Ask the County Law Librarian – Statute of Limitations for Fraud
Q. I am researching California statute of limitations for Power of Attorney. I became ill in the late Spring of 2008 with a brain tumor and mental health problems and signed a power of attorney to a lawyer and in examining my back statements I believe a significant amount of my funds were taken from my bank account for her personal use and I want to take legal action. Please advise. I never submited a release document. Thank you. jg
A. The first thing you should do is revoke that Power of Attorney, if you haven’t already! You can find sample revocation forms in many of the resources listed in our Legal Research Guide to Powers of Attorney, available on our website at http://www.saclaw.org/pages/powerattorney.aspx.
It looks as though you may have an action for constructive fraud against the attorney who took funds from your bank account for her personal use. The elements of constructive fraud are (1) a relationship between the plaintiff and defendant in which the defendant owes the plaintiff a fiduciary duty; (2) an act, omission or concealment by the defendant involving a breach of that fiduciary duty; and (3) resulting damage to the plaintiff. California Civil Code § 1573.
A “fiduciary relationship” is the legal relationship that exists when one person (the beneficiary) justifiably places reliance on another (the fiduciary) to aid or protect the beneficiary. The fiduciary has the responsibility of acting in the best interests of the beneficiary. Examples of fiduciary relationships include trustee/beneficiary, guardian/ward, attorney/client, and the agent/principal relationship created by a Power of Attorney.
California Probate Code § 4128(a) describes the duty an “agent” owes to the “principal” in the following notice, which is required on Powers of Attorney sold or distributed for use without consulting a lawyer:
By acting or agreeing to act as the agent (attorney-in-fact) under this power of attorney you assume the fiduciary and other legal responsibilities of an agent. These responsibilities include:
1. The legal duty to act solely in the interest of the principal and to avoid conflicts of interest.
2. The legal duty to keep the principal’s property separate and distinct from any other property owned or controlled by you. You may not transfer the principal’s property to yourself without full and adequate consideration or accept a gift of the principal’s property unless this power of attorney specifically authorizes you to transfer property to yourself or accept a gift of the principal’s property. If you transfer the principal’s property to yourself without specific authorization in the power of attorney, you may be prosecuted for fraud and/or embezzlement. If the principal is 65 years of age or older at the time that the property is transferred to you without authority, you may also be prosecuted for elder abuse under Penal Code Section 368. In addition to criminal prosecution, you may also be sued in civil court.
The statute of limitations for fraud is three years. California Code of Civil Procedure § 338(d). The statute does not “accrue,” or start running, until “the discovery, by the aggrieved party, of the facts constituting the fraud.” When “discovery” occurs is generally question of fact. When “the plaintiff suspects or should suspect that her injury was caused by wrongdoing,” the statute starts to accrue. Parsons v. Tickner, 31 Cal. App. 4th 1513 (1995).
The word “wrongdoing” is used in its lay sense. A plaintiff need not be aware of every fact necessary to establish each element of a cause of action. If a plaintiff has reason to suspect that someone has done something “wrong” to them and has the incentive to sue, that is sufficient for statute of limitations purposes. Kline v. Turner, 87 Cal. App. 4th 1369 (2001).
A plaintiff’s duty to inquire about suspicious facts may be relaxed where the defendant owed the plaintiff a fiduciary duty. In that case, there is no duty to inquire until the relationship is repudiated or the plaintiff becomes aware of facts that would make a reasonably prudent person suspicious of the fiduciary. Dabney v. Philleo, 38 Cal. 2d 60 (1951).
Where a trustee gives a beneficiary “an interim or final account in writing, or other written report” that adequately discloses the basis of a fraud claim, however, a suit for breach of trust must be commenced within 3 years of the beneficiary’s receipt of the account or report. California Probate Code § 16460(a)(1).
You can read more about the statute of limitations for fraud at the Law Library in
California Practice Guide: Civil Procedure Before Trial: Statutes of Limitations.
So, depending upon when you examined your back statements and realized a significant amount of your funds were taken, your lawsuit may not be barred by the statute of limitations.
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