222 Cal. App. 4th 303
Cal. Ct. App.2013Background
- Stueve Brothers Farms, LLC and related entities (the Stueves) allege a multi-faceted scheme involving attorney Novell, attorney Allen, and Berger Kahn to drain the Alta Dena Dairy fortune through trusts and ancillary entities.
- Novell served as trustee; Allen acted as attorney for multiple Stueve entities; Berger Kahn provided formal legal representation during the scheme (2006–2007).
- Alleged scheme included formation of venture entities (Clarke-Novell LLC, GSF Acquisitions Inc., Firma Funding LLC), sham loans, and asset siphoning to benefit the defendants.
- Plaintiffs filed a 331-page second amended complaint in September 2010 asserting ten causes of action including fraud, negligent misrepresentation, breach of fiduciary duty, conversion, professional negligence, negligent hiring/retention, prudent investor rule, and RICO.
- The trial court sustained a demurrer in part and dismissed the claims against the trust and entity Stueves; this appeal concerns the demurrer as it affects those trust/estate plaintiffs; the court reverses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the four-year outside limitations period bars all claims | Stueves argue not all claims are time-barred. | Berger Kahn asserts the four-year period precludes the claims. | Not barred as a matter of law; remand for factual resolution. |
| Whether tolling applied under CCP 340.6(a)(2) (continued representation) | Tolling continued through Allen's association with Berger Kahn. | Tolling ended when Allen left the firm. | Tolling extended only until Allen left, with timing issues to be determined on remand. |
| Whether knowledge of the misdeeds by an attorney can be imputed to the client through a successor firm | Knowledge of Allen/Berger Kahn should be imputed to Buchalter Nemer and the Stueves. | Knowledge should not be imputed to the client via the successor firm. | Knowledge is not imputed from the attorney to the client in this context. |
| Whether conspiracy and aiding-and-abetting theories support fraud claims against Berger Kahn | Fraud/misrepresentation claims can proceed under conspiracy/aiding theories. | Claims barred as based on non-actionable scheme. | Reversed on remand: conspiracy and aiding/abetting theories may support fraud claims. |
| Whether actual fraud vs. concealment vs. other theories govern the limitations and viability of fraud claims | 3-year statute for actual fraud may apply; 340.6 governs constructive fraud/concealment. | Defendant argues limitations bar claims; argues for 3-year period where applicable. | Actual fraud theory under 338(d) may survive; constructive fraud/negligent misrepresentation governed by 340.6; remand for further development. |
Key Cases Cited
- Beal Bank, SSB v. Arter & Hadden, LLP, 42 Cal.4th 503 (Cal. 2007) (tolls under §340.6(a)(2) duration; continued representation does not toll against unrelated firms)
- Baright v. Willis, 151 Cal.App.3d 303 (Cal. App. 1984) (demurrer on statute of limitations must show facially the bar; not merely possible bar)
- Witty v. Clinch, 207 Cal. 779 (Cal. 1929) (agent's knowledge not imputable to principal when agent acts against principal's interests)
- Security First Nat. Bank v. Ross, 214 Cal.App.2d 424 (Cal. App. 1963) (constructive notice and tolling considerations in trust context)
- Sanfran Co. v. Rees Blow Pipe Mfg. Co., 168 Cal.App.2d 191 (Cal. App. 1959) (imputation of knowledge to defendant corporate entity varies by context)
- Witty v. Clinch, 207 Cal.2d 779 (Cal. 1929) (agency hostility defeats presumption of disclosure to principal)
- Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC, 162 Cal.App.4th 858 (Cal. App. 2008) (fraud concealment under 338(d) governs discovery timing; distinct from 340.6")
- Vega v. Jones, Day, Reavis & Pogue, 121 Cal.App.4th 282 (Cal. App. 2004) (fraud concealment and discovery rule under statute 338(d))