Plaintiff, executrix of the estate of Valentine Davies, appeals from a trial court determination that her action for breach of confidence is barred by the statute of limitations. The parties stipulated for purpose of the limitation issue that in 1951 Valentine Davies submitted his written story "Love Must Go On" to defendant in confidence and that defendant incorporated the idea, central theme, and dramatic core of that story into his successful play "Who Was That Lady I Saw You With," first produced in 1958. The trial court found that in 1954 and thereafter defendant disclosed the story to various persons in the entertainment industry in violation of Davies' confidence, and that Davies learned of these disclosures sometime before November 11,
As we shall explain, this court has never ruled that a cause of action for breach of confidence can rest upon a basis other than a contract that protects that confidence. Assuming the viability of such a cause of action in the present litigation — an assumption compelled here by the law of the case — we conclude that the trial court correctly determined that the two-year period of Code of Civil Procedure section 339, subdivision 1, bars this cause of action.
We shall point out why we reject plaintiff's contention that the statute of limitations should not begin to run until 1958 when defendant profited from the exploitation of Davies' idea. We shall explain that Davies had already suffered actual and appreciable damage from defendant's breach before November 11, 1955. Neither Davies' difficulty in proving the extent of damage, nor the absence of profits upon which he could impose a constructive trust, delays the running of the period of limitations. Because plaintiff's suit was not filed within two years after November 11, 1955, it is barred by the statute of limitations.
The legal proceedings which followed the filing of plaintiff's first complaint in 1959 doubtless deserve a place in the annals of protracted and maddeningly inefficient litigation not far removed from that of Charles Dickens' Jarndyce v. Jarndyce. Plaintiff's first complaint asserted two causes of action: breach of contract and breach of confidence. Valentine Davies died before trial, and plaintiff pursued the litigation as the executrix of the estate. At trial, in 1962, the court dismissed the breach of confidence claim for insufficient evidence. It submitted the breach of contract cause to the jurors, but the jurors failed to reach a verdict.
A second trial the following year focused solely on plaintiff's contract claim. The jurors rendered a defense verdict. The Court of Appeal subsequently affirmed the defense verdict on the contract issue but reversed that part of the judgment that granted a nonsuit as to the cause for breach of confidence. The appellate court remanded this issue for a possible third trial. (Davies v. Krasna (1966) 245 Cal.App.2d 535 [54 Cal.Rptr. 37] [hereinafter Davies I].) We denied a petition for hearing.
Undaunted, defendant obtained leave to file still another amended answer, this one for the purpose of asserting the statute of limitations.
Plaintiff once again seeks appellate relief. She argues that her action is one for constructive fraud and thus not governed by the limitations period of section 339, subdivision 1; in any event, she contends, Davies' cause of action did not arise until 1958 when defendant and others transformed Davies' story into a Broadway production and first reaped monetary rewards. Defendant, on the other hand, urges that the limitations period began to run no later than November 11, 1955, by which date Valentine Davies had learned of the alleged breach of confidence.
Logically, before determining the applicable statute of limitations, we should decide whether a cause of action lies against one who discloses an idea given him in confidence when such action does not rest upon contract expressed or implied in fact. The court has never resolved that issue.
We are asked, therefore, to resolve a statute of limitations issue with respect to a theory of liability never acknowledged or rejected by this court. Under normal circumstances, our first step would be to explore whether California law should recognize such liability. If we were to reject plaintiff's theory of action, however, we would violate the rule that a matter adjudicated on a prior appeal normally will not be relitigated on a subsequent appeal in the same case.
