FREDERICK A. AUGUSTA, Plaintiff and Appellant, v. UNITED SERVICE AUTOMOBILE ASSOCIATION et al., Defendants and Respondents. No.

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1 Page 1 FREDERICK A. AUGUSTA, Plaintiff and Appellant, v. UNITED SERVICE AUTOMOBILE ASSOCIATION et al., Defendants and Respondents. No. D COURT OF APPEAL OF CALIFORNIA, FOURTH APPELLATE DISTRICT, DIVISION ONE. 13 Cal. App. 4th 4; 16 Cal. Rptr. 2d 400; 1993 Cal. App. LEXIS 123; 93 Cal. Daily Op. Service 1095 February 9, 1993, Decided SUBSEQUENT HISTORY: [***1] Review Denied May 13, 1993, Reported at: 1993 Cal. LEXIS PRIOR HISTORY: Superior Court of San Diego County, No , Judith L. Haller, Judge. DISPOSITION: Treating the order granting the motion for summary judgment as a judgment, the judgment is reversed. Augusta shall recover his costs on appeal. CASE SUMMARY: PROCEDURAL POSTURE: Appellant car owner sought review of an order by the Superior Court of San Diego County (California), which granted summary judgment to respondent service centers based on the one-year statute of limitations of Cal. Civ. Proc. Code 340(3), in appellant's action arising out of the alleged spoliation of evidence which occurred when a speedometer was removed from appellant's car. OVERVIEW: Appellant car owner filed suit against respondent service centers for negligent spoliation of evidence when appellant's vehicle was discovered to be missing the speedometer while in the possession of respondents. The speedometer was relevant to a personal injury action allegedly caused by the defective cruise control system of appellant's vehicle. The trial court granted summary judgment to respondents based on the one-year statute of limitations of Cal. Civ. Proc. Code 340(3). On appeal, the court reversed and held that the action was timely filed under the two-year limitations period of Cal. Civ. Proc. Code 339(1). The court held that the cause of action for spoliation of evidence was based on an analogy to interference with prospective economic advantage and therefore subject to the two-year statute of limitations. OUTCOME: The court reversed the summary judgment granted to respondent service centers because appellant car owner's spoliation cause of action was based similar to an action for interference with a prospective economic advantage and therefore the two-year statute of limitations should have been applied. LexisNexis(R) Headnotes Governments > Legislation > Statutes of Limitations > General Overview Torts > Procedure > Statutes of Limitations > General Overview [HN1] It is a well-established rule that the applicable statute of limitations is determined by the nature of the

2 13 Cal. App. 4th 4, *; 16 Cal. Rptr. 2d 400, **; 1993 Cal. App. LEXIS 123, ***1; 93 Cal. Daily Op. Service 1095 Page 2 right sued upon. The form of the action or the relief demanded does not determine the limitations period. Torts > Procedure > Statutes of Limitations > General Overview [HN2] With respect to the choice between the one-year period of Cal. Civ. Proc. Code 340(3), and the two-year period of Cal. Civ. Proc. Code 339(1), the principle of selection which has emerged is that the one- year period applies to all alleged infringements of personal rights, whereas the two-year period applies only to alleged infringements of property rights. Torts > Business Torts > Commercial Interference > Prospective Advantage > General Overview Workers' Compensation & SSDI > Remedies Under Other Laws > Exclusivity > General Overview [HN3] The spoliation cause of action involves infringement of a property right. Evidence > Relevance > Spoliation Torts > Business Torts > Commercial Interference > Prospective Advantage > Elements [HN4] The cause of action for spoliation of evidence is developed on the basis of an analogy to interference with prospective economic advantage. Civil Procedure > Pleading & Practice > Defenses, Demurrers & Objections > Affirmative Defenses > Statutes of Limitations > Retroactivity Torts > Business Torts > Commercial Interference > Prospective Advantage > Elements Torts > Procedure > Statutes of Limitations > General Overview [HN5] It is now well established that a cause of action for interference with prospective economic advantage, an action involving a property right, is governed by the two-year limitations period of Cal. Civ. Proc. Code 339(1). Under this state of the law where it is now clearly settled that the spoliation cause of action involves an interference with a property interest, not a personal, and is founded on precepts of interference with prospective economic advantage to which the two-year limitations period applies. SUMMARY: CALIFORNIA OFFICIAL REPORTS SUMMARY The trial court granted defendants summary judgment in