Newell v. Abouelmagd, G053785

• Decision Date: 17 January 2018
• Docket Number: G053785
• Parties: DEBRA NEWELL, Plaintiff and Appellant, v. MOHAMED ABOUELMAGD, Defendant and Respondent.
• Court: California Court of Appeals Court of Appeals

DEBRA NEWELL, Plaintiff and Appellant, v. MOHAMED ABOUELMAGD, Defendant and Respondent.

G053785

COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION THREE

January 17, 2018

ORDER MODIFYING OPINION AND DENYING PETITION FOR REHEARING; NO CHANGE IN JUDGMENT

It is hereby ordered that the opinion filed on January 17, 2018, be modified as follows:

At the end of the third full paragraph on page 14, before the heading "DISPOSITION" add as footnote 5 the following footnote:

"⁵In a petition for rehearing, defendant asserts for the first time that the trial court lacked personal jurisdiction over him. This argument was never previously made, on appeal or below, and we easily dispose of it. The court obtained personal jurisdiction over defendant when he first demurred to plaintiff's complaint and did not object to personal jurisdiction. (§ 418.10, subd. (e)(3); Roy v. Superior Court (2005) 127 Cal.App.4th 337, 344-345.)"

There is no change in the judgment.

The petition for rehearing is DENIED.

IKOLA, J.

WE CONCUR:

O'LEARY, P. J.

FYBEL, J.

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Super. Ct. No. 30-2015-00785669)

OPINION

Appeal from a judgment of the Superior Court of Orange County, Theodore R. Howard, Judge. Reversed.

Law Offices of Douglas S. Honig and Douglas Honig for Plaintiff and Appellant.

Estelle & Kennedy, Michael L. Kennedy and Danielle K. Little for Defendant and Respondent.

Seeking to recover approximately half a million dollars loaned to Defendant Mohamed Abouelmagd, Plaintiff Debra Newell appeals from a judgment dismissing her second amended complaint after the court sustained defendant's demurrer without leave to amend. The court concluded her claims were barred by the applicable statutes of limitation. In doing so, the court rejected plaintiff's assertions that the statutes of limitation had been tolled during defendant's absence from the state, and that defendant should be estopped from asserting the limitation period as a defense.

Plaintiff contends the trial court erred in two respects. First, she claims the court wrongly concluded that tolling under Code of Civil Procedure section 351 would be unconstitutional under the dormant commerce clause of the United States Constitution.¹ (U.S. Const., art. I, § 8, cl. 3.; commerce clause.) Second, she claims the court erroneously concluded she did not plead sufficient facts to estop defendant from asserting a statute of limitation defense. We conclude application of section 351 under the circumstances of this case would not violate the dormant commerce clause, and, thus, we reverse the judgment of dismissal. In light of our disposition, we do not reach the estoppel issue.

FACTS²

Plaintiff, a California resident, and defendant, a New York and/or New Jersey resident, met in Las Vegas. He represented to her he was not married, which later proved to be false, and they became romantically involved. Because of their intimate relationship, when defendant encountered financial hardship in mid-1999, plaintiff orallyagreed to loan him money. Defendant orally agreed to repay plaintiff the amount borrowed, without interest. Over the course of the following year, plaintiff continued periodically to loan defendant additional sums of money. By September 2000, the loans to defendant totaled nearly $700,000.

Although plaintiff allegedly did not care how defendant would use the money, defendant expressed to her that he intended to use it for a combination of personal and business expenses. In one of the many "love letters" written by defendant to plaintiff after she had loaned him the majority of the money, he indicated one proposal he could offer her was to give her half of the shares he owned in his businesses. He also stated that if he were to be successful in his business, he would "reward" her with the original money borrowed and a high percentage of interest.

After repaying plaintiff a small portion of what was owed, defendant executed a written promissory note in plaintiff's favor. In it he acknowledged he had borrowed money from her for personal and business reasons, he indicated the outstanding debt was $490,000, and he promised he would pay her $20,000 per month until the remaining debt was paid in full.

Following the terrorist attacks of September 11, 2001, defendant expressed concern he would be subject to harassment and retaliation based on his Egyptian nationality. He told plaintiff he planned to move back to Egypt, permanently, but he would continue to repay her from there. She believed him.

