Judge: Gail Killefer, Case: 21STCV09560, Date: 2022-10-19 Tentative Ruling
Case Number: 21STCV09560 Hearing Date: October 19, 2022 Dept: 37
HEARING DATE: October 19, 2022
CASE NUMBER: 21STCV09560
CASE NAME: Jason Lanc v. Nick T. Movagar, et al.
MOVING PARTIES: Cross-Defendants, Michael S. Brown
and California Lawyers Group LLP
OPPOSING PARTIES: Cross-Complainants, Nick Movagar,
Steven Yamin, Daniel Reeves, and Movagar & Yamin APLC
TRIAL
DATE: July 5, 2023
PROOF OF SERVICE: OK
MOTION: Cross-Defendants’ Demurrer to
Cross-Complaint
OPPOSITION: October 5, 2022
REPLY: October 11,
2022
Tentative: Moving Cross-Defendants’ demurrer to
the first three causes of action is sustained, without leave to amend. Moving
Cross-Defendants are to give notice.
Background
This action arises in connection
with Nick Movagar, Steven Yamin, Daniel Reeves and Movagar &
Yamin, A Professional Law Corporation (collectively “Defendants’”)
representation of Jason Lanc (“Plaintiff”) in his underlying
personal injury action, Jason Lanc v. Liana Hovhannisyan (“Underlying
Case”). While Defendants represented Lanc in the Underlying Case through
several stages of litigation, the matter was negotiated to settlement with
different counsel for Plaintiff, which Defendants sought to prevent and enforce
their rights as Plaintiff’s alleged counsel of record.
On March 11, 2021,
Lanc filed this lawsuit again all Defendants alleging claims for: (1)
Intentional Interference with Contract; (2) Conversion; (3) Breach of Fiduciary
Duty; (4) Declaratory Relief; (5) Intentional Infliction of Emotional Distress;
and (6) Negligent Infliction of Emotional Distress
In an effort to allow
Lanc to obtain the settlement sum of $250,000, which was deposited with the
Court by former Defendant and Cross-Complainant Safeco, the Parties submitted a
Joint Stipulation to the Court on July 29, 2021 for: (1) Discharge of Defendant
and Cross-Complainant Safeco; (2) Dismissal of Plaintiff Jason Lanc’s Complaint
against Defendant and Cross-Complainant Safeco; and (3) Dismissal of Defendant
and Cross-Complainant Safeco’s Cross-Complaint against all Cross-Defendants
without Prejudice. The Joint Stipulation was entered by court order on July 30,
2021.
Since the Joint
Stipulation, the parties have attempted to informally resolve Defendants’
claims for the reasonable value for their services, as to the settlement
amount, but have not come to a resolution.
On May 4, 2022, the court granted
Defendants’ request to file a Cross-Complaint in this action against
Plaintiff Jason Lanc (“Lanc”) and to name as Cross-Defendants, Michael S. Brown
(“Brown”) and California Lawyers Group LLP (“CLG”) alleging: (1) Equitable Indemnity;
(2) Contribution; (3) Declaratory Relief regarding Equitable Indemnity and
Contribution; and (4) Quantum Meruit. On May 5, 2022, Defendants filed
their cross-complaint alleging these causes of action.
Brown and CLG (collectively “Moving Cross-Defendants”) now
demur to the first three causes of action of the Cross-Complaint.
Cross-Complainants oppose the motion.
Request
for Judicial Notice
Moving Cross-Defendants request judicial notice of the
following in support of its demurrer:
1.
Portions of Docket in the matter Nick T.
Movagar, et. al., vs. Jason Lanc, et al., Case No. 21STCV09560. (Exhibit 1);
2.
Courtney M. Serrato’s Declaration in support of
filing proposed cross-complaint. (Exhibit 2);
3.
M&Y’s Cross-Complaint filed in this matter.
(Exhibit 3).
Moving Cross-Defendants’ request is granted. The existence
and legal significance of these documents are proper matters for judicial
notice. (Evid. Code § 452(h).)
