Prakashpalan v. Engstrom, Lipscomb & Lack ( 2014 )


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  • Filed 2/27/14 (unmodified opn. attached)
    CERTIFIED FOR PUBLICATION
    IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
    SECOND APPELLATE DISTRICT
    DIVISION ONE
    MURUGANANDAN PRAKASHPALAN et                          B244236
    al.,
    (Los Angeles County
    Plaintiffs and Appellants,                   Super. Ct. No. SC112882)
    v.                                           ORDER MODIFYING OPINION
    AND DENYING PETITION FOR
    ENGSTROM, LIPSCOMB AND LACK et                        REHEARING
    al.,
    [CHANGE IN JUDGMENT]
    Defendants and Respondents.
    THE COURT:
    It is ordered that the opinion filed herein on February 11, 2014, be modified as
    follows:
    On page 16, footnote eight is deleted and replaced with the following: “Although
    Rules of Professional Conduct, rule 4-100(B)(3) specifies that such accountings shall be
    kept for a minimum ‘of five years,’ the rule does not obviate a fiduciary’s duty to provide
    an accounting.”
    On page 29, the second and all subsequent sentences of the first full paragraph are
    deleted.
    On page 31, the words of the first sentence of the first full paragraph at line 11,
    “and expert witness fee, Perlmutter Matter” are deleted.
    On page 31, the words of the second sentence, “and the expert witness fees in the
    Perlmutter Matter” are deleted.
    This modification changes the judgment.
    The petition for rehearing is denied.
    CERTIFIED FOR PUBLICATION.
    _______________________________________________________________________
    MALLANO, P. J.                   JOHNSON, J.
    I would grant the petition for rehearing.
    _______________________________________________________________________
    ROTHSCHILD, J.
    2
    Filed 2/11/14 (unmodified version)
    CERTIFIED FOR PUBLICATION
    IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
    SECOND APPELLATE DISTRICT
    DIVISION ONE
    MURUGANANDAN PRAKASHPALAN et                          B244236
    al.,
    (Los Angeles County
    Plaintiffs and Appellants,                   Super. Ct. No. SC112882)
    v.
    ENGSTROM, LIPSCOMB AND LACK et
    al.,
    Defendants and Respondents.
    APPEAL from a judgment of the Superior Court of Los Angeles County, John H.
    Reid, Judge. Affirmed in part and reversed in part.
    Dion-Kindem & Crockett and Peter R. Dion-Kindem for Plaintiffs and Appellants
    Muruganandan Prakashpalan and Navamalar Prakashpalan.
    Engstrom, Lipscomb & Lack, Robert T. Bryson and Edward P. Wolfe for Defendants
    and Respondents Engstrom, Lipscomb & Lack, Jerry Ramsey, Walter Lack and Robert
    Wolfe.
    ——————————
    3
    Plaintiffs Muruganandan Prakashpalan and Navamalar Prakashpalan were clients of
    defendant law firm Engstrom, Lipscomb and Lack and the individual defendants Walter Lack,
    Jerry Ramsey, and Robert Wolfe, who are attorneys with the firm (collectively Engstrom).
    Plaintiffs appeal judgment entered after the trial court sustained Engstrom’s demurrer to their
    complaint based on Engstrom’s representation of plaintiffs. We affirm in part and reverse in
    part.
    FACTUAL BACKGROUND AND PROCEDURAL HISTORY
    1.     Factual Allegations of the Second Amended Complaint
    Plaintiffs’ claims arise out of three separate representations undertaken by Engstrom:
    the Allegro Matter, the Malibu Construction Matter, and the Perlmutter Matter. The second
    amended complaint (SAC) alleged 13 causes of action: (1) professional negligence/legal
    malpractice/conflict of interest; (2) breach of fiduciary duty; (3) fraudulent concealment of
    conflict of interest; (4) fraudulent concealment of embezzlement; (5) intentional fraud;
    (6) constructive fraud; (7) unjust enrichment; (8) unfair business practices (Allegro Matter);
    (9) unfair business practices (Perlmutter Matter); (10) conversion; (11) civil conspiracy to
    commit intentional fraud; (12) civil conspiracy to commit conversion; and (13) accounting.
    Plaintiffs’ complaint alleged the following:
    (a)     The Allegro Matter
    Plaintiffs’ home was severely damaged in the 1994 Northridge earthquake. From
    January 1995 to January 30, 1998, Engstrom and two other law firms represented plaintiffs
    and other property owners in a bad faith and property damage claim against their insurer, State
    Farm. The action was not a class action, and plaintiffs were specifically assigned to
    Engstrom. In or around November 1997, Engstrom entered into a settlement with State Farm
    and obtained over $100 million for 93 insured families. Plaintiffs allege that Engstrom
    received $245,000, about one-third of plaintiffs’ settlement share, and distributed the
    remaining $500,000 to plaintiffs. In February 2012, plaintiffs were able to randomly contact
    17 of the plaintiffs in the Allegro Matter. Based on their discussions with the Allegro
    plaintiffs, it was clear to plaintiffs that Engstrom had instructed all plaintiffs in the Allegro
    4
    Matter not to discuss the settlement funds with anyone. However, plaintiffs concluded, after
    conducting a mathematical analysis of the settlement and of the overall litigation, that there
    was over $22 million of settlement funds unaccounted for. Based upon this discrepancy,
    plaintiffs calculated that Engstrom had withheld funds from plaintiffs’ share of the settlement
    funds.
    (b)     The Malibu Construction Matter
    From January 1995 through January 30, 1998, Engstrom represented plaintiffs in
    connection with the Malibu Construction Matter. In late 1994, plaintiffs purchased land in
    Malibu, California, a fact which Engstrom knew. In early 1995, due to a contractor’s
    negligence, the Malibu property sustained “hill cut failure.” Engstrom provided
    representation to plaintiffs in connection with the contractor’s negligence, plaintiffs’ insurance
    claim against its insurer, State Farm, and other construction matters. State Farm provided a
    defense to plaintiffs in connection with the hill cut failure; this defense was provided at the
    same time as the Allegro Matter was being litigated. As a result, Engstrom requested that
    plaintiffs permit Engstrom to review all of plaintiffs’ documents and discovery responses
    prior to submission to State Farm.
    Engstrom requested that plaintiffs estimate the cost to repair the hill cut failure,
    including the cost of importing dirt. Plaintiffs had learned they could obtain free dirt from the
    Los Angeles County Public Works Department (Public Works), and Engstrom knew of
    plaintiffs’ plans to import dirt to repair the hill cut failure. Plaintiffs requested that Engstrom
    keep this information confidential.
    During the Malibu Construction Matter, Engstrom provided legal advice regarding
    plaintiffs’ neighbors the Perlmutters in connection with a nuisance, and also assisted in getting
    a restraining order against Jacob Perlmutter, who allegedly hired thugs to harass plaintiff
    Navamalar Prakashpalan.
    (c)     The Perlmutter Matter
    In January 2005, plaintiffs’ Malibu property sustained damages due to a landslide
    originating on the Perlmutters’ property. In 2006, plaintiffs learned the Perlmutters were
    5
    involved in unpermitted construction activity and illegal construction that caused the
    landslide, including abandonment of their 25 feet deep septic pits. Plaintiffs filed a complaint
    against the Perlmutters for negligence arising from the landslide, and the Perlmutters filed a
    cross-complaint against plaintiffs alleging that plaintiffs’ Malibu construction was the cause
    of the landslide. The Perlmutters’ insurer hired the Law Office of Paul Wright to represent
    them in this matter.
    In early 2009, allegedly after discovering their case had no merit, the Perlmutters
    retained Engstrom on a contingency basis as their additional attorneys. Although they knew
    the Perlmutter Matter was substantially related to the Malibu Construction Matter, Engstrom
    did not notify plaintiffs of the representation or obtain their consent, and Engstrom knew that
    the Perlmutters were claiming that plaintiffs’ slope repair was the cause of the landslide. Yet
    Engstrom failed to disclose the conflict of interest and during the litigation, Engstrom and
    their expert claimed that the 3,800 cubic yards of dirt plaintiffs imported caused the landslide.
    Engstrom used attorneys who did not have direct communication with plaintiffs in the Malibu
    Construction Matter and Allegro Matter, all of which was a clever plan to conceal the conflict
    of interest from plaintiffs.
    Sometime after the Perlmutters retained Engstrom, the Perlmutters’ insurance
    company hired the law firm of Gibbs, Giden, Locher, Turner & Senet (Gibbs) to join as
    additional attorneys to represent the Perlmutters in settling the Perlmutter Matter. During the
    Perlmutter Matter, the Perlmutters revealed that their unpermitted construction activities were
    performed by entities collectively known as “the McDermott contractors.” Plaintiffs amended
    their complaint to add the McDermott contractors as defendants, including McDermott
    Plumbing (represented by Skapik Law Group) and McDermott Pumping (represented by
    Walters, McClusky & Boehle).
