Judge: Daniel M. Crowley, Case: 23STCV20031, Date: 2024-07-19 Tentative Ruling

Case Number: 23STCV20031    Hearing Date: July 19, 2024    Dept: 71

Superior Court of California

County of Los Angeles

DEPARTMENT 71

AMENDED TENTATIVE RULING

Defendants HG Law APC’s and Hyka A. Karapetian’s demurrer to Plaintiffs Lilit Keshishyan’s and Levon Ehtibaryan’s first amended complaint is sustained with 20 days leave to amend.

Defendants HG Law APC’s and Hyka A. Karapetian’s motion to strike is denied as moot.

Defendants HG Law APC (“HG Law”) and Hyka H. Karapetian (“Karapetian”) (collectively, “Defendants”) demur to Plaintiffs Lilit Keshishyan’s (“Keshishyan”) and Levon Ehtibaryan’s (“Ehtibaryan”) (collectively, “Plaintiffs”) first amended complaint (“FAC”).  (Notice of Demurrer, pg. 2; C.C.P. §§430.10 et seq.)  Defendants also move to strike portions of the FAC.  (Notice of MTS, pg. 2.)

Request for Judicial Notice

Defendants’ 2/13/24 request for judicial notice of Plaintiffs’ initial complaint is denied, as the Court does not need to take judicial notice of filings on the instant docket.

Background

Plaintiffs filed their initial Complaint on August 22, 2023.  On November 17, 2023, Plaintiffs filed the operative FAC against Defendants alleging five causes of action: (1) legal malpractice; (2) breach of fiduciary duty; (3) fraud and deceit; (4) breach of contract; and (5) violation of Penal Code §496.

This action arises out of Plaintiffs retaining HG Law on June 28, 2017, to represent them regarding a June 27, 2017, auto collision that occurred in Glendale, California, for a personal injury action against Commercial Waste Services Inc. and its driver, Ramon Alcantara.  (FAC ¶¶18-19.)  Plaintiffs allege they each executed separate Client Services Agreements for the retention of Defendants in the personal injury action, and Defendants did not disclose or advise Plaintiffs of any potential conflict(s) of interest with respect to the firm’s representation of multiple parties in the same action, and Defendants did not present or obtain Plaintiffs’ informed written consent to joint representation despite the potential for conflict(s) of interest arising from such joint representation.  (FAC ¶¶20-21.)

On February 13, 2024, Defendants filed the instant demurrer and motion to strike.  On March 13, 2024, Plaintiffs filed their combined opposition.[1]  On March 18, 2023, Defendants filed a reply.

A.   Demurrer

Summary of Demurrer

Defendants demur to Plaintiffs’ 1st, 2nd, 3rd, 4th, and 5th causes of action.  Defendants demur on the basis that Plaintiff’s 1st, 2nd, 4th, and 5th causes of action are barred by the statute of limitations.  (Demurrer, pgs. 2-4; C.C.P. §430.10(e).)  Defendants demur on the basis that Plaintiffs’ 1st, 2nd, 3rd, and 5th causes of action fail to state facts sufficient to constitute a cause of action against Defendants.  (Demurrer, pgs. 2-4; C.C.P. §430.10(e).)  Defendants demur on the basis all of Plaintiffs’ causes of action are uncertain.  (Demurrer, pgs. 2-4; C.C.P. §430.10(f).)  Finally, Defendants demur on the basis the 2nd, 3rd, 4th, and 5th causes of action are duplicative.  (Demurrer, pgs. 2-4; Kracht v. Perrin, Gartland & Doyle (1990) 219 Cal.App.3d 1019, 1022-1023; Loube v. Loube (1998) 64 Cal.App.4th 421, 429-431; Award Metals, Inc. v. Superior Court (1991) 228 Cal.App.3d 1128, 1135.)

          Meet and Confer

Before filing a demurrer pursuant to this chapter, the demurring party shall meet and confer in person, by telephone, or by video conference with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.  (C.C.P. §430.41(a), emphasis added.)  A declaration must be filed with a demurrer regarding the results of the meet and confer process.  (C.C.P. §430.41(a)(3).)

