Case Number: EC066630 Hearing Date: October 19, 2018 Dept: NCD

TENTATIVE RULING

Calendar: 6

Date: 10/19/18

Case No. EC 066630 Trial Date: January 28, 2019

Case Name: Zhang, et al. v. Deng, et al.

DEMURRER

MOTION TO STRIKE

Moving Party: Defendant Daniel Hong Deng

Responding Party: Plaintiffs Man Fan Zhang and Xinlei Zhang

RULING:

Demurrer to First Amended Complaint is SUSTAINED WITHOUT LEAVE TO AMEND to the entire First Amended Complaint on the ground the pleading fails to allege actual innocence, or that plaintiff Xinlei Zhang has obtained post-conviction relief. Coscia v. McKenna & Cunneo (2001) 25 Cal.4th 1194, 1201. The pleading simply attaches a Writ of Habeas Corpus, without making any specific factual allegations in the pleading itself. More importantly, defendant has submitted judicially noticeable material showing that the subject Writ of Habeas Corpus has been denied, which is a fact admitted in the opposition papers. This is sufficient to establish an absence of post-conviction relief, or continuing efforts to obtain such relief. As the opposition has failed to show how the pleading could be further amended to cure this defect, the demurrer is sustained without further leave to amend.

Motion to Strike Portions of First Amended Complaint is MOOT in light of the sustaining of the demurrer to the entire pleading without leave to amend.

Stay of the matter ordered February 2, 2018 is now lifted. Defendant to submit an appropriate request for dismissal.

RELIEF REQUESTED:

Sustain demurrer to First Amended Complaint

Strike allegations of punitive damages, attorneys’ fees, emotional distress damages

MEET AND CONFER? Ok

CAUSES OF ACTION: From First Amended Complaint

1) Breach of Contract

2) Breach of Contract

3) Breach of Covenant of Good Faith and Fair Dealing

4) Breach of Fiduciary Duty

5) Professional Negligence

6) Common Law Fraud

7) Unfair Competition

SUMMARY OF FACTS:

Plaintiff Man Fan Zhang and his son, plaintiff Xinlei Zhang, bring this action against defendant Daniel Deng, an attorney who represented Xinlie Zhang in an underlying criminal case, and defendant Darren Cornforth, an attorney brought in by Deng to represent plaintiff Xinlei Zhang, but whom plaintiffs did not retain.

Plaintiffs allege that when Man Fan Zhang, who has lived in China his entire life, first met with defendant Deng, Deng made promises which were not true, including that he was a close personal friend of the head of the prosecution office, the District Attorney Jackie Lacey, that he had donated thousands of dollars to her election and would use his special political influence to defend plaintiff’s son and get a special result. Deng promised that if he was hired, plaintiff would get no more than one year in jail, and likely even less time in custody and the case would be reduced to a misdemeanor. Plaintiffs also allege that Deng promised if he was hired he would not represent any other people charged with the same offense from the same incident.

Deng charged $200,000 for the representation, having plaintiff Man Fan Zhang wire the money to another person’s account in China, to avoid income tax and hide the legal fees. Plaintiffs were unaware of this scheme.

Plaintiffs allege that defendant Deng was then retained by two other defendants on the same case, but stated to plaintiffs that there was no conflict of interest, and at no time presented a conflict of interest waiver. Defendant Deng then brought in Darren Cornforth to represent plaintiff Xinlei Zhang, who plaintiffs did not retain, and who spent very little time discussing the case with plaintiff or his parents.

The complaint alleges that after the preliminary hearing, defendant Deng told plaintiff Xinlei Zhang he must plead guilty and accept a six year sentence. The other two defendants, who he also represented, would get ten years and thirteen years. Deng stated that plaintiff had to accept the six years or the other defendants would get more time, and that if the case went to trial, and one defendant got convicted, then all of them would get convicted. Deng also stated that he knew Judge Serna, and that Judge Serna had the power to reduce the sentence to three years.

Plaintiff Xinlei Zhang was convicted on September 2015 after the plea bargain and is currently serving a six-year sentence, and has retained other counsel to pursue a writ of habeas corpus.

