Community Cause v. Boatwright

• Decision Date: 23 October 1981
• Citation: 124 Cal.App.3d 888,177 Cal.Rptr. 657
• Court: California Court of Appeals Court of Appeals
• Parties: COMMUNITY CAUSE, Plaintiff and Appellant, v. Daniel E. BOATWRIGHT, Defendant and Respondent. Civ. 50286.

Page 657

177 Cal.Rptr. 657

124 Cal.App.3d 888

COMMUNITY CAUSE, Plaintiff and Appellant, v. Daniel E. BOATWRIGHT, Defendant and Respondent.

Civ. 50286.

Court of Appeal, First District, Division 3, California.

Oct. 23, 1981.

Hearing Denied, Dec. 16, 1981.

Stephan C. Williams, Walnut Creek, for plaintiff and appellant.

Arthur M. Shelton, Walnut Creek, for defendant and respondent.

SCOTT, Associate Justice.

Plaintiff Community Cause filed an action for damages and injunctive and declaratory relief against defendant Daniel E. Boatwright. A demurrer to plaintiff's second amended complaint was sustained without leave to amend, and plaintiff has appealed from the ensuing judgment. The principal question presented is whether allegations of fraudulent nondisclosure will toll the statutes of limitation of both the Moscone Governmental Conflict of Interests and Disclosure Act and its successor, the Political Reform Act of 1974. We also consider whether the limitations period of the latter act is tolled during an administrative investigation by the Fair Political Practices Commission.

The Complaint and the Demurrer

Community Cause is a nonprofit California corporation located in Contra Costa County. Defendant Daniel Boatwright was a state assemblyman representing the 10th Assembly District, which encompassed part of Contra Costa County. ¹

The gist of plaintiff's complaint is that over a period of years, Boatwright violated both the Moscone Governmental Conflict of Interests and Disclosure Act (Gov.Code, § 3600 et seq.; hereafter the 1973 Act) and the Political Reform Act of 1974 (Gov.Code, § 81000 et seq.; hereafter PRA), ² by repeatedly failing to disclose his interest in a partnership known as Countrywood Shopping Center Associates (hereafter Countrywood) which owned certain real property adjacent to Walnut Creek.

The original complaint was filed in May of 1978. At issue is the second amended complaint, which contains 20 causes of action. The first six allege that defendant violated the 1973 Act in that he intentionally or negligently failed to disclose his Countrywood interest in disclosure statements filed on April 30 and August 12, 1974, and April 1, 1975. The seventh through twentieth allege violations of the PRA: defendant allegedly intentionally or negligently failed to disclose his Countrywood interest in statements filed on December 22, 1975, and March 12, 1976; defendant also allegedly failed to disclose certain income and filed an otherwise inaccurate disclosure statement on December 16, 1976. The complaint also alleges that plaintiff discovered defendant's nondisclosure as a result of discovery conducted in a lawsuit between Countrywood's partners, when certain documents became available as public record. These causes of action will be explained in more detail as we discuss appellant's contentions.

In support of his demurrer, defendant urged that certain of these causes of action were barred by applicable statutes of limitation, that others failed to state facts sufficient to allege any violation of the PRA, and that others were insufficient in that the required request for administrative action had not been made to the Fair Political Practices Commission. The trial court did not specify its reasons for sustaining the demurrer other than that the entire complaint "does not and cannot state a cause of action."

In determining whether or not a complaint is sufficient to withstand a general demurrer, the rule is that a demurrer admits all the material and issuable facts properly pleaded, and if it appears that the plaintiff is entitled to any relief against the defendant, the complaint will be held good, even though the facts may not be clearly stated. (Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566, 572, 108 Cal.Rptr. 480, 510 P.2d 1032.) Moreover, generally great liberality should be exercised in permitting a plaintiff to amend his complaint, and it ordinarily constitutes an abuse of discretion to sustain a demurrer without leave to amend if there is a possibility that the defect can be cured by amendment. (Scott v. City of Indian Wells (1972) 6 Cal.3d 541, 549, 99 Cal.Rptr. 745, 492 P.2d 1137.) However, if it does not appear that under applicable substantive law there is any reasonable probability that the defects can be cured, there is no abuse of discretion in sustaining a demurrer without leave to amend. (Sackett v. Wyatt (1973) 32 Cal.App.3d 592, 603, 108 Cal.Rptr. 219.) Furthermore, the burden is on the plaintiff to demonstrate that the court abused its discretion. Plaintiff must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349, 134 Cal.Rptr. 375, 553 P.2d 1147.)

