Case Name: Dincel Law Group, APC, et al. v. Carmen Colet, et al.

Case No.: 18CV339276

Cross-Defendant Dincel Law Group’s and Kim O. Dincel’s Demurrer to Cross-Complaint for Professional Negligence; Fraud; Negligent Misrepresentation and; Declaratory Relief

Factual and Procedural Background

In 2012, Ralph Colet (now deceased) and defendant Carmen Colet (collectively, “Colets”) retained plaintiff Kim Dincel (“Dincel”), an attorney, to provide legal services in an action against the Colets by the City of Los Angeles Department of Airports brought in San Mateo County Superior Court (“Underlying Action”). (Second Amended Complaint (“SAC”), ¶¶1 – 4 and 9.) In 2012, the Colets entered into a written fee agreement signed by Ralph Colet. (SAC, ¶9 and Exh. A.)

Between June 2012 and January 22, 2013, the Colets agreed to make payments on the incurred legal costs and fees as clients of plaintiff Dincel and plaintiff Dincel Law Group, APC (“DLG”), the firm plaintiff Dincel opened after leaving his prior firm. (SAC, ¶13.) After months of legal representation by plaintiffs Dincel and DLG, the Colets chose to terminate plaintiffs Dincel and DLG. (SAC, ¶18.) At termination, plaintiff Dincel and defendant Colet entered into an additional oral agreement whereby plaintiff Dincel agreed to forego suing defendant Colet for the incurred legal costs and fees on the condition that the Colets pay the outstanding fees and costs upon resolution of the Underlying Action. (SAC, ¶21.) The Colets agreed. (Id.)

The Underlying Action resolved on December 7, 2016, but defendant Colet has not paid plaintiffs the amount due. (SAC, ¶24.) The full amount of the debt owed to plaintiff Dincel is $135,571.05 plus 10% interest per month for the 38 months prior.

On December 6, 2018, plaintiff DLG filed a Judicial Council form complaint against defendant Colet asserting a single cause of action for breach of contract.

On February 15, 2019, plaintiffs DLG and Dincel filed a first amended complaint asserting causes of action for:

(1) Breach of Oral Contract
(2) Unjust Enrichment
(3) Common Count: Goods and Services Rendered
(4) Common Count: Open Book Account

Upon stipulation, plaintiffs DLG and Dincel filed the operative SAC on June 20, 2019 which asserts causes of action for:

(1) Breach of Oral Contract
(2) Unjust Enrichment
(3) Common Count: Goods and Services Rendered

On August 12, 2019, defendant Colet filed an answer to plaintiffs’ SAC and also filed a cross-complaint. In the cross-complaint, Colet asserts she did not agree to be jointly and severally liable under the written fee agreement purportedly signed by her late husband with Dincel. (Cross-Complaint, ¶¶2, 16 – 20.) Colet did not execute a written engagement agreement to secure the representation of DLG or Dincel and Colet did not request DLG or Dincel provide legal services. (Cross-Complaint, ¶23.)

Colet’s cross-complaint asserts causes of action for:

(1) Professional negligence
(2) Fraud
(3) Negligent Misrepresentation
(4) Declaratory Relief

On September 18, 2019, DLG and Dincel filed the motion now before the court, a demurrer to Colet’s cross-complaint.

I. Procedural violation.

As a preliminary matter, the court notes that cross-defendants DLG and Dincel failed to comply with Code of Civil Procedure section 430.41. That section provides that the demurring party must meet and confer with the party who filed the challenged pleading “for the purpose of determining whether an agreement could be reached that would resolve the objections to be raised in the demurrer.” (Code Civ. Proc., §430.41, subd. (a).) During this process, the demurring party must identify all causes of action it believes are subject to demurrer, identify the bases for the demurrer, and provide legal support. (Code Civ. Proc., §430.41, subd. (a)(1).) In turn, the opposing party shall provide legal support for its position that the pleading is legally sufficient or any identified defects may be cured. (Code Civ. Proc., §430.41, subd. (a)(1).) The demurring party shall file and serve with its demurrer a declaration stating that: (1) the means by which the demurring party met and conferred and that the parties did not reach agreement; or (2) that the party who filed the pleading failed to respond or otherwise failed to meet and confer in good faith. (Code Civ. Proc., § 430.41, subd. (a)(3).) If a demurring party fails to file the requisite declaration, the court may continue the hearing and order the parties to meet and confer. (Assem. Com. on Judiciary, Rep. on Sen. Bill No. 383 (2015-2016 Reg. Sess.), p. 2.) A court may not sustain a demurrer based on the insufficiency of the meet and confer process. (Code Civ. Proc., §430.41, subd. (a)(4).)

Cross-defendants DLG and Dincel failed to file a meet and confer declaration as required by Code of Civil Procedure section 430.41. In furtherance of judicial economy, the court will overlook cross-defendants DLG and Dincel’s failure to comply with Code of Civil Procedure section 430.41 in this instance but hereby places cross-defendants DLG and Dincel and their counsel on notice that they are required to comply with the Code of Civil Procedure in the future.

