Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
San Francisco County Super. Ct. No. 440240
Sepulveda, J.
Appellant Virginia Smith (Smith) challenges the grant of summary judgment in favor of respondents Edwin D. Hatter (her former accountant) and Hatter & Co., CPA. She claims that the trial court erred in denying her request to dismiss three causes of action without prejudice, and that it also erred in granting summary judgment as to the remaining cause of action (for breach of fiduciary duty). We conclude that the trial court erred in denying appellant’s request to dismiss three causes of action without prejudice; however, summary judgment was appropriate as to appellant’s breach of fiduciary duty claim. We therefore reverse in part and affirm in part.
I. Factual and Procedural Background
In the early 1990s, respondent Edwin Hatter began preparing tax returns for appellant and her husband Craig Smith, who died in 1996. At the time of her husband’s death, Smith had no significant financial or business experience, and she therefore relied on professionals for financial advice. According to Smith, Hatter became her “primary financial adviser” in September 2000.
Respondents argue in their brief to this court that Hatter was not, in fact, Smith’s “financial adviser,” as she stated in her declaration to the trial court. However, their reply papers in support of summary judgment do not appear in the clerk’s transcript on appeal, so we do not know how (or whether) they responded to this factual assertion in the trial court. We are informed by the trial court’s clerk that the reply papers are missing from the court’s file, and that appellant’s counsel was notified of that fact during the preparation of the clerk’s transcript.
In their briefs to this court, the parties present sharply contrasting versions of the nature of the parties’ relationship and the scope of Hatter’s services to Smith. They agree, however, that their dispute centers on a May 2001 stock repurchase agreement in which Smith sold shares in a trailer park (Continental Parks) in order to raise money to purchase a home in the Pleasanton area. According to Smith, she told Hatter in May 2001 that she needed $150,000 to close escrow on the home. He told her that she could sell shares of Continental Parks to raise the money. Hatter also told Smith that she was “required” to sell additional shares in order to raise $50,000 to settle a 1994 dispute between her late husband and Joyce Bickel (who apparently was the president of Continental Parks).
Hatter drafted a May 2001 stock repurchase agreement with terms that Smith claimed were substantially detrimental to her interests and substantially beneficial to Bickel and Continental Parks, including the following: 1) that she would no longer be an officer or director of the corporation, 2) that she would no longer receive a monthly $2,000 director’s fee, and 3) that she would lose her rights to vote her remaining shares by giving Bickel her proxy to vote the shares. Smith claims that Hatter never explained these supposedly detrimental effects of the stock transaction; however, they were all disclosed in the stock repurchase agreement, which Smith signed. She also claims that Hatter did not explain to her that she would lose her status as the majority shareholder of Continental Parks. Although the May 2001 stock repurchase agreement stated how many shares Smith was selling, it did not specifically state that she would no longer be the majority shareholder. Smith does not identify the presumably negative “consequences and ramifications of her no longer being the majority shareholder,” other than the effects identified above.
Smith claimed in her declaration to the trial court that Hatter did not inform her that Continental Parks had more than $783,000 in available cash that could be “potentially” used for shareholder dividend payments, a possible alternative to selling Smith’s shares in the company. She also claims that Hatter was acting on behalf of Bickel and the corporation when he drafted the May 2001 stock repurchase agreement, which constituted a conflict of interest.
Apparently because Smith was in desperate financial need, she ultimately sold additional shares in Continental Parks through subsequent stock repurchase agreements drafted by Hatter and dated August 6, 2001, March 15, 2002, and December 19, 2002.
Hatter resigned in April 2003 as trustee of Smith’s trust and as her accountant and tax preparer “[d]o [sic] to financial decisions that we disagree upon.”
Smith filed a complaint in April 2005, alleging causes of action for breach of fiduciary duty, professional negligence, breach of contract, and constructive fraud. As for her breach of fiduciary duty claim, Smith alleged that she had a fiduciary relationship with Hatter, that respondents breached their fiduciary duties by acting below the standard of care with respect to their services to Smith, and that Smith reasonably relied on respondents’ advice without knowledge of its negligent character. During Smith’s deposition, she clarified that she believed that Hatter had a conflict of interest by representing both her and Bickel when he prepared stock transaction agreements regarding Continental Parks, and that she was “taken very great advantage of” in the transactions, because it was ultimately unnecessary to sell her shares.
