Court Limits Advance Payments That Toll Statute of Limitations under Insurance Code Section 11583

By Christopher Kendrick, Valerie Moore
JDSupra
June 2, 2016

http://www.jdsupra.com/legalnews/court-limits-advance-payments-that-toll-68869/

In Doe v. Roman Catholic Archbishop etc. (No. B264947, filed 5/26/16), a California appeals court held that gifts lavished on victims by a molesting priest did not constitute advance or partial payment of damages sufficient to toll the statute of limitations on a civil lawsuit for damages under Insurance Code section 11583.

The plaintiffs in Doe v. Roman Catholic Archbishop were adult victims of childhood sexual abuse by a Catholic priest dating back to the 1970s and 1980s. The priest had died in 1985, but in 2014 the victims sued the Archdiocese of Los Angeles alleging claims for childhood sexual abuse and negligence. The trial court sustained the Church’s demurrer without leave to amend on the ground that the lawsuit was barred by the applicable statute of limitations, since it was filed more than 30 years after the last act of abuse had occurred.

Plaintiffs argued that the statute of limitations was tolled by actions of the priest under Insurance Code section 11583. Section 11583 provides that any “advance payment or partial payment of damages made by any person” (1) may not “be construed as an admission of liability” and (2) shall be credited against any final settlement or judgment. However, if the person making that “advance payment or partial payment of damages” does not give the recipient written notice of the applicable statute of limitations, the statute will be tolled until written notice is given or until the person retains an attorney, whichever happens first.

The court explained the statute, saying: “This section seeks to walk the line between two competing goals: ‘[E]ncourag[ing] early payments on prima facie meritorious claims while at the same time avoiding the risk that such early payments would lull a claimant into a sense of complacency about filing a lawsuit because of the apparent cooperativeness of the defendant.’ [] Although this provision is entitled ‘Motor vehicle insurance; Advance or partial payment of damages’ and is located in the Insurance Code, it applies in child sexual abuse cases.”

Plaintiffs had alleged that the priest and/or the Archdiocese provided them money and gifts from the time their molestation began until an unspecified time prior to the priest’s death in 1985, and the Archdiocese provided one plaintiff with psychological counseling in 1996. But because neither the priest nor the Archdiocese provided the plaintiffs with written notice of the limitations period for sexual abuse claims, they argued that the statute of limitations was tolled.

The court found that the gifts as had been alleged by the plaintiffs would not trigger the statute: “As applied here, the critical word within the phrase ‘advance payment or partial payment of damages’ is ‘damages.’ Because ‘damages’ are an element of every civil claim, the word is well defined and every definition is the same: Damages compensate.” “Whatever their semantic differences, the statutory and dictionary definitions of ‘damages’ share several basic concepts. Each requires there to be ‘compensation,’ in ‘money,’ ‘recovered’ by a party for ‘loss’ or ‘detriment’ it has suffered through the acts of another.”

But the court concluded that the gifts alleged by the plaintiffs were part of the crime: “Payments a child molester makes to seduce and keep his victims open to future abuse—so-called ‘grooming’ payments—are part and parcel of the sexual abuse itself.... Sexual abuse of a child is a crime. [] So is paying a child not to report the sexual abuse.”

The court also answered the question “what if a payment serves two purposes—one to compensate, and another to facilitate a crime? Is that payment an ‘advance payment or partial payment of damages’ within the meaning of section 11583? We conclude it is not, and conclude that a payment must be solely compensatory in order to qualify as ‘damages’ under section 11583.”

The court said that the gifts had been lavished upon the plaintiffs in furtherance of the crime and tolling the statute based on such gift payments would be inconsistent with the offset provision of section 11583, because it would permit an offset or credit for payments in furtherance of a crime. Also, the statute’s exclusionary wording precluding use of the payments as evidence of liability would effectively require the exclusion of evidence of the crime. The court said that because giving of gifts is a common feature of child molestation cases, finding section 11583 applicable would in effect repeal the statute of limitations imposed by the Legislature.

The court then found that although the Archdiocese’s payment for psychological counseling would indeed have constituted an advance or partial payment on damages under section 11583, the acts had occurred after the original statute of limitations had already run, and section 11583 could be construed so as to revive expired claims. The Doe v. Roman Catholic Archbishop court also concluded that the statutory language regarding payment by a “person” could be satisfied by the priest’s payments, which could also be attributed to the Church on an agency theory.

Despite having concluded that the allegations of gifting by the priest did not meet the requirement for advance or partial payment of damages, the Doe v. Roman Catholic Archbishop court did nonetheless find that the plaintiffs should have been granted leave to amend on a theory that it was possible for the plaintiffs to allege facts showing that the priest and/or the Church had made payments after the abuse stopped, that might then constitute “damages” intended to compensate the plaintiffs rather than further the crime of childhood sexual abuse.