Judge: Gail Killefer, Case: 22STCV32851, Date: 2023-08-28 Tentative Ruling

Case Number: 22STCV32851    Hearing Date: August 28, 2023    Dept: 37

HEARING DATE:                 Monday, August 28, 2023

CASE NUMBER:                   22STCV32851

CASE NAME:                        Joseph Shalant v. David H. Pierce

MOVING PARTY:                 Defendant, David H. Pierce 

OPPOSING PARTY:             Plaintiff, Joseph Shalant

TRIAL DATE:                        Not Set

PROOF OF SERVICE:           OK

PROCEEDING:                      Demurrer to Second Amended Complaint with Motion to Strike

OPPOSITION:                        11 August 2023

REPLY:                                  21 August 2023

TENTATIVE:                         Defendant’s demurrer is sustained in its entirety without leave to amend. Defendant’s motion to strike is denied as moot. This case is dismissed with prejudice. Defendant to give notice.

Background

This action arises out of the representation of Joseph L. Shalant ("Plaintiff") by David H. Pierce ("Defendant") in the appeal of the underlying case of Joseph Shalant v. Robert Mackston, LASC SC116968 ("Mackston") in March 2020. The Mackston case was filed on May 8, 2012, and proceeded to a jury trial on October 29, 2019. Mr. Shalant represented himself in pro per at trial. The jury awarded no damages to Plaintiff, the verdict was entered on November 11, 2019, and Judgment was filed on February 27, 2020.  

Mr. Shalant chose to file a notice of appeal. When the Court of Appeal denied his request for a prefiling order due to his vexatious litigant status, he sought appellate counsel and found Mr. Pierce through Legal Match. Although there is disagreement as to what Mr. Shalant told Mr. Pierce about his vexatious litigant status, the parties agreed that Mr. Pierce would represent Mr. Shalant on a limited basis, with Mr. Shalant performing most of the work. On March 9, 2020, Mr. Pierce provided Mr. Shalant with a fee agreement and Mr. Shalant paid a $2500 deposit. Mr. Pierce filed a notice of appeal in the Mackston appeal (8305061) on March 16, 2020.  

On March 27, 2020, Mr. Pierce advised Mr. Shalant that he would no longer represent Mr. Shalant in the underlying matter. On March 31, 2020, Mr. Pierce advised the Los Angeles Superior Court that he would no longer represent Mr. Shalant, and, on April 1, 2020, Mr. Pierce advised the Court of Appeals that he would no longer represent Mr. Shalant in the appeal process. After much discussion, the parties reached a stipulated agreement whereby they filed a Substitution of Attorney in the appellate action on April 6, 2020, and Mr. Pierce returned the $2,500 deposit. Mr. Shalant never engaged new counsel for his appeal. On December 2, 2021, the Court of Appeal advised counsel that based on Mr. Shalant's status as a vexatious litigant, the court was inclined to dismiss the appeal, which it did on January 11, 2022.  

On March 30, 2023, Plaintiff filed the operative First Amended Complaint (“FAC”). The FAC alleges the same causes of asserted in his original Complaint for: (1) fraud and (2) professional malpractice (legal malpractice) against Defendant Pierce.  

On May 23, 2023, the court sustained Defendant’s demurrer to the FAC with leave to amend. On June 9, 2023, Plaintiff filed a Second Amended Complaint (“SAC”) alleging two causes of action: (1) Breach of Fiduciary Duties and Fraud; and (2) Breach of Contract and Legal Fraud.  

On June 28, 2023, Defendant Pierce filed a demurrer with a motion to strike the SAC. Plaintiff filed opposing papers on August 11, 2023. Defendant Pierce filed a reply on August 21, 2023.

Request for JUDICIAL notice

The Court may take judicial notice of records of any court of record of the United States. (Evid. Code, § 452(d)(2).) However, the court may only judicially notice the existence of the record, not that its contents are the truth. (Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1565.) 

Defendant Pierce requests judicial notice of the following:

1)     Exhibit A: The Judgment in the case of Joseph Shalant v. Robert Mackston, LASC Case No. SCl16968.  

2)     Exhibit B: March 31, 2020, notice to the Los Angeles Superior Court in writing, with copy to Mr. Shalant, that defendant would no longer be representing plaintiff in the Appeal process. 

3)     Exhibit C: April 1, 2020, notice to the Court of Appeal in writing, with copy to Mr. Shalant, that defendant would no longer be representing plaintiff in the Appeal process.  

4)     Exhibit D: Substitution of Attorney signed by both plaintiff, Joseph Shalant, and defendant, David H. Pierce and filed with the Court of Appeal on April 6, 2020.  

5)     Exhibit E: Docket sheet in Court of Appeal case No. B305061 (Shalant v. Mackson). 

