Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of San Diego County, Super. Ct. No. GIC881505 Michael M. Anello and Timothy B. Taylor, Judges.
HUFFMAN, J.
Cross-complainants and appellants Reza Safaie and his investment firm Royale Westminster Retirement, LLC (together Royale), were the losing parties at a court trial that resulted in a judgment quieting title to certain residential property (the property) in favor of cross-complainant and respondent Carlin T. Elmendorf, who inherited it from his mother in 1973. In the complaint which gave rise to his cross-action, Elmendorf (then age 78) was sued for adverse possession of the property by a third party (Justin Killman, not a party to this appeal). Elmendorf was found to be in need of a guardian ad litem. Attorney Deane Haskins was appointed and on his behalf, answered the complaint and filed a cross-complaint against Killman, Royale, and others to quiet title and for other relief. As alleged in the answer and cross-complaint, Elmendorf has brain damage from 1958 brain tumor surgery, and he has long had dementia.
On appeal, Royale contends the trial court misinterpreted Code of Civil Procedure sections 352 and 328, when it ruled that Elmendorf was not barred by the applicable limitations periods from bringing his cross-complaint to quiet title. (All further statutory references are to this code unless noted.) These sections each provide for suspended or tolled application of any limitations period for the bringing of an action for the recovery of real property, during a time when the plaintiff is "insane." (Pearl v. Pearl (1918) 177 Cal. 303, 306-307 (Pearl) [applying the principles of § 352 in a trust case]; 3 Witkin, Cal. Procedure (5th ed. 2008) Actions, § 698, pp. 918-919.)
Royale's arguments of misapplication of the statutory criteria of sections 352 and 328 are based on the consistent showing in the evidence that from the time of his operation, Elmendorf was able to function to some degree, in some respects, in handling his personal and financial business, without the appointment of a conservator or other legal representative. Royale therefore contends its affirmative defense of a limitations bar against Elmendorf's cross-complaint, in which Elmendorf claimed superior title to the property as against Royale or any other persons who relied on a void or voidable deed stemming from a purported 1998 transfer of the property, should have been deemed meritorious.
The record does not bear out any of Royale's contentions. The trial court's determinations that Elmendorf was protected by the suspension and tolling provisions of sections 352 and 328 are fully supported by the evidence, and represent a correct application of this law to the evidence. We find no legal error and affirm the judgment.
We have also decided that Elmendorf's request for sanctions for a frivolous appeal, payable to him or to the court, should properly be denied under the objective test, as will be explained. (In re Marriage of Flaherty (1982) 31 Cal.3d 637.)
FACTUAL AND PROCEDURAL BACKGROUND
A. Introduction: History and Competing Claims to the Property
Since 1958, when he had brain surgery, Elmendorf has suffered from some kind of cognitive disorder. He is eligible for disability benefits from the military, in which he served before his surgery, but he did not collect them for a number of years. Although he completed one year of law school in the 1970's, he dropped out and has not been employed since. He has no immediate family.
Elmendorf inherited the property (several lots, including 3811 Kendall Street in San Diego, in the Crown Point area of Pacific Beach) from his mother when she died in 1973. In connection with probate proceedings for his mother's estate, Elmendorf became the subject of conservatorship proceedings brought by the attorney for the estate, who alleged that Elmendorf was unable to assist in the process. However, there is no final resolution of that petition in this record, and Elmendorf is not sure what happened.
The mother's estate was not settled until 1978, when Elmendorf received title pursuant to a recorded "Decree of Final Distribution Without an Account." He lived in the property from time to time but it became run down. Neighbors and others became concerned about the visible decay, lack of utilities, and thefts of personal property from the house. Elmendorf mainly lived nearby with a girlfriend.
The exhibits in the record show that in a related action in 1979, Elmendorf's uncle sued him for specific performance to transfer a portion of the lots at this property to him, as had allegedly been the wish of the mother. A default was taken and an elisor appointed for that partial transfer.
