Opinion
B213104 No. BC 384674
06-22-2010
JAMSHID ARYEH, Plaintiff and Appellant,v.CANON BUSINESS SOLUTIONS, INC., Defendant and Respondent.
Westrup Klick, R. Duane Westrup, Mark L. Van Buskirk, Jennifer L. Conner;Krieger & Krieger, Linda Guthamnn Krieger and Terrence B. Krieger for Plaintiff andAppellant.Dorsey & Whitney, Kent J. Schmidt, John P. Cleveland, Richard H. Silberbergand Robert G. Manson for Defendant and Respondent.
Westrup Klick, R. Duane Westrup, Mark L. Van Buskirk, Jennifer L. Conner; Krieger & Krieger, Linda Guthamnn Krieger and Terrence B. Krieger for Plaintiff and Appellant.
Dorsey & Whitney, Kent J. Schmidt, John P. Cleveland, Richard H. Silberberg and Robert G. Manson for Defendant and Respondent.
CERTIFIED FOR PUBLICATION
APPEAL from a judgment of the Superior Court of Los Angeles County, Robert L. Hess, Judge. Affirmed.
FLIER, J.
Jamshid Aryeh appeals from the order (judgment) of dismissal of his second amended complaint brought under the Unfair Competition Law (UCL), Business and Professions Code section 17200 et seq. The trial court sustained respondent Canon Business Solutions, Inc.s (Canon) general demurrer without leave to amend, ruling that the allegations failed to state a cause of action and that the claim is barred by laches, the applicable statute of limitations set forth in section 17208, and the doctrines of res judicata and collateral estoppel. Appellant contends the continuing violations doctrine extended the statute of limitations, his action is not barred by laches, he adequately pleaded a UCL claim, and neither res judicata nor collateral estoppel applies. We hold the action is barred by limitations, and we therefore affirm.
All further statutory references are to the Business and Professions Code unless indicated otherwise.
Section 17208 provides, in pertinent part: "Any action to enforce any cause of action pursuant to this chapter shall be commenced within four years after the cause of action accrued."
FACTS
On review of the sufficiency of a complaint against a general demurrer, we treat the demurrer as admitting all properly pleaded material facts, but not contentions, deductions or conclusions of fact or law. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318 (Blank).) We also consider matters subject to judicial notice. (Ibid.)
Canon sells and leases copiers, scanners, printers and other products to customers. In November 2001, appellant, as an individual and doing business as ABC Copy & Print, entered into an agreement with Canon to lease a black and white copier. Under the agreement, appellant agreed to pay a monthly fee in return for a monthly copy allowance, and also agreed to pay an additional excess copy charge for each additional copy beyond the monthly allotment. In February 2002, appellant entered into a second lease agreement with Canon to lease a color copier under similar terms.
Shortly after entering into the copy rental agreements, appellant began noticing that meter readings taken by Canons field service personnel did not appear to accurately reflect the number of copies actually made on appellants leased copiers. Appellant asked Canon numerous times, orally and in writing, to repair the copiers and to take accurate readings, to no avail. Consequently, appellant began keeping his own records of the number of copies made on each machine and determined he was being charged for "test" copies made when Canon service personnel repaired or serviced the machines. Despite appellants attempts to have Canon correct the "excessive" copying charges, Canon failed to reimburse appellant for such overcharges and also charged him late fees.
PROCEDURAL HISTORY
On January 31, 2008, appellant filed this suit on behalf of himself and similarly situated persons residing in the State of California who entered into copy rental agreements with Canon and who were overcharged for copies from four years preceding the action to the date of judgment. The complaint essentially alleged the foregoing facts and contained a single cause of action for unfair competition under the UCL. Appellant alleged that Canon knew or should have known it was charging appellant for excessive copies on the leased machines. Appellant sought injunctive relief, restitution and attorney fees.
Canon generally demurred to the complaint and asserted that the action was barred on various grounds, including the four-year statute of limitations under section 17208.
The trial court sustained the general demurrer. The court ruled appellant had notice of the problem in at least 2002, after the second lease, about six years before he filed this action and well after the four-year statute of limitations had expired. Although the court did not believe appellant could plead around the limitations, the court granted appellant leave to amend.
Appellant filed a first amended complaint, adding an allegation that on various dates between February 2002 and November 2004, Canons service personnel ran "test copies" during service or maintenance calls.
