Filed 4/26/17 IV Solutions v. Health Net of California CA2/2
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO
IV SOLUTIONS, INC.,
Plaintiff and Appellant,
v.
HEALTH NET OF CALIFORNIA et al.,
Defendants and Respondents.
B268816 c/w B275179
(Los Angeles County
Super. Ct. No. BC571629)
APPEAL from a judgment and order of the Superior Court
of Los Angeles County. William F. Fahey, Judge. Affirmed.
Wolf, Rifkin, Shapiro, Schulman & Rabkin, Marc E.
Rohatiner and Eric Levinrad for Plaintiff and Appellant.
Cooley, William P. Donovan, Jr. and Matthew Caplan for
Defendant and Respondent Health Net of California, Inc.
Musick, Peeler & Garrett, Dan Woods and Peter J. Diedrich
for Defendants and Respondents Golden Empire Managed Care,
A Medical Group, Inc. and Managed Care Systems, L.P.
2
IV Solutions, Inc. (appellant) appeals from a judgment
entered after the trial court sustained a demurrer to appellant’s
First Amended Complaint (FAC) in this action. The FAC alleged
causes of action for breach of written contract; breach of implied
contract; intentional and negligent misrepresentation; and open
book account against respondents Health Net of California, Inc.
(Health Net); Golden Empire Managed Care, a Medical Group,
Inc. (GEMCare); and Managed Care Systems, L.P. (Managed
Care) (collectively respondents).1
The trial court sustained Health Net’s demurrer, and
GEMCare and Managed Care’s motion for judgment on the
pleadings, on the ground that the claims were barred by the
applicable statutes of limitation. The trial court then heard and
granted Health Net’s motion for attorney fees, awarding Health
Net fees in the amount of $78,763. Appellant separately
appealed from the judgment and the attorney fee order, and we
consolidated the appeals. Finding no error, we affirm both the
judgment and the attorney fee order.
FACTUAL BACKGROUND2
During the relevant time period, appellant was a licensed
clinical pharmacy. Respondents are licensed health care plans
and insurers.
An individual known as A.C. was covered by health
insurance policies issued by Health Net and GEMCare. A.C.

1 Appellant does not challenge on appeal the trial court’s
dismissal of appellant’s second cause of action for breach of
implied contract. Therefore, we do not discuss this cause of
action further.
2 The facts as stated here are allegations taken from the
FAC. Properly pleaded facts are presumed true for the purposes
of this opinion. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
3
suffered from an uncommon condition which can cause
irreversible physical deformities and mental problems. Her
physician prescribed Supprelin LA, which is designed to deliver
medication continuously for 12 months after implantation.
Insertion of the implant is a surgical procedure. On or about
March 3, 2009, respondents authorized the Supprelin LA implant
for A.C. They designated the implant and related services as
“approved,” and assigned them an authorization number.
However, in early 2009, A.C.’s health care providers had
difficulty obtaining Supprelin LA. Due to this problem, Health
Net and GEMCare looked to obtain it from an out-of-network
pharmacy. Appellant was able to promptly provide the implant.
Managed Care authorized the implant and the necessary
surgery on or about March 9, 2009. On or about March 24, 2009,
Children’s Hospital of Central California or A.C.’s physician
contacted appellant and requested that it provide the Supprelin
LA. Appellant delivered the implant on or about March 25, 2009.
At the time that appellant provided the implant, appellant
and Health Net were parties to an agreement containing the
following provision:
“‘[IV Solutions] agrees that for any and all
future services it provides to any insured or member
under any insurance policy or evidence of coverage
issued by Health Net (or any of its affiliates, parent
companies, sister companies, subsidiaries, successors,
or predecessors) it shall accept as payment in full the
amount specified or otherwise defined under the
particular insurance policy or evidence of coverage in
effect at the time that the service was rendered . . . .’”
After providing the authorized Supprelin LA implant to
A.C., appellant timely submitted its claims for payment to Health
Net. Appellant submitted its standard “‘billed charges,’” or retail
rate to Health Net. However, Health Net failed to process or pay
4
the claims in a timely manner. Health Net set forth “completely
and obviously” improper interpretations of its own health plan
terms, and attempted to rely upon what respondents defined as
“‘usual and customary’” rates. Respondents used their health
plan documents against appellant but refused to provide copies of
those documents to appellant. When appellant finally obtained
the plan documents, it discovered that respondents had
misapplied the document terms in this matter to their benefit.
