Jump San Diego, LLC v. Kruger et al

Filing 42

ORDER on Motion for Summary Judgment [Doc. No. 37 ]. Signed by Judge Cathy Ann Bencivengo on 12/7/2017. (jjg)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 JUMP SAN DIEGO, LLC, Case No.: 3:14-cv-1533-CAB-(BLM) Plaintiff, 12 13 v. 14 ORDER ON MOTION FOR SUMMARY JUDGMENT JANAY KRUGER, as an individual, and KRUGER DEVELOPMENT COMPANY, a California Corporation, 15 16 [Doc. No. 37] Defendants. 17 18 19 This matter is before the Court on Defendants’ motion for summary judgment. The 20 motion has been fully briefed, and the Court deems it suitable for submission without oral 21 argument. Because the undisputed facts demonstrate that Plaintiff’s claims are barred by 22 the applicable statute of limitations, the motion is granted. 23 I. 24 The material facts here are undisputed. Background In March 2011, Jump SD retained 25 Defendants Janay Kruger and Kruger Development Company (together, “Kruger”) to 26 provide land-use consulting advice related to locating a suitable site for Jump SD’s 27 trampoline business. In December 2011, Kruger advised Jump SD that an industrial space 28 located at 8190 Miralani Drive in San Diego (the “Property”) “was properly zoned for 1 3:14-cv-1533-CAB-(BLM) 1 Plaintiff’s business, would not require any additional permits and was otherwise 2 appropriate for Plaintiff’s business without the need for any significant administerial 3 processes with the City of San Diego.” [Doc. No. 1 ¶ 14; see also Doc. No. 22 ¶ 14.] In 4 January 2012, Jump SD executed a ten-year lease for the Property (the “Lease”). [Doc. 5 No. 1 ¶ 12; Doc. No. 22 ¶ 15.] Jump SD “would not have executed the Lease but for 6 Defendants’ land-use consulting advice.” [Doc. No. 22 at ¶ 23.] 7 In or before February 2012, Jump SD’s broker Evan McDonald conveyed to Jump 8 SD that the zoning for the Property did not permit Jump SD’s intended use. [Doc. No. 37- 9 2 at 92-93; Doc. No. 1 ¶ 15; Doc. No. 22 ¶ 16.] Jump SD was informed that the Property 10 “would require additional permits and was not otherwise appropriate for Plaintiff’s 11 business requiring significant administerial work with the City of San Diego.” [Doc. No. 12 1 ¶ 15.] This work included obtaining a Conditional Use Permit (“CUP”). [Doc. No. 1 ¶ 13 16; Doc. No. 22 ¶ 17.] 14 In February 2012, Jump SD retained attorney Paul Robinson “to obtain entitlements 15 from the City of San Diego to operate the trampoline business, which resulted in Jump 16 seeking a CUP.” [Doc. No. 38 at 6.] In April or May 2012, Jump SD hired land-use 17 consultant Karen Ruggels to assist in the processing of a CUP for the Property. [Doc. No. 18 37-2 at 8-11; Doc. No. 38 at 6.] Ruggels’ first invoice to Jump SD, dated June 4, 2012, 19 totaled $4,398.13 for work she performed in May 2012 in connection with obtaining a CUP 20 for the Property. [Doc. No. 37-2 at 21.] On May 17, 2012, Jump SD made a deposit of 21 $5,000 to the City for processing of its CUP application, and on June 19, 2012, Jump SD 22 submitted the CUP application itself. [Id. at 18-23; Doc. No. 6-1 at 4-8.] On June 20, 23 2012, Jump SD made another payment, this time for $8,618, to the City in connection with 24 its CUP application. [Doc. No. 37-2 at 25-30; Doc. No. 6-1 at 10.] 25 On June 25, 2014, Jump SD filed its original complaint in this action, asserting 26 claims for negligence, negligent misrepresentation, and breach of contract. This court 27 granted Kruger’s motion to dismiss that entire complaint as time-barred, but the Ninth 28 Circuit reversed, finding that the record did “not conclusively establish when Jump first 2 3:14-cv-1533-CAB-(BLM) 1 sustained damages.” After remand, Jump SD filed the operative first amended complaint 2 (“FAC”), asserting claims for negligence and breach of contract. Fact discovery is now 3 complete, and Kruger moves for summary judgment on the grounds that Jump SD’s claims 4 are time-barred. 