Case Number: EC067208 Hearing Date: June 01, 2018 Dept: A

Manesh v Melkonian

DEMURRER; MOTION TO STRIKE

Calendar: 12

Case No: EC067208

Hearing Date: 6/1/18 (cont. from 5/11/18)

Action Filed: 8/17/17

Trial: Not set

MP: Defendant Geoffrey G. Melkonian

RP: Plaintiffs Reza Fateh Manesh, Shahla Tehrani Broomand (aka Shahla Tehrani)

ALLEGATIONS IN COMPLAINT:

Plaintiffs Reza Fateh Manesh, Shahla Tehrani Broomand (aka Shahla Tehrani) commenced this action against Defendant Geoffrey G. Melkonian, Esq. for legal malpractice. Plaintiffs allege that they retained the services of Defendant in order to handle a default judgment that had been entered against them and to seek counsel with regard to filing for bankruptcy. They allege that Defendant wrongfully advised them to file a Chapter 7 rather than Chapter 13 bankruptcy.

The FAC, filed January 17, 2018, alleges causes of action for: (1) breach of contract; (2) negligent misrepresentation; (3) breach of fiduciary duty; and (4) NIED.

RELIEF REQUESTED:

Defendant demurs to the FAC and moves to strike punitive damages from the FAC.

This matter initially came for hearing on April 20, 2018, which the Court continued to May 11, 2018.

On May 11, 2018, the Court continued the motion to June 1, 2018 in order to provide time for the parties to discuss the issue of statute of limitations and/or sham pleading doctrine. Plaintiffs filed a Response to the Court’s Tentative Ruling on May 18, 2018. On May 29, 2018, Defendant filed a supplemental brief and Plaintiff filed a responsive brief.

DISCUSSION:

Request for Judicial Notice

Defendant requests judicial notice of Exhibit A, which is Plaintiff Reza Fateh Manesh’s filing of the Amended Schedule A/B and C with the United States Bankruptcy Court – Central District of California, filed on July 20, 2016 in case No. 1:15-bk-12563-VK. The request is granted pursuant to Evidence Code, §452(d).

Demurrer

Defendant demurs to each cause of action in the FAC.

Untimely Filing of the FAC

Defendant argues that the FAC was not timely filed because it was filed after the opposition to the demurrer became due and Plaintiff did not obtain the leave of Court. (See CCP §472(a) [stating an amended complaint may be filed and served no later than the date for filing an opposition to a demurrer or motion to strike the initial pleading].)

However, this is not a proper ground to demur to the FAC. CCP §430.10 provides the grounds upon which a demurrer may be brought, which includes lack of the court’s jurisdiction, lack of legal capacity to sue, failure to state sufficient facts to constitute a cause of action, uncertainty, etc. The untimely filing of the FAC is not a basis for demurrer. As no motion to strike the FAC has been filed, the Court will consider the FAC as the operative pleading.

Statute of Limitations and Sham Pleading

CCP §340.6 provides that an action against an attorney for a wrongful act or omission, other than for actual fraud, arising in the performance of professional services shall be commenced (a) within 1 year after the plaintiff discover, or through the use of reasonable diligence should have discovered, the facts constituting the wrongful act or omission, or (b) 4 years from the date of the wrongful act or omission, whichever occurs first.

Plaintiffs were referred to Defendant at some time around June 2015. (FAC, ¶6.) Plaintiffs allege in late-2015 and early-2016, Defendant did not properly file for bankruptcy on behalf of Plaintiffs and wrongfully advised Plaintiffs. According to Reza Fateh Manesh’s Schedule A/B (Property at §33) and Schedule C (Property You Claim as Exempt at §3), which was signed on July 11, 2016 and filed on July 20, 2016 with the bankruptcy court, Reza Fateh Manesh listed as a claim against third parties, “Possible professional malpractice lawsuit against Geoffrey G. Melkonian.” (RJN, Ex. A.) This action was commenced on August 17, 2017.

Defendant argues that because Plaintiffs were aware of their potential lawsuit against Defendant as early as July 11, 2016, Plaintiffs should have filed their initial complaint by latest July 11, 2017.

