Court Opinion

ID: 6500080
Source: CourtListenerOpinion
Date Created: 2022-07-14 20:02:45.906012+00
Date Added: 2024-06-11T09:15:32.315030
License: Public Domain

Filed 7/14/22 Valkof v. U.S. Bank CA2/8
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         SECOND APPELLATE DISTRICT

                                      DIVISION EIGHT

VLADO VALKOF,

         Plaintiff and Appellant,
                                                                B313341
         v.
                                                                (Los Angeles County
U.S. BANK, N.A.,                                                Super. Ct. No. 19SMCV00453)

         Defendant and Respondent.

      APPEAL from a judgment of the Superior Court of Los
Angeles County. Mark H. Epstein, Judge. Affirmed.
      John L. Dodd & Associates and John L. Dodd for Plaintiff
and Appellant.
      Ballard Spahr, Scott S. Humphreys, Susan Nona Nikdel,
Justin Kerner, and Tracy Blane Rane, for Defendant and
Respondent.

                        _________________________________
      Vlado Valkof filed this suit derivatively on behalf of SIV,
LLC against U.S. Bank, N.A. (the Bank). His sole claim is for
negligence related to his ex-wife and former business partner
Ana Valkova’s (Valkova) opening of a bank account and alleged
misappropriation of funds deposited into that account that were
meant for SIV, LLC. The Bank demurred, and the trial court
sustained its demurrer to the second amended complaint without
leave to amend. The trial court concluded that Valkof failed to
properly plead negligence, and the claim was also barred by the
statute of limitations. Valkof appeals, arguing the trial court
erred on both grounds.
      We agree with the trial court that the negligence claim is
time-barred. We therefore do not need to address whether the
negligence claim was also properly pled. We affirm solely on the
ground that the negligence claim is time-barred.
      FACTUAL AND PROCEDURAL BACKGROUND1
      Valkof is a member of SIV, LLC, which he established with
Valkova and three others, in September 2014.
      In December 2014, Valkova went to the Bank and opened a
business checking account in the name of “Ana V. Valkova dba
SIV[,] LLC.” Valkova told the Bank’s representative that she was
the only member and manager of SIV, LLC, even though it had
other members. The Bank did not ask to see SIV, LLC’s
operative agreement or fictitious business name statement.

1
      The factual background is drawn exclusively from the
properly pleaded allegations in the operative second amended
complaint. (See Heckart v. A-1 Self Storage, Inc. (2018) 4 Cal.5th
749, 753–754.)

                                   2
Valkova presented a signed resolution from SIV, LLC authorizing
her to open the account, which she signed as the single member.
      Subsequently, Valkova led Valkof and the other members
of SIV, LLC to believe that an account was opened for SIV, LLC,
so they transferred a total of $330,000 into the account titled
“Ana V. Valkova dba SIV[,] LLC,” with at least some checks made
out to “SIV, LLC.” Valkova subsequently converted the funds
meant for SIV, LLC in the account for her personal use.
      Valkof did not know of the full extent of the above-
described circumstances until April 2017, which is when his
family law attorney received a response to a subpoena to the
Bank in his family law case.
      On March 7, 2019, Valkof filed a suit against Valkova and
the Bank derivatively on behalf of SIV, LLC. The other members
of SIV, LLC declined to join him in the suit. Valkof voluntarily
dismissed Valkova from the suit in August 2019.
      Valkof filed his first amended complaint, which was only
against the Bank, in March 2020. The Bank demurred, and the
court sustained that demurrer, with leave to amend, in June
2020.
      Valkof filed his second amended complaint in July 2020,
asserting a sole claim of negligence against the Bank. The Bank
again demurred, and the trial court sustained it without leave to
amend after a hearing and supplemental briefing on the
applicable statute of limitations.
     Valkof timely appealed.2

2
      U.S. Bank argues that this appeal is untimely, erroneously
claiming that the appeal was due by March 20, 2021. The Notice

