Blease v. Osborne







Filed 11/9/10 Blease v. Osborne CA4/2






NOT TO BE PUBLISHED IN OFFICIAL REPORTS


California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.




IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION TWO

ALESHA BLEASE, et al, Plaintiffs and Appellants, v. JOHN OSBORNE, Defendant and Respondent.

E049809 (Super.Ct.No. CIVVS804111) OPINION

APPEAL from the Superior Court of San Bernardino County. Joseph R. Brisco and Steve Malone, Judges.^[1] Affirmed.
Thomas W. Gillen for Plaintiffs and Appellants.
Gray & Prouty, Malcolm D. Schick and Kelly Cox for Defendant and Respondent.
Plaintiffs Alesha Blease, Amanda Richards, Chad Gruenewald, and Layne Gruenewald (collectively referred to as Plaintiffs) appeal from a judgment in favor of defendant John Osborne (Defendant), entered after the trial court sustained without leave to amend the demurrer of Defendant to the first amended complaint. The trial court found that Plaintiffs’ claims were barred by the applicable statute of limitations. Plaintiffs challenge the trial court’s ruling. We affirm.
I. PROCEDURAL BACKGROUND AND FACTS
This is not the first time that this court has heard the ongoing dispute between the some of the descendents of H.S. Osborne. (Gruenewald v. Scott and Osborne (June 21, 2010, E046596/E047405 [nonpub. opn.] (Gruenewald).) On July 9, 2010, Defendant requested this court to take judicial notice of its opinion in case No. E047405 (the Barstow action). Such case was consolidated with case No. E046596. Plaintiffs do not object to the request; however, they do request that it be denied. Ruling on Defendant’s request was reserved for consideration with this appeal. Given the state of the record before this court, we grant Defendant’s request for judicial notice for the purpose of providing the necessary background information to summarize the dispute between the parties. Thus, we incorporate by reference the following from our opinion in case No. E046596:
“H.S. Osborne died in July 2000. He was survived by four adult children—Nancy Gruenewald [(Nancy)], Joyce Hartman [(Joyce)], John Osborne [(John)], and Gary Osborne [(Gary)]—and by 16 grandchildren.
“[H.S. Osborne] had created a living trust (the Trust). After his death, the Trust assets included all of the stock in [Osborne Tank & Supply, Inc. [(Corporation)]. They also included certain real property in Oro Grande (the Oro Grande property).
“According to the terms of the Trust, the income of the Corporation was to go to his children for as long as they (or any of them) lived. Once all of the children were deceased, the Corporation was to be liquidated and distributed among all of his grandchildren then living.
“Upon his death, Nancy and Joyce became the trustees of the Trust; John became president of the Corporation.
“Various and sundry disputes arose, which need not be recounted here. In the hope of settling these disputes, some of the parties entered into an agreement dated March 5, 2001 (the Agreement). Those parties were: (1) Nancy, in her individual capacity and as cotrustee of the Trust; (2) Joyce, in her capacity as cotrustee of the Trust and as an officer of the Corporation; and (3) John, in his capacity as president of the Corporation.^[[2]]
“The Agreement provided that the Trust would sell the Oro Grande property to Nancy for $90,000. It also provided that the Corporation would sell all of its assets to Nancy for an additional $160,000. The Corporation would distribute the $160,000 by paying $10,000 to each of the 16 grandchildren.^[[3]] Finally, the Trust would dissolve the Corporation.
“The probate court approved the Agreement. Nancy paid the $90,000, and the Trust duly conveyed the Oro Grande property to her. Nancy also paid the $160,000, and the Corporation turned over at least some of its assets to her. . . . Nancy immediately resold both the Oro Grande property and the former assets of the Corporation to her adult son Layne [Gruenewald (Layne)].