Respondents misclassified the Supprelin LA implant as a standalone
medication instead of an implant in order to invoke a lower
payment rate.
Respondents failed to pay appellant at the applicable
pricing scheme, and involved their attorney to attempt to “strongarm”
appellant into believing that it was not entitled to see the
plan documents that respondents insisted were applicable to this
matter.
In addition, respondents regularly pointed their fingers at
each other, claiming it was one of the others that was responsible
for payment of appellant’s charges.
From 2009 until at least April 2013, respondents issued
partial payments, explanations of benefits, and other letters
attempting to justify their underpayments to appellant.
Throughout this time period, appellant made multiple demands
and appeals for proper payments, and respondents reconsidered
appellant’s appeals and inquiries, issued partial checks and
benefit explanations stating their adjudication positions.
Respondents never issued a full and final refusal to pay the
claims at issue and they continue to fail to pay the majority of
appellant’s claims.
PROCEDURAL HISTORY
Appellant filed its first complaint in this action on
February 6, 2015. After Health Net demurred to the complaint,
5
appellant voluntarily amended. The FAC was filed on June 1,
2015.
Health Net demurred to all four causes of action in the FAC
on the ground that each action was barred by the applicable
statute of limitations. Health Net also demurred to the third
cause of action for intentional and negligent misrepresentation
on the ground that it failed to state facts sufficient to constitute a
cause of action against Health Net, and was not pled with
sufficient specificity. In addition, Health Net demurred to the
fourth cause of action for open book account on the ground that
appellant failed to allege that the cause of action was governed by
an open book account instead of the agreement alleged in the
FAC.
GEMCare and Managed Care filed a motion for judgment
on the pleadings as to the second and fourth causes of action,
which were the only causes of action alleged against these
entities. GEMCare and Managed Care argued that the causes of
action were barred by the applicable statutes of limitations.
On October 26, 2015, the court granted the motion for
judgment on the pleadings and sustained the demurrer without
leave to amend. The court held:
“On its face, the FAC shows that [appellant’s]
claims accrued on March 25, 2009 but no later than
in May, 2009 . . . . This action was not filed until
February 6, 2015, long after all applicable statutes of
limitations had expired.”
The court noted that respondents’ other arguments were
well-taken. Appellant’s request for leave to amend was denied on
the ground that appellant had proffered no new facts. In
addition, “in light of the judicial admissions in the FAC,” the trial
court could not “envision how [appellant] could now plead viable
claims.”
6
On February 5, 2016, the trial court entered judgment in
favor of respondents.
Health Net then moved to recover its attorney fees,
pursuant to the terms of the 2008 agreement between Health Net
and appellant.3 The court granted Health Net’s motion,
awarding Health Net $78,763 in attorneys’ fees.
On December 7, 2015, appellant appealed from the
judgment. On May 25, 2016, appellant appealed the attorney fee
award. The two matters were consolidated.
DISCUSSION
I. Standards of review
When reviewing a trial court’s order sustaining a demurrer
without leave to amend, we apply well-established rules of
review. “‘A demurrer tests the legal sufficiency of the complaint.
[Citation.] Therefore, we review the complaint de novo to
determine whether it contains sufficient facts to state a cause of
action. [Citation.] “We treat the demurrer as admitting all
material facts properly pleaded, but not contentions, deductions
or conclusions of fact or law.” [Citation.] . . .’ [Citations.]”
(Czajkowski v. Haskell & White, LLP (2012) 208 Cal.App.4th 166,
173.)
“‘“The standard of appellate review of a judgment on the
pleadings is . . . identical to that on a judgment following the
sustaining of a demurrer.”’” (Kempton v. City of Los Angeles
(2008) 165 Cal.App.4th 1344, 1347-1348.)
Where, as here, the trial court has sustained a demurrer
without leave to amend, “we must decide whether there is a
reasonable possibility the plaintiff could cure the defect with an

3 The 2008 agreement provided that, “[i]n any dispute
arising out of this AGREEMENT, the prevailing PARTY shall be
entitled to recover its reasonable costs, including, but not limited
to . . . reasonable attorneys’ fees.”
7
amendment. [Citation.] If we find that an amendment could
cure the defect, we conclude that the trial court abused its
discretion and we reverse; if not, no abuse of discretion has
occurred. [Citation.]” (Schifando v. City of Los Angeles (2003) 31
Cal.4th 1074, 1081.)