Defendant did not follow through on his promises. After paying back about $85,000 of the money borrowed, with the last payment having occurred in April 2002, defendant disappeared. Between 2004 and 2008, Plaintiff traveled to New York twice, and Egypt once, to try to locate defendant based on information he had given to her. She was unsuccessful.

In January 2015, plaintiff learned defendant had not permanently moved to Egypt; he was living in New York and/or New Jersey. She filed a lawsuit against him, alleging breach of an oral and a written contract, a common count of indebtedness and fraud.

Defendant demurred to the complaint based, in part, on statute of limitation grounds. Plaintiff opposed the demurrer, arguing the applicable statutes of limitation had been tolled, pursuant to section 351, until defendant appeared in the case because he had never previously been present in California. In response, defendant contended tolling of the statutes of limitation would be unconstitutional under the circumstances. Relying on the United States Supreme Court's decision in Bendix Autolite Corp. v. Midwesco Enterprises (1988) 486 U.S. 888 (Bendix), and the Ninth Circuit Court of Appeals' decision in Abramson v. Brownstein (9th Cir. 1990) 897 F.2d 389 (Abramson), defendant argued application of the tolling statute would violate the dormant commerce clause because it would unwarrantedly impede interstate commerce.

The trial court sustained the demurrer and granted plaintiff leave to amend the complaint.

Plaintiff filed a first amended complaint containing modified allegations about the circumstances surrounding the loans. While in the original complaint plaintiff alleged she loaned defendant "certain sums of money . . . which would be used as an investment in his business," the amended allegations stated plaintiff made the loan "because she had a personal, intimate relationship with [d]efendant." It further stated she did not lend the money in order to profit from it, and she "was not in the business of lending money."

Defendant filed a second demurrer based on the same statute of limitation and dormant commerce clause arguments. The trial court once again sustained the demurrer with leave to amend. In doing so, it expressed concern that plaintiff's modified allegations appeared inconsistent with those in the original complaint concerning the "investment" nature of the loan, and plaintiff had provided no explanation for the shift.

After plaintiff filed a second amended complaint, which included more detail and an explanation for the changes made since the original complaint, defendant demurred again based on the same arguments. The trial court sustained the demurrer, but this time without leave to amend. Citing Dan Clark Family Limited Partnership v. Miramontes (2011) 193 Cal.App.4th 219 (Dan Clark), it concluded application of section 351 in this case would be an unconstitutional burden on interstate commerce irrespective of whether the underlying transaction was "commercial" or "personal" in nature because it would force defendant to be present in California for the statutory period in order to avoid being subjected to potential liability "'in perpetuity.'" It determined this burden on interstate commerce "outweighs the burden on a plaintiff in having to pursue an out-of-state defendant." The court also rejected the application of equitable estoppel, noting plaintiff did not identify what defendant did that she reasonably relied upon in deciding to not file a lawsuit sooner.

Plaintiff timely appealed following entry of judgment dismissing the case.

DISCUSSION

Plaintiff claims the court erred in finding section 351 unconstitutional as applied to this case and in rejecting the application of equitable estoppel. In making these arguments, she asserts the court erroneously made factual determinations rather than assuming the facts in the complaint were true as it is required to do when ruling on a demurrer. As we shall explain, the trial court incorrectly concluded on demurrer thatapplication of section 351's tolling provision would violate the dormant commerce clause.

"When reviewing a judgment dismissing a complaint after the [sustaining] of a demurrer without leave to amend, courts must assume the truth of the complaint's properly pleaded or implied factual allegations. [Citation.] . . . [Citation.] . . . [W]e give the complaint a reasonable interpretation, and read it in context." (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.) "'A demurrer on the ground of the bar of the statute of limitations will not lie where the action may be, but is not necessarily barred.' [Citations.] It must appear clearly and affirmatively that, upon the face of the complaint, the right of action is necessarily barred. [Citations.] This will not be the case unless the complaint alleges every fact which the defendant would be required to prove if he were to plead the bar of the applicable statute of limitation as an affirmative defense." (Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 881.)

We apply a de novo standard of review to the...