Filed 9/18/20 Manesh v. Melkonian CA2/5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FIVE

REZA FATEH MANESH et al.,

Plaintiffs and Appellants,

v.

GEOFFREY G. MELKONIAN,

Defendant and Respondent.

B292820

(Los Angeles County

Super. Ct. No. EC067208)

APPEAL from an order of the Superior Court of Los Angeles County, William D. Stewart, Judge. Affirmed.

Reza Fateh Manesh, Shahla Teharani, in pro. per., for Plaintiffs and Appellants.

P.K. Schrieffer, Paul K. Schrieffer, Tami Kay Lee, for Defendant and Respondent.

__________________________

Plaintiffs and appellants Reza Manesh and his wife Shahla Tehrani appeal from a judgment of dismissal following an order sustaining a demurrer without leave to amend in favor of defendant and respondent attorney Geoffrey Melkonian in this action for legal malpractice. On appeal, Manesh and Tehrani contend: (1) Melkonian waived his statute of limitations defense by failing to raise it at the first opportunity; and (2) the statute of limitations was tolled while Melkonian continued to represent them. We conclude Melkonian did not waive the statute of limitations defense, because he raised it by demurrer to the amended complaint, and he ceased to represent Manesh and Tehrani in connection with the subject matter of the malpractice claim more than one year before the complaint was filed. Therefore, we affirm.

FACTS

In 1993, third party Reza Pour filed a complaint against Manesh and Tehrani in case number BC075569 in the Central District Superior Court, and renewed the judgment most recently on March 19, 2015 (the renewed judgment case). Pour also obtained a default judgment against Manesh and Tehrani in Van Nuys where certain real property was located (LASC Case No. LC102099; the default judgment case).

Manesh met with Melkonian in June 2015. Manesh explained that the default judgments had been fraudulently obtained; Manesh and Tehrani were never properly served. They wanted Melkonian to file motions to set aside the default judgment and the renewed judgment.

Manesh and Melkonian entered into a legal services agreement dated June 16, 2015. The agreement stated that the legal services to be provided were “filing a motion to set aside default judgment entered in LC102099 against [Manesh and Tehrani].” Manesh agreed to pay $250 per hour for the services provided under the agreement, including an initial deposit of $3,000.

On June 23, 2015, Melkonian sent a letter to Manesh and Tehrani confirming that they had asked his law office to represent both of them in the default judgment case. Melkonian explained that his office could not represent both of them without advising them of the conflict of interest and obtaining their signed consent, which they provided. Melkonian substituted into the default judgment case on behalf of Manesh and Tehrani on June 23, 2015.

In July 2015, Manesh and Tehrani received a notice of sale for their property on Delano Street in Van Nuys scheduled for August 5, 2015. Melkonian filed an ex parte motion to set aside the default judgment and stay the sale of the property. Melkonian also substituted into the renewed judgment case as the attorney of record. He also filed an ex parte motion to set aside the renewed judgment and stay the sale of the property.

Melkonian advised Manesh to file for bankruptcy under chapter 7 of the bankruptcy code in order to eliminate the default judgment. Manesh and Melkonian entered into a second legal services agreement dated July 28, 2015. The legal services to be provided under the agreement were “Representation of Debtor regarding the FILING OF A CHAPTER 7 BANKRUPTCY PETITION.”

On July 29, 2015, the trial court denied the ex parte motion to set aside the default judgment. Melkonian advised Manesh not to wait for the ruling in the renewed judgment case, because if the ex parte motion was denied, there would not be time to file for bankruptcy. Melkonian erroneously told Manesh that the default judgment would not be enforceable against Manesh in the chapter 7 bankruptcy proceeding. Pour would be required to file an adversary complaint in the bankruptcy court to prove that the Delano property belonged to Manesh. Melkonian filed Manesh’s petition for bankruptcy under chapter 7 and filed a notice in the renewed judgment case that the matter was automatically stayed by the bankruptcy proceedings. Melkonian did not attend the August 4, 2015 hearing on the motion to set aside the renewed judgment.

Melkonian filed a motion in bankruptcy court to transfer the case to chapter 13. In December 2015, the bankruptcy trustee filed a motion to require Manesh to turn over the Delano property. Melkonian did not appear at the hearing on December 17, 2015, to argue against the motion to turn over the Delano property to the trustee. Melkonian also failed to appear at the January 7, 2016 hearing to transfer the case to chapter 13; the bankruptcy court denied the motion and revoked Manesh’s chapter 7 discharge. On February 23, 2016, the bankruptcy trustee also filed an adversary complaint against Manesh to revoke his discharge.

