Heritage Marketing and Insurance Services, Inc. v. Chrustawka
Decision Date | 29 February 2008 |
Docket Number | No. G037240.,G037240. |
Citation | 73 Cal.Rptr.3d 126,160 Cal.App.4th 754 |
Court | California Court of Appeals Court of Appeals |
Parties | HERITAGE MARKETING AND INSURANCE SERVICES, INC. et al., Plaintiffs and Appellants, v. Anjanette CHRUSTAWKA et al., Defendants and Respondents. |
Rosenquest & Associates, Nils Rosenquest, San Francisco, and Robert L. Wishner for Plaintiffs and Appellants.
Wu & Cheung, Mark H. Cheung and Charles C.H. Wu, Irvine, for Defendants and Respondents.
Defendants Bradley J. Chrustawka, Anjanette Chrustawka, nee Price (Price), and Katherine M. Matonic obtained summary adjudication of five causes of action on the grounds they were barred by the applicable statute of limitations and were not tolled by Code of Civil Procedure section 351 (section 351). Because those were the only causes of action alleged against the latter two, the trial court entered judgment in their favor, leaving the action pending against Chrustawka only. Plaintiffs appeal, contending section 351 tolled the various limitations periods and entry of judgment was improper. We disagree and affirm.
During the pendency of the appeal, we received notice that plaintiff Stanley Norman filed a Chapter 7 bankruptcy petition. His appeal is severed and stayed.
Plaintiffs Stanley Norman and his son, Jeffrey Norman, own and run plaintiffs Heritage Marketing and Insurance Services, Inc. and Heritage Marketing and Insurance Services, a general partnership, both involved in the business of providing living trust services (collectively Heritage). Defendant Chrustawka was Heritage's national managing director. Defendants Price and Matonic were employees of non-parties American Heritage Professional Services and American Heritage Trust Preparation Services (collectively American Heritage), also owned by the Normans.
In April 2000, Chrustawka, Price, and Matonic left their employment with Heritage and American Heritage. Shortly thereafter they moved to Texas and have lived there since. A few months after their move, they opened American Charter Professional Services and Guardian Document and Insurance Services, both of which allegedly completed with Heritage.
Four years later, the Normans and Heritage sued Chrustawka, Price, and Matonic, alleging six causes of action: (1) breach of contract; (2) conspiracy to defraud; (3) defamation; (4) tortious interference with economic advantage; (5) slander per se; and (6) violation of the California Trade Secrets Act. The first cause of action was asserted solely against Chrustawka. The second through sixth causes of action were against all three defendants.
Defendants moved for summary adjudication on various grounds, including that the second through sixth causes of action were barred by enumerated statutes of limitations. Plaintiffs opposed the motion, asserting that section 351 tolled the limitation periods. Defendants responded that application of section 351 was unconstitutional under the commerce clause of the United States Constitution.
Before the hearing, the court issued a tentative ruling, denying the motion as to the first cause of action but granting summary adjudication of the second through sixth causes of action on the ground they were time-barred. Following oral argument, the court continued the hearing and invited supplemental briefing on section 351.
After receiving the supplemental briefs, the court issued another tentative ruling reiterating its conclusion the second through sixth causes of action were barred by the applicable statutes of limitations. The tentative read, (Italics omitted.) The court later entered judgment in favor of Price and Matonic.
Plaintiffs do not dispute that their second through sixth causes of action would be time-barred if section 351 were not applied to toll the statutes of limitations. Instead they contend there was a triable issue of fact regarding the constitutionality of section 351 in this case.
Section 351 extends the time in which to file suit if the defendant was outside California when the action accrued or leaves the state after it accrued. It reads, "If, when the cause of action accrues against a person, he is out of the State, the action may be commenced within the term herein limited, after his return to the State, and if, after the cause of action accrues, he departs from the State, the time of his absence is not part of the time limited for the commencement of the action."
Where, as here, a state statute such as the statute of limitation denies a standard defense "to out-of-state persons or corporations engaged in commerce," it must be "be reviewed under the Commerce Clause to determine whether its denial is discriminatory on its face or an impermissible burden on commerce." (Bendix Autolite Corp. v. Midwesco Enterprises, Inc. (1988) 486 U.S. 888, 893, 108 S.Ct. 2218, 100 L.Ed.2d 896 (Bendix) [ ].) As Bendix explained, (Bendix, supra, 486 U.S. at p. 893, 108 S.Ct. 2218.)
Section 351 has been held to be an unreasonable burden on interstate commerce with regard to nonresidents who engage in such commerce within California. (Abramson v. Broumstein (9th Cir.1990) 897 F.2d 389, 392.) Abramson involved a Massachusetts resident who had entered into an agreement with two California residents. Having filed an untimely suit for breach of contract and fraud, the California residents asserted section 351 tolled the applicable statutes of limitations. Following Bendix, Abramson concluded that applying the statute in that case would impermissibly burden interstate commerce because (Abramson v. Brownstein, supra, 897 F.2d at p. 392.)
The statute has also been held to "impermissibly burden[] interstate commerce with respect to [California] residents who travel in the course of interstate commerce." (Filet Menu, Inc. v. Cheng (1999) 71 Cal.App.4th 1276, 1283, 84 Cal.Rptr.2d 384 (Filet Menu).) As Filet Menu explained, section 351 violates the commerce clause to the extent it (Filet Menu, supra, 71 Cal.App.4th at pp. 1282-1283, 84 Cal.Rptr.2d 384.)
Filet Menu limited its holding to "travel for the facilitation of interstate commerce," reasoning that "[Residents travel outside of California for many reasons unrelated to the service of interstate commerce" and (Filet Menu, supra, 71 Cal.App.4th at p. 1283, 84 Cal. Rptr.2d 384.) Because the complaint did not "describe the extent to which [the defendant's] absences from the state were in the course of interstate commerce," the court concluded.it did "not establish that applying section 351 in the circumstances of this case violates the commerce clause" and reversed the judgment entered following the sustaining of defendants' demurrer without leave to amend. (Id. at p. 1284, 84 Cal.Rptr.2d 384.)
The determinative question in this case, therefore, is whether the undisputed facts show defendants' conduct sufficiently made an impact on interstate commerce to invoke the commerce clause. During oral argument, plaintiffs conceded section 351 would not toll the statute of limitations on the fourth cause of action for tortious interference with economic advantage because it contains allegations implicating interstate commerce. But they dispute that result for the remaining causes of action where defendants are alleged to have left California after the claims accrued.
The parties disagree whether the tolling provisions of section 351 apply to former California residents such as defendants who move out of state. Plaintiffs contend section 351 tolls the statutes of limitations under these circumstances unless the move affects or facilitates interstate commerce. Defendants on the other hand argue the statute does not apply to California residents who permanently leave the state to reside elsewhere.
California courts generally hold the tolling provisions apply to (Green v....
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