    After pretrial discovery, Gibbs wanted to settle the matter on behalf of the Perlmutters
    with plaintiffs, and the Perlmutters made a Code of Civil Procedure section 998 offer.
    Plaintiffs declined the offer. Gibbs requested continuance of the trial to settle with plaintiffs,
    and the court granted a continuance to permit mediation. At a mediation held December 3,
    6
    2010, defendant Wolfe revealed the damaging information that plaintiffs intended to import
    dirt from Public Works. The next day, plaintiffs realized the significance of Wolfe’s
    revelation to their case. Plaintiffs “caved in” and accepted the Code of Civil Procedure
    section 998 offer, although plaintiffs’ loss was over $4 million and the offer was $500,000.
    When the McDermott contractor entities—who were motivated to settle because their
    negligence caused the landslide—learned of the settlement, plaintiffs were likewise forced to
    settle with the McDermott parties for $500,000.
    Plaintiffs allege they did not discover the conflict of interest until April 2011 while in
    court on the Perlmutter Matter. At that time, plaintiffs observed a familiar face in the
    courtroom gallery among the spectators, and recognized the individual as defendant attorney
    Ramsey. In early May, plaintiffs wrote to Engstrom regarding the conflict of interest, and on
    May 3, 2011, received a letter in response from Engstrom in which Engstrom denied any
    conflict of interest, stated that plaintiffs waived the conflict, any contact with plaintiffs’
    adversaries was insignificant and minimal, and the two matters were not substantially related.
    Plaintiffs further allege that “[o]n May 16, 2011, [Engstrom] emailed [their] attorney
    threatening [them] with a debtor examination to effectuate a lien on PLAINTIFFS’ property
    and thereby [Engstrom] collected over $1.3 million.” Elsewhere in the SAC, plaintiffs allege
    the $1.3 million constituted the judgment against them in the Perlmutter Matter.
    2.      Procedural Background
    On June 6, 2011, plaintiffs commenced this lawsuit, alleging six causes of action for
    professional negligence and malpractice; breach of fiduciary duty and conflict of interest;
    fraudulent concealment; constructive fraud, fiduciary fraud, intentional fraud and conspiracy
    to commit fraud; unjust enrichment; and unfair business practices under Business &
    Professions Code section 17500 (UCL). Plaintiffs filed a first amended complaint on
    January 17, 2012, alleging eight causes of action (the same six as the original complaint plus
    claims for conversion and civil conspiracy).
    On April 12, 2012, the trial court overruled defendant’s demurrer to the first cause of
    action and sustained the demurrer as to the second, third, fourth, fifth, sixth, seventh, and
    7
    eighth causes of action of the first amended complaint, with leave to amend. Plaintiffs filed
    their SAC on April 30, 2012.
    Engstrom demurred to the SAC, arguing the alleged confidential information about the
    source of the dirt used in the Malibu Construction Matter was a matter of public record and
    therefore not confidential; Engstrom was entitled to dismissal of the Allegro Matter claims
    because it could not mount an adequate defense without breaching the attorney-client
    privilege with respect to the other Allegro Matter plaintiffs under Solin v. O’Melveny & Myers
    (2001) 
    89 Cal. App. 4th 451
    (Solin); plaintiffs did not plead fraud with sufficient particularity;
    plaintiffs could not seek restitution because their claims were made under an enforceable
    contract; plaintiffs failed to allege recoverable damages under the UCL; plaintiffs’ conversion
    claim failed to allege an identifiable sum of money; plaintiffs failed to allege all elements of a
    civil conspiracy; plaintiffs failed to state facts sufficient to state a claim for accounting; and
    certain of plaintiffs’ claims relating to the Allegro Matter (the second, fourth, seventh, eighth,
    tenth causes of action) were time-barred. Engstrom requested judicial notice of the grading
    permit plaintiffs obtained from the City of Malibu in 1998 connection with installation of a
    “manufactured fill slope” and the Permit issued to the County of Los Angeles for the purpose
    of entering the plaintiffs’ property to deposit fill material.
    Engstrom also moved to strike certain portions of plaintiffs’ SAC that requested
    punitive damages and attorney fees and costs on the grounds that the SAC failed to allege
    malice, fraud or oppression and the cause of action for accounting did not permit the recovery
    of damages, and the UCL did not provide for attorney fees.
    In opposition,1 plaintiffs generally contended the Public Works documents were
    expired permits and had been obtained as a result of a privileged communication with
    1 Plaintiffs attached to their opposition defendants’ answers to interrogatories in
    which defendants stated that the settlement in the Allegro Matter was subject to a
    confidentiality agreement. Plaintiffs also sought judicial notice of (1) a copy of the as-
    built approved plan from the City of Malibu with respect to the grading,
    (2) correspondence from the City of Malibu regarding the grading dated November 23,
    8
    plaintiffs. Further, plaintiffs argued the documents were not public records because Public
    Works does not provide information over the phone or over the counter unless a party is
    aware of the information and makes a request in writing. Plaintiffs further distinguished the
    case from 
    Solin, supra
    , 
    89 Cal. App. 4th 451
    , in which the clients intervened in a case to
    prevent disclosure of confidential information; here, the other parties in the Allegro Matter
    were coming forward and volunteering information, and thus the evidence was available.
    Further, the statute of limitations was not a bar to plaintiffs’ claims because Engstrom’s
    actions were committed in secret.
    Plaintiffs also opposed the motion to strike, contending the fraud alleged was sufficient
    under Civil Code section 3294, pointing to Engstrom’s alleged conduct in representing
    adverse interests without disclosing same to plaintiffs and in disclosing confidential
    information, and by taking settlement funds to which they were not entitled.
    In reply, Engstrom asserted that plaintiffs’ failure to plead facts sufficient to entitle
    them to equitable tolling of the statute of limitations under the discovery rule in the Allegro
    Matter because there was nothing preventing plaintiffs from discovering any alleged
    misconduct in the 15 years since the settlement of the Allegro Matter. Further, unless all the
    Allegro plaintiffs waived the attorney-client privilege, plaintiffs would not be able to
    demonstrate how the settlement monies were disbursed. With respect to the Public Works
    document, Engstrom contended plaintiffs shared this allegedly confidential information with a
    public entity long before Engstrom allegedly improperly informed their adversaries.
    The court granted Engstrom’s request for judicial notice and granted plaintiffs’ request
    for judicial notice only as to the final approved plan from the City of Malibu.
    The court sustained the demurrer without leave to amend. The court found that with
    respect to those claims based on the Allegro Matter (second, fourth, seventh, eighth, tenth,
    twelfth and thirteenth causes of action), the statute of limitations did not bar those claims even
    2010 stating that no imported soils were used in the grading, and (3) defendant Wolfe’s
    correspondence dated December 3, 2010 with Public Works requesting documents
    evidencing the placing of fill dirt at plaintiffs’ residence.
    9
    under the delayed discovery rule because plaintiffs alleged sufficient facts to show they did
    not discover their claim until November 2011.2 However, plaintiffs’ claims based on the
    Allegro Matter settlement were barred under 
    Solin, supra
    , 
    89 Cal. App. 4th 451
    , which held
    that where a lawsuit is incapable of complete resolution without breaching the attorney-client
    privilege, the suit may not proceed, if a balancing of certain factors set forth in Solin and
    explained in Dietz v. Meisenheimer Herron (2009) 
    177 Cal. App. 4th 771
    is satisfied. Here, the
    trial court found the plaintiffs had failed to satisfy those factors because although some of the
    Allegro plaintiffs had come forward, Engstrom would be forced to reveal confidential
    information relating to the other Allegro plaintiffs in order to defend the action, and thus
    demurrer was sustained as to those claims on that basis. Further, plaintiffs’ claims that a
    portion of the Allegro Matter settlement proceeds were unaccounted for was entirely based on
    speculation.
    With respect to claims based on the Perlmutter Matter (first, third, fifth, sixth, ninth,
    and eleventh causes of action), the trial court found that although Engstrom’s judicially
    noticed documents did not establish plaintiffs’ importation of fill dirt was a matter of public
    record, plaintiffs nonetheless failed to explain how they were damaged by this disclosure.
    The court also addressed the specific merits of certain of plaintiffs’ claims, as more
    fully discussed below.
    The trial court denied leave to amend because plaintiffs failed to show how they could
    correct the deficiencies in their complaint. In addition, because plaintiffs failed to plead any
    viable causes of action to support punitive damages, the trial court granted the motion to
    strike.
