Appellate Court Decisions

CALEXICO HOSPITAL MANAGEMENT GROUP, LLC, Plaintiff and Appellant, v. STATE OF CALIFORNIA et al., Defendants and Respondents.


2001 Cal. App. Unpub. LEXIS 2543

October 18, 2001, Filed


[*1] NOT TO BE PUBLISHED IN OFFICIAL REPORTS. California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

PRIOR HISTORY: APPEAL from a judgment of the Superior Court of Imperial County, Donal B. Donnelly, Judge. Super. Ct. No. L00074.

DISPOSITION: Affirmed in part and reversed in part.



OPINION: In this action arising out of the failure of Calexico Hospital (the Hospital), a general acute care hospital located in Calexico, California, the manager of and investor in the Hospital, plaintiff and appellant Calexico Hospital Management Group, LLC (CHMG), sued defendants and respondents the State of California (State), the California Department of Health Services (DHS), and State employees Nelson Ford, Glenda Shekel, Hunt, n1 Joan Carmen, Donna Loza, Wayne Moon n2 and Barry Giles (collectively, respondents). CHMG alleged that the respondents caused the failure and closure of the Hospital in January 1998 by promising[*2] but failing to deliver an inspection known as the Medicare/Medi-Cal survey that would have enabled the Hospital to obtain provider numbers, which in turn would have allowed it to obtain reimbursement for services rendered to indigent patients.

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n1 No first name for this defendant appears in the record. Hunt was subsequently dismissed from the action and is not a party to this appeal.

n2 Wayne Moon was later dismissed from the action and is not a party to this appeal.

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CHMG first filed an administrative claim with the State to challenge respondents' actions. Thereafter, CHMG filed a lawsuit in the Imperial County Superior Court, alleging causes of action for (1) deprivation of rights under color of State law under 42 United States Code section 1983 (section 1983); (2) fraud and deceit; and (3) violation of the due process and equal protection clauses of article I, section 7 of the California Constitution. Respondents filed a demurrer in response to CHMG's complaint, asserting: [*3] (1) the section 1983 claim was barred by the one-year statute of limitations; (2) the fraud cause of action was barred by CHMG's failure to assert such a claim in its administrative claim; and (3) no claim for money damages is available under article I, section 7 of the California Constitution. In August 2000, the court sustained respondents' demurrer, without leave to amend. In September 2000, the court entered judgment dismissing CHMG's complaint in its entirety.

On appeal, CHMG contends that the court erred in sustaining the respondents' demurrer as to the first cause of action brought under section 1983 as the statute of limitations was tolled during the time that CHMG pursued its administrative claim. CHMG asserts the court erred in dismissing the second cause of action for fraud as the administrative claim adequately alleged facts constituting fraud so as to preserve that claim for its civil suit. Finally, CHMG contends the court erred in sustaining the demurrer to its cause of action for violation of the due process and equal protection clauses of the California Constitution as, under the facts of this case, a claim for money damages lies for such a violation. We reverse[*4] the court's order sustaining respondents' demurrer as to the first and second causes of action and affirm the court's order sustaining respondent's demurrer to the third cause of action.


A. The Allegations of CHMG's Complaint n3

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n3 Because we are reviewing the court's sustaining of respondents' demurrer, for the purposes of this appeal we accept as true all material allegations alleged in the complaint. ( Blank v. Kirwan (1985) 39 Cal.3d 311, 318 (Blank).)

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CHMG was the manager of the Hospital and all of its affiliated health care facilities in Calexico. The Hospital served thousands of patients, many of whom were indigent. Many patients would travel across the border from Mexico to receive health services at the Hospital.

The State, through its licensing and certification branch, conducted surveys and inspections of hospitals within the State of California for the purpose of approving the hospitals' entitlement to seek reimbursement for[*5] health care services. Passing the survey would have enabled CHMG and the Hospital to obtain "provider numbers" to enable them to seek reimbursement from Medicare and Medi-Cal for health care services provided to their patients.

CHMG began operating the Hospital in 1996 after the Hospital emerged from bankruptcy, during which time it had ceased operations and its license to operate was suspended. CHMG obtained a $1.5 million line of credit to cover initial expenses, hired physicians and other staff, entered into agreements and began preparing for its licensing inspection which was scheduled to take place at the end of November 1996.

The first licensing inspection occurred in January 1997. The respondents refused CHMG's request for a license on the grounds that the Hospital's policies and procedures manuals were incomplete and that proctoring policies and application reviews for medical staff were insufficient. CHMG updated all policies and procedure manuals and submitted them for approval with respondents in February 1997. CHMG at that time again requested a licensing survey. CHMG was told that an inspection would take place in March 1997. The respondents approved the Hospital's[*6] manuals at that time. However, the licensing inspection did not take place as promised. CHMG was told this was due to scheduling conflicts and that an inspection could not occur until May 1997.

In May 1997 a second inspection took place. The respondents again declined to issue a license for the Hospital. The grounds given were incomplete policies and procedures. CHMG again made changes to its policies and procedures manuals and submitted them to respondents. CHMG also requested a third licensing inspection.

