Case Name: Williams v. Milde, et al.
Case No.: 17-CV-313335

This is a legal malpractice action initiated by plaintiff Lorie Williams (“Plaintiff”) against her prior attorneys, defendants Breck E. Milde (“Milde”) and Eric T. Hartnett (“Hartnett”) (collectively “Defendants”).

According to the allegations of the first amended complaint (“FAC”), Plaintiff hired Defendants to represent her in a lawsuit she filed against Michael Ferris (“Ferris”) (“Underlying Action”). (FAC, ¶ 9.) As part of their representation, Defendants drafted and filed a complaint and first amended complaint on Plaintiff’s behalf. (Id. at ¶¶ 16-17.) Defendants omitted from the pleadings any allegation regarding the amount of monetary damages sought. (Id. at ¶ 19

In connection with the Underlying Action, Ferris was ordered to provide further responses to outstanding discovery requests. (FAC, ¶ 20.) He subsequently failed to comply with that order, leading Defendants to file a motion seeking an order imposing monetary, evidentiary, terminating, and issue sanctions. (Id. at ¶ 21.) The court granted the request for terminating sanctions, effectively ending Ferris’ ability to defend himself in that action. (Id. at ¶ 23; Exh. 3.)

Thereafter, the court entered default against Ferris and Defendants requested a default judgment be entered against him. (FAC, ¶ 24.) At the default hearing, Defendants for the first time identified the amount of damages to which Plaintiff was purportedly entitled. (Id. at ¶¶ 25-26.) The court awarded Plaintiff $227,072.81 in monetary damages, including an award of punitive damages. (Id. at ¶¶ 27-28; Exh. 5.) Two years later, Ferris moved to void the default and judgment on the bases the first amended complaint did not set forth any identifiable sum as a basis for the monetary damages and Plaintiff did not timely file a statement of damages, which must be filed prior to seeking an award of punitive damages in a default hearing. (Id. at ¶ 31.) The court posted a tentative ruling granting that motion and vacating the default and judgment (the “Order”), which Plaintiff did not contest. (Id. at ¶ 35.) As a result, the judgment awarding monetary damages to Plaintiff was vacated. (Id. at ¶ 36.) Defendants’ failure to allege an identifiable amount of damages and prepare a statement of damages injured Plaintiff in the amount of $227,072.81. (Id. at ¶¶ 44, 53.)

Plaintiff asserts two causes of action for professional negligence and breach of fiduciary duty. Defendants presently demur to both causes of action and move to strike portions of the pleading.

I. Request for Judicial Notice

Plaintiff requests judicial notice of the following two documents filed by Ferris in the Underlying Action: the reply in support of the motion to set aside and void default judgment and default filed on September 19, 2017 and the notice of hearing of the demurrer and the demurrer to the second amended complaint filed on January 17, 2018. These documents are proper subjects of judicial notice pursuant to Evidence Code section 452, subdivision (d), which authorizes courts to judicially notice court records. However, they are not relevant to any material issue raised herein, which is a precondition for judicial notice. (See People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2 [any matter to be judicially noticed must be relevant to a material issue].) As acknowledged by Plaintiff, the documents “constitute background information concerning a matter in issue on The Demurrer.” (RJN, p. 2:7-8.) Plaintiff does not rely on the documents to support the substance of her arguments. Accordingly, the request for judicial notice is DENIED.

II. Demurrer

Defendants demur to both causes of action on the ground of uncertainty, arguing “there is uncertainty as to the damages being claimed by [Plaintiff] in this action and it cannot be determined how or in what manner [she] has suffered damages in the amount of $227,070.81.” (Mem. Ps. & As., p. 5:2-3.)

For context, the ruling states as follows: “[T]he Court GRANTS the motion of Defendant Michael Ferris, and finds that both the default and default judgment are VOID for failure to allege specific damages in the complaint, and failure to serve a statement of damages. However, nothing in this order will affect the entry of the order granting terminating sanctions.” (FAC, Exh. 6.) The ruling then provided “Plaintiff will need to amend the complaint to properly claim the amount of damages that are sought, and serve a statement of damages for the punitive damages and then file another Request for Entry of Default.” (Ibid.)

Defendants preliminarily and correctly characterize the ruling as voiding the default and judgment but keeping the terminating sanctions in place. Thus, while the pleading currently indicates there is no default in effect, the ruling clearly contemplates that further default proceedings may occur. Defendants then assert the ruling reflects Plaintiff has not forfeited the right to obtain a judgment in the Underlying Action and may be awarded damages in the future if she follows the court’s instructions, or if necessary, takes the action to trial. Defendants contend that because Plaintiff may still recover damages in the Underlying Action, her claim for damages here is uncertain.

