FRAUD I CONSTRUCTIVE FRAUD I BREACH OF FIDUCIARY DUTY – What is the Statute of Limitations in Fraud, Constructive Fraud and Breach of Fiduciary Cases

FRAUD I CONSTRUCTIVE FRAUD I BREACH OF FIDUCIARY DUTY – What is the Statute of Limitations in Fraud, Constructive Fraud and Breach of Fiduciary Cases

March 11, 2021

Statute of limitations (“SOL”) mandates that a lawsuit must be filed within a certain time limit. The statute of limitations varies by jurisdiction and the cause of action being brought. Once the prescribed period of time passes to bring a certain action, a claim is no longer viable because it may not be filed, or if filed it may be subject to dismissal via a demurrer, motion to dismiss or as an affirmative defense raised in the defendant’s answer.

In our previous blog discussing “breach of fiduciary duty SOL” and comparing the differences between constructive fraud and breach of fiduciary duty, we touched on the issue of statute of limitations as it relates to these two causes of action.  Here we take a closer look at the SOL as it relates to a cause of action for Fraud, Constructive Fraud and Breach of Fiduciary Duty.

Cause of Action Prima Facie Statute of Limitations [SOL]
Fraud To establish a claim for fraud, the Plaintiff must prove all of the following:

1. Def presented fact was true;

2. Def’s representation was false;

3. Def knew that the representation was false when made it;

4. Def intended that the Plaintiff would rely on the representation;

5. Plaintiff reasonably relied on Def’s representation;

6. Plaintiff was harmed; and

7. Plaintiff’s reliance on was a factor in causing the harm.

CACI No. 1900 Intentional Misrepresentation

3

three-year statute of limitation for fraud

Constructive Fraud To establish a claim for constructive fraud, the Plaintiff must prove all of the following:

1. Def was in a fiduciary relationship with Plaintiff;

2. Def acted on Plaintiff’s behalf;

3. Def knew specific information at issue;

4. Def misled the Plaintiff;

5. Plaintiff was harmed; and

6. Def’s conduct was a factor in causing the Plaintiff’s harm.

CACI No. 4111 Constructive Fraud

3

three-year statute of limitation for constructive fraud

Breach of Fiduciary Duty To establish a claim for breach of fiduciary, the Plaintiff must prove all of the following:

1. Def was in a fiduciary relationship with Plaintiff;

2.  Def acted on Plaintiff’s behalf;

3.  Def failed to act as a reasonably careful as a fiduciary;

4. Plaintiff was harmed; and

5. Def’s conduct was a factor in causing the Plaintiff’s harm.

CACI No. 4101 Failure to use reasonable case in a Fiduciary Relationship

4

Four-year statute of limitation for breach of Fiduciary Duty

Statute of Limitations for Fraud [SOL for Fraud]:

A cause of action for Fraud in California can be plead in various forms including: Intentional Misrepresentation, Concealment, False Promise and Negligent Misrepresentation.  Looking at a civil cause of action for fraud as an intentional misrepresentation alleges that the plaintiff suffered harm or injury as a result of the defendant’s false representation.

“To establish this claim, the fraud victim must prove all of the following:

  1. That the defendant represented to the fraud victim that a fact was true;
  2. That defendant’s representation was false;
  3. That defendant knew that the representation was false when s/he made it, or that s/he made the representation recklessly and without regard for its truth;
  4. That defendant intended that the fraud victim would rely on the representation;
  5. That the fraud victim reasonably relied on defendant’s representation;
  6. That the fraud victim was harmed; and
  7. That the fraud victim’s reliance on defendant’s representation was a substantial factor in causing his/her harm”
  • The statute of Limitations for Fraud is governed under the Code of Civil Procedure § 338(d). Per the Code of Civil Procedure Section 338(d) a cause of action for fraud must be filed within three-years. The three-year statute of limitation for fraud “does not begin to run until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.” (Sun’n Sand, Inc. v. United California Bank (1978) 21 Cal.3d 671, 701 [148 Cal.Rptr. 329, 582 P.2d 920])

Statute of Limitations for Constructive Fraud [SOL for Constructive Fraud]:

Under California Code of Civil Procedure §1573 a cause of action for Constructive Fraud is a particular kind of breach of fiduciary duty in which the defendant has misled the plaintiff to the plaintiff’s prejudice or detriment. Constructive fraud differs from actual fraud in that no fraudulent intent is required. Thus, if the defendant is under a fiduciary duty to provide complete and accurate information to the plaintiff, however the defendant fails to do so, and the plaintiff is misled to their detriment or prejudice, there is a claim for constructive fraud despite the lack of any intent to mislead or deceive. (See. California Code of Civil Procedure §1573) Looking at a civil cause of action for constructive fraud, the fraud victim alleges that s/he was harmed because s/he was misled by the other party’s failure to provide complete and accurate information.