In June 1997, the respondents granted CHMG permission to open the Hospital and reactivated its license to operate effective June 1997. The Hospital opened its doors to the public in June 1997. The Hospital began treating patients, many of whom were indigent and either underinsured or uninsured.

At the same time, CHMG wrote to respondents, requesting a Medicare/Medi-Cal survey to allow it to bill and collect Medicare and Medi-Cal benefits for medical services and products delivered at the Hospital. During the first seven months following the Hospital's reopening, the sum of monies the Hospital would have been entitled to collect from Medicare and Medi-Cal came to approximately [*7]$3.5 million.

According to CHMG, respondents promised on several occasions to conduct a Medicare/Medi-Cal survey or, when they did, concocted false reasons to deny approval. The Hospital was thus forced to remain open to keep its license, but unable to collect for its services, the major portion of which would come from Medicare and Medical due to the indigence of its patients. However, the respondents kept promising that a survey would take place in the near future.

In response to a promise from respondents that a Medicare/Medi-Cal survey would take place in December 1997 and that it would be conducted in a fair and prompt manner, two principals of CHMG signed personal guarantees on a new loan in the amount of $450,000. The loan was required for the Hospital to continue treating its patients, pay its employees, meet its other obligations and continue to operate until its could begin collecting from Medicare and Medi-Cal. The two principals of CHMG also provided personal funds and credits to keep the Hospital open.

However, despite respondents' promises, they continued to delay the Medicare/Medi-Cal survey and kept imposing additional and unwarranted roadblocks on the[*8] approval process. Ultimately, CHMG asserts, the promised survey never occurred. As a result, the Hospital ceased emergency room operations in December 1997 and closed all operations of the Hospital in January 1998. The closure of the Hospital left the City of Calexico without hospital services, forcing its residents to travel to El Centro or elsewhere to obtain hospital care.

CHMG alleges that the respondents had an ulterior motive for delaying and refusing their ability to collect Medicare and Medi-Cal benefits. CHMG claims they did this because the Hospital serviced patients that respondents suspected were illegal aliens whom the Hospital was forbidden from treating under the provisions of Proposition 187, a proposition later held to impermissibly and unconstitutionally deny health care services to such individuals. According to CHMG, based upon this illegal position, respondents set out to force the Hospital to close its doors.

As a result of respondents' actions, CHMG and its principals lost their investment in the Hospital, the principals have a judgment against them for the $450,000 loan they personally guaranteed, and they lost profits they would have made but for[*9] the respondents' actions.

B. CHMG's Claim

In December 1998, CHMG filed a claim for damages with the State and DHS. The claim alleged in part:

"On or about October of 1997, The Department, through its employee[s] and agents represented to Management that in thirty (30) days or less a Medicare and Medi-Cal inspection team would complete an inspection at the Hospital for the purpose of granting Medicare and Medi-Cal provider numbers . . . . Based on these representations, Ash and Smith[] personally borrowed and guaranteed additional loans . . . . Although the inspection was promised to be completed within thirty (30) days from October of 1997, the inspection in fact never occurred. [P] . . . [P] Claimants have incurred . . . damages . . . ”

The State issued a letter in March 1999 indicating that it had no jurisdiction to consider the claim, as the DHS, with whom CHMG had already filed its claim, was the proper entity to process the matter. The letter also advised that CHMG would have one year from a final decision on the claim within which to file a civil action. Thereafter, in April 1999, the State sent another letter indicating that it had no jurisdiction[*10] to consider the claim as it had been presented more than six months after the claim arose. This letter contained no notice of a deadline within which to file a civil action following the State's action on the claim. The DHS never responded to CHMG's December claim.

In May 1999, CHMG filed an amended claim with the State and DHS. This claim stated the same promise of an inspection, the loan taken out in response to the promise, the failure of respondents to abide by the promise, and CHMG's resulting damages, quoted, ante. The amended claim also added a new paragraph 15, asserting that CHMG had now been sued by various entities as a result of the failure of the Hospital and that the damages asserted in those lawsuits were the result of respondents' actions. CHMG received no response to this claim from either the State or DHS.

C. The Instant Action

In November 1999, CHMG filed an action in the Imperial County Superior Court and shortly thereafter filed a first amended complaint. n4 The complaint alleged three causes of action: (1) for deprivation of rights under color of state law under section 1983; n5 (2) for fraud and deceit; and (3) for deprivation of property[*11] without due process of law and/or denial of equal protection of the laws in violation of article I, section 7 of the California Constitution. n6

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n4 For ease of reference, the term "complaint" shall refer to CHMG's first amended complaint.

n5 Section 1983 provides in part: "Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory or the District of Columbia, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity or other proper proceeding for redress . . . ."

n6 Article I, section 7 of the California Constitution provides in part: "A person may not be deprived of life, liberty, or property without due process of law or denied equal protection of the laws . . . ."

