Judge: Stephen P. Pfahler, Case: 24STCV00299, Date: 2024-04-16 Tentative Ruling

Case Number: 24STCV00299    Hearing Date: April 16, 2024    Dept: 68

Dept. 68

Date: 4-16-24

Case: 24STCV00299

DEMURRER TO THE COMPLAINT

MOVING PARTY: Defendant, O’Neil & Matusek

RESPONDING PARTY: Plaintiff, Jerry Kohn

RELIEF REQUESTED

Demurrer to the Complaint for Declaratory Relief

SUMMARY OF ACTION

Defendant O’Neil & Matusek represented Plaintiff Jerry Kohn in Jerry Kohn v. Lou Maze, et al., 20STCV07618, until Plaintiff terminated representation on June 1, 2023. Following termination of representation, the underlying case settled. Defendant apparently submitted a lien on the underlying action, and seeks collection of certain fees and costs from the settlement. Plaintiff seeks to challenge the recovery, or at least the amount of recovery. 

On January 4, 2024, Plaintiff filed a complaint for Declaratory Relief.

RULING: Overruled.

1^st Cause of Action: Declaratory Relief

Defendant O’Neil & Matusek challenge the declaratory relief claim on grounds of insufficient facts due to the lack of allegations articulating the terms of the disputed agreement or a copy of the agreement, and (“a hidden”) misjoinder of parties based on certain language over the fee dispute potentially involving any and all attorneys for Plaintiff. Plaintiff maintains the complaint presents a proper declaratory relief claim, and denies any requirement for presentation of any terms of the retainer agreement. Plaintiff also challenges the procedural posture of the demurrer. Defendant in reply maintains its right to rely on the fee agreement before seeking quantum meruit recovery.

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., § 452.) The court “ ‘ “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law . . . .” ’ ” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525.) In applying these standards, the court liberally construes the complaint to determine whether a cause of action has been stated.  (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 733.)

“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.” (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 616; Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139 [“[U]nder our liberal pleading rules, where the complaint contains substantive factual allegations sufficiently apprising defendant of the issues it is being asked to meet, a demurrer for uncertainty should be overruled or plaintiff given leave to amend.]

Declaratory relief arises under Code of Civil Procedure section 1060:

“Any person interested under a written instrument … or under a contract, or who desires a declaration of his or her rights or duties with respect to another, or in respect to, in, over or upon property … may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action or cross-complaint in the superior court for a declaration of his or her rights and duties in the premises, including a determination of any question of construction or validity arising under the instrument or contract. He or she may ask for a declaration of rights or duties, either alone or with other relief; and the court may make a binding declaration of these rights or duties, whether or not further relief is or could be claimed at the time. The declaration may be either affirmative or negative in form and effect, and the declaration shall have the force of a final judgment. The declaration may be had before there has been any breach of the obligation in respect to which said declaration is sought.”

“[Declaratory relief] serves to set controversies at rest before they lead to repudiation of obligations, invasion of rights or commission of wrongs; in short, the remedy is to be used in the interests of preventive justice, to declare rights rather than execute them.” (Travers v. Louden (1967) 254 Cal.App.2d 926, 931.) “[U]nder California rules, an actual controversy that is currently active is required for such relief to be issued, and both standing and ripeness are appropriate criteria in that determination. (Citation.) One cannot analyze requested declaratory relief without evaluating the nature of the rights and duties that plaintiff is asserting, which must follow some recognized or cognizable legal theories, that are related to subjects and requests for relief that are properly before the court.” (Otay Land Co.v. Royal Indemn. Co. (2008) 169 Cal.App.4th 556, 563.) “‘[S]ection 1060 does not require a breach of contract in order to obtain declaratory relief, only an ‘actual controversy.’ Declaratory relief pursuant to this section has frequently been used as a means of settling controversies between parties to a contract regarding the nature of their contractual rights and obligations.’” (Osseous Technologies of America, Inc. v. DiscoveryOrtho Partners LLC (2010) 191 Cal.App.4th 357, 365.) Declaratory relief operates prospectively. (Id. at p. 366.)

