOG continued to argue the 

claims against them related back to the filing of the original 

pleadings. The trial court acted well within its discretion in 

ignoring any minor procedural defect in the way the parties were 

named in the amended pleadings and by continuing to treat

McKiernan and Torcal as Doe and Roe defendants and crossdefendants. (See Streicher v. Tommy’s Electric Co. (1985) 

164 Cal.App.3d 876, 885 [trial court abused its discretion by not 

allowing plaintiff leave to cure defects in manner in which Doe 

defendants were identified in amended complaint].)

Further, to the extent McKiernan and Torcal contend the 

claims do not relate back because the City failed to exercise 

sufficient diligence to discover their role in the alleged scheme by 

the time the original pleadings were filed, the argument fails. “If 

the actual knowledge test . . . is satisfied, it is irrelevant that 

plaintiff was negligent or failed to exercise reasonable diligence in 

not having discovered defendant’s identity or liability earlier:
25

‘[A] plaintiff will not be refused the right to use a Doe pleading 

even where the plaintiff’s lack of actual knowledge is attributable 

to plaintiff’s own negligence.’” (Grinnell Fire Protection Systems

Co. v. American Sav. & Loan Assn. (1986) 183 Cal.App.3d 352, 

359.)

In sum, because the allegations are sufficient to support 

relation back under Code of Civil Procedure section 474, the 

relevant filing date for purposes of the statute of limitations 

analysis is June 19, 2017 for the City’s cross-complaint and 

June 30, 2017 for WRCOG’s complaint (except as to the conflictof-interest claim).

2. As alleged, the False Claims Act claim is not time 

barred

Under Government Code section 12651, subdivision (a), any 

person who, among other things, “[k]nowingly presents or causes 

to be presented a false or fraudulent claim for payment or 

approval” to an officer, employee, or agent of a political 

subdivision of the state or who conspires to commit such an act is 

liable for treble damages. Civil penalties may also be assessed. 

A civil action may be brought by the political subdivision under 

section 12652, subdivision (b)(1). 

The statute of limitations is set forth in Government Code 

section 12654. Since January 1, 2013, section 12654 has 

provided: “A civil action under Section 12652 shall not be filed 

more than six years after the date on which the violation of 

Section 12651 is committed, or more than three years after the 

date when facts material to the right of action are known or 

reasonably should have been known by the Attorney General or 

prosecuting authority with jurisdiction to act under this article, 
26

but in no event more than 10 years after the date on which the 

violation is committed, whichever of the aforementioned occurs 

last.”6 (Italics added.) The submission of each false claim gives 

rise to a separate violation (see Gov. Code, § 12651, subd. (a)), 

and it thus follows that a new claim accrues for statute of 

limitations purposes when a new false claim is submitted. 

The parties agree the six-year statute of limitations applies 

here. However, the six-year statute of limitations applies only to 

false claims submitted on or after January 1, 2013. Claims based 

on invoices submitted on or after that date are timely because the 

original cross-complaint and complaint were filed in June 2017, 

which is less than six years after January 1, 2013. The third 

amended cross-complaint and the third amended complaint 

allege McKiernan and Torcal submitted hundreds of invoices 

from 2012 through 2016, “most if not all” of which “contained 

excessive mark-ups[] and . . . requests for payments for work that 

was not actually performed for the City.” Accepting the 

allegations as true (as we must on demurrer), the City and 

WRCOG’s claims based on alleged false and fraudulent invoices 

submitted between 2013 and 2016 are not barred by the statute 

6 Before January 1, 2013, the statute provided that a civil 

action may not be filed “more than three years after the date of 

discovery by the Attorney General or prosecuting authority with 

jurisdiction to act under this article or, in any event, not more 

than 10 years after the date on which the violation of 

Section 12651 was committed.” (Gov. Code, § 12654, Stats. 2012, 

ch. 647, § 6.) The parties do not discuss this version of the 

statute. We do not need to consider how this statute would apply 

to claims based on false invoices submitted before January 1, 

2013 because the operative pleadings allege at least some of the 

invoices at issue were submitted after January 1, 2013. 
27

of limitations.7 Accordingly, the court erred in sustaining the 

demurrer to this cause of action.