According to the register of actions, respondents filed a cross-complaint on September 19, 2005; however, the cross-complaint (which apparently was for breach of oral contract) does not appear in the record on appeal. Following a court trial on March 6, 2006, the trial court awarded respondents $9,724 on the cross-complaint. The final judgment refers to the award on the cross-complaint, and appellant’s notice of appeal purports to appeal from a “judgment after court trial.” Although appellant refers to the court trial in her opening brief, she does not challenge the judgment against her on the cross-complaint.
Citing Planned Parenthood v. City of Santa Maria (1993) 16 Cal.App.4th 685, respondents argue that evidence presented by Smith did not “supersede” her pleadings. In Planned Parenthood, a women’s health care organization filed a complaint for declaratory and injunctive relief, to enjoin defendant city from imposing an anti-abortion restriction on an award of a block grant to the organization to build a clinic. (Id. at p. 689.) The trial court granted summary judgment in favor of the organization, but the organization claimed that the trial court erred by not ordering the city to “ ‘turn over’ ” the grant money. (Id. at p. 690.) The appellate court disagreed, noting that this relief had not been sought in the original complaint. (Id. at pp. 690-691.) Here, by contrast, Smith never expanded the relief she sought; she merely provided evidence that supported her breach of fiduciary duty cause of action. And although we agree with the general proposition that “the pleadings always define the issues” for purposes of summary judgment motions (Hejmadi v. AMFAC, Inc. (1988) 202 Cal.App.3d 525, 536), Smith was obviously permitted to present evidence to support a cause of action in her complaint, assuming the pleading was not defective. (There is nothing in the record to suggest that respondents challenged Smith’s complaint at the pleading stage.)
Respondents filed a motion for summary judgment on November 21, 2005, and the motion was set for a hearing on February 3, 2006. Respondents argued, among other things, that because the “gravamen” of appellant’s complaint was for professional negligence, for which there is a two-year statute of limitations, appellant’s entire complaint was time-barred. On January 19, 2006, appellant requested dismissal without prejudice of her causes of action for professional negligence, breach of contract, and constructive fraud. She filed her opposition to the motion for summary judgment the next day, arguing that the statute of limitations for her remaining cause of action for breach of fiduciary duty was four years, and that the claim was timely.
Respondents apparently opposed the dismissal in their reply papers in support of summary judgment; however, those papers do not appear in the record on appeal. (Ante, fn. 1.)
The trial court granted summary judgment. The trial court rejected appellant’s attempt to dismiss three causes of action without prejudice, and ordered summary judgment as to all four causes of action in the complaint. It ruled that the gravamen of appellant’s complaint was for breach of professional negligence, and that appellant’s entire complaint was barred by the applicable two-year statute of limitations. The trial court also ruled that there was no triable issue of material fact as to whether Hatter breached any fiduciary duty, and as to whether appellant suffered damages. Appellant timely appealed from the subsequent judgment.
II. Discussion
A. Standard of Review.
In reviewing the trial court’s decision granting summary judgment, we examine the evidence de novo and “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” (Yanowitz v. L’Oreal USA, Inc. (2005) 36 Cal.4th 1028, 1037.) “[W]e determine with respect to each cause of action whether the defendant seeking summary judgment has conclusively negated a necessary element of the plaintiff’s case, or has demonstrated that under no hypothesis is there a material issue of fact that requires the process of trial, such that the defendant is entitled to judgment as a matter of law.” (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 334.)
In assessing each cause of action, we apply the same three-part analysis required of the trial court. (Knight v. Hayward Unified School Dist. (2005) 132 Cal.App.4th 121, 128.) We first identify the issues framed by the pleadings, then determine whether the moving party has established facts negating the opponent’s claim and, if the moving party has carried its burden, we conclude the analysis by determining whether the opposition has demonstrated the existence of a triable issue of material fact. (Ibid.; Code Civ. Proc., § 437c, subd. (p)(2).)
All further statutory references are to the Code of Civil Procedure.
