Lu v. Deng CA6 ( 2014 )

Filed 9/19/14 Lu v. Deng CA6
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SIXTH APPELLATE DISTRICT
MEI-CHIEN LU, H037860
(Santa Clara County
Plaintiff and Appellant, Super. Ct. No. 1-10-CV169316)
v.
AN-CHANG DENG,
Defendant and Respondent.
Plaintiff Mei-Chien Lu appeals from the order granting summary adjudication in
favor of defendant An-Chang Deng on her causes of action for intentional infliction of
emotional distress, breach of fiduciary duty, actual fraud, constructive fraud, and
reimbursement and indemnity. Plaintiff also appeals from the order granting defendant’s
motion for nonsuit on her cause of action for negligent infliction of emotional distress.1
We find no error and affirm the judgment.
1
Though plaintiff states on the first page of her opening brief that she “does not
challenge the ruling[] on . . . negligent infliction of emotional distress” and asks for this
court “to grant ‘leave to amend’ ” for this cause of action, she argues in her reply brief
that the trial court erred when it granted the motion for nonsuit for negligent infliction of
emotional distress. Since defendant argued in his brief that the trial court properly
granted the motion, we will consider the issue. (See Reichardt v. Hoffman (1997) 52
Cal.App.4th 754, 764.)
I. Statement of the Case
On April 14, 2010, plaintiff filed a complaint for damages. The complaint states
causes of action for domestic violence (first), intentional infliction of emotional distress
(second), negligent infliction of emotional distress (third), breach of fiduciary duty
(fourth), actual fraud (fifth), constructive fraud (sixth), and reimbursement and indemnity
(seventh).
In April 2011, defendant brought a motion for summary judgment or summary
adjudication. Plaintiff’s opposition to the motion was filed in July 2011. Defendant filed
a reply to plaintiff’s opposition. The trial court denied the motion for summary
adjudication as to the causes of action for domestic violence and negligent infliction of
emotional distress and granted the motion as to the causes of action for intentional
infliction of emotional distress, breach of fiduciary duty, actual fraud, constructive fraud,
and reimbursement and indemnity.
During the jury trial, the trial court granted defendant’s motion for nonsuit as to
the negligent infliction of emotional distress cause of action. Following trial, judgment
was entered in favor of defendant.
After the trial court denied plaintiff’s motion for new trial, plaintiff filed a timely
notice of appeal.
II. Plaintiff’s Allegations
The parties were married in 1985. Defendant was awarded his Ph.D. in electrical
engineering from the University of California at Berkeley in 1986 while plaintiff was
awarded her Ph.D. in material sciences and engineering from the same university in 1987.
The parties then began working at high-technology companies. In 1991, their first son
was born. In 1992, defendant joined EPIC Design Systems (EPIC), a start-up company,
while plaintiff was employed by Intel Corporation. In late 1994, EPIC went public, and
their second son was born.
2
In October 1995, while defendant was away on a business trip, plaintiff was in a
car accident in which the parties’ older son died. Due to the accident, plaintiff suffered
profound grief. Defendant then “abandoned plaintiff and treated her cruelly.” About a
year after the accident, another son was born. Defendant “continued to make plaintiff
feel guilty, . . . demeaned and belittled her,” and began yelling at her frequently.
In early 1997, Synopsys, Inc. acquired EPIC, and defendant became an employee
of Synopsys. In August 1998, defendant and other employees left Synopsys and formed
Nassda Corporation.
In September 1998, plaintiff began suffering from physical illnesses and quit her
job at Intel.
In February 2000, Synopsys brought an action against defendant for breach of
proprietary information and related causes of action. Defendant did not explain the
litigation to plaintiff.
After plaintiff rejected a job offer in 2000, defendant became more abusive
towards plaintiff by yelling at her, arguing with her, yelling at their children, and telling
her to “ ‘go to hell.’ ”
In December 2001, Nassda underwent an initial public offering and its shares
“became perceived as quite valuable.” Defendant’s language and behavior became more
abusive. He attended business dinners and told plaintiff that he “wished [she] would die”
more frequently.
In June 2004, defendant told plaintiff that they had lost the Synopsys litigation.
He told her that Synopsys would acquire Nassda by paying $7 per share, he would not
compete against Synopsys for four years, and the settlement would produce $6 million in
cash for them. In November 2004, defendant presented plaintiff with some pages and
told her to sign them, which plaintiff did. Defendant did not tell plaintiff about the
significance of the pages or of the settlement agreement to which they referred.
3
In March or April 2005, defendant told plaintiff they should divorce. After the
Synopsys litigation settlement closed in May 2005, defendant had plaintiff sign more
documents related to the stock liquidation without telling her any details. Defendant then
stopped working.
Defendant continued his abusive and angry behavior towards plaintiff. Defendant
did not celebrate the parties’ twentieth anniversary, but he took plaintiff to a park and told
her that he wanted to murder her. “As a result of continued and ongoing abuse since
1995, plaintiff involuntarily suppressed and lost memories of that event, only to recall it
later when her suppressed memories began to resurface.”
At the end of 2005 or the beginning of 2006, defendant began to talk seriously
about a divorce. When the parties argued, defendant “physically intimidated” plaintiff.
