Judge: Anne Richardson, Case: 22AHCV00796, Date: 2023-04-03 Tentative Ruling

Case Number: 22AHCV00796    Hearing Date: April 3, 2023    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

MOVING PARTY:               Defendant Michelle Leonard.

OPPOSITION:                      Plaintiffs The Claypool Law Firm and Brian E. Claypool.

Following non-binding arbitration proceedings between the parties, Plaintiffs The Claypool Law Firm and Brian E. Claypool brought this action to vacate a Los Angeles County Bar Association arbitration award and allege Breach of Contract against Defendant Michelle Leonard for failing to agree to the turnover of legal fees to Plaintiffs in the amount of $386,443.80 arising from Plaintiffs’ representation of Michelle Leonard in a Nevada case involving recovery for victims of the Route 91 Harvest Festival concert shooting. (See 22AHCV00796 Complaint.)

Now before the Court are a Demurrer and Motion to Strike by Michelle Leonard against the 22AHCV00796 Complaint, which are respectively OVERRULED and DENIED because the Complaint sufficiently pleads that Plaintiffs The Claypool Law Firm and Brian E. Claypool validly operated as Michelle Leonard’s legal counsel in relation to Michelle Leonard’s injuries from the Route 91 Harvest Festival concert shooting, as to support the Breach of Contract claim alleged in the 22AHCV00796 Complaint.

Background

On October 1, 2017, Michelle Leonard—a resident of the State of Arizona—attended the Route 91 Harvest Festival concert, held in Las Vegas, Nevada, when a shooter discharged thousands of rounds from the window of his hotel room upon unsuspecting concertgoers. As a result, Michelle Leonard sustained physical and psychological injuries.

On October 3, 2018, upon the request of Michelle Leonard, The Claypool Law Firm emailed Michelle Leonard an engagement letter to retain The Claypool Firm to represent her in relation to the shooting. On October 5, 2018, Michelle Leonard returned a signed engagement letter and addendum via email. Within the same email, Michelle Leonard requested that The Claypool Law Firm notify her previous lawyer that she had now retained The Claypool Law Firm. On or around the same day, October 5, 2018, attorney Brian E. Claypool signed and executed the engagement letter and addendum.

Litigation pertaining to the Route 91 Harvest Festival Concert, also known as the One October shooting, took place in Las Vegas, Nevada, where the shooting occurred. In order to litigate the case in Nevada, and prior to being retained by Michelle Leonard, The Claypool Law Firm engaged the law firm Eglet Adams to act as local co-counsel. Michelle Leonard was made aware of Eglet Adams being Nevada local co-counsel.

A global settlement in the amount between seven hundred and thirty-five million dollars ($735,000,000) and eight hundred million dollars ($800,000,000) was reached by approximately 4,500 concertgoers and MGM International. To fairly evaluate the participating claimants’ injuries, the Claims Processor and Claims Administrators created a protocol and claim allocation methodology (“Claims Protocol” or “One October Protocol” or “Protocol”). Michelle Leonard received the One October Protocol, opted into the global settlement, and agreed to be bound by the Protocol’s terms.

On July 14, 2020, The Claypool Law Firm submitted Michelle Leonard’s claim to the Claims Processor for evaluation and point allocation. On August 27, 2020, the Claims Processor issued a Notice of Allocation, awarding Michelle Leonard 866.0986 points. On September 16, 2020, The Claypool Law Firm submitted a Reconsideration of the initial allocation. On December 3, 2020, the Claims Processor issued a Notice of Allocation After Reconsideration, awarding Michelle Leonard 972.2057 points, an increase of 106.1071 points. An appeal to the reconsideration was denied on March 8, 2021, keeping Michelle Leonard’s award to 972.2057 points.

On March 10, 2021, two days after Michelle Leonard’s point allocation was final, and after all of the work that The Claypool Law Firm performed on the initial claims filing, the submission of reconsideration, and the drafting and submission of an appeal, Michelle Leonard terminated The Claypool Law Firm.

On April 1, 2021, the Claim Administrators concluded the evaluation of all claims and appeals and determined that each point awarded had a value of $1,051.28210895841. Based on the per point dollar value, Michelle Leonard’s settlement allocation amounted to $1,129,962.46.

Pursuant to the terms of the engagement letter/contingency fee retainer agreement between Michelle Leonard and The Claypool Law Firm, “The Firm w[ould] receive as a fee, thirty three percent (33%) of the gross recovery before deduction of costs and expenses at any time up until 100 days before trial,” as well as all costs.

