Taigod 3 v. Mandarin Realty 1 Corp. CA2/5 ( 2021 )

Filed 3/10/21 Taigod 3 v. Mandarin Realty 1 Corp. CA2/5
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
TAIGOD 3, LLC, B298793
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC647465)
v.
MANDARIN REALTY 1
CORPORATION et al.,
Defendants and
Respondents.
APPEAL from a judgment of the Superior Court of Los
Angeles County, Yvette M. Palazuelos and Rupert A.
Byrdsong, Judges. Affirmed.
Lew Law Firm, Bill W. Lew, for Plaintiff and
Appellant.
Interlink Law Group, Jane A. Rheinheimer, for
Defendants and Respondents.
__________________________
Plaintiff and appellant Taigod 3, LLC (Taigod) appeals
from a judgment following a jury trial in favor of real estate
broker David Wan and his company Mandarin Realty 1
Corporation (Mandarin) in this action arising out of a forged
signature in a 2002 real estate transaction. The jury found
that the statute of limitations on Taigod’s claims had run
before the action was filed. On appeal, Taigod contends the
trial court erred by instructing the jury on delayed discovery,
rather than providing an instruction on fraudulent
concealment that Taigod requested. We conclude that the
evidence did not support an instruction on equitable estoppel
based on fraudulent concealment. Even if it was error to
refuse the instruction, however, Taigod has not shown a
miscarriage of justice necessary to reverse the judgment on
appeal, because there was no evidence to support that
Taigod met its burden to show it exercised reasonable
diligence to identify the wrongdoer. Therefore, we affirm.
FACTS AND PROCEDURAL BACKGROUND
Purchase Agreement and Breach
In 2002, Winners Investment Group One (Winners)
owned a retail shopping center in Alhambra, California. The
shopping center’s anchor tenant was Alhambra Bowling
Center, Inc. (Bowling Center). The lease agreement between
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Winners and Bowling Center included a ten-year lease term
expiring in August 2003, with an option to extend the lease
for five years. The landlord was required to pay Bowling
Center for tenant improvements made by Bowling Center
when it vacated the premises.
Winners listed the property for sale through real estate
salesperson Yevonne Luo, who was a friend of one of the
owners of Winners. Luo brought the listing for the property
with her when she began working for Wan at his real estate
agency, Mandarin.
Ken Lai, Taigod’s managing member, saw the property
advertised in a Chinese newspaper and called Wan to
discuss purchasing the property. Lai speaks Cantonese as
his primary language and Wan speaks English and
Cantonese. Lai made an offer on behalf of Taigod, and
entered into a purchase agreement. Mandarin acted as a
dual agent, representing both buyer and seller in the
transaction. During escrow, Taigod reviewed the Bowling
Center lease. Taigod refused to purchase the shopping
center if it would be liable to pay for Bowling Center’s tenant
improvements.
A document referred to by the parties as escrow
addendum B, dated February 28, 2002, was drafted by an
unknown author. The addendum provided that upon
Bowling Center’s termination of the lease or expiration of
the lease term, Winners would pay the buyer of the shopping
center for Bowling Center’s tenant improvements,
restoration of the premises, and up to two months of the
3
shopping center buyer’s lost rent for the time necessary to
complete the restoration work, not to exceed a total of
$250,000, which would be held in escrow. If an appraisal for
the restoration work exceeded $250,000, Winners would
deposit the additional amount in escrow. The document also
stated that Bowling Center’s rent would be $26,000 per
month, which would increase after two months to $30,000
per month. If Bowling Center chose to exercise its option for
a five-year extension, the monthly rent would be $35,000 per
month for the first two months and then increase to $40,000
per month.
Wan gave the escrow addendum to Lai, who signed on
behalf of Taigod. The two general partners of Winners
signed the document on behalf of Winners. Wan signed on
behalf of Mandarin. The signature of Bowling Center’s
owner, Yi-Chieh Chow, also known as Terry Chow, appeared
on escrow addendum B on behalf of Bowling Center.
Bowling Center exercised its option to extend the lease
for five years. In 2008, Bowling Center stopped paying rent.
Bowling Center decided not to renew its lease at the
expiration of the term in September 2008. Bowling Center
requested payment for its tenant improvements. Taigod
sought the increased rent provided for in the addendum and
claimed that Winners was required to pay Bowling Center
for the tenant improvements.
4
Case 1
In October 2009, Bowling Center filed an action for
breach of contract against Winners and Taigod. (Super. Ct.
L.A. County, 2009, No. BC425001) (Case 1).) Winners and
Taigod each filed cross-complaints against the other parties.
Lai learned in 2009 that although Chow admitted the
signature on the escrow addendum was her signature, she
claimed she did not sign the document. Lai called Wan and
asked if he knew anything about the authenticity of escrow
addendum B. Over the course of the proceedings in Case 1,
Lai asked Wan many times whether he knew who had
altered the document. Wan always said no.
Winners was dismissed from Case 1 prior to the
beginning of a jury trial in March 2013. Lai was present for
every day of the trial, although he did not understand the
testimony entirely.
Wan testified. Bowling Center’s attorney asked Wan if
anyone from Mandarin had cut and pasted Chow’s signature
to the addendum. Wan answered, “I don’t think so.”
Lai was concerned about Wan’s answer. He asked Wan
in the hallway of the courthouse during a break later that
day whether he or the people in his office had falsified the
document. Wan said no.
