Judge: Andrew E. Cooper, Case: 22CHCV01324, Date: 2024-01-24 Tentative Ruling

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Case Number: 22CHCV01324    Hearing Date: January 24, 2024    Dept: F51

DEMURRER WITH MOTION TO STRIKE

Demurrer with Motion to Strike Filed: 8/28/23

MOVING PARTY: Defendant Engstrom, Lipscomb & Lack (“Defendant”)

RESPONDING PARTY: Plaintiffs Nicole Youssef; and James Youssef (collectively, “Plaintiffs”)

NOTICE: OK

RELIEF REQUESTED: Defendant demurs to Plaintiffs’ entire second amended complaint (“SAC”). Defendant also seeks an order striking Plaintiffs’ references to punitive damages in the SAC.

TENTATIVE RULING: The demurrer is overruled and the motion to strike is denied. Defendant to file its answer to Plaintiffs’ SAC within 20 days.

REQUEST FOR JUDICIAL NOTICE: Defendant’s request for judicial notice is granted. Plaintiffs’ request for judicial notice is granted.

Defendant is reminded to review the 5/3/19 First Amended General Order Re Mandatory Electronic Filing for Civil. When e-filing documents, parties must comply with the “TECHNICAL REQUIREMENTS” which are set forth at page 4, line 4 through page 5, line 12 of the Court’s 5/3/19 First Amended General Order Re Mandatory Electronic Filing for Civil (particularly bookmarking declarations and exhibits). (CRC 3.1110(f)(4).) Plaintiffs are reminded that “except in a summary judgment or summary adjudication motion, no opening or responding memorandum may exceed 15 pages.” (Cal. Rules of Ct., rule 3.1113(d).)

Failure to comply with these requirements in the future may result in papers being rejected, matters being placed off calendar, matters being continued so documents can be resubmitted in compliance with these requirements, documents not being considered and/or the imposition of sanctions.

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BACKGROUND 

On 8/30/23, Defendant filed the instant demurrer and motion to strike. On 11/20/23, Plaintiffs filed their oppositions. On 11/28/23, Defendant filed its reply.

DEMURRER

Here, Defendant demurs to Plaintiffs’ entire SAC on the basis that Plaintiffs fail¿to allege facts sufficient to¿state¿either of the causes of action therein.

A.    Meet and Confer

Defendant’s counsel declares that on 8/8/23, he sent Plaintiffs’ counsel an email in an attempt to meet and confer regarding the issues raised in the instant demurrer and motion to strike. (Decl. of Andrew M. Jacobson, ¶ 3.) On 8/9/23, counsel for the parties further met and conferred telephonically, but the parties were unable to come to a resolution. (Ibid.) Accordingly, the Court finds that counsel has satisfied the preliminary meet and confer requirements of Code of Civil Procedure section 430.41, subdivision (a).

B.     Legal Malpractice

“An attorney will normally be held liable for malpractice only to the client with whom the attorney stands in privity of contract, and not to third parties.” (Borissoff v. Taylor & Faust (2004) 33 Cal.4th 523, 529.) Generally, an attorney-client relationship is created by an express or implied contract.  (Koo v. Rubio's Restaurants, Inc. (2003) 109 Cal.App.4th 719, 729; Nichols v. Keller (1993) 15 Cal.App.4th 1672, 1684.)  Regarding express contracts, the existence of an attorney-client relationship is a question of law.  (Meehan v. Hopps (1956) 144 Cal.App.2d 284, 287, 301.)  However, an implied-in-fact attorney-client relationship is based on the facts and circumstances of each case.  (See Miller v. Metzinger (1979) 91 Cal.App.3d 31, 39; Hecht v. Superior Court (1987) 192 Cal.App.3d 560, 565-566.)   

An implied attorney-client relationship can arise by inference from the conduct of the parties—neither a fee payment nor a formal agreement is required.  (E.g., Lister v. State Bar (1990) 51 Cal.3d 1117, 1126.)  The parties' intent and conduct are critical to the formation of an implied-in-fact attorney-client relationship.  (Hecht, supra, 192 Cal.App.3d at 565.) 

Here, it is undisputed that no express agreement for legal representation exists between the Plaintiffs and Defendant. Defendant therefore argues that “Plaintiffs cannot establish that EL&L owed Plaintiffs a duty ‘to use such skill, prudence and diligence as members of the profession generally possess.’” (Dem. 10:16–18.)