The complaint also alleges that one of the victims in the matter, Yiran Liu, has filed a civil lawsuit against plaintiff and others and that two of the other defendants in the criminal matter have filed a civil lawsuit against Deng which is now pending in federal court.

Defendant Deng filed a demurrer and motion to strike in response to the original complaint, which were heard on February 2, 2018. The demurrer was sustained in part and overruled in part, and the motion to strike was granted in part and denied in part with leave to amend.

The court ordered that plaintiffs file an amended complaint within thirty days, and issued a stay of the matter to permit plaintiffs to pursue postconviction remedies. The minute order states:

“However, the stay does not apply to the plaintiff filing an amended complaint pursuant to this ruling. It also does not apply to defendant responding to an amended complaint by filing an answer or by challenging the pleading by way of a demurrer, or other procedural mechanism.”

Plaintiffs have filed a First Amended Complaint, and defendant has responded by challenging the pleading by way of demurrer and motion to strike.

ANALYSIS:

Demurrer

Defendant Deng again argues that the entire action and each cause of action are barred in this matter, as plaintiff has failed to plead that he is actually innocent of the underlying criminal charges.

The demurrer to the entire complaint was previously sustained as follows:

“Demurrer to Complaint is SUSTAINED to the entire complaint on the ground the pleading fails to allege actual innocence, or that plaintiff Xinlei Zhang has obtained postconviction relief. Coscia v. McKenna & Cunneo (2001) 25 Cal.4th 1194, 1201.

The pleading here alleges that plaintiff Xinlei Zhang has retained other counsel to pursue a writ of habeas corpus. [Para. 30]. However, it does not appear that this relief has yet been granted, and there are insufficient allegations of actual innocence in the pleading.”

The pleading again does not allege facts supporting a claim of actual innocence, but now alleges:

“On or about February 26, 2018, a Petition for Writ of Habeas Corpus was filed in the Los Angeles County Superior Court Action, No. KA109395 alleging among other factors ‘factual innocence.’ A true and correct copy of the Petition for Writ of Habeas Corpus is attached hereto as Exhibit ‘A’ and incorporated herein by this reference.”

[Para. 32].

This appears an insufficient response to the court’s previous order, as it is not clear what facts from the writ are incorporated, and this pleading itself does not allege any fact supporting an allegation of actual innocence.

In any case, defendant also argues that the writ of habeas corpus has since been denied, and submits a request for judicial notice of a minute order of the court in the criminal action, dated March 26, 2018, which states:

“THE COURT HAS READ AND CONSIDERED THE WRIT OF HABEAS CORPUS FILED FEBRUARY 27, 2018.

THE PETITION FOR WRIT OF HABEAS CORPUS IS DENIED FOR REASONS FULLY REFLECTED IN THE ORDER SUMMARILY DENYING PETITION FOR WRIT OF HABEAS CORPUS SIGNED AND FILED THIS DATE AND INCORPORATED HEREIN BY THIS REFERENCE.

DEFENDANT REMAINS COMMITTED TO THE DEPARTMETN OF CORRECTIONS.”

[RFJN, Ex. A, p. 1].

Evidently, there was some confusion in the criminal court concerning whether any nunc pro tunc order was necessary, but it appears the actual outcome was a denial of the writ. [RFJN, Ex. A, pp. 1, 2].

The opposition concedes, “Admittedly, the court in the criminal matter denied the Writ of Habeaous [sic] Corpus.” [Opp., p. 10:24].

The opposition does not indicate that there is any other process available or being diligently pursued to obtain post-conviction relief in the criminal matter. It would accordingly appear that the entire FAC fails due to the failure of defendant to obtain such relief, and the demurrer is now sustained without leave to amend.

The opposition again argues that the causes of action based on breach of contract, fraud and specifically a theory of conflict of interest are not barred because they do not fundamentally involve a legal malpractice claim.

However, the court has already rejected that argument in connection with the previous pleading, and plaintiffs fail to point to any amendments which have been made which would justify revisiting or changing that ruling.

