Capital Options, LLC v. George Goldsmith
16-60054
| 9th Cir. | Jan 10, 2018Background
- Capital Options, LLC sued George H. Goldsmith and G2, LLC claiming wrongful diversion of G2 funds and asserting contract-based claims after bankruptcy proceedings.
- Defendants moved to dismiss under California’s two-year statute of limitations for oral contracts; the Bankruptcy Court granted dismissal and denied Capital’s reconsideration and disqualification motions.
- Capital sought attorney Stapleton’s disqualification, arguing Stapleton concurrently represented Goldsmith and G2 and that Goldsmith had diverted G2 assets creating a conflict; the court denied disqualification.
- Capital first contested use of the two-year SOL late (on reconsideration) and argued instead that a four-year SOL applied; the court found this argument untimely.
- Capital advanced tolling theories (Cal. CCP § 351 due to Goldsmith’s move, fraudulent concealment, equitable tolling based on prior state litigation, and 11 U.S.C. § 108 bankruptcy tolling); the court rejected all.
- The Ninth Circuit affirmed: claims against Goldsmith and G2 were time-barred and Capital failed to show grounds for tolling or disqualification.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Attorney disqualification | Stapleton conflicted by representing both Goldsmith and G2 after alleged diversion | No conflict shown; Capital lacks demonstrated interest in G2; Goldsmith and G2 essentially one | Denied — no abuse of discretion in refusing disqualification |
| Applicable SOL (2-yr v. 4-yr) | Four-year written-contract SOL applied; Capital implicitly raised it | Two-year oral-contract SOL applies; Capital raised objection too late | Dismissal under two-year SOL affirmed; Capital’s late objection rejected |
| Tolling via Cal. CCP § 351 (defendant left state) | Goldsmith’s move to Montana tolled the SOL until return | Application would conflict with Commerce Clause precedent; Capital didn’t plead distinguishing facts | Rejected — tolling under § 351 not warranted |
| Fraudulent concealment / equitable tolling / § 108 | Fraud, prior state suit, or bankruptcy filing tolled SOL | No adequate pleading of concealment; state suit facts insufficient; § 108 argument waived and, in any event, claims filed late even with § 108 | Rejected — plaintiff failed to meet pleading/waiver/burden requirements; claims untimely |
Key Cases Cited
- Stone v. Travelers Corp., 58 F.3d 434 (9th Cir.) (standard of review for Rule 12(b)(6) dismissal)
- In re Tracht Gut, LLC, 836 F.3d 1146 (9th Cir.) (Bankruptcy Rule 7012(b) incorporates FRCP 12 standards)
- Pouncil v. Tilton, 704 F.3d 568 (9th Cir.) (statute of limitations accrual is fact-intensive; accrual findings entitled to deference)
- 389 Orange St. Partners v. Arnold, 179 F.3d 656 (9th Cir.) (arguments forfeited if raised too late on reconsideration)
- Abramson v. Brownstein, 897 F.2d 389 (9th Cir.) (limits on applying state absence-tolls when interstate commerce concerns arise)
- Fuller v. First Franklin Fin. Corp., 163 Cal. Rptr. 3d 44 (Cal. Ct. App.) (fraudulent concealment requires particularized pleading of discovery timing and facts)
- Lahr v. National Transp. Safety Bd., 569 F.3d 964 (9th Cir.) (issues not raised below are generally waived on appeal)