Case Name: Afnani, et al. v. The Fuller Law Firm, et al.
Case No.: 17CV306307

Defendants the Fuller Law Firm, Lars T. Fuller and Saman Taherian (collectively, “Defendants”) demur to the third amended complaint (“TAC”) filed by plaintiffs Sasan Afnani (“Sasan”) and Nasim Afnani (“Nasim”) (collectively, “Plaintiffs”) and move to strike portions contained therein.

This is an action for legal malpractice arising out of the provision of legal services in a bankruptcy proceeding. According to the allegations of the TAC, Plaintiffs, a married couple, held title as joint tenants with a right of survivorship to a property located in San Jose (the “Property”). (TAC, ¶ 10.) First Federal Bank of California held a deed of trust on the Property in the amount of $392,905.88 (“First Federal Lien”), while JP Morgan Chase Bank (“JP Morgan”) held a second deed of trust on the Property in the amount of $93,507 (the “Second Lien”). (Id., ¶ 11.)

Plaintiffs each separately retained and employed Defendants to represent them in Chapter 13 bankruptcy proceedings. (TAC, ¶ 12.) Defendants agreed to represent Plaintiffs in all work usually and customarily included in such a representation, including obtaining appropriate court orders relating to the Property. (Id.) The scope of Defendants’ employment also included giving notice of the automatic stay imposed by the bankruptcy filing on all lienholders who had a claim against any of Plaintiffs’ real property, as well as maintaining the stay in force against such lienholders for as long as necessary to secure for Plaintiffs the relief they sought with the filing. (Id., ¶ 13.) Thus, Defendants had a duty to oppose any motion by a lienholder for relief from the automatic stay. (Id., ¶ 14.)

Rather than filing a joint bankruptcy petition for Plaintiffs as husband and wife, Defendants chose to file two separate petitions (hereafter “Sasan’s Case” and “Nasim’s Case”) and maintained each plaintiff’s records in separate files. (TAC, ¶ 16.) Despite the fact that the Property was jointly held by Plaintiffs, Defendants negligently failed to list it as an asset in Nasim’s Case indicating, incorrectly, that it was Sasan’s property. (Id., ¶ 16.) Defendants also negligently failed to list the Second Lien in Nasim’s Case in the list of creditors holding secured claims. (Id.) In Sasan’s petition, the Property is listed as having a value of $355,000; as the First Federal Lien was $392,905.88 at the time of the bankruptcy filing, it was not fully supported by the equity in the Property, and the Second Lien was not supported by any equity at all. (Id., ¶ 17.)

U.S. Bankruptcy law includes a procedure, sometimes called “avoiding” or “stripping,” under which a debtor can obtain an order or judgment removing a lien from real property if that lien is found by the court not to be supported by equity in that property. (TAC, ¶ 18.) If this procedure is not properly followed, the lienholder retains a legal right to foreclose on the lien, with the result that the debtor-client might lose the property and all benefits of ownership, including the value of past payments made, any equity growth and any future stream of rental payments. (Id., ¶ 19.) On August 30, 2010 and October 19, 2010, Defendants filed and then re-filed a motion in Sasan’s Case to value the Second Lien at zero dollars, which the court determined to be the case. (TAC, ¶ 20.) There is no doubt that had such a motion been filed in Nasim’s Case, it also would have valued the Second Lien at zero dollars, and her subsequent completed plan would not have required her to pay anything toward the Second Lien because its valuation would have been zero as it was it Sasan’s Case. (Id.)

On December 3, 2010, the court issued an order in Sasan’s Case which directed that for the purposes of Sasan’s Chapter 13 plan, the Second Lien was valued at zero, JP Morgan did not have a secured claim, and the lien could not be enforced. (TAC, ¶ 21.) However, the order was contingent on Defendants also obtaining a zero valuation on the Second Lien in Nasim’s Case. (Id.) Further, the order provided that if Sasan’s Case was dismissed or converted to one under another chapter before Sasan obtained a discharge or completed the plan, the order would cease to be effective and the lien could be restored upon application by the lienholder. (Id.)