                                  3
                            DISCUSSION
A.     Demurrer Standard and Standard of Review
       A general demurrer challenges whether the allegations of a
complaint are sufficient to state a cause of action. (Code Civ.
Proc., § 430.10, subd. (e); SLPR, L.L.C. v. San Diego Unified Port
Dist. (2020) 49 Cal.App.5th 284, 316 (SLPR).) In evaluating the
sufficiency of the allegations, the court must accept the truth of
all material facts properly pleaded, but not contentions,
deductions, or conclusions of fact or law, and may also consider
matters that may be judicially noticed. (SLPR, supra, at p. 316.)
       Our review of the trial court’s judgment after sustaining a
demurrer is de novo. (Rakestraw v. California Physicians’ Service
(2000) 81 Cal.App.4th 39, 43 (Rakestraw).) On appeal, it is the
plaintiff’s burden to show error by the trial court in sustaining a
demurrer, and we may affirm on any ground stated in the
demurrer without regard to the trial court’s basis for decision.
(SLPR, supra, 49 Cal.App.5th at p. 317.) Because a demurrer
tests the legal sufficiency of a complaint, on appeal “the plaintiff
must show the complaint alleges facts sufficient to establish
every element of each cause of action.” (Rakestraw, supra, at

of Appeal was filed prematurely, on April 1, 2021. We therefore
notified Valkof on August 13, 2021, that his appeal would be
dismissed because he had not filed a judgment of dismissal,
which is required for an appeal of an order on a demurrer. (Hill
v. City of Long Beach (1995) 33 Cal.App.4th 1684, 1695 (Hill).)
The trial court entered the judgment of dismissal on September
1, 2021, and Valkof filed that judgment with this court on
September 8, 2021. His appeal is therefore timely. (See Cal.
Rules of Court, rule 8.104(a).)

                                    4
p. 43.)
B.      Valkof Timely Cured His Lack of an Attorney
       The Bank asks us to dismiss Valkof’s appeal without
considering the merits because he filed his notice of appeal pro
se, without counsel, as a derivative of an LLC, citing Paradise v.
Nowlin (1948) 86 Cal.App.2d 897, 898 (Paradise) [“A corporation
cannot appear in court by an officer who is not an attorney and it
cannot appear in propria persona”].) We decline to do so,
following more recent precedent holding that a pro se filing can
be cured by timely obtaining counsel.
       In 2004, the court in CLD Construction, Inc. v. City of San
Ramon (2004) 120 Cal.App.4th 1141 (CLD) noted that authorities
subsequent to the 1948 Paradise decision have “question[ed] the
present day validity of Paradise’s summary conclusion that a
notice of appeal (or, impliedly, another document) filed on behalf
of a corporation by a nonattorney is automatically void” and have
found it “more appropriate and just to treat a corporation’s
failure to be represented by an attorney as a defect that may be
corrected.” (CLD, at pp. 1147, 1149 [holding a complaint filed by
a non-attorney on behalf of a corporation could be timely cured].)
In CLD, the court cited “the weight of nationwide authority [in
favor of allowing for timely curing of a pro se filing on behalf of a
corporation] and this state’s increasing acceptance of the view
that representation of the corporation by an attorney is not an
absolute prerequisite to the court’s fundamental power to hear or
determine a case.” (Id. at p. 1149.)
       It does not appear that any published California case has
followed or disagreed with CLD for this proposition. At least one
court ignored it. In Gamet v. Blanchard (2001) 91 Cal.App.4th
1276 (Gamet), a non-attorney noticed an appeal on behalf of a
corporation. Without any mention of Paradise, the court in