Defendant argues that no implied attorney-client relationship exists giving rise to Defendant’s duty to Plaintiffs because “in this case, there are no allegations or evidence showing that Plaintiffs’ father intended for anyone other than himself and his wife to be represented by EL&L in the SoCalGas litigation.” (Id. at 13:18–20.) “EL&L never communicated with Plaintiffs, never obtained a signed retainer agreement from Plaintiffs, never received a request for a retainer agreement for Plaintiffs and did absolutely nothing that would induce Plaintiffs to believe that an attorney client relationship was formed.” (Id. at 7:24–27.)

In the SAC, Plaintiffs allege that their stepmother, Sandra Bui, was referred to Defendant’s law firm by an attorney who she informed about Plaintiff Nicole Youssef’s medical symptoms stemming from the subject gas leak. (SAC ¶ 5.) Plaintiffs further allege that Defendant sent Ms. Bui an email making “it appear that it would be communicating with a singular head of household rather than each individual potential claimant.” (Pls.’ Opp. 6:7–8, citing SAC ¶ 9.) “Ms. Bui and Plaintiffs each reasonably believed that Plaintiffs would be included in the gas leak litigation in part because the Engstrom Firm had taken the steps necessary to have their son/half-brother James Clark included in the gas leak litigation and had informed Ms. Bui of that fact.” (Id. at 7:3–6, citing SAC ¶ 12.) Plaintiffs further allege that their father, Tony Youssef, wrote to Defendant: “If I need to fill out another one for my wife and/or kids please provide client IDs for the missing questionnaire(s),” and Defendant subsequently wrote to Ms. Bui: “If you hear nothing further from us, then it is fine.” (SAC ¶¶ 19–20.) Plaintiffs allege that Defendant repeatedly reassured Ms. Bui and Tony Youssef that they were not required to take any further action to assure that their household’s claims were pursued. (Id. at ¶¶ 22–28.)

Based on the foregoing allegations, Plaintiffs argue in opposition that “at all times relevant hereto, Plaintiffs were members of the Youssef/Bui household and were expressly led by Defendant to believe that (1) communications from Defendant would be sent to their parents, who should then relay the information to them; (2) information concerning Plaintiffs [sic] claims would be sought by Defendant via their parents; and (3) even if Plaintiffs did not directly receive newsletter communications from Defendant, Defendant were still working on their case.” (Pls.’ Opp. 11:26–12:5.) Therefore, Plaintiffs contend that “Defendant’s conduct and/or communications always led the entire Youssef/Bui family to believe that any recovery would be handled on a family-wide basis, that Plaintiffs’ interests were being handled, and that Tony Youssef, Sandra Bui, and Plaintiffs had done everything within their power in order to perfect each of their claims.” (Id. at 12:10–14.)

In reply, Defendant argues that “the evidence shows that Plaintiffs never formed any type of attorney client relationship with EL&L and the Plaintiffs’ parents never manifested a clear, certain, and undisputed intent for EL&L to represent Plaintiffs.” (Def.’s Reply 3:11–13.) “Plaintiffs allege that they were led to believe that any recovery would be on a family-wide basis. However, they fail to allege any facts to support who or what led them to that illogical opinion.” (Id. at 5:17–19.) The Court disagrees.

Based on the allegations in the SAC, the Court finds that Plaintiffs have sufficiently alleged facts at the pleading stage to support their contention that Defendant, through its communications with Plaintiff’s parents, led them to believe that they were included in the gas leak litigation as a household, inclusive of Plaintiffs, therefore Plaintiffs have sufficiently alleged an implied attorney-client relationship between the parties. (SAC ¶¶ 3–28.) Accordingly, the Court agrees with Plaintiffs that “at a minimum, the factual allegations asserted by Plaintiffs in the SAC are sufficient to conclude that Defendant’s conduct reasonably induced Plaintiffs to believe that the relationship was formed.” (Pls.’ Opp. 13:14–16.) The Court notes Defendant’s arguments offered in attacking the merits of Plaintiffs’ allegations but declines to reach them at the demurrer stage.

Based on the foregoing, the Court finds that Plaintiffs have sufficiently cured the pleading defects set forth in the Court’s ruling on Defendant’s previous demurrer and have alleged facts sufficient to support a cause of action for legal malpractice. Accordingly, the demurrer to Plaintiffs’ first cause of action is overruled.