Ultimately, Defendants failed to complete or even start the process of valuing the Second Lien on the Property at zero in Nasim’s Case as provided by the court’s order, and also failed to give the court the required notice of that. (TAC, ¶ 22.) Additionally, Defendants negligently failed to do the following: notify the court in Sasan’s Case that Nasim had completed her Chapter 13 plan; obtain a judgment voiding the Second Lien on the Property in Sasan’s Case or otherwise before the Property was foreclosed on; record any judgment voiding the lien because they never obtained a judgment voiding the lien in the first place; and oppose a motion for relief from the automatic stay by the holder of the Second Lien against the Property. (Id.) The motion for relief from the stay was granted by the court, thereby enabling the lienholder of the Second Lien to proceed to foreclose on the Property. (Id., ¶ 23.)

Defendants did not inform Plaintiffs about the motion or its result, i.e., that the Property was now at risk of foreclosure if they did not resume making payments on the Second Lien. (Id.) Sasan’s Chapter 13 plan called for no payments to be made on the Second Lien and Defendants advised him that such payments would not be necessary because the lien was going to be avoided through the bankruptcy procedure. (Id., ¶ 24.) Plaintiffs allege that Defendants intentionally concealed the foregoing failings from them, as well as the fact that they needed to continue making payments on the Second Lien in order to avoid foreclosure. (Id., ¶¶ 25, 36.) Had they known, Plaintiffs allege, they would have continued making such payments and maintained possession of the Property. (Id., ¶ 38.)

Defendants negligently allowed the court to enter the discharge of Sasan’s bankruptcy on July 7, 2014 and close the case on August 19, 2014, without obtaining a judgment removing the Second Lien. (TAC, ¶ 26.) The foregoing failures fell below Defendants’ professional standard of care and left the Property exposed to foreclosure. (Id., ¶¶ 27-28.)

Prior to April 6, 2016, Plaintiffs were completely unaware that Defendants failed to take the required actions to protect their ownership interests and rights in the Property and were unaware of the foreclosure risk. (TAC, ¶ 35.) Defendants advised Plaintiffs that they had completed their work for them without verifying that this was in fact the case. (Id., ¶ 37.) Plaintiffs continued making payments on their primary mortgage on the Property until the foreclosure and, because of Defendants’ negligence, lost any value on the Property they might have obtained due to these payments. (Id., ¶ 39.) The first information Plaintiffs had about any threat to their ownership came from a tenant on the Property who told them they were being evicted. (Id., ¶ 40.) After their initial suspicions that they were in default on the First Federal Lien or were the victims of identity theft proved unfounded, Plaintiffs learned for the first time that Defendants had failed to remove the Second Lien and that it was being foreclosed on. (Id.)

On April 3, 2016, a successor owner of the Second Lien recorded a trustee’s deed in its favor and then, on April 6, 2016, sold the Property at a trustee’s sale to Duke Partners LLC. (TAC, ¶ 41.) On April 14, 2016, Defendants reopened Sasan’s Case in an effort to enjoin any re-sale of the Property and undo the foreclosure action. Plaintiffs later learned that Defendants had also negligently failed to complete the lien avoidance procedure on their family home. (Id., ¶ 42.) Defendants were able to correct their errors in time to avoid the loss of this property. (Id.)

Based on the foregoing, Plaintiffs filed their initial complaint in this action on June 29, 2017, asserting claims for: (1) attorney malpractice; (2) breach of fiduciary duty (concealment); (3) breach of fiduciary duty; and (4) attorney malpractice (conflict of interest). Defendants subsequently demurred to the second, third and fourth causes of action on the ground of failure to state facts sufficient to constitute a cause of action as pleaded in the First Amended Complaint (“FAC”) and moved to strike portions contained therein. (Code Civ. Proc., §§ 430.10, subd. (e), 435 and 436.) On November 1, 2017, the Court sustained the demurrer without leave to amend as to the third and fourth causes of action and sustained it with 10 days’ leave to amend as to the second cause of action.

