Case Name: Reupert v. West

Case No.: 19CV344973

Defendant Noah West (“Defendant”) demurs to the complaint (“Complaint”) filed by plaintiff Alison Reupert (“Plaintiff”).

I. Factual and Procedural Background
II.

This is a personal injury action arising out of a motor vehicle accident. According to the allegations of the Complaint, on February 3, 2017, Defendant was driving Plaintiff in her grandfather’s vehicle in San Jose when they were involved in an accident. Plaintiff alleges that unbeknownst to her, Defendant had inhaled “Dust-off” before and/or while he was driving. Defendant subsequently blacked out and turned the wheel to the right, causing the vehicle to swerve off of the roadway and collide head-on with a tree. The collision totaled the vehicle and resulted in significant injuries to Plaintiff.

Plaintiff additionally pleads that on March 27, 2017, Defendant was convicted of one felony count of driving under the influence of drugs and causing injury to another person in relation to the foregoing collision. As a condition of his resulting probation, Defendant is under an order to pay Plaintiff restitution for damages from the collision. Plaintiff alleges that the time during which the restitution order has been in effect does not count toward the two-year limitations period with respect to her claims, and thus that the limitations period has been tolled and her claims are timely. Plaintiff additionally alleges that Defendant is estopped from asserting the statute of limitations defense due to his and/or his insurance agent’s fraudulent behavior. Plaintiff filed this action on March 21, 2019.

On June 3, 2019, Defendant filed the instant demurrer to the Complaint. Plaintiff opposes the motion.

III. Defendant’s Request for Judicial Notice
IV.

In support of his demurrer to the Complaint, Defendant requests that the Court take judicial notice of the following items: (1) the Complaint (Exhibit A); (2) an email exchanged between counsel for the parties dated May 3, 2019 (Exhibit B); (3) the felony complaint filed in Santa Clara Superior Court on February 8, 2017, Case No. C-17-569985 (the “DUI Action”) (Exhibit C); (4) the Plea in the DUI Action, dated March 27, 2017 (Exhibit D); (5) the Probation and Sentencing in the DUI Action, dated June 2, 2017 (Exhibit E); and (6) the Order for Victim Restitution in the DUI Action, filed May 2, 2018 (Exhibit F). Except for the second item, all of the foregoing materials are court records. Consequently, they are proper subjects of judicial notice pursuant to Evidence Code section 452, subdivision (d). The second item, however, is a personal email and does not come within any of the recognized categories of judicial notice provided by Evidence Code sections 451 and 452. Therefore, Defendant’s request for judicial notice is GRANTED IN PART and DENIED IN PART. The request is DENIED as to Exhibit B and otherwise GRANTED.

V. Defendant’s Demurrer
VI.

The entire basis of Defendant’s demurrer is that Plaintiff’s Complaint is untimely. As a general matter, a demurrer lies where the dates alleged in the complaint show “clearly and affirmatively” that the action is barred by the statute of limitations, and “it is not enough that the complaint shows that the action may be barred.” (Geneva Towers Ltd. Partnership v. City & County of San Francisco (2003) 29 Cal.4th 769, 781 [emphasis added].) The statute of limitations begins to run when the particular cause of action “accrues.” (Code Civ. Proc., § 312.) Generally, a cause of action accrues when, under the substantive law, the wrongful act is done or the wrongful result occurs, and the consequent liability arises. (Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 397.) The limitations period for a cause of action for personal injury arising out of the negligence of another, as asserted here, is two years. (Code Civ. Proc., § 335.1.) Defendant maintains that Plaintiff’s claim accrued on the date of injury, February 3, 2017, and therefore she needed to file this action by February 3, 2019 in order to be timely. However, the claim was not filed until the following month, and therefore Defendant contends that Plaintiff’s action is time-barred. He continues that Plaintiff has failed to plead facts sufficient to toll the statute of limitations under Code of Civil Procedure section 352.5 (“Section 352.5”) or to invoke the doctrines of equitable estoppel and equitable tolling.

