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Fielding v. Gateway Title Co.

California Court of Appeals, First District, Third Division
Jul 23, 2008
No. G039334 (Cal. Ct. App. Jul. 23, 2008)

Opinion

NOT TO BE PUBLISHED

Appeal from a judgment of the Superior Court of Orange County No. 06CC06564, Corey S. Cramin, Judge.

Carroll & Werner and Lee G. Werner for Plaintiff and Appellant.

Billet, Kaplan & Dawley, Gregory A. Dawley and Paul N. Glasser for Defendant and Respondent.


OPINION

O’LEARY, J.

Joseph Fielding appeals from a judgment in favor of Gateway Title Company (Gateway), after Gateway’s motion for summary judgment was granted. Fielding contends there are material issues of fact as to: (1) whether Gateway’s alleged negligence in its handling of the escrow on the sale of a gas station to Fielding caused him damage; and (2) whether his action is barred by a one-year limitations period contained in the escrow agreement. We find there are no material issues of fact, and the summary judgment motion was properly granted. Accordingly, we affirm the judgment.

FACTS AND PROCEDURE

The Complaint

On May 26, 2006, Fielding filed a complaint against Gateway, Josef Friwat, and Aram Pashaian. The complaint alleged that in December 2004, Fielding agreed to purchase a Union 76 gas station in Long Beach, owned by Friwat, which included a convenience store and fast food facility. Fielding agreed to purchase the business and lease the land and improvements from Friwat, but he also negotiated an option to purchase the property. Friwat knew Fielding intended to establish and operate his own fast food facility on the premises. He told Fielding the current fast food tenant had only a month-to-month lease, terminable on 30 days notice.

The complaint alleged “escrows” were opened with Gateway’s subsidiary Chapman Avenue Escrow. A “true and correct copy” of the escrow instructions signed by Fielding on March 9, 2005, was attached to the complaint. The instructions titled, “Escrow Instructions For Business Only (not property),” provided the escrow would close on March 15, 2005, if all contingencies were satisfied. Among the contingencies were that Conoco Phillips, the Union 76 franchisor for the station, approve Fielding as a dealer. Other requirements in the instructions included that Fielding would sign a lease with Friwat for the premises, he would have an option to purchase the premises by August 31, 2005, for which “a separate new escrow will be opened . . . [,]” and Friwat would grant possession of the premises to Fielding immediately upon close of escrow.

Among the general provisions was an instruction that Gateway would be given a “notice of bulk sale” for publication pursuant to section 6105 of the California Uniform Commercial Code. Paragraph 12 of the instruction’s general provisions provided any action brought in connection with the escrow must be brought within one year after the close of escrow.

Fielding alleged the escrow closed in March 2005, and the $675,000 total he had deposited into escrow was released to Friwat. He paid an additional $45,000 to Conoco Phillips, the Union 76 franchisor for the station. Prior to the close of escrow, Fielding asked Friwat to give 30 days notice to the current fast food restaurant on the premises. Friwat convinced Fielding to wait until he had operated the gas station a few months before opening his own fast food restaurant, cautioning Fielding “he should not attempt to learn two new businesses at the same time.” In late April 2005, Fielding learned from Friwat’s partner, Pashaian, that the fast food vendor on the premises had a five-year lease on the premises, with another five-year option term. After taking possession, Fielding also discovered the monthly expenses of the gas station were much higher than Friwat had represented.

Fielding’s complaint contained several causes of action against Friwat and Pashaian. As to Gateway, Fielding alleged two causes of action, one for breach of contract and one for negligence. Both were based on the same allegations. The escrow instructions made closing escrow contingent upon Conoco Phillips approving Fielding for transfer of the dealership. Additionally, a bulk sales notice was supposed to be published before the close of escrow. Gateway closed escrow on the sale without ensuring these two conditions had been met.

Summary Judgment Motion

On February 1, 2007, Gateway filed its summary judgment motion. Gateway’s separate statement set forth as undisputed facts that Conoco Philips approved Fielding as a dealer in November 2005 and Fielding could not identify any claims filed against him that would have been affected by the publication of a bulk sales notice, and the limitations period on any such claims being filed had expired. Accordingly, Fielding could not demonstrate any damage suffered as a result of Gateway’s alleged breaches.

Apparently, although not an allegation in the complaint, Fielding contended Gateway breached the escrow instructions by failing to provide Fielding with a copy of the fast food sublease. In its summary judgment motion, Gateway addressed this issue as well. Fielding has apparently abandoned this claim as it is not referred to in its briefs.

