Legal Question in Business Law in California

Under California Civil Code Section 1689:

What is the time frame to rescind a contract - settlement - when fraud has occurred during settlement negotiations?

Asked on 6/15/13, 1:53 pm

4 Answers from Attorneys

Timothy McCormick Libris Solutions - Dispute Resolution Services

4 years. Code of Civil Procedure section 337.

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Answered on 6/15/13, 2:31 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Without more details, I can give you only a rather general answer, which may or may not be correct under the specific circumstances at hand.

While there is a three-year statute of limitations for lawsuits based on fraud, I believe the time within which rescission must be sought is considerably less. There are some authorities that suggest the right to rescind must be invoked "promptly" upon discovery of the facts that reveal the fraud. The time may vary depending upon where the fraud occurs -- in the inducement to enter into the settlement, in the settlement agreement itself, or in the carrying out of its terms.

There are a couple of California appellate cases that, if understood and applied to the facts of your situation, may be very helpful. The first is Oakland Raiders v. County Coliseum, a 2006 case reported at 144 Cal.App.4th 1175. The other is Village Northridge Homeowners' Association v. State Farm Fire & Casualty Co., a 2010 California Supreme Court case reported at 50 Cal.4th 913. You should be able to find both cases on line; if not, try the county law library in Santa Rosa.

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Answered on 6/15/13, 2:32 pm
Seth Wiener Law Offices of Seth W. Wiener

The statute of limitations on a cause of action for rescission of a written contract on account of fraud is four years. See Code Civ. Proc . § 337(3). The statutory period does not begin to run, however, until discovery of the facts constituting the fraud. See id. And a common-law rule of delayed accrual applies to misrepresentations. See April Enterprises, Inc. v. KTTV, 147 Cal.App.3d 805, 832 (1983). To come under the delayed-discovery rule, the plaintiff is required to set forth in the complaint “facts showing that [it was] not negligent in failing to make the discovery sooner and that [it] had no actual or presumptive knowledge of facts sufficient to put [it] on inquiry.” See Hobart v. Hobart Estate Co., 26 Cal. 2d 412, 437 (1945).

Seth W. Wiener

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Answered on 6/15/13, 8:34 pm
Anthony Roach Law Office of Anthony A. Roach

I think the previous attorneys misread your question. The economy is so bad now that attorneys must have little time to listen and carefully read things anymore.

If you have a settlement agreement that was in litigation, then you are governed by the shorter time period of 6 months set forth in Code of Civil Procedure section 473.

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Answered on 6/16/13, 11:46 pm

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