6)     Exhibit F: December 2, 2021, letter from the Court of Appeal advising counsel in case No. B305061 (Shalant v. Mackson) that based on appellant's status as a vexatious litigant the Court was inclined to dismiss the appeal. 

Defendant’s request for judicial notice is granted.

Discussion

I.         Legal Standard

A.        Demurrer

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, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)  “To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged.”¿(C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.)¿ For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded.¿ (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.)¿ A demurrer “does not admit contentions, deductions or conclusions of fact or law.”¿ (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.)¿¿

            B.        Motion to Strike

 Any party, within the time allowed to respond to a pleading may serve and file a notice of motion to strike the whole or any part thereof. (CCP, § 435(b)(1); CRC, rule 3.1322(b).) The court may, upon a motion or at any time in its discretion and upon terms it deems proper: (1) strike out any irrelevant, false, or improper matter inserted in any pleading; or (2) strike out all or any part of any pleading not drawn or filed in conformity with the laws of California, a court rule, or an order of the court. (CCP., § 436(a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782 [“Matter in a pleading which is not essential to the claim is surplusage; probative facts are surplusage and may be stricken out or disregarded”].)¿¿¿ 

            C.        Leave to Amend

“Where the defect raised by a motion to strike or by demurrer is reasonably capable of cure, leave to amend is routinely and liberally granted to give the plaintiff a chance to cure the defect in question.” (CLD Construction, Inc. v. City of San Ramon (2004) 120 Cal.App.4th 1141, 1146.) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.)¿¿ 

II.        Demurrer[1]

Defendant Pierce demurs to the first cause of action in the SAC on the basis that it fails to state facts sufficient to constitute a cause of action and is uncertain. Defendant Pierce demurs to the second cause of action on the basis that it is barred by the statute of limitations, does not state facts sufficient to constitute a cause of action, and is uncertain.

A.        First Cause of Action – Breach of Fiduciary Duties and Fraud

“The elements of a cause of action for breach of fiduciary duty are the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach.” (Meister v. Mensinger (2014) 230 Cal.App.4th 381, 395.) The elements of a fraud cause of action are: (1) misrepresentation (false representation, concealment, or omission); (2) knowledge of falsity; (3) intent to induce reliance; (4) justifiable reliance; and (5) resulting damage. (Davis v. Southern California Edison Co. (2015) 236 Cal.App.4th 619.) Fraud must be pled in the complaint specifically. General and conclusory allegations are not sufficient. (Stansfield v. Starkey¿(1990)¿220 Cal.App.3d 59,¿74;¿Nagy v. Nagy¿(1989) 210 Cal.App.3d 1262, 1268.)

Unlike most causes of action where the “the policy of liberal construction of the pleadings,” fraud requires particularity, that is, “pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Stansfield, supra, 220 Cal.App.3d at 73;¿Lazar v. Superior Court¿(1996) 12 Cal.4th 631, 645.) Every element of a fraud cause of action must be alleged both factually and specifically. (Hall v. Department of Adoptions¿(1975) 47 Cal.App.3d 898, 904; Cooper v. Equity General Insurance¿(1990) 219 Cal.App.3d 1252, 1262.)¿¿ 

Defendant Pierce does not deny that on March 9, 2020 he and Plaintiff entered into a fee contract. (SAC at p.2:10-25.) The SAC states the meeting was in person and lasted about two  hours. (SAC at p.1:24.) Plaintiff asserts that Defendant Pierce misrepresented having legal malpractice insurance based on the language in the retainer agreement, ¶ 3.  Had had Plaintiff known that Defendant Pierce did not have malpractice insurance, Plaintiff alleges that he would have retained other counsel and his appeal would not have been dismissed. (SAC at p. 6:23-7:11.)

Plaintiff fails, however, to allege specific facts to show he was damaged by Defendant Pierce’s failure to disclose that he did not carry malpractice insurance.  The SAC admits that Plaintiff signed a substitution of attorney form shortly after retaining the services of Defendant Pierce. (SAC at p. 9:11-19.) Plaintiff fails to plead reliance because the retainer agreement no longer governed the parties' relationship.  Plaintiff cannot point to the retainer agreement to assert that he did not seek new counsel; the substitution agreement was a superseding act that cut off Plaintiff’s reliance on the retainer agreement and its purported representations.

The SAC further states that on March 27, 2020, Defendant Pierce modified the retainer agreement but never informed Plaintiff that he would no longer be representing him:

Defendant NEVER SAID this March 27 email, or otherwise, ‘that he would no longer represent Mr. Shalant in the underlying matter.’ Contrariwise, defendant concluded in this email, ‘With that said, and with your permission, I will provide you with a modified agreement.’

