Opinion
NOT TO BE PUBLISHED
Super. Ct. No. TCV1039.
BLEASE, Acting P. J.
Plaintiff Brian Smith appeals from an order granting summary judgment and directing entry of summary judgment in favor of defendant Steve Dunham. Smith’s complaint sought damages for breach of contract, dissolution of the parties’ alleged joint venture agreement, and declaratory relief. The trial court entered summary judgment in favor of Dunham upon a finding that plaintiff’s claims were barred by the statute of limitations. Plaintiff argues there were triable issues of fact as to when he actually discovered that Dunham would not honor the parties’ alleged agreement.
We shall conclude that the statute of limitations began to run when Smith became aware of facts that would make a reasonably prudent person suspicious. Smith’s testimony that at least as early as 2002 he “knew” that Dunham was using money earned as a result of the alleged joint venture on another project is susceptible of only one legitimate inference--that he knew or should have known of the breach at that time. Since his complaint was not filed until July 2005, the two-year statute of limitations had expired. We shall affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
Smith’s complaint was filed on July 27, 2005, and alleged that Pat Bagan gave Smith and Dunham a boat named The SS Tahoe in 1998, and that Smith and Dunham entered into an oral agreement to joint venture the restoration of the Tahoe and use it on Lake Tahoe for tours and other purposes. Smith alleged the agreement was that Dunham would finance the majority of the restoration work and that Smith would oversee the restoration and contribute labor and finances when available. Smith further alleged that Dunham profited from the use of the Tahoe from 2000 to the date of the complaint. The complaint alleged Dunham breached the agreement in January 2004 when he informed Smith there was no oral contract, and they had no agreement.
Dunham filed a motion for summary judgment on the grounds Smith had insufficient evidence of an oral joint venture agreement, and the claims were barred by the two year statute of limitations. (Code Civ. Proc., § 339, subds. 1 & 3.) Dunham adduced the following pertinent facts. The bill of sale and the certificate of documentation from the United States Coast Guard both showed Dunham as the sole owner of the Tahoe. When the restoration work began, Smith was Dunham’s employee. Dunham paid at least six people, including Smith, to restore the boat.
The restoration work on the Tahoe was completed in July 1999. The Tahoe booked a few cruises in the summer of 1999, but Smith did not ask for his share of any monies earned from the boat because he was not worried about it until the boat had paid for itself. It took two years, until 2001, for the boat to pay for itself, and at that point Smith started to worry about his “cut.” He confronted Dunham sometime in 2001 or 2002. After confronting Dunham, Smith continued to work for Dunham, and received a wage as an employee.
During the summer of 2002, Smith believed the Tahoe was making money. However, Smith did not ask Dunham where the money was going. At his deposition, Smith gave the following explanation for his silence.
“Q: But during that summer of 2002, the Tahoe was operating, booking cruises and, according to your mind, making some money; is that correct?
“[Smith]: Yes.
“Q: During that summer, did you ask [Dunham] where the money was going?
“A: I don’t believe we brought that up.
“Q: Why didn’t that come up?
“ . . . . . . . . . . . .
“[Smith]: Because I knew where moneys were going. . . . [Dunham] had a lot of bills doing the Safari Rose project.
The Safari Rose was a boat Dunham purchased and restored in Seattle, and later brought to Lake Tahoe.
“Q: Now, you weren’t a partner with [Dunham] in the Safari Rose, were you?
“A: No.
“Q: Didn’t it occur to you that if [Dunham] is using your profits from the Tahoe on the -- the Safari Rose project that something ain’t right?
“A: Yes.
“Q: Did you mention that to [Dunham]?
“A: In January, I did.
“Q: In January of 2004?
“A: Yes.”
The trial court granted summary judgment in Dunham’s favor on the statute of limitations. The court stated, “it is not disputed that plaintiff believed in 2001 that defendant would not honor the alleged agreement to share ownership and profits from the boat. . . . More importantly, it is not disputed plaintiff knew as early as Summer 2002 that defendant was diverting profits from the joint venture to another boat restoration project in which plaintiff had no interest. . . . [¶] Thus, although plaintiff had actual knowledge of all of the elements of a cause of action for breach of contract as early as the summer of 2002, he failed to commence this action in timely fashion. Plaintiff’s complaint was filed in July 2005, more than two years from the date his cause of action against defendant for breach of contract accrued.”
DISCUSSION
Smith argues that there were triable issues of fact as to when he discovered his causes of action. We disagree.
