Unreported / Non-Citable
Background
Shek Lim Yu owned a unit in a five-unit Berkeley building from 1991 until he deeded it to his daughter, Elizabeth Yu, on February 26, 2004, though he continued living there until February 2011. In 1996, while the building was a tenancy in common, owners Andrew Potter and Ralph Murphy told him that owners would be fined unless they took on management responsibilities; because of his limited English proficiency, Potter said he could instead take out the common garbage bin each week. In 2000, after the building converted to condominiums, Potter—now an association board member—told him the garbage assignment was permanent. The CC&Rs made the association's board solely responsible for common-area maintenance, but no one told Yu that his assignment was unnecessary.
On February 15, 2024, Yu sued the association, represented by his daughter, alleging constructive fraud, breach of the duty of undivided loyalty, and an Unruh Civil Rights Act violation. After the trial court sustained a demurrer to his first amended complaint with leave to amend, it sustained a second demurrer without leave, concluding all three causes of action were barred by the applicable statutes of limitations, and dismissed the action.
The association then moved for $38,595 in attorney fees under Civil Code section 5975, subdivision (c), a CC&Rs fee clause, and Civil Code section 1717. The trial court granted the full amount on two alternative grounds: the contractual provision and the statute governing prevailing parties in actions to enforce the governing documents of a common interest development. Yu pursued consolidated appeals from the dismissal judgment and the postjudgment fee order.
The Court’s Holding
The Court of Appeal affirmed. Yu did not challenge that constructive fraud and breach of fiduciary duty carried three-year limitations periods, and he conceded the Unruh Act claim carried a two-year period, but he argued the discovery rule postponed accrual until February 16, 2022. The court explained that a plaintiff relying on delayed discovery must plead the time and manner of discovery and why reasonable diligence could not have produced earlier discovery; accrual begins under either actual suspicion or circumstances that would put a reasonable person on inquiry, not only when every legal element is understood.
The court found three independent reasons Yu's timeliness theory failed. First, he admitted signing the CC&Rs in 1999, and a reasonably diligent person would have read them, revealing the association's maintenance responsibility; his limited English proficiency did not excuse this. Second, judicially noticed pleadings from Elizabeth's own lawsuit—filed October 6, 2017, with amendments on April 24, 2018 and September 7, 2018—alleged the family had been tricked into garbage duties and detailed the CC&Rs' allocation of responsibility, supporting an inference that Yu and his daughter discussed the wrongdoing well before 2022 and contradicting his claimed discovery date. Third, even accepting that assertion, he failed to plead facts showing why diligent communication with his daughter could not have revealed the falsity by 2018. The only reasonable inference was that he suspected injury by no later than 2018, making the 2024 complaint untimely under either period. He also failed to show amendment could cure the bar, so dismissal without leave was proper, and the court did not reach the trial court's other demurrer grounds.
On fees, the court examined the gravamen of the claims rather than their tort or statutory labels. Each cause of action depended on the CC&Rs' maintenance provisions and the association's duties under them, making the action one to enforce governing documents under section 5975, subdivision (c). That statutory basis made consideration of the alternative contractual ground unnecessary. Yu's conclusory challenge to the amount was forfeited, as was any argument that fees should be apportioned away from the Unruh Act claim.
Key Takeaways
- A plaintiff invoking delayed discovery must plead specific facts showing both when and how discovery occurred and why reasonable diligence could not have produced earlier discovery.
- Signing governing documents can supply inquiry notice of their contents, and judicially noticed allegations in a related family member's lawsuit can contradict a later claimed discovery date.
- A fiduciary relationship may relax the duty of inquiry but does not allow a claimant to ignore circumstances that would make a reasonably prudent person suspicious.
- For Davis-Stirling fee shifting, courts look to the gravamen of the claims and relief sought, not whether the complaint is labeled fraud, fiduciary-duty, or statutory discrimination litigation.
- The court affirmed the dismissal judgment and fee order, awarded the association its costs on appeal, and did not reach the alternative contractual fee basis or the trial court's other demurrer grounds.
Why It Matters
The decision illustrates how delayed-discovery allegations can fail on demurrer when the complaint and judicially noticed records establish earlier inquiry notice as a matter of law, including through a family member's prior pleadings describing the same alleged wrongdoing.
On attorney fees, the opinion applies gravamen analysis to claims that repeatedly invoked CC&Rs duties despite noncontractual labels; because section 5975 supplied a sufficient basis, the affirmance did not depend on the separate contractual theory or on apportioning fees among claims.