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The respondents demurred, arguing that (1) [*12] the first cause of action brought under section 1983 was untimely as it was not filed within one year after the Hospital ceased operations in January 1998; (2) the second cause of action for fraud and deceit was barred as CHMG did not allege fraud in its claim with the State; and (3) the third cause of action for violation of CHMG's due process and equal protection rights was without merit as no claims for money damages are allowed for violation of such rights. CHMG opposed the motion and, in support of its opposition, attached copies of CHMG's claims.

In August 2000, after oral argument by counsel and supplemental briefing by the parties, the court sustained respondents' demurrer, without leave to amend, finding:

"1. The demurrer to the first cause of action is sustained without leave to amend. Plaintiff's claim under Section 1983 is barred by the one year statute of limitations. [Citation.] The doctrine of equitable tolling does not apply because plaintiff pursued no separate administrative claims for the same relief before filing suit. . . .

"2. The demurrer to the second cause of action is sustained without leave to amend. The factual basis for plaintiff's[*13] claims for fraud and deceit were not fairly reflected in an adequate and timely claim under California's claims act . . . . There are no factual or legal assertions of fraudulent or deceitful conduct by individuals . . . . The Court cannot consider the contents of plaintiff's second claim submitted to the state on May 12, 1999 as an amendment to the original claim because it was untimely. Under Government Code Sections 910.6 and 911.2, any such amendment must have been made before expiration of the claims filing period (which in this case was January 9, 1999) or before final action by the state board (which in this case was April 16, 1999). . . .

"3. The demurrer to the third cause of action is sustained without leave to amend. Plaintiff's allegations of denial of due process and equal protection under the California Constitution do not allow for recovery of money damages. [Citation.] Plaintiff had an effective alternative form of judicial relief by way [of] a lawsuit for damages (e.g., on a fraud cause of action) later lost through noncompliance with state claims statutes. [Citation.]" (Original underscoring. [*14] )

Judgment was entered, dismissing CHMG's action, in September 2000. This timely appeal follows.


A. Standard of Review

In reviewing a judgment entered after the sustaining of a demurrer to a complaint, we must determine whether the complaint alleges sufficient facts to state a cause of action. In so doing, we accept as true all material facts properly pleaded in the complaint. ( Blank, supra, 39 Cal.3d at p. 318.) We will only reverse a court's order sustaining a demurrer upon a clear showing of error or abuse of discretion. ( Loehr v. Ventura County Community College Dist. (1983) 147 Cal.App.3d 1071, 1076.)

B. Relevant Provisions of the Tort Claims Act

Before a plaintiff may file a civil action for damages against a public entity, he or she must serve a proper and timely claim upon the public entity. ( Gov. Code, § 945.4; n7 City of San Jose v. Superior Court (1974) 12 Cal.3d 447, 454 (City of San Jose).) A failure to file a timely and proper claim is fatal to the action. ( City of San Jose, supra, 12 Cal.3d at p. 454.) Moreover, "the factual[*15] circumstances set forth in the written claim must correspond with the facts alleged in the complaint; even if the claim were timely, the complaint is vulnerable to a demurrer if it alleges a factual basis for recovery which is not fairly reflected in the written claim." ( Nelson v. State of California (1982) 139 Cal.App.3d 72, 79.) The claim is required to state a "general description" of the injury, but need not be in evidentiary detail. ( Blair v. Superior Court (1990) 218 Cal.App.3d 221, 224.)

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N7 Government Code section 945.4 provides in part: "No suit for money or damages may be brought against a public entity on a cause of action for which a claim is required to be presented . . . until a written claim therefor has been presented to the public entity and has been acted upon by the board, or has been deemed to have been rejected by the board . . . ."

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Claims for injuries to persons, personal property or crops are to be filed within six[*16] months, all others within one year:

"A claim relating to a cause of action for death or for injury to person or to personal property or growing crops shall be presented . . . not later than six months after the accrual of the cause of action. A claim relating to any other cause of action shall be presented . . . not later than one year after the accrual of the cause of action." (Gov. Code, § 911.2.) n8

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n8 Respondents do not contend on appeal, nor did they below, that this action is barred as it is of the type required to be filed within six as opposed to 12 months.

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Amendments to claims may be filed within one year of accrual of the cause of action or before the entity takes final action on the claim, whichever is later:

"A claim may be amended at any time before the expiration of the period designated in [Government Code] Section 911.2 or before final action thereon is taken by the board, whichever is later, if the claim as amended[*17] relates to the same transaction or occurrence which gave rise to the original claim. The amendment shall be considered a part of the original claim for all purposes." (Gov. Code, § 910.6, subd. (a).)

Any notice that a claim is rejected, in whole or in part, or allowed must state the action the entity is taking and give a warning that the claimant has six months from the date of the notice to file a civil action. (Gov. Code, § 913 .) The notice must be either personally served on or mailed to the claimant. (Gov. Code, § 915.4.)

If the entity gives a proper notice of rejection of the claim, with the requisite warnings, a civil action must be brought within six months of the notice. (Gov. Code, § 945.6, subd. (a).) If no notice is given, or the notice is defective, the action must be filed within two years of accrual of the claimant's cause of action. (Gov. Code, § 945.6, subd. (2); Mandjik v. Eden Township Hospital Dist. (1992) 4 Cal.App.4th 1488, 1499 (Mandjik).)

