Case Name: Law Office of Travis Whitfield v. Hipolito Cerda

Case No.: 18CV322814

I. Factual Background

This action filed by plaintiff Law Office of Travis Whitfield (the “Law Office”) against defendant Hipolito Cerda (“Cerda”) arises out of a failed attorney-client relationship.

As alleged in the complaint, Cerda retained the Law Office to represent him in his divorce proceedings but did not pay for services rendered. (Complaint at p. 3.) The Law Office therefore filed the complaint, alleging causes of action for breach of contract, common counts, and account stated.

Cerda filed a cross-complaint against the Law Office, pleading claims for: (1) professional negligence, (2) breach of fiduciary duties, and (3) breach of contract .

As alleged in the cross-complaint, Cerda retained the Law Office to represent him in a contentious divorce involving many issues over the division of property. (Cross-Comp., ¶ 12.) In particular, there was a significant dispute over Cerda and his ex-wife’s interests in two Chase bank accounts belonging to and held in the name of Cerda’s daughter and son-in-law. (Ibid.) Cerda’s ex-wife contended Cerda owned and controlled these accounts because he transferred $45,000 into them around October 1, 2015, and the funds contained therein were consequently community property. (Id. at ¶ 13.) Cerda, on the other hand, maintained he transferred $45,000 to the Chase accounts to repay the community loan. (Id. at ¶ 14.) Specifically, he asserted he borrowed $45,000 from his daughter and son-in-law from 2013 to 2015 for construction being done on properties belonging to him and his ex-wife. (Ibid.) Before construction was over, Cerda transferred this money to their accounts to repay the loan. (Ibid.)

Cerda speaks only Spanish but, through the translation assistance of his daughter, advised the Law Office of these facts and informed it that the Chase accounts belonged to his daughter and son-in-law. (See Id. at ¶¶ 15-16.) Despite this fact, the Law Office failed to conduct proper discovery to verify the truth of Cerda’s claims or an accounting of the Chase accounts, which would have readily shown Cerda had no interest in them. (Id. at ¶ 17.)

Around April 12, 2016, the Law Office entered into a stipulation with Cerda’s ex-wife regarding the Chase accounts in open court. (Id. at ¶ 18.) At this time, the Law Office stipulated that Cerda owned or controlled the two Chase accounts, even though this directly contradicted what Cerda had told it. (Ibid.) The Law Office did not confirm the terms of the stipulation with Cerda, did not provide a translator to translate the stipulation for Cerda in his daughter’s absence, and did not ensure Cerda understood the terms and implications of the stipulation before having him enter into it in open court. (Ibid.)

As a result of Cerda entering into the stipulation, $45,000 was transferred from the Chase accounts into a trust account held by Cerda’s ex-wife’s attorney, Cerda’s ex-wife is now claiming an entitlement to the entire amount along with all funds in the Chase accounts, and Cerda’s daughter and son-in-law were joined in the divorce proceedings as claimants. (Id. at ¶ 20.) When Cerda’s daughter and son-in-law were joined as claimants, they also retained the Law Office to represent them. (Id. at ¶ 21.) Despite the fact such representation posed an obvious conflict of interest to its representation of Cerda, at no point did the Law Office explain this potential conflict to either Cerda or his daughter and son-in-law or have them sign a waiver as required under the California Rules of Professional Conduct. (Ibid.) Moreover, while representing them, the Law Office would bill Cerda for work done for his daughter and son-in-law despite lacking authorization to do so. (Id. at ¶ 22.)

Currently before the Court is the Law Office’s demurrer to the cross-complaint, which Cerda opposes.

II. Demurrer

As an initial matter, the ground upon which the Law Office demurs to the cross-complaint is not recited precisely in its demurrer.

The grounds for demurrer are enumerated in Code of Civil Procedure section 430.10 (“Section 430.10”), subdivisions (a)-(i), and must be distinctly specified in the demurrer. (Code Civ. Proc., § 430.60; see also Cal. Rules of Court, rule 3.1320(a).) These grounds include uncertainty and the failure to state facts sufficient to constitute a cause of action, among others. (Code Civ. Proc., § 430.10.)

