Mohamed Abouelmagd v. Debra Newell

Petitioner Mohamed Abouelmagd, lived in New York. Between 1999 and 2000, Mohamed obtained a series of loans of nearly one million dollars from a California resident, Debra Newell, for the purpose of investing in his New York business, Bary Group International, Inc. Mohamed allegedly ceased repaying these business loans in 2002. Debra filed suit against Mohamed in California state court nearly thirteen years later in 2015 even though California recognizes a 2-year, 3-year and 4-year statute of limitations in actions for breach of oral contract, fraud and breach of written contract/common counts, respectively. However, these and all other state statutes of limitations are tolled in perpetuity for out of state residents pursuant to Code of Civil Procedure Section 351 for any period that a person is “out of the state.” The trial court dismissed Debra’s case because the tolling statute violated the Commerce Clause. The California Court of Appeal disagreed and reversed the judgment in Mohamed’s favor. The questions presented are:

1. Is the California tolling statute that suspends statutes of limitations protection for out-of-state residents, unconstitutional and violative of Bendix Autolite Corp. v. Midwesco Enterprises, 486 U.S. 888 (1988) as applied to nonresidents who engage in business transactions with California residents by forcing them to forfeit the limitations defense available to California residents?

2. Does California fail to properly apply the Commerce Clause by limiting its application to business entities, and not natural persons?