Judge Bruce G. Iwasaki

Department 58

Hearing Date: February 7, 2025

Case Name: Louderback v. Sutton

Case No.: 24STCV14798

Matter: Demurrer with Motion to Strike

Moving Party: Cross-Defendants John R. Louderback and Jacqueline M. Louderback

Responding Party: Cross-Complainant Christopher Sutton

Tentative Ruling: The Demurrer to the Cross-Complaint is overruled. The Motion to Strike is denied.

This action arises from an attorney client relationship. On June 13, 2024, Plaintiffs John R. Louderback and Jacqueline M. Louderback filed a Complaint against Defendant Christopher Sutton for professional malpractice for legal services rendered.

On September 4, 2023, Defendant/Cross-Complainant Sutton (Sutton) filed a Cross-Complaint against Plaintiffs/Cross-Defendants John R. Louderback and Jacqueline M. Louderback (Louderbacks) for (1.) breach of contract, (2.) account stated, (3.) services rendered, and (4.) quantum meruit.

Cross-Defendants Louderbacks now demur to the breach of contract cause of action in the Cross-Complaint. Cross-Complainant Sutton opposes the demurrer.

The demurrer is overruled. The motion to strike is denied.

Legal Standard for Demurrers

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.)

Analysis

First Cause of Action for Breach of Contract:

Cross-Defendants demur to this cause of action on the grounds that the breach of contract claim fails to allege facts showing an enforceable contract.

A cause of action for breach of contract requires alleging “the following elements: (1) existence of the contract; (2) plaintiff's performance or excuse for nonperformance; (3) defendant's breach; and (4) damages to plaintiff as a result of the breach.” (CDF Firefighters v. Maldonado (2008) 158 Cal.App.4th 1226, 1239.)

The Cross-Complaint alleges that Cross-Defendants Louderbacks failed to comply with their obligations under their “Attorney Services Agreement” (Fee Agreement) with Cross-Complainant Sutton by failing to make all payments owed for legal services rendered. (XC ¶¶ 21-23.)

On demurrer, Cross-Defendants Louderbacks argue that the Fee Agreement is unenforceable because Cross-Complainant Sutton did not sufficiently disclose that he lacked professional liability insurance. Specifically, Louderbacks argue that Section 15 of the Fee Agreement contains some disclosure that he does not carry insurance but that this disclosure fails to satisfy the requirements of California Rules of Professional Conduct, Former Rule 3-410.

California Rules of Professional Conduct, Former Rule 3-410 requires an attorney who does not have professional liability insurance to so inform a client in writing at the time of engagement where it is reasonably foreseeable that the legal representation will exceed four hours.

For example, in Hance v. Super Store Industries (2020) 44 Cal.App.5th 676, the Court of Appeal concluded the trial court abused its discretion in enforcing a fee agreement where the attorney had failed to disclose to the client he had no malpractice insurance in violation of the State Bar Rules of Professional Conduct, rule 3-410. Specifically, the court found that the failure of attorney to disclose lack of professional liability insurance to clients pursuant to CRPC rule 3-410 rendered consents obtained under fee-splitting agreement unenforceable, explaining that “[t]he disclosure would enable the client to make an informed decision whether to engage an attorney who did not carry insurance that would protect the client in the event of the attorney's negligent or other wrongful conduct that might have an adverse effect on the client's case.” (Id. at 684, 689.)

Here, the Fee Agreement – unlike the agreement in Hance – contains some disclosure and states, in relevant part: “Sutton agrees to vigorously represent Client. Sutton, however, does not warrant or guarantee any particular results in reference to Client’s matters, or that any amount of award or settlement may be recovered for Client. These types of disputes and other possible governmental proceedings are inherently risky and it is possible that Client’s goals and expected results will not be achieved. Sutton does not insure any aspect of Client’s goals or claims or defenses. Sutton carries no insurance that would guarantee or otherwise cover such matters or cover the manner in which his services are performed. (XC, Ex. A, ¶ 15 [bold and underline in original, italics added].)

As the opposition admits, the Fee Agreement “does not precisely replicate the model language recommended under former California Rule of Professional Conduct 3-410 regarding an attorney’s lack of professional liability insurance.” However, as the opposition also notes, the State Bar’s suggested language -- “I do not have professional liability insurance” -- is a model, not a mandate.

As a preliminary matter, at the demurrer stage, courts construe any favorable interpretation of a contract in the light most favorable to the pleading party. (Ferrick v. Santa Clara University (2014) 231 Cal.App.4th 1337, 1341 [“A complaint's allegations are construed liberally in favor of the pleader.”]; Martinez v. Socoma Companies, Inc. (1974) 11 Cal.3d 394, 400 [“When a complaint is based on a written contract which it sets out in full, a general demurrer to the complaint admits not only the contents of the instrument but also any pleaded meaning to which the instrument is reasonably susceptible.”].) Moreover, borrowing from the concept of informed consent in the context of medical procedures, generally, it is a factual question as to whether a physician has obtained a patient’s informed consent. (McKinney v. Nash (1981) 120 Cal.App.3d 428, 441.) Thus, a determination of whether the Fee Agreement provided informed consent at the demurrer stage here is not proper.

Cross-Defendants’ demurrer to the Cross-Complaint is overruled.

Legal Standard for Motions to Strike

“The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading. (b) Strike out 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.”¿(Code Civ. Proc., § 436.) “Immaterial” or “irrelevant” matters include allegations not essential to the claim, allegations neither pertinent to nor supported by an otherwise sufficient claim or a demand for judgment requesting relief not supported by the allegations of the complaint. (Code Civ. Proc., § 431.10, subds. (b)(1)-(3).)

Discussion

Cross-Defendants Louderbacks also move to strike the request for interest and attorneys’ fees in the Cross-Complaint. Cross-Defendants argue, based on their demurrer arguments, that because, the Fee Agreement is unenforceable, the request for interest and attorney fees arising from the Fee Agreement is also unenforceable.

However, as the Court noted in overruling the demurrer, the Court cannot find on the pleadings that the Fee Agreement is unenforceable as a matter of law. Thus, the Fee Agreement’s attorney fee provision and interest request survives the motion to strike.

The motion to strike the request for interest and attorneys’ fees is denied.

Conclusion

The demurrer is overruled. The motion to strike is denied.