Judge: David Sotelo, Case: 19STCV27890, Date: 2022-10-20 Tentative Ruling
Case Number: 19STCV27890 Hearing Date: October 20, 2022 Dept: 40
MOVING PARTY: Cross-Defendant/Cross-Complainant
Greenspoon Marder, LLP and Cross-Defendant James H. Turken.
Eisner PC initiated this action when it sued Jeffrey
Bernstein and Superior Equipment Solutions (“SES”) for non-payment of attorney
fees. (“SES”) responded with this Cross-Complaint against
Eisner PC, Greenspoon Marder, LLP, James H. Turken alleging
Professional Negligence (Legal Malpractice) that when Eisner, Greenspoon Marder
and Turken (counsel at Greenspoon Marder) represented SES they made a single negligent
decision to which Bernstein and SES argue was of such paramount importance to the
Underlying Action that it directly resulted in the ultimate judgment against Bernstein
and SES.
This Court granted Einsner’s motion for summary judgment
against this cross-complaint earlier this year.
Greenspoon Marder and Turken now bring their own Motion for Summary
Judgment on the grounds that Bernstein and SES do not present any triable issues
of material fact as to (1) whether a better outcome could have been obtained in
the Underlying Action but for the exclusion of the Berger Emails, (2) whether statements
made by Greenspoon Marder and Turken in their representation of Bernstein and SES
caused the latter’s damages in the Underlying Action as a matter of law, and (3)
whether Bernstein’s unclean hands, as evinced by Bernstein’s deposition testimony
in the Underlying Action, preclude recovery in this Legal Malpractice action.
This Court agrees and GRANTS Greenspoon and Turken’s Motion
for Summary Judgment because (1) Greenspoon and Turken carry their burden of
showing that no triable issues of material fact exist as to whether admission
or use of the Berger Emails in the Underlying Action would have led to a
different outcome for Bernstein and SES, fatally undercutting the Professional
Negligence claim against Greenspoon and Turken, and (2) Bernstein and SES fail
to make a sufficient converse showing.
The Underlying Action, LASC Action
No. SC127857
Bernstein is the owner SES”, where Dale Seiden (“Seiden”) was
employed as Vice President of Sales and Marketing from 2001 to 2017,
On June 25, 2017, Seiden filed a lawsuit Bernstein and SES for
Breach of Contract, Promissory Fraud, Promissory Estoppel, and Declaratory Relief
(LASC Action No. SC127857 or “the Underlying Action”). Seiden alleged that he
and Bernstein entered an oral contract to give Seiden a 20% ownership interest in
SES but that Bernstein failed to do so.
The parties in this pending motion disagree on summary judgment
as to whether, after allegedly stringing Seiden along with false promises, a written
agreement outlining Seiden’s interest in SES was forthcoming and whether, after
making such promises, Bernstein not only reneged on the contract but also denied
ever making any such promises to Seiden. However, for background purposes, the parties
appear to agree that in the Underlying Action, Seiden made several allegations against
Bernstein and SES, including that:
While Seiden was the catalyst for SES’s
success, his role as Vice President of Sales and Marketing “did not adequately reflect
his significant contributions”;
In an August 2012 meeting, Seiden met
with Bernstein at latter’s apartment and told Bernstein that he wanted 20% ownership
of SES;
Bernstein agreed to give Seiden 20%
ownership because he agreed that Seiden “definitely” deserved it;
Bernstein told Seiden he was engaged
on a task “for a few more weeks,” and that Bernstein would meet his attorney David
Berger “immediately thereafter to document the parties’ agreed-upon ownership agreement”;
After the August 2012 meeting, Seiden
made several visits to Bernstein’s office over the next several months to inquire
about the ownership documentation, and Bernstein always told him that his attorney
David Berger was working on it;
In an exchange of emails between Bernstein
and Seiden sent on September 7, 2013, Bernstein promised to Seiden that Bernstein
would be meeting with Berger to draft the ownership documents in favor of Seiden;
Despite this promise and Seiden’s follow-ups
with Bernstein, the ownership transfer to Seiden failed to proceed;
In April 2015, Seiden told Bernstein
that a competing company had offered Seiden a job, prompting Bernstein to apologize
for not yet drafting ownership documents for Seiden and promise to meet with Berger;
and
In January 2017, Bernstein for the first
time repudiated his promise to grant ownership in SES to Seiden, prompting Seiden
to file the Underlying Action.
