Kirschenmann
v. Bender

 

 

 

 

Filed
7/17/14  Kirschenmann v. Bender CA5

 

 

 

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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opinion has not been certified for publication or ordered published for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

FIFTH APPELLATE DISTRICT

 
>

CHARLES KIRSCHENMANN,               Plaintiff and Appellant,                           v.   ROBERT BENDER et al.,               Defendants and Respondents.

F066714   (Super. Ct. No. CV-275232)   O P I N I O N

 

 

THE COURThref="#_ftn1" name="_ftnref1" title="">^*

            APPEAL from
the judgment of the Superior Court of Kern
County.  Sidney P. Chapin, Judge.

            Darling &
Wilson, Joshua G. Wilson; Thomas Anton & Associates, Thomas J. Anton and
Gina M. Cervantes for Plaintiff and Appellant.

            Kuhs &
Parker, Bernard C. Barmann, Jr. and Keri L. Bland for Defendants and Respondents.
 

-ooOoo-

Appellant Charles Kirschenmann
appeals from the judgment entered after the trial court granted href="http://www.fearnotlaw.com/">summary judgment for respondents Robert
and Stacie Bender (Bender) on the ground that appellant’s complaint for href="http://www.mcmillanlaw.us/">breach of oral contract was barred by the
two-year limitations period in Code of Civil Procedure section 339.href="#_ftn2" name="_ftnref2" title="">^[1]  Kirschenmann
contends the trial court erred in granting
summary judgment because Bender did not establish that the complaint was barred
by the statute of limitations.  We will affirm.

FACTS AND PROCEDURAL HISTORY

            In 2004, Kirschenmann
Farms, Inc. (KFI) was disassociating and selling its assets.  Kirschenmann, who was a member of KFI’s Board
of Directors, proposed to purchase KFI’s New Sabo Ranch and KFI agreed to the
sale.  At the time, Kirschenmann’s friend
and business associate, Bender, wanted to purchase farm property for a
tax-deferred exchange under 26 United
States Code section 1031 (section 1031 exchange).  Therefore, when KFI agreed to allow Kirschenmann
to purchase New Sabo Ranch in the summer of 2004, Bender asked Kirschenmann to
sell him the ranch.  As part of the
agreement, Bender asked that Sierra Farms, Inc., an entity in which Kirschenmann,
his son Brian, and Bender were involved, lease New Sabo and pay rent in an
amount sufficient to pay Bender’s interest expenses.  Bender also agreed that “at a point in the
future,” he and Kirschenmann would both take title in the ranch and would share
any profits derived from its development. 
At the August 2004 KFI board meeting, the board approved the sale of the
New Sabo property to Bender for $500,000. 
Bender purchased the property in October 2004 for that amount. 

According to Kirschenmann, in
September 2004, he and Bender entered into an oral agreement regarding the New
Sabo property.  Pursuant to href="http://www.fearnotlaw.com/">the agreement, Kirschenmann would allow
Bender to purchase the property to accommodate Bender’s section 1031 exchange
tax deadline.  But, at some point in time,
Bender was to find other property he wanted to purchase.  Kirschenmann would purchase that property and
Bender and Kirschenmann would carry out another section 1031 exchange and Bender
would convey the New Sabo property to Kirschenmann at the price Bender paid for
the property.  In addition, Bender agreed
to lease the property to Sierra Farms, who owned the adjacent “shed”
property.  Sierra Farms was owned 25
percent by Kirschenmann, 25 percent by his son Brian, and 50 percent by
CSS.  CSS was a “farming outfit from the
Midwest” in which Bender was a principal. 
The original lease was for three years and expired on December 31,
2007.  The five-year extension expired on
December 31, 2012.  At some point, Sierra
Farms subleased the property to KFI, which is owned 25 percent by Kirschenmann,
25 percent by Brian, and 50 percent by Sierra Farms Corporation, which is owned
by Kirschenmann’s grandchildren. 

Kirschenmann did not pursue the New
Sabo conveyance sooner because he was waiting for Bender to tell him he had
found another property so they could carry out the exchange.  He did not demand that Bender convey the
property until the fall of 2011.  In his
demand letter to Bender, Kirschenmann asked that Bender find new property and return
the New Sabo Ranch land to Kirschenmann pursuant to their agreement.  While the agricultural real estate property
values were “stagnant” in 2004, by 2011 the New Sabo property was worth over a
million dollars.  Bender did not respond
to Kirschenmann’s demand.

