FEDERICO RACANCOJ v. HIGH TEN PARTNERS INC (2011)

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

Plaintiffs appeal from the summary judgment entered against them and in favor of defendant real estate brokers.   We find that the trial court correctly determined that plaintiffs' two causes of action were barred by the statute of limitations.   Since these were the only claims at issue, summary judgment was properly granted.

FACTUAL AND PROCEDURAL BACKGROUND

Defendants and respondents High Ten Partners, Inc., dba Coldwell Banker George Realty (Coldwell Banker), and its agent, Ethel Campos, represented plaintiffs and appellants Federico and Julia Racancoj as brokers in connection with plaintiffs' purchase of a house in Los Angeles.   The house was listed and represented by the sellers, Colleen and Robert Obeid, as having three legally approved units (a triplex).   Plaintiffs entered into a purchase agreement for the house in January 2005 and closed escrow in February 2005.

After the close of escrow, plaintiffs discovered that one of the units in the house had extensive termite and dry rot damage affecting the foundation, walls, and ceiling.   At some point they also discovered that the Los Angeles Department of Building and Safety had approved only two of the units and had issued numerous notices of deficiency.   The Department classified the house as a duplex rather than a triplex.

Plaintiffs brought suit against Coldwell Banker, Campos, and the sellers in February 2009.   They filed the operative first amended complaint in March 2009, alleging breach of contract and fraud causes of action based on defendants' failure to advise them of the structural and permit problems.   The sellers never responded to the complaint or otherwise appeared in the case.

After conducting discovery, respondent brokers filed a motion for summary judgment/summary adjudication in January 2010.   Respondents moved for summary judgment on the ground that both of plaintiffs' claims were barred by the statute of limitations.   Alternatively, they moved for summary adjudication as to each cause of action on statute of limitations grounds, moved for summary adjudication on the breach of contract cause of action on the basis that respondents were not parties to the written contract at issue, and moved for summary adjudication on the basis that plaintiffs could not establish liability for various alleged individual acts or omissions.¹  In support of their argument that the claims were time-barred, respondents presented evidence that defendants learned of the dry rot and termite damage by April 15, 2005, and learned, or at least should have learned, of the problem with the unapproved third unit by February 3, 2005.

In opposition, plaintiffs contended that the statute of limitations was tolled by their repeated efforts to engage in mediation prior to filing suit.   They also contended that their broker, Campos, suppressed evidence of the damage to the house and the unpermitted unit, evidence which she owed a fiduciary duty to disclose.   They argued that a more “flexible” statute of limitations standard should apply because of plaintiffs' relationship with Campos, and that information which may constitute constructive notice in most cases should not be considered to impart notice in this case.

The trial court granted respondents' motion for summary judgment on the statute of limitations ground.   It also found that even if summary judgment were not appropriate, respondents would be entitled to summary adjudication on the separate grounds proffered by respondents.   Judgment was entered on April 20, 2010.   Plaintiffs timely appealed.²

DISCUSSION

The scope of relevant issues on a summary judgment motion is determined by the pleadings.  (Nieto v. Blue Shield of California Life & Health Ins. Co. (2010) 181 Cal.App.4th 60, 74.)  “A defendant moving for summary judgment need address only the issues raised by the complaint;  the plaintiff cannot bring up new, unpleaded issues in his or her opposing papers.”  (Government Employees Ins. Co. v. Superior Court (2000) 79 Cal.App.4th 95, 98–99, fn. 4;  see also FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 381 [pleadings serve “as the outer measure of materiality” on summary judgment].)

Summary judgment must be granted if the papers show an absence of triable issues of material fact and that the moving party is entitled to judgment as a matter of law.  (Code Civ. Proc., § 437c, subd. (c).)  A defendant meets its initial burden on summary judgment by showing that one or more elements of the plaintiff's causes of action cannot be established, or that the causes of action are subject to a complete defense.  (Code Civ. Proc., § 437c, subd. (p)(2).)   The burden then shifts to the plaintiff to show a triable issue of fact as to a cause of action or defense.  (Ibid.)

We generally review a trial court's decision on summary judgment de novo, determining independently whether the facts not subject to dispute support summary judgment.  (Intel Corp. v. Hamidi (2003) 30 Cal.4th 1342, 1348.)   Doubts are resolved in favor of the party opposing the judgment, and we are not bound by the trial court's reasons for the summary judgment ruling.  (Conte v. Wyeth, Inc. (2008) 168 Cal.App.4th 89, 97;  M.B. v. City of San Diego (1991) 233 Cal.App.3d 699, 703–704;  Knapp v. Doherty (2004) 123 Cal.App.4th 76, 85.)