The trial court instructed the jury on Bowling Center’s
theory that Taigod was responsible for Bowling Center’s
harm because Luo, Wan, and Mandarin had forged Chow’s
5
signature to the escrow addendum. Lai was present when
the instruction was read to the jury.
The jury found in favor of Bowling Center and awarded
damages of $200,315 and punitive damages of $104,583.
Taigod paid a total of $1.1 million to Bowling Center,
including attorney fees and costs.
Case 2
Within the month of the judgment in the case between
Bowling Center and Taigod, on March 28, 2013, Bowling
Center filed an action against the real estate agency,
Mandarin, its principal, Wan, and its agent, Luo, based on
the evidence of forgery presented during Case 1. (Super. Ct.
L.A. County, 2013, No. BC504198) (Case 2).) Bowling
Center alleged several causes of action based on the theory
that an employee of the broker forged Chow’s signature on
the escrow addendum. Taigod was not aware of the case at
the time of filing, but learned of Case 2 in September 2015,
when Bowling Center’s attorney Bill Lew subpoenaed Lai to
testify as a percipient witness.
Lai testified at trial in September 2015. While he was
at the courthouse, he spoke to Wan in the hallway and asked
if Wan or the people in his office had falsified escrow
addendum B. Wan answered no. Luo also testified in Case
2 that she did not alter or forge the escrow addendum.
The jury returned its verdict on liability on September
4, 2015. The jury found that Bowling Center could not have
6
discovered the identity of the forger before March 2010. The
special verdict form asked with respect to Bowling Center’s
claim for intentional interference with prospective economic
relations, “Did David Wan or Yevonne Luo or Mandarin
Realty 1 Corporation engage in wrongful conduct by cutting
and pasting Escrow Addendum B or assisting or
participating or conspiring in the scheme in cutting and
pasting Escrow Addendum B?” The jury answered, “Yes.”
After further proceedings were conducted to determine the
issue of punitive damages on September 8, 2015, judgment
was entered on October 5, 2015, in favor of Bowling Center.
Bowling Center’s attorney told Lai about the verdict in
June 2016, and Taigod engaged the attorney to represent
Taigod.
Case 3
A. Complaint and Pre-Trial Rulings
On January 19, 2017, Taigod filed the complaint in this
case against Mandarin, Luo and Wan. (Super. Ct. L.A.
County, 2017, No. BC647465) (Case 3).) Taigod filed an
amended complaint on April 24, 2017, alleging several
causes of action, including fraud based on misrepresentation
and concealment, negligent misrepresentation, inducing
breach of contract, intentional interference with contractual
relations and with prospective economic advantage,
7
negligent interference with prospective economic advantage,
and conspiracy to defraud.
The trial court bifurcated the statute of limitations
issue to be tried first with a separate jury. Taigod entered
into a settlement agreement with Luo.
Mandarin and Wan filed a motion in limine to exclude
testimony or evidence identifying them as forgers based on
the findings of the jury in Case 2. The jury verdict in Case 2
did not determine which individual was responsible for
pasting the signature on the escrow addendum. They
argued that statements referring to them as forgers would
be confusing to the jury and unjustly prejudicial to the
defendants.
A hearing was held on January 17, 2019. Taigod
opposed the motion to exclude evidence of the jury’s verdict
in Case 2. Taigod claimed the statute of limitations began to
run when Taigod learned of the jury verdict in Case 2 in
June 2016. Taigod argued that under the California
Supreme Court case of Bernson v. Browning-Ferris
Industries (1994) 7 Cal.4th 926 (Bernson), although Taigod
learned that a fraud had been committed during Case 1, the
statute of limitations was tolled until Taigod had reasonable
notice of the identity of the wrongdoer. The jury verdict
would not be presented for the truth of the matter, but to
establish Taigod’s knowledge of the perpetrators which
triggered the statute of limitations.
The trial court disagreed that the statute was tolled
under Bernson until Taigod knew the identity of the
8
perpetrators. Wan and Mandarin argued that there was
sufficient evidence to put Taigod on notice in Case 1,
including the jury instruction that Bowling Center was
claiming harm as a result of a forgery by Wan, Luo, and
Mandarin as the agents of Taigod. In addition, the identity
of the forger was limited to a finite number of people, not a
wide universe of people.
The court questioned whether Taigod had taken steps
to ascertain the identity of the forger. Taigod’s attorney
argued that whether Taigod took reasonable steps to
ascertain the forger’s identity was precisely the question to
be presented to the jury. He noted that there were no
findings in the first trial concerning the identity of the
forger. He argued there would be no prejudice to the
defendants, because the evidence of the jury verdict in Case
2 was simply to establish Taigod’s knowledge for the purpose
of the statute of limitations and could be excluded from the
second phase of the trial on liability before a different jury.
The court stated that a finding on the identity of the
forger was not required for the statute of limitations to start
running. The court granted the motion to exclude evidence
or testimony of whether the defendants forged the document,
including the jury verdict in Case 2, and prohibited
discussion of whether Wan and Mandarin forged the
document. Lai could not testify that he learned Wan and
Mandarin were the perpetrators of the forgery when
attorney Lew told him in 2016 that the jury’s verdict in Case
2 had found them liable.