In mid-2007, defendant and plaintiff began living in separate rooms. In late 2007,
plaintiff began wondering why she had not been given the Synopsys settlement
agreement to read before she signed the signature pages.
In April 2008, defendant forced himself into plaintiff’s room and scratched her
arm.
In mid-2008, plaintiff located a copy of the settlement agreement at home and read
it. She saw that it contained an admonition to the effect that she should consult with her
own attorney before signing the signature pages. Sometime thereafter, she learned that
the settlement agreement was incomplete and incorrectly described the parties’ shares for
settlement payments.
In October 2008, plaintiff moved out of the family residence and defendant filed a
petition for marital dissolution.
The first cause of action for domestic violence incorporates by reference the
previous allegations and alleges that “from approximately 1995 through 2008, defendant
perpetrated upon plaintiff repeated, regular, and continuous domestic violence by, among
other things, demeaning her, yelling at her, stating that he ‘wished [she] would die,’
4
telling her to ‘go to hell,’ arguing with her, pushing her, assaulting her, treating her as a
virtual slave beholden to him.” As a result of defendant’s acts, plaintiff suffered
“humiliation, mental anguish, and emotional and physical distress, . . . [was] in
reasonable apprehension of imminent serious bodily injury,” was unable to work, and
incurred medical expenses. This cause of action also alleges that defendant’s actions
were “willful, wanton, and malicious,” thus entitling her to punitive damages.
The second cause of action for intentional infliction of emotional distress
incorporates by reference the previous allegations and alleges that “[w]ithin two years
last past and continuing through approximately October 2008, defendant
intentionally . . . repeatedly, and continuously in a malicious, rude, violent and insolent
manner, intimidated, argued with, and assaulted plaintiff, all with the intent and purpose
of causing plaintiff” to suffer “humiliation, mental anguish, and emotional and physical
distress.” As a result of defendant’s conduct, plaintiff was unable to work and incurred
medical expenses. This cause of action also alleges that defendant’s actions were
“willful, wanton, malicious, and oppressive,” thus entitling her to punitive damages.
The third cause of action for negligent infliction of emotional distress incorporates
by reference the previous allegations and alleges that “[w]ithin two years past and
continuing through approximately October 2008, defendant negligently, . . . regularly,
and continuously in a rude, violent and insolent manner, intimidated, maligned, argued
with, and assaulted plaintiff.” It is further alleged that defendant knew or should have
known that his abusive behavior would cause severe emotional distress to plaintiff. As a
result of defendant’s acts, plaintiff suffered “humiliation, mental anguish, and emotional
and physical distress, and has been injured in mind and body,” was unable to work, and
incurred medical expenses.
The fourth cause of action for breach of fiduciary duty incorporates by reference
the previous allegations and alleges that in January 2009, plaintiff obtained and read a
copy of a discovery order in the Synopsys litigation which made the following findings:
5
one of Nassda’s products was copied or derived from Synopsys’ materials while the
defendants were employed by Synopsys; Nassda’s development log was created after the
fact in an attempt to avoid liability to Synopsys; the defendants “intentionally altered,
destroyed, damaged, lost and or misplaced” electronic media discussed in the discovery
order; the conduct of the defendants in “altering, losing, misplacing and/or destroying
relevant data” was done in concert by the defendants with the intent to conceal evidence
of liability by Nassda and did conceal such evidence. The discovery order “severely
compromised the ability of the Synopsys litigation defendants to defend against the
claims made against them in the Synopsys litigation.”
It is further alleges that when the parties in the Synopsys litigation reached a
verbal settlement agreement, defendant knew: he might have had exposure for criminal
prosecution for his actions in leaving Synopsys and starting Nassda; the discovery order
findings meant that the Synopsys defendants would lose; plaintiff’s property interest in
Nassda would be negatively affected; he would become unemployed; he planned to
dissolve his marriage soon after the settlement was completed; the written settlement
agreement had language recommending and advising plaintiff to consult an attorney; and
the signature pages that were given to plaintiff in November 2004 were part of a much
larger set of documents.
This cause of action also alleges that “[b]ecause of their marital relationship, and
because settlement of the Synopsys litigation would have material effects of the rights of
plaintiff, defendant had fiduciary duties to fully disclose to plaintiff all material facts
concerning the Synopsys litigation and its settlement . . . before asking [plaintiff] to sign
the Signature Pages.” By failing to make these disclosures, defendant breached his
fiduciary duties. As a result of defendant’s breach of fiduciary duties, plaintiff signed the
settlement agreement “in ignorance of its effects on her and of her rights” and suffered
damages in the amount of approximately $10 million. Plaintiff’s rights included a right
to “claim ownership of her Nassda Corporation shares as a bona fide purchaser and to
6
claim that defendant’s actions giving rise to the liability being settled were not for the
benefit of the community but were the result of defendant’s intentional misconduct and/or
criminal behavior, for which defendant should bear the burden, not plaintiff.” Plaintiff
first became aware of the discovery order and of the economic consequences of the
settlement agreement to her in early 2009.
