Judge: Latrice A. G. Byrdsong, Case: 19STCV12706, Date: 2023-11-13 Tentative Ruling

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Case Number: 19STCV12706    Hearing Date: November 13, 2023    Dept: 25

Hearing Date:                         Monday, November 13, 2023

Case Name:                             SCOT L. BENNETT v. LUIS HERNANDEZ; DAMIEN HERNANDEZ, a minor; JOHN KOUTSOUKOS; “JANE DOE” KOUTSOUKOS; and DOES 1-50

Case No.:                                19STCV12706

Motion:                                   Motion for Judgment on the Pleadings

Moving Party:                         Defendant John Koutsoukos

Responding Party:                   Plaintiff Scot L. Bennett

Notice:                                    OK

Tentative Ruling:           Defendant John Koutsoukos’ Motion for Judgment on the Pleadings is DENIED.

BACKGROUND

On April 12, 2019, Plaintiff Scot L. Bennett (“Plaintiff”) filed Complaint against Defendant Luis Hernandez; Damien Hernandez, a minor; John Koutsoukos; “Jane Doe” Koutsoukos (“Defendants”); and DOES 1-50, inclusive, alleging causes of action for (1) Breach of Contract; (2) Fraud; (3) Common Counts; and (4) Conversion.

On July 27, 2023, Defendant John Koutsoukos filed a Motion for Judgment on the Pleadings. On November 2, 2023, Plaintiff filed an opposition. No reply has been filed.

MOVING PARTY POSITION

            Defendant argues that the complaint does not state facts sufficient to constitute a cause of action. Specifically, Defendant argues that Plaintiff cannot be given relief on an unenforceable and voidable contract under Civil Code (CC), Section 1608 and California Professional Code of Ethics Rule 1-320. Defendant further argues that Plaintiff cannot be given relief on an unlawful contract under CC, Section 1667 and California Professional Code of Ethics Rule 1-320. Moreover, Defendant argues that any further proceedings held regarding this matter are in direct violation of the California Professional Code of Ethics Rule 1-320.

OPPOSITION

In opposition, Plaintiff argues that the breach of contract cause of action is not defeated by the illegality of the contract. Plaintiff further argues that the fraud cause of actions has been virtually admitted by Koutsoukos. Also, Plaintiff argues that the conversion cause of action survives this motion. Lastly, Plaintiff argues that even if all other causes of action fail, Quantum Meruit survives because he did spend time working and is entitled to be paid for his efforts.

REPLY

None as of 11/9/23.

ANALYSIS

I.          Motion for Judgment on the Pleadings (MJOP)

A.                Legal Standard

The standard for ruling on a motion for judgment on the pleadings is essentially the same as that applicable to a general demurrer, that is, under the state of the pleadings, together with matters that may be judicially noticed, it appears that a party is entitled to judgment as a matter of law.  (Bezirdjian v. O'Reilly (2010) 183 Cal.App.4th 316, 321-322, citing Schabarum v. California Legislature (1998) 60 Cal.App.4th 1205, 1216.)  Matters which are subject to mandatory judicial notice may be treated as part of the complaint and may be considered without notice to the parties. Matters which are subject to permissive judicial notice must be specified in the notice of motion, the supporting points and authorities, or as the court otherwise permits. (Id.)  The motion may not be supported by extrinsic evidence. (Barker v. Hull (1987) 191 Cal.App.3d 221, 236.)

When the moving party is a defendant, he or she must demonstrate that “The court has no jurisdiction of the subject of the cause of action alleged in the complaint” or “The complaint does not state facts sufficient to constitute a cause of action against that defendant.” (CCP § 438(c)(1)(B)(i)-(ii).)

B.              Discussion

Meet and Confer Requirement

A motion for judgment on the pleadings must be accompanied by a meet and confer declaration demonstrating an attempt to meet and confer in person or by telephone, at least five days before the date a motion for judgment on the pleadings is filed. (CCP § 439.)

Before the Court addresses the merits of this present motion, the Court notes that the motion is not accompanied by a meet and confer declaration as required by CCP, Section 439. Although the Court may not grant or deny a motion for judgment on the pleadings due to the moving party’s insufficient meet and confer efforts, it can be grounds to continue the motion or take the motion off-calendar.

