Judge: Deborah C. Servino, Case: 30-2020-0117568, Date: 2022-11-04 Tentative Ruling
Defendant Merritt L. McKeon’s demurrer to Plaintiff Greg Keel’s First Amended Complaint (“FAC”), is sustained in part and overruled in part. The demurrer as to the first and third causes of action, is sustained without leave to amend. The demurrer as to the remainder of the FAC, is overruled.
Request for Judicial Notice
The court grants McKeon’s request to judicially notice of (1) Plaintiff’s motion for sanctions filed on October 1, 2018 in In re Marriage of Keel, Greg and Marie (Orange County Superior Court case no. 14D007669). The court can take judicial notice of the records in the pending action, or in any other action pending in the same court or any other court of record in the United States. (Evid. Code, § 452, subd. (d).) But judicial notice of other court records and files is limited to matters that are indisputably true. This generally means judicial notice is limited to the orders and judgments in the other court file, as distinguished from the contents of documents filed therein. (Fremont Indem. Co. v. Fremont Gen. Corp. (2007) 148 Cal.App.4th 97, 113.) The court cannot accept as true the contents of pleadings or exhibits in the other action just because they are part of the court record or file. Such documents are inadmissible hearsay in the present case. (Day v. Sharp (1975) 50 Cal.App.3d 904, 914.)
The court denies the request for judicial notice of the request for dismissal filed in this case as to Marie Keel. It is unnecessary to ask the court to take judicial notice of materials previously filed in this case. “[A]ll that is necessary is to call the court’s attention to such papers.” (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2021) ¶ 9.53.1a.)
Allegations from the FAC
The FAC alleges that the Family Law Court entered a Judgment on September 13, 2017 finding that the real property located at 7940 Fareholm was community property even though it was titled only in Marie’s name. On February 15, 2018, the court ruled that Marie Keel had 70 days to refinance the property to buy out Plaintiff’s half and to pay attorney’s fees. (FAC, at ¶¶ 8, 12.) These Orders are attached as Exhibits 1 and 2 to the FAC. Neither sets an amount for the payoff (i.e. what Marie Keel would have to pay Greg to buy him out of his half interest in the home). In the February 15, 2018 Order, the court said that the parties would agree on the amount that Ms. Keel would have to pay Plaintiff. (FAC, at Exh. 2.)
Plaintiff alleges that on February 15, 2018, McKeon (Marie Keel’s attorney in the family law matter) and David Savin (a loan refinancer) “specifically stated and agreed” with Plaintiff that they would help Marie to facilitate a loan pursuant to the court orders and the funds would only be disbursed to Plaintiff. In exchange for these promises, Plaintiff agreed to let McKeon and Savin oversee the refinance. (FAC, at ¶ 11.) Plaintiff alleges that in violation of their agreement, McKeon disbursed money to herself that was not provided for in the court orders and Savin took a commission in excess of $13,422, which was not authorized. (FAC, at ¶¶ 11, 14.)
Merits
Demurrer Based Upon Attorney-Client Privilege
McKeon again argues that the attorney-client privilege prevents her from defending herself. The court already rejected this argument in the motion for judgment on the pleadings (“MJOP”). The court held in relevant part that this is not a proper argument made on a pleadings motion and it likely cannot be adjudicated based on the face of the Complaint. (ROA 197.) The same is still true. McKeon has not given the court the necessary facts needed to adjudicate this issue as they are beyond the four corners of the FAC.
Breach of Fiduciary Duty (First Cause of Action)
The elements of a cause of action for breach of fiduciary duty are the existence of a fiduciary relationship, breach of fiduciary duty, and damages. (Shopoff & Cavallo LLP v. Hyon (2008) 167 Cal.App.4th 1489, 1509.) The allegation of a fiduciary relationship must be supported by either a contract, or a relationship that imposes it as a matter of law. A mere allegation that a party assumed fiduciary duties to another party is a legal conclusion, not a well-pleaded fact. (Berryman v. Merit Property Management, Inc. (2007) 152 Cal.App.4th 1544, 1558-1559.)