McKiernan and Torcal also demurred to this claim on the 

ground that it was not pleaded with sufficient particularity. “As 

in any action sounding in fraud, the allegations of a federal False 

Claims Act complaint must be pleaded with particularity. The 

complaint must plead the time, place, and contents of the false 

representations, as well as the identity of the person making the 

misrepresentation and what he obtained thereby.” (City of 

Pomona v. Superior Court (2001) 89 Cal.App.4th 793, 803,

quotation marks omitted; State ex rel. Edelweiss Fund, LLC v. 

JPMorgan Chase & Co. (2023) 90 Cal.App.5th 1119 [discussing 

the particularity requirement in a False Claims Act case].) The 

trial court did not reach this ground, and we therefore remand to 

the trial court for consideration of this issue in the first instance. 

3. As alleged, the claim for intentional misrepresentation

is not time barred

The statute of limitations for a claim of fraud is three years 

from accrual. (Code Civ. Proc., § 338, subd. (d).) A cause of 

action for fraud “is not deemed to have accrued until the 

discovery, by the aggrieved party, of the facts constituting the 

fraud or mistake.” (Id. § 338, subd. (d).) Courts have interpreted 

this provision to mean that the cause of action accrues when the 

plaintiff discovers, or has reason to discover, the cause of action.

(Vera v. REL-BC, LLC (2021) 66 Cal.App.5th 57, 69.) 

Thus, if any portion of the fraud claim accrued on or after 

June 2014, the claim would be timely for statute of limitations 

7 We express no opinion as to the application of the statute of 

limitations for false claims submitted before 2013.
28

purposes. Three years after June 2014 is June 2017, the date of 

filing of the original cross-complaint and complaint.8 As 

discussed, the City and WRCOG allege McKiernan and Torcal 

submitted hundreds of fraudulent invoices from 2012 to 2016. 

For invoices submitted after June 2014, the claim is timely if the 

submission of a new invoice gives rise to a separate cause of 

action for fraud for statute of limitations purposes (such as under 

the continuous accrual doctrine). For invoices submitted before 

June 2014 (or for invoices both before and after June 2014 if a 

new cause of action does not accrue on the submission of each 

invoice), the claim is timely if the City did not have reason to 

discover the cause of action before June 2014. 

We cannot tell, as a matter of law, from the face of the 

complaint, that no portion of the fraud claim accrued after June 

2014. The third amended cross-complaint and complaint at least 

generally allege that some of the fraudulent invoices were 

submitted after June 2014, within the statute of limitations 

period. The City and WRCOG may be able to prove the 

submission of at least some of the post-June 2014 invoices 

constituted a separate, independent act of fraud for statute of 

limitations purposes. 

For example, the City and WRCOG may be able to prove 

the continuous accrual doctrine applies. Under that doctrine, 

when a plaintiff alleges he or she was harmed by a series of 

continual or recurring transactions, such as by the submission of 

a series of invoices over time, a cause of action accrues each time 

a wrongful act occurs, triggering a new limitations period. 

(Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 

8 In arriving at the June 2014 date, we count backward from 

the date of filing, which is June 2017. 
29

1199 (Aryeh) [new claim accrues upon submission of each 

actionable invoice]; Gilkyson v. Disney Enterprises, Inc. (2016) 

244 Cal.App.4th 1336, 1341 [continuous accrual doctrine applied 

to obligation to pay royalties; each breach of the obligation to pay 

royalties is separately actionable].) The effect of the doctrine is 

that “a suit for relief may be partially time-barred as to older 

events but timely as to those [acts of wrongdoing occurring] 

within the applicable limitations period.” (Aryeh, at p. 1192.)