Elmendorf's father died in 1984, leaving him additional real property in Descanso and on Market Street in San Diego. Third parties at those properties, as well as this property, started to make efforts to adversely possess them. In connection with probate proceedings for his father's will, Elmendorf hired an attorney in 1993 to assist him in acting as executor of the estate. By 1995, he sold the Market Street property to the party who had occupied it.
Elmendorf was sued in 1997 for attorney fees by the attorney he had hired in 1993 to assist him in acting as executor of the father's estate. The fees action was settled. The father's estate had a Morgan Stanley bank account containing securities, managed by an investment advisor, who was contacted a few times a year by Elmendorf when he needed cash. The investment advisor testified that over $100,000 of securities had escheated to the state, for lack of attention, but she was unable to contact Elmendorf or get answers from him about them. Elmendorf has no credit card and pays no taxes. He has an expired state identification card.
In 1998, a grant deed for the subject property was apparently signed by Elmendorf to transfer the property to "Ian James Grossman, " and recorded. It later turned out that Grossman was really one Nicholas Herman, who pled guilty to real estate fraud in taking and selling that property, among others. Elmendorf does not recall signing such a deed. Around 1999, there was a fire at the property, and it continued to deteriorate. Real estate taxes were not paid by Elmendorf after 1998.
In 2000, the original plaintiff/cross-defendant Justin Killman started to use the subject property with the intent to adversely possess it, by changing the locks and paying some taxes. He was assisted by his parents, former cross-defendants William Killman and Donna Killman. Killman was also occupying several other residential properties owned by others for his own use, in pursuit of potential adverse possession rights. In 2007, Killman told Elmendorf he was living at the property. Elmendorf hired an attorney.
In January 2007, Grossman recorded a grant deed for the property to Gold Coast Realty Investments, Inc. (Gold Coast). In March 2007, Gold Coast transferred the property to Royale. Landmark Quick Fund, Inc. (Landmark) holds a trust deed on the property.
B. Killman Sues; Elmendorf and Royale Cross-Complain
In March 2007, Killman filed his adverse possession complaint, as amended. He named numerous defendants, including Elmendorf. Through his guardian ad litem, Elmendorf answered the complaint, alleging he was incapacitated and incapable of taking rational care of his property.
Next, several cross-complaints were filed, including the one by Elmendorf in October 2008. Previously, Royale had filed a cross-complaint seeking a declaration of interest in the property and damages versus the Killmans for a pattern of racketeering, etc., but it did not name Elmendorf as a cross-defendant. Landmark, Royale's lender, also filed a cross-complaint against the Killmans. (Note: The Killmans lost at trial, appealed, but then settled and dismissed their appeal. Likewise, Landmark is not a party to the appeal.)
In Elmendorf's cross-complaint, he sought the following relief against Royale: second cause of action, quiet title; tenth and eleventh causes of action, declaratory and injunctive relief for cancellation of deeds, including those of Royale, Landmark, Gold Coast, etc.
Royale answered Elmendorf's cross-complaint, pleading numerous affirmative defenses, including the bar of the relevant statutes of limitation or laches. (§§ 338-340, 343.)
C. Evidence About Mental Condition; Rulings
At the eight-day bench trial conducted during June and July 2008, the trial court heard extensive testimony and admitted numerous exhibits about the chain of title and the roles of the various participants. With respect to the issues between Elmendorf and Royale, the witnesses addressed various topics relating to Elmendorf's mental condition during the relevant time periods, beginning in the 1970's and going through 1998 to the present. His neighbors, banker, and attorneys gave details about their various dealings with Elmendorf and transfers of the property, including the roles of Grossman/Herman and Royale.
Elmendorf testified about how he handled his business affairs, such as his inheritance from his parents, admitting he was essentially not paying attention due to his inability to concentrate. He believes that his heart medication might have caused him to neglect his various property and estate problems.
