Kleinecke v. Montecito Water Dist.

• Decision Date: 22 September 1983
• Citation: 195 Cal.Rptr. 58,147 Cal.App.3d 240
• Parties: David KLEINECKE, Plaintiff and Appellant, v. MONTECITO WATER DISTRICT, Defendant and Respondent. Civ. 66784.
• Court: California Court of Appeals Court of Appeals

Page 58

195 Cal.Rptr. 58

147 Cal.App.3d 240

David KLEINECKE, Plaintiff and Appellant, v. MONTECITO WATER DISTRICT, Defendant and Respondent.

Civ. 66784.

Court of Appeal, Second District, Division 6, California.

Sept. 22, 1983.

Carroll Barrymore, Santa Barbara, for plaintiff and appellant.

Price, Postel & Parma, J. Terry Schwartz and William W. Watts, Santa Barbara, for defendant and respondent.

GILBERT, Associate Justice.

Plaintiff David Kleinecke (Kleinecke) brought an action against defendant Montecito Water District (Water District) to quiet title and obtain a permanent injunction to remove water pressure regulators and housings from his land. He appeals from a summary judgment in favor of Water District based on the running of the statute of limitations.

We conclude that Water District is estopped to raise the bar of the statute of limitations.

Facts

Declarations filed on behalf of Kleinecke and Water District disclose the following scenario: beginning in 1978, counsel for Kleinecke (plaintiff's counsel) and counsel for Water District (defense counsel) had some "contact" with each other concerning a dispute over Water District's easement on Kleinecke's property but they did not resolve it. Therefore, on November 7, 1980, Kleinecke filed a complaint naming as defendants Montecito Sanitary District (Sanitary District) and various Does.

The complaint alleged that Sanitary District exceeded its easement for water pipelines on Kleinecke's property by constructing pressure control valves surrounded by six-foot industrial fences. Kleinecke sought, among other things, an order requiring Sanitary District to remove the valves.

Kleineke's complaint stated the facts with meticulous care. It did however suffer from one significant infirmity. It named the wrong party as a defendant. The complaint should have named Montecito Water District (Water District) rather than Sanitary District which was served on November 19, 1980.

Sanitary District and Water District are separate and distinct municipal corporations. Sanitary District was formed under the provisions of Health and Safety Code section 6400, et seq. (The Sanitary District Act of 1923) while Water District was formed under the provisions of Water Code section 30000 et seq. (The County Water District Act).

When an attorney serves the wrong party with a summons and complaint, he usually receives a telephone call advising him of the error. Counsel for plaintiff did not receive such a call. This was one of those exceedingly rare situations where by a cruel twist of fate counsel for Sanitary District was also counsel for Water District. Defense counsel learned of Kleinecke's error when he received word from Water District that Sanitary District had been mistakenly served with the complaint.

Imbued with a sense of duty to his client and possessing the instincts of a litigator, he informed Water District there could be a statute of limitations defense. He then told Water District what its options were: preserve the statute of limitations defense, or notify Kleinecke of his error. He next asked Water District what it wished him to do. We won't prolong the suspense. Water District told him to assume a passive posture and preserve the statute of limitations defense, and that's what he did--well not quite. He did file an answer, not one on behalf of Water District, however, but rather one on behalf of Sanitary District, the wrong party served.

In the meantime, plaintiff's counsel was treading water, waiting for Sanitary District's answer. When he did not receive it by January 12, 1981, he wrote to defense counsel to inquire about it. Defense counsel did not answer the letter because he had answered the complaint and assumed plaintiff's counsel would soon receive it or learn of it. He had actually sent a copy of his answer to plaintiff's counsel's street address rather than the post office box which appeared on the complaint along with his street address. In his declaration, plaintiff's counsel states that mail is not delivered to his street address.

Receiving no answer from defense counsel, plaintiff's counsel wrote him again on February 19, 1981, to inquire about the answer. Once again, he was ignored. Finally, he learned that the answer had been filed when he tried to enter a default on March 1, 1981. He, however, was still unaware of the dangerous undercurrents around him because the answer generally denied the allegations in the complaint and failed to mention that Sanitary District was the wrong party served. When plaintiff's counsel finally learned of this mistake through answers to interrogatories in May 1981, after the statute of limitations had run on February 29, 1981, he asked defense counsel to stipulate to the filing of an amended complaint, properly naming Water District as a defendant. This time defense counsel answered him. He said, "No."