The court previously granted McKeon’s MJOP as to this cause of action with leave to amend. (ROA 197.) An attorney can create a fiduciary relationship with a non-client. A fiduciary duty to a competing party is created by the actual agreement of the attorney. (Johnstone v. State Bar (1966) 64 Cal.2d 153, 155–156; Crooks v. State Bar (1970) 3 Cal.3d 346, 355.) In these circumstances, the duty applies regardless of whether an attorney-client relationship exists. (Guzzetta v. State Bar (1987) 43 Cal.3d 962, 979.) The court held that the Complaint, however, did not contain an allegation that McKeon and Plaintiff had an agreement that created a fiduciary relationship. The Complaint insufficiently alleged that McKeon owed a fiduciary duty to Plaintiff “by virtue of the license to practice law in the State of California actually alleges that McKeon owed a fiduciary duty to Plaintiff and any third parties with an interest in any funds she received and maintained in a designated trust account. (Complaint, at ¶¶ 6, 16.)
Now, the FAC alleges that Plaintiff made an agreement with McKeon, his ex-wife and adversary’s attorney in the Family Law case, to “let” his ex-wife refinance the family home:
MERRITT MCKEON and Does 1 through 100, inclusive, induced [Plaintiff] to agree to allow MARIE KEEL to refinance the property by way of MERRITT MCKEON … and hold the proceeds in the attorney client trust account for the sole benefit of Plaintiff.
(FAC, at ¶ 21.)
The court finds several problems with this allegation. First, Plaintiff previously alleged in in the Complaint that Marie Keel obtained a loan without his knowledge and consent. (Compl., at ¶ 10.) He now alleges a contradictory statement that not only did he know about the loan, but he had a specific agreement with his opposing attorney. Within the FAC, he still alleges that the loan was “without the knowledge or consent of Plaintiff . . .” (FAC, at ¶ 14.) Amendments contradicting “allegations in an earlier pleading will not be allowed in the absence of very satisfactory evidence upon which it is clearly shown that the earlier pleading is the result of mistake or inadvertence.” (American Advertising & Sales Co. v. Mid-Western Transport (1984) 152 Cal.App.3d 875, 879 [emphasis added; internal quotes omitted].) Plaintiff has failed to allege any relationship by which McKeon would owe an opposing party a fiduciary duty in a contested family law matter. Moreover, Plaintiff has failed to allege an agreement between himself and opposing parties as he has alleged no consideration on his part to let McKeon assist in her client’s refinance of the property pursuant to the Family Court’s orders.
To the extent Plaintiff is alleging that the money from the refinance was only supposed to be paid to him and as specifically delineated by various court orders, and McKeon was holding the money “in trust” for him, that also does not create a fiduciary relationship. “A debt is not a trust” and does not create a fiduciary relationship, “whether [debtor's] liability is certain or contingent”]. (Downey v. Humphreys (1951) 102 Cal.App.2d 323, 332 [the obligation to pay money is a debt].)
Finally, “[w]hether a fiduciary duty exists is generally a question of law. Whether the defendant breached that duty towards the plaintiff is a question of fact.” (Marzec v. Public Employees’ Retirement System (2015) 236 Cal.App.4th 889, 915, internal citation omitted.) Here, Plaintiff has failed to plead facts sufficient to show a fiduciary duty between himself and his ex-wife’s attorney in a contested family law dispute.
The demurrer as to the first cause of action is sustained without leave to amend. Plaintiff has already been given leave to amend, has failed to cure the deficiency previously noted, and has not shown how he can cure the deficiency.
Conversion (Second Cause of Action)
“Conversion is the wrongful exercise of dominion over the property of another. The elements of a conversion claim are (1) the plaintiff's ownership or right to possession of the property; (2) the defendant's conversion by a wrongful act or disposition of property rights; and (3) damages.” (Lee v. Hanley (2015) 61 Cal.4th 1225, 1240; CACI no. 2100.)