Again, in Coscia v. McKenna & Cunneo (2001) 25 Cal.4th 1194, the California Supreme Court found that the trial court had correctly sustained a demurrer without leave to amend, on the ground plaintiff had failed to show that he was actually innocent by obtaining post-conviction relief:

“[W]e conclude that a plaintiff must obtain postconviction relief in the form of a final disposition of the underlying criminal case–for example, by acquittal after retrial, reversal on appeal with directions to dismiss the charges, reversal followed by the People’s refusal to continue the prosecution, or a grant of habeas corpus relief–as a prerequisite to proving actual innocence in a malpractice action against former criminal defense counsel.”

Coscia, at 1201.

Again, regardless of defendant’s renewed arguments that the promise not to represent conflicting clients is separately actionable, it appears that all of the claims here arise fundamentally from plaintiffs’ allegations that the attorneys were ineffective in connection with representing plaintiff in the underlying criminal matter, and it is held that under such circumstances, actual innocence must be established.

Defendant Deng had previously relied on Khodayari v. Mashburn (2011) 200 Cal.App.4th 1184, in which the Second District affirmed the trial court’s order sustaining a demurrer to a complaint by plaintiff against his former criminal defense attorney, alleging that due to the attorney’s deficient representation of plaintiff in postconviction proceedings, plaintiff was found in violation of probation. The Second District found that plaintiff was required to show actual innocence of the probation violations. The Second District reasoned:

“Appellant purported to allege not simply a claim for legal malpractice arising from the restitution and probation violation proceedings at which respondent represented him, but also claims for fraud, intentional misrepresentation, concealment, deceit, constructive fraud, negligent misrepresentation, negligence, breach of fiduciary duty, intentional infliction of emotional distress, abuse of process, breach of contract, breach of the implied covenant of good faith and fair dealing, and violations of Business and Professions Code section 17200. However, “the nature of a cause of action does not depend on the label the plaintiff gives it or the relief the plaintiff seeks but on the primary right involved.” (Bird, Marella, Boxer & Wolpert v. Superior Court (2003) 106 Cal.App.4th 419, 427, 130 Cal.Rptr.2d 782 (Bird).) Here, it is clear that the primary right involved in all of appellant’s claims is “the right to competent legal representation” (id. at p. 427, 130 Cal.Rptr.2d 782), (ibid.), and thus, for application of the actual innocence requirement, all are properly characterized as claims for legal malpractice.”

Khodayari, at 1190.

The Second District in Khodayari found, however, that the trial court had erred in dismissing the action, rather than permitting leave to amend and staying the action until actual innocence could be effectively alleged. Khodayari, at 1196-1197. Here, the trial court has followed this stay and permit amendment procedure, plaintiffs have failed to obtain post-conviction relief or to sufficiently allege actual innocence, and it now is appropriate to sustain the demurer to the entire FAC on this ground.

Moreover, to the extent the argument is that there remain breach of contract and fraud claims on the part of the father, the breach of contract claims rest entirely upon the harm alleged being the son accepting a plea deal, and the payment of fees to provide representation, and to hire other counsel to correct the alleged malpractice. [Paras. 56]. The fraud claims rely on representations that there would be no acceptance of a client with a conflict of interest, which sounds in malpractice. [Paras. 80-88]. Moreover, the claims appear based on a written contract, and specifically “a short sentence in the retainer agreement mentioning conflicts of interest.” [Para. 81]. The court in its previous order sustained the demurrer to the breach of contract and implied covenant causes of action of the original complaint on the additional grounds:

“Demurrer to the first cause of action for breach of contract and second cause of action for breach of implied covenant of good faith and fair dealing are SUSTAINED on the additional grounds that the pleading fails to sufficiently allege how plaintiff Man Fan Zhang was a party to any contract or its implied covenants, and as to all plaintiffs, the pleading fails to either attach a copy of the written contract or allege its terms verbatim.”

No retainer agreement has been attached to the FAC showing the parties to said agreement, or any term mentioning a conflict of interest. The alleged terms are again not alleges verbatim. The opposition inexplicably offers to now attach such a document upon being granted leave to amend. There is no explanation why such a document, if it exists, was not attached to the FAC upon the previous order of the court.

The demurrer is now sustained without leave to amend.

Motion to Strike

The motion to strike is deemed moot in light of the sustaining of the demurrer to the entire pleading without leave to amen.

The stay of this matter is lifted, and defendant is ordered file an appropriate request for dismissal.