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In Re Demas Wai Yan v. Tony Fu

December 28, 2011


Bankruptcy No. 04-33526 Adversary Proceeding No. 10-3152 TEC

The opinion of the court was delivered by: Richard Seeborg United States District Judge


Demas Yan appeals a decision of the Bankruptcy Court dismissing with prejudice his cross- complaint in an action brought against him by Tony Fu, which had been removed from state court.

Disputes between Yan and Fu originally arose in the context of their involvement in a condominium 25 construction project at 663 Chenery Street in San Francisco between 2001 and 2003. Those 26 disputes, which grew to include numerous other individuals related to Yan and Fu, have been the 27 subject of numerous adversary proceedings in Yan's bankruptcy, and have generated at least four 28 separate appeals in this Court in addition to this one. See C 09-3930 RS, C 11-2211 RS, C 11-3071 2 RS, and C 11-3914 RS. 3 4 complaint all arose pre-petition, and therefore are property of the bankruptcy estate. Yan 5 acknowledges that his allegations include matters dating from before he filed his petition for 6 bankruptcy. Yan insists, however, that under California law, his claims for intentional infliction of 7 emotional distress and breach of fiduciary duty both accrued upon "completion of the last act" 8 supporting the causes of action.*fn1 Yan reasons that because his cross-complaint asserts that the 9 allegedly wrongful conduct took place "[a]round the period from 2000 up to July 2010," "[f]rom 10 necessarily accrued after his bankruptcy petition was filed in 2006.

Neither of the cases cited by Yan support his proposition the statute of limitations does not accrue until completion of the "last act" of wrongdoing. See Cantu v. Resolution Trust Corp., 4 Cal. App. 4th 857, 889 (1992) ("A cause of action for intentional infliction of emotional distress accrues, 15 and the statute of limitations begins to run, once the plaintiff suffers severe emotional distress as a result of outrageous conduct on the part of the defendant."); Di Grazia v. Anderlini, 22 Cal. App. 4th 1337, 1349 (1994) (rejecting argument that limitations period for breach of fiduciary duty claim 18 against trustee of express trust began to run upon mere suspicion of wrongdoing, but holding that 19 claim accrues upon "known breach."). It appears Yan may be attempting to rely on the principle 20 that in certain narrow circumstances involving an ongoing course of related wrongful conduct, a 21 plaintiff may recover damages for acts taking place outside the limitations period provided they are 22 "sufficiently linked" to events occurring within the statutory period. See Richards v. CH2M Hill, 23 Inc., 26 Cal.4th 798, 811-817 (2001) (discussing the "continuing violation" doctrine in the context 24 of employee discrimination and harassment). While various theoretical approaches have been 25 applied in such contexts to allow plaintiffs to seek redress for claims that otherwise would be time-26 barred, see id., nothing in the facts here would support a conclusion that Yan's claims did not accrue until some point in time after his bankruptcy filing. Yan admittedly alleges conduct took place prior 2 to 2006, which he contends constituted breaches of fiduciary duty and intentional infliction of 3 emotional distress. Even assuming some form of the "continuing violation" doctrine were available 4 in the setting of this commercial dispute to make recovery for those acts possible notwithstanding 5 the bar of the statute of limitations, it would not somehow transform them into post-petition claims.*fn2

While Yan has argued that Fu engaged in additionalacts of misconduct after the bankruptcy 7 filing in 2006, he has failed to show any error in the bankruptcy court's conclusion that the cross-8 complaint, as pleaded, failed to plead such acts with sufficient clarity and factual support. Moreover, 9 the bankruptcy court gave Yan the opportunity to amend his cross-complaint to set forth facts that 10 would show acts constituting either a breach of fiduciary duty or intentional infliction of emotional

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distress that took place post-petition, and Yan declined to do so. Accordingly, the decision of the bankruptcy court is affirmed.



Tony Fu 5813 Geary Blvd. PMB 188 San Francisco, CA 94121 Demas Wai Yan 595 Market St No. 1350 San Francisco, CA 94105

DATED: 12/28/11

/s/ Chambers Staff Chambers of Judge ...

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