Even though appellants did not initially bear the burden on summary judgment in the trial court, however, they bear the burden of showing error on appeal.   (Claudio v. Regents of University of California (2005) 134 Cal.App.4th 224, 230.)   Notwithstanding our de novo review of a summary judgment ruling, we do not attempt to find triable issues on behalf of appellants.   Rather, it is appellants' responsibility to affirmatively demonstrate error.  (Lewis v. County of Sacramento (2001) 93 Cal.App.4th 107, 116.)   Furthermore, we consider only those facts presented to the trial court, and disregard allegations raised for the first time on appeal.  (Havstad v. Fidelity National Title Ins. Co. (1997) 58 Cal.App.4th 654, 661.) ³  We affirm an order granting summary judgment if it was correct on any ground that the parties had an adequate opportunity to address in the trial court.  (Securitas Security Services USA, Inc. v. Superior Court (2011) 197 Cal.App.4th 115, 120.)

A. The Applicable Statutes of Limitations

With the foregoing concepts in mind, we review the summary judgment proceedings as framed by the relevant pleadings.   Plaintiffs' first amended complaint contained two causes of action—one for breach of contract and the other for fraud.   The statute of limitations is three years for fraud.   (Code Civ. Proc., § 338, subd. (d).)  The statute of limitations is four years for breach of a written contract (Code Civ. Proc., § 337), and two years for breach of a contract not founded upon an instrument or writing.   (Code Civ. Proc., § 339.)

Although plaintiffs attached a written contract (the purchase agreement and related disclosures) as an exhibit to their complaint, they admitted in their opposition to the motion for summary judgment that respondents were not parties to the contract.   Plaintiffs did not identify any written contract between themselves and respondents.⁴  Thus, to the extent there was a valid agreement between plaintiffs and respondents, it was either oral or implied, and the applicable statute of limitations for the breach of contract cause of action was two years.

Plaintiffs filed suit on February 13, 2009.   Their action for breach of contract was brought in a timely manner only if it accrued on or after February 13, 2007, and the fraud cause of action was timely only if it accrued on or after February 13, 2006.   The determination of whether a case is barred by the statute of limitations is normally a question of fact.  (Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1112.)   Summary judgment is proper, however, when “the uncontradicted facts established through discovery are susceptible of only one legitimate inference.”  (Ibid.) As explained below, the evidence established that both causes of action accrued well prior to the applicable trigger dates.

B. Discovery of the Wrongdoing

1. The structural damage

In conjunction with their separate statement, respondents presented evidence that plaintiffs learned that the property suffered from termite and rot-related structural damage in approximately April 2005.   This evidence came directly from the first amended complaint, which stated that when a tenant vacated one of the units in April 2005, “[t]he plaintiffs discovered extensive damage detrimental to the structural integrity and safety of the unit.”   It also came from plaintiffs' responses to special interrogatories and requests for admissions, which likewise admitted discovery of the damage in April 2005.

In opposing summary judgment, plaintiffs attempted to escape the statute of limitations by arguing that the delayed discovery rule should apply.   Pursuant to this rule, the running of the statute of limitations may be “delayed until the plaintiff is aware of her injury and its negligent cause.”  (Jolly v. Eli Lilly & Co., supra, 44 Cal.3d at p. 1109.)   A type of this rule always applies in cases of fraud, which do not accrue until “the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.”  (Code Civ. Proc., § 338, subd. (d).)  The rule also can apply in cases of breach of contract, when the breaches are secretly committed and cannot be discovered until a later time.  (April Enterprises, Inc. v. KTTV (1983) 147 Cal.App.3d 805, 832.)

Plaintiffs' delayed discovery argument clearly failed here.   Even when the rule applies, the limitations period will begin to run when circumstances are sufficient to raise a suspicion of wrongdoing—i.e., notice or information that would put a reasonable person on inquiry.  ( Jolly v. Eli Lilly & Co., supra, 44 Cal.3d at pp.   1110–1111.)   Plaintiffs' case against the brokers was based on the contention that the brokers knew, or should have known, of the problems with the house prior to the close of escrow, but concealed the problems, assuring plaintiffs that the property was a “good purchase.”   But plaintiffs' own admissions established they had actual knowledge of the structural problems by April 2005.⁵

