Chen v. Jordan CA4/1

Filed 12/24/14 Chen v. Jordan CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

NENG-GUIN CHEN, D064717 & D065587

Plaintiff and Respondent,

v. (Super. Ct. No. 37-2001-00059491-
CU-BC-NC)
STEVE JORDAN et al.,

Defendants and Appellants.

APPEAL from a judgment of the Superior Court of San Diego County, Robert P.

Dahlquist, Judge. Reversed.

Jeffrey S. Eddington; Law Offices of Mary A. Lehman and Mary A. Lehman for

Defendants and Appellants.

Neng-Guin Chen, in pro. per., for Plaintiff and Respondent.
 INTRODUCTION

Lisbeth Jordan, as personal representative of the Estate of Stephan Jordan

(Jordan); LRDB, LLC (LRDB); and Rebuilding America, Inc. (Rebuilding America)

(collectively, appellants) appeal from a judgment in favor of Neng-Guin Chen.

Appellants contend the trial court erred by denying their motion for judgment because

Chen's claims are facially time-barred and she has not and cannot plead the applicable

statutes of limitations were tolled. Alternatively, appellants contend the court erred by

denying their motion to vacate the judgment on the same ground, or by denying it as to

Jordan and Rebuilding America on the ground they were not parties to the agreement

underlying the litigation.

We agree the court erred by denying appellants' motion for judgment on the

pleadings. As Chen has not demonstrated she can amend her complaint to overcome the

pleading deficiencies, we remand the matter to the trial court with directions to enter

judgment on the pleadings for appellants. Given our conclusion, we need not address

whether the court also erred by denying appellants' motion to vacate the judgment.1

BACKGROUND

Chen, a licensed real estate agent, purchased a five-unit apartment building in

2004. The purchase agreement identifies LRDB as the seller. The agreement was signed

by "Steve Jordan" as a member of LRDB.

1 There is currently a conflict in the law as to whether a party may appeal the denial
of a motion to vacate a judgment. (See City of Los Angeles v. Glair (2007) 153
Cal.App.4th 813, 820-823; Howard v. Lufkin (1988) 206 Cal.App.3d 297, 300-303.)
Given our conclusion, we need not address this issue either.
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 As part of the sales documents, LRDB provided Chen with a real estate transfer

disclosure statement (disclosure statement). The disclosure statement included questions

asking whether LRDB was aware of any "room additions, structural modifications, or

other alterations or repairs" that were either (1) made without necessary permits, or (2)

not in compliance with building codes. Instead of checking the "Yes" or "No" box

provided on the disclosure statement, LRDB handwrote "unknown" in response to these

questions. In addition, LRDB handwrote on the disclosure statement, "Construction

standards [and] codes change over the years. The contractor has made repairs and

replacement of items deemed necessary. The property, however is not brand new, and is

not represented as such." LRDB's agent also handwrote a note recommending, "buyer

obtain a professional home inspection. Condition of tenant occupied units will be

determined during buyer's inspection . . . ."

The appraisal report prepared for Chen's lender similarly states, "The improvement

is very old and was likely built around the turn of the century (perhaps 1898). The

quality is low cost and incorporate[s] many features which would not be allowed by

present building codes or construction standards."

In 2009, the City of Oceanside, where the building is located, cited Chen because

one of the rental units was an unpermitted garage conversion. Resolution of the citation

resulted in the unit becoming uninhabitable.

In 2011, Chen filed a complaint against appellants for breach of contract, unjust

enrichment, intentional misrepresentation, and fraud. She claimed, had she known of the

unpermitted work, she either would not have purchased the property or she would have

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paid a purchase price, obtained a loan, and paid property taxes based upon the property

having four rental units, rather than five.

Appellants answered the complaint, generally denying its allegations. Appellants

also asserted numerous affirmative defenses, including that: (1) Chen's claims were

barred by various statutes of limitations; (2) Jordan and Rebuilding America did not own

the property at issue; and (3) Jordan and Rebuilding America did not owe any duty to

Chen.