                                     5
Gamet notified the corporation that its appeal would be dismissed
unless it timely retained counsel, which it did. (Id. at p. 1282.)
       We follow the well-reasoned approach of CLD in declining
to follow Paradise if a filing by a non-attorney can be timely
cured without prejudice to the opposing party or the court. (CLD,
supra, 120 Cal.App.4th at p. 1150.) Allowing appellants to cure
the defect of filing pro se when a corporation or LLC needs to be
represented by counsel is a rule that serves a “pragmatic purpose
of protecting against the distractions and potentially harmful
results that can arise from the unlicensed practice of law . . .
because the court retains authority to dismiss an action if an
unrepresented corporation does not obtain counsel within
reasonable time,” and furthers the goal that “disputes should be
resolved on their merits.” (Id. at p. 1149.)
       The curative approaches of CLD and Gamet are
particularly appropriate on the facts here where the defect was
cured before the appeal was even effectively valid. Valkof’s pro se
notice of appeal was filed on April 1, 2021, months before the
trial court’s judgment of dismissal was entered. Valkova retained
counsel on August 25, 2021—before the trial court entered the
judgment of dismissal on September 1, 2021. On August 26,
2021, we granted Valkof an extension of time to file the judgment
of dismissal until September 27, 2021, after we notified him that
an appeal from an order on a demurrer is not appropriate until a
judgment of dismissal is entered (citing Hill, supra, 33
Cal.App.4th 1684). Because Valkof cured his lack of an attorney
before the appeal was effectively valid, he timely cured his defect.
SIV, LLC was thus represented before the Bank or this court
were “in the position of having to deal with a nonattorney
corporate representative,” so there was no prejudice to us or the
appellee. (Cf. CLD, supra, 120 Cal.App.4th at pp. 1150, 1152

                                    6
[allowing time to timely cure where there is no prejudice to the
court nor appellees].)
       Finally, we reject Valkof’s assertion that because his suit is
on behalf of an LCC, rather than a corporation, as in Paradise, he
could file pro se. LLCs are similar to corporations and
unincorporated associations in that they are legal entities
separate and apart from their members, and are not natural
persons, so they must be represented through licensed attorneys
because they are not natural persons. (See Clean Air Transport
Systems v. San Mateo County Transit Dist. (1988) 198 Cal.App.3d
576, 578-579; Edmon & Karnow, Cal. Practice Guide: Civil
Procedure Before Trial (The Rutter Group 2021) ¶¶ 2:123-2:125.)
C.     The Negligence Claim is Time-Barred
       We find that the demurrer was properly sustained because
the second amended complaint’s sole claim is time-barred.
       For the defense that a claim is time-barred to be successful
on general demurrer, the “defect must clearly and affirmatively
appear on the face of the complaint; it is not enough that the
complaint shows merely that the action may be barred.”
(McMahon v. Republic Van & Storage Co., Inc. (1963) 59 Cal.2d
871, 874; see also E–Fab, Inc. v. Accountants, Inc. Services (2007)
153 Cal.App.4th 1308, 1315 (E–Fab).) In evaluating whether the
claim is time-barred, the court must determine (1) which statute
of limitations applies and (2) when the claim accrued. (E–Fab,
supra, 153 Cal.App.4th at p. 1316.)
       As to the first determination, the statute of limitations
governing Valkof’s negligence claim is two years. (Code Civ.
Proc., § 335.1.) Valkof concedes this.

                                     7
       Valkof’s claim of error is with the second inquiry.
He argues that the trial court erred in relying on police reports to
determine when his negligence claim accrued. Notably, he does
not assert that the trial court erred in also relying on an email
that he attached to the complaint to reach its conclusion. He
concedes that a trial court can, when considering a demurrer,
accept as fact the content of exhibits directly attached to a
complaint, and recognizes that he attached the email that the
trial court relied on to the complaint. Instead, he argues that the
trial court erred in drawing an unwarranted “inference” from
that email that he had knowledge of the Bank’s wrongful conduct
no later than February 8, 2016, which made the complaint filed
in March 2019 untimely. In the second amended complaint, he
plead delayed discovery: stating that he did not know the “full
extent” of Valkova’s crime until his lawyer obtained the U.S.
Bank documents in April 2017. His argument fails for two
reasons.
       First, he did not properly plead delayed discovery. The
limitations period generally commences when the cause of action
accrues. (Code Civ. Proc., § 312.) The discovery rule postpones
accrual of a cause of action until the plaintiff discovers, or has
reason to discover, the cause of action. (E-Fab, supra, 153
Cal.App.4th at p. 1318.) “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.’ ” (Fox v. Ethicon Endo-Surgery,
Inc. (2005) 35 Cal.4th 797, 807 (Fox).) To rely on the delayed
discovery rule, a plaintiff must plead “ ‘the inability to have made
earlier discovery despite reasonable diligence.’ ” (Id. at p. 808.)
Valkof did not do so. There are no allegations of there being any
valid reason why Valkof waited a year to subpoena bank records.
He therefore cannot rely upon the discovery rule in asserting that