Timeliness

            All papers opposing a motion must be filed with the court and copy served on each party at least nine (9) court days, and all reply papers must be filed at least five (5) court days before the hearing on the motion. (CCP § 1005(b).)

Based upon the original October 10, 2023 hearing date of motion, Plaintiff’s opposition was due September 27, 2023. However, on the Court’s own motions the hearing was continued to November 6, 2023, then November 13, 2023, respectively. (Min. Order 9/20/23; Min. Order 10/6/23.) As such, Plaintiff Opposition was now due October 30, 2023. Plaintiff filed/served the opposition on November 2, 2023, which made it so untimely that it infringed upon Defendant’s due process rights to timely file a reply, which was due November 3, 2023. As of November 9, 2023, Defendant has not filed his reply to address the merits of the opposition. Nonetheless, the Court shall address the untimely opposition on the merits.

First Cause of Action – Breach of Contract

            To state a cause of action for breach of contract, Plaintiff must allege: (1) the existence of a contract; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s breach of said contract; and (4) the resulting damages to plaintiff due to the breach. (D’Arrigo Bros. of California v. United Farmworkers of America (2014) 224 Cal.App.4th 790, 800.)

            Pursuant to Civil Code (CC), Section 1608, “If any part of a single consideration for one or more objects, or of several considerations for a single object, is unlawful, the entire contract void.” (CC § 1608.)

            Furthermore, the California Professional Code of Ethics Rule 1-320(A), states in pertinent part: “[n]either a member nor a law firm shall directly or indirectly share legal fees with a person who is not a lawyer” unless (1) there is an agreement between a member and a law firm, partner, or associate to provide payment of money after the member’s death to the member’s estate or specified persons over a reasonable period of time; (2) a member or law firm undertaking to complete unfinished legal business of a deceased member pay the estate of the deceased member or other person legally entitled to a proportion of the total compensation for the services rendered by the deceased member; (3) a member or law firm has a compensation, profit-sharing, or retirement plan based in whole or in part on a profit-sharing arrangement that does not circumvent these rules or Business and Professions Code, Section 6000 et seq that includes nonmember employees; or (4) a member is paying a prescribed registration, referral, or participation fee to a lawyer referral service established, sponsored, and operated in accordance with the State Bar of California’s Minimum Standards for a Lawyer Referral Service in California. (California Professional Code of Ethics Rule 1-320(A).)

            Moreover, CC, Section 1667, states that a contract is unlawful if it is “contrary to an express provision of law; contrary to the policy of express law, though not expressly prohibited; or otherwise contrary to good morals.” (CC § 1667.)

            Here, Defendant argues that the complaint does not state facts sufficient to constitute a cause of action and that he is entitled to judgment on the pleadings. Defendant contends that Plaintiff cannot be given relief on (1) an unenforceable and voidable contract; (2) an unlawful contract; and (3) that any further proceedings held regarding this matter are in direct violation of the California Professional Code of Ethics Rule 1-320.

            As to the first and second points, Defendant asserts that Plaintiff alleges that Defendant offered one-third of his attorney’s fees as consideration for a contract, which Defendant denies. Defendant argues that it is unlawful for an attorney to share his attorney’s fees with non-attorneys under California Professional Code of Ethics Rule 1-320, so the contract alleged in Plaintiff’s complaint is unlawful, void, and unenforceable under CC, Sections 1608 and 1667.

As to the third point, Defendant argues that California Professional Code of Ethics Rule 1-320 is a public policy rule that was created to ensure and protect the integrity of the legal system and the public’s faith in the legal system. Defendant further asserts that Plaintiff’s complaint is asking this Court to violate the California Professional Code of Ethics Rule 1-320, and award a non-attorney with attorney’s fees. Thus, Defendant contends that the Court cannot grant the relief sought by Plaintiff and must not conduct or hold any further proceedings on this matter because doing so would be in direct violation of public policy and the Professional Code of Ethics.

