Chatsky and Associates v. Superior Court
- Area
- civil
- Panel
- McINTYRE (author)
Analysis
The trial court granted the bank's motion for summary adjudication, holding that the plaintiffs' claims for payment of forged checks were barred by the one-year statute of limitations in Code of Civil Procedure section 340(c). The Court of Appeal affirmed this ruling, concluding that the specific one-year period in section 340(c) applies to depositor-bank forgery claims rather than the general three-year period in Commercial Code section 4111.
| Ruling reviewed | Standard | The court | The model |
|---|---|---|---|
Granting of the Bank's motion for summary adjudication based on the expiration of the one-year statute of limitations under Code of Civil Procedure section 340(c).“we conclude that the trial court properly granted summary adjudication based on expiration of the one-year limitation period of section 340(c).” | de novo | correct | agree with court The appellate court correctly applied de novo review to the question of statutory interpretation. It properly identified section 340(c) as the more specific statute governing actions by depositors against banks for forged checks, distinguishing it from the general three-year period in Commercial Code section 4111. The court correctly rejected the implied repeal argument, noting that the statutes can be harmonized and that the Legislature did not provide 'undebatable evidence' of an intent to supersede the older, specific statute. The reasoning is supported by the principle that specific statutes control over general ones and the high bar for implied repeal. |
Authorities
- relied: Roy Supply, Inc. v. Wells Fargo Bank (1995) 39 Cal.App.4th 1051 — Establishes that the one-year limitations period of section 340(c) applies to actions by a depositor against a bank for the payment of a forged or raised check, and that this period begins when the charge is reported in a regular monthly account statement.
- relied: Edward Fineman Co. v. Superior Court (1998) 66 Cal.App.4th 1110 — The court distinguished this case, noting that it did not hold that all Division 4 actions are governed by the three-year period of Commercial Code section 4111, but rather that the three-year period had expired in that specific instance, making discussion of section 340(c) unnecessary.
- relied: Hays v. Wood (1979) 25 Cal.3d 772 — Provides the standard for implied repeal, requiring that the later provision give 'undebatable evidence of an intent to supersede the earlier' provision.
- relied: In re Thierry S. (1977) 19 Cal.3d 727 — Establishes that implied repeal occurs only when two statutes are 'irreconcilable, clearly repugnant, and so inconsistent that the two cannot have concurrent operation.'
- relied: Voss v. Superior Court (1996) 46 Cal.App.4th 900 — Supports the presumption that the Legislature had existing laws in mind when enacting a new statute, which is why the high standard for implied repeal exists.
- relied: Bialo v. Western Mutual Ins. Co. (2002) 95 Cal.App.4th 68 — Confirms that statutory interpretation presents a question of law subject to de novo review on appeal.
The appellate opinion: sound — The opinion is sound because it correctly applies the principle that specific statutes control over general ones and rigorously applies the high standard for implied repeal. It effectively distinguishes prior case law (Fineman and Roy) to show they do not contradict the conclusion that section 340(c) remains the applicable limitation period for this specific type of claim.
The trial court granted Bank of America's motion for summary adjudication, holding that depositors' claims for payment of forged checks dated February 2001 or earlier were barred by the one-year limitations period of Code of Civil Procedure section 340(c), running from the bank statements disclosing the checks. On writ review, the Court of Appeal held de novo that section 340(c), not the three-year period of California Uniform Commercial Code section 4111, governs a depositor's forged-check claims against its bank, rejected the implied-repeal argument, and denied the petition.