After being served in the Underlying Action, Bernstein and SES
retained as lead counsel James H. Turken (“Turken”), who at the time was employed
by Eisner PC, fka Eisner Jaffe, APC (“Eisner”).
During the meetings and discussions that Turken and Eisner had
with Bernstein as part of their initial investigation, Bernstein gave Turken and
Eisner 12 emails he had exchanged with David Berger from October 25, 2013 to November
26, 2013 (the “Berger Emails”).
In the first of the twelve Berger Emails, dated October
25, 2013 with subject line “Phantom Stock letter,” Bernstein stated: “David, I want
to provide a letter to Dale [Seiden] stating he will be entitled to a 5% participation
in a sale of the company as long as he is still working here. Is this something
you can and want to do?” The remainder of the Berger emails indicate that instead
of the 20% allegedly agreed to by Bernstein, Seiden would only be given a 5% payout
from any sale of SES without further elaborating on any ‘phantom stock.’
At some point in the Underlying Action, Bernstein specifically
told Turken that these Emails supported his defense and specifically instructed
Turken to utilize the Berger Emails in Bernstein’s defense.
Nevertheless, Eisner and Turken withheld the Berger Emails based
on of attorney-client privilege, identifying these emails on a privilege log dated
October 10, 2017 that was produced to Seiden’s counsel in the Underlying Action.
On Opposition, Bernstein and SES argue that neither Turken nor
anyone else at Eisner ever explained to Bernstein that by asserting privilege over
the Berger emails, Bernstein and SES would be waiving the right to utilize the Berger
emails at trial—contrary to Bernstein’s prior instructions to Turken.
In April 2018, Turken left Eisner and joined
Cross-Defendant/Cross-Complainant Greenspoon Marder LLP (“Greenspoon Marder” or
“Greenspoon”). Then, on or about April 13, 2018, Greenspoon substituted into the
Underlying Action as Bernstein’s counsel of record. James H. Turken remained as
lead counsel.
The combined allegations on summary judgment show that Greenspoon
on several occasions continued to assert privilege over the Berger Emails through
April 19, 2019, when Greenspoon Marder produced the Berger Emails to Seiden’s counsel
informing counsel that Bernstein was now waiving the privilege.
Prior to this, in February 2019, Bernstein was deposed in the
Underlying Action, at which time he testified that:
Bernstein recalled Seiden “came over to [his] apartment sometime
in the year 2012 and in particular August of 2012” and, during that visit, Seiden
“raised the subject matter of an equity interest in SES being given to him,” although
there was no specific percentage suggested or demanded by Seiden;
Seiden told Bernstein during their August 2012 meeting that Seiden
deserved to share in the benefits of the success of SES and that it was important
to Seiden to hold equity in SES;
Bernstein might have rudimentarily explained to Seiden what a
phantom stock was during their August 2012 meeting and did tell Seiden that Bernstein
would contact David Berger to determine how to structure such an ownership transfer
to Seiden;
By the time he had the September 7, 2013 email exchange with
Seiden, Bernstein had already spoken with Berger about getting Seiden an equity
interest in SES, and Bernstein already had reached a conclusion that “[he] couldn’t
do what [he] wanted to do” (where Bernstein’s Separate Statement’s Additional Material
Facts puts forward the position that tax and related complications decided Bernstein
in not continuing the ownership transfer process in favor of Seiden);
Bernstein lied to Seiden in his September 7, 2013 email exchange
when Bernstein represented that he had made an appointment to speak with David Berger
in relation to giving Seiden an equity interest in SES and continued to lie to Seiden
through 2017 regarding Bernstein’s efforts to transfer partial ownership of SES
to Seiden through Berger’s work (though the Court notes (1) that Bernstein provides
evidence that on April 9, 2019—10 days before Greenspoon served the Berger Emails
on Seiden’s Counsel—Greenspoon Marder served an Errata Sheet to the February 2019
deposition, in which Bernstein updated his testimony to state that Bernstein did
not lie to Seiden regarding a future meeting with Berger, that Bernstein and Berger
spoke in October and November 2013 through the Berger Emails, and that Bernstein
did not lie to Seiden through 2017 when Bernstein asserted that he was making efforts
to draft ownership transfer documents through Berger and (2) the Errata Sheet
was precluded at trial in the Underlying Action through a Motion in Limine by
Seiden); and
Bernstein did not feel the need to inform Seiden that Bernstein
was not taking action to draft ownership transfer documents in favor of Seiden because,
in part, Bernstein needed Seiden to remain at SES to perform a sales function for
the company and because Bernstein did not want Seiden’s sales performance to drop
if Bernstein informed Seiden that no ownership transfer documents were being drafted.