5 II. 6 Under Federal Rule of Civil Procedure 56, the court shall grant summary judgment 7 “if the movant shows that there is no genuine dispute as to any material fact and the movant 8 is entitled to judgment as a matter of law.” Fed. R. Civ. P 56(a). To avoid summary 9 judgment, disputes must be both 1) material, meaning concerning facts that are relevant 10 and necessary and that might affect the outcome of the action under governing law, and 2) 11 genuine, meaning the evidence must be such that a reasonable judge or jury could return a 12 verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 13 (1986); Cline v. Indus. Maint. Eng’g & Contracting Co., 200 F.3d 1223, 1229 (9th Cir. 14 2000) (citing Anderson, 477 U.S. at 248). “Disputes over irrelevant or unnecessary facts 15 will not preclude a grant of summary judgment.” T.W. Elec. Serv., Inc. v. Pacific Elec. 16 Contractors Ass’n, 809 F.2d 626, 630 (9th Cir. 1987). Legal Standard 17 III. 18 Neither party disputes that a two year statute of limitations applies to both of 19 Plaintiff’s claims. The only question is when the statute of limitations clock began to run. 20 “Generally speaking, a cause of action accrues at the time when the cause of action is 21 complete with all of its elements.” E-Fab, Inc. v. Accountants, Inc. Servs., 153 Cal. App. 22 4th 1308, 1317 (Cal. Ct. App. 2007) (internal quotation marks omitted). However, “[t]he 23 discovery rule postpones accrual of a cause of action until the plaintiff discovers, or has 24 reason to discover, the cause of action.” Id. at 1318 (internal quotation marks omitted). 25 Here, this means that Jump SD’s claims arising out of Kruger’s allegedly negligent advice 26 did “not accrue until the plaintiff (1) sustain[ed] damage and (2) discover[ed], or should 27 [have] discover[ed], the negligence.” Roger E. Smith, Inc. v. SHN Consulting Eng’rs & 28 Geologists, Inc., 89 Cal. App. 4th 638, 650-51 (Cal. Ct. App. 2001). “While ‘[t]he mere Discussion 3 3:14-cv-1533-CAB-(BLM) 1 breach of a professional duty, causing only nominal damages, speculative harm, or the 2 threat of future harm not yet realized does not suffice to create a cause of action for 3 negligence,’ an action accrues, and the statute begins to run, as soon as the plaintiff suffers 4 ‘appreciable harm’ from the breach.” Id. at 651 (quoting Budd v. Nixen, 6 Cal. 3d 195, 200 5 (1971)). 6 consideration.” Adams v. Paul, 11 Cal. 4th 583, 589 (1995). It is “the fact of damage rather than the amount [that] is the relevant 7 Here, Jump SD concedes that all elements of Jump SD’s claims, except for damages, 8 had accrued before June 25, 2012 (two years before the original complaint was filed). 9 [Doc. No. 38 at nn. 1, 3.] The only dispute at issue in this motion is whether Jump SD had 10 sustained damages before that date. “Situations in which the plaintiff discovers the 11 negligence before he actually sustains damages are unusual.” Id. This is not one of those 12 unusual situations. Jump SD’s claims are premised on Kruger’s advice that “the Property 13 was properly zoned for Jump SD’s business,” and that such advice was incorrect because 14 Jump SD had to obtain a CUP. [Doc. No. 1 at ¶¶ 13-16; Doc. No. 22 at ¶ 14-17.] In 15 reliance on Kruger’s allegedly erroneous advice, Jump SD executed a lease on the Property 16 that it would not otherwise have executed. In other words, Jump SD incurred liabilities 17 (payments under the Lease) that it would not have incurred but for Kruger’s advice. Cf. 18 Foxborough v. Van Atta, 26 Cal. App. 4th 217, 227 (1994) (“[W]hen malpractice results in 19 . . . the imposition of a liability, there has been actual injury regardless of whether future 20 events may affect the permanency of the injury or the amount of monetary damages 21 eventually incurred.”). Further, a lease on property that does not require additional 22 permitting is more valuable than one that does require permitting. Thus, the Lease Jump 23 SD signed in reliance on Kruger’s advice was worth less than Jump SD believed based on 24 Kruger’s advice. Because of Kruger’s alleged negligence, to open its trampoline business 25 after executing the Lease, Jump SD had “to resort to the more onerous, expensive, and 26 unpredictable task of obtaining [a CUP and complying with other zoning requirements], 27 the very situation it hired [Kruger] to avoid.” Id. at 227. 