Estate of Jenkins CA2/5 ( 2023 )

Filed 3/27/23 Estate of Jenkins CA2/5
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
Estate of JAMES R. JENKINS, B312428
Deceased.
LILY GRIEGO et al., (Los Angeles County Super.
Ct. No. 18STPB10198)
Petitioners and Appellants,
v.
ALAN R. PENUELA, as
Administrador etc., et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of Los
Angeles County, Brenda Penny, Judge. Reversed with directions.
Oldman, Cooley, Sallus, Birnberg, Coleman & Gold, Mary-
Felicia Apanius and Marc L. Sallus for Petitioners and
Appellants.
Law Office of John Derrick and John Derrick for
Defendants and Respondents.
Lily and Victor Griego alleged in a Probate Code section
850 petition that decedent James Jenkins, their real estate agent,
fraudulently caused them to sign a grant deed purporting to
transfer to himself and others partial ownership of real property
the Griegos had purchased.1 The probate court sustained a
demurrer to the petition without leave to amend on statute of
limitation grounds and ordered dismissal of their petition. We
reverse.
FACTS
In 1973, Lily Griego met Jenkins, and they became lifelong
friends.2 He represented her in various transactions as a real
estate agent and broker. In 1978, Jenkins represented Lily and
her previous husband in the purchase of a house in La Puente.
In 1986, Jenkins and Lily together purchased a house in West
Covina that they renovated and sold. Lily considered Jenkins
part of her family and trusted him implicitly.
1. The Torch Street Property Purchase
In 1993, Jenkins represented the Griegos in their purchase
of an 18-unit apartment building located on Torch Street in
1 Among other things, Probate Code section 850 authorizes,
“any interested person” to petition the probate court for an order
“[w]here the decedent died in possession of, or holding title to,
real or personal property, and the property or some interest
therein is claimed to belong to another . . . .” (Prob. Code, § 850,
subd. (a)(2)(C).)
2 Because several of the parties and other interested persons
share the same last name, we will from time to time use first
names. We intend no disrespect.
2
Baldwin Park. The sellers transferred title to the Griegos by a
grant deed recorded on December 23, 1993.3
Jenkins died in 2018. In February 2019, Alan Penuela was
appointed administrator of Jenkins’s estate. On September 24,
2019, more than one year after Jenkins’s death, Alan recorded a
grant deed dated April 21, 1994, bearing the Griegos’ signatures
that purported to transfer ownership of the Torch Street property
as follows: 62.50 percent to the Griegos, 12.50 percent to Norma
and David Dreger, 12.50 percent to respondents Alan Penuela
and Joan Penuela, and 12.50 percent to real estate agent
Jenkins.
The 1994 grant deed was notarized by Jenkins’s friend,
Eira Vazquez. Of the grantees, Norma and David Dreger are
Lily’s sister and brother-in-law. Alan and Joan Penuela were
friends of decedent Jenkins. The Griegos denied having any
personal or business relationship with the Penuelas. This 1994
grant deed was not recorded for 25 years. Alan’s attorney sent
the Griegos a letter in September 2019 regarding the 1994 grant
deed.
2. The Section 850 Petition
On November 13, 2019, less than two months after the
1994 grant deed was recorded by Alan Penuela, the Griegos filed
a petition for transfer and return of the Torch Street property
pursuant to Probate Code section 850. The claim named Alan, as
3 In 1999, the Griegos transferred their interest in the Torch
Street property to their newly created trust, entitled the VICTOR
R. GRIEGO, Jr. or LILY D. GRIEGO, Trustees for the GRIEGO
FAMILY TRUST, Dated: September 28, 1999. The Griegos filed
their petition as individuals and as trustees on behalf of the
trust. When we refer to the Griegos, we include the trust.
3
an individual and in his capacity as administrator of Jenkins’s
estate, his wife Joan, and the Dregers.4
In their Probate Code petition, the Griegos alleged causes
of action for fraud, cancellation of written instrument, quiet title,
and breach of fiduciary duty. They also sought punitive damages.
Specifically, they charged that in 1993, in connection with the
Torch Street purchase, Jenkins placed before them numerous
documents for Lily and Victor to sign. He did not bring the 1994
grant deed to their attention. Instead, the Griegos believed the
1994 grant deed must have been “hidden” among the other
purchase documents they signed in 1993 and, other than their
signatures, was a blank document later filled out by Jenkins
without their consent. Jenkins “flipped through the documents,
folding the pages and pointed to where [the Griegos] had to sign
without reading any of the documents. This was normal for them
to do since as stated before Lily trusted James wholeheartedly
and this was not the first purchase Lily had handled this way
with James.” The Griegos recalled they signed a notarial journal
that they believed belonged to Jenkins and denied ever appearing
4 From time to time, we refer to the Penuelas as
“respondents.”