9
Mandarin and Wan requested Judicial Council of
California Civil Jury Instructions (CACI) 4541 on the statute
of limitations and CACI 1925 on delayed discovery in cases
of fraud or mistake. As modified for trial, the instruction
based on CACI 1925 stated: “Defendants Mandarin Realty 1
Corporation and David Wan contend that Plaintiff Taigod 3,
LLC’s lawsuit was not filed within the time set by law. To
succeed on this defense, Defendants Mandarin Realty 1
Corporation and David Wan must prove that Plaintiff Taigod
3, LLC[’s] claimed harm occurred before January 19, 2014.
[¶] If Defendants Mandarin Realty 1 Corporation and David
Wan prove that Plaintiff Taigod 3, LLC[’s] claimed harm
occurred before January 19, 2014, Plaintiff Taigod 3, LLC’s
lawsuit was filed on time if Plaintiff Taigod 3, LLC proves
that before that date, it did not discover facts constituting
the fraud or mistake, and with reasonable diligence could
not have discovered those facts.”
Taigod objected that the CACI instructions requested
by the defendants on the statute of limitations were not
applicable to the case and instead requested a special jury
instruction that incorporated the concept of fraudulent
concealment. The first two paragraphs of the special
1 CACI 454 provides: “[Name of defendant] contends
that [name of plaintiff]’s lawsuit was not filed within the
time set by law. To succeed on this defense, [name of
defendant] must prove that [name of plaintiff]’s claimed
harm occurred before [insert date from applicable statute of
limitation].”
10
instruction addressed the statute of limitations and delayed
discovery, but Taigod added a third paragraph as follows:
“Mandarin Realty 1 Corporation, David Wan, and Yevonne
Luo are prevented from raising a statute of limitations
defense if, as the result of their intentional concealment,
Taigod 3, LLC was unable to discover, or through the
exercise of reasonable diligence could not have discovered,
the Defendants’ actual identities as the alleged perpetrators
of Taigod 3, LLC’s claimed harm of the alleged cutting and
pasting of Escrow Addendum before January 19, 2014.”2
2 Taigod’s proposed special instruction provided in full:
“Mandarin Realty 1 Corporation, David Wan and Yevonne
Luo contend that Taigod 3, LLC’s lawsuit was not filed
within the time set by law. To succeed on this defense,
Mandarin Realty 1 Corporation, David Wan and Yevonne
Luo must prove that Taigod 3, LLC’s claimed harm of the
alleged cutting and pasting of Escrow Addendum B occurred
before January 19, 2014. [¶] If Mandarin Realty 1
Corporation, David Wan and Yevonne Luo prove that Taigod
3, LLC’s claimed harm of the alleged cutting and pasting of
Escrow Addendum B occurred before January 19, 2014,
Taigod 3, LLC’s lawsuit was still filed on time if Taigod 3,
LLC proves that before that date, Taigod 3, LLC did not
discover, and did not know of facts that would have caused a
reasonable person to suspect, that it had suffered harm that
was caused by someone’s wrongful conduct or Taigod 3, LLC
did not discover, and a reasonable and diligent investigation
would not have disclosed the alleged cutting and pasting of
Escrow Addendum B. [¶] Mandarin Realty 1 Corporation,
David Wan, and Yevonne Luo are prevented from raising a
statute of limitations defense if, as the result of their
11
The trial court ruled that it would give the standard
CACI 1925 and not modified jury instructions. The court
noted that the directions specified that CACI 1925 should be
used if the plaintiff alleged the delayed discovery rule
applied to avoid the bar of the limitation defense. Taigod
argued that CACI 1925 did not apply, because it directed the
jury to determine when Taigod learned of the forgery and
whether there were circumstances that delayed discovery of
the forgery, rather than when Taigod learned the identity of
the defendants to sue. The trial court denied the request to
modify the standard instruction. The trial court also
rejected Taigod’s verdict form, which would have required
the jury to make special findings, and strongly suggested the
parties’ use a general verdict form.
During a final status conference on May 31, 2019,
Taigod objected again to using the delayed discovery
instruction without including language from the Bernson
case about the identity of the perpetrator. The court
declined to reconsider the ruling on the instruction but
stated that “to the extent that you don’t have an instruction
that’s written out, that doesn’t prevent the parties from
arguing the evidence the way they want to argue it. [¶] If
intentional concealment, Taigod 3, LLC was unable to
discover, or through the exercise of reasonable diligence
could not have discovered, the Defendants’ actual identities
as the alleged perpetrators of Taigod 3, LLC’s claimed harm
of the alleged cutting and pasting of Escrow Addendum B
before January 19, 2014.”
12
you want to make your arguments and frame them based on
the evidence, you’re free to do so. You can be persuasive.
There doesn’t necessarily have to be a CACI on the point to
make your point.”
B. Trial
A three-day jury trial began on June 17, 2019. During
opening statements, Taigod’s attorney argued that Lai knew
everything he needed to know to file a lawsuit except the
identity of the person who did it. A universe of people could
have forged the document among the dozens of people
working for the broker, the escrow company, and the seller,
but Taigod could not sue the whole universe without risking
a malicious prosecution action.
Wan testified at trial that as a real estate broker, he
owns Mandarin and has 35 sales agents working for him.