28 4 3:14-cv-1533-CAB-(BLM) 1 Whether the measure of Jump SD’s damages equals part of Jump SD’s rent 2 payments under the Lease, the expenses incurred in connection with obtaining the CUP, or 3 something else, Jump SD sustained damages the moment it executed the Lease in reliance 4 on Kruger’s advice because at that point Jump SD was stuck with a contractual obligation 5 that it would not have had but for Kruger’s alleged negligence.1 “Neither uncertainty of 6 amount nor difficulty of proof renders that injury speculative or inchoate.” Jordache 7 Enterprises, Inc. v. Brobeck, Phleger & Harrison, 18 Cal. 4th 739, 744 (1998); cf. 8 Foxborough, 26 Cal. App. 4th at 226 (“The cause of action arises, however, before the 9 client sustains all, or even the greater part, of the damages occasioned by his attorney's 10 negligence. Any appreciable and actual harm flowing from the attorney’s negligent 11 conduct establishes a cause of action upon which the client may sue.”) (quoting Budd, 6 12 Cal. 3d at 201). At a minimum, Jump SD paid more for the Lease than it would have had 13 it known that it would also have to incur expenses relating to obtaining a CUP. Jump SD 14 did not have to actually obtain a CUP or actually pay expenses related thereto to have 15 sustained these damages. Jump SD could have sued Kruger for actual damages as soon as 16 it discovered that her advice was incorrect.2 17 Regardless, even assuming Jump SD had not sustained damage simply by executing 18 the Lease, there is no dispute Jump SD incurred expenses related to obtaining a CUP at 19 least as early as May 2012. Indeed, in its opposition, Jump SD admits that it hired Karen 20 21 22 23 24 25 26 27 28 Jump SD’s argument that the statute of limitations did not start to run until Jump SD discovered that its expenses would exceed what it had anticipated paying for its trampoline business is incorrect. First, with respect to the breach of contract claim, Jump SD suffered damages insofar as what it paid (or was obligated to pay) Kruger for allegedly bad advice, and became aware of these damages as soon as it discovered that Kruger’s advice was wrong. Second, Jump SD’s anticipated total cost to open its trampoline business is irrelevant to whether it suffered damages resulting from Kruger’s negligence. If Jump SD was forced to incur expenses that it would not have incurred but for Kruger’s negligence, it suffered damages even if its total costs to open its trampoline business were less than it anticipated. 2 Although Jump SD had sustained damages as soon as it executed the Lease in reliance on Kruger’s advice, it had yet to discover Kruger’s negligence at that point. The statute of limitations did not begin to run until Jump SD actually discovered that the Property was not properly zoned for a trampoline business, which Jump SD concedes occurred before June 25, 2012. 1 5 3:14-cv-1533-CAB-(BLM) 1 Ruggels to aid in processing a CUP with the City of San Diego, and that she began to 2 prepare the application paperwork in May and June 2012. [Doc. No. 38-1 at ¶ 12.] Further, 3 the undisputed evidence shows that on June 4, 2012, Ruggels billed Jump SD for $4,398.13 4 for work she performed in May 2012 in connection with the CUP application. Based on 5 the FAC, if not for Kruger’s allegedly erroneous advice, Jump SD would not have incurred 6 these expenses because it would not have entered into the Lease for the Property. Jump 7 SD even admitted in the original complaint that but for Kruger’s advice, it would not have 8 incurred significant “consulting fees.” [Doc. No. 1 ¶ 17.] Accordingly, the undisputed 9 evidence proves that Jump SD sustained damages prior to June 25, 2012. Because Jump 10 SD concedes that it had already discovered Kruger’s negligence as of that date, her claims 11 are barred by the statute of limitations. 12 IV. 13 For the foregoing reasons, Kruger’s motion for summary judgment is GRANTED. 14 The Clerk of Court shall enter JUDGMENT in favor of Defendants and against Plaintiff 15 and CLOSE this case. 16 17 Conclusion It is SO ORDERED. Dated: December 7, 2017 18 19 20 21 22 23 24 25 26 27 28 6 3:14-cv-1533-CAB-(BLM)

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