Uncertainty is a disfavored ground for demurrer and is typically sustained only where the pleading is so unintelligible and uncertain the responding party cannot reasonably respond or recognize the claims against it. (Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal.App.4th 612, 616.) The law is settled that “[a] special demurrer for uncertainty is not intended to reach the failure to incorporate sufficient facts in the pleading but is directed at the uncertainty existing in the allegations actually made.” (Butler v. Sequeira (1950) 100 Cal.App.2d 143, 145–146.)
Defendants essentially argue that Plaintiff has not alleged their conduct damaged her, which is an element of a cause of action for legal malpractice and breach of fiduciary duty. (See Charnay v. Cobert (2006) 145 Cal.App.4th 170, 179, 182 [setting forth elements of legal malpractice and breach of fiduciary duty causes of action].) Thus, Defendants’ argument is actually directed at Plaintiff’s purported failure to allege sufficient facts and not any uncertainty of allegations actually asserted. The purported defects do not render the FAC unintelligible. There is no uncertainty as to how and the manner in which Plaintiff was allegedly damaged. She clearly pleads she was damaged as a result of Defendants’ failure to include an identifiable amount of damages in her pleadings and submit a statement of damages. (See FAC, ¶¶ 44, 53.) As such, the demurrer is not sustainable on the basis the pleading is uncertain.

Defendants also state it is unclear whether the Ruling—which was a tentative ruling—has become final, suggesting the pleading is also uncertain on that basis. To the extent this statement was intended to be a separate and distinct argument, it is problematic because the allegation that the Ruling was a tentative ruling does not make the pleading uncertain. Plaintiff’s allegations are clear; she alleges the court issued a tentative ruling that would presumably be adopted after the hearing. (See FAC, ¶ 35.) Further, the Court observes it is otherwise evident from the FAC that the tentative ruling was adopted. “Tentative rulings ‘indicate the way the judge is prepared to decide the matter based on the information before him or her when the ruling was prepared.’ [Citations].” (Brown, Winfield & Canzoneri, Inc. v. Superior Court (2010) 47 Cal.4th 1233, 1245.) In Santa Clara County, a tentative ruling becomes the order of the court on the scheduled hearing date if the contesting party fails to timely notice an objection to the other party and the court. (Behm v. Clear View Technologies (2015) 241 Cal.App.4th 1, 7, fn. 3, citing Super. Ct. Santa Clara County, Local Rules, Civil Rule 8E and Cal. Rules of Court, rule 3.1308(a).) Here, Plaintiff alleges she did not challenge the tentative ruling and it therefore presumably became the final order. (See FAC, ¶ 35.) Consequently, the fact Plaintiff alleges the Ruling was a tentative ruling does not render the pleading uncertain.

Accordingly, the demurrer to the first and second causes of action on the ground of uncertainty is OVERRULED.

III. Motion to Strike

Defendants move to strike Plaintiff’s allegations relating to the award of punitive damages in the Underlying Action and request for an award of attorney’s fees in the instant case.
On a motion to strike portions of a pleading under Code of Civil Procedure section 435, a court may strike out any irrelevant or improper matter inserted in the pleading. (Code Civ. Proc., § 436, subd. (a).) Irrelevant matter includes a demand for judgment requesting relief not supported by the allegations of the complaint. (Code of Civ. Proc., § 431.10, subds. (b), (c).)

A. Award of Punitive Damages

Defendants move to strike the following portions of the pleading relating to Plaintiff’s award of punitive damages in the Underlying Action: (1) paragraph 41, lines 14-21; (2) paragraph 43, lines 9-13; (3) paragraph 49, lines 17-23; and (4) paragraph 52.

Defendants assert Plaintiff may not include allegations concerning the award of punitive damages because she cannot recover lost punitive damages as compensatory damages in a legal malpractice claim. In support, Defendants rely on Ferguson v. Lieff, Cabraser, Heimann & Bernstein (2003) 30 Cal.4th 1037 (“Ferguson”).

In Ferguson, the plaintiffs initiated an action against the defendant law firm who represented them in an underlying class action lawsuit. (Ferguson, supra, 30 Cal.4th at p. 1041.) In the underlying lawsuit, the plaintiffs asserted a claim for punitive damages. (Ibid.) The law firm negotiated a global settlement agreement that included dismissing the punitive damages claim. (Ibid.) Several class members objected to the settlement on the basis they would not recover punitive damages. (Id. at p. 1042.) Despite those objections, the parties eventually settled and that claim was dismissed. (Id. at p. 1043.) Two objectors then filed an action against the law firm, asserting numerous causes of action including legal malpractice and breach of fiduciary duty. (Ibid.) As part of their compensatory damages, the plaintiffs alleged they lost a potential award of punitive damages. (Id. at p. 1044.) The law firm subsequently moved for summary judgment, which the trial court granted. (Ibid.) The Court of Appeal affirmed the trial court’s decision, finding in relevant part that the plaintiffs could not recover compensatory damages that include lost punitive damages in the underlying lawsuit. (Ibid.)