“At that point, however, the probate court threw a spanner in the works—it refused to approve the distribution of the $160,000 to the grandchildren, because that would infringe the rights of any grandchildren not yet born.
“The parties agreed that the distribution should go forward anyway; however, each of the children, along with the grandchildren born to him or her, would have to sign an agreement (the Indemnity), holding harmless Nancy, Joyce, the Trust, and the Corporation, as a condition of receiving those grandchildren’s shares.^[[4]] In December 2001, at the request of the Trust, the Corporation prepared the necessary indemnity forms. It also cut a check to each grandchild for $10,000. It then made the forms and the checks available to all of the children and grandchildren. In the case of Nancy and her four children, it sent the forms and the checks to Nancy’s attorney.
“In December 2001, John and Joyce and their children signed their forms and received their checks. Suddenly, however, Nancy and Layne raised a new issue: whether John was really the father of one of his claimed children. They refused to sign the forms unless and until John provided proof of paternity.
“At first, Gary, the fourth sibling, refused to sign, because he felt that some of the release language was too broad. In February 2002, however, he withdrew his objection; he and his children signed the forms, and they, too, received their checks.
“Meanwhile, also in February 2002, Joyce and Nancy were removed as trustees, and [Melodie Z. Scott (Scott)] was appointed as the successor trustee.^[[5]] In addition, Joyce and John were removed as officers of the Corporation, and Scott became the president.
“In April 2002, Nancy and her four children finally signed and returned the forms. At that point, however, Joyce (like Nancy) was no longer either a trustee or a corporate officer and had no authority to distribute their $40,000. Scott, who did have the authority, refused to distribute the $40,000 without an agreement from the grandchildren indemnifying her (or an order from the probate court authorizing the distribution). Thus, Nancy’s children never received the $40,000.” (Gruenewald, supra, E046596, pp 3-6.)
On September 24, 2002, through her attorney, Nancy issued a Notice of Default to all other parties to the Agreement.
On April 21, 2004, Nancy and her son, Layne (one of Plaintiffs) initiated the Barstow action against John, the Corporation, and other parties, alleging, inter alia, breach of contract and conversion of $40,000. (Gruenewald, supra, E046596, p 8.) On July 28, a first amended complaint was filed alleging breach of the Agreement and conversion claims for the failed distribution of $40,000 to Plaintiffs. It was alleged that Plaintiffs (with the exception of Layne) had assigned their claims to their shares to Nancy. Nancy’s and Layne’s claims were defeated by summary judgment or jury verdicts. (Gruenewald, supra, E046596, p 12.) Specifically, regarding their claim of breach of the Agreement, the jury found that Nancy had breached it. “The evidence at trial showed that, in or before December 2001, ‘[a]ll of the parties’—inferably including Nancy—agreed to the revised distribution plan. This required each child and grandchild to sign the Indemnity as a condition of receiving that grandchild’s $10,000.^[[6]] The Corporation performed fully, by tendering the indemnity forms along with the checks. Thus, Nancy was required to perform—by signing the Indemnity—within a reasonable time. (Civ. Code, § 1657.) The jury could properly find that April 2002 was not a reasonable time. [¶] Nancy may be arguing that the tender was not unconditional, because it required her and Layne to sign the Indemnity. This condition, however, was already imposed by the parties’ agreement; it was not imposed unilaterally after the fact. (See Civ. Code, §§ 1494, 1498; see also Walsh v. Walsh (1940) 42 Cal.App.2d 287, 293.) Indeed, it was Nancy who imposed an improper condition—by insisting that John provide proof of paternity. Accordingly, there was sufficient evidence that Nancy did breach the revised distribution agreement.” (Gruenewald, supra, E046596, p 19.)
