Block v. Raines Feldman LLP CA2/7 ( 2020 )

Filed 12/30/20 Block v. Raines Feldman LLP CA2/7
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
WILLIAM H. BLOCK, B297871
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. SC125895)
v.
RAINES FELDMAN LLP et al.,
Defendants and Appellants.
APPEALS from a judgment of the Superior Court of Los
Angeles County, Mark A. Young, Judge. Reversed with
directions.
Lavely & Singer, Martin D. Singer and Paul N. Sorrell for
Plaintiff and Appellant.
Robie & Matthai, Edith R. Matthai and T. John Fitzgibbons
for Defendant and Appellant Raines Feldman LLP.
Tantalo & Adler, Joel M. Tantalo and Michael S. Adler for
Defendant and Appellant Noel C. Lohr.
INTRODUCTION
William H. Block appeals from the judgment in this legal
malpractice action following the trial court’s orders granting
motions by the law firm Raines Feldman LLP, attorney
Noel Lohr, and Lohr’s company LHR Enterprises, LLC, for
summary judgment and denying a motion by Block for leave to
amend his complaint. Block alleged Raines Feldman, Lohr, and
LHR Enterprises breached their duties of loyalty and care to him
by representing him notwithstanding a conflict of interest created
by simultaneously representing Block’s employer, QED Holdings,
LLC (QED), negotiating deals for Block that increased his
liability to QED, and failing to close and finalize a separation
agreement between Block and QED (although Block subsequently
abandoned this last claim). Block also alleged that the
defendants breached an oral contract, that LHR Enterprises
breached a written contract, and that Lohr (as of counsel with
Raines Feldman) improperly refused to cooperate with Block in
an arbitration proceeding QED commenced against him.
Raines Feldman and Lohr moved separately for summary
judgment on the grounds that the statute of limitations
governing legal malpractice actions barred Block’s complaint,
that Block’s alleged damages were not caused by the defendants’
alleged professional negligence and were speculative, and that
the defendants could not defend themselves in the action without
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disclosing attorney-client privileged information.1 The trial court
granted both motions, ruling that the statute of limitations
barred portions of Block’s action and that the remaining portions
alleged only speculative damages. The court rejected the
argument by Raines Feldman and Lohr that the court had to
dismiss the case because they could not defend themselves
without disclosing privileged information. The court denied
Block’s motion for leave to amend the complaint, ruling that
Block inexcusably delayed in seeking leave to amend until after
Raines Feldman and Lohr filed their motions for summary
judgment and that Block did not show the proposed causes of
action were based on newly discovered facts. Block appealed the
trial court’s adverse rulings, and Raines Feldman and Lohr
protectively cross-appealed from the portion of the trial court’s
order declining to grant summary judgment on the ground they
could not defend themselves without disclosing attorney-client
privileged information.
We agree with the trial court that Block’s alleged damages
arising from Lohr’s refusal to cooperate with Block or testify in
the arbitration are speculative as a matter of law, but that
Block’s alleged damages arising from Raines Feldman’s and
Lohr’s breaches of fiduciary duty and negligence are not.
1 Lohr joined Raines Feldman’s motion and filed a separate
motion. LHR Enterprises did not file a motion for summary
judgment or join in Raines Feldman’s or Lohr’s motion. Raines
Feldman and Lohr assert Block voluntarily dismissed LHR
Enterprises after the trial court granted the motions for
summary judgment, although there is nothing in the record to
corroborate their assertion. Block states only that the parties
“stipulated to deal with claims against [LHR Enterprises]
depending upon the results of this appeal.”
3
Because at oral argument Block abandoned certain theories of
liability, however, his potential damages from the claims that
remain are significantly curtailed. We also conclude the trial
court erred in granting summary judgment on the statute of
limitations defense because Block submitted evidence that
created triable issues of material fact on whether the statute of
limitations was tolled while Raines Feldman and Lohr continued
to represent Block. And we agree with the trial court that Raines
Feldman and Lohr did not demonstrate they could not defend
themselves without revealing attorney-client privileged
information. Therefore, we reverse the orders granting the
motions for summary judgment and the order denying Block
leave to amend.
