Farms v. Duarte Nursery, Inc.

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PARSONS FARMS, et al., Plaintiffs and Respondents, v. DUARTE NURSERY, INC., Defendant and Appellant.

F084041

California Court of Appeals, Fifth District

October 31, 2023

NOT TO BE PUBLISHED

APPEAL from an order of the Superior Court of Stanislaus County. No 2016283, John D. Freeland, Judge.

Law Offices of Brunn &Flynn, Gerald E. Brunn, Drexwell M Jones, Mahanvir S. Sarota; Quinn & Kronlund and Michael C. Kronlund for Defendant and Appellant.

Downey Brand, James M. Morris and Tyler A. Horn, for Plaintiffs and Respondents.

OPINION

SNAUFFER, J.

Defendant Duarte Nursery, Inc. appeals from an order granting plaintiff Parsons Farms a right to attach order. Duarte contends the trial court erroneously granted the order for many reasons including because Parsons did not establish the probable validity of the claims upon which the order was issued. Duarte argues the claims lack probable validity because they are barred by the statute of limitations. We agree with Duarte and on that basis will reverse the order granting the right to attach order and direct the trial court to discharge the subsequently obtained writ of attachment.

FACTS

I. The pleadings

A. Original complaint

Parsons is a farming operation that grows pistachios. Duarte is a commercial nursery that propagates and sells a variety of pistachio tree called UCB-1.

On February 13, 2015, Parsons and seven other plaintiffs^[1] (also farmers) filed a complaint against Duarte for tort and contract claims arising out of the sale of UCB-1 pistachio rootstock.^[2] The complaint alleged nine causes of action, including claims for negligence and breach of contract. All causes of action were asserted by "all plaintiffs" against Duarte. The gravamen of all but the sixth cause of action was that rootstock delivered to plaintiffs suffered defects that prevented them from being commercially viable.

The sixth cause of action was different in that it involved rootstock that was allegedly never delivered. It was entitled "Breach of Contract-New Trees" and was alleged by all plaintiffs against Duarte. It alleged: "Between September 2010 and March 2013, for valuable consideration, plaintiffs and defendants entered into a written contract to supply UCB-1 pistachio trees for expected delivery at various dates in 2013, 2014, and 2015 with the intended purpose of establishing commercial pistachio orchards." Plaintiffs alleged they performed their part of "the contract" by making initial deposits totaling more than $1,000,000 for the trees. They also alleged that beginning in September 2013 they became aware that previously delivered UCB-1 trees from Duarte were defective and commercially unsuitable. Plaintiffs learned that many other growers had also received defective trees from Duarte and had to remove the trees.

The sixth cause of action stated: "On February 6, 2015, based on defendants' apparent inability to produce and tender goods that met industry standards for quality and health, and were merchantable for their ordinary purpose, plaintiffs informed defendants that they were repudiating the orders for the new trees and demanded return of amounts paid on deposit." The complaint did not say whether this repudiation was made orally or in writing. !(CT 117-118)! The alleged breach was Duarte's failure to return the deposits.

No contracts were attached to the original complaint.

B. First amended complaint

On April 6, 2015, plaintiffs filed their first amended complaint which realleged the same nine causes of action. Plaintiffs amended the sixth cause of action for "Breach of Contract-New Trees" to clarify that the cause of action was alleging multiple contracts were entered into and breached.^[3] But plaintiffs did not clarify how many contracts were alleged and did not attach any contracts to the first amended complaint. Plaintiffs also amended the time frame used to identify the contracts in the sixth cause of action. It was now alleged the parties entered into contracts between September 2010 and March 2013 for pistachio trees with expected delivery dates in 2012, 2013, and 2014.^[4] It also was now alleged plaintiffs "repudiat[ed] the orders for the new trees and demanded return of amounts paid on deposit" not just on February 6, 2015, but also on March 30, 2015 and April 3, 2015.

C. Second amended complaint

Plaintiffs filed their second amended complaint on May 6, 2015, adding a tenth cause of action for declaratory relief. The sixth cause of action was unchanged.

D. Third amended complaint

On June 7, 2019, the trial court granted plaintiffs' motion for leave to file a third amended complaint over Duarte's objection. Plaintiffs filed the third amended complaint the same day.

