Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Stanislaus County No. 628978. William A. Mayhew, Judge.
Law Offices of Kathleen P. Clack and Kathleen P. Clack for Plaintiffs and Appellants.
Freeman, D’Aiuto, Pierce, Gurev, Keeling & Wolf, Coren D. Wong and Arnold J. Wolf for Defendants and Respondents.
OPINION
Detjen, J.
This is an appeal from a judgment of dismissal after the trial court sustained without leave to amend a demurrer to appellant’s third amended complaint. We conclude that, in the particular circumstances before us, the trial court did not err in dismissing this action.
Facts and Procedural History
On appeal from judgment on a sustained demurrer, we accept as true all facts properly pleaded in the complaint, together with such facts as may properly be judicially noticed. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
Plaintiff and appellant William G. Bartha is a licensed real estate appraiser. (Although it is unclear from the complaint, plaintiff and appellant W.G. Bartha & Associates appears to be the name under which William G. Bartha does business. We will refer to the plaintiffs collectively as appellant.) In 2006, appellant was retained by Oak Valley Community Bank (the bank) to appraise undeveloped real estate upon which a potential borrower planned to build a self-storage facility. Appellant submitted the appraisal and was paid a fee of $4,500.
Subsequently, the bank retained defendant and respondent Bill Deutsch (respondent), another real estate appraiser, to perform a “technical review” of appellant’s previously submitted appraisal. Respondent delivered his review letter, dated July 13, 2006, to Ron Schofield, a vice-president of the bank. The 11-page letter was unrelentingly critical of appellant’s appraisal. The letter concluded: “The [appraisal] report, as reviewed, was not considered to comply with the requirements of the Uniform Standards of Appraisal Practice. This was not considered a credible report. The value conclusions were both inaccurate and misleading. [¶] The client is advised that the value conclusion presented in the report of $4,400,000 was considered substantially overstated, relative to a current date of value or any prospective date of value in October 2006, and should not be relied upon as a basis in loan making decisions.” (Original underlining.)
The bank sent appellant a copy of respondent’s review letter on July 18, 2006. The bank asked appellant to “carefully read the enclosed Appraisal Review prepared for us by Mr. Bill Deutsch, MAI, and either amend or rewrite the appraisal in such a manner that the revised work will be found to be acceptable. If you choose not to amend or rewrite the appraisal, please refund the appraisal fee of $4,500 previously paid to you ….” Appellant, according to the third amended complaint, “tried to reach the Bank by telephone, but received no response. About 2-3 months later [appellant] learned that the Bank stopped requesting appraisals from [appellant]. The Bank stopped doing business with [appellant], ending a long standing business relationship.”
On July 11, 2008, appellant filed a complaint against respondent. The complaint alleged six causes of action: slander; slander per se; libel; libel per se; trade libel; intentional and negligent interference with economic relations; and interference with prospective business advantage. In a section captioned “General Allegations, ” appellant alleged in detail all the various ways in which respondent’s letter was false. He alleged the falsehoods were “published … with personal animosity, hatred, and ill will or published causing [appellant] to be shunned or avoided having a tendency to injure him in his occupation.” Appellant alleged he had lost income as a proximate result of respondent’s publication of the falsehoods and that he had suffered damage to his reputation.
All quotations from the complaints are reproduced in original form, except as indicated by the presence of bracketed language.
In the ensuing statements of his separate causes of action, appellant incorporated the preceding allegations and summarily alleged elements of the cause of action. In his fifth cause of action, “Trade Libel, ” appellant alleged that respondent’s falsehoods “impute to [appellant] general disqualification in those respects which the occupation peculiarly requires, or by imputing something with reference to his profession, trade or business that has a natural tendency to lessen its profits.” The cause of action also alleged the falsehoods exposed appellant “to contempt, ridicule, and caused him to be shunned or avoided and injured [him] in his occupation.” It alleged the falsehoods “imputed dishonesty or lack of ethics to [appellant] as a professional damaging his professional reputation.” In the sixth cause of action, “Intentional and Negligent Interference with Economic Relations, ” appellant summarized respondent’s alleged falsehoods, then alleged that the falsehoods “were designed to disrupt the relationship” between appellant and the bank. Appellant alleged the falsehoods constituted an unfair trade or business practice. In the seventh cause of action, “Interference with Prospective Business Advantage, ” appellant alleged that, as a result of respondent’s falsehoods, appellant was “unable to communicate with the Bank nor continue doing appraisals with the Bank after a long standing successful working relationship. As a proximate result of [the falsehoods], [appellant was] compelled to suffer unexpected financial losses without any warning or planning for the loss of said business.” The complaint sought special, general and punitive damages.
