Opinion
A099213.
10-10-2003
DELTA V-A LTD., et al., Plaintiff and Appellant, v. CLEAN POWER TECHNOLOGY, INC., et al., Defendant and Respondent.
Appellants Altawind, Inc., Delta V-A, Ltd. and Delta V-B. Ltd. appeal from an order granting a demurrer without leave to amend and dismissing defendant and respondent Patrick Hodges from the case, and from an order granting a motion to strike appellants complaint in its entirety as to defendants and respondents Clean Power Technologies, Inc., The Delta Partners Trust and Energy Projects Inc.
We affirm.
BACKGROUND
On August 15, 1995, appellants filed their complaint against Patrick Hodges (Hodges), Carol Hodges, Tera Power Corporation, Delta Energy Project Phase III, Delta Energy Project Phase IV, Delta Energy Project Phase VI, Requip, Inc., Roan Corporation and Does 1 through 100. Appellants alleged, generally, that some or all of the defendants individually and collectively had breached agreements to act on behalf of appellants in connection with the operation of wind generation facilities and the sale of power from those facilities under an agreement (the power sale agreement) with Californias Department of Water Resources (the Department).
Appellants did not pursue their case against Carol Hodges.
Appellants legal theories were restated and clarified in a First Amended Complaint filed by them on December 7, 1995. They alleged there that Hodges effectively owned and operated Requip, Inc., that Requip, Inc., was the general partner of the Delta defendants and that the Delta defendants had acquired Tera Power Corporation. They claimed that all the defendants had such a unity of interest and ownership as to be the alter egos of one another. Appellants alleged that Tera Liquidating Trust entered into the power sales agreement with the Department in 1982. In 1984, Tera Power Corporation (as a subsidiary of Tera Liquidating Trust) and Hodges entered into a letter of intent under which Tera Power Corporation was to "act as the single point of contact" under the power sales agreement. Appellants claimed that the letter of intent established that Tera Power Corporation was acting as appellants agent, with duties of managing the wind generation facilities, dealing with the Department and collecting and distributing all monies received from the sale of power pursuant to the power sales agreement.
Appellants alleged, generally, that Tera Power Corporation breached its fiduciary duty to appellants by misappropriating opportunities for expansion and further development of the wind generation facilities, misappropriating confidential and proprietary business information, granting a security interest in the common facilities to a third party, failing to meet its obligations under the letter of intent, failing to distribute income derived from the power sales agreement, failing to pay to appellants insurance money received for claims made for damages sustained to appellants wind generation equipment and failing to disclose amounts received or to pay money due under a joint legal representation agreement.
More specifically, appellants alleged that the defendants negligence had caused damage to appellants wind turbines, and that in March 1994, the parties had entered into an oral agreement under which the defendants agreed to pay for that damage when the defendants received insurance proceeds covering the damage. The defendants received the insurance proceeds in April 1994, but did not pay appellants. Appellants asserted that the defendants conduct and representations were fraudulent and breached the oral contract.
Appellants also alleged that in April 1990, appellants and the defendants entered into written agreements under which appellants agreed to advance $100,000 for legal costs and services on the defendants behalf, and the defendants agreed to pay appellants 7 percent of any recovery obtained in a San Mateo Court action. The defendants agreed to pay at such time as they sold their interest in the wind generation facilities or entered into a redevelopment agreement. They did not, however, pay appellants, although they recovered approximately $5 million in settlement of the action (and therefore owed appellants approximately $350,000), and also entered into a redevelopment agreement in February 1993. In addition, the defendants committed fraud by representing to appellants that they had received only $1 million in settlement of the action, thereby inducing appellants to accept only $54,000 as payment of their 7 percent interest in that action. Appellants did not discover the fraud until January 1994, when they learned of the actual amount of the settlement.
This litigation apparently grew out of a dispute the parties had with an entity that sold windmills.
Appellants alleged that in September 1993, they entered into an agreement to purchase the defendants interests in the power sales agreement, equipment, common facilities and all other assets for the purpose of redeveloping the wind generation facilities. They also entered into a negotiated agreement with Vestas American Wind Technology, Inc., which would enable them to purchase those interests. In connection with this venture, appellants disclosed confidential and proprietary information to Patrick Hodges. After receiving this information, the defendants refused to proceed with the sale of their assets, and used the information they had received to induce Vestas to sever its business relationship with appellants and instead to enter into a redevelopment deal with the defendants.
