Judge: Stephen P. Pfahler, Case: 22CHCV00244, Date: 2023-04-25 Tentative Ruling

Case Number: 22CHCV00244    Hearing Date: April 25, 2023    Dept: F49

Dept. F-49

Date: 4-25-23

Case # 22CHCV00244

Trial Date: Not Set

MOTION TO STRIKE COMPLAINT

MOVING PARTY: Defendant, Steffanie Stelnick

RESPONDING PARTY: Plaintiff, Bruce Saunders

RELIEF REQUESTED

Motion to Strike First Amended Complaint

·         Paragraphs 26 and 31: “Costs and payments made to cover the multiple years of frivolous litigation”

·         Prayer “For Disgorgement of Attorney Fees”

SUMMARY OF ACTION [Summary of Complaint]

Plaintiff Bruce Saunders alleges defendant Steffanie Stelnick provided legal representation on an action titled Saunders v. Global Aerospace Technology Corp., et al. (PC057761), without ever executing a retainer agreement or the alleged consent of Plaintiff to file the complaint in the first place. The case was dismissed following a March 21, 2019, demurrer sustained without leave to amend, which led to entry of an attorney fee judgment and lien of $54,375.

Following the dismissal, and again without the alleged permission of Plaintiff, Defendant filed a second “shareholder complaint” on June 24, 2019—Saunders v. Cormier (19CHCV00525).

All communications during the operative period of time allegedly occurred between Defendant and Plaintiff’s unnamed daughter. Plaintiff’s daughter was also allegedly employed, at least during part of the operative period, as a paralegal with Defendant until November 29, 2019. Notwithstanding the alleged employment relationship, following the filing of the second action, Defendant allegedly ceased communications with the daughter. A default was entered in favor of Plaintiff on August 1, 2019, which led to an unopposed motion to set aside the default by Cormier, et al. Defendant demanded payment from Plaintiff for services rendered and for ongoing representation.

It’s not clear whether any funds were or any agreement for representation was executed. Regardless, the daughter corresponded with opposing counsel and responded to discovery after termination of the employment with Defendant.

On May 12, 2021, Defendant allegedly demanded payment of $5,000 to continue working on the case, but then later advised to the filing of a notice of motion to be relieved as counsel. On May 26, 2021, Defendant advised the daughter that an associate of the firm would instead take over the case, but later learned the associate in fact no longer worked at the firm.

On August 12, 2021, Plaintiff retained new counsel on the action. A settlement agreement was executed on March 4, 2022. Plaintiff alleges the delays in prosecuting the action, and attorney fee judgment, reduced the potential value of the settlement.

On April 11, 2022, Plaintiff filed a complaint for Breach of Fiduciary Duty and Negligence. On October 28, 2022, the court granted Defendant’s motion to strike the complaint. Plaintiff filed a first amended complaint on November 28, 2022, for Breach of Fiduciary Duty and Negligence.

RULING: Granted.

Defendant Steffanie Stelnick moves to strike the claims for “Costs and payments made to cover the multiple years of frivolous litigation” in paragraphs 26 and 31, and the prayer “For Disgorgement of Attorney Fees.” Defendant moves to strike on grounds that disgorgement of fee claims are “typically” only permitted in conflict of interest cases, and nothing in the subject action alleges a conflict of interest. Defendant also challenges the lack of any allegations regarding the payment of any actual fees.

Plaintiff in opposition acknowledges the prior order granting the motion to strike, and contends the operative complaint now pleads a valid basis for seeking disgorgement of attorney fees on the basis of a conflict of interest. Plaintiff specifically relies on the argument that any determination of egregiousness relies on a factual determination outside the scope of consideration for a demurrer.

Defendant in reply challenges the lack of an articulated conflict of interest claim. Defendant reiterates the lack of any allegation regarding any actual payment to Defendant. The operative complaint states nothing more than a negligence cause of action.

Like the original complaint, the first amended complaint continues to lack any allegation of any actual payment of attorney fees. Plaintiff also denies the existence of any executed retainer agreement for either filed complaint, though in fact references a contingency fee agreement for at least the first of the two underlying filed actions. No basis of agreement is stated for the second filed complaint.

The first amended complaint also continues to additionally lack any allegations regarding acceptance of the proposed fee agreement prior to the substitution of new counsel on the second action. Thus, as addressed above, nothing in the complaint alleges any actual charges from Defendant or payment of attorney fees to Defendant, and instead only reiterates the damages claims allegedly caused, at least in part, by the delays in adjudication of the action. The court once again declines to consider unstated allegations.

To the extent Plaintiff refers to the attorney fee judgment and lien obtained against Plaintiff in the prior action in the opposition, it’s not clear whether Plaintiff in fact relies on this judgment as the basis of disgorgement. Regardless, the argument lacks legal and factual support, if this is the purpose of the reference.

As for the standard to claim “disgorgement” of any fees, a party may make an argument for the forfeiture of the right to collect fees upon the violation of certain rules of professional conduct. The standard requires the showing of an “egregious” violation. (Mardirossian & Associates, Inc. v. Ersoff (2007) 153 Cal.App.4th 257, 278; Cal Pak Delivery, Inc. v. United Parcel Service, Inc. (1997) 52 Cal.App.4th 1, 14.) While the court again declines to consider any extrinsic inference as to the basis of the claim, the court also again finds the operative complaint lacks any facts demonstrating a basis of support for disgorgement were NO fees were paid OR where Defendant actually never sought payment of fees. Plaintiff in opposition cites to the standard regarding the potential claim for attorney fees, but again, other than reference to the possibility, the operative complaint lacks any factual allegations seeking to prevent a claim for fees.

The motion to strike is again granted on grounds of no stated basis for the disgorgement for nonpaid/nonexistent fees.

Plaintiff is granted 20 days leave to file a new amended complaint in support of the struck disgorgement claims only. Any new or additional claims may be subject to a motion to strike. Any motion to strike on the same subject matter pled in the potential second amended complaint will constitute the third time the Court considers the subject matter. “In response to a motion to strike and before the case is at issue, a pleading shall not be amended more than three times, absent an offer to the trial court of additional facts to be pleaded that, if pleaded, would result in a reasonable possibility that the defect can be cured. ...” (Code Civ. Proc., § 435.5, subd. (e)(1).) If Plaintiff declines to file a new complaint within the time frame, Defendant is ordered to answer the complaint within 10 days of the lapsed period for amendment.

Defendant to give notice.