When Taigod refused to buy the property if it had to pay for
tenant improvements, Wan spoke with Winners. Winners
agreed to pay for the tenant improvements. He believes
Lai’s brother drafted the escrow addendum. The parties to
the real estate transaction signed the escrow addendum with
the documents at the escrow office, but Winners delivered
the signature of Bowling Center to Wan. Wan has never
seen the original document and it has never been produced
in any of the lawsuits. He noted that the seller of the
property is in Taiwan.
13
At the conclusion of Wan’s testimony, the trial court
solicited written questions from the jury for the court to ask
of the witness. A juror asked when the lawsuits concluded,
and Wan answered that it was 2016 or 2017. Another juror
asked if it was Winners responsibility to provide the escrow
account. Wan answered that it was. Asked who checks the
validity of the documents in a contract, Wan answered that
he checks the contract.
Lai testified with the assistance of an interpreter. A
special interrogatory propounded in Case 3 asked when
Taigod became aware of the existence of Case 2. Lai
answered October 2013, but he was mistaken in his
recollection and intended to answer October 2015.
During Lai’s deposition in Case 3, he was asked, “[I]n
October 2013, you learned that David Wan responded to
request for admissions [in Case 2] and denied that he had
forged the [escrow addendum]?” Lai responded, “Yes.” After
reviewing his deposition testimony, Lai corrected this
response twice. The first correction stated that he learned in
June 2016 and a second correction listed for the same
question stated that he learned in 2015. Asked in the
deposition if he knew about the second case in October 2013,
he responded, “Yes.” He later corrected his response to state
that it was in 2015.
Lai did not ask Luo or either of the principals of
Winners if they had anything to do with the alteration of the
escrow addendum. A juror submitted a question asking the
date that Case 2 was decided, as well as the outcome of the
14
case, and when Luo was no longer a party to the present
case. The court asked the first and last questions only.
Luo testified that she worked for Mandarin for about a
year. She did not alter escrow addendum B.
During closing arguments, defendants’ attorney argued
that Lai asked Wan several times whether he forged the
document, because he had doubts and Wan’s statements did
not dissuade him. Defendants’ attorney also highlighted the
discrepancies in Lai’s testimony concerning the date that he
learned about Case 2.
Taigod’s attorney argued that Lai acted with
reasonable diligence in asking Wan whether Mandarin was
involved in the forgery. Lai had a client relationship with
Wan, while Chow had no direct relationship to Wan. He
argued the statute of limitations never started to run,
because Taigod did not know who to file an action against.
He stated that Taigod filed the instant action because time
was running out, but also stated that the clock was not even
ticking yet when Taigod filed the lawsuit.
During deliberations, the jury asked, “What in the
words of the law triggers the start of the time period referred
to by the statute of limitations.” The court referred the jury
to review CACI 1925. Taigod continued to object to the
instructions as failing to incorporate the holding of Bernson.
On June 19, 2019, the jury found in favor of the
defendants and against Taigod on the statute of limitations.
The trial court entered judgment in favor of the defendants
15
that day. Taigod filed a timely notice of appeal from the
judgment on June 25, 2019.
DISCUSSION
Standard of Review
“A party is entitled upon request to correct,
nonargumentative instructions on every theory of the case
advanced by him which is supported by substantial
evidence.” (Soule v. General Motors Corp. (1994) 8 Cal.4th
548, 572 (Soule).) “‘[T]he duty of the court is fully discharged
if the instructions given by the court embrace all the points
of the law arising in the case. [Citations.] [¶] A party is not
entitled to have the jury instructed in any particular
phraseology and may not complain on the ground that his
requested instructions are refused if the court correctly gives
the substance of the law applicable to the case. [Citation.]’
[Citations.]” (Davis v. Honeywell Internat. Inc. (2016) 245
Cal.App.4th 477, 495.)
“We review de novo whether a challenged instruction
correctly states the law.” (Bowman v. Wyatt (2010) 186
Cal.App.4th 286, 298.) The use of standard instructions
approved by the Judicial Council, such as CACI, is “strongly
encouraged.” (Cal. Rules of Court, rule 2.1050(e).) “If the
latest edition of the jury instructions approved by the
Judicial Council contains an instruction applicable to a case
and the trial judge determines that the jury should be
16
instructed on the subject, it is recommended that the judge
use the Judicial Council instruction unless he or she finds
that a different instruction would more accurately state the
law and be understood by jurors. Whenever the latest
edition of the Judicial Council jury instructions does not
contain an instruction on a subject on which the trial judge
determines that the jury should be instructed, or when a
Judicial Council instruction cannot be modified to submit
the issue properly, the instruction given on that subject
should be accurate, brief, understandable, impartial, and
free from argument.” (Ibid.)
We view the evidence in the light most favorable to the
party contending that a requested instruction should have
been given, since the party was entitled to the requested
instruction if the evidence could establish the elements of
the party’s theory of the case. (Ayala v. Arroyo Vista Family
Health Center (2008) 160 Cal.App.4th 1350, 1358.) We
assume the jury, given correct instructions, might have
drawn inferences more favorable to the appellant and
rendered a verdict in that party’s favor on those issues to
which it received misdirection. (Veronese v. Lucasfilm Ltd.
(2012) 212 Cal.App.4th 1, 4–5 (Veronese).)
“A judgment may not be reversed on appeal, even for
error involving ‘misdirection of the jury,’ unless ‘after an
examination of the entire cause, including the evidence,’ it
appears the error caused a ‘miscarriage of justice.’ (Cal.