The first amended complaint omitted the reference to the time appellant discovered the alleged overcharging. Specifically, in paragraph 14, the original complaint alleged, "Shortly after entering into the copy rental agreements with [Canon], [appellant] began to notice that the meter readings taken by [Canons] field servicemen did not appear to reflect the accurate number of copies...." (Italics added.) The first amended complaint substituted a new paragraph 14 that, among other things, omitted the word "shortly" and changed the allegation to read, "After entering into the copy rental agreements with [Canon], the products leased by [appellant] required service and/or maintenance." (Italics added.)
Appellant further alleged that the test copies run by Canons service personnel caused appellant to exceed the total allowable copies and required appellant to pay additional fees to Canon. Appellant asserted that, from time to time during the four-year period prior to the filing of his complaint, Canons service personnel "made from 50 to 900 Test Copies during various service and/or maintenance calls." The amended complaint listed 17 instances during the period commencing February 6, 2002, and ending November 16, 2004, in which Canons service personnel made test copies. Appellant alleged, "Each time [Canons] servicemen ran Test Copies... was independent of any prior occasions when [Canons] servicemen ran Test Copies" and each date "resulted in a separate and distinct violation giving rise to separate and distinct damage."
Canon generally demurred to the amended pleading. The trial court again sustained the demurrer and granted appellant leave to amend a second time on counsel for appellants representations that the payments obtained by Canon violated the written agreements between the parties. The court stated, "[t]he statute of limitations and standing to seek injunctive relief are issues, and I want to know if [appellant] is now a lessee of these Canon products." The court directed appellants counsel to "put in whatever you think you can do, and well address this squarely when we come back."
Appellant filed a second amended complaint, in which he alleged that "[a]s of the date of the filing of this second amended complaint, [appellant] is not now a lessee of Canon products." For the first time, appellant attached copies of the November 2001 and February 2002 contracts. He asserted that neither contract authorized a charge for test copies.
Canon interposed a general demurrer on numerous grounds, including the statute of limitations, and requested that the court sustain the demurrer without leave to amend. Canon argued that the second amended complaint revealed even more defects in appellants claim. For example, the written agreements appellant attached as exhibits established for the first time that no provision in the contracts required Canon to provide a credit for test copies. The attached agreements also showed that each agreement expired after 60 months. Thus, no injunctive relief would lie as neither agreement was currently in effect. Because appellant took no action to halt the alleged violation of his rights while the agreements were in effect, Canon also argued his claims were barred by laches.
The trial court determined the second amended complaint failed to dispel Canons objections based on the statute of limitations. The court stated, "[t]here is no continuing practices doctrine that applies here" and "no equitable tolling that I can see that could possibly apply[;] [under section] 17200[,] when the act occurs the clock starts, and here we have an allegation that there was actual knowledge in February of 2002 in an earlier pleading..., and you have been given the chance to amend to address this if it was possible."
After further argument by both sides, the court indicated it had not changed its mind. Appellants counsel requested that "[i]f the court is inclined to sustain the demurrer without leave [to amend], I would ask the court to do it on the statute of limitations ground because... there needs to be some clarity, and I would like the opportunity to pursue that." The court concluded appellant was "concededly" aware of his claim "almost six years in advance of the suit being filed" and sustained the demurrer without leave to amend.
This timely appeal followed.
STANDARD OF REVIEW
When a demurrer is sustained, we ascertain whether the complaint states facts sufficient to constitute a cause of action. (Blank, supra, 39 Cal.3d at p. 318.) "[W]hen [a demurrer] is sustained without leave to amend, we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm." (Ibid.) The burden of proving such reasonable possibility rests squarely on the appellant. (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081 (Schifando).)
We discuss additional standards of review below in context of specific issues.
DISCUSSION
1. Four-year Statute of Limitations
Appellant does not dispute that the four-year statute of limitations prescribed in section 17208 applies to his action. However, appellant asserts the statutory clock not only starts at the time of the first occurrence i.e., the time an allegedly offending act was committed and caused injury--but rather "re-starts" each time the defendant invades the plaintiffs rights and causes injury. Specifically, appellant argues that a doctrine of continuing violations should be applied to violations of the UCL. We reject appellants contention. His UCL cause of action accrued more than four years before he filed his action, and the continuing violation doctrine does not apply to the circumstances of this case.