The only examining doctor, psychiatrist Dr. Kenneth Khoury, provided a report and testimony that after interviewing Elmendorf, he found him to be suffering from chronic dementia, most likely posttraumatic from his surgery many years ago. Based on his interview and review of limited medical records, he gave the opinion that Elmendorf does not possess the capacity to adequately handle his financial affairs and has not been able to do so for many years. Elmendorf has about a third or fourth grade level of functioning. Dr. Khoury's diagnostic criteria included a finding that Elmendorf lacked "executive capacity, " which is a feature of dementia identified in the American Psychiatric Association Diagnostic and Statistical Manual of Mental Disorders (4th ed. Text Rev. 2000), page 148 (DSM-IV) (dementia includes development of multiple cognitive deficits or disturbances, such as "executive functioning, " which affects planning or decision-making). Dr. Khoury's report concluded that Elmendorf "lives a very marginal life and he also has very limited understanding of his medical condition. It is my recommendation, somewhat akin to the present legal concerns, that he would benefit from conservatorship to adequately manage his fiscal affairs and also his medical affairs."
By stipulation, a report of a consulting psychiatrist, Dr. Matthew Carroll, was admitted, describing his review of limited records about Elmendorf's condition. The court received written closing briefs and took the matter under submission. Only Killman filed objections to the proposed statement of decision. On August 13, 2008, the statement of decision was issued, outlining the factual background of the case and ruling on each of the cross-claims. The court described the mental condition evaluation by Dr. Khoury as showing that Elmendorf was lacking in capacity to handle his affairs during the relevant time periods. Dr. Carroll's report was not deemed helpful by the court, because he was not given enough information to form an opinion.
As relevant here, the court ruled that Elmendorf's cross-complaint was timely filed and meritorious. The 1978 probate transfer of the property to Elmendorf remained intact and he remained the fee simple owner. Neither Killman, Royale, nor Landmark, owned any right, title, estate, lien, or interest in the property. Judgment was entered accordingly and Royale appeals.
As part of Elmendorf's response on appeal, he has filed a motion for sanctions, seeking over $25,000 attorney fees, plus some amount to be payable to this court for the expenses of processing this allegedly frivolous appeal. (§ 907.)
DISCUSSION
Royale claims the trial court erred in ruling that Elmendorf's cross-complaint to quiet title, etc., was not barred by the applicable limitations periods, because the court incorrectly evaluated the effect of Elmendorf's mental condition upon his capacity, over time, to handle his business affairs. Royale frames the issue on appeal as "whether an individual with limited 'executive functions, ' who can handle his own affairs, though not very skillfully, is 'insane' within the meaning of sections 328 and 352, " for the purposes of determining if that individual fits within the statutory categories of persons exempted from being held to ordinary limitations standards for bringing litigation to establish title to real property.
In pertinent part, section 352, subdivision (a) provides: "If a person entitled to bring an action... is, at the time the cause of action accrued either under the age of majority or insane, the time of the disability is not part of the time limited for the commencement of the action." (See also § 328 ["If a person entitled to commence an action for the recovery of real property..., is at the time title first... accrues either under the age of majority or insane, the time, not exceeding 20 years, during which the disability continues is not deemed any portion of the time in this chapter limited for the commencement of the action..., but the action may be commenced..., within the period of five years after the disability shall cease...."].) There has never been any contention in this case that Elmendorf's disabilities will cease.
In Pearl, supra, 177 Cal. 303, 306-307, the Supreme Court addressed such tolling issues in the related context of a late-filed action for breach of trust. The high court determined in that context that a nonstatutory trial court finding that a property owner was "of unsound mind, " demonstrably leading to his inability to care for his property, transact business, or understand the nature or effects of his acts, "was equivalent to a finding in express terms that [he] was insane within the meaning of the statute of limitations [§ 352; citations].... The statute did not run against him during the period of his incapacity." (Pearl, supra, 177 Cal. 303, 306-307; italics added.)
Royale acknowledges this authority, and admits that Elmendorf is and has been largely alienated from mainstream society and its economy. However, Royale continues to contend that the totality of the evidence showed that in some respects, during the relevant time periods, Elmendorf took care of his ordinary daily needs and attended to some financial affairs, and therefore he must fall short of statutory insanity in this context.
