KAVINDER PAUL SINGH v. DHALIWAL LAW FROUP, INC., ET AL.
Case No.: 1-14-CV-258594
DATE: June 12, 2014
TIME: 9:00 a.m.
DEPT.: 3

“In reviewing the sufficiency of a complaint against a general demurer, we are guided by long settled rules. ‘We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. We also consider matters which may be judicially noticed.’” Blank v. Kirwan (1985) 39 Cal.3d 311, 318. “A demurrer tests only the legal sufficiency of the pleading. It admits the truth of all material factual allegations in the complaint; the question of plaintiff’s ability to prove these allegations, or the possible difficulty in making such proof does not concern the reviewing court.” Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213-214. The Complaint will be construed “liberally . . . with a view to substantial justice between the parties.” CCP §452; Stevens v. Sup. Ct. (1999) 75 Cal App 4th 594, 601.

Defendants’ demurrer to Plaintiff’s claim for Professional (legal) Negligence in the First Amended Complaint (“FAC”) on the ground that it fails to state sufficient facts solely because Plaintiff fails to sufficiently plead causation or actual damages is OVERRULED. Defendants’ arguments in their motion and reply that rely on factual assertions beyond the face of the pleading cannot support a demurrer.

“To state a cause of action for legal malpractice, a plaintiff must plead ‘(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.’ To show damages proximately caused by the breach, the plaintiff must allege facts establishing that, ‘but for the alleged malpractice, it is more likely than not the plaintiff would have obtained a more favorable result.’” Charnay v. Cobert (2006) 145 Cal.App.4th 170, 179, internal citations omitted.

The Charnay Court reversed a trial court’s sustaining of a demurrer to a legal malpractice claim that alleged that if the plaintiff had been properly advised of her responsibility to contribute to the costs of real property repair and her potential exposure to the opposing parties’ attorneys fees if she did not prevail in her cross-action or the underlying action, she would have settled the lawsuit for no more than the maximum $25,000 recoverable in a limited civil action instead of eventually becoming liable for more than $600,000 judgment as a result of her attorney’s advice to vigorously defense the suit and file a cross-complaint. The Court found that, contrary to cases decided on summary judgment, “at this early stage of the proceedings,” a plaintiff “need only allege that, but for [defendant’s] malpractice, she would have obtained a ‘more favorable result’ than’” what ultimately occurred. 145 Cal App 4th at 179-180. The Court found that plaintiff had done so and her ability to prove such allegations was irrelevant on demurrer.

Here Plaintiff alleges that Defendant Rattan Dev Singh Dhaliwal publicly held himself out as having an expertise in bankruptcy (FAC at 7); that Plaintiff retained Defendants in May 2012 specifically to represent him in a Chapter 13 bankruptcy case (FAC at 8); that Defendant Dhaliwal told Plaintiff in May 2012 that that the value of his property “had declined to $275,000 and by utilizing the Chapter 13 bankruptcy proceeding, defendant could obtain a reduction in the principal amount of the loan, referred to as a ‘cramdown,’ from $472,000 to $250,000 and that defendant could ‘strip’ i.e. eliminate, the existing second loan,” and that he would “act diligently to process plaintiff’s Chapter 13 case” (FAC at 9). After May 2012 Defendants “ceased communicating with plaintiff or his parents, who plaintiff had expressly authorized to communicate with defendant on his behalf during plaintiff’s extended absences required by his work,” (FAC at 10). Plaintiff further alleges that between May and October 2012 he was informed that his lender OneWest Bank had agreed to a cramdown “which contemplated a re-written $250,000 loan which is a reduction from $472,000 of $222,000” if Defendants filed a motion to establish the fair market value of Plaintiff’s property and a motion to cramdown in the Chapter 13 bankruptcy case. FAC at 12-13. Defendants however, did not file either motion and took no action at all until November 2012 when Defendant Dhaliwal filed a “skeletal” Chapter 13 petition “without plaintiff’s knowledge or consent (or that of plaintiff’s parents). Defendant forged plaintiff’s signature to the plan, conduct which resulted in defendant’s subsequent sanction by the court, including monetary fines and suspension from electronic filing.” FAC at 11. Plaintiff terminated Defendants in January 2013 and acquired new bankruptcy counsel, but by that time the value of his property had increased and “OneWest Bank would no longer consider the reduction in of the principal amount of the loan for $472,000 to $250,000, or any amount in between.” Plaintiff’s new counsel filed the appropriate motions Defendants had not and “was successful in stripping the $100,000 second loan but was unable to obtain reductions to the OneWest Bank loan.” FAC at 14-15.

These factual allegations, assumed to be true for purposes of demurrer, adequately support Plaintiff’s claim that but for Defendants’ alleged negligence (not just the failure to take promised actions but also the failure to communicate with the client) he would have obtained a more favorable result than what ultimately occurred. All of the cases relied on by Defendants (other than Charnay) are the results of either summary judgment motions or judgments entered at trial where the former clients, after having the opportunity to discover and present evidence, were unable to either prove causation or establish that the damages claimed were not speculative. See Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 18 Cal 4th 739 (review of summary judgment awarded by trial court); Shopoff & Cavallo LLP v. Hyon (2008) 167 Cal App 4th 1489 (review of summary judgment and various trial verdicts); Garretson v. Harold I. Miller (2002) 99 Cal App 4th 563 (following jury verdict, motion for JNOV granted by trial court); Valentine v. Membrila Ins. Services, Inc. (2004) 118 Cal App 4th 462 (judgment after bench trial), and; Barnard v. Langer (2003) 109 Cal App 4th 1453 (motion for nonsuit granted at bench trial). Here, Plaintiff’s ability to later prove the allegations described above is irrelevant and he is entitled to seek evidence to support them through discovery.