(SAC at p. 3:15-16; p.7:15-8:2) The Complaint alleges Defendant Pierce sent notices on March 31 and April 1, 2021, to the court stating that hat he was no longer representing Plaintiff in the appeal process without informing Plaintiff. (SAC at p. 3:19-22; RJN Ex. B, C.) Prior to notifying the courts that Defendant Pierce was not representing Plaintiff in the appeal, Defendant Pierce failed to inform Plaintiff of the fact and failed to inform Plaintiff that he had no intention of representing Plaintiff. (SAC at p. 8:11-19.) Plaintiff asserts that Defendant Pierce’s representations to the court that he was not representing Plaintiff were false and led the courts to believe that Plaintiff was without counsel. (SAC at p.8:20-24; p. 13:1-6.)

Defendant Pierce asserts that on March 26, 2020, he learned for the first time that Plaintiff was a vexatious litigant, had been disbarred, and had failed to mention that his request to file the notice of appeal in pro per had been denied. On March 27, 2020, Defendant Pierce advised Plaintiff that he could no longer represent him. On demurrer, the court accepts Plaintiff’s allegations in the SAC are assumed to be true and issues of fact are not resolved on demurrer. (See Marshall v. Gibson, Dunn & Crutcher (1995) 37 Cal.App.4th 1397, 1403; Fuhrman v. California Satellite Systems (1986) 179 Cal.App.3d 408, 422.) Therefore, for the demurrer to be sustained, the defect must appear on the face of the SAC.

Plaintiff fails to explain how Mr. Pierce’s March 31 and April 1, 2021, notices to the court harmed Plaintiff. Plaintiff’s appeal had not yet been dismissed when the notices were sent. Plaintiff also does not deny that he signed the substitution of attorney form shortly afterward, putting him on notice that he had no counsel and was unrepresented. (SAC at p. 9:11-19.) Plaintiff also states that the initial $2,500 retainer he paid Defendant Pierce was returned to him. Therefore, Plaintiff fails to show that he was damaged by Defendant Pierce’s notices to the court and his subsequent withdrawal as Plaintiff’s counsel.

Plaintiff also asserts that Defendant Pierce changed the terms of the retainer agreement via the March 27, 2020, email to obtain a higher fee.  Plaintiff never alleges that he did in fact pay a higher fee to Defendant Pierce or that Defendant Pierce kept fees for work that was not completed. (SAC at p.7:16-25; p. 12:22-27.) Plaintiff again fails to show he was damaged by the changes in the retainer fee agreement.

Plaintiff asserts that neither Defendant Pierce nor opposing counsel nor the court informed him that he was required to be represented by counsel. (SAC at p. 5:12-14.) The SAC fails to state that Defendant Pierce owed him a fiduciary duty to inform Plaintiff that he was required to obtain counsel to proceed with his appeal. The SAC also fails to state that Defendant Pierce concealed the fact that Plaintiff was required to obtain counsel to proceed with his appeal. Instead, the SAC states that Plaintiff himself “relied upon the holding in SHALANT V. GIRARDI (2011) 51 Cal.4th 1164 that he was legally able to represent him” and consequently “he did not seek new counsel (as defendant had represented him from the outset). Plaintiff, acting in pro per, then very diligently worked on his appeal up to and including when oral argument was scheduled for December 2021.” (SAC at p. 5:7-11.) Accordingly, the SAC fails to allege that Defendant Pierce induced Plaintiff to go without counsel in his appeal.

The court took judicial notice that on December 2, 2021, the Court of Appeal advised Plaintiff that due to his status as a vexatious litigant, the appellate court was inclined to dismiss the appeal. (RJN Ex. F.)  There are no facts before the court showing that Plaintiff heeded the notice of the Court of Appeal and obtained new counsel after receiving notice of the intent to dismiss. A review of the docket for the appeal case in question (8305061), shows that on December 20, 2022, Plaintiff filed a response and that the appeal was denied on January 11, 2022. (RJN Ex. E.) In sum, Plaintiff fails to show that Defendant Pierce is proximately responsible for Plaintiff’s failure to obtain new counsel to represent him in his appeal.

Lastly, while the court agrees that the SAC is deficient in that it omits the first two paragraphs of the FAC which identify the parties in the action and establishes jurisdiction, and the defects justify sustaining the demurrer to the SAC, it does not justify denying leave to amend.

As Plaintiff has failed to allege facts showing damage and proximate causation, the court agrees that the first cause of action is deficient on its face. As this is Plaintiff’s second demurrer and Plaintiff has failed to show that first cause of action is capable of amendment, the demurrer is sustained without leave to amend.

B.        Second Cause of Action – Breach of Contract and Legal Fraud

The elements of a claim for breach of contract are: “(1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal. 4th 811, 821.) In addition, the complaint must demonstrate damages proximately caused by the breach. (St. Paul Ins. v. American Dynasty (2002) 101 Cal.App.4th 1038, 1060.)