On the other hand, were we to declare that California law does recognize liability for breaches of artistic confidences, we would slight whatever interests cut against our declaring such liability, since the
Following the law of the case, we assume that plaintiff has stated a valid cause of action for breach of confidence. (Davies I, 245 Cal. App.2d at p. 550.) When defendant received Valentine Davies' idea, with the understanding that this idea was confidential, defendant incurred an obligation not to use or disclose that idea without the creator's consent. (Davies I, 245 Cal. App.2d at p. 549.) The obligation thus incurred lies not in the contractual language but is imposed by law (Davies II, 12 Cal. App.3d at p. 1054); an action for its breach lies either in quasi-contract or in tort (see Thompson v. California Brewing Co. (1961) 191 Cal.App.2d 506, 508 [12 Cal.Rptr. 783]).
Plaintiff contends, however, that her suit should be classified as one for constructive fraud (see Civ. Code, § 1573) based upon breach of a duty arising from a confidential relationship, and is thus governed by Code of Civil Procedure section 338, subdivision 4, which provides a three-year period from discovery of the fraud. Although the trial court findings suggest that plaintiff's suit was untimely even under the more liberal provisions of that section, defendant pleaded only the two-year period of section 339, subdivision 1, as a bar to the complaint.
The only two cases to consider this issue have applied the two-year limitation of section 339, subdivision 1. In Thompson v. California Brewing Co. (1957) 150 Cal.App.2d 469 [310 P.2d 436], plaintiff submitted an idea for the advertising of beer to defendant, who used that idea without compensating plaintiff. Plaintiff sued on three counts, an express oral contract, an implied in fact contract, and breach of confidence. After holding that the contract counts fell under the two-year limitation, the court went on to hold that "Section 339, subdivision 1, applies also to the third count.... We find alleged in the third count no element of fraud such as would bring it within the purview of section 338, subdivision 4, of the Code of Civil Procedure." (150 Cal. App.2d at p. 477.) Since defendant in Thompson first used plaintiff's idea more than two years before plaintiff filed suit, the court held his action for breach of confidence barred by limitations. (150 Cal. App.2d at p. 478.)
In Monolith Portland Midwest Co. v. Kaiser Aluminum & C. Corp. (9th Cir.1969) 407 F.2d 288, a Ninth Circuit decision applying California law, plaintiff alleged that its employee invented an improved technique of lining kilns. In the course of supplying metal plates used in kilns, defendant consulted with plaintiff on technical matters, and through those discussions learned of plaintiff's innovation. Defendant later revealed that innovation to plaintiff's competitors, and plaintiff sued for breach of confidence. The District Court had found that "`no conduct of the defendants ... toward plaintiff was shown to constitute any variety of fraud'" (407 F.2d at p. 293, fn. 4), and on appeal the parties agreed that the case was governed by section 339, subdivision 1. Rejecting plaintiff's contention that defendant's violation was a continuing tort, the court held the action barred: "The cause of action arises but once, and recovery for the wrong is barred within two years thereafter unless the statute has been effectively tolled." (407 F.2d at p. 293.)
Plaintiff offers no plausible grounds for distinguishing Thompson or Monolith.
Plaintiff's argument confuses a cause of action for breach of confidence with a cause of action for violation of a duty arising from a confidential relationship. "A confidential relation exists between two persons when one has gained the confidence of the other and purports to act or advise with the other's interest in mind. A confidential relation may exist although there is no fiduciary relation; it is particularly likely to exist where there is a family relationship or one of friendship or such a relation of confidence as that which arises between physician and patient or priest and penitent." (Rest. 2d Trusts, § 2, com. b, quoted in Vai v. Bank of America (1961) 56 Cal.2d 329, 337-338 [15 Cal.Rptr. 71, 364 P.2d 247] and Goldberg v. Goldberg (1963) 217 Cal.App.2d 623, 629-630 [32 Cal.Rptr. 93].) An action for breach of confidence, on the other hand, arises whenever an idea, offered and received in confidence, is later disclosed without permission. (See ante, at p. 508.)