    2
    Although plaintiffs alleged in their SAC that they became aware of their claim in
    February 2012, plaintiffs initially propounded discovery regarding the Allegro Matter in
    November 2011.
    10
    DISCUSSION
    I.     Standard of Review
    “The function of a demurrer is to test the sufficiency of a pleading as a matter of law,
    [and] we apply the de novo standard of review in an appeal following the sustaining of a
    demurrer without leave to amend.” (California Logistics, Inc. v. State of California (2008)
    
    161 Cal. App. 4th 242
    , 247; Holiday Matinee, Inc. v. Rambus, Inc. (2004) 
    118 Cal. App. 4th 1413
    , 1420.) A complaint “is sufficient if it alleges ultimate rather than evidentiary facts,” but
    the plaintiff must set forth the essential facts of his or her case “‘“‘with reasonable precision
    and with particularity sufficient to acquaint [the] defendant with the nature, source, and
    extent’”’” of the plaintiff’s claim. Legal conclusions are insufficient. (Doe v. City of Los
    Angeles (2007) 
    42 Cal. 4th 531
    , 550 & 551, fn. 5.) “We assume the truth of the allegations in
    the complaint, but do not assume the truth of contentions, deductions, or conclusions of law.”
    The trial court errs in sustaining a demurrer “if the plaintiff has stated a cause of action under
    any possible legal theory, and it is an abuse of discretion for the court to sustain a demurrer
    without leave to amend if the plaintiff has shown there is a reasonable possibility a defect can
    be cured by amendment.” (California Logistics, Inc. v. State of 
    California, supra
    , 161
    Cal.App.4th at p. 247.)
    A complaint must contain a “statement of the facts constituting the cause of action, in
    ordinary and concise language.” (Code Civ. Proc., § 425.10, subd. (a)(1).)3 The facts to be
    pleaded are those upon which liability depends—facts constituting the cause of action, or
    “ultimate facts.” (Doe v. City of Los 
    Angeles, supra
    , 42 Cal.4th at p. 550.) Such facts must be
    plausible. (See 
    Id. at p.
    551.) “A complaint must allege the ultimate facts necessary to the
    statement of an actionable claim. It is both improper and insufficient for a plaintiff to simply
    plead the evidence by which he hopes to prove such ultimate facts.” (Careau & Co. v.
    Security Pacific Business Credit, Inc. (1990) 
    222 Cal. App. 3d 1371
    , 1390.) In negligence
    3All statutory references herein are to the Code of Civil Procedure unless
    otherwise indicated.
    11
    cases, although negligence may be pleaded in general terms, if the pleaded facts of negligence
    and injury do not naturally give rise to an inference of causation, plaintiff must plead specific
    facts explaining how the conduct caused or contributed to plaintiff’s injury. (Bockrath v.
    Aldrich Chemical Co. (1999) 
    21 Cal. 4th 71
    , 78.)
    II.    Engstrom’s Demurrer
    A.      Plaintiffs’ Claims Based on the Allegro Action—Statute of Limitations
    Notwithstanding the trial court’s ruling that plaintiffs’ claims based on the Allegro
    Matter were not barred by the statute of limitations, Engstrom’s brief argues that the statute of
    limitations bars such claims. As a general rule, respondents who fail to file a cross-appeal
    cannot claim error in connection with the opposing party’s appeal. (Estate of Powell (2000)
    
    83 Cal. App. 4th 1434
    , 1439.) A limited exception to this rule is provided by section 906,
    which states in pertinent part: “The respondent . . . may, without appealing from [the]
    judgment, request the reviewing court to and it may review any of the foregoing [described
    orders or rulings] for the purpose of determining whether or not the appellant was prejudiced
    by the error or errors upon which he relies for reversal or modification of the judgment from
    which the appeal is taken.” “‘The purpose of the statutory exception is to allow a respondent
    to assert a legal theory which may result in affirmance of the judgment.’ [Citation.]”
    (Hutchinson v. City of Sacramento (1993) 
    17 Cal. App. 4th 791
    , 798.) We therefore consider
    the statute of limitations issue.
    1.      Malpractice Claim
    “An 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.” (§ 340.6, subd. (a).) Section 340.6
    states two distinct and alternative limitation periods: One year after actual or constructive
    discovery, or four years after occurrence (the date of the wrongful act or omission), whichever
    occurs first. The statute applies to an action for malpractice as well as breach of fiduciary
    12
    duty arising out of the performance of an attorney’s professional duties, but it does not apply
    to actions for fraud. (Favila v. Katten Muchin Rosenman LLP (2010) 
    188 Cal. App. 4th 189
    ,
    223.) Further, the statute applies to actions for any act or omission arising out of the
    performance of an attorney’s professional duties. (Ibid.)
    The statute is tolled only during the time the plaintiff has not sustained actual injury.
    (§ 340.6, subd. (a)(1).) Actual injury occurs where the plaintiff suffers any loss or injury
    legally cognizable as damages based on the asserted errors or omissions of an attorney.
    (Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 
    18 Cal. 4th 739
    , 743.) The
    fact of injury or damage need not be recognized or noticed by the plaintiff. Nor does the fact
    that damage may be difficult to calculate or prove prevent the legal malpractice statute of
    limitations from running. (Croucier v. Chavos (2012) 
    207 Cal. App. 4th 1138
    , 1148.)
    Here, plaintiffs’ injury occurred in 1997 when Engstrom allegedly wrongfully withheld
    the settlement funds, more than four years before the filing of the plaintiffs’ SAC in April
    2012. Thus, plaintiffs’ malpractice and breach of fiduciary duty claims based on the Allegro
    Matter settlement funds distribution are barred by section 340.6.
    2.     Fraud-Based Claims
    We requested the parties to brief separately the issue of the applicability of the statute
    of limitations in Probate Code section 16460 to client trust accounts and the disbursement of
    settlement funds from such accounts. Plaintiffs contend that Engstrom had a duty as holder of
    their client funds in trust, to account for and maintain records of such funds under Rules of
    Professional Conduct, rule 4-100, and that Probate Code section 16460 governs the limitations
    period, as well as lessens their duty of inquiry into Engstrom’s handling of such funds as a
    fiduciary; furthermore, the holding of client trust funds is arguably not the rendering of
    professional services to which Code of Civil Procedure section 340.6 would apply. Engstrom
    counters that Code of Civil Procedure section 340.6 controls any claims for breach of trust
    such as alleged here and Code of Civil Procedure section 338, subdivision (d) controls any
    fraud claims, and also that Probate Code section 16460 by its express terms states that it
    applies unless the potential breach of trust is covered by another statute. Furthermore,
    13
    Engstrom argues that both Code of Civil Procedure section 338, subdivision (d) and Probate
    Code section 16460 supply the same time period and delayed discovery rule and plaintiffs are
    not under any lessened duty of discovery; as a result, plaintiffs have failed to establish that any
    new facts not available to them in 1997 came to light in 2012 to justify their late amendment
    of their pleading.
    By its own terms, section 340.6 does not govern claims for fraud.4 Generally, courts
    have applied section 338, subdivision (d) to actions for fraud against attorneys. This statute of
    limitations for fraud is three years. (§ 338, subd. (d).) This section also codifies the delayed
    discovery rule, providing that a cause of action for fraud “‘is not to be deemed to have accrued
    until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.’”
    (Brandon G. v. Gray (2003) 
    111 Cal. App. 4th 29
    , 35; § 338, subd. (d).) The date a
    complaining party learns, or at least is put on notice, that a representation was false is the date
    the statute starts running. (§ 338, subd. (d).) The fraudulent concealment doctrine will also
    toll the statute of limitations under section 338, subdivision (d). “[T]he ground of relief is that
    the defendant, having by fraud or deceit concealed material facts and by misrepresentations
    hindered the plaintiff from bringing an action within the statutory period, is estopped from
    taking advantage of his own wrong.” (Pashley v. Pacific Elec. Ry. Co. (1944) 
    25 Cal. 2d 226
    ,
    231.) To take advantage of this doctrine “‘the plaintiff must show . . . the substantive
    elements of fraud[] and . . . an excuse for late discovery of the facts.’” (Snapp & Associates
    Ins. Services, Inc. v. Robertson (2002) 
    96 Cal. App. 4th 884
    , 890.)
    With respect to trust accounts, Probate Code section 16460 applies to a fiduciary’s
    duty to provide an accounting to a beneficiary and provides a three-year limitations period that
    is triggered by the trustee’s accounting duty. A beneficiary of a trust who receives an
    4Plaintiffs assert that the holding of settlement funds does not arise out of the
    provision of professional services and thus that section 340.6 does not apply for that
    reason. We disagree, as in this case, the funds in the trust account are settlement
    proceeds, Engstrom’s conduct in holding such funds arises out of the provision of
    professional services, namely, the settlement of the case on plaintiffs’ behalf.