The fifth cause of action for actual fraud incorporates by reference the previous
allegations and alleges that defendant presented the signature pages of the Synopsys
settlement agreement to plaintiff without fully disclosing all material facts. It further
alleges that had defendant informed her of the material facts, she would not have signed
the settlement agreement. Plaintiff would have retained counsel to inform her of, and to
protect, her rights, “including her rights to claim ownership of her Nassda Corporation
shares as a bona fide purchaser and to claim that defendant’s action giving rise to the
liability being settled were not for the benefit of the community but were the result of
defendant’s intentional misconduct and/or criminal behavior, for which defendant should
bear the financial burden.” As a result of defendant’s fraud, plaintiff has suffered
damages of approximately $10 million. This cause of action also alleges that defendant’s
actions were “willful, wanton, malicious, and oppressive,” thus entitling her to punitive
damages.
The sixth cause of action for constructive fraud incorporates by reference the
previous allegations and alleges that defendant’s failure to disclose material facts about
the Synopsys settlement agreement before having her sign the signature pages constitutes
constructive fraud. Had defendant informed her of the material facts, she would not have
signed the document and would have retained counsel to inform her of, and to protect,
her rights. As a result of defendant’s acts, plaintiff suffered damages of approximately
$10 million.
The seventh cause of action for reimbursement and indemnity incorporates by
reference the previous allegations. It alleges that “[a]s a result of defendant’s actions, the
7
martial community had to settle an action which cost the marital community no less than
$19 million, which should have been paid by defendant, not by the community property.
[¶] . . . The community estate is entitled to reimbursement from defendant’s separate
property (and plaintiff is entitled to reimbursement and/or indemnity from defendant’s
share of the community property) for the amount paid to Synopsys, Inc. in settlement of
the Synopsys litigation.”
III. Discussion
A. Motion for Summary Adjudication
1. Standard of Review
“ ‘ “Appellate review of a ruling on a summary judgment or summary adjudication
motion is de novo.” ’ ” (Food Pro Internat., Inc. v. Farmers Ins. Exchange (2008) 169
Cal.App.4th 976, 993.) “[T]he party moving for summary judgment bears the burden of
persuasion that there are no triable issues of material fact and that [the moving party] is
entitled to judgment as a matter of law.” (Aguilar v. Atlantic Richfield Co. (2001) 25
Cal.4th 826, 850 (Aguilar).) The moving party “bears an initial burden of production to
make a prima facie showing of the nonexistence of any triable issue of material fact; if he
carries his burden of production, he causes a shift, and the opposing party is then
subjected to a burden of production of his own to make a prima facie showing of the
existence of a triable issue of material fact.” (Ibid.) “A prima facie showing is one that is
sufficient to support the position of the party in question.” (Id. at p. 851.)
2. Defendant’s Evidence
With the exception of physical altercations in 2007 and 2008, plaintiff did not
recall “anything” that defendant had done to her that caused her to suffer emotional
distress after January 2007, except that he kept coming into her room when they were
supposed to be staying in separate rooms. Defendant did not assault or hit plaintiff after
2007, except for one incident in April 2008.
8
The position that defendant held at Nassda was “for the benefit of [their] marital
community as the income from [his] job, etc. was generating community property
income.” After Nassda underwent an initial public offering in December 2001, plaintiff
became very familiar with its stock prices as she regularly transferred shares of Nassda
stock each quarter. When the parties involved in the Synopsys litigation had reached a
tentative agreement, defendant told plaintiff about the keys terms of the settlement. He
told her that Synopsys would acquire Nassda by paying $7 per share, he would not
compete with Synopsys for four years, and they would receive shares with a value of $6
million. In November 2004, he had the attorney involved in the litigation e-mail plaintiff
a copy of the settlement agreement. When defendant brought plaintiff the documents to
sign, they were not fighting and he did not put pressure on her to sign them. When she
asked what would happen if she did not sign them, he replied that there would be no
settlement. Plaintiff did not ask defendant where the other pages of the settlement
agreement were. She did not read what she was signing, and never thought about
whether there were other pages. After signing the settlement agreement, plaintiff never
asked defendant about the Synopsys litigation.
Defendant brought home all of the documents involved in the Synopsys litigation
on May 11, 2005, and put them on a shelf. In 2007, plaintiff attempted to read the
documents, but “got a big headache . . . couldn’t continue, so [she] was not able to read
it.”
Plaintiff thinks that defendant should have divorced her before entering into the
Synopsys settlement agreement.
As a result of the settlement agreement, the community estate gained over $6
million.
Defendant and plaintiff never signed any agreement between the two of them as
adverse parties.
9
3. Plaintiff’s Response
Defendant pushed plaintiff away from the table in 2000 and her sweater was torn.
In 2005, defendant kicked plaintiff’s chair. He hit her on the shoulder on another
occasion in 2005 as she was sitting on a sofa and placed his hands around her shoulders.