A cause of action for breach of an oral agreement is governed by Code of Civil Procedure section 339. That section provides that an action for breach of an oral obligation must be commenced within two years of accrual. The related cause of action for declaratory relief is governed by the same statute of limitations. (Leahey v. Department of Water and Power of City of Los Angeles (1946) 76 Cal.App.2d 281, 286.)
References to an unnamed section are to the Code of Civil Procedure.
Ordinarily, a cause of action accrues upon the occurrence of the last element essential to the cause of action. (April Enterprises, Inc. v. KTTV (1983) 147 Cal.App.3d 805, 826.) However, in cases where it would be manifestly unjust to deprive a plaintiff of a cause of action before he is aware he has been injured, the delayed discovery rule applies. (Ibid.) This means the statute of limitations begins to run not upon injury, but when the plaintiff either actually discovers his injury, or could have discovered his injury through the exercise of reasonable diligence. (Ibid.)
Smith claims the trial court failed to recognize the fiduciary relationship between Smith and Dunham. This is incorrect. The effect of the fiduciary relationship on the statute of limitations is to make the statute run from the date of discovery, rather than the date of injury. (April Enterprises, Inc. v. KTTV, supra, 147 Cal.App.3d at p. 827.) The trial court recognized this when it found that Smith believed in 2001 that Dunham was not honoring the joint venture agreement, and knew in the summer of 2002 that Dunham was diverting profits from the joint venture to another project.
Smith argues the evidence does not show he “knew” that Dunham was diverting profits, only that he was using money from his business on the Safari Rose. He argues both that his suspicion, as opposed to his actual knowledge, was not enough to trigger the running of the statute, and that his deposition statement indicated only that he thought Dunham was using his business profits, as opposed to profits from the Tahoe, to pay expenses for the Safari Rose. We are not convinced by either argument.
Smith’s statement that he “knew” the money was going to the Safari Rose project was in response to the question why, if he knew the Tahoe was making money, he did not ask Dunham where the money was going. There were no outstanding questions about money from Dunham’s business being spent on the Safari Rose. The only reasonable inference to be drawn from Smith’s answer to the question was that he knew all the money earned from the Tahoe was being spent on the Safari Rose.
As to Smith’s argument that his suspicion did not ripen into actual knowledge until some later date, a plaintiff has a duty to investigate when he has knowledge of facts sufficient to arouse reasonable suspicion, even where a fiduciary relationship exists. (Electronic Equipment Express, Inc. v. Donald H. Seiler & Co. (1981) 122 Cal.App.3d 834, 855.) A plaintiff has a duty to investigate once he becomes aware of facts that would make a reasonably prudent person suspicious. (Bedolla v. Logan & Frazer (1975) 52 Cal.App.3d 118, 131.) Once a plaintiff has a suspicion of wrongdoing, he must go find the facts, and cannot wait for the facts to find him. (Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1110.)
Citing Eisenbaum v. Western Energy Resources, Inc. (1990) 218 Cal.App.3d 314, 324, and Hobart v. Hobart Estate Co. (1945) 26 Cal.2d 412, 438, Smith claims he had no duty to discover a breach by a fiduciary. This is incorrect. Even where a fiduciary relationship exists, there is a duty to inquire where the plaintiff is aware of facts that would make a reasonably prudent person suspicious. (Hobart v. Hobart Estate Co., supra, at p. 438; Miller v. Bechtel Corp. (1983) 33 Cal.3d 868, 874-875.)
Smith stated he was worried about his “cut” in 2001, and “knew” in 2002 that money from the operation of the Tahoe was going to pay bills on the Safari Rose project. These facts are susceptible of only one legitimate inference--that Smith either discovered or should have discovered the alleged breach no later than the summer of 2002. Because he did not file his complaint until July 2005, the two year statute of limitations had expired, and summary judgment was proper. (Jolly v. Eli Lilly & Co., supra, 44 Cal.3d at p. 1112.)
The second major heading of Smith’s brief purports to argue that the two year statute of limitations pursuant to section 339 is inapplicable. However, the substance of the argument merely repeats the themes that the fiduciary relationship between the parties compels the application of the delayed discovery rule, that there was no evidence of actual knowledge of the breach, and that Smith had no duty of inquiry. Moreover, Smith did not argue below that any other statute of limitations applied, and admitted at oral argument that the two year statute was applicable. We thus do not consider whether some other unnamed statute of limitations is applicable.
DISPOSITION
The judgment is affirmed.
We concur: BUTZ, J., CANTIL-SAKAUYE, J.