B. Respondents Not Required to Attach Complaint to Moving Papers.
As a preliminary matter, we reject Smith’s argument that because respondents failed to attach a copy of Smith’s complaint to their motion for summary judgment, or request judicial notice of the document, the trial court’s analysis of the statute of limitations was “inherently flawed.” Smith questions whether the trial court was permitted to review the allegations of the complaint when considering the statute of limitations issue, and suggests that we may not do so on appeal. First, Smith failed to raise this issue below, and it is therefore waived. (Imperial Bank v. Pim Electric, Inc. (1995) 33 Cal.App.4th 540, 546.) Indeed, Smith’s separate statement responding to respondents’ statement of undisputed material facts acknowledged that some allegations in her complaint were undisputed. Second, there is of course no requirement that a party attach a copy of the complaint to a motion for summary judgment, or formally request judicial notice of the complaint, in order for the trial court to consider it. Section 437c, subdivision (b)(7) provides that “[a]ny incorporation by reference of matter in the court’s file shall set forth with specificity the exact matter to which reference is being made,” something respondents did when they cited to Smith’s complaint in their separate statement of undisputed material fact.
Smith’s claim that she “is unable to provide a Clerk’s Transcript reference to the Complaint” because respondents neither attached it to their complaint nor requested judicial notice of it is not well taken. She of course could have (and should have) listed her complaint in her notice designating the record on appeal, but did not do so. This court later granted respondents’ motion to augment the appellate record with a copy of the complaint, making Smith’s otherwise frivolous argument moot.
C. Smith Was Permitted to Dismiss Claims Without Prejudice.
Smith argues that the trial court erred when it denied her request to dismiss without prejudice her causes of action for professional negligence, breach of contract, and constructive fraud, and instead entered summary judgment as to those claims. Section 581, subdivision (b)(1) provides that a plaintiff may dismiss an action with or without prejudice, “upon written request of the plaintiff to the clerk, filed with papers in the case, or by oral or written request to the court at any time before the actual commencement of trial.” Subdivision (c) provides that a plaintiff may dismiss his complaint, or any cause of action asserted in it, “with or without prejudice prior to the actual commencement of trial.” Subdivision (a)(6) of the statute provides that “[a] trial shall be deemed to actually commence at the beginning of the opening statement or argument of any party or his or her counsel, or if there is no opening statement, then at the time of the administering of the oath or affirmation to the first witness, or the introduction of any evidence.” The right to voluntarily dismiss causes of action without prejudice is not absolute, and “a substantial and fairly complex body of case law has grown up involving when—and when not—a plaintiff’s statutory right to dismiss pursuant to section 581, subdivision (b)(1) is cut off by the presence of some impending ‘dispositive’ procedure.” (Franklin Capital Corp. v. Wilson (2007) 148 Cal.App.4th 187, 194 (Franklin) [plaintiff permitted to voluntarily dismiss action without prejudice before hearing on order to show cause].)
Neither party addresses the appropriate standard of review, and our independent research has revealed an apparent split in authority. (Zapanta v. Universal Care, Inc. (2003) 107 Cal.App.4th 1167, 1171 (Zapanta) [where facts surrounding request for dismissal undisputed, review is de novo]; Tire Distributors, Inc. v. Cobrae (2005) 132 Cal.App.4th 538, 544 [appropriate standard of review is abuse of discretion].) Even assuming that the standard of review is abuse of discretion, we conclude that the trial court’s order dismissing appellant’s claims with prejudice was an abuse of discretion, given the clear statutory language that Smith be permitted to dismiss her claims without prejudice.
Zapanta, supra, 107 Cal.App.4th 1167, addressed a situation similar to this one. Defendants filed a motion for summary judgment, and plaintiffs filed a request for dismissal of the entire action without prejudice the day before their opposition to the motion was due. (Id. at p. 1170.) The trial court struck the request for dismissal, and granted summary judgment as to the entire complaint. (Id. at pp. 1170-1171.) The appellate court reversed, finding that the trial court exceeded its jurisdiction by granting the motion for summary judgment. (Id. at p. 1174.) Because judgment on the summary judgment motion was not a “mere formality,” and defendants had no other preexisting entitlement to a favorable disposition, plaintiffs were entitled to dismiss the action without prejudice. (Id. at p. 1173.) Likewise here, the trial court had not yet indicated how it would rule on respondents’ summary judgment motion (and, indeed, had not yet received Smith’s opposition) before Smith attempted to dismiss three causes of action, and the trial court erred in not permitting her to do so. (Id. at pp. 1172-1173.)