                                    8
he learned of the alleged bank negligence in April 2017.
      Second, the evidence incorporated into the complaint—i.e.,
the email (alone, even without the police reports which we do not
rely on here)—shows that the claim accrued in February 2016,
which made the complaint filed in March 2019 untimely.
Attached to the second amended complaint is an email from
Valkof to the other members of the LLC stating, “Following the
decision from our legally scheduled and called LLC meeting on
February 8, 2016, at R+D Restaurant . . . I filed a police report
#2016-00005260 about Ana’s crime[.]” This shows that Valkof
knew of Valkova’s crime in February 2016, and thus had a reason
to suspect a factual basis for the negligence claim against the
Bank at this time. (See Fox, supra, 35 Cal.4th at p. 807 [claim
accrues where there is reason to suspect a factual basis].) Valkof
does not dispute that the crime by Valkova referred to in the
email is the basis for his negligence claim against the Bank. The
second amended complaint specifically alleges that Valkof and
three other members of SIV, LLC transferred approximately
$330,000 into the bank account, and that Valkova converted some
of those funds to her personal use. As Valkof recognizes, exhibits
are incorporated into the face of the complaint for purposes of
considering the demurrer, including the statute of limitations.
(See Foxen v. Carpenter (2016) 6 Cal.App.5th 284, 288, 292.)
When there is a conflict between factual allegations in a
complaint and evidence in the exhibits attached to it, we credit
the evidence. (Barnett v. Fireman’s Fund Ins. Co. (2001) 90
Cal.App.4th 500, 505.) Here, the evidence shows that Valkof
knew of Valkova’s crime in February 2016 (involving her
accessing money that the Bank was supposed to be holding for
SIV, LLC’s sole use) and thus had reason to suspect negligence by
the Bank then too. Valkof did not need to know that the Bank

                                   9
had committed wrongdoing for the statute of limitations to be
triggered. Under the delayed discovery rule, there is no delay in
accrual when the defendant is unknown because the identity of
the defendant is not an element of a cause of action. (Fox, supra,
35 Cal.4th at p. 807.)
       In sum, the statute of limitations had run on Valkof’s
negligence claim, precluding his sole claim against the Bank.
D.     Request for Judicial Notice of This Court’s Family
       Court Appeal File is Denied Because the Family
       Court Minute Order is Irrelevant
       Valkof asks us to take judicial notice of the family court file
in his divorce matter with Valkova, asserting it is relevant to the
Bank’s assertion in its demurrer that a “referenced order in
Mr. Valkof’s family law matter is final.” We decline to do so
because the family court file and its contents not relevant to
anything on appeal.
       Relatedly, on appeal Valkof takes issue with the trial court
taking judicial notice “of the family law minute order,” arguing
that “[t]o the extent the court relied on the family law order, it
erred. Even if it didn’t rely on it, the order cannot be the basis for
affirmance.” The trial court did not rely on any family law order
in sustaining the demurrer, and we do not rely on it now. It is
irrelevant to the trial court’s decision, and to our decision, so we
do not rely on it ourselves, nor take judicial notice of the record in
the family law matter.

                                    10
                         DISPOSITION
       The judgment is affirmed. Defendant U.S. Bank is entitled
to its costs on appeal.

                                                         *
                                     HARUTUNIAN, J.

We concur:

             STRATTON, P. J.

             WILEY, J.

*
      Judge of the San Diego Superior Court, assigned by the
Chief Justice pursuant to article VI, section 6 of the California
Constitution.

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