CACI 1925 Affirmative Defense—Statute of Limitations—Fraud or Mistake

California Civil Jury Instructions CACI

1925 Affirmative Defense—Statute of Limitations—Fraud or Mistake

[Name of defendant] contends that [name of plaintiff]’s lawsuit was not filed within the time set by law. To succeed on this defense, [name of defendant] must prove that [name of plaintiff]’s claimed harm occurred before [insert date three years before date of filing].

[If [name of defendant] proves that [name of plaintiff]’s claimed harm occurred before [insert date three years before date of filing], [name of plaintiff]’s lawsuit was still filed on time if [name of plaintiff] proves that before that date, [he/she/nonbinary pronoun/it] did not discover facts constituting the fraud or mistake, and with reasonable diligence could not have discovered those facts.]

Directions for Use

This instruction is for use if the defendant claims that the plaintiff’s action was not filed within the applicable three-year period for fraud or mistake. (See Code Civ. Proc., § 338(d).) Include the second paragraph if the plaintiff alleges that the delayed-discovery rule applies to avoid the limitation defense. The plaintiff bears the burden of pleading and proving delayed discovery. (See E-Fab, Inc. v. Accountants, Inc. Services (2007) 153 Cal.App.4th 1308, 1319 [64 Cal.Rptr.3d 9] [regardless of which limitation statute applied to case, burden was on plaintiff].)

Sources and Authority

Statute of Limitations for Fraud or Mistake. Code of Civil Procedure section 338(d).

“The [Code of Civil Procedure section 338(d) three-year] limitations period … ‘does not begin to run until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.’ ” (Sun’n Sand, Inc. v. United California Bank (1978) 21 Cal.3d 671, 701 [148 Cal.Rptr. 329, 582 P.2d 920].)

“The discovery rule ‘may be expressed by the Legislature or implied by the courts.’ By statute, the discovery rule applies to fraud actions. (Code Civ. Proc., § 338, subd. (d).) In addition, ‘judicial decisions have declared the discovery rule applicable in situations where the plaintiff is unable to see or appreciate a breach has occurred.’ ” (E-Fab, Inc., supra, 153 Cal.App.4th at p. 1318, internal citations omitted.)

“Code of Civil Procedure section 338, subdivision (d), effectively codifies the delayed discovery rule in connection with actions for fraud, providing that a cause of action for fraud ‘is not to be deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.’ In a case such as this, that date is the date the complaining party learns, or at least is put on notice, that a representation was false.” (Brandon G. v. Gray (2003) 111 Cal.App.4th 29, 35 [3 Cal.Rptr.3d 330].)

“This discovery element has been interpreted to mean ‘the discovery by the aggrieved party of the fraud or facts that would lead a reasonably prudent person to suspect fraud.’ ” (Doe v. Roman Catholic Bishop of Sacramento (2010) 189 Cal.App.4th 1423, 1430 [117 Cal.Rptr.3d 597], original italics.)

“Case law has interpreted this accrual provision to mean that ‘a cause of action [under Code Civ. Proc., § 338(d)] accrues, and the limitations period commences to run, when the aggrieved party could have discovered the … mistake through the exercise of reasonable diligence.’ ” (Creditors Collection Serv. v. Castaldi (1995) 38 Cal.App.4th 1039, 1044 [45 Cal.Rptr. 2d 511].)

“One [exception to the limitations period] is the doctrine of fraudulent concealment, which tolls the statute of limitations if a defendant’s deceptive conduct ‘has caused a claim to grow stale.’ ” (Fuller v. First Franklin Financial Corp. (2013) 216 Cal.App.4th 955, 962 [163 Cal.Rptr.3d 44].)

“ ‘Technical rules as to when a cause of action accrues apply therefore only in those cases which are free from fraud committed by the defendant. Said section 338, subdivision 4, … recognizes the nonapplicability of those technical rules where the fraud of the defendant may be so concealed that in the absence of circumstances imposing greater diligence on the plaintiff, the cause of action is deemed not to accrue until the fraud is discovered. Otherwise, in such cases, the defendant by concealing his fraud, would effectively block recovery by the plaintiff because of the intervention of the statute of limitations.’ ” (Snow v. A. H. Robins Co. (1985) 165 Cal.App.3d 120, 127–128 [211 Cal.Rptr. 271], internal citation omitted.)

“[C]ourts have relied on the nature of the relationship between defendant and plaintiff to explain application of the delayed accrual rule. The rule is generally applicable to confidential or fiduciary relationships. The fiduciary relationship carries a duty of full disclosure, and application of the discovery rule ‘prevents the fiduciary from obtaining immunity for an initial breach of duty by a subsequent breach of the obligation of disclosure.’ ” (Parsons v. Tickner (1995) 31 Cal.App.4th 1513, 1526 [37 Cal.Rptr. 2d 810], internal citations omitted.)

“ ‘The provision tolling operation of [section 338(d)] until discovery of the fraud has long been treated as an exception and, accordingly, this court has held that if an action is brought more than three years after commission of the fraud, plaintiff has the burden of pleading and proving that he did not make the discovery until within three years prior to the filing of his complaint.’ ” (Samuels v. Mix (1999) 22 Cal.4th 1, 14 [91 Cal.Rptr.2d 273, 989 P.2d 701], internal citation omitted.)

“Only causes of action based on actual fraud are governed by section 338, subdivision (d). This includes … causes of action based on fraudulent concealment, which ‘is a species of fraud or deceit. [Citations.]’ ” (Stueve Bros. Farms, LLC v. Berger Kahn (2013) 222 Cal.App.4th 303, 322 [166 Cal.Rptr.3d 116].)

“[T]he section 338, subdivision (d), three-year statute of limitations applies to an unjust enrichment cause of action based on mistake.” (Federal Deposit Ins. Corp. v. Dintino (2008), 167 Cal.App.4th 333, 348 [84 Cal.Rptr.3d 38], original italics.)

Secondary Sources

3 Witkin, California Procedure (5th ed. 2008) Actions, §§ 653–663
Rylaarsdam & Edmon, California Practice Guide: Civil Procedure Before Trial, Ch. 6-C, Answer, ¶¶ 6:462–6:462.2 (The Rutter Group)
California Civil Procedure Before Trial, Ch. 25, Answer (Cont.Ed.Bar 4th ed.) § 25.46
43 California Forms of Pleading and Practice, Ch. 489, Relief From Judgments and Orders, § 489.261 (Matthew Bender)
7 California Points and Authorities, Ch. 70A, Defaults and Relief From Orders and Judgments: Equitable Remedies, §§ 70A.32, 70A.52 et seq. (Matthew Bender)
1 Matthew Bender Practice Guide: California Pretrial Civil Procedure, Ch. 4, Limitation of Actions, 4.42 (Matthew Bender)