Defendants’ counsel declares that on October 17, 2023, she called Plaintiffs’ counsel twice and reached an answering service both times.  (Decl. of Koshkaryan ¶4.)  Defendants’ counsel declares that on October 27, 2023, after emailing Plaintiffs’ counsel a meet and confer letter, she met and conferred on the telephone with Plaintiffs’ counsel.  (Decl. of Koshkaryan ¶¶5-6, Exhs. A.)  Defendants’ counsel declares that on December 19, 2023, she again met and conferred with Plaintiffs’ counsel and discussed their meet and confer issued and parties were unable to come to an agreement.  (See Decl. of Koshkaryan ¶7.)  Defendants’ counsel’s declaration is sufficient under C.C.P. §430.41(a).  Accordingly, the Court will consider the instant demurrer.

Legal Standard

“[A] demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.)  A demurrer 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.  (See Donabedian v. Mercury Insurance Co. (2004) 116 Cal.App.4th 968, 994 [in ruling on a demurrer, a court may not consider declarations, matters not subject to judicial notice, or documents not accepted for the truth of their contents].)  For purposes of ruling on a demurrer, all facts pleaded in a complaint are assumed to be true, but the reviewing court does not assume the truth of conclusions of law.  (Aubry v. Tri-City Hospital District (1992) 2 Cal.4th 962, 967.)

          Statute of Limitations

C.C.P. §340.6 provides in part, “[a]n 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, whichever occurs first.”  (C.C.P. §340.6(a), emphasis added.)

Plaintiffs allege that on June 28, 2017, they retained Defendants to represent them regarding the auto collision in a personal injury action against Commercial Waste Services Inc. and its driver, Ramon Alcantara.  (FAC ¶19.)  Plaintiffs allege on or about June 26, 2019, Defendants, on behalf of Plaintiffs, filed a personal injury action in Los Angeles Superior Court, which was assigned Case Number 19STCV22401, Lilit Keshishyan, et al. v. Ramon Alcantara, et al. (“Personal Injury Action”).  (FAC ¶22.)

Plaintiffs allege on August 15, 2022, Plaintiff Keshishyan saw that the Court’s Register of Actions reflected a Request for Dismissal had been filed in June 2022.  (FAC ¶31.)  Plaintiffs allege Plaintiff Keshishyan did not understand what it meant that a Request for Dismissal had been filed in the case, and immediately texted Defendant Karapetian and referenced the dismissal and asked for an update on the case.  (FAC ¶31.)  Plaintiffs allege Defendant Karapetian replied, indicating disbursement is not finalized, that she had arrived back in the country on August 9, 2022, that she had caught Covid, and explained she would call Plaintiffs “as soon as everything is finalized,” although Defendant Karapetian did not explain the status or what she meant by “everything” or what was actually being “finalized.”  (FAC ¶31.)  Plaintiffs allege she also did not explain what it meant that a Request for Dismissal had been filed.  (FAC ¶31.)

Plaintiffs allege during the meeting at Defendants’ office on August 23, 2022, Defendant Karapetian finally disclosed that she had settled Plaintiffs’ personal injury action for $80,000.00 on or around June 15, 2022.  (FAC ¶34.)  Plaintiffs allege she also informed Plaintiffs that she had signed the written release agreement memorializing the terms of the settlement on behalf of Plaintiffs and confirmed that the Request for Dismissal filed in June 2022 had been filed “with prejudice” and therefore had fully and completely disposed of the Personal Injury Action.  (FAC ¶34.)

The one-year limitations period for professional negligence, at a minimum, was triggered on August 15, 2022, by Plaintiffs’ discovery of the facts constituting the alleged act or omission, i.e., the filing of the request for dismissal without their knowledge or consent. The one-year limitations period is triggered by Plaintiffs’ discovery of the facts constituting the alleged act or omission, not “by his discovery that such facts constitute professional negligence, i.e. by discovery that a particular legal theory is applicable based on the known facts.”  (Peregrine Funding, Inc. v. Sheppard Mullin (2005) 133 Cal.App.4th 658, 684; see Laird v. Blacker (1992) 2 Cal.4th 606, 609 [holding C.C.P. §340.6(a)’s one-year-from-discovery limitation period commences when he or she suffers an adverse judgment or dismissal in the underlying action].)  