An award of attorney fees is generally reviewed for abuse of
discretion. (Soni v. Wellmike Enterprise Co. Ltd. (2014) 224
Cal.App.4th 1477, 1481.)
II. Appellant’s claims are barred as a matter of law
A. Breach of written contract
The statute of limitations for an action for breach of written
contract is four years. (Code Civ. Proc., § 337.)
“A cause of action for breach of contract accrues at the time
of breach, which then starts the limitations period running.
[Citation.]” (Cochran v. Cochran (1997) 56 Cal.App.4th 1115,
1120.)
Accepting appellant’s claims as pled, the breach occurred in
2009. In March 2009, appellant was asked to provide the
Supprelin LA, which it provided on or about March 25, 2009, then
timely submitted its claim for payment to respondents. The
written agreement between the parties, dated May 20, 2008,
defined the pricing mechanism that Health Net should have paid.
However, Health Net failed to process or pay the claim in a
timely manner. Appellant admits that payment was due no later
than May 2009, as appellant has alleged “[a]s a direct and
proximate result of [Health Net’s] breach, [appellant] has been
damaged in an amount exceeding the jurisdictional limit of this
Court, according to proof at trial, plus interest at the legal rate of
10%, which has been accruing since May, 2009.”
Appellant did not file its claim for breach of contract
against Health Net until February 2015. Thus, it is barred by
the four-year statute of limitations.
8
B. Intentional and negligent misrepresentation
The statute of limitations for an action for intentional
misrepresentation is three years. (Code Civ. Proc. § 338, subd.
(d).) The statute of limitations for an action for negligent
misrepresentation is two years. (§ 339, subd. (1); Butcher v.
Truck Ins. Exchange (2000) 77 Cal.App.4th 1442, 1467-1468.) A
claim for intentional or negligent misrepresentation accrues
when a plaintiff is on notice that the defendant has made the
misrepresentation. (E-Fab, Inc. v. Accountants, Inc. Services
(2007) 153 Cal.App.4th 1308, 1323.)
Appellant alleges that “[o]n or about March 5, 2009,”
GEMCare and Managed Care made misrepresentations
regarding the payments and the categorization of Supprelin LA.
Appellant also alleges that Health Net made “various
representations” to appellant, including “that [appellant] was
authorized to provide services to A.C., that Health Net would
make full payment to [appellant] and that it would follow the
terms of its various health plans when calculating payments to
[appellant].” Appellant should have been on notice of these
misrepresentations when it received less than full payment in
2009. Further, appellant alleges that “[a]s a direct and
proximate result of Health Net’s fraudulent, intentional and/or
negligent misrepresentations, [appellant] has been damaged in
an amount in excess of the jurisdictional minimum of this Court,
plus interest at the legal rate of 10%, which has been accruing
since May, 2009.” The cause of action accrued in May 2009 when
proper payment was due.
Appellant did not file its claim for intentional or negligent
misrepresentation against respondents until February 2015,
more than three years beyond the accrual of its claim. Thus, the
claim is barred.
9
C. Open book account
Claims for open book account are subject to a four-year
statute of limitations, which begins to run “as of the last entry in
the book account.” (R.N.C., Inc. v. Tsegeletos (1991) 231
Cal.App.3d 967, 972 (R.N.C.); Code Civ. Proc., § 337, subd. (2).)
“A book account does not remain open indefinitely so that any
payment towards the debt necessarily becomes an ‘entry’ for
purposes of the applicable limitations period. Instead, a book
account . . . becomes closed once . . . there will be no further
activity on the account other than the payments by a creditor
towards the settled debt.” (R.N.C., at p. 972.) In R.N.C., the
statute of limitations began to run on a claim for open book
account either when the creditor summed up the debt, or when
the creditor demanded payment in full. (Id. at pp. 973-975.)
Partial payments made later did not re-open the account. (Ibid.)
In its allegations regarding open book account, appellant
incorporated by reference all previous allegations set forth in its
FAC. Appellant alleged that respondents became indebted to
appellant for the services appellant provided to A.C., and despite
appellant’s demands for payment, failed to pay the outstanding
balance on the account. Under the law set forth above, the claim
for open book account accrued when appellant “timely submitted”
its claims for payment after providing the Supprelin LA in 2009.
(R.N.C., supra, 231 Cal.App.3d at p. 972.)
Appellant did not file its claim for open book account until
February 2015, more than four years after the last possible entry
in an open book account. Thus, the claim is barred.
