Shahnaz Mokhtari v. Shahin Motallebi

DEMURRER TO COMPLAINT

 

MOVING PARTY: Defendant Shahin Motallebi

RESPONDING PARTY(S): None

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

Plaintiff Shahnaz Mokhtari brings this action against her former attorney, Defendant Shahin Motallebi, for legal malpractice and related causes of action.  Plaintiff alleges she retained Defendant to defend her in the real property dispute entitled Yazdanpanah v. Mokhtari, Los Angeles Superior Court Case No. EC066532. Following a court-approved sale of the property, the proceeds were placed in Defendant’s Client/Attorney Trust account.  Plaintiff alleges that Defendant exhausted the money in the Trust account to satisfy his own personal debts and concealed this information from Plaintiff.  Plaintiff now brings this action for (1) breach of fiduciary duty, (2) conversion, (3) legal malpractice, (4) false promises, intentional misrepresentation of important facts, and/or concealment, (5) breach of written contract, and (6) constructive trust.

On March 23, 2023, the court granted Defendant’s motion to compel arbitration and stayed the case. The parties did not arbitrate the matter, and at the July 18, 2024 OSC, the parties agreed to forego arbitration and the stay was lifted.

Defendant now demurrers to the Complaint. No opposition was filed. 

TENTATIVE RULING:

Defendant’s Demurrer to the Complaint is OVERRULED in its entirety.

Defendant is ordered to file an Answer to the Complaint within 21 days of this Ruling.

Plaintiff is ordered to give notice, unless waived.  

DISCUSSION:

Demurrer

I. Meet and Confer

The Declaration of Defendant Shahin Motallebi reflects that Defendant emailed a meet and confer letter to Plaintiff’s counsel, but that Plaintiff’s counsel did not respond. While this demonstrates the absence of any substantive meet and confer, in the interests of judicial economy, the court will proceed to address the demurrer on the merits. The parties are admonished to comply with all meet and confer obligations going forward. (CCP § 430.41.)

II. Legal Standard

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. (Code Civ. Proc., §§ 430.30, 430.70.) At the pleading stage, a plaintiff need only allege ultimate facts sufficient to apprise the defendant of the factual basis for the claim against him. (Semole v. Sansoucie (1972) 28 Cal. App. 3d 714, 721.) A “demurrer does not, however, admit contentions, deductions or conclusions of fact or law alleged in the pleading, or the construction of instruments pleaded, or facts impossible in law.” (S. Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732 (internal citations omitted).)

III. Analysis

Defendant demurrers to each cause of action in the Complaint. Each is addressed in turn.

A. First Cause of Action for Breach of Fiduciary Duty; Third Cause of Action for Negligence

First, Defendant argues the first cause of action for breach of fiduciary duty and third cause of action for negligence fail because the underlying case in which he represented the Plaintiff was resolved in Plaintiff’s favor. “The elements of a cause of action for breach of fiduciary duty are: (1) existence of a fiduciary duty; (2) breach of the fiduciary duty; and (3) damage proximately caused by the breach.” (Gutierrez v. Girardi (2011) 194 Cal.App.4th 925, 932.) “The elements of a cause of action for negligence are: duty; breach of duty; legal cause; and damages.” (Friedman v. Merck & Co. (2003) 107 Cal. App. 4th 454, 463.)

Here, the entire action is based on the allegation that Defendant Motallebi represented Plaintiff Shahnaz Mokhtari in the underlying case. (Compl. ¶¶ 7-16.) Plaintiff alleges that Defendant received proceeds from the sale of Plaintiff’s real property to be held in his client trust account. (Id. ¶ 12.) Plaintiff alleges, however, that Defendant drained the client trust account, including the money owed to Plaintiff, to pay off Defendant’s “personal debts.” (Id. ¶ 13.) 

In other words, the alleged breach of fiduciary duty has nothing to do with the merits of the underlying case. Rather, it is based on Defendant allegedly misappropriating money owed to the Plaintiff. 

Accordingly, Defendant’s Demurrer to the First Cause of Action and Third Cause of Action is OVERRULED.

B. Second Cause of Action for Conversion

Next, Defendant argues the second cause of action for conversion fails because Plaintiff has not alleged that Defendant “intentionally” converted Plaintiff’s property. 

However, Plaintiff has alleged that Defendant used the money in the trust account to pay off “personal debts.” (Compl. ¶ 13.) This demonstrates the requisite wrongful intent to convert the property.

Defendant also argues in the memorandum (but not his declaration) that the money was drained from the trust account “due to a check scam.” Even so, a demurrer tests the pleadings alone and not the evidence or other extrinsic matters. The court must “accept[] as true all well pleaded facts” in the Complaint. (See Fox v. JAMDAT Mobile, Inc., 185 Cal. App. 4th 1068, 1078.) Therefore, Plaintiff has stated a cause of action for conversion.

Accordingly, Defendant’s Demurrer to the Second Cause of Action is OVERRULED. 

C. Fourth Cause of Action for Fraud

Next, Defendant argues the Fourth Cause of Action for fraud fails because Plaintiff has not pled the alleged facts with particularity. Defendant also again insists that the trust account was depleted due to a check scam. 