A. Tolling Pursuant to Section 352.5
B.

In her Complaint, Plaintiff maintains that the applicable two-year limitations period was tolled by the conditions of Defendant’s probation, particularly an order to pay restitution, which were imposed on him by his DUI conviction based on the subject collision. Plaintiff is relying on the tolling mechanism provided by Section 352.5, which provides that if, after a cause of action accrues against a person, that person comes under an order for restitution as a condition of probation with respect to the specific act or omission giving rise to that person’s liability, the running of the statute of limitations on an action based on the act or omission is suspended during the time the order is in effect. Defendant argues that the fines he was ordered to pay as part of the “Probation and Sentencing Order” (the “P&S Order”) for the DUI Action were not a condition of his probation and thus Plaintiff cannot rely on Section 352.5 to render her claim timely.

Defendant bases his argument on the contents of the P&S Order, of which the Court has taken judicial notice. The problem for Defendant is that Plaintiff has specifically pleaded that restitution was a condition of Plaintiff’s probation. Generally, a court must accept the truth of factual allegations for the purposes of demurrer, except where those allegations are “contrary to the law or to a fact of which judicial notice may be taken [,which are] treated as a nullity.” (C.R. v. Tenet Healthcare Corp. (2009) 169 Cal.App.4th 1094, 1102.) In the Court’s view, the P&S Order does not unequivocally establish on its own (without consideration of other evidence or explanation by the parties) that Defendant’s obligation to pay restitution to Plaintiff was not a condition of his probation, especially in light of what is pleaded by Plaintiff in this regard in the Complaint. Consequently, the Court finds unpersuasive Defendant’s contention that tolling under Section 352.5 is not available to Plaintiff, and thus rejects Defendant’s argument that Plaintiff’s Complaint is clearly time-barred.

C. Equitable Estoppel
D.

Defendant next argues that his demurrer to the Complaint should be sustained on the ground of a lack of timeliness because Plaintiff has not pleaded sufficient facts to support application of the doctrine of equitable estoppel.

While tolling is “concerned with the point at which the limitations period begins to run and with the circumstances in which the running of the limitations period may be suspended,” equitable estoppel, in contrast, “comes into play only when the limitations period has run and addresses itself to the circumstances in which a party will be estopped from asserting the statute of limitations as a defense to an admittedly untimely action because his conduct has induced another into forbearing suit within the applicable limitations period…. [It] takes its life … from the equitable principle that no man will be permitted to profit from his own wrongdoing in a court of justice.” (Battuello v. Batuello (1998) 64 Cal.App.4th 842, 847-848 [internal citations omitted].) In the usual case, estoppel is a question of fact to be resolved by the trier of fact. (Mills v. Forestex Co. (2003) 108 Cal.App.4th 625, 652.)

In order to establish a basis for equitable estoppel, the following four factors must be pleaded and proven by the plaintiff: “(1) The party to be estopped must know the facts; (2) he must intend that his conduct shall be acted upon, or must so act that the party asserting the estoppel had the right to believe that it was so intended; (3) the party asserting the estoppel must be ignorant of the true state of facts; and, (4) he must rely upon the conduct to his injury.” (Spray, Gould & Bowers v. Associated Internat. Ins. Co. (1999) 71 Cal.App.4th 1260, 1268.) No intent to deceive is required on the part of the person sought to be estopped. (Lantzy v. Centex Homes (2003) 31 Cal.4th 363, 384.) The foregoing elements must be specially pleaded “with sufficient accuracy to disclose [the] facts relied upon.” (Sofranek v. Merced County (2007) 146 Cal.App.4th 1238, 1250.) The defendant’s statement or conduct must amount to a misrepresentation of fact bearing on the necessity of bringing a timely suit. (Lantzy, supra, 31 Cal.4th at 384, fn. 18.)

