This is the third chapter of Silicon Valley litigation spanning more than 14 years involving a microchip company, ZF Micro Devices, Inc. (ZF Devices), and its successor, ZF Micro Solutions, Inc. (ZF Solutions).
In the instant third lawsuit, the ZF Entities alleged in a complaint that Mark Putney, a TAT representative who was a ZF Devices board member, breached fiduciary duties owed to ZF Devices. The ZF Entities also alleged in a separate cross-complaint — originally filed in the second lawsuit but later severed and consolidated in this third suit — that TAT breached its fiduciary duties to ZF Devices. This third lawsuit went to trial in December 2013. TAT and Putney prevailed, and the ZF Entities appealed.
At trial, TAT argued that ZF's claim (accruing in February 2002) was barred by the applicable four-year statute of limitations because ZF's cross-complaint was not filed until March 2009. ZF contended that the cross-complaint was timely because the statute of limitations was tolled by the filing of TAT's lawsuit in February 2005. TAT replied that this tolling doctrine applied only to compulsory cross-complaints; because the ZF cross-complaint was permissive (unrelated to the claims alleged in TAT's complaint), its filing did not relate back to the date the complaint was filed. The trial court, acknowledging
We agree that ZF's cross-complaint was permissive but conclude the tolling doctrine applies to both permissive and compulsory cross-complaints. Although more recent intermediate appellate court decisions have suggested the tolling doctrine applies only to related (compulsory) cross-complaints, there is controlling Supreme Court authority from 1922 and 1946 that the tolling doctrine applies to the defendant's related and unrelated cross-claims against the plaintiff.
Because the tolling doctrine applied to ZF's permissive cross-complaint, its filing related back to the date TAT filed its complaint (February 2005). The cross-complaint having been timely filed, the court erred in submitting TAT's statute of limitations defense to the jury. Accordingly, we will reverse the judgment entered on ZF's cross-complaint against TAT and remand to the court below for further proceedings.
Given the factual and procedural complexity concerning this matter, we provide a brief summary at the outset.
TAT is a Swiss private equity firm that invests in startup high-technology companies. Between 1997 and 1999, TAT infused ZF Devices with significant capital by investing approximately $9.8 million into the company which resulted in TAT holding 21.7 percent of the outstanding shares of ZF Devices. TAT held a seat on the board of directors of ZF Devices, and TAT's representatives on the board were Thomas Egolf and, later, Mark Putney. Putney resigned from the board in November 2001.
Sands Brothers Venture Capital L.L.C. (Sands Venture) and SB New Paradigm Associates LLC (SB) were additional investors of ZF Devices; collectively, Sands Venture and SB (hereafter, collectively, Sands) owned 10.4 percent of ZF Devices's stock. Sands's representative on ZF Devices's board of directors was Gary Kennedy, who resigned that position in November 2001.
On February 28, 2002, Kennedy — who had provided a $1 million secured bridge loan to ZF Devices in 2001 on which the company later defaulted — foreclosed on the assets of ZF Devices. This marked the end of ZF Devices's operations. At or about the same time, Feldman formed ZF Solutions for the purpose of acquiring ZF Devices's assets. Feldman and his sister, Marsha Armstrong, lent ZF Solutions approximately $400,000 for it to acquire from Kennedy the assets of ZF Devices he had obtained by foreclosing on his loan. Included among the assets ZF Solutions acquired was ZF Devices's microchip production agreement with NSC.
II. The NSC Lawsuit
On April 25, 2002, ZF Solutions sued NSC for damages (ZF Micro Devices, Inc. v. National Semiconductor Corp. (Super. Ct. Santa Clara County, 2004, No. 102CV807339) (the NSC lawsuit)). The lawsuit was based upon claims that, among other things, NSC failed to produce ZF Devices's "ZFx86" microchips as agreed under their contract. While the case was ongoing, NSC contended that ZF Solutions had no standing to assert tort claims against NSC because those claims belonged to the shareholders of ZF Devices. In responding to this contention, Feldman produced a document
The case proceeded to trial, and a jury awarded ZF Solutions damages of $29 million. The trial judge vacated the verdict, but the case was later settled in or about December 2004 for $20 million.
