Judge: Joseph Lipner, Case: 21STCV24925, Date: 2023-09-21 Tentative Ruling

Case Number: 21STCV24925    Hearing Date: September 21, 2023    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

Plaintiffs Kevin Korosh Shahin and Azadeh Tadayon move for leave to file a second amended complaint. Defendants Fischbach & Fischbach and Joseph S. Fischbach move for summary judgment.   The Court DENIES both motions for the reasons explained below. 

Background

          On July 7, 2021, Plaintiffs Kevin Korosh Shahin (“Shahin”) and Azadeh Tadayon (“Tadayon”) (collectively, “Plaintiffs”), initiated this legal malpractice action against Defendants Fischbach & Fischbach and Joseph S. Fischbach (collectively, “Defendants”). The operative First Amended Complaint (“FAC”) was filed on December 3, 2021, and it alleges the following causes of action: (1) breach of contract; (2) professional negligence; and (3) breach of fiduciary duty. As alleged in the FAC, Plaintiffs assert that Defendants failed to provide them with competent legal services, and they discovered their injuries around March 2020.

          On January 3, 2022, Defendants filed a cross-complaint against the plaintiffs, asserting the following causes of action: (1) quantum meruit; (2) reasonable value of services rendered; and (3) account stated.

          On April 22, 2022, Defendants filed their answer to the FAC, which included the affirmative defense that Plaintiffs’ claims were barred by the relevant statute of limitations.

On March 22, 2023, Defendants filed their Motion for Summary Judgment on the ground that the legal malpractice action is time-barred because it was brought more than a year after the Defendants withdrew as Plaintiffs’ counsel of record in the underlying dispute. On May 24, 2023, Plaintiffs filed their opposition to Defendants’ Motion for Summary Judgment. On June 2, 2023, Defendants filed their reply papers in support of their Motion for Summary Judgment.

          On May 11, 2023, Plaintiffs filed their Motion for Leave to Amend, seeking to file a second amended complaint. On May 25, 2023, Defendants filed their opposition to Plaintiffs’ Motion for Leave to Amend. On September 14, 2023, Plaintiffs filed their reply.

Legal Standards

Leave to Amend

The courts have a strong policy of allowing motions for leave to amend. “If the motion to amend is timely made and the granting of the motion will not prejudice the opposing party, it is error to refuse permission to amend….” (Morgan v. Super. Ct. (1959) 172 Cal.App.2d 527.)  A court can deny leave to amend after long, inexcusable delay, where there is cognizable prejudice, such as discovery needed, trial delay, critical evidence lost, or added preparation expense.  (Solit v. Tokai Bank (1999) 68 Cal.App.4th 1435, 1448.)

California Rules of Court, rule 3.1321(a) requires that a motion to amend must “[i]nclude a copy of the proposed… amended pleading… [and] state what allegations in the previous pleading are proposed to be [deleted and/or added], if any, and where, by page, paragraph, and line number, the [deleted and/or additional] allegations are located…” Also, California Rules of Court, rule 3.1324(b) states: “[a] separate declaration must accompany the motion and must specify: (1) the effect of the amendment; (2) why the amendment is necessary and proper; (3) when the facts giving rise to the amended allegations were discovered; and (4) the reasons why the request for amendment was not made earlier.”

Summary Judgment

The purpose of a motion for summary judgment “is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.”  (Aguilar v. Atl. Richfield Co. (2001) 25 Cal.4th 826, 843.)  “Code of Civil Procedure section 437c, subdivision (c), requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.”  (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.)

“On a motion for summary judgment, the initial burden is always on the moving party to make a prima facie showing that there are no triable issues of material fact.”  (Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519.)  A defendant moving for summary judgment “has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action . . . cannot be established.”  (Code Civ. Proc., § 437c, subd. (p)(2).)  “Once the defendant . . . has met that burden, the burden shifts to the plaintiff . . . to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.”  (Ibid.)  “If the plaintiff cannot do so, summary judgment should be granted.” (Avivi v. Centro Medico Urgente Med. Ctr. (2008) 159 Cal.App.4th 463, 467.)

