Case Name: Erblich v. Marsten
Case No.: 17CV320907

According to the allegations of the second amended complaint (“SAC”), plaintiff Mitchell Erblich (“Plaintiff”) hired defendant Michelle Marsten (“Defendant”) to represent him in a divorce action filed by his now ex-wife Lenora in November 2007 pursuant to a written retainer agreement. (See SAC, ¶ 5.) During the course of the litigation, Defendant made a substantial number of intentional misrepresentations to Plaintiff, upon which Plaintiff relied, namely: Plaintiff “did not need to worry… that his pre-marital property in the house after his departure was being damaged or sold or disposed of… because the Court would see to it that his property in the house was secured and safe”; “a Court order she generated would allow him to move back into the residence on July 1, 2011 after an inspection by the personal property arbitrator to verify that his personal premarital property was in the residence”; Plaintiff “did not need another court order on… $200,000.00 worth of damage to the residence… and that [Defendant] would handle the damages at trial”; Defendant “would file with the Court a Petition to have his ex-wife pay for his attorneys’ fees when she willfully disregarded Court orders and prolonged the divorce proceedings”; “the arbitration as to the personal property would be converted to mediation and that attorneys would not be necessary at the proceedings”; Defendant “would enforce all of the Court orders as to child care, IRS deductions for Head of Household, separation of accounts after date of separation and allocation of community accounts”; and Plaintiff’s “ex-wife was responsible for the payment of mortgage interest and principal as to the residence and that the condition of the property would be maintained.” (FAC, ¶¶ 5-13, 17-23.)

On December 22, 2017, Plaintiff filed his initial complaint against Defendant, asserting causes of action for:

1) Legal malpractice;
2) Breach of fiduciary duty; and,
3) Breach of contract.

On March 19, 2018, Plaintiff filed the FAC against Defendant, asserting causes of action for:

1) Legal malpractice;
2) Breach of fiduciary duty;
3) Breach of contract;
4) Breach of the covenant of good faith and fair dealing; and,
5) Fraud.

Defendant demurred to the FAC, and on October 23, 2018, the Court sustained the demurrer, stating:

Plaintiff contends that Defendant committed legal malpractice through her failure to allow Plaintiff to secure his premarital property from the marital residence, to enforce numerous court orders against his former spouse, to secure a proper first right of refusal to purchase the marital residence, and to enforce court orders during the course of her representation, including one that required his former spouse to pay principal and interest payments on the mortgage on the marital residence which she failed to do, nearly resulting in foreclosure. (See FAC, ¶¶ 8-11, 18, 28.)

Defendant demurs to the first through fourth causes of action on the ground that they are barred by the one-year statute of limitations of Code of Civil Procedure section 340.6. Defendant also demurs to each cause of action on the ground that the fail to state facts sufficient to constitute a cause of action, and to the second cause of action on the ground that it is uncertain. Defendant also moves to strike portions of the FAC.

The demurrer to the first through fourth causes of action for fraud and negligent misrepresentation

Defendant demurs to the first through fourth causes of action on the ground that they are barred by the one-year statute of limitations provided by Code of Civil Procedure section 340.6. In opposition, Plaintiff acknowledges that “[t]he gravamen of a complaint and the nature of the right sued on, rather than the form of the action or relief demanded, determines which statute of limitation applies…. [w]here the injury is suffered by reason of an attorney’s professional negligence, the gravamen of the claim is legal malpractice, regardless of whether it is pled in tort or contract.” (Quintilliani v. Mannerino (1998) 62 Cal.App.4th 54, 65-66; see also Levin v. Graham & James (1995) 37 Cal.App.4th 798, 805 (stating that “[i]n all cases other than actual fraud, whether the theory of liability is based on the breach of an oral or written contract, a tort, or a breach of a fiduciary duty, the one-year statutory period applies”); see also Stoll v. Super. Ct. (S-K-I Ltd.) (1992) 9 Cal.App.4th 1362, 1369 (reversing trial court’s overruling of demurrer, stating that “the action below is time barred under section 340.6, and that the demurrer should have been sustained without leave to amend”); see Opposition to Def.’s motion to strike , pp. 3:22-25, 4:1-9 (citing to above cases and stating “[m]alpractice statute cannot be circumvented by alleging breach of fiduciary duty by, among other things, charging excessive fees”).) Instead, Plaintiff contends that his participation in the Santa Clara County Bar Association’s fee arbitration program “either tolls the applicable statute of limitations or in the alternative in and of itself constitutes the filing of a malpractice action by the Plaintiff….”

