Judge Gail Killefer, Case 22STLC03071 2023-02-06 Tentative Ruling

TENTATIVE: Defendants’ demurrers[1] to the Complaint is sustained. Plaintiff is granted 30 days leave to amend. Defendants are to give notice.

This action arises out of services provided by Julia Sklar dba Law Offices of Julia Sklar (“Plaintiff”) to clients Irina Melmik and Sofia Melnik (“Clients”). The complaint alleges Clients retained Plaintiff for representation in a personal injury claim arising from an automobile accident. During the representation, Clients discharged Plaintiff as their attorney, and hired Defendants Konstantin Gurovich, dba Gurovich Law Group (“Gurovich”) and Margarita Skuratovsky (“Skuratovsky”) (collectively “Defendants”). According to the Complaint, Defendants’ settled Clients’ claim and Clients recovered their portion of the settlement proceeds. The Complaint alleges Plaintiff is due her portion of the settlement proceeds for services performed, but Defendants withdrew all monies from the accounts and have been unjustly enriched.

On May 3, 2022, Plaintiff filed the operative Complaint against Defendants for (1) money for quantum meruit, (2) conversion, (3) imposition of constructive trust (Civil Code § 2224), (4) unjust enrichment, and (5) declaratory relief.

Defendants now demur to all causes of action of the Complaint. Plaintiff opposes the demurrer.

Objection 1-2: overruled. These are not evidentiary objections. Plaintiff contends only the complaint should be considered at this demurrer stage, and the declarations filed are not “a proper subject of judicial notice.” (Big Valley Band v. Superior Court (2005) 133 Cal. App. 4th 1185, 1193.) Defendants have not requested judicial notice of their declarations, and no judicial notice has been otherwise afforded.

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 (Berkley).) “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.)

A. Plaintiff’s Duty to Establish the Existence & Enforceability of a Lien

Defendants first contend “all 5 causes of action against Defendants are predicated on the alleged failure of Defendants to pay Plaintiff’s claimed attorney fee lien from the settlement proceeds of the underlying personal injury action...” (Dem., 10; refencing Complaint ¶¶ 8-13, 18, 25-26, 32, 36-37.)

Indeed, the referenced paragraphs of the Complaint speak to Plaintiff’s entitlement to a “share of the settlement proceeds reflecting the reasonable value of her services to the clients,” implying the imposition of an attorney’s lien on the settlement proceeds. (Complaint ¶¶8-13, 18, 25-26, 32, 36-37.)

Defendants then correctly explain Plaintiff’s performing of services alone does not establish an attorney’s lien in California, relying on Carroll v. Interstate Brands Corp. (2002) 99 Cal.App.4th 1168, 1172.

“A lien may be created by contract or by operation of law. (Civ. Code, § 2881.) In most jurisdictions a lien is established by operation of law in favor of an attorney to satisfy attorney fees and expenses out of the proceeds of a prospective judgment. (See 1 Witkin, Cal. Procedure (4th ed. 1996) Attorneys, § 192, p. 248.) In California, an attorney's lien is created only by contract -- either by an express provision in the attorney fee contract (Cetenko v. United California Bank (1982) 30 Cal. 3d 528, 531; Haupt v. Charlie's Kosher Market (1941) 17 Cal.2d 843) or by implication where the retainer agreement provides that the attorney is to look to the judgment for payment for legal services rendered (Wagner v. Sariotti (1943) 56 Cal. App. 2d 693, 697; see Gelfand, Greer, Popko & Miller v. Shivener (1973) 30 Cal. App. 3d 364, 375, 377; Skelly v. Richman (1970) 10 Cal. App. 3d 844, 865 fn. 3.) Unlike a service lien or a mechanic's lien, for example (Civ. Code, §§ 3051, 3110), an attorney's lien is not created by the mere fact that an attorney has performed services in a case. (Ex parte Kyle (1850) 1 Cal. 331; see Isrin v. Superior Court (1965) 63 Cal. 2d 153, 157; see generally 1 Witkin, Cal. Procedure, supra, Attorneys, §§ 192-193, pp. 248-249.)” (Carroll, supra, 99 Cal.App.4th at 1171-72.)

