Court Opinion

ID: 5664008
Source: CourtListenerOpinion
Date Created: 2022-01-12 01:38:26.282056+00
Date Added: 2024-06-11T08:38:09.644122
License: Public Domain

McINTYRE, J.
I respectfully dissent, as I disagree with the conclusion reached both by the trial court and the majority that plaintiff Thomas H. Kline’s fraud claims are barred by the statute of limitations. The majority concedes that “[gjenerally, statute of limitations issues raise questions of fact that must be tried; however, when the uncontradicted facts are susceptible of only one legitimate inference, summary judgment is proper.” (Maj. opn., ante, at p. 1374.) However, it concludes that “[t]he only legitimate inference based on the uncontroverted facts is that in September 1990 a reasonable person in Kline’s position would conclude he was injured as the result not only of Knight’s wrongdoing but of Priority’s as well.” (Maj. opn., ante, at p. 1374.) The basis for this conclusion is said to be that the facts known to Kline placed him on inquiry that defendant Priority Records, Inc. (Priority) did something wrong and had he proceeded against Priority, discovery would have revealed its fraudulent conduct. In 1990, the only claims against Priority would have been for breach of contract, negligence or some other similar theory based upon Priority’s placing Marion Knight’s name on the check in place of Kline’s. Thus, the majority’s conclusion is based on the theory that if a party has sufficient information to permit the initiation of any claim against another, that same information starts the statute of limitations for fraud.
The principal case cited by the majority for this proposition is Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103 [245 Cal.Rptr. 658, 751 P.2d 923] (Jolly), which does indeed state that the statute of limitations begins to run when the plaintiff has information that would put a reasonable person on inquiry and that a party need not be aware of the specific facts necessary to establish a claim, since they can be developed in pretrial discovery. However, the context in which this language appears is quite different than the facts in this case. In Jolly, the question was whether the plaintiff had sufficient information about whether the ingestion of a particular drug might have caused her medical conditions and injuries of which she was clearly aware. Here, that language is being used to support the holding that as a matter of law the statute of limitations for fraud commences to run even though it is arguable whether Kline had reason to know or suspect that Priority had defrauded him. I do not think the Jolly case supports the holding here.
The majority also cites Parsons v. Tickner (1995) 31 Cal.App.4th 1513 [37 Cal.Rptr.2d 810] (Parsons), and quotes general language which comes from 3 Witkin, California Procedure (3d ed. 1985) Actions, section 454, pages *1377484-485, setting forth the general discovery rule. The holding of Parsons, however, does not support the application of the Jolly language to the issue in this case. There, the appellate court reversed an order sustaining a demurrer without leave to amend holding that the trial court erred in determining that the three-year fraud statute of limitations barred the plaintiff’s fraud claims. The plaintiff alleged that the defendant owners of a music company concealed the fact that the plaintiff’s decedent, a songwriter, never transferred the copyrights to his music to them although they had the right to publish and collect royalties on the catalogue of music. The Parsons court rejected an argument similar to the one here—that the plaintiff could not be excused from discovery of the concealed facts because she was aware for many years of the existence of royalty contracts relating to the decedent’s music. It stated that the plaintiff was not in possession of any information that would have reasonably revealed that the decedent had not transferred the copyrights to the defendants. In short, Parsons is similar to this matter in that the plaintiff had some information about the defendant’s conduct but not enough to say as a matter of law that the plaintiff was on inquiry from the beginning.
As to whether knowledge of some wrongdoing on the part of the defendant necessarily starts the running of the fraud statue of limitations, the holding in Snow v. A. H. Robins Co. (1985) 165 Cal.App.3d 120 [211 Cal.Rptr. 271] (a case mentioned in Jolly) is to the contrary. In a personal injury action brought by the user of an IUD against its manufacturer, the court distinguished, for the purposes of applying statutes of limitations, between the wrongs asserted in causes of action for fraud and misrepresentation from claims for negligence, strict liability and breach of warranty. It held that while the latter claims were time-barred, the former were not, as the plaintiff was entitled to the benefit of the rule tolling the statute until the discovery of the facts constituting the fraud. The same analysis applies here. Kline’s claims for breach of an oral agreement and negligence are barred but the trier of fact must determine whether the fraud statute of limitations has expired.
Kline’s opposition to the motion for summary judgment was that in 1990, Priority told him that Knight persuaded it to issue the check to Knight rather than Kline, and further stated that although it had tried a stop payment on the check, its efforts were ineffective because Knight cashed the check immediately. Neither Priority nor Knight told Kline in 1990 that at the same time the check was given to Knight, Priority signed a record contract with Knight to represent the same group which Kline already represented and that had contracted with Priority to provide certain recordings. Kline contends that this piece of information was learned only in 1996, within three years of the *1378filing of the lawsuit. There is triable issue of fact as to whether Kline was on inquiry notice of a potential fraud claim against Priority in 1990 or only when he obtained the additional information in 1996. Accordingly, I would reverse the grant of the summary judgment in this case.
Appellant’s petition for review by the Supreme Court was denied June 13, 2001.