Following The Claypool Law Firm’s termination, Michelle Leonard received her full settlement award, minus the attorney fees and costs in dispute. The disputed attorney fees amounted to $386,443.80. The disputed funds have been interpleaded with the Nevada Eighth Judicial District Court, and the Nevada Court has jurisdiction and control over the funds.

On March 25, 2021, The Claypool Law Firm filed a lien for Attorney Fees and Costs for work performed for and legal representation of Michelle Leonard, which was served on Michelle Leonard on March 27, 2021.

On April 6, 2021, The Claypool Law Firm filed a motion with the Nevada Court, requesting the court to determine whether the Firm had perfected its lien under Nevada law, and requesting that the Nevada Court direct Michelle Leonard to resolve her attorney lien dispute pursuant to the procedures outlined within the One October Protocol. On June 24, 2021, the Nevada Court determined that The Claypool Law Firm did perfect its lien pursuant to Nevada law, and instructed Michelle Leonard and The Claypool Law Firm to resolve their attorney lien dispute pursuant to the One October Protocol.

However, on or around September 13, 2021, The Claypool Law Firm received a letter from the Los Angeles County Attorney-Client Mediation and Arbitration Services (“ACMAS”), informing it that Michelle Leonard has initiated an arbitration proceeding through their program.

Per the Complaint, pursuant to California Business and Professions Code §6200 et seq., participation in arbitration is mandatory for attorneys if initiated by a client. As such, Brian E. Claypool had no option but to participate in the arbitration.

On March 4, 2022, as a pro se plaintiff, Michelle Leonard filed LASC Action No. 22STCV07972, alleging claims of Professional Negligence, Breach of Fiduciary Duty, and Breach of Contract against Brian E. Claypool, The Claypool Law Firm, and Does 1-20. The claims are grounded in allegations that Brian E. Claypool and The Claypool Law Firm’s representation of Michelle Leonard fell below the standard the care and demanded an unconscionable fee rate from Michelle Leonard. The action was assigned to Department 40 at Stanley Mosk Courthouse.

On June 27, 2022, a mandatory fee arbitration between Michelle Leonard and Brian E. Claypool was held before a panel of arbitrators by the Los Angeles County Bar Association ACMAS. An arbitration award was issued on September 12, 2022, which required that Michelle Leonard pay attorney fees for legal services performed to Brian E. Claypool in the total amount of twenty thousand dollars ($20,000). The arbitration award further provided that Brian E. Claypool would be responsible for two thousand and five-hundred dollars ($2,500) out of the five-thousand dollar ($5,000) arbitration filing fee. As such, the arbitration panel instructed Michelle Leonard to pay Brian E. Claypool a total of seventeen thousand and five hundred dollars ($17,500) for legal services performed.

On October 10, 2022, The Claypool Law Firm and Brian E. Claypool filed this action—LASC Action No. 22AHCV00796—with the superior court, making a Rejection of Arbitration Award and Request for Trial after Attorney-Client Fee Arbitration, premised in part on the grounds that at the time of the arbitration, both Michelle Leonard and Brian E. Claypool informed the arbitration panel that the arbitration would be non-binding, and based on Plaintiffs expressly rejecting the arbitration award. The Complaint also includes a claim for Breach of Contract, alleging that The Claypool Law Firm is, pursuant to a contract between the parties, entitled to 33% of the gross recovery obtained by Michelle Leonard from the One October Protocol, and that Michelle Leonard has breached the contract by disputing the attorney fees, initiating a non-binding arbitration through the Los Angeles County Bar Association ACMAS, and circumventing the procedure outline in the One October Protocol. The action was assigned to Department P of the Pasadena Courthouse.

On November 3, 2022, the Complaint, Summons, Petition to Vacate, and other documents were served on Michelle Leonard in Arizona by substituted service. On November 4, 2022, service of the same documents was made on Michelle Leonard by first class mail. Proof of service therefor was filed with the Court on December 5, 2022.

On December 6, 2022, the 22STCV07972 Complaint—made by Michelle Leonard in March 2022—was served on Brian E. Claypool and The Claypool Law Firm. Proof of service therefor was filed with the Court on December 8, 2022.

On February 7, 2023, Brian E. Claypool and The Claypool Law Firm filed a Demurrer and Motion to Strike against the 22STCV07972 Complaint and its three causes of action.