III. The TAT Lawsuit
On February 14, 2005, two ZF Devices investors, TAT and Sands Venture, brought suit against the ZF Entities and Feldman (TAT Capital Partners, Ltd. v. Feldman (Super. Ct. Santa Clara County, 2010, No. CV35531) (the TAT lawsuit)). TAT and Sands Venture alleged jointly claims for dissolution of ZF Devices, breach of fiduciary duty (against Feldman), fraudulent transfer, and for an accounting. Two separate complaints were later filed by TAT and Sands. A number of individuals who were ZF Solutions shareholders (including Feldman and his sister, Armstrong), identified collectively as the "transferee defendants," were named in the separate complaints.
Generally speaking, TAT's and Sands's claims arose out of their respective contentions that, as ZF Devices shareholders, they were entitled to receive pro rata distributions of the proceeds of the $20 million settlement of the NSC lawsuit. TAT and Sands based their claims substantially upon the April 2004 "Consent Agreement," which had been solicited by Feldman in response to NSC's assertion during the NSC lawsuit that ZF Solutions had no standing to assert ZF Devices's tort claims. Under the consent agreement, TAT and Sands ratified after-the-fact Feldman's transfer of ZF Devices's legal rights against NSC to ZF Solutions. TAT and Sands claimed that, in exchange for signing the consent agreement, they were promised that, as ZF Devices shareholders, they would receive pro rata distributions of any recovery obtained in the NSC lawsuit. TAT and Sands alleged that ZF Solutions breached the consent agreement by distributing all net NSC lawsuit settlement proceeds to itself and to the transferee defendants (ZF Solutions' shareholders). TAT and Sands alleged further that the disposition of the settlement proceeds constituted a fraudulent transfer of assets.
On March 11, 2009, the court granted ZF's motion for leave to file a cross-complaint against TAT. ZF filed that cross-complaint on March 18,
The TAT lawsuit was tried in late 2009 to early 2010. The trial judge considered various pretrial matters, including TAT's motion to sever the ZF cross-complaint. On December 21, 2009, the court granted that motion, ordering the ZF cross-complaint severed and consolidated with another pending superior court action that had been filed by the ZF Entities against TAT, Putney, and Egolf, namely, the instant case (case No. 109CV134970; hereafter, the ZF lawsuit).
The TAT lawsuit proceeded to a three-phase trial. In the first phase, the court found that there were contracts that existed between TAT and ZF Solutions and Sands and ZF Solutions, and that they were sufficiently definite to be enforceable. In the second phase, a jury found in favor of TAT and Sands on their respective breach of contract claims, and it awarded damages to them. In the third phase, after hearing additional testimony, the court found in favor of TAT and Sands on their fraudulent transfer claims against the transferring defendants. A judgment was entered that included awards of damages (including interest) of $4,460,447 to TAT and $2,135,859 to Sands. Substantial monetary judgments of varying amounts were also entered against the 22 transferee defendants, including Feldman, against whom the judgment amount was $2,220,271. ZF Solutions and 20 of the 22 transferee defendants appealed from the judgment. In an unpublished decision filed July 2, 2012, we affirmed the judgment.
IV. The ZF Lawsuit
The ZF lawsuit was filed on February 17, 2009. In their complaint, the ZF Entities alleged claims against TAT, Putney, and Egolf for breach of fiduciary duty (among other claims). After being granted leave in the TAT lawsuit to file a cross-complaint against TAT, ZF amended the complaint in the ZF lawsuit, removing TAT as a defendant. (But as stated, ante, that cross-complaint was subsequently ordered severed and consolidated with the ZF lawsuit.) ZF later amended the complaint again to remove Egolf as a defendant.