“To qualify for declaratory relief under section 1060, plaintiffs were required to show their action ... presented two essential elements: ‘(1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to the rights or obligations of a party.’” (Lee v. Silveira (2016) 6 Cal.App.5th 527, 546.) The operative language in the complaint states in paragraph 14:

“Plaintiff seeks a judicial declaration and declaratory judgment (a) that none of the Defendants is or shall be entitled to any amount of money from Plaintiff, from any attorney of Plaintiff, from the Underlying Matter, or from any proceeds of the settlement of the Underlying Matter; and (b) In the alternative, to the extent it is established that any of Defendants is or shall be entitled to (a) any amount of money from Plaintiff, from any attorney of Plaintiff, from the Underlying Matter, or from any proceeds of the settlement of the Underlying Matter. In the alternative, to the extent it is established that any of Defendants is or shall be entitled to (a) any amount of money from Plaintiff, from any attorney of Plaintiff, from the Underlying Matter, or from any proceeds of the settlement of the Underlying Matter; or (b) any lien against the Plaintiff, against any attorney of the Plaintiff, against the Underlying Matter, or against any proceeds of the settlement of the Underlying Matter, then Plaintiff seeks a judicial declaration of the extent and conditions of such entitlement.”

The plain language of the operative complaint not only alleges a controversy subject to a declaratory relief claim, but said claim constitutes the proper means to resolving an attorney fee lien dispute involving former counsel. (Brown v. Superior Court (2004) 116 Cal.App.4th 320, 333.) The court therefore finds the declaratory relief claim properly alleged for purposes of the demurrer.

Defendant’s argument seeking to impose a mandatory contractual element as a necessarily pled precursor to a declaratory relief cause of action requires inference beyond the scope of the pleading. “When discharge occurs, if a lien exists, it survives, but it is for quantum meruit, the reasonable value of services rendered to the time of discharge, rather than for the full contract fee.” (Hansen v. Jacobsen (1986) 186 Cal.App.3d 350, 355–356.) Nothing in the motion or reply in any way undermines the well established quantum meruit basis of recovery for contingent fee contracts addressed in a lien by former counsel. (Huskinson & Brown v. Wolf (2004) 32 Cal.4th 453, 460-461; Fracasse v. Brent (1972) 6 Cal.3d 784, 791.)

Arguments characterizing the declaratory relief as arising in breach of contract fails to reflect the current applicable standard. (Moss v. Moss (1942) 20 Cal.2d 640, 643; City of Alturas v. Gloster (1940) 16 Cal.2d 46, 49.) The means for determining the amount of any potential recovery in no way requires a party to plead all underlying terms of the foundation agreement in order to allege the basic and minimal elements of the actual declaratory relief cause of action for purposes of surviving demurrer. (Cazares v. Saenz (1989) 208 Cal.App.3d 279, 287-289.)

On the misjoinder argument, specifically contend a potential misjoinder may exist due to the lack of current counsel as a party to the action. Defendant focuses on the section in paragraph 14, which states: “to the extent it is established that any of Defendants is or shall be entitled to (a) any amount of money from Plaintiff, from any attorney of Plaintiff, from the Underlying Matter, or from any proceeds of the settlement of the Underlying Matter.” The argument depends on a finding that current counsel seeks to somehow potential deprive Defendants of their right to adjudication the lien. (Aresh v. Marin-Morales (2023) 92 Cal.App.5th 296, 304; see Sanford v. Rasnick (2016) 246 Cal.App.4th 1121, 1131.) The court finds no support for this argument, and again declines to consider any extrinsic reference dependent conclusions.

The demurrer is overruled. Defendant to answer the complaint within 10 days of this order.

Case Management Conference set for May 14, 2024.

Defendant to provide notice.