Appellants First Amended Complaint, therefore, sought damages on theories of breach of fiduciary duty, breach of contract, fraud and interference with economic relationship. Appellants also sought declaratory relief, and an injunction.
On February 5, 1996, the Department terminated the power sales agreement, with the result that appellants and the defendants filed separate actions against the Department. Those actions were consolidated, and were litigated through August 2001.
In the meantime, in January 1996, Hodges instituted bankruptcy proceedings. On July 17, 1996, the bankruptcy judge issued an order releasing Hodges from all dischargeable debts. On October 12, 2001, cognizant of appellants prosecution of the present case, the bankruptcy judge issued an order "to preserve the efficacy of [Hodgess] discharge." The court ordered appellants (respondents in the bankruptcy proceedings) immediately to take all necessary steps to cease prosecution of any claim based on Hodgess pre-petition conduct. It ordered appellants to file a motion to amend their complaint within 10 days "to state expressly that relief is sought solely on account of [Hodgess post-petition] conduct," and called upon the superior court to exercise its discretion to enable appellants to comply with the bankruptcy courts order.
On November 30, 2001, appellants filed a second amended complaint, adding three new entities as parties defendant: respondents Clean Power Technology, Inc., The Delta Partners Trust and Energy Projects, Inc. The second amended complaint stated causes of action for breach of fiduciary duty, misrepresentation and fraud, intentional interference with economic relationship and declaratory relief.
The defendants demurred to the second amended complaint, and further moved to strike the second amended complaint in its entirety as it related to Hodges and to respondents Clean Power Technologies, Inc., The Delta Partners Trust and Energy Projects, Inc. The defendants position was that appellants claims against Hodges had been discharged in the bankruptcy proceedings, and that appellants claims against all defendants were time-barred or alleged breaches of a fiduciary duty for conduct taking place when no fiduciary duty was owed.
The defendants also asserted that appellants twice before had sought leave to file amended complaints adding the new defendants, pointing out that the court had denied their request both times. The parties discuss this point on appeal, but we find it unnecessary to address it.
On February 26, 2002, the court granted the demurrer, allowing appellants seven days in which to amend the complaint. As to appellants claim for breach of fiduciary duty, the court directed appellants to "amend their complaint to state facts, if possible, to support the claim that Defendant Hodges engaged in acts following January 16, 1996 (the date Hodges claims were discharged in bankruptcy) but prior to February 5, 1996 (the date [the Department] cancelled the [power sales agreement] under which [appellants] [claim] a fiduciary duty was owed." As to appellants claims for fraud and intentional interference with economic relationships, the court directed appellants to amend their complaint to state facts, if possible, showing that the wrongful acts allegedly committed by Hodges were committed sometime after January 16, 1996. As to all causes of action, the court directed appellants to amend their complaint to state facts, if possible, showing compliance with the applicable statutes of limitations or establishing that their compliance with the statutes of limitations had been tolled or excused.
Appellants responded to the courts order by filing a third amended complaint against all defendants on March 6, 2002. Defendants again demurred, and filed a motion to strike the third amended complaint in its entirety as to Hodges, Clean Power Technology, Inc., the Delta Partners Trust and Energy Projects, Inc.
On April 23, 2002, the trial court overruled demurrers to appellants causes of action for breach of fiduciary duty against Tera Power Corporation and for declaratory relief. (The latter was alleged against all defendants except Hodges.) The court sustained without leave to amend causes of action against Hodges for breach of fiduciary duty and interference with economic relations. It sustained without leave to amend demurrers to causes of action against the other defendants for misrepresentation and fraud and for interference with economic relations. The courts rulings effectively disposed of all of appellants claims against Hodges, and the court, accordingly, dismissed Hodges from the case. On the same day, the court granted the motion to strike the complaint in its entirety as to respondents Clean Power Technologies, Inc., The Delta Partners Trust and Energy Projects, Inc., and dismissed all three defendants from the action. The court also ruled that the motion to strike was moot as to Hodges in light of its earlier dismissal of Hodges from the case.
On June 21, 2002, appellants appealed from these orders.