| Ruling reviewed | Standard | The court | The model |
|---|---|---|---|
Grant of summary adjudication on the ground that the one-year limitations period of Code Civ. Proc. § 340(c), as the more specific statute, governs a depositor's claims against its bank for payment of forged checks rather than Com. Code § 4111's three-year period“We agree with the trial court's conclusion that section 340(c) is the more specific statute because it expressly concerns the factual circumstances at issue” | de novo | correct | agree with court Section 340(c) by its terms addresses the precise claim at issue (a depositor against a bank for payment of a forged check), while § 4111 is a general catch-all for Division 4 obligations; the specific-over-general canon and the duty to harmonize statutes (Estate of McDill, Fuentes) support the result, and the one-year period dovetails with the § 4406(f) one-year preclusion rule, whose Code Comments confirm consistency with § 340(c). The court did not expressly address Com. Code § 3118 as to the pleaded § 3420 conversion count, but an issuer's claim against its drawee for paying forged checks is not a conversion claim, so the omission does not undermine the result. |
Rejection of plaintiffs' contention that Com. Code § 4111 impliedly repealed Code Civ. Proc. § 340(c) as to forged-check claims“We reject plaintiffs' suggestion that the Legislature impliedly repealed section 340(c) when it enacted Commercial Code section 4111 as neither of the two conditions necessary to implement the doctrine” | de novo | correct | agree with court Under In re Thierry S. and Hays v. Wood, implied repeal requires either irreconcilable conflict or undebatable evidence of intent to supersede; the statutes can be read concurrently and the legislative history of § 4111 is silent on § 340(c), so neither condition is met. The court's reliance on the Legislature's later amendment of § 340 without altering subdivision (c) is a weaker inference, but it is supplementary rather than essential. |
Authorities
- relied: Bialo v. Western Mutual Ins. Co. (2002) 95 Cal.App.4th 68 — Statutory interpretation is a question of law reviewed de novo.
- relied: Estate of McDill (1975) 14 Cal.3d 831 — Courts must harmonize seemingly inconsistent statutes.
- relied: Fuentes v. Workers' Comp. Appeals Bd. (1976) 16 Cal.3d 1 — Courts avoid interpretations that require one statute to be ignored.
- relied: In re Thierry S. (1977) 19 Cal.3d 727 — Implied repeal requires statutes that are irreconcilable, clearly repugnant, and incapable of concurrent operation.
- relied: In re White (1969) 1 Cal.3d 207 — Source of the irreconcilability standard for implied repeal.
- relied: Stop Youth Addiction, Inc. v. Lucky Stores, Inc. (1998) 17 Cal.4th 553 — The law shuns repeal by implication; courts must maintain the integrity of both statutes where possible.
- relied: Hays v. Wood (1979) 25 Cal.3d 772 — Implied repeal also may be found where the later provision gives undebatable evidence of intent to supersede the earlier.
- relied: Voss v. Superior Court (1996) 46 Cal.App.4th 900 — The Legislature is presumed aware of existing law and its judicial construction when enacting a new statute.
- relied: Roy Supply, Inc. v. Wells Fargo Bank (1995) 39 Cal.App.4th 1051 — History of § 340(c); the one-year period runs per check from the account statement; § 4406 is an issue-preclusion statute consistent with § 340(c).
- relied: Edward Fineman Co. v. Superior Court (1998) 66 Cal.App.4th 1110 — Distinguished: applied § 4406 preclusion and noted § 4111 had run, but did not consider § 340(c).
- relied: People v. Superior Court (Zamudio) (2000) 23 Cal.4th 183 — Cases are not authority for propositions not considered.
The appellate opinion: sound with gaps — The opinion correctly frames the issue as statutory harmonization, applies the governing Supreme Court standards for implied repeal, and persuasively distinguishes Fineman and Roy as not having considered § 340(c). It does not engage the counterargument that § 4111 is itself specific to Division 4 claims or address Com. Code § 3118 as to the pleaded conversion count, and the legislative-inaction inference is thin, though none of this undermines the result.
Opinion
CHATSKY AND ASSOCIATES et al., Petitioners,
v.
The SUPERIOR COURT of San Diego County, Respondent;
Bank of America Corp., Real Party in Interest.
Court of Appeal, Fourth District, Division One.
*155 Robert B. Coffin, San Diego, for Petitioners.
No appearance for Respondent.
Frandzel Robins Bloom & Csato and Thomas M. Robins, III, Los Angeles, for Real Party in Interest.
McINTYRE, J.
In this case we conclude that the one-year limitations period of Code of Civil Procedure section 340, subdivision (c) (§ 340(c)), rather than the three-year limitations period of California Uniform Commercial Code section 4111, applies to claims by depositors against their bank for payment of forged checks written on the depositors' accounts. (All references to the "Commercial Code" refer to the California Uniform Commercial Code.)