When it became apparent that Nancy and Layne would not prevail in the Barstow action, Plaintiffs (Nancy’s children, including Layne) initiated this action in July, 2008.^[7] (Gruenewald, supra, E046596, pp 37, 43.) They alleged they are four of 16 “grandchildren trust beneficiaries” of the Trust, whose claims were based on the Agreement and the Indemnity. They claimed Defendant’s failure to disburse $40,000 to them and dissolve the Corporation amounted to a breach of the Agreement and the Indemnity. Plaintiffs alleged they had previously assigned their rights to Nancy; however, the trial court in Nancy’s prior action found she lacked standing to pursue the $40,000 on behalf of Plaintiffs.
Defendant demurred to Plaintiff’s First Amended Complaint on the grounds that Plaintiffs’ claims were time barred. The trial court agreed, stating: “The plaintiff[s’] complaint shows on its face at that time cause of action for breach of contract and conversion all barred by the applicable statu[te]s of the limitation and plaintiff[s’] complaint, does not contain any allegation of equitable tolling estoppel . . . .” Judgment was entered on September 15, 2009, and notice of entry of judgment was filed on October 15, 2009. Plaintiffs appeal.
II. STANDARD OF REVIEW
“On appeal from a judgment dismissing an action after sustaining a demurrer without leave to amend, the standard of review is well settled. We give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] Further, we treat the demurrer as admitting all material facts properly pleaded, but do not assume the truth of contentions, deductions or conclusions of law. [Citations.] When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action. [Citation.] And when it is sustained without leave to amend, we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse. [Citation.]” (City of Dinuba v. County of Tulare (2007) 41 Cal. 4th 859, 865.)
“‘The defense of statute of limitations may be asserted by general demurrer if the complaint shows on its face that the statute bars the action.’ [Citations.]” (E-Fab, Inc. v. Accountants, Inc. Services (2007) 153 Cal.App.4th 1308, 1315.)
III. DEMURRER BASED ON STATUTE OF LIMITATIONS
In determining whether Plaintiffs’ claims against Defendant are time-barred, we consider what statutes of limitations apply and when did Plaintiffs’ claims arise.
A. Applicable Statute of Limitations
Plaintiffs allege their claims against Defendant are based on the Agreement and the Indemnity. According to Plaintiffs, Defendant breached those contracts by failing to distribute $40,000 to Plaintiffs. The statute of limitations for breach of a written contract is four years. (Code Civ. Proc. § 337.)
Plaintiffs also allege that Defendant converted the $40,000 owed to them. Code of Civil Procedure section 338, subdivision (c), provides that a cause of action for conversion must be asserted within three years of accrual of the claim.
B. Accrual of Plaintiffs’ Claims
“It is well accepted that a limitations period commences when the cause of action ‘accrues.’ [Citations.] ‘“Generally speaking, a cause of action accrues at ‘the time when the cause of action is complete with all of its elements.’”’ [Citation.] ‘The cause of action ordinarily accrues when, under the substantive law, the wrongful act is done and the obligation or liability arises, i.e., when an action may be brought.’ [Citation.]” (Salenga v. Mitsubishi Motors Credit of America, Inc. (2010) 183 Cal.App.4th 986, 996.)
Here, the Agreement was entered into on March 5, 2001, and the Indemnity was entered into on December 14, 2001. According to Plaintiffs, they completed their obligations under the contracts by April 4, 2002; however, “there did not exist a breach of that contract until [they] gave to [Defendant] a ‘5 day’ notice to cure the default.” Such notice was mailed on September 24, 2002. Thus, Plaintiffs claimed that the breach occurred as of October 4, 2002. Likewise, regarding their claim for conversion, the alleged conversion occurred after October 4, 2002, when Defendant failed to distribute the funds to Plaintiffs.