Respondents claim that Zapanta, supra, 107 Cal.App.4th 1167 is an “outlier” and that the opinion “appears to have taken a significantly different position from its predecessor cases.” In fact, the recent Franklin opinion discussed the authority cited by respondent, as well as authority regarding voluntary dismissals dating back to 1902, and found that in all but one case, voluntary dismissal was ineffective only where it “could be said to have been taken [¶] —(a) in the light of a public and formal indication by the trial court of the legal merits of the case, or [¶] —(b) in the light of some procedural dereliction by the dismissing plaintiff that made dismissal otherwise inevitable.” (Franklin, supra, 148 Cal.App.4th at pp. 194-205, original italics.) We agree that this so-called “mere formality” test “readily harmonizes” Zapanta with the authority cited by respondents. (Franklin, supra, at p. 200; see also Groth Bros. Oldsmobile, Inc. v. Gallagher (2002) 97 Cal.App.4th 60, 73 [plaintiff not permitted to dismiss action without prejudice after tentative ruling against it on demurrer, where no opposition had been filed]; Mary Morgan, Inc. v. Melzark (1996) 49 Cal.App.4th 765, 768-769 [plaintiff not permitted to dismiss action without prejudice after adverse tentative summary judgment ruling announced and hearing is continued for purpose of allowing plaintiff to produce opposition evidence].)
Citing Hartbrodt v. Burke (1996) 42 Cal.App.4th 168, respondents characterize appellant’s attempt to dismiss her claims as improper “gamesmanship,” because she was trying to change the “gravamen” of her lawsuit for determining the statute of limitations. According to respondents, because Smith acknowledges that the three causes of action she attempted to dismiss were time-barred, she dismissed those claims in order to change the focus of her lawsuit to be solely on her allegations of breach of fiduciary duty (which respondents apparently do not dispute is otherwise governed by a longer statute of limitations). Even assuming this was Smith’s intention, dismissing three causes of action did not, in fact, alter the gravamen of her complaint. (See § II.D., post.)
Moreover, we disagree with respondents to the extent that they argue we should solely consider any “gamesmanship” by Smith. In Hartbrodt v. Burke, plaintiff attempted to dismiss his action without prejudice right before a hearing on defendants’ motion for terminating sanctions because of plaintiff’s failure to comply with discovery orders. (Hartbrodt v. Burke, supra, 42 Cal.App.4th at pp. 171-172.) The court held that the trial court properly rejected the dismissal request, because such a “tactic would simply defeat the trial court’s power to enforce its discovery orders.” (Id. at p. 175.) The Franklin court recently noted that Hartbrodt is the one case that did not follow the “mere formality rule,” as there was no indication from the court in Hartbrodt how it intended to rule on defendants’ motion for terminating sanctions when plaintiff attempted to dismiss the action. (Franklin, supra, 148 Cal.App.4th at p. 205, citing Hartbrodt, supra, 42 Cal.App.4th at p. 172.) The Franklin court emphasized that although there were equitable reasons to dismiss the case in Hartbrodt with prejudice, and although “looking to the equities is good judicial policy, we are mindful that any consideration of when the statutory right to voluntary dismissal terminates must be rationally connected to the statutory phrase ‘commencement of trial.’ ” (Franklin, supra, 148 Cal.App.4th at p. 207.)
Respondents likewise rely on Tire Distributors, Inc. v. Cobrae, supra, 132 Cal.App.4th at page 546, for the proposition that we should focus on notions of “ ‘fairness’ ” and examine a “ ‘plaintiff’s motivation and intent’ ” when considering whether it is permissible to dismiss claims without prejudice. In Tire Distributors, the court held that a dismissal a day before a summary judgment motion hearing was effective, because the party dismissing the suit had a good faith belief that the defendant who filed the summary judgment motion had already settled out of the case. (Id. at pp. 546-547.) It is true that the Tire Distributors opinion referred to “notion[s] of fairness” and “the plaintiff’s motivation and intent in dismissing his complaint” (id. at p. 546); however, we again quote from Franklin: “The Tire Distributors opinion should not, divorced from its facts, be read for the idea that unfairness or good faith in a vacuum are all that a court needs to look at in deciding whether a voluntary dismissal is effective.” (Franklin, supra, 148 Cal.App.4th at pp. 208-209.)