APPEALABILITY
The general rule is that orders overruling a demurrer, or granting a demurrer with or without leave to amend, or striking or denying motions to strike, are interlocutory in nature, and not appealable. (Harmon v. De Turk (1917) 176 Cal. 758; Orange Unified School Dist. v. Rancho Santiago Community College Dist. (1997) 54 Cal.App.4th 750, 756; Sousa v. Captial Co. (1962) 202 Cal.App.2d 221; Shank v. Los Gatos Associates (1961) 193 Cal.App.2d 824.) The rule that an appeal may not be taken from an interlocutory order, however, does not apply when the case involves multiple parties and a judgment is entered that leaves no issue to be determined as to one party. (Justus v. Atchison (1977) 19 Cal.3d 564, 568, overruled on other grounds in Ochoa v. Superior Court (1985) 39 Cal.3d 159, 171.)
It follows that we are not here concerned with the trial courts rulings to the extent that the court overruled the demurrers. We also are not concerned with the merits of the rulings granting demurrers to all defendants other than respondents Hodges, Clean Power Technologies, Inc., The Delta Partners Trust and Energy Projects Inc. As to the other defendants, the courts ruling on the demurrers is an interlocutory order, not subject to review on appeal. We also are not concerned with the trial courts order denying appellants motion to strike "the Answers (or demurrers) and Cross-Complaints of all Defendants except for Patrick Hodges and enter Judgment against those same Defendants in favor of Plaintiffs." Our review is limited to the order granting demurrers as to all causes of action alleged against Hodges and dismissing Hodges from the case, and the order striking the complaint in its entirety against Clean Power Technologies, Inc., The Delta Partners Trust and Energy Projects, Inc.
THE DEMURRER
I.
General Legal Principles
A demurrer attacks the sufficiency of the factual allegations in a complaint. In reviewing the sufficiency of a complaint against a general demurrer, the appellate court treats the demurrer as admitting all material facts properly pleaded, but not contentions, deductions, or conclusions of fact or law. (Rakestraw v. California Physicians Service (2000) 81 Cal.App.4th 39, 42-43.))
We review an order sustaining a demurrer de novo. (Rakestraw v. California Physicians Service, supra, 81 Cal.App.4th at p. 43.) When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action. 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; if not, there has been no abuse of discretion and we affirm. (Blank v. Kirwin (1985) 39 Cal.3d 311, 318.) The plaintiff bears the burden of proving there is a reasonable possibility that the defect in the pleadings can be cured by amendment. (Ibid.; Rakestraw v. California Physicians Service, supra, 81 Cal.App.4th at p. 43.)
II.
Appellants Allegations and Respondents Defenses to
Appellants Allegations
One of the defenses raised by the defendants was that the applicable statutes of limitations barred most of appellants claims. That defense rests on the premise that appellants commenced suit on these claims no earlier than November 30, 2001—the date on which they filed their second amended complaint. We hold, in Section III, below, that this premise is correct, finding that because the claims made in the second and third amended complaints are distinct from those made in the original and first amended complaints, they do not relate-back to the earlier pleadings for purposes of avoiding the statutes of limitations. In this section, therefore, we do not consider the allegations made by appellants in their original complaint or first amended complaint.
Breach of Fiduciary Duty
Appellants alleged that Hodges was a stockholder, director, president and/or controlling manager of several entities, including Tera Power Corporation. They alleged that Tera Power Corporation acted as appellants agent in connection with the power sales agreement, presumably theorizing that as a result of Hodges involvement with Tera Power Corporation, he, too, acted as appellants agent in connection with the power sales agreement.
Any claim against Hodges that existed prior to January 16, 1996, when bankruptcy proceedings were instituted, was discharged in the bankruptcy proceedings. Any fiduciary relationship between Hodges and appellants ended when the Department terminated the agreement in February 1996. (Civ. Code, § 2355, subd. (b).) Acts, omissions or misrepresentations made by Hodges, or any defendant, after February 1996, therefore, could not have breached any fiduciary duty owed to appellants.
Civil Code section 2355 provides that "[a]n agency is terminated, as to every person having notice thereof, by any of the following: . . . (b) The extinction of its subject."
Moreover, as respondents point out, a claim for breach of fiduciary duty is subject to a four-year statute of limitations. (Code Civ. Proc., § 343; David Welch Co. v. Erskine & Tulley (1988) 203 Cal.App.3d 884, 893.) The four-year period began to run when appellants knew or should have known the essential facts that established the elements of their causes of action, and when they had sustained appreciable and actual damage as a result of the alleged breach of fiduciary duty. (McKeown v. First Interstate Bank (1987) 194 Cal.App.3d 1225, 1228, overruled on other grounds as discussed in International Engine Parts, Inc. v. Feddersen & Co. (1995) 9 Cal.4th 606, 618.) It follows that, in order to avoid the demurrer, appellants had to allege facts from which it could be concluded that Hodges engaged in conduct between January 16, 1996 and February 5, 1996 that breached a fiduciary duty owed to appellants, and that appellants commenced an action within four years of the alleged breach or of the date on which they knew or should have known of the breach of duty.