Melkonian said he would charge additional fees of $5,000 to negotiate a settlement with the bankruptcy trustee or $25,000 to litigate the adversary complaint. Melkonian did not respond to the adversary complaint. Manesh and Tehrani had paid $5,000 to Melkonian to set aside the state court default and renewed state court judgments. They did not receive an accounting of the funds, and Melkonian remains the attorney of record in the state court cases. Manesh paid Melkonian $2,500 for representation in the chapter 7 bankruptcy case, for which he never received an accounting.

On March 16, 2016, Melkonian substituted out of the bankruptcy case and attorney Simon Resnik Hayes substituted in to represent Manesh. At the direction of his new attorney, Manesh filed amended bankruptcy schedules on July 20, 2016. In the space to list claims against third parties, he stated: “Possible professional malpractice lawsuit against Geoffrey G. Melkonian.”

On August 12, 2016, Manesh, acting in pro per, filed an independent action against Pour and other defendants to set aside the renewed judgment in equity based on a lack of personal jurisdiction (LASC case no. BC630366; the equitable action). In December 2016, Manesh filed a notice of related cases in the equitable action listing several cases, including the default judgment case and the renewed judgment case. He did not select a box on the form to indicate that either case remained pending. Instead, he checked boxes stating both cases had been disposed of by judgment.

On December 12, 2016, Manesh, as the plaintiff in pro per in the equitable action, filed a notice of related cases in the renewed judgment case. Pour opposed the notice. On December 28, 2016, without filing a notice of substitution, Manesh filed an answer to the opposition in the renewed judgment action as the defendant in pro per.

In March 2017, Manesh, acting as the defendant in pro per, filed an ex parte application in the renewed judgment case for an order shortening time to hear a motion relating and consolidating the cases. Manesh appeared at the hearing on March 8, 2017, in his capacity as the defendant in pro per. Pour’s attorney informed the court that the bankruptcy matter remained pending, and the court made no order.

Manesh conducted research and consulted bankruptcy attorneys about the default judgment and the bankruptcy trustee’s decision to take the Delano property. Bankruptcy attorneys said Melkonian should never have filed a petition under chapter 7 with the active default judgment matter. Manesh spoke with a retired attorney in late July 2017, who opined that Melkonian’s conduct had been negligent.

PROCEDURAL BACKGROUND

On August 17, 2017, Manesh and Tehrani filed a legal malpractice action against Melkonian. Melkonian filed a demurrer on November 20, 2017, which asserted that the complaint was ambiguous and unintelligible, but did not raise the statute of limitations as a defense. On December 22, 2017, new counsel for Melkonian filed a second demurrer on several grounds, including that the complaint was barred by the statute of limitations. Melkonian took the demurrers off calendar on January 12, 2018.

On January 17, 2018, Manesh and Tehrani filed an amended complaint against Melkonian for breach of contract, negligent misrepresentation, breach of fiduciary duties, and negligent infliction of emotional distress. The complaint alleged Melkonian wrongfully advised Manesh to file a petition for bankruptcy under chapter 7 rather than chapter 13, then failed to appear to argue the motion to transfer the case to chapter 13. As a result, the bankruptcy proceeding has continued for more than two years, Manesh is losing the Delano property, and he has incurred financial losses of more than $250,000.

Melkonian filed a demurrer to the amended complaint on February 16, 2018, on several grounds, including the applicable statute of limitations. He also filed a request for judicial notice of the schedules filed in the bankruptcy proceedings.

Manesh and Tehrani opposed the demurrer on the ground that the statute of limitations defense had been waived because Melkonian failed to raise it in his first demurrer. In addition, they argued that they did not suffer damages until December 6, 2017, when the bankruptcy court judge ruled that the bankruptcy court could not reverse the default judgment entered in state court.

Melkonian filed a reply stating that the statute of limitations defense had been raised in the demurrer to the original complaint that was taken off calendar, and Manesh and Tehrani were aware of their action no later than July 20, 2016, when Manesh listed a potential malpractice action against Melkonian on his filed bankruptcy schedules.

A hearing was held on May 11, 2018. No reporter’s transcript has been included in the record on appeal. The minute order reflects that the trial court granted the request for judicial notice of the bankruptcy schedules. The trial court allowed the parties to file supplemental briefs on the statute of limitations and whether the varying allegations to circumvent the statute of limitations constituted a sham pleading.