III. Estoppel is not applicable
A defendant’s actions may estop the defendant from
asserting the statute of limitations if the defendant’s acts or
conduct wrongfully induces the plaintiff to believe an amicable
adjustment of his claim will be made. (Bertorelli v. City of Tulare
10
(1986) 180 Cal.App.3d 432, 440.) “Whether an estoppel exists --
whether the acts, representations, or conduct lulled a party into a
sense of security preventing him from instituting proceedings
before the running of the statute, and whether the party relied
thereon to his prejudice -- is a question of fact, not of law.
[Citation.]” (Industrial Indem. Co. v. Industrial Acci. Com. (1953)
115 Cal.App.2d 684, 690.)
Appellant claims that the FAC alleges facts which, if true,
would be sufficient to establish that respondents are estopped
from asserting the running of the statute of limitations until
April 2013. Appellant points out that the FAC states: “From
2009 to at least April, 2013, [respondents] issued partial
payments, explanations of benefits, and other letters attempting
to justify their underpayments to [appellant].” The FAC further
alleges that, “Throughout this time period, [appellant] made
multiple demands and appeals for proper payments, and
[respondents] reconsidered [appellant’s] appeals and inquiries,
issued partial checks, and benefit explanations stating their
adjudication positions.” Appellant argues that, if proven, these
allegations are sufficient to support a conclusion that
respondents lulled appellant into a false sense of security until
April 2013, thereby preventing appellant from bringing an action
against respondents. Appellant argues that it was error for the
trial court to dispose of this factual question on demurrer.
The law does not support appellant’s position that repeated
requests for reconsideration of the payment amount serve to toll
the statute of limitations. In Singh v. Allstate Ins. Co. (1998) 63
Cal.App.4th 135 (Singh), the insureds argued that the statute of
limitations should be tolled during an approximately one-month
time period during which they asked the insurance company to
reconsider its initial denial of their claim and received a second
denial of their claim. The Court of Appeal held that a request for
11
reconsideration did not serve to toll the statute of limitations.
The court reasoned, “Plaintiffs were aware of the right to sue,
and of potential grounds, before any request for reconsideration.
The justifications for equitable tolling are absent, once the carrier
has initially denied the claim.” (Id. at p. 142.)
More recently, in Vishva Dev, M.D., Inc. v. Blue Shield of
California Life & Health Ins. Co. (2016) 2 Cal.App.5th 1218
(Vishva Dev), a provider of medical care appealed an insurer’s
decision to pay less than the full amount of emergency medical
services through the insurer’s internal appeal process. The
provider had received a written Explanation of Benefits (EOB) as
to each patient, setting forth the amount that the insurance
company would pay for each patient. These EOBs put the
provider on notice that its claims for payments were being denied
in part. Because the provider filed suit more than two years after
receiving the EOBs, its claim was barred. (Id. at p. 1224.) The
insurer’s “willingness to consider additional evidence, or provide
a voluntary appeal process, after it had given unequivocal notice
that a claim was rejected did not toll the limitations period.
[Citations.]” (Ibid.)
These cases show that the statute of limitations begins
with the insurer’s notice to the claimant that its “claim for
payments [is] being denied in part or in whole.” (Vishva Dev,
supra, 2 Cal.App.5th at p. 1224.) Upon receipt of the insurance
company’s initial denial, the provider has “knowledge of the facts
essential to” the provider’s claim -- therefore, the limitations
period begins to run. (Id. at p. 1223.) The provider’s subsequent
requests for reconsideration or demands for further payment do
not serve to extend the statute of limitations. This is true even
where partial payment of money due under a contract is
subsequently made. Such partial payment does not extend the
12
applicable statute of limitations. (Code Civ. Proc., § 360; Boyle v.
Lampe (1963) 223 Cal.App.2d 715, 719).
Further, the factual allegations of the operative pleading do
not suggest that appellant was lulled into believing that its claim
would be paid. Instead, appellant alleges that during these
subsequent communications, respondents attempted to justify
their underpayments to appellant. Under these circumstances,
respondents are not estopped from asserting the statute of
limitations as a defense to appellant’s claims.
IV. Equitable tolling is not applicable
The doctrine of equitable tolling applies “‘“[w]hen an
injured person has several legal remedies and, reasonably and in
good faith, pursues one.”’ [Citations.]” (McDonald v. Antelope
Valley Community College Dist. (2008) 45 Cal.4th 88, 100
(McDonald).) In McDonald, a statute of limitations on an
employment claim was subject to equitable tolling where the
plaintiff took advantage of internal grievance procedures offered
by the Antelope Valley Community College District before filing
suit pursuant to the Fair Employment and Housing Act (FEHA).