However, the court may not take judicial notice of the truth of the contents of
the documents. (Herrera v. Deutsche
Bank National Trust Co. (2011) 196 Cal.App.4th 1366, 1375.) Documents are only judicially noticeable to
show their existence and what orders were made.
The truth of the facts and findings within the documents are not
judicially noticeable. (Lockley v.
Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91
Cal.App.4th 875, 885.)
Discussion
I.
Meet and Confer
Requirement
CCP § 430.41
provides that a Defendant, prior to filing a demurrer, “shall meet and confer
in person or by telephone” with Plaintiff to determine whether an agreement can
be reached regarding the objections to be raised in the demurrer. Further, as
part of the meet and confer process, the demurring Defendant “shall identify
all of the specific causes of action that it believes are subject to the
demurrer and identify with legal support the basis of the deficiencies.” (CCP §
430.41(a)(1).) The Plaintiff is then to respond by providing “legal support for
its position that the pleading is legally sufficient,” or, alternatively, “how
the complaint…could be amended.” (Id.) This meet and confer shall occur
“at least five days before the date the responsive pleading is due.” (CCP §
430.41(a)(2).) Finally, the demurring Defendant is to file and serve a
declaration with the demurrer stating either:
“(A) The means by
which the demurring party met and conferred with the party who filed the
pleading subject to demurrer, and that the parties did not reach an agreement
resolving the objections raised in the demurrer.
(B) That the party
who filed the pleading subject to the demurrer failed to respond to the meet
and confer request of the demurring party or otherwise failed to meet and
confer in good faith.”
(CCP § 430.41(a)(3)(A)-(B).)
Moving Cross-Defendants submit
the declaration of their counsel, Michael S. Brown (“Brown”), to show
compliance with the meet and confer requirements. Brown attests that on August
10, 2022, counsel “initiated by email and a phone call to defense counsel Courtney
Serrato a request for a meet and confer,” and opposing counsel did not change
her position after the issues raised in this demurrer were brought forth.
(Brown Decl. ¶¶ 3-7.)
The Brown Declaration is sufficient for purposes of CCP § 430.41.
II.
Legal Standard
A
demurrer is an objection to a pleading, the grounds for which are apparent from
either the face of the complaint or a matter of which the court may take
judicial notice. (CCP § 430.30(a); see
also Blank v. Kirwan (1985) 39 Cal.3d
311, 318.) The purpose of a demurrer is
to challenge the sufficiency of a pleading “by raising questions of law.” (Postley
v. Harvey (1984) 153 Cal.App.3d 280, 286.)
The court “treat[s] the demurrer as admitting all material facts
properly pleaded, but not contentions, deductions or conclusions of fact or
law. . . .” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525.) “In the construction of a pleading, for the
purpose of determining its effect, its allegations must be liberally construed,
with a view to substantial justice between the parties.” (CCP § 452; see also Stevens v. Sup. Ct. (1999) 75 Cal.App.4th 594, 601.) “When a court evaluates a complaint, the
plaintiff is entitled to reasonable inferences from the facts pled.” (Duval
v. Board of Trustees (2001) 93 Cal.App.4th 902, 906.)
The
general rule is that the plaintiff need only allege ultimate facts, not
evidentiary facts. (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550.) “All that is required of a plaintiff, as a
matter of pleading, even as against a special demurrer, is that his complaint
set forth the essential facts of the case with reasonable precision and with
sufficient particularity to acquaint the defendant with the nature, source and
extent of his cause of action.” (Rannard v. Lockheed Aircraft Corp.
(1945) 26 Cal.2d 149, 156-157.)
“[D]emurrers for uncertainty are disfavored and are granted only if the
pleading is so incomprehensible that a defendant cannot reasonably
respond.” (Mahan v. Charles W. Chan Ins. Agency, Inc. (2017) 14 Cal.App.5th
841, 848, fn. 3, citing Lickiss v. Fin.
Indus. Regulatory Auth. (2012) 208 Cal.App.4th 1125, 1135.) In addition, even where a complaint is in
some respects uncertain, courts strictly construe a demurrer for uncertainty
“because ambiguities can be clarified under modern discovery procedures.” (Khoury
v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)
Demurrers do not lie as to only parts
of causes of action where some valid claim is alleged but “must dispose of an
entire cause of action to be sustained.”
