Wood v. Elling Corp.

• Decision Date: 30 December 1977
• Citation: 20 Cal.3d 353,142 Cal.Rptr. 696,572 P.2d 755
• Court: California Supreme Court
• Parties: , 572 P.2d 755 Phil L. WOOD, Plaintiff and Appellant, v. ELLING CORPORATION et al., Defendants and Respondents. L.A. 30761.

Page 696

142 Cal.Rptr. 696

20 Cal.3d 353, 572 P.2d 755

Phil L. WOOD, Plaintiff and Appellant, v. ELLING CORPORATION et al., Defendants and Respondents.

L.A. 30761.

Supreme Court of California.

Dec. 30, 1977.

Miller, Bronn & Brummett and Dennis A. Alekel, Long Beach, for plaintiff and appellant.

Murry Luftig, San Diego, for defendants and respondents.

MANUEL, Justice.

Plaintiff Phil L. Wood appeals from a judgment of dismissal ¹ entered following the sustaining, without leave to amend, of defendants' general demurrer to his amended complaint on the ground that said complaint was filed after the expiration of the applicable period of limitations.

In April 1971 plaintiff filed an action (SO C 25238) against Walter and Cathryn Wencke, Walter Wencke as trustee for Wenda Kay Wencke and Wayne Karl Wencke, Elling Corporation (a Nevada corporation), Adele, Inc. (a Nevada corporation), and 50 defendants designated by fictitious name. The complaint alleged inter alia that defendants Walter and Cathryn Wencke had defaulted on a promissory note payable to plaintiff and had made fraudulent conveyances of property to persons unknown to plaintiff who were designated as defendants by fictitious name. The prayer requested "judgment against the defendants, and each of them" setting aside the conveyances and awarding plaintiff punitive damages and other relief; it also sought a money judgment against defendants Wencke in a sum exceeding $329,000 plus interest. The names of the two corporate defendants were not mentioned specifically at any point in this original complaint excepting the title, but in January 1972 an amendment was filed alleging that defendants Wencke had fraudulently conveyed certain property to them.

Summons was promptly issued and served upon defendants Wencke but was not served upon Elling Corporation (Elling) and Adele, Inc. (Adele) until June 1974. Elling and Adele thereupon moved that the action be dismissed as to them on the ground that service and return of summons had not been effected as to them within three years after the commencement of the action. (Code Civ.Proc., § 581a.) The motion was denied, but Elling and Adele successfully sought a writ of mandate in the Court of Appeal, and the action was ordered dismissed as to them. ² That decision is now final. (Elling Corp. v. Superior Court (1975) 48 Cal.App.3d 89, 123 Cal.Rptr. 734; hg. den. July 9, 1975.)

Shortly thereafter, on August 14, 1975, plaintiff brought the instant action (SO C 39672) against the same parties defendant named in the first action with the exception that Walter Wencke as trustee for Wenda Kay and Wayne Karl Wencke was omitted. The first cause of action, seeking to set aside the alleged fraudulent conveyances to Elling and Adele, was substantially identical to that portion of the amended complaint in SO C 25238 seeking the same relief. The second and third causes of action allege that corporate defendants Elling and Adele are the alter egos of the Wenckes and seek to hold Elling and Adele jointly and severally liable for the personal obligations of the Wenckes; no similar causes of action were stated in the earlier action. Defendants' demurrer to this complaint was ultimately sustained without leave to amend on the ground that all three causes of action were barred by the three-year statute of limitations governing actions for fraud (Code Civ.Proc., § 338, subd. 4). Plaintiff appeals from the ensuing judgment of dismissal.

Relying heavily upon the prior opinion in Elling Corp. v. Superior Court, supra, 48 Cal.App.3d 89, 123 Cal.Rptr. 734 both as judicial precedent and as the law of the case plaintiff urges that the trial court erred in holding the action barred by the statute of limitations because the applicable statutory period was tolled from the date of the filing of the first action (SO C 25238) until the date, more than four years later, of the order dismissing Elling and Adele from that action. The contention is based upon the following language in the prior opinion: "(B)y naming a party defendant in an original complaint, the plaintiff stops the running of the statute of limitations; but if the summons is not served and returned within three years, the unserved defendant is entitled to a dismissal. The dismissal is not an adjudication on the merits, and if plaintiff wishes to renew his suit against that defendant he may do so by a new pleading (in the same action or another one), subject to whatever statute of limitation may be applicable at the time the new pleading is filed. These rules are derived from the language of the statute and purpose to encourage promptness in the prosecution of actions. (Citations.)" (Elling Corp. v. Superior Court, supra, 48 Cal.App.3d at p. 96, 123 Cal.Rptr. at p. 738.) It is urged (1) that the plain meaning of this language indicates that the statute of limitations is tolled from the time of filing to the time of dismissal, and (2) that the Court of Appeal's failure to hold all further actions against the corporate defendants barred by the statute of limitations, in conjunction with its knowledge that the cause of action had accrued more than three years before, constitutes an implied holding that the statute was tolled, which implied holding is now the law of the case.