However, Plaintiff’s opposition fails to set forth and facts or citations as to how any kind of tolling might apply here. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 (stating that “Plaintiff must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading”), quoting Cooper v. Leslie Salt Co. (1969) 70 Cal.2d 627, 636; see also Hendy v. Losse (1991) 54 Cal.3d 723, 742 (stating that “the burden is on the plaintiff… to demonstrate the manner in which the complaint might be amended”).) Moreover, it should be noted that the fee arbitration program is separate and apart from the alleged malpractice.

On the day of the hearing, counsel for Plaintiff handed to the Court a declaration that had not yet been filed, with a Family Court transcript attached. Even though counsel claimed that the document had been e[-]filed, it has not yet appeared in the docket (well over a month later). The Court did not authorize any supplemental pleadings (in particular after the tentative ruling was issued), and the Court has not considered the supplemental declaration in reaching this ruling. Even if it is considered, it does not affect the basis for this order. The hearing in question occurred well after Defendant had withdrawn as Plaintiff’s counsel, and in no way sets the date for or tolls the statute of limitations.

Plaintiff’s argument regarding the first through fourth causes of action lack merit. The demurrer to the first through fourth causes of action on the ground that they are time-barred by Code of Civil Procedure section 340.6 is SUSTAINED without leave to amend.

The demurrer to the fifth cause of action for fraud

Defendants demur to the fifth cause of action for fraud, asserting that it is not pled with the requisite specificity and fails to allege a misrepresentation. Indeed, “fraud actions are subject to strict requirements of particularity in pleading.” (Furia v. Helm (2003) 111 Cal.App.4th 945, 956; see also Nagy v. Nagy (1989) 210 Cal.App.3d 1262, 1268 (stating same); see also Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184 (stating that “[i]n California, fraud must be pled specifically; general and conclusory allegations do not suffice”).) The specificity requirement has two purposes: to apprise the defendant of certain definite accusations against him so that he can intelligently respond to them, and also to weed out nonmeritorious actions on the basis of the pleadings. (See Tenet Healthsystem Desert, Inc. v. Blue Cross of California (2016) 245 Cal.App.4th 821, 838.) Minimally, a fraud cause of action must “allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.” (Lazar v. Super. Ct. (Rykoff-Sexton, Inc.) (1996) 12 Cal. 4th 631, 645; see also Tenet Healthsystem Desert, supra, 245 Cal.App.4th at p.838 (stating same).) It is clear that the fifth cause of action is not pled with sufficient particularity as it does not allege when the misrepresentation occurred. Accordingly, the demurrer to the fifth cause of action is SUSTAINED with 10 days leave to amend after service of entry of the signed order.

(October 22, 2018 order re: demurrer to FAC, pp.2:25-28, 3:1-28, 4:1-28, 5:1-13.)

Demurrer to the SAC

Previously, the fifth cause of action for fraud in the FAC did not make clear on what the alleged misrepresentations were based, as they were not pled with the requisite particularity. (See October 22, 2018 order to FAC, p. 5.) The SAC now alleges the factual basis for the causes of action with the requisite particularity; however, these causes of action of the SAC make clear that they are premised on purported misrepresentations, acts or omissions made in the course of Defendant’s representation of Plaintiff in the divorce action. (See SAC, ¶¶ 7-31.) As stated in the Court’s prior order, “[t]he gravamen of a complaint and the nature of the right sued on, rather than the form of the action or relief demanded, determines which statute of limitation applies…. [w]here the injury is suffered by reason of an attorney’s professional negligence, the gravamen of the claim is legal malpractice, regardless of whether it is pled in tort or contract.” (Quintilliani v. Mannerino (1998) 62 Cal.App.4th 54, 65-66 (also stating that “whether the gravamen of the action is legal malpractice or not, i.e. … whether the legal or nonlegal functions were the predominate reason for the agreement… whether the alleged wrongful conduct was legal or nonlegal in nature”).) In opposition, Plaintiff clings to Levin v. Graham & James (1995) 37 Cal.App.4th 798, in which the court stated, “[i]n all cases other than actual fraud, whether the theory of liability is based on the breach of an oral or written contract, a tort, or a breach of a fiduciary duty, the one-year statutory period applies. (Id. at p.805.)