    14
    accounting that would put him or her on notice of a claim against the trustee has three years
    from the date of receipt of the accounting to file an action; if no accounting is provided, any
    action must be filed within three years of the discovery of the claim. Under Probate Code
    section 16460, the duty of inquiry is triggered where there is sufficient information (either
    through an accounting or otherwise) to put the beneficiary on notice to take action. (Prob.
    Code, § 16460, subd. (a); Noggle v. Bank of America (1999) 
    70 Cal. App. 4th 853
    , 861, fn. 5 [a
    duty of inquiry exists even where the alleged wrongdoer is a fiduciary].)5
    An express trust is defined as a fiduciary relationship whereby a trustee holds property
    for another’s benefit. (Placerville Fruit Growers’ Assn. v. Irving (1955) 
    135 Cal. App. 2d 731
    ,
    736.) There can be no reasonable dispute that an attorney’s client trust account is an express
    trust: Rules of Professional Conduct, rule 4-100 provides: “(A) All funds received or held for
    the benefit of clients by a member or law firm, including advances for costs and expenses,
    shall be deposited in one or more identifiable bank accounts labeled ‘Trust Account,’ ‘Client’s
    Funds Account’ or words of similar import, maintained in the State of California . . . .”
    Further, an attorney owes the client a duty to account for funds held in the client trust account.
    Rule 4-100 also provides: “(B) A member shall: [¶] . . . [¶] (3) Maintain complete records of
    all funds, securities, and other properties of a client coming into the possession of the member
    or law firm and render appropriate accounts to the client regarding them; preserve such
    records for a period of no less than five years after final appropriate distribution of such funds
    or properties; and comply with any order for an audit of such records issued pursuant to the
    Rules of Procedure of the State Bar. [¶] (4) Promptly pay or deliver, as requested by the
    5  Contrary to Engstrom’s contention, Probate Code section 16460 does not state
    that it applies unless any potential breach of trust is covered by another statute. Probate
    Code section 16460, subdivision (a) states it applies “[u]nless a claim is previously barred
    by adjudication, consent, limitation, or otherwise.” The use of the word “previously”
    does not mean any other limitations statute is paramount; rather, it connotes that any
    failure to provide an appropriate accounting, given that such duties are generally ongoing,
    cannot formerly have been the subject of disposition.
    15
    client, any funds, securities, or other properties in the possession of the member which the
    client is entitled to receive.”
    In addition, California Rules of Professional Conduct, rule 3-310(D), which was in
    effect at the time of the settlement of the Allegro Matter, provided that “[a] member who
    represents two or more clients shall not enter into an aggregate settlement of the claims of or
    against the clients without the informed written consent of each client.” Although the
    California Rules of Professional Conduct do not specifically address what must be disclosed
    to a client to obtain the client’s “informed consent,” the American Bar Association’s Model
    Rules of Professional Conduct impose additional demands, and require the lawyer to disclose
    the total amount of the aggregate settlement, the details of that lawyer’s other clients’
    participation in the settlement. (ABA Model Rules of Prof. Conduct, rule 1.8(g).)
    As pointed out in Vafi v. McCloskey (2011) 
    193 Cal. App. 4th 874
    , where there are two
    statutes governing the same subject, the question of which statute governs is subject to de
    novo review. (
    Id. at p.
    880.) Vafi further explained that “‘when a general and [a] particular
    [statutory] provision are inconsistent, the latter is paramount to the former. So a particular
    intent will control a general one that is inconsistent with it.’ [Citation.] Thus, a specific
    statute of limitations takes precedence over a general one, even though the latter ‘“would be
    broad enough to include the subject to which the more particular provision relates.”
    [Citation.]’” (Ibid.)
    Although California has declined to adopt American Bar Association Model Rules of
    Professional Conduct, rule 1.8(g), which precisely defines the scope of disclosure in an
    aggregate settlement, an attorney’s duty accurately to account for client trust funds in the
    context of an aggregate settlement is nonetheless governed by Rules of Professional Conduct,
    rule 4-100(B). Under rule 4-100(B) in the context of an aggregate settlement, the attorney
    must disclose sufficient information to enable the client to evaluate whether the settlement
    proceeds have been properly distributed. That rule imposes a more particularized duty than
    16
    the general duty imposed under Civil Code section 1710 not to omit or misrepresent facts,
    which duty is the basis for a generic claim of fraud.6
    Thus, under the rule of statutory construction that we apply a more specific statute,
    given the accounting duty applicable to the express trust that is a client trust account, we apply
    Probate Code section 16460 to plaintiffs’ fraud-based claims that Engstrom did not properly
    distribute the aggregate settlement proceeds in the Allegro Matter. As alleged, the only
    information plaintiffs received from Engstrom was the amount of their share of the Allegro
    Settlement, Engstrom’s attorney fees, and that the 93 families received a total of $100 million.
    Even without applying the more detailed standard of American Bar Association Model Rules
    of Professional Conduct, rule 1.8(g), Engstrom’s accounting was incomplete because it did
    not provide plaintiffs with sufficient information to evaluate whether all monies were
    distributed, and whether they received the sums they were entitled to receive.
    As a result, plaintiffs asserted they did discover the claim in February 2012 (after they
    filed their original complaint) when they conducted a survey of some of the other settling
    plaintiffs in the Allegro Matter, making plaintiffs’ complaint timely under the principles of
    Probate Code section 16460. Thus, plaintiffs should be permitted to amend their complaint to
    set forth delayed discovery entitling them to a tolling of the statute of limitations on the
    Allegro Matter under Probate Code section 16460 based upon an assertion that Engstrom
    failed to provide an accounting sufficient for them to determine whether their portion of the
    settlement proceeds was fairly and accurately distributed to them.7 As a result of this
    6 A deceit, within the meaning of Civil Code section 1709 is, in relevant part,
    “[t]he suggestion, as a fact, of that which is not true, by one who does not believe it to be
    true[] [and] [¶] . . . [¶] . . . [t]he suppression of a fact, by one who is bound to disclose it,
    or who gives information of other facts which are likely to mislead for want of
    communication of that fact.” (Civ. Code, § 1710.)
    7 The pertinent causes of action are the fourth cause of action (fraudulent
    concealment of embezzlement), seventh cause of action (unjust enrichment), eighth cause
    of action (unfair business practices), tenth cause of action (conversion), twelfth cause of
    action (conspiracy to commit fraud), and thirteenth cause of action (accounting)).
    17
    insufficient accounting which plaintiffs have alleged was the result of concealment, plaintiffs,
    who had no other sources of information, were not put on notice of any wrongdoing until they
    later conducted an investigation by surveying other settling plaintiffs in the Allegro Matter.
    We note that substantively, the trial court found plaintiffs’ claims based on the Allegro
    Matter failed because they were based upon speculation. However, based upon the
    accounting duty Engstrom owed to plaintiffs under the Professional Rules of Conduct,
    and the fact plaintiffs’ allegations indicate they received an insufficient amount of
    information concerning the disposition of the aggregate settlement, this ground for
    sustaining Engstrom’s demurrer is without merit because the plaintiffs’ lack of
    information resulted from Engstrom’s alleged failure to adequately account. “‘Where no
    duty is imposed by law upon a person to make inquiry, and where under the circumstances ‘a
    prudent man’ would not be put upon inquiry, the mere fact that means of knowledge are open
    to a plaintiff, and he has not availed himself of them, does not debar him from relief when
    thereafter he shall make actual discovery.’ [Citation.]” (Vai v. Bank of America (1961) 
    56 Cal. 2d 329
    , 342, 353 [failure of fiduciary to fully and fairly disclose material facts constituted
    breach of fiduciary duty and constructive fraud].)
    Although no other cases have so applied Probate Code section 16460, we do not see
    this as a reason for not doing so here. The statutory limitations period of Probate Code section
    16460 (which we only apply to plaintiffs’ fraud-based claims due to the exception of Code
    Civ. Proc, § 340.6) is identical to that of the three-year statute of limitations of Code of Civil
    Procedure section 338, subdivision (d), and there is a similar, if not identical, delayed
    discovery rule. The difference is that discovery is triggered under Probate Code section
    16460 by the receipt of an accounting, or if no accounting is supplied, by facts sufficient to
    put the plaintiff on notice of any wrongdoing. Given that accounting duties for an attorney
    vis-à-vis a client trust account were already in place under the Rules of Professional Conduct
    at the time of the Allegro Settlement, applying Probate Code section 16460 here does not
    18
    work an injustice.8 Instead, we clarify and reinforce an attorney’s duty in the context of an
    aggregate settlement where the settling plaintiffs will have limited information about the other
    settling plaintiffs’ receipts and the device of the aggregate settlement could provide a shield
    for an attorney to misappropriate or improperly distribute funds, as plaintiffs have alleged
    here.
