Judge: Michael E. Whitaker, Case: 23SMCV00668, Date: 2023-10-03 Tentative Ruling

Case Number: 23SMCV00668    Hearing Date: October 3, 2023    Dept: 207

TENTATIVE RULING

BACKGROUND

This case arises from a dispute over the allocation of attorneys’ fees between two law firms that worked on a personal injury lawsuit.  On February 14, 2023, Plaintiffs and Cross-Defendants The Lawman Group, APC and Shahin Gozarkhah (“Cross-Defendants”) filed suit against Defendants and Cross-Complainants California Lawyers Group, Inc. and Mitra Chegini (“Cross-Complainants”) for breach of contract, common counts, compensation for legal services, and declaratory relief, alleging Cross-Defendants did most of the work on the client’s case, yet Cross-Complainants, who took over legal representation at the end of the case, refuse to pay Cross-Defendants’ appropriate share of the attorneys’ fees.

Cross-Complainants brought a cross-complaint for intentional interference with economic advantage and unfair business practices, alleging that Cross-Defendants “attempted to complete filings and update information online” on behalf of Cross-Complainants, refused to provide authorization for Cross-Complainants to endorse and deposit the settlement check, threatened litigation and demanded money, asserted a lien, and filed the instant litigation.  (Cross-complaint ¶¶ 18, 24.)

Cross-Defendants demur to both causes of action in the cross-complaint, on the basis that each fails to state a cause of action pursuant to Code of Civil Procedure, section 430.10, subdivision (e).  Cross-Complainants have opposed the demurrer.  No reply was filed.

ANALYSIS

1.      STATEMENT OF DEMURRERS

Cross-Complainants contend that Cross-Defendants’ Demurrers are deficient because there is no statement of demurrers which cites to the applicable statute allowing for a demurrer.  (Opp. at p. 3.)

California Rules of Court, rule 3.1320(a) requires, “Each ground of demurrer must be in a separate paragraph and must state whether it applies to the entire complaint, cross-complaint, or answer, or to be specified causes of action or defenses.”

On August 3, Cross-Defendants originally filed a combined Notice of Demurrer and Demurrer, attached to the memorandum of points and authorities.  The top of the page noticed the hearing for September 13.  The following language appeared at the bottom of the page:

DEMURRER TO THE FIRST CAUSE OF ACTION

1. The FIRST cause of action for “Intentional Interference With Economic Advantage” fails to state facts sufficient to constitute a cause of action as against Cross-Defendants.  Code of Civil Procedure § 430.10(e).

DEMURRER TO THE SECOND CAUSE OF ACTION

2. The SECOND cause of action for “Unfair Business Practices Pursuant to Section 17200 of California Business and Professions Code” fails to state facts sufficient to constitute a cause of action as against Cross-Defendants.  Code of Civil Procedure § 430.10(e).

This language satisfies the requirements of Rule 3.1320(a).

On August 8, Cross-Defendants filed a Revised Notice of Demurrer, rescheduling the date of the hearing to October 3.  That Revised notice states:

This NOTICE supersedes and replaces the previous notice for this hearing that was originally scheduled for 9/13/23, but whose original date has now been vacated at the request of Cross-Defendants due to the Notice of Unavailability of Counsel filed by MITRA CHEGINI on behalf of Cross-Complainants on July 25, 2023.

Although it may be slightly confusing, because of the fact that the prior notice and statement of demurrers were combined on the same page, the Court interprets this statement as replacing the prior Notice of hearing only, represented by the top portion of the prior filing.  Cross-Defendants were changing the hearing date, not the grounds for the demurrers.  As such, there was no need to re-assert the statement of demurrers already asserted.

Therefore, the Court finds that the statement of demurrers, which appeared on the same page as the original notice, satisfies the procedural requirements.

2.      DEMURRERS

“It is black letter law that a demurrer tests the legal sufficiency of the allegations in a complaint.”  (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.)  In ruling on a demurrer, the court must “liberally construe[]” the allegations of the complaint.  (Code Civ. Proc., § 452.)  “This rule of liberal construction means that the reviewing court draws inferences favorable to the plaintiff, not the defendant.”  (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1238.) 

A.    FIRST CAUSE OF ACTION – INTENTIONAL INTERFERENCE WITH ECONOMIC ADVANTAGE

The elements of a cause of action for intentional interference with prospective economic advantage are: (1) the existence between plaintiff and a third party of an economic relationship with the probability of future economic benefit to the plaintiff; (2) defendant’s knowledge of the relationship; (3) intentionally wrongful acts designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm proximately caused by the defendant’s action.  (Roy Allan Slurry Seal, Inc. v. American Asphalt South, Inc. (2017) 2 Cal.5th 505, 512.)

With respect to the first element, Cross-complainants have alleged that the client, Alireza Daneshi (“Daneshi”) was dissatisfied with Cross-defendants’ legal services, and retained Cross-complainants to take over the case.  (Cross-complaint ¶ 9.)  With respect to the second element, Cross-complainants have alleged that Cross-defendants knew about the new representation, because Cross-defendants received a notice of substitution of attorney and responded by asserting a lien for their own legal fees.  (Ibid.) 

As for the third element, the wrongful acts Cross-complainants allege Cross-defendants committed are (1) attempting to access Cross-complainants’ business account, complete filings, and update information through the Secretary of State’s website; (2) failing to authorize Cross-complainants to endorse and deposit the $240,000 settlement check until Cross-complainants agreed to pay Cross-defendants $81,000 in fees; (3) sending letters to Cross-complainants threatening litigation and demanding money; (4) asserting a lien for $81,000; and (5) filing the instant lawsuit.  (See Cross-complaint ¶¶ 16-19.) 