FACTUAL AND PROCEDURAL BACKGROUND
A. Lohr Represents Block in Connection with Film
Projects and His Separation from QED
Block created and controls several companies that produce
entertainment content, including DG Licensing, LLC and Block
Entertainment, LLC. In 2006 Block created QED International,
LLC, and in 2012 sold that company to Media Content Capital,
LP. The successor to QED International, QED Holdings, LLC
(QED), retained Block as its Chief Executive Officer. Media
Content Capital is the majority shareholder of QED. According
to Lohr, she represented QED in film finance matters through
LHR Enterprises beginning in November 2012.
On September 30, 2013 Block, on behalf of DG Licensing,
and Lohr, on behalf of LHR Enterprises, executed a consulting
services agreement. The agreement stated LHR Enterprises
would “furnish the consulting services of [Lohr]” in connection
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with production loans, distribution agreements, and “such other
matters as may be requested [by DG Licensing]” for the motion
picture Dirty Grandpa. The parties acknowledged “the services
to be rendered include services of a business nature, although
they may include rendering certain legal services or legal advice.”
Two weeks later, in October 2013, Lohr joined Raines Feldman as
of counsel with the firm. The agreement between Lohr and
Raines Feldman stated a partner of the firm would supervise
Lohr’s work.
In 2014 Block began negotiating his separation from QED.
On July 10, 2014 Block sent Lohr an email summarizing several
key negotiating points he had exchanged with Joshua Grode, an
attorney at Irell & Manella LLP, who represented QED and
Media Content Capital. Block stated in his email to Lohr:
“Noel—This is a brief summation of my new deal with QED. [I]
[w]ould like you to prepare a draft for [counsel for QED].” Lohr
responded by sending an email the next day stating: “I’ve spent
some time looking at the original deal documents for the
investment and your employment agreement and I have some
questions and thoughts as we look to document the new
arrangement. I’d like the opportunity to talk these through with
you.” Block alleges this email exchange created an attorney-
client relationship between him and Lohr as of counsel to Raines
Feldman.2 The managing director of Media Content Capital,
Sasha Shapiro, also understood Lohr represented Block in his
negotiations with QED.
2 Block alleged he retained Lohr to represent him in his
separation from QED in May 2014, but this email exchange
occurred in July 2014.
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B. Block and QED Negotiate Block’s Separation
Agreement
Negotiations on Block’s separation from QED continued
through the end of 2014. Meanwhile, Block pursued Dirty
Grandpa and other projects on which both Lohr and another
Raines Feldman attorney, Josh Mogin, provided advice.
On December 19, 2014 Shapiro sent Block the proposed
terms for Block’s separation from QED, which Shapiro called the
“framework for the settlement and separation agreement”
between QED and Block (and which Block shortens to the
“framework agreement” and Raines Feldman refers to as the
“deal points”). The proposed agreement listed 10 terms,
including a January 31, 2015 date for the termination of Block’s
employment with QED; formulas for the division of proceeds,
agency fees, producer fees, and the “back end (‘points’)” from
various film projects, including Dirty Grandpa; methodologies for
financing and allocating certain market expenses; a mutual
release; an indemnification by Block; a $150,000 payment by
Block for expenses QED had advanced him; and an office
sublease for Block. After clarifying a point regarding the division
of proceeds, Block sent an email to Shapiro, copied to Lohr,
stating, “Unless Noel has a question, I am confirmed. Noel?” On
December 21, 2014 Lohr responded that “[t]he clarification
work[ed] for [her] as well.” Block stated that he directed Lohr “to
immediately close the deal.” Shapiro sent Block an email
suggesting Lohr draft “the long-form document for us.”
On December 20, 2014 Block sent Lohr an email stating
Shapiro told him that he (Shapiro) wanted Lohr to represent
Media Content Capital “for the administration of QED.” Block
told Lohr he was “fine with that” and would “recus[e]” Lohr from
representing him “once my deal is closed.” Lohr replied by
thanking Block for his help in getting her work from Media
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Content Capital and QED. She also said she would prepare an
engagement letter for that work “going forward after the
settlement that clarifies that [she] can represent [Block] and
Block Entertainment on other things” not adverse to Media
Content Capital or QED.