an action for negligent spoliation of evidence, ruling that the action was time-barred by the one-year statute of limitations for personal injury (Code Civ. Proc., 340, subd. (3)). Plaintiff had amended his products liability complaint against other defendants to add the spoliation action 17 months after discovering that evidence to support the products liability action was missing. (Superior Court of San Diego County, No , Judith L. Haller, Judge.) The Court of Appeal reversed. It held that a cause of action for spoliation of evidence is for an injury to the plaintiff's property interests, does not involve an injury to the plaintiff's person, and is essentially the same as a cause of action for interference with a prospective economic advantage. Thus, the two-year statute of limitations of Code Civ. Proc., 339, subd. 1 (obligation or liability not founded on written instrument), applied to plaintiff's spoliation of evidence action. (Opinion by Todd, J., with Wiener, Acting P. J., and Nares, J., concurring.) HEADNOTES CALIFORNIA OFFICIAL REPORTS HEADNOTES Classified to California Digest of Official Reports (1) Appellate Review 27--Decisions Appealable--Order on Motion for Summary Judgment. --A trial court's order granting a summary judgment motion is not appealable. However, where an appellant's notice of appeal addresses the granting of a summary judgment motion, rather than the judgment itself, the appellate court may treat the order appealed from as a judgment and construe the notice of appeal as applying to that judgment. (2a) (2b) (2c) Limitation of Actions 23--Period of Limitations--Obligation Not Founded on Written Instrument--Action for Spoliation of Evidence. --In a negligent spoliation of evidence action, the trial court erred in granting defendants summary judgment, finding that the action was time-barred by the one-year statute of limitations for personal injury (Code Civ. Proc., 340, subd. (3)). Plaintiff had amended his products liability complaint against other defendants to add the spoliation action 17 months after discovering that evidence to support the products liability action was missing. A spoliation cause of action involves infringement of a property right, rather than an injury to the person. Also,

3 13 Cal. App. 4th 4, *; 16 Cal. Rptr. 2d 400, **; 1993 Cal. App. LEXIS 123, ***1; 93 Cal. Daily Op. Service 1095 Page 3 the action is akin to actions for interference with advantageous economic advantage, which are governed by the two-year limitations period of Code Civ. Proc., 339, subd. 1 (obligation or liability not founded on written instrument). Thus, Code Civ. Proc., 339, subd. 1, applied to plaintiff's spoliation of evidence action. [See 3 Witkin, Cal. Procedure (3d ed. 1985) Actions, 440.] (3) Limitation of Actions 26--Period of Limitations--Torts--Distinction Between One-year and Two-year Periods. --The applicable statute of limitations is determined by the nature of the right sued upon. The form of the action or the relief demanded does not determine the limitations period. With respect to the choice between the one-year period of Code Civ. Proc., 340, subd. (3) (personal injury), and the two-year period of Code Civ. Proc., 339, subd. 1 (obligation or liability not founded on written instrument), the one-year period applies only to alleged infringements of personal rights, whereas the two-year period applies to alleged infringements of property rights. (4) Workers' Compensation 7--Exclusivity of Remedy--Scope of Exclusivity. --In the area of workers' compensation law and its exclusive remedy rule, the fundamental basis of workers' compensation is an injury sustained in and arising from the course of employment when the injury is personal physical injury or death. The exclusive remedy provisions apply only in cases of such industrial personal injury or death. COUNSEL: Jack B. Winters, Jr., and John C. Skube for Plaintiff and Appellant. Broton, Petrini & Conron, Kevin C. Young, Shifflet, Walters, Kane & Konoske, Gregory C. Kane and Jeffrey A. Miller, for Defendants and Respondents. JUDGES: Opinion, by Todd, J., with Wiener, Acting P. J., and Nares, J., concurring. OPINION BY: TODD, J. OPINION [*6] [**401] (1) (See fn. 2.) Frederick A. Augusta appeals after the trial court granted a summary judgment based on the one- year statute of limitations of Code of Civil Procedure 1 section 340, subdivision (3), in Augusta's spoliation of evidence action against County Auto Pool North (County Auto) and United Service Automobile Association (USAA). 