Finally, we emphasize that in reviewing this matter, we are not concerned with the plaintiff's possible inability or difficulty in proving the allegations of the complaint. (Gruenberg, supra, 9 Cal.3d at p. 572, 108 Cal.Rptr. 480, 510 P.2d 1032.)

Fraudulent Concealment and Statutes of Limitations

First, plaintiff contends that the relevant statutes of limitation were tolled because defendant fraudulently concealed these causes of action.

The disclosure schemes of both the 1973 Act and the Political Reform Act of 1974 seek appropriate information from designated state and local officials about the sources and general magnitude of their financial interests which may give rise to conflicts of interests. (Hays v. Wood, supra, 25 Cal.3d at p. 782, 160 Cal.Rptr. 102, 603 P.2d 19.) The 1973 Act required disclosure of limited information about investments or real property in excess of $1,000, and of somewhat more detailed information as to sources of personal income. (Id., at p. 781, 160 Cal.Rptr. 102, 603 P.2d 19.) Either the district attorney, the Attorney General, or a citizen or group of citizens was authorized to bring an action in superior court to enjoin violations or compel compliance. (§ 3751.) A penalty could be imposed for nondisclosure. (§ 3751, subd. (d).) Although the act contained no express statute of limitations on actions to compel compliance, the parties agree that such an action was "upon a statute for a penalty or forfeiture," and that therefore the statute of limitations was one year. (Code Civ.Proc., § 340, subd. 1.) ³

The PRA also requires periodic disclosures of personal income, and investment and real property interests. (§§ 87200-87207.) Unlike the 1973 Act, the PRA provides for both criminal and civil penalties for violations. A wilful violation of the PRA is a misdemeanor. (§ 91000.) In addition, "(a)ny person who intentionally or negligently violates any of the reporting requirements of this act shall be liable in a civil action brought by the civil prosecutor or by a person residing within the jurisdiction for an amount not more than the amount or value not properly reported." (§ 91004.) The civil prosecutor with respect to state officials is the Fair Political Practices Commission (hereafter FPPC). (§§ 91001(b), 83100, 83115.) Prior to filing an action pursuant to section 91004, a person must first request that the FPPC commence the action. (§ 91007.) Finally, no action is to be filed pursuant to section 91004 "more than two years after the first day on which a request to the civil prosecutor could be filed." (§ 91011.) ⁴

1 The general rule is that a statute of limitations begins to run when a cause of action accrues, even though the plaintiff is ignorant of the cause of action or of the identity of the wrongdoer. A cause of action invariably accrues when there is a remedy available. (Baker v. Beech Aircraft Corp. (1974) 39 Cal.App.3d 315, 321, 114 Cal.Rptr. 171.) In this case, therefore, a separate cause of action accrued on the date of each disclosure statement.

In its first six causes of action, governed by one-year statute of limitations applicable to the 1973 Act, plaintiff complained of incomplete disclosure statements made in April and August 1974, and April 1975, but its original complaint was not filed until May 10, 1978. ⁵ Those causes of action are obviously barred unless the statute was tolled for some reason. The two-year statute of limitations of the PRA applies to plaintiff's remaining causes of action. The seventh through tenth and nineteenth and twentieth causes of action, which allege incomplete disclosure in December 1975 and March 1976, are also barred unless the statute has been tolled.

1 In general the fraudulent concealment by the defendant of a cause of action tolls the relevant statute of limitations, which does not begin to run until the aggrieved party discovers the existence of the cause of action. (Pashley v. Pacific Elec. Ry. Co. (1944) 25 Cal.2d 226, 229, 153 P.2d 325.) The rationale for this rule is that such a defendant should be estopped from taking advantage of his own wrong by asserting the statute of limitations. (Sears v. Rule (1945) 27 Cal.2d 131, 147, 163 P.2d 443.)

1 In Baker v. Beech Aircraft Corp., supra, 39 Cal.App.3d at page 324, 114 Cal.Rptr. 171 the court expanded upon that rationale, explaining that statutes of limitation are intended in part to prevent fraud, to keep parties from asserting rights after a lapse of time has destroyed or impaired the evidence which would show that such rights never existed or had been extinguished.

"To hold that by concealing fraud, or by committing fraud in such a manner as to conceal it until after the party committing the fraud could plead the statute of limitations to protect itself, is to make the law which was designed to prevent fraud the means by which it is successful and secure. (See Waugh v. Guthrie Gas, Light, Fuel & Improvement Co., supra, 37 Okl. 239 (131 P. 174, 178).)" (Id., at p. 324, 114 Cal.Rptr. 171.)

Defendant argues that the doctrine of fraudulent concealment is inapplicable to statutory causes of action which impose penalties. Defendant first correctly states the general rule...