Const., art. VI, § 13.) When the error is one of state law
only, it generally does not warrant reversal unless there is a
17
reasonable probability that in the absence of the error, a
result more favorable to the appealing party would have
been reached. (People v. Watson (1956) 46 Cal.2d 818, 835.)
[¶] Thus, when the jury receives an improper instruction in
a civil case, prejudice will generally be found only ‘“[w]here it
seems probable that the jury’s verdict may have been based
on the erroneous instruction . . . .”’ (LeMons v. Regents of
University of California [(1978)] 21 Cal.3d 869, 875, quoting
Robinson v. Cable (1961) 55 Cal.2d 425, 428.)” (Soule, supra,8 Cal.4th at p. 574.)
Assessing prejudice from an erroneous instruction
requires evaluation of several factors, including “‘(1) the
degree of conflict in the evidence on critical issues [citations];
(2) whether respondent’s argument to the jury may have
contributed to the instruction’s misleading effect [citation];
(3) whether the jury requested a rereading of the erroneous
instruction [citation] or of related evidence [citation]; (4) the
closeness of the jury’s verdict [citation]; and (5) the effect of
other instructions in remedying the error [citations].’ (Pool
[v. City of Oakland (1986) 42 Cal.3d 1051,] 1069–1070,
quoting LeMons v. Regents of University of California[,
supra,] 21 Cal.3d 869, 876.)” (Soule, supra, 8 Cal.4th at
pp. 570–571.)
Fraudulent Concealment
The parties agree that the three-year limitations
period for fraud provided in Code of Civil Procedure section
18
338, subdivision (d), is the applicable statute of limitations.
At the defendants’ request, the trial court instructed the jury
on the rule of delayed discovery, but Taigod contends that
the jury should have been instructed on fraudulent
concealment instead. We conclude that although the delayed
discovery rule did not apply to Taigod’s theory of the case,
any error in giving the legally correct delayed discovery
instruction was harmless. The evidence at trial did not
support an instruction on fraudulent concealment, but even
if it was error to refuse the instruction, Taigod has not
shown a miscarriage of justice.
A. General Principles and Delayed Discovery
Competing policies are balanced through statutes of
limitation. “One purpose is to give defendants reasonable
repose, thereby protecting parties from ‘defending stale
claims, where factual obscurity through the loss of time,
memory or supporting documentation may present unfair
handicaps.’ [Citations.] A statute of limitations also
stimulates plaintiffs to pursue their claims diligently.
[Citations.] A countervailing factor, of course, is the policy
favoring disposition of cases on the merits rather than on
procedural grounds.” (Fox v. Ethicon Endo-Surgery, Inc.
(2005) 35 Cal.4th 797, 806 (Fox).)
The statute of limitations generally begins to run when
an action accrues, usually on the date of injury. (Bernson,
supra, 7 Cal.4th at p. 931.) “Alternatively, it is often stated
19
that the statute commences ‘upon the occurrence of the last
element essential to the cause of action.’ [Citations.]”
(Bernson, supra, 7 Cal.4th at p. 931.)
Under the discovery rule, the accrual date is postponed
until the plaintiff discovers, or has reason to discover, the
cause of action. (Fox, supra, 35 Cal.4th at p. 807.) A
plaintiff has reason to discover a cause of action when the
plaintiff has reason to suspect a factual basis for
wrongdoing, causation, and harm. (Ibid.) Under the
discovery rule, suspicion of one of these components, along
with knowledge of any of the remaining components,
generally triggers the statute of limitations. (Ibid.) “Rather
than examining whether the plaintiffs suspect facts
supporting each specific legal element of a particular cause
of action, we look to whether the plaintiffs have reason to at
least suspect that a type of wrongdoing has injured them.”
(Ibid.)
“The discovery rule only delays accrual until the
plaintiff has, or should have, inquiry notice of the cause of
action.” (Fox, supra, 35 Cal.4th at p. 807.) Plaintiffs are
presumed to have knowledge of an injury if they are aware of
circumstances that put them on inquiry or they had the
opportunity to obtain knowledge from sources that were
open to investigation. (Id. at pp. 807–808.) “In other words,
plaintiffs are required to conduct a reasonable investigation
after becoming aware of an injury, and are charged with
knowledge of the information that would have been revealed
by such an investigation.” (Id. at p. 808.)
20
“A plaintiff need not be aware of the specific ‘facts’
necessary to establish the claim; that is a process
contemplated by pretrial discovery. Once the plaintiff has a
suspicion of wrongdoing, and therefore an incentive to sue,
she must decide whether to file suit or sit on her rights. So
long as a suspicion exists, it is clear that the plaintiff must
go find the facts; she cannot wait for the facts to find her.”
(Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1111 (Jolly).)
“It is not necessary that a plaintiff find the smoking gun
before being charged with inquiry notice.” (The Police
Retirement System of St. Louis v. Page (2018) 22 Cal.App.5th
336, 343.) “At this point it is necessary only to point out the
oft-stated rule that it is the discovery of facts, not their legal
significance, that starts the statute.” (Jolly, supra, 44 Cal.3d
at p. 1113.)
“While ignorance of the existence of an injury or cause
of action may delay the running of the statute of limitations
until the date of discovery, the general rule in California has
been that ignorance of the identity of the defendant is not
essential to a claim and therefore will not toll the statute.