Appellants alleged that the Department terminated the power sales agreement because Tera Power Corporation (controlled, presumably, by Hodges) failed to post required liability insurance. According to appellants this failure, coupled with the failure to inform appellants that no insurance had been posted, breached the duty Tera Power Corporation owed to appellants as their agent. The termination of the power sales agreement necessarily put appellants on notice that Tera Power Corporation had done something wrong. Their resulting claim for breach of fiduciary duty, therefore, accrued on or about February 5, 1996, more than four years before appellants filed the second amended complaint.
Appellants alleged (as they had alleged, generally, in their first amended complaint), that in 1990, Hodges entered into an agreement with appellants under which appellants advanced $ 100,000 to be used for legal fees in an action being prosecuted by appellants and the defendants in San Mateo County. Appellants alleged that Hodges guaranteed appellants at least a 23 percent interest in the power sales agreement unless the defendants advanced an additional $84,000 towards the litigation, and that the defendants never advanced that money. The pleadings do not specify the date on which Hodges was to pay the money, the date on which he was to increase appellants interest in the power sales agreement for non-payment, or the date that appellants learned that Hodges had neither paid the money nor increased their interest. In any event, even if appellants complied with the statute of limitations by commencing suit on this claim in 1995, the claim accrued prior to the bankruptcy proceedings and necessarily was discharged in those proceedings.
Appellants alleged that Hodges misappropriated opportunities for expansion and further development of the wind generation facility otherwise available to appellants, and made misrepresentations through 1996 that caused the wind generation facility to fail and also caused the loss of the wind generation facilitys assets. Any conduct occurring after February 5, 1996, could not have breached a fiduciary duty as Hodges did not owe appellants any fiduciary duty after that date. Any conduct giving rise to a claim that accrued prior to January 16, 1995, was discharged in the bankruptcy proceedings. Moreover, appellants were on notice of any conduct that injured their ability to operate under the power sales agreement when the agreement was terminated in February 1996; yet, they did not file their second amended complaint within four years from that date.
Appellants alleged that Hodges breached a fiduciary duty in 1996 by making false representations that undermined appellants agreements with Energy Unlimited, Inc., and AsiaPower International, Inc., causing these entities to terminate their agreements with appellants in mid-1996. Appellants also claimed that Hodgess wrongful conduct caused the Department to terminate the power sales agreement, which then caused appellants to lose their substantial investment in the wind generation facility and their contracts with Energy Unlimited, Inc., and AsiaPower International, Inc. Appellants effectively were put on notice of Hodgess wrongful conduct when the Department terminated the power sales contract in February 1996, and/or in mid-1996, when Energy Unlimited, Inc., and AsiaPower International, Inc. terminated their agreements with appellants. Appellants claims therefore accrued no later than mid-1996, and they were required to seek relief within four years of that date.
Appellants alleged, generally, that after the termination of the power sales agreement, Hodges sought more than his share of compensation for the termination of that agreement or sought to sell more than his share of the parties joint assets. These allegations cannot support a claim for breach of fiduciary duty as whatever fiduciary duty Hodges may have owed to appellants no longer existed.
Misrepresentation and Fraud
A party seeking to recover on a claim of misrepresentation and fraud must show (1) a misrepresentation, (2) knowledge of the falsity of the representation, (3) intent to defraud, (4) justifiable reliance and (5) resulting damage. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974.) A cause of action for misrepresentation and fraud is subject to the three-year limitations period set forth in Code of Civil Procedure section 338. Under subdivision (d) of that section, such a cause of action "is not to be deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake." Under this, the "delayed discovery rule," the period of limitations begins to run when the plaintiff has a "suspicion of wrongdoing;" in other words, when the plaintiff has notice of information of circumstances to put a reasonable person on inquiry. (Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1109-1111.)
Appellants, accordingly, were required to seek relief within three years of obtaining information that would create a suspicion of wrongdoing. Put another way, assuming, as we will find, that appellants commenced suit on these claims on November 30, 2001, when they filed their second amended complaint, the three-year statute bars their claims if they were put on notice of the misrepresentations any time prior to November, 30, 1998.