On September 12, 2008, appellant filed a first amended complaint; as far as our record discloses, this amended complaint was filed prior to any pleading in response to the original complaint. The first amended complaint contains slight changes to the general allegations of the complaint, repeats the seven causes of action verbatim and adds an eighth cause of action, “Negligence.” (That cause of action alleges respondent “owed a legal duty under Business and Professions Code Sections 17200-17500 et seq. to use due care to [appellant] not to use pejorative, unfair, false and misleading statements.”)
Respondent demurred to the first amended complaint on the basis that each cause of action was “barred by the one-year statute of limitations.” Respondent contended the one-year statute of limitations for libel and slander actions, Code of Civil Procedure section 340, subdivision (c), applied to all eight causes of action because the injury alleged in all causes of action was the same injury to reputation caused by the defamatory statements. Appellant opposed the demurrer, contending (as relevant here) the relevant statute of limitations for trade libel and interference with business relationships is the two-year limitation of Code of Civil Procedure section 339. The trial court sustained the demurrer as to all causes of action and permitted appellant to further amend the complaint.
On December 30, 2008, appellant filed a second amended complaint. This complaint expanded appellant’s allegations concerning the falsehoods in respondent’s review letter; it omitted the causes of action for slander, slander per se, libel, and libel per se. In addition, as to the cause of action for trade libel, the second amended complaint added allegations that the falsehoods were “damaging to [appellant’s] business” and “diminish[ed] his professional credibility and competence such that Bank and others no longer hired him to perform appraisals.” As had the complaint and the first amended complaint, the trade libel cause of action in the second amended complaint alleged that respondent’s falsehoods “imputed dishonesty or lack of ethics to [appellant] as a professional damaging his professional reputation.” As had the earlier complaints, it alleged that appellant suffered personal distress and “injury to his feelings” as a result of the falsehoods. The interference and negligence causes of action were unchanged in the second amended complaint. Respondent again demurred based on the statute of limitations. Over appellant’s opposition, the court again sustained the demurrer with leave to amend.
On February 24, 2009, appellant filed his third amended complaint. The allegations of the third amended complaint were extensively revised. As to the trade libel cause of action, now set forth as the third cause of action, the third amended complaint attempted to focus on the falsehoods as disparaging appellant’s “appraisals, ” instead of his more-generalized skill in performing such appraisals. This version of the complaint omitted the allegations that the falsehoods caused personal distress and injury to feelings; it continued to allege, however, that the falsehoods “imputed dishonesty or lack of ethics to [appellant’s] work in the appraisal trade.” The other three causes of action in the third amended complaint, intentional interference with contract, tortious interference with economic relations, and unfair business practices, all focused on the alleged falsehoods as disparaging “the quality and service of [appellant’s] Appraisals, ” which, in turn, caused the bank not to hire appellant for future appraisal work.
Respondent again demurred, both on the basis that the complaint was barred by the one-year statute of limitations for defamation, and on the basis “that a cause of action for trade libel cannot be based on an opinion as a matter of law.” Appellant opposed the demurrer, essentially, on the basis that his causes of action were “not derivative of” a defamation cause of action. He did not address respondent’s “opinion” contention.
Appellant also contended his delayed discovery of his injury from respondent’s falsehoods tolled accrual of his causes of action. The affirmative allegations of the third amended complaint establish, however, that appellant knew of his injury on or about July 18, 2006, when he received a letter from the bank demanding repayment of the appraisal fee based on respondent’s disparaging review of the appraisal. The date of the review letter was July 13, 2006, and the original complaint was filed July 11, 2008, less than two years from the earliest possible date of the accrual of his cause of action. Although appellant again seeks to raise the delayed discovery issue on appeal, he has not shown that the issue of delayed discovery is relevant to the appeal: The trial court concluded, and appellant agrees, that the action was filed more than one year, but less than two years, after accrual of the causes of action. The only issue on appeal is whether all of the causes of action are subject to the one-year statute of limitations.
The trial court sustained the demurrer and denied appellant leave to further amend the complaint. The court concluded that all causes of action alleged in the third amended complaint were “based on the same supposedly defamatory statement which was the subject of [appellant’s] previous defamation cause of action which the Court concluded was barred by the one-year statute of limitations. And the gravamen of the cause of action for trade libel is the purported injury to [appellant’s] reputation ….”
