Judge Theresa M. Traber, Case Number: 20STCV47563, Date: 2024-02-21 Tentative Ruling

Judge: Theresa M. Traber, Case: 20STCV47563, Date: 2024-02-21 Tentative Ruling

Case Number: 20STCV47563 Hearing Date: February 21, 2024 Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE: February 21, 2024 TRIAL DATE: NOT SET

CASE: The Dominguez Firm v. Victor James Desimone, et al.

CASE NO.: 20STCV47563

(1) DEMURRER TO FIRST AMENDED COMPLAINT;

(2) DEMURRER TO FIRST AMENDED COMPLAINT

MOVING PARTY: (1) Defendant Bohm Law Group, Inc.; (2) Defendants Jose, Maria, and Aldo Villegas

RESPONDING PARTY(S): (1)(2) Plaintiff The Dominguez Firm, LLP

CASE HISTORY:

· 12/11/20: Complaint filed.

· 04/26/21: First Amended Complaint filed.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

This is a breach of contract and fraud action. In its complaint, Plaintiff alleges that the Villegas Defendants retained Plaintiff to represent them in a potential lawsuit against the County of San Bernardino and then breached their retainer agreement with Plaintiff. Plaintiff also alleges that Defendant Desimone and others defrauded Plaintiff of its referral fee agreement with the Villegas Defendants, under which the case was to be referred to the firm Layfield & Barrett and Plaintiff was to receive 33% of the gross attorney fees paid from any settlement or judgment in their case in San Bernardino County. Instead, Desimone and others ended up representing the Villegas Defendants in that case.

Defendants Bohm Law Group and Jose, Maria, and Aldo Villegas separately demur to the First Amended Complaint

TENTATIVE RULING:

Defendant Bohm Law Group’s Demurrer to the First Amended Complaint is OVERRULED in its entirety.

Defendants Jose, Maria, and Aldo Villegas’s Demurrer to the First Amended Complaint is SUSTAINED without leave to amend as to the second cause of action and otherwise OVERRULED.

Defendants are ordered to answer the First Amended Complaint within 20 days of this order.

DISCUSSION:

Demurrer to First Amended Complaint by Bohm Law Group

Defendant Bohm Law Group demurs to the fifth, sixth, seventh, eighth, and tenth causes of action asserted against it.

Legal Standard

A demurrer 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. (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal.App.4th 1216, 1228.) 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.” (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905.) “The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.” (Hahn, supra, 147 Cal.App.4th at p. 747.) The ultimate facts alleged in the complaint must be deemed true, as well as all facts that may be implied or inferred from those expressly alleged. (Marshall v. Gibson, Dunn & Crutcher (1995) 37 Cal.App.4th 1397, 1403; see also Shields v. County of San Diego (1984) 155 Cal.App.3d 103, 133 [stating, “[o]n demurrer, pleadings are read liberally and allegations contained therein are assumed to be true”].) “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.)

Meet and Confer

Before filing a demurrer, the demurring party shall meet and confer in person or by telephone with the party who has filed the pleading subject to the demurrer and file a declaration detailing their meet-and-confer efforts. (Code Civ. Proc., § 430.41(a).) However, an insufficient meet-and-confer process is not grounds to overrule or sustain a demurrer. (Code Civ. Proc., § 430.41(a)(4).)

Although the moving papers claim that the parties met and conferred with respect to the issues raised in this demurrer, the attached declaration from Defendant’s counsel makes no reference to any meet-and-confer efforts. (See Declaration of V. James DeSimone ISO Demurrer.) Defendant has not shown satisfaction of its statutory meet-and-confer obligations. Nevertheless, the Court will address the merits of the demurrer in the interest of an efficient resolution of this dispute.

Fifth Cause of Action (Intentional Interference with Contractual Relations)

Defendant demurs to the fifth cause of action for failure to allege sufficient facts.

Defendant argues that the fifth cause of action for intentional interference with contractual relations fails to state facts sufficient to constitute any cause of action against it because (1) the contract at issue is invalid and unenforceable; (2) Plaintiff’s allegations are contradicted by the fee-splitting agreement attached to the complaint; and (3) Plaintiff fails to allege facts that would establish causation.

The elements of a cause of action for interference with contractual relations are: (1) the existence of a valid contract between the plaintiff and a third party; (2) the defendant's knowledge of this contract; (3) the defendant's intentional acts designed to induce a breach or disruption of the¿contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damages. . . . Proof the interfering conduct was wrongful, independent from the interference itself, is not required to recover for interference with contractual relations.