9 

“[T]he doctrine represents an equitable ‘response to the 

inequities that would arise if the expiration of the limitations 

period following a first breach of duty or instance of misconduct 

were treated as sufficient to bar suit for any subsequent breach 

or misconduct; [absent the doctrine,] parties engaged in longstanding misfeasance would thereby obtain immunity in 

9 In the briefing in the trial court, the City and WRCOG 

assumed without analysis that if the claims related back to the 

filing of the original cross-complaint and complaint, the claims 

would be timely. Accordingly, they did not address the 

application of the continuous accrual doctrine (but did address it 

on appeal). Similarly, in the trial court briefing, McKiernan and 

Torcal did not address whether the statute of limitations would 

bar the entire claim when some, but not all, of the alleged acts 

occurred within the statute of limitations period. 

McKiernan and Torcal do not argue that the City and 

WRCOG forfeited the continuous accrual argument by failing to 

raise it below. Because this appeal presents a purely legal 

question, we consider the argument here. (See Orange County 

Water Dist. v. Sabic Innovative Plastics US, LLC (2017) 

14 Cal.App.5th 343, 394 [court exercised its discretion to consider 

the continuous accrual argument raised for the first time on 

appeal because the argument presented a purely legal question].)
30

perpetuity from suit even for recent and ongoing misfeasance. In 

addition, where misfeasance is ongoing, a defendant’s claim to 

repose, the principal justification underlying the limitations 

defense, is vitiated.’” (Gilkyson v. Disney Enterprises, Inc., supra, 

244 Cal.App.4th at pp. 1341-1342.) We cannot tell from the face 

of the third amended pleadings that the doctrine would not apply 

here, and we therefore cannot conclude at this stage of the 

litigation that the fraud claim is barred by the statute of 

limitations.10 

Further, the City and WRCOG have adequately alleged 

that the City could not have discovered the fraud until sometime 

after June 2014, and that the claim therefore did not accrue 

before that date. Again, a cause of action for fraud accrues when 

the plaintiff discovers, or has reason to discover, the cause of 

action. (Vera v. REL-BC, LLC, supra, 66 Cal.App.5th at p. 69.) 

“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. 

[Citations.] Under the discovery rule, suspicion of one or more of 

the elements of a cause of action, coupled with knowledge of any 

remaining elements, will generally trigger the statute of 

limitations period.” (Fox v. Ethicon Endo-Surgery, Inc. (2005) 

35 Cal.4th 797, 807 (Fox), quotation marks omitted.) Under this 

test, “we look to whether the plaintiffs have reason to at least 

suspect that a type of wrongdoing has injured them.” (Ibid.) 

10 The Aryeh court suggested the continuous accrual doctrine 

would not apply to a fraud claim when the complaint “alleged a 

single fraud committed at contract formation.” (See Aryeh, supra,

55 Cal.4th at p. 1201.) We cannot tell at this stage in the 

proceedings from the face of the complaint whether the fraud 

claim here would fall into that category. 
31

“[I]n order to employ the discovery rule to delay accrual of a 

cause of action, a potential plaintiff who suspects that an injury 

has been wrongfully caused must conduct a reasonable 

investigation of all potential causes of that injury. If such an 

investigation would have disclosed a factual basis for a cause of 

action, the statute of limitations begins to run on that cause of 

action when the investigation would have brought such 

information to light. In order to adequately allege facts 

supporting a theory of delayed discovery, the plaintiff must plead 

that, despite diligent investigation of the circumstances of the 

injury, he or she could not have reasonably discovered facts 

supporting the cause of action within the applicable statute of 

limitations period.” (Fox, supra, 35 Cal.4th at pp. 808-809.)

If an action is brought more than three years after 

commission of the fraud, the plaintiff has the burden of pleading 

and proving that he or she did not make and could not reasonably 

have made the discovery until within three years prior to the 

filing of his or her complaint. (Cansino v. Bank of America, 

supra, 224 Cal.App.4th at p. 1472; see also Fox, supra, 35 Cal.4th 

at p. 809.) Specifically, the plaintiff “‘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, at p. 808.) 

The issue of “[w]hen a plaintiff reasonably should have 

discovered facts for purposes of the accrual of a cause of action or 

application of the delayed discovery rule is generally a question of 

fact, properly decided as a matter of law only if the evidence (or, 

in this case, the allegations in the complaint and facts properly 

subject to judicial notice) can support only one reasonable 

conclusion.” (Stella v. Asset Management Consultants, Inc., 
32

supra, 8 Cal.App.5th at p. 193; accord, Jolly v. Eli Lilly & Co.