C. The First Cause of Action Under Section 1983

For[*18] causes of action upon which a written claim must be filed, the statute of limitations is provided for in the Government Code. A civil action upon such causes of action must generally be filed either six months after written notice of rejection of the claim by the public entity or two years from accrual of the cause of action if the public entity does not give notice of rejection of the claim. (Gov. Code, § 945.6, subd. (a)(1) & (2).)

However, for certain causes of action a written claim to a public entity need not be filed as a prerequisite to filing a civil action. A section 1983 action brought in state court is one such cause of action not subject to state claims statutes, and hence not subject to their statutory limitations periods. ( Felder v. Casey (1988) 487 U.S. 131, 153 (Felder).) As the United States Supreme Court explained in Felder, "In enacting [section] 1983, Congress entitled those deprived of their civil rights to recover full compensation from the governmental officials responsible for those deprivations. A state law that conditions that right of recovery upon compliance with a rule designed to minimize[*19] governmental liability, and that directs injured persons to seek redress in the first instance from the very targets of the federal legislation, is inconsistent in both purpose and effect with the remedial objectives of the federal civil rights law. Principles of federalism, as well as the Supremacy Clause, dictate that such a state law must give way to vindication of the federal right when that right is asserted in state court." ( Felder, supra, at p. 153.)

Thus, for actions brought against public entities under section 1983, the statute of limitations applicable to section 1983 actions brought against private parties is used. The statute of limitations to be applied to such actions brought in state court is the limitations period for ordinary personal injury actions. ( Owens v. Okure (1989) 488 U.S. 235, 249-250.) In California, the statute of limitations for personal injuries is set forth in Code of Civil Procedure section 340, subdivision (3), which provides for a one-year statute of limitations. This one-year statute of limitations period is applicable to section 1983 actions brought in California. ( [*20] Taylor v. Regents of University of California (9th Cir. 1993) 993 F.2d 710, 711-712, cert. den. (1994) 510 U.S. 1076.)

Here, CHMG's cause of action arose in January 1998 when the Hospital closed its doors. CHMG did not file this action until November 1999, one year and 10 months later. Thus, applying the applicable one-year statute of limitations, CHMG's action would be untimely.

However, CHMG contends that the action was tolled from the time it filed its claim in December 1998 and while the matter was pending before the State, until it filed its action in November 1999. Thus, CHMG asserts, the action was timely as there is only 10 months of untolled time between accrual of the cause of action in January 1998 and the filing of CHMG's complaint in November of 1999. Respondents do not dispute that if the action was tolled during that time period, CHMG's section 1983 action is timely. However, respondents argue that the doctrine of equitable tolling is inapplicable in a situation where a person files a claim against a public entity and later files a civil action for damages. We conclude that the doctrine of equitable tolling does apply in this [*21]case and thus the section 1983 cause of action was timely and the court's order sustaining respondents' demurrer to this cause of action must be reversed.

Code of Civil Procedure section 356 excludes from a statute of limitations period the time during which an action is stayed by "injunction or statutory prohibition." n9 (See Graybar Electric Co. v. Lovinger (1947) 81 Cal.App.2d 936, 937-938.) The term "statutory prohibition" has been interpreted broadly to apply anytime that pending proceedings prevent an effective suit. ( Hoover v. Galbraith (1972) 7 Cal.3d 519, 526.) "It has long been settled in this and other jurisdictions that whenever the exhaustion of administrative remedies is a prerequisite to the initiation of a civil action, the running of the limitations period is tolled during the time consumed by the administrative proceeding." ( Elkins v. Derby (1974) 12 Cal.3d 410, 414.) The policy underlying this tolling rule was explained in Olson v. County of Sacramento (1974) 38 Cal.App.3d 958: "The judicial policy underlying the decisions which toll statutes of limitations [*22] during the pendency of interrelated administrative proceedings in cases where the latter may be dispositive of an essential element of a legal cause of action is founded on the need for harmony and the avoidance of chaos in the administration of justice. It avoids a multiplicity of actions in cases having common elements of law or fact or both. It does not pressure litigants concurrently to seek redress in two separate forums with the attendant danger of conflicting decisions on the same issue. It relieves litigants of the pressure to outrace each other in seeking an adjudication of one or the other of the legal proceedings in a forum where he may believe he has a greater chance of prevailing. The orderly administration of justice is best served by tolling the statute of limitations on independent actions at law until the final determination of the interrelated administrative proceeding." ( Id. at p. 965, italics omitted.)

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n9 Code of Civil Procedure section 356 provides: "When the commencement of an action is stayed by injunction or statutory prohibition, the time of the continuance of the injunction or prohibition is not part of the time limited for the commencement of the action."

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Of relevance to our action, the statute of limitations is tolled anytime a plaintiff is required to file a claim against a public entity prior to filing a civil suit. ( Cal. Cigarette Concessions v. City of L. A. (1960) 53 Cal.2d 865, 868; Dillon v. Board of Pension Commrs. (1941) 18 Cal.2d 427, 430-431.)