Plaintiffs did not present any evidence that could possibly justify application of the delayed discovery rule, such as evidence showing they could not have learned of the brokers' alleged concealment until a later date.  “ ‘It has long been established that the defendant's fraud in concealing a cause of action against him tolls the applicable statute of limitations, but only for that period during which the claim is undiscovered by plaintiff or until such time as plaintiff, by the exercise of reasonable diligence, should have discovered it.’ ”  (Bernson v. Browning–Ferris Industries (1994) 7 Cal.4th 926, 931.)   It was plaintiffs' burden to produce evidence supporting the assertion that they could not have reasonably discovered respondents' wrongful conduct at an earlier point.  (See Fox v. Ethicon Endo–Surgery, Inc. (2005) 35 Cal.4th 797, 808 [for delayed discovery rule to apply, plaintiff must conduct and plead reasonable investigation of all potential causes of injury];  Gryczman v. 4550 Pico Partners, Ltd. (2003) 107 Cal.App.4th 1, 6 [in opposing summary judgment, it is plaintiff's burden to show triable issue of material fact supporting application of delayed discovery rule].)   Plaintiffs produced absolutely no evidence of this sort.   The causes of action therefore accrued by April 2005, when plaintiffs became aware (or should have become aware) of their injury and the alleged cause.

2. The unpermitted unit

Plaintiffs contend that even if the statute of limitations expired on the portion of their claims relating to the structural damage, the claims still survived with regard to respondents' failure to disclose that one of the units in the house was unpermitted.   Plaintiffs contend they did not discover the permit issue until 2008.

We find this argument unpersuasive.   The gravamen of plaintiffs' complaint was that respondents concealed problems with the house.   Plaintiffs did not plead the various problems (i.e., the sctural damage and the lack of permits) under separate causes of action.   Rather, these problems were components of the entirety of the information that the brokers allegedly concealed.  “A plaintiff need not be aware of the specific ‘facts' necessary to establish the claim;  that is a process contemplated by pretrial discovery.   Once the plaintiff has a suspicion of wrongdoing, and therefore an incentive to sue, she must decide whether to file suit or sit on her rights.”  (Jolly v. Eli Lilly & Co., supra, 44 Cal.3d at p. 1111.)   Plaintiffs discovered (or should have discovered) respondents' alleged wrongdoing—the concealment of problems with the house – no later than April 2005.   Each discovery of further problems did not act to reset the statute of limitations.

In any event, the evidence shows that plaintiffs had at least constructive knowledge of the permit issues even before the close of escrow.   Plaintiffs produced in discovery a document from their lender entitled “Additional Conditions.”   This document stated “[a]ppraiser to address why LADBS and public records still show subject is a 2 unit dwelling.   Verify date garage conversion was completed.”   The document was signed by both plaintiffs on February 3, 2005.   It was sufficient to impart notice that only two of the three units in the house were recognized by the Department of Building and Safety.   At a minimum, the document should have spurred plaintiffs to investigate potential permit problems.

Plaintiffs' assertion that the document was “suppressed” by their broker was insufficient to avoid summary judgment.   Plaintiffs are correct that a broker owes a fiduciary duty to his or her clients (Field v. Century 21 Klowden–Forness Realty (1998) 63 Cal.App.4th 18, 21), and that circumstances which ordinarily would require an investigation may not excite suspicion in a fiduciary relationship.  (Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1394.)   On the other hand, “[a] person in a fiduciary relationship may relax, but not fall asleep.”   (Ibid.) Facts that would make a reasonably prudent person suspicious still give rise to a duty to investigate further, and a plaintiff is charged with knowledge of the matters that the investigation would have revealed, even in the context of a fiduciary relationship.  (Ibid.)

Plaintiffs did not deny that they received and signed the “Additional Conditions” document.   Furthermore, they presented no evidence that they conducted any sort of investigation after receiving the document (which contained highly suspicious information) in February 2005, or after discovering the structural damage in April 2005.   The totality of this information was certainly sufficient to put plaintiffs on notice of potential wrongdoing.   The lack of investigation cannot serve to delay the accrual of a cause of action.

C. No Equitable Tolling

In opposing summary judgment, plaintiffs also argued that the statute of limitations was equitably tolled by their attempts to mediate their issues with respondents.   Plaintiffs presented no admissible evidence showing these attempts at mediation.   Instead, attached to plaintiffs' opposition papers were several unauthenticated letters from their attorney to respondents' attorney discussing possible dates for mediation.   It appears that no actual mediation was ever held.⁶  These unauthenticated letters clearly did not meet the showing required to avoid summary judgment.  (See Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 356 [once defendant meets initial burden on summary judgment, plaintiff must respond with admissible evidence raising a triable issue of material fact];  Evid.Code, § 1401 [to be received in evidence, writing must be authenticated].)

