Opinion ID: 1253950
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Heading Rank: 5

Heading: Analogy to Fraud Claims

Text: Defendant argues that, as plaintiffs in some fraud actions are required, in order to avoid the three-year limitation on commencement of such actions found in Code of Civil Procedure section 338, subdivision (d) (section 338(d)), to plead and prove their reasonably delayed discovery of the conduct they allege to constitute fraud (3 Witkin, Cal. Procedure, supra, Actions, § 602, at pp. 773-775; 5 Witkin, Cal. Procedure, supra, Pleading, § 883, at pp. 342-343, and authorities cited there), and as section 340.6(a) is worded somewhat similarly to section 338(d), plaintiff here should face a similar requirement. Section 338(d) provides that a plaintiff must commence within three years any action for relief on the ground of fraud or mistake. The cause of action in that case is not to be deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake. Defendant correctly notes that in Hobart v. Hobart Estate Co., supra, 26 Cal.2d 412, 159 P.2d 958, we stated: The provision tolling operation of [section 338(d)] until discovery of the fraud has long been treated as an exception and, accordingly, this court has held that if an action is brought more than three years after commission of the fraud, plaintiff has the burden of pleading and proving that he did not make the discovery until within three years prior to the filing of his complaint. ( Id. at p. 437, 159 P.2d 958, citing Sublette v. Tinney (1858) 9 Cal. 423; Lady Washington C. Co. v. Wood (1896) 113 Cal. 482, 45 P. 809; Consolidated R. & P. Co. v. Scarborough (1932) 216 Cal. 698, 16 P.2d 268; Knapp v. Knapp (1940) 15 Cal.2d 237, 242, 100 P.2d 759.) [3] In suggesting that we construe section 340.6(a) similarly to section 338(d), defendant emphasizes the presence in each of a reference to when the plaintiff discovers the facts underlying his or her cause of action. While defendant errs in calling the two references almost identical, each statute indeed contains a discovery provision. (Compare § 340.6(a) [action ... shall be commenced within one year after the plaintiff discovers, or through the use of reasonable diligence should have discovered, the facts constituting the wrongful act or omission] with § 338(d) [cause of action ... is not to be deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake].) Defendant seeks to buttress his argument based on this statutory phrasing by analogizing fraud and malpractice claims, generally. Defendant points to our suggestion in Neel that `[c]ases in which the defendant stands in a fiduciary relationship to the plaintiff are frequently treated as if they involved fraudulent concealment of the cause of action by the defendant. The theory is that although the defendant makes no active misrepresentation, this element is supplied by an affirmative obligation to make full disclosure, and the non-disclosure itself is a `fraud.'' ( Neel, supra, 6 Cal.3d at p. 189, 98 Cal.Rptr. 837, 491 P.2d 421, quoting Amen v. Merced County Title Co. (1962) 58 Cal.2d 528, 534, 25 Cal.Rptr. 65, 375 P.2d 33.) For several reasons, we agree with the Court of Appeal that, while there may be some linguistic similarity between parts of section 340.6(a) and section 338(d), the case law involving the statute of limitations for fraud does not help defendant here. First, the relatively recent vintage of section 340.6(a), which, as noted, was added to the code in 1977 (Stats.1977, ch. 863, § 1, p. 2609), as compared to section 338(d), which originally was enacted in 1872 (Historical Note, 13A West's Ann. Code Civ. Proc. (1982 ed.) foll. § 338, p. 295), affords us a different perspective in construing the former than courts have enjoyed in construing the latter. Thus, legislative enactment of the fraud limitations statute, including its discovery provision, predated judicial development of the common law discovery rule (see Neel, supra, 6 Cal.3d at p. 192, fn. 32, 98 Cal.Rptr. 837, 491 P.2d 421; Hobart v. Hobart