The ZF lawsuit proceeded to trial in November 2013 before a different judge than the trial judge in the TAT lawsuit. The operative pleadings were the second amended complaint for breach of fiduciary duty against Putney, and the first amended cross-complaint for breach of fiduciary duty against TAT. During in limine motions, the trial court dismissed ZF Devices as plaintiff and cross-complainant, concluding that all of its rights had been
The trial court denied ZF's motion in limine and granted TAT's motion to bifurcate. In later pretrial proceedings, the court tentatively ruled that (1) the statute of limitations was not tolled by the filing of the TAT complaint on February 14, 2005, and (2), thus, the operative date to determine whether the ZF cross-complaint was time-barred was its filing date on March 18, 2009. The trial court confirmed those conclusions later during the bifurcated trial.
The trial court ordered that TAT and Putney initially present evidence supporting their statute of limitations defense, followed by ZF's presenting evidence of delayed accrual of the statute. The parties stipulated that for purposes of the statute of limitations, the harm to ZF Devices occurred on February 28, 2002 — the date that Kennedy, as secured lender, foreclosed on ZF Devices's assets and the company ceased doing business. And the trial court determined that ZF's breach of fiduciary duty claim was subject to a four-year statute of limitations. (See Code Civ. Proc., § 343; Thomson v. Canyon (2011) 198 Cal.App.4th 594, 606 [129 Cal.Rptr.3d 525].)
Accordingly, in the first phase of the bifurcated trial (as it pertained to the cross-complaint), the jury was required to determine (1) whether the ZF cross-complaint on its face was time-barred because it was filed on March 18, 2009, more than four years after ZF's breach of fiduciary duty claim accrued
On December 17, 2013, the jury returned a verdict in favor of TAT and Putney. In separate special verdict forms, the jury found that (1) the ZF Entities (or either of them) had knowledge of any breaches of fiduciary duty committed by TAT before March 18, 2005 (i.e., more than four years before the filing of ZF's cross-complaint), and (2) the ZF Entities (or either of them) had knowledge of any breaches of fiduciary duty committed by Putney before February 17, 2005 (i.e., more than four years before the filing of ZF's complaint). A judgment was entered on the verdict on January 10, 2014. The court concluded, based upon the jury's findings, that ZF's claims were time-barred and that TAT and Putney were therefore entitled to judgment in their favor on the first amended cross-complaint and second amended complaint, respectively.
I. Applicability of Tolling Doctrine to ZF Cross-complaint
ZF contends the trial court erred in concluding that (1) the claims in ZF's cross-complaint were unrelated to those asserted by TAT in its complaint and the cross-complaint was therefore permissive, and (2) the filing of the TAT complaint, therefore, did not toll the statute of limitations for the ZF cross-complaint because the tolling doctrine applies only to compulsory cross-complaints. Therefore, we determine first whether the ZF cross-complaint was permissive (as concluded by the trial court). Concluding that the trial court correctly so held, we then address whether the tolling doctrine applies to permissive cross-complaints. "The application of the statute of limitations on undisputed facts is a purely legal question [citation]; accordingly, we review the lower courts' rulings de novo." (Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1191 [151 Cal.Rptr.3d 827, 292 P.3d 871].)
A. The ZF Cross-complaint Was Permissive
1. Issue Was Not Previously Decided
Citing to different parts of the record, the parties argue that there was a prior, binding determination that the ZF cross-complaint was compulsory (as argued by ZF) or permissive (as argued by TAT). We address their respective positions in turn.
a. ZF's compulsory cross-complaint position
ZF contends that when the court in the TAT lawsuit granted the ZF Entities leave to file their cross-complaint, it adjudicated that the pleading was compulsory. On March 11, 2009, the court granted ZF's motion, concluding that "[t]he proposed Cross-Complaint arises out of the transactions, circumstances, and occurrences that are at issue in the related actions and is a mandatory cross[-]complaint." In its opening brief, ZF argues in a heading that "[t]he cross-complaint has been ruled mandatory" (some capitalization and italics omitted). Under that heading, beyond stating that there was never a subsequent order "nullifying [the court's] March 11, 2009 Order," ZF offers little argument in support of its position that this order constitutes a conclusive adjudication that the ZF cross-complaint was compulsory. And it does not address the subject in its reply brief at all.