Plaintiffs filed their action on July 14, 2008, more than five years (nearly six) after Defendant allegedly breached the contracts and/or converted the $40,000. Given these facts, the trial court correctly found that Plaintiffs’ claims were barred by the applicable statutes of limitations.
C. Equitable Tolling
“‘Equitable tolling is a judge-made doctrine “which operates independently of the literal wording of the Code of Civil Procedure” to suspend or extend a statute of limitations as necessary to ensure fundamental practicality and fairness. [Citations.]’” (In re Marriage of Zimmerman (2010) 183 Cal.App.4th 900, 911.) Application of equitable tolling doctrine requires timely notice to the defendant in filing the first claim, lack of prejudice to the defendant, and good faith conduct by the plaintiff. (Addison v. State of California (1978) 21 Cal.3d 313, 319.)
Plaintiffs contend that the limitations period should equitably be tolled because the fact that the Barstow action was commenced “warned [Defendant] that [Plaintiffs] could sue him.” Defendant contends the doctrine is inapplicable, because there is no evidence that Plaintiffs were faced with several legal remedies, and reasonably and in good faith, pursued one. Defendant further claims that Layne was a party to the Barstow action, so Layne’s claims are subject to res judicata. Regarding the remaining Plaintiffs, Defendant argues there is no evidence that they were faced with several legal remedies, that they were prevented from pursuing their legal remedies, or that they attempted to pursue any legal remedy prior to initiating this action. Plaintiffs disagree, arguing that, by assigning their claims to Nancy to pursue in the Barstow action, they were barred from instituting independent litigation until the court ruled that Nancy lacked standing. Since the order on such ruling was not filed until June 23, 2008, they claim that the applicable statutes of limitations were tolled from April 21, 2004, through the filing of the order. We disagree.
To begin with, we note the trial court previously found that Nancy lacked standing to sue on behalf of Plaintiffs. (Gruenewald, supra, E046596, p 11.) Since Nancy did not have standing to bring any action on behalf of Plaintiffs, it was incumbent upon them to pursue their own claims as the real parties in interest. They failed to do so. Next, as Defendant notes, an assignment does not work to toll the statutes of limitations. (Hooker v. East Riverside Irrigation Dist. (1918) 38 Cal.App. 615, 621-622 [“Except in the case of certain statutory exceptions, a statute of limitations runs against the right of action, not against the holder thereof.”].) Likewise, Plaintiffs’ attempt to excuse their delay on the grounds that they mistakenly believed assigning their right to Nancy tolled the statutes of limitation is misplaced. Ignorance of the law is no excuse. (Mark v. Spencer (2008) 166 Cal.App.4th 219, 228-229.)
D. Res Judicata and Collateral Estoppel
Notwithstanding the above, we note that Plaintiffs’ claims were adjudicated in favor of Defendant in the Barstow action. (Gruenewald, supra, E046596, p 12.) Thus, Plaintiffs are barred from raising them in this action.
“As generally understood, ‘[t]he doctrine of res judicata gives certain conclusive effect to a former judgment in subsequent litigation involving the same controversy.’ [Citation.] The doctrine ‘has a double aspect.’ [Citation.] ‘In its primary aspect,’ commonly known as claim preclusion, it ‘operates as a bar to the maintenance of a second suit between the same parties on the same cause of action. [Citation.]’ [Citation.] ‘In its secondary aspect,’ commonly known as collateral estoppel, ‘[t]he prior judgment . . . “operates”’ in ‘a second suit . . . based on a different cause of action . . . “as an estoppel or conclusive adjudication as to such issues in the second action as were actually litigated and determined in the first action.” [Citation.]’ [Citation.] ‘The prerequisite elements for applying the doctrine to either an entire cause of action or one or more issues are the same: (1) A claim or issue raised in the present action is identical to a claim or issue litigated in a prior proceeding; (2) the prior proceeding resulted in a final judgment on the merits; and (3) the party against whom the doctrine is being asserted was a party or in privity with a party to the prior proceeding. [Citations.]’ [Citation.]” (People v. Barragan (2004) 32 Cal.4th 236, 252-253.)
We reject Plaintiffs’ attempt to bypass collateral estoppel by claiming that the Barstow action is based upon the rights and duties flowing from the Agreement, whereas, the current action involved the Indemnity. The primary right to the $40,000 flows from the Agreement. The Indemnity was merely a means of protecting H.S. Osborne’s children and the trustees in the event another grandchild was born after the distribution.





IV. DISPOSITION
The judgment is affirmed. Costs are awarded to defendant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS



HOLLENHORST
Acting P. J.
We concur:

RICHLI
J.

KING
J.



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