(1988) 44 Cal.3d 1103, 1112.)

Here, the City and WRCOG adequately allege the City, in 

the exercise of reasonable diligence, could not have discovered the 

fraud before June 2014. Until mid-2015, the City’s top

managers—including the city manager, assistant city manager, 

finance director, city attorney, city economic development 

director, city director of planning, and city director of public 

works—were part of the conspiracy to defraud the City. As of 

June 2014, they were all still in those roles at the City; they later 

pleaded guilty to criminal charges arising from their role in the 

fraud. These managers concealed their wrongdoing from the City 

Council, which did not suspect any potential misconduct until 

April 2015, when the FBI and the Riverside County District 

Attorney’s Office executed search warrants on the City.

These allegations are sufficient to withstand a demurrer on 

the delayed discovery issue. Each of the members of the 

management team listed above owed fiduciary duties to the City. 

(See, e.g., County of San Bernardino v. Walsh (2007) 

158 Cal.App.4th 533, 543 [chief administrative officer of a county 

owes fiduciary duties to the county].) “‘Where a fiduciary 

obligation is present, the courts have recognized a postponement 

of the accrual of the cause of action until the beneficiary has 

knowledge or notice of the act constituting a breach of fidelity.

[Citations.] The existence of a trust relationship limits the duty 

of inquiry. “Thus, when a potential plaintiff is in a fiduciary 

relationship with another individual, that plaintiff’s burden of 

discovery is reduced and he is entitled to rely on the statements 

and advice provided by the fiduciary.”’” (WA Southwest 2, LLC v. 

First American Title Ins. Co. (2015) 240 Cal.App.4th 148, 157.) 
33

What the City Council should have been able to discover under 

those circumstances is a highly factual issue that cannot be 

determined from the face of the pleadings. In addition, given the 

facts alleged here, there may be complicated factual issues 

involving whose knowledge should be considered in determining 

whether the City, as an entity, had inquiry notice. We cannot 

conclude as a matter of law that the City should have discovered 

the fraud by June 2014.

We specifically cannot conclude, as a matter of law, that 

the City was on inquiry notice of the billing fraud from the fact 

WRCOG had previously sued the City for wrongdoing arising out 

of the payment of TUMF fees. The City alleges its city attorney 

was in on the fraud and lied to the City Council about the 

litigation. Further, we cannot conclude from the face of the 

complaint that the issues regarding the TUMF fees were 

sufficiently related to the billing fraud issues such that inquiry 

notice as to fraud in connection with the TUMF fees would be 

sufficient to constitute inquiry notice regarding the billing fraud.

The trial court did not analyze whether the allegations 

were sufficient to support a delayed accrual date of June 2014. 

Rather, the court considered whether the City and WRCOG had 

sufficiently alleged they could not have discovered the fraud as of 

the date of the filing of the Roe and Doe amendments in 2019. 

That is not the correct inquiry for at least three reasons. First, as 

discussed, the City and WRCOG have sufficiently alleged the 

claims relate back to the filing of the original complaint and 

cross-complaint in June 2017. Second, a plaintiff has three years 

from the date the claims should have been discovered to file suit; 

thus, whether the City and WRCOG could have discovered the 
34

fraud has to be considered in light of the City’s knowledge three 

years before the filing date, not as of the date of filing. 

Third, the court improperly considered whether WRCOG 

was on inquiry notice. The only relevant question is whether the 

City (and not WRCOG) had such notice. WRCOG sues as the 

assignee of the City; the assignment was made in 2017. WRCOG 

steps into the shoes of the City as the assignee, taking the 

assignor’s rights and remedies. (See Johnson v. County of Fresno 

(2003) 111 Cal.App.4th 1087, 1097.) Any knowledge that 

WRCOG had regarding wrongdoing by City officials before the 

City’s assignment of its claims is relevant only to the extent it 

sheds light on whether the City had inquiry notice. 

In sum, the trial court erred in sustaining the demurrer to 

the fraud cause of action on statute of limitations grounds. 