    Finally, with respect to an attorney’s duties of confidentiality owed to multiple clients
    in an aggregate settlement, to the extent that other clients’ settlement information is
    confidential, that does not preclude disclosure of some information regarding the settlement
    sufficient to permit the aggregate settlement plaintiffs to determine whether the settlement
    funds have been properly distributed. In that manner, the rule of 
    Solin, supra
    , 89 Cal.App.4th
    at p. 467—that where confidential information is vital to an attorney’s defense and the suit
    could not proceed without disclosure of such confidential information, the suit must be
    dismissed—will not be implicated because we do not advocate a disclosure of confidential
    information. We require that the information disclosed regarding an aggregate settlement
    must be sufficient to put the plaintiffs’ on notice of any potential claim and must comport with
    an attorney’s duties under Rules of Professional Conduct, rule 4-100(A) and (B).
    B.     First Cause of Action (Professional Negligence); Second Cause of Action
    (Breach of Fiduciary Duty)
    Plaintiffs’ first cause of action for professional malpractice based upon conflict of
    interest (breach of duty of confidentiality and breach of duty of loyalty) alleged that
    Engstrom’s representation of the Perlmutters was undertaken without plaintiffs’ informed
    written consent in breach of rule 3-310 of the Rules of Professional Conduct, and Engstrom
    performed below the standard of care when it disclosed to plaintiffs’ adversaries plaintiffs’
    plan to import free fill dirt from Public Works. Plaintiffs alleged that they suffered damages
    in the form of a settlement for substantially less than they were actually damaged in the
    8
    Although Rules of Professional Conduct, rule 4-100(B)(3) specifies that such
    accountings shall be kept for a minimum “of five years,” we do not read that rule to
    impose an outside limit on the amount of time an attorney must keep accounting records.
    19
    Perlmutter Matter, as well as “threatening [them] with a debtor examination to effectuate a
    lien on plaintiffs’ property and thereby [Engstrom] collected over $1.3 million.” Plaintiffs’
    second cause of action for breach of fiduciary duty is based upon the alleged insufficient
    distribution of settlement funds in the Allegro Matter and the conflict of interest and
    disclosure of confidential information in the Perlmutter Matter.
    Plaintiffs contend the trial court erred in concluding that they failed to allege how
    Engstrom’s disclosure of their plan to import dirt caused them damage because they alleged
    they would not have settled for $500,000 if the disclosure had not been made, which they
    assert is a sufficiently detailed allegation to withstand demurrer. Further, even if their dirt
    importation plan was a public record, defendants were barred from disclosing information
    obtained during the course of their representation of plaintiffs under Oasis West Realty, LLC
    v. Goldman (2011) 
    51 Cal. 4th 811
    , 821. Further, plaintiffs alleged sufficient facts to establish
    breach of fiduciary duty in their allegations of defendants’ embezzlement of the settlement
    funds, and the trial court erred in applying 
    Solin, supra
    , 
    89 Cal. App. 4th 451
    because the
    balancing determination necessary under Solin is fact intensive and cannot be made at the
    demurrer stage.9
    Rule 3-310(C) of the California Rules of Professional Conduct provides that: “A
    member shall not, without the informed written consent of each client: [¶] (1) Accept
    representation of more than one client in a matter in which the interests of the clients
    potentially conflict; or [¶] (2) Accept or continue representation of more than one client in a
    matter in which the interests of the clients actually conflict . . . .” (Rules Prof. Conduct,
    rule 3-310(C).) Rule 3-310(E) provides that an attorney shall not, without the informed
    written consent of the current or former client, “accept employment adverse to the client or
    former client where, by reason of the representation of the client or former client, the member
    9 Plaintiffs assert in their opening brief that Engstrom conceded the fill dirt
    revelation was a basis for the reduction in plaintiffs’ settlement figure. However,
    plaintiffs do not offer any factual support for this assertion.
    20
    has obtained confidential information material to the employment.” (See also Bus. & Prof.
    Code, § 6068, subd. (e).) However, a “violation of the Rules of Professional Conduct does
    not, in and of itself, render an attorney liable for damages. [Citations.]” (Stanley v. Richmond
    (1995) 
    35 Cal. App. 4th 1070
    , 1097.) In a tort action for breach of fiduciary duty or
    professional negligence, however, the rules may inform the scope of an attorney’s duty.
    (Slovensky v. Friedman (2006) 
    142 Cal. App. 4th 1518
    , 1534–1535.)
    “‘“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 the profession
    commonly possess and exercise; (2) breach of that duty; (3) a causal connection between the
    negligent conduct and the resulting injury; and (4) actual loss or damage resulting from the
    professional negligence.”’” (Shopoff & Cavallo LLP v. Hyon (2008) 
    167 Cal. App. 4th 1489
    ,
    1509.) The elements of a cause of action for breach of fiduciary duty are the existence of a
    fiduciary relationship, breach of fiduciary duty, and damages. (Ibid.)
    “Where the potential conflict is one that arises from the successive representation of
    clients with potentially adverse interests, the courts have recognized that the chief fiduciary
    value jeopardized is that of client confidentiality” but that “the primary value at stake in cases
    of simultaneous or dual representation is the attorney’s duty—and the client’s legitimate
    expectation—of loyalty, rather than confidentiality.” (Flatt v. Superior Court (1994) 
    9 Cal. 4th 275
    , 283, 284.) “‘[A]n attorney is forbidden to do either of two things after severing [his]
    relationship with a former client. [He] may not do anything which will injuriously affect [his]
    former client in any manner in which [he] formerly represented [the client] nor may [he] at
    any time use against [his] former client knowledge or information acquired by virtue of the
    previous relationship.’” (Oasis West Realty, Inc. v. 
    Goldman, supra
    , 51 Cal.4th at p. 821.)
    Here, with respect to the Perlmutter Matter, plaintiffs’ claims for professional
    negligence and breach of fiduciary duty fail because they allege no causation, a required
    element of these claims. Plaintiffs assert that attorney Wolfe divulged their plan to import free
    dirt obtained from Public Works, but do not explain how the Perlmutters’ knowledge of their
    plan caused plaintiffs’ damage claim against the Perlmutters to collapse. Plaintiffs have not
    21
    alleged the basis for their valuation of their case, why their use of fill dirt, or free fill dirt,
    harmed their position, or why their use of fill dirt was a matter that could be kept confidential
    in a lawsuit involving damage to their property based upon the fill dirt.
    With respect to the Allegro Matter, as discussed above, claims based on professional
    negligence and breach of fiduciary duty are barred by the statute of limitations in
    section 340.6.
    C.       Fraudulent Concealment of Conflict of Interest (Third Cause of Action) and
    Fraudulent Concealment of Embezzlement (Fourth Cause of Action)
    Plaintiffs’ fraudulent concealment causes of action allege that Engstrom failed to
    disclose that it was representing the Perlmutters in the Perlmutter Action, although attorneys
    Lack and Ramsey avoided direct contact with the Perlmutters, they were involved in behind-
    the-scenes legal work, while Wolfe, who had not worked on the Malibu Construction Matter,
    had contact with the Perlmutters. As a result, plaintiffs allege they would not have settled the
    Allegro Matter and would not have settled the Perlmutter Matter for the sums they did. The
    court found on the third cause of action for fraudulent concealment of conflict of interest in
    the Perlmutter Matter that although a disclosable conflict of interest existed, plaintiffs failed to
    allege how they were damaged by Wolfe’s disclosure of their plans regarding the fill dirt. On
    the fourth cause of action for fraudulent concealment of funds not distributed in the Allegro
    Matter settlement, the court found plaintiffs’ damage claims speculative and plaintiffs failed
    to show how the alleged concealment caused damages because the alleged concealment came
    after the plaintiffs had agreed to settle the matter. Plaintiffs contend the trial court erred in
    concluding they did not sufficiently allege causation on the Allegro Matter or Perlmutter
    Matter.
    Civil Code section 1710, paragraph (3) provides that deceit includes “[t]he suppression
    of a fact, by one who is bound to disclose it.” In general, to prove a fraud based on
    concealment, a plaintiff must demonstrate: “(1) the defendant . . . concealed or suppressed a
    material fact, (2) the defendant [had] a duty to disclose the fact to the plaintiff, (3) the
    defendant . . . intentionally concealed or suppressed the fact with the intent to defraud the
    22
    plaintiff, (4) the plaintiff [was] unaware of the fact and would not have acted as he [or she]
    did if he [or she] had known of the concealed or suppressed fact, and (5) as a result of the
    concealment or suppression of the fact, the plaintiff sustained damage. (Linear Technology
    Corp. v. Applied Materials, Inc. (2007) 
    152 Cal. App. 4th 115
    , 131.)