Plaintiffs filed the second amended complaint (“SAC”) on November 13, 2017, asserting claims for: (1) attorney malpractice; and (2) breach of fiduciary duty (concealment). Defendants again demurred, this time solely to the second cause of action on the ground of failure to state facts sufficient to constitute a cause of action. (Code Civ. Proc., § 430.10, subd. (e).) The motion was sustained with leave to amend. Defendants also filed a motion to strike various portions of the SAC, including Plaintiffs’ requests for punitive and emotional damages, as well as attorney’s fees. The motion was granted with leave to amend as to punitive damages, but granted without leave to amend as to all other portions of the SAC Defendants sought to strike.

On March 6, 2018, Plaintiffs filed the TAC, which asserts the same two causes of action as the SAC. On April 20, 2018, Defendants filed the instant demurrer to the second cause of action on the ground of failure to state facts sufficient to constitute a cause of action. (Code Civ. Proc., § 430.10, subd. (e).) Defendants also filed the motion to strike Plaintiffs’ request for punitive damages and allegations relating thereto. (Code Civ. Proc., §§ 435 and 436.) Plaintiffs oppose both motions.

I. Defendants’ Request for Judicial Notice

In support of their demurrer and motion to strike, Defendants request that the Court take judicial notice of the following items: (1) Plaintiffs’ Complaint (Exhibit 1); (2) Plaintiffs’ FAC (Exhibit 2); (3) Plaintiffs’ SAC (Exhibit 3); (4) the Court’s order sustaining the demurrer to the SAC (Exhibit 4); and (5) the Court’s order granting the motion to strike portions of the FAC (Exhibit 5).

All of these items are court records and therefore proper subjects of judicial notice pursuant to Evidence Code section 452, subdivision (d). Accordingly, Defendants’ request for judicial notice is GRANTED.

II. Demurrer

With the instant motion, Defendants essentially reassert the same arguments against Plaintiffs’ second cause of action as they did to this claim in their preceding demurrers. That is, they contend that the second cause of action is a sham pleading, that it seeks relief for the alleged breach of a fiduciary duty that does not exist, and that it is not sufficiently pleaded. Each of these arguments will be addressed in turn.

The second cause of action for breach of fiduciary duty based on fraudulent concealment is predicated on allegations that Defendants breached the fiduciary duties that they owed to Plaintiffs by concealing from them the following facts: that they had failed to complete all work required to void the Second Lien; that they had failed to oppose OneWest’s motion for relief from the automatic stay imposed by the bankruptcy filing; that the motion had been granted, enabling the holder of the Second Lien to foreclose on the Property; and that because the stay had been lifted, Plaintiffs needed to resume making payments on the Second Lien in order to protect their interest in the Property. (TAC, ¶¶ 55-68.) Plaintiffs further allege that they did not become aware that Defendants had failed to take the required actions to protect their interest in the Property and thus that their ownership of the Property was at risk until April 6, 2016.

As the Court noted in its prior orders, the elements of a claim for fraud and deceit based on concealment specifically are as follows: “(1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff; (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.” (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 748.) Defendants’ initial demurrer to this claim in the FAC was sustained, in part, due to the Court’s finding that Plaintiffs’ assertion in the FAC that Defendants had an intent to defraud them by concealing their alleged acts of professional negligence was “entirely incompatible with and defeated by the allegation that Defendants only learned of their purported failure to remove the Second Lien on the Property upon Plaintiffs informing them.” It logically followed, the Court explained, that if Defendants had no knowledge of their failings with respect to the Second Lien on the Property until their clients informed them, they could not be alleged to have had an intent to conceal those failings from Plaintiffs in the first place.