As with the False Claims Act claim, McKiernan and Torcal 

also demurred to this cause of action on the ground it was not 

alleged with sufficient particularity. The trial court did not reach 

this issue. We reverse and remand for consideration of the issue, 

along with any other grounds raised in the demurrers the court 

did not reach. 

4. As alleged, the claims for civil conspiracy to defraud, 

breach of fiduciary duty, and breach of the duty of 

loyalty are not time barred

The claims for civil conspiracy to defraud, breach of 

fiduciary duty and breach of the duty of loyalty all sound in 

fraud. The statute of limitations for each is therefore three years 

under Code of Civil Procedure section 338, subdivision (d). (See 

American Master Lease LLC v. Idanta Partners, Ltd. (2014) 

225 Cal.App.4th 1451, 1479 [where gravamen of breach of 
35

fiduciary duty claim is fraud, statute of limitations is three 

years]; Filmservice Laboratories, Inc. v. Harvey Bernhard 

Enterprises, Inc. (1989) 208 Cal.App.3d 1297, 1309 [statute of 

limitations for conspiracy is based on the underlying cause of 

action].) These claims, as alleged, are not time barred for the 

same reason the fraud claim is not time barred. The City and 

WRCOG adequately allege facts supporting the conclusion that

the City could not have reasonably discovered the claims before 

June 2014. 

As with the other claims, McKiernan and Torcal raised 

certain challenges to these claims that the trial court did not 

reach. We reverse and remand for consideration of the remaining 

issues. 

5. As alleged, the claim for negligence is not time barred

Although it is not entirely clear, the claim of negligence 

seems to be based on a theory that McKiernan and Torcal owed a 

professional duty of care to the City arising out of their 

relationship with ULC, and that they breached the duty by 

negligently allowing the invoices for unnecessary, overpriced or 

non-existent services to be submitted for payment from 2012 to 

2016.

11 A claim for professional negligence is governed by the 

two-year statute of limitations in Code of Civil Procedure 

section 339, subdivision 1. (International Engine Parts, Inc. v. 

Feddersen & Co. (1995) 9 Cal.4th 606, 608 [applying § 339, 

subd. 1, to a claim of professional negligence by an accountant].) 

The delayed discovery rule applies to claims of professional 

negligence. (Id. at pp. 613-615.) 

11 We express no opinion as to whether any such duty existed.
36

As discussed, the City and WRCOG have adequately 

alleged the claim relates back to the filing of the original crosscomplaint and complaint on June 19 and June 30, 2017. Thus, 

the negligence claim is timely if it accrued on or after June 19 or 

June 30, 2015. 

The pleadings allege McKiernan and Torcal’s negligence 

continued until early 2016. As with the fraud-based causes of 

action, we cannot conclusively determine, as a matter of law, that 

claims based on negligence occurring after June 2015 would not 

be subject to the continuous accrual doctrine. Again, the 

continuous accrual doctrine would allow the City and WRCOG to 

pursue claims for “actionable wrongs for which the statute of 

limitations has not yet expired, even if earlier wrongs would be 

barred.” (Orange County Water Dist. v. Sabic Innovative Plastics 

US, LLC (2017) 14 Cal.App.5th 343, 395 [applying the continuous 

accrual doctrine to a negligence cause of action].) “Under the 

doctrine of continuous accrual, if any [of the alleged] negligent 

acts occurred within the statute of limitations, the cause of action 

is not barred.” (Id. at p. 396.) Because it cannot be determined 

from the face of the third amended cross-complaint and third 

amended complaint that the claim for negligence is completely 

barred by the statute of limitations, the trial court erred in 

sustaining the demurrer to this claim on statute of limitations 

grounds. 

We therefore need not address whether the City and 

WRCOG have sufficiently alleged they could not have discovered 

the wrongdoing by June 2015. 

We reverse and remand for consideration of the remaining 

challenges to this claim that the trial court did not reach.
37

6. As alleged, the conflict-of-interest claim is time barred

As previously discussed, the City and WRCOG allege 

McKiernan and Torcal violated Government Code section 1090

which provides in relevant part: “(a) [C]ity officers or employees

shall not be financially interested in any contract made by them 

in their official capacity. . . . [¶] (b) An individual shall not aid or 

abet a . . . city officer or employee in violating subdivision (a).” 