Additionally, Gateway asserted the action was time-barred. Fielding admitted escrow on the sale of the gas station closed on March 14, 2005, after which he took possession of the gas station and began operating the business. In the complaint, he alleged escrow closed in March 2005. In interrogatory responses, Fielding repeatedly referred to escrow closing on March 14, 2005. Fielding testified at his deposition he received the escrow closing statement sometime before the end of March 2005. The Gateway escrow officer handling the transaction, Mildred Cork, declared the escrow on the sale of the business closed March 14, 2005. Fielding’s complaint was filed on May 26, 2006, more than one year after the close of escrow.

Opposition/Amended Complaint

On February 23, 2007, Fielding filed an amended complaint purporting to substitute Gateway in as Doe defendant No. 31 in his complaint’s sixth cause of action for conspiracy to defraud, and the ninth cause of action for “willful misconduct.”

On April 6, 2007, Fielding filed his opposition to Gateway’s summary judgment motion. In his declaration, Fielding asserted he suffered damage because if Gateway had abided by the escrow instructions (i.e., not closed escrow because Conoco Phillips had not yet approved him as a dealer and bulk notices were not yet published) escrow would not have closed when it did and his funds would have remained on deposit with Gateway. When Fielding learned in April 2005 the fast food tenant had a five-year lease (not month to month), Gateway would still have been holding Fielding’s funds and he would have been able to get his money back.

As to the contractual limitations period defense, Fielding “disputed” there was a one-year limitations period in the escrow instructions because it was “hidden within the fine print” of the instructions. Fielding “disputed” that escrow closed on March 14, 2005, because the “[e]scrow did not properly ‘close[.]’”

Fielding’s opposition included deposition testimony from Cork to the following effect—that in January or February 2005, the parties had changed the terms of the escrow agreeing to “‘transfer the business and let the escrow remain open until they could transfer the real property.’” On or around March 9 or 10, she had a conversation with Fielding and Friwat from which she understood “the parties wanted to close the business portion of the escrow so that all funds Fielding deposited would be sent to Friwat[.]” The court sustained Gateway’s objection to the testimony on relevance and foundational grounds.

Ruling

In its order granting summary judgment, the trial court noted Fielding did not present any evidence disputing Gateway’s facts, rather he argued the legal effect of the facts. The undisputed facts were that Concoco Phillips approved Fielding as a dealer; no claims that would have been covered by bulk sales notice had been filed against Fielding; the escrow instructions contained a one-year limitations period; escrow closed on March 14, 2005, and Fielding took possession of the premises at that time and began operating the gas station business; Fielding’s complaint was filed on May 26, 2006. Fielding’s complaint was barred by the one-year limitations period contained in the escrow instructions. The court found Gateway had satisfied its burden to show Fielding did not suffer any damage as a result of Gateway’s alleged breach of the escrow instructions. On its own motion, the court struck Fielding’s amended complaint because it was not filed in conformity with law, and Fielding had not obtained leave of court to amend his complaint. The court subsequently entered judgment in favor of Gateway.

Fielding proceeded to trial against Friwat and Pashaian. Fielding has filed a motion to augment the record on this appeal with a copy of the jury verdict awarding him over $1.3 million damages against the remaining defendants. In his reply brief, he cites the verdict in support of his argument that he should have been permitted to name Gateway as a Doe defendant in the remaining causes of action. He makes no reasoned argument as to how the verdict against the remaining defendants supports his arguments on appeal. The motion is DENIED.

DISCUSSION

1. Standard of Review on Summary Judgment

Summary judgment is properly granted when there is no triable issue as to any material fact and the moving party is entitled to judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).) “A defendant seeking summary judgment bears the initial burden of proving the ‘cause of action has no merit’ by showing that one or more elements of plaintiff’s cause of action cannot be established or there is a complete defense. [Citations.] Once the defendant’s burden is met, the burden shifts to the plaintiff to show that a triable issue of fact exists as to that cause of action. [Citation.] [¶] ‘[We] review[] de novo the trial court’s decision to grant summary judgment and we are not bound by the trial court’s stated reasons or rationales. [Citations.]’ [Citation.] We accept as true the facts alleged in the evidence of the party opposing summary judgment and the reasonable inferences that can be drawn from them. [Citation.] However, to defeat the motion for summary judgment, the plaintiff must show ‘“specific facts,”’ and cannot rely upon the allegations of the pleadings. [Citations.]” (Horn v. Cushman & Wakefield Western, Inc. (1999) 72 Cal.App.4th 798, 805 (Horn).)

2. Fielding’s Complaint is Barred by the One-Year Limitations Period

Fielding contends the trial court erred by applying the one-year limitations period contained in the escrow instructions. We disagree.