(Poizner v. Fremont General Corp. (2007)
148 Cal.App.4th 97, 119.) “Generally it is an abuse of
discretion to sustain a demurrer without leave to amend if there is any reasonable
possibility that the defect can be cured by amendment.” (Goodman
v. Kennedy (1976) 18 Cal.3d 335, 349.)
III.
Analysis
A.
Preclusion
of all claims for Indemnification and/or Contribution
First, Moving Cross-Defendants contend that their demurrer against the
first two causes of action must be sustained as indemnity or contribution
claims by an attorney against successor counsel are generally precluded.
(Demurrer, 6; citing Lewis v. Purvin (1989) 208 Cal.App.3d 1208, 1211-14;
Austin v. Superior Court (1999) 72 Cal.App.4th 1126.)
The court in Austin provides further explanation for this
preclusion, stating:
“[T]here are competing policies in the case of a lawyer sued for
malpractice. Again, in Copenbarger we noted: “In the case of a
lawyer sued for malpractice, however, there are policies which militate against
permitting the assertion of indemnity and contribution claims against the
successor lawyer. Since the successor lawyer frequently is the very lawyer
representing plaintiff in the malpractice action, permitting such a claim to
proceed would create conflicts for that lawyer in the malpractice action. The
mere ability to pursue such a claim would thus give the lawyer being sued for
malpractice a tactical weapon not available to defendants in other tort
actions. Other policies militating against permitting such a cross-complaint or
suit for indemnity or contribution to proceed arise from the difficult problems
posed by the lawyer's duty to protect the confidences of the client and arising
out of the policies protecting the lawyer's work product. These conflicting
policies resulted in a number of conflicting appellate decisions.”
(Austin, supra, 72 Cal.App.4th at
1128; citing Copenbarger v. International Ins. Co. (1996) 46 Cal.App.4th
961, 965.)
Moving Cross-Defendants then point out that the
Cross-Complaint pursues claims based on Cross-Complainants’ previous
representation of Plaintiff Lanc. (Demurrer, 7-8.) As such, Moving
Cross-Defendants contend such claims for indemnity and contribution should be
precluded, citing the Austin court’s holding’s precedential effect. (Id.)
In opposition, Cross-Complainants contend the
cited cases are inapposite here as they operate “only in legal malpractice or
professional negligence cases brought by the client,” whereas the Plaintiff
here does not assert claims for legal malpractice. (Opp., 2, 6.) Cross-Complainants
further argue that holding such preclusive effect here “would
mean that all successor counsel would be immunized from a cross-complaint for
any conduct that does not arise out of a claim for professional negligence or
legal malpractice, simply because of their position as ‘successor counsel.’”
(Opp., 7.) However, Cross-Complainants fail to explain why such a holding would
immunize all successor counsels, especially since Plaintiff here has alleged
that Cross-Complainants acted in breach of the duties they owed to Plaintiff in
at least some capacity. Cross-Complainants also contend “the claims in
Plaintiff’s Complaint and the Cross-Complaint arise out of allegations relating
to Cross-Complainants’ and Cross-Defendants’ conduct after they were no longer
counsel for Plaintiff in the Underlying Case.” (Id.) However, Cross-Complainants
again fail to explain how the claims in this action, relating to the settlement
of Plaintiff’s claims in the underlying litigation by Cross-Complainants and
their alleged efforts to prevent such settlement and enforce their rights, do not
relate to their acting as counsel for Plaintiff here.
In reply, Moving
Cross-Defendants cite Holland v. Thacher, (1988) 199 Cal.App.3d 924, to
contend the inclusion or exclusion of a legal malpractice claim does not
determine the influence of this case law, but rather the public policy
considerations involved when a former attorney brings a claim against a
successor counsel for indemnity. (Reply, 4.) Specifically, the Holland
court elaborated:
“To begin
with, it must be remembered that disallowing such actions imposes no burden on
the predecessor attorney. Through the assertion of an affirmative defense the
former attorney is still able to reduce his or her own exposure by the extent
of the successor attorney's responsibility for the client's injury. As Thacher
and Miller point out, principles of agency permit the successor attorney's
negligence to be imputed to the client-plaintiff to reduce his or her recovery
through application of comparative fault principles. (internal
citations omitted.) However, because a successful affirmative
defense would reduce the client-plaintiff's recovery, cross-complaints have a
superficial appeal.