(McDonald, at pp. 96-97). The McDonald court explained that,
“The filing of an administrative claim, whether mandated or not,
affords a defendant notice of the claims against it so that it may
gather and preserve evidence, and thereby satisfies the principal
policy behind the statute of limitations. [Citation.]” (Id. at p.
102.)
The doctrine of equitable tolling also applies between the
date of an insured’s timely notice to an insurance company and
the date that the insurance company formally denies coverage in
writing. (Prudential-LMI Com. Insurance v. Superior Court
(1990) 51 Cal.3d 674, 700 (Prudential). In Prudential, the
insureds discovered a crack in the foundation of a building they
owned. In December 1985, they filed a claim with their brokers,
13
who immediately notified the insurance companies who had
issued insurance policies on the property during the plaintiffs’
period of ownership. (Id. at p. 680.) Prudential conducted an
investigation of the claim. In August 1987, shortly before
receiving formal written notice that their claim had been denied,
the plaintiffs filed suit against Prudential and three other
insurers, alleging breach of contract, bad faith, breach of
fiduciary duties and negligence. (Id. at p. 681.) Although
plaintiffs filed their lawsuit beyond the one-year statute of
limitations, the statute was tolled from December 1985 until
September 1987, when plaintiffs were notified by Prudential that
coverage was denied. (Id. at p. 693.) The court reasoned that
such a policy “allows the claims process to function effectively,
instead of requiring the insured to file suit before the claim has
been investigated and determined by the insurer.” (Id. at p. 692.)
Appellant argues that the doctrine of equitable tolling
should apply in this case based on the following allegations:
“From 2009 to at least April, 2013,
[respondents] issued partial payments, explanations
of benefits, and other letters attempting to justify
their underpayments to [appellant]. Throughout this
time period, [appellant] made multiple demands and
appeals for proper payments, and [respondents]
reconsidered [appellant’s] appeals and inquiries,
issued partial checks, and benefit explanations
stating their adjudication positions. [Respondents]
have never issued a full and final refusal to pay the
claims at issue here . . . .”
Appellant insists that we must deem true its allegation
that it was never given a formal written denial of its claims. As a
result, appellant argues, the statute of limitations remains
equitably tolled, or was equitably tolled until at least April 2013,
the end of the time period during which respondents reconsidered
14
appellant’s claims. Appellant argues that to hold otherwise
would create the anomalous situation where appellant would be
forced to file a lawsuit before it was finally and unequivocally
informed that the claim would not be paid.
Appellant cannot avoid its own allegations that
respondents issued EOBs and then attempted to “justify” its
underpayments. Pursuant to Vishva Dev, EOBs put the provider
on notice of its claims. (Vishva Dev, supra, 2 Cal.App.5th at p.
1223.) Appellant’s “demands and appeals for proper payments”
do not serve to toll the statute of limitations. (Singh, supra, 63
Cal.App.4th at p. 142.) Furthermore, appellant admits that it
was on notice of its claims in 2009 through its allegation that its
claims accrued in 2009. Appellant’s contention that respondents
“never issued a full and final refusal to pay the claims at issue
here” is undermined by its own allegations that it received EOBs
and disputed those EOBs.
Important policy supports the rule that an EOB starts the
statute of limitations running without regard to a provider’s
protests. If such back and forth between the parties following the
issuance of an EOB could toll the statute of limitations, “any
party engaging in an insurance company’s optional appeals
process could continuously toll the statute of limitations, thereby
rendering it a nullity. [Citation.]” (Vishva Dev, supra, 2
Cal.App.5th at p. 1225.)
Unlike the situation in McDonald, appellant did not pursue
its remedy in any other forum. Appellant’s allegations show that
appellant received EOBs and partial payments beginning in
2009. This put appellant on notice of its claims and commenced
the running of the statute of limitations. Because an EOB
15
issued, commencing the running of the statute of limitations, a
further full and final refusal to pay was unnecessary.4

4 Appellant cites two district court cases from the Central
District of California in support of its argument that the
allegation that “[respondents] have never issued a full and final
refusal to pay the claims at issue here” mandates reversal of the
judgment sustaining the demurrer. (IV Solutions, Inc. v.