QED retained Raines Feldman to draft the long-form
separation agreement. A January 12, 2015 conflict waiver letter
from Lohr on Raines Feldman letterhead sought written consent
from QED, Block, and Block Entertainment for Raines Feldman
to represent QED “in connection with its general corporate,
entertainment and employment matters and related legal issues,
and particularly with respect to the documentation and review of
the separation and settlement with Block.” The letter stated that
Raines Feldman “previously represented [QED] in unrelated
matters” and “currently represents [QED]” and that Lohr, “who is
of counsel to [Raines Feldman] also represents Block, [Block
Entertainment] and other Block related entities and also
represents [QED] in unrelated matters in her capacity outside of
[Raines Feldman].” The letter defined the “Parties” as QED,
Media Content Capital, and Block. By signing the letter, the
Parties consented to Raines Feldman’s representation of QED
“even though there may be future actual conflicts between the
Parties.” Though Lohr was not a “Party,” the letter stated Lohr
“agrees by signing [the] letter on behalf of [Raines Feldman], that
she will not represent Block or [Block Entertainment] in
connection with any matter in which Block or [Block
Entertainment] is adverse to [QED].” Block signed the letter
“based on the assumption and agreement that [Raines Feldman
and Lohr] would not represent [QED] until Block’s exit deal with
[QED] was closed.”
Long before Block signed the conflict waiver letter and just
a day before Block (through Lohr) confirmed the terms of the
7
framework agreement, however, Lohr sent an email to Shapiro
(without sending a copy to Block) raising questions about the
framework agreement’s general release, indemnity, and division
of proceeds from unproduced film projects owned by QED as of
the date of termination of Block’s employment that Block
subsequently produced, including a film called Birth of a Dragon.
The draft long-form agreement Lohr eventually sent Block and
Shapiro on January 26, 2015 deviated from the framework
agreement reached in December 2014 by, among other things,
including carve-outs from the mutual release that favored QED
and by giving QED rights in subsequent productions related to
Dirty Grandpa that were not included in the framework
agreement.
On January 31, 2015 Block sent an email to Tim Connors,
an attorney affiliated with QED, asking to “engage” him “to help
finish” the separation agreement. About two weeks later
Connors sent Block an email identifying the “two open issues [as]
the 50% share of [Dirty Grandpa] sequels and the nonreciprocal
release.” According to Raines Feldman, negotiations on Block’s
separation agreement fell apart shortly thereafter because “QED
discovered liabilities that Block had created for QED without
obtaining necessary approvals or disclosing them to QED.”
C. Block Retains Lavely & Singer, and QED Commences
an Arbitration and a Federal Action Against Block
Block retained the law firm of Lavely & Singer in February
2015 to represent him in connection with his separation from
QED. On March 18, 2015 QED commenced an arbitration
8
against Block.3 The arbitration demand alleged Block and Block-
owned entities usurped QED’s rights in Dirty Grandpa and Birth
of a Dragon by entering into agreements with third parties
without QED’s consent and by transferring certain rights from
QED to Block-owned entities. QED also sued Block in federal
district court on April 1, 2015. On April 2, 2015 Block filed a
Statement of Counterclaims and Cross-claims in the arbitration.
D. Lohr Continues To Provide Legal Services to Block,
but Refuses To Cooperate with Him in the Arbitration
Lohr continued to represent Block or Block Entertainment
on matters related to Dirty Grandpa and other projects until
October 2015. For example, in June 2015 Lohr helped Block
negotiate a collection account management agreement (known in
the industry as a CAMA) for Dirty Grandpa that is referred to in
a draft of the long-form agreement that was supposed to
formalize the framework agreement. Also in June 2015 LHR
Enterprises sent an invoice to DG Licensing for “[s]ervices
provided in connection with Dirty Grandpa,” including work on a
distribution deal with Lionsgate, “chain-of-title follow-up,” “tax
purchase documents and issues,” and “overbudget issues.” In
August 2015 Block sent Lohr an email asking her to address the
sales fee for Creative Artists Agency stemming from the
Lionsgate deal. Lohr responded that she “will calendar.” In
October 2015 Block and Lohr exchanged emails about an Eastern
European distribution agreement for Dirty Grandpa, including a
term sheet for the deal.
