Judge James A. Mangione, Case 37-2022-00022799-CU-PN-CTL 2023-12-22 Tentative Ruling

Judge: James A. Mangione, Case: 37-2022-00022799-CU-PN-CTL, Date: 2023-12-22 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - December 20, 2023

12/22/2023 09:00:00 AM C-75 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:James A Mangione

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Civil - Unlimited Professional Negligence Summary Judgment / Summary Adjudication (Civil) 37-2022-00022799-CU-PN-CTL DE MEO VS COOLEY LLP [IMAGED] CAUSAL DOCUMENT/DATE FILED:

Defendant Cooley LLP's Motion for Summary Judgment, or in the Alternative, Summary Adjudication is granted.

The moving party on a motion for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) If satisfied, the burden shifts to the opposing party to make his or her own prima facie showing of the existence of a triable issue of fact. (Id.) 'There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.' (Id.) Additionally, to create a triable issue of material fact on a motion for summary judgment, 'the opposition evidence must be directed to those issues raised by the pleadings.' (Howard v. Omni Hotels Management Corp. (2012) 203 Cal.App.4th 403, 422.) If the pleading 'minimally advises the opposing party of the nature of the theory . . . pursued during the motion proceedings, the courts may, in appropriate cases, evaluate the evidence presented as supplementing the bare bones of the pleading.' (Id.) 'The test is whether such a particular theory or defense is one that the opposing party could have reasonably anticipated would be pursued, and whether a request for leave to amend accordingly would likely have been granted . . . .' (Id.) Breach of Fiduciary Duty In order to plead a cause of action for breach of fiduciary duty, a plaintiff must allege facts showing (1) the existence of a fiduciary relationship, (2) its breach, and (3) damage proximately caused by that breach. (Apollo Capital Fund LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226, 244.) Plaintiff alleges two bases to support its claim that the parties were in a fiduciary relationship. First, the Second Amended Complaint ('SAC') claims that, even absent an attorney-client relationship, Defendant 'owed a fiduciary duty to De Meo, as a Member of Rebotics, under [Rules of Professional Conduct] 1.13(f), to explain the identity of Cooley's client whenever the Cooley lawyers knew or reasonably should have known that Rebotics' interests were adverse to De Meo's.' (SAC ¶ 29.) Second, Plaintiff claims that an attorney-client relationship existed between the parties. Although the SAC does not contain this allegation, Defendant's moving papers contain significant argument as to whether such a relationship existed. Therefore, the Court finds that the pleadings provided Defendant with the notice required under the Howard test.

Although the existence of an attorney-client relationship involves a question of law, any conflict in the evidence of an attorney-client relationship is a question of fact. (Sprengel v. Zbylut (2019) 40 Cal.App.5th 1028, 1042.) It is undisputed that there is no written agreement between the parties Calendar No.: Event ID: TENTATIVE RULINGS

3007018 CASE NUMBER: CASE TITLE: DE MEO VS COOLEY LLP [IMAGED] 37-2022-00022799-CU-PN-CTL establishing an attorney-client privilege and that Defendant's interactions with Plaintiff related only to ReTech and Rebotics. 'Generally, when representing a corporation, an attorney's client is the corporate entity, not individual shareholders or directors, and the individual shareholders or directors cannot presume that corporate counsel is protecting their interests.' (Id. (quotation marks omitted).) '[U]nder some circumstances, an attorney's representation of a partnership may create an implied attorney-client relationship with the individual partners.' (Id. at 1043.) 'When assessing the existence of an implied attorney-client relationship between a corporate attorney and the entity's individual members, the key inquiry is whether 'the totality of the circumstances' implies an agreement that the corporate attorney will not act adversely to the individual shareholder's interests with respect to the issues in dispute. [Citation.] Stated differently, we must assess whether the parties conducted themselves in a way that would reasonably cause a shareholder to believe the attorney would protect the shareholder's individual interests.' (Id. at 1047.) As to the 2017 Transaction, Plaintiff does not dispute that Defendant acted under the direction of ReTech in drafting the documents, did not negotiate the terms of the transfer and never spoke with Plaintiff regarding the transfer. (UMF 12-13.) Additionally, Plaintiff did not seek advice from or try to contact Defendant in relation to the 2017 Transaction and had no ownership interest in ReTech at the time the transfer occurred. (UMF 9, 12-13.) While Plaintiff contends that he believed Defendant was representing Rebotics based on Defendant's involvement in preparing the documents, no written Engagement Agreement existed between Defendant and Rebotics until September 27, 2018. (UMF 15.) Finally, at the time the 2017 Transaction occurred, Plaintiff had not spoken to Defendant in over two years. (UMF 23.) The Court finds there is no material factual dispute that, under the totality of the circumstances, no reasonable shareholder would believe Defendant would protect the shareholder's interest. Therefore, no attorney-client relationship existed at the time of the 2017 Transaction. Finally, Rule of Professional Conduct 1.13(f) is inapplicable to the 2017 Transaction because Defendant did not deal with Plaintiff.