Appellants first alleged that the defendants misrepresented that they owned or controlled all interests in the power sales agreement, making that misrepresentation in order to redevelop 100 percent of the wind facility for themselves. When, in May 1995, appellants learned that the defendants did not own or control the interests of two entities (PLM and Wind Millers), the defendants sought to sell the power sales agreement back to the Department without the knowledge or consent of appellants. The allegations therefore establish that appellants learned of the alleged fraud long before November 30, 1998.
Appellants alleged that in April 1996, Hodges filed a claim with the Department seeking compensation for 100 percent of the power sales agreement, effectively seeking compensation for appellants interest. Appellants conceded that they learned of Hodgess claim in August 1998, but alleged that they did not learn until May 2000 that Hodges controlled the interests of other entities. Appellants knowledge of the claim in August 1998 put them on notice that Hodges was attempting to claim their interest, triggering the three-year limitations period. It does not matter that they may not have known the identities of all involved entities, or of Hodgess alleged control of them. Once appellants were aware that Hodges was claiming appellants interest, appellants had notice of circumstances to put a reasonable person on inquiry of the alleged misrepresentation.
Appellants alleged that they were injured by misrepresentations made to third parties. As they could not have relied on a misrepresentation made to a third party, this allegation does not support their claim against Hodges.
Appellants alleged that as part of a 1990 agreement, the defendants misrepresented that they would pay $54,000 to appellants. Appellants earlier pleadings established that this sum represents an amount the defendants promised to pay appellants as their 7 percent share of the settlement proceeds out of the San Mateo litigation. Appellants alleged there that they learned in January 1994 that the defendants had misrepresented the value of the settlement, and that appellants were in fact entitled to $350,000 as their share of the settlement. Appellants may not be time-barred from making this claim, as they raised the point in their earlier proceedings. The claim, however, accrued prior to Hodges bankruptcy proceedings, and therefore, cannot be pursued against him.
Appellants also alleged that the defendants concealed the fact that certain entities (identified by appellants as Clean Power-CA and Energy Projects-CA) had been reconstituted as Clean Power-Nevada and Energy Projects-Nevada during the last three years. Nothing in the complaint suggests that the reconstitution of these entities in any way harmed appellants for purposes of an action for misrepresentation and fraud. The allegations, rather, appear to be an attempt to bring the new entities in as party defendants on the grounds that they are the alter egos of Clean Power-CA and Energy Projects-CA. The issues relating to these allegations, therefore, will be discussed later, in connection with the discussion of the motion to strike.
Appellants complain that documents relating to the acquisition of Tera Power Corporation, the assignment of certain interests to The Delta Partners Trust and the receipt of insurance proceeds, were not produced until 1998, and were at that time subject to a confidentiality agreement so that appellants did not actually obtain them until 2000. These allegations seem to be directed towards the argument that appellants cause of action for misrepresentation and fraud did not accrue until 2000. As discussed above, however, appellants claims accrued when they learned of the actionable misrepresentations, not when they learned about the ownership or control of the various defendants. Appellants also alleged that they were aware in 1994 that a settlement was greater than $1 million—apparently again referring to their agreement to take $54,000 as their share of the settlement. As discussed above, any claim arising from that alleged misrepresentation accrued when appellants learned of the misrepresentation in 1994 and was discharged in the 1996 bankruptcy proceedings.
Intentional Interference with Economic Relationships
Appellants fifth cause of action alleged intentional interference with economic relationships as to all defendants except Hodges. Their sixth cause of action alleged interference with economic relationships as to Hodges, only.
An action for interference with economic interests is subject to the two-year statute of limitations set forth in Code of Civil Procedure section 339, subdivision 1. (Augusta v. United Service Automotive Assn. (1993) 13 Cal.App.4th 4, 10.) Assuming, once again, that appellants commenced suit on their claims at the time they filed their second amended complaint, they are barred from seeking relief on this theory for any claim that accrued prior to November 30, 1999.
Appellants alleged that they were unable to install certain equipment under the power sales agreement because Tera Power Corporation undermined their efforts by minimizing their interests under the power sales agreement. That claim could have accrued no later than 1996, when the power sales agreement was terminated, and is time-barred.