Pacificare Life & Health Ins. Co. (C.D.Cal Dec. 19, 2016, CV 16-
07153 SJO) 2016 U.S. Dist. LEXIS 182727 (Pacificare); IV
Solutions, Inc. v. Conn. Life Ins. Co. (C.D.Cal. Dec. 5, 2016, CV
13-9026-GW) 2016 U.S. Dist. LEXIS 182755 (Connecticut).)
These cases are not controlling authority in this court. Further,
they are factually inapposite. In Connecticut, the district court
was considering a motion for reconsideration of a denial of
summary judgment on the grounds that the statute of limitations
barred IV Solution’s claim. In contrast to the matter before us,
there were allegations in the complaint that the defendant had
repeatedly requested more documentation and had encouraged
IV Solutions to pursue internal appeals. Here, the allegations
suggest that following the issuance of the EOB, respondents’
communications were restricted to justifications of their position.
Similarly, in Pacificare, the district court was considering a
motion to dismiss IV Solution’s complaint on the ground that the
statute of limitations barred the claims. IV Solutions had alleged
that after it brought the shortfall in payment to Pacificare’s
attention, Pacificare specifically stated that it was reviewing the
claims and would have a final answer at some later date. No
such allegations exist here. Nor can appellant amend its
complaint to include allegations that contradict its prior
allegations that respondents’ communications were attempts to
“justify their underpayments” and state their “adjudication
positions.” (See People ex rel. Gallegos v. Pacific Lumber Co.
(2008) 158 Cal.App.4th 950, 957 [“‘“A plaintiff may not discard
factual allegations of a prior complaint, or avoid them by
contradictory averments, in a superseding, amended pleading.”
[Citation.]’ [Citation.].”)
16
V. The discovery rule is not applicable
Pursuant to the discovery rule, a plaintiff’s cause of action
begins to run from the time the plaintiff discovers, or through the
exercise of diligence should have discovered, the injury. (April
Enterprises, Inc. v. KTTV (1983) 147 Cal.App.3d 805, 826.) The
rule applies when a breach or violation is difficult to detect, but
not where the breach is immediate and obvious. (William L.
Lyon & Associates, Inc. v. Superior Court (2012) 204 Cal.App.4th
1294, 1309 (Lyon) [discovery rule applicable where real estate
broker failed to disclose its knowledge of construction defects and
sellers concealed defect with dark paint].)
Appellant argues that this rule should apply here,
concerning both appellant’s breach of contract and
misrepresentation claims.
A. Breach of Contract
As to the contract cause of action, appellant points to its
allegation that the agreement between appellant and respondent
provided that appellant would accept as payment “the amount
specified or otherwise defined under the particular insurance
policy or evidence of coverage in effect at the time that the service
was rendered.” Appellant argues that it could not have
determined that respondent breached its agreement until it
obtained A.C.’s policy and other documents related to the
coverage in place at the time that appellant provided such
services to A.C. However, as alleged in the FAC, respondents
refused to provide those documents to appellant. Appellant
asserts that it finally was able to obtain the applicable documents
in April 2013.5 When respondents finally provided the applicable
documents, appellant discovered that respondents had

5 The FAC does not allege that the plan documents were
produced in April 2013.
17
misapplied the document terms, and that the partial payments to
appellant on A.C.’s claims were in breach of the 2008 agreement.
Thus, appellant argues, it did not discover, and could not
reasonably have discovered, Health Net’s breach of the 2008
agreement until April 2013 when Health Net finally produced the
applicable insurance plan documents.
The allegations of the FAC show that appellant was aware
of the alleged underpayment long before April 2013. Appellant
alleges that after it submitted its claims for payment to Health
Net, Health Net “failed to process or pay the claims in a timely or
proper manner. Health Net set forth completely and obviously
improper interpretations of its own health plan terms, and
attempted to rely upon what [respondents] unilaterally defined
as ‘usual and customary’ rates. In fact, [respondents]
intentionally and fraudulently asserted their health plan
documents against [appellant], in a knowing attempt to
misrepresent the plan terms to [appellant], while at the same
time refusing to provide a copy of those documents to
[appellant].” These allegations reveal that appellant was aware
of respondents’ “obviously” improper interpretations of the health
plan terms even before it received the documents in question.