  • A prima facie showing of constructive fraud, per the Judicial Council of California Civil Jury Instructions (2020 ed.) No. 4111 Constructive Fraud, requires the following:

“To establish this claim, the fraud victim must prove all of the following:

  1. That the defendant was fraud victim’s [agent/stockbroker/real estate agent/real estate broker/corporate officer/partner or was otherwise in a fiduciary relationship];
  2. That the defendant acted on fraud victim’s behalf for a specific purpose or purpose(s);
  3. That defendant knew, or should have known, that [specific information at issue];
  4. That defendant misled the fraud victim by [failing to disclose this information or providing the plaintiff with information that was inaccurate or incomplete];
  5. That the fraud victim was harmed; and
  6. That the defendant’s conduct was a substantial factor in causing the fraud victim’s harm”
  • The statute of Limitations for Constructive Fraud is governed under the Code of Civil Procedure § 338(d). Per the Code of Civil Procedure Section 338(d) a cause of action for constructive fraud must filed be within three-years. The three-year statute of limitation for constructive fraud “does not begin to run until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.” (Sun’n Sand, Inc. v. United California Bank (1978) 21 Cal.3d 671, 701 [148 Cal.Rptr. 329, 582 P.2d 920]) As in an actual fraud case, the delayed-discovery rule in fraud cases applies and is codified in California Code of Civil Procedure § 338(d): “Within three years: (d) An action for relief on the ground of fraud or mistake…[is] not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.”

 Statute of Limitations for Breach of Fiduciary Duty [SOL for Breach of Fiduciary Duty]:

 A cause of action for Breach of Fiduciary Duty arises with a fiduciary fails to use reasonable care in that relationship and the individual to whom this duty is owed suffers a harm as a result. In Wolf, the court holds that a fiduciary relationship is “any relation existing between parties to a transaction wherein one of the parties is in duty bound to act with the utmost good faith for the benefit of the other party.” (Wolf v. Superior Court (2003) 107 Cal.App.4th 25, 29 [130Cal.Rptr.2d 860].)   Looking at a civil cause of action for breach of fiduciary duty, the fraud victim claims that s/he was harmed by the defendant’s breach of the fiduciary duty to use reasonable care.

  • A prima facie showing of Breach of Fiduciary Duty, per the Judicial Council of California Civil Jury Instructions (2020 ed.) No. 4101 Failure to use reasonable case in a Fiduciary Relationship, requires the following:

“To establish this claim, the fraud victim must prove all of the following:

  1. That the defendant was fraud victim’s [agent/stockbroker/real estate agent/real estate broker/corporate officer/partner or was otherwise in a fiduciary relationship];
  2. That the defendant acted on the fraud victim’s behalf for purposes of a specific transaction;
  3. That the defendant failed to act as a reasonably careful as a fiduciary would have acted under the same or similar circumstances;
  4. That the fraud victim was harmed; and
  5. That the defendant’s conduct was a substantial factor in causing the fraud victim’s harm”
  • The statute of Limitations for Breach of Fiduciary Duty is governed under the Code of Civil Procedure § 343. Per the Code of Civil Procedure Section 343 a cause of action for breach of fiduciary duty must be filed within four-years.

For additional discussions on causes of action for Fraud, Constructive Fraud and Breach of Fiduciary Duty please see links are included below:

For articles discussing Verdicts for Fraud, Constructive Fraud and Breach of Fiduciary Duty please see links are included below:

For articles discussing Damages for Fraud, Constructive Fraud and Breach of Fiduciary Duty please see links are included below:

Fraud Lawyer, Constructive Fraud Attorney, Breach of Fiduciary Duty Law

The statute of limitations in fraud and fiduciary cases are a concern and viable claims must be brought within the permitted statutory period. If you have fallen victim to fraud, constructive fraud or have questions regarding a potential fiduciary duty case we encourage you to contact our offices at 619-432-5145 for a free consultation with one of our fraud attorneys and constructive fraud lawyers.

    Diana Legal