Our analysis of those arguments and distinctions requires examination of the statutory language and definitions in light of legislative purposes and equitable principles, as applied to this factual context, including the procedural posture of the case (Royale's affirmative defense of limitations). We next set forth our standards of review, deal with the sanctions request, and then turn to the substantive issues presented.
I
RULES OF REVIEW; SPECIAL PROBLEMS RE: INSANITY ISSUES
Basic rules of review for judgments following statements of decision are well established. "Where [a] statement of decision sets forth the factual and legal basis for the decision, any conflict in the evidence or reasonable inferences to be drawn from the facts will be resolved in support of the determination of the trial court decision." (In re Marriage of Hoffmeister (1987) 191 Cal.App.3d 351, 358.) Royale did not file objections to the proposed statement of decision. Appropriate implied findings may therefore support the trial court's evaluation of the factual matters put forth in the parties' respective showings, through testimony and documentary exhibits. (In re Marriage of Arceneuax (1990) 51 Cal.3d 1130, 1133-1134.)
We examine factual findings by the trial court under a substantial evidence approach, requiring in support of a judgment "evidence of 'ponderable legal significance, ... reasonable in nature, credible, and of solid value.' " (Bowers v. Bernards (1984) 150 Cal.App.3d 870, 873, italics omitted.) We look at the entire record on appeal rather than simply considering the evidence cited by a party. (Ibid.) "While substantial evidence may consist of inferences, such inferences must be 'a product of logic and reason' and 'must rest on the evidence' [citation]; inferences that are the result of mere speculation or conjecture cannot support a finding [citations]." (Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627, 1633.)
Normally, statute of limitations issues are treated as presenting questions of fact, although if "uncontradicted facts established through discovery are susceptible of only one legitimate inference, " judgment as a matter of law can be ordered. (Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1112.) Where, as here, the outcome of an appeal turns upon the meaning of statutory phrases, such as whether the subject actions qualified under particular statutory standards, the factual record should be analyzed for conflicting evidence; only if none of the facts is disputed can the matter be decided as a pure issue of law. (Harustak v. Wilkins (2000) 84 Cal.App.4th 208, 213 (Harustak).)
Here, all the relevant factual matters were presented in the context of defining and applying certain statutory criteria that had to be satisfied, regarding the "insanity" or overall degree of disability that Elmendorf showed over time, and whether it should excuse him from responsibility for attending to his affairs, for limitations purposes regarding Royale's affirmative defense of limitations. (§§ 352, 328.) From 1958 on, Elmendorf handled the business of living his lifestyle without any imposition of a formal conservatorship or confinement, but circumstantial evidence and direct testimony also showed he consistently displayed to his uncle, neighbors, attorneys, and his banker many social and mental deficiencies in handling numerous problems that arose concerning his property. (1 Witkin, Cal. Evidence (4th ed. 2000) Circumstantial Evidence, § 125, pp. 475-476.) Accordingly, this record presents mixed questions of law and fact about whether Elmendorf's cross-complaint should be deemed untimely.
In such a case, we turn to the guidance in Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 800-801 (Ghirardo), for deciding a mixed factual and legal question: " 'The first step is the establishment of basic, primary or historical facts. The second is the selection of the applicable law. The third is the application of law to the facts.' " Regarding the third step, " ' "the key to the resolution of this question is the nature of the inquiry that is required to decide 'whether the rule of law as applied to the established facts is or is not violated." ' " (Ibid.)
The rule of law to be applied, as referenced in Ghirardo, supra, 8 Cal.4th 791, and stated in sections 352 and 328, requires interpretation of the loaded term "insane." Questions of sanity arise in numerous procedural contexts, requiring evaluation of individual capacity to make a will or trust, competency to testify, criminal defense, and many more. (1 Witkin, Cal. Evidence, supra, Burden of Proof and Presumptions, § 16, pp. 169-170; § 27, pp. 177-178; § 30, pp. 180-181; Kyle v. Green Acres at Verona, Inc. (1965) 207 A.2d 513, 520-521.) Issues of competency arise when probate conservatorships or LPS conservatorships are being considered. (3 Witkin, Cal. Procedure, supra, Actions, § 701, pp. 920-921 ["Commitment of a person under the Lanterman-Petris-Short Act [citation; [Welf. & Inst. Code § 5150] et seq.] is not a conclusive judicial determination of insanity. The purpose of this proceeding is not to determine whether a person is incapable of handling property or business, but only whether the person needs care and remedial aid."].)