Manesh and Tehrani filed a response stating that although Manesh believed Melkonian committed legal malpractice by filing the bankruptcy petition instead of attempting to set aside the renewed judgment, he had not yet incurred any damages as a result of the malpractice. In addition, the statute of limitations was tolled by Melkonian’s continuing representation of Manesh and Tehrani. Specifically, Melkonian filed the notice of stay in the renewed judgment case and continued to be the attorney of record in that case.

Melkonian filed a supplemental brief as well. He noted the verified complaint filed in August 2017 stated that Manesh and Tehrani had incurred damages of more than $250,000. He also argued that he did not represent them in the renewed judgment case. He attached a copy of a document that Manesh filed in pro per in the renewed judgment case on December 16, 2016, to relate the cases, and the ex parte application filed on March 8, 2017, in pro per.

Manesh and Tehrani responded to Melkonian’s supplemental brief. They argued that Manesh filed an equitable action in pro per to vacate the renewed judgment. Although Manesh had filed notices of related cases in pro per, Melkonian remained the attorney of record in the renewed judgment case.

The trial court entered an order sustaining the demurrer and a judgment dismissing the amended complaint on July 18, 2018. The plaintiffs filed a timely notice of appeal.

DISCUSSION

Standard of Review

“A demurrer tests the legal sufficiency of the factual allegations in a complaint. We independently review the sustaining of a demurrer and determine de novo whether the complaint alleges facts sufficient to state a cause of action or discloses a complete defense. (McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 415.) We assume the truth of the properly pleaded factual allegations, facts that reasonably can be inferred from those expressly pleaded, and matters of which judicial notice has been taken. (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.) We construe the pleading in a reasonable manner and read the allegations in context. (Ibid.) We must affirm the judgment if the sustaining of a general demurrer was proper on any of the grounds stated in the demurrer, regardless of the trial court’s stated reasons. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967.)” (Vitkievicz v. Valverde (2012) 202 Cal.App.4th 1306, 1310–1311.)

Waiver

Citing federal authorities from other jurisdictions, Manesh and Tehrani contend that Melkonian was required to assert the statute of limitations defense in his demurrer to the initial complaint or the defense was waived. This is incorrect under California law.

“It is blackletter law that the defense of the statute of limitations is a personal privilege which must be affirmatively invoked in the lower court by appropriate pleading (if the defense appears on the face of the complaint, it must be raised by demurrer; otherwise it must be specially pleaded in the answer) or is waived (Hall v. Chamberlain (1948) 31 Cal.2d 673, 679).” (O’Neil v. Spillane (1975) 45 Cal.App.3d 147, 156.) “The failure to assert an affirmative defense by demurrer or answer results in the waiver or, more accurately, forfeiture of the defense unless the defense concerns the lack of subject matter jurisdiction or failure to state facts sufficient to state a cause of action. (Code Civ. Proc., § 430.80, subd. (a); Minton v. Cavaney (1961) 56 Cal.2d 576, 581.)” (Vitkievicz v. Valverde, supra, 202 Cal.App.4th at p. 1314, fn. omitted.)

In this case, Melkonian did not fail to assert the statute of limitations as a defense. Although Melkonian filed demurrers to the original complaint, one of which raised the statute of limitations, the demurrers were taken off calendar and Manesh and Tehrani filed an amended complaint before a ruling was made on the demurrers. Melkonian asserted his statute of limitations defense to the amended complaint at the first opportunity in his demurrer to the amended complaint. The defense was not waived.

Continuing Representation

Manesh and Tehrani contend that the statute of limitations for their legal malpractice action against Melkonian was tolled because he continued to be identified as their attorney of record in the state court cases. We conclude Melkonian’s representation of Manesh and Tehrani ended more than one year prior to the date of the complaint, and therefore, their claim for professional negligence is barred by the statute of limitations.

An action for legal malpractice, other than for actual fraud, must be commenced “within one year after the plaintiff discovers, or through the use of reasonable diligence should have discovered, the facts constituting the wrongful act or omission, or four years from the date of the wrongful act or omission, whichever occurs first.” (Code Civ. Proc., § 340.6, subd. (a).) Manesh and Tehrani were on notice of their claim for legal malpractice against Melkonian no later than July 20, 2016, when Manesh listed a potential malpractice lawsuit against Melkonian on his bankruptcy schedules. Under Code of Civil Procedure section 340.6, subdivision (a), Manesh and Tehrani had one year, until July 20, 2017, to file such an action. The complaint filed August 17, 2017, was untimely, unless the statute of limitations was tolled.