Appellant filed a timely notice of appeal.
Respondent filed a motion for sanctions, contending the appeal is frivolous and taken for purposes of delay. We deferred ruling on the motion by order dated July 9, 2010. We now deny the motion, concluding that the appeal presents a colorable issue concerning the applicability of Civil Code section 3425.3 in the circumstances of the case.
Discussion
Defamation and trade libel are two different causes of action and protect two different interests. Defamation, both in its libel and slander versions, seeks to protect the personal reputation of the defamed person; the interest in personal reputation is vindicated by an award of general damages and can include damages for emotional distress. Trade libel, by contrast, seeks to protect a property interest in the reputation of a business or the goods sold by the business; that interest is vindicated by special damages reflecting loss of sales resulting from the disparagement of the product. (See generally Polygram Records, Inc. v. Superior Court (1985) 170 Cal.App.3d 543, 548-549.) Similarly, interference with contractual or prospective business relationships, while sounding in tort and not in contract, is vindicated by an award of special damages reflecting actual business losses, and not by an award of general damages for the distress caused by the loss of business.
In this case, appellant entirely failed to recognize this distinction in his original complaint and in his first and second amended complaints. With the filing of the third amended complaint, appellant began to make the appropriate distinctions. Thus, he eliminated the allegation that respondent’s falsehoods caused appellant personal distress and injury to his feelings, which initially had been alleged as damages in his trade libel and interference causes of action. However, appellant still failed to distinguish meaningfully between his original, core defamation causes of action and the more peripheral trade libel and interference claims.
Thus, as respondent contends, and as the trial court concluded, all of appellant’s causes of action are based in his primary right to be free of defamatory statements by respondent. As respondent contends, and as the trial court concluded, all causes of action arising from this primary right should be subject to the one-year statute of limitations because the main components of the primary right, namely, the causes of action for libel and slander, are subject to the one-year statute of limitations. (See Civ. Code, § 340, subd. (c).) Such was the holding in Strick v. Superior Court (1983) 143 Cal.App.3d 916 (Strick), upon which respondent relies and upon which the trial court relied.
In Strick, the plaintiffs were the parents of a man profiled in a magazine article. They alleged that they had agreed to be interviewed by the authors of the article on the basis that their participation would result in a story that presented favorable aspects of their lives and their son’s life. The resulting article did not meet that expectation. (Strick, supra, 143 Cal.App.3d at p. 919, fn. 1.) The plaintiffs sued the publisher of the magazine for libel. (Id. at p. 918.) The defendant moved for summary judgment because the complaint was filed more than one year after initial publication of the article. (Id. at p. 919.) While the motion was pending, the plaintiffs filed an amended complaint adding causes of action for fraud and for breach of oral contract. The original summary judgment motion was denied. (Ibid.)
The defendant filed a new motion for summary adjudication of the libel and fraud causes of action. The trial court determined that the defendant had established the initial date of publication and the plaintiffs had not produced evidence to create a triable issue concerning a different, later date of publication. (Strick, supra, 143 Cal.App.3d at p. 919-921.) Accordingly, the trial court granted summary adjudication of the libel and fraud causes of action. The plaintiffs sought a writ of mandate. (Id. at pp. 918.)
The evidence showed that at least half of the copies of the April 1980 issue of the magazine, which contained the article in question, were delivered to retail outlets on March 26, 1980. The plaintiff’s evidence showed that mail subscribers received the magazine on March 27, 1980. (Strick, supra, 143 Cal.App.3d at pp. 920-921.) The action was filed on March 27, 1981, more than one year after the initial delivery to retailers. (Id. at p. 918.)
The Court of Appeal affirmed. It held that the cause of action for libel accrued upon the initial distribution--for libel-law purposes, the “publication”--of the magazine on March 26, 1980. (Strick, supra, 143 Cal.App.3d at p. 922.) In addition, the court held that the fraud cause of action was barred by the one-year statute of limitations because the injury claimed by the plaintiffs in the fraud cause of action was “the same as that which could be caused” by the libel cause of action. (Id. at p. 925.) The Strick opinion attributes its conclusion to a literal application of the language of the Uniform Single Publication Act, adopted in California as Civil Code section 3425.3 (hereafter, section 3425.3). That section states: “No person shall have more than one cause of action for damages for libel or slander or invasion of privacy or any other tort founded upon any single publication or exhibition or utterance, such as any one issue of a newspaper or book or magazine or any one presentation to an audience or any one broadcast over radio or television or any one exhibition of a motion picture. Recovery in any action shall include all damages for any such tort suffered by the plaintiff in all jurisdictions.”