    With respect to the Perlmutter Matter, the mere disclosure of plaintiffs’ fill dirt plan
    does not establish why such disclosure was the cause of plaintiffs’ lowered settlement figure,
    and the trial court properly sustained to demurrer to plaintiffs’ third cause of action. However,
    with respect to the Allegro Matter, as set forth above plaintiffs’ claims set forth in their fourth
    cause of action are not time barred, nor are they speculative and plaintiffs are permitted to
    amend such claims to set forth a basis for their delayed discovery of the facts.
    D.      Fifth Cause of Action (Intentional Fraud)
    Plaintiffs’ fifth cause of action alleges that Engstrom failed to disclose its conflict of
    interest in the Perlmutter Matter to plaintiffs, and in communication with plaintiffs by letter
    dated May 3, 2011, falsely maintained that the matters were not substantially related, plaintiffs
    had waived the conflict, and Engstrom’s contact with the Perlmutters was insignificant and
    minimal. As a result of these misrepresentations, Engstrom defrauded plaintiffs of $1.3
    million.
    The trial court found plaintiffs’ theory of liability unclear because plaintiffs did not
    allege why $1.3 million was paid based on defendants’ misrepresentations about the conflict
    of interest. Plaintiffs argue the trial court erred because if plaintiffs had known of the conflict,
    they would have taken steps to vacate the judgment improperly obtained against them.
    The elements of a claim for fraudulent concealment require the plaintiff to show that:
    “(1) the defendant . . . concealed or suppressed a material fact, (2) the defendant [was] under a
    duty to disclose the fact to the plaintiff, (3) the defendant . . . intentionally concealed or
    suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff was unaware of the
    fact and would not have acted as he did if he had known of the concealed or suppressed fact,
    and (5) as a result of the concealment or suppression of the fact, the plaintiff sustained
    damage. (Marketing West, Inc. v. Sanyo Fisher (USA) Corp. (1992) 
    6 Cal. App. 4th 603
    , 612–
    23
    613.) There must also be a duty to disclose. Such a duty may be established where there is a
    confidential relationship between the parties, defendant has made a representation which was
    likely to mislead due to the nondisclosure, there is active concealment of undisclosed matters,
    or one party has sole knowledge of or access to material facts and knows such facts are not
    known to or discoverable by the other party. (Goodman v. Kennedy (1976) 
    18 Cal. 3d 335
    ,
    346–347.)
    Here, plaintiffs’ claims fail because they allege no causation. Plaintiffs assert that
    attorney Wolfe divulged their plan to import free dirt obtained from Public Works, but do not
    explain how the Perlmutters’ knowledge of their plan plausibly caused their damage claim
    against the Perlmutters to collapse. Plaintiffs have not alleged the basis for their valuation of
    their case, why their use of fill dirt, or free fill dirt, harmed their position, or why their use of
    fill dirt was a matter that could be kept confidential in a lawsuit involving damage to their
    property based upon the fill dirt.
    E.      Sixth Cause of Action (Constructive Fraud)
    Plaintiffs’ sixth cause of action for constructive fraud was based on Engstrom’s
    disclosure in the Perlmutter Matter of plaintiffs’ plan to import free fill dirt obtained from
    Public Works, and as a result, plaintiffs settled the Perlmutter Matter for less than the amount
    of their damages. The trial court found plaintiffs failed to allege how Engstrom’s revelation
    of plaintiffs’ confidential plan to import dirt from Public Works caused their damages.
    Plaintiffs contend the trial court erred because they adequately pleaded that Engstrom’s failure
    to maintain their confidences and its conflict of interest caused them damages.
    Constructive fraud “‘“‘is a unique species of fraud applicable only to a fiduciary or
    confidential relationship.’”’” (Michel v. Moore & Associates, Inc. (2007) 
    156 Cal. App. 4th 756
    , 763.) “Constructive fraud ‘arises on a breach of duty by one in a confidential or
    fiduciary relationship to another which induces justifiable reliance by the latter to his
    prejudice.’ [Citations.] Actual reliance and causation of injury must be shown. [Citations.]”
    (Tyler v. Children’s Home Society (1994) 
    29 Cal. App. 4th 511
    , 548, italics omitted; see also
    Younan v. Equifax Inc. (1980) 
    111 Cal. App. 3d 498
    , 516, fn. 14 [elements of constructive
    24
    fraud cause of action are “(1) a fiduciary or confidential relationship; (2) nondisclosure;
    (3) intent to deceive, and (4) reliance and resulting injury (causation)”].) “‘“In its generic
    sense, constructive fraud comprises all acts, omissions and concealments involving a breach
    of legal or equitable duty, trust or confidence, and resulting in damages to another.
    [Citations.] Constructive fraud exists in cases in which conduct, although not actually
    fraudulent, ought to be so treated—that is, in which such conduct is a constructive or quasi
    fraud, having all the actual consequences and all the legal effects of actual fraud.”
    [Citation.]’” (Estate of Gump (1991) 
    1 Cal. App. 4th 582
    , 601; see also Civ. Code, § 1573;
    Engalla v. Permanente Medical Group, Inc. (1997) 
    15 Cal. 4th 951
    , 981–982, fn. 13.)
    “[W]hether a fiduciary duty has been breached, and whether conduct constitutes
    constructive . . . fraud, depend on the facts and circumstances of each case. (Assilzadeh v.
    California Federal Bank (2000) 
    82 Cal. App. 4th 399
    , 415.)
    Here, plaintiffs’ inability to plead how Engstrom’s concealment of its conflict of
    interest, or its revelation of plaintiffs’ confidential plan to import fill dirt caused plaintiffs to
    settle the case for less than their valuation is fatal to their claim. Plaintiffs have not alleged the
    basis for their valuation of their case, why their use of fill dirt harmed their position, why their
    use of fill dirt was a matter that could be kept confidential in a lawsuit involving damage to
    their property, or why the use of fill dirt as opposed to free dirt affected the outcome of their
    case.
    F.      Seventh Cause of Action (Unjust Enrichment)
    Plaintiffs’ seventh cause of action for unjust enrichment was based upon the alleged
    $22 million in unaccounted funds remaining from the Allegro Matter settlement and
    Engstrom’s wrongful retention of a portion of that sum. Plaintiffs sought restitution of such
    wrongfully obtained sums due them. The trial court found plaintiffs failed to allege that
    Engstrom retained a larger portion of the settlement funds than it was entitled to retain.
    Plaintiffs contend the trial court erred because they specifically alleged that Engstrom
    “‘embezzled, misused and stole settlement funds from PLAINTIFFS for their own use’” and
    at the pleading stage, plaintiffs need only allege ultimate facts.
    25
    The elements for a claim of unjust enrichment are “receipt of a benefit and unjust
    retention of the benefit at the expense of another.” (Lectrodryer v. SeoulBank (2000) 
    77 Cal. App. 4th 723
    , 726.) “The theory of unjust enrichment requires one who acquires a benefit
    which may not justly be retained, to return either the thing or its equivalent to the aggrieved
    party so as not to be unjustly enriched.” (Otworth v. Southern Pac. Transportation Co. (1985)
    
    166 Cal. App. 3d 452
    , 460.) It is not, strictly speaking, a theory of recovery, “‘but an effect:
    the result of a failure to make restitution under circumstances where it is equitable to do so.’
    [Citation.] . . . It is synonymous with restitution.” (Melchior v. New Line Productions, Inc.
    (2003) 
    106 Cal. App. 4th 779
    , 793.) Ordinarily, restitution is required only if “‘the benefits
    were conferred by mistake, fraud, coercion, or request.’” (Nibbi Brothers, Inc. v. Home
    Federal Sav. & Loan Assn. (1988) 
    205 Cal. App. 3d 1415
    , 1422, italics omitted.)
    With respect to the Allegro Matter, as set forth above plaintiffs’ claims set forth in
    their seventh cause of action are not time barred, nor are they speculative and plaintiffs are
    permitted to amend such claims to set forth a basis for their delayed discovery of the facts.
    G.      Eighth Cause of Action (Unfair Business Practices, Allegro Matter)
    Plaintiffs alleged that Engstrom violated the UCL by embezzling funds from the
    Allegro settlement and by violating the confidentiality provisions of the Business and
    Professions Code and the Rules of Professional Conduct in connection with the Perlmutter
    Matter, and sought restitution of such funds. The trial court found plaintiffs failed to support
    their claim for damages because they failed to allege that Engstrom retained a larger portion of
    the settlement funds than it was entitled to. Plaintiffs contend the trial court erred because
    they recognize damages are not available under the UCL, but seek restitution of the funds
    allegedly misappropriated by Engstrom.