He also hit her on her chest and shoulder in late 2005 or early 2006 when she was sitting
in a recliner. She did not remember how many times he hit her, but he stopped when
their older child said, “No, Dad.” Before July 2007, he struck her with his hand. One
afternoon in April 2008, plaintiff was sitting behind her bedroom door reading when
defendant said that he wanted to come in so he could use the bathroom. She asked him to
use another bathroom, but he “couldn’t hold on.” He pushed the door open and struck
her. It hit her so hard that it scratched her arm. On their 20th anniversary in 2005,
defendant took her to a park where he told her that he wanted to murder her.
Defendant told plaintiff that he did nothing wrong in connection with the
Synopsys litigation. When defendant talked about the litigation, he yelled at her.
Defendant failed to tell plaintiff about the discovery order that found that he and his
codefendants had stolen trade secrets from Synopsys and had direct involvement in
destroying evidence. He also failed to tell her that her separate property shares of Nassda
stock and her interest in the community Nassda stock would be sold to pay $20 million to
Synopsys to extinguish the liability that defendant faced. Defendant admitted that he
paid $19,683,157 to Synopsys, and $1.288 million of this amount came from plaintiff’s
separate property account. If the parties had not been required to pay Synopsys, they
would have received $34 million from the sale of the Nassda stock. Defendant also never
told plaintiff that there was language in the settlement agreement instructing the parties to
consult an attorney.
Defendant received a phone call on November 30, 2004, from his attorney asking
the best way to send a document to plaintiff and defendant did not remember whether it
was sent by e-mail or fax. The document was not the entire settlement agreement, but
10
“some of the documents related to our family community.” He does not remember how
much of the settlement agreement was sent. Plaintiff did not know that there was
anything more to the settlement agreement other than the pages that were provided to her
by defendant.
Plaintiff has been significantly damaged by defendant’s actions, because her
separate property was used to pay off a debt owed solely by defendant to Synopsys. The
community estate should have gained far more than $6 million. If they had not paid
Synopsys over $19 million, they would have received $34 million for the Nassda shares.
Plaintiff and defendant signed various settlement documents which affected both
their community and separate property interests.
4. Defendant’s Reply
When defendant opened the door to plaintiff’s bedroom in 2008, he did not know
that she was behind the door.
5. Trial Court’s Ruling
The trial court denied the motion for summary adjudication as to the cause of
action for domestic violence on the ground that it was not barred by the statute of
limitations. The trial court granted the motion on the intentional infliction of emotional
distress cause of action. The trial court concluded: the only act that occurred within the
two-year statute of limitations was the April 2008 incident in which defendant opened the
door and plaintiff’s arm was scratched; this act did not constitute intentional infliction of
emotional distress as a matter of law; and the continuing tort doctrine did not apply. The
motion was denied as to the cause of action for negligent infliction of emotional distress.
The trial court reasoned that the continuing tort doctrine did not apply and thus only the
April 2008 incident was not barred by the statute of limitations. However, the trial court
found that defendant failed to demonstrate that he did not cause any damages to plaintiff
as a result of the scratch or that he failed to use due care in opening the door.
11
The trial court found that the breach of fiduciary duty, fraud, and constructive
fraud causes of action were barred by the statute of limitations and granted the motion as
to these claims. The motion was also granted as to the reimbursement and indemnity
cause of action. The trial court reasoned: plaintiff failed to allege that her separate
property was used to satisfy the obligation to Synopsys; there was no evidence of
defendant’s misconduct; and the settlement benefited the community.
6. Intentional Infliction of Emotional Distress Cause of Action
Plaintiff contends that the trial court erred when it granted summary adjudication
on the intentional infliction of emotional distress claim.
“A cause of action for intentional infliction of emotional distress exists when there
is ‘ “ ‘ “(1) extreme and outrageous conduct by the defendant with the intention of causing,
or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff’s
suffering severe or extreme emotional distress; and (3) actual and proximate causation of
the emotional distress by the defendant’s outrageous conduct.” ’ ” ’ [Citations.] A
defendant’s conduct is ‘outrageous’ when it is so ‘ “ ‘extreme as to exceed all bounds of
that usually tolerated in a civilized community.’ ” ’ [Citation.] And the defendant’s
conduct must be ‘ “ ‘intended to inflict injury or engaged in with the realization that injury
will result.’ ” ’ [Citation.] [¶] Liability for intentional infliction of emotional distress
‘ “does not extend to mere insults, indignities, threats, annoyances, petty oppressions, or
other trivialities.” [Citations.]’ ” (Hughes v. Pair (2009) 46 Cal.4th 1035, 1050-1051.)
“Moreover, ‘ “[i]t is for the court to determine, in the first instance, whether the
defendant’s conduct may reasonably be regarded as so extreme and outrageous as to
permit recovery.” ’ [Citations.]” (Fowler v. Varian Associates, Inc. (1987) 196
Cal.App.3d 34, 44.)
12
The statute of limitations for the tort of infliction of emotional distress is two
years. (Code Civ. Proc., § 335.1;2 Pugliese v. Superior Court (2007) 146 Cal.App.4th
1444, 1450 (Pugliese).)
