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Evanston Insurance Co. v. Federal National Mortgage Association

filed: July 17, 1992.

EVANSTON INSURANCE COMPANY, PLAINTIFF-APPELLANT,
v.
FEDERAL NATIONAL MORTGAGE ASSOCIATION, ET AL., DEFENDANT-APPELLEE.



Appeal from the United States District Court for the Central District of California. D.C. No. CV-90-4782-JGD. John G. Davies, District Judge, Presiding.

Before: D.w. Nelson and Thompson, Circuit Judges, and Pro, District Judge*fn*

MEMORANDUM

OVERVIEW

Evanston Insurance Company appeals the district court's order dismissing its indemnity claims and its subrogation claims for negligence, negligent misrepresentation, restitution, and breach of contract, against the Federal National Mortgage Association (FNMA). We have jurisdiction under 28 U.S.C. § 1291 and we affirm.

Discussion

We review de novo a district court's order granting a motion to dismiss for failure to state a claim under Fed. R. Civ. Pro. 12(b)(6). Rothman v. Vedder Park Management, 912 F.2d 315, 316 (9th Cir. 1990). All allegations of material fact are taken as true and construed in the light most favorable to the nonmoving party. Id.

The district court granted FNMA's motion to dismiss Evanston's subrogation claims because it determined that they are barred by the applicable statutes of limitations. We agree.

Evanston's claims against FNMA arose out of a class action filed October 4, 1984 against Evanston's insured, Guild Mortgage Company. By virtue of having to defend the class action, Guild was put on notice of the facts necessary to establish its claims against FNMA and sustained appreciable and actual damage in the form of attorney fees. See Laird v. Blacker, 828 P.2d 691, 696 (Cal. 1992) (plaintiff sustained actual injury when she was compelled to incur legal costs and expenditures as a result of defendant's malpractice).

The longest statute of limitations claimed by Evanston is four years, for restitution and breach of contract. See Cal. Code Civ. Pro. § 337. The statutes of limitation at issue in the subrogation claims began to run no later than October 4, 1984, when Guild knew or should have known the essential facts to establish the elements of its causes of action, and when it had sustained appreciable and actual damages. Neel v. Magana, Olney, Levy, Cathcart & Gelfand, 491 P.2d 421, 422 (Cal. 1971); Budd v. Nixen, 491 P.2d 433, 434 (Cal. 1971). All four subrogation claims brought against FNMA in the complaint filed July 9, 1990, are time barred. Because Guild, Evanston's subrogor, is barred by the statute of limitations on its direct claims against FNMA, Evanston's subrogation claims are also time barred. Smith v. Parks Manor, 243 Cal. Rptr. 256, 261 (Cal. Ct. App. 1987) (an insurer subrogee stands in the stead of the original claimant and is subject to all defenses which could have been asserted against that party).

We reject Evanston's argument that FNMA is estopped to plead the statute of limitations as a defense.

Where one acts with full knowledge of plain provisions of law, and their probable effect upon facts within his knowledge, especially where represented by counsel, he can neither claim (1) ignorance of the true facts or (2) reliance to his detriment upon the conduct of the person claimed to be estopped, two of the essential elements of estoppel.

Cal. Cigarette Concessions v. City of Los Angeles, 350 P.2d 715, 717 (Cal. 1960). FNMA is not equitably estopped from asserting a statute of limitations defense to Evanston's subrogation claims because Guild acted with full knowledge of the applicable statutes of limitations, and their probable effect upon facts within its knowledge, while represented by counsel. See Cal. Cigarette Concessions, 350 P.2d at 718 (counsel is presumed to know the statute of limitations for filing claims).

The district court granted FNMA's motion to dismiss Evanston's indemnity claims because it determined that a post-settlement action for indemnity would involve duplication and waste of judicial resources. We may affirm, however, on any ground supported by the record. Jama Constr. v. City of Los Angeles, 938 F.2d 1045, 1047 (9th Cir. 1991), cert. denied, 112 S. Ct. 1293 (1992).

Evanston argues it stated a claim for implied contractual indemnity by its allegations that FNMA breached a duty, imposed by its contract with Guild, to accurately set and approve index rates used to calculate adjustable rate ...


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