    “Business and Professions Code section 17200 is written in the disjunctive [and]
    establishes three varieties of unfair competition—acts or practices which are unlawful, or
    unfair, or fraudulent.” (Podolsky v. First Healthcare Corp. (1996) 
    50 Cal. App. 4th 632
    , 647.)
    The three prongs of the law have different thresholds. Under its “unlawful” prong, “the UCL
    borrows violations of other laws . . . and makes those unlawful practices actionable under the
    26
    UCL.” (Lazar v. Hertz Corp. (1999) 
    69 Cal. App. 4th 1494
    , 1505.) Thus, a violation of
    another law is a predicate for stating a cause of action under the UCL’s unlawful prong. In a
    consumer case, determining whether a business practice is “unfair” involves “balancing the
    utility of the defendant’s conduct against the gravity of the harm to the alleged victim.”
    (Smith v. State Farm Mutual Automobile Ins. Co. (2001) 
    93 Cal. App. 4th 700
    , 718.)
    Traditional fraud requirements, such as intent or actual reliance, are inapplicable to the UCL.
    (Massachusetts Mutual Life Ins. Co. v. Superior Court (2002) 
    97 Cal. App. 4th 1282
    , 1288.)
    A distinguishing feature of the UCL is that it does not provide a private action for
    damages or other legal remedies. Instead, the UCL provides an equitable means to prevent
    unfair practices in the future and restore money or property to victims of those practices. (Cel-
    Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 
    20 Cal. 4th 163
    ,
    179.) Thus, remedies are limited to injunctive relief and restitution. Unlawful practices are
    practices “forbidden by law, be it civil or criminal, federal, state, or municipal, statutory,
    regulatory, or court-made.” (Saunders v. Superior Court (1994) 
    27 Cal. App. 4th 832
    , 838–
    839.) To state a cause of action based on an unlawful business act or practice under the UCL,
    a plaintiff must allege facts sufficient to show a violation of some underlying law.
    A business act or practice is unfair when the conduct “threatens an incipient violation
    of an antitrust law, or violates the policy or spirit of one of those laws because its effects are
    comparable to or the same as a violation of the law, or otherwise significantly threatens or
    harms competition.” (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone 
    Co., supra
    , 20 Cal.4th at p. 187.) To establish an unfair business act or practice, a plaintiff must
    establish the unfair nature of the conduct and that the harm caused by the conduct outweighs
    any benefits that the conduct may have. (McKell v. Washington Mutual, Inc. (2006) 
    142 Cal. App. 4th 1457
    , 1473.)
    Finally, a fraudulent business act or practice is one in which members of the public are
    likely to be deceived. (Olson v. Breeze, 
    Inc., supra
    , 48 Cal.App.4th at p. 618 [“‘“Fraudulent,”
    as used in the statute, does not refer to the common law tort of fraud but only requires a
    showing members of the public “‘are likely to be deceived’’”].) Thus, in order to state a cause
    27
    of action based on a fraudulent business act or practice, the plaintiff must allege that
    consumers are likely to be deceived by the defendant’s conduct. (Committee on Children’s
    Television, Inc. v. General Foods Corp. (1983) 
    35 Cal. 3d 197
    , 211.)
    With respect to the Allegro Matter, as set forth above plaintiffs’ claims set forth in
    their eighth cause of action are not time barred, nor are they speculative and plaintiffs are
    permitted to amend such claims to set forth a basis for their delayed discovery of the facts.
    H.      Ninth Cause of Action (Unfair Business Practices, Perlmutter Matter)
    Plaintiffs alleged that Engstrom owed it a full disclosure of the conflict of interest that
    existed in connection with Engstrom’s representation of the Perlmutters, and that Engstrom’s
    disclosure of plaintiffs’ plan to import dirt from Public Works violated rule 3-310 of the Rules
    of Professional Conduct requiring that Engstrom maintain plaintiffs’ confidence. Plaintiffs
    sought disgorgement of all revenue Engstrom received from plaintiffs in the Perlmutter
    Matter. The trial court found plaintiffs failed to allege how they were damaged by Engstrom’s
    conduct, and did not allege that defendants obtained any money or property that could be
    disgorged to them under the UCL. Plaintiffs contend the trial court erred because they did
    allege that Engstrom obtained $1.3 million from them as a result of Engstrom’s fraudulent,
    unfair, and unlawful acts.
    Here, plaintiffs’ claims fail because they allege no causation. Plaintiffs assert that
    attorney Wolfe divulged their plan to import free dirt obtained from Public Works, but do not
    explain how the Perlmutters’ knowledge of their plan caused their damage claim against the
    Perlmutters to collapse. Plaintiffs have not alleged the basis for their valuation of their case,
    why their use of fill dirt, or free fill dirt, harmed their position, or why their use of fill dirt was
    a matter that could be kept confidential in a lawsuit involving damage to their property based
    upon the fill dirt. Nor can plaintiffs explain or clarify the inconsistency between their
    assertions that Engstrom received $1.3 million from them while at the same time they assert
    that the $1.3 million figure constituted the judgment in the Perlmutter Matter.
    28
    I.      Tenth Cause of Action (Conversion)
    Plaintiffs alleged that Engstrom instructed the plaintiffs in the Allegro Matter not to
    discuss the settlement with anyone, yet based upon plaintiff’s mathematical analysis of a
    sampling of some of plaintiffs in the Allegro Matter, Engstrom converted a portion of the
    Allegro Matter settlement funds to their own use, an assertion that Engstrom refused to
    respond to under oath. The trial court found plaintiffs’ calculation of the sums owed from the
    Allegro Matter were unsupported. Plaintiffs contend that they alleged sufficient facts to
    support a claim for conversion based upon their calculations of the missing settlement funds.
    “‘Conversion is the wrongful exercise of dominion over the property of another.’”
    (Farmers Ins. Exchange v. Zerin (1997) 
    53 Cal. App. 4th 445
    , 451.) The elements of a claim
    for conversion are (1) “the plaintiff’s ownership or right to possession of the property at the
    time of the conversion,” (2) “the defendant’s conversion by a wrongful act or disposition of
    property rights,” and (3) damages. (Ibid.) “It is not necessary that there be a manual taking of
    the property,” only “an assumption of control or ownership over the property, or that the
    alleged converter has applied the property to his [or her] own use.” (Id. at pp. 451–452.)
    With respect to the Allegro Matter, as set forth above plaintiffs’ claims set forth in
    their tenth cause of action are not time barred, nor are they speculative and plaintiffs are
    permitted to amend such claims to set forth a basis for their delayed discovery of the facts.
    J.      Eleventh Cause of Action (Civil Conspiracy to Commit Intentional Fraud)
    and Twelfth Cause of Action (Civil Conspiracy to Commit Conversion)
    Plaintiffs’ eleventh cause of action alleged that to induce plaintiffs to pay over $1.3
    million to settle the Perlmutter Matter, Engstrom formed a conspiracy to make a number of
    material representations to plaintiffs, including concealing the conflict of interest in the
    Perlmutter Matter and using confidential information in the Perlmutter Matter, threatening
    plaintiffs with a judgment debtor examination and obtaining $1.3 million. Plaintiffs’ twelfth
    cause of action alleged that Engstrom requested that plaintiffs not discuss the settlement with
    anyone, misrepresented that they only retained one-third of plaintiffs’ settlement share, there
    was $22 million in settlement funds unaccounted for, and Engstrom conspired to commit
    29
    these wrongful acts. The trial court found these claims failed because plaintiffs failed to
    allege any underlying torts to support the conspiracy claim.
    There is no separate tort of civil conspiracy and no action for conspiracy to commit a
    tort unless the underlying tort is committed and damage results therefrom. (Unruh v. Truck
    Insurance Exchange (1972) 
    7 Cal. 3d 616
    , 631.) The significance of a conspiracy theory of
    liability is that each member may be held jointly liable as a tortfeasor, even though he or she
    may not have participated directly in the underlying tort. (Richard B. LeVine, Inc. v. Higashi
    (2005) 
    131 Cal. App. 4th 566
    , 574.) “The elements of an action for civil conspiracy are
    (1) formation and operation of the conspiracy and (2) damage resulting to the plaintiff
    (3) from a wrongful act done in furtherance of the common design.” (Rusheen v. Cohen
    (2006) 
    37 Cal. 4th 1048
    , 1062.) Where fraud is alleged to be the object of the conspiracy, the
    claim must be pleaded with particularity. (Favila v. Katten Muchin Rosenman LLP (2010)
    
    188 Cal. App. 4th 189
    , 211.)
    Here, plaintiffs have failed to establish how Engstrom’s conduct in the Perlmutter
    Matter caused them damages, and the trial court properly sustained Engstrom’s demurrer to
    the eleventh cause of action. With respect to plaintiffs’ twelfth cause of action based on the
    torts alleged in the Allegro Matter, plaintiffs’ claims are not time barred, nor are they
    speculative and plaintiffs are permitted to amend such claims to set forth a basis for their
    delayed discovery of the facts.