Upon being granted leave to amend, Plaintiffs then omitted in the new version of the complaint the problematic allegation that Defendants did not realize that they had failed to remove the Second Lien until Plaintiff’s brought it to their attention on or around April 6, 2016. Because there was no explanation for the omission, the Court agreed with Defendants’ contention that the removal of the foregoing allegation implicated the sham pleading doctrine, which precludes parties from amending complaints to omit harmful allegations, without explanation, from previous complaints, in order to avoid attacks raised in demurrers or motions for summary judgment. (See, e.g., Deveny v. Entropin, Inc. (2006) 139 Cal.App.4th 408, 425.) Generally, “[i]f a party files an amended complaint and attempts to avoid the defects of the original complaint by either omitting facts which made the previous complaint defective or by adding facts inconsistent with those previous pleading, the court may take judicial notice of prior pleadings and may disregard any inconsistent allegations.” (Colapinto v. County of Riverside (1991) 230 CAL.App.3d 147, 151.) It was therefore incumbent upon Plaintiffs, the Court concluded, to explain the omission from the SAC of the allegations that Defendants did not realize that they had failed to remove the Second Lien until Plaintiff’s brought it to their attention on or around April 6, 2016 in order for the Court not to deem the SAC a sham.

The Court also agreed that Plaintiffs were obligated to explain their omission of the harmful allegation because of the doctrine of judicial admissions. It was Defendants’ contention in their demurrer to the SAC (and the FAC, for that matter) that the omitted allegation regarding Defendants’ acquiring knowledge of their purported failure to remove the Second Lien from Plaintiffs was a binding judicial admission that defeated their claim as it was predicated on intentional conduct by Defendants. As explained previously, a judicial admission is a party’s “unequivocal concession of the truth of a matter, and removes the matter as an issue in the case. [Citations.]” (Gelfo v. Lockheed Martin Corp. (2006) 140 Cal.App.4th 34, 48.) Judicial admissions can be made in pleadings, and where so made, cannot be contradicted by the party against whom the pleadings are used. (Myers v. Trendwest Resorts, Inc. (2009) 178 Cal.App.4th 735, 746 [explaining that a pleader “cannot blow hot and cold as to the facts positively pleaded”].) The omission, Defendants argued, was a clear attempt by Plaintiffs to evade the negative effect of a judicial admission.

While acknowledging that Defendants’ summation of the doctrine was correct, the Court noted that it “does not apply to allegations in pleadings that have been superseded by amendments, especially where the initial pleading was not verified and the court granted permission to file the amended pleading to correct a potentially damaging admission in the initial pleading that was the result of mistake, inadvertence, or inadequate knowledge of the facts.” (Minish v. Hanuman Fellowship (2013) 214 Cal.App.4th 437, 456.) The Court then exercised its inherent authority to relieve a party from the effects of judicial admissions by amendments to the pleadings by permitting Plaintiffs to amend the SAC in order to explain the omission of the harmful allegation from that pleading. (See Valerio v. Andrew Younquist Construction (2002) 103 Cal.App.4th1264, 1272.) Plaintiffs initially made an effort to explain the omission in their opposition to the demurrer to the SAC, stating that a further review of additional documents in the bankruptcy cases disclosed facts to them demonstrating that Defendants “must have been aware” that they did not complete the lien avoidance procedure, which they had a duty to do, prior to April 6, 2016. Plaintiffs then went on to specifically set forth each of the particular documents and what each established with regards to Defendants’ knowledge of their purported failings, in particular:

 A proposed “Order Valuing Lien of JP Morgan Chase Bank NA” submitted to the court by Defendants in Sasan’s Case concerning the Second Lien that was returned to Plaintiff’s because it was not signed, and included a notation from the court requesting that Sasan file a memorandum of points and authorities “dealing with the issue of a debtor’s ability to value real property, essentially stripping the lien, on real property co-owned by a non-filing co-obligor”;
 A “Motion to Value Lien” filed in Sasan’s Case in which Defendants advised the court that they would also be moving to “value the Property for the purpose of avoiding the 2nd Trust Deed” in Nasim’s Case and acknowledged that “the lien may not be avoidable if Nasim Afnani does not file such motion or if Nasim Afnani’s motion is not successful”;
 The order granting the foregoing motion, drafted by Defendants, which stated that the Second Lien was to be voided for all purposes, and that the court would enter an appropriate form of judgment doing so upon Sasan’s application, “provided that similar relief is also granted in the Chapter 13 case of Nasim Afnani, co-owner of property”; and
 The subsequent “Judgment Voiding Lien of JP Morgan Chase Bank NA,” drafted by Defendants, which was stamped “unsigned” by the court and explained that the relief requested was not being granted because the order granting the motion to avoid the Second Lien in Sasan’s Case was contingent on similar relief being granted in Nasim’s Case, and a review of Nasim’s Case showed that she had not filed such a motion.