We are
persuaded that the apparent benefit of allowing cross-complaints must give way
to the sound public policy reasons enunciated in those cases supporting the
majority rule forbidding them. Underlying the various formulations of the
policy rationale is the concern that a cross-complaint for indemnity might
adversely affect the relationship between the client and the successor
attorney. Furthermore, as the predecessor attorney can seek protection from
liability by asserting an affirmative defense, ‘inherent’ in the additional
cross-complaint option are ‘the seeds of irresponsible cross-lawsuits motivated
by naught but spite and a desire to spread confusion, dissention [sic]
in the opponent's camp.’ (internal citations omitted.)
The concern
about the negative effects on the attorney-client relationship has been
variously expressed. Lawsuits between the successive attorneys of a client may
engender conflict that will preclude or discourage the successor lawyer from
participating in the case. ... Several courts have observed that the allowance
of cross-complaints would frequently result in the plaintiff's lawyer feeling
he or she can no longer participate in the litigation. ... Though this may not
be a controlling consideration, we can envision situations in which the
problems presented by a potential cross-complaint from the former attorney
might make it hard for the client to find a competent replacement.
A successor
attorney confronted with a cross-complaint might feel disinclined to take the
case, or compelled to drop out, because the attorney-client privilege could
seriously interfere with an effective defense. In all likelihood, much of the
information relevant to the successor attorney's defense derives from the
representation of the client. Thus, if cross-complaints were allowed, the
successor attorney would be unable to use privileged information gained in the
course of the professional relationship with the client to defend himself or
herself unless the client waived the attorney-client privilege. The only ‘solution’
to this problem that has been proposed is to put the client to an election ‘either
to waive the privilege or assume responsibility in the present suit (on an
imputed negligence theory) for any judgment against Lawyer II.’ (Braun, Gibson,
Dunn & Crutcher v. Superior Court Revisited (1982)
22 Santa Clara L.Rev. 1, 26, fn. 68.) The difficulty with this theory is that
the attorney-client privilege, which is a creature of statute (Evid. Code, §
954), cannot be judicially modified. As has been noted, ‘the area of privilege’
'is one of the few instances where the Evidence Code precludes the courts from
elaborating upon the statutory scheme.' (Evid. Code, § 911, Cal. Law Revision
Com. comment.)” (Dickerson v. Superior Court (1982) 135 Cal.App.3d
93, 99.) The Legislature, which possesses sole authority to effectuate the
proposed solution, has not done so.
By
disallowing cross-complaints by former attorneys, a successor attorney who has
exacerbated or failed to mitigate damages caused by a predecessor will be held
liable only if the client sues both the negligent attorneys. In that event, the
successor lawyer would be free to use the privileged information because of the
waiver of privilege inherent in a suit brought by a client alleging breach of a
duty arising out of the lawyer-client relationship. (Evid. Code, § 958.)
The
discovery problem created by the attorney-client privilege would also be
presented, it is true, if the predecessor attorney raised the issue of the
successor attorney's comparative negligence by way of affirmative defense. In
this event, however, the client would have a greater incentive to waive the
privilege. By refusing to do so, the client would restrict the successor
attorney's ability to respond to the affirmative defense, and therefore, run
the risk of reducing the ultimate recovery against the predecessor attorney.”
(Holland v. Thacher (1988) 199 Cal.App.3d 924,
929–931.)
Moving Cross-Defendants further explain that the
“gist of the underlying complaint is that former legal counsel refused to take
the steps necessary as former counsel to enable distribution of the settlement
proceeds to plaintiff. The essence of the cross-complaint is that distribution
of the settlement funds was held up by successor legal counsel... All of these
facts flow from attorney-client relationships or the end of an attorney-client
relationship. It is nonsensical to argue that, simply because
plaintiff did not sue for legal malpractice, the judicial concerns and public
policy reasons precluding indemnification and contribution cross-claims by
former attorneys against successor attorneys somehow dissolve.” (Reply, 4-5.)