The essential elements of a count for intentional misrepresentation are (1) a misrepresentation, (2) knowledge of falsity, (3) intent to induce reliance, (4) actual and justifiable reliance, and (5) resulting damage. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638. Generally, “[i]n California, fraud must be pled specifically; general and conclusory allegations do not suffice.” (Alfaro v. Community Housing Improvement System & Planning Assn., Inc.¿(2009) 171 Cal.App.4th 1356, 1384, internal quotations omitted.) “The normal policy of liberally construing pleadings against a demurrer will not be invoked to sustain a fraud cause of action that fails to set forth such specific allegations. (Id.)” The heightened pleading standard for fraud requires “pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Id.) 

Here, the allegations underlying the fraud are straightforward. Plaintiff alleges that Defendant represented that he “would hold in trust the proceeds from the sale of the REAL PROPERTY, and that said proceeds would remain in Defendant SHAHIN MOTALLEBI's Client/Attorney Trust account pending the outcome of the matter.” (Compl. ¶ 44.) When Defendant made these representations, he “used or intended to use” the money in the trust account “as security or collateral for other business transactions.” (Id. ¶ 45.) Defendant allegedly intended for Plaintiff “to rely on the false promises so Defendants could retain possession, control and use of the proceeds from the sale of the REAL PROPERTY, and to prevent [Plaintiff] from seeking an order from the Court to have said proceeds interplead with the Court or placed in a trust account created exclusively for said proceeds.” (Id. ¶ 46.) Plaintiff alleges she “reasonably relied on” Defendant’s promises “and did not seek an order from the Court to have the proceeds from the sale of the REAL PROPERTY interplead with the Court or placed in a trust account created exclusively for said proceeds.” (Id. ¶ 47.) 

Considering these allegations, and accepting them as true, Plaintiff has stated a claim for fraud. 

Accordingly, Defendant’s Demurrer to the Fourth Cause of Action is OVERRULED.

D. Fifth Cause of Action for Breach of Contract

Next, Defendant argues the fifth cause of action fails because “the underlying case was resolved with a judgment for Mokhtari, and the legal contract between Mokhtari and Motallebi was satisfactorily completed after the resolution of the case.” (Dem. 7: 22-24.) It was only “due to [a] check scam” that “Motallebi’s IOLTA account was depleted.” (Id.) 

A cause of action for damages for breach of contract is comprised of the following elements: (1) the contract, (2) plaintiffs performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to plaintiff. (Careau & Co. v. Security Pacific Business (1990) 222 Cal.App.3d 1371, 1388).  

As already discussed, this action is based on Defendant’s alleged misappropriation of the funds belonging to Plaintiff. It is irrelevant that the underlying case was resolved in Plaintiff’s favor. 

Accordingly, Defendant’s Demurrer to the Fifth Cause of Action is OVERRULED.

E. Sixth Cause of Action for Constructive Trust

Next, Defendant argues the sixth cause of action fails because Plaintiff did not “state specific and sufficient facts to necessitate creation of a ‘constructive trust’” and because “[t]here is no evidence that Motallebi ever committed any wrongful acts or is holding on to Mokhtari’s funds.” (Dem. 8: 14-17.) 

A “constructive trust is an equitable remedy that compels a wrongdoer—one who has property or proceeds to which he is not justly entitled—to transfer same to its rightful owner.” (Shoker v. Superior Ct. of Alameda Cnty. (2022) 81 Cal. App. 5th 271, 278.) “[A] constructive trust may be an appropriate remedy in a wide variety of circumstances.” (Id., emphasis added.)

Here, Plaintiff has alleged that Defendant possessed and misappropriated funds belonging to Plaintiff. For pleading purposes, this is sufficient to state a claim for constructive trust. Additionally, whether there is evidence that Defendant did, in fact, commit the wrongdoings alleged is not the proper subject of the demurrer. (See Fox, supra, 185 Cal. App. 4th at 1078 [a demurrer “accepts as true all well pleaded facts” in the Complaint].) 

Accordingly, Defendant’s Demurrer to the Sixth Cause of Action is OVERRULED.

F. Mootness

Finally, Defendant argues the Complaint should be dismissed as moot because Plaintiff has been (or will be) made whole.  Defendant attempts to introduce extrinsic evidence that he has entered into a payment plan with Plaintiff and the California Bar. Relatedly, Defendant contends that allowing this action to proceed would result in a double recovery for Plaintiff.

Again, a demurrer tests the pleadings alone—which must be accepted as true—and not the evidence or other extrinsic matters. (See Fox, supra, 185 Cal. App. 4th at 1078.) Whether the action is moot presents a question of fact that cannot be resolved by a demurrer. Accordingly, the demurrer based on mootness fails.

Defendant’s Demurrer to the Complaint is OVERRULED in its entirety.

Defendant is ordered to file an Answer to the Complaint within 21 Days of this Ruling.

Plaintiff is ordered to give notice, unless waived.  

IT IS SO ORDERED.

Dated:   November 5, 2024 ___________________________________