[Citations.] As we have observed, ‘the statute of limitations
begins to run when the plaintiff suspects or should suspect
that her injury was caused by wrongdoing, that someone has
done something wrong to her.’ [Citation.] Aggrieved parties
generally need not know the exact manner in which their
injuries were ‘effected, nor the identities of all parties who
may have played a role therein.’ [Citation.]” (Bernson,
supra, 7 Cal.4th at p. 932.)
21
“Although never fully articulated, the rationale for
distinguishing between ignorance of the wrongdoer and
ignorance of the injury itself appears to be premised on the
commonsense assumption that once the plaintiff is aware of
the injury, the applicable limitations period (often effectively
extended by the filing of a Doe complaint) normally affords
sufficient opportunity to discover the identity of all the
wrongdoers.” (Bernson, supra, 7 Cal.4th at p. 932.)
In this case, the jury was given a correct instruction on
the delayed discovery rule. The statute of limitations did not
begin to run when the forgery was committed in 2002,
because Taigod was not aware of it. Taigod discovered facts
sufficient to put it on inquiry notice at some point between
2009 and March 2013: Taigod learned in 2009 that Chow
claimed she never signed the addendum, and Bowling
Center presented evidence of the forgery at trial in Case 1 in
March 2013. The only fact that Taigod did not know at the
time of trial in March 2013 was the identity of the
perpetrator, but the perpetrator’s identity was not an
element of any cause of action. Applying the delayed
discovery rule, the statute of limitations began to run no
later than March 2013, and Taigod’s action filed in 2017 was
barred, unless another doctrine applied to further extend the
statute of limitations.
Any error in giving the delayed discovery instruction,
however, was harmless. The trial court instructed the jury
to find the action was filed on time if Taigod proved that it
did not discover facts constituting the fraud, and with
22
reasonable diligence could not have discovered those facts,
before January 19, 2014. The court did not state that the
identity of the perpetrator was not one of the facts
constituting the fraud. The language of the instruction
allowed Taigod to argue its theory that the statute of
limitations did not begin to run before January 19, 2014,
because the identity of the perpetrator was a necessary fact
that could not have been discovered earlier.
B. Fraudulent Concealment
Taigod contends the trial court erred when it failed to
give the special instruction on fraudulent concealment that
Taigod requested. Under the fraudulent concealment rule, a
defendant who intentionally conceals his or her identity may
be equitably estopped from asserting the statute of
limitations to defeat an untimely claim. (Bernson, supra, 7
Cal.4th at p. 936.)3 Fraudulent concealment is a “close
3 The Bernson court described fact patterns in which
the general rule may not apply because “as a result of the
defendant’s intentional concealment, the plaintiff is not only
unaware of the defendant’s identity, but is effectively
precluded as a practical matter from ascertaining it through
normal discovery procedures. May a thief, for example, who
leaves no clues to his identity defeat an action by the rightful
owner to recover the stolen property if the owner fails to find
and serve the culprit within the applicable limitations
period? Should the anonymous perpetrator of an assault and
battery be immune from the victim’s civil damage action
23
cousin” of the discovery rule. (Id. at p. 931.) “Like the
discovery rule, the rule of fraudulent concealment is an
equitable principle designed to effect substantial justice
between the parties; its rationale ‘is that the culpable
defendant should be estopped from profiting by his own
wrong to the extent that it hindered an “otherwise diligent”
plaintiff in discovering his cause of action.’ [Citations.]”
(Ibid.) “The rule of fraudulent concealment is applicable
whenever the defendant intentionally prevents the plaintiff
from instituting suit; the rule applies whether or not the
action itself is based on fraud.” (Id. at p. 931, fn. 3.)
“As we long ago observed, ‘The statute of limitations
was intended as a shield for [defendant’s] protection against
stale claims, but he may not use it to perpetrate a fraud
upon otherwise diligent suitors.’ [Citation.]” (Bernson,
supra, 7 Cal.4th at p. 935.) “One should not profit from one’s
own wrongdoing. Accordingly, we hold that a defendant may
be equitably estopped from asserting the statute of
limitations when, as the result of intentional concealment,
after the time for identifying and serving Doe defendants
has been exhausted? Or, alternatively, should the
defendants in these circumstances be estopped from
capitalizing upon their own misconduct under an equitable
rule, akin to the rule of fraudulent concealment, which
would toll the statute until the plaintiff discovers, or through
the exercise of reasonable diligence should have discovered,
the defendant’s identity?” (Bernson, supra, 7 Cal.4th at
p. 933.)
24
the plaintiff is unable to discover the defendant’s actual
identity.” (Bernson, supra, 7 Cal.4th at p. 936.)
“The rule of equitable estoppel includes, of course, the
requirement that the plaintiff exercise reasonable diligence.
[Citation.] Thus, under our holding the statute will toll only
until such time that the plaintiff knows, or through the
exercise of reasonable diligence should have discovered, the
defendant’s identity. Lack of knowledge alone is not
sufficient to stay the statute; a plaintiff may not disregard
reasonably available avenues of inquiry which, if vigorously
pursued, might yield the desired information.” (Bernson,
supra, 7 Cal.4th at p. 936.)