Further, appellant has alleged that from 2009 to 2013,
respondents “issued partial payments, explanations of benefits,
and other letters attempting to justify their underpayments” to
appellant. The FAC reveals that during this time period,
appellant “made multiple demands and appeals for proper
payments.” These allegations reveal that appellant was aware
that it had been underpaid well before April 2013. Unlike the
situation in Lyon, respondents’ alleged breach of contract was not
difficult to detect. Thus, the discovery rule is inapplicable.
Appellant’s cause of action for breach of contract accrued as soon
18
as it had reason to believe it had been underpaid -- which,
according to the FAC, was in 2009.
B. Misrepresentation
A cause of action for fraud or negligent misrepresentation
does not accrue until “the discovery, by the aggrieved party, of
the facts constituting the fraud or mistake.” (Code Civ. Proc.,
§ 338, subd. (d).) Appellant’s third cause of action for intentional
and negligent misrepresentations alleges that various
representations made by Health Net were false. Those
misrepresentations included representations that “Health Net
would make full payment to [appellant] and that it would follow
the terms of its various health plans when calculating payments
to [appellant].”
Appellant argues that it could not have discovered the
representations made by Health Net were false until it received
the provider agreement which Health Net insisted was applicable
to appellant’s claim. Until it received this document in April
2013, appellant contends, it presumed the reimbursement checks
sent to it were made properly pursuant to the applicable
insurance policy or evidence of coverage.
Appellant’s allegations undermine its present position that
it did not discover the alleged misrepresentations until April
2013. For the same reasons set forth above as to the breach of
contract, appellant cannot claim that it was ignorant of the
misrepresentations at the same time as it made demands for
“proper” payments. The discovery rule applies to postpone
accrual of the cause of action until “the plaintiff suspects or
should suspect that [the] injury was caused by wrongdoing.”
(Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1110-1111). The
allegations show that appellant, at the very least, suspected
wrongdoing when it began making demands for “proper”
19
payment. Appellant was not required to have all of the specific
facts in order for the statute of limitations to commence running:
“A plaintiff need not be aware of the specific
‘facts’ necessary to establish the claim; that is a
process contemplated by pretrial discovery. Once the
plaintiff has a suspicion of wrongdoing, and therefore
an incentive to sue, she must decide whether to file
suit or sit on her rights. So long as a suspicion exists,
it is clear that the plaintiff must go find the facts; she
cannot wait for the facts to find her.”
(Jolly v. Eli Lilly & Co., supra, 44 Cal.3d at p. 1111.)
The allegations show that appellant had suspicion of
wrongdoing in 2009 when it began making demands for proper
payment. Under the circumstances, the discovery rule does not
apply.6
VI. The trial court did not abuse its discretion in denying
leave to amend
Appellant argues that the trial court abused its discretion
in denying leave to amend to cure the claimed deficiencies in the
FAC. Appellant asserts that it could plead further facts to
establish that respondents were estopped from asserting the
statute of limitations until April 2013; that any applicable
limitations periods were equitably tolled; and that appellant’s
claims did not accrue until April 2013 when it obtained the plan
documents and determined that it would be improperly paid.

6 Because we have determined that the applicable statute of
limitation bars each of appellant’s claims, we need not discuss the
alternative grounds on which the demurrer was sustained: that
appellant’s cause of action for intentional and negligent
misrepresentation was not pled with sufficient specificity, and
that a claim for open book account cannot stand where an express
contract governs the relationship between the parties.
20
Appellant has the burden to show “‘a reasonable possibility
that the defect can be cured by amendment.’” (Berryman v. Merit
Property Management, Inc. (2007) 152 Cal.App.4th 1544, 1550;
see also Goodman v. Kennedy (1976) 18 Cal.3d 335, 349
[“Plaintiff must show in what manner he can amend his
complaint and how that amendment will change the legal effect
of his pleading”].)
Appellant has not met its burden of showing a reasonable
possibility that a second amended complaint would change the
result. In fact, appellant fails to set forth any specific allegations
showing how appellant could cure the defects in the FAC. An
allegation that appellant did not receive the relevant plan
documents until April 2013 does not change the fact that
payment was due in 2009, an EOB and partial payment were
provided to appellant in 2009, and the parties began disputing
the amount paid in 2009. Appellant’s suspicion of wrongdoing --
which, according to the allegations of the FAC, began in 2009 --
was sufficient to commence the running of the statute of
limitations. (Jolly v. Eli Lilly & Co., supra, 44 Cal.3d at p. 1111.)
The trial court found that “the FAC shows that
[appellant’s] claims accrued on March 25, 2009 but no later than
in May, 2009.” In light of “the judicial admissions in the FAC,”
the trial court could not envision how appellant could then plead
viable claims. Under the circumstances, the trial court did not
abuse its discretion in so holding.