Strick, supra, 143 Cal.App.3d 916, has been repeatedly cited with approval in the three decades since it was decided (see Christoff v. Nestle USA, Inc. (2009) 47 Cal.4th 468, 476; M.G. v. Time Warner, Inc. (2001) 89 Cal.App.4th 623, 630; Baugh v. CBS, Inc. (N.D. Cal. 1993) 828 F.Supp. 745, 755 -756), and the Legislature has not seen fit to amend section 3425.3 to change the construction of the statute applied in Strick. The case is firmly established as California precedent and appellant has not presented any convincing reasons to revisit the issue.
It remains true after Strick that trade libel is a separate and different cause of action from those to recover for defamation. (See Guess, Inc. v. Superior Court (1986) 176 Cal.App.3d 473, 478-479; Total Call Intern., Inc. v. Peerless Ins. Co. (2010) 181 Cal.App.4th 161, 169 [discussion in context of insurance coverage issue].) A cause of action for trade libel protects the diminution of value of a product or business; a cause of action for libel or slander compensates injury to personal reputation. (Polygram Records, Inc. v. Superior Court, supra, 170 Cal.App.3d 543, 549.)
In the present case, however, the distinction between the two is reduced to the vanishing point and, as the trial court concluded, there is no independent cause of action alleged in the third amended complaint. (Cf. Blatty v. New York Times Co. (1986) 42 Cal.3d 1033, 1044 [interrelationship of various torts for First Amendment purposes].) We reach this conclusion for the following reasons: First and foremost, appellant alleges he received full value for the only product actually disparaged by respondent. That is, he was paid full price for the appraisal that respondent reviewed; although the complaint alleges, in effect, that the bank demanded its money back for the appraisal, the complaint does not allege appellant refunded his fee or that the bank otherwise recovered all or a part of the fee. Second, to the extent appellant alleges that his future “products” lost value (that is, were not ordered by the bank), that loss of value was purely collateral to the injury to appellant’s reputation. This was not a situation in which, for example, allegations of shoddy workmanship rendered a line of clothing less valuable. Here, the harm to appellant’s reputation comes first, and it is only this reputational harm that results in the diminution of value (to zero) of appellant’s professional product. (As far as the complaint alleges, and as far as common experience discloses, there is no market for cut-rate or “knock off” loan appraisals, as there might be for jeans.) Accordingly, we agree with the trial court that the gist or gravamen of all of appellant’s causes of action is the injury to his reputation. Under Strick, all of the causes of action are subsumed in the defamation claims, as alleged in the original cause of action, and all claims are barred by the one-year statute of limitations. (Strick, supra, 143 Cal.App.3d at p. 925.) It does not appear to us that further amendment of the complaint could avoid this fundamental issue; denial of leave to amend was not an abuse of discretion.
Appellant also argues briefly, and without any support in the record, that the trial court impermissibly weighed the evidence to determine that appellant knew or should have known of the libelous publication more than a year before the filing of the complaint. The complaint, however, alleges that the review letter was published on July 13, 2006, and that appellant received a copy of the letter on or about July 18, 2006. It alleges that appellant was concerned enough about the letter that he tried to call bank officials immediately but, when he failed to reach them, he did not pursue the issue. From these allegations, it is impossible to infer that appellant did not know or have reason to know of the injury to his reputation well prior to July 11, 2007, which was one year before the complaint was filed in 2008.
Even when the statute of limitations is tolled under the so-called discovery rule (see Shively v. Bozanich (2003) 31 Cal.4th 1230, 1237 [discovery rule applied in defamation cases only when “defamatory statement is made in secret or is inherently undiscoverable”]), it is knowledge of the fact of wrongful injury (not knowledge of the extent of the injury) that gives a plaintiff a duty of inquiry and results in accrual of a cause of action. (Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1110.) While normally this is a determination for the trier of fact, the question becomes one of law when the evidence supports only one conclusion. (Id. at p. 1112.) Such is the case here.
Disposition
The judgment is affirmed. Respondent is awarded costs on appeal.
WE CONCUR: Wiseman, Acting P.J. Kane, J.