Judge: Elaine W. Mandel, Case: 22SMCV00207, Date: 2022-08-12 Tentative Ruling

Case Number: 22SMCV00207    Hearing Date: August 12, 2022    Dept: P

Tentative Ruling
Creditors Adjustment Bureau v. Fallas et al., Case No. 22SMCV00207
Hearing Date August 12, 2022
Defendant Fallas’ Demurrer to First Amended Complaint (FAC)

Plaintiff Creditor’s Adjustment Bureau’s (CAB) alleges Fallas failed to pay for legal services. Fallas demurs, arguing CAB failed to provide proper notice of client’s right to arbitrate and the breach of contract is insufficiently pleaded.

Arbitration notice
An attorney bringing a claim against a client for recovery of fees must provide written notice “in the form that the board of trustees prescribes,” stating the client has a right to arbitration. Failure to provide notice “shall be a ground for the dismissal of the action[.]” Cal. Bus. & Profs. Code §6201(a).

Fallas concedes CAB provided a notice of Right to Fee Arbitration, but argues it was not provided on the State Bar form, is missing material elements, including the state bar seal, bullet point 1, the language “using a form provided by the local bar association or state bar of California fee arbitration program,” and an asterisk. Fallas argues these omissions are fatal, since §6201 states the notice must be “in the form that the board of trustees prescribes[.]” Fallas fails to demonstrate that any of these omissions is material or that the statutory language regarding “the form that the board of trustees prescribes” necessitates dismissal of the complaint. CAB provided Fallas with substantial notice of his right to arbitrate as required under §6201(a). OVERRULED.

Breach of Contract
Fallas argues CAB failed to allege the assignor’s performance under the contract. Fallas states the notice of right to arbitration stated the fees at issue were incurred for “advisory services related to Pegasus, La Pantera, and Fallas Affiliates,” while the complaint states the legal services were incurred to “represent the Fallas Group in connection with the contemplated amendments to the Secured Loans[.]” Demurrer at pg. 5. It is not clear that these categories of legal service are inconsistent. At the pleading stage, a complaint must be read liberally, and its allegations treated as true. A reasonable reading suggests Pegasus, La Pantera and Fallas Affiliates are members of or associated with the Fallas group, so the services detailed in the FAC fall within the scope of the agreement referenced in the notice. OVERRULED.

Defendant to answer within 10 court days. 

Sanctions
CAB requests monetary sanctions against Fallas, arguing the demurrer was made in bad faith. The demurrer contained substantive legal arguments which merited consideration. Sanctions DENIED.