Case Number: BC657976 Hearing Date: March 23, 2018 Dept: 32

Jenny Hsu,

Plaintiff,

v.

Giovanni Orantes, et al.,

Defendants.

Case No.: BC657976 [related to BC668841]

Hearing Date: March 23, 2018

[TENTATIVE] order RE:

(1) Demurrer to plaintiffs’ first amended complaint [bc657976]

(2) Demurrer to plaintiffs’ first amended complaint [bc668841]

BACKGROUND

This is a legal malpractice action. In BC657976, Plaintiff Jenny Hsu (“Jenny”) asserts a claim of professional negligence against Defendants Giovanni Orantes and The Orantes Law Firm (“Orantes”) arising out of their representation of Hsu in a bankruptcy matter. Jenny alleges that Orantes’ negligence caused her to lose over $3 million in equity in her real property. In BC668841 asserts a legal malpractice claim against Orantes arising out of their representation of Jenny as a plaintiff in a civil action. The civil action dealt with a foreclosure sale and a loan modification application. Jenny alleges that Orantes’ negligence caused her action to be dismissed.

REQUEST FOR JUDICIAL NOTICE

Orantes’ request for judicial notice is GRANTED.

DISCUSSION

A demurrer challenges only the legal sufficiency of the complaint, not the truth of its factual allegations or the plaintiff’s ability to prove those allegations. (Picton v. Anderson Union High Sch. Dist. (1996) 50 Cal. App. 4th 726, 732.) The court must treat as true all of the complaint’s material factual allegations, but not contentions, deductions or conclusions of fact or law. (Id. at 732–33.) The complaint is to be construed liberally to determine whether a cause of action has been stated. (Id. at 733.)

Orantes demurs to the FAC in both BC657976 and BC668841. Orantes contends that Jenny lacks standing to assert her claims against Orantes. Orantes contends that when a bankruptcy petition is converted from a Chapter 11 proceeding to a Chapter 7 proceeding—as is the case here—standing to maintain a state lawsuit is vested in the bankruptcy trustee, absent the trustee’s abandonment of the claim. (Bostanian v. Liberty Savings Bank (1997) 52 Cal. App. 4th 1075, 1085.) However, Jenny alleges that in her bankruptcy case, “the parties entered into a settlement agreement where plaintiffs’ right to sue defendants… for money damages were fully preserved.” (FAC ¶ 7.) Jenny also alleges that the trustee in the bankruptcy case “filed a final report on or about May 2, 2017 which did not include plaintiff JENNY HSU’s malpractice claim against defendants. . . . As such, any of the claims as set forth in this complaint against defendants were abandoned by the trustee such that plaintiffs are the owners of these malpractice claims against defendants. . . .” (FAC ¶ 8.) Thus, Orantes alleges a sufficient basis for standing at the pleading stage.

Orantes also contends that Jenny cannot establish damages. The gravamen of this action is that Orantes’ negligence caused Jenny to lose over $3 million in equity in her real property and that defendants’ negligence caused Jenny’s rights to be relinquished. (See, FAC paragraph 7.) At this phase of the litigation, Jenny has established a viable cause of action.

Based on the foregoing, the demurrers are OVERRULED.