On summary judgment, Bernstein provides a Declaration putting
forth that Turken did not attend the February 2019 deposition, instead sending associate
Blake Osborne, who directed Bernstein not to answer questions regarding communications
with David Berger relating to the phantom stock without explaining that this course
of action could lead to the exclusion of the Berger Emails. Further, Bernstein points
the Court to his February 2019 deposition transcript, in which Seiden’s counsel
advised Osborne to produce correspondence between Bernstein and Berger—i.e., the
Berger Emails—and that Osborne responded by again asserting privilege over the Berger
Emails through reference to Bernstein’s October 2017 privilege log.
On April 9, 2019, Greenspoon Marder served an Errata Sheet to
the February 2019 deposition, in which Bernstein updated his testimony to state
that Bernstein did not lie to Seiden regarding a future meeting with Berger, that
Bernstein and Berger spoke in October and November 2013 through the Berger Emails,
and that Bernstein did not lie to Seiden through 2017 when Bernstein asserted that
he was making efforts to draft ownership transfer documents through Berger.
(A review of the docket for the Underlying Action—LASC Action
No. SC127857—shows that on April 12, 2019, Seiden made a Motion in Limine to exclude
Bernstein’s Errata Sheet dated April 9, 2019 from the trial in the Underlying Action.)
(Repeated) On April 19, 2019, Greenspoon Marder produced the
Berger Emails and waived privilege on behalf of Bernstein and SES.
(A review of the docket for the Underlying Action—LASC Action
No. SC127857—shows that on April 23, 2019, Seiden made a Motion in Limine to exclude
the Berger Emails from the trial in the Underlying Action.)
(Bernstein provides as evidence the Opposition to the Motion
in Limine to exclude the Berger Emails, as drafted by Greenspoon Marder, which argued
several times that these communications were directly relevant to the litigation
at issue and key to Bernstein and SES’s defense in the Underlying Action.)
On May 8, 2019, the Court in the Underlying Action granted Seiden’s
Motion in Limine to exclude the Berger Emails because the attorney-client privilege
had asserted over the Berger Emails “multiple times over the course of a couple
years, used as a shield, … [but that] now … [Bernstein and SES had made] a tactical
decision to change course and us[e] [the Berger Emails] … as a sword,” which the
Court “d[idn]’t believe … [was] appropriate.”
A review of the same May 8, 2019 Order shows that Seiden’s Motion
in Limine to exclude Bernstein’s Errata Sheet was also granted in that Order.
Trial in the Underlying Action began on September 16, 2019.
The testimony Bernstein provided in his February 28, 2019 deposition
was read into the record at trial. Further, Seiden’s counsel was able to elicit
testimony from Seiden to the effect that Bernstein never promised Seiden phantom
stock at their meeting—presumably the meeting in August 2012.
On September 25, 2019, the jury in the Underlying Action returned
a verdict in favor of Seiden and against Bernstein and SES, awarding Seiden compensatory
and punitive damages $2,335,575. The jury thereafter awarded Seiden punitive damages
against each defendant. (According to Bernstein’s Declaration on summary judgment,
the jury found for Seiden and awarded a judgement of over $4.5 million, which Bernstein
frames as 20% of the estimated value of SES.)