    K.      Thirteenth Cause of Action (Accounting)
    Plaintiffs alleged that Engstrom was in the best position to know the disposition of the
    Allegro Matter settlement funds, and that the settlement funds received from Engstrom were
    inaccurate and not based upon the applicable retainer agreement; based on the fiduciary
    relationship of the parties, plaintiffs were entitled to an accounting. In addition, plaintiffs
    alleged that plaintiffs paid approximately $300,000 as expert fees in the Perlmutter Matter
    based on Engstrom’s invoices, and that Engstrom misused these funds. The trial court found
    plaintiffs’ accounting claim failed because plaintiffs failed to plead facts sufficient to show
    they were entitled to an accounting. Plaintiffs contend the trial court erred, pointing to the fact
    30
    that they alleged defendants were their attorneys, owed them a fiduciary duty, obtained
    settlement proceeds in which plaintiff had an interest, and had a duty to account for the
    distribution of such settlement proceedings.
    An accounting is an equitable proceeding which is proper where there is an
    unliquidated and unascertained amount owing that cannot be determined without an
    examination of the debits and credits on the books to determine what is due and owing. (St.
    James Church v. Superior Court (1955) 
    135 Cal. App. 2d 352
    , 359; Peoples Finance etc. Co.
    v. Bowman (1943) 
    58 Cal. App. 2d 729
    , 734.) Equitable principles govern, and the plaintiff
    must show the legal remedy is inadequate. Thus, where the books and records are so
    complicated that an action demanding a fixed sum is impracticable, an accounting is
    appropriate. (Civic Western Corp. v. Zila Industries, Inc. (1977) 
    66 Cal. App. 3d 1
    , 14.) If an
    ascertainable sum is owed, an action for an accounting is not proper. (St. James Church, at
    p. 359.) Generally, an underlying fiduciary relationship, such as a partnership will support an
    accounting, but the action does not lie merely because the books and records are complex.
    (San Pedro Lumber Co. v. Reynolds (1896) 
    111 Cal. 588
    , 596–597; Union Bank v. Superior
    Court (1995) 
    31 Cal. App. 4th 573
    , 594.) Some underlying misconduct on the part of the
    defendant must be shown to invoke the right to this equitable remedy. (Union Bank, at
    pp. 593–594.)
    With respect to the Allegro Matter, as set forth above plaintiffs’ claims set forth in
    their thirteenth cause of action are not time barred, nor are they speculative and plaintiffs are
    permitted to amend such claims to set forth a basis for their delayed discovery of the facts.
    With respect to claims based on the defendants’ failure in the Perlmutter Matter to account for
    $300,000 in expert witness fees plaintiffs paid to Engstrom after plaintiffs rejected
    defendants’ section 998 offer, plaintiffs have alleged they received an insufficient accounting
    of how such funds were disbursed and allege some of the funds may have been misused. The
    trial court erred in sustaining the demurrer to this claim on the ground that there was no
    fiduciary duty owed because Engstrom were plaintiffs’ attorneys and owed a duty to account
    with respect to the expert witness fees paid. To the extent plaintiffs contend defendants
    31
    fraudulently misappropriated any of such expert witness fees, plaintiffs are permitted to
    amend their complaint to set forth facts supporting such an additional claim.
    L.      Punitive Damages
    Civil Code section 3294 authorizes an award of punitive damages where the defendant
    has acted with “oppression, fraud, or malice.” “Malice” is described as “conduct that is
    intended by the defendant to cause injury to the plaintiff or despicable conduct which is
    carried on by the defendant with a willful and conscious disregard of the rights or safety of
    others.” (Civ. Code, § 3294, subd. (c)(1).) A punitive damage claim depends upon a viable
    claim for compensatory damages for its vitality. (See McLaughlin v. National Union Fire Ins.
    Co. (1994) 
    23 Cal. App. 4th 1132
    , 1164.) Here, because plaintiffs are permitted to amend their
    complaint to state claims for intentional torts upon which a claim for punitive damages may
    be based, the trial court erred in striking plaintiffs’ prayer for punitive damages.
    32
    DISPOSITION
    The judgment is affirmed with respect to Muruganandan Prakashpalan and Navamalar
    Prakashpalans’ first cause of action (professional negligence), second cause of action (breach
    of fiduciary duty), third cause of action (fraudulent concealment of conflict of interest), fifth
    cause of action (intentional fraud, Perlmutter Matter), sixth cause of action (constructive
    fraud, Perlmutter Matter), ninth cause of action (unfair business practices, Perlmutter Matter),
    and eleventh causes of action (conspiracy, Perlmutter Matter), and reversed with respect to
    Muruganandan Prakashpalan and Navamalar Prakashpalans’ fourth cause of action
    (fraudulent concealment of embezzlement), seventh cause of action (unjust enrichment),
    eighth cause of action (unfair business practices, Allegro Matter), tenth cause of action
    (conversion), twelfth cause of action (civil conspiracy, Allegro Matter) and thirteenth cause of
    action (accounting, Allegro Matter, and expert witness fees, Perlmutter Matter). The motion
    to strike is reversed on those claims related to the Allegro Matter and the expert witness fees
    in the Perlmutter Matter. The parties are to bear their own costs on appeal.
    CERTIFIED FOR PUBLICATION.
    JOHNSON, J.
    I concur:
    MALLANO, P. J.
    33
    Rothschild, J., concurring and dissenting:
    I agree that plaintiffs have not adequately alleged how they were harmed by
    defendants’ disclosures about the fill dirt, so I agree that the demurrer was properly
    sustained as to all claims arising from that conduct. I disagree about the timeliness of
    the remaining claims, all of which relate to the settlement of the Northridge earthquake
    litigation (the “Allegro Matter”) in 1997. I would affirm the judgment in its entirety, and
    I therefore respectfully dissent in part.
    Defendants were plaintiffs’ lawyers, and all of plaintiffs’ claims concerning the
    settlement of the Allegro Matter arise from defendants’ performance of professional
    services for plaintiffs. Those claims are consequently subject to the statute of limitations
    defined by subdivision (a) of Code of Civil Procedure section 340.6, which provides that,
    apart from cases of “actual fraud,” the action 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.” Plaintiffs filed suit more than fourteen
    years after the (alleged) wrongful act of omission, so their claims are untimely unless they
    are based on “actual fraud.” (Code Civ. Proc., § 340.6, subd. (a).)
    In my view, plaintiffs have not sufficiently alleged actual fraud. They claim
    that defendants did not give them their full share of the settlement proceeds in the
    Allegro Matter, but plaintiffs admit that their sole basis for that claim is the following:
    (1) defendants settled the Allegro Matter for “over $100 [m]illion for about 93 families”;
    (2) in or about November 1997, defendants distributed $500,000 to plaintiffs, and
    defendants informed plaintiffs that they (defendants) retained one-third of the proceeds of
    the settlement of plaintiffs’ claims as their fee, pursuant to the contingent fee agreement
    between plaintiffs and defendants; (3) in or about March 2012, plaintiffs learned that
    17 of the plaintiff families in the Allegro Matter received, on average, $467,441 from
    the settlement, which would yield a total of $43,472,029 for 93 families; (4) plaintiffs
    calculated that, assuming a one-third contingent fee for all 93 families and a total
    settlement of $100 million, payment of $43,472,029 in settlement proceeds to the
    93 families would leave over $22 million of the settlement proceeds “unaccounted.”
    Plaintiffs infer from these calculations that defendants defrauded them by withholding
    settlement funds to which plaintiffs were entitled.
    Plaintiffs’ theory is entirely speculative. Plaintiffs do not allege, and I do not
    discern, any basis for believing that the 17 families included in their calculations are
    representative of the 93 families included in the settlement. Rather, plaintiffs allege only
    that it is “fair to assume the variation in the distribution among all plaintiffs should be
    within [a] few thousands per family” and “it is fair to assume that most properties
    [included in the settlement] are in similar category and condition in many aspects.”
    Plaintiffs’ groundless assumptions do not constitute sufficient allegations of fraud.
    Further, plaintiffs do not even allege the amount of damages that they sought to recover in
    the Allegro Matter. Thus they have not sufficiently alleged damages either.
    Given that plaintiffs admit that they have no basis for their fraud claim other than
    what is alleged in their pleadings, and given that an inference of fraud based on plaintiffs’
    allegations would be pure speculation, I conclude that plaintiffs have not adequately
    alleged fraud. Their claims are therefore untimely under Code of Civil Procedure
    section 340.6.
    ROTHSCHILD, J.
    2