At his deposition, Kirschenmann
described the terms of the oral agreement he had with Bender.  There were no witnesses to the conversation
that resulted in the oral agreement and Kirschenmann could not recall anything
Bender said or did during the conversation. 
With regard to the time of performance term, Kirschenmann initially testified
that he expected Bender to convey the property sooner rather than later─that
the agreement was for a short term.  Later,
he testified that the time of performance was within the terms of the lease.  Kirschenmann also testified that it was within
his power at all times to require Bender’s performance by making a demand.     

In November 2011, Kirschenmann sued
alleging that Bender had breached the oral agreement by refusing to convey the
property to him and seeking specific performance.  Bender denied the allegations of the
complaint and, as an affirmative defense, alleged that the claim was barred by section
339’s two-year statute of limitations.  Bender
moved for summary judgment on the ground that the oral contract between the
parties did not specify a time for performance. 
Therefore, the time for Kirschenmann to demand Bender’s performance was
limited to the two-year limitations period in section 339 applicable to
breaches of oral contracts.href="#_ftn3"
name="_ftnref3" title="">^[2] 

The trial court found that Bender
had established his statute of limitations defense and Kirschenmann’s proffered
evidence failed to raise a triable issue of fact for two reasons.  First, the court sustained Bender’s
objections to Kirschenmann’s evidence on the ground that Kirschenmann had not
authenticated any of the documents submitted in support of his opposition.  And second, the evidence was irrelevant
because there was no dispute that Kirschenmann had the power at all times to fix
his right of action by making demand on Bender. 
Therefore, Bender had established that the statute of limitations had
run on the breach of oral contract claim. 
Judgment was entered accordingly and Kirschenmann appealed.  

DISCUSSION

>Standard of Review

>            A
defendant may move for summary judgment if he contends the action has no merit.
 (§ 437c, subd. (a).)  A defendant moving for summary judgment has
the initial burden of showing a cause of action is without merit.  One of the ways the defendant meets that burden
is by showing there is a complete defense to the cause of action.  (Id.,
subd. (p)(2).)  If the defendant makes
such a showing, the burden shifts to the plaintiff to produce evidence
demonstrating the existence of a triable issue of material fact.  (Hutton
v. Fidelity National Title Co. (2013) 213 Cal.App.4th 486, 492 (>Hutton).)  ‘“A trial court properly grants summary judgment
where no triable issue of material fact exists and the moving party is entitled
to judgment as a matter of law.’ 
[Citation.]”  (>Conroy v. Regents of University of
California (2009) 45 Cal.4th 1244, 1250.)

            In
reviewing an appeal from a summary judgment, our task is to determine de novo whether
an issue of material fact exists and whether the moving party is entitled to
summary judgment as a matter of law.  We
independently review the parties’ papers supporting and opposing the motion,
using the same rules and standards as the trial court.  First, we identify the issues framed by the
pleadings.  Second, we determine whether
the moving party’s showing has established facts which justify a judgment in
the moving party’s favor.  Third, when a
summary judgment motion prima facie justifies a judgment, we determine whether
the opposition demonstrates the existence of a triable issue of material fact.  In doing so, we liberally construe the
opposing party’s evidence, except that to which objections were made and
sustained, we strictly construe the moving party’s evidence, and we resolve all
doubts in favor of the opposing party.  (>Hutton, supra, 213 Cal.App.4th at pp. 493-494; State Dept. of Health Services v. Superior Court (2003) 31 Cal.4th
1026, 1035.)

>Analysis

>1.     
>Issues Framed by the Pleadings

            Kirschenmann
alleged that he had an oral contract with Bender, that Bender would find
property financially equivalent to the New Sabo property, Kirschenmann would
purchase that property, and Kirschenmann and Bender would then exchange those
properties in a section 1031 exchange. 
As a result, Bender would convey the New Sabo property to Kirschenmann
at a later date.  Consistent with the
agreement, KFI permitted Bender to purchase the New Sabo property in October
2004.  Kirschenmann fully performed his
promises under the agreement, was able and willing to pay the agreed-upon
original sales price for the property, and in 2011, demanded that Bender convey
the property to him.  Bender breached the
agreement by refusing to transfer the property to Kirschenmann as
promised.  