On January 3, 2020, Greenspoon Marder filed a Motion for New
Trial in the Underlying Action, arguing in relevant part that the Court’s exclusion
of the Berger Emails was in error and warranted a new trial. (Bernstein and SES
provide evidence that in this Motion for New Trial, Greenspoon argued that had the
Berger Emails been admitted into evidence, they “would undoubtedly … have influenced
the jury’s decision.”) The trial Court denied a New Trial. (A transcript for
that hearing shows that while the Court found Bernstein’s testimony regarding discussions
with Seiden as to the topic of “phantom stock” consistent--based on juxtaposition
with the Berger Emails—nevertheless, the jury disregarded much of Bernstein’s testimony
as simply not credible.)
(Bernstein provides a Declaration arguing that on February 3,
2020—at a time when Bernstein had already hired new counsel, Saied Kashani—Turken
urged Bernstein and Kashani to appeal the judgment in the Underlying Action and
that associate Blake Osborne explained, to the agreement of Turken, that the their
“number one” ground for appeal to overturn the judgment was the exclusion of the
Berger Emails and discussions with Berger, but that Bernstein and SES were unable
to appeal because they could not post a $4.8 million bond to stay the judgment for
appeal purposes and because Eisner and Greenspoon Marder were unwilling to assist
in posting bond.)
Through new counsel Kashani, Bernstein and SES subsequently settled
with Seiden, agreeing to pay Seiden $4.5 million over time (with interest). (Bernstein’s
Declaration provides that prior to entering the settlement with Seiden, Bernstein
invited Eisner and Greenspoon Marder to attempt to obtain a better settlement offer,
with both law firms declining the invitation.)
This Action
Shortly before the Underlying Action was settled, on August 7,
2019, Eisner initiated this action by filing a Complaint against Bernstein and SES
pursuant to claims of Breach of Contract and Common Counts on the grounds that Bernstein
and SES had failed to remit payment of $65,936.25 due to Eisner based on Eisner’s
representation of Bernstein and SES in the Underlying Action.
On January 11, 2021, Bernstein and SES made the Cross-Complaint
at issue in this hearing, making a single claim of Professional Negligence, i.e.,
Legal Malpractice, against Eisner, Greenspoon Marder, Turken, and Does 1-10.
On June 16, 2021, Greenspoon Marder brought its own Cross-Complaint,
alleging Breach of Contract, Open Book Account, Account Stated, and Quantum Meruit
against Bernstein, SES, and Roes 1-100, with a First Amended Cross-Complaint filed
on August 20, 2021.
On November 18, 2021, Eisner made an opposed Motion for Summary
Judgment against Bernstein and SES’s Professional Negligence claim as it related
to Eisner, which this Court granted on February 18, 2022 on the grounds that “the
Berger Emails were excluded because of strategic decisions made at critical times
long after Eisner LLP ceased representing Bernstein/SES.”
Cross-Complainants Bernstein and SES are admonished for failing
to comply with California Rules of Court, rule 3.1350, subdivisions (f)(2) and (3),
requiring that, in an opposition’s Separate Statement, citation to the evidence
in support of the position that a fact is controverted or in support of each material
fact asserted in the separate statement must include reference to the exhibit, title,
page, and line numbers.” (See Cal. Rules of Court, rule 3.1350, subd. (f)(2); see
also, e.g., Opp’n, Separate Statement, UMF Nos. 17-20.)
Bernstein and Seiden are further admonished for failing to,
in their brief, cite to the location of their evidence in Opposition to this
Motion for Summary Judgment. (See Opp’n, 16:1-17:5.)
Professional Negligence,Legal Malpractice]: GRANTED,
as to Greenspoon Marder, LLP and James H. Turken.