The common thread of these various legal inquiries is whether the individual whose sanity is questioned should be held to the standards of an everyday citizen, for purposes of handling any problems that his or her demonstrated lack of competency has arguably generated. In Ghirardo, supra, 8 Cal.4th 791, 800-801, two options for the "nature" of such an inquiry are offered, of which we think the first is most appropriate: " ' " '[1] If application of the rule of law to the facts requires an inquiry that is "essentially factual, " [citation]--one that is founded "on the application of the fact-finding tribunal's experience with the mainsprings of human conduct, " [citation]--the concerns of judicial administration will favor the [trial] court, and the [trial] court's determination should be classified as one of fact reviewable under the clearly erroneous standard. [2] If, on the other hand, the question requires us to consider legal concepts in the mix of fact and law and to exercise judgment about the values that animate legal principles, then the concerns of judicial administration will favor the appellate court, and the question should be classified as one of law and reviewed de novo.' " ' " (Ibid.; italics added.)
We think nothing could be more central to "the mainsprings of human conduct" than the kinds of questions that arise during a factual inquiry into sanity (the soundness or unsoundness of mind of an individual during the relevant time periods), for purposes of holding him responsible for protecting his own interests, such as seeking legal resolution of conflicts that arise about those interests. (Ghirardo, supra, 8 Cal.4th at pp. 799-801; Pearl, supra, 177 Cal. 303, 306-307.) We therefore must look to whether the trial court's determinations about the factual bases for applying the limitations rules were "clearly erroneous." (Ghirardo, supra, at pp. 800-801.)
II
MOTION FOR SANCTIONS
In connection with the substantive arguments on appeal, Elmendorf contends that Royale's statements of the facts and record in this appeal are so deficient that its arguments based on them should be deemed waived, or the appeal frivolous. (See, e.g., Doe v. Roman Catholic Archbishop (2009) 177 Cal.App.4th 209, 218; Nwosu v. Uba (2004) 122 Cal.App.4th 1229, 1245-1247.) The appellate courts may impose sanctions for a party's failure to set forth a complete and accurate statement of facts. (Cal. Rules of Court, rule 8.204(a)(2)(A); Singh v. Board of Retirement (1996) 41 Cal.App.4th 1180, 1182, fn. 1.)
We agree that Royale's briefs make a selective, incomplete presentation of the evidence in the record, while seeking to excuse that defect by claiming all of the "consistent" evidence about Elmendorf's level of mental functioning cannot, as a matter of law, amount to statutory insanity. Royale thus argues this is an appropriate case for de novo statutory interpretation. As outlined above, Elmendorf's request for review of mixed questions of law and fact, with an emphasis on fact, is clearly the better approach. (Ghirardo, supra, 8 Cal.4th at pp. 799-801.)
Although Royale's briefing is somewhat problematic, and made no serious effort to comply with the rules of court, we will deem it sufficient to present the merits of the issues, which do not appear to us to be excessively simple in nature. The California statutes giving rise to this definitional issue date back to the 1800's, and the equitable theories that may excuse disabled persons from legal obligations go back even further. In the language of the respondent's brief, sections 352 and 328 refer "to a person incapable of caring for his or her property by a word of another age: 'insane.' " An example of such early analysis is found in Crowther v. Rowlandson (1865) 27 Cal. 376, 381: "Loss of understanding would be proof of an imbecile rather than of an insane or disordered mind. Fatuity is one thing, and madness is another; and... the fact [is] that the distinction between the two has been overlooked. To establish the insanity alleged, it was sufficient for the plaintiff to prove that at the time he delivered the instruments referred to, he was incapacitated from a rational care of his property by reason of mental delusion."
