Judge: Jon R. Takasugi, Case: 23STCV08297, Date: 2024-04-15 Tentative Ruling

Case Number: 23STCV08297    Hearing Date: April 15, 2024    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

            Defendants’ motion for a judgment on the pleadings as to Plaintiff’s Complaint is SUSTAINED, WITHOUT LEAVE TO AMEND.

On 4/14/2023, Plaintiff Waring Plaza Properties, L.P. (Waring) filed suit against Manatt, Phelps & Phillips, LLP and Benjamin G. Shatz, alleging: (1) professional negligence; (2) breach of implied contract; and (3) common counts.

            On 7/5/2023, Cross-Complainant Manatt, Phelps & Phillips, LLP filed a cross-complaint (XC) against Waring Plaza Properties, L.P., alleging: (1) breach of written contract; (2) open book account; and (3) quantum meruit; and (4) breach of implied-in-fact contract.

            Now, Manatt, Phelps & Phillips, LLP and Benjamin G. Shatz (collectively, Defendants) move for a judgment on the pleadings as to Waring’s Complaint.

Factual Background

Waring engaged Manatt as its appellate counsel in an appeal by Ross for Less (Ross) of a trial court judgment in favor of Waring. Part of Ross’s argument was that the trial court had erred by not considering its estoppel argument. The Court of Appeal agreed and determined that Waring’s claim was barred by the estoppel doctrine.

Now, Waring brings this claim for breach of contract and legal malpractice against Waring as its appellate counsel.

Discussion

            Defendants argue that Waring’s Complaint fails to state a claim because: (1) the professional negligence claim fails Waring can neither (i) relitigate whether the estoppel defense barred its underlying contract claim, nor (ii) establish it would have obtained any different outcome if not for Manatt’s failure to request a remand; (2) the implied contract claim is barred as a matter of law; and (3) the common counts claim is derivative of the second claim.

            After review, the Court agrees.

            As to the first claim, Plaintiff’s claim is based on allegations that:

18. On appeal, Ross argued the trial court erred by refusing to decide on Ross’s estoppel arguments.

19. Defendants should have addressed Ross’s contention by raising the following argument to the appellate court. Because the trial court’s tentative decision after phase one of trial and the later statement of decision failed to explicitly address the estoppel arguments, the appellate court should remand the case to the trial court for further findings. Defendants did not make this argument and instead, fell below the standard of care by arguing the trial court considered and rejected Ross’s argument.

20. Ross contended the estoppel argument presented a legal issue for de novo appellate review.

21. Because of Defendants’ negligence, the appellate court ruled on the estoppel issue as a matter of law (in Ross’s favor), reversed the judgment in Plaintiff’s favor, and vacated the award of over $4 million to Plaintiff

            (Complaint ¶¶ 18-21.)

            Thus, while Waring argues that it has set forth multiple grounds for Defendants’ conduct falling below the standard of care, Waring is bound by the four corners of the Complaint. As set forth in the Complaint, Waring alleges that Defendants failed to argue that: (1) the appellate court should remand the case to the trial court for further findings or (2) that the argument should not present a legal issue for de novo appellate review.

            However, as noted by Defendants, the Court of Appeal found the facts establishing estoppel were undisputed, and thus decided that the estoppel defense barred Waring’s underlying contract claim as a matter of law.

More specifically, in considering whether to remand to the trial court, the Court of Appeal recognized “the determination of either waiver or estoppel is a question of fact, and the trier of fact’s finding is binding on the appellate court.” (Opn. at 36 (quoting Platt Pacific, Inc. v. Andelson (1993) 6 Cal.4th 307, 319.) However, the Court of Appeal explained remand was not necessary in cases where “the facts are undisputed and only one inference may reasonably be drawn, the issue is one of law and the reviewing court is not bound by the trial court’s ruling.” (Ibid.) After reviewing the trial court record, the Court of Appeal held the facts establishing estoppel in this case were undisputed, the question on estoppel was legal, and estoppel applied:

Waring Plaza continued to accept the Substitute Rent, twice agreed to the extension of the Lease by Ross despite what would constitute a default under the Lease, and then decided after 10 years that it wanted the full Minimum Rent paid by Ross. It did so because it did not want to lose Ross as a tenant and owed on its mortgage. Ross presented evidence that it extended the Lease on the understanding it would only have to pay Substitute Rent. By failing to take any legal action against Ross, Waring Plaza induced Ross to continue the Lease to its detriment. The facts are undisputed. We conclude that estoppel applies, which bars Waring Plaza from seeking Minimum Rent for the period awarded by the trial court.