Appellants subsequently moved for judgment on the pleadings. They sought an

order dismissing the complaint, arguing Chen's claims were barred by the applicable

statutes of limitations and the discovery rule did not apply because Chen had inquiry

notice prior to purchasing the property. Alternatively, they sought an order dismissing

the complaint as to Jordan and Rebuilding America, arguing neither was a party to the

purchase agreement.

The court denied the motion because it was "not persuaded that the complaint does

not state a cause of action against [appellants]." Two weeks later, at a trial readiness

conference, defense counsel informed the court appellants no longer intended to defend

the action.

At trial, which the court conducted in appellants' absence, Chen submitted

declarations and documents in support of her claims. Based on this evidence, the court

entered judgment for Chen and awarded her $557,528.60, consisting of $360,434 in

damages, $30,000 in attorney fees, $165,819.60 in interest, and $1,275 in costs.

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 Appellants moved to vacate the judgment in Chen's favor and to enter a new

judgment in their favor. Alternatively, they moved to vacate the judgment and enter a

new judgment in favor of Jordan and Rebuilding America. The asserted grounds for the

motion were: (1) uncontroverted evidence established Chen's action was barred by the

statutes of limitations; (2) Chen failed to plead and prove the accrual of her causes of

action were delayed by the discovery rule; (3) Chen did not introduce any evidence

Jordan or Rebuilding America were involved in the acts underlying her claims; and (4)

the judgment awarded attorney fees which Chen did not request in her complaint and did

not support with evidence. The court granted the motion as to the attorney fees, but

denied the motion in all other respects.

DISCUSSION

After a defendant has answered a complaint, a court may grant the defendant

judgment on the pleadings if "[t]he complaint does not state facts sufficient to constitute a

cause of action against that defendant." (Code Civ. Proc., § 438, subd. (c)(1)(B)(ii),

(f)(2).)2 " 'A motion for judgment on the pleadings is equivalent to a demurrer and is

governed by the same de novo standard of review.' [Citation.] 'All properly pleaded,

material facts are deemed true, but not contentions, deductions, or conclusions of fact or

law . . . .' " (People ex rel. Harris v. Pac Anchor Transportation, Inc. (2014) 59 Cal.4th

772, 777.) We consider judicially noticeable matters as well. (Ibid.)

2 Further statutory references are to the Code of Civil Procedure unless otherwise
indicated.
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 Chen's contract cause of action was subject to a four-year statute of limitations.

(§ 337.) Her remaining causes of action were subject to a three-year statute of

limitations. (§ 338, subd. (d); Federal Deposit Ins. Corp. v. Dintino (2008) 167

Cal.App.4th 333, 346-348.) The related purposes of a statute of limitations are "to

protect defendants from the stale claims of dilatory plaintiffs" and "to stimulate plaintiffs

to assert fresh claims against defendants in a diligent fashion." (Norgart v. Upjohn Co.

(1999) 21 Cal.4th 383, 395, internal citations omitted.) "Critical to applying a statute of

limitations is determining the point when the limitations period begins to run. Generally,

a plaintiff must file suit within a designated period after the cause of action accrues.

[Citation.] A cause of action accrues 'when [it] is complete with all of its

elements'those elements being wrongdoing, harm, and causation." (Pooshs v. Philip

Morris USA, Inc. (2011) 51 Cal.4th 788, 797 (Pooshs).) Chen's causes of action were

complete in all their elements when she purchased the property from LRDB in 2004 as

that is when LRDB's wrongdoing caused her to incur monetary damages.

Nonetheless, under the discovery rule, accrual of a cause of action may be

"postponed until the plaintiff 'discovers, or has reason to discover, the cause of action.' "

(Pooshs, supra, 51 Cal.4th at p. 797.) For purposes of this rule, discovery "occurs when

the plaintiff 'has reason . . . to suspect a factual basis' for the action." (Ibid.) A plaintiff

has reason to suspect a factual basis for the action when the plaintiff has notice of

information or circumstances that would put a reasonable person on inquiry. (Norgart v.