Plaintiff's counsel looked for a way out of the deep water. On May 14, 1981, he filed a motion under Code of Civil Procedure section 473, seeking to amend his complaint to name Water District as a defendant on the ground that he had mistakenly named Sanitary District. The trial court granted his motion even though Water District argued that plaintiff was seeking not merely to correct a misnomer as to a defendant but to bring in an entirely new party after the statute of limitations had run. (Chitwood v. County of Los Angeles (1971) 14 Cal.App.3d 522, 525, 92 Cal.Rptr. 441; Stephens v. Berry (1967) 249 Cal.App.2d 474, 478-479, 57 Cal.Rptr. 505.)

Kleinecke filed his amended complaint and Water District filed its answer along with a cross-complaint to quiet title in a prescriptive easement against Kleinecke. It also filed a summary judgment based on the bar of the statute of limitations because Kleinecke's notice of motion to amend the complaint occurred more than five years following completion of all work by Water District.

The attorney in plaintiff's counsel's office who drafted the complaint alleged in his declaration that at the time he drafted the complaint, he did not know that Sanitary District and Water District were separate entities. He believed that since the time of the easement grant Water District had reorganized and had changed not only its legal status but also its name to Sanitary District. He further presumed that some transfer of easement rights had been made, making Sanitary District the successor entity. It was not until he received answers to interrogatories propounded to Sanitary District in early May 1981 that he learned that Water District changed its name in 1979 from Montecito County Water District to Montecito Water District, and that Sanitary District was a separate legal entity and not the direct successor to the former Montecito County Water District.

The trial court reluctantly granted the summary judgment motion on the grounds that the statute of limitations had run on February 29, 1981. ¹ We agree with the trial judge's observations that "fundamental fairness would dictate that plaintiff should be entitled to relief under § 473 of the Code of Civil Procedure." His further observation, however, that "existing case law holds otherwise" is no longer true.

We acknowledge that Wright v. Redwood Theatres, Inc. (1942) 49 Cal.App.2d 403, 121 P.2d 756, on which the trial court relied, would compel a dismissal in the instant case. In Wright, plaintiff brought an action for personal injury against Redwood Theaters, Inc., when she should have named National Theater Syndicate of California. Both corporations had common officers, maintained joint offices with the same telephone numbers, and a major portion of the stock of each company was owned by the same individual. As in the instant case, the same attorney who represented both the wrong party served and the party who should have been served, filed an answer on behalf of the wrong party served. In Wright, he even continued the case beyond the date on which the statute of limitations ran. In sustaining a demurrer without leave to amend, the court held that defendant was not estopped to assert the statute of limitations because it owed no duty to plaintiff to disclose any information, and because plaintiff was not misled by any act of defendant.

Our examination of Wright brings us to an inescapable conclusion. Wright is wrong. Its holding achieves an unjust result which should not be repeated here. Equitable estoppel as a bar to asserting the statute of limitations should have had its place in Wright, and it will have its place in the case at bench.

The doctrine of equitable estoppel is based on the theory that a party who by his declarations or conduct misleads another to his prejudice should be estopped to prevent him from obtaining the benefits of his misconduct. (Morgan v. International Aviation Underwriters, Inc. (1967) 250 Cal.App.2d 176, 180, 58 Cal.Rptr. 164.) Under appropriate circumstances equitable estoppel will lie to bar a defendant from pleading the bar of the statute of limitations where the plaintiff was induced to refrain from bringing a timely action by the fraud, misrepresentation or deceptions of defendant. (Ginns v. Savage (1964) 61 Cal.2d 520, 524-525, 39 Cal.Rptr. 377, 393 P.2d 689; Mills v. Mills (1956) 147 Cal.App.2d 107, 119, 305 P.2d 61.) A defendant should not be permitted to lull his adversary into a false sense of security and cause the bar of the statute of limitations to occur and then plead in defense the delay occasioned by his own conduct. (Carruth v. Fritch (1950) 36 Cal.2d 426, 433, 224 P.2d 702; Holland v. Nelson (1970) 5 Cal.App.3d 308, 313, 85 Cal.Rptr. 117.)

The elements of estoppel to plead the statute of limitations when a public entity is involved are as follows: " '(1) the party to be estopped must be apprised of the facts; (2) he must intend that his conduct shall be acted upon, or must so act that the party asserting the estoppel had a right to believe it was so intended; (3)...