Even if the evidence had been admissible, though, equitable tolling still would not apply.   The statute of limitations may be equitably tolled for a specific remedy when a plaintiff, who possesses several legal remedies, reasonably and in good faith pursues another of the remedies.  (Addison v. State of California (1978) 21 Cal.3d 313, 317–318.)   Plaintiffs appeared to have only one remedy for their claims—a lawsuit in state court.   Engaging in discussions regarding possible mediation was not the pursuit of a legal remedy required to equitably toll the statute of limitations.  (See 65 Butterfield v. Chicago Title Ins. Co. (1999) 70 Cal.App.4th 1047, 1063 [plaintiff cited “no authority holding that merely engaging in informal negotiations equitably tolls the statute”].)   Plaintiffs did not pursue the legal remedy for their claims, the lawsuit in state court, until February 2009, long after the statute of limitations had expired.

D. Breach of Fiduciary Duty

Plaintiffs were represented by counsel in the trial court proceedings.   They are not represented by counsel on appeal.   This lack of representation perhaps explains why plaintiffs devote considerable parts of their appellate briefs arguing the validity of a claim that was never brought—breach of fiduciary duty.

It is possible that plaintiffs' counsel was remiss in failing to plead a breach of fiduciary duty cause of action in the trial court proceedings.   Depending on the gravamen of the action, the residual four-year statute of limitations of Code of Civil Procedure section 343 can apply to a breach of fiduciary duty claim.  (See Thomson v. Canyon (2011) 198 Cal.App.4th 594, 606–607 [further explaining that if the claim sounds in fraud, the three-year period of Code Civ., Proc., § 338, subd. (d) applies].)   It is not for us to determine whether a breach of fiduciary duty claim could have been properly made, however, or whether it would have been time-barred.   We do not engage in hypothetical exercises.

In reviewing a ruling on a motion for summary judgment, we consider only the facts that were before the trial court when it ruled on the motion.  (Mills v. Forestex Co., (2003) 108 Cal.App.4th 625, 640.)   We disregard new allegations on appeal.  (Havstad v. Fidelity National Title Ins. Co., supra, 58 Cal.App.4th 654, 661.)  “Thus, possible theories that were not fully developed or factually presented to the trial court cannot create a ‘triable issue’ on appeal.”  (American Continental Ins. Co. v. C & Z Timber Co. (1987) 195 Cal.App.3d 1271, 1281.)

It is helpful to reemphasize that the scope of a summary judgment motion is determined by the pleadings, and a moving defendant need only address those issues stated in the complaint.  (Nieto v. Blue Shield of California Life & Health Ins. Co., supra, 181 Cal.App.4th 60, 74;  Government Employees Ins. Co. v. Superior Court, supra, 79 Cal.App.4th 95, 98–99, fn. 4.) The operative complaint here contained two causes of action—breach of contract and fraud.   Respondents properly addressed both causes of action in their summary judgment papers.   They were not obligated to address a theoretical third claim.   (Conroy v. Regents of University of California (2009) 45 Cal.4th 1244, 1254.)

It should also be noted that following the filing of the motion for summary judgment, plaintiffs never requested leave to amend their complaint.   Instead, they stood on the claims as presented, never wavering from their complaint even at the time of the hearing.   When a summary judgment motion is supported by evidence sufficient to negate a plaintiff's claims, the plaintiff forfeits the opportunity to amend the complaint by failing to request leave to amend.   (County of Santa Clara v. Atlantic Richfield Co. (2006) 137 Cal.App.4th 292, 333.)  “[A] plaintiff wishing ‘to rely upon unpleaded theories to defeat summary judgment’ must move to amend the complaint before the hearing.”   (Oakland Raiders v. National Football League (2005) 131 Cal.App.4th 621, 648.)   No request was made to amend the complaint, either before or after the hearing.   We will not reverse to allow plaintiffs to pursue an unpleaded claim.

DISPOSITION

The judgment is affirmed.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

We concur:

FOOTNOTES

FN1. While respondents' motion properly sought to dispose of each cause of action, their attempt to have various possible individual bases of liability summarily adjudicated was procedurally improper.  “A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.”  (Code Civ. Proc., § 437c, subd. (f)(1).)   This error is immaterial to this opinion, however, since we reach our decision on other grounds..  FN1. While respondents' motion properly sought to dispose of each cause of action, their attempt to have various possible individual bases of liability summarily adjudicated was procedurally improper.  “A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.”  (Code Civ. Proc., § 437c, subd. (f)(1).)   This error is immaterial to this opinion, however, since we reach our decision on other grounds.

