Case Name: Cassinelli v. Applied Physics Systems, Inc., et al.
Case No.: 1-12-CV-236526
Plaintiff/cross-defendant John Cassinelli (“Cassinelli”) and cross-defendant Anna Szabelski (“Szabelski”) (collectively, “Cross-Defendant”) demur to the second amended cross-complaint (“SACC”) filed by Applied Physics Systems, Inc. (“APS”).
The instant action arises out of a dispute between Cassinelli and his former employer, APS. On June 28, 2008, APS hired Cassinelli as an hourly employee. (SACC at ¶ 5.) After approximately three months, APS offered Cassinelli health insurance benefits. (Id.) In February 2009, Cassinelli asked APS whether it would provide health insurance benefits for cross-defendant Szabelski, whom Cassinelli identified as his domestic partner. (Id. at ¶ 6.) APS answered in the affirmative, and in exchange for Cassinelli and Szabelski signing an Affidavit of Domestic Partnership (the “Affidavit”), under which both parties swore under oath that they were domestic partners and would promptly notify APS of any change in their domestic partnership status, agreed to provide and pay for health insurance benefits for Szabelski. (Id. at ¶ 8 and Exhibit A.) In accordance with both an oral agreement made by Cassinelli and in reliance on the sworn Affidavit, APS provided and paid for health insurance benefits for Szabelski from March 2009 to May 2012. (Id. at ¶ 9.)
On May 3, 2012, APS learned that Cassinelli, identifying himself as “single,” asked a woman out on a date on APS property during work hours. (SACC at ¶ 10.) The woman reported Cassinelli’s behavior to APS, who learned for the first time that Cassinelli might not be in a valid domestic partnership with Szabelski. (Id.) On May 10, 2012, during a conversation with APS’s HR Manager, Cassinelli identified his purported domestic partner Szabelski as his “roommate” and “landlord,” not as his domestic partner. (Id. at ¶ 11.) APS further inquired about Cassinelli’s purported domestic partner and then decided to terminate his employment, believing that Cassinelli had fraudulently signed the Affidavit in order to obtain health insurance for Szabelski. (Id. at ¶ 12.)
On June 18, 2014, APS filed the SACC asserting the following causes of action: (1) violation of Penal Code § 502; (2) breach of contract; (3) breach of the covenant of good faith and fair dealing; (4) conversion; (5) fraud and deceit; (6) negligent misrepresentation; and (7) promissory estoppel.
On July 8, 2014, Cassinelli filed the instant demurrer to the second, third, sixth and seventh causes of action on the ground of failure to state facts sufficient to constitute a cause of action. (Code Civ. Proc., § 430.10, subd. (e).) On July 14, 2014, Szabelski filed a notice of joinder to Cassinelli’s demurrer.
Szableski’s request for judicial notice is GRANTED. (Evid. Code, § 452, subd. (d).)
APS’s request for judicial notice is GRANTED. (Evid. Code, § 452, subd. (d).)
As an initial matter, the Court declines to consider the arguments raised by Szabelski in her reply to APS’s opposition. (See Reichardt v. Hoffman (1997) 52 Cal.App.4th 754, 764 [points raised for the first time in reply brief will not ordinarily be considered, because such consideration would deprive respondent of an opportunity to counter the argument].)
The Court previously sustained Cassinelli’s demurrer to the second (breach of contract), sixth (negligent misrepresentation) and seventh (promissory estoppel) causes of action on statute of limitations grounds, finding that APS had failed to sufficiently pleaded delayed discovery. Here, Cross-Defendants assert that the aforementioned claims (as well as the third cause of action for breach of the implied covenant) are still time-barred pursuant to the two-year limitations period prescribed by Code of Civil Procedure section 339, subdivision (1), for claims founded upon an oral agreement. The Court finds this contention to be unavailing.
California courts have often stated the maxim that “[i]n ordinary tort and contract actions, the statute of limitations … begins to run upon the occurrence of the last element essential to the cause of action.” (Neel v. Magana, Olney, Levy, Cathcart & Gelffand (1971) 6 Cal.3d 176, 187.) Here, the acts upon which APS’s claims against Cross-Defendants are predicated, i.e., the alleged misrepresentation of Cassinelli’s relationship status with Szabelski in order to fraudulently obtain health benefits for her, occurred in February 2009, when Cassinelli signed the Affidavit affirming that he and Szabelski were domestic partners and made verbal representations to that effect. Consequently, absent any exceptions to the general rule of accrual, the statute of limitations on APS’s claims, which is undisputedly two years, would have begun to run at that time and concluded prior to the filing of the initial cross-complaint in November 2013. APS insists, however, that the discovery rule operates to delay the accrual of its claims, rendering its causes of action timely.