(Sole Energy Co. v. Petrominerals Corp. (2005) 128 Cal.App.4th 212, 237-238.)

First, Defendant argues that the contract with which it allegedly interfered – the “2-200” referral fee agreement – became invalid and legally void “once Layfield began his campaign of criminal conduct, by stealing from his own clients.” (Demurrer, at p. 10:22-23.) This argument relies on extrinsic evidence that is not subject to judicial notice, as discussed in connection with Defendant’s request for judicial notice, and therefore it is without merit.

Second, Defendant argues that Plaintiff’s allegations are contradicted by the referral fee agreement attached to the complaint. Even if that were true, it would simply mean that the terms of the contract in the exhibit would control over the terms alleged in the complaint. (Kalnoki v. First American Trustee Servicing Solutions, LLC (2017) 8 Cal.App.5th 23, 38-39.) It would not render the entire cause of action invalid for failure to state facts sufficient to constitute a cause of action. This argument is also without merit because Defendant mischaracterizes Plaintiff’s allegations. Plaintiff alleges that the agreement “entitled [Plaintiff] to 33% of the gross attorneys fees paid from any settlement or judgment in the [Villegas Family’s] case against San Bernardino County.” (FAC ¶ 67.) The attached exhibit also refers to 33% of the “total fees paid.” (FAC Exh. B.) This language is not the equivalent of “33% share of any fee that Layfield earns,” as Defendant argues. (Demurrer, at p. 11:20.) Moreover, even if Defendant were correct on that point, the remainder of Defendant’s argument – that Layfield “did not earn any fees” – relies on extrinsic evidence that is not subject to judicial notice. (Ibid.)

Defendant also argues that the claim is uncertain and ambiguous because it does not allege which contractual relations were interfered with. According to Defendant, if DeSimone interfered in the contract between Plaintiff and the Villegas family, there was no duty owed by the family to pay fees to Plaintiff. (Demurrer p. 12:3-5.) However, if the interference was between Plaintiff and Layfield, then Defendant argues that the First Amended Complaint has failed to allege a causal connection. (Id. p.12:6-8.) However, Defendant’s position operates from the flawed premise that Plaintiff did not adequately allege causation.

Plaintiff alleges that Defendants’ conduct “prevented performance of the 2-200 Agreement.” (FAC ¶ 69.) Specifically, Plaintiff alleges that Defendants “failed to notify TDF of the settlement in July 2020, preventing TDF from asserting its right to payment at the time of the settlement.” (Ibid.)) Based on these and other allegations, Plaintiff alleges that “[t]his conduct was a substantial factor in, and directly caused, the harm to TDF in the form of deprivation of the $1,008,333.00 referral fee to which it is contractually entitled.” (¶ 72.)

These allegations are sufficient, if true, to show that the “economic harm [Plaintiff] suffered was proximately caused by the acts of the defendant.” (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1166 [holding that allegations that the third party’s product was superior and its bid was lower than defendant’s and that the plaintiff’s “own loss of commission . . . was directly caused by [the defendant’s] tortious acts” satisfied the proximate cause element.) Moreover, Defendant’s arguments to the contrary rely on extrinsic evidence that is not properly the subject of judicial notice. (Demurrer, at pp. 12-13.)

Defendant’s argument that this cause of action is a “disguised claim[] for breach of contract, unjust enrichment, and quantum meruit” (Demurrer, at p. 15) is also without merit. Plaintiff has sufficiently alleged the elements of a cause of action for intentional interference with contractual relations.

Accordingly, the demurrer is OVERRULED as to the fifth cause of action for intentional interference with contractual relations.

Sixth Cause of Action (Intentional Interference with Prospective Economic Advantage)

Defendant demurs to the sixth cause of action for failure to allege sufficient facts.

In addition to the arguments Defendant made in connection with the fifth cause of action, which are addressed above, Defendant argues that the sixth cause of action fails because Plaintiff has not alleged any independently wrongful or illegal act on Defendant’s part.

The elements of intentional interference with prospective economic advantage are:

(1) an economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff; (2) the defendant's knowledge of the relationship; (3) intentional acts on the part of the defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the acts of the defendant.

(Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1153.) In addition, a “plaintiff seeking to recover damages for interference with prospective economic advantage must plead and prove as part of its case-in-chief that the defendant's conduct was ‘wrongful by some legal measure other than the fact of interference itself.’” (Ibid., citation omitted, bold emphasis added.) In other words, a plaintiff must allege “intentional wrongful acts on the part of the defendant designed to disrupt the relationship.” (Id. at 1154.) “An act is not independently wrongful merely because defendant acted with an improper motive.” (Id. at 1158.) Rather, it must be “proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard.” (Id. at 1159, bold emphasis added.) In Korea Supply, the court declined to “further define what sources of law can be relied on to determine whether a defendant has engaged in an independently wrongful act, other than to say that such an act must be wrongful by some legal measure, rather than merely a product of an improper, but lawful, purpose or motive.” (Id. at 1159 n. 11.)