The escrow instructions signed by Fielding contained the following provision, printed in all capital letters on the first page of the general instructions: “NO ACTION SHALL LIE AGAINST THE ESCROW HOLDER FOR ANY CLAIMS, LOSS, LIABILITY OR ALLEGED CAUSE OF ACTION OF ANY KIND OR NATURE WHATSOEVER, HOWEVER CAUSED OR OCCURRED, UNDER THIS ESCROW OR IN CONNECTION WITH THE HANDLING OR PROCESSING OF THIS ESCROW UNLESS BROUGHT WITHIN TWELVE (12) MONTHS AFTER THE CLOSE OF ESCROW OR CANCELLATION OF ESCROW, WHICHEVER OCCURS FIRST.” Escrow closed on March 14, 2005; Fielding’s action for negligence and breach of contract was filed May 26, 2006, more than one year after the close of escrow.

It is well settled that parties to a contract may “modify the length of the otherwise applicable California statute of limitations, whether the contract has extended or shortened the limitations period. [Citation.]” (Hambrecht & Quist Venture Partners v. American Medical Internat., Inc. (1995) 38 Cal.App.4th 1532, 1547.) The only caveat is that “the period fixed be not so unreasonable as to show imposition or undue advantage in some way.” (Beeson v. Schloss (1920) 183 Cal. 618, 622-623 (Beeson); 3 Witkin, Cal. Procedure (2005 supp.) Actions, § 437, pp. 101-103; 43 Cal.Jur.3d (2003) Limitation of Actions, § 9, pp. 31-33.) Whether a contractual limitation period is reasonable is a question of law. (Capehart v. Heady (1962) 206 Cal.App.2d 386, 388; see also Beeson, supra, 183 Cal. at p. 624; Tebbets v. Fidelity & Casualty Co. (1909) 155 Cal. 137, 138-139 (Tebbets); C & H Foods Co. v. Hartford Ins. Co. (1984) 163 Cal.App.3d 1055, 1062-1064, 1068 (C & H Foods).)

Fielding does not contend one year is an unreasonable limitations period. Indeed, we note similar and much shorter contractual limitations periods have been routinely upheld. (Fageol T. & C. Co. v. Pacific Indemnity Co. (1941) 18 Cal.2d 748, 753 [insurance policy—12 months after loss]; Beeson, supra, 183 Cal. at p. 624 [employment contract—six months after receipt of commissions statement]; Tebbets, supra, 155 Cal. at pp. 138-139 [insurance policy—six months from date of death]; CBS Broadcasting Inc. v. Fireman’s Fund Ins. Co. (1999) 70 Cal.App.4th 1075, 1084 [insurance policy—12 months]; West v. Henderson (1991) 227 Cal.App.3d 1578, 1587 [shopping center lease—six months]; Capehart, supra, 206 Cal.App.2d at pp. 388-391 [service station lease—three months].) Certainly, there is nothing inherently unreasonable about this one-year limitations period.

Rather, relying on the rule contractual limitations clauses should be strictly construed against the party invoking them (Lewis v. Hopper (1956) 140 Cal.App.2d 365, 367), Fielding argues the limitations period should not be applied in this case because it was unfairly hidden in the fine print of the general provisions of the escrow instructions. Nonsense. A similar contention was rejected in C & H Foods, supra, 163 Cal.App.3d at page 1063. There, plaintiffs complained the contractual limitations period should not be enforced because it was “‘buried in small type in an obscure corner on the backside of the insurance policy.’” (Ibid.) But the record showed “a short policy with a single front and a single reverse side with the provision in question printed in the same size type as all of the other printed provisions of the policy except for the titles of some of its paragraphs and the witness clause. In short, the furnished provisions of the policy incorporated into the complaint as an exhibit are inconsistent with plaintiffs’ conclusional allegations concerning them.” (Ibid.) Here, the general provisions of the escrow instructions were contained in a two-page document signed by Fielding. The limitations clause was on the first page, printed entirely in capital letters, as opposed to the other provisions in the document that were almost entirely in lower case letters with only an occasional word or phrase in capital letters. Fielding initialed that page of the instructions. The limitations period was in plain view.

Fielding also contends the shorter limitations period cannot be invoked because it applied only upon the “close of escrow” or “cancellation of escrow.” But because Gateway did not “properly” close the escrow (i.e., since it breached the instructions by not ensuring all contingencies were first satisfied), escrow did not really “close” at all. Not surprisingly, Fielding provides no authority to support his proposition that only a “proper” closing of escrow triggers the shorter limitations period. The undisputed evidence is that escrow closed on March 14, 2005, after which Fielding took possession of the gas station and began operating the business. Fielding’s complaint was filed on May 26, 2006, more than one year after the close of escrow, and is time-barred.

In view of this conclusion, we need not address the trial court’s alternate ground for summary judgment—the lack of evidence of any damage.