II. Request for judicial notice.

In support of the demurrer, cross-defendants DLG and Dincel request judicial notice of the existence and content of two court records from the Underlying Action, a substitution of counsel and a notice of attorney’s lien. Evidence Code section 452, subdivision (d) states that the court may take judicial notice of “[r]ecords of any court of this state.” This section of the statute has been interpreted to mean that the trial court may take judicial notice of the existence of the court’s own records. Evidence Code section 452 and 453 permit the trial court to “take judicial notice of the existence of judicial opinions and court documents, along with the truth of the results reached—in the documents such as orders, statements of decision, and judgments—but [the court] cannot take judicial notice of the truth of hearsay statements in decisions or court files, including pleadings, affidavits, testimony, or statements of fact.” (People v. Woodell (1998) 17 Cal.4th 448, 455.) Accordingly, cross-defendants’ request for judicial notice in support of demurrer is GRANTED, but only insofar as the court takes judicial notice of the existence of the documents, not necessarily the truth of any matters asserted therein.

III. Cross-defendants DLG and Dincel’s demurrer to the first cause of action [professional negligence] in cross-complainant Colet’s cross-complaint is SUSTAINED.

“In order to establish a cause of action for legal malpractice the plaintiff must demonstrate: (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 injury; and (3) actual loss or damage resulting from the negligence.” (Carlton v. Quint (2000) 77 Cal.App.4th 690, 699; see also CACI No. 600.)

Among other things, cross-defendants DLG and Dincel argue Colet’s claim for professional negligence is subject to demurrer because it is “void of … any dates or description of an attorney client relationship.” Colet’s cross-complaint denies any agreement to be bound by the written fee agreement between her late husband and Dincel’s former firm, Silicon Valley Law Group (“SVLG”). (Cross-Complaint, ¶¶16 – 21.) Colet affirmatively denies executing a written fee agreement to secure DLG or Dincel’s representation and affirmatively denies requesting DLG or Dincel provide legal services. (Cross-Complaint, ¶23.)

“To state the obvious, an attorney’s duty to his or her client depends on the existence of an attorney-client relationship. If that relationship does not exist, the fiduciary duty to a client does not arise. [Citations.] Except for those situations where an attorney is appointed by the court, the attorney-client relationship is created by some form of contract, express or implied, formal or informal. [Citations.]” (Fox v. Pollack (1986) 181 Cal.App.3d 954, 959.)

In view of Colet’s affirmative denial of any a contractual or any other attorney-client relationship, there is no duty owed to Colet. Consequently, Colet has not and cannot state a cause of action for professional negligence. Cross-defendants DLG and Dincel’s demurrer to cross-complainant Colet’s first cause of action on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for professional negligence is SUSTAINED with 10 days’ leave to amend.

IV. Cross-defendants DLG and Dincel’s demurrer to the second cause of action [fraud] in cross-complainant Colet’s cross-complaint is SUSTAINED.

“The elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) “Fraud actions are subject to strict requirements of particularity in pleading. … Accordingly, the rule is everywhere followed that fraud must be specifically pleaded.” (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216.) “The pleading should be sufficient to enable the court to determine whether, on the facts pleaded, there is any foundation, prima facie at least, for the charge of fraud.” (Commonwealth Mortgage Assurance Co. v. Superior Court (1989) 211 Cal.App.3d 508, 518.)

Among other reasons, cross-defendants demur to Colet’s second cause of action for fraud on the ground that Colet has not alleged fraud with the requisite specificity. The court finds cross-defendants’ argument persuasive. In particular, the court finds a lack of any specific allegation that Colet relied. “It is settled that a plaintiff, to state a cause of action for deceit based on a misrepresentation, must plead that he or she actually relied on the misrepresentation.” (Mirkin v. Wasserman (1993) 5 Cal.4th 1082, 1088, internal citations omitted; see also CACI No. 1907.) Colet alleges that for years prior to this action, DLG and Dincel represented that Ralph Colet owed legal fees and from May 2017 to August 17, 2018, intermittently sent monthly statements to Ralph Colet, but that in September 2018, Dincel began sending the monthly statements to Colet directly. Colet contends these monthly statements are false because she and her late husband were not responsible for legal fees. (Cross-Complaint, ¶¶38 – 42.) Colet then alleges very generically that she “reasonably acted in reliance on the misrepresentations.” The court finds this allegation lacks the specificity required for pleading fraud. Again, in light of Colet’s strong and affirmative denial that she owes DLG and Dincel any legal fees, Colet must specifically allege how she actually and detrimentally relied in order to state a cause of action for fraud.

Accordingly, cross-defendants DLG and Dincel’s demurrer to cross-complainant Colet’s second cause of action on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for fraud is SUSTAINED with 10 days’ leave to amend.