Apart from Code of Civil Procedure section 356, courts also apply an "equitable tolling" of the statute of limitations where an injured person has several legal remedies and reasonably and in good faith pursues one. ( Addison v. State of California (1978) 21 Cal.3d 313, 318 (Addison).) This equitable tolling doctrine is applicable to actions against public entities. ( Id. at p. 320.) The equitable tolling doctrine is also broader than that supplied under Code of Civil Procedure section 356 as it is applicable whenever a plaintiff in good faith pursues one action, even if the first is not a prerequisite to a later suit. ( Myers v. County of Orange (1970) 6 Cal.App.3d 626, 633-636.) Thus, in Tu-Vu Drive-In Corp. v. Davies (1967) 66 Cal.2d 435,[*24] the plaintiff's property was seized under a writ of execution in an action in which the plaintiff was not a party. The plaintiff could have sued immediately for the wrongful taking of its property, but, instead, filed a third party claim and thereafter instituted a suit for damages for its unlawful detention. In that case it was held that the statute of limitations was tolled during the third-party claim proceeding. ( Id. at pp. 436-437.)

In County of Santa Clara v. Hayes Co. (1954) 43 Cal.2d 615 (Santa Clara), the defendant negligently made mistakes in the publication of a proposed county charter, and the County could have immediately brought an action for damages against the defendant. ( Id. at p. 617.) However, the County took the position that the mistakes were not sufficient to invalidate the charter and presented it to the Legislature for approval. The charter was approved by the Legislature but was subsequently invalidated in a legal proceeding because of its defective publication. Thereafter, the County instituted a suit for damages. The California Supreme Court held that the statute of limitations was tolled [*25]during the period that the County submitted the charter to the Legislature for approval instead of filing suit. ( Id. at p. 619.) As the high court stated,“[The County] was confronted with the choice of assuring damages by failing to submit the charter or attempting to avoid any damage by putting it into effect. It would be anomalous if by the very act of attempting to prevent damage from the defendant's wrong, it should lose the benefit of the rule tolling the statute . . . ”( Id. at pp. 618-619.)

In Myers v. County of Orange, supra, 6 Cal.App.3d 626, the widow of a county employee sought damages for an alleged wrongful discharge of her deceased husband. She was faced with two possible procedures: an administrative remedy and a civil action. She chose to apply for a hearing by an appeal board, seeking to have her husband's discharge rescinded and her husband reinstated as an employee from the date of discharge until the date of his death. After the board rejected her appeal, she filed a claim against the county and then a suit in superior court. The defendant demurred on the basis of the statute of limitations,[*26] which demurrer was sustained by the superior court. The Court of Appeal reversed, holding that the statute of limitations was tolled during the period that the plaintiff pursued her administrative remedies, even though it was unclear that she was required to pursue such a remedy prior to filing suit. ( Id. at pp. 634-637.)

The time to file an action is also tolled during the time period that the plaintiff pursues a nonjudicial procedure, such as arbitration, mediation or other administrative remedy mandated by a contract or law. ( Van Hook v. So. Cal. Waiters Alliance (1958) 158 Cal.App.2d 556, 565.) This is so even if exhaustion of such remedies is not mandatory, so long as the procedure is actually utilized. ( Rodriguez v. Southern Cal. Dist. Council of Laborers (1984) 160 Cal.App.3d 956, 961 (Rodriguez).)

In assessing whether equitable tolling should be applied in a given case, courts generally ask three questions: (1) whether there was a timely notice to the defendant in the filing of the first claim or proceeding; (2) whether there is any prejudice to the defendant by allowing the tolling; and (3) whether the [*27]plaintiff's conduct in delaying filing the second action was reasonable and in good faith. ( Addison, supra, 21 Cal.3d at p. 319.)

The first prong simply means that the first claim or action was filed within the applicable limitations period. ( Collier v. City of Pasadena (1983) 142 Cal.App.3d 917, 924.) The second prong requires that the claims in the two actions be sufficiently similar that the first action puts the defendant on notice of the claims against it and allows it to adequately defend against the second. ( Id. at p. 925.) The third prong is less clearly defined, but appears to question whether the plaintiff's actions were motivated by tactical reasons or whether there has been undue delay caused by the filing of the two separate actions. ( Id. at p. 926.)

As discussed, ante, the tolling provisions of Code of Civil Procedure section 356 only apply where a governmental claim filing is required. We could locate no California case deciding whether this tolling provision applies where, as here, the cause of action sought to be tolled is one as to which a claim[*28] is not required, but other causes of action based upon the same facts do require the filing of a claim. The policy behind the tolling provisions of Code of Civil Procedure section 356, to avoid a multiplicity of actions, would support application of that section's tolling provision to this case. To force CHMG to file its section 1983 case while its fraud and state constitutional claims were pending in the claim filed with the State would frustrate such goals and possibly lead to inconsistent results.

