Case Name: William Whittaker, et al. v. Worden & Worden, et al.
Case No.: 2014-1-CV-267975

This is an action for professional negligence in accounting arising from tax advice given to Plaintiffs in conjunction with the sale of commercial real estate located in Oregon. Currently before the Court is the motion for summary judgment by Defendants Worden & Worden Accountants, Inc. and John Tim Worden (“Defendants”).

Defendants’ request for judicial notice of Plaintiffs’ Complaint is GRANTED pursuant to Evidence Code §452(d). Notice is taken of the Complaint’s existence and filing dates (here and in San Diego County) but not of the truth of its allegations.

The pleadings limit the issues presented for summary judgment. (See Government Employees Ins. Co. v. Sup. Ct. (2000) 79 Cal.App.4th 95, 98; Laabs v. City of Victorville (2008) 163 Cal.App.4th 1242, 1258; Nieto v. Blue Shield of Calif. Life & Health Ins. (2010) 181 Cal.App.4th 60, 73 [“the pleadings determine the scope of relevant issues on a summary judgment motion.”].) The moving party bears the initial burden of production to make a prima facie showing that there are no triable issues of material fact. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.)

The moving party’s declarations and evidence will be strictly construed in determining whether they negate or disprove an essential element of a plaintiff’s claim “in order to resolve any evidentiary doubts or ambiguities in plaintiff’s (or opposing party’s) favor.” (Johnson v. American Standard, Inc. (2008) 43 Cal.4th 56, 64, parentheses added.) While the same standards of admissibility govern both, the opposition declarations are liberally construed while the moving party’s evidence is strictly scrutinized. (Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 768.) The evidence must be liberally construed in support of the opposing party, resolving any doubts in favor of that party. (Yanowitz v. L’Oreal USA, Inc. (2005) 36 Cal.4th 1028, 1037.)

“A defendant seeking summary judgment must show that at least one element of the plaintiff’s cause of action cannot be established, or that there is a complete defense to the cause of action. … The burden then shifts to the plaintiff to show there is a triable issue of material fact on that issue.” (Alex R. Thomas & Co. v. Mutual Service Casualty Ins. Co. (2002) 98 Cal.App.4th 66, 72; internal citations omitted.)

The elements of a cause of action for professional negligence are: (1) the duty of the professional to use such skill, prudence, and diligence as other members of his profession commonly possess and exercise; (2) a breach of that duty; (3) a proximate causal connection between the negligent conduct and the resulting injury; and (4) actual loss or damage resulting from the professional’s negligence. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 746-747.) In an action for professional negligence “causation is an issue of fact for the jury to decide except in those cases where reasonable minds cannot differ; in those cases, the trial court may decide the issue itself as a matter of law.” (Yanez v. Plummer (2013) 221 Cal.App.4th 180, 187, citing Ishmael v. Millington (1966) 241 Cal.App.2d 520, 525–526, 529.)

Defendants’ motion for summary judgment is DENIED for failure to meet the initial burden. Defendants do not dispute their negligence. The basis for Defendants’ motion is that, regardless of their admittedly incorrect tax advice, Plaintiffs cannot establish the element of causation because their damages (taxes assessed by Oregon on the basis that the sale constituted Oregon source income) were unavoidable. Even if Defendants are correct that any alternative structuring of the Oregon real estate sale required the consent of John Whittaker and James Whittaker, the evidence submitted by Defendants, noncommittal declarations by John and James Whittaker stating only that they “cannot say” what they would have done in response to alternatives that were not presented to them, does not establish that Plaintiffs could not have obtained their consent. A moving defendant must generally present evidence that, if uncontradicted, “would constitute a preponderance of evidence that an essential element of the plaintiff’s case cannot be established . . .” (Kids’ Universe v. In2Labs (2002) 95 Cal.App.4th 870, 879.)

Even if it were assumed for purposes of argument that Defendants had met their initial burden and the burden of persuasion shifted, Plaintiffs’ evidence would suffice to raise triable issues of material fact as to causation. The Declaration of William Whittaker, stating that based on their relationship at the time, he could have obtained John and James Whittaker’s approval for changes to the family LLC or for an alternative structure for the Oregon property sale, raises a triable issue as to causation. “Typically in summary judgment litigation, equally conflicting evidence requires a trial to resolve the dispute.” (Kids’ Universe v. In2Labs, supra, at 881.)

Plaintiffs’ evidence would also raise triable issues as to causation by disputing the basic premise of Defendants’ motion: that John and James Whittaker’s approval was required for any restructuring of the Oregon land sale that could have avoided the Oregon tax assessment resulting from Defendants’ incorrect tax advice. The declarations of William Whittaker and Norman Pendell both posit several possible alternative ways to structure the Oregon land sale in which the tax assessment caused by Defendants’ admittedly incorrect tax advice could have been avoided without the approval (or involvement) of John and James Whittaker.