“When deciding whether to grant summary judgment, the court must consider all of the evidence set forth in the papers (except evidence to which the court has sustained an objection), as well as all reasonable inferences that may be drawn from that evidence, in the light most favorable to the party opposing summary judgment.”  (Avivi, supra, 159 Cal.App.4th at p. 467; see also Code Civ. Proc., § 437c, subd. (c).)

Judicial Notice

In connection with its opposition to Plaintiffs’ Motion for Leave to Amend, Defendants request the Court to take judicial notice of its answer filed on April 22, 2022, to the FAC. Pursuant to Evidence Code § 452(d), the Court shall grant this request.

In connection with its Motion for Summary Judgment, Defendants request the Court to take judicial notice for the following documents: (1) the cross-complaint filed on August 23, 2017 in Los Angeles Superior Court case No. BC662679, Denis Pariseau, et al. v. Tadayon, et al (the “Underlying Action”); (2) the complaint filed in the Underlying Action; (3) the Order on Stipulation for Arbitration issued January 11, 2018 in the Underlying Action; (4) the Motion to be Relieved as Counsel of Record for Plaintiff Shahin filed on October 21, 2019 in the Underlying Action; (5) the Declaration in Support of the Motion to be Relieved as Counsel of Record for Plaintiff Shahin filed in the Underlying Action; (6) the Motion to be Relieved as Counsel of Record for Plaintiff Tadayon filed on October 21, 2019 in the Underlying Action; (7) the Declaration in Support of the Motion to be Relieved as Counsel of Record for Plaintiff Tadayon filed in the Underlying Action; (8) the October 31, 2019 Minute Order re: Ex Parte Application filed in the Underlying Action; (9) the November 20, 2019 Minute Order regarding Defendants’ motions to be relieved as counsel in the Underlying Action; (10) the signed order granting the aforementioned motions; and (11) the proof of service of the signed ordered. Pursuant to Evidence Code § 452(d), the Court shall grant this request.

Discussion

Motion for Leave to Amend

Plaintiffs seek leave to file a second amended complaint to address Defendants’ statute of limitations defense because it forms the basis of Defendants’ Motion for Summary Judgment. (Motion re: Leave to Amend at pg. 3.)

Here, the proposed amendment would allege that Plaintiff Shahin was and currently is experiencing issues with his eyesight. (Id. at pg. 4; Lambirth Decl. ¶¶ 7, 9; Ex. 1.) Because Plaintiff Shahin underwent eye surgery, he had to stay in bed for six weeks, which affected his ability to commence this action. (Ibid.) Plaintiffs contend that they only recently discovered Defendants’ intent to challenge the timeliness of this action through the Motion for Summary Judgment. (Id. at pg. 5; Lambirth Decl. ¶¶ 3-5.) Additionally, Plaintiffs reason that the proposed amendment would not cause prejudice to Defendants because it does not affect the substantive issues in this action. (Id. at pg. 5.)

In opposition, Defendants assert that the motion was not timely because Plaintiffs knew of Defendants’ affirmative defense regarding the statute of limitations as early as April 22, 2022. (Opposition re: Leave to Amend at pg. 5.) Defendants reason that Plaintiffs knew of Plaintiff Shahin’s alleged disability, which was identified during Plaintiff Shahin’s deposition on August 23, 2022, and they were aware to reference Emergency Rule 9 in the FAC as a basis for tolling. (Id.; Cole Decl. ¶ 2, Exh. 1.) Furthermore, Defendants assert that they would be irreparably harmed if the court were to grant leave to amend in this instance because it would require the parties to conduct further discovery into Plaintiff Shahin’s alleged disability. (Id. at pg. 6.) Nevertheless, Defendants reason that the proposed amendment fails to justify the application of tolling under Code of Civil Procedure § 340.6(a)(4) because Defendant Shahin had the ability to commence legal action and the proposed amendment would not apply to Plaintiff Tadayon’s claims. (Id. at pp. 6-9.)