Plaintiffs realleged the ten causes of action of the second amended complaint and added an eleventh cause of action. The new cause of action was entitled "Non-Delivery of Trees" and was alleged by only Parsons against Duarte.^[5] This new cause of action pleaded breaches of two contracts for the delivery of pistachio rootstock. The two contracts were attached to the complaint as exhibits.

The first contract, identified as Contract No. 41665, was entered into September 25, 2012, between Parsons and Duarte for the purchase of 7,680 potted UCB-1 pistachio rootstock and protectors for $69,120. The contract called for the payment of deposits totaling $34,560, which Parsons alleged it paid. The balance of the purchase price was due on delivery, which was originally to happen in January 2015 but was extended to July 15, 2015.

The second contract, identified as Contract No. 46045, was entered into February 1, 2014, between Parsons and Duarte for the purchase of 20,650 UCB-1 pistachio rootstock and protectors for $185,850. The contract required payment of deposits totaling $46,462.50. The balance of the purchase price was due on delivery, which was to happen in January 2015.

The eleventh cause of action alleged that Parsons performed its obligations under both contracts 41665 and 46045 by paying all deposits when due. Parsons alleged Duarte breached both contracts by failing to deliver any of the rootstock and by failing to refund their deposits. They also alleged the failure to deliver the rootstock excused them from having to pay the purchase price balances. Parsons further alleged Duarte knew it never delivered the trees and never refunded the deposits, telling Parsons it did not have the money to do so. Parsons did not allege that it ever tried to "repudiate" or rescind either contract 41665 or 46045.

The third amended complaint sought "at least" $952,223.50 in damages on the eleventh cause of action, comprising the amount of the unreturned deposits plus the value of the loss of future pistachio production.

Both contracts 41665 and 46045 provided that any action for breach of contract must be commenced within two years of accrual.

E. Fourth amended complaint

Duarte demurred to the third amended complaint. But before the demurrer hearing, the parties stipulated that plaintiffs could file a fourth amended complaint and that Duarte would retain its right to demur or otherwise challenge the pleading. The fourth amended complaint, filed August 26, 2019, realleged the same causes of action as the third amended complaint. The sixth cause of action remained the same and allegations were added to the eleventh cause of action. The new allegations asserted that Duarte would not be prejudiced if Parsons were allowed to proceed on its claims related to the alleged breaches of contracts 41665 and 46045.

II. Duarte's motion for summary judgment

Duarte moved for summary judgment or summary adjudication. Duarte argued as to the eleventh cause of action that the alleged claims of breaches of contracts 41665 and 46045 were barred by both (1) the two-year contractual limitations provision in both contracts and (2) the four-year statutory limit under Code of Civil Procedure section 337.^[6] The trial court granted summary adjudication for Duarte on some causes of action but not on the eleventh. As to the eleventh, the court found Duarte "failed to produce any evidence establishing that the facts alleged in that claim do not relate back to the filing of the initial pleading in this action."^[7]

III. Right to attach order

Almost two months after the court's summary adjudication order, Parsons filed an application for a right to attach order and writ of attachment. The application was based on Parsons's eleventh cause of action-the breaches of contracts 41665 and 46045. Parsons supported its application with declarations and exhibits. Duarte opposed the motion on multiple grounds, including on the ground that the breach of contract claims upon which the application was made are barred by the statute of limitations and the contractual limitations period. The trial court granted Parsons's application after a hearing and entered a right to attach order and order for issuance of writ of attachment. Parsons obtained a writ of attachment from the court clerk.

DISCUSSION

Duarte contends the trial court erred in granting Parsons a right to attach order for many reasons, including that Parsons cannot establish the probable validity of the breach of contract claims upon which the order was granted because those claims are time barred. Duarte maintains that Parsons's claims for the breaches of contracts 41665 and 46045, asserted in the eleventh cause of action, are barred by the four-year statutory limit and the two-year contractual limitations period. This is because the contracts were allegedly breached in January 2015 when Duarte failed to deliver the rootstock as the contracts required, and Parsons did not allege the breach of these contracts until June 2019 in the third amended...