FACTUAL AND PROCEDURAL BACKGROUND
Chatzky and Associates (Chatzky) and nine other related companies (together plaintiffs), opened checking accounts at Bank of America (the Bank). On March 19, 2001, plaintiffs notified the Bank that some checks written on the accounts had been forged and Chatzky subsequently terminated the alleged forger, who was its bookkeeper and office manager. On March 19, 2002, plaintiffs sued the Bank, alleging causes of action for conversion (Com.Code, § 3420), breach of contract, violation of Commercial Code section 4103 and unfair business practices. The trial court subsequently granted the Bank's motion for summary adjudication, concluding that recovery on checks dated February 2001 or earlier was barred by the one-year limitation period of section 340(c) because the plaintiffs failed to bring their action within one year after being provided with bank statements listing the forged checks.
Plaintiffs sought writ review of the trial court's order, requesting that the order be vacated and a new and different order be entered denying the motion. We issued an *156 order to show cause why the relief sought should not be granted.
DISCUSSION
Issue Presented and Standard of Review
This appeal presents the legal question of whether the one-year limitations period of section 340(c) or the three-year limitations period of Commercial Code section 4111 applies to claims by depositors against their bank for the payment of forged checks written on the depositors' accounts. Although this issue comes to us on a motion for summary adjudication, we need not engage in the traditional summary judgment analysis because the parties do not dispute the facts underlying application of the applicable limitation period.
The question presented involves statutory interpretation, which presents a question of law subject to de novo review on appeal. (Bialo v. Western Mutual Ins. Co. (2002) 95 Cal.App.4th 68, 76-77, 115 Cal.Rptr.2d 3.) Where, as here, we are called upon to interpret two seemingly inconsistent statutes to determine which applies under a particular set of facts, our goal is to harmonize the law (Estate of McDill (1975) 14 Cal.3d 831, 837, 122 Cal.Rptr. 754, 537 P.2d 874) and avoid an interpretation that requires one statute to be ignored. (Fuentes v. Workers' Comp. Appeals Bd. (1976) 16 Cal.3d 1, 7, 128 Cal.Rptr. 673, 547 P.2d 449.)
When two statutes concern the same subject matter and cannot be reconciled with each other, the more recent statute is deemed to have repealed the first statute by implication under the doctrine of implied repeal. (In re Thierry S. (1977) 19 Cal.3d 727, 744, 139 Cal.Rptr. 708, 566 P.2d 610.) However, the law shuns repeal by implication and, if possible, courts must maintain the integrity of both statutes. (Stop Youth Addiction, Inc. v. Lucky Stores, Inc. (1998) 17 Cal.4th 553, 569, 71 Cal.Rptr.2d 731, 950 P.2d 1086.) For this reason, the implied repeal doctrine is properly invoked only when (1) two potentially conflicting statutes cannot be harmonized and are "`irreconcilable, clearly repugnant, and so inconsistent that the two cannot have concurrent operation....'" (In re Thierry S., supra, 19 Cal.3d at p. 744, 139 Cal.Rptr. 708, 566 P.2d 610, quoting In re White (1969) 1 Cal.3d 207, 212, 81 Cal.Rptr. 780, 460 P.2d 980) or (2) the later provision gives "undebatable evidence of an intent to supersede the earlier" provision. (Hays v. Wood (1979) 25 Cal.3d 772, 784, 160 Cal.Rptr. 102, 603 P.2d 19.) This high standard of conflict exists because it must be presumed that the Legislature had existing laws in mind when it enacted a new statute. (Voss v. Superior Court (1996) 46 Cal.App.4th 900, 925, 54 Cal.Rptr.2d 225.)
Analysis
Enacted in 1905, section 340(c) (formerly section 340(3)) imposes a one-year statute of limitations on certain actions, including actions "`by a depositor against a bank for the payment of a forged or raised check.'" (Roy Supply, Inc. v. Wells Fargo Bank (1995) 39 Cal.App.4th 1051, 1065, 46 Cal.Rptr.2d 309 (Roy), quoting Stats.1905, ch. 258, § 2, pp. 231-232.) In 1929, the Legislature amended the statute to include actions by a depositor against a bank for the payment of checks bearing "`... a forged or unauthorized indorsement.'" (Roy, supra, 39 Cal.App.4th at p. 1065, 46 Cal.Rptr.2d 309, quoting Stats.1929, ch. 518, § 1, p. 896.) The one-year limitations period applies independently with respect to each forged check and begins to run when the charge is reported to the depositor in a regular monthly account statement. (Roy, supra, *157 39 Cal.App.4th at p. 1074, 46 Cal.Rptr.2d 309.)