“One factor which must be considered pertinent to the
diligence inquiry is whether the filing of a timely Doe
complaint would, as a practical matter, have facilitated the
discovery of the defendant’s identity within the requisite
three-year period for service of process. (Code Civ. Proc.,
§ 583.210, subd. (a); Jolly[,] supra, 44 Cal.3d at p. 1118.)
Where the identity of at least one defendant is known, for
example, the plaintiff must avail himself of the opportunity
to file a timely complaint naming Doe defendants and take
discovery. However, where the facts are such that even
discovery cannot pierce a defendant’s intentional efforts to
conceal his identity, the plaintiff should not be penalized.”
(Bernson, supra, 7 Cal.4th at pp. 936–937.)
“It is only in those relative few [civil cases] where the
defendant asserts a statute of limitations defense and the
plaintiff claims that he was totally ignorant of the
25
defendant’s identity as a result of the defendant’s fraudulent
concealment, that the issue will even arise; among those few,
it will be the rare and exceptional case in which the plaintiff
could genuinely claim that he was aware of no defendants,
and even more rare that, given knowledge of at least one, he
could not readily discover the remainder through the filing of
a Doe complaint and the normal discovery processes.”
(Bernson, supra, 7 Cal.4th at p. 937.)
In Bernson, a member of the Los Angeles City Council
learned he was the subject of a highly critical report.
(Bernson, supra, 7 Cal.4th at p. 929.) Bernson obtained a
copy, but had no information about the author. In February
1990, two reporters for the Los Angeles Times told him that
the report had been prepared by defendant Browning–Ferris
Industries of California, Inc. (BFI). Bernson contacted BFI’s
attorney to confirm the information, but the attorney denied
any knowledge of the report. The attorney sent a letter to
the Los Angeles Times, with a copy to Bernson, denying that
BFI had direct or indirect responsibility for preparation of
the report. The attorney demanded that the newspaper
retract attribution to BFI and advise Bernson that BFI was
not involved. Bernson accepted the attorney’s
representation. In late May 1991, a different Los Angeles
Times reporter informed an employee of Bernson that an
independent political consultant prepared the report on
behalf of BFI. From this information, Bernson concluded the
attorney’s representations were false and he filed a libel
action within one year.
26
The California Supreme Court concluded that
“[a]lthough the normal rule is that ignorance of the identity
of the defendant is not a basis for tolling the statute of
limitations, under the particular circumstances this court
determined that as a matter of equity, the defendant should
be estopped from profiting from its own misconduct in
precluding the plaintiff from ever ascertaining the identity of
the defendant.” (Shively v. Bozanich (2003) 31 Cal.4th 1230,
1249.)
We note the differences between the doctrines of
equitable tolling and equitable estoppel. (Lantzy v. Centex
Homes (2003) 31 Cal.4th 363, 383.) “‘“Tolling, strictly
speaking, is concerned with the point at which the
limitations period begins to run and with the circumstances
in which the running of the limitations period may be
suspended. . . . Equitable estoppel, however, . . . comes into
play only after the limitations period has run and addresses
. . . the circumstances in which a party will be estopped from
asserting the statute of limitations as a defense to an
admittedly untimely action because his conduct has induced
another into forbearing suit within the applicable limitations
period. [Equitable estoppel] is wholly independent of the
limitations period itself and takes its life . . . from the
equitable principle that no man [may] profit from his own
wrongdoing in a court of justice.”’ [Citations.]” (Id. at
p. 383.) For a defendant to be equitably estopped from
asserting a statute of limitations, the plaintiff must be
27
“directly prevented . . . from filing [a] suit on time.” (Id. at
p. 385.)
C. Application
Taigod requested a special instruction on fraudulent
concealment.4 The issue of equitable estoppel based on
4 A modified version of CACI 456, which is intended for
use when a plaintiff contends the defendant should be
estopped from asserting the statute of limitations, might
have been more appropriate for Taigod’s theory of estoppel
based on fraudulent concealment. CACI 456 currently
provides: “[Name of plaintiff] claims that even if
[his/her/nonbinary pronoun/its] lawsuit was not filed on
time, [he/she/nonbinary pronoun/it] may still proceed
because [name of defendant] did or said something that
caused [name of plaintiff] to delay filing the lawsuit. In
order to establish the right to proceed, [name of plaintiff]
must prove all of the following: [¶] 1. That [name of
defendant] said or did something that caused [name of
plaintiff] to believe that it would not be necessary to file a
lawsuit; [¶] 2. That [name of plaintiff] relied on [name of
defendant]’s conduct and therefore did not file the lawsuit
within the time otherwise required; [¶] 3. That a reasonable
person in [name of plaintiff]’s position would have relied on
[name of defendant]’s conduct; [and] [¶] 4. [That after the
limitation period had expired, [name of defendant]’s
representations by words or conduct proved to not be true;
and] [¶] 5. That [name of plaintiff] proceeded diligently to
file suit once [he/she/nonbinary pronoun/it] discovered the
need to proceed. [¶] It is not necessary that [name of
28
fraudulent concealment of the wrongdoer’s identity is an
equitable issue for determination by the court, but the trial
court may exercise its discretion to submit the issue to a jury
and adopt the jury’s factual findings. (See Hopkins v.