The Griegos alleged the Dregers, the Griegos’ relatives,
claim no interest in the property aside from a 12.5 percent share
of the rent proceeds, pursuant to a separate agreement which we
discuss below. They also alleged that the Dregers are willing to
stipulate to the cancellation of the 1994 grant deed. The Dregers,
although named as respondents in Griegos’ petition, have neither
filed a brief in this appeal nor otherwise appeared. Whether the
Dregers continue to hold a 12.5 percent share of the Torch Street
property under the 1994 grant deed is not before us.
4
before Eira Vazquez, the notary public whose name appears on
the 1994 grant deed.
The petition also described a “deal” Lily made with Jenkins
and the Dregers that allowed the three of them to invest in the
Torch Street property in exchange for lifetime rental receipts.
Jenkins applied the commission he had earned on the purchase of
the Torch Street property to receive a 25 percent share of the
rents. The Dregers invested $12,500 to receive a 12.5 percent
share. Based on this agreement, when the property turned a
profit four years after the purchase, the Griegos began to pay the
applicable percentage of rent proceeds to Jenkins and the
Dregers. The payments were made over a period of 20 years until
Jenkins’s death. It is unclear from the petition whether the
Griegos continued to pay the Dregers after Jenkins’s death.
According to the petition, the Penuelas did not invest in the
property, and were never paid any of the rental proceeds.
The Griegos denied they had any intention to sign what
respondents claim is the 1994 grant deed. They alleged they
were not aware of the 1994 deed until their attorney received a
letter from Alan Penuelas’s attorney in 2019.
3. The Demurrer and Motion to Strike
Respondents moved to strike the request for punitive
damages and portions of the first amended petition that dealt
with an unrelated real estate transaction. Respondents also
demurred to the first amended petition, arguing it was barred by
two statutes of limitations and it failed to state a cause of action
for fraud. They argued the four causes of action in the amended
petition arose out of the alleged fraud in the execution of the 1994
grant deed. The Griegos’ petition, filed some 25 years after they
signed the 1994 grant deed, fell outside the three-year limitations
5
period for fraud under Code of Civil Procedure section 338,
subdivision (d) (section 338(d)). According to respondents, the
Griegos could not benefit from the discovery rule because they
had the opportunity to read the documents that were presented
to them and should have discovered they were signing a deed
merely by looking at it.
Respondents also argued that even if the three-year statute
of limitations for fraud was tolled and the Griegos’ causes of
action survived Jenkins’s death under section 338(d), the petition
still failed — the statute of limitations for filing a claim against a
decedent is one year from date of death and is not tolled or
extended for any purpose. (Code Civ. Proc., § 366.2 (section
366.2).) Respondents argued that because the claim was filed
more than one year after Jenkins’s death, section 366.2 served as
a second bar to the Griegos’ claims.
In three minute orders all dated February 3, 2021, the
probate court sustained the demurrer without leave to amend,
denied the petition with prejudice, and granted the motion to
strike.5 The court ordered respondents’ counsel to prepare an
order after hearing for each ruling. On April 2, 2021, the Griegos
5 Although the Griegos purport to appeal from all three
minute orders, they urge this court to reverse only the order
sustaining the demurrer and do not discuss the other orders. At
this stage of the proceedings, the order dismissing the petition
rises and falls with the order sustaining the demurrer. The
Griegos have abandoned on appeal any arguments of error
related to the order on the motion to strike.
6
filed a notice of appeal although no final judgment or order of
dismissal had been filed.6
DISCUSSION
On appeal, the Griegos contend the probate court erred
when it sustained the demurer. They primarily address the
probate court’s ruling that the statute of limitations under
section 366.2 barred their petition but also assert their claims are
not barred by the statute of limitations of section 338(d). They
further contend their fraud claim, upon which their remaining
6 In a letter dated June 16, 2021, this court alerted the
Griegos to the missing final judgment or appealable order and
warned that their appeal was subject to dismissal. The parties
urged us to treat the three unsigned February 3 minute orders as
an appealable order. We declined to do so and on December 8,
2022, ordered the parties to submit an order complying with Code
of Civil Procedure section 581d. They did so on January 13, 2023,
when they jointly submitted three documents: (1) Order After
Hearing Sustaining Demurrer Without Leave to Amend;
(2) Order After Hearing Granting Motion to Strike Portions of the
First Amended Petition; and (3) Order Denying First Amended
Petition With Prejudice After Sustaining Demurrer Without
Leave to Amend. All three orders were signed by the trial judge
on January 5, 2023, and filed in the superior court on January 6,
2023. We grant the parties’ stipulated request to augment the
record with these orders. Thus augmented, the record now
contains an appealable final order of dismissal in the form of the
order denying the first amended petition with prejudice. (Code
Civ. Proc., §§ 581d, 904.1; City of Los Angeles v. City of Los
Angeles Employee Relations Bd. (2016) 7 Cal.App.5th 150, 157.)