2 Augusta's action was filed against County Auto and USAA some 17 months after his agent first discovered missing a speedometer necessary for establishing his products liability case against the car's manufacturer and dealer. Augusta contends his action [***2] was timely under the two-year limitations period of section 339, subdivision 1. Moreover, Augusta argues a delayed discovery rule applies so that, even if the limitations period is one year, his action is timely. 1 All statutory references are to the Code of Civil Procedure unless otherwise specified. 2 Augusta's notice of appeal addresses the trial court's order granting the motion for summary judgment which County Auto points out is not appealable since it is a preliminary to a final judgment which is appealable. Augusta has not bothered to respond to this contention which could determine the case against him without consideration of the merits. The rule is that we may treat the order appealed from as a judgment and construe the notice of appeal as applying to that judgment. ( Rose v. Fife (1989) 207 Cal.App 3d 760, 764, fn. 3 [255 Cal.Rptr. 440].) We follow this rule. Based largely on cases decided in the context of the exclusive remedy rule pertaining to [***3] workers' compensation, we conclude the cause of action for spoliation of evidence is for an injury to the plaintiff's property interests; it does not involve an injury to the plaintiff's person; and it is essentially the same as a cause of action for interference with a prospective economic advantage as to which the two-year statute of limitations applies. Thus, we reverse the trial court's ruling that the one-year statute of limitations applies. In light of this conclusion, we do not address the delayed discovery contention. FACTS On April 21, 1987, Augusta was injured in a vehicle collision allegedly caused by a malfunction of the cruise control system of his 1983 Porsche 911 SC. On the order of [**402] the California Highway Patrol officer at the scene the Porsche was towed to the Leucadia Shell Station. Ken Obenski, consulting engineer retained by Augusta's attorney to inspect the car and its cruise control

4 13 Cal. App. 4th 4, *6; 16 Cal. Rptr. 2d 400, **402; 1993 Cal. App. LEXIS 123, ***3; 93 Cal. Daily Op. Service 1095 Page 4 system, examined the car at the Leucadia Shell Station on April 30. The speedometer was in the car at the time Obenski first inspected it. On May 1, 1987, the car was released to the care, custody and control of Augusta's insurance carrier, USAA, which in turn released it into [***4] the care, [*7] custody and control of County Auto to which it was towed. On May 4, Obenski inspected the car at County Auto and noted the speedometer was still intact. On August 5, 1987, the car was towed to Bradley Allen Automotive for reconstructive testing by Obenski. When Obenski arrived that day to conduct the testing, a manager at Bradley Allen Automotive told him the speedometer was missing when they picked up the car at County Auto. Obenski immediately informed Augusta's attorney the speedometer was missing. On April 8, 1988, Augusta filed an action for damages for personal injuries against Porsche of America, Inc., and Allen Johnson Porsche-Audi, not naming County Auto or USAA as defendants. On January 4, 1989, some 17 months after Augusta discovered the speedometer was missing, Augusta filed a first amended complaint naming County Auto and USAA as defendants in causes of action for negligent and intentional spoliation of evidence, and for breach of the covenant of good faith and fair dealing. A successful demurrer left only the negligent spoliation of evidence count against County Auto and USAA. The complaint against County Auto and USAA alleges that their negligence [***5] has caused damage to Augusta in that he "will not be able to adequately prove or substantiate his claim for personal injuries [sic] liability without the original speedometer of the subject Porsche." In 1990 the case was considered by this court after the trial court denied a motion for summary judgment based on the bar of the one-year statute of limitations. The trial court had ruled that the relation back doctrine applied to prevent the limitations period from running. In September 1990 this court issued a writ directing the trial court to vacate its order denying summary judgment on the basis the relation back doctrine applies. We concluded the trial court erred in its reasoning the relation back doctrine applied "because if there had not been an automobile accident there would not have been a spoliation action." We held "the trial court's 'but for' analysis stretches its application beyond acceptable limits." The matter was remanded for consideration of alternative arguments raised. On remand the trial court vacated its order and granted the motion for summary judgment based on the one-year statute of limitations. The trial court denied Augusta's motion for