“The¿elements¿of a cause of action for
professional¿negligence¿are (1) the existence of the duty of the professional
to use such skill, prudence, and diligence as other members of the profession
commonly possess and exercise; (2) breach of that duty; (3) a causal connection
between the negligent conduct and the resulting injury; and (4) actual loss or
damage resulting from the¿professional¿negligence.” (Oasis West Realty, LLC
v. Goldman (2011) 51 Cal.4th 811, 821.) “An attorney, by accepting
employment to give legal advice or render legal services, impliedly agrees to
use ordinary judgment, care, skill, and diligence in the performance of the
tasks he or she undertakes.” (Nicholas v. Keller (1993) 15 Cal.App.4th
1672, 1682.) “[C]ausation … is ordinarily a question of fact which cannot be
resolved by summary judgment.” (Id. at 1687.) “The issue of causation
may be decided as a question of law only if, under undisputed facts, there is
no room for a reasonable difference of opinion.” (Ibid.)
However, “one who establishes malpractice on the part of his
attorney in prosecuting or defending a lawsuit must also prove that careful
management of it would have resulted in recovery of a favorable judgment and
collection of same or, in case of a defense that proper handling would have
resulted in a judgment for the client.” (Campbell v. Magana (1960) 184
Cal.App.2d 751, 754.) But such requirement should not be confused with
causation or injury and is only used as a safeguard against speculative or
conjectural claims and is a standard of proof designed to limit damages to that
caused by the attorney’s malfeasance and is thus used correctly only to
safeguard against speculative damages. (See Mattco Forge, Inc. v. Arthur
Young & Co. (1997) 52 Cal.App.4th 820, 833-34.)
Bernstein and SES allege that Greenspoon and Turken committed
Professional Negligence when Greenspoon and Turken: (1) did not follow Bernstein’s
instructions that they use the Berger Emails, (2) did not insure that the Berger
Emails would be used at trial despite the recognition the emails were “key to [Bernstein
and SES’s] defense” in the case, and (3) because they knew or should have known
that withholding the Berger emails could or would possibly preclude their use at
trial, but they nevertheless withheld these documents based on claims of privilege,
ultimately resulting in a several million dollar judgment against Bernstein and
SES. Instead, the continued assertion of privilege constituted the entire or a substantial
factor in causing damages according to proof to Bernstein and SES. (See Cross-Complaint,
¶¶ 11-13, 26-35 [underlying facts], 36-40 [negligence claim].)
Defendants Greenspoon Marder and Turken present three arguments
in favor of summary judgment: The Professional Negligence claim fails because (1)
Bernstein cannot prove beyond speculation and conjecture that he could have obtained
a better outcome in the Underlying Action but for the exclusion of the Berger emails,
(2) Bernstein’s causation evidence—i.e., the arguments made by Greenspoon Marder
while advocating on behalf of Bernstein and that advocacy on behalf of a client
do not constitute judicial admissions, e.g., admissions of guilt on behalf of client
not a judicial admission, and (3) that Bernstein’s claim against Greenspoon Marder
is barred by the doctrine of Unclean Hands. (Mot., 19:15-23:11 [speculation], 23:12-24:2
[judicial admissions], 24:23-25:20 [unclean hands].)
To support the first of these three points, Greenspoon Marder
and Turken point to a February 13, 2020 statement made by Underlying Trial
Court Judge, Mark A. Young, in denying the Motion for New Trial wherein he
states that the jury in that action “found him [i.e., Bernstein] absolutely not
credible” at trial. (Mot., 23:4-9 [legal argument]; Mot., Exhibits Comp., Ex. 15,
6:28-7:6 [transcript language].) A review of the same transcript shows that Judge
Young further stated that (1) Bernstein and SES in fact presented an argument to
the jury to the effect that Bernstein considered granting Seiden phantom stock in
SES, which the jury “disregarded,” and (2) Bernstein’s deposition testimony regarding
stringing Seiden along because “he was too good of a salesperson” to lose also contributed
to the judgment against Bernstein and SES. (Mot., Exhibits Comp., Ex. 15, 5:19-6:11
[phantom stock], 7:6-12 [stringing along].)
