DAN CLARK FAMILY LIMITED PARTNERSHIP v. MIRAMONTES









Filed 3/3/11






CERTIFIED FOR PUBLICATION


COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

DAN CLARK FAMILY LIMITED PARTNERSHIP, Plaintiff and Appellant, v. JULIETA ADA MIRAMONTES et al., Defendants and Respondents.

D056064 (Super. Ct. No. ECU03788)

APPEAL from a judgment of the Superior Court of Imperial County, Jeffrey B. Jones, Judge. Affirmed.
Law Office of Andrew B. Kaplan, Andrew B. Kaplan and William Tucker for Plaintiff and Appellant.
Horton, Knox, Carter & Foote, Margarita McKee Haugaard and Melissa Blackburn for Defendants and Respondents.

I.
INTRODUCTION
Plaintiff Dan Clark Family Limited Partnership (Dan Clark) appeals from a judgment entered after the trial court sustained the defendants' demurrer to Dan Clark's third amended complaint, without leave to amend. The trial court concluded that Dan Clark's causes of action for conversion and claim and delivery were untimely under the three-year statute of limitations that applies to the claims.
On appeal, Dan Clark contends that the trial court erred in finding that the statute of limitations was not tolled pursuant to Code of Civil Procedure[1] section 351, which tolls the statute of limitations for the time period during which a defendant is out of California. The trial court concluded that application of section 351 to toll the limitations period for plaintiff's claims would violate the Commerce Clause of the United States Constitution.
We conclude that applying section 351 to toll the statute of limitations in this case would run afoul of the Commerce Clause because it would force a nonresident defendant to choose between remaining in the state for several years, or returning to his or her place of residence, thereby forfeiting the protections of the statute of limitations. Putting nonresident defendants to such a choice would discourage nonresidents from engaging in even a single commercial transaction in California. Because Dan Clark raises no other issues on appeal, we affirm the judgment of the trial court.
II.
FACTUAL AND PROCEDURAL BACKGROUND
A. Factual background[2]
Dan Clark is a limited partnership domiciled in Texas. The Miramonteses are residents of Mexico.
In early May 2001, Dan Clark purchased three commercial vehicles (the Vehicles) from a company in Stockton, California. Dan Clark financed the purchase of the Vehicles with an $80,000 loan from CIT Group/Equipment Financing, Inc. (CIT). Dan Clark obtained Texas certificates of title for the Vehicles and registered the Vehicles in Texas. Dan Clark has continued to maintain registration of the Vehicles in Texas.
Immediately after purchasing the Vehicles, Dan Clark authorized James Frehner to pick up the Vehicles in California and deliver them to Dan Clark in Texas. The record is unclear as to the precise terms of the arrangement between Dan Clark and Frehner with respect to the pickup and delivery of the Vehicles.[3] Frehner never delivered the Vehicles to Dan Clark.
Between 2001 and 2003, Dan Clark's principal attempted to contact Frehner by telephone and made a number of trips to Las Vegas, Nevada, where he believed Frehner maintained a trucking business. At some point, Dan Clark became aware that Frehner had closed his trucking business in Nevada.
Dan Clark sets forth a number of allegations describing its attempts to locate Frehner and the Vehicles between 2001 and 2004. Dan Clark also filed suit against Frehner in Nevada in an attempt to recover the Vehicles, and obtained a judgment against Frehner, as well as a writ of possession. Dan Clark was unable to execute on the writ of possession because it could not locate the Vehicles.
In November or December 2004, an employee of Dan Clark contacted the California Department of Motor Vehicles (DMV) and explained that he was attempting to locate certain missing vehicles for which valid title and registration had been issued in Texas. A DMV employee informed Dan Clark's employee that someone had "tried to register" the Vehicles in California. After additional communication with the DMV, Dan Clark became aware that as of 2003, an individual identified as Ada Julieta Miramontes[4] had been listed as the registered owner of the Vehicles. DMV representatives indicated to Dan Clark that the DMV would rescind any California title or registration that had been issued with respect to the Vehicles.
The same Dan Clark employee who contacted the DMV also attempted to contact Julieta Miramontes about the Vehicles by telephone. A woman answered the call, but hung up without providing any information. Dan Clark then hired an attorney in California who wrote a letter to Julieta Miramontes and her brother, Alejandro Miramontes, notifying them that Dan Clark was the rightful owner of the Vehicles.[5]
Dan Clark eventually filed suit against the Miramonteses in July 2007. After conducting additional investigation with the DMV and propounding discovery in the lawsuit, Dan Clark came to believe that on March 27, 2002, Frehner purported to convey ownership of the Vehicles to the Miramonteses. Dan Clark alleges that the Miramonteses knew that Frehner did not own the Vehicles when they took possession of the Vehicles from Frehner, and that the Miramonteses actively concealed the conveyance from Dan Clark.
In its complaint, Dan Clark alleges that the Miramonteses were outside of California for an undetermined period of time between March 27, 2002 and July 20, 2007, and that during this time, the Miramonteses traveled between California and Mexico for personal reasons. Dan Clark further alleged that the Miramonteses did not engage in interstate commerce while they were in California during this time period.
B. Procedural background
Dan Clark filed its initial complaint in this action on July 20, 2007 and filed a first amended complaint on February 19, 2008.
On April 21, 2008, the Miramonteses filed a demurrer to the first amended complaint. After a hearing on May 20, the court entered an order sustaining the demurrer with leave to amend.
Dan Clark filed a second amended complaint on July 30, 2008. The Miramonteses demurred to the second amended complaint, and the trial court held a hearing on the demurrer on October 8, 2008. The court sustained this demurrer as well, and again granted Dan Clark leave to amend.
Dan Clark filed a third amended complaint on November 14, 2008, alleging causes of action for claim and delivery and conversion. The Miramonteses demurred to this complaint, and the court held an initial hearing on the matter on February 3, 2009. On June 25, the trial court issued a tentative ruling sustaining the demurrer to the third amended complaint, this time without leave to amend. The court held a second hearing on the matter on July 30. At the conclusion of the July 30 hearing, the court affirmed its tentative ruling.
The court sustained the demurrer after concluding that Dan Clark's lawsuit--which was filed in July 2007--was untimely under the applicable three-year statute of limitations. The court determined that Dan Clark's cause of action against Frehner for conversion accrued at the time Dan Clark learned of the conversion, which, the court found, occurred in 2001. The court further determined that "a new conversion occurred when Frehner transferred possession of the trailers to defendants on March 27, 2002 . . . and the cause of action against defendants accrued at that time." The court rejected Dan Clark's arguments that the delayed discovery rule applied to the causes of action, and/or that the statute of limitations had been tolled, based on section 351, during the time that the Miramonteses were out of the state.
The trial court entered judgment in favor of the Miramonteses on August 17, 2009.
Dan Clark filed a timely notice of appeal on October 15, 2009.
III.
DISCUSSION
On appeal, the parties do not dispute the trial court's determinations that (1) Dan Clark's causes of action against the Miramonteses accrued on March 27, 2002; (2) the applicable statute of limitations is three years; and (3) Dan Clark initiated its action on July 20, 2007. The parties thus appear to agree that Dan Clark's claims are untimely unless there is some basis for tolling the statute of limitations. Dan Clark contends that it has alleged sufficient facts to support tolling the statute of limitations pursuant to section 351, which provides:
"If, when the cause of action accrues against a person, he is out of the state, the action may be commenced within the term herein limited, after his return to the state, and if, after the cause of action accrues, he departs from the state, the time of his absence is not part of the time limited for the commencement of the action."