On February 27, 2023, Michelle Leonard filed a Notice of Related Case in the 22AHCV00796 and 22STCV07972 actions.

On March 2, 2023, Department 40 found the 22AHCV00796 and 22STCV07972 actions were related within the meaning of California Rules of Court, rule 3.300(a), with 22STCV07972 as the lead case, and the cases being assigned to Department 40 for all purposes.

On March 6, 2023, Michelle Leonard filed a Demurrer and Motion to Strike against the 22AHCV00796 Complaint made by The Claypool Law Firm and Brian E. Claypool. The Demurrer and Motion to Strike were filed by Century Law Group LLP and The Law Offices of Kevin Gerry.

On March 8, 2023, Michelle Leonard filed a Motion to Consolidate in the 22STCV07972 action.

On March 20, 2023, The Claypool Law Firm and Brian E. Claypool opposed the Demurrer and Motion to Strike against the 22AHCV00796 Complaint.

On March 23, 2023, Brian E. Claypool and The Claypool Law Firm opposed the Motion to Consolidate.

As of Friday, March 24, 2023, Michelle Leonard failed to reply to The Claypool Law Firm and Brian E. Claypool opposition to the Demurrer and Motion to Strike of the 22AHCV00796 Complaint.

On March 27, 2023, Michelle Leonard replied to the March 23, 2023 opposition by Brian E. Claypool and The Claypool Law Firm against the Motion to Consolidate.

Now before the Court are Michelle Leonard’s Demurrer to and Motion to Strike the 22AHCV00796 Complaint.

Demurrer: OVERRULED.

Legal Standard

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747; see Code Civ. Proc., § 430.10, subd. (e).) This device can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “To survive a [general] demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged.” (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.) In testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-67.) A demurrer, however, “does not admit contentions, deductions or conclusions of fact or law.” (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.) When considering demurrers, courts read the allegations liberally and in context. (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal.App.4th 1216, 1228, disapproved on other grounds, Jones v. Lodge at Torrey Pines Partnership (2008) 42 Cal.4th 1158, 1162.) The face of the complaint includes exhibits attached to the complaint. (Frantz v. Blackwell (1987) 189 Cal.App.3d 91, 94.) If facts appearing in the exhibits contradict those alleged, the facts in the exhibits take precedence. (Holland v. Morse Diesel Intern., Inc. (2001) 86 Cal.App.4th 1443, 1447.)

Analysis

Defendant Michelle Leonard demurs to the 22AHCV00796 Complaint on the lack of sufficient pleading grounds. (See Demurrer, Notice, 2:1-5.) The body of the Points and Authorities in support argues that the “Demurrer and Motion to Strike should be granted because the 1) the Attorney Client Retainer Agreement is void because it could not legally be fulfilled; and, 2) the Complaint is not drawn in conformity with the laws of the State of California and is therefore subject to a motion to strike because it fails to state a cause of action.” (See Demurrer, 3:5-13.) To elaborate on the first point, Michelle Leonard argues that: (1) The Claypool Law Firm is a California corporation and thus cannot represent itself in court, either in propria persona or through an officer or agent who is not an attorney; (2) Brian E. Claypool cannot be a partner of The Claypool Law Firm, as alleged in the 22AHCV00796 Complaint; (3) The Claypool Law Firm cannot practice law and provide services as described in the Attorney Client Retainer Agreement with Michelle Leonard; and (4) while Brian E. Claypool may practice law in California and is an officer of the firm, the Attorney Client Retainer Agreement does not name him as agent of The Claypool Law Firm or as acting on behalf of the firm to represent Michelle Leonard, for which reasons the agreement cannot be fulfilled and is void. (Demurrer, 7:6-8:2.)

In opposition, The Claypool Law Firm and Brian E. Claypool argue that (1) the law firm operates as a professional corporation authorized to practice law and (2) Brian E. Claypool is an employee of The Claypool Law Firm and acted as an agent of the firm in its representation of Michelle Leonard. (Opp’n, 5:13-8:1, 8:2-28.)

No reply was filed by Michelle Leonard as of Friday, March 24, 2023 and thus, no reply exists against The Claypool Law Firm and Brian E. Claypool’s opposition. (See Code Civ. Proc., [replies must be filed five court days before the hearing, which, here, lands on March 24, 2023, accounting for the State holiday of March 31, 2023].) Indeed, as of March 30, 2023, no reply had been filed.