However, we need not decide Code of Civil Procedure section 356's application to the facts of this case as CHMG's action falls under the ambit of the more general equitable tolling doctrine. Here, CHMG was required to file a claim with the State as a prerequisite to filing a suit for damages for fraud and violation of its equal protection and due process rights. It is undisputed that the claim was timely filed. The facts underlying the claim and subsequent lawsuit are essentially the same. Thus, respondents were put on notice as to the subject of the claims, were in a position to defend those claims and were not prejudiced[*29] by CHMG pursuing that claim prior to institution of legal proceedings. Because CHMG was required to file a claim with the State before initiating its civil action, it timely did so, and thereafter promptly initiated this action, it cannot be said that CHMG failed to act reasonably and in good faith.

In arguing against imposition of equitable tolling in this case, respondents claim that "CHMG did not have several legal remedies at its disposal, nor did it pursue only one remedy in lieu of another reasonably and in good faith, which was designed to lessen the extent of its injury or damages." Respondents' argument is not well taken. CHMG had the option of immediately suing for damages on its section 1983 claim only, or, as it did here, of waiting to pursue that claim until after it filed and the State acted on the claim required for its other causes of action. The fact that the claim procedure was not in a judicial forum does not mean it did not constitute a separate remedy that CHMG was pursuing. (See Rodriguez, supra, 160 Cal.App.3d at pp. 960-961; Santa Clara, supra, 43 Cal.2d at p. 619.) It acted reasonably and in good faith to potentially[*30] reduce its damages by giving the State the opportunity to resolve the matter quickly and cost effectively through the claims process. The situation presented here is precisely that for which the equitable tolling doctrine was designed.

Applying the equitable tolling doctrine to this matter, the section 1983 claim was timely. First, neither the March nor April letters by the State can constitute rejections of CHMG's claim, thereby triggering a six-month period within which to file a civil action. The State's March letter states that only the DHS, not itself, had jurisdiction to consider the claim and accept or reject it. Further, neither letter complied with statute. The first letter erroneously states that CHMG had one year, instead of six months, within which to file an action after the DHS had acted on the claim. The second letter gave to time period at all within which to file an action. These statutory defects prohibit them from being considered as rejections of CHMG's claim, so as to start the running of the six-month time period within which to file a lawsuit. ( Mandjik, supra, 4 Cal.App.4th at p. 1499.) The DHS, with whom CHMG also filed its claim, [*31] never responded to either the original or amended claim at all. Because the State did not mail a proper rejection, and the DHS did not respond at all to CHMG's claim, CHMG had two years from the accrual of its cause of action to file this lawsuit. (Ibid.) Accordingly, as the filing of the claim with the State and DHS tolled the applicable statute of limitations, and the State and DHS's failure to act on the claim gave CHMG two years from the accrual of its cause of action in January 1998 within which to file this action (Gov. Code, § 945.6, subd. (a)(2)), the complaint filed in November 1999 was timely.

D. The Second Cause of Action for Fraud and Deceit

CHMG contends that the court erred in finding that it did not adequately allege a fraud cause of action in its claim with the State so as to preserve it for this later civil action. We conclude that the allegations in the claim were sufficient to put respondents on notice that CHMG was alleging fraud against them and therefore the court's dismissal of the second cause of action was in error and must be reversed.

A claim against a public entity must identify the factual basis for any later [*32] civil action. If it does not, the civil action is subject to demurrer for failure to comply with the Tort Claims Act (Gov. Code, § 810 et seq.). ( Lopez v. Southern Cal. Permanente Medical Group (1981) 115 Cal.App.3d 673, 676-677.) However, perfect identity between the legal theories alleged in the claim and later action is not required. The causes of action pleaded in the lawsuit must "substantially correspond with the circumstances described in the claims as the basis of the plaintiff's injury." ( White v. Moreno Valley Unified School Dist. (1986) 181 Cal.App.3d 1024, 1031.) The test is whether sufficient information is disclosed in the claim "'"to reasonably enable the public entity to make an adequate investigation into the merits of the claim and to settle it without the expense of a lawsuit."'" (Ibid.) So long as the claim and later action are based upon the same fundamental facts concerning the nature and cause of the plaintiff's injuries, the plaintiff has complied with the claim filing requirements. ( White v. Superior Court (1990) 225 Cal.App.3d 1505, 1510-1511.)

Respondents argue[*33] that their demurrer to the second cause of action for fraud was properly sustained, as the claim was devoid of any facts capable of supporting a cause of action for fraud. Respondents' argument is not well taken.

The elements of a cause of action for fraud are (1) misrepresentation of a material fact; (2) knowledge of the falsity; (3) intent to deceive and induce reliance; (4) reliance; and (5) resulting damage. ( City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 481.)

Here, CHMG's claim alleged (1) a representation by respondents that a Medicare/Medi-Cal inspection would be completed within 30 days; (2) that CHMG relied upon the representation in incurring additional debt; (3) that the representation was false in that the respondents did not conduct the promised inspection; and (4) as a result CHMG suffered damage. Although not necessarily stating all the legal elements of a fraud claim, these allegations fairly put respondents on notice that CHMG was alleging a fraud claim against respondents.