Section 340(c) dovetails with Commercial Code section 4406, subdivision (f), which precludes a bank customer from asserting a claim against a bank based on a forged or unauthorized signature unless the customer discovers and reports the matter within one year after the bank made available a statement of account showing payment of the item, regardless of either the customer's or the bank's lack of care. This section acts as an issue-preclusion statute (rather than a statute of limitations) and claims that are not dependent upon proof of the forgery will not be precluded. (Roy, supra, 39 Cal.App.4th at pp. 1065-1066, 46 Cal.Rptr.2d 309.) Code Comments to this section expressly indicate that the one-year preclusion period is consistent with the statute of limitation contained in section 340(c). (23B pt. 1 West's Ann. Cal.Codes, pp. 187-188.)
Effective in January 1993, Commercial Code section 4111 sets forth a general three-year limitation period for actions "to enforce an obligation, duty or right" arising under Division 4 of the Commercial Code. (Stats. 1992, ch. 914, § 17.) In adopting Commercial Code section 4111, the Legislature intended to correct an omission in the original Division 4, which did not contain an express statute of limitations. (Sen. Com. on Judiciary, Sen. Bill No. 833 (1991-1992 Reg. Sess.) as amended Apr. 29, 1991.) Significantly, Division 4 of the Commercial Code addresses not only the relationship of banks with their customers, but also the relations between different banks as to bank deposits and collections. (23B pt. 1 West's Ann. Cal.Codes, p. 25, Introductory Comment.) The legislative history for this section does not address section 340(c).
Plaintiffs contend that the one-year limitation period of section 340(c) was supplanted by the three-year limitation period of Commercial Code section 4111, arguing that any other conclusion renders Commercial Code section 4111 meaningless. Applying the previously mentioned principles of statutory construction to the present case, we conclude that the trial court properly granted summary adjudication based on expiration of the one-year limitation period of section 340(c). (While the Bank also moved for summary adjudication under Commercial Code section 4406, and the plaintiffs conceded that their claims as to some of the checks at issue were precluded under this section, there is no need for us to address this section based on our conclusion that the limitation period has expired. The motion also addressed other issues, which are not before us in this writ proceeding.)
Plaintiffs' argument to the contrary requires us to conclude that the Legislature either ignored section 340(c) or intended to repeal this section when it enacted Commercial Code section 4111. However, we are required to harmonize these two seemingly inconsistent statutes, if possible, to avoid an interpretation that requires one statute to be ignored. We agree with the trial court's conclusion that section 340(c) is the more specific statute because it expressly concerns the factual circumstances at issue an action by a depositor against its bank for the payment of a forged check. (§ 340(c).) In contrast, Commercial Code section 4111 generally applies to other actions arising between banks or a bank and its customers "to enforce an obligation, duty, or right." When so construed, the statutes work in harmony and do not contradict each other.
We reject plaintiffs' suggestion that the Legislature impliedly repealed section 340(c) when it enacted Commercial Code section 4111 as neither of the two conditions necessary to implement the doctrine *158 of implied repeal is met. As addressed above, the two statutes are not irreconcilable or clearly repugnant; rather, they can be harmonized so as to maintain the integrity of both statutes. Additionally, Commercial Code section 4111 does not provide "undebatable evidence of an intent to supersede the earlier" provision. (Hays v. Wood, supra, 25 Cal.3d at p. 784, 160 Cal.Rptr. 102, 603 P.2d 19.) Nothing in Commercial Code section 4111 or its history establishes that the Legislature intended to repeal section 340(c) and we will not presume the existence of such intent in the absence of an express declaration. Because the Legislature is presumed to have been aware of the existing statutory law and its judicial construction, we assume that the Legislature was aware of section 340(c) when it enacted Commercial Code section 4111. (Voss v. Superior Court, supra, 46 Cal.App.4th at p. 925, 54 Cal.Rptr.2d 225.)