Substantively, Royale is laboring to address imprecise terminology from the 1800's, in the era of the DSM-IV and DSM-V. In opposition to the motion for sanctions, Royale points to an application for attorney fees in the trial court, in which Elmendorf's attorneys acknowledged that these are complex legal issues about the definitions of sanity that were resolved only with difficulty at trial. Likewise, in an application for approval of an attorney fee agreement originally brought in this court (but deferred to the trial court), Elmendorf's attorneys referred at length to the novelty and complexity of the legal questions presented.
The better course of action on the sanctions motion is to exercise our discretion to assess the record and reach the merits of the various claims, even without meaningful assistance from Royale. The appeal is not entirely frivolous under the applicable objective test, nor has any persuasive suggestion of subjective frivolity been made. (In re Marriage of Flaherty, supra, 31 Cal.3d 637, 649-651.)
III
ANALYSIS
A. Basic Principles; Issues Presented
"Statutes of limitation are designed to promote justice by preventing surprises through the revival of claims that have been allowed to slumber until evidence has been lost, memories have faded, and witnesses have disappeared." (Parker v. Walker (1992) 5 Cal.App.4th 1173, 1188-1189.) The statute of limitations is not a disfavored defense, where it is used to promote appropriate policy considerations. (Hsu v. Mt. Zion Hospital (1968) 259 Cal.App.2d 562, 576 (Hsu).) Both legal and equitable actions are subject to statutes of limitations. (3 Witkin, Cal. Procedure, supra, Actions, § 446, pp. 568-569.) Elmendorf pled equitable theories in his cross-complaint (quiet title, declaratory relief, and cancellation of instruments). Equitable actions are subject to the doctrine of laches, a related concept in limitations analysis (e.g., whether a plaintiff has excusably delayed in bringing an action). (Ibid.)
Statutory tolling provisions such as sections 352 and 328 likewise represent policy determinations that some plaintiffs in property matters, who suffer from mental conditions rendering them " 'incapable of caring for [their] property or transacting business or understanding the nature or effects of [their] acts..., ' " must be protected from the adverse consequences of their inattention. (Feeley v. Southern Pacific Transportation Co. (1991) 234 Cal.App.3d 949, 952 [statute tolled while plaintiff was in coma]; Wade v. Busby (1944) 66 Cal.App.2d 700, 702-703 [amendment of pleadings allowed where it was problematical whether a transferor was allegedly insane or incompetent, for purposes of tolling section 352, relying on Crowther v. Rowlandson, supra, 27 Cal. 376, 384].)
With those policy considerations in mind, we next identify the issues that do not assist us in resolving the adequacy of this record, regarding the trial court's findings that Elmendorf qualified under the statutory criteria of sections 352 or 328 to have his cross-complaint pursued, despite a limitations defense. First, it makes no difference that the 1998 deed may be deemed either void or voidable, for purposes of choosing the applicable statute of limitations. Through its affirmative defense, Royale seeks to have applied a three-year limitations period to the filing of the cross-complaint. He contends that even if the 1998 deed to Grossman had been fraudulently created, Elmendorf could have discovered its existence, in the exercise of reasonable care. (§ 338, subd. (d) [a fraud cause of action is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake].) Alternatively, Royale would rely on the four-year statute found in section 343, as an action "for relief not hereinbefore provided for."
However, if the evidence showed that before and after 1998, Elmendorf at all relevant times lacked the kind of competent mental condition referenced in sections 352 and 328, Elmendorf is entitled to the suspension of the relevant statute of limitations, whichever it may be. (See Robertson v. Superior Court (2001) 90 Cal.App.4th 1319, 1327-1328 [the court undertook to clarify the effect of various limitations sections applicable to actions seeking to vindicate a right to possession or title to real property, including section 318 et seq., and allowing exceptions for a claimant or person in the chain of title who, due to minority or insanity, may be entitled to a tolling period not to exceed 20 years; citing, e.g., Zakaessian v. Zakaessian (1945) 70 Cal.App.2d 721, 725].)