Here, it simply could not be said that Smith’s case had progressed to a point that there was an “actual commencement of trial” (§ 581, subds. (b)(1), (c)), or that the dismissal of the case was a “ ‘mere formality.’ ” (Franklin, supra, 148 Cal.App.4th at p. 200.) As in Zapanta, supra, 107 Cal.App.4th at pages 1172-1173, no tentative ruling had been issued, and the request for dismissal was filed before opposition to the motion for summary judgment was due. Respondents attempt to distinguish Zapanta by stating that “an odious gamesmanship is at work,” because Smith dismissed three claims “in order to seek to manipulate the legal posture of her remaining, live claim.” Again, however, our inquiry is not on Smith’s subjective intent in dismissing three causes of action, but on whether she was entitled under section 581 to do so, which she was. Respondents also note that Zapanta is distinguishable because Smith requested dismissal of “only three-quarters of the lawsuit,” as opposed to the entire action. The statute again addresses this issue, as a plaintiff may dismiss a complaint, “or any cause of action asserted in it . . . with or without prejudice prior to the actual commencement of trial.” (§ 581, subd. (c), italics added.) Because Smith was permitted to dismiss her causes of action for professional negligence, breach of contract, and constructive fraud without prejudice, the trial court erred in granting summary judgment as to those three claims. Instead, the trial court should have permitted Smith to dismiss the causes of action without prejudice.
D. Breach of Fiduciary Duty Cause of Action Nonetheless Time-Barred.
As the trial court noted, a two-year statute of limitations applies to both Smith’s cause of action for breach of oral contract as well as her cause of action for professional negligence. (§ 339; Hydro-Mill Co., Inc. v. Hayward, Tilton & Rolapp Ins. Associates, Inc. (2004) 115 Cal.App.4th 1145, 1154 (Hydro-Mill).) The trial court ruled that because Smith suffered actual injury more than two years before she filed her complaint, those causes of action were therefore time-barred, a ruling that Smith does not challenge on appeal. Smith likewise does not challenge on appeal the trial court’s conclusion that Smith’s constructive fraud cause of action was barred by the two-year statute of limitations. The trial court also concluded that because the gravamen of Smith’s complaint was for professional negligence, her cause of action for breach of fiduciary duty was barred by the two-year statute of limitations.
On appeal, Smith does not dispute that, assuming the two-year statute of limitations applies, her cause of action for breach of fiduciary duty is time-barred. She argues instead that the trial court’s analysis regarding her breach of fiduciary duty claim was “fundamentally tainted” because the court considered her entire complaint. Smith argues that because her cause of action for breach of fiduciary duty was the sole claim she had not dismissed, the gravamen of her complaint was for breach of fiduciary duty, which is governed by a four-year statute of limitations. (David Welch Co. v. Erskine & Tulley (1988) 203 Cal.App.3d 884, 893 [“[W]here a cause of action is based on a defendant’s breach of its fiduciary duties, the four-year catchall statute set forth in Code of Civil Procedure section 343 applies.”].)
Respondents apparently do not dispute that the statute of limitations for a cause of action for breach of fiduciary duty is four years, or that the filing of Smith’s complaint in April 2005, for a breach of fiduciary duty in connection with the May 2001 stock repurchase agreement would be timely if a four-year statute of limitations applies. They argue instead that the trial court did not err when it denied Smith’s request to dismiss three causes of action, because this was an improper attempt to change the focus of the lawsuit. When the complaint as a whole is considered, according to respondents, it is clear that the focus of the complaint was for professional negligence, because each cause of action included allegations that Hatter failed to adequately perform professional services.
As a preliminary matter, Smith was of course permitted to allege different causes of action—with different statutes of limitation—based on the same underlying facts. (Glue-Fold, Inc. v. Slautterback Corp. (2000) 82 Cal.App.4th 1018, 1021, 1023-1024, 1028-1029 [considering whether three different statutes of limitation had run for three causes of action based on same wrong]; Wilshire Westwood Associates v. Atlantic Richfield Co. (1993) 20 Cal.App.4th 732, 743-744 [statute of limitations had run as to some, but not all, causes of action in connection with soil contamination on buyer’s property]; April Enterprises, Inc. v. KTTV (1983) 147 Cal.App.3d 805, 828 [single act may constitute both a breach of fiduciary against joint venture and a breach of contract].) Moreover, at least one treatise regarding the role of accountants states that one advantage of bringing a breach of fiduciary duty cause of action is that it may be subject to a longer statute of limitations period. (Causey & Causey, Duties and Liabilities of Public Accountants (6th ed. 1999) p. 16.)