Here, the intentional infliction of emotional distress cause of action focused on
defendant’s conduct during the period of April 2008 and October 2008. Defendant
presented plaintiff’s deposition testimony that she did not recall “anything” that
defendant had done to her that caused her to suffer emotional distress after January 2007
with two exceptions: he kept coming into her room when they were supposed to be
staying in separate bedrooms, and a physical altercation in 2008. Though a spouse’s
conduct of entering into the other spouse’s room without permission may be annoying, it
cannot be characterized as extreme and outrageous. As to the April 2008 incident,
plaintiff testified that as she was sitting behind her bedroom door, defendant wanted to
come in to use the bathroom. She asked him to use the other bathroom, but he said that
he could not. He then pushed the door so hard that her arm was scratched and they had
an argument. As a matter of law, this incident also cannot be considered extreme and
outrageous. Thus, the trial court did not err when it concluded that defendant was
entitled to judgment on this cause of action.
Relying on Pugliese, supra, 146 Cal.App.4th 1444, plaintiff contends that the
continuing tort doctrine applies to her claim for emotional distress. “Generally, a
limitations period begins to run upon the occurrence of the last fact essential to the cause
of action. [Citation.] However, where a tort involves a continuing wrong, the statute of
limitations does not begin to run until the date of the last injury or when the tortuous acts
cease. [Citation.]” (Id. at p. 1452.) In Pugliese, the issue was whether the petitioner was
barred under the three-year limitations period set forth in section 340.15 from recovering
2
All further statutory references are to the Code of Civil Procedure unless stated
otherwise.
13
for acts of domestic violence that occurred three years prior to the filing of the complaint.
(Id. at p. 1448.) Pugliese focused on the statutory language that “domestic violence
lawsuits must be commenced within three years ‘from the date of the last act of domestic
violence . . . .’ ” (Id. at p. 1451.) Thus, Pugliese held that domestic violence is a
continuing tort for statute of limitations purposes if the victim proves a continuing course
of abusive conduct. (Ibid.)
In Pugliese, the petitioner also alleged a cause of action for intentional infliction of
emotional distress and that the last act of emotional abuse occurred less than two years
prior to the filing of her complaint. (Pugliese, supra, 146 Cal.App.4th at p. 1450.) Thus,
Pugliese concluded that her intentional infliction of emotional distress cause of action
was timely under section 335.1. (Ibid.) However, Pugliese did not consider whether the
continuing tort doctrine applied to the intentional infliction of emotional distress cause of
action. We decline to extend the holding of Pugliese to the present case. In contrast to
the statutory language of section 340.15, section 335.1 states that actions must be
commenced “[w]ithin two years.” Moreover, even if we were to apply the continuing tort
doctrine, plaintiff testified at her deposition that with two exceptions she did not suffer
emotional distress as a result of defendant’s conduct after January 2007. Since we have
concluded that these incidents did not constitute extreme and outrageous behavior as a
matter of law, plaintiff’s emotional distress cause of action was also untimely under the
continuing tort doctrine.3
3
Plaintiff also argues that the trial court erred when it denied the motion for new
trial on the intentional infliction of emotional distress cause of action. However, the
motion for new trial was not brought on this ground.
14
7. Breach of Fiduciary Duty, Fraud, and
Constructive Fraud Causes of Action
Plaintiff contends that the trial court erred when it granted the motion for summary
adjudication as to the causes of action for breach of fiduciary duty, fraud, and
constructive fraud. We shall consider these claims together, since they are based on
defendant’s alleged breach of his duty to plaintiff by failing to disclose facts relevant to
her decision to sign the Synopsys settlement agreement.
“Each spouse shall act with respect to the other spouse in the management and
control of the community assets and liabilities in accordance with the general rules
governing fiduciary relationships . . . . This duty includes the obligation to make full
disclosure to the other spouse of all material facts and information regarding the
existence, characterization, and valuation of all assets in which the community has or
may have an interest and debts for which the community is or may be liable, and to
provide equal access to all information, records, and books that pertain to the value and
character of those assets and debts, upon request.” (Fam. Code, § 1100, subd. (e).)
“The elements of fraud are: (1) a misrepresentation (false representation,
concealment, or nondisclosure); (2) knowledge of falsity (or scienter); (3) intent to
defraud, i.e., to induce reliance; (4) justifiable reliance; and (5) resulting damage.”
(Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 990.)
The elements of a cause of action for constructive fraud are (1) the existence of a
fiduciary relationship, (2) nondisclosure, that is, breach of the fiduciary duty, (3) intent to
deceive , and (4) reliance and resulting injury. (Stokes v. Henson (1990) 217 Cal.App.3d
187, 197.)
These causes of action are governed by the three-year limitations period set forth
in section 338, subdivision (d). (§ 338, subd. (d) [fraud claims]; Alfaro v. Community
Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1391
(Alfaro).) Generally, a cause of action accrues, and thus triggers the statute of
15
limitations, when it “ ‘is complete with all of its elements.’ [Citations.]” (Fox v. Ethicon
Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 806-807.) However, under the discovery rule
a cause of action does not accrue until a plaintiff discovers, or has reason to discover, the
cause of action. (Ibid.) Section 338, subdivision (d) has codified this rule for fraud
actions. It provides that a “cause of action [for fraud] is not deemed to have accrued until
the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.”
(§ 338, subd. d.)