Upon consideration of the arguments presented, the Court finds that the Motion does not sufficiently comply with all requirements of California Rules of Court, rule 3.1324. For instance, based on Defendants’ evidence, Plaintiffs’ counsel’s supporting declaration does not sufficiently state why the amendment was not made earlier. Plaintiffs’ counsel claims that he was not aware that the statute of limitations defense was being affirmatively raised as a complete defense until he reviewed Defendants Motion for Summary Judgment. (Lambirth Decl. ¶¶ 3-5.) However, this explanation is unlikely when Plaintiffs had the foresight to evoke Emergency Rule 9 in their FAC as a ground for tolling, which occurred before Defendants filed any answer. Furthermore, Plaintiffs’ assertion that Defendants did not file a demurrer based on the applicable statute of limitations is not dispositive because “[a] demurrer tests the sufficiency of the complaint as a matter of law.” (Osornio v. Weingarten (2004) 124 Cal.App.4th 304, 316.)  As evidenced by the ruling on Defendants’ Motion for Summary Judgment, the issue of whether Plaintiffs’ claims are time-barred is a factual dispute that would not have been an appropriate issue to address in a demurrer. Additionally, Plaintiffs were aware of Plaintiff Shahin’s alleged disability as late as August 23, 2022 when Plaintiff Shahin sat for his declaration. (See Opposition re: Leave to Amend; Cole Decl. ¶ 2, Exh. 1.) As a result, this inexcusable delay would prejudice Defendants by requiring the need to conduct further discovery on the issue of Plaintiff Shahin’s alleged disability. Even if the Court were to accept Plaintiffs’ reasoning, the proposed amendment would do nothing to further toll Plaintiff Tadayon’s claims because there is no indication that she experienced a physical disability that would have prevented her from commencing this action. Thus, Plaintiffs have failed to present an adequate reason as to why leave to amend was not sought sooner.

Accordingly, Plaintiffs’ Motion for Leave to Amend is denied.

Motion for Summary Judgment

Defendants move for summary judgment on the grounds that all of Plaintiffs’ claims are governed by one-year statute of limitations imposed by Code of Civil Procedure and that these claims are time-barred. (See Notice of Motion at pp. 2-3.)

Pursuant to Code of Civil Procedure § 340.6, “[a]n action against an attorney for a wrongful act or omission, other than actual fraud, must be commenced within one year after the plaintiff discovers, or through 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.” Further, this statute of limitations applies to “those claims whose merits necessarily depend on proof that an attorney violated a professional obligation in the course of providing professional services.” (Lee v. Hanley (2015) 61 Cal.4th 1225, 1236-1237.) Moreover,  “[t]he period is tolled during the times, inter alia, (i) the client ‘has not sustained actual injury,’ (ii) the negligent attorney continues to represent the client, (iii) the attorney willfully conceals facts constituting the negligence, or (iv) the plaintiff is under a disability that "restricts the plaintiff's ability to commence legal action.” (Laird v. Blacker (1992)2 Cal. 4th 606, 609.)

Here, it undisputed that the statute of limitations imposed by Code of Civil Procedure § 340.6 applies to all of Plaintiffs’ claims. As alleged in the FAC, the first cause of action for breach of contract stems from Defendants allegedly breaching their professional obligation in the underlying action. (See FAC at pg. 3.) Similarly, the second cause of action for negligence alleges that Defendants “negligently and carelessly performed legal services while representing Plaintiffs” in the Underlying Action. (See FAC at pg. 4.) Lastly, the third cause of action for breach of fiduciary duty is based on allegations that Defendants breached their fiduciary duty during their representation in the underlying action.