In opposition, Plaintiffs argue they did not suffer monetary damages until December 6, 2017, when Judge Victoria Kaufman ruled in the bankruptcy trustee’s adversary case against Reza Fateh Manesh that the bankruptcy court cannot overturn a superior court’s default judgment. However, these allegations are not alleged in the operative pleading and constitute extrinsic facts. Thus, they cannot be considered in ruling on a demurrer as to the sufficiency of the allegations of the complaint. (See Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.)

Next, Defendant argues that based on the original complaint filed in this action, Plaintiffs’ FAC constitutes a sham pleading. Defendant argues that the initial complaint stated that they were unaware of the professional negligence of Defendant until late November 2016, after researching and talking to other attorneys about their case. (Compl., ¶20.) Differently, in the FAC, Plaintiffs allege it was not until late July 2017 that Plaintiff Manesh spoke to a retired attorney who opined that Defendant’s conduct was negligent. (FAC, ¶31.)

Here, there are inconsistencies between the initial complaint and FAC, regarding the date Plaintiffs allege they were apprised of a professional negligence claim against Defendant. Thus, the Court takes judicial notice of the prior pleading. As stated in the initial hearing on this matter, the Court provided time for Plaintiffs to explain this inconsistency; failure to do so may result in a finding that the pleading is a sham. (Amid v. Hawthorne Community Medical Group, Inc. (1989) 212 Cal.App.3d 1383, 1390.) The Court notes that Defendant’s arguments regarding sham pleading were not addressed by Plaintiffs in the opposition brief.

In Plaintiffs’ supplemental brief (Response to the Court’s Tentative Ruling), Plaintiffs argue that when complying with the bankruptcy requirements, they were advised by their attorney (Matthew Resnik) to list any possible claims. Thus, they argue they listed a potential action against Defendant, but were not yet sure if there was a viable malpractice claim against him. They argue it was not until November 2016 that Resnik informed Plaintiffs that they had a legal malpractice claim against Defendant. They also argue that it was not until July 2017 that their claim was confirmed by another attorney. This explanation only confirms that Plaintiffs were on notice of a possible claim against Defendant as early as July 11, 2016. Though their suspicions of legal malpractice were confirmed in November 2016 and again in July 2017, they were on notice of the facts that gave rise to their legal malpractice lawsuit against Defendant by July 11, 2016, and the fact that their claim was confirmed in November 2016 and July 2017 does not toll the period to file their lawsuit.

Plaintiffs also argue that their action was tolled because they did not sustain actual injury in July 2016, but rather suffered injury in December 2017 following Judge Kaufman’s ruling. (See CCP §340.6(a)(1).) However, this argument is disingenuous since Plaintiffs commenced this action on August 17, 2017—months before December 2017.

Next, Plaintiffs argue that the action was tolled because Defendant represents Plaintiffs regarding the specific subject matter in which the alleged wrongful act or omission occurred. (CCP §340.6(a)(2).) They provide Exhibit C, which is one page of the Case Summary page for case no. BC075569 (Pour v. Manesh). However, the Pour action was commenced on February 24, 1993 and it appears that a judgment was entered on May 11, 1995. While the docket shows that on July 15, 2015, Defendant had substituted into the action as counsel for Reza Fateh Manesh, it appears thereafter that Reza Fateh Manesh began representing himself “in pro per”. Based on the papers filed in the Pour action, it does not appear that Defendant was representing Plaintiffs at the time of the bankruptcy proceeding since Reza Fateh Manesh filed papers “in pro per” and appeared to hearings as a self-represented litigant. In addition, it is unclear what relation Pour v. Manesh has to this instant action for legal malpractice against Defendant in connection with a bankruptcy proceeding.

Thus, pursuant to CCP §340.6, Plaintiffs should have filed their action within a year after they discovered, or through the use of reasonable diligence should have discovered, the facts constituting Defendant’s alleged wrongful act or omission (i.e., one year from July 11, 2016). The fact that they “confirmed” their possible claim against Defendant months later after being potentially aware of the lawsuit does not provide any grounds for tolling or the delayed discovery rule. Thus, the Court finds that this action is time barred by the statute of limitations.