In opposition, Plaintiff argues that the Rules of Professional Conduct only operate against the attorney, not the other party. Furthermore, Plaintiff argues that illegality of a contract cannot preclude recovery in this case because the parties are not in pari delicto citing to Cain v. Burns (1955) 131 Cal.App.2d 439. The Cain court held that where a statute was enacted for the protection of a specific class, a member of that class is not considered in pari delicto with those who violate the statute and are entitled to relief that may be recovered through the courts. (Cain v. Burns (1955) 131 Cal.App.2d 439, 442.) Plaintiff asserts that he was contracted to perform the services of a paralegal and the work itself was not illegal, thus Defendant’s argument that the court cannot enforce the contract is flawed. Similarly, in Cain v. Burns, the plaintiff was a private investigator that entered into a fee-splitting agreement with an attorney, for investigative work the court found to be legal and proper, and such agreement was enforced. (Cain v. Burns, supra, 131 Cal.App.2d at 442.)

            On the face of the complaint, Plaintiff alleges that the terms of the contract stated the following: (1) he would locate an attorney who would handle Damian Hernandez v. Kaiser; (2) he would work with the attorney overseeing all aspects of the case to ensure that it was handled correctly; and (3) he would be paid the fair market value of his services from the attorney fees portion of any settlement or judgment. Plaintiff alleges that he brought the case to Defendant who entered into a retainer agreement on a contingency basis with Luis Hernandez on behalf of the minor, Damian Hernandez, making Plaintiff a third-party beneficiary to that retainer agreement. Plaintiff further alleges that he and Defendant entered into a verbal agreement, memorialized in various writings, that he would be paid one-third of any attorney fees realized on contingency cases and $50.00 per hour on hourly cases, to be paid at the time money was received by the law firm on any settlement, judgment, or other payment of fees. Moreover, Plaintiff alleges that Defendant breached the agreement by failing to make any payment to him upon settlement of the Damian Hernandez v. Kaiser matter. Additionally, Plaintiff alleges that as a direct and proximate result of the breach he has been damaged in the sum of $7,500.00.

            Therefore, the Court finds that Plaintiff states facts sufficient to support a cause of action for breach of contract. Plaintiff alleges that a contract existed that was entered into by him and Defendant. Plaintiff also alleges that he performed according to the purported contract and Defendant did not, which resulted in breach. Plaintiff alleges that the breach resulted in damages of $7,500.00. The arguments presented by Defendant and Plaintiff concerning the legality of the contract appear to be defenses, which go beyond the scope of this present motion, which only determines the sufficiency of the pleadings on its face.

Second Cause of Action – Fraud

            To state a cause of action for fraud, Plaintiff must allege: “(1) a misrepresentation; (2) knowledge of falsity; (3) intent to induce reliance; (4) justifiable reliance; and (5) resulting damage.” (City of Industry v. City of Fillmore (2011) 198 Cal.App.4th 191, 211.)

            Here, Defendant does not directly address the fraud allegations set forth in Plaintiff’s complaint. Defendant seemingly argues that the entire complaint fails to state a cause of action because the contract is unlawful, void, and unenforceable.

In opposition, Plaintiff argues that the cause of action for fraud should survive this motion even if the contract is found to be illegal because by Defendant’s reliance on the illegality of the contract as a defense, he has admitted to fraud. Plaintiff also contends that Defendant completed his scheme to deprive him of rightfully earned money. Furthermore, Plaintiff argues that fraud is not reliant on a valid contract.

On the face of the complaint, Plaintiff realleges that he brought the Damian Hernandez v. Kaiser case to Defendant who entered into a retainer agreement on a contingency basis with Hernandez on behalf of the minor, Damian Hernandez, making Plaintiff a third-party beneficiary to that retainer agreement. Plaintiff alleges that Defendant entered into an agreement with him to start a general private practice for which Plaintiff would receive compensation for his knowledge and experience. Plaintiff then alleges that as a result of false representations by Defendant about advertising his general private practice, Plaintiff remained employed and continued to work on the Damian Hernandez v. Kaiser case until its conclusion. Plaintiff also realleges that upon settlement and receipt of the funds in the Damian Hernandez v. Kaiser case, Defendant cut off all communication with him and kept all of the fees received, depriving him of at least $6,250.00 and as much as $7,500.00 depending on how his share would have been calculated. Plaintiff alleges that his reliance on the false promises of Defendant was the direct and proximate result of the damages he incurred in the aforementioned sum. Plaintiff further alleges that Defendant received $18,500.00 for performing less than 4 hours of work while he received nothing for approximately 150 hours of work. Plaintiff also alleges that Luis Hernandez knew or should have known of the intent to defraud him.