Here, the alleged breach of fiduciary duty and fraud occurred in November 2004
when plaintiff signed the settlement agreement. Defendant presented evidence that he
told plaintiff about the keys terms of the settlement prior to her signing the document,
that is, that Synopsys would acquire Nassda by paying $7 per share, he would not
compete with Synopsys for four years, and they would receive shares with a value of $6
million. When plaintiff asked defendant what would happen if she did not sign the
documents, he replied that there would be no settlement. Plaintiff did not read what she
was signing, did not ask defendant where the other pages of the settlement agreement
were, and never thought about whether there were other pages. After signing the
settlement agreement, plaintiff never asked defendant about the Synopsys litigation.
Plaintiff also knew that defendant brought home all of the settlement documents involved
in the Synopsys litigation on May 11, 2005, and put them on a shelf.
As this court has stated, “[a] person in a fiduciary relationship may relax, but not
fall asleep. ‘[I]f she became aware of facts which would make a reasonably prudent
person suspicious, she had a duty to investigate further, and she was charged with
knowledge of matters which would have been revealed by such an investigation.’
[Citation.]” (Alfaro, supra, 171 Cal.App.4th at p. 1394.) Here, plaintiff concedes that
she did not read the settlement agreement prior to signing it. She also concedes that she
had access to it after May 11, 2005, when defendant put it on a shelf in their home, and
yet she still did not read it. She argues, however, that she did not become suspicious
16
about its terms until after she read the discovery order in 2009 and thus these causes of
action were not barred by the three-year statute of limitations. Based on that document,
she learned: defendant and his codefendants had stolen trade secrets from Synopsys and
had direct involvement in destroying evidence; and her separate property shares of
Nassda stock and her interest in the community Nassda stock would be sold to pay $20
million to Synopsys to extinguish the liability that defendant faced. However, if plaintiff
had read the settlement agreement, she would have learned that she and defendant were
paying $19,683,157 to Synopsys to settle its claims against defendant. She would have
also been advised to consult an attorney. Given the very substantial amount of money
involved and the complexity of the transaction, a reasonably prudent person would then
have consulted an attorney for advice regarding its impact on her rights. Since the trial
court did not err in finding that plaintiff failed to demonstrate the existence of a triable
issue of material fact as to the timeliness of these claims, it properly granted the motion
for summary adjudication as to the causes of action for breach of fiduciary duty, actual
fraud, and constructive fraud.
8. Reimbursement and Indemnity
Plaintiff next challenges the trial court’s ruling in which it granted summary
adjudication as to the reimbursement cause of action.4
The seventh cause of action for reimbursement and indemnity alleges that the
marital community settled the Synopsys action for $19 million as a result of defendant’s
actions, and thus “[t]he community estate is entitled to reimbursement from defendant’s
4
Plaintiff also contends that the trial court erred when it denied her motion for new
trial on this cause of action. She asserts that her “incomplete deposition could have
affected Judge’s perception.” There is nothing in the record to support her position.
17
separate property (and plaintiff is entitled to reimbursement and/or indemnity from
defendant’s share of the community property)” for $19 million.5
Under Family Code section 1000, subdivision (b), the liability of a married person
shall be satisfied from separate or community property depending on whether the act or
omission giving rise to liability “occurred while the married person was performing an
activity for the benefit of the community.”
Plaintiff contends that courts should “look to the nature of the tortious conduct and
the motivation behind it, and find that there is not benefit to the community if the conduct
is intentional or criminal.” Thus, she claims that it would be inequitable for her to share
the net loss for defendant’s misconduct.
In re Marriage of Stitt (1983) 147 Cal.App.3d 579 (Stitt) and In re Marriage of
Partridge (1990) 226 Cal.App.3d 120 (Partridge) focused on the nature of the spouse’s
misconduct. Stitt held that the wife was responsible for unpaid attorney’s fees incurred
by her for her defense against embezzlement charges in civil and criminal litigation.
(Stitt, at p. 582.) Stitt also noted that there was no evidence that the embezzlement
5
Plaintiff contends that the trial court erred when it found that the complaint did not
allege her separate property damages. She relies on language in the complaint that the
settlement agreement required the sale of “their” shares in Nassda and that “plaintiff’s
property interests” in Nassda would be reduced by the settlement agreement. We
disagree with plaintiff’s interpretation of the complaint. These two paragraphs state:
“The verbal settlement agreement reached with Synopsys, Inc. called for Defendant and
plaintiff: [¶] to sell their shares in Nassda Corporation for merger with Synopsys, Inc. for
approximately $33,876,000; [¶] to pay capital gains on the sale of about $8,650,700; [¶]
to pay Synopsys, Inc. about $19,683,157 in settlement of Synopsys, Inc.’s claims against
Defendant. [¶] The verbal settlement agreement reached with Synopsys, Inc. would
reduce plaintiff’s property interests in Nassda Corporation from an after-tax value of
about $12,613,000 ($33,876,000 less $8,650,000 = $25,226,000 divided by 2) to about
$2,771,421 ($33,876,000 less $8,650,000 = $25,226,000 less $19,683,157 = $5,542,843
divided by 2); a loss of about $10,000,000.” If plaintiff had also sought a separate
property interest in the Nassda shares, the complaint would have sought more than one
half of the value of the Nassda shares. Thus, the complaint seeks reimbursement only for
her community property interest in the Nassda shares.
