Case Name: Randall M. Widmann v. Stephanie Sebastian, et al.
Case No.: 1-12-CV-235008
Motion by Cross-Defendant Randall M. Widmann for Judgment on the Pleadings as to the Cross-Complaint of Stephanie Sebastian
Factual and Procedural Background
Plaintiff Randall M. Widmann and defendant Stephanie Sebastian entered into a written attorney-client fee agreement for legal services. (Complaint, ¶6.) The agreement called for Widmann to be paid 35% of the gross amount of any recovery without deduction for costs or any hourly fees. (Id.) The agreement also provided that Widmann would be reimbursed for all fees, costs, and expenses incurred upon receipt of invoices and Sebastian would pay late charges of 1% per month from the date of the statement until paid. (Id.)
Widmann provided legal services to Sebastian in connection with her claims against her former employer for harassment, discrimination, wrongful termination, among other claims. (Complaint, ¶7.) Sebastian settled her claims against her former employer who tendered $250,000 to Sebastian in the form of two checks. (Complaint, ¶8.) On April 27, 2012, Widmann provided Sebastian with a final accounting setting forth fees due in the amount of $87,500 and mailed one of the two checks to her. (Complaint, ¶9.) Sebastian breached the fee agreement by refusing to pay as agreed and refusing to endorse the second settlement check. (Complaint, ¶10.) Sebastian refused to endorse the second check until October 26, 2012 at which time she endorsed the second check and instructed Widmann to disburse $100,000 to her and $13,420 to himself. (Id.) The $74,080 balance remains in Widmann’s client trust account until resolution of the dispute. (Id.) Widmann informed Sebastian of her right to fee arbitration. (Complaint, ¶12.)
On October 26, 2012, Widmann filed a complaint against Sebastian asserting claims for:
- Breach of Contract
- Bad Faith – Breach of Implied Covenant
- Account Stated
On December 18, 2012, Sebastian filed a demurrer to the second cause of action in Widmann’s complaint. On January 30, 2013, the court (Hon. Kirwan) sustained Sebastian’s demurrer to the second cause of action without leave to amend. On February 8, 2013, Sebastian filed an answer to the complaint and also filed a cross-complaint against Widmann. In the cross-complaint, Sebastian alleges that prior to entering into a legal fee agreement with Widmann, Widmann explained that he would operate under a two-phase system. (Cross-Complaint, ¶10.) Under phase one of this system, Widmann would perform work to resolve Sebastian’s claims without litigation on a straight hourly basis at $365 per hour. (Id.) If litigation were necessary, phase two would require renegotiation of the fee agreement to reflect a full or partial contingency agreement. (Id.) On August 2, 2011, Widmann sent correspondence to Sebastian’s former employer outlining Sebastian’s claims and requesting a proposal to resolve the dispute. (Cross-Complaint, ¶13.) On the morning of August 24, 2011, Sebastian and Widmann met to discuss the necessity of moving to phase two. (Cross-Complaint, ¶15.) That same afternoon, Sebastian’s former employer wrote and proposed mediation. (Cross-Complaint, ¶16.) On August 26, 2011, Widmann sent Sebastian a letter outlining the new contingency fee agreement, but did not mention the mediation proposed by Sebastian’s former employer. (Cross-Complaint, ¶17.) On August 29, 2011, Sebastian hand-delivered the executed phase two agreement to Widmann, but Widmann again did not mention the proposed mediation. (Cross-Complaint, ¶19.) Thereafter, Widmann sent Sebastian’s former employer correspondence agreeing to the proposed mediation. (Cross-Complaint, ¶20.) Had Sebastian known of the mediation proposal, she would not have agreed to move to phase two and would not have executed the contingency fee agreement. (Cross-Complaint, ¶28.) Sebastian’s cross-complaint asserts claims for:
- Breach of Fiduciary Duty
- Breach of Contract
- Professional Negligence
On March 8, 2013, Widmann filed a special motion to strike (anti-SLAPP) Sebastian’s cross-complaint. On March 15, 2013, Widmann filed a motion for summary judgment of the complaint.
On June 4, 2013, the court (Hon. Kirwan) denied Widmann’s special motion to strike Sebastian’s cross-complaint and also denied Widmann’s motion for summary judgment of the complaint.
On June 12, 2013, Widmann filed a notice of appeal. On September 10, 2014, the Sixth District Court of Appeal affirmed the ruling denying Widmann’s special motion to strike.
On November 17, 2014, Widmann filed the motion now before the court: a motion for judgment on the pleadings as to Sebastian’s cross-complaint. Sebastian opposes.
Discussion
- Requests for Judicial Notice
In support of his motion for judgment on the pleadings, Widmann requests judicial notice of (1) Widmann’s complaint, (2) Sebastian’s answer to Widmann’s complaint; and (3) Sebastian’s cross-complaint.
In opposition to the motion for judgment on the pleadings, Sebastian requests judicial notice of (1) Orders on Discovery Motions filed July 10, 2013; and (2) the Court of Appeal opinion, case number H039773.
Evidence Code section 452, subdivision (d), the court may take judicial notice of “[r]ecords of any court of this state.” This section of the statute has been interpreted to mean that the trial court may take judicial notice of the existence of court records. Evidence Code section 452 and 453 permit the trial court to “take judicial notice of the existence of judicial opinions and court documents, along with the truth of the results reached—in the documents such as orders, statements of decision, and judgments—but [the court] cannot take judicial notice of the truth of hearsay statements in decisions or court files, including pleadings, affidavits, testimony, or statements of fact.” (People v. Woodell (1998) 17 Cal.4th 448, 455.)