Moreover, if the Legislature had wanted to abrogate application of section 340(c) in favor of the general limitation period of Commercial Code section 4111 where a depositor sues its bank for payment of a forged check, it had two opportunities to do so. First, when it enacted Commercial Code section 4111 and second, when it changed section 340(c) to remove personal injury and wrongful death actions, making these actions subject to a two year limitations period. (Code Civ. Proc., § 335.1; see Stats.2002, ch. 448, § 2.) The Legislature's failure to act persuades us that it did not intend the general limitation period of Commercial Code section 4111 to apply to the specific situation at issue.
We reject the plaintiffs' assertion that the court in Edward Fineman Co. v. Superior Court (1998) 66 Cal.App.4th 1110, 78 Cal.Rptr.2d 478 (Fineman) held that all actions arising under Division 4 are governed by the three-year limitation period of Commercial Code section 4111 and that claims based on forgeries are not excluded. In Fineman, a bank moved for summary adjudication on certain checks contending recovery was barred by the issue-preclusion effect of Commercial Code section 4406 and the three-year limitation period of Commercial Code section 4111. (Fineman, supra, at p. 1115, 78 Cal.Rptr.2d 478.) The Fineman court held that Commercial Code section 4406 precluded the plaintiff from pursuing its claim because it failed to report unauthorized signatures on the checks to its bank within the one-year period. (Fineman, supra, at p. 1125, 78 Cal.Rptr.2d 478.) The court also noted that the three-year limitation period of Commercial Code section 4111 had expired. (Fineman, supra, at p. 1125, 78 Cal.Rptr.2d 478.) Thus, there was no need for the bank to move for summary adjudication under section 340(c) (or for the court to discuss this statute) because the longer three-year limitations period under Commercial Code section 4111 had already expired. It is axiomatic that cases are not authority for propositions not considered. (People v. Superior Court (Zamudio) (2000) 23 Cal.4th 183, 198, 96 Cal.Rptr.2d 463, 999 P.2d 686.)
Roy, supra, 39 Cal.App.4th 1051, 46 Cal.Rptr.2d 309, is also of little assistance in resolving the instant dispute. In Roy, the court applied Commercial Code section 4406, holding that depositors were precluded from asserting certain claims against its bank where they did not discover and notify the bank of forged checks within one year of receiving account statements and canceled checks. (Roy, supra, 39 Cal.App.4th at p. 1058, 46 Cal.Rptr.2d 309.) As such, the Roy court had no need to address what limitation period applied. (Id. at p. 1073, fn. 25, 46 Cal.Rptr.2d 309.) Despite this, Roy implicitly recognized the continuing application of section 340(c) by *159 noting that the time period in which a customer must act under Commercial Code section 4606 begins to run at the same time that the limitations period of section 340(c) begins to run. (Roy, supra, 39 Cal.App.4th at p. 1073, fn. 25, 46 Cal.Rptr.2d 309.)
In summary, we conclude that the trial court correctly applied the one-year limitation period of section 340(c) in this action. If the foregoing interpretation is not what the Legislature intended, then it is up to the Legislature to act.
DISPOSITION
The petition is denied. Our temporary stay of the proceedings is vacated. The Bank is entitled to costs in this writ proceeding.
WE CONCUR: HUFFMAN, Acting P.J., and AARON, J.
Cites, in this corpus
- Chatsky & Associates v. Superior Court No. D043096 · 2004-04-12
- Bialo v. Western Mutual Insurance B146336 · 2001-01-09
- People v. Superior Court (Zamudio) S073031 · 2000-07-12
- Edward Fineman Co. v. Superior Court of L.A. Cty. B122497 · 1998-10-02
- Stop Youth Addiction, Inc. v. Lucky Stores, Inc. No. S055373 · 1998-02-23
- Voss v. Superior Court F023017 · 1996-06-20
- Roy Supply, Inc. v. Wells Fargo Bank C017141 · 1995-10-26
- Hays v. Wood S.F. 23830 · 1979-11-30
- King v. Thierry S. Crim. 19663 · 1977-07-22
- Fuentes v. Workers' Compensation Appeals Board S.F. 23264 · 1976-02-02
- Estate of McDill L.A. 30405 · 1975-07-24
- In Re White Crim. 13520 · 1969-11-18
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