reconsideration [***6] and on January 3, 1991, filed a written order granting the summary judgment motion of County Auto and USAA on the bases the one-year limitations period applied and Augusta's delayed discovery argument was unmeritorious. This appeal followed. [*8] DISCUSSION (2a) Neither the parties nor we have found any direct authority on the question of what statute of limitations applies to a cause of action for spoliation of evidence. Augusta argues the action is subject to section 339, subdivision 1, providing a two-year limitations period for "[a]n action upon a contract, obligation or liability not founded upon an instrument of writing...." County Auto and USAA argue the applicable limitations period is in section 340, subdivision (3), providing a one-year limitations period for "[a]n action... for injury to or for the death of one caused by the wrongful act or neglect of another...." 3 3 Section 340, subdivision (3), also applies the one-year limitation period, among other things, to an action for "libel, slander, assault, battery, false imprisonment, seduction of a person below the age of legal consent," and an action "by a depositor against a bank for the payment of a forged or raised check, or a check that bears a forged or unauthorized endorsement...." [***7] [**403] (3) [HN1] It is a well-established rule that the applicable statute of limitations is determined by the nature of the right sued upon. ( Hedlund v. Superior Court (1983) 34 Cal.3d 695, 704 [194 Cal.Rptr. 805, 669 P.2d 41, 41 A.L.R.4th 1063]; Davies v. Krasna (1975) 14 Cal.3d 502, 515 [121 Cal.Rptr. 705, 535 P.2d 1161, 79 A.L.R.3d 807].) The form of the action or the relief demanded does not determine the limitations period. ( Davies v. Krasna, supra, 14 Cal.3d at p. 515; Edwards v. Fresno Community Hosp. (1974) 38 Cal.App.3d 702, 704 [113

5 13 Cal. App. 4th 4, *8; 16 Cal. Rptr. 2d 400, **403; 1993 Cal. App. LEXIS 123, ***7; 93 Cal. Daily Op. Service 1095 Page 5 Cal.Rptr. 579, 3 A.L.R.4th 1209].) "[HN2] With respect to the choice between the one-year period of section 340, subdivision (3), and the two-year period of section 339, subdivision 1, '[t]he principle of selection which has emerged is that the oneyear period applies to all alleged infringements of personal rights, whereas the two-year period applies only to alleged infringements [***8] of property rights. [Citations.]' ( Richardson v. Allstate Ins. Co. (1981) 117 Cal.App.3d 8, )" ( Guess, Inc. v. Superior Court (1986) 176 Cal.App.3d 473, 478 [222 Cal.Rptr. 79].) (2b) Thus, the question here is whether the cause of action for spoliation of evidence involves an infringement of a "property right" or of a "personal right." Drawing from analyses of the spoliation tort in the realm of the exclusive remedy rule in workers' compensation cases, we are of the view [HN3] the spoliation cause of action involves infringement of a property right. Moreover, this action is akin to actions for interference with advantageous economic advantage to which the two-year period applies. Accordingly, we conclude the two-year period applies to the spoliation action here at issue. [*9] There is an apparent parallel between the language of section 340, subdivision (3), alluding to an action for injury or death caused by the wrongful act or neglect of another and the workers' compensation-exclusive remedy. (4) In the area of workers' compensation and its exclusive remedy rule "the fundamental basis of workers' compensation [***9] is an injury sustained in and arising out of the course of employment when the injury is 'personal physical injury or death.' " ( Shoemaker v. Myers (1990) 52 Cal.3d 1, 16 [276 Cal.Rptr. 303, 801 P.2d 1054, A.L.R.4th 1720], quoting Cole v. Fair Oaks Fire Protection Dist. (1987) 43 Cal.3d 148, 160 [233 Cal.Rptr. 308, 729 P.2d 743].) "[T]he exclusive remedy provisions apply only in cases of such industrial personal injury or death." (52 Cal.3d at p. 16.) A case Shoemaker cites for the last proposition is Ramey v. General Petroleum Corp. (1959) 173 Cal.App.2d 386, 402 [343 P.2d 787], which held that workers' compensation does not bar a cause of action for fraudulent deprivation of a claim against a third party. In other words, such a deprivation of a claim does not involve personal injury or death. (2c) An action for deprivation of a claim against a third party has obvious similarity to an action for spoliation of evidence which deprives a party of the ability [***10] to prove a claim against the original tortfeasor, here in the products liability context. A more directly applicable case in the workers' compensation field is Coca-Cola Bottling Co. v. Superior Court (1991) 233 Cal.App.3d 1273 [285 Cal.Rptr. 183] in which the court held that the