Because the explanation for Plaintiffs’ omission was provided only in their memorandum opposing Defendants’ demurrer to the SAC rather than the pleading itself, the Court granted them leave to amend to address this deficiency. While this explanation is now pleaded in the TAC, Defendants still maintain that the second cause of action is a sham pleading. They insist that the new facts pleaded by Plaintiffs were available in the public domain and thus their absence in prior iterations of the complaint gives rise to the implication of abuse of process on the part of Plaintiffs. They further take issue with Plaintiffs’ failure to explain why they failed to review the bankruptcy court documents prior to filing the original complaint and assert that it is illogical for Plaintiffs not to have reviewed the underlying bankruptcy file prior to initiating an action predicated on alleged malpractice in those proceedings. Given all the foregoing, they explain, the new facts added to the TAC amount to a sham and should be disregarded by the Court.

The Court finds Defendants’ contentions to be without merit. All that is required of a party where the sham pleading doctrine and the doctrine of judicial admissions have been implicated is that they explain their omission of the harmful allegation/admission, i.e., that such an allegation “was the result of mistake, inadvertence, or inadequate knowledge of the fact.” (Minish v. Hanuman Fellowship (2013) 214 Cal.App.4th 437, 456.) Plaintiffs have done so here, with the additional allegations in the TAC indicating that they did not have full knowledge of the facts when they initially pleaded that Defendants only learned of their failure to remove the Second Lien upon Plaintiffs informing them. Defendants have offered no authority which provides that the Court must consider the reasonableness of Plaintiffs’ explanation or conduct as they appear to suggest in criticizing Plaintiffs’ alleged failure to review the bankruptcy file prior to filing the initial complaint. In short, the Court does not find the omission of the harmful allegation in light of the explanation provided by Plaintiffs to be a sham and thus will not disregard Plaintiffs’ amendments to the SAC.

Defendants next argue, as they did previously in support of their demurrer to the FAC, that the second cause of action seeks relief for the alleged breach of a fiduciary duty- the failure to disclose material facts- that does not exist. Specifically, Defendants insist that a breach of fiduciary duty cause of action against an attorney requires some further violation of the obligation of trust, confidence, and/or loyalty that he or she owes to a client and cannot just be based on allegations of professional negligence.

As the Court explained in its prior order rejecting this argument, the only authority cited by Defendants in support of their contention that breach of either one of the aforementioned duties must be alleged in order to state a breach of fiduciary duty claim against an attorney is a legal malpractice treatise; no case law or statutory authority holding as such is cited. The scope of an attorney’s fiduciary duty to a client may be determined as a matter of law based on both the Rules of Professional Conduct and “statutes and general principles relating to other fiduciary relationships” (Stanley v. Richmond, supra, 35 Cal.App.4th at 1086), and the Court is not aware of any authority which limits a breach of fiduciary duty claim against an attorney to breaches of the duties of confidentiality and loyalty. If anything, the foregoing statement in fact suggests to the contrary, i.e., that the duties upon which this claim may be predicated are numerous. Consequently, this argument by Defendants’ is again not well taken.