Based on the above authority, cross-defendant Widmann’s request for judicial notice in support of motion for judgment on the pleadings re cross-complaint is GRANTED. Cross-complainant Sebastian’s request for judicial notice in support of opposition to motion for judgment on the pleadings is GRANTED.
- Motion for Judgment on the Pleadings
- Speculative Damages
Widmann argues first that Sebastian cannot recover damages on her cross-complaint because her damages are too uncertain and/or speculative. In Ferguson v. Lieff, Cabraser, Heimann & Bernstein (2003) 30 Cal.4th 1037, 1048, the court wrote, “[D]amages may not be based upon sheer speculation or surmise, and the mere possibility or even probability that damage will result from wrongful conduct does not render it actionable.” In Piscitelli v. Friedenberg (2001) 87 Cal.App.4th 953, 989, the court wrote, “Whatever its measure in a given case, it is fundamental that ‘damages which are speculative, remote, imaginary, contingent, or merely possible cannot serve as a legal basis for recovery. [Citations.]’ [Citations.] [‘It is black-letter law that damages which are speculative, remote, imaginary, contingent or merely possible cannot serve as a legal basis for recovery’].) However, recovery is allowed if claimed benefits are reasonably certain to have been realized but for the wrongful act of the opposing party.”
Widmann acknowledges Sebastian’s allegation that she suffered damage in becoming obligated to pay a contingency fee to Widmann rather than an hourly fee. Widmann argues, however, that damages here are too uncertain or speculative because there is no way to calculate how much time Widmann would spend prosecuting Sebastian’s claims. Widmann’s argument fails because it violates one of the cardinal rules on demurrer [or motion for judgment on the pleadings]. “In reviewing the sufficiency of a complaint against a general demurer, we are guided by long settled rules. ‘We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. We also consider matters which may be judicially noticed.’” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “A demurrer tests only the legal sufficiency of the pleading. It admits the truth of all material factual allegations in the complaint; the question of plaintiff’s ability to prove these allegations, or the possible difficulty in making such proof does not concern the reviewing court.” (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213 – 214.)
Widmann’s argument essentially contradicts Sebastian’s allegations that “as a proximate result of the acts of [Widmann] herein above described, SEBASTIAN has been damaged as [Widmann] is now claiming to be owed over $74,080,00 as a contingency fee under the ‘Phase Two’ Fee Agreement, an amount which he would not be entitled if the ‘Phase One’ Fee Agreement remained in effect.” (See Cross-Complaint, ¶¶43, 48, and 52.) The words, “as a result” constitute a factual allegation of the causal connection between Widmann’s conduct and Sebastian’s injury. While Widmann may be able to cast doubt on that allegation through evidence at trial or some other dispositive motion, the court must accept the allegation as true on demurrer or, in this case, motion for judgment on the pleadings.
- Evidence Code Section 1119
Widmann’s second argument is that Sebastian’s cross-complaint is based entirely upon mediation communications which are inadmissible under Evidence Code section 1119.
That statute states: Except as otherwise provided in this chapter:
(a) No evidence of anything said or any admission made for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation is admissible or subject to discovery, and disclosure of the evidence shall not be compelled, in any arbitration, administrative adjudication, civil action, or other noncriminal proceeding in which, pursuant to law, testimony can be compelled to be given.
(b) No writing, as defined in Section 250, that is prepared for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation, is admissible or subject to discovery, and disclosure of the writing shall not be compelled, in any arbitration, administrative adjudication, civil action, or other noncriminal proceeding in which, pursuant to law, testimony can be compelled to be given.
(c) All communications, negotiations, or settlement discussions by and between participants in the course of a mediation or a mediation consultation shall remain confidential.
Widmann made the very same argument in opposing Sebastian’s motion for leave to conduct discovery in connection with the special motion to strike. As Sebastian notes, Judge Manoukian opined:
Widmann’s assertion that the discovery sought by Sebastian is protected from discovery by Evidence Code section 1119 is not well-taken. Critically, Sebastian is not seeking information regarding the substance of the mediation itself or any communications to that effect, but rather only facts peripheral to it. Disclosure of information concerning when Widmann became aware of the fact that Affymetrix was amendable [sic] to resolving Sebastian’s claims through mediation does not implicate any of the concerns which Evidence Code section 1119 was enacted to address. The statutory purpose of the code section is to “encourage the use of mediation by prompting a candid and informal exchange regarding events in the past …. This frank exchange is achieved only if the participants know that what is said in the mediation will not be used to their detriment through later court proceedings and other adjudicatory processes.” (Cassel, supra, 51 Cal.4th at 123.) Communications which reflect when Affymetrix brought up the possibility of mediation does not reach the substance of the “events in the past.” Further, Evidence Code section 1120, subdivision (b), expressly provides that the mediation confidentiality statute does not limit the admissibility of an agreement to mediate a dispute. The discovery sought by Sebastian is either one step removed from or equivalent to the foregoing. Thus, the discovery sought by Sebastian is not barred by Evidence Code section 1119.
This court agrees that the gravamen of Sebastian’s claim does not concern the substance or content of any mediation communications. Instead, the gravamen of Sebastian’s claim is Widmann’s failure to disclose the fact that Sebastian’s former employer proposed mediation before Sebastian executed and delivered the phase two agreement to Widmann. Sebastian’s claims do not rely on any matters which would be made inadmissible by Evidence Code section 1119.
For the above stated reasons, cross-defendant Widmann’s motion for judgment on the pleadings is DENIED.
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