The creator of the idea may transmit the idea in the protective context of a confidential relationship, as, for example, when an inventor reveals his concept to a patent lawyer (cf. Stevens v. Marco (1956) 147 Cal.App.2d 357 [305 P.2d 669]). But ideas may also be transmitted in the course of arms length negotiations between businessmen who can profit from its exploitation. (E.g., Blaustein v. Burton (1970) 9 Cal.App.3d 161 [88 Cal.Rptr. 319]; Thompson v. California Brewing Co., supra, 150 Cal.App.2d 469; see examples in Rest., Torts, § 757, com. j.) The point is that the existence of a confidential relationship is not essential to a cause of action for violation of confidence; in the absence of an acceptance of trust, which is the essence of a confidential relationship (Vai v. Bank of America, supra, 56 Cal.2d 329, 338), a violation of confidence does not create a cause of action in constructive fraud (see Crocker-Anglo Nat. Bank v. Kuchman (1964) 224 Cal.App.2d 490, 494 [36 Cal.Rptr. 806]).
Since plaintiff's cause of action for breach of confidence does not rest upon a confidential relationship it cannot be classed as an action for constructive fraud. Following the earlier decisions of Thompson v. California Brewing Co., supra, 150 Cal.App.2d 469 and Monolith Portland Midwest Co. v. Kaiser Aluminum & C. Corp., supra, 407 F.2d 288, we conclude that plaintiff's action is governed by the two-year period of section 339, subdivision 1.
Defendant, to Davies' knowledge, had breached his duty of confidence before November 11, 1955; if the period of limitation commenced on or before that date, plaintiff's action does not overcome the bar of limitations. Plaintiff contends, therefore, that the cause of action did not accrue until 1958 when defendant used Davies' idea to produce a profitable Broadway play. She advances three arguments: (1) that Davies' cause of action for breach of confidence did not arise until defendant publicly exhibited Davies' idea; (2) that the cause of action did not arise until Davies had an effective remedy, which condition, she asserts, first obtained in 1958; and (3) that the cause of action, to the extent it seeks to impose a constructive trust, did not arise until defendant by profiting from Davies' idea created a trust res. We shall discuss each argument in turn.
Plaintiff's first argument, that Davies' cause of action did not arise until defendant publicly exhibited Davies' idea in 1958, confuses two different theories of action. A suit for breach of an implied contract not to exploit an idea without paying for it does arise only with the sale or
Plaintiff secondly argues that Davies lacked an effective remedy for defendant's breach of confidence until 1958. A 1955 action for injunctive relief, she maintains, would have been futile since defendant had already disclosed Davies' idea; an action for damages would have resulted in merely nominal recovery. Only when defendant, by producing a profitable play in 1958, demonstrated the true value of Davies' idea, did Davies have an effective remedy.
Plaintiff's contention that a period of limitation should not begin to run until the injured party possesses an effective remedy raises issues which turn upon the practical purpose that a statute of limitations serves in our legal system. The fundamental purpose of such statutes is to protect potential defendants by affording them an opportunity to gather evidence while facts are still fresh. (Elkins v. Derby (1974) 12 Cal.3d 410, 417 [115 Cal.Rptr. 641, 525 P.2d 81]; Pashley v. Pacific Elec. Ry. Co. (1944) 25 Cal.2d 226, 229 [153 P.2d 325]; Telegraphers v. Ry. Express Agency (1944) 321 U.S. 342, 348-349 [88 L.Ed. 788, 792-793, 64 S.Ct. 582].) Modern adjustments in limitations law, however, have reflected concern for the practical needs of prospective plaintiffs. Our law has evolved, for example, to a point where the limitations clock only begins to run on certain causes of action when the injured party discovers or should have discovered the facts supporting liability. (See, e.g., Neel v. Magana, Olney, Levy, Cathcart & Gelfand (1971) 6 Cal.3d 176, 186-190
Impelled by this concern for the pragmatic, we have drifted away from the view held by some that a limitations period necessarily begins when an act or omission of defendant constitutes a legal wrong as a matter of substantive law. (See generally Developments in the Law — Statutes of Limitations (1950) 63 Harv.L.Rev. 1177.) Rather, we generally now subscribe to the view that the period cannot run before plaintiff possesses a true cause of action, by which we mean that events have developed to a point where plaintiff is entitled to a legal remedy, not merely a symbolic judgment such as an award of nominal damages.