The Court also does not find persuasive Defendants’ contention that the second cause of action is duplicative of the first and therefore should be disregarded as superfluous. The case cited by Defendants in support of their assertion, Carreau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1395, involved entirely different claims- a breach of the implied covenant of fair dealing and a breach of contract- which clearly rose or fell with one another. That is, the court concluded that if the allegations at issue did not go beyond the statement of a mere contract breach and, relying on the same facts, simply sought the same damages or other relief already claimed in the breach of contract cause of action, they could be disregarded as superfluous with no additional claim having been stated. Defendants cite no authority which provides that claims for professional negligence and breach of fiduciary duty based on concealment similarly stand and fall together. As Plaintiffs contend in their opposition, the facts upon which the first cause of action for attorney malpractice is predicated relate to Defendants’ alleged failure to “use reasonable skill and care in representing Plaintiffs”- i.e., professional competence, while the facts giving rise to the second, in contrast, relate to Defendants’ intentional acts of concealment and incomplete disclosure. Further, Plaintiffs seek remedies with the second cause of action- in particular, punitive damages- that are not available in connection with the first due to Defendants’ alleged concealment of their wrongdoing. This is above and beyond mere professional negligence. Thus, the Court finds Defendants’ contention that the second cause of action is duplicative of the first to be without merit.

Finally, Defendants again assert that the second cause of action is insufficiently pleaded because Plaintiffs have not alleged facts establishing that Defendants had knowledge of the falsity of any alleged statements they made to Plaintiffs. The Court rejects this argument for the same reason it did in the preceding demurrer: knowledge of falsity and intent to deceive are both facts, and thus are sufficiently pleaded by the general averment that a defendant knew a representation to be false when made and intended to defraud the plaintiff. (See, e.g., Hall v. Mitchell (1922) 9 Cal.App. 743; see also 5 Witkin, California Procedure (5th ed. 2008) Pleading, §§ 726, 728.) With Plaintiffs having made such allegations here (see TAC, ¶¶ 62-66), this argument does not provide a basis upon which to sustain the demurrer. Moreover, even if Plaintiffs had not alleged knowledge of the falsity of a statement by Defendants to them, this claim would still be sufficiently pleaded given the elements of a claim for fraud predicated on concealment in particular, namely: (1) the concealment or suppression of a material fact by the defendant; (2) the defendant’s duty to disclose the fact to the plaintiff; (3) the defendant’s intention to conceal or suppress the fact with the intent to defraud the plaintiff; (4) the plaintiff’s lack of awareness of the fact and that he would not have acted as he did if he had had such awareness; and (5) resulting damage to the plaintiff. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 748.) Each of the foregoing elements has been pleaded in the TAC. (See TAC, ¶¶ 58-67.)

As none of the arguments submitted by Defendants in support of their motion are persuasive, Defendants’ demurrer to the second cause of action on the ground of failure to state facts sufficient to constitute a cause of action is OVERRULED.

III. Motion to Strike

As stated above, Defendants move to strike Plaintiffs’ request for punitive damages and allegations relating thereto, as well as the request for “disgorgement of unjust enrichment but excluding any claim for attorneys’ fees paid by Plaintiffs to Defendants in connection with the underlying representation.” (See TAC, ¶ 68; Prayer for Relief, ¶¶ 2-3.) Defendants maintain that such allegations should be stricken because Plaintiffs have failed to plead facts which entitle them to punitive damages and Plaintiff’s request for disgorgement was already ordered stricken by the Court.

Generally, the right to exemplary or punitive damages requires proof of “oppression, fraud, or malice” on the part of the defendant by “clear and convincing evidence.” (Civ. Code, § 3294, subd. (a).) For pleading purposes, in order to support a prayer for punitive or exemplary damages, the complaint must allege “ultimate facts of the defendant’s oppression, fraud or malice.” (Cyrus v. Haveson (1976) 65 Cal.App.3d 306, 316-317.) Simply pleading the statutory terms “oppression, fraud or malice” is insufficient to adequately allege punitive damages, but only to the extent that the complaint pleads facts to support those allegations. (Blegen v. Superior Court (1986) 176 Cal.App.3d 503, 510-511.) Therefore, specific factual allegations demonstrating oppression, fraud or malice are required. (Brousseau v. Jarrett (1977) 73 Cal.App.3d 864, 872.) However, the complaint will be read as a whole so that even conclusory allegations may suffice when read in context with facts alleged as to the defendant’s wrongful conduct. (Perkins v. Super. Ct. (1981) 117 Cal.App.3d 1, 6-7; Clauson v. Super. Ct. (1998) 67 Cal.App.4th 1253, 1255).