Respondents therefore rely on the rule that “[t]he applicable statute of limitations is determined by—as variously phrased—the nature of the right sued upon, the primary interest affected by the defendant’s wrongful conduct, or the gravamen of the action.” (Hydro-Mill, supra, 115 Cal.App.4th at pp. 1158-1159; see also Barton v. New United Motor Manufacturing, Inc. (1996) 43 Cal.App.4th 1200, 1207.) Respondents argue that the trial court’s “gravamen analysis” was correct, because Smith’s complaint was essentially one for professional negligence, even if it purported to state a cause of action for breach of fiduciary duty. We agree.
We find Curtis v. Kellogg & Andelson (1999) 73 Cal.App.4th 492, upon which respondents rely, persuasive. A corporation sued its accounting firm in connection with tax advice after the IRS audited the corporation and ultimately issued a notice of deficiency. (Id. at pp. 495-496.) The court concluded that because “the gravamen of the breach of contract and breach of fiduciary duty claims are the purported malpractice, the two-year statute of limitations applies.” (Id. at p. 503.) Although the trial court relied on Curtis in granting summary judgment, Smith did not address it in her opening brief, and she did not file a reply brief.
Here, Smith’s complaint alleged a fiduciary duty between her and respondents, and that respondents “breached their fiduciary duties to plaintiff[] by acting below the standard of care in providing tax advice, investment advice, financial planning, tax planning, and trustee advice and services, including, but not limited to, the imprudent investment and sale of trust assets; failure to formulate an overall investment strategy suitable to the trust; failure to render and provide tax services; and overall negligent management of the trust assets.” (Italics added.) The complaint further alleged that Smith reasonably relied on respondents’ advice and services, “without knowledge of its negligent character.” (Italics added.) Even when we solely consider the breach of fiduciary duty cause of action, it is clear that Smith’s claim sounds in negligence.
In concluding that summary judgment was appropriate even had the trial court considered only Smith’s cause of action for breach of fiduciary duty (as opposed to the entire complaint), we are arguably affirming an order granting summary judgment on a ground not relied upon by the trial court. (§ 437c, subd. (m)(2).) Supplemental briefing pursuant to section 437c, subdivision (m)(2) is unnecessary, however, as the parties have already addressed this issue. Smith argued in her opening brief that the trial court should have considered only the breach of fiduciary duty claim. Respondents argued that, even if the trial court analyzed the breach of fiduciary duty cause of action “with or without” the other three claims, summary judgment was appropriate, because the cause of action was “still grounded in professional negligence.” Smith had an “opportunity to present [her] views on the issue” (§ 437c, subd. (m)(2)) in a reply brief; however, she chose not to file one.
In reaching our conclusion, we acknowledge that, in some contexts, a plaintiff may pursue a claim for breach of fiduciary duty against an accountant. The parties disagree over whether (as Smith claims) Hatter owed her a fiduciary duty as her investment advisor/financial consultant (Stokes v. Henson (1990) 217 Cal.App.3d 187, 195-196), or whether (as respondents claim) there was no fiduciary relationship because Hatter’s “only obligation to Smith was that of a tax preparer,” and this function did not “create a broader fiduciary duty toward Smith regarding the global management of her finances.” Respondents’ argument ignores the fact that Smith’s breach of fiduciary duty cause of action focuses not on Hatter’s preparation of Smith’s taxes, but on his role in preparing stock repurchase agreements for Smith’s shares in Continental parks. It is perhaps irrelevant whether Hatter was acting as Smith’s “investment advisor” or simply her accountant. Although there are few reported cases addressing the nature of the relationship between an accountant and his client, courts that have addressed the issue have assumed that a fiduciary relationship exists. (Electronic Equipment Express, Inc. v. Donald H. Seiler & Co. (1981) 122 Cal.App.3d 834, 855-856 [discussing fiduciary relationship between accountant and client in context of diligence required to investigate professional negligence claim]; Bedolla v. Logan & Frazer (1975) 52 Cal.App.3d 118, 130-131 & fn. 12 [discussing jury instruction regarding fiduciary relationship between accountant and client].)