Although no authority directly states that a violation of the Rules of Professional Conduct is an “independently wrongful act,” courts have relied on the Rules as establishing fiduciary duties (Mirabito v. Liccardo (1992) 4 Cal.App.4th 41, 45-46), and as a measure of unlawful practices for purposes of an unfair competition claim (see Herrera v. Stender (2012) 212 Cal.App.4th 614, 632.) The Court of Appeal has also upheld claims for intentional interference with prospective economic advantage on summary judgment where the evidence showed a triable issue of fact as to whether a law firm breached fiduciary duties arising out of its obligations under the Rules of Professional Conduct. (Tri-Growth Centre City, Ltd. v. Silldorf, Burdman, Duignan & Eisenberg (1989) 216 Cal.App.3d 1139, 1145-47.)

In its opposition, Plaintiff argues that it has pled that Defendant failed to notify Plaintiff of the settlement in July of 2020, preventing it from asserting its lien rights. (FAC ¶ 85.) Plaintiff contends that this failure constituted a violation of Defendant’s obligations under Rule of Professional Conduct 1.15(d)(1). This rule provides:

(d) A lawyer shall:

(1) promptly notify a client or other person of the receipt of funds, securities, or other property in which the lawyer knows or reasonably should know the client or other person has an interest;

(Cal. R. Prof. Conduct Rule 1.15(d)(1).) As case law suggests that a violation of the Rules of Professional Conduct can constitute an independently wrongful act, the Cout finds that these allegations, which plainly contend that Defendant violated the rules, are sufficient to allege independently wrongful conduct.

Accordingly, the demurrer is OVERRULED as to the sixth cause of action.

Seventh Cause of Action (Negligent Interference with Prospective Economic Advantage)

Defendant also demurs to the seventh cause of action for failure to allege sufficient facts.

Defendant does not raise any arguments in connection with this cause of action that have not already been addressed above.

Accordingly, for the reasons discussed in connection with Defendant’s arguments as to the fifth and sixth causes of action, above, and regarding Defendant’s demurrer on the basis of uncertainty, below, the demurrer is OVERRULED as to the seventh cause of action.

Eighth Cause of Action (Fraud)

Defendant demurs to the eighth cause of action for failure to allege sufficient facts.

As relevant to this cause of action, Defendant argues that Plaintiff has not identified any misrepresentations made by it and that Plaintiff has not pled the elements of fraudulent concealment. In its, opposition, Plaintiff acknowledges that this cause of action is one for “fraudulent concealment,” not misrepresentation. (Oppo., at p. 9:13.)

The elements of fraudulent concealment are (1) concealment or suppression of a material fact; (2) by a defendant with a duty to disclose the fact to the plaintiff; (3) intent to defraud the plaintiff by intentionally concealing or suppressing the fact; (4) the plaintiff was unaware of the fact and would not have acted as he or she did if he or she had known of the concealed or suppressed fact; and (5) the plaintiff sustained damage as a result of the concealment or suppression of fact. (Hambridge v. Healthcare Partners Medical Group, Inc. (2015) 238 Cal.App.4th 124, 162.)

There are four circumstances in which nondisclosure or concealment may constitute actionable fraud: (1) when the defendant is in a fiduciary relationship with the plaintiff; (2) when the defendant had exclusive knowledge of material facts not known to the plaintiff; (3) when the defendant actively conceals a material fact from the plaintiff; or (4) when the defendant makes partial representations but also suppresses some material fact.” (LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 336.) A duty to disclose may also arise when a defendant possesses or exerts control over material facts not readily available to the plaintiff. (Jones v. ConocoPhillips Co. (2011) 198 Cal.App.4th 1198, 1199.)

“Even under the strict rules of common law pleading, one of the canons was that less particularity is required when the facts lie more in the knowledge of the opposite party.” (Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1256, 1384.)

As to fraudulent concealment, Defendant argues that the complaint “fails to allege facts to show that DeSimone . . . concealed material facts that he had a legal duty to disclose.” (Demurrer, at p. 19:14.) As noted above, however, a duty to disclose facts can arise in variety of contexts. Here, Plaintiff alleges that Defendant had a duty to disclose the settlement, arising from the Rules of Professional Conduct, and that it failed to do so. (FAC¶¶ 23-25, 31-35, 94.) These allegations are sufficient.