b. TAT's permissive cross-complaint position
TAT makes the parallel contention that ZF is collaterally estopped from asserting that its cross-complaint was compulsory. TAT asserts that the trial court's December 21, 2009 order severing the ZF cross-complaint and consolidating it with the ZF lawsuit, coupled with this court's subsequent affirmance of the judgment in the TAT lawsuit, constituted a conclusive determination that the cross-complaint was permissive. In making its severance/consolidation order, the trial court held that the claim asserted in the ZF cross-complaint and the claims alleged in the TAT lawsuit were not related "at all." And TAT correctly noted that in the prior appeal in the TAT lawsuit, the appellants (ZF Solutions and the individual "transferring defendants") challenged unsuccessfully the trial court's order severing the ZF cross-complaint and consolidating it in the within action.
2. The Claims Were Not Logically Related
Few California courts have interpreted the relatedness requirement of the compulsory cross-complaint statute.
ZF alleged in the cross-complaint that TAT, through its partners and agents, Putney and Egolf (both of whom were at times members of ZF Devices's board), breached its fiduciary duties to ZF Devices. Generally, it was alleged that TAT (1) communicated to potential ZF Devices investors a lack of confidence in the company's management in an attempt to manipulate the potential investors and thereby advance TAT's personal agenda; (2) attempted to effect a sale of ZF Devices without the board's knowledge or approval, thereby communicating that the company was in a weak position; and (3) offered ZF Devices shares to potential investors at a discounted price, without board approval, in exchange for the potential investors' assistance in TAT's taking control of the board. More specifically, ZF alleged breaches of fiduciary duty in connection with matters spanning from 1998 (involving a Switzerland presentation by Feldman in which he disclosed ZF Devices's confidential information to investors of TAT and to Walter Furter, who, unbeknownst to Feldman, was an executive of a ZF Devices competitor), through 2001 (involving TAT's contacts with a potential investor, Thomas Wiesel Partners). ZF alleged that ZF Devices sustained resulting damages, because it was unable to secure necessary financing, suffered from internal dissension, and was ultimately unable to succeed and defaulted on its loan to Kennedy in February 2002.
Our conclusion that the ZF cross-complaint is not logically related to TAT's claims is underscored by contrasting the circumstances presented here with those found in cases in which courts determined the cross-complaints were compulsory. For example, in Currie Medical, supra, 136 Cal.App.3d 774, the plaintiff (Currie) and the defendant (Bowen) entered into an oral contract in which Currie agreed to cease its competing business and to act as a distributor for Bowen in selling labels to hospitals. (Id. at p. 776.) In a federal action, Bowen sued Currie for unfair competition and violations of the Lanham Act (15 U.S.C. § 1051 et seq.), claiming that Currie had obtained Bowen's trade secrets while the distribution contract existed, and, after its termination, unfairly competed with Bowen. (Currie Medical, at p. 776.) After that case was dismissed, Currie sued Bowen in state court claiming that Bowen breached the distributorship contract and fraudulently induced Currie to enter into it. (Ibid.) The appellate court affirmed the granting of Bowen's summary judgment motion. (Ibid.) It agreed with the trial court that Currie's claims were barred under the compulsory cross-complaint statute because they were logically related to Bowen's federal claims, in that both claims concerned the parties' relationship under, and performance of, the distributorship contract. (Id. at p. 777.)