These contentions are without merit. The language in Elling to which plaintiff has reference, while arguably susceptible of the reading which he places upon it, was clearly not intended to convey that meaning. In stating that the plaintiff "stops the running of the statute of limitations" by naming a party defendant in the complaint, the court manifestly intended to indicate that upon the filing of a timely complaint against a named party defendant the statute of limitations is eliminated as a means by which that defendant may ensure prompt prosecution of the claim against him. There remain to him for this purpose, however, the protections afforded by sections 581a and 583 of the Code of Civil Procedure. When those protections operate to bring about a dismissal, the applicability of the pertinent statute of limitations is restored as if no action had been brought. (See Williams v. City of Oakland (1973) 30 Cal.App.3d 64, 69, 106 Cal.Rptr. 101; Fleishbein v. Western Auto S. Agency (1937) 19 Cal.App.2d 424, 427, 65 P.2d 928.) ³ In this respect the law of California is consistent with what has been stated to be the rule in the majority of jurisdictions. "In the absence of a statute, a party cannot deduct from the period of the statute of limitations applicable to his case the time consumed by the pendency of an action in which he sought to have the matter adjudicated, but which was dismissed without prejudice to him . . . ." (51 Am.Jur.2d, Limitation of Actions, § 311, p. 813.)

This rule, of course, is wholly in accord with the policy in favor of the prompt prosecution of legal claims, whereas the proposition advanced by plaintiff might well operate in defiance of that policy. ⁴ If a timely action dismissed without prejudice were, without more, to have the effect of tolling the statute of limitations during the pendency of that action, an indefinite extension of the statutory period through successive filings and dismissals might well result.

Equally without merit is plaintiff's suggestion that whatever may be the general rule in this area, the Court of Appeal's failure in Elling to hold all further actions against Elling and Adele barred by the statute of limitations and its suggestion, with full knowledge of the date of the accrual of the cause of action, that a further action would lie "subject to whatever statute of limitation may be applicable at the time the new pleading is filed" (Elling, supra, at p. 96, 123 Cal.Rptr. at p. 738) makes it the law of the case that the three-year statute was tolled during the pendency of the first action. "Generally, the doctrine of law of the case ⁵ does not extend to points of law which might have been but were not presented and determined in the prior appeal. (Citation.) As an exception to the general rule, the doctrine is also held applicable to questions not expressly decided but implicitly decided because they were essential to the decision on the prior appeal." (Estate of Horman (1971) 5 Cal.3d 62, 73, 95 Cal.Rptr. 433, 441, 485 P.2d 785, 793.) It is clear, however, that the only questions presented and determined in Elling Corp. v. Superior Court, supra, related to the running of the three-year period for service and return of summons under Code of Civil Procedure section 581a, and the suggestion that the distinct question of the application of the statute of limitations was "implicitly decided" is contradicted by express language in the opinion. ⁶

Plaintiff next contends that the trial court erred by applying the wrong statute of limitations to the case. The governing statutory period, he urges, is not that set forth in Code of Civil Procedure section 338, subdivision 4, but rather the period prescribed in section 355 of the same code. The latter section provides: "If an action is commenced within the time prescribed therefor, and a judgment therein for the plaintiff be reversed on appeal, the plaintiff . . . may commence a new action within one year after the reversal." Plaintiff, recognizing that no judgment in his favor had been reversed on appeal at the time of his filing the instant action, nevertheless urges that our decision in Bollinger v. National Fire Ins. Co. (1944) 25 Cal.2d 399, 154 P.2d 399, requires application of the indicated one-year period in the circumstances of this case.

In Bollinger the plaintiff, having sustained a nonsuit in an earlier action for filing suit prematurely under the terms of an insurance policy, immediately brought a second suit on the same cause of action, which suit was subsequently dismissed after demurrer on the ground that the 15-month shortened limitation period of the policy had expired. We reversed,...