Further, it matters not that the complaint fleshed out these allegations in more detail. Where the "differences between[*34] the complaint and the claim were merely the result of a plaintiff's addition of factual details or additional causes of action," the action is not defective. ( Stevenson v. San Francisco Housing Authority (1994) 24 Cal.App.4th 269, 277.) The facts alleged in CHMG's complaint were sufficiently related to those alleged in the claim to allow respondents to properly investigate, and therefore the claim was sufficient. (See Smith v. County of Los Angeles (1989) 214 Cal.App.3d 266, 279 [claim that road construction caused landslide sufficient to support allegations that clearing of landslide debris and water runoff were contributing causes in damage to homes].)

Nor is there any merit to respondents' argument that the claim was defective because a fraud cause of action against a public employee must allege, in addition to the ordinary elements of fraud, motivation by corruption or malice,“'i.e., a conscious effort to deceive, vex, annoy or harm the injured party' [citation]”( Masters v. San Bernardino County Employees Retirement Assn. (1995) 32 Cal.App.4th 30, 42.) Respondents confuse the pleading requirements to state[*35] a valid cause of action in a complaint with the requirements for setting forth the general nature of the wrong in a claim. There is no authority for the proposition that a plaintiff must properly set forth every element of a cause of action to have complied with the claims filing requirement. Rather, as explained, ante, the claim is valid if it contains sufficient information to allow the public entity to conduct an adequate investigation. Here, CHMG's claim did so, and therefore the court's sustaining of respondents' demurrer to the second cause of action for fraud must be reversed. n10

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n10 Based upon this conclusion, we need not address whether CHMG's amended claim was timely and should have been considered by the court in ruling on respondents' demurrer. At any rate, the facts in the amended claim were virtually identical to the original.

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E. The Third Cause of Action for Violation of CHMG's Due Process and Equal Protection Rights

CHMG contends that the court erred in granting respondents' [*36] demurrer to the third cause of action for violation of its due process and equal protection rights. We conclude that the court properly sustained respondents' demurrer to this cause of action as there is no right to recover money damages for denial of CHMG's due process or equal protection rights under article I, section 7.

California's due process and equal protection provisions are contained in article I, section 7, which provides in part: "A person may not be deprived of life, liberty, or property without due process of law or denied equal protection of the laws . . . ." This provision was added to the State Constitution in 1974, through Proposition 7. ( Gates v. Superior Court (1995) 32 Cal.App.4th 481, 522-524 (Gates).)

This court recently addressed the availability of a tort action for an alleged violation of due process rights under the California Constitution, and concluded in that case that no such action was allowed. ( Carlsbad Aquafarm, Inc. v. State Dept. of Health Services (2000) 83 Cal.App.4th 809, 823 (Carlsbad Aquafarm).) In Carlsbad Aquafarm, the plaintiff sued DHS, alleging that it had violated the plaintiff's[*37] due process rights by refusing to provide notice or a hearing before it failed to recertify the plaintiff as an approved interstate shellfish seller. ( Id. at p. 811.) Following a jury trial, the plaintiff was awarded $290,000 in damages. The defendant appealed the verdict, asserting that the plaintiff was not entitled to recover monetary damages under the state Constitution's due process provision. (Ibid.)

In addressing the issue, this court first reviewed both United States Supreme Court and California precedent analyzing when a right to an action for damages is granted by a constitutional provision. ( Carlsbad Aquafarm, supra, 83 Cal.App.4th at pp. 815-816.) Based upon this review, we concluded that the determination of whether a state constitutional tort remedy is available "is dependent on numerous factors, including (1) the voters' intent in permitting monetary damages for a violation of the particular constitutional provision[;] (2) the availability of another remedy; (3) the extent to which the provision is 'self-executing' and the judicial manageability of the tort; and (4) the importance of the constitutional right." ([*38] Id. at p. 817.)

In Carlsbad Aquafarm, we described the voter intent factor as the "most significant in California constitutional tort analysis." ( Carlsbad Aquafarm, supra, 83 Cal.App.4th at p. 817.) In assessing this first factor, we relied heavily upon the analysis of the Proposition 7 voting materials conducted by the Second District Court of Appeal in Gates (supra, 32 Cal.App.4th 481), wherein that court determined that there was no damages action available for an alleged violation of equal protection rights under the California Constitution. ( Carlsbad Aquafarm, supra, 83 Cal.App.4th at pp. 817-818.) We concluded that since the constitutional due process provision did not expressly allow a damages action, and as there was nothing in the voter material when the due process provision was added by popular vote under Proposition 7 that indicated an intent to provide a damages remedy, this factor strongly supported the conclusion that there was no damages action available for an alleged violation of state due process rights. ( Id. at pp. 817-819.)

In assessing the second factor, [*39] we concluded that the plaintiff had the alternative remedy of a petition for a writ of mandate, seeking an order that the defendant provide it with due process before its recertification decision, and/or an action for damages under section 1983. ( Carlsbad Aquafarm, supra, 83 Cal.App.4th at p. 821.)