18
benefited the community. (Stitt, at p. 587.) In Partridge, the husband failed to file
quarterly estimated taxes. (Partridge, at p. 123.) In the dissolution proceedings, the
husband agreed to pay all tax penalties, but argued that the wife was responsible for one-
half of the community tax debt. (Partridge, at pp. 123-124.) Partridge rejected the
wife’s argument that the husband had breached his fiduciary duty to her, since the wife
assisted the husband with bookkeeping and thus should have been aware that he was not
making the tax payments. (Partridge, at p. 126.) Partridge concluded that “the
undisputed facts show the nature of husband’s conduct was not such that the court was
entitled to make an uneven allocation of liability for debt under the deliberate
misappropriation doctrine.” (Partridge, at p. 127.)
Other cases have focused on whether there was a benefit to the community as a
result of the spouse’s conduct. In re Marriage of Hirsch (1989) 211 Cal.App.3d 104(Hirsch) involved gross negligence by the husband which benefited the community. In
Hirsch, the husband sought reimbursement for one-half of the amount he paid to settle a
lawsuit, including attorney’s fees and costs. (Id. at p. 106.) Hirsch discussed Stitt,
stating: “Confined to its facts, Stitt is correct. An innocent spouse is not required to
share in losses incurred by the intentionally tortious or criminal conduct of a spouse
where there is no benefit to the community. But the holding in Stitt is overbroad because
it includes negligent as well as intentional torts. Thus, to the extent Stitt holds the
negligent conduct of a spouse engaged in an activity benefiting the community provides
sufficient justification to characterize a debt as a separate obligation, it is incorrect.”
(Hirsch, at p. 110, fn. omitted.) Hirsch then noted that “[a]lthough intentional torts and
crimes rarely benefit the community, we can envision situations in which the community
would be enriched by such conduct. For example, had wife put the embezzled funds into
a community account or other community property, it would have been appropriate for
the community to bear the corresponding loss.” (Id. at p. 110, fn. 8.) Hirsch also
reasoned that the characterization of the spouse’s tortious conduct which gave rise to the
19
resulting obligation as either negligent or intentional did not resolve the issue of
reimbursement. (Id. at pp. 110-111.) Hirsch concluded that courts must consider
whether the spouse’s conduct benefited the community. (Id. at p. 111.) Since the
husband presented evidence that his exposure to liability arose out of his conduct while
serving on the bank’s board of directors during the marriage and the funds he received for
serving on the board were community property, Hirsch held that the settlement
obligations were not the husband’s separate debt. (Ibid.)
In In re Marriage of Bell (1996) 49 Cal.App.4th 300 (Bell), the wife embezzled
funds from her employer during the marriage, and used some of the money for
community expenses and deposited the remainder in joint accounts. (Bell, at pp. 302,
303-304.) In the dissolution proceedings, the wife sought allocation of the cost of the
civil settlement to the community. (Bell, at pp. 304-305.) Relying on Stitt, supra, 147
Cal.App.3d 579, the trial court found that whether the community benefited from the
wife’s conduct was irrelevant. (Bell, at pp. 305-306.) However, the Court of Appeal held
that since the community benefited from the wife’s embezzlement, the community bore
the liability for the cost of the settlement and reversed the judgment. (Bell, at pp. 310-
311.)
In our view, the present case is analogous to Bell, supra, 49 Cal.App.4th 300.
Here, defendant presented evidence that he started Nassda, became its President and
Chief Operating Officer during the marriage, and his position generated community
property income. Plaintiff now seeks reimbursement for her community interest in the
Nassda stock that was worth approximately $34 million prior to the Synopsys litigation.
However, the value of the Nassda stock at that time was based on defendant’s efforts
during the marriage. Assuming that these efforts included misappropriation of
proprietary information from defendant’s prior employer, they nonetheless benefited the
community by increasing the value of their stock portfolio. To reimburse plaintiff for the
value of the stock prior to the settlement with Synopsys would allow her to benefit from
20
defendant’s misconduct. Plaintiff’s attempt to distinguish Bell on the ground that there is
“no undisputed evidence that the community put the Nassda shares to its use” is not
persuasive. Whether the shares were sold to meet community expenses or simply left in a
joint account is irrelevant. (See Hirsch, supra, 211 Cal.App.3d at p. 110, fn. 8.)
Accordingly, we conclude that the trial court properly granted the motion for summary
adjudication for reimbursement and indemnity.6
B. Motion for Nonsuit
Plaintiff contends that the trial court erred when it granted defendant’s motion for
nonsuit as to her cause of action for negligent infliction of emotional distress.7
Here, the trial court stated: “I don’t think the plaintiff proved the necessary
elements of negligent infliction of emotional distress. I don’t know how you shoehorn
some kind of duty into not opening a door that somebody you don’t know is sitting right
in front of you. [¶] And I don’t know that there was any evidence to suggest that
incident in and of itself, . . . was a source of severe emotional distress to the plaintiff.”