As to the 2021 Transaction, Plaintiff admitted in his deposition that, during the October 16, 2021 Zoom call, attorney's from Cooley 'made it clear' that '[t]hey believed they weren't' acting as Plaintiff's attorney. (UMF 26; Deft Evid. Compendium, Ex. 1, pg. 246:12-21.) Even assuming arguendo that Plaintiff had reasonably believed until that point that Defendant was his attorney, no reasonable person would believe an attorney-client relationship existed after being affirmatively informed by the attorney that the attorney was not representing him. Plaintiff claims via declaration that the attorney did not affirmatively say that Cooley did not represent Plaintiff, only that she believed Cooley did not represent Plaintiff, this is a distinction without a difference. Furthermore, Plaintiff had not spoken to anyone at Cooley for over six years, was not involved in the discussions/negotiations surrounding the sale, retained independent counsel, and ultimately negotiated a separate agreement with the buyer without Defendant's involvement. (UMF 21, 23, 28, 30.) Plaintiff claims that Defendant's conduct, including speaking to him without Propocio present, sending him signature pages without the corresponding documents, explaining the content of the sale documents and drafting the sale documents for his independent interest created a reasonable belief that Defendant was representing Plaintiff. However, an explicit disavowal of an attorney-client relationship would inform any reasonable shareholder that the attorney was not acting on behalf of the shareholder's or with the shareholder's best interest in mind.

Therefore, there is no material factual dispute that Defendant was not in an attorney-client relationship with Plaintiff during the 2021 Transaction. Furthermore, to the extent that Rule of Professional Conduct 1.13(f) can serve as a basis to impose a fiduciary duty on an attorney toward a non-client (a questionable proposition, at best), Defendant satisfied its duty under the rule by disavowing the attorney-client relationship with Plaintiff at the October 16 Zoom meeting.

Fraudulent Concealment The elements of fraudulent concealment are (1) defendant concealed or suppressed a material fact; (2) defendant was under a duty to disclose the fact to the plaintiff; (3) defendant intentionally concealed or suppressed the fact with the intent to defraud the plaintiff; (4) plaintiff was unaware of the fact and would not have acted in the same way knowing of the concealed or suppressed fact; (5) causation; and (6) the plaintiff sustained damage. (Lovejoy v. AT&T Corp. (2001) 92 Cal. App. 4th 85, 96.) There are four circumstances in which nondisclosure or concealment may constitute actionable fraud: (1) when the Calendar No.: Event ID: TENTATIVE RULINGS

3007018 CASE NUMBER: CASE TITLE: DE MEO VS COOLEY LLP [IMAGED] 37-2022-00022799-CU-PN-CTL defendant is in a fiduciary relationship with the plaintiff; (2) when the defendant had exclusive knowledge of material facts not known to the plaintiff; (3) when the defendant actively conceals a material fact from the plaintiff; and (4) when the defendant makes partial representations but also suppresses some material facts. (Hoffman v. 162 North Wolfe LLC (2014) 228 Cal.App.4th 1178, 1186.) In his opposition papers, Plaintiff raises a new theory of fraudulent concealment that a Cooley attorney misrepresented to him that the 2021 Transaction documents were in their final form, rather than a draft form. Because there is no reference to this argument anywhere in the SAC, the Court will not consider it.

(See Howard, 203 Cal.App.4th at 422.) Instead, the Court addresses whether there are triable issues of fact relating to Plaintiff's claim that Defendant's alleged violation of Rules of Professional Conduct 1.13(f) constituted the concealment of a material fact Defendant had a duty to disclose based on the parties' fiduciary relationship. For the reasons discussed above, the Court has found that no fiduciary relationship existed between the parties. Therefore, there is no material factual dispute that Defendant did not owe Plaintiff a duty of disclosure.

Plaintiff's evidentiary objections sustained as to objection nos. 1, 4, 7, 12 and 13 and overruled as to objection nos. 2, 3, 5, 6 and 8-10. Defendant's evidentiary objections are sustained as to objection nos.

2, 4, 8, 11, 12, 14-16, 19 and 23-46 and overruled as to objection nos. 1, 3, 5-7, 9, 10, 13, 17, 18 and 20-22.

Defendant is directed to submit a proposed judgment to the Court within five (5) court days.

The minute order is the order of the Court.

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