The elements of a claim for¿professional¿negligence¿are: “(1) the duty of the¿professional¿to use such skill,¿prudence, and diligence as other members of his¿profession commonly¿possess and exercise; (2) a breach of that duty; (3) a¿proximate causal connection between the negligent conduct and the resulting injury; and (4) actual loss or damage resulting from the¿professional's negligence.” (Paul v.¿Patton¿(2015) 235 Cal.App.4th 1088, 1095.)¿ 

CCP § 340.6 (a) provides that an action against an attorney for a “wrongful act or omission,” other than for actual fraud, shall be commenced within one year after “the plaintiff discovers, or through the use of reasonable diligence should have discovered, the facts constituting the wrongful act or omission, or four years from the date of the wrongful act or omission, whichever occurs first.” 

Here, Defendant Pierce represented Plaintiff for 27 days, from March 9, 2020, when the parties signed the retainer agreement, through April 6, 2020, when the Substitution of Attorney was filed.  If there were facts showing professional negligence, this action would have to have been filed by April 6, 2021. (CCP § 340.6.) It was not. 

The SAC alleges that Plaintiff did not discover the harm allegedly done to him by Defendant Pierce until January 11, 2022, when the appellate court dismissed his appeal.  (SAC at p. 14:11-12.)  Plaintiff fails to plead facts as to why Plaintiff did not discover that he had a legal malpractice claim against Defendant Pierce until January 11, 2022, rather than when Plaintiff signed the substitution of attorney form on April 6, 2022. (RJNEx. D.)

The SAC fails to allege that Plaintiff had no basis for knowing or discovering that he was required to retain counsel to proceed with his appeal. Indeed, Plaintiff attributed his erroneous belief that he could represent himself in the appeal action to his own interpretation of the holding in SHALANT V. GIRARDI (2011) 51 Cal.4th 1164 – not to any act or omission by Defendant Pierce. (SAC at p. 5:7-11.)

This claim is barred by the statute of limitations.

Moreover, the SAC fails to state facts that show Defendant Pierce's withdrawal of counsel constituted a breach of his professional duties that accrued when Plaintiff’s appeal was dismissed.  The court agrees that the SAC fails to allege how Defendant Pierce breached the retainer agreement. The SAC specifically states that the March 27, 2020, email purporting to change the terms of the retainer agreement makes clear that the purported changes were contingent on Plaintiff’s acceptance:

“With that said, and with your permission, I will provide you with a modified agreement.”

(SAC at p. 12:22-26.) The SAC fails to state that Plaintiff denied the request for modification, that Defendant Pierce did in fact change the terms of the retainer agreement, or that Plaintiff did in fact pay more fees which Defendant Pierce unlawfully retained when he withdrew as counsel.

The SAC also states that Paragraph 11 of the original retainer agreement provided that the “Attorney may withdraw from representation of Client (a) with Client’s consent, (b) upon court approval for good cause, or (c) if no action has been filed, upon reasonable notice to Client.” (SAC at p.6:8-11.) The SAC states that Plaintiff signed the substitution of attorney form, meaning Defendant Pierce withdrew as counsel with the consent of Plaintiff. (SAC at p. 9:13-19.) Accordingly, there are no facts to show breach or damages as to the retainer agreement to support a claim for breach of contract.

The SAC also fails to state facts that show Defendant Pierce breached his professional duty of care by having Plaintiff sign the substitution of attorney form. The SAC does not allege that Defendant Pierce did in fact raise his fees, that Plaintiff paid the higher fees, and that Defendant Pierce retained the fees. There are no facts alleged to show that Defendant Pierce breached a duty or acted negligently. Moreover, the SAC does not allege a proximate link between Plaintiff’s signing of the substitution of attorney form, the Court of Appeal’s December 2, 2021, letter informing Plaintiff of its intent to dismiss the appeal, and the actual dismissal on January 11, 2022. (RJN Ex. E, F.)

The SAC in a conclusory manner states that Defendant Pierce violated State Bar Rules 1.9 by refusing to inform the appellate court that he was representing Plaintiff in that court and failed to help avoid Plaintiff’s appeal case from being dismissed. (SAC at p. 13:25-14:6.) Plaintiff fails to allege facts that even after Defendant Pierce was no longer counsel for Plaintiff, he had an obligation to inform the appellate court that “he had been legally representing Plaintiff,” despite this fact not being true. 

For the reasons stated above, the court sustains the second cause of action on the basis that it is barred by the statute of limitations and fails to state facts sufficient to constitute a cause of action. 

IV.       Motion to Strike

As the demurrer to the SAC has been sustained without leave to amend, the motion to strike is denied as moot.

Conclusion

Defendant’s demurrer is sustained in its entirety without leave to amend. Defendant’s motion to

strike is denied as moot. This case is dismissed with prejudice. Defendant to give notice.