We exercise our discretion to treat the Griegos’ appeal as from
the appealable January 13, 2023, final order of dismissal. (Hood
v. Hacienda La Puente Unified Sch. Dist. (1998) 65 Cal.App.4th
435, 437, fn. 1.)
7
claims for cancellation of instrument, quiet title, and breach of
fiduciary duty are based, was properly alleged.
Respondents counter that the Griegos have forfeited their
section 338(d) argument and that the argument lacks merit in
any case. They assert section 366.2 serves as a second bar
against the Griegos’ claims and that the Griegos have failed to
state causes of action for cancellation of an instrument and
fraud.7 We begin by addressing the forfeiture issue.
1. Forfeiture
Respondents contend the Griegos have forfeited any
argument regarding the three year/discovery statute of
limitations of section 338(d) because the Griegos do not address it
in the argument section of their opening brief.
In sustaining the demurrer, the probate court specified its
ruling was based on section 366.2 but did not expressly mention
section 338(d), even when discussing the discovery rule. In
challenging the probate court’s ruling, the Griegos focus their
opening brief on section 366.2 in keeping with the court’s ruling.
On appeal, respondents continue to assert both statutes bar the
Griegos’ claims.
We decline to find forfeiture. The parties fully briefed the
application of section 338(d) and the discovery rule in the probate
court, those arguments were recounted in detail in the Griegos’
opening brief even if “section 338(d)” infrequently appears,
respondents address section 338(d) and the discovery rule
extensively in their appellate brief, and the reply brief addresses
the issue. Respondents do not claim they were prejudiced by lack
7 Respondents make no arguments regarding the sufficiency
of the Griegos’ allegations of quiet title and breach of fiduciary
duty.
8
of notice. (Nelsen v. Legacy Partners Residential, Inc. (2012)
207 Cal.App.4th 1115, 1121–1122.) A more express statement in
the opening brief that the Griegos were arguing against the
application of both statutes of limitations would have avoided the
forfeiture point altogether. Nevertheless, under the
circumstances, we conclude the Griegos have not forfeited their
argument that the discovery rule tolls the section 338(d) statute
of limitations.8 (See Chapman v. Enos (2004) 116 Cal.App.4th
920, 927 [no forfeiture in close case]; People v. Tate (2010)
49 Cal.4th 635, 677 fn. 23 [where the question of forfeiture of an
issue is close and difficult, “we proceed on the assumption that no
forfeiture occurred”].)
2. Standard of Review
“A demurrer tests the legal sufficiency of the factual
allegations in a complaint. We independently review the superior
court’s ruling on a demurrer and determine de novo whether the
complaint alleges facts sufficient to state a cause of action or
discloses a complete defense. [Citations.] We assume the truth
of the properly pleaded factual allegations, facts that reasonably
can be inferred from those expressly pleaded and matters of
which judicial notice has been taken. [Citations.] We liberally
construe the pleading with a view to substantial justice between
8 The Griegos also raise, to varying degrees of thoroughness,
the doctrines of equitable tolling, extrinsic fraud, equitable
estoppel, and delayed accrual in connection with their discussion
of section 366.2. Although some of these doctrines may also apply
to section 338(d), only the discovery rule is well developed in the
Griegos’ briefing in the probate court and on appeal. We
therefore do not address these doctrines relative to section 338(d).
We consider the application of some of those doctrines to section
366.2 below.
9
the parties (Code Civ. Proc., § 452; Gilkyson v. Disney
Enterprises, Inc. (2016) 244 Cal.App.4th 1336, 1340; see
Schifando [v. City of Los Angeles (2003) 31 Cal.4th 1074,] 1081
[complaint must be read in context and given a reasonable
interpretation]); but, ‘[u]nder the doctrine of truthful pleading,
the courts “will not close their eyes to situations where a
complaint contains allegations of fact inconsistent with attached
documents, or allegations contrary to facts which are judicially
noticed.” ’ ” (Ivanoff v. Bank of America, N.A. (2017)
9 Cal.App.5th 719, 725–726.)
We next turn to the merits of the statute of limitations
arguments, first under section 338(d) and then under section
366.2.
3. Section 338(d) – The Three Years/Delayed Discovery
Statute of Limitations for Fraud
Respondents assert the statute of limitations under section
338(d) began to run, at the latest, by April 21, 1994, the date of
the 1994 grant deed. Under section 338(d), the Griegos were,
thus, required to file their petition by April 21, 1997, subject to
any delayed discovery argument. By respondents’ calculation,
the November 13, 2019 petition was filed over two decades too
late.