Manesh and Tehrani contend the tolling provision for “continuous representation” applies. The limitations period is tolled when “[t]he attorney continues to represent the plaintiff regarding the specific subject matter in which the alleged wrongful act or omission occurred.” (Code Civ. Proc., § 340.6, subds. (a)(1) & (a)(2).) “‘The continuous relationship tolling provision applies only so long as representation continues “regarding the specific subject matter in which the alleged wrongful act or omission occurred.”’ (Beal Bank, SSB v. Arter & Hadden, LLP (2007) 42 Cal.4th 503, 514, fn. 8, italics added.)” (Lockton v. O’Rourke (2010) 184 Cal.App.4th 1051, 1062 (Lockton).)

“‘“An attorney’s representation of a client ordinarily ends when the client discharges the attorney or consents to a withdrawal, the court consents to the attorney’s withdrawal, or upon completion of the tasks for which the client retained the attorney.’” (GoTek Energy[, Inc. v. SoCal IP Law Group, LLP (2016)] 3 Cal.App.5th [1240,] 1246 [(GoTek Energy)].) Nevertheless, an attorney may withdraw from representation in a matter within the meaning of section 340.6(a)(2) even absent a client’s consent. ‘“[F]or purposes of Code of Civil Procedure section 340.6, subdivision (a)(2), in the event of an attorney’s unilateral withdrawal or abandonment of the client, the representation ends when the client actually has or reasonably should have no expectation that the attorney will provide further legal services. [Citations.] That may occur upon the attorney’s express notification to the client that the attorney will perform no further services.”’ (GoTek Energy, at p. 1247.)” (Nguyen v. Ford (2020) 49 Cal.App.5th 1, 13 (Nguyen).)

“However, an attorney’s failure to formally withdraw from representation does not necessarily mean that the attorney continues to represent the client. ‘[T]he formal act of withdrawing does not demarcate the end of the professional relationship in the context of the legal malpractice statute of limitations. “[T]he failure to formally withdraw as attorney of record, standing alone, will not toll the statute of limitations under the rubric of continued representation.”’ (Flake[ v. Neumiller & Beardslee (2017)] 9 Cal.App.5th [223,] 230–231, italics omitted [(Flake)].)” (Nguyen, supra, 49 Cal.App.5th at p. 13.) “Therefore, whether termination of representation has ended for purposes of section 340.6(a)(2) does not depend on whether the attorney has formally withdrawn from representation, such as by securing a court order granting permission to withdraw.” (Ibid.)

“In addition, the inquiry into when representation has terminated does not focus on the client’s subjective beliefs about whether the attorney continues to represent him or her in the matter. Instead, the test is objective and focuses on the client’s reasonable expectations in light of the particular facts of the attorney-client relationship. ‘In deciding whether an attorney continues to represent a client, . . . , we objectively examine “‘evidence of an ongoing mutual relationship and of activities in furtherance of the relationship.’”’ (Shaoxing City Maolong Wuzhong Down Products, Ltd. v. Keehn & Associates, APC (2015) 238 Cal.App.4th 1031, 1038 (Shaoxing City); see also GoTek Energy, supra, 3 Cal.App.5th at p. 1248.) Representation ends ‘“‘when the client actually has or reasonably should have no expectation that the attorney will provide further legal services.’”’ (Flake, supra, 9 Cal.App.5th at p. 231, italics omitted.) In other words, tolling under the continuous representation exception ends when ‘“‘a client has no reasonable expectation that the attorney will provide further legal services.’”’ (Ibid., italics added.)” (Nguyen, supra, 49 Cal.App.5th at p. 14.)

“For example, one court has held that an attorney continued to provide representation in a matter even though the judgment was already final on appeal because the attorney represented the client on postappeal fees and costs. (See Jocer[ Enterprises, Inc. v. Price (2010)] 183 Cal.App.4th [559,] 571 [(Jocer)].) Similarly, evidence that an attorney continued to bill a client for work related to the matter defeated summary judgment over the application of section 340.6(a)(2), notwithstanding evidence that another attorney had taken over the representation. (O’Neill v. Tichy (1993) 19 Cal.App.4th 114, 121.) Conversely, a Court of Appeal found as a matter of law that the continuous tolling exception did not apply where the attorney had substituted out as counsel and it was ‘undisputed’ that the attorney did not provide legal advice, perform work, send bills, or appear on behalf of the plaintiff after the attorney substitution. (Shaoxing City, supra, 238 Cal.App.4th at p. 1039.)” (Nguyen, supra, 49 Cal.App.5th at p. 14.)