The Court views the FAC as alleging at least 2 distinct wrongful acts by defendants: 1) causing plaintiff’s suit against Commercial Waste Services Inc. and its driver, Ramon Alcantara, to be dismissed without plaintiff’s consent; and 2) not dispersing the settlement pursuant to the settlement terms.  The Court agrees that the one-year statute of limitations as to the first act ran on August 15, 2023, when plaintiffs discovered that the matter had been dismissed.  As to the second act, however, the Court finds that the statute for that did not run until August 23, 2023, such that plaintiffs’ present action would be timely filed.   

The Court finds that plaintiffs’ current complaint does not adequately distinguish between these two acts, rendering it uncertain.  Accordingly, Defendants’ demurrer to Plaintiffs’ 1st, 2nd, 4th, and 5th causes of action is sustained 20 days leave to amend.

          Failure to State a Claim

          Fraud (3rd COA)

“The elements of fraud that will give rise to a tort action for deceit are: ‘(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.’”  (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974, internal quotation marks omitted.)

“The specificity requirement means a plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made, and, in the case of a corporate defendant, the plaintiff must allege the names of the persons who made the representations, their authority to speak on behalf of the corporation, to whom they spoke, what they said or wrote, and when the representation was made.”  (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645; West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 793.)

Plaintiffs allege they repeatedly trusted Defendants to represent them competently and to abide by rules of professional conduct including but not limited to communication and zealous representation and acting in client’s best interests; however, Defendants failed to advise Plaintiffs of potential or actual conflicts of interest and ultimately acted in its own best interest.  (FAC ¶69.)

Plaintiffs allege Defendants settled the matter of Lilit Keshishyan, et al. v. Ramon Alcantara, et al. on or around June 15, 2022, without communicating offers or obtaining authorization of Plaintiffs, and each of them, for such settlement or disbursement.  (FAC ¶70.)  Plaintiffs allege as of August 15, 2022, Defendant Karapetian had still never communicated any settlement offers to either Plaintiff Keshishyan or Plaintiff Ehtibaryan, nor had she sought or obtained either Plaintiffs’ authorization to accept any settlement offers on behalf of either of the Plaintiffs.  (FAC ¶71.)

Plaintiffs allege on August 22, 2022, after not having received any updates from their many inquiries, nor any explanation of the significance of a Request for Dismissal having been filed in June 2022, Plaintiff Keshishyan again texted Defendant Karapetian and asked to meet with her at her office the next day to finally receive a status on their case.  (FAC ¶72.)  Plaintiffs allege it was not until August 23, 2023, during the meeting at Defendants’ office that Defendant Karapetian finally disclosed that she had settled Plaintiffs’ personal injury action for $80,000.00 on or around June 15, 2022.  (FAC ¶73.)  Plaintiffs allege she also informed Plaintiffs that she had signed the written release agreement memorializing the terms of the settlement on behalf of Plaintiffs and confirmed that the Request for Dismissal filed in June 2022 had been filed “with prejudice” and therefore had fully and completely disposed of the personal injury action.  (FAC ¶73.) 

Plaintiffs allege accordingly, pursuant to such release agreement and dismissal with prejudice, Plaintiffs were bound to the terms of the settlement agreement despite the fact that neither of them had ever received any communication from Defendants informing them of any settlement offer either in terms of amount(s) offered or other terms, nor had either of them ever been consulted regarding whether either or both of them were in agreement with the settlement amount or other associated terms.  (FAC ¶74.)

