Judge Alison Mackenzie, Case 23SMCV00414 2023-05-09 Tentative Ruling

Judge: Alison Mackenzie, Case: 23SMCV00414, Date: 2023-05-09 Tentative Ruling

Case Number: 23SMCV00414 Hearing Date: May 9, 2023 Dept: 207

Background

Plaintiff Christine Foxen (“Plaintiff”) brings this action against Defendants John Carpenter, Paul Zuckerman, and Carpenter & Zuckerman (erroneously sued as Carpenter Zuckerman & Rowley, LLP) (collectively “Defendants”) and others, stemming from a disagreement regarding the allocation and disbursement of settlement funds obtained in resolving a prior personal injury action brought by Plaintiff and for which Defendants acted as her legal counsel. Plaintiff’s Complaint asserts causes of action against Defendants for declaratory relief, breach of fiduciary duty, breach of contract, unfair competition, fraud, conversion, breach of the implied covenant of good faith and fair dealing, money had and received, and accounting. Defendants now bring this demurrer to each of these causes of action, arguing they are barred by applicable statutes of limitation. Plaintiff opposes Defendants’ demurrer.

Request for Judicial Notice

Defendants request the Court take judicial notice of Court records from prior litigation between the parties, LASC Case Nos. BC537184 and BC576625, an opinion rendered by the California Court of Appeal, records from the California Supreme Court, the Complaint in the instant action, and correspondence from the Los Angeles County Bar Association. Defendants’ request is unopposed and is GRANTED except as to the correspondence from the Los Angeles County Bar Association (Ex. 17 to RJN) as there does not appear to be a basis for taking judicial notice of this document pursuant to Evidence Code § 452.

Legal Standard

When considering demurrers, courts read the allegations liberally and in context. (Wilson v. Transit Authority of City of Sacramento (1962) 199 Cal.App.2d 716, 720-21.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the pleading alone, and not on the evidence or facts alleged.” (E-Fab, Inc. v. Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315.) As such, the court assumes the truth of the complaint’s properly pleaded or implied factual allegations. (Id.) However, it does not accept as true deductions, contentions, or conclusions of law or fact. (Stonehouse Homes LLC v. City of Sierra Madre (2008) 167 Cal.App.4th 531, 538.)

The general rule is that the plaintiff need only allege ultimate facts, not evidentiary facts. (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550.) “All that is required of a plaintiff, as a matter of pleading, even as against a special demurrer, is that his complaint set forth the essential facts of the case with reasonable precision and with sufficient particularity to acquaint the defendant with the nature, source and extent of his cause of action.” (Rannard v. Lockheed Aircraft Corp. (1945) 26 Cal.2d 149, 156-157.)

Analysis

This action concerns the allocation and disbursement of settlement funds received in 2011 in connection with a prior personal injury lawsuit in which Defendants acted as counsel for Plaintiff. Plaintiff alleges Defendants provided an accounting which included improper and inflated charges to allow Defendants to retain the bulk of the settlement funds. Plaintiff filed a malpractice suit regarding this dispute in 2015. (Ex. 4 to RJN.) The Court in that prior action sustained Defendants’ demurrer without leave to amend, finding Plaintiff’s non-fraud claims were all barred by the one-year statute of limitations for malpractice actions imposed by Code Civ. Proc. § 340.6 as Plaintiff, by her own admission, had been aware of the claimed improper charges since September 2011. (Ex. 7 to RJN.)

Defendants argue Plaintiff’s Complaint in the instant action simply re-asserts the same claims concerning the allocation of the settlement funds which were rejected as time-barred in the 2015 malpractice action. Plaintiff argues her claims in the instant action stem from a November 17, 2021 “Final Revised Accounting and Disbursements” sent to Plaintiff by Defendants. Plaintiff argues she has timely asserted claims in connection with this 2021 final accounting which are not time-barred.

The Complaint, however, has no allegations of wrongdoing relating to the 2021 final accounting other than the alleged wrongdoing Plaintiff knew at the time of the 2015 malpractice case. Indeed, the Complaint is nearly identical in substance to the First Amended Complaint filed in the 2015 malpractice action. (Ex. 5 to RJN.) For example, the Complaint in this action alleges Defendants wrongfully paid themselves $1,195,500 from these settlement proceeds (Complaint at ¶19), improperly charged Plaintiff $934,141.95 for costs and expenses including $95,510 in expert fees (id at ¶20), induced her to sign a personal injury lien (id at ¶21), withheld $354,405.86 in costs (id), charged her $125,000 for services rendered by Finlay Boag (id at ¶23). Each of these allegations appear in Plaintiff’s prior First Amended Complaint. (Ex. 5 at ¶¶23, 24, 25, 27.) In paragraph 24 of the operative Complaint, Plaintiff alleges she discovered this wrongdoing by September 21, 2011.

Plaintiff does not identify any new wrongdoing in connection with the November 2021 final accounting which was not already known to Plaintiff at the time she filed the prior malpractice complaint in 2015. The only allegation regarding the 2021 final accounting is the general claim that “Plaintiff believes and on information and belief alleges that some or all of the other fees, costs and bills set forth in the “Initial Proposed Disbursement” and in the 2021 Accounting are similarly false, fraudulent, improper, wrong, and deceitful.” (Complaint at ¶31.) In other words, Plaintiff has admitted the November 2021 accounting is improper for the same reasons as asserted in her prior First Amended Complaint, which was based on the initial proposed disbursement. Defendants’ repetition of the same improprieties in the 2021 accounting does not negate Plaintiff’s admission that she had knowledge of this alleged wrongdoing in September 2011.

Plaintiff argues the similarity between the 2011 initial proposed disbursement and 2021 final accounting is a factual question going to the merits of Plaintiff’s claim which cannot be resolved on demurrer. But both disbursements are attached as exhibits to Plaintiff’s Complaint and thus can be considered in ruling on Defendants’ demurrer. The Court finds Plaintiff has been aware of the alleged wrongdoing which forms the basis of her instant Complaint since the filing of the substantially identical First Amended Complaint in the malpractice action on June 8, 2015. As such, her claims in this action are time-barred pursuant to the statutes of limitation set forth in Code Civ. Proc. §§ 338 and 340.6. The Court thus SUSTAINS Defendant’s demurrer to Plaintiff’s Complaint.

Plaintiff bears the burden of demonstrating she can cure the defects in the Complaint through further amendment. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) Plaintiff’s Complaint and opposition do not identify any new wrongdoing or impropriety which is unique to the 2021 final accounting. Rather, Plaintiff appears to simply be attempting to re-litigate the same substantive dispute regarding Defendant’s allocation of settlement funds to costs and attorneys which was rejected as time-barred in the 2015 malpractice action. The Court thus finds Plaintiff has failed to carry her burden of showing she can cure this issue by further amendment and the Court sustains Defendants’ demurrer without leave to amend.

Conclusion

Defendants’ demurrer is SUSTAINED without leave to amend.