In contrast to Currie Medical, the claims in the TAT complaint and the claims in the ZF cross-complaint neither involved the same relationship nor the operation of the same enterprise. Stated broadly, the claims in the ZF cross-complaint concerned the operation of, and alleged fiduciary duty
B. The ZF Cross-complaint Was Not Time-barred
Having concluded that the ZF cross-complaint was permissive, we address whether the trial court properly held that the tolling doctrine was inapplicable and that therefore, the cross-complaint's filing date did not relate back to the date TAT filed its complaint. If the tolling doctrine applied to ZF's cross-complaint, then it would be deemed filed when TAT filed its complaint (February 14, 2005). In that case, the cross-complaint was asserted less than four years after the claim arose, because the alleged conduct resulting in harm occurred prior to February 28, 2002, when ZF Devices ceased operations. (See § 343; Thomson v. Canyon, supra, 198 Cal.App.4th at p. 606.) Accordingly, if the tolling doctrine applied to the ZF cross-complaint, the court erred by ordering a bifurcated trial on TAT's statute of limitations defense to that cross-complaint.
The applicability of the tolling doctrine to permissive cross-complaints is not free of doubt. The author of one well-respected treatise states that the tolling doctrine applies broadly to all cross-complaints: "The statute is a bar to the defendant's affirmative claim only if the period has already run when the complaint is filed. The filing of the complaint suspends the statute during the pendency of the action, and the defendant may set up his or her claim by appropriate pleading at any time. [Citations.]" (3 Witkin, Cal. Procedure (5th
The parties have failed to identify any post-1971 published decisions — and we are unaware of any — in which an appellate court has affirmatively held that the tolling doctrine either does or does not apply to permissive cross-complaints. Prior to 1971, the statutory scheme provided for two, rather distinct, cross-claim pleadings, the counterclaim and the cross-complaint. The cross-complaint was previously more narrowly defined and the compulsory cross-complaint statute did not exist. Because the tolling doctrine originated in pre-1971 case law, we necessarily make a brief detour to outline prior law concerning counterclaims and cross-complaints to place these cases in context with the present cross-complaint statute.
2. Former Counterclaim and Cross-complaint Statutes
Under former section 438, the counterclaim was a claim by the defendant against the plaintiff that tended to diminish or defeat the plaintiff's recovery. (Terry Trading Corp. v. Barsky (1930) 210 Cal. 428, 435 [292 P. 474] (Terry Trading).) The statute originally provided that the counterclaim was restricted to claims arising out of the contract or transaction set forth in the complaint. (Howell, Counterclaims and Cross-complaints in California (1936) 10 S.Cal. L.Rev. 415, 418 (Howell).) But the statute was amended in 1927 to broaden the scope of relief. (Stats. 1927, ch. 813, § 1, p. 1620; see Howell, supra, at pp. 420-421, 438-439.) After 1927, as long as the counterclaim fulfilled the requirements of tending to diminish or defeat the plaintiff's recovery and involving only parties to the action, it was allowable, regardless of whether the claim related to the plaintiff's cause of action. (Terry Trading, at pp. 435-436.) The legislative intent of the amendment "to avoid multiplicity of suits and to have all conflicting claims between the parties
The cross-complaint, in its former version as stated in former section 442, was intended to allow claims related to the complaint to be asserted by a defendant against any party — unlike the counterclaim, which was restricted to a defendant's claims against the plaintiff. After the statute was amended in 1957 (see Stats. 1957, ch. 1498, § 1, p. 2824), the former cross-complaint could be asserted against any third party. (See Carey v. Cusack (1966) 245 Cal.App.2d 57, 64 [54 Cal.Rptr. 244].) Under the old statute, there was "a very shadowy line of distinction between a cross-complaint and a counterclaim and a considerable area in which they overlap[ped]." (Schrader v. Neville (1949) 34 Cal.2d 112, 114 [207 P.2d 1057].)