            (Id. at p. 41.)

            As such, regardless of whether or not Defendants either sought a remand or sought to apply a different standard of review, Waring has not alleged any facts which could show the result would be different. This is because the Court of Appeal’s decision was based on a determination that the facts were undisputed and that only one inference could be reasonably drawn by the evidence. As such, there were no issues of fact which could have been determined differently on remand or under a different standard of review.

            As noted by Defendants, “Waring does not allege Manatt negligently advanced an argument (or failed to advance an argument) that caused the Court of Appeal to erroneously conclude the undisputed facts in the trial court established estoppel. Instead, Waring merely seeks to relitigate the issue under the guise of professional negligence by speculating a different judge may have reached a different conclusion were the case remanded to the trial court. That is not sufficient to overcome the issue preclusion bar.” (MJOP, 17: 7-12.)

            As for the second cause of action, Waring itself previously demurred to Defendants’ implied-in-fact contract, arguing that such contracts are not permitted under California law:

Business and Professions Code section 6148(a) states that “the contract for services in the case shall be in writing.” (Emphasis added.) Manatt ignores this requirement and suggests the parties entered a contract for services that was not in writing. (XComp, pars. 31-32) The only instance in which a contract governed by Business and Professions Code section 6148 may be implied-in-fact is where “the attorney’s services are of the same general kind as previously rendered to and paid for by the client.” Business and Professions Code section 6148(d)(2). Manatt did not, and cannot, allege any facts suggesting it ever represented Waring previously for the same kind of services. Therefore, this exception does not apply. Because Manatt cannot allege the existence of a valid implied agreement, Manatt failed to state claim for breach of an implied-in-fact contract and cannot cure this defect by amendment.

            (Memorandum of Points and Authorities of Waring’s Demurrer to Manatt’s XC at p. 8.)

            The Court agreed with Waring’s argument.

Now, in opposition, Waring defends its implied-in-fact contract claiming by arguing that while Business and Professions Code section 6148 prohibits attorneys from claiming an implied-in-fact contract identical to the void written contract, it does not prohibit clients from claiming the existence of an implied-in-fact contract like the one Waring alleges. However, Waring cites no legal authority to support the proposition that it may deny the existence of the implied-in-fact contract for purposes of Manat’s Cross-Complaint, while availing itself of the existence of the very same implied-in-fact contract for its own claim. Put another way, while the Court likely agrees that Waring, but not Defendants, may claim the existence of an implied-in-fact contract even if Business and Professions Code section 6148 has not been complied with, the existence of that contract can be not confirmed selectively, and an acknowledgement of the contract by the client would necessarily then entitle attorneys to pursue claims based on the same implied-in-fact contract. Given that Defendants implied-in-fact contracts were dismissed on demurrer based on Waring’s own denouncement of the existence of any contract, Waring is not entitled to benefit from that dismissal and then pursue those claims here.

Finally, as to the third cause of action, the breach of an implied-in-fact contract claim and common count for money had and received are based on the same facts and seek the same recovery. Given the Court’s conclusion that the substantive claim for breach of an implied-in-fact contract fails as a matter of law, the Court reaches the same conclusion as to this cause of action.

Based on the foregoing, Defendants’ motion for a judgment on the pleadings as to Waring’s Complaint is sustained, without leave to amend.

It is so ordered.

Dated:  April    , 2024

   Hon. Jon R. Takasugi
   Judge of the Superior Court

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