In defense of that claim, Bender
alleged, among other things, the breach of oral contract claim was barred by
the two-year statute of limitations pursuant to section 339.

>2.     
>Bender’s Showing that Prima Facie Evidence Justified
Judgment

Bender contended he was entitled to
summary judgment because, assuming an oral agreement was formed in 2004 as
alleged, section 339’s two-year statute of limitations, asserted as his seventh
affirmative defense, barred the 2011 claim for breach of an oral
agreement.  Thus, Bender had a complete
defense to Kirschenmann’s claims. 

The Law

Section 339 provides that a cause
of action on an oral contract must be brought within two years.  A cause of action for breach of contract ordinarily
accrues at the time of the breach, and the statute of limitations begins to run
then.  (3 Witkin, Cal. Procedure (5th ed.
2008) Actions, § 520, p. 664.)  When
a contract fails to specify the time for performance of the promised act, a
demand for performance is necessary to put the promisor in default.  That is, the promisor must be given the
opportunity to perform before he can be found to have breached the agreement.  (Caner
v. Owners Realty Co. (1917) 33 Cal.App. 479, 480 (Caner).) 

If the defendant’s obligation to
perform arises when the plaintiff demands performance, courts have held that
the demand must be made within a reasonable time and the statute of limitations
will begin to run after that time has elapsed. 
(3 Witkin, Cal. Procedure, supra,
Actions, § 532, p. 683; Bass v.
Hueter (1928) 205 Cal. 284, 287.)  The
reason for this rule is that the plaintiff is not permitted to control and
indefinitely suspend the running of the statute of limitations by neglecting or
deliberately refusing to assert his right.  (Williams
v. Bergin (1897) 116 Cal. 56, 60-61; Phillis
v. Santa Barbara (1964) 229 Cal.App.2d 45, 55.)  Where a plaintiff has it in his power at all
times to fix his right of action by making a demand on defendant, the demand
must be made within a reasonable time after it can be lawfully made, and the demand
must be made within the period of the statute of limitations.  (Stafford
v. Oil Tool Corp. (1955) 133 Cal.App.2d 763, 766.)

The “reasonable time” allowed to
make the demand depends on the circumstances of each case.  But because this approach invites litigation
of the issue and potentially results in all sorts of contradictory decisions, courts
have added the qualification that, in the absence of peculiar circumstances, a
period equal to that of the statute of limitations is reasonable.  Under this approach, the plaintiff has at most
a double statutory period─two years plus two years─on an oral
contract.  (3 Witkin, Cal. Procedure, >supra, Actions, § 533, p. 683;
Bass v. Hueter, supra, 205 Cal. at p. 287.) 

For example, in >Jenkins v. Marsh (1913) 22 Cal.App. 8,
the creditor sought to recover on the debtor’s oral agreement to repurchase corporate
stock from the creditor at an agreed-upon sum at any time after the agreement
date upon the creditor’s demand.  The creditor
did not demand repurchase until more than five years later.  The action was time-barred by section 339.  The creditor was obligated to make his demand
within a reasonable time.  A “reasonable
time” was equivalent to the statute of limitations barring the action.  Thus, the creditor had two years from the
date of the contract in which to make his demand.  His demand and this action─brought more
than five years later─were thus barred by the statute of limitations.  (Jenkins
v. Marsh, supra, 22 Cal.App. at pp.
9-10; accord, Caner, >supra, 33 Cal.App. at pp. 480-481 [buyer’s
action for seller’s breach of a written promise to grade streets at an
unspecified time, made five to seven years before suit was filed, was barred by
the statute of limitations]; Ginther v.
Tilton (1962) 206 Cal.App.2d 284, 286 [action for defendant’s breach of an
oral agreement to help build plaintiff’s house after plaintiff helped build
defendant’s house was barred because demand for performance was not made within
period coincident with running of the statute of limitations].)