Upjohn Co., supra, 21 Cal.4th at p. 398.) "[T]he discovery rule most frequently applies

when it is particularly difficult for the plaintiff to observe or understand the breach of
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duty, or when the injury itself (or its cause) is hidden or beyond what the ordinary person

could be expected to understand." (Shively v. Bozanich (2003) 31 Cal.4th 1230, 1248.)

"In order to rely on the discovery rule for delayed accrual of a cause of action, '[a]

plaintiff whose complaint shows on its face that [his or her] 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.' [Citation.] In assessing the sufficiency of the allegations of

delayed discovery, the court places the burden on the plaintiff to 'show diligence';

'conclusory allegations will not withstand [a motion for judgment on the pleadings]' "

(Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 808 (Fox).)

Appellants contend the court erred in denying their motion for judgment on the

pleadings because Chen's claims were facially time-barred and she failed to comply with

the discovery rule's specific pleading requirements. Chen does not directly counter this

point. Instead, she contends appellants are estopped from asserting a statute of

limitations defense because LRDB blatantly lied on the disclosure statement. She also

contends she had no way of knowing one of the units was a garage conversion because all

of the information provided to her before the sale indicated the property contained five

rental units and all of the units were similar in appearance. Appellants have the better of

the argument.

As Chen did not file her complaint until seven years after she purchased the

property, her claims are facially time-barred under both of the applicable statutes of

limitation. To the extent she is relying on the discovery rule to avoid the bar, she

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indisputably has not complied with the rule's special pleading requirements because there

are no allegations in her complaint to show she was unable, despite reasonable diligence,

to discover the existence of the unpermitted garage conversion sooner.

To the extent Chen is relying on the doctrine of fraudulent concealment to avoid

the bar, her complaint is similarly deficient. The doctrine of fraudulent concealment

"tolls the statute of limitations if a defendant's deceptive conduct 'has caused a claim to

grow stale.' [Citations.] In support of this doctrine, a plaintiff must allege the supporting

factsi.e., the date of discovery, the manner of discovery, and the justification for the

failure to discover the fraud earlierwith the same particularity as with a cause of action

for fraud." (Fuller v. First Franklin Financial Corp. (2013) 216 CalApp.4th 955, 962

(Fuller).) There are no allegations in Chen's complaint showing justification for the

delayed discovery of her claims. Thus, the court erred in denying appellants' motion for

judgment on the pleadings.

The only question remaining is whether Chen should be allowed an opportunity to

amend her complaint to comply with the pleading requirements. (Fox, supra, 35 Cal.4th

at p. 811.) "It is the plaintiff's burden on appeal to show in what manner it would be

possible to amend a complaint to change the legal effect of the pleading; we otherwise

presume the pleading has stated its allegations as favorably as possible. (Fuller, supra,

216 Cal.App.4th at p. 962; accord, Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Mendoza

v. Continental Sales Co., (2006) 140 Cal.App.4th 1395, 1402.) Despite her burden,

Chen's brief does not address whether or how she might amend her complaint to

overcome any pleading deficiencies.
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 Moreover, it appears from the record a viable amendment is not possible. LRDB's

obviously evasive responses to the disclosure statement questions about awareness of

unpermitted work and code violations would have prompted a reasonable person

concerned about these matters to inquire further. Records from the City of Oceanside

and the County of San Diego introduced by Chen at trial showed one of the units was a

garage conversion. The records from the City of Oceanside also showed no permit had

been issued for the work. The existence of these publicly available sources of

information effectively precludes Chen from being able to plead she could not have, with

reasonable diligence, discovered LRDB's deception sooner. We, therefore, conclude

Chen has not met her burden of establishing it is possible for her to amend her complaint

to avoid the applicable time bars.

DISPOSITION

The judgment is reversed. The matter is remanded to the trial court with

directions to enter a judgment on the pleadings for appellants. Appellants are awarded

their appeal costs.

MCCONNELL, P. J.

WE CONCUR:

MCINTYRE, J.

O'ROURKE, J.

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