Here, Plaintiff alleges that Defendant should be estopped from asserting the statute of limitations based on settlement negotiations with the insurer of the vehicle involved in the collision, USAA General Indemnity Company (“USAA”). Per the Complaint, Defendant was uninsured at the time of the collision, and therefore Plaintiff made an uninsured motorist claim to USAA. USAA offered Plaintiff $100,000 to settle her claim; Plaintiff retained an attorney and made a counteroffer for the policy limits of $300,000. In her demand letter, Plaintiff informed USAA that her offer would remain open until January 22, 2019 and that she had to formerly institute an arbitration proceeding on or before February 1, 2019 to preserve her uninsured motorist claim. On January 18, 2019, USAA asked Plaintiff if she would be willing to extend USAA’s deadline to respond to January 31, 2019- Plaintiff agreed.

After turning down USAA’s next offer on January 31st of $110,000, Plaintiff initiated arbitration proceedings the next day by sending USAA a formal notice stating as much. On March 20, 2019, USAA sent Plaintiff’s counsel a letter stating that she did not have a valid uninsured motorists claim, that Defendant was an insured under the USAA policy, and that Plaintiff failed to make a timely claim before the statute of limitations ran on February 2, 2019. Prior to that point, USAA (who is alleged to have acted as Defendant’s agent) never informed Plaintiff that she did not have a valid uninsured motorist (“UIM”) claim or that Defendant was an insured person under the policy, and instead misrepresented that the claim was subject to UIM arbitration. Plaintiff maintains that based on the foregoing, Defendant should not be permitted to raise the statute of limitations as a defense to her claim.

In contrast, Defendant asserts that he should not be equitably estopped from asserting the statute of limitations defense because Plaintiff has not alleged any conduct on his part that was designed to induce her detrimental reliance; rather, she has only pleaded conduct by USAA. Defendant further explains that UIM coverage is not third-party coverage but first-party coverage designed to compensate the insurance company’s own insured rather than indemnify against liability claims from others. (See Weston Reid, LLC v. American Ins. Group, Inc. (2009) 174 Cal.App.4th 940, 950.) Defendant continues that Plaintiff’s claim against USAA is accordingly separate and apart from any cause of action she may have had against him, and therefore she was required to timely file suit against him whether or not she intended to enter into arbitration with USAA.

Plaintiff responds that she has sufficiently pleaded deceptive conduct as to Defendant because she has alleged that USAA was acting as his agent. (Complaint at p. 8, ¶ 12.) Thus, she explains, Defendant is bound by the conduct of USAA in this regard, a la the defendant in the case of Pashley v. Pacific Elec. Co. (1944) 25 Cal.2d 226, 227-228.) In Pashley, a streetcar passenger sued for injuries suffered as a result of the car being operated in a negligent manner by the defendant. The plaintiff submitted to treatment by the defendant’s physicians and was instructed not to go to another doctor; that if he did, they would not be responsible; and that his injuries would heal fully. Plaintiff followed their directions and was falsely advised that his injuries were healed. Plaintiff eventually discovered that this was not the case, but only after the statute of limitations on his claim had run. The trial court deemed the action time-barred but the Court of Appeal reversed, reasoning that the plaintiff had sufficiently pleaded equitable estoppel based on the physicians’ fraudulent concealment of his claim. The Court of Appeal held that the defendant was bound by the alleged deceit and misrepresentations of its agents, the doctors who treated the plaintiff, because their conduct was intended for the defendant’s benefit and if it was to succeed, it was the defendant who stood to reap the pecuniary rewards.

The Court finds Plaintiffs’ argument persuasive. Plaintiff has alleged that USAA was Defendant’s agent and “the fraud of [] agents will be imputed to the principal for the purpose of preventing the running of the statute of limitations whether the principal was aware of it or not.” (Pashley, supra, 25 Cal.2d at 235.) As explained by the Pashley court, “[t]he injustice of allowing such fraud to become successful by reason of lapse of time and concealment is an injustice to the plaintiff, and it is precisely the same in effect and extent whether the fraud is that of the defendant or its agents. The defendant, having received the benefit of its agents’ fraud, has no equity in its favor.” (Id. at 236-237.) Here, as alleged Defendant received the benefit of USAA’s purportedly deceitful settlement negotiations with Plaintiff. Whether or not USAA actually was Defendant’s agent when the complained of conduct took place is a question for a future stage of the proceedings. Accordingly, Defendant’s argument regarding the sufficiency of Plaintiff’s equitable estoppel allegations does not provide a basis upon which to sustain the demurrer.