Defendants thus contend “Plaintiff has failed to allege anywhere in the Complaint that prior to asserting these foregoing causes of action against Defendants, Plaintiff had completed a separate declaratory relief action against her former clients, wherein the validity, monetary value, and enforceability of Plaintiff's attorney fee lien had been determined.” (Dem., 10-11.)

Defendants further cite Mojtahedi v. Vargas (2014) 228 Cal. App. 4th 974 to contend an attorney alleging claims against a successor attorney for portions of settlement proceeds through an attorney’s lien should first establish “the amount of the lien or its enforceability in a separate action against the clients.” (Dem., 11.)

In Mojtahedi, the plaintiff, Mojtahedi, represented two clients in a personal injury action until the defendant, Vargas, substituted in as new counsel. (Mojtahedi v. Vargas, supra, 228 Cal. App. 4th at 976.) Mojtahedi informed the claims adjuster that he had a lien for attorneys’ fees, but Vargas deposited the settlement funds into the client trust account after the clients settled their case. (Id.) When Mojtahedi learned of the settlement, he demanded his attorneys’ fees of $4,407 from Vargas from the $14,500 settlement. (Id.) Vargas offered $2000 for Mojtahedi’s fees, but Mojtahedi refused and brought this action for fraud, violation of Commercial Code §§ 3110(d) and 3420, negligence, and interference with prospective economic advantage. (Id.) The trial court sustained Vargas’ demurrer without leave to amend, on the grounds that Mojtahedi did not have an enforceable lien, which Mojtahedi appealed. (Id. at 977.)

The trial court in Mojtahedi based on its decision on case law holding that a previously discharged attorney must file an independent action against his client to enforce a contractual attorneys’ fee lien. (Id.)

Defendants argue “Plaintiff brought this case on very similar facts and has failed to establish the existence, amount, and enforceability of her claimed lien prior to filing this action.” (Dem., 12.)

In opposition, Plaintiff contends Mojtahedi is inapposite as Plaintiff’s entitlement to the settlement proceeds “was established before for [sic] the complaint was filed,” since the settlement check listed Plaintiff as a payee. (Opp., 8-9.) Plaintiff points to no controlling authority that stands for such contention. Plaintiff then cites to Kinney v. Clark (2017) 12 Cal App.5th 704, and Southern California Gas Co. v. Flannery (2016) 5 Cal.App.5th 476, as controlling authority which the court disregards: one case involved the sale of residential property; the second, an interpleader regarding fire damage to a ranch respectively. (Opp., 9.)

In reply, Defendants correctly contend “the attorney must file an independent action against the former client to establish the existence of the lien, to determine the amount of the lien, and to enforce it. (Reply, 3-4; citing Carroll v. Interstate Brands Corp. (2002) 99 Cal.App.4th 1168, 1173; Valenta v. Regents of Univ. of Calif. (1991) 231 Cal.App.3d 1465, 1467.) This court finds the Mojtahedi court’s analysis further illuminating:

“It is well established that “[a]fter the client obtains a judgment, the attorney must bring a separate, independent action against the client to establish the existence of the lien, to determine the amount of the lien, and to enforce it.” (Brown v. Superior Court (2004) 116 Cal.App.4th 320, 328, (Brown ) quoting, Carroll v. Interstate Brands Corp., supra,99 Cal.App.4th at p. 1173; accord, Valenta, supra, 231 Cal.App.3d at p. 1470; Hansen, supra,186 Cal.App.3d at p. 356; Bandy v. Mt. Diablo Unified Sch. Dist. (1976) 56 Cal.App.3d 230, 234; Hendricks v. Superior Court, (1961) 197 Cal.App.2d 586, 589.)