The Griegos contend they immediately filed their petition
upon discovery of Jenkins’s fraud when they received the letter
from Alan’s attorney in 2019. According to the Griegos, the
discovery rule delayed accrual of their causes of action until
sometime in 2019 and the filing of the petition on November 13th
10
of that year was timely.9 As we explain, we conclude the Griegos
adequately alleged delayed discovery of their claims such that
section 338(d) does not bar their petition on demurrer.
a. The Discovery Rule
Section 338(d) provides for a three-year limitations period
for “[a]n action for relief on the ground of fraud or mistake. The
cause of action in that case is not deemed to have accrued until
the discovery, by the aggrieved party, of the facts constituting the
fraud or mistake.” The section 338(d) discovery rule has been
interpreted to mean “the discovery by the aggrieved party of the
fraud or facts that would lead a reasonably prudent person to
suspect fraud.” (Miller v. Bechtel Corp. (1983) 33 Cal.3d 868,
875.)
In general, the “discovery rule only delays accrual until the
plaintiff has, or should have, inquiry notice of the cause of action.
The discovery rule does not encourage dilatory tactics because
plaintiffs are charged with presumptive knowledge of an injury if
they have ‘ “ ‘information of circumstances to put [them] on
inquiry’ ” ’ or if they have ‘ “ ‘the opportunity to obtain knowledge
9 The Griegos’ four causes of action for fraud, breach of a
fiduciary duty, quiet title, and cancellation of a written
instrument are premised on Jenkins’s fraudulent conduct. Each
is subject to the discovery rule. (April Enterprises, Inc. v. KTTV
(1983) 147 Cal.App.3d 805, 827, 828 fn. 11 (April Enterprises) [“It
is well-settled that the discovery rule applies to causes of action
involving the breach of a fiduciary relationship”]; Welsher v.
Glickman (1969) 272 Cal.App.2d 134, 140 [action to quiet title
based on fraud]; Zakaessian v. Zakaessian (1945) 70 Cal.App.2d
721, 725 [where the gravamen of the cause of action to cancel an
instrument involves fraud or mistake, section 338(d) is the
applicable statute of limitations].)
11
from sources open to [their] investigation.’ ” ’ [Citations.] 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.” (Fox v. Ethicon Endo–Surgery, Inc.
(2005) 35 Cal.4th 797, 807–808 (Fox).)
“In order to rely on the discovery rule for delayed accrual of
a cause of action, ‘[a] plaintiff whose complaint shows on its face
that his claim would be barred without the benefit of the
discovery rule must specifically plead facts to show (1) the time
and manner of discovery and (2) the inability to have made
earlier discovery despite reasonable diligence.’ [Citation.] In
assessing the sufficiency of the allegations of delayed discovery,
the court places the burden on the plaintiff to ‘show diligence’;
‘conclusory allegations will not withstand demurrer.’ ” (Fox,
supra, 35 Cal.4th at p. 809, fn. 3.)
The duty to inquire is different when the claim is against a
fiduciary. “ ‘Where a fiduciary obligation is present, the courts
have recognized a postponement of the accrual of the cause of
action until the beneficiary has knowledge or notice of the act
constituting a breach of fidelity. [Citations.] The existence of a
trust relationship limits the duty of inquiry. “Thus, when a
potential plaintiff is in a fiduciary relationship with another
individual, that plaintiff’s burden of discovery is reduced and he
is entitled to rely on the statements and advice provided by the
fiduciary.” ’ ” (WA Southwest 2, LLC v. First American Title Ins.
Co. (2015) 240 Cal.App.4th 148, 157 [emphasis added] (WA
Southwest 2, LLC).)
Postponement of the limitations period until discovery
“prevents the fiduciary from obtaining immunity for an initial
12
breach of duty by a subsequent breach of the obligation of
disclosure.” (Neel v. Magana, Olney, Levy, Cathcart & Gelfand
(1971) 6 Cal.3d 176, 189 (Neel v. Magana).)
b. The Griegos Adequately Alleged the Time and Manner
of Discovery
Here, the Griegos allege they discovered Jenkins’s fraud in
2019 when Alan’s attorney alerted them to the existence of the
1994 grant deed. Respondents counter that the Griegos failed to
adequately allege the time of discovery because the Griegos fail to
specify when they received the letter from Alan’s attorney. We
conclude the first amended petition adequately alleges the time
and manner of discovery.