3. No Error by Excluding Cork’s Deposition Testimony

Fielding contends the trial court erred by finding inadmissible Cork’s deposition testimony that in January or February 2005, the parties had changed the terms of the escrow agreeing to “‘transfer the business and let the escrow remain open until they could transfer the real property.’” We find no error.

“We review the trial court’s evidentiary rulings on summary judgment for abuse of discretion. [Citations.] As the parties challenging the court’s decision, it is plaintiffs’ burden to establish such an abuse, which we will find only if the trial court’s order exceeds the bounds of reason. [Citation.]” (DiCola v. White Bros. Performance Products, Inc. (2008) 158 Cal.App.4th 666, 679-680.)

Fielding has not satisfied his burden. The court excluded the testimony on relevance and lack of foundation grounds. Fielding makes absolutely no showing as to how the testimony was relevant. Assuming it was offered to support Fielding’s assertion escrow never closed, the testimony does not aid him. Fielding admitted the operative escrow instructions were those signed on March 9, 2005. Those instructions were for an escrow on the sale of the business only. The instructions indicated there would be a second escrow opened for the sale of the real property should Fielding decide to exercise his option to purchase. Fielding admitted escrow on the sale of the business closed on March 14, 2005. He has not demonstrated, nor can we fathom, any way in which this testimony would have aided his cause.

4. Court Properly Struck Doe Amendment

Fielding contends the trial court erred by striking his amendment to his complaint by which he attempted to designate Gateway as a Doe defendant in causes of action that were not addressed by the summary judgment motion. We find no error.

A trial court may “at any time in its discretion . . . [s]trike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.” (Code Civ. Proc., § 436, subd. (b).) Accordingly, the trial court has discretion to strike an amended pleading filed without leave of court when such leave is necessary. (In re Estate of Walters (1949) 89 Cal.App.2d 797, 800; 49 Cal.Jur.3d (2008) Pleading, § 303, pp. 482-483.) The trial court struck Fielding’s attempted Doe amendment to his complaint because it was filed without leave of court. Fielding has not shown the court abused its discretion.

Fielding argues leave to amend is not necessary for a Doe amendment, but his was not a proper use of a Doe amendment. “Code of Civil Procedure section 474 permits a plaintiff to amend complaints by adding parties as Doe defendants ‘[w]hen the plaintiff is ignorant of the name of a defendant’ at the time the complaint is filed. ‘The purpose of section 474 is to enable a plaintiff to avoid the bar of the statute of limitations when he [or she] is ignorant of the identity of the defendant.’ [Citation.] . . . [I]f that requirement is met, the amendment to the complaint relates back to the date the complaint was filed and the statute of limitations is preserved. [Citations.]” (Davis v. Marin (2000) 80 Cal.App.4th 380, 386-387, italics added, fn. omitted.)

Gateway was already a party and Fielding certainly was not ignorant of its identity. Furthermore, a responsive pleading had been filed by Gateway. Although an amended complaint may be filed as a matter of course and without leave of the court before a responsive pleading is filed in the action (see Code Civ. Proc., § 472; Woo v. Superior Court (1999) 75 Cal.App.4th 169, 175 (Woo)), after a responsive pleading is filed, a plaintiff must seek permission of the court by way of a noticed motion to amend a pleading. (Code Civ. Proc., § 473; Woo, supra, 75 Cal.App.4th at p. 175.) Fielding could not circumvent the requirements of Code of Civil Procedure section 473 by employing the ruse of a Doe amendment.

Fielding’s amendment was filed in response to Gateway’s summary judgment motion in a clear attempt to defeat the motion. “If appellant wished to rely upon unpleaded theories to defeat summary judgment, he was required to move to amend the complaint prior to the hearing on respondent’s motion. [Citation.]” (Leibert v. Transworld Systems, Inc. (1995) 32 Cal.App.4th 1693, 1699.) Furthermore, even were the amendment proper, it would suffer the same fate as the other causes of action—the newly pleaded causes of action would be subject to the one-year limitations period that doomed Fielding’s negligence and breach of contract causes of action.

DISPOSITION

The judgment is affirmed. The Respondent is awarded its costs on appeal.

WE CONCUR: RYLAARSDAM, ACTING P. J., IKOLA, J.


Summaries of

Fielding v. Gateway Title Co.

California Court of Appeals, First District, Third Division
Jul 23, 2008
No. G039334 (Cal. Ct. App. Jul. 23, 2008)
Case details for

Fielding v. Gateway Title Co.

Case Details

Full title:JOSEPH FIELDING, Plaintiff and Appellant, v. GATEWAY TITLE COMPANY…

Court:California Court of Appeals, First District, Third Division

Date published: Jul 23, 2008

Citations

No. G039334 (Cal. Ct. App. Jul. 23, 2008)

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