VII. The trial court did not abuse its discretion in
granting Health Net’s motion for attorney fees
The 2008 settlement agreement, which was the subject of
the first cause of action for breach of written contract against
Health Net, contained a provision allowing a prevailing party to
recover attorney fees. The contract provides:
21
“In any dispute arising out of this
AGREEMENT, the prevailing PARTY shall be
entitled to recover its reasonable costs, including, but
not limited to, all claims for costs, including
reasonably attorneys’ fees, expert witness or
consultant fees, and other fees normally incident to
litigation or arbitration, expended or incurred in
connection with violation of any provision of this
AGREEMENT.”
Appellant argues that only the first cause of action for
breach of written contract arose out of the 2008 settlement
agreement, and only the fees attributable to the defense of that
claim are recoverable by Health Net.
“In any action on a contract, where the contract specifically
provides that attorney’s fees and costs, which are incurred to
enforce that contract, shall be awarded either to one of the
parties or the prevailing party, then the party who is determined
to be the party prevailing on the contract . . . shall be entitled to
reasonable attorney’s fees in addition to other costs.” (Civ. Code,
§ 1717, subd. (a).) The phrase “on a contract” is construed
liberally. (Eden Township Healthcare Dist. v. Eden Medical
Center (2013) 220 Cal.App.4th 418, 426.) “Where a cause of
action based on the contract providing for attorney’s fees is joined
with other causes of action beyond the contract, the prevailing
party may recover attorney’s fees under [Civil Code] section 1717
only as they relate to the contract action. [Citations.]” (Reynolds
Metals Co. v. Alperson (1979) 25 Cal.3d 124, 129 (Reynolds).) “‘In
determining whether an action is “on the contract” under [Civil
Code] section 1717, the proper focus is not on the nature of the
remedy, but on the basis of the cause of action.’ [Citation.]”
(Eden Township, supra, at p. 426.)
“Attorney’s fees need not be apportioned when incurred for
representation on an issue common to both a cause of action in
22
which fees are proper and one in which they are not allowed.”
(Reynolds, supra, 25 Cal.3d at pp. 129-130.) Where the theories
are “factually intertwined” and it is “impracticable, if not
impossible, to separate the multitude of conjoined activities into
compensable or noncompensable time units,” attorney fees need
not be apportioned. (Fed-Mart Corp. v. Pell Enterprises, Inc.
(1980) 111 Cal.App.3d 215, 227 (Fed-Mart).) For example, where
a bank’s collection efforts on a note were interrelated with its
defense against fraud allegations, and defense of the charge of
fraud was necessary in the bank’s efforts to collect on the notes,
attorney fees incurred by the bank in defending against the fraud
action were compensable under the attorney fee provision of the
note. (Wagner v. Benson (1980) 101 Cal.App.3d 27, 37.)
A trial court has discretion to allocate the proportionate
share of attorney fees attributable to one aspect of a case where
appropriate, but a trial court is not required to make such an
allocation where issues are “‘inextricably interrelated.’” (FedMart,
supra, 111 Cal.App.3d at p. 228.) “The determination of
what constitutes actual and reasonable attorney fees is
committed to the sounds discretion of the trial court,” and will be
disturbed only where there has been a manifest abuse of
discretion. (Ibid.)
Health Net’s motion for attorney fees sought fees for
briefing on the first demurrer and motion to strike; propounding
written discovery; engaging in mediation; preparing for
deposition and deposing one key witness; and attending court
appearances and drafting the second demurrer. The trial court
found that “the requested attorney fees were incurred in
connection with Health Net’s defense of this action on the
contract, including the fees incurred in obtaining and defending
the fee award, and were necessary, justified and reasonable given
23
the complexity of the case and the time spent on dispositive
motion practice.”
Appellant’s theories were factually intertwined, and all
activities for which Health Net sought fees were related to the
contract action. Thus, apportionment was not required. (FedMart,
supra, 111 Cal.App.3d at p. 227.) Under the
circumstances, the trial court did not abuse its discretion in
failing to apportion attorney fees.
DISPOSITION
The judgment and attorney fee order are affirmed.
Respondents are awarded their costs of appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
____________________________, J.
CHAVEZ
We concur:
__________________________, Acting P. J.
ASHMANN-GERST
__________________________, J.
HOFFSTADT