E. Equitable Tolling
F.

Finally, Defendant argues that Plaintiff has failed to plead facts sufficient to equitably toll the statute of limitations. Equitable tolling is a judicially created doctrine which applies “occasionally and in special situations” “to soften the harsh impact of technical rules which might otherwise prevent a good faith litigant from having a day in court.” (Addison v. State of California (1978) 21 Cal.3d 313, 319; see also McDonald v. Antelope Valley Community College Dist. (2008) 45 Cal.4th 88, 99.) It “halts the running of the limitations period so long as the plaintiff uses reasonable care and diligence in attempting to learn the facts that would disclose the defendant’s fraud or other misconduct.” The doctrine “focuses primarily on the plaintiff’s excusable ignorance of the limitations period. [It] is not available to avoid the consequences of one’s own negligence.” (Sagehorn v. Engle (2006) 141 Cal.App.4th 452, 460 – 461 [internal citations omitted].) Whereas with equitable estoppel the focus in on the actions of the defendant, with equitable tolling the focus is on the plaintiff’s excusable neglect. (Id.)

Equitable tolling requires “a showing of three elements: ‘timely notice, and lack of prejudice, to the defendant, and reasonable and good faith conduct on the part of the plaintiff.’ [Citations.]” (McDonald, supra, 45 Cal.4th at p. 102.) “When a plaintiff relies on a theory of fraudulent concealment, delayed accrual, equitable tolling, or estoppel to save a cause of action that otherwise appears on its face to be time-barred, he or she must specifically plead facts which, if proved, would support the theory.” (Mills v. Forestex Co. (2003) 108 Cal.App.4th 625, 641.)

Defendant maintains that equitable tolling is not available to Plaintiff because: he was not given timely notice because he was not a party to the settlement discussions/arbitration; he would be highly prejudiced because the facts are not identical to the first party claim; and Plaintiff’s conduct was unreasonable and not in good faith.

The second and third arguments can be disposed of quite readily as Plaintiff has specifically pleaded that she operated in good faith and Defendant would not be prejudiced by this action, and these arguments pertain to the truth of these allegations. A demurrer does not test the veracity of a plaintiff’s claims. Thus, these assertions by Defendant do not provide a basis upon which to sustain his demurrer.

As for the first argument, the requirement of timely notice essentially means that the first claim must have been filed within the statutory period and must have alerted the defendant in the second claim of the need to begin investigating the facts. (Hopkins v. Kedzierski (2014) 225 Cal.App.4th 736, 747.) In practice, this generally means that the party being sued in the first is the same in the second. (Id.) Defendant argues that he was not given timely notice because a UIM action is a first party claim that is completely unrelated to Plaintiff’s claim against him and thus the parties being sued in the actions were different.

In her opposition, Plaintiff notes, correctly, that equitable tolling does not require that the defendants in the two actions be the same (see Hopkins, supra, 225 Cal.App.4th at 750) and argues that Defendant would not have investigated or defended the instant action- his insurer would have done so. Thus, she maintains, Defendant stands in the shoes of his insurer as to “notice” and any and all information derived from her and therefore the requirement of timely notice is met.

Defendant’s argument regarding lack of notice depends on Plaintiff’s prior action against USAA being a UIM claim. However, Plaintiff has alleged that it was not actually a UIM claim because Defendant was in fact insured by the company. Thus, Defendant’s argument is predicated on the very conduct that Plaintiff maintains should result in Defendant being equitably estopped from asserting the statute of limitations defense in the first place. As USAA is alleged to have been Defendant’s agent and insurer, and thus in the position to investigate and defend the instant action as Plaintiff maintains, the Court is not persuaded that Plaintiff has not adequately alleged facts sufficient to establish the timely notice element of equitable tolling. As all of Defendant’s arguments with respect to equitable tolling fail, the demurrer cannot be sustained on this basis.

In accordance with the foregoing analysis, Defendant’s demurrer to the Complaint is OVERRULED.