Here, Plaintiff alleges that he has a contract with terms that would create a lien. Nonetheless, Plaintiff failed to allege facts establishing that he adjudicated the existence, value, or enforceability of his lien. Plaintiff merely asserts that he has a ‘detailed log stating a lien amount of $4,407.00 based on pre-substitution time and costs expended.’ A log of Plaintiff's time, although useful to adjudicate the reasonable value of Plaintiff's services in a separate action against the clients, is insufficient to establish that Plaintiff is entitled to a particular amount of the settlement money in his suit against Defendant. Plaintiff admits that he never brought a separate action against his clients to litigate those issues. Therefore, he has yet to establish the value or validity of his purported lien.

In asserting that he does not need to bring a separate action against the clients, Plaintiff attempts to distinguish his case from Valenta, Hansen, and Bandy. Plaintiff states that unlike those cases, Plaintiff has not filed a lien or a notice of lien in any pending action, Plaintiff's former clients' personal injury matter has been resolved, and Plaintiff's attempt to recover his lien is ripe. All of these differences are insignificant and fail to alter the applicability of the central principle conveyed by Valenta, Hansen, and Bandy: the attorney's lien is only enforceable after the attorney adjudicates the value and validity of the lien in a separate action against his client.

Plaintiff provided the services to the clients, not to Defendant. If successful in a declaratory relief action regarding the reasonable value of his services, Plaintiff's fees will be paid out of the clients' settlement proceeds. (Hendricks, supra, 197 Cal.App.2d at p. 589 [‘An attorney's contingent fee contract ... only gives him a lien on his client's recovery.’].) Plaintiff must thus litigate with the clients to determine the reasonable cost of the services he provided to them. Plaintiff has omitted this essential step of establishing his entitlement to a particular portion of the settlement proceeds.

To the extent that Plaintiff distinguishes the present matter from the above-mentioned case law by asserting that there is no actual dispute between him and his clients regarding the amount owed to him, we conclude that even if this is true, it is irrelevant. The Court of Appeal addressed this identical issue in Brown, supra, 116 Cal.App.4th at pages 328–330. There, an attorney sought to establish the priority of his contractual attorney fees lien over the lien of a judgment creditor. (Id. at pp. 323–324.) The Brown Court held that the attorney had to bring an independent action against his client to establish the enforceability and amount of his contractual lien, and could not simply intervene and address that issue in a dispute between the creditor and his client. (Id. at p. 324.) Notably, the attorney seeking to enforce his lien attempted to distinguish his case from prior cases and avoid suing his client by arguing that those cases involved a dispute between the attorney and the client, and in contrast, his case did not. There, the Brown Court stated that ‘[w]hile it may be true that Carroll and its predecessors involved attorney-client disputes, the rationale of those cases is not limited to such disputes.’ (Id. at p. 329, .) Without first establishing a right to any portion of his client's settlement proceeds, Plaintiff in this case lacks any basis to assert that Defendant fraudulently withheld any money from him.” (Mojtahedi v. Vargas, (2014) 228 Cal.App.4th 974, 977-78.)

Thus, as all causes of action of Plaintiff’s Complaint seek Plaintiff’s share of the settlement proceeds by alleging the existence of an attorney’s lien on the settlement monies, the court finds the Complaint to be insufficiently pled as Plaintiff fails to establish the existence, amount, and enforceability of an attorney’s lien on the settlement proceeds.

Defendants’ demurrers to the Complaint is sustained. Plaintiff is granted 30 days leave to amend. Defendants are to give notice.

[1] As Defendants individually have brought two identical demurrers to the Complaint, the court will address the two demurrers together.

[2] Each Defendant submit their declaration as counsel to demonstrate that they have complied with their meet and confer obligations pursuant to CCP § 430.41. Defendants attest that each “attempted to meet and confer with Plaintiff...; however, Plaintiff maintained that she has pled all facts to satisfy each required element of every cause of action in the Complaint.” (Gurovich Decl. ¶ 21, Exh. A-C; Skuratovsky Decl. ¶21, Exh. A-B.) The Declarations are sufficient for purposes of CCP § 430.41.