Appellants alleged that they entered into an agreement with Energy Unlimited, Inc., under which Energy Unlimited, Inc., agreed to assist them in the development of a wind facility. These parties then worked out a November 1995, agreement with AsiaPower International, Inc., under which AsiaPower International, Inc., agreed to contribute equity or debt in excess of $15 million. On or about September 1995, however, the defendants took action to undermine appellants in order to cause Energy Unlimited, Inc., and AsiaPower International Inc., to contract with defendants instead of appellants. Appellants further alleged that they had spent more than $500,000 to develop the project, all of which was lost when the power sales agreement was terminated because of the defendants failure to post liability insurance. Energy Unlimited, Inc., and AsiaPower International, Inc., terminated their agreements with appellants in mid-1996. As discussed previously, in connection with appellants allegations of breach of fiduciary duty, appellants were injured from the loss of the ability to benefit from their agreement with Energy Unlimited, Inc., and AsiaPower International, Inc., either when the power sales agreement terminated in April 1996 or in mid-1996 when those entities terminated their agreements with appellants. Their claims, therefore, accrued in 1996, and are time-barred.
Declaratory Relief
The trial court overruled the demurrer to appellants cause of action for declaratory relief.
III.
Time that Appellants Commenced Actions
"Once an action has been timely commenced by the filing of a complaint, the filing of a supplemental or amended complaint which does not introduce a new cause of action is not subject to the statute of limitations." (Hutnick v. United States Fidelity & Guaranty Co. (1988) 47 Cal.3d 456, 464.) Not every amended pleading, however, is protected under the relation-back theory. " `[W]here an amendment is sought after the statute of limitations has run, the amended complaint will be deemed filed as of the date of the original complaint provided recovery is sought in both pleadings on the same general set of facts. [Citation.]" (Smeltzley v. Nicholson Mfg. Co. (1977) 18 Cal.3d 932, 936, italics added by the court.) Put another way, "[a]n amended complaint relates back to the original complaint when it (1) is based on the same general facts as the original, (2) seeks relief for the same [harm], and (3) refers to the same incident. [Citation.] The amended pleading will not relate back to the original if it refers to a different incident, even though it alleges the same resulting injury." (Foxborough v. Van Atta (1994) 26 Cal.App.4th 217, 230.)
Appellants cite Barrington v. A. H. Robins Co. (1985) 39 Cal.3d 146. Barrington is factually inapposite to the present case, and, in any event, does not favor appellants position that the relation-back doctrine requires a conclusion that appellants effectively commenced their actions at the time they filed their original and/or first amended complaints. Barrington was concerned with the failure of the plaintiff to serve a defendant within the three-year period set forth in former Code of Civil Procedure section 581a, subdivision (a). The plaintiff conceded that the relation-back doctrine barred her from seeking relief under the several causes of action stated in her original complaint. She pointed out, however, that she had stated a new cause of action in an amended complaint, and contended that as to that cause of action, the three-year period in section 581a, subdivision (a) began to run upon the filing of the amended complaint. The Supreme Court agreed, finding that because the new cause of action did not arise from the same operative facts as those stated in the original complaint, the three-year period on the new cause of action began to run only from the date the amended complaint was filed. (Id. at p. 154.) That reasoning, applied here, supports the conclusion that a new cause of action does not relate back to an earlier-stated cause of action unless both claims arise from the same set of operative facts.
Breach of Fiduciary Duty
Appellants claims against Hodges for breach of fiduciary duty fail not only because of the failure to assert them within the applicable limitations period, but because appellants could not and did not plead around Hodges bankruptcy. Appellants also could not recover for breach of fiduciary duty against any defendant for conduct occurring after February 5, 1996, when the Department terminated the power sales agreement. It therefore is unnecessary to decide whether the third amended complaints claims against Hodges arise from the same set of facts as the claims in the original and first amended complaint.
Misrepresentation and Fraud
Appellants earlier pleadings alleged that the defendants acted fraudulently by promising to pay appellants for damages to their turbines when the defendants received insurance proceeds, and acted fraudulently by misrepresenting the amount received in settlement of the San Mateo action. In their third amended complaint, appellants alleged misrepresentation of the amount of the settlement in the San Mateo action. This claim therefore relates back to the original pleadings. As discussed above, however, as to Hodges, this claim was discharged in the bankruptcy proceedings. Appellants remaining claims of misrepresentation and fraud are alleged in connection with transactions not touched on in the earlier pleadings. These claims do not relate back to the original pleadings and are time-barred.