In 1971, significant changes to California's cross-claims statutes, recommended by the Law Revision Commission (10 Cal. Law Revision Com. Rep. (1971) p. 518 et seq.), were enacted by the Legislature (See Stats. 1971, ch. 244, § 23, p. 378; see § 426.10 et seq.) The counterclaim was abolished, and any claim heretofore "asserted by a counterclaim [would] be asserted by a cross-complaint." (§ 428.80.) Under the new statute, the defendant or cross-defendant could assert in the cross-complaint "[a]ny cause of action ... against any of the parties who filed the complaint or cross-complaint against him [or her]," regardless of whether such claims were related to those upon which the suit was brought. (§ 428.10, subd. (a).) Where the cross-complaint was brought against any other person, the cause of action had to be one that "(1) [arose] out of the same transaction, occurrence, or series of transactions or occurrences as the cause brought against him [or her] or (2) assert[ed] a claim, right, or interest in the property or controversy which [was] the subject of the cause brought against him [or her]." (§ 428.10, subd. (b).) The prior compulsory counterclaim rule (see former § 439) was eliminated with the abolition of that form of pleading, and the new law created a compulsory cross-complaint statute, providing that the failure of a party sued "to allege in a cross-complaint any related cause of action which (at the time of serving
3. Pre-1971 Tolling Cases
In an early case under the former statutory scheme, the California Supreme Court enunciated and applied the tolling doctrine to permit a counterclaim where the limitations period would have otherwise run after the filing of the complaint but before the filing of the counterclaim. (See Whittier v. Visscher (1922) 189 Cal. 450 [209 P. 23] (Whittier).) There, in the defendants' answer to a suit to recover on a promissory note, a cross-demand was alleged against the plaintiff's assignor based upon stockholder liability for indebtedness of the corporation. (Id. at pp. 451-452.) The trial court rejected that counterclaim, inter alia, on the basis that it was time-barred. In addressing the defendants' challenge to that decision, the Supreme Court held: "It is conceded that [the counterclaim] was not so barred when the original action was begun, and the authorities in this state seem to be agreed that if the right of action relied on was alive at the commencement of the suit the statute does not run against it, when, as in this case, the full statutory period has expired thereafter during the pendency of the action and before the claim is pleaded as a cross-complaint. [Citations.]
Likewise, in Jones v. Mortimer (1946) 28 Cal.2d 627 [170 P.2d 893] (Jones) — one of the main cases relied on by ZF — the high court considered whether a counterclaim, which was unrelated to the claim alleged in the complaint, was barred by the statute of limitations. The plaintiff had sued an insolvent financial institution, California Mutual Building and Loan Association (Cal-Mutual), and the state's Building and Loan Commissioner for services rendered to Cal-Mutual. (Id. at p. 629.) The plaintiff obtained a judgment, and the commissioner approved his claim in liquidation with a reduction by the
At the outset, the Supreme Court in Jones rejected the plaintiff's contention that the commissioner's failure to file the counterclaim prior to the plaintiff's obtaining a judgment barred the counterclaim under the compulsory counterclaim statute (former § 439). It concluded that the plaintiff's claim and the counterclaim did not arise out of the same transaction, even giving the "broadest meaning" to that term. (Jones, supra, 28 Cal.2d at p. 630.) The court then addressed whether the counterclaim was time-barred. It reiterated tolling doctrine principles, concluding that "[t]he statute of limitations is not available to plaintiff as to defendants' counterclaim if the period has not run on it at the time of commencement of plaintiff's action even though it has run when the counterclaim is pleaded. [Citations.]" (Jones, supra, 28 Cal.2d at p. 633; see also Union Sugar Co. v. Hollister Estate Co. (1935) 3 Cal.2d 740, 746 [47 P.2d 273] (Union Sugar) [defendant's counterclaim and setoff for breach of farming contract not time-barred because "`filing of the complaint... operated to suspend the running of the statute of limitations as to any counterclaim'"]; Holtzendorff v. Housing Authority of the City of Los Angeles (1967) 250 Cal.App.2d 596, 635 [58 Cal.Rptr. 886] [employer's counterclaim for monies paid to reimburse employee for defense costs in case arising out of actions taken during employment not time-barred; under Jones, it was deemed filed on filing date of complaint]; Goodwin v. Alston (1955) 130 Cal.App.2d 664, 669 [280 P.2d 34] [citing Jones, holding that counterclaim based upon usurious loan was not barred by statute of limitations, where statute had not run at time complaint to foreclose on loan was filed].)
