Lloyd Johnson, et al. v. McCarthy & Kroes, et al.
Case No: 1487105
Hearing Date: Mon Apr 09, 2018 9:30

Nature of Proceedings: Motion Compel; Motion Order Requiring Non-Resident Plaintiffs to File an Undertaking; Case Management Conference

Michael Johnson, et al., v. McCarthy & Kroes, et al., #1487105, Judge Sterne

Hearing Date: April 9, 2018

Matters:

1. Motion to Compel Deposition of the Estate of Plaintiff Polly Johnson (by and through its Personal Representative) and Impose Monetary Sanctions in the sum of $2,800

2. Motion for an Order Requiring Non-Resident Plaintiffs to File an Undertaking in the Amount of at Least $73,400

Attorneys:

For Plaintiff: Shannon Guevara (B/B Law Group – Los Angeles)

For Defendants: Vikram Sohal (Nemecek & Cole – Sherman Oaks)

Tentative Ruling:

1. The court denies defendants’ motion to compel the deposition of the estate of Polly Johnson by and through its personal representative, without prejudice to proceeding with the deposition of Michael Johnson in the manner described in this ruling, either by agreement or motion. The court denies the requests for monetary sanctions.

2. The court denies defendants’ Motion for Order Requiring Non-Resident Plaintiffs to File an Undertaking Pursuant to CCP § 1030.

Background: On February 20, 2015, plaintiffs Lloyd Johnson, Polly Johnson, and Michael Johnson (Johnson) filed their original complaint in this action against defendants McCarthy & Kroes, R. Christopher Kroes, and Patrick McCarthy. The complaint alleges that the attorney defendants and their law firm committed professional negligence and breached their fiduciary duties to their clients, the plaintiffs, in the course of representing them in multiple lawsuits. The also seek declaratory relief and state a claim for financial elder abuse. The operative complaint is the first amended complaint (“FAC”) filed on August 18, 2017. Defendants filed a cross-complaint against Lloyd Johnson and Michael Johnson for breach of contract, and other claims, alleging nonpayment of fees.

Lloyd Johnson and Polly Johnson died during the course of this litigation. Michael Johnson was appointed personal representative for the estates of Lloyd Johnson and Polly Johnson.

Motion to Compel Deposition: Defendants move to depose the estate of Polly Johnson by and through its personal representative, Michael Johnson, without waiving their right to depose Michael Johnson as an individual and as the personal representative of the estate of Lloyd Johnson. Michael Johnson, individually and as personal representative of the two estates (hereinafter “Johnson”) opposes the motion as violating the one deposition rule in CCP § 2025.610. Both parties ask for monetary sanctions.

CCP § 2025.610(a) provides: “Once any party has taken the deposition of any natural person, including that of a party to the action, neither the party who gave, nor any other party who has been served with a deposition notice pursuant to Section 2025.240 may take a subsequent deposition of that deponent.” Pursuant to CCP § 2025.610(c)(1), the section does not preclude taking a subsequent deposition of a natural person who has previously been deposed as a result of that person’s designation to testify on behalf of an organization under § 2025.230. CCP § 2025.230 governs situations where the deponent is not a “natural person,” in which case “the deponent shall designate and produce at the deposition those of its officers, directors, managing agents, employees, or agents who are most qualified to testify on its behalf as to those matters to the extent of any information known or reasonably available to the deponent.”

If Lloyd and Polly Johnson were still alive, there would be no question that the three interests represented by the plaintiffs would be subject to three separate depositions. In the FAC, plaintiffs allege professional negligence in four lawsuits: one in which defendants represented Lloyd and Polly in an action arising out of a stock purchase agreement, including a shareholder derivative suit; one in which Michael Johnson, as assignee for part of the litigation, represented Lloyd and Polly’s interests in a breach of contract case; one in which defendants represented Michael in a suit against R&R Auction Company; and one in which defendants represented Michael in a contract dispute. Each of the three plaintiffs would have been deposed regarding their experience with defendants and their interests in the underlying litigation.

Now there is one individual who represents three interests: his own and the interest of each estate. The question is whether he can be deposed once or up to three times, once in each of his three capacities.

“An ‘estate’ is not a legal entity and is neither a natural nor artificial person. It is merely a name to indicate the sum total of the assets and liabilities of a decedent….” Bright’s Estate v. Western Air Lines, 104 Cal.App.2d 827 (1951). After the death of a person who commenced an action or proceeding, the action may be continued by the decedent’s personal representative. CCP § 377.31.

The “estate” itself cannot designate an officer, director, managing agent, employee, or agent as the person most knowledgeable to be a deponent pursuant to CCP § 2025.230. There is no organization that has such agents. There is only the personal representative and only he or she can be deposed in an action commenced or continued on behalf of the estate. So, technically, the exception in CCP § 2025.610(c)(1) does not apply.

Even if Johnson could be deposed three times, it would be harsh to have him be deposed on three separate occasions, especially since he now lives in Florida. It appears that the more appropriate course of action would be to depose Johnson a single time in all three capacities. On motion, the court may establish the sequence and timing of discovery for the convenience of the parties and in the interests of justice. CCP § 2019.020(b). That deposition may require more than the seven hours provided in CCP § 2025.290(a), but that section permits the court to allow additional time.