The reason for the rule disappears
when the demand is not under the plaintiff’s control, but depends upon the act
of another.  If the condition of the obligation
to perform is some other person’s act, and the plaintiff’s demand would merely
bring pressure on that person, failure to make the demand does not start the
running of the statute.  (3 Witkin, Cal.
Procedure, supra, Actions, § 534, pp.
684-685.)  For example, in >Williams v. Bergin, supra, 116 Cal. 56, the
contract provided that the plaintiff contractors were entitled to recover on a
1892 contract to provide street work for the county on the street
superintendent’s assessment and issuance of a warrant.  The contractors timely completed the work and
the superintendent accepted the work but delayed issuing the warrant.  In 1896, the contractors sued to collect on
the contract.  (Id. at pp. 58-59.)  By way of
demurrer, the defendants contended that because the plaintiffs were entitled to
demand the assessment and warrant from the superintendent immediately upon his
acceptance of their work, their failure to do so for an unreasonable period of
time barred their claim.  The court
disagreed.  Under the allegations, the plaintiffs’
right to be paid depended on an official act of a public officer.  The allegations of the complaint did not show
that it was the plaintiffs, rather than the public officer, who were
responsible for the delay in issuing the warrant.  (Id. at
pp. 61-62.) 

The Evidence

            In support of> the motion for summary judgment on the ground that the causes of
action for breach of the oral agreement were barred by section 339, Bender
presented evidence that:  the oral
agreement whereby Bender would convey the New Sabo property to Kirschenmann at
a later date for $500,000 was made in September 2004.  No date of performance was specified, but Kirschenmann
had the ability to demand Bender’s performance at any time.  Agricultural property values were stagnant
when the agreement was made, but the property had more than doubled in value by
the time Kirschenmann demanded it be conveyed to him.  Kirschenmann first demanded performance in
August 2011, almost seven years after the contract was made, and filed suit in
November 2011 after Bender failed to respond to his demand for conveyance.  The two-year statute of limitations applied.   

Analysis

            Under the
case law set forth above, Bender’s evidence established that Kirschenmann’s
causes of action based on the alleged oral contract were barred by section 339
and justified a judgment in Bender’s favor.  The evidence established that the oral
agreement that Bender would convey the New Sabo property to Kirschenmann for
the same $500,000 price Bender paid for it in 2004 was made in September 2004; Kirschenmann
had the power at all times to fix his right of action by demanding that Bender
perform under the contract; Kirschenmann failed to demand performance or file
suit on Bender’s alleged breach of the oral agreement for seven years; by then,
the property had more than doubled in value. 
Accordingly, the evidence shows that Kirschenmann failed to demand
performance within a reasonable time and failed to file suit within two years
after that.  As such, his causes of
action based on the oral contract were barred. 
(Stafford v. Oil Tool Corp., >supra, 133 Cal.App.2d at pp. 766-767.) 

>3.     
>Existence of a Triable Issue of Material Fact

Kirschenmann asserts that triable
issues of material fact exist as to the reasonable time within which his demand
had to be made.  The only material fact he
disputed regarding this issue was whether he had it within his power at all
times to fix his right of action by making a demand on Bender.  Kirschenmann asserted that Bender’s duty to
perform could be triggered by either his demand or Bender’s finding a suitable
exchange property.   

Kirschenmann asserts that the
reasonable time in which a demand must be made is not always dictated by the
statute of limitations.  Rather, the reasonable
time depends on the circumstances of each case. 
It is only in the absence of such circumstances that a time coincident
with the running of the statute of limitations will be deemed the reasonable
time.  (Stafford v. Oil Tool Corp., supra,
133 Cal.App.2d at p. 766.) 

Kirschenmann contends his
deposition testimony creates triable issues of fact as to the reasonable time
for performance.  He testified that the
terms of the contract provided:

“The terms of the contract was
[sic], at some point in time,
[Bender] was going to … get another piece of property… because I was just
accommodating him for a short term>. 
And it was understood that it was for a length of time and I was just
trying to help him out.” 

“At some point in time, [Bender] was supposed to find other property
to purchase and we were going to do another 1031 exchange back.” 

“It was understood it was going to
take place in a couple of years, within a
year or a couple ….  [I]t had to take
place at least a year after the first exchange. 
Actually, I think the law says two
years.” 

“[Bender’s conveyance of the New
Sabo property to him was] supposed to happen sooner than later.”  

“There was an understanding he was
supposed [to] do it as soon as convenient.”


“I just assumed [the conveyance]
was going to take place within the next
two to three years.”

“[I]t was supposed to probably take
place before the lease was up.” 