The first amended petition can reasonably be read to state
that the Griegos were unaware of the 1994 grant deed until 2019,
the year when Alan was appointed administrator to Jenkins’s
estate and when the 1994 grant deed was recorded. The Griegos
specifically allege Lily and Victor were not aware of that deed for
25 years – the math leads to the conclusion that, according to the
petition, the letter from Alan’s attorney was received, at the
earliest, in 2019 (1994 + 25).
c. The Griegos Adequately Alleged Their Inability to
Have Discovered the Fraud Earlier
The Griegos alleged Jenkins withheld the 1994 grant deed
from them from the time they signed the deed in 1993 until his
death in 2018. They further alleged that Jenkins’s concealment
of the deed for 25 years was “without the knowledge of Lily and
Victor.” These allegations are sufficient to demonstrate the
Griegos’ inability to have made an earlier discovery.
Respondents ignore Jenkins’ failure to disclose the
existence of the 1994 grant deed to the Griegos. They instead
13
rely on the Griegos’ admitted failure to read the documents to
argue the Griegos’ own negligence prevented them from
discovering the fraud earlier. In support of this theory,
respondents cite to Edgar Rice Burroughs, Inc. v. Commodore
Productions & Artists, Inc. (1959) 167 Cal.App.2d 463, 475
(Edgar Rice) to assert the Griegos had a means to discover
Jenkins’s fraud earlier simply by reading what they signed. But
Edgar Rice did not involve the failure to read a contract or a
fiduciary relationship. There, a party to a contract complained he
overpaid for the right to broadcast a radio show. The court found
the complaining party was on inquiry notice of his claim because
he, at all times, was in possession of the books and records that
would have revealed the overpayment. (Edgar Rice, supra,
167 Cal.App.2d at p. 476.) As we have explained, there is no duty
to inquire under the facts of this case. (See WA Southwest 2,
LLC, supra, 240 Cal.App.4th at p. 157; Neel v. Magana, supra,
6 Cal.3d at p. 189.)
Here, the Griegos allege they had no knowledge of the 1994
grant deed, much less control or possession of it. They claim
Jenkins gave them a blank document to sign and only filled it out
later. Based on the allegations in the petition, the Griegos were
justified in relying on Jenkins because they held Jenkins in a
position of trust. Leaving aside the claimed outright fraud in the
execution of the blank document, Jenkins owed the Griegos a
fiduciary duty to disclose the terms of the 1994 grant deed,
particularly his own interest in the property, when he filled in
those terms. “The law imposes on a real estate agent ‘the same
obligation of undivided service and loyalty that it imposes on a
trustee in favor of his beneficiary.’ [Citations.] This relationship
not only imposes upon him the duty of acting in the highest good
14
faith towards his principal but precludes the agent from
obtaining any advantage over the principal in any transaction
had by virtue of his agency. [Citation.] ‘Such an agent is charged
with the duty of fullest disclosure of all material facts concerning
the transaction that might affect the principal’s decision.
[Citations.]’ ” (Batson v. Strehlow (1968) 68 Cal.2d 662, 674–675;
Neel v. Magana, supra, 6 Cal.3d at pp. 188–189 [“The duty of a
fiduciary embraces the obligation to render a full and fair
disclosure to the beneficiary of all facts which materially affect
his rights and interests”].)
As our late colleague, Justice Walter Croskey, wrote in
Brown v. Wells Fargo Bank, N.A. (2008) 168 Cal.App.4th 938,
(Brown): “If the defendant is in a fiduciary relationship with the
plaintiff which requires the defendant to explain the terms of a
contract between them, the plaintiff’s failure to read the contract
would be reasonable. In such a situation, the defendant
fiduciary’s failure to perform its duty would constitute
constructive fraud, the plaintiff’s failure to read the contract
would be justifiable, and constructive fraud in the execution
would be established.” (Id. at p. 959 [citations omitted]; accord
Ashburn v. AIG Financial Advisors, Inc. (2015) 234 Cal.App.4th
79, 102.)
Courts have regularly applied the discovery rule where a
fiduciary has fraudulently concealed material facts giving rise to
the cause of action. (See generally 3 Witkin, Cal. Procedure (6th
ed. 2022) Actions, § 718 [citing cases].)
In April Enterprises, supra, 147 Cal.App.3d at page 827,
the parties were joint venturers with fiduciary obligations to each
other. One accused the other of wrongful destruction of certain
video tapes. The court held the statute of limitations did not run
15
when the destruction occurred but only upon discovery of it. The
court reasoned, “Such a relationship compels a rule of delayed
accrual to avoid barring a victim of wrongful conduct from
asserting a cause of action before he could reasonably be expected
to discover its existence. Moreover, the wrongful act in the
instant case consisted of destruction of the videotapes while they
were in respondents’ exclusive custody and control. Under these
circumstances respondents cannot, in fairness, expect the statute
of limitations to begin running the moment the clandestine act
was completed.” (Ibid.; see also Lee v. Escrow Consultants (1989)
210 Cal.App.3d 915, 921 [court held the plaintiff to a “relaxed”
duty of inquiry due to his fiduciary relationship with the
defendant escrow company]; Parsons v. Tickner (1995)
31 Cal.App.4th 1513, 1529.)
Here, the Griegos were also entitled to assume Jenkins
would fulfill his fiduciary duty to them and disclose “all facts
which materially affect [their] rights and interests.” (Neel v.