A. Accrual
A cause of action for unfair business practice under section 17200 must be commenced "within four years after the cause of action accrued." (§ 17208; see also Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 178-179 (Cortez); Blanks v. Seyfarth Shaw LLP (2009) 171 Cal.App.4th 336, 364; see 13 Witkin, Summary of Cal. Law (10th ed. 2005) Equity, § 128, p. 448.) The cause of action accrues when the defendants conduct occurs, not when the plaintiff learns about the conduct. (Snapp & Associates Ins. Services, Inc. v. Robertson (2002) 96 Cal.App.4th 884, 891 (Snapp) ["discovery rule, which delays accrual of certain causes of action until the plaintiff has actual or constructive knowledge of facts giving rise to the claim, does not apply" to causes of action under § 17200].) When the allegations regarding a defendants conduct covers a period of time, the cause of action accrues at the time of the initial conduct. (Id. at p. 892 [complaint alleging wrongdoing that began more than four years before action commenced and was "on-going" barred by § 17208].)
In Snapp, the plaintiff insurance broker hired a salesman who brought with him a number of client accounts (TRG accounts). (Snapp, supra, 96 Cal.App.4th at p. 887.) In February 1993, the plaintiff learned that the salesman had deposited commissions earned on TRG accounts into his own bank account. Plaintiff confronted the salesman and terminated his employment in March 1993. (Ibid.) Soon thereafter, plaintiff began receiving notices that defendant was acting as broker for the terminated salesman on some TRG accounts. Plaintiff caused a "cease and desist" letter to be sent to the defendant in May 1993. (Id. at pp. 887-888.) Plaintiff then pursued the salesman for damages but its efforts were thwarted by his bankruptcy proceedings. Over four years later, in August 1997, plaintiff filed a complaint against the defendant including a claim under the UCL. (Id. at p. 889.)
The trial court in Snapp determined plaintiffs UCL action was time-barred. (Snapp, supra, 96 Cal.App.4th at pp. 889.) The appellate court agreed, holding that section 17208 required the action to be commenced within four years after the cause of action accrued. (Snapp, at p. 891.) "Thus, the statute begins to run... irrespective of whether plaintiff knew of its accrual, unless plaintiff can successfully invoke the equitable tolling doctrine." (Ibid.) The trial court rejected the plaintiffs claim that the statute did not commence running until the defendant purchased the TRG accounts from the salesman in February 1994. The court noted the first amended complaint had alleged that defendants solicitation of plaintiffs former employees and customers "started in or about May 1993, and is on-going." (Id. at p. 892, italics added.) The plaintiff thus knew of a potential claim against the defendant more than four years before it filed its complaint. (Ibid.) The court held the claims barred by the UCL four-year statute of limitations as defendants wrongful conduct, although allegedly "ongoing," began and was known to the plaintiff more than four years prior to the actions commencement. (Ibid.) We find Snapp to be controlling.
Appellant asserts that Snapps holding is relevant only to the issue whether the delayed discovery rule should be applied to UCL claims and has no relevance to the issue whether a cause of action is subject to "continuing violations" or "multiple accrual." We do not interpret Snapps holding so narrowly.
The UCL claim asserted in Snapp was based upon essentially the same type of conduct at issue in the present case: the allegedly wrongful collection of fees on a recurring basis. In Snapp, the fees at issue were recurring insurance premiums collected over a period of time beginning outside the limitations period and continuing into the limitations period. In the instant action, the fees at issue are recurring "excess copy charges" imposed over a period of time beginning outside the limitations period and continuing into the limitations period. The court in Snapp held that the very first allegedly improper brokering charge, which became known to the plaintiff soon after its imposition, commenced the running of the four-year statute of limitations, barring the plaintiffs claim even though plaintiff asserted that the imposition of such charges was "ongoing." (Snapp, supra, 96 Cal.App.4th at pp. 891-892.) Here, appellants initial complaint alleged that appellant began to notice that the meter readings taken by Canons field service personnel did not appear to reflect the accurate number of copies "[s]hortly after" appellant entered into the copy rental agreements. Appellant thus admitted in the initial complaint he knew of the alleged inaccurate readings and overcharge about February 2002, six years before filing his lawsuit.
Appellant omitted this allegation in his subsequent pleadings and offered no explanation for the omission nor made any showing he had since obtained further facts indicating his prior allegation was inaccurate. When a pleading contains allegations destructive of a cause of action, the defect cannot be cured in later filed pleadings by simply omitting the allegations without explanation. (Hendy v. Losse (1991) 54 Cal.3d 723, 742.) The ""original defect infects the subsequent pleading so as to render it vulnerable to a demurrer."" (Id. at p. 743.) The plaintiff is bound by his prior admission absent a showing of inadvertence or mistake or discovery of new facts justifying an amendment of the complaint. (Banis Restaurant Design, Inc. v. Serrano (2005) 134 Cal.App.4th 1035, 1044.)
