Judge Elaine W. Mandel, Case Number: 24SMCV01138, Date: 2025-02-05 Tentative Ruling

Judge: Elaine W. Mandel, Case: 24SMCV01138, Date: 2025-02-05 Tentative Ruling

Case Number: 24SMCV01138 Hearing Date: February 5, 2025 Dept: P

Tentative Ruling

California Lawyers Group v. Carpenter Zuckerman & Rowley, Case no. 24SMCV01138

Hearing date February 5, 2025

Defendant’s Demurrer to the FAC

Plaintiff California Lawyers Group sues defendants Carpenter, Zuckerman & Rowley and Carpenter & Zuckerman for fraud and tort of another arising from defendants allegedly preventing plaintiff from collecting fees in an underlying case in which both parties served as counsel. Defendants demur, arguing all claims are time barred. At the initial hearing 12/5/24, the court ordered supplemental briefings on the statute of limitations issue. Min. Order 12/5/24.

Cal. Code Civ. Proc. §388(d) establishes a 3-year statute of limitations for fraud. Defendants assert plaintiff’s first through third COAs are time-barred, as they accrued 9/9/19, when plaintiff became aware of the alleged fraud underlying its claims.

Plaintiff argues it did not have a legally cognizable claim as of 9/9/19, and only accrued a claim as of 1/2/23 when the attorney lien was confirmed. Plaintiff argues an attorney lien can only form the basis for enforcement following validation by the court. See Mojtahedi v. Vargas (2014) 228 Cal.App.4th 974, 977. Plaintiff argues its claims could not have been asserted before 1/2/23, as it had no legal standing to bring those claims because damages would have been uncertain.

Defendants argue Mojtahedi is distinguishable because plaintiff is not seeking damages from the attorney’s lien but for litigation expenses incurred. FAC paras. 92-94, 116, 163. Defendants are correct; Mojtahedi, supra is inapplicable, as it addresses damages arising from fraudulently withholding an attorney’s lien, not damages arising from litigation expenses.

Defendants argue the statute began to run when plaintiff suffered actual harm, and the uncertain amount of potential damages does not toll the statute of limitations. Davies v. Krasna (1975) 14 Cal.3d 502, 513. Defendants argue it is merely whether damage of any amount has occurred that starts the clock. See Adams v. Paul (1995) 11 Cal.4th 583, 589 (holding the fact of damage rather than the amount to be the relevant consideration in determining the existence of actual harm). Under California law, a plaintiff suffered actual harm for purposes of the statute of limitations when she first incurs litigation costs or fees as a result of defendant's alleged wrongdoing. See Budd v. Nixen (1971) 6 Cal.3d 195, 201.

Here, plaintiff learn of defendants’ fraud on 9/9/19, following its filing of a complaint to confirm the attorney’s lien. FAC paras. 90-91. Plaintiff incurred actual harm via litigation costs when filing that complaint. Indeed, this lawsuit arises from plaintiff’s alleged litigation expenses. All elements of plaintiff’s fraud claims were met as of 9/9/19, starting the running of the statute. The first through third COAs are time-barred as of 9/9/22.

The statute of limitations for a COA for intentional interference with prospective economic advantage is two years. See Cal. Code Civ. Proc. §339; Guess, Inc. v. Superior Court (Jeff Hamilton, Inc.) (1986) 176 Cal.App.3d 473. Defendants argue the fourth COA for fraud of another is time-barred, as it also accrued 9/9/19. Plaintiff alleges defendants’ acceptance of the settlement check in the underlying action without plaintiff being named as a payee constituted intentional interference. FAC paras. 72, 75, 76, 167. Plaintiff alleges this interference required plaintiff to file a civil action to protect plaintiff’s attorney fee lien, which resulted in monetary damages in the form of litigation costs and attorney’s fees. Id. As with the first three COAs, plaintiff incurred actual harm as a result of defendants’ alleged acts when it incurred litigation costs associated with securing the attorney’s lien. Plaintiff alleges becoming aware of defendants’ tortious conduct 9/9/19, satisfying all elements of the cause of action and starting the running of the statute as of that date. FAC paras. 90-91. Plaintiff’s fourth COA is time-barred as of 9/9/21.

Plaintiff cannot cure the statute of limitations issues. The demurrer is SUSTAINED without leave to amend.