The court denies defendants’ motion to compel the deposition of the estate of Polly Johnson by and through its personal representative, without prejudice to proceeding with the deposition of Michael Johnson in the manner described in this ruling, either by agreement or motion. The court expects the parties to meet and confer in good faith to reach an agreement regarding the time, location, and length of Michael Johnson’s deposition without the involvement of the court.

Because both plaintiff and defendants failed to pursue a reasonable approach to resolution of this dispute, the court denies the requests for monetary sanctions.

Motion for Order Requiring Non-Resident Plaintiffs to File an Undertaking Pursuant to CCP § 1030: Michael Johnson now lives in Florida. Defendants move to require him to file an undertaking pursuant to CCP § 1030. Johnson opposes the motion, contending that defendants have not met their burden under the statute and the costs claimed are excessive.

CCP § 1030(a) provides: “When the plaintiff in an action … resides out of the state, or is a foreign corporation, the defendant may at any time apply to the court by noticed motion for an order requiring the plaintiff to file an undertaking to secure an award of costs and attorney’s fees which may be awarded in the action….” Defendants do not seek attorney’s fees.

“The motion shall be made on the grounds that the plaintiff resides out of the state … and that there is a reasonable possibility that the moving defendant will obtain judgment in the action…. The motion shall be accompanied by an affidavit in support of the grounds for the motion and by a memorandum of points and authorities. The affidavit shall set forth the nature and amount of the costs … the defendant has incurred and expects to incur by the conclusion of the action….” CCP § 1030(b). If the court determines defendants have established the grounds for the motion, it shall order the plaintiff to file an undertaking in an amount specified as security for the costs. CCP § 1030(c).

Defendants are “not required to show that there was no possibility that [plaintiff] could win at trial, but only that it was reasonably possible that [defendants] would win.” Baltayan v. Estate of Getemyan, 90 Cal.App.4th 1427, 1432 (2001) [italics in original]. (In Baltayan, the defendant relied on statements the plaintiff and defendant made to police and a judicial arbitration award in defendant’s favor. The action was going forward for a trial de novo after the arbitration.)

Defendants rely on the declaration of their counsel Michael McCarthy (not to be confused with defendant Patrick McCarthy). He says he personally reviewed the files in the four underlying cases and determined that his client “prudently and vigorously represented Plaintiffs.” [McCarthy Dec. ¶¶3, 5] As an example, he says that, in the derivative action, his client “filed several demurrers, discovery motions, ex parte applications, and attended multiple court hearings on behalf of their clients.” [McCarthy Dec. ¶4] He says that, after his clients were no longer attorneys, one action was dismissed after a demurrer to the sixth amended complaint was sustained and, in another, summary judgment was granted against plaintiffs. [McCarthy Dec. ¶¶6, 7] He has “determined that Michael Johnson acted unreasonably when refusing to accept the settlement offer that M&K was able to obtain for him in the underlying Munson case.” [McCarthy Dec. ¶8]

That is the sum total of evidence presented to show a reasonable possibility of defendants obtaining judgment. Setting aside the propriety of counsel purporting to testify as an expert witness in his client’s case, the evidence is insufficient.

“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.” Coscia v. McKenna & Cuneo, 25 Cal.4th 1194, 1199 (2001).

To show that Johnson will not be able to show defendants failed to use such skill, prudence, and diligence as members of their profession commonly possess and exercise, defendants must do more than state they filed several demurrers, discovery motions, and ex parte applications, and that they attended multiple court hearings in a single case. The mere volume of work does not amount to skill, prudence, and diligence. Michael McCarthy’s conclusions are not based on stated facts or evidence.

Defendants argue that the negative conclusion of two of the cases “may negate the causation element in a legal malpractice claim.” [Reply 4:4-6] First, the evidence presented reflects only two of the cases resulted in negative conclusions—dismissal and summary judgment. There were two other lawsuits. Second, the cases cited do not support the proposition that a negative conclusion alone alleviates counsel of a professional liability claim. Steketee v. Lintz, Williams & Rothberg, 38 Cal.3d 46, 57 (1985) (“An attorney cannot be held liable for failing to file an action prior to the expiration of the statute of limitations if he ceased to represent the client and was replaced by other counsel before the statute ran on the client’s action.”); Shelly v. Hansen, 244 Cal.App.2d 210, 213 (1966), disapproved on other grounds in Neel v. Magana, Olney, Levy, Cathcart & Gelfand, 6 Cal. 3d 176, 185 n15 (1971) (there still existed an enforceable right of action by plaintiff at the time new counsel received the file); Daniels v. DeSimone, 13 Cal.App.4th 600, 609-610 (1993) (defendant counsel ceased to represent the client and was replaced by other counsel before the statute ran on the client’s action). Defendants offer no evidence that new counsel had the opportunity to take action to mitigate the effects of any alleged deficiencies in defendants’ representation of their clients.

Defendants claim that there is a reasonable probability that the other three causes of action will fail. But the court must look at the FAC as a whole. Johnson’s failure to win every cause of action does not amount to defendants prevailing. If Johnson prevails on the professional negligence cause of action, he likely would achieve a net recovery and would be the prevailing party.

The court finds that defendants have not sustained their burden to show a reasonable possibility of obtaining judgment. Therefore, the court denies defendants’ Motion for Order Requiring Non-Resident Plaintiffs to File an Undertaking Pursuant to CCP § 1030.