Defendants argue that Plaintiffs suffered an actual injury on June 19, 2019 when the initial arbitration award was issued in the underlying action and that the accrual period began when Defendants were relieved as counsel in that action on November 22, 2019. (Motion re: Summary Judgment at pp. 14-17.) Based on the undisputed facts presented in the motion, Defendants rely on the following evidence. The underlying action concerned a partition action of a property that Plaintiffs partly owned with other partners. (UMF Nos. 1-2.) In the underlying action, Plaintiffs filed a cross-complaint for (1) breach of fiduciary duty, (2) breach of contract, (3) negligence, and (4) dissolution of partnership, and these claims were referred to arbitration on January 11, 2018, while the underlying partition claim was stayed. (UMF No. 4.) Defendants began representing Plaintiffs on May 6, 2018, and the arbitration hearing occurred in April 2019. (UMF Nos. 5-7.) On June 19, 2019, the arbitrator issued an award in Plaintiffs’ favor in an amount that was far lower than Plaintiffs’ claimed damages. (UMF No. 8.) Following the issuance of the arbitration award, Plaintiffs expressed their dissatisfaction with Defendants’ representation by text message on August 4, 2019, and as a result, Defendants moved to withdraw as counsel. (UMF Nos. 10-12.) On November 20, 2019, the court in the underlying action granted Defendants’ motions to be relieved as counsel and proof of service of the order was filed on November 22, 2019, effectively ending the representation. (UMF Nos. 14-18.) Under the assumption that the accrual period began on November 22, 2019 while also taking into account the tolling period afforded by Emergency Rule 9, Defendants contend that Plaintiffs had to file the instant action on May 19, 2021. (Motion re: Summary Judgment at pg. 17.) However, the initial complaint was not filed until July 7, 2021. Thus, Defendants assert that the entire action is subject to summary judgment because the claims are time-barred. (Id. at pg. 19.)

Upon consideration of the evidence presented by Defendants, the court finds that they have not met their burden on summary judgment. Specifically, the evidence submitted does not establish when Plaintiffs were injured. Defendants claim that Plaintiffs were injured when the arbitrator issued his award on June 19, 2019. Additionally, Defendants reason that Plaintiffs knew or should have known the facts “underpinning their claims” at the conclusion of arbitration based on the dissatisfaction Plaintiffs expressed to Defendants about the representation that they received. (Id. at pp. 15-16.) The mere fact that Plaintiffs were discontented with Defendants’ legal representation near the conclusion of arbitration does not imply that they “had an ability to learn the facts underlying” their claims. (See McCann v. Welden (1984) 153 Cal.App.3d 814, 822-823.)

As argued by Plaintiff, it is by no means clear that the injury occurred when the arbitrator issued his award on June 19, 2019.  The arbitration award was issued that day,  but it was not confirmed. Thus, on June 19, 2019, the arbitration award amounted to only “a contract between the parties.” (Mossman v. City of Oakdale (2009) 170 Cal. App. 4th 83, 89.) In the context of an arbitration award, Sirott v. Latts (1992) 6 Cal.App.4th 923, stated that a plaintiff’s actual injury occurred when the arbitration award was confirmed because that confirmation constituted a judicial determination on what the plaintiff was entitled to and what the plaintiff owed, which resulted in the actual injury. (Id. at pp. 929-930.) In reply, Defendants attempt to argue that the Court of Appeals in Sirott arbitrarily chose the confirmation date. However, this argument is not persuasive. Rather, because the arbitration award could have been vacated entirely, Plaintiffs’ injury was speculative and contingent on a further judicial determination. While trying to discount the discussion in Sirott, Defendants have not cited any authority that the date of an unconfirmed arbitration award is necessarily the date of injury.

There are also disputed facts about when Plaintiff learned of his injury.  Plaintiff claims they first discovered the negligently prepared Closing Argument Brief on or about January 19, 2023.  (AUMF No. 1.)  While Defendants claim in their reply brief that this is a lie, the Court cannot determine which party is correct on the basis of the evidence submitted on summary judgment. 

Defendants rely on Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 18 Cal.4th 739.  This case is inapposite.  In the language relied upon by Plaintiff, Jordache stated:

Actual injury refers only to the legally cognizable damage necessary to assert the cause of action. There is no requirement that an adjudication or settlement must first confirm a causal nexus between the attorney's error and the asserted injury. The determination of actual injury requires only a factual analysis of the claimed error and its consequences. The inquiry necessarily is more qualitative than quantitative because the fact of damage, rather than the amount, is the critical factor.

(Id. at pg. 752.) However, the decision also states that: “we must distinguish between an actual, existing injury that might be remedied or reduced in the future, and a speculative or contingent injury that might or might not arise in the future.” (Id. at pg. 754.) In Jordache, the actual injury was the expenditure of millions of dollars to defend a legal action and the loss of millions of dollars from “profitable investments forgone to pay defense costs.” (Id.) The current case does not involve the same sort of harm. 

Accordingly, the motion for summary judgment is denied.