Defendant also argues that Plaintiff fails to allege damages arising from the alleged fraud. Plaintiff does, however, allege that Defendant’s failure to give notice of the settlement caused Plaintiff to lose its fee, as discussed above. (FAC ¶ 88(j).)

Accordingly, the demurrer is OVERRULED as to the eighth cause of action.

Tenth Cause of Action (Violation of Business & Professions Code §§ 17200, et seq.)

Defendant demurs to the tenth cause of action for failure to allege sufficient facts.

California Business & Professions Code § 17200 prohibits any “unlawful, unfair or fraudulent business act or practice.” Ultimately, “an ‘unfair’ business practice occurs when that practice ‘offends an established public policy or when the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.” (Davis v. Ford Motor Credit Co., LLC (2009) 179 Cal.App.4th 581, 585.)

In part, Plaintiff has “borrowed” the law governing its previous causes of action as the basis for this claim. (FAC ¶ 98 [alleging that Defendants engaged in fraudulent business practices because they “fraudulently concealed information”].) Where a plaintiff cannot state a claim under the “borrowed” law, it cannot state a UCL claim either. (Ingels v. Westwood One Broad. Servs., Inc. (2005) 129 Cal.App.4th 1050, 1060 [“A defendant cannot be liable under § 17200 for committing unlawful business practices without having violated another law.”].)

Here, however, Defendant’s demurrer has been overruled as to the fraudulent concealment claim that partially forms the basis for this cause of action. At a minimum, that cause of action forms a sufficient basis for a claim of fraudulent business practices.

Accordingly, the demurrer is OVERRULED as to the tenth cause of action.

Uncertainty

Defendant also demurs to each of the five causes of action discussed above as uncertain.

Demurrers¿for uncertainty are disfavored, because discovery can be used for clarification, and they apply only where defendants cannot reasonably determine what issues or claims are stated.¿(Chen v. Berenjian (2019) 33 Cal.App.5th 811, 822; Khoury v. Maly's of Cal., Inc.¿(1993) 14 Cal.App.4th 612, 616.) If the complaint is sufficiently comprehensible that Defendant can reasonably respond – as it is here – the complaint is not uncertain. (Mahan v. Charles W. Chan Ins. Agency, Inc. (2017) 14 Cal.App.5th 841, 848 n.3.)

As each claim challenged by Defendant states facts sufficient to constitute a cause of action, Defendant’s demurrer to the First Amended Complaint for uncertainty is likewise OVERRULED.

Conclusion

Accordingly, Defendant Bohm Law Group’s Demurrer to the First Amended Complaint is OVERRULED in its entirety.

Demurrer to Complaint

Defendants Jose, Maria, and Aldo Villegas separately demur to the first two causes of action in the First Amended Complaint.

Legal Standard

Meet and Confer

The Declaration of Attorney V. James DeSimone states that the parties met and conferred via email and telephone between May 24, 2021 and May 27, 2021. (Declaration of V. James DeSimone ISO Demurrer ¶ 2.) Defendants have therefore satisfied their statutory meet and confer obligations.

Request for Judicial Notice

Defendants’ purported request for judicial notice is DENIED. To give proper notice to the parties and the Court of a request for judicial notice, “[a]ny request for judicial notice must be made in a separate document.” (CRC 3.1113(l).) By burying this request for judicial notice in the middle of the sole filed document, Defendants did not comply with this requirement.

In addition, even if the Court overlooked this procedural deficiency, as it did in connection with Defendants’ demurrer to the initial complaint, these requests would be denied as irrelevant, as they were then. The Court may only take notice of the existence of these documents, not the truth of the facts asserted therein, and therefore these documents would not establish the facts necessary to support Defendant’s arguments. Therefore, it is unnecessary to take judicial notice of these documents. (Gbur v. Cohen (1979) 93 Cal.App.3d 296, 301 (“[J]udicial notice . . . is always confined to those matters which are relevant to the issue at hand.”].)

First Cause of Action: Breach of Contract

Defendants argue that Plaintiff’s first cause of action for breach of contract fails to state facts sufficient to constitute a cause of action.

A cause of action for breach of contract has the following elements: “(1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to plaintiff.” (Agam v. Gavra (2015) 236 Cal.App.4th 91, 104.)