Magana, supra, 6 Cal.3d at pp. 188–189.) As in April
Enterprises, the wrongful acts alleged in this case involve
clandestine conduct: hiding a blank grant deed in a stack of
documents, later filling out the grant deed outside the Griegos’
presence, concealing from them the existence of the executed
deed, and keeping the deed in Jenkins’s exclusive custody and
control for over 25 years. Under these circumstances,
respondents cannot in fairness expect the statute of limitations to
begin running on April 21, 1994, when the grant deed was
allegedly secretly filled out to transfer partial ownership of the
property to Jenkins and others.
We find distinguishable the case on which respondents
rely, Alfaro v. Community Housing Improvement System &
16
Planning Assn. (2009) 171 Cal.App.4th 1356, 1395. Respondents
point to that opinion’s use of the poetic maxim: “A person in a
fiduciary relationship may relax, but not fall asleep.” In Alfaro,
the plaintiffs were purchasers of real property who complained of
an undisclosed deed restriction. On demurrer, the court found
the purchasers were deemed to have constructive notice of the
deed restrictions as the deed had been recorded. The purchasers
thus had notice of the purported fraud when they received their
copy of the recorded deed even though the defendant sellers failed
to otherwise disclose the deed restriction or explain its effect on
the resale value of the property to the purchasers. (Id. at
pp. 1394–1396.)
The allegations in the first amended petition support the
conclusion that the Griegos did not fall asleep, even if they may
have been fully relaxed: They were lulled into trusting their real
estate agent – their fiduciary – which they were entitled to do
under Brown and Neel v. Magana. Unlike the plaintiffs in Alfaro,
the petition alleges facts that would support the Griegos’ claim
that they did not have constructive knowledge of the 1994 grant
deed until 2019 when the deed was recorded by Alan Penuela.
We also point out that in 1993, even if the Griegos had realized
they had signed a document that might have appeared to be a
blank grant deed, it would not have advised them that Jenkins
would later fill it out to transfer partial ownership of the Torch
Street property without their consent.
We conclude the time of accrual for purposes of section
338(d) was not in 1994 but in 2019 when the Griegos received
notice from Alan’s lawyer. The Griegos’ petition was timely
under that statute.
17
4. Section 366.2 – The One Year Statute of Limitations
for Filing a Claim Against a Decedent
We now turn to respondents’ second line of defense — the
statute of limitations under section 366.2. We conclude equitable
estoppel precludes respondents from asserting a bar to the
Griegos’ claims.
Section 366.2, subdivision (a) provides, “If a person against
whom an action may be brought on a liability of the person,
whether arising in contract, tort, or otherwise, and whether
accrued or not accrued, dies before the expiration of the
applicable limitations period, and the cause of action survives, an
action may be commenced within one year after the date of death,
and the limitations period that would have been applicable does
not apply.” In subdivision (b), section 366.2 further provides that
its limitations period “shall not be tolled or extended for any
reason” except as set out in specified provisions of the Probate
Code, none of which apply here.
Although the one-year statute of limitations
in section 366.2 expressly states it may not be tolled or extended,
equitable estoppel is available. (Battuello v. Battuello (1998)
64 Cal.App.4th 842, 848.) This is because the doctrines of
equitable tolling and equitable estoppel are distinct. Tolling
addresses when the statute of limitations accrues and what
circumstances justify suspending the running of the limitations
period. Equitable estoppel, on the other hand, “ ‘is not concerned
with the running and suspension of the limitations period, but
rather comes into play only after the limitations period has run
and addresses itself to 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
18
another into forbearing suit within the applicable limitations
period. Its application is wholly independent of the limitations
period itself and takes its life, not from the language of the
statute, but from the equitable principle that no man will be
permitted to profit from his own wrongdoing in a court of
justice.’ ” (Id. at pp. 847–848.)
“ ‘ “An estoppel may arise although there was no designed
fraud on the part of the person sought to be estopped. [Citation.]