“A defendant is entitled to a nonsuit if the trial court determines that, as a matter
of law, the evidence presented by plaintiff is insufficient to permit a jury to find in his
favor. [Citation.] . . . [¶] In reviewing a grant of nonsuit, we are ‘guided by the same
6
Plaintiff also argues that there were triable issues of material fact regarding
whether defendant acted for the benefit of the community. She argues that defendant
“abandoned the family,” abused her, “hinted sexual affairs,” and thus the community was
not benefited by defendant’s position as President and Chief Operating Officer of Nassda.
There is no support in case law for this position.
7
Relying on Pugliese, supra, 146 Cal.App.4th at pp. 1451-1456, plaintiff also
contends that the trial court erred in limiting her claim for negligent infliction of
emotional distress to the April 2008 incident. As previously stated, Pugliese is
distinguishable. In contrast to the statutory language of section 340.15, section 335.1,
which applies to a negligent infliction of emotional distress cause of action, states that
actions must be commenced “[w]ithin two years.”
21
rule requiring evaluation of the evidence in the light most favorable to the plaintiff.’
[Citation.] We will not sustain the judgment ‘ “unless interpreting the evidence most
favorably to plaintiff's case and most strongly against the defendant and resolving all
presumptions, inferences and doubts in favor of the plaintiff a judgment for the defendant
is required as a matter of law.” ’ [Citation.]” (Nally v. Grace Community Church (1988)
47 Cal.3d 278, 291.)
In Wong v. Tai Jing (2010) 189 Cal.App.4th 1354, this court set forth the
principles applicable to the present issue. “A claim of negligent infliction of emotional
distress is not an independent tort but the tort of negligence to which the traditional
elements of duty, breach of duty, causation, and damages apply. [Citations.] [¶] In
Molien v. Kaiser Foundation Hospitals (1980) 27 Cal.3d 916, the Supreme Court made it
clear that to recover damages for emotional distress on a claim of negligence where there
is no accompanying personal, physical injury, the plaintiff must show that the emotional
distress was ‘serious.’ (Id. at pp. 927-930; see Burgess v. Superior Court [1992] 2
Cal.4th at p. 1073, fn. 6. [‘[t]he requirement that the emotional distress suffered be
“serious” has its origins in Molien’]; Potter [v. Firestone Tire & Rubber Co. (1993)] 6
Cal.4th at p. 999 [emotional distress must be ‘serious’]; Thing v. La Chusa (1989) 48
Cal.3d 644, 668 . . . [‘serious’].) [¶] Moreover, the court explained, ‘ “serious emotional
distress may be found where a reasonable [person], normally constituted, would be
unable to adequately cope with the mental stress engendered by the circumstances of the
case.” [Citation.]’ (Molien, supra, 27 Cal.3d at p. 928 . . . .)” [¶] In our view, this
articulation of ‘serious emotional distress’ is functionally the same as the articulation of
‘severe emotional distress.’ Indeed, given the meaning of both phrases, we can perceive
no material distinction between them and can conceive of no reason why either would, or
should, describe a greater or lesser degree of emotional distress than the other for
purposes of establishing a tort claim seeking damages for such an injury.” (Wong, supra,
189 Cal.App.4th at pp. 1377-1378.)
22
Here, plaintiff testified that they started to live in separate bedrooms in July 2007.
Though defendant moved into the children’s bedroom, he continued to enter the master
bedroom to use the adjoining bathroom. After plaintiff had gone to sleep, he “would
come in and do other things” and plaintiff was “very annoyed” and was “mentally
stressed every time he came in.” One afternoon in 2008, she sat in a chair “right behind
the door of the master bedroom” with the door closed. When defendant returned home,
he wanted to enter. Plaintiff asked him to use the other bathroom. She believed that he
knew that she was right by the door, because her “voice was so close,” he should have
been able to determine where she was sitting. However, defendant pushed the door open
and her arm was scratched. The scratch was about two to three inches long and was “not
a sharp scratch, it’s like a door, edge of the door.” Even assuming that a reasonable jury
would have concluded that defendant could have determined that plaintiff was sitting
behind the closed door by the sound of her voice and thus knew that he would hit her by
opening the door, there was no evidence that she suffered serious emotional distress as a
result of his act. As a matter of law, a reasonable person, who had placed herself in front
of a closed door, would have been able to adequately cope with the mental stress of
defendant’s conduct of opening the door, which then scratched her arm. Thus, the trial
court did not err in granting the motion for nonsuit.8
8
It appears that plaintiff also argues that there was more than one incident in which
defendant forced himself into the master bedroom and injured her. First, the evidence to
which plaintiff refers was presented after the motion for nonsuit was granted. Second,
this evidence does not support her claim. Defendant testified that plaintiff had mentioned
an incident in April but he did not recall any incident in which she placed a chair behind
the door. He then testified that there were many incidents between July 2007 and
October 2008 in which he knocked on the door so he could get his clothes, entered, and
then left.
23
IV. Disposition
The judgment is affirmed. Costs on appeal are awarded to defendant.
_______________________________
Mihara, J.
WE CONCUR:
______________________________
Bamattre-Manoukian, Acting P. J.
______________________________
Grover, J.
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