According to Dan Clark, its allegations that the Miramonteses were absent from the state for personal reasons for an unspecified period of time between the alleged conversion and the filing of the complaint are sufficient to prevent the court from determining that its action is untimely as a matter of law.

A. Standards of review
We review de novo an order sustaining a demurrer to determine whether the complaint alleges facts sufficient to state a cause of action. (CPF Agency Corp. v. Sevel's 24 Hour Towing Service (2005) 132 Cal.App.4th 1034, 1042.) We exercise our independent judgment as to whether the complaint states a cause of action, "giv[ing] the complaint a reasonable interpretation" and "treat[ing] the demurrer as admitting all properly pleaded material facts." (Palestini v. General Dynamics Corp. (2002) 99 Cal.App.4th 80, 86.)
When 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. [Citations.] The burden of proving such reasonable possibility is squarely on the plaintiff." (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
B. Relevant law
1. Commerce Clause
"The Commerce Clause, while literally a grant of power to Congress, also restricts states from passing laws that interfere with interstate commerce. [Citations.] 'This "negative" aspect of the Commerce Clause prohibits economic protectionism--that is, regulatory measures designed to benefit in-state economic interests by burdening out-of-state competitors.' [Citations.]" (Fireside Nissan v. Fanning (1994) 30 F.3d 206, 214 (Fireside).) "Laws that have either the purpose or effect of discriminating against interstate commerce will be struck down as unconstitutional unless the state can establish that there is no reasonable alternative method of safeguarding a legitimate local interest. [Citations.]" (Ibid.)
"In the absence of discrimination, state action that interferes with or burdens interstate commerce will be struck down if the local interest is not very substantial or if the burdens imposed on interstate commerce are excessive in relation to the putative benefits of the state's action. [Citations.] Thus, when a state law regulates in-state and out-of-state businesses evenhandedly, courts should apply 'less strict scrutiny' or a more lenient balancing test than they would apply in the case of discrimination against interstate commerce. [Citations.]" (Fireside, supra, 30 F.3d at p. 214; see also Pike v. Bruce Church, Inc. (1970) 397 U.S. 137, 142 ["If the statute does not impermissibly discriminate, then the statute is valid unless the burden imposed on interstate commerce is 'clearly excessive' in relation to the putative local benefits"].)
The United States Supreme Court has noted that while "there is no clear line separating the category of state regulation that is virtually per se invalid under the Commerce Clause, and the category subject to the Pike v. Bruce Church balancing approach . . . [i]n either situation the critical consideration is the overall effect of the statute on both local and interstate activity." (Brown-Forma Distillers Corp. v. New York State Liquor Auth. (1986) 476 U.S. 573, 579.)



TO BE CONTINUED AS PART II….

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