With respect to the fourth element, Cross-complainants allege:  “Cross-Complainants further allege, Cross-Defendants engaged in such intentional acts which acts were and are designed to disrupt Cross-Complainants' relationship with their clients by engaging Cross-Complainants in the task of defending and prosecuting Cross-Defendants' frivolous and vindictive claim, which efforts have and will continue to diminish and disrupt Cross-Complainants' ability to provide legal services to their clients in an affective and timely manner.” 

As for the fifth element, Cross-complainants allege Cross-Complainants allege “as a direct and proximate result of Cross-Defendants' intentional interference with Cross-Complainants' business relationship with it clients, Cross-Complainants have incurred compensatory damages in sum according to proof at trial.” 

B.     SECOND CAUSE OF ACTION – UNFAIR BUSINESS PRACTICES

To bring a claim for unlawful business practices, a plaintiff must show either an unlawful, unfair, or fraudulent business act or practice.  (Adhav v. Midway Rent A Car, Inc. (2019) 37 Cal.App.5th 954, 970.)  “[A]n ‘unfair’ business practice occurs when it offends an established public policy or when the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.”  (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 184.)  “Prevailing plaintiffs are generally limited to injunctive relief and restitution” and “may not receive damages […] or attorney fees.”  (Id. at p. 179.)

Here, Cross-complaints allege in pertinent part:

·         Cross-Complainants allege that on or about December 28, 2022, GREG BYBERG, counsel for Cross-Defendants, attempted to complete filings and update information online for CLG. The web user access was denied. Information of companies registered with California Secretary of State, for limited purposes, is public record. However, requesting access to complete filings and update private information of a company is not accessible to the public. [Exhibit "A" attached hereto is the true and correct copy of GREG BYBERG's unsuccessful attempt to gain access to CLG's private records with California Secretary of State]. [Exhibit "B" attached hereto is a true and correct copy of denial of requesting access].

·         Cross-Complainants allege that Cross-Defendants, jointly and severally, engaged in the following wrongful business practices in violation of Section 17200 of the California Business and Profession Code: A) Not providing authorization to endorse and deposit the original settlement draft of $240,000.00 and therefore creating extensive delay for Cross-Complainant to receive its undisputed amount of attorney fee earned; B) Not providing authorization to endorse and deposit the original settlement draft of $240,000.00, A plan to directly and intentionally interfere with Cross-Complainants legal obligation to pay DANESHI'S portion and medical providers portion in a timely manner with no delay; C) Sending letters to Cross-Complainant threatening litigation and demanding unwarranted amount of money; D) By asserting an unjustifiable and baseless amount of $ 81,000.00, once again preventing Cross-Complainant fi.om receiving their earned attorney fees; E) Bringing the instant action against Cross-Complainants when the issue of the division of attorney fee could have been very easily and without consuming the Court's time be referred to fee dispute arbitration; F) Requesting access to CLG's private corporate documents to complete filings/update information causing Cross-Complainant to spend less time working on the clients' matters and instead spending additional time in taking preventive measurements to assure all future requests by Cross-Defendants and/or their attorney of record be denied.

·         Cross-Complainants allege that the above business practices were, and are, intentional, unfair, and unlawful business practices. Nevertheless Cross-Defendants performed the intentional acts as stated in paragraphs 23 and 24 of this Cross-Complaint with the sole intention to wrongfully and unlawfully undermine Cross-Complainants’ law practice and business.

·         Cross-Complainants allege that as a direct and proximate result of the above described unfair, intentional and unlawful business practices committed directly either by Cross-Defendants themselves or through their counsel of record, GREG BYBERG, Cross-Complainants have incurred compensatory damages in a sum according to proof at the time of trial, and are entitled to Section 17203 of California Business and Profession code to have any person who engages, has engaged or proposes to engage in unfair competition to be enjoined in any Court of competent jurisdiction. Cross-Complainants hereby request that this Court make such orders or judgments, as may be necessary to prevent the use or employment of Cross-Defendants of such tactics and mechanisms that would unreasonably, unlawfully and unfairly interfere with Cross-Complainants' law business and practice.

(Cross-complaint ¶¶ 23-26.) 

            The Court finds that Cross-complainants have sufficiently pled the ultimate facts necessary to state causes of action for intentional interference with economic advantage and unfair business practices as noted above.  Ultimate facts are those “constituting the cause of action” or those upon which liability depends, e.g., duty of care, breach of the duty and causation (damages).  (See Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550.) [1] “To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff's proof need not be alleged.” (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872 [at pleading stage, plaintiff need not specify which of the defendant’s employees committed negligent acts or omissions].)

            The Court notes that Cross-Defendants’ arguments are related to the inclusion or omission of details which amount to evidentiary facts.  Yet unearthing evidentiary facts supporting a cause of action is the function of the discovery process.  (See, e.g., Chen v. Berenjian (2019) 33 Cal.App.5th 811, 822 [“A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures”]; Hernandez v. Superior Court (2003) 112 Cal.App.4th 285, 301 [“The purpose of pretrial discovery is to obtain all of the facts relative to a claim or defense”] .)

            Therefore, for pleading purposes, the Court finds Cross-Complainants’ allegations are sufficient and consequently, the Court overrules Cross-defendants’ demurrer to the first and second causes of action.

CONCLUSION AND ORDER

Therefore, the Court overrules Cross-Defendants’ demurrer to the first and second causes of action.  Further, the Court orders Cross-Defendants to an answer to the Cross-complaint on or before October 17, 2023. 

Cross-Defendants shall provide notice of the Court’s rulings and file a proof of service of such.

DATED:  October 3, 2023                                                      ___________________________

                                                                                          Michael E. Whitaker