“[The agreement was] I’m trying to
help a guy park money from paying taxes, so I said, ‘Let’s just go ahead and
put the New Sabo in your name, that solves the issue.  And at
some point in time, we’re probably going to find some farmland that we need
in our business and you can go buy this farm ground and exchange back where the
New Sabo belongs back to the shed.” 

“The original lease was for three
years and a five-year extension.” 

“Somewhere in that eight years … the land needs to go back in the
shed.” 

Kirschenmann asserts that the
reasonable inference from his testimony was that the timing of the demand was
related to Bender’s identification of new property.  In addition, the time of performance was
during the eight-year extended lease term. 
Thus, there are triable issues of fact with respect to Bender’s
contractual responsibility to identify suitable property to use in the second
exchange transaction and with respect to completing the transaction within the
eight-year extended lease term.   

Bender responds that waiting seven
years to demand performance under an oral contract concerning real estate is “extraordinarily
unreasonable.”  Under Kirschenmann’s view
of the agreement, Bender invested in property for which he would never receive
a return on his investment.  And, if land
values appreciated in subsequent years, as they did here, Kirschenmann was
entitled to purchase the land for much less than its fair market value and reap
all the profit. 

When opposition to a motion for
summary judgment is based on inferences, those inferences must be reasonably
deducible from the evidence; they cannot be derived from speculation,
conjecture, or guesswork.  (>Annod Corp. v. Hamilton & Samuels (2002)
100 Cal.App.4th 1286, 1298-1299.)  Moreover,
the inference relied on must satisfy the “more likely than not” evidentiary
burden the plaintiff will carry at trial. 
(Leslie G. v. Perry &
Associates (1996) 43 Cal.App.4th 472, 487.) 
In this case, the only reasonable inference from the evidence is that
the oral agreement failed to specify a time for performance─when Bender was
obligated to find equivalent property for a section 1031 exchange so that the
New Sabo property would be conveyed to Kirschenmann.  Kirschenmann’s deposition testimony demonstrated
that he was uncertain about the date when performance was due, probably because
the parties never specified a date for performance.  Kirschenmann understood or assumed that the
transaction could have occurred as soon as “30 days after the fact” or as late
as eight years after the fact, at the termination of the extended lease.  Accordingly, the only reasonable inference
from Kirschenmann’s testimony was that the date for performance was
unspecified.  As a result, the oral
agreement at issue is governed by the rules applicable to contracts that fail
to specify the time for performance of the promised act.

Because the oral agreement failed
to specify the time for performance, Kirschenmann was obligated to demand
performance before Bender could be liable for breach of the agreement.  (Caner,
supra, 33 Cal.App. at p. 480.)  Under
settled law, Kirschenmann’s demand had to be made within a reasonable time.  (Civ. Code, § 1657; Bass v. Hueter, supra, 205
Cal. at p. 287.)  While the reasonable
time allowed to assert the demand depended on the circumstances of the case, absent
peculiar circumstances, a period equal to that of the statute of limitations was
reasonable.  Kirschenmann thus had two years
to demand performance and, if Bender failed to perform, an additional two years
to bring suit on Bender’s breach of the agreement.  (Ibid.) 

Kirschenmann’s inconsistent testimony
did not raise a triable issue of material fact as to the time to perform term
of the oral agreement.  Generally, reasonableness
of time for performance is a question of fact, which depends on the circumstances
of the particular case.  (>Eidsmore v. RBB, Inc. (1994) 25
Cal.App.4th 189, 198.)  However, given the
circumstances of this case, which involved real property subject to fluctuating
values, Kirschenmann could not indefinitely suspend the running of the statute
of limitations by neglecting to assert his rights until property values had
increased substantially.  (>Slye v. Brock (1935) 3 Cal.App.2d 670,
675 [given the nature of the mining property involved, even the four-year
statute of limitations might be deemed to be an unreasonable length of time to
exercise the option to purchase the property on unspecified date].) 

The court need not determine
precisely what a reasonable time was in this case.  Here, Kirschenmann’s demand for performance under
the oral agreement made seven years after the agreement, was unreasonable as a
matter of law under the circumstances.  As
such, Kirschenmann’s right of action to sue on Bender’s failure to perform
under the agreement was barred by section 339 and the trial court properly
granted summary judgment for Bender. 

DISPOSITION

            The
judgment is affirmed.  Costs are awarded
to respondent Bender.