Judge: Gail Killefer, Case: 24STCV13838, Date: 2024-10-01 Tentative Ruling

Case Number: 24STCV13838    Hearing Date: October 1, 2024    Dept: 37

HEARING DATE:                 Tuesday, October 1, 2024

CASE NUMBER:                   24STCV13838

CASE NAME:                        Anne Kramer v. Estate of Kim H. Perman, et al.

MOVING PARTY:                 Defendants the Estate of Kim H. Pearman; Kim H. Pearman, a Law Corporation; Robert Pearman

OPPOSING PARTY:             Plaintiff Anne Kramer

TRIAL DATE:                        Not set.

PROOF OF SERVICE:           OK

PROCEEDING:                      Demurrer to Complaint with Motion to Strike

OPPOSITION:                        17 September 2024

REPLY:                                  23 September 2024

TENTATIVE:                         Defendants’ demurrer to the third cause of action is overruled and sustained as moot as to the fourth cause of action. On its own motion, the court strikes the claim for fraud in the caption page of the Complaint without leave to amend. The court denies Defendants’ motion to strike the request for punitive damages from the Complaint. Defendants must file an Answer by October 31, 2024.  An OSC Re: Filing of Answer is set for November 7, 2024, at 8:30 a.m. and the Case Management Conference is continued to December 19, 2024, at 8:30 a.m. Defendants to give notice.

Background

On June 3, 2024, Anne Kramer (“Plaintiff”) filed a Complaint against the Estate of Kim H. Pearman; Kim H. Pearman, a Law Corporation; Robert Pearman; and Does  1 to 25.

The Complaint alleges following four causes of action:

1)     Professional Negligence;

2)     Breach of Contract;

3)     Breach of Fiduciary Duty;

4)     Fraud.

The Estate of Kim H. Pearman and Kim H. Pearman (collectively “Defendants”) have filed a demurrer to the Complaint. Defendant Robert Perman, along with Defendants, moves to strike the Complaint’s request for punitive damages. Plaintiff opposes the Motion. The matter is now before the court.

LEGAL STANDARDS

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.)¿¿¿ 

Demurrer[1]

I.         Discussion

A.        Summary of Allegations in Complaint

This action arose out of the Defendants’ legal representation of Plaintiff.  Defendants allowed Plaintiff’s case to be dismissed for failure to prosecute, lied to Plaintiff about the dismissal, and waited years before seeking to set aside the dismissal, and continued to lie to Plaintiff about a decision denying their appeal.  (Compl., ¶ 1.)

After being terminated from her job in violation of the FEHA, Plaintiff retained Defendant Kim Pearman and his firm to represent her in a lawsuit against her former employer. (Compl., ¶¶ 14-21.) On January 20, 2018, Defendants filed a four-page complaint against Plaintiff’s former employer for wrongful termination due to Plaintiff’s physical disability and medical condition. (Id., ¶ 21.) Defendants failed to oppose the motion to bifurcate the issue of liability and damages and failed to appear at the hearing to set the trial date, resulting in the trial court dismissing the case on January 11, 2019. (Id., ¶¶ 22-28.)

As of 2018, Defendants knew Kim Pearman was not competent to practice law and failed to make proper arrangements to ensure his cases were properly supervised. (Compl, ¶ 23.)

Defendants failed to inform Plaintiff about the court’s order or hearing dates and failed to inform Plaintiff that her case was dismissed due to counsel’s failure to appear. (Id., ¶¶ 26, 30, 36.) Plaintiff learned of the dismissal of her case from her former employer’s counsel. (Id., ¶ 30.) Plaintiff regularly inquired about the progress of her lawsuit and was always informed that her case was “advancing properly” despite Defendants doing nothing on the case. (Id., ¶¶ 32, 33.) Two years after the dismissal, on June 29, 2021, Defendants sought to set aside the dismissal but withdrew the motion due to improper service. (Id., ¶ 34.) It was not until October 26, 2021, that Defendants refiled the motion to set aside the dismissal, but the motion was denied due to untimeliness and failure to cite authority for such relief. (Id., ¶¶ 37-44.)

Defendants failed to inform Plaintiff that they had refiled the motion to set aside the dismissal or that they had sought reconsideration of the order denying the request. (Compl., ¶¶ 45, 46.)

Defendants failed to timely file documents in the appeal, and the appeal was dismissed. (Id., ¶¶ 48, 52.) Defendants again failed to inform Plaintiff her case had been appealed and that the appeal had been dismissed. (Id., ¶¶ 49, 54.) “Even after the denial of the appeal, Defendants continued to inform Plaintiff that her case was advancing well.” (Id., ¶ 56.) It was not until November 2023, that Plaintiff met with Defendants to discuss her damages that she learned her case was dismissed. (Id., ¶ 58.)

Defendants now demurs to the third cause of action for breach of fiduciary duty and the fourth cause of action for fraud.

B.        First Cause of Action – Breach of Fiduciary Duty

"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.) A fiduciary relationship is “any relation existing between parties to a transaction wherein one of the parties is duty bound to act with the utmost good faith for the benefit of the other party.” (Cleveland v. Johnson (2012) 209 Cal.App.4th 1315, 1338.) “Such a relation ordinarily arises where a confidence is reposed by one person in the integrity of another.” (Id.) “[B]efore a person can be charged with a fiduciary obligation, he must either knowingly undertake to act on behalf and for the benefit of another, or must enter into a relationship which imposes that undertaking as a matter of law.” (Id.)   

Defendants do not dispute that a fiduciary relationship exists between Plaintiff and Defendants by virtue of the attorney-client relationship. However, Defendants assert that a claim for breach of fiduciary duty cannot be premised on the same operative facts as a professional negligence claim and require further allegations of violation of trust, confidence, or loyalty. None of the cases cited by Defendants support this proposition.