Here, Plaintiff has added three new causes of action without leave of Court that are not fraud causes of action. Plaintiff’s own argument in opposition demonstrates that these causes of action are barred by the statute of limitations. (See Quintilliani v. Mannerino (1998) 62 Cal.App.4th 54, 67-69 (stating that “the exception for actual fraud in section 340.6 was intended to apply to intentional fraud, not constructive fraud resulting from negligent misrepresentation… the actual fraud exception [is] inapplicable to the alleged negligent misrepresentation causes of action”; also stating that “[s]ince most claims for breach of fiduciary obligations can be restated as a claim for attorney malpractice, and since the fiduciary obligations here arose out of the attorney-client relationship, we find that section 340.6 applies to such claims”; also stating that section 340.6 applies to fifth cause of action for both breach of contract for legal and nonlegal services).) The demurrer to the second through fourth causes of action is SUSTAINED without leave to amend.

Moreover, the SAC’s fraud cause of action does not allege facts sufficient to constitute a fraud cause of action since, like the first through fourth causes of action of the FAC to which a demurrer was previously sustained without leave to amend, it is barred by the one-year statute of limitations provided by Code of Civil Procedure section 340.6 as the allegations are not within the actual fraud exception. As to the first alleged misrepresentation, that Plaintiff “did not need to worry because the Court would see to it that his property in the house was secured and safe,” the fraud cause of action alleges that “[t]he true facts were that she did nothing that was required to secure the property other than to get Mr. Erblich a 4-hour window to remove specified and ex-wife approved limited property while leaving the bulk of it in his ex-wife’s care and for her disposal.” (See SAC, ¶¶ 7, subpara. (b).) The allegation—Defendant “did nothing that was required”—demonstrates negligence, not malfeasance, and it is clear that the alleged failure was regarding Defendant’s provision of legal services to Plaintiff. Moreover, the allegations do not allege an intent to induce reliance. (See Lazar v. Super. Ct. (Rykoff-Sexton, Inc.) (1996) 12 Cal. 4th 631, 638 (stating that intent to induce reliance is an element for fraud cause of action; see also Cadlo v. Owens-Illinois, Inc. (2004) 125 Cal.App.4th 513, 519 (noting that the distinction between fraud cause of action and negligent misrepresentation is that a negligent misrepresentation cause of action does not require an intent to induce reliance).) Regarding the next alleged misrepresentation that “a Court order she generated would allow him to move back in to the residence on July 1, 2011 after an inspection by the personal property arbitrator to verify that his personal premarital property was in the residence,” Plaintiff alleges that “[t]he true facts were that Ms. Marsten did not intend to ensure that the property arbitrator inspected the house immediately prior to July 1, 2011 and she planned a vacation and unavailability while the transfer was scheduled to take place, meaning she knew she would be unavailable if something went wrong with the transfer.” (See SAC, ¶¶ 8, subpara. (b).)

Here, the allegation of intent is unrelated to the alleged misrepresentation and also does not allege intent to induce reliance. As to the other alleged misrepresentations, the SAC alleges that Defendant did not intend to perform a certain duty in her representation of Plaintiff. (See SAC, ¶¶ 9-13, subparas.(b), (d) (alleging “[t]he true facts were that an order should have been drafted at the time…[t]he true facts were that a motion should have been drafted at the time…[t]he true facts were that Ms. Mar[s]ten should have ensured that the arbitration was a mediation, not arbitration and that the arbitrator protected the rights of Mr. Erblich, not just those of his own interests and that of Mr. Erblich’s wife… [t]he true facts were that Ms. Marsten should have ensured compliance with the Court orders, including HOH deduction, separation of accounts after separation, stating that it was too expensive to enforce compliance with same”).) Likewise, however, although they allege that Defendant did not intend to perform those duties, it does not allege that Defendant intended to induce reliance. Moreover, the allegations still sound in malpractice, not fraud.

Plaintiff has not demonstrated how he might amend the SAC so as to state a viable cause of action. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 (stating that “Plaintiff must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading”), quoting Cooper v. Leslie Salt Co. (1969) 70 Cal.2d 627, 636; see also Hendy v. Losse (1991) 54 Cal.3d 723, 742 (stating that “the burden is on the plaintiff… to demonstrate the manner in which the complaint might be amended”).) The demurrer to the first cause of action of the SAC is SUSTAINED without leave to amend.

Defendant shall submit a proposed judgment based on this order (but without attaching a copy) either approved as to form or with proof of compliance with Rules of Court, Rule 3.1312.

The Court will prepare the Order.