The discovery rule is an exception to the general rule defining the accrual of a cause of action and postpones said accrual until “the plaintiff discovers, or has reason to discover, the cause of action.” (E-Fab, Inc. v. Accountants, Inc. Services (2007) 153 Cal.App.4th 1308, 1318.) The discovery rule ameliorates the harshness of the general accrual principles where “it is manifestly unjust to deprive plaintiffs of a cause of action before they are aware that they have been injured. [Citation.]” (April Enterprises, Inc. v. KTTV (1983) 147 Cal.App.3d 805, 826.)
“A plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence. The burden is on the plaintiff to show diligence, and conclusory allegations will not withstand demurrer.” (E-Fab, Inc., supra, 153 Cal.App.4th at 1319, emphasis in original.) As the Court noted in its prior order, APS has clearly met the first pleading requirement of the discovery rule in alleging that it became aware of the truth of Cassinelli and Szabelski’s relationship status in May 2012 after learning that Cassinelli had asked another individual out and inquiring about his purported domestic partner. (SACC at ¶¶ 10-12.)
Previously, the Court found that APS did not meet the second pleading requirement in the FACC because it failed to plead an inability to have made earlier discovery of Cassinelli’s wrongful conduct. In the SACC, however, APS has corrected this deficiency in pleading that prior to May 2012, it had no reason to suspect Cassinelli of any duplicity because Cross-Defendants had always represented their relationship to be one of domestic partnership and APS had no occasion to observe them together in order to examine the personal nature of their relationship because Szabelski was not employed by APS. (SACC at ¶¶ 10-11.) Similar allegations have been held to be sufficient to meet the second requirement necessary to invoke application of the discovery rule. (See, e.g., E-Fab, supra, 153 Cal.App.4th at 1325 [allegations that plaintiff had no reason to suspect defendant of wrongdoing deemed sufficient to plead inability to have made earlier discovery].) There is currently nothing pleaded in the SACC which suggests that APS had knowledge or cause for knowledge of the true nature of Cross-Defendants’ relationship prior to May 2012. Contrary to Cross-Defendants’ assertions, for the purposes of pleading delayed discovery, the issue is not simply whether APS could have discovered Cross-Defendants’ relationship status if it had made direct inquiries, but rather whether facts existed that put it on notice of the possible duplicity and compelled them to investigate further.
Accordingly, APS has sufficiently pleaded delayed discovery and therefore Cross-Defendants’ contention that its second, third, sixth and seventh causes of action are time-barred is without merit.
However, Cross-Defendants’ assertion that that the third cause of action for breach of the implied covenant is duplicative of the breach of contract claim and therefore superfluous is well-taken. “The covenant of good faith and fair dealing, implied by law in every contract, exists merely to prevent one contracting party from unfairly frustrating the other party’s right to receive the benefits of the agreement actually made.” (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 349-350.) The covenant is “implied as a supplement to the express contractual covenants, to prevent a contracting party from engaging in conduct which (while not technically transgressing the express covenants) frustrates the other party’s rights to the benefits of the contract.” (Racine & Laramie, Ltd. v. Department of Parks & Recreation (1992) 11 Cal.App.4th 1026, 1031-1032.) “[W]here breach of an actual term is alleged, a separate implied covenant claim, based on the same breach, is superfluous.” (Guz, supra, 24 Cal.4th at 327.)
Here, while APS has added allegations to this cause of action in response to the Court’s order sustaining the demurrer to this claim in the initial cross-complaint, it still merely restates APS’s breach of contract claim in alleging conduct on the part of Cassinelli which amounted to him not being in a domestic partnership with Szabelski while she continued to receive health benefits from APS. Consequently, APS has failed to state a claim for breach of the implied covenant.
In accordance with the foregoing analysis, Cross-Defendants’ demurrer to the third cause of action (breach of implied covenant) on the ground of failure to state facts sufficient to constitute a cause of action is SUSTAINED WITHOUT LEAVE TO AMEND and their demurrer to the second (breach of contract), sixth (negligent misrepresentation) and seventh (promissory estoppel) causes of action on the ground of failure to state facts sufficient to constitute a cause of action is OVERRULED.
Link to this page