Plaintiffs allege in addition to the contingency-based attorneys’ fees totaling $26,400 for resolving the personal injury action, Defendant Karapetian took $35,000 of the remaining settlement funds as compensation to Defendants for legal services rendered in an unrelated matter handled on behalf of Plaintiff Ehtibaryan in 2017, a matter for which Plaintiff Keshishyan was not a party.  (FAC ¶75.)  Plaintiffs allege Defendant Karapetian explained to Plaintiffs that she would be disbursing the settlement funds in larger portion to Plaintiff EHTIBARYAN because of the amount Plaintiff Ehtibaryan allegedly owed to Defendants for the 2017 Matter, despite the fact that the Settlement Agreement in Plaintiffs’ personal injury action actually specified that $45,000 of the settlement funds would go to Plaintiff Keshishyan and $35,000 of the settlement funds would go to Plaintiff Ehtibaryan.  (FAC ¶76.)

Plaintiffs allege upon receipt of their file, Plaintiffs discovered that Defendants had forged a Promissory Note dated July 13, 2019, purporting that Plaintiff Ehtibaryan promised to pay Hyka Galazhyan $30,000 within thirty days of receipt of payment for resolution of the Personal Injury Action, which Plaintiff Ehtibaryan denies.  (FAC ¶77.)  Plaintiffs allege Plaintiff Ehtibaryan denies having ever made such covenant or promise and denies the validity of such document or the terms thereof.  (FAC ¶77.) 

Plaintiffs allege they reasonably relied on Defendants’ material misrepresentations of competency, good faith, and communications, and depended on Defendants to advise them of an settlement offers and appropriately advise them of potential or actual conflicts, settlement offers, and make legally sound recommendations in Plaintiffs’ best interest, but Defendants failed to obtain Plaintiffs’ agreement to the settlement of their case and signed the settlement agreement on behalf of Plaintiffs, and each of them, on or around June 15, 2022 and without their authorization.  (FAC ¶78.)

Plaintiffs allege they suffered actual financial damages when, in addition to the contingency based attorneys’ fees totaling $26,400 for resolving the personal injury action, Defendant Karapetian took $35,000 of the remaining settlement funds as compensation to Defendants for legal services rendered in an unrelated matter handled on behalf of Plaintiff Ehtibaryan in 2017, a matter for which Plaintiff Keshishyan was not a party.  (FAC ¶79.)  Plaintiffs allege Plaintiff Keshishyan’s settlement portion was $45,000, from which attorney’s fees of 33% were $14,850, litigation costs were $650, and associated liens were resolved with a balance due of $2,100; therefore, Plaintiff Keshishyan should have received $27,400.  (FAC ¶80.)  Plaintiffs allege based on Plaintiff Ehtibaryan’s settlement portion for $35,000, from which attorney’s fees of 33% were $11,550, litigation costs were $250, and associated liens were resolved with a balance due of $1,500; therefore, Plaintiff Ehtibaryan should have received $21,700.  (FAC ¶80.)

Plaintiffs allege as a result of Defendants’ intentional misconduct, Plaintiffs were injured personally, and suffered extreme and severe emotional distress, including betrayal of trust Plaintiffs had placed in Defendants and accordingly is entitled to an award of economic and noneconomic damages for emotional distress.  (FAC ¶81.)

Plaintiffs fail to allege, with the requisite specificity, each Defendants’ knowledge of falsity (or ‘scienter’), intent to defraud, i.e., to induce reliance; justifiable reliance, and resulting damage from the allegation that Defendants forged a promissory note dated July 13, 2019.  (FAC ¶77; Engalla, 15 Cal.4th at pg. 974, internal quotation marks omitted.)

With regard to Plaintiffs’ allegation of Defendants’ nondisclosure of potential or actual conflicts of interest or the concealment of the settlement offers, Plaintiffs fail to allege with the requisite specificity each Defendants’ scienter, intent to induce reliance.

Accordingly, Defendants’ demurrer to Plaintiffs’ 3rd cause of action is sustained with 20 days leave to amend.

Conclusion

Defendants’ demurrer to Plaintiffs’ FAC is sustained with 20 days leave to amend.

Moving Party to give notice.

B.    Motion to Strike

In light of the Court’s ruling on the demurrer, Defendants’ motion to strike is denied as moot.

Dated:  March _____, 2024