C.    Fraudulent Concealment

Plaintiffs’ second cause of action alleges fraudulent concealment against Defendant. “‘[T]he elements of an action for fraud and deceit based on concealment are: (1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.’ [Citation]” (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 868.) Fraud causes of action must be pled with specificity. The particularity requirement “necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.)

Here, Defendant argues that Plaintiffs have not sufficiently alleged the requisite elements of a duty to disclose nor justifiable reliance. “Because Plaintiffs did not have attorney-client relationship with EL&L, EL&L was under no duty to disclose any facts regarding the SoCalGas litigation.” (Dem. 14:20–22.) Defendant further argues that “Plaintiffs’ fraud claim is uncertain as to whether EL&L was under a duty to disclose any material facts and to whom in which that duty ran, specially, their father or non-client Plaintiffs, and what circumstances would show justifiable reliance.” (Id. at 15:17–19.)

As set forth above, the Court finds that Plaintiffs have sufficiently alleged that an implied attorney-client relationship was created between the parties which would give rise to Defendant’s duty to disclose. Plaintiffs, as Tony Youssef and Ms. Bui’s children, “were led to believe by the Engstrom Firm that the entire family was fully represented by the Engstrom Firm, and they each relied justifiably on the Engstrom Firm to include them in the gas leak litigation. At no time up and until November 2022 did the Engstrom Firm ever indicate to the Youssef/Bui family that the Plaintiffs were not represented by the Engstrom Firm nor did the Engstrom Firm ever request that additional or expanded retainer agreements be executed.” (SAC ¶ 64.)

Based on the foregoing, the Court finds that Plaintiffs have sufficiently cured the pleading defects set forth in the Court’s ruling on Defendant’s previous demurrer and have alleged facts sufficient to support a cause of action for fraudulent concealment. Accordingly, the demurrer to Plaintiffs’ second cause of action is overruled.

D.    Statute of Limitations

Defendant further argues that each of Plaintiffs’ causes of action are time-barred by the applicable statute of limitations. “An action against an attorney for a wrongful act or omission, other than for actual fraud, arising in the performance of professional services shall be commenced within one year after the plaintiff discovers, or through the use of reasonable diligence should have discovered, the facts constituting the wrongful act or omission, or four years from the date of the wrongful act or omission, whichever occurs first.” (Code Civ. Proc. § 340.6, subd. (a).) However, the four year limitations period can be tolled when the attorney willfully conceals known facts constituting the wrongful act or omission. (Id. at subd. (a)(3).)

The statute of limitations for an action for relief on the ground of fraud or mistake is three years, but “is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.” (Code Civ. Proc. § 338, subd. (d).) “In order to rely on the discovery rule for delayed accrual of a cause of action, ‘[a] plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.’” (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 808.)

An attorney may be equitably estopped from asserting a statute of limitations defense to a malpractice action, where the attorney’s advice was responsible for the client’s tardy filing of the action. (Leasequip, Inc. v. Dapeer (2002) 103 Cal.App.4th 394, 403–405.)

Defendant argues that “the Court should reject Plaintiffs [sic] alleged November 2022 discovery date as Plaintiffs’ [sic] fail to allege any reasonable diligence in the SAC which would afford them the refuge of relying on the November 2022 discovery date.” (Dem. 18:18–20.) “The widespread public press coverage combined with the filing of the November 4, 2016 lawsuit which was publicly available, and over five years of no communication between Plaintiffs and EL&L, are enough to alert a reasonable person to the fact that they are not being represented by a law firm that they never even communicated with.” (Id. at 21:7–10.)

Plaintiffs argue in opposition that “at no time up and until November 2022 did Defendant ever indicate to the Youssef/Bui household, including Plaintiffs that they were not represented by Defendant or that any affirmative steps needed to be taken for them to be represented. Defendant never requested that additional or expanded retainer agreements be executed.” (Pls.’ Opp. 16:17–21.) “Despite their knowledge of the Plaintiffs, no one in the Youssef household was timely advised that (1) each family member living in the home must separately retain counsel to participate in the settlement, (2) Plaintiffs were not actually included by Defendant on the Underlying Complaint, or (3) that Plaintiffs would not receive a settlement payment.” (Id. at 17:19–22.) Therefore, Plaintiffs contend that “taken as a whole, the SAC sets forth why and how Plaintiffs [sic] conduct amounts to ‘reasonable diligence’ so as to justify the delayed discovery.” (Id. at 16:13–14.)