The Court finds that the 22AHCV00796 Complaint sufficiently alleges that, at all times involving legal representation of Michelle Leonard, (1) The Claypool Law Firm was a valid corporate law firm in the State of California and acted as such in relation to Michelle Leonard (Complaint, ¶¶ 5-6, 11-17) and (2) Brian E. Claypool was a licensed California attorney managing The Claypool Law Firm’s representation of Michelle Leonard as related to Michelle Leonard’s injuries from the Route 91 Harvest Festival concert shooting, including the One October Protocol. (Complaint, ¶¶ 6, 13; see also Complaint, ¶¶ 32-48.)

The Court thus OVERRULES Michelle Leonard’s Demurrer to Complaint.

Motion to Strike: DENIED.

Legal Standard

The court may, upon a motion or at any time in its discretion and upon terms it deems proper: (1) strike out any irrelevant, false, or improper matter inserted in any pleading; or (2) strike out all or any part of any pleading not drawn or filed in conformity with the laws of California, a court rule, or an order of the court. (Code Civ. Proc. § 436, subds. (a)-(b).) For the purposes of a motion to strike pursuant to Sections 435 to 437 of the Code of Civil Procedure, the term “pleading” means a demurrer, answer, complaint, or cross-complaint, (Code Civ. Proc., § 435, subd. (a)), and an immaterial allegation or irrelevant matter in a pleading entails (1) an allegation that is not essential to the statement of a claim or defense, (2) an allegation that is neither pertinent to nor supported by an otherwise sufficient claim or defense, or (3) a demand for judgment requesting relief not supported by the allegations of the complaint or cross-complaint (Code Civ. Proc., § 431.10, subds. (b)(1)-(3).)

Analysis

The body of the Points and Authorities in Michelle Leonard’s Demurrer argues that the “Demurrer and Motion to Strike should be granted because the 1) the Attorney Client Retainer Agreement is void because it could not legally be fulfilled; and, 2) the Complaint is not drawn in conformity with the laws of the State of California and is therefore subject to a motion to strike because it fails to state a cause of action.” (See Demurrer, 3:5-13.) The first point was discussed ante. (See Demurrer discussion.) To support the second point, Michelle Leonard points to her arguments against The Claypool Law Firm’s and Brian E. Claypool’s ability to argue that a contract for legal representation between the parties ever existed, i.e., any retainer agreement is void because the Complaint fails to allege that The Claypool Law Firm has proper counsel or that it represented Michelle Leonard in legal matters. (Demurrer, 8:4-28 [second point]; see also Demurrer, 7:6-8:2 [arguments for why retainer agreement is void].)

In opposition, The Claypool Law Firm and Brian E. Claypool argue that “The Claypool Law Firm[,] as a professional law corporation[,] was authorized to practice law in the state of California,” “did so through its director, chief executive officer, secretary, chief financial officer, and employee Brian Claypool,” where “[t]he agency relationship between The Claypool Law Firm and Brian Claypool was actual and Plaintiff Claypool had the authority to enter into the Attorney Client Retainer Agreement with Ms. Leonard,” for which reason “a contract did exist between the parties and this Court has the authority and should deny Defendant Leonard’s motion to strike.” (Opp’n, 9:1-9.)

No reply was filed by Michelle Leonard as of Friday, March 24, 2023 and thus, no reply exists against The Claypool Law Firm and Brian E. Claypool’s opposition. (See Code Civ. Proc., [replies must be filed five court days before the hearing, which, here, lands on March 24, 2023, accounting for the State holiday of March 31, 2023].) Indeed, no reply was filed as of March 30, 2023.

The Court adopts its discussion ante to conclude that the 22AHCV00796 Complaint sufficiently alleges that The Claypool Law Firm engaged in legal representation of Michelle Leonard, through its agent Brian E. Claypool, as related to Michelle Leonard’s injuries from the Route 91 Harvest Festival concert shooting. (See Demurrer discussion supra; see also Complaint, ¶¶ 5-6, 11-17.)

The Court thus DENIES Michelle Leonard’s Motion to Strike.

Conclusion

Defendant Michelle Leonard’s Demurrer is OVERRULED because the Complaint sufficiently pleads that Plaintiffs The Claypool Law Firm and Brian E. Claypool validly operated as Michelle Leonard’s legal counsel in relation to Michelle Leonard’s injuries from the Route 91 Harvest Festival concert shooting, as to support the Breach of Contract claim alleged in the 22AHCV00796 Complaint.

Defendant Michelle Leonard’s Motion to Strike the Complaint is DENIED for the same reasons.