Demurrer to Second Amended Complaint–OVERRULLED

1. 1st COA: Legal Malpractice

To state a cause of action for legal malpractice, the plaintiff must allege:

(1) breach of the attorney’s duty to use such skill, prudence, and diligence as other members of the profession commonly possess and exercise;

(2) a proximate causal connection between the negligent conduct and the resulting injuries;

(3) actual loss or damage resulting from the negligence.

(Thompson v. Halvonik (1995) 36 Cal.App.4th 657, 661.)

Plaintiff has pled a proper cause of action. He alleges it was a costly mistake to appoint a receiver and that defendants did so solely to collect their fees contrary to plaintiff’s instructions not to do so. He further contends Defendants should have recommended other means to recover the judgment, including acceptance of installment payments on the judgment debt.

Defendants argue that the claim fails because the damages alleged are too speculative. (Thompson v. Halvonik (1995) 36 Cal.App.4th 657, 661; Shopoff & Cavallo LLP v. Hyon (2008) 167 Cal.App.4th 1489, 1509.) But the cases cited by Defendants are distinguishable.

In Thompson, the plaintiff developed a severe infection when he was born at defendant hospital. The infection left him with severe mental retardation. His mother retained defendant firm but then switched to another law firm that obtained a $1.7 million verdict in his favor. Plaintiff claimed that he lost about $525,000 and $25,000 for expenses because he would have had a higher recovery had his initial attorneys proceeded more diligently. The trial court granted summary judgment in favor of defendant attorneys because the damage claim was too speculative and Plaintiff failed to present sufficient evidence of his actual damages in his opposition.

Thompson involved a motion for summary judgment, so Plaintiff was required to produce actual evidence of damage, but failed to do so. He alleged “three species” of damage caused by delay. The court noted that all three allegations were speculative and there was no actual evidence of harm. But in this case the matter is still at the pleading stage and Plaintiff is not required to present actual evidence of harm.

Shopoff is also distinguishable because the plaintiff in that case alleged a threat of future harm. “Hyon’s theories of recovery for legal malpractice in the cross-complaint suffer from a critical infirmity: they pled speculative damages that might occur in the future, but had not yet occurred.” (Shopoff & Cavallo LLP v. Hyon (2008) 167 Cal.App.4th 1489, 1509-1510.)

In this case, however, Plaintiff does not merely allege speculative future damages. He alleges that he has already incurred financial harm based on Defendants’ bad advice to seek appointment of a receiver.

Defendants argue that because Judge Lewis ultimately appointed the receiver, his conduct immunizes Defendants against malpractice for urging the appointment of a receiver, because the SAC represents a collateral attack on the wisdom of Judge Lewis’s ruling. But Defendants fail to cite any case law in support of this novel argument. On the contrary, common sense suggests that an attorney may still be found liable for malpractice for counseling a particular course of action, even if the judge ultimately rules in favor of that course of action. The wisdom of that course of action depends on what harm it causes the client, if any, rather than on whether it was legally attainable.

Defendants argue that Civil Code 47 (b) immunizes any communication published or broadcast in any judicial proceeding. But this argument fails because Plaintiff is suing not for any in court arguments made by his attorneys but rather their private advice, legal counsel, and strategy communicated outside of court. Furthermore, Defendants fail to cite any authority on point showing that the privilege immunizes them against the legal advice they provided to Plaintiff in the prior litigation against his brothers.

2. 2nd COA: Breach of Fiduciary Duty

The elements of a cause of action for breach of fiduciary duty are a fiduciary relationship, its breach, and damage proximately caused by that breach. (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith Inc. (1998) 68 Cal.App.4th 445, 483.) The allegations of SAC sufficiently allege each of these elements.

Defendants renew their argument that the alleged damages are too speculative to give rise to a cause of action. (Lazy Acres Market Inc. v. Tseng (2007) 152 Cal.App.4th 1431.) But Lazy Acres is distinguishable because therein counsel failed to recuse herself due to a conflict of interest until very late in the case. Even so, there were no allegations showing how the delay caused plaintiff any damages.

“Here the complaint alleges no facts to show that Lazy Acres would have achieved a better result in the underlying action but for Tseng’s alleged breach of duty. In fact, the complaint admits the matter was settled without contribution by Lazy Acres when Western Heritage paid Courts $100,000. The complaint does not suggest how Lazy Acres could have achieved a better result than that but for Tseng’s breach of duty.” (Id, at 1437.)

In this case, unlike Lazy Acres, the Plaintiff does allege that the advice to seek appointment of a receiver was incorrect and that it would have been better for Plaintiff to recover the judgment through other means.

3. Defendants’ Request for Judicial Notice

The court GRANTS Defendants’ request to take judicial notice that Exhibits 1 – 12 are documents filed in this action. Although the court may not take judicial notice of the truth of matters asserted therein that are reasonably subject to dispute.

“A court may take judicial notice of the fact of a document’s recordation, the date the document was recorded and executed, the parties to the transaction reflected in a recorded document, and the document’s legally operative language, assuming there is no genuine dispute regarding the document’s authenticity. From this, the court may deduce and rely upon the legal effect of the recorded document, when that effect is clear from its face.” (Fontenot v. Wells Fargo Bank N.A. (2011) 198 Cal.App.4th 256, 265.) But a court may not take judicial notice of the truth of factual representations, made in the recorded document, that are reasonably open to dispute. (Ibid.; See also Evid. Code 451 (e), (f); Evid. Code 452 (g), (h).)

Defendants’ Anti-SLAPP Special Motion to Strike–Denied

Defendants fail to carry their initial burden to show that the Plaintiff’s legal malpractice action infringes on their free speech rights or right to petition for redress of grievances. On the contrary, Plaintiff alleges that Defendants gave him bad legal advice and blames his attorneys for seeking appointment of a receiver against his instructions, which has allegedly resulted in a long and costly delay in recovering his judgment.

Defendants fail to make a prima facie showing that Plaintiff’s lawsuit arises from “an act in furtherance of a person’s right of petition or free speech under the United States or California Constitutions in connection with a public issue.” None of the four categories set forth in CCP 425.16 (e) is implicated.

Defendants cite no legal authority to show that under the facts of this case, private legal advice was given “in connection with an issue under consideration” by a judicial body. There is no showing that the advice concerned a public issue or an issue of public interest. .

Defendants to give notice.