Next, we addressed the extent to which the constitutional provision was self-executing. As we explained, "the self-executing analysis is helpful in the sense that it focuses a court's attention on the extent to which a constitutional provision includes 'guidelines, mechanisms, or procedures from which a damages remedy could be inferred.' [Citation.] Where these express or implied guidelines are absent and permitting compensatory relief would be impractical, the constitutional provision may be inappropriate to support a damages remedy." ( Carlsbad Aquafarm, supra, 83 Cal.App.4th at p. 822.)

We concluded that this factor supported the conclusion there was no damages remedy available in that case. First, we noted that the "due process provision reflects general principles ""without laying down rules by means of which those principles may be[*40] given the force of law."" [Citation.]" ( Carlsbad Aquafarm, supra, 83 Cal.App.4th at p. 822.) We further concluded that "permitting a 'procedural due process' tort raises a host of practical problems. There are substantial inherent difficulties in proving a party's damages resulted from the denial of a hearing, particularly where, as here, the government agency and the administrative hearing officer had substantial discretion in ruling on the merits of the issue." (Ibid.)

Finally, we considered the importance of the constitutional right at issue. We observed that "while this factor may be a proper consideration in the overall analysis, it is not one upon which we place great significance. How does one rank the importance of different constitutional provisions? While the courts have emphasized the special dignity accorded free speech, free press and voting rights in determining that damages should be allowed under those constitutional provisions [citations], can we say a procedural due process right should be accorded more or less dignity? We agree the due process right is fundamental. But absent the applicability of the other relevant factors[*41] discussed here, the relative importance of the constitutional right is of little help in determining the availability of a damages remedy for a violation of that right." ( Carlsbad Aquafarm, supra, 83 Cal.App.4th at p. 823, original italics.) Based upon all the relevant factors, we concluded that in that case there was no damages action available for an alleged violation of the plaintiff's due process rights. (Ibid.)

Applying this same analysis to our case, we also conclude that there is no constitutional tort action available to CHMG as a result of respondents' alleged violation of its due process and equal protection rights. First, as discussed in Carlsbad Aquafarm (supra, 83 Cal.App.4th 809) and Gates (supra, 32 Cal.App.4th 481), there is no evidence that voters intended to allow a damages action for violations of due process or equal protection rights. Indeed, the only evidence on this issue, the voter pamphlet statement that the proposition "'does not increase government costs,' suggests that the voters would not have realized they were creating a new damages remedy against the government." ( Carlsbad Aquafarm, supra, 83 Cal.App.4th at p. 818;[*42] see also Gates, supra, 32 Cal.App.4th at p. 524.)

Second, as CHMG itself admits, it does have alternative remedies. It may seek relief under its section 1983 and fraud claims. It is of no moment, as CHMG suggests, that it is possible that respondents may have valid defenses to these claims that ultimately may prove fatal to CHMG's action, or that CHMG may only seek relief against the individual defendants and not the State or DHS. n11 Such a potentiality does not "justify this court in creating a new species of constitutional tort." ( Carlsbad Aquafarm, supra, 83 Cal.App.4th at p. 822.)

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n11 The State and DHS are not "persons" subject to suit under section 1983. ( Will v. Michigan Department of State Police (1989) 491 U.S. 58, 64.) Further, the State and DHS may be immune from liability for fraud committed by their employees. (See Gov. Code, § 818.8.)

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Further, as we held in Carlsbad Aquafarm (supra, 83 Cal.App.4th 809), [*43]the fact that article I, section 7 of the California Constitution is not "self-executing" militates against a finding that a damages remedy is warranted for the alleged violation of CHMG's due process and equal protection rights. Additionally, as in Carlsbad Aquafarm, there are inherent difficulties in proving that the respondents' alleged failure to conduct a Medicare/Medi-Cal inspection in a timely fashion caused CHMG's damages. Even had the inspection occurred, CHMG might have failed that inspection. Further, the Hospital might not have survived even had it passed the inspection. This factor therefore also warrants a denial of a constitutional tort remedy in this case.

Finally, we agree with Carlsbad Aquafarm that, in the absence of other factors favoring a constitutional damages remedy in this case, the relative importance of the constitutional rights at issue here is of little help in deciding the issue presented. We conclude that, applying all the relevant factors laid out in Carlsbad Aquafarm, CHMG has no damages remedy for the respondents' alleged violation of its due process and equal protection rights. n12 Accordingly, the court's sustaining of respondents' [*44] demurrer to the third cause of action was correct, and this portion of the court's order is affirmed.

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n12 We note that the issue of the availability of a constitutional tort action for violation of due process, and also for free speech rights, is presently pending before our Supreme Court. (See Katzberg v. Regents of University of California (2001) 88 Cal.App.4th 147, review granted July 18, 2001, S097445; Degrassi v. Cook (2001) 85 Cal.App.4th 163, review granted Feb. 28, 2001, S094248.)

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The court's order sustaining respondents' demurrer to the first and second causes of action is reversed and the matter is remanded for further proceedings on these claims. The court's sustaining of respondents' demurrer to the third cause of action is affirmed. The parties are to bear their own costs on appeal.





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