Thursday, May 14, 2026
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Court of Appeal:
Annotation on Check Referencing Debt Not Time-Bar Waiver
Opinion Says Memo Line Reciting Loan to Plaintiff Is Mere Accounting Notation, Not Unqualified Admission of Ongoing Obligation Necessary to Avoid Expired Statute
By Kimber Cooley, associate editor
Div. One of the Fourth District Court of Appeal has held that a notation on the memo line of a check made out to the plaintiff that references a loan between the parties for which repayment was years overdue is insufficient to qualify as a clear, unconditional written acknowledgement of an ongoing obligation to revive the promise to pay in the face of an expired statute of limitations.
Justice Julia C. Kelety authored the opinion, filed April 16 and certified for publication on Tuesday, declaring that the check notation failed to trigger tolling provisions found at Code of Civil Procedure §360 or case law providing for the revival of a time-barred claim if a debtor makes an unqualified, written admission of a continuing obligation to pay. She wrote:
“The notation…identifies a payee and categorizes a transaction for accounting purposes. It does not constitute an unqualified admission of a subsisting obligation, a statement of the amount owed, a promise to pay any remaining balance, or a waiver of any defense. It is an accounting notation, not an acknowledgment.”
Seeking repayment for a purported loan was Bhaskar Dawadi, who asserted that he had loaned $80,000 to Pradhi Inc., a company allegedly controlled by Prasanna Adhikari, in January 2015. According to Dawadi, the terms of the written promissory note called for full repayment within one year with 0% interest.
Three Payments
Dawadi received nothing until June 2021, when Adhikari made the first of three $1,000 payments. The first two checks each indicated “BR Dawadi-Pradhi Loan Payment” on the memo line, and the third check, signed in November 2023, said only “Payment.”
Adhikari later denied ever having borrowed money from Dawadi and refused a request for a personal guarantee of the debt. In July 2024, Dawadi filed a complaint against Adhikari, Pradhi Inc., and an allegedly related company, asserting causes of action for breach of contract and fraud.
The defendants demurred, arguing that the four-year statute of limitations governing contracts, found at Code of Civil Procedure §337, had expired. Dawadi opposed the demurrer, citing the checks and the 1946 California Supreme Court case of Western Coal and Mining Company v. Jones, which recognizes that an unqualified, written acknowledgment of a debt may establish a continuing obligation to pay.
San Diego Superior Court Judge Catherine A. Richardson sustained the demurrer without leave to amend, finding that the plaintiff’s claims were time-barred, the 2021 payments did not revive the causes of action under §360, and that Western Coal was distinguishable because it involved a subsequent, written contract rather than notations on the face of a check.
Statute Has Run
Kelety wrote:
“Here, the loan was due in January 2016. The statute of limitations for a written contract is four years….The cause of action was therefore barred as of January 2020—more than four years before this suit was filed in July 2024. The statute of limitations bar is apparent on the face of the complaint. Importantly, the statute of limitations operates as a procedural bar to the remedy, not an extinguishment of the underlying debt.”
She acknowledged the three payments made by Adhikari but said that “those payments cannot by themselves revive the barred cause of action” under §360.
That section provides that “[n]o acknowledgment or promise is sufficient evidence of a new or continuing contract, by which to take the case out of the operation of this title, unless the same is contained in some writing, signed by the party to be charged thereby” and further specifies that “any payment…on a promissory note…shall be deemed a sufficient acknowledgment…to stop…the running of the time within which an action may be commenced.”
Barred Claim
Pointing out that the section also declares that “no such payment of itself shall revive a cause of action once barred,” she said that “Section 360 applies only to continuing contracts against which the statute has not yet run at the time of the payment or acknowledgment.”
Addressing Western Coal and its progeny, she remarked:
“The standard for a sufficient post-expiration written acknowledgment is demanding. The acknowledgment must be unqualified and unconditional, a flat, direct admission of the debt.”
Saying that “[t]he check annotations here do not meet that standard,” she added:
“Moreover, the surrounding circumstances decisively rebut any inference of an unconditional intent to pay. Dawadi’s own complaint alleges that Adhikari refused his explicit request to personally assume or revive the debt and subsequently denied having borrowed the money at all….Where the record reflects a clear, unqualified denial, not a clear, unqualified acknowledgment, the check annotations cannot bear the legal weight Dawadi places on them.”
Acting Presiding Justice Truc T. Do and retired Justice Richard D. Huffman, sitting by assignment, joined in the opinion affirming the defense judgment.
The case is Dawadi v. Adhikari, 2026 S.O.S. 1327.
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