In the Complaint, Plaintiff alleged that McKeon wrongfully converted money and property from him. (Complaint, at ¶¶ 21-22.) The court previously granted McKeon’s MJOP as to this cause of action with leave to amend. (ROA 197.) The court held that money cannot be the subject of a cause of action for conversion unless there is a specific, identifiable sum involved, such as where an agent accepts a sum of money to be paid to another and fails to make the payment.’ A ‘generalized claim for money [is] not actionable as conversion.’ ” (PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384, 395, internal citations omitted.) The court also held that Plaintiff failed to sufficiently allege what property was converted. (ROA 197.)
Now, in the FAC alleges that McKeon held $208,000 in loan proceeds that belonged to Plaintiff. (FAC, at ¶ 29.) Based on the allegations in the FAC and Exhibit thereto, Plaintiff alleges that his ex-wife was only authorized to refinance the home so as to facilitate a buy-out of Plaintiff’s equity and not for her own purposes including but not limited to paying her own attorney’s amounts not specifically authorized by the Family Law court. Accepting these allegations as true, Plaintiff has now stated a claim for conversion. Accordingly, the demurrer as to the second cause of action is overruled.
Money Had and Received (Third Cause of Action)
The essential allegations of a claim for money had and received are (1) a statement of indebtedness in a “certain sum,” (2) consideration, and (3) nonpayment. (Farmers Ins. Exchange v. Zerin (1997) 53 Cal.App.4th 445, 460.) A claim for money had and received is stated where a plaintiff alleges that a defendant is “indebted to the plaintiff in a certain sum ‘for money had and received by the defendant for the use of the plaintiff.’ ” (Schultz v. Harney (1994) 27 Cal.App.4th 1611, 1623.)
The court previously granted McKeon’s MJOP as to this cause of action with leave to amend. The court held that the Complaint failed to allege facts that McKeon was indebted to Plaintiff in a certain sum, consideration, and nonpayment. (ROA 197.)
Here again, there is still no consideration by Plaintiff alleged. Therefore, he has again failed to state a claim. Accordingly, the demurrer as to this cause of action is sustained without leave to amend.
Violation of Penal Code Section 496 (Fourth Cause of Action)
Penal Code section 496, subdivision (a) makes it a criminal offense to receive stolen property. It provides in relevant in part:
Every person who buys or receives any property that has been stolen or that has been obtained in any manner constituting theft or extortion, knowing the property to be so stolen or obtained, or who conceals, sells, withholds, or aids in concealing, selling, or withholding any property from the owner, knowing the property to be so stolen or obtained, shall be punished by imprisonment in a county jail for not more than one year, or imprisonment. . .
(Pen. Code, § 496, subd. (a).) The three essential elements of the offense are (a) property obtained by theft or extortion; (b) receiving, concealing, selling, or withholding the property; and (c) knowledge of theft or extortion. (See CALCRIM no. 1750 [receiving stolen property].)
Subdivision (c) of the statute sets forth a right to special civil remedies where a violation of Penal Code section 496, subdivision (a) has occurred. Subdivision (c) states: “Any person who has been injured by a violation of subdivision (a) or (b) may bring an action for three times the amount of actual damages, if any, sustained by the plaintiff, costs of suit, and reasonable attorney’s fees.”
The court previously granted McKeon’s MJOP as to this cause of action with leave to amend. The court held that the Complaint failed to allege sufficient facts to support this claim in light of the fact that a conversion was not alleged. (ROA 197.)
Now, Plaintiff alleges that Defendants took money that was supposed to be his and converted it for their own use. (FAC, at ¶¶ 41-43.) Accepting these allegations as true, a claim has been stated. Accordingly, the demurrer as to this cause of action is overruled.
No later than November 21, 2022, McKeon shall file an answer to the FAC.
McKeon shall give notice of the ruling.
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