The terms “officer” and “employee” include “outside advisors with 

responsibilities for public contracting similar to those belonging 

to formal officers” or “formal employees.” (People v. Superior 

Court (Sahlolbei) (2017) 3 Cal.5th 230, 237.) Further, the words 

“officer” and “employee” include corporate consultants with the 

requisite responsibility. (Davis v. Fresno Unified School Dist.

(2015) 237 Cal.App.4th 261, 300.) McKiernan and Torcal do not 

dispute the statute of limitations for a claim under section 1090 

is four years.

The City alleges “the December 2013 [c]ontract between the 

City and cross-defendant ULC is voidable under [s]ection 1090 

because cross-defendants[] McKiernan and Torcal . . . were 

responsible for designing and developing the 2013 [c]ontract, and 

for promoting its approval and execution by the City, which they 

did in their capacities as ‘public officials’ as that term is defined 

in Government Code section 1090. [Citation.] These crossdefendants[] . . . were also financial beneficiaries under the 2013 

[c]ontract.” As discussed, this claim does not relate back to the 

filing of the original cross-complaint and complaint because 

McKiernan’s identity is apparent from the face of the contract

and the fact he would benefit from the contract would also have

been known. 
38

The City has not adequately alleged why it was not aware 

of the alleged conflict of interest at the time the contract was 

executed. Although it is not entirely clear, the City and WRCOG 

seem to be alleging the contract itself gave rise to the conflict of 

interest. The City and WRCOG have not alleged that the City 

Council was not aware of the nature of the contract and ULC’s 

role in implementing it from the day the contract was signed.

Again, the agreement was executed in December 2013. As 

alleged, the claim accrued at the time the agreement was 

executed. Four years after December 2013 is December 2017. 

Because the claim does not relate back, the relevant date by 

which timeliness is measured is the date of filing the Roe and 

Doe amendments in August and September 2019. As that is 

more than four years after the claim accrued, the trial court 

properly sustained the demurrer to this claim. 

However, because the trial court did not expressly address 

the deficiencies in the allegations regarding delayed discovery 

specifically with respect to this claim, we conclude the City and 

WRCOG should be provided with an opportunity to amend

(assuming the claim survives the other challenges that the trial 

court has not yet addressed). 

7. As alleged, the claim for breach of written contract is 

not time barred

The statute of limitations for breach of a written contract is 

four years. (Code Civ. Proc., § 337, subd. (a).) The delayed 

discovery rule postpones accrual of a breach of contract claim 

under some circumstances, such as when the breach involves 

fraud. (April Enterprises, Inc. v. KTTV (1983) 147 Cal.App.3d 

805, 830.)
39

Measured backward, four years before the date of filing of 

the original complaint and cross-complaint is June 2013. Thus, 

the breach of contract claim is timely if the claim accrued on or 

after June 2013. The claim for breach of the December 17, 2013 

contract necessarily accrued after June 2013 since the contract 

was not in existence in June 2013. 

As with the other claims, we remand for consideration of 

the other bases for the demurrer not reached by the trial court. 

8. As alleged, the RICO claim is not time barred

The City asserts a claim for violation of the federal 

Racketeer Influenced and Corrupt Organizations Act (RICO).

(18 U.S.C. § 1961 et seq.) To state a claim for a civil RICO 

violation, a plaintiff must allege “(1) conduct (2) of an enterprise 

(3) through a pattern (4) of racketeering activity.” (See Charles J. 

Vacanti, M.D., Inc. v. State Comp. Ins. Fund (2001) 24 Cal.4th 

800, 826.) “For an act or omission to qualify as racketeering 

activity, it must be included in the list of activities set forth in 

title 18, United States Code section 1961, subdivision (1).” 

(Gervase v. Superior Court (1995) 31 Cal.App.4th 1218, 1232.) 

The statute of limitations for a RICO claim is four years. 