Kedzierski (2014) 225 Cal.App.4th 736, 744–755 [equitable
estoppel is an equitable issue for resolution by the court, but
the trial court may empanel an advisory jury to make
preliminary factual findings].) In this case, however, an
instruction on fraudulent concealment was not supported by
the evidence at trial. Even if we were to conclude that it was
error to refuse Taigod’s instruction, Taigod has not
demonstrated a miscarriage of justice, because there was no
evidence to support a finding by the trier of fact that Taigod
exercised reasonable diligence to discovery the identity of the
wrongdoer.
Taigod’s only investigation of the identity of the forger
was to ask Wan several times if he knew what had happened
or was responsible for the forgery. When Wan denied
responsibility, Lai took no further action to investigate. The
universe of individuals who could have forged the signature
on escrow addendum B was known and limited, unlike the
wide universe of unknown individuals who could have
authored the report in Bernson. Once BFI denied
responsibility for the defamatory report in Bernson, the
plaintiff in that case had no information from which to
further investigate the identity of the wrongdoer and was
defendant] have acted in bad faith or intended to mislead
[name of plaintiff].”
29
effectively precluded from filing an action. In this case,
there were three entities potentially responsible for the
wrongdoer’s act: the seller, the real estate agency, and/or
the escrow agency. Taigod was on inquiry notice that one of
these entities was the source of Taigod’s harm. When Wan
denied knowing anything about the forgery, however, Lai
took no further action to learn the identity of the wrongdoer.
Lai did not ask the seller, Luo, or other employees of the
escrow agency for information about the creation, execution
or transmission of the escrow addendum.
When the forgery was discovered during Case 1, in
addition to simply asking parties for information, Taigod
could have investigated the identity of the wrongdoer by
adding causes of action, conducting discovery, and deposing
the parties on the forgery issue under oath. After the
conclusion of Case 1, in light of the limited number of
entities who were potentially responsible, Taigod could have
filed a timely Doe complaint and used the discovery
procedures to uncover the defendant’s identity. Had Taigod
filed a Doe complaint and conducted discovery, Taigod would
have learned that Bowling Center had filed an action against
Wan, Luo, and Mandarin. At that point, Taigod could have
consolidated the actions or joined in Bowling Center’s action.
Taigod did not investigate any of the reasonably available
avenues of inquiry which, if vigorously pursued, might have
yielded the information necessary to determine the identity
of the wrongdoer.
30
We recognize that Wan and Mandarin, acting as the
dual agent of Winners and Taigod in the purchase
transaction, owed fiduciary duties to Taigod that they did
not owe to Bowling Center. A broker acting as a dual agent
owes fiduciary duties to both buyer and seller. (Civ. Code,
§ 2079.16; Horiike v. Coldwell Banker Residential Brokerage
Co. (2016) 1 Cal.5th 1024, 1028 (Horiike).) A dual agent has
a duty “to learn and disclose facts material to the property’s
price or desirability, including those facts that might
reasonably be discovered by the buyer. (Assilzadeh v.
California Federal Bank (2000) 82 Cal.App.4th 399, 414–
416; see also Salahutdin v. Valley of California, Inc. (1994)
24 Cal.App.4th 555, 563 [buyer’s agent has duty to verify the
accuracy of information transmitted to the buyer or explain
that it is unverified].)” (Horiike, supra, 1 Cal.5th at p. 1041.)
The existence of a fiduciary relationship may have permitted
Taigod to rely on Lai’s representations about the transaction
to a greater extent than a third party, and Wan made
several representations to Lai outside of the court
proceedings that he did not make to Chow. Conversely,
however, Taigod may have had claims against Wan and
Mandarin that could have been pursued even without having
knowledge of the identity of the wrongdoer. For example,
Taigod may have had a claim for breach of fiduciary duty
based on the agent’s duty to review the escrow documents, if
it was questionable that a bowling alley could afford to pay
an increase in rent of $14,000 per month, going from $26,000
to $40,000 per month, within 20 months after the
31
transaction closed. In the course of litigating any other
claims against Wan and Mandarin, Taigod could have
investigated the forgery as well.
Other than repeatedly asking Wan about the forgery,
Taigod took no steps to discover the wrongdoer’s identity.
Even after Lai was subpoenaed to testify and learned
Bowling Center had considered the evidence sufficient to
pursue a lawsuit, Taigod took no steps to join Bowling
Center’s action or file an action of its own. Lai learned about
Bowling Center’s case and testified at trial, but Taigod did
not even follow up to discover the jury’s verdict for nine
months. The trial court in Case 3 precluded evidence of the
jury’s verdict in Case 2, a ruling which Taigod has not
appealed, but even if the trial court allowed admission of the
jury’s verdict in Case 2, it would not provide evidence of
Taigod’s diligence in investigating the identity of the
wrongdoer. Taigod was on inquiry notice, but did not make
inquiries other than asking informal questions of Wan. All
of the evidence concerning the identity of the wrongdoer was
known to Taigod by the conclusion of Case 1; there is no
evidence that any additional facts about the identity of the
forger were discovered following the conclusion of Case 1.
Taigod not only waited for the facts to come to it, but waited
for a jury finding of liability to come to it as well. There was
simply no showing of reasonable diligence to justify applying
equitable estoppel in this case.
32
DISPOSITION
The judgment is affirmed. Respondents David Wan
and Mandarin Realty 1 Corporation are awarded their costs
on appeal.
MOOR, J.
We concur:
BAKER, Acting P. J.
KIM, J.
33