In Mirabito v. Liccardo (1992) 4 Cal.App.4th 41, the appellate court found that a breach of fiduciary claim could be premised on the fact that the defendant owed a duty to disclose. (Id., ¶ 44.) Although, “[t]he scope of an attorney's fiduciary duty may be determined as a matter of law based on the Rules of Professional Conduct,” Defendants fail to cite case law requiring Plaintiff to list all the Professional Rules that Defendants violated by not informing her about the true status of her case. (Stanley v. Richmond (1995) 35 Cal.App.4th 1070, 1086.)

The determination of breach of fiduciary duty is not just based on the Rules of Professional Conduct, but is also determined “ ‘together with statutes and general principles relating to other fiduciary relationships, all help define the duty component of the fiduciary duty which an attorney owes to his [or her] client.’ ” (Ibid.)

In Barbara A. v. John G. (1983) 145 Cal.App.3d 369, the appellate court found that “ ‘[a] member of the State Bar should not under any circumstances attempt to deceive another person, . . .’ ” (Id., p. 383.) Here, Plaintiff alleges facts to show that Defendants deceived Plaintiff about the true status of her case.  “An attorney's duty, the breach of which amounts to negligence is not limited to his failure to use the skill required of lawyers. Rather, it is a wider obligation to exercise due care to protect a client's best interests in all ethical ways and in all circumstances.” (Day v. Rosenthal (1985) 170 Cal.App.3d 1125, 1147.) Defendants failed to show that the duty owed for purposes of showing negligence is different from the duty used to “ ‘define the duty component of the fiduciary duty which an attorney owes to his [or her] client.’ ” (Stanley, supra,  35 Cal.App.4th at p. 1086.) Moreover, the Complaint sufficiently alleges that Defendants failed to use the skill required and due care by failing to oppose the motion to bifurcate, failing to appear, failing to timely move for dismissal, failing to provide the proper basis for reconsideration, and by failing to properly file and argue the motion to appeal.

Lastly, “[w]hether an attorney has breached a fiduciary duty to his or her client is generally a question of fact.” (Stanley, supra,  35 Cal.App.4th at p. 1087.) Therefore, whether Defendants breached their fiduciary duty is a question of fact not subject to adjudication on demurrer. "On a demurrer a court's function is limited to testing the legal sufficiency of the complaint. [Citation.] 'A demurrer is simply not the appropriate procedure for determining the truth of disputed facts.’ [Citation.]” (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 113-114.)

Therefore, the demurrer to the third cause of action is overruled.

C.        Fourth Cause of Action – Fraud

Defendants demur to the fourth cause of action on the basis that the fraud cause of action is not pled with the requisite specificity. Plaintiffs represent to the court that:

The word “Fraud” was inserted in the caption by mistake and Plaintiff did not include any actual cause of action for fraud. This information was conveyed to the attorneys for Defendant and Plaintiff offered to file a notice of errata. Without receiving a response to that offer, Defendants filed a demurrer to the non-existent fourth cause of action. The notice of errata is filed herewith and the demurrer on this issue is therefore moot.

(Opposition, at p. 2:19-26.)

The record before the court does not show that a notice of errata was filed. Therefore, the court strikes the word fraud from the caption page without leave to amend.

Motion to Strike

Defendants move to strike the Complaint’s request for punitive damages as alleged in Paragraph 70 and the Prayer for Relief.

To state a claim for punitive damages under Civ. Code § 3294, a plaintiff must allege specific facts showing that the defendant has been guilty of malice, oppression, or fraud. (Smith v. Superior Court (1992) 10 Cal. App. 4th 1033, 1042.)¿ The basis for punitive damages must be pled with specificity; conclusory allegations devoid of any factual assertions are insufficient. (Ibid.)¿¿“Malice” is defined in Civ. Code § 3294 (c)(1) as “conduct which is intended by the defendant to cause injury” or “despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.” “Oppression” is “despicable conduct subjecting a person to cruel and unjust hardship in conscious disregard of that person’s rights.” (Civ. Code § 3294(c)(2).) The term “despicable” has been defined in the case law as actions that are “base,” “vile,” or “contemptible.”¿ (Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc. (2000) 78 Cal.App.4th 847, 891.)¿¿ 

The court finds that Plaintiff has alleged facts that are more than gross negligence, and show actual malice and/or oppression. The Complaint alleges that Defendants knew that Plaintiff’s case had been dismissed due to their failure to prosecute that case and in willful and conscious disregard for Plaintiff’s rights, Defendants continued to conceal from Plaintiff the true status of her case and that fact that Defendant Kim Pearman was not competent to practice law, resulting in Plaintiff’s appeal being denied and Plaintiff being “precluded from recovering damages for her meritorious wrongful termination claim.” (Compl., ¶ 55.) This conduct infringed on the Plaintiff’s right to have her interests represented by competent counsel, her right to make informed decisions about how her case is handled, and her right to be apprised of all major developments of her case.

The motion to strike punitive damages is denied.

Conclusion

Defendants’ demurrer to the third cause of action is overruled and sustained as moot as to the

fourth cause of action. On its own motion, the court strikes the claim for fraud in the caption

page of the Complaint without leave to amend. The court denies Defendants’ motion to strike the

request for punitive damages from the Complaint. Defendants must file an Answer by October

31, 2024.  An OSC Re: Filing of Answer is set for November 7, 2024, at 8:30 a.m. and the Case

Management Conference is continued to December 19, 2024, at 8:30 a.m. Defendants to give

notice.