Judge Bruce G. Iwasaki, Case Number: 21STCV18608, Date: 2025-03-06 Tentative Ruling

Plaintiff Patricia Nakahara[1] sued her attorney, Defendant Bruce Cohen, for allegedly failing to repay a loan she made to him in 2017. On September 17, 2021, Patricia Nakahara (Plaintiff or Nakahara) filed the operative Second Amended Complaint (SAC) against Bruce Cohen (Defendant or Cohen) alleging causes of action for (1) breach of oral contract; (2) common count – money lent; and (3) breach of fiduciary duty.

The SAC alleges that “attorney defendant Bruce Cohen got behind on his rent and needed to borrow money to avoid being evicted. Having knowledge that plaintiff recently sold some real property she owned, Bruce Cohen asked plaintiff if he could borrow some money to pay his overdue rent. Plaintiff felt pressured to lend Bruce Cohen the money because she was relying on him to represent her diligently in her legal matters, and she was worried that he might be unable to do so if he got evicted. Therefore, on or about May 18, 2017, plaintiff entered into a[n] oral contract with defendant Bruce Cohen whereby she agreed to loan him $111,902.45 to help him pay his overdue back-rent. The terms of the agreement were that plaintiff would give defendant 2 checks totaling $111,902.45 payable to the defendant's landlord, and that defendant would pay the loan back within one year. . . . in early 2021 the defendant made it clear that he did not intend to pay back the loan, so plaintiff decided she wanted to take legal action to recover her money.” (SAC ¶¶ 4, 6.)

Defendant Bruce Cohen, individually and as trustee of The Vipperman Cohen Trust,

now demurs to the Second Amended Complaint. Plaintiff only opposes the demurrer to the demurrer brought by Defendant Bruce Cohen in his individual capacity.

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., § 452.) The court “ ‘ “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law . . . .” ’ ” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525.) In applying these standards, the court liberally construes the complaint to determine whether a cause of action has been stated. (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 733.)

Defendant argues that the first and second causes of action are barred by the two-year statute of limitations set forth in Code of Civil Procedure section 339. Defendant also argues that the third cause of action for breach of fiduciary duty is barred by the one-year statute of limitations set forth in Code of Civil Procedure section 340.6.

In opposition, Plaintiff argues all the claims are tolled by Defendant’s continued legal representation of Plaintiff.

Code of Civil Procedure section 340.6 provides in pertinent part that “(a) 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).)

Section 340.6 applies to any claims against attorneys other than actual fraud. (Lee v. Hanley (2015) 61 Cal. 4th 1225, 1236-1240.) Specifically, Section 340.6 applies to breach of fiduciary duty claims (Stoll v. Sup. Ct. (1992) 9 Cal. App. 4th 1362, 1366-69), and a breach of an oral or written contract (Levin v. Graham & James (1995) 37 Cal.App.4th 798, 805).

As a preliminary matter, however, Code of Civil Procedure section 340.6 statute of limitations provision and tolling provision does not apply to Plaintiff’s first and second causes of action.

Both the breach of the oral contract and the related common count arise from Plaintiff’s loan to Defendant for Defendant’s rent and Defendant’s failure to repay that loan. (SAC ¶¶ 4-5, 13.) The SAC alleges that Plaintiff and Defendant had an ongoing attorney-client relationship wherein Defendant represented Plaintiff in business matters. (SAC ¶ 4.) Then, in 2017, Defendant fell behind on his rent and Plaintiff offered Defendant to cover this back rent with a loan. (SAC ¶ 4.)

Based on these allegations, the loan and Defendant’s failure to repay it did not arise in the performance of Defendant’s professional services. The attorney-client relationship was incidental to the loan. (Lee v. Hanley (2015) 61 Cal.4th 1225, 1238 [“Misconduct does not ‘aris[e] in’ the performance of professional services for purposes of section 340.6(a) merely because it occurs during the period of legal representation or because the representation brought the parties together and thus provided the attorney the opportunity to engage in the misconduct.”]; Connelly v. Bornstein (2019) 33 Cal.App.5th 783, 795.) Thus, the limitations period and tolling provision of section 340.6 do not apply to the causes of action for breach of oral contract and common count.

However, section 340.6 does apply to the breach of the fiduciary duty claim. Lee v. Hanley (2015) 61 Cal.4th 1225 is instructive. In Lee, our Supreme Court found “section 340.6(a)’s time bar applies to claims whose merits necessarily depend on proof that an attorney violated a professional obligation in the course of providing professional services. In this context, a ‘professional obligation’ is an obligation that an attorney has by virtue of being an attorney, such as fiduciary obligations, the obligation to perform competently, the obligation to perform the services contemplated in a legal services contract into which an attorney has entered, and the obligations embodied in the State Bar Rules of Professional Conduct. By contrast, as the Court of Appeal observed, section 340.6(a) does not bar a claim for wrongdoing—for example, garden-variety theft—that does not require proof that the attorney has violated a professional obligation, even if the theft occurs while the attorney and the victim are discussing the victim's legal affairs. Section 340.6(a) also does not bar a claim arising from an attorney's performance of services that are not ‘professional services,’ meaning ‘services performed by an attorney which can be judged against the skill, prudence and diligence commonly possessed by other attorneys.’ [Citation.]” (Lee, supra, 61 Cal.4th at pp. 1236-1237.)

