Judge: Mark E. Windham, Case: 22STLC06967, Date: 2023-05-22 Tentative Ruling

Case Number: 22STLC06967    Hearing Date: May 22, 2023    Dept: 26

Gomez Law, APC v. Mikhael, et al.

DEMURRER

(CCP § 430.10 et seq.)

TENTATIVE RULING:

Cross-Defendants Gomez Law, APC and James Hornbuckle’s Demurrer to the Cross-Complaint is SUSTAINED WITH 20 DAYS’ LEAVE TO AMEND AS TO THE FIRST AND SECOND, SUSTAINED WITHOUT LEAVE TO AMEND AS TO THE FIFTH CAUSE OF ACTION, AND OVERRULED AS TO THE THIRD AND FOURTH CAUSES OF ACTION.

ANALYSIS:

Plaintiff Gomez Law, APC (“Cross-Defendant Gomez Law”) filed the instant action for breach of retainer agreement against Defendant Abdelnour Mikhael (“Cross-Complainant”) on October 20, 2022. Cross-Complainant filed an Answer and Cross-Complaint against on Cross-Defendants Gomez Law and James Hornbuckle (“Cross-Defendant Hornbuckle”) January 23, 2023. The Cross-Complaint alleges causes of action for (1) fraud; (2) constructive fraud; (3) breach of fiduciary duty; (4) professional negligence; and (5) unjust enrichment.

Cross-Defendants filed the instant Demurrer to the Cross-Complaint on March 3, 2023. Cross-Complainant filed an opposition on March 13, 2023 and Cross-Defendants replied on March 16, 2023. The Demurrer was initially set for hearing on March 22, 2023 and continued to May 22, 2023.

Discussion

Cross-Defendants demur to each cause of action for failure to allege facts sufficient to state a cause of action and uncertainty. (Citing Code Civ. Proc., § 430.10, subds. (e), (f).) The Demurrer is accompanied by a meet and confer declaration but it does not demonstrate compliance with Code of Civil Procedure section 430.41. The declaration does not explain why the attorneys were unable to meet and confer prior to the filing of the Demurrer despite having plenty of time to do so. (Motion, Hornbuckle Decl., ¶¶2-3.)

The Cross-Complaint alleges that following the withdrawal of Cross-Complainant’s counsel in two actions in which he was the plaintiff (“the underlying actions”), Cross-Defendants were retained in January 2022 as substitute counsel. (Cross-Compl., ¶¶9-10.) To induce their hiring by Cross-Complainant, Cross-Defendant Hornbuckle represented “that he was very familiar with both types of cases, that he and his staff were going to vigorously litigate the cases and do everything that was needed to win, that he was confident that they would win both cases, and that he would rectify the problems in connection with the designation of experts.” (Id. at ¶10.) Cross-Complainant reasonably relied on these representations to hire Cross-Defendants. (Ibid.) During the litigation of the underlying actions, Cross-Defendant Hornbuckle represented to Cross-Complainant that “everything was going well in his cases, that his firm was aggressively litigating the cases and positioning them to win, and that he had nothing to worry about . . . .” (Id. at ¶11.) Again, Cross-Complainant reasonably relied on these representations. (Ibid.) Despite these representations, Cross-Defendants did very little to advance the underlying actions. (Id. at ¶12.) They did not conduct meaningful discovery or rectify the expert designation, nor provide Cross-Complainant with a detailed status of the underlying actions. (Ibid.) Instead, they withdrew as counsel with trial just weeks away, prejudicing Cross-Complainant. (Id. at ¶14.) They also failed to give Cross-Complainant the entire case file, as requested. (Id. at ¶15.)

1st Cause of Action for Fraud

The elements of fraud are (1) misrepresentation; (2) knowledge of falsity; (3) intent to defraud (induce reliance); (4) justifiable reliance; and (5) resulting damage. (Conroy v. Regents of Univ. of Cal. (2009) 45 Cal. 4th 1244, 1255.) Fraud must be alleged with specific facts that “show how, when, where, to whom, and by what means the representations were tendered.” (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469.) When fraud is alleged against a corporation, the pleading must also allege by whom the representations were made and their authority to speak for the corporation. (Ibid.)

The facts in the Cross-Complaint are not sufficient to allege fraud. The Cross-Complaint sufficiently alleges the content of the representations made by Cross-Defendant Hornbuckle. It also sufficiently alleges Cross-Defendants’ intent to induce Cross-Complainant’s reliance on the representations based on their desire to keep being paid and that Cross-Complainant did so rely on the representations. (See id. at ¶¶11, 13, 16.) However, the allegations do not include information as to how, when, where and by what means the representations were made. (See Cross-Compl., ¶¶10-11.) Nor does the Cross-Complaint allege Cross-Defendant Hornbuckle’s authority to speak on behalf of Cross-Defendant Gomez Law. The Demurrer to the first cause of action is sustained.