This evidence supports a conclusion that no triable issues
of material fact exist as to Bernstein and SES’s Professional Negligence claim:
Instead, it compels a reasonable factfinder to the sole conclusion that Bernstein
and SES cannot show that “proper handling [of the Underlying Action by
Greenspoon and Turken by disclosing the Berger Emails at a reasonable time]
would have resulted in a judgment for the client.” (Campbell v. Magana, supra,
184 Cal.App.2d at p. 754.)
Bernstein and SES also argue that statements made by
Greenspoon Marder and Turken in their representation of Bernstein and SES in
the Underlying Action directly led to a judgment against Bernstein and SES (and
thus the subsequent remedial settlement with Seiden). (Opp’n, 15:26-17:14.) They
point to three pieces of evidence—although the Opposition completely fails to
cite to the location of the relevant evidence in their Exhibits: (1) Attorney
Turken stating during his Opposition against the Motion in Limine to exclude
the Berger Emails from the Underlying Action that the Berger Emails were “key
to the Defendants’ defense” and “prima facie evidence to contradict the
Plaintiff’s [i.e., Seiden’s] version of events of the key issue in [that]
litigation”; (2) Seiden’s non-specific evidence at trial—an email to Bernstein
without key details as to whether Seiden would be given 20% of SES or phantom
stock, among other points—would have been contradicted by the precluded Berger
Emails, leaving Bernstein’s position at trial “completely uncorroborated”; and
(3) post trial in the Underlying Action, Turken agreed that the preclusion of
the Berger Emails was the primary ground upon which an appeal to the Judgement
would be made. (Opp’n, 16:1-17:5; see Opp’n, Exhibits, Ex. E, 1:22 [Opposition
to Motion in Limine to exclude Berger Emails arguing “[the] [Berger] [E]mails are
directly relevant to and at issue in this litigation, and key to Defendants’
defense”], Exs. 1-2 [Dale Seiden emails allegedly relied on by Seiden in the
Underlying Action]; see also Opp’n, Bernstein Decl., ¶ 15 [Bernstein declaring
that at a February 3, 2020 meeting with James Turken and new counsel Saied
Kashani, Turken agreed with Associate Blake Osborne in stating that the Berger
Emails were the “number one” ground for appeal of judgment in the Underlying
Action and that the Emails constituted grounds to reverse such judgment].)
The Court finds that none of this evidence show that, but
for the inclusion of the Berger Emails, judgment in favor of Bernstein and SES
would have resulted. At most, this evidence shows that the Berger Emails could
have been helpful in the Underlying Action and in attempting to overturn the
judgment against Bernstein and SES therein.
None of this evidence convinces this Court that a reasonable
factfinder could determine that this evidence constitutes or creates a triable
issue of material fact: Simply, Bernstein and SES’s briefing and evidence do
not allow even for an inferential conclusion that, had the Berger Emails been
included in the Underlying Action, Bernstein and SES would have prevailed.
Further, the fact that Greenspoon and Turken submitted briefing and considered
an appeal based on the Berger Emails, highlighting the importance of these
communications, does not constitute an admission that is dispositive in the
question of Legal Malpractice here. Indeed, such briefing and statements by
Turken do not have substantial probative value where the statements
“represent[ed] merely an effort by … [Turken] to advance his client[]s[’]
cause.” (Smith v. Lewis (1975) 13 Cal.3d 349, 364, disapproved on other
grounds in In re Marriage of Brown (1976) 15 Cal.3d 838, 844 [discussion
of Smith in relation to the French rule].)
Cross-Defendant/Cross-Plaintiff Greenspoon Marder, LLP and Cross-Defendant
James H. Turken’s Motion for Summary Judgment of Defendants/Cross-Complainants/Cross
Defendants Jeffrey Bernstein and Superior Equipment Solutions, et al. January 11,
2021 Cross-Complaint is GRANTED because (1) Greenspoon and Turken carry their
burden on summary judgment of showing that no triable issues of material fact
exist as to whether non-preclusion of the Berger Emails from the Underlying
Action would have led to a different outcome for Bernstein and SES in that
action, fatally undercutting the Professional Negligence claim against
Greenspoon and Turken, and (2) Bernstein and SES fail to make a sufficient
converse showing.