FN2. Respondents' purported motion to strike portions of appellants' opening brief is denied.   Respondents' request, which is contained within the body of their own brief, does not comply with the mandatory requirements for separate motions on appeal.  (Cal. Rules of Court, rule 8.54;  Jocer Enterprises, Inc. v. Price (2010) 183 Cal.App.4th 559, 565.).  FN2. Respondents' purported motion to strike portions of appellants' opening brief is denied.   Respondents' request, which is contained within the body of their own brief, does not comply with the mandatory requirements for separate motions on appeal.  (Cal. Rules of Court, rule 8.54;  Jocer Enterprises, Inc. v. Price (2010) 183 Cal.App.4th 559, 565.)

FN3. Plaintiffs' Request for Judicial Notice filed March 17, 2011, is denied.   Absent exceptional circumstances, we do not take judicial notice of evidence that was not presented to the trial court.  (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444, fn. 3.) A copy of the document that plaintiffs seek to have judicially noticed has apparently been in their possession since 2005, and so could have been presented to the trial court.   No exceptional circumstances exist that would compel us to take judicial notice..  FN3. Plaintiffs' Request for Judicial Notice filed March 17, 2011, is denied.   Absent exceptional circumstances, we do not take judicial notice of evidence that was not presented to the trial court.  (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444, fn. 3.) A copy of the document that plaintiffs seek to have judicially noticed has apparently been in their possession since 2005, and so could have been presented to the trial court.   No exceptional circumstances exist that would compel us to take judicial notice.

FN4. Plaintiffs argued that respondents were third party beneficiaries to the purchase agreement because they would benefit by receiving a commission if the sale went through.   Simply because respondents may have benefited, however, did not make them potentially liable for breach of the purchase agreement.  Civil Code section 1559 provides that a third party beneficiary may enforce a contract.   It does not provide that a third party beneficiary may be sued on that contract.   And, in any event, respondents were (at most) incidental beneficiaries to the purchase agreement, and so would not have been able to enforce the agreement, much less be liable for its breach.  (See Martinez v. Socoma Companies, Inc. (1974) 11 Cal.3d 394, 406–407.).  FN4. Plaintiffs argued that respondents were third party beneficiaries to the purchase agreement because they would benefit by receiving a commission if the sale went through.   Simply because respondents may have benefited, however, did not make them potentially liable for breach of the purchase agreement.  Civil Code section 1559 provides that a third party beneficiary may enforce a contract.   It does not provide that a third party beneficiary may be sued on that contract.   And, in any event, respondents were (at most) incidental beneficiaries to the purchase agreement, and so would not have been able to enforce the agreement, much less be liable for its breach.  (See Martinez v. Socoma Companies, Inc. (1974) 11 Cal.3d 394, 406–407.)

FN5. Plaintiffs emphasized at oral argument that sometime prior to close of escrow, a document labeled as a termite inspection report, which purportedly bore their signatures, was created.   Plaintiffs insist that they never actually signed the document and that no termite inspection occurred.   We agree with plaintiffs that, given the right circumstances, this could be a powerful piece of evidence.   However, aside from a brief reference to the suspicious document in plaintiffs' declarations opposing summary judgment, plaintiffs' summary judgment papers, including their opposition memorandum, contained no mention of the issue.   In any event, given that plaintiffs admittedly discovered the termite problems by April of 2005, the issue would not assist them in avoiding the statute of limitations defense..  FN5. Plaintiffs emphasized at oral argument that sometime prior to close of escrow, a document labeled as a termite inspection report, which purportedly bore their signatures, was created.   Plaintiffs insist that they never actually signed the document and that no termite inspection occurred.   We agree with plaintiffs that, given the right circumstances, this could be a powerful piece of evidence.   However, aside from a brief reference to the suspicious document in plaintiffs' declarations opposing summary judgment, plaintiffs' summary judgment papers, including their opposition memorandum, contained no mention of the issue.   In any event, given that plaintiffs admittedly discovered the termite problems by April of 2005, the issue would not assist them in avoiding the statute of limitations defense.

FN6. For some reason, rather than filing suit, plaintiffs' counsel apparently dithered over the possibility of mediation for well over a year, sending open-ended letters to opposing counsel every few months regarding the subject..  FN6. For some reason, rather than filing suit, plaintiffs' counsel apparently dithered over the possibility of mediation for well over a year, sending open-ended letters to opposing counsel every few months regarding the subject.

DOI TODD, J. CHAVEZ, J.