Resolution of the defense of statute of limitations is normally a question of fact. However, when the uncontradicted facts are susceptible of only one legitimate inference, the court may determine the matter as a question of law. (See Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1112; Snapp, supra, 96 Cal.App.4th at pp. 889-890.) Such a rule serves the fundamental purpose underlying the statute of limitations, namely, to give defendants reasonable repose and to protect parties from having to defend stale claims. (Jolly, at p. 1112.) In the present case, the uncontradicted facts are susceptible of only one legitimate inference: appellant knew "shortly after" he entered into the second contract in February 2002 of Canons alleged overcounting of copies and overcharging for them.
B. No Continuing Violation
Appellant cites no legal authorities justifying his assertion that the continuing violations doctrine applies to UCL claims. He claims application of the continuing violations doctrine to a "pure UCL consumer lawsuit" is an issue of first impression and it was error for the trial court not to apply the doctrine to save his UCL claim. In making this argument, appellant cites a smorgasbord of federal and state law authorities that are factually and legally inapposite, including authorities that do not involve the continuing violations doctrine. None of the authorities appellant cites compels us to apply the continuing violations doctrine to salvage his claim.
In Richards v. CH2M Hill, Inc. (2001) 26 Cal.4th 798 (Richards), our Supreme Court discussed the continuing violations doctrine in context of the statute of limitations under the Fair Employment and Housing Act (Gov. Code, § 12900 et seq.; FEHA). Quoting a leading treatise, the Supreme Court observed that the continuing violation doctrine is "arguably the most muddled area in all of employment discrimination law." (Richards, at p. 813, quoting 2 Lindemann & Grossman, Employment Discrimination Law (3d ed. 1996) p. 1351.) The Supreme Court noted that the continuing violation doctrine is muddled because it "refers not to a single theory, but to a number of different approaches, in different contexts and using a variety of formulations, to extending the statute of limitations in employment discrimination cases." (Ibid.)
The Supreme Court identified four different approaches followed by state and federal courts in applying the continuing violation doctrine. (Richards, supra, 26 Cal.4th at pp. 813-817.) The Supreme Court concluded that courts applying the continuing violation doctrine "have tended toward a broader view of that doctrine when the cause of action involves ongoing harassment or ongoing failure to accommodate disability." (Id. at p. 817.) In the case of alleged FEHA violations, the Supreme Court determined the one-year statute of limitations should be "construed liberally" in order to "carry out the purposes of the FEHA to safeguard the employees right to hold employment without experiencing discrimination." (Id. at p. 819.) Further, the FEHA limitations period "should be interpreted so as to promote the resolution of potentially meritorious claims on the merits." (Ibid.)
The Richards court declared: "we do not believe the FEHA statute of limitations should be interpreted to give a disabled employee engaged in the process of seeking reasonable workplace accommodation or ending disability harassment two unappealing choices: on the one hand resigning and bringing legal action soon after the first signs that her rights have been violated, or on the other hand attempting to persist in the informal accommodation process and risk forfeiture of the right to bring such an action altogether. Nor... is the third choice--retaining employment while bringing formal legal action against the employer a viable option for many employees." (Richards, supra, 26 Cal.4th at pp. 820-821.) The court observed that there is good reason to view a failure over time to reasonably accommodate a disabled employee as a single course of conduct, as reasonable accommodation is often an "ongoing process" rather than a single action. (Id. at p. 821.) Moreover, in cases of employment discrimination or harassment, a single instance of an employers failure to accommodate that may seem "trivial" in isolation can take on greater significance and inflict greater injury when viewed as "one of a series of such failures." (Id. at p. 822.) The court therefore held that when an employer engages in a continuing course of unlawful conduct under the FEHA by refusing reasonable accommodation of a disabled employee or engaging in disability harassment not amounting to a constructive discharge, the statute of limitations begins to run, "not necessarily when the employee first believes that his or her rights may have been violated," but either when the course of conduct is brought to an end or when the employee is on notice that further efforts to end the unlawful conduct will be in vain. (Id. at p. 823.)
