Judge: Maurice A. Leiter, Case: BC618179, Date: 2022-10-21 Tentative Ruling

Case Number: BC618179    Hearing Date: October 21, 2022    Dept: 54

Hearing Date: October 21, 2022

Department 54, Judge Maurice A. Leiter

Demurrer to Second Amended Complaint

Moving Party: Defendants Richard Shinee and Green & Shinee

Responding Party: Plaintiff Armando Macias

T/R:     DEFENDANTS’ DEMURRER IS SUSTAINED WITH LEAVE TO AMEND.

PLAINTIFF TO FILE AND SERVE A THIRD AMENDED COMPLAINT WITHIN 30 DAYS OF NOTICE OF RULING. DEFENDANTS TO FILE AND SERVE A RESPONSE WITHIN 30 DAYS THEREAFTER.

            DEFENDANTS TO NOTICE.

If the parties wish to submit on the tentative, please email the courtroom at¿SMCdept54@lacourt.org¿with notice to opposing counsel (or self-represented party) before 8:00 am on the day of the hearing.

The Court considers the moving papers, opposition, and reply.         

BACKGROUND

            On April 8, 2022, Plaintiff sued Defendants alleging causes of action for legal malpractice and breach of fiduciary duty. Plaintiff alleges Defendants committed malpractice in connection with Plaintiff’s contested right to sit on the Sheriff’s union board.

In 2013, Plaintiff was reelected to the board of directors of the Los Angeles Sherriff’s union (ALADS). The same year, the board elected Plaintiff President of the union. In 2014, the board voted to remove Plaintiff from the board because he had violated the “75% rule.” This rule provides that “to run for a seat on ALADS’ board of directors, deputies must be a unit representative and attend at least 75% of unit representative meetings for two years preceding their candidacy pursuant to ALADS’ bylaws.” (SAC ¶ 9.) Plaintiff also was removed as the union President because only board members may hold executive office. Plaintiff alleges that this rule had been never applied to sitting directors running for re-election. Plaintiff then challenged his removal.

REQUEST FOR JUDICIAL NOTICE

            Defendants’ request for judicial notice is GRANTED.

ANALYSIS

A demurrer to a complaint may be taken to the whole complaint or to any of the causes of action in it.  (CCP § 430.50(a).)  A demurrer challenges only the legal sufficiency of the complaint, not the truth of its factual allegations or the plaintiff's ability to prove those allegations.  (Picton v. Anderson Union High Sch. Dist. (1996) 50 Cal. App. 4th 726, 732.)  The court must treat as true the complaint's material factual allegations, but not contentions, deductions or conclusions of fact or law.  (Id. at 732-33.)  The complaint is to be construed liberally to determine whether a cause of action has been stated.  (Id. at 733.)

A. Legal Malpractice

To state a legal malpractice cause of action the plaintiff must plead: (1) the duty of the attorney to use such skill, prudence and diligence as members of his or her profession commonly possess and exercise; (2) a breach of that duty; (3) proximate causal connection between the breach and the resulting injury; and (4) actual loss or damage resulting from the attorney’s negligence. (Jocer Enterprises, Inc. v. Price (2010) 183 Cal.App.4th 559, 572.)  

            Plaintiff alleges “when Macias’ eligibility to serve on ALADS’ board was brought to the board’s attention in or about March of 2014, Shinee was ALADS’ general counsel and, at the same time, Shinee was also Macias’ attorney although on a matter unrelated to Macias’ eligibility to serve on ALADS’ board.” (SAC ¶ 67.) Plaintiff alleges “Shinee was ALADS’ general counsel for many years and during those years, whenever the issue of a sitting director’s eligibility to run for reelection based on the director’s failure to satisfy the 75% rule, Shinee had uniformly advised the board that the directors were eligible because the 75% rule did not apply to sitting directors running for reelection.” (SAC ¶ 69.)

When Plaintiff’s eligibility was questioned, Defendants advised the board that they had a conflict of interest and hired independent counsel to opine on the issue. (SAC ¶ 70.) Defendants hired Brent Gidden, who advised that Plaintiff was not eligible to sit on the board.

Plaintiff alleges Defendants committed malpractice when they “failed to inform Macias that Shinee could provide his opinion on the 75% rule if Macias waived Shinee’s conflict of interest…” and when they refused “to protect Macias’ interests and inform the board as he always had in the past, that the 75% rule did not apply to sitting directors running for reelection fell below the standard of care and loyalty required of Shinee to Macias.” Additionally, Plaintiff claims that Gidden was not truly independent, and Defendants should have advised Plaintiff to seek his own independent counsel.

Moving Defendants argue this cause of action is barred by the immunity provided in 29 U.S.C. § 185(b). This section provides in relevant part, “[a]ny money judgment against a labor organization in a district court of the United States shall be enforceable only against the organization as an entity and against its assets, and shall not be enforceable against any individual member or his assets.” (Id.) Both federal and California state courts have found that legal counsel functioning as union agents in the collective bargaining process are immune from individual liability for malpractice under 29 U.S.C. § 185(b). (See Aragon v. Pappy, Kaplon, Vogel & Phillips (1989) 214 Cal.App.3d 451, 458-463; Peterson v. Kennedy, 771 F.2d 1244 (9th Cir. 1985).) Courts have applied this immunity in situations where counsel represents a union member in a grievance procedure and the union member sues for professional negligence. (Id.)

Defendants assert that they were acting as agents of the union in the collective bargaining process and are therefore immune from suit for malpractice. In opposition, Plaintiff argues that immunity does not apply because Plaintiff is not suing for services rendered during the collective bargaining process and because Defendants still owed Plaintiff ethical duties.

The relevant cases do not explicitly define what actions are a part of the “collective bargaining process.” As noted, courts have applied immunity in situations where counsel represents a union member in a grievance procedure and the union member sues for professional negligence. (Aragon, supra; Peterson supra.) The Ninth Circuit in Peterson identified examples of actions “wholly unrelated to the collective bargaining process e.g., drafting a will, handling a divorce or litigating a personal injury suit.” (Peterson, supra 771 F.2d at 1259.) Here, Defendants represented Plaintiff in a union-related matter and hired counsel to advise on an issue of union governance. These actions are fundamentally union matters and are part of the collective bargaining process. (See Ellis v. Bhd. of Railway, Airline & Steamship Clerks, Freight Handlers, Express & Station Employees (1984) 466 U.S. 435, 448.) Defendants are immune.

Defendants’ demurrer to the cause of action for legal malpractice is SUSTAINED.

B. Breach of Fiduciary Duty

The elements for a breach of fiduciary duty cause of action are “the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach.” (Thomson v. Canyon (2011) 198 Cal.App.4th 594, 604.)  

Defendants assert that Plaintiff’s breach of fiduciary duty claim fails because Defendants did not owe Plaintiff a fiduciary duty. Defendants contend they did not represent Plaintiff individually; they represented the union itself. An attorney for an organization does not owe individual members a fiduciary duty. Plaintiff does not allege that he personally hired and paid Defendants to represent him in the grievance procedure.

The courts in both Peterson and Aragon found that when counsel represents a union member in a grievance procedure counsel actually is representing the union, and there is no attorney-client relationship between the individual member and counsel. (See Peterson, supra 771 F.2d at 1258, [“We do not believe that an attorney who is handling a labor grievance on behalf of a union as part of the collective bargaining process has entered into an ‘attorney-client’ relationship in the ordinary sense with the particular union member who is asserting the underlying grievance.”]) Plaintiff has failed to allege a fiduciary duty.

Defendants’ demurrer to the cause of action for breach of fiduciary is SUSTAINED.