Administrative Management Services, Inc. v. Fidelity & Deposit Co.

Opinion

ASHBY, J. Appellant William Cartwright appeals from an order granting a motion to strike his “special answer” which he filed as a third party defendant pursuant to Code of Civil Procedure section 428.70. We conclude the appeal lies and that the trial court erred in striking the answer.

In 1971, in connection with the marriage dissolution proceedings of Adeline and Joseph Zamot, appellant Cartwright was appointed by the superior court to act as a receiver of the Zamots’ private convalescent hospital. A receiver’s bond (Code Civ. Proc., § 567) was provided by the defendant in this case, Fidelity and Deposit Company of Maryland (F&D). In his capacity as receiver, Cartwright apparently caused the hospital to breach a contract with the plaintiff in this case, Administrative Management Services, Inc. (AMS). In 1973 AMS obtained a default judgment against Cartwright for approximately $13,000. The judgment recites that Cartwright, as receiver, failed and refused to faithfully execute the duties of his trust according to law.

On March 14, 1977, plaintiff AMS filed the instant action against defendant F&D to recover, on the receiver’s bond, the judgment against Cartwright which remained unpaid. F&D’s demurrer to the complaint was sustained but thiis ruling was reversed on appeal in February 1979. (Administrative Management Services, Inc. v. Fidelity & Deposit Co. (1979) 89 Cal.App.3d 532 [152 Cal.Rptr. 620].)

Defendant F&D then answered plaintiff’s complaint without raising the defense that the action was barred by the four-year statute of limitations of Code of Civil Procedure section 337, subdivision 1. On July [48713], 1979, defendant F&D filed a cross-complaint against Cartwright, alleging that F&D was entitled to indemnity from Cartwright for any judgment in favor of plaintiff AMS against defendant F&D, because in his application for a bond Cartwright had agreed to indemnify F&D.

In January 1980 defendant F&D filed its first amended answer to plaintiff AMS’s first amended complaint, again without raising any defense of the statute of limitations. In February 1980 defendant F&D moved to amend its answer to include a statute of limitations defense, on the ground that F&D’s attorney had inadvertently overlooked such a defense. Exercising its discretion, the court in April 1980 denied F&D’s motion to amend its answer, concluding that F&D had waived such defense by failing to raise it in a timely manner. F&D’s petition to the Court of Appeal for a writ was denied without opinion in May 1980. (2 Civ. 59244.)