“While determining whether an attorney ‘“continues to represent the plaintiff regarding the specific subject matter”’ [citation] under section 340.6(a)(2) is generally a question of fact, it ‘can be decided as a question of law if the undisputed facts can support only one conclusion.’ [Citation.] Consequently, ‘courts should sustain demurrers based on section 340.6 in appropriate circumstances.’ (Croucier v. Chavos (2012) 207 Cal.App.4th 1138, 1145.)” (Nguyen, supra, 49 Cal.App.5th at pp. 14–15.)

The allegations of the complaint reflect that Manesh and Tehrani engaged Melkonian to provide distinct legal services, and Melkonian ceased to represent them with respect to the specific subject matter more than one year prior to the filing of their legal malpractice action against him. Manesh and Tehrani hired Melkonian to file post-judgment motions in two state cases in which judgments had been entered against them. He substituted into those cases as counsel of record, filed the motions, and the motion to set aside the default judgment was denied. Manesh and Tehrani also engaged Melkonian to institute a bankruptcy proceeding, which stayed the ruling on the motion to vacate the renewed judgment. Rather than hire Melkonian to perform further legal services at his specified rates, Manesh and Tehrani hired a new attorney in March 2016, who substituted in as counsel of record in the bankruptcy proceeding. Melkonian took no further actions on behalf of Manesh and Tehrani in any proceeding, nor did Manesh and Tehrani request that Melkonian do so.

The complaint does not establish continuous representation, because it does not reflect a reasonable expectation that Melkonian would provide further services after July 2016. The fact that Melkonian remained the attorney of record in the state cases, standing alone, does not establish that Melkonian continued to represent Manesh and Tehrani for the purposes of tolling the statute of limitations on their malpractice action, when every other fact shows Melkonian no longer represented Manesh and Tehrani after July 2016. By July 2016, Manesh had substituted in new counsel in the bankruptcy case and was contemplating a malpractice action against Melkonian. There were no activities after July 2016 showing an ongoing mutual relationship between Melkonian and the appellants. There was no allegation that Melkonian continued to provide legal advice, perform work, send bills, or appear on behalf of Manesh and Tehrani.

Contrary to the notion that Melkonian and Manesh had an ongoing mutual relationship, Manesh took all further actions in the state cases in pro per. After filing an equitable action in pro per, he filed a notice of related cases stating that the default and renewed judgment cases were resolved by judgment, not pending matters. Manesh appeared as a self-represented defendant in the state cases in which Melkonian had been listed as counsel of record. The fact that Manesh, acting in pro per, subsequently filed a separate action in equity to set aside the state court judgments, and filed an application in the renewed judgment case in pro per to consolidate matters, reinforces that there were no further actions expected of Melkonian to be taken in the state cases.

Manesh and Tehrani suspected they had a claim against Melkonian as early as July 2016. They did not allege facts showing continuing representation after that date, other than the bare fact that he was still listed as counsel of record in some of the state court matters. Based on these facts, the trial court properly found the complaint filed more than a year later on August 17, 2017, was barred by the one-year statute of limitations for professional negligence.

DISPOSITION

The judgment is affirmed. Respondent Geoffrey Melkonian is awarded his costs on appeal.

MOOR, J.

We concur:

BAKER, Acting P. J. KIM, J.

Parties and Attorneys
Manesh et al. v. Melkonian
Division 5
Case Number B292820
Party Attorney

Reza Fateh Manesh : Plaintiff and Appellant
1839 Verdugo Loma Dr. #B
Glendale, CA 91208 Pro Per

Shahla Broomand Tehrani : Plaintiff and Appellant
1839 Verdugo Loma Dr. #B
Glendale, CA 91208 Pro Per

Geoffrey Melkonian : Defendant and Respondent
Paul Karsten Schrieffer
P.K. Schrieffer, LLP
100 N. Barranca Avenue, Suite 1100
West Covina, CA 91791

Wayne H. Hammack
P.K. Schrieffer
100 N. Barranca Street
Suite 1100
West Covina, CA 91791

Tami Kay Lee
P. K. Schrieffer LLP
100 N. Barranca Street
Suite 1100
West Covina, CA 91791