In our case, the trial court ruled the fraudulent or void 1998 deed was essentially not discovered by Elmendorf until 2007, when the adverse possession action was filed by Killman, serving to bring the state of title to the subject property to Elmendorf's attention and that of his guardian ad litem. Thus, Elmendorf's cause of action to set aside the deed accrued at that time. It is not a material issue whether the deed was actually signed by Elmendorf, under misrepresentations about what it was, or whether it was a forgery. (§§ 338-340, 343.) For purposes of applying the statutory exemptions created by sections 352 and 328 to the running of the limitations period, we need not make any separate analyses on whether the deed was void or voidable.
Further, it makes no difference to the limitations question whether the 1998 deed is attacked under real property theories or contract theories. Both of these bodies of law contain the same historic allowances for the suspension or tolling of applicable limitations periods, when a party that has a cause of action to assert certain rights suffers from a substantial enough mental impairment. (See 1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 55, pp. 100-101 [Civ. Code 39, subd. (a) allows rescission of a conveyance or other contract of a person of unsound mind, but not entirely without understanding, made before the incapacity of the person has been judicially determined; "[t]he test of this unsoundness is whether the party was mentally competent to deal with the subject involved with a full understanding of his or her rights, and whether the party understood the nature, purpose, and effect of the contract."].)
B. Burden of Proof and Application
"There is a rebuttable presumption affecting the burden of proof that a person is of unsound mind if the person is substantially unable to manage his or her own financial resources or resist fraud or undue influence, and substantial inability may not be proved solely by isolated incidents of negligence or improvidence. [Citation.]" (1 Witkin, Summary of Cal. Law, supra, Contracts, § 55, p. 100; italics added.) In both contract matters and cases concerning the possession of real property, a determination of the mental soundness of an involved party necessarily comes down to substantiality of the showing, or a matter of degree.
Here, the sufficiency of the evidence in the record can be viewed from two perspectives: (a) whether Elmendorf carried his burden of showing statutory insanity at the relevant times, justifying the 2008 filing of this cross-complaint, or (b) whether Royale adequately proved the applicability of its affirmative defense of limitations barring the cross-complaint, due to Elmendorf's arguable ability to be aware of his rights regarding the 1998 deed from which Royale claims its 2007 interest in the property.
With respect to Elmendorf's burden of showing his cross-complaint was not untimely, Evidence Code section 522 would normally require that "the burden of proof of insanity rests on the party alleging insanity. [Citations.]" (1 Witkin, Summary of Cal. Law, supra, Contracts, § 52, p. 97.) Here, Royale bears the burden of showing Elmendorf's sanity, for limitations purposes. When the statute of limitations is asserted as an affirmative defense, the burden of proving that the action is barred rests upon the defendant. (See 5 Witkin, Cal. Procedure, supra, Pleadings, § 1081, pp. 514-515; Colonial Insurance Co. v. Industrial Accident Commission (1945) 27 Cal.2d 437, 440.) This approach is consistent with normal rules of evidence. "When the plaintiff must plead certain matters as part of his or her cause of action these need only be denied by the defendant; other defenses must be raised affirmatively. Just as logically the rules of evidence should be considered. Those matters on which the defendant has the burden of proof should be pleaded affirmatively." (5 Witkin, Cal. Procedure, supra, Pleadings, § 1081, pp. 514-515.)
We find additional guidance about the sufficiency of Elmendorf's showing about his mental state in the cases that have addressed sanity issues in different factual contexts. In Pearl, supra, 177 Cal. 303, adequate proof was brought forward to justify suspension of the limitations period that would otherwise apply in a claim of breach of trust, when it was shown that the subject deed of trust property made out to the trustee defendant was executed at a time when the decedent transferor was " 'weak and ill in body and mind, and incapable of caring for his property, or transacting business, or understanding the nature or effects of his acts.' " (Id. at p. 305.) Those circumstances supported a judgment that a breach of trust had taken place, and that the action for breach of trust was not time-barred, because the limitations period did not begin to run until the trust was repudiated (when the property was sold by the defendant). (Id. at pp. 305-306.)