4. Post-1971 Tolling Cases
TAT chiefly relies on Trindade v. Superior Court (1973) 29 Cal.App.3d 857 [106 Cal.Rptr. 48] (Trindade) in support of its position that the tolling doctrine applies only to compulsory cross-complaints.
Subsequent cases following Trindade contain similar language and are relied upon by TAT for the proposition that the tolling doctrine does not apply to permissive cross-complaints. They, like Trindade, are equally unpersuasive. For example, in Sidney v. Superior Court (1988) 198 Cal.App.3d 710, 713-714 [244 Cal.Rptr. 31] (Sidney), after the plaintiff sued Sidney for personal injuries and property damage and Sidney cross-complained against the plaintiff and his employer, the trial court denied Sidney's later motion to amend his cross-complaint to allege a personal injury claim arising out of the same automobile accident, concluding the claim was time-barred because it was brought more than one year after the accident and its filing did not relate back to the filing of the complaint. (Id. at pp. 713-714.) The appellate court (relying on Trindade, supra, 29 Cal.App.3d at p. 860, and an earlier edition of Weil and Brown), granted the petition for writ of mandate, holding: "[A] cross-complaint need only be subject-matter related to the plaintiff's complaint — i.e., arise out of the same occurrence (See §§ 426.10, 428.10) — to relate back to the date of filing the complaint for statute of limitation purposes. [Citation.]" (Sidney, at p. 714.) Sidney, like Trindade, involved a compulsory cross-complaint. To the extent the court in Sidney concluded that
5. Conclusion: Scope of Tolling Doctrine
In multiple decisions predating legislation that abolished the counterclaim and redefining the cross-complaint, the Supreme Court characterized the tolling doctrine as embracing all cross-claims by a defendant against the plaintiff, regardless of their relatedness to the claims asserted in the complaint. (See Jones, supra, 28 Cal.2d at p. 633; Union Sugar, supra, 3 Cal.2d at p. 746; see also Whittier, supra, 189 Cal. at p. 456; Perkins, supra, 120 Cal. at p. 28.) Because Jones and Union Sugar were decided after the 1927 amendment to former section 442 that broadened the counterclaim to include both related and unrelated claims, we view those cases as persuasive, if not controlling, authority for the proposition that the tolling doctrine applies to the counterclaim's modern-day equivalent, the cross-complaint.
Trindade, supra, 29 Cal.App.3d 857 and its progeny are the principal authority upon which TAT relies — and upon which the trial court based its decision — in asserting that the tolling doctrine applies only to compulsory cross-complaints. As we have discussed, neither Trindade nor subsequent cases relying on Trindade addressed the specific issue of whether the filing of a complaint tolled the statute of limitations for a defendant's permissive cross-complaint against the plaintiff. And, as noted, Trindade's statement that the filing of a complaint tolled the statute of limitations for the defendant's claims against the plaintiff "`relating to or depending upon the contract, transaction, matter, happening or accident upon which the action is brought, ...' [citation]" (id. at p. 860, italics added) was a quotation of former section 442, which defined the cross-complaint as limited to claims related to the complaint. Trindade cannot therefore be viewed as persuasive authority for the proposition that the tolling doctrine applies only to compulsory cross-complaints.
Accordingly, the trial court erred in having the jury determine in a first phase of a bifurcated trial whether the ZF cross-complaint was barred by the applicable statute of limitations. Because the filing of TAT's complaint
The judgment, insofar as it was entered on the special verdict in favor of TAT and against ZF Solutions on its first amended cross-complaint, is reversed. Insofar as the judgment was entered on the special verdict in favor Putney on ZF Solutions' second amended complaint, we find no error. ZF shall recover its costs on appeal.
Rushing, P. J., and Premo, J., concurred.