Intentional Interference with Economic Relationships
Appellants earlier pleadings alleged interference with a 1993 arrangement with Vestas Wind Technology. In their third amended complaint, appellants alleged interference with later agreements with Energy Unlimited, Inc., and AsiaPower International, Inc. They also alleged interference with appellants plans to install equipment under the power sales agreement. Nothing in appellants third amended complaint suggests that these allegations have anything to do with the arrangement with Vestas Wind Technology. Appellants claims, therefore, do not relate back to their earlier pleadings.
IV.
Effect of Stay
Appellants cite a stay agreed-to by the parties in the San Francisco Superior Court proceedings, contending that "the Stay agreed to by the parties allowed for the filing of amended pleadings based on the doctrine of relation back since they related to the same causes of action and the efforts to misappropriate Appellants [sic] interest in the [wind generation facility]." We already have discussed the relation back theory, and have concluded that it does not permit a finding that the claims stated in the second and third amended complaints effectively were commenced upon the filing of the original complaint or first amended complaint. Appellants, however, argue that by entering into the stay in the San Francisco Superior Court proceedings, the parties agreed to toll the statutes of limitations during the course of those proceedings.
The relevant agreement was memorialized in stipulations filed in the superior court in May 2000 and March 2002. Appellants emphasize the following language in the May 2000, stipulation: "it was/is agreed . . . that the Statute[s] of Limitations beginning in the Code of Civil Procedure 583.310 are hereby stayed until ninety (90) days beyond the date of trial, which trial date has now been rescheduled for August 18, 2000, for all purposes including trial, amendment of the complaint or any of the pleadings herein."
Code of Civil Procedure section 583.310 requires the plaintiff to bring an action to trial "within five years after the action is commenced against the defendant." It has nothing to do with the statutes of limitations that prescribe the time in which a party must commence an action. Nothing in the stipulations suggests an agreement to toll the time period for commencing an action—as opposed to the time period for bringing the matter to trial after the action has been commenced. The parties agreement therefore does not toll the applicable statutes of limitations or in any way estop the defendants from asserting the statutes of limitations as a bar to the claims made by appellants in their second and third amended complaints.
V.
Conclusion
The trial court correctly sustained Hodges demurrer as to all causes of action stated in the third amended complaint.
DEFENDANTS MOTION TO STRIKE
The trial court ruled that the motion to strike was moot as to Hodges in light of its ruling dismissing all causes of action against him. We agree, and do not address appellants contentions that Hodges was not entitled to have the complaint stricken against him.
The trial court also granted the motion to strike the complaint as to Clean Power Technologies, Inc., the Delta Partners Trust and Energy Projects, Inc. Appellants did not name these entities as parties defendant until they filed their second amended complaint, and the trial court held that appellants had not met their burden of showing that these parties were the alter egos of one or some of the original defendants, ruling further that the claims against them were barred by the applicable statutes of limitations.
Appellants only attack on this ruling is the claim that language in the parties May 2000 and March 2002, stipulations staying the proceedings extended the statute of limitations for all purposes. As discussed above, we disagree. The stipulations tolled the time period for bringing the matter to trial after suit was commenced; they did not toll the time period for commencing the action in the first place.
We also find no error in the trial courts ruling. Appellants theory against respondents Clean Power Associates and the Delta Partners Trust appears to be that these entities acquired the assets of the other defendants, and that the defendants, and Hodges in particular, concealed their unity of interest with these entities, a concealment that allowed Hodges to shelter the assets from his bankruptcy. Appellants claims against Clean Power Associates and the Delta Partners Trust, therefore, are based on the theory that these entities are legally responsible for the actions of the other defendants, or, at least, are liable for any sums owed by the other defendants to appellants.
For appellants to recover on this theory, they were required to allege facts from which it might be concluded that Clean Power Associates and the Delta Partners Trust were the alter egos of some other defendant. The third amended complaint alleged only that Hodges was a stockholder, director, president and/or controlling manager of a number of entities, including Tera Power Corporation, Clean Power Technologies, Inc., Energy Projects, Inc., Requip, Inc. and Roan Corporation. It alleged that Roan Corporation was the trustee and successor trustee of the Delta Partners Trust "to which the above entities save for Requip were contributed at one time or another." It alleged that Tera Power Corporation was assigned to the Delta Partners Trust sometime in 1991, and that "Hodges through Requip and Clean Power controlled and operated [Tera Power Corporation] for his own benefit from 1991 forward." Appellants also alleged that Hodges owned shares in Clean Power Technologies, the Delta Partners Trust and Energy Projects, Inc., and that these entities plus Clean Power-CA, Clean Power-Nevada, Energy Project-CA and Energy Projects-Nevada are the alter egos of their stockholders.