exclusive remedy rules did not apply to a cause of action for spoliation against the plaintiff's employer for the disappearance of component parts of a company truck which had suddenly gone out of control and rolled over on a county road while plaintiff, Jones, was operating it during the course and scope of employment. Jones had filed a third party action against the truck's manufacturer and the county. Coca-Cola states, in part: "The injury alleged was the disappearance of the evidence which the Joneses allegedly needed to prove their third party, civil action against Ford and/or County. This is not an injury (physical, emotional or both) to the person of Jones, the injured employee. It is an injury to the Joneses' property interests, i.e., an interference with a valuable, probable expectancy of prevailing in their third party actions, particularly [***11] [**404] against Ford. It is an interference with the prospective economic advantage they allegedly stand to obtain if they can prove their civil action against either Ford or County. [Citations.]" (Id. at p. 1289, italics added.) [HN4] The cause of action for spoliation of evidence was developed on the basis of an analogy to interference with prospective economic advantage. ( Smith v. Superior Court (1984) 151 Cal.App.3d 491, 502 [198 Cal.Rptr. 829]; see [*10] Youst v. Longo (1987) 43 Cal.3d 64, 73 [233 Cal.Rptr. 294, 729 P.2d 728, 85 A.L.R.4th 1025]; and see Velasco v. Commercial Bldg. Maintenance Co. (1985) 169 Cal.App.3d 874, [215 Cal.Rptr. 504].) Velasco directly applied the stated elements of the tort of negligent interference with prospective economic advantage as set forth in J'Aire Corp. v. Gregory (1979) 24 Cal.3d 799, 804 [157 Cal.Rptr. 407, 598 P.2d 60], to the tort of negligent spoliation of evidence then before the court. ( Velasco, supra, 169 Cal.App.3d at p. 878.) [***12] [HN5] It is now well established that a cause of action for interference with prospective economic advantage, an action involving a property right, is governed by the two-year limitations period of section 339, subdivision 1, ( Edwards v. Fresno Community Hosp., supra, 38 Cal.App.3d 702, 706; 3 Witkin, Cal.

6 13 Cal. App. 4th 4, *10; 16 Cal. Rptr. 2d 400, **404; 1993 Cal. App. LEXIS 123, ***12; 93 Cal. Daily Op. Service 1095 Page 6 Procedure (3d ed. 1985) Actions, 439, pp. 469, 470.) Under this state of the law where it is now clearly settled that the spoliation cause of action involves an interference with a property interest, not a personal injury ( Coca-Cola, supra, 233 Cal.App.3d at p. 1289), and is founded on precepts of interference with prospective economic advantage to which the two-year limitations period applies, we conclude the two-year statute of limitation applies to this case. Accordingly, the trial court's determination of the case on the basis of the one-year statute must be reversed. We briefly note that the reliance by County Auto and USAA on County of San Diego v. Sanfax Corp. (1977) 19 Cal.3d 862, 878 [140 Cal.Rptr. 638, 568 P.2d 363], [***13] is not well taken because the employer there was suing a third party under Labor Code section 3852 to recoup workers' compensation benefits payable to the employee. The court held the action was essentially a tort action and the one-year statute of limitations applied. The employer was seeking amounts paid or payable on account of the employee's personal injury which entitled the employee to the benefits in the first place. In essence the employer was standing in the shoes of the employee in that case, suing for personal injury. Unlike the situation in County of San Diego v. Sanfax Corp. where the " 'readily discernible analogue in state tort law' " (19 Cal.3d at p. 878) was to a personal injury tort action, the situation in the case at bar presents a direct analogy to the two-year rule applicable to actions for interference with prospective economic advantage. 4 4 We have also considered the argument advanced at oral argument that an analogy should be drawn to the rule pertaining to legal malpractice actions under section that a one-year limitations period commences upon "discovery" of the facts constituting the wrongful act or omission. Due to the profession-specific nature of section 340.6, we believe it is inappropriate to rely on that section in any significant respect for purposes of determining whether a spoliation cause of action involves interference with a personal right. [***14] [*11] DISPOSITION Treating the order granting the motion for summary judgment as a judgment, the judgment is reversed. Augusta shall recover his costs on appeal. Wiener, Acting P. J., and Nares, J., concurred. Respondents' petition for review by the Supreme Court was denied May 13, 1993.