The fact remains, however, that although Smith alleged a fiduciary relationship with Hatter, her cause of action for breach of fiduciary relationship sounded in professional negligence. (Curtis v. Kellogg & Andelson, supra, 73 Cal.App.4th at p. 503.) Smith argues that the evidence demonstrates that Hatter breached duties arising from his fiduciary, as opposed to “mere professional,” relationship with Smith. She claims, without citation to the record, that Hatter failed to make the “ ‘fullest disclosure’ to Smith about the consequences and effect of her actions.” In fact, the May 2001 stock repurchase agreement disclosed that 1) Smith would no longer be an officer or director of the corporation, 2) she would no longer receive a monthly $2,000 director’s fee, and 3) she would lose her rights to vote her remaining shares by giving Bickel her proxy to vote the shares.
We note that two of the cases upon which the trial court relied are not as helpful as respondent claims on appeal. Hydro-Mill, supra, 115 Cal.App.4th at pages 1158-1159, held that because a complaint against an insurance broker demonstrated that allegations of professional negligence subsumed all of the allegations for breach of fiduciary duty, the complaint was barred by a two-year statute of limitations. In reaching its conclusion, however, the court noted that “it is unclear whether a fiduciary relationship exists between an insurance broker and an insured.” (Id. at p. 1156.) It did not consider whether a fiduciary relationship exists between an accountant and a client. Stoll v. Superior Court (1992) 9 Cal.App.4th 1362, 1363 held that the statute of limitations for both a legal malpractice and a breach of fiduciary duty cause of action against an attorney is identical. This conclusion was based on section 340.6, which provides that an action against an attorney for a wrongful act, other than for actual fraud, shall be brought within one year. (Id. at pp. 1366, 1368.) The court concluded that the one-year limitations period applied to claims for breach of fiduciary duty. (Id. at p. 1368.) Here, respondents do not (and cannot) claim that section 340.6 applies to a breach of fiduciary claim against an accountant.
Smith also argues that Hatter failed to “adequately disclose conflicts of interest.” But there is no evidence in the record that Smith did not, as Hatter stated in his declaration, know that Hatter was acting as Bickel’s accountant in May 2001. Smith stated in her separate statement that she “[d]isputed” this claim, arguing that Hatter’s declaration lacked foundation. She also noted that “Hatter felt compelled to disclose” in a later stock repurchase agreement that he was the accountant for Bickel and Continental Parks, apparently suggesting that this raised an inference that the information had not been previously disclosed. Smith did not, however, offer any evidence that the information had not been previously disclosed, as her declaration is silent on this matter.
Finally, Smith claims that Hatter breached a fiduciary duty to her by failing to disclose that Continental Parks had more than $783,000 available in cash that could possibly be used for dividend payments to her. Even assuming that this is true, again, this is an allegation that sounds in professional negligence. In Curtis v. Kellogg & Andelson, supra, 73 Cal.App.4th at page 496, plaintiff alleged that because of advice from his accounting firm, his medical firm paid his wife annual salaries that the United States tax court later ruled were excessive. His complaint further alleged that the accounting firm “ ‘fail[ed] to advise the Corporation that the amounts paid as compensation to [plaintiff’s wife] . . . were excessive or that the Corporation even faced the possibility of penalties, and by its failure to disclose its negligence to the Corporation.’ ” (Ibid.) The appellate court ultimately concluded that the gravamen of the breach of fiduciary duty allegations were the accounting firm’s alleged malpractice, and that the two-year statute of limitations applied. (Id. at p. 503.) We likewise conclude that claims of any alleged failure to properly advise Smith sounded in professional negligence.
Smith does not challenge the trial court’s conclusion that the statute of limitations began to run no later than December 2002, when Smith last sold shares in Continental Parks. Because we conclude that the gravamen of Smith’s purported breach of fiduciary duty claim was for professional negligence, which is governed by a two-year statute of limitations, the filing of Smith’s complaint in April 2005, was untimely. We therefore need not address the trial court’s alternative conclusion that, as a matter of law, Hatter breached no fiduciary duty to Smith.
III. Disposition
The judgment is affirmed in part and reversed in part. The trial court’s order granting summary judgment as to appellant’s breach of fiduciary duty cause of action is affirmed. The trial court’s order granting summary judgment and denying appellant’s request to dismiss without prejudice her causes of action for professional negligence, breach of contract, and constructive fraud is reversed. Each side shall bear its own costs incurred on appeal.
We concur:
Reardon, Acting P.J.
Rivera, J.