Here, the SAC alleges that “[w]hen the defendant attorney borrowed the $111,902.45 from plaintiff, he breached his fiduciary duty to plaintiff by entering into a business transaction with a client which creates a conflict of interest, and which violates the California Rules of Professional Conduct.” (SAC ¶ 13.) As such, Plaintiff maintains, this cause of action arises from the performance of Defendant’s professional duties and is subject to section 340.6.

There are, however, insufficient allegations to support tolling of he section 340.7 limitations period.

In order to fall within the tolling provision of Code of Civil Procedure section 340.6, subdivision (a)(2), the attorney must have continued “to represent the plaintiff regarding the specific subject matter in which the alleged wrongful act or omission occurred.” (Code Civ. Proc., § 340.6, subd. (a)(2)) as to which the misconduct occurred. “Code of Civil Procedure section 340.6 does not expressly state a standard to determine when an attorney's representation of a client regarding a specific subject matter continues or when the representation ends, and the legislative history does not explicitly address this question.” (Gonzalez v. Kalu (2006) 140 Cal.App.4th 21, 28; Nielsen v. Beck (2007) 157 Cal.App.4th 1041, 1048–1049.)

In this case, the SAC alleges that Defendant offered to repay Plaintiff’s loan by performing legal services without compensation. (SAC ¶6.) However, Defendant continued to charge Plaintiff. (SAC ¶ 6.) The SAC further alleges that Plaintiff felt compelled to ask Defendant for the money “but she was again worried that he would cease representing her in her pending legal matters if she rocked the boat.” (SAC ¶ 6.)

These allegations fail to show an ongoing relationship between the parties involving the same subject matter. Rather, the allegations are vague as to the nature of Defendant’s legal representation, alluding to a broad “business” representation relationship. But “specific subject matter” means “specific subject matter.” (Foxborough v. Van Atta (1994) 26 Cal.App.4th 217, 229.) Here, without such specifics, Plaintiff cannot show the claim is subject to tolling. (Nguyen v. Ford (2020) 49 Cal.App.5th 1, 12 [“ ‘[t]he inquiry is not whether an attorney-client relationship still exists but when the representation of the specific matter terminated’ ”].) Thus, the demurrer to this cause of action is sustained.

As noted above, the one-year statute of limitations does not apply to the oral contract claims. The two-year statute of limitations applies to both the oral contract and the related common count. (Code Civ. Proc § 339, subd. (1).)

The SAC alleges that the oral agreement was breached on July 13, 2018. (SAC ¶ 7.) This action was not filed until May 18, 2021—more than two years later.

As noted above, section 340.6 does not apply to this cause of action. As such, the tolling provision of section 340.6 also does not apply. Therefore, Plaintiff’s argument that the claim is tolled by the parties’ ongoing legal representation relationship is mistaken. The demurrer to the oral conctract claim is sustained.

For the same reasons, the demurrer to the common count arising from the same allegations as the breach of the oral agreement also fails. (McBride v. Boughton (2004) 123 Cal.App.4th 379, 394 [“When a common count is used as an alternative way of seeking the same recovery demanded in a specific cause of action, and is based on the same facts, the common count is demurrable if the cause of action is demurrable.”].)

Defendant, in his representative capacity, also argues that the SAC is devoid of any factual allegations implicating the Trust in any of the three claims. That is, the SAC does not allege that Defendant Cohen acted in his representative capacity as the trustee of his personal trust in any of his alleged dealings with Plaintiff.

Plaintiff does not address these arguments in the opposition filed. Further, the SAC does not identify any acts undertaken by Defendant Cohen in his representative capacity.

The demurrer is sustained as to all three causes of action alleged to Defendant Cohen in his representative capacity.

The Demurrers to the Second Amended Complaint are sustained in their entirety. Plaintiff shall have leave to amend. An amended pleading shall be filed and served on or before April 7, 2025.

[1] On September 17, 2021, the Court granted National Commercial Recovery, Inc.’s motion to substitute Ms. Patricia Nakahara as the Plaintiff in this action and to file a further amended pleading adding a third cause of action for Breach of Fiduciary Duty based on the existence of the attorney-client relationship between her and Mr. Cohen.

Judge Bruce G. Iwasaki

Department 58