Here, malice, fraud and oppression all serve as the foundation for Plaintiffs’ punitive damages requests. Under the punitive damages statute, Civil Code section 3294, “malice” is defined as conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.” (Civ. Code, § 3294, subd. (c)(1).) “Oppression” is defined as “despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.” (Id., § 3294, subd. (c)(2).) “Despicable conduct,” in turn, has been described as conduct that is “so vile, base, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary decent people.” (Mock v. Michigan Millers Mutual Ins. Co. (1992) 4 Cal.App.4th 306, 331.) Finally, “fraud” is defined as “an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.” (Civ. Code, § 3294, subd. (c)(3).)

Defendants reiterate their now-rejected argument that the TAC contains sham allegations that must be disregarded, and it is this argument that serves as the basis for their request that punitive damages be stricken from the pleading. This request, Defendants explain, is based on such sham allegations and therefore necessarily fails when those allegations are disregarded. Because the Court does not find these allegations to be a sham, this argument does not provide a basis upon which to strike Plaintiffs’ request for punitive damages.

Defendants next assert that Plaintiffs have not pleaded any facts which amount to malice, oppression or fraudulent conduct on their part necessary to support a claim for punitive damages. But Plaintiffs have indeed pleaded such conduct on the part of Defendants in alleging that they fraudulently concealed their failures in the bankruptcy proceedings relative to the removal of the Second Lien, and that such conduct resulted in damage to Plaintiffs. (TAC, ¶ 58-67.) Consequently, Defendants’ assertion is without merit. This is Defendants final argument with regards to Plaintiffs’ request for punitive damages. As none of Defendants’ arguments are persuasive, the Court finds no basis to strike the request for punitive damages and allegations relating thereto.

Defendants lastly move to strike Plaintiffs’ prayer for “disgorgement of unjust enrichment but excluding any claim for attorneys’ fees paid by Plaintiffs to Defendants in connection with the underlying representation.” (TAC, Prayer for Relief, ¶ 3.) In the preceding iterations of the Complaint, Plaintiffs requested disgorgement of fees paid to Defendants in connection with the legal representation provided by them in the underlying bankruptcy action. Defendants successfully moved to strike this request in both the FAC and the SAC arguing, persuasively, that fees paid to the purportedly negligent attorney are not recoverable as tort damages in a malpractice action. (Orrick Herrington & Sutcliffe LLP v. Superior Court (2003) 107 Cal.App.4th 1052, 1058-1060.) They maintain that Plaintiffs have improperly inserted the disgorgement prayer into the TAC and that the Court must again strike it from the pleadings. They further assert that Plaintiffs’ conduct is a blatant and continued disregard of the Court’s prior orders that warrants the imposition of sanctions, which they will seek in a separate motion.

While Plaintiffs have technically complied with the Court’s prior orders in qualifying their request for disgorgement of unjust enrichment with language which excludes from recovery “any claim for attorneys’ fees paid by Plaintiffs to Defendants in connection with the underlying representation,” they otherwise have not pleaded any benefit Defendants received at Plaintiffs’ expense that should be disgorged other than the attorneys’ fees paid for the underlying representation. Plaintiffs insist that this pleading is appropriate because “discovery may yet reveal other non-fee money or property” of theirs that should be the disgorged. If this is in fact the case, Plaintiffs can simply later move to amend their pleading to request such amounts. As it stands now, nothing has been pleaded in the TAC which permits Plaintiffs to recover any such items on a disgorgement theory. Accordingly, this request is stricken.

In accordance with the foregoing analysis, Defendants’ motion to strike is GRANTED IN PART and DENIED IN PART. The motion is GRANTED WITHOUT LEAVE TO AMEND as to Plaintiffs’ prayer for “disgorgement of unjust enrichment but excluding any claim for attorneys’ fees paid by Plaintiffs to Defendants in connection with the underlying representation” (TAC Prayer for Relief, ¶ 3) and otherwise DENIED.