On reply, Defendant argues that “contrary to Plaintiffs’ assertions, ignorance and age are not an excuse. Even young adults understand concepts of litigation and the choice of retaining a lawyer.” (Def.’s Reply 7:11–12.) The Court again finds Defendant’s arguments to be inapposite at the demurrer stage. Based on the foregoing, the Court finds that Plaintiffs have sufficiently alleged reasonable diligence in their delayed discovery of Defendant’s alleged wrongdoing, by adding factual allegations stating that Defendant repeatedly assured Plaintiffs’ parents that they were not required to take any further action to assure that their household’s claims were pursued. (SAC ¶¶ 22–28.) Accordingly, the demurrer is overruled on this basis.

MOTION TO STRIKE

The court may, upon a motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading. (Code Civ. Proc., § 436, subd. (a).) The court may also strike all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Id., § 436, subd. (b).) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Id., § 437.)

A.    Punitive Damages

Here, Defendant moves to strike Plaintiffs’ references to punitive damages from the SAC. Punitive damages may be recovered upon a proper showing of malice, fraud, or oppression by clear and convincing evidence. (Civ. Code § 3294, subd. (a).) “Malice” is defined as conduct intended to cause injury to a person or despicable conduct carried on with a willful and conscious disregard for the rights or safety of others. (Id. at subd. (c); Turman v. Turning Point of Cent. Cal., Inc. (2010) 191 Cal.App.4th 53, 63.) “Oppression” means despicable conduct subjecting a person to cruel and unjust hardship, in conscious disregard of the person’s rights. (Ibid.) “Fraud” is an intentional misrepresentation, deceit, or concealment of a material fact known by defendant, with intent to deprive a person of property, rights or otherwise cause injury. (Ibid.)

Punitive damages must be supported by factual allegations. Conclusory allegations, devoid of any factual assertions, are insufficient to support a conclusion that parties acted with oppression, fraud or malice. (Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1042; Anschutz Entertainment Group, Inc. v. Snepp (2009) 171 Cal.App.4th 598, 643.)

Here, Defendants argue that “Plaintiffs failed to allege any facts showing that EL&L acted with malice or an intent to harm Plaintiffs.” (MTS 8:26–27.) “Plaintiffs’ allegations are based solely on EL&L’s alleged legal malpractice and professional negligence regarding EL&L’s alleged failure to file a lawsuit on behalf of Plaintiffs and obtaining them claim numbers.” (Id. at 6:28–7:2.) “At best, Plaintiff alleges negligent conduct on the part of EL&L with respect to information EL&L should have provided Plaintiffs’ parents regarding how individual claims will be handled in the SoCalGas litigation.” (Id. at 9:8–11 [emphasis in original].)

In opposition, Plaintiffs argue that “Defendant’s [sic] concealed and suppressed material facts that ultimately caused Plaintiffs harm. … Defendant’s failures resulted in Plaintiffs entirely being left out of the settlement.” (Pls.’ Opp. 3:22–23; 4:4.) “Defendant never notified Tony, Sandra or Plaintiffs that each family member must file a separate claim, even though they had express knowledge of Plaintiffs existence prior to the filing of the Underlying Complaint. They overtly chose to do nothing. This alone is malicious and evidence of an intent to harm Plaintiffs.” (Id. at 5:17–20.)

While the Court disagrees that Plaintiffs have sufficiently alleged the requisite malice that would warrant recovery of punitive damages, the Court nevertheless finds that Plaintiffs have alleged a basis for punitive damages under the “fraud” prong of Civil Code section 3294 in alleging that Defendant concealed the fact that it failed to include Plaintiffs as claimants in the gas leak litigation. The issue of Defendant’s intent to defraud is a question of fact that the Court declines to address at the demurrer stage. (Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1061.) Accordingly, the motion to strike is denied.

CONCLUSION 

The demurrer is overruled and the motion to strike is denied. Defendant to file its answer to Plaintiffs’ SAC within 20 days.

The Court is not requesting oral argument on this matter.  Pursuant to California Rules of Court, Rule 3.1308(a)(1) notice of intent to appear is required.  Unless the Court directs argument in the Tentative Ruling, no argument will be permitted unless a “party notifies all other parties and the court by 4:00 p.m. on the court day before the hearing of the party’s intention to appear and argue.  “The tentative ruling will become the ruling of the court if no notice of intent to appear is received.”  

Notice may be given either by email at CHAdeptF51@LACourt.org or by telephone at (818) 407-2233.