Here, the stated ground for the Law Office’s demurrer is that “based on undisputed material facts plead in the Cross-Complaint Plaintiff is entitled to judgment as a matter of law.” (Dem. at p. 2:11-12.) But this is not a statutorily enumerated ground for demurrer. (See Code Civ. Proc., § 430.10.) Instead, it appears to be a reference to the standard for evaluating a motion for summary judgment. (See Code Civ. Proc., § 437c(c) [“The motion for summary judgment shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”].) The Law Office also does not reference Section 430.10 at any point in its demurrer or supporting memorandum.

With that said, it otherwise appears the Law Office intended to demur to each cause of action in the cross-complaint on the ground of failure to state facts sufficient to constitute a cause of action because it additionally asserts in the demurrer that the “facts as alleged…do not support [the cross-complaint’s three causes of action].” (See Dem. at p. 4:13-14.) As such, though a demurrer may be disregarded for failure to properly specify the grounds upon which any objection to the complaint is taken (Code Civ. Proc., § 430.60), the Court will reach the merits here since the Law Office’s demurrer is reasonably read as invoking that ground.

The Law Office advances a sole argument in support of its demurrer, namely that Cerda’s claims are barred by the statute of limitations.

The defense of statute of limitations may be asserted by general demurrer if the complaint shows on its face that the action is time-barred. (E-Fab, Inc. v. Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315.) But it is not enough that a pleading shows an action might be time-barred; in order for a cause of action to be disposed of at the pleading stage, it must clearly and affirmatively appear untimely. (Id. at 1315-1316.) In evaluating whether an action is time-barred, the two critical inquiries are: (1) what statute of limitations applies; and (2) when the action accrued. (Id. at p. 1316.)

With respect to the applicable limitations period, the Law Office references Code of Civil Procedure section 340.6 (“Section 340.6”), which provides in relevant part that “[a]n action against an attorney for a wrongful act or omission, other than for actual fraud, arising in the performance of professional services shall 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).)

There is no dispute between the parties that Section 340.6 applies to all the causes of action in the cross-complaint. To that point, the Court observes that the gravamen of each of the claims is that the Law Office violated its professional obligations in the course of providing professional services or rendered services that were not of the quality or skill for which it was paid. (See Austin v. Medicis (2018) 21 Cal.App.5th 577, 586, citing Lee v. Hanley (2015) 61 Cal.4th 1225, 1236-37 [“While [Section 340.6] plainly applies to malpractice claims, it also governs claims whose merits necessarily depend on proof that an attorney violated a professional obligation in the course of providing professional services.”].)

Turning to the issue of accrual, the Law Office asserts all of the acts and omissions giving rise to the three causes of action occurred in 2016 but the cross-complaint was not filed until August 7, 2018; it concludes all the claims are time-barred “because the action was not commenced within one year after the plaintiff discovered the facts constituting the wrongful act or omission.” (Mem. of Pts. and Auth. at p. 6:13-14.) This argument is flawed.

Under Section 340.6, the limitations period begins to runs upon the plaintiff’s discovery of the wrongful act or omission. (Code Civ. Proc., § 340.6, subd. (a) [an action must be brought within one year after the plaintiff discovers or should have discovered the wrongful act].) Here, the Law Office cites the dates the wrongful acts occurred (i.e. 2016) as the time Cerda discovered the facts and the statute of limitations accrued but there is no indication in the pleading that Cerda discovered the wrongful acts or omissions in 2016. In fact, the cross-complaint is completely silent as to the time of discovery. As such, there is nothing on the face of the pleading demonstrating the statute of limitations bars Cerda’s claims.

As such, the Law Office’s demurrer to every cause of action in the cross-complaint is OVERRULED.

The Court will prepare the Order.