Kohan v. Cohan

• Citation: 204 Cal.App.3d 915,251 Cal.Rptr. 570
• Decision Date: 21 September 1988
• Docket Number: No. B027586,B027586
• Court: California Court of Appeals
• Parties: Khanbaba KOHAN et al., Plaintiffs, Respondents and Cross-Appellants, v. Nedjatollah F. COHAN et al., Defendants, Appellants and Cross-Respondents.

Page 570

251 Cal.Rptr. 570

204 Cal.App.3d 915

Khanbaba KOHAN et al., Plaintiffs, Respondents and Cross-Appellants, v. Nedjatollah F. COHAN et al., Defendants, Appellants and Cross-Respondents.

No. B027586.

Court of Appeal, Second District, Division 7, California.

Sept. 21, 1988.

Review Denied Nov. 30, 1988.

Coudert Brothers, Douglas L. Hallett, George M. Soneff and Craig H. Missakian, Los Angeles, for defendants, appellants and cross-respondents.

Kaye, Scholer, Fierman, Hays & Handler, Pierce O'Donnell, Cruz Reynoso, Betsy Handler and Morton Minikes, Los Angeles, for plaintiffs, respondents and cross-appellants.

LILLIE, Presiding Justice.

In an action for dissolution of partnership, an accounting and other relief, defendants appeal from an order granting plaintiffs' motion for new trial and plaintiffs cross-appeal from the judgment vacated pursuant to the order for new trial.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiffs, Khanbaba Kohan and Morteza Kohan, and defendant Nedjatollah Cohan are brothers and natives of Iran. In Iran the brothers transacted business together accumulating real and personal property held in the names of all three. In 1961 the brothers executed an agreement which recited that, in the past, the wealth accumulated by them had "been registered to everyone's name in a non-proportional ratio." In order "to clarify their financial situation," the agreement declared that all of the brothers' assets, in Iran or abroad, registered in the name of any one brother, or which any of them subsequently acquired, were to be divided among them in the following proportions: Nedjatollah, 35 percent; Khanbaba, 35 percent; Morteza, 30 percent. The agreement further provided that any asset acquired by one brother through his individual activities became part of the joint account of all of them. The agreement was to remain in force until "an official written settlement is drawn up evidencing the dividing of the joint belongings...." Following their execution of the agreement the business of the brothers flourished and by the time of the Iranian revolution (1978-1979) they were among the wealthiest families in Iran. Because of the revolution all three brothers left Iran arriving in California in 1979.

In 1981, in response to his request, Khanbaba received from Nedjatollah a statement of assets in the latter's possession. On July 29, 1982, Khanbaba and Morteza, apparently dissatisfied with this accounting, sued Nedjatollah in California for declaratory relief, dissolution of partnership, accounting, breach of contract, breach of fiduciary duty and injunctive relief. The second amended complaint ¹ included the following allegations: In breach of the parties' 1961 agreement, defendant refused to dissolve the partnership and account for and divide the assets thereof and appropriated for himself alone assets standing in his name which he held in trust for plaintiffs; plaintiffs did not learn of defendant's repudiation of the partnership agreement and appropriation of partnership assets until a time within three years of the filing of the complaint.

Defendants moved for summary judgment on the ground the action is barred by the statute of limitations, arguing plaintiffs' causes of action accrued when defendant repudiated and withdrew from the partnership in 1976. In support of the motion defendant submitted letters which he sent to each of the plaintiffs (dated Feb. 19, 1976, and Mar. 2, 1976, respectively) which stated, "I declare and announce herewith that I am not ready to cooperate with you henceforth by any term and condition whatsoever," and demanded that all funds, documents, notes and commercial instruments in plaintiffs' possession belonging to defendant be returned to him. In his declaration in opposition to the motion plaintiff Khanbaba stated that after he received the letter from defendant the parties restored relations and thereafter continued to conduct the partnership business as they always had done. The motion for summary judgment was granted. The order granting the motion stated that the cause of action for an accounting--the fundamental cause of action in the complaint--accrued in 1976 when defendant repudiated the partnership agreement. The California statute of limitations, not that of Iran, is applicable in this case. The four-year statute of limitations (Code Civ.Proc., §§ 337, subd. 1, 343) ² governs, was not tolled by section 351, ³ and bars this action. Summary judgment accordingly was entered in favor of defendants and against plaintiffs.

