Metropolitan News-Enterprise


Friday, October 1, 2021


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Time-Barred Fraud Actions Can’t Be Converted Into Contract Suits—C.A.

Summary Judgment Affirmed for Owner of Mobile Park; Bad Advice by Manager That Government Approval Not Needed for Construction Wasn’t Contractual Breach


By a MetNews Staff Writer


Mobile home owners who were misinformed by the on-site manager of the park where they occupied space that improvements could be made to their properties without government approval, and who did not timely sue for the ensuing harm when they found they were in noncompliance with the law, cannot maintain actions under a contract theory, the Fifth District Court of Appeal held on Friday.

The statute of limitations for fraud is three years and there is a four-year time bar on actions based on contract. An action by the mobile home owners was brought within four years.

Three couples appealed from the summary judgment granted by Merced Superior Court Judge Brian L. McCabe to defendant CTC Investors, LLC. The defendant had sold them their mobile homes and entered into contracts with them under which the couples leased space in Casa Mobile Home Park.

Implied Covenant

After state inspectors disapproved the modifications they had made on the mobile homes, they found they lacked the funds to bring the properties into compliance and lost the mobile homes. On appeal the couples insisted that they had valid causes if action for breach of the implied covenant of good faith and fair dealing.

Acting Presiding Justice Herbert I. Levy wrote the unpublished opinion affirming the judgment, explaining:

“[W]e agree with the trial court’s conclusion that no cause of action existed in this case under the implied covenant of good faith and fair dealing. Although the allegations of false representations and detrimental reliance potentially indicated fraud, they cannot reasonably be stretched into a viable claim for breach of the lease agreements under the guise of the implied covenant of good faith and fair dealing.”

He continued:

“As the trial court correctly pointed out, the implied covenant is only recognized to protect the parties’ rights or benefits embodied in their express contract. Here, there was no adequate connection between the rights or benefits provided in the lease agreements and the subject matter of the alleged false representations, and thus no cause of action for breach of the implied covenant was available.”

Purpose of Leases

Levy elaborated:

“The manifest purpose of the written lease agreements was the rental of spaces in the Park, not the purchase or improvement of any person’s mobilehome. The necessity of obtaining government approvals or permits before making substantial improvements to one’s own mobilehome, situated on a rented space at the Park, was not within the scope of the express provisions of said lease agreements. In other words, no express covenant or benefit provided under the lease agreements related to that specific subject matter. Consequently, inasmuch as there was no express contractual right or benefit concerning which an implied covenant would be needed to afford protection from the conduct of the other party, the implied covenant does not apply to the circumstances of this case.”

The case is Muniz v. CTC Investors, F079107.


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