(See Agency Holding Corp. v. Malley-Duff & Associates, Inc.,

supra, 483 U.S. at p. 156.) The “‘civil RICO limitations period 

begins to run when a plaintiff knows or should know the injury 

that underlies his cause of action.’” (Pincay v. Andrews (9th Cir. 

2001) 238 F.3d 1106, 1109.) The claim accrues even if the 

plaintiff does not discover the injury is caused by a pattern of 

racketeering activity. (Rotella v. Wood (2000) 528 U.S. 549, 555.)
40

The “separate accrual” doctrine applies to civil RICO 

claims.12 “[I]f a new RICO predicate act gives rise to a new and 

independent injury, the statute of limitations clock will start over 

for the damages caused by the new act.” (Lehman v. Lucom (11th 

Cir. 2013) 727 F.3d 1326, 1330-1331 (Lehman), citing Klehr v. 

A.O. Smith Corp. (1997) 521 U.S. 179, 190 (Klehr); see also 

Love v. National Medical Enterprises (5th Cir. 2000) 230 F.3d 

765, 772-774; Bankers Trust Co. v. Rhoades (2d Cir. 1988) 

859 F.2d 1096, 1102.) “At the same time . . . the ‘plaintiff cannot 

use an independent, new predicate act as a bootstrap to recover 

for injuries caused by other earlier predicate acts that took place 

outside the limitations period.’” (Lehman, at p. 1331, quoting

Klehr, at p. 190.) To constitute a new predicate act that will 

restart the statute of limitations, the act “must be a new and 

independent act that is not merely a reaffirmation of a previous 

act” and “[i]t must inflict new and accumulating injury on the 

plaintiff.” (Pace Industries, Inc. v. Three Phoenix Co. (9th Cir. 

1987) 813 F.2d 234, 238, italics added; accord, Grimmett v. Brown

(9th Cir. 1996) 75 F.3d 506, 513.)

The RICO claim is based at least in part on the same 

allegedly false and fraudulent invoices as the other fraud-based 

claims. We again count backward from the date of filing because 

if any portion of the claim accrued four years prior to the filing 

date, it is not barred by the statute of limitations. Four years 

prior to the filing of the City’s cross-complaint is June 2013. The 

third amended cross-complaint alleges at least some of the 

fraudulent invoices were submitted after that date. We cannot 

12 The term “separate accrual” is used in the RICO context, as 

opposed to the term “continuous accrual” that is used in other 

contexts.
41

conclude, as a matter of law, from the face of the third amended 

cross-complaint, that those acts of fraud could not constitute new 

and independent acts giving rise to a new injury for statute of 

limitations purposes. The trial court thus erred in sustaining the 

demurrer to this claim on statute of limitations grounds. 

As with the other claims, the court did not reach other 

issues raised in the demurrer, such as whether the RICO claim 

was alleged with sufficient particularity. We reverse and remand 

to the trial court for consideration of those issues in the first 

instance.

DISPOSITION

The judgment is reversed and the matter is remanded with 

directions to vacate the order sustaining McKiernan’s and 

Torcal’s demurrers without leave to amend. The trial court is 

directed to consider the remaining grounds for the demurrers 

that it did not reach. To the extent the demurrers were based on 

the statute of limitations, the trial court is directed to enter a 

new order (1) overruling the demurrers on the claims for violation 

of the False Claims Act, intentional misrepresentation, civil 

conspiracy, breach of fiduciary duty, breach of the duty of loyalty, 

breach of contract, negligence, and RICO; and (2) sustaining the 

demurrers with leave to amend on the conflict of interest claims 

(unless the court concludes there are other grounds on which to 

sustain the demurrer to the conflict of interest claims without 

leave to amend). The City and WRCOG are to recover their costs 

on appeal. 
42

The Request for Judicial Notice filed by McKiernan and 

Torcal on May 2, 2023 is denied. 

ESCALANTE, J.*

We concur:

SEGAL, Acting P. J.

FEUER, J.

* Judge of the Los Angeles County Superior Court, assigned 

by the Chief Justice pursuant to article VI, section 6 of the 

California Constitution.