The court agrees.
The court has reviewed the Cross-Complaint and
recognizes the several conflicts and considerations which the Holland
court outlined. Based upon this review the court finds that the Cross-Complaint
does involve, and arises from, attorney-client relationships where necessary
protections outweigh other considerations. As such, the court finds the cited
precedent to be instructive and holds Cross-Complainants are precluded from
bringing forth the first two causes of action for equitable indemnity and
contribution.
The court therefore sustains Moving Cross-Defendants’
demurrer to the first two causes of action.
B.
First Cause of Action: Equitable Indemnity
“‘The elements of a cause of action for
[equitable] indemnity are (1) a showing of fault on
the part of the indemnitor and
(2) resulting damages to the indemnitee for which
the indemnitor is ... equitably responsible.’ ”
[citation omitted] (C.W. Howe Partners Inc. v. Mooradian (2019) 43
Cal.App.5th 688, 700.)
As the court
has found the first cause of action to be precluded, it continues with the
analysis of other claims.
C.
Second Cause of Action: Contribution
“The comparative fault
doctrine “is designed to permit the trier of fact to consider all relevant
criteria in apportioning liability. The doctrine ‘is a flexible, commonsense
concept, under which a jury properly may consider and evaluate the relative
responsibility of various parties for an injury (whether their responsibility
for the injury rests on negligence, strict liability, or other theories of
responsibility), in order to arrive at an “equitable apportionment or
allocation of loss.” ’ [Citation omitted.]” (Pfeifer v. John Crane,
Inc. (2013) 220 Cal.App.4th 1270, 1285.)
As the court
has also found the second cause of action to be precluded, it continues with
the analysis of the third cause of action.
D.
Third Cause of Action: Declaratory Relief
California courts have recognized
that “[t]he existence of an ‘actual controversy relating to the legal rights
and duties of the respective parties,’ suffices to maintain an action for
declaratory relief.”¿ (Ludgate Ins. Co. v. Lockheed Martin Corp.¿(2000)
82 Cal.App.4th 592, 605 (Ludgate).)¿ “Any person interested under a
written instrument, ... or under a contract, or who desires a declaration of
his or her rights or duties with respect to another, or in respect to, in, over
or upon property,¿ ... may, in cases of actual controversy relating to the
legal rights and duties of the respective parties, bring an original action or
cross-complaint in the superior court ... for a declaration of his or her rights
and duties in the premises, including a determination of any question of
construction or validity arising under the instrument or contract."¿ (Ibid.,
quoting CCP § 1060.)¿¿¿
Moving
Cross-Defendants contend the third cause of action is also insufficiently pled
as the first two causes of action are precluded and there is no controversy
between the parties as to the first two causes of action. (Demurrer, 13.) In
opposition, Cross-Complainants assert that the third cause of action is sufficiently
pled because it alleges all elements of a declaratory relief claim and “seeks
this court make a judicial determination of the respective rights and duties of
Cross-Complainants and Cross-Defendants and the comparative liability as it
relates to Plaintiff’s Complaint.” (Opposition, 8-9.) In reply, Moving
Cross-Defendants correctly contend “[t]he declaratory relief sought in
this lawsuit is not necessary or proper under all the circumstances, especially
given the fact that the underlying litigation will resolve whether any
cross-defendant has any liability and, if so, what his or its comparative part
of that liability happens to be.” (Reply, 7.)
Finding the
third cause of action to be derivative of the first two causes of action, the
court finds the third cause of action is insufficiently pled. As the first two
causes of action are precluded, the court finds no further claim for
declaratory relief stands.
For these
reasons, Moving Cross-Defendants’ demurrer to this cause of action is sustained.
Conclusion
Moving Cross-Defendants’ demurrer to the
first three causes of action is sustained, without leave to amend. Moving
Cross-Defendants are to give notice.