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Jamshid Aryeh v. Canon Business Solutions

January 24, 2013

JAMSHID ARYEH, PLAINTIFF AND APPELLANT,
v.
CANON BUSINESS SOLUTIONS, INC., DEFENDANT AND RESPONDENT.



Court: Superior County: Los Angeles Judge: Robert L. Hess Super. Ct. No. BC384674 Ct.App. 2/8 B213104

The opinion of the court was delivered by: Werdegar, J.

Los Angeles County

The common law theory of continuous accrual posits that a cause of action challenging a recurring wrong may accrue not once but each time a new wrong is committed. We consider whether the theory can apply to actions under the unfair competition law (Bus. & Prof. Code, § 17200 et seq.; hereafter UCL) and, if so, whether it applies here to save plaintiff Jamshid Aryeh's suit from a limitations bar. We conclude: (1) the text and legislative history of the UCL leave UCL claims as subject to the common law rules of accrual as any other cause of action, and (2) continuous accrual principles prevent Aryeh's complaint from being dismissed at the demurrer stage on statute of limitations grounds. Accordingly, we reverse the Court of Appeal's judgment.

FACTUAL AND PROCEDURAL BACKGROUND*fn1

Aryeh runs a copy business under the name ABC Copy & Print. Defendant Canon Business Solutions, Inc. (Canon) sells, leases, services, and repairs copiers and other office products. In November 2001 and February 2002, Aryeh entered agreements with Canon to lease copiers for a term of 60 months. The leases required Aryeh to pay monthly rent for each copier, subject to a maximum copy allowance. Copies in excess of the monthly allowance required payment of an additional per copy charge.

Canon serviced the leased copiers periodically. Shortly after entering the two leases, Aryeh noticed discrepancies between meter readings taken by Canon employees and the actual number of copies made on each copier. When Canon would not respond to Aryeh's complaints, Aryeh began compiling independent copy records. Aryeh concluded that during service visits, Canon employees were running test copies--according to the operative complaint, a total of at least 5,028 copies over the course of 17 service visits between February 2002 and November 2004. These copies resulted in Aryeh exceeding his monthly allowances and owing excess copy charges and late fees to Canon.

Aryeh sued in January 2008, alleging a single claim for violation of the UCL. The original complaint alleged Canon knew or should have known it was charging for excess copies and that the practice of charging for test copies was both unfair and fraudulent. The complaint also included class allegations. Aryeh originally sought restitution and injunctive relief, but later amended his complaint to seek only restitution.

Canon demurred, arguing that the claim was barred by, inter alia, the statute of limitations. (See Bus. & Prof. Code, § 17208.)*fn2 After twice sustaining demurrers with leave to amend, the trial court finally sustained a demurrer without leave to amend and dismissed the action with prejudice. Its order recited several grounds, but the court made clear the primary basis for dismissal was the statute of limitations. The trial court read state law as establishing that "the clock [on a UCL claim] starts running when the first violation occurs." Consequently, because the second amended complaint established a first violation in 2002, the claim was barred by the four-year statute of limitations.

A divided Court of Appeal affirmed. The majority agreed with the trial court that neither delayed discovery nor the continuing violation doctrine could be applied to extend the statute of limitations for UCL claims; accordingly, Aryeh's claim was untimely. The dissent would have reversed under the theory of continuous accrual, reasoning that even if some parts of Aryeh's claim were stale, not all parts of it were barred.

We granted review to resolve lingering uncertainty over the timing of accrual and the applicability of continuing-wrong accrual principles under the UCL.

DISCUSSION

This appeal follows the sustaining of a demurrer. The application of the statute of limitations on undisputed facts is a purely legal question (see Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1112); accordingly, we review the lower courts' rulings de novo. We must take the allegations of the operative complaint as true and consider whether the facts alleged establish Aryeh's claim is barred as a matter of law. (See Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 810-811.)

I. Accrual and Equitable Exceptions to the Usual Running of the Statute of Limitations

An affirmative defense, the statute of limitations exists to promote the diligent assertion of claims, ensure defendants the opportunity to collect evidence while still fresh, and provide repose and protection from dilatory suits once excess time has passed. (See, e.g., Shively v. Bozanich (2003) 31 Cal.4th 1230, 1246; Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 395-396; Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 18 Cal.4th 739, 755-756; Jolly v. Eli Lilly & Co., supra, 44 Cal.3d at p. 1112.) The duration of the limitations period marks the legislatively selected point at which, for a given claim, these considerations surmount the otherwise compelling interest in adjudicating on their merits valid claims. (See Johnson v. Railway Express Agency (1975) 421 U.S. 454, 463-464; Pooshs v. Philip Morris USA, Inc. (2011) 51 Cal.4th 788, 797; Norgart, at p. 396.)

The limitations period, the period in which a plaintiff must bring suit or be barred, runs from the moment a claim accrues. (See Code Civ. Proc., § 312 [an action must "be commenced within the periods prescribed in this title, after the cause of action shall have accrued"]; Pooshs v. Philip Morris USA, Inc., supra, 51 Cal.4th at p. 797; Fox v. Ethicon Endo-Surgery, Inc., supra, 35 Cal.4th at p. 806; Norgart v. Upjohn Co., supra, 21 Cal.4th at p. 397.) Traditionally at common law, a "cause of action accrues 'when [it] is complete with all of its elements'--those elements being wrongdoing, harm, and causation." (Pooshs, at p. 797, quoting Norgart, at p. 397.) This is the "last element" accrual rule: ordinarily, the statute of limitations runs from "the occurrence of the last element essential to the cause of action." (Neel v. Magana, Olney, Levy, Cathcart & Gelfand (1971) 6 Cal.3d 176, 187; accord, Howard Jarvis Taxpayers Assn. v. City of La Habra (2001) 25 Cal.4th 809, 815; Buttram v. Owens-Corning Fiberglas Corp. (1997) 16 Cal.4th 520, 531, fn. 4.)

To align the actual application of the limitations defense more closely with the policy goals animating it, the courts and the Legislature have over time developed a handful of equitable exceptions to and modifications of the usual rules governing limitations periods. These doctrines may alter the rules governing either the initial accrual of a claim, the subsequent running of the limitations period, or both. The " 'most important' " of these doctrines, the discovery rule, where applicable, "postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action." (Norgart v. Upjohn Co., supra, 21 Cal.4th at p. 397; accord, Fox v. Ethicon Endo-Surgery, Inc., supra, 35 Cal.4th at p. 807.) Equitable tolling, in turn, may suspend or extend the statute of limitations when a plaintiff has reasonably and in good faith chosen to pursue one among several remedies and the statute of limitations' notice function has been served. (McDonald v. Antelope Valley Community College Dist. (2008) 45 Cal.4th 88, 99-100.) The doctrine of fraudulent concealment tolls the statute of limitations where a defendant, through deceptive conduct, has caused a claim to grow stale. (Regents of University of California v. Superior Court (1999) 20 Cal.4th 509, 533.) The continuing violation doctrine aggregates a series of wrongs or injuries for purposes of the statute of limitations, treating the limitations period as accruing for all of them upon commission or sufferance of the last of them. (Richards v. CH2M Hill, Inc. (2001) 26 Cal.4th 798, 811-818; see also National Railroad Passenger ...


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