In Pearl, the Supreme Court applied tolling doctrines, even though the language of the statute had not been formally invoked: "It is true that the complaint and findings use the language hereinbefore stated and do not use the words 'unsound' or 'insane, ' but the finding that he was incapable of caring for his property or transacting business or understanding the nature or effects of his acts was equivalent to a finding in express terms that the deceased was insane within the meaning of the statute of limitations [§ 352; citations]. The statute did not run against him during the period of his incapacity." (Pearl, supra, 177 Cal. 303, 306-307; see Alcott Rehabilitation Hospital v. Superior Court (2001) 93 Cal.App.4th 94, 101, adopting Pearl analysis ["352 is a tolling provision.... [¶] For purposes of Code of Civil Procedure section 352, a plaintiff is 'insane' if 'incapable of caring for his [or her] property or transacting business or understanding the nature or effects of his [or her] acts.' "].)
In Hsu, supra, 259 Cal.App.2d 562, 572, the question presented was whether a plaintiff (Mrs. Hsu) could assert insanity to avoid the bar of a statute of limitations, based upon her attributing of her ongoing mental disability to the alleged assault and battery on which she sued, leading to her treatment in a mental hospital. All of her allegations arose from her husband's treatment at the defendants' hospital, about three years before she filed her action, when she and her husband had an altercation with the staff and he was removed and transferred elsewhere. During portions of the three-year period after the altercation and after she was discharged from the mental hospital, she was able to manage an apartment building and take care of her two children without assistance, which suggested she could have taken appropriate legal action to file a complaint to protect her rights earlier. The jury found she had been capable of understanding the nature of her acts and was not excused from taking timely earlier action. The court noted that her hospitalization alone did not amount to evidence of contractual incompetence. (Id. at p. 574; see 3 Witkin, Cal. Procedure, supra, Actions, § 698, pp. 918-919.) Apparently, the degree of her impairment that was proven did not support complete tolling of the limitations period.
The evidence in our case proved to the satisfaction of the trial court that under all the relevant circumstances, Elmendorf was substantially unable to comply with normal limitations rules. In view of the purposes of these specific statutory protections, the trial court correctly concluded that Elmendorf's 10-year delay in filing suit, after the 1998 deed was fraudulently created, should reasonably be characterized as an understandably diligent pursuit of his claim. This delay stopped only when he was appointed a guardian ad litem, in connection with the fortuitous circumstance that Killman was separately attacking his property rights.
Although it is not disputed that Elmendorf was able to live, somewhat marginally, in society, without confinement or conservatorship, numerous additional factors support the trial court's conclusion that these statutory limitations periods for acting upon the 1998 deed must be suspended or tolled under these circumstances, because of the degree of his impairment shown. These statutory criteria of inability to manage his affairs were adequately demonstrated in the manner of his financial dealings with (1) his mother's estate (leading to a preliminary conservatorship request and being sued by his uncle, with the use of an elisor), (2) the attorneys that he belatedly consulted to assist with his father's estate (leading to their lawsuit against him for unpaid fees), (3) his governmental disability entitlement (leading to his failure to collect monies for at least seven years), (4) his dealings with his banker (in which he requested cash occasionally but was unavailable for meaningful decisionmaking about investments or stopping the escheatment process).
All of the above factors, and more, combined to create mixed questions of law and fact that were properly resolved in the ruling that Elmendorf was mentally incapacitated to the point of being unable to care for his own property and financial affairs, within the meaning of sections 352 and 328. (Pearl, supra, 177 Cal. 303, 306-307; Harustak, supra, 84 Cal.App.4th 208, 212.) The trial court's determinations about the factual bases for applying the limitations rules were not "clearly erroneous." (Ghirardo, supra, 8 Cal.4th 791, 800-801.) Rather, the court correctly concluded that Royale's asserted limitations bar against Elmendorf's cross-complaint could not be enforced under these circumstances.
DISPOSITION
Affirmed; motion for sanctions denied. Costs are awarded to Elmendorf.
WE CONCUR: BENKE, Acting P.J., McINTYRE, J.