For the reasons above, the Court will sustain the demurrer to the FAC on the basis that this legal malpractice action is untimely and barred by the statute of limitation. Plaintiffs have had the opportunity to discuss the merits of their action at the hearing and by way of supplemental briefing, but have not provided a means to cure the issues raised in the demurrer. Accordingly, the demurrer will be sustained without leave to amend on statute of limitations grounds.

Breach of Contract

Defendant demurs to the 1st cause of action on the ground that it fails to allege sufficient facts to constitute a cause of action.

“The standard elements of a claim for breach of contract are: “(1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) damage to plaintiff therefrom. [Citation.]” (Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1178.) The plaintiff must attach the contract at issue to the complaint or plead the material terms to assert a breach of contract claim. (Construction Protective Servs., Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198–99; San Diego Housing Comm’n v. Indust. Indem. Co. (1998) 68 Cal.App.4th 526, 536.)

Here, Plaintiffs attached the retainer agreement as Exhibit A to the FAC, which states that Defendant was retained for the purpose of representing Plaintiffs in LASC Case No. LC102099. (FAC, ¶8, Ex. A.) Plaintiffs allege that they entered into a contract with Defendant on June 23, 2015 for legal services with regard to 2 default judgments, in exchange for $4,000.00. (FAC, ¶35.) Plaintiffs allege that Defendant breached the agreement by failing to attend an August 4, 2015 hearing with Department 44, failing to appear on December 17, 2015 to argue the trustee’s motion, failing to attend the January 7, 2016 hearing on Reza Fateh Manesh’s motion in bankruptcy court to transfer the Chapter 7 case to a Chapter 13 case, and failing to respond to the U.S. Trustee’s Adversary Complaint filed on February 23, 2016. (Id., ¶36.) Here, the allegations are sufficient to allege a breach of contract cause of action against Defendant since a portion of the cause of action alleges a viable claim.

However, this claim is essentially a claim for legal malpractice. (See Jones v. Whisenand (2017) 8 Cal.App.5th 543, 550 [“In a legal malpractice action arising from a civil proceeding, the elements are (1) the duty of the attorney to use such skill, prudence, and diligence as members of his or her profession commonly possess and exercise; (2) a breach of that duty; (3) a proximate causal connection between the breach and the resulting injury; and (4) actual loss or damage resulting from the attorney’s negligence.”].) As such, in light of the above-mentioned problems with the statute of limitations, the Court will sustain the demurrer to the 1st cause of action.

Negligent Misrepresentation

To allege a cause of action for negligent misrepresentation, the requisite elements are: (1) a misrepresentation of a past or existing material fact; (2) without reasonable grounds for believing it to be true; (3) with intent to induce another’s reliance on the fact misrepresented; (4) ignorance of the truth and justifiable reliance thereon by the party to whom the misrepresentation was directed; and (5) damages. (B.L.M. v. Sabo & Deitsch (1997) 55 Cal. App. 4th 823, 834.) This cause of action is a tort of deceit and the facts constituting each element must be alleged with particularity; the claims cannot be saved by referring to the policy favoring liberal construction of pleadings. (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216.) Since this claim must be pleaded with particularity, the cause of action based on misrepresentations must allege facts showing how, when, where, to whom, and by what means the misrepresentations were tendered. (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.)

In this cause of action, Plaintiffs allege that on June 29, 2015, Defendant wrongfully advised Plaintiffs not to wait for the next scheduled ex parte motion in Department 44 scheduled for August 4, 2015, because there might not be time to file a Chapter 7 Bankruptcy. (FAC, ¶41.) Plaintiffs also allege that Defendant wrongfully advised Plaintiff that any default judgment would not be enforceable against them. (Id., ¶42.)

Defendant demurs to this cause of action, arguing that Plaintiffs are seeking tort damages for a contract claim. While these claims may seemingly overlap, they are still distinct. For example, in the first cause of action, Plaintiffs allege Defendant breached their agreement by failing to attend hearings as required. In this cause of action, Plaintiffs allege Defendant made misrepresentations regarding the legal effect of a default judgment.