These allegations are conclusory, and fail to state facts from which it might be concluded that Clean Power Technologies, Inc., or the Delta Partners Trust are in fact the alter egos of Hodges or some other defendant named in the original or first amended complaint. The trial court, therefore, properly struck the complaint as to both defendants.
Appellants assert two theories against Energy Projects, Inc. First, they allege that Hodges and Energy Projects, Inc., had a unity of interest, presumably theorizing that Energy Projects, Inc., therefore is legally responsible for Hodgess conduct. Appellants allegations of a connection between Hodges and Energy Projects, Inc., like their allegations of a connection between Clean Power Technologies, Delta Partners Trust and the other defendants, are conclusory and do not state facts from which it might be concluded that any assets held by Energy Projects, Inc., can be reached to satisfy an obligation owed by Hodges. Although appellant alleged that Hodges owned and operated Energy Projects, Inc., that allegation does not of itself provide a basis for holding Energy Projects, Inc., responsible for appellants claims against Hodges.
Appellants allege, for example, that "Hodges, while stating under penalty of perjury that he had no interest in [Energy Projects, Inc.] in his bankruptcy filings on January 16, 1996, in fact owned and managed the [Energy Projects, Inc.] interests for both his and the benefit of his children beginning in mid 1993, that he has admitted that he or members of his family have acted as President of [Energy Projects, Inc.] since mid-1993 . . . that [Energy Projects, Inc.] had transferred its interests to the DELTA PARTNERS TRUST, and that while he did not know who the owners or directors of [Energy Projects, Inc.] were when giving deposition testimony in May 2000, he made a claim with the State of California for approximately $7.7 [million] in April 1996 shortly after his bankruptcy filing."
Appellants also alleged that Energy Projects, Inc., was in some manner implicated in allowing the defendants to attempt to sell the power sales agreement back to the Department, and/or preventing appellants from sharing in the settlement of the defendants claim against the Department. As discussed above, the statute of limitations bars appellants from seeking damages for these alleged wrongs. The trial court, therefore, also properly granted Energy Power, Inc.s motion to strike.
Appellants, citing Omega Video Inc. v. Superior Court (1983) 146 Cal.App.3d 470, contend that the defendants were and are estopped to assert the statute of limitations in connection with appellants claims against Clean Power Technology, Inc., the Delta Partners Trust and Energy Projects, Inc.
Omega Video has no application here. In that case the plaintiffs filed a complaint within the applicable limitations period, naming several defendants including "Fernseh." At the time, Fernseh was only a division of another defendant, and not a separate entity that could be sued. The defendants, however, responded to the complaint as if Fernseh were a party defendant, making a general appearance on its behalf. The Fernseh division later was sold to another entity, and at that time was incorporated. The court noted that a general appearance on behalf of a nonexistent defendant is an unauthorized appearance allowing the defendant to withdraw the appearance. Nonetheless, the unique circumstances of the case were such that the plaintiffs would be permitted to sue Fernseh as a fictitiously named defendant. (Omega Video Inc. v. Superior Court, supra, 146 Cal.App.3d at pp. 476-477, 482.) As the general rule is that a statute of limitations will not bar a plaintiff from amending the complaint to substitute a named defendant for a Doe defendant, if the plaintiff brought suit against the Doe defendant within the applicable limitations period (e.g., Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 408-409), the substitution allowed the plaintiffs to avoid the bar of the statute of limitations in connection with its claims against Fernseh. (Id. at p. 482.)
In the present case, unlike Omega Video, no mistaken general appearance was made on behalf of Clean Power Technologies, Delta Partners Trust or Energy Projects, Inc. Omega Video, therefore, provides no basis for arguing that these parties may be substituted for some fictitiously named defendant. Indeed, appellants have no need to site Omega Video for that proposition. They are free to substitute any entity that existed at the time they filed the complaint, and the applicable statutes of limitations will not bar them from seeking relief from a substituted defendant on any timely filed claim. The flaw in appellants pleadings is not that they are attempting a late substitution of party defendants, but that their claims are time-barred. Omega Video does not address that problem.
In conclusion, the trial court properly granted respondents motion to strike.
CONCLUSION
The orders dismissing Hodges from the case and striking the complaint in its entirety against the other respondents and dismissing them from the case, are affirmed.
We concur: Marchiano, P.J. and Margulies, J.