Thus in Budd v. Nixen (1971) 6 Cal.3d 195 [98 Cal.Rptr. 849, 491 P.2d 433], we held that the limitations period on plaintiff's legal malpractice action did not begin until plaintiff had suffered "appreciable harm." (Id. at p. 200.) "The mere breach of ... duty," we said, "causing only nominal damages, speculative harm, or the threat of future harm — not yet realized" normally "does not suffice to create a cause of action...." (Id.; see also Miller v. Bean (1948) 87 Cal.App.2d 186, 189 [196 P.2d 596].)
Particularly illustrative in this regard is Walker v. Pacific Indemnity Co. (1960) 183 Cal.App.2d 513 [6 Cal.Rptr. 924], which involved an insurance broker who carelessly procured a $15,000 liability policy after his client requested a $50,000 policy. The insured subsequently incurred a personal injury judgment in excess of $15,000, and a Court of Appeal held that the limitations period on the insured's assignee's negligence action against the broker had commenced when the judgment was entered, not when the broker procured the wrong policy. The court stated that "It is clear that mere possibility, or even probability, that an event causing damage will result from a wrongful act does not render the act actionable. Of course, it is uncertainty as to the fact of damage, rather than its amount, which negatives the existence of a cause of action. In the case at bar, the fact of any damage at all was completely uncertain until judgment in the personal injury action." (183 Cal. App.2d at p. 517.) (Citations omitted.) Rejecting the contention that plaintiff could have sued for nominal damages when he discovered the inadequacy of the coverage, the court stated that "an action for mere nominal damages
Davies, moreover, could have included in a 1955 action for actual damages a prayer for injunctive relief to bar defendant from further unauthorized disclosure or use of Davies' story.
We fear that plaintiff's interpretation of the statute of limitations would impair the safeguards it imposes in cases involving unliquidated damages. As Justice Allport pointed out in his dissenting opinion in the Court of Appeal, "The argument [advanced by plaintiff] would be available in all such actions that the applicable statute is tolled for an indefinite time simply because the nature and extent of the damage was not determined or readily provable within the otherwise applicable statutory period of limitation." We conclude that the statutory period commenced once Davies suffered actual and appreciable damage, and thus no later than November 11, 1955.
Plaintiff thirdly and finally asserts that, for want of a res, the remedy of constructive trust was not available to Davies until 1958; she maintains that consequently the period of limitation on that remedy should not begin to run until 1958.
In summary, we hold that if plaintiff has a cause of action for breach of confidence, that cause of action is subject to the two-year limitation of Code of Civil Procedure section 339, subdivision 1. Under the facts as found by the trial court, plaintiff had suffered actual and appreciable harm from defendant's breach by November 11, 1955; the statutory period therefore began to run no later than that date. Neither plaintiff's difficulty in proving the extent of damage, nor the lack of a res on which to impose a constructive trust, delays the running of the period of limitation. Consequently plaintiff's suit when filed on November 19, 1959, was barred by limitations.
The judgment is affirmed.
Wright, C.J., McComb, J., Sullivan, J., Clark, J., Molinari, J.,
Appellant's petition for a rehearing was denied July 3, 1975. Mosk, J., did not participate therein.
The doctrine of law of the case of course is not inflexible. (England v. Hospital of Good Samaritan (1939) 14 Cal.2d 791, 795 [97 P.2d 813].) The principal ground for ignoring the doctrine, however, is an intervening or contemporaneous change in the law (see Ryan v. Mike-Ron Corp. (1968) 259 Cal.App.2d 91, 96-97 [66 Cal.Rptr. 224]; 6 Witkin, Cal. Procedure (2d ed. 1971) pp. 4568-4570), a circumstance not present in the instant case.