On review, the California Supreme Court similarly held the plaintiffs could not recover lost punitive damages as compensatory damages in a legal malpractice action. (Ferguson, supra, 30 Cal.4th at p. 1046.) The court set forth numerous reasons for precluding any recovery of lost punitive damages as compensatory damages, including: (1) allowing such recovery would defeat the very purpose of punitive damages, which is to punish the tortfeasor and not compensate the injured party; (2) “[m]aking a negligent attorney liable for lost punitive damages would not serve a societal interest[] because the attorney did not commit and had no control over the intentional misconduct justifying the punitive damages award”; (3) “[a]llowing recovery of lost punitive damages as compensatory damages in legal malpractice actions would also violate public policy[] because the amount of the award bears no relation to the gravity of the attorney’s misconduct or his or her wealth”; (4) awarding lost punitive damages is too speculative when they were not awarded in the underlying lawsuit; (5) determining the amount of punitive damages to be awarded involves a “complex standard of proof” different from that governing the award of compensatory damages; and (6) “allowing recovery of lost punitive damages as compensatory damages in a legal malpractice action may exact a significant social cost [because] [e]xposing attorneys to such liability would likely increase the cost of malpractice insurance, cause insurers to exclude coverage for these damages, or further discourage insurers from providing professional liability insurance in California.” (Id. at pp. 1046-50.)

It is clear Ferguson prohibits awarding compensatory damages in a malpractice claim for lost punitive damages. As such, Plaintiff is not legally entitled to damages to the extent they are based on her lost punitive damages.

Plaintiff’s two arguments in opposition do not support a contrary conclusion. Plaintiff first asserts Ferguson is inapplicable because awarding punitive damages is not speculative here since the trial court actually awarded punitive damages in contrast to Ferguson. This difference alone does not support the conclusion that Ferguson is inapplicable. The speculative nature of the award was only one of numerous reasons supporting the California Supreme Court’s decision; the outcome did not hinge on the fact punitive damages were not actually awarded. (See Ferguson, supra, 30 Cal.4th at pp. 1046-50.) Further, the court dedicated most of the decision to a discussion of the public policy reasons for prohibiting this type of recovery, suggesting those were the most crucial factors. Those factors apply here. Plaintiff also maintains that prohibiting her from seeking compensatory damages based on lost punitive damages permits Ferris to escape civil punishment for his acts due to Defendants’ errors. But the California Supreme Court considered a similar argument in Ferguson and determined it would be worse to pass the civil punishment to the negligent attorneys who did not engage in the underlying punishable behavior. (See id. at pp. 1046-47.) In any event, the case against Ferris is not over, and she can still pursue claims against him, including punitive damages.

Because Plaintiff may not recover lost punitive damages in this action, the allegations relating to the award of punitive damages in the Underlying Action are irrelevant and shall be stricken.

B. Attorney’s Fees

Defendants move to strike the allegations relating to Plaintiff’s request for an award of attorney’s fees in paragraphs 45 and 56 of the FAC and paragraph 7 of the prayer for relief.
Defendants assert the request for attorney’s fees is irrelevant because there is no cognizable basis alleged for awarding them. A plaintiff may recover an award of attorney’s fees when the award is authorized by contract, statute, or law. (Code Civ. Proc., § 1033.5, subd. (a)(10).) While no legal authority requires Plaintiff to explicitly allege the potential source of the request for attorney’s fees, the FAC does not reflect any basis for awarding them. No cause of action is predicated on the existence of a contract or statute providing for an award of attorney’s fees. There is otherwise no apparent legal basis alleged in the FAC for awarding attorney’s fees. In fact, Plaintiff admits “that current law does not permit her to recover the attorneys’ fees she incurs in prosecuting” this action. (Opp., p. 6:19-20.) Plaintiff is therefore not entitled to an award of attorney’s fees. Plaintiff’s insistence that she should be able to include a request for attorney’s fees to protect her right to fees should the law change does not support a different conclusion. Plaintiff cites no authority suggesting she may request an award of attorney’s fees to which she is not presently entitled merely because she wants to preserve her right to seek attorney’s fees in the unlikely event the law might change. If such a change in law occurs, Plaintiff can move to amend the pleading to include a request for attorney’s fees. Accordingly, the pleading does not reflect a basis for awarding Plaintiff attorney’s fees and the challenged allegations shall be stricken.

C. Conclusion

Accordingly, the motion to strike is GRANTED in its entirety without leave to amend.

The Court shall prepare the Order.