To create an equitable estoppel, ‘it is enough if the party has been
induced to refrain from using such means or taking such action
as lay in his power, by which he might have retrieved his position
and saved himself from loss.’ . . . ‘ . . . Where the delay in
commencing action is induced by the conduct of the defendant
[the statute of limitations] cannot be availed of by him as a
defense.’ ” ’ ” (Lantzy v. Centex Homes (2003) 31 Cal.4th 363, 384
(Lantzy).)
Respondents acknowledge equitable estoppel may shield
against section 366.2 but assert it is unavailable here.10 First,
they argue the Griegos have forfeited the issue because the words
“equitable estoppel” or their variants are not found anywhere in
the record below. We again decline to find forfeiture. Whether
on demurrer equitable estoppel applies to the facts as pled is a
legal issue that does not depend upon weighing disputed facts.
We accordingly may consider the issue for the first time on
10 In their brief, respondents concede, “So although equitable
tolling cannot extend time under section 366.2, respondents
accept that in appropriate cases, such as where decedent’s
representative induces a claimant not to timely file suit on a
claim, equitable estoppel can apply.”
19
appeal.11 (Sea & Sage Audubon Society, Inc. v. Planning Com.
(1983) 34 Cal.3d 412, 417 [appellate court may address purely
legal questions presented for the first time on appeal when no
factual determinations are required]; Key v. Tyler (2019)
34 Cal.App.5th 505, 540.)
Second, respondents argue the Griegos may not benefit
from equitable estoppel because they signed the deed without
reading it. This argument fails because equitable estoppel is
concerned with respondents’ conduct that results in the delay in
bringing the action. That is, we look to Jenkins’ failure to
disclose the grant deed during his lifetime and Alan, standing in
Jenkins’ shoes as the representative of his estate, failing to
record the 1994 grant deed for more than one year after Jenkins’s
death. The Griegos alleged it is this conduct that resulted in the
delay. Under Lantzy and Battuello, respondents are estopped
from asserting the statute of limitations as a defense in these
circumstances.
Respondents rely on Britton v. Girardi (2015)
235 Cal.App.4th 721, 734 (Britton) to argue equitable estoppel
requires “ ‘an excuse for late discovery of the facts.’ ” We are not
persuaded. Britton was not decided on equitable estoppel
grounds. It focused instead on equitable tolling and the delayed
discovery rule.12 (Id. at pp. 732–734.) Section 366.2 expressly
11 In any event, respondents have fully briefed the issue on
appeal, as we discuss next.
12 According to Britton: “The fraudulent concealment doctrine
will also toll the statute of limitations. ‘ “[T]he ground of relief is
that the defendant, having by fraud or deceit concealed material
facts and by misrepresentations hindered the plaintiff from
20
states its limitations period may not be tolled or extended.
Britton is not relevant to our discussion of equitable estoppel and
its application to section 366.2.
5. The Griegos Stated Causes of Action for Cancellation
of Deed and Fraud
Aside from their statute of limitations arguments,
respondents also challenge the legal sufficiency of the causes of
bringing an action within the statutory period, is estopped from
taking advantage of his own wrong.” (Pashley v. Pacific Elec. Ry.
Co. (1944) 25 Cal.2d 226, 231 [153 P.2d 325].) “To take
advantage of this doctrine ‘ “ ‘the plaintiff must show . . . the
substantive elements of fraud . . . and . . . an excuse for late
discovery of the facts.’ ” (Snapp & Associates Ins. Services, Inc. v.
Robertson (2002) 96 Cal.App.4th 884, 890 [117 Cal.Rptr.2d 331].)’
(Prakashpalan [v. Engstrom, Lipscomb & Lack (2014)]
223 Cal.App.4th [1105,] 1123 [167 Cal.Rptr.3d 832].)” (Britton,
supra, 235 Cal.App.4th at p. 734 [italics added].) The “doctrine”
to which Snapp & Associates refers is the doctrine of fraudulent
concealment, not the equitable estoppel doctrine. (Snapp &
Associates, supra, at p. 890, disapproved on a different ground in
Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185.)
In any event, respondents have failed to establish factors
similar to those which supported the statute of limitations bar in
Britton. There, the plaintiffs alleged their attorney
misappropriated settlement funds but did not bring suit until 15
years after they received their settlement checks. The court held
the plaintiffs were placed on inquiry notice at the time they
received their settlement checks because they were promised, but
did not receive, a complete and accurate accounting or all pages
of the settlement agreement. Two retired judges had been
appointed to conduct appeals of the allocation. Yet, no plaintiff
ever complained of the distribution or took advantage of the
appeal process. (Britton, supra, 235 Cal.App.4th at pp. 736–737.)
21
action for cancellation of deed and fraud. We address those
arguments separately.
a. Cancellation of Deed
Respondents argue the Griegos have failed to state a cause
of action to cancel the deed. Respondents rely on Rosenthal v.
Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394(Rosenthal) to argue the deed may only be reformed and not
voided.
Respondents read Rosenthal too broadly. Its holding does
not apply to a fiduciary who has a duty of full disclosure, as was
present here. In Rosenthal, the court addressed when
misrepresentations may excuse a failure to read a contract
containing an arbitration clause. (Rosenthal, supra, 14 Cal.4th at
p. 420.) Rosenthal expressly found “no authority for the
proposition the fiduciary obligations of a broker extend to orally
alerting the customer to the existence of an arbitration clause or
explaining its meaning and effect.” (Id. at p. 425.) Examining
cases and authority discussing non-fiduciary relationships, the
Rosenthal court held that equitable relief for fraud, through
reformation of the written contract, may be allowed where a
party’s misrepresentations lead the second party to fail to read
the writing. However, this circumstance did not allow the
defrauded party to void the contract entirely. (Id. at pp. 420–
423.) Rosenthal did not address when it is reasonable for a party
in a fiduciary relationship to fail to read a contract due to the
fiduciary’s fraud, and what relief is available in that situation.
Brown examined Rosenthal and other cases when it
indicated a plaintiff’s failure to read a contract is justifiable
where the parties are in a fiduciary relationship and the fiduciary
has a duty to explain the terms of the contract between them. “In
22
such a situation, the defendant fiduciary’s failure to perform its
duty would constitute constructive fraud, the plaintiff’s failure to
read the contract would be justifiable, and constructive fraud in
the execution would be established.” (Brown, supra,
168 Cal.App.4th at p. 959 [citations omitted].) In that
circumstance, “ ‘ “the fraud goes to the inception or execution of
the agreement, so that the promisor is deceived as to the nature
of his act, and actually does not know what he is signing, or does
not intend to enter into a contract at all, mutual assent is
lacking, and [the contract] is void.” ’ ” (Rosenthal, supra,14 Cal.4th at p. 415.) The Griegos have stated a cause of action
to void the deed.
b. Fraud
Respondents next contend the Griegos’ negligence in failing
to read the documents presented by Jenkins not only prevents
them from benefiting from the discovery rule, it also means their
allegations cannot satisfy the justifiable reliance element of a
fraud claim. We disagree. Again, respondents ignore Jenkins’s
fiduciary relationship with the Griegos. As we have discussed,
Brown explained: “Generally, it is not reasonable to fail to read a
contract; this is true even if the plaintiff relied on the defendant’s
assertion that it was not necessary to read the contract. . . . This
presumes, however, that the parties were dealing at arm’s
length. . . . If the defendant is in a fiduciary relationship with the
plaintiff which requires the defendant to explain the terms of a
contract between them, the plaintiff’s failure to read the contract
would be reasonable.” (Brown, supra, 168 Cal.App.4th at p. 959
[fn. omitted].) In their petition, the Griegos have alleged that,
under the circumstances, they justifiably relied on the fraud.
23
We also reject respondents’ contention that the first
amended petition failed to plead fraud with sufficient
particularity. “ ‘The elements of fraud, which give rise to the tort
action for deceit, are (a) misrepresentation (false representation,
concealment, or nondisclosure); (b) knowledge of falsity (or
“scienter”); (c) intent to defraud, i.e., to induce reliance;
(d) justifiable reliance; and (e) resulting damage.’ ” (Lazar v.
Superior Court (1996) 12 Cal.4th 631, 638.) The Griegos alleged
that Jenkins was their real estate agent who caused them to
unknowingly, and in justifiable reliance, sign a grant deed
transferring partial ownership of the Torch Street property to
himself and others without the Griegos’ knowledge or consent.
These allegations adequately state a cause of action for fraud.
Although the Griegos may not have alleged with great detail
Jenkins’s motivations, how he executed his scheme, the
participation, or lack thereof, of the Penuelas and Dregers in
Jenkins’s scheme, and when Alan learned of the 1994 grant deed,
the allegations were sufficient to satisfy the particularity
requirement, certainly given that Jenkins and Alan would have
known the additional details. “ ‘Less specificity is required when
“it appears from the nature of the allegations that the defendant
must necessarily possess full information concerning the facts of
the controversy.” ’ ” (Citizens of Humanity, LLC v. Costco
Wholesale Corp. (2009) 171 Cal.App.4th 1, 20, disapproved on a
different ground by Kwikset Corp. v. Superior Court (2011)
51 Cal.4th 310, 337.)
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DISPOSITION
The judgment is reversed with directions to vacate the
orders sustaining the demurrer without leave to amend and
dismissing the petition, and to enter a new order overruling the
demurrer. The Griegos shall recover their costs on appeal.
RUBIN, P. J.
WE CONCUR:
MOOR, J.
KIM, J.
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