V. Cross-defendants DLG and Dincel’s demurrer to the third cause of action [negligent misrepresentation] in cross-complainant Colet’s cross-complaint is SUSTAINED.

“Negligent misrepresentation is a form of deceit, the elements of which consist of (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.” (Fox v. Pollack (1986) 181 Cal.App.3d 954, 962; internal citation omitted; see also Ragland v. U.S. Bank National Assn. (2012) 209 Cal.App.4th 182, 196 see also CACI, No. 1903.)

California courts have never decided whether the tort of negligent misrepresentation … must also be pled with specificity. But such a requirement is implied in the reasoning of two decisions[, Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197 and B.L.M. v. Sabo & Deitsch (1997) 55 Cal.App.4th 823.] … Because of the potential for false claims, we hold that a complaint for negligent misrepresentation in a [share]holder’s action should be pled with the same specificity required in a [share]holder’s action for fraud. (We express no view on whether this pleading requirement would apply in other actions for negligent misrepresentation.)

(Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.)

For the same reason discussed above, Colet has not alleged, with the requisite specificity, any reliance on the purported misrepresentations. Accordingly, cross-defendants DLG and Dincel’s demurrer to cross-complainant Colet’s third cause of action on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for negligent misrepresentation is SUSTAINED with 10 days’ leave to amend.

VI. Cross-defendants DLG and Dincel’s demurrer to the fourth cause of action [declaratory relief] in cross-complainant Colet’s cross-complaint is OVERRULED.

“Where the dates alleged in the complaint show the action is barred by the statute of limitations, a general demurrer lies.” (Weil & Brown et al., CAL. PRAC. GUIDE: CIV. PROC. BEFORE TRIAL (The Rutter Group 2019) ¶7:50, p. 7-31 citing Iverson, Yoakum, Papiano & Hatch v. Berwald (1999) 76 Cal.App.4th 990, 995, et al.) “The running of the statute must appear ‘clearly and affirmatively’ from the dates alleged. It is not enough that the complaint might be barred.” (Id. citing Committee for Green Foothills v. Santa Clara County Board of Supervisors (2010) 48 Cal.4th 32, 42, et al.)

Cross-defendants contend the fourth cause of action for declaratory relief is subject to a three year statute of limitations pursuant to Code of Civil Procedure section 338, subdivision (a) which provides a three-year statute of limitations for “[a]n action upon a liability created by statute, other than a penalty or forfeiture.” Colet’s fourth cause of action seeks declaratory relief regarding her rights and duties with regard to “(a) whether the [written fee agreement] was terminated according to its terms on or about January 2013; (b) whether SVLG had a right to assign the [written fee agreement] to Dincel under the circumstances described herein without the written consent of Colet; (c) whether SVLG had a right to assign the Colet account under the terms of the [written fee agreement] and the assignment to Dincel under the circumstances described herein without the written consent of Colet; and (d) whether Dincel has standing to pursue collection of the Colet account based on the assignment.” (Cross-Complaint, ¶55.)

Cross-defendants contend this cause of action accrued no later than June 25, 2015 when Colet was put on notice of DLG and Dincel’s lien in the Underlying Action and that since Colet did not assert this claim until the filing of this cross-complaint on August 12, 2019, the claim is barred. “With respect to torts, generally speaking, a claim accrues and the statute of limitations begins to run upon the occurrence of the last event essential to the cause of action, even if the plaintiff is unaware that a cause of action exists. The infliction of actual and appreciable harm will commence the limitations period.” (Shamsian v. Atlantic Richfield Co. (2003) 107 Cal.App.4th 967, 979 – 980; internal citations and punctuation omitted.) The court is not persuaded that Colet’s claim for declaratory relief accrued upon service of DLG and Dincel’s notice of attorney’s lien on June 25, 2015. The court does not consider Colet to have suffered any actual or appreciable harm.

Alternatively, cross-defendants demur citing to Code of Civil Procedure section 1061 which states, “The court may refuse to exercise the power granted by this chapter in any case where its declaration or determination is not necessary or proper at the time under all the circumstances.” “The declaratory relief statute should not be used for the purpose of anticipating and determining an issue which can be determined in the main action. The object of the statute is to afford a new form of relief where needed and not furnish a litigant with a second cause of action for the determination of identical issues.” (California Ins. Guarantee Assn. v. Superior Court (1991) 231 Cal.App.3d 1617.) Cross-defendants’ argument is incomplete. Cross-defendants appear to be suggesting that Colet’s claim for declaratory relief is unnecessary here because the issues are already raised and/or will be adjudicated by DLG and Dincel’s complaint. However, DLG and Dincel assert a claim for breach of an oral contract. It is not entirely clear whether the issues asserted in Colet’s cross-claim for declaratory relief entirely overlap.

Accordingly, cross-defendants DLG and Dincel’s demurrer to cross-complainant Colet’s fourth cause of action on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for declaratory relief is OVERRULED.