Estate Co., supra, 26 Cal.2d at p. 437, 159 P.2d 958; April Enterprises, Inc. v. KTTV, supra, 147 Cal.App.3d at pp. 828-829, 195 Cal.Rptr. 421) and necessarily cannot have embodied a rejection of that jurisprudence. More recently, however, in section 340.6 the Legislature has chosen to abrogate the common law rule and to enact a special rule for actions against attorneys for wrongful acts or omissions. ( Radovich v. Locke-Paddon, supra, 35 Cal.App.4th at p. 970, 41 Cal.Rptr.2d 573; see also Jordache, supra, 18 Cal.4th at p. 748, 76 Cal. Rptr.2d 749, 958 P.2d 1062.) At least one of the Legislature's purposes in enacting section 340.6 evidently was to benefit potential attorney malpractice defendants, providing them with a means of cutting off the endless exposure to suit that existed under the common law discovery rule. ( Southland Mechanical Constructors Corp. v. Nixen, supra, 119 Cal.App.3d at p. 428, 173 Cal.Rptr. 917; Mallen, Panacea, supra, 52 State Bar J. at pp. 23-24.) To the extent it serves that specific remedial purpose, of course, analyses of other statutes are not pertinent to section 340.6. ( Radovich v. Locke-Paddon, supra, at p. 970, 41 Cal.Rptr.2d 573.) Second, the respective provisions are structured differently. Section 338(d)'s discovery provision, like the common law discovery rule, affords fraud plaintiffs a rule of indefinitely delayed accrual (cause of action ... is not to be deemed to have accrued), thus saving certain otherwise barred claims when plaintiffs can prove diligence. Section 340.6(a)'s discovery provision, by contrast, affords attorney malpractice defendants a defensive limitation on commencement of lawsuits (action ... shall be commenced within), thus barring suit on otherwise viable claims when malpractice defendantsas we concludecan prove a plaintiff's lack of diligence. ( Neel, supra, 6 Cal.3d at p. 191, 98 Cal.Rptr. 837, 491 P.2d 421 [distinguishing between classifying ... civil actions as to their period of limitation from the different issue as to when the cause of action accrues (italics in original)].) [4] While the difference in a statute of limitations between a delayed accrual provision and one limiting commencement of actions may be primarily linguistic, without significant practical import in a given case, the Legislature's choice of terminology in a statute may, nevertheless, illustrate the legislative intent lying behind its enactment. Thus, to burden plaintiffs with proving that their causes of action have accrued (as section 338(d) has been construed to require of fraud plaintiffs) is one thing; to burden plaintiffs (as defendant suggests we should in construing section 340.6(a)) with disproving dilatory commencement, an element of their opponents' limitations defense under that statute, would be quite another. Third, the two statutes function differently in their respective areas of the law. As mentioned, section 338(d)'s discovery provision has long been treated as an exception to the limitations defense otherwise provided by section 338(d). ( Hobart v. Hobart Estate Co., supra, 26 Cal.2d at p. 437, 159 P.2d 958.) Section 340.6(a)'s discovery provision is, by contrast, not an exception, but itself a discrete, independent limitations defense. ( Flowers v. Torrance Memorial Hospital Medical Center, supra, 8 Cal.4th at p. 999, 35 Cal.Rptr.2d 685, 884 P.2d 142; Regents of University of California v. Hartford Acc. & Indem. Co., supra, 21 Cal.3d at pp. 640-641, 147 Cal.Rptr. 486, 581 P.2d 197; Radovich v. Locke-Paddon, supra, 35 Cal.App.4th at p. 966, 41 Cal.Rptr.2d 573; see generally, 3 Witkin, Cal. Procedure, supra, Actions, § 581, at p. 737.) Given these fundamental differences in provenance, structure and function between the discovery provisions of section 338(d) and section 340.6(a), we cannot conclude that the latter's plain language is somehow trumped by a judicial gloss relating to the former, so as to determine the burden of proof question presented in this case. Rather, we must construe section 340.6 on its own terms.