Therefore, the Court finds that Plaintiff states facts sufficient to support a cause of action for fraud. Plaintiff alleges that Defendant made misrepresentations to him that he justifiably relied on and resulted in him not being paid for his purported services. Plaintiff also alleges that Defendant intended to induce reliance so that Plaintiff would continue to work on the subject case giving rise to the complaint. Furthermore, Plaintiff alleges that Defendant and Luis Hernandez knew the information was false. As discussed above, the arguments presented by Defendant and Plaintiff concerning the legality of the contract appear to be defenses, which go beyond the scope of this present motion, which only determines the sufficiency of the pleadings on its face.

Third Cause of Action – Common Counts

To state a cause of action for common counts, Plaintiff must allege: “(1) plaintiff performed certain services for the defendant; (2) the reasonable value of those services; (3) the services were rendered at the request of the defendant; and (4) the services were unpaid” (State Compensation Insurance Fraud v. ReadyLink Healthcare, Inc. (2020) 50 Cal.App.5th 422, 449.)

Here, Defendant also does not directly address the common counts allegations set forth in Plaintiff’s complaint. As discussed above, Defendant simply argues the entire complaint fails to state a cause of action.

In opposition, Plaintiff does not address the common counts cause of action directly. Plaintiff simply argues that regardless of whether the other causes of action survive, the fact remains that he expended 130 hours on the Damian Hernandez v. Kaiser case and was never compensated for the purported work. Plaintiff also argues that the quantum meruit claim is not dependent upon the contract only the value of the services performed by him for Defendant.

On the face of the complaint, Plaintiff alleges that Defendant became indebted to him within the last two years for work, labor, services and materials rendered at the special instance and request of Defendant and for which Defendant promised to pay Plaintiff. Plaintiff alleges that payment for services rendered were in the sum of $6,250.00 on a contingency basis, which is the reasonable value. Plaintiff alleges that the amount is due and unpaid despite Plaintiff’s demand plus prejudgment interest.

Therefore, the Court finds that Plaintiff states facts sufficient to support a cause of action for common counts. Plaintiff alleges that he performed certain services for Defendant, the reasonable value of those services were rendered at Defendant’s request, and Plaintiff’s services have remained unpaid. Furthermore, Defendant does not contest that Plaintiff alleges such services were rendered at his request and not paid for by him.

Fourth Cause of Action – Conversion

To state a cause of action for conversion, Plaintiff must allege: (1) ownership or right to possession of the property, (2) the defendant’s conversion by a wrongful act or disposition of property rights, and (3) resulting damages. (Welco Electronics, Inc. v. Mora (2014) 223 Cal.App.4th 202, 208.)

Here, Defendant again does not directly address the conversion allegations set forth in Plaintiff’s complaint. Defendant blanketly argues that the entire complaint fails to state a cause of action.

In opposition, Plaintiff argues that if the court accepts that the contract existed and that it is in fact enforceable against Defendant, then the conversion must also survive as a consequence of the breach of contract.

On the face of the complaint, Plaintiff alleges that Defendant received settlement monies from the Damian Hernandez v. Kaiser case, which are owed to him. Plaintiff further alleges that he was to be paid specifically from those settlement proceeds. Plaintiff also alleges that pursuant to community property law, once either Defendant or “Jane Doe” Koutsoukos took possession of the money, it was effectively in possession of both of them. Moreover, Plaintiff alleges that Defendant continues to remain in possession of the converted funds and refuses to even acknowledge his communications. Additionally, Plaintiff alleges that he has been waiting 20 months with virtually no money.

Therefore, the Court finds that Plaintiff states facts sufficient to support a cause of action for conversion. Plaintiff alleges that the he is entitled to a portion of the settlement funds, Defendant took possession of all the settlement funds, and as a result, Plaintiff did not get paid at all.

II.        Conclusion

Accordingly, Defendant John Koutsoukos’ Motion for Judgment on the Pleadings should be DENIED.

The Non-Jury Trial currently scheduled for 12/05/2023 remains on calendar as currently scheduled.

Counsel for the Moving Party is ordered to give notice.