Nevertheless, the alleged misrepresentations essentially arise from Plaintiffs’ allegations that Defendant committed legal malpractice and gave improper legal advice to Plaintiffs. As such, the Court will sustain the demurrer to the 2nd cause of action due to statute of limitations problem.

Breach of Fiduciary Duty

To state a cause of action for breach of fiduciary duty, the plaintiff must allege the following: (1) the existence of a fiduciary relationship; (2) its breach; and (3) damage proximately caused by that breach. (Roberts v. Lomanto (2003) 112 Cal. App. 4th 1553, 1562.) A fiduciary relationship exists between an attorney and his client. (Pierce v. Lyman (1991) 1 Cal.App.4th 1093, 1102.)

In the 4th cause of action, Plaintiffs allege that they had a fiduciary relationship with Defendant, Defendant breached the duties, and thereby injured Plaintiffs. (SAC, ¶¶48-50.) Plaintiffs incorporate the prior allegations, but fail to specify what fiduciary duty Defendant breached. The basic fiduciary obligations owed by an attorney to his clients are undivided loyalty and confidentiality. (Pierce, supra, 1 Cal.App.4th at 1102.) Plaintiffs have not alleged how Defendant breached either the duty of loyalty or confidentiality, or both.

Thus, the Court will sustain the demurrer to the 4th cause of action.

NIED

“NIED is not an independent tort, but is the tort of negligence; thus, the traditional elements of duty, breach of duty, causation, and damages apply. (Spates v. Dameron Hosp. Assn. (2003) 114 Cal.App.4th 208, 213.) A cause of action for NIED may be brought under two general instances: (1) where Plaintiff is a bystander and seeks to recover damages as percipient witness to the injury of another; or (2) where Plaintiff is a direct victim in that the emotional distress damages result from a duty owed the plaintiff that is assumed by defendant or imposed on the defendant as a matter of law, or that arises out of the relationship between the two. (McMahon v. Craig (2009) 176 Cal.App.4th 1502, 1509-10.)

In the 4th cause of action, Plaintiffs allege that Defendant’s actions were intentional or negligent, and that he breached his duty to properly advise and pursue setting aside the default judgment and file an appropriately determined bankruptcy case on Plaintiffs’ behalf. (FAC, ¶¶52-53.) They allege his failure to do so caused them severe emotional distress.

These allegations are insufficient to allege a cause of action for NIED under both the bystander theory and the direct victim theory. The opposition brief does not even address this 4th cause of action for NIED or how it can be cured upon amendment.

Thus, the Court sustains the demurrer to the NIED cause of action without leave to amend.

Uncertainty

Pursuant to CCP § 430.10(f), “uncertainty” is a proper demurrer ground where the pleading is ambiguous and unintelligible. Demurrers for uncertainty will only be sustained where the complaint is such that the defendant cannot reasonably respond—i.e., determine what issues must be admitted or denied or what counts or claims are directed against him or her. (Khoury v. Maly’s Calif., Inc. (1993) 14 Cal.App.4th 612, 616.)

The demurrer based on uncertainty will be overruled. The allegations are not so unintelligible such that Defendant is unable to respond. In fact, Defendant has shown he is able to respond to the pleadings by way of his demurrer since he has addressed the merits of each cause of action. Thus, uncertainty is not a ground upon which the demurrer should be sustained.

Motion to Strike

In light of the ruling on the demurrer, the Court will take the motion off calendar as moot.

RULING:

Sustain the demurrer to the 1st to 3rd causes of action without leave to amend because Plaintiffs had multiple opportunities to present to the Court how these causes of action could be amended. Despite arguments at the hearing and 2 supplemental briefs by Plaintiffs, they have not explained how they can allege that their action is not time-barred.

Sustain the demurrer to the 4th cause of action. The Court will not grant leave to amend as Plaintiffs have already had the opportunity to amend this the complaint once and Plaintiffs have not addressed this cause of action in their opposition to show how defects regarding the NIED cause of action can be cured upon amendment.

Take the motion to strike off calendar as moot.