This court applied the continuing violations doctrine in Alch v. Superior Court (2004) 122 Cal.App.4th 339 (Alch), in which the plaintiffs filed a series of class action lawsuits on behalf of television writers against studios, networks and talent agencies for age discrimination under the FEHA. We acknowledged in Alch the type of "continuing violation" comprising a "systematic, companywide corporate policy of discrimination against a protected class" that began prior to and extended into the limitations period. (Alch, supra, 122 Cal.App.4th at pp. 369, 374-376.)
Appellant notes Alch included claims under the UCL. In Alch, we found that the trial court erred in ruling plaintiffs were required to show potential competitive harm or consumer deception to state a claim under the UCL. (Alch, supra, 122 Cal.App.4th at pp. 400-403.) But we held the trial court properly sustained demurrers to UCL claims because the plaintiffs were seeking nonrestitutionary backpay and the court had no authority to award such damages in the first instance. (Id. at p. 408.) Alch did not discuss the continuing violation doctrine with respect to the statute of limitations under the UCL. (Id. at pp. 400-409.)
We find no correlation between appellants claim seeking recovery for individual instances in which he purports to have been wrongfully charged for "test" copies and the plaintiffs claims in Richards and Alch, which were not based upon specific acts of alleged misconduct, but instead upon on-going, accumulative harassment in the case of Richards or a broad and longstanding corporate policy of employment discrimination in the case of Alch. (Richards, supra, 26 Cal.4th at p. 822; Alch, supra, 122 Cal.App.4th at pp. 375-376.) Here, once appellant was aware he was being "overcharged" for test copies and that his protests to Canon were futile, he could and should have taken diligent action. He could not wait for years until the agreement expired while more "overcharges" accumulated before filing a complaint.
Only one reported California case to our knowledge has extended the continuing violations doctrine outside the employment law context. In Komarova v. National Credit Acceptance, Inc. (2009) 175 Cal.App.4th 324 (Komarova), a plaintiff who had been mistakenly and repeatedly harassed by a debt collection agency asserted a claim under the Robbins-Rosenthal Fair Debt Collection Practices Act (Civ. Code, § 1788 et seq.). The court found that the defendants statute of limitations defense was overcome by the continuing violation doctrine, permitting recovery "for actions that take place outside the limitations period if these actions are sufficiently linked to unlawful conduct within the limitations period." (Komarova, supra, at p. 343, quoting Richards, supra, 26 Cal.4th at p. 812.) The court, quoting Joseph v. J.J. MacIntyre Companies, L.L.C. (N.D. Cal. 2003) 281 F.Supp.2d 1156 (Joseph), noted that "[t]he key is whether the conduct complained of constitutes a continuing pattern and course of conduct as opposed to unrelated discrete acts." (Komarova, supra, at p. 343.) Citing a close analogy between "a pattern of debtor harassment consisting of a series of calls" and a hostile work environment, the court explained that, as with hostile work environment cases, debtor harassment claims "by "[t]heir very nature involve[] repeated conduct" rather than "discrete acts"...." (Komarova, supra, 175 Cal.App.4th at p. 344, quoting Joseph, supra, 281 F.Supp.2d at p. 1160.)
Routinely billing and collecting for "test" copies is not the type of harassing and egregious conduct the continuing violation doctrine is designed to deter. No comparable policy considerations compel applying the continuing violations doctrine to violations of the UCL. (Cortez, supra, 23 Cal.4th at pp. 173.) The UCL is not an "all-purpose substitute" for a tort or contract action. (Ibid.) The Legislature has expressed a goal that the UCL be "a streamlined procedure for the prevention of ongoing or threatened acts of unfair competition." (Id. at pp. 173-174.) A claim for recovery of past damages is not within the contemplation of the UCL.
The statute of limitations on a UCL action begins to run upon accrual unless equitably tolled. (Snapp, supra, 96 Cal.App.4th 884, 891.) Appellant does not assert equitable tolling applies to his action, nor does he allege any facts establishing the doctrine applies.
2. Leave to Amend
Appellant has not informed this court of any new facts or suggested how he could amend his complaint to overcome the statute of limitations. Nor did he make any such showing in the trial court. Thus, the court did not abuse its discretion in sustaining the demurrer without leave to amend. (Schifando, supra, 31 Cal.4th at p. 1081.)
DISPOSITION
The judgment is affirmed. Respondent Canon is to recover costs on appeal.
FLIER, J.
I concur:
Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.