Plaintiffs moved for a new trial ⁴ on the grounds that section 351 applies to toll the statute of limitations until defendant's arrival in California and, in any event, there is a triable issue of fact as to whether or not defendant's repudiation of the partnership in 1976 later was nullified by acts and statements of the parties. The motion was granted on the first ground, i.e., section 351 is applicable in this case. The order granting the motion for new trial expressly vacated the summary judgment.

Defendants moved for reconsideration of the order granting a new trial. The court granted the motion but, upon reconsideration, reaffirmed its new trial order.

Defendants appeal from the order granting plaintiffs' motion for a new trial. ⁵ Plaintiffs cross-appeal from the summary judgment.

DISCUSSION

I DEFENDANTS' APPEAL

The first clause of section 351 provides that "[i]f, 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." The second clause of the statute provides that "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." Defendants contend the word "return" in the first clause shows the intent of the Legislature that section 351 apply only where a person was present in California before a cause of action accrued against him, was absent from the state when the cause of action accrued, and thereafter returned to California. The use of the word "departs" in the second clause, defendants argue, further supports this interpretation of section 351.

In Cvecich v. Giardino (1940) 37 Cal.App.2d 394, 99 P.2d 573, an argument similar to that of defendants was rejected. There, in 1929 the defendant, a resident of New Jersey, executed in New Jersey a written bond wherein she agreed to pay to plaintiff, a resident of New York, a sum of money in 1932. This obligation was secured by real property in New Jersey and was payable in New York. The debt was not paid when due and prior liens on the real property were foreclosed rendering plaintiff's security valueless. In 1937 plaintiff commenced an action in California on the obligation and attached certain property of defendant in this state. Plaintiff was a resident of New York and defendant a resident of New Jersey; neither party was physically present in California at any time. Defendant appealed from judgment in favor of plaintiff contending the action was barred by the statute of limitations. Defendant argued that inasmuch as section 351 uses the word "return" to this state, it has no application to a nonresident defendant who, until she appeared in the present action, was never in California; such a defendant cannot "return" to a state she never entered. The court rejected the contention stating: "While it is true that normally the term 'return' carries with it the implication of coming back after having first been here, the term as used in statutes of limitations, and particularly in statutes of the nature of section 351, has quite uniformly been interpreted to mean that the section applies so as to toll the statute not only where the defendant was once a resident of the state and leaves it and returns, but also where the defendant has never been in, or resided in, the state until the filing of the complaint. The term as used in statute of limitations has come to have this special meaning. The applicable principles, supported by authorities from many states (Texas alone being cited to the contrary), are stated as follows in 17 Ruling Case Law, page 837, section 199: 'According to the generally accepted doctrine, if the statute provides that the period of limitation shall not run in favor of a debtor who is absent from or out of the state, the saving clause extends to foreigners, or those who have never resided in the state, as well as to citizens who may be temporarily absent. Whether the defendant be a resident of the state, and only absent for a time, or whether he resides altogether out of the state, is immaterial. He is equally within the proviso. If the cause of action arose out of the state, it is sufficient to save the statute from running in favor of the party to be charged until he comes within its jurisdiction....' " ( Cvecich v. Giardino, supra, 37 Cal.App.2d at p. 399, 99 P.2d 573.)

Cases before and after Cvecich consistently have interpreted section 351 to toll the statute of limitations as to a cause of action against a defendant who was a nonresident of California when the cause of action accrued; in such case the statute commences to run only when the defendant enters the state. (San Diego Realty Co. v. Hill (1914) 168 Cal. 637, 639, 143 P. 1021; McCormick v. Marcy (1913) 165 Cal. 386, 388-389, 132 P. 449; McKee v. Dodd (1908) 152 Cal. 637, 639-640, 93 P.2d 854; Dougall v. Schulenberg (1894) 101 Cal. 154, 157, 35 P. 635; Lewis v. Superior Court (1985) 175 Cal.App.3d 366, 373, 220 Cal.Rptr. 594; State Medical Education Board v. Roberson (1970) 6 Cal.App.3d 493, 501, 86 Cal.Rptr. 258; State National Bank v. Kerfoot (1919) 41 Cal.App. 198, 200, 182 P. 320; Chappell v. Thompson (1913) 21 Cal.App. 136, 137-138, 131 P. 82.) "The California tolling statute is not expressly limited in its coverage, and the California courts, like those in most other states with similar ...