Plaintiff alleges that (1) it entered into a retainer agreement with Defendant that granted Plaintiff a “first lien for their fees . . . on any settlement or judgment obtained by client,” (2) Plaintiff performed its obligations under the agreement, (3) Defendant breached the agreement by failing to take steps to ensure payment of Plaintiff’s referral fees, and (4) Plaintiff was damaged as a result. (FAC¶¶ 41, 43, 45-47.) Plaintiff also alleges that (1) Defendant signed a contract memorializing the referral of the case to Layfield and its 33% referral fee, (2) Plaintiff performed its obligations under that agreement, (3) Defendant breached the agreement by failing to take steps to ensure payment of Plaintiff’s referral fees, and (4) Plaintiff was damaged as a result. (¶¶ 43-46.)

These allegations are sufficient. To the extent that Defendants challenge these allegations, they rely on extrinsic evidence that is not properly the subject of judicial notice. As to the claim that Plaintiff did not allege that it submitted the dispute to the Los Angeles County Bar Dispute Resolution Service, Defendants cite no authority requiring the Plaintiff to plead with such specificity on this claim. Plaintiff has alleged that it performed its obligations under the contract. Defendants’ arguments that Plaintiff did not do so are, as with the remainder of their arguments, based on extrinsic evidence that is not properly the subject of judicial notice.

Accordingly, the demurrer to the first cause of action is OVERRULED.

Second Cause of Action: Breach of the Implied Covenant of Good Faith and Fair Dealing

Defendants also demur to the second cause of action for breach of implied covenant of good faith and fair dealing for failure to state sufficient facts.

Defendants raise only two additional arguments as to this cause of action that were not rejected in connection with the first cause of action: that this cause of action fails because (1) it “does not allege what contractual terms were breached and what implied covenants were breached,” and (2) this cause of action is only available between insurers and their insureds.

As to the latter argument, the implied covenant of good faith and fair dealing is “implied by law in every contract,” not just insurance contracts. (Thrifty Payless, Inc. v. The Americana at Brand, LLC (2013) 218 Cal.App.4th 1230, 1244.) To state a cause of action for breach of the implied covenant of good faith and fair dealing, a plaintiff must allege that the “conduct of the defendant, whether or not it also constitutes a breach of a consensual contract term, demonstrates a failure or refusal to discharge contractual responsibilities, prompted not by an honest mistake, bad¿judgment or negligence but rather by a conscious and deliberate act, which unfairly frustrates the agreed common purposes and disappoints the reasonable expectations of the other party thereby depriving that party of the benefits of the agreement.” (Careau & Co. v. Security Pacific Business Credit, Inc.¿(1990) 222 Cal.App.3d 1371, 1395, bold emphasis added.) “If the allegations do not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek the same damages or other relief already claimed in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is actually stated.” (Ibid.) “Thus, absent those limited cases where a breach of a consensual contract term is not claimed or alleged, the only justification for asserting a separate cause of action for breach of the implied covenant is to obtain a tort recovery.” (Ibid.)

Here, Plaintiffs have engaged in the “disfavored” practice of incorporating by reference all facts that formed the basis for their breach of contract cause of action into this cause of action via Paragraph 47. (See Uhrich v. State Farm Fire & Cas. Co. (2003) 109 Cal. App. 4th 598, 605 [referring to the practice of “incorporating all or most prior paragraphs within each purported cause of action” as “disfavored,” and noting that “[t]his type of pleading should be avoided as it tends to cause ambiguity and creates redundancy”].) Plaintiff’s allegations in this cause of action are also identical to the allegations in its breach of contract cause of action, even leaving aside the incorporation by reference. (Compare ¶¶ 41-46 with ¶¶ 48-53.) As a result, this cause of action is superfluous and does not state a claim. (Bionghi v. Metro. Water Dist. (1999) 70 Cal.App.4th 1358, 1370.)

Accordingly, the demurrer to the second cause of action is SUSTAINED without leave to amend.

Conclusion

Accordingly, Defendants Jose, Maria, and Aldo Villegas’s Demurrer to the First Amended Complaint is SUSTAINED without leave to amend as to the second cause of action and otherwise OVERRULED.

CONCLUSION:

Accordingly, Defendant Bohm Law Group’s Demurrer to the First Amended Complaint is OVERRULED in its entirety.

Defendants Jose, Maria, and Aldo Villegas’s Demurrer to the First Amended Complaint is SUSTAINED without leave to amend as to the second cause of action and otherwise OVERRULED.

Defendants are ordered to answer the First Amended Complaint within 20 days of this order.

Moving Parties to give notice.

IT IS SO ORDERED.

Dated: February 21, 2024 ___________________________________

Theresa M. Traber

Judge of the Superior Court

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.