2nd Cause of Action for Concealment

The elements of fraudulent concealment are: “(1) concealment or suppression of a material fact; (2) by a defendant with a duty to disclose the fact to the plaintiff; (3) the defendant intended to defraud the plaintiff by intentionally concealing or suppressing the fact; (4) the plaintiff was unaware of the fact and would not have acted as he or she did if he or she had known of the concealed or suppressed fact; and (5) plaintiff sustained damage as a result of the concealment or suppression of the fact.” (Graham v. Bank of America, N.A. (2014) 226 Cal. 15 App. 4th 594, 606.) As with the active fraud cause of action, the Cross-Complaint does not allege sufficient facts to support concealment. It is alleged that Cross-Defendants concealed the fact that they did not conduct meaningful discovery or rectify the expert designation. However, when, where, and how these facts were concealed from Cross-Complainant is not detailed. Also, Cross-Complainant does not allege specifically how they acted in reliance on the missing information.

The opposition to the Demurrer argues that the second cause of action is alternatively one for constructive fraud, the elements of which are (1) fiduciary, confidential or special relationship; (2) breach (e.g., nondisclosure); (3) reliance; (4) causation; and (5) damages. (Younan v. Equifax Inc. (1980) 111 Cal. App. 3d 498, 516, 517, n. 14.) Again, more facts must be alleged regarding the manner in which the information was concealed and Cross-Complainant’s reliance. The Demurrer to the second cause of action is sustained.

3rd Cause of Action for Breach of Fiduciary Duty

The elements of this cause of action are: (1) existence of fiduciary duty; (2) breach of the duty; and (3) damage caused by the breach. (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 182.) The facts alleged regarding all the causes of action are sufficient to state that Cross-Complainants breached their fiduciary duty to Cross-Defendant. A fiduciary relationship is one in which one party 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.” (Oakland Raiders v. National Football League (2005) 131 Cal. App. 4th 621, 632.) By allegedly misrepresenting to, and concealing from Cross-Complainant, their failure to properly prosecute the underlying actions, as well as failing to provide the case files and withdrawing in close proximity to trial, Cross-Defendants allegedly breached that undertaking. (See Cross-Compl., ¶¶11-15.) It is also alleged that these breaches harmed Cross-Complainant by forcing them to “expend additional attorney’s fees to try to rectify the problems, reconstruct the file, and litigate the cases.” (Id. at ¶15.) All three elements of the cause of action are sufficiently alleged.

In demurring to the third cause of action, Cross-Defendants broadly refer to the docket in the underlying case and the continuation of those trial dates. No specific information about the trial dates and continuances are cited to show that Cross-Complainant was not harmed as alleged, or that Cross-Complainant did not incur the additional expenses as a result of the breaches. The Demurrer to the third cause of action is overruled.

4th Cause of Action for Professional Negligence

The elements of breach of professional negligence are: (1) the duty of the professional to use such skill, prudence, and diligence as other members of his profession commonly possess and exercise; (2) a breach of that duty; (3) a proximate causal connection between the negligent conduct and the resulting injury; and (4) actual loss or damage resulting from the professional’s negligence. (Osornio v. Weingarten (2004) 124 Cal. App. 4th 304, 319.) Cross-Defendants again argue that Cross-Complainant was not harmed because the trial in both underlying actions was continued. As noted above, no details regarding the proceedings in the underlying cases are mentioned to show that Cross-Complainant did not incur damages to complete the prosecution of those cases. Also, the Cross-Complaint adequately alleges that Cross-Defendants breached their professional duty of care by, among other things, failing to conduct discovery, failing to communicate with Cross-Complainant, and withdrawing close to trial. The Demurrer to the fourth cause of action is overruled.

5th Cause of Action for Unjust Enrichment

There is a split of authority in California court regarding whether unjust enrichment is a cause of action. (See Ghirardo v. Antonioli (1996) 14 Cal.4th 39, 50, 52, 53-55 [recognizing split in authority]; compare Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1370 [“ ‘[T]here is no cause of action in California for unjust enrichment’ ”] with Lyles v. Sangadeo-Patel (2014) 225 Cal.App.4th 759, 769).] This Court follows the line of cases holding that unjust enrichment is synonymous with restitution, which can be sought as a remedy for various causes of action. (See Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 231.) The Demurrer to the fifth cause of action, therefore, is also sustained.

Leave to Amend

As to the first and second causes of action, leave to amend is granted for Cross-Complainant to allege additional facts. (See Smith v. Cimmet (2011) 199 Cal.App.4th 1381, 1394; Cadle Co. II v. Harvey (2000) 83 Cal.App.4th 927, 934 [leave to amend is appropriate where there is a reasonable chance for plaintiff to cure the deficiency].)  Leave to amend is denied as to the fifth cause of action.

Conclusion

Cross-Defendants Gomez Law, APC and James Hornbuckle’s Demurrer to the Cross-Complaint is SUSTAINED WITH 20 DAYS’ LEAVE TO AMEND AS TO THE FIRST AND SECOND, SUSTAINED WITHOUT LEAVE TO AMEND AS TO THE FIFTH CAUSE OF ACTION, AND OVERRULED AS TO THE THIRD AND FOURTH CAUSES OF ACTION.

Moving party to give notice.