3 QED supplemented its arbitration demand on July 21,
2015, but the record on appeal includes only the demand filed in
March 2015.
9
Block also sought Lohr’s cooperation in the arbitration with
QED to prove the December 2014 framework agreement was
enforceable. Through Raines Feldman, however, Lohr refused to
meet with counsel for Block and took the position she had never
represented Block in his separation from QED. On October 15,
2015 Block served a subpoena for Lohr’s appearance at the
arbitration hearing. Raines Feldman, as Lohr’s attorneys,
objected to the subpoena, essentially taking the position she
either represented all of the parties or was not sure which parties
she represented and needed the arbitrator to determine that for
her. Lohr’s objection stated (contrary to the position Raines
Feldman had taken previously): “[S]ince [Lohr] acted as the
attorney for the parties, testimony by her would raise attorney
client privilege issues. Before she could testify at all, a
determination or ruling would have to be made regarding which
party or parties she represented, and during what time period.
Without such a ruling, any testimony by her would potentially
violate the attorney client privilege of one or the other of the
parties.” Raines Feldman subsequently wrote to counsel for
Block on behalf of Lohr and stated that Lohr “did NOT serve as
Mr. Block’s attorney” in connection with Block’s separation from
QED. Lohr also requested a hearing for the arbitrator to rule on
her objections. On October 21, 2015 Block sent Lohr an email
terminating the services of her “law firm.”
E. Block and QED Settle Their Dispute
On November 2, 2015 Block and QED entered into a
settlement agreement. The agreement provided for the division
of proceeds from Dirty Grandpa and its sales fee, addressed
certain costs and expenses for Dirty Grandpa as well as the
collection account management agreement for Dirty Grandpa,
and required Block to pay QED $1.5 million from Block’s share of
10
back-end and sales fees. The settlement agreement also
addressed production credits for Dirty Grandpa and included
releases by Block and QED and an indemnification by Block.
F. Block Files This Action, Raines Feldman and Lohr
Move for Summary Judgment, and Block Asks for
Leave To Amend the Complaint
On May 23, 2016 Block filed this action against Raines
Feldman, Lohr, and LHR Enterprises. Block alleged causes of
action against all defendants for breach of fiduciary duty,
negligence, breach of oral contract, and against LHR Enterprises
for breach of a written contract. In his causes of action for breach
of fiduciary duty and negligence, Block alleged the defendants
“(a) represent[ed] Block notwithstanding a clear conflict of
interest emanating from their representation of [QED], (b)
negotiat[ed] new deals for Block outside [QED] that [QED]
contended were in violation of Block’s obligations under [a 2012
contribution agreement] and his Employment Agreement,
(c) fail[ed] to close the settlement reached between Block and
[QED] on December 19-21, 2014, as referenced in emails
exchanged between Block and [QED], and instead creat[ed] open
issues and uncertainties that led to subsequent, costly litigation
between the parties, (d) fail[ed] to discharge their duties and
obligations to Block in connection with the negotiation and
documentation of his separation and settlement agreement with
[QED] because of their conflicts of interest, (e) fail[ed] and
refus[ed] to reasonably cooperate with Block in connection with
his arbitration hearing in the dispute between Block and [QED],
including by failing to meet with Block and his counsel, and
refus[ed] to testify at the arbitration hearing despite the fact that
Lohr was a key witness and had been subpoenaed for the
hearing, and (f) refus[ed] to acknowledge Defendants’ previous
11
representation of Block, and [took] the position that Lohr had not
represented Block . . . .” Block alleged that, as a result, he
incurred “costly litigation,” “was forced to settle with QED . . . on
a less favorable basis,” and suffered monetary damages in excess
of $3 million.
In November 2018 Raines Feldman and Lohr filed motions
for summary judgment. They argued they were entitled to
judgment as matter of law because (1) the one-year statute of
limitations under Code of Civil Procedure section 340.6 barred
the action,4 (2) Block could not establish causation because QED
would not have agreed to terms more favorable to Block, and
(3) the evidence necessary to disprove Block’s allegations was
subject to the attorney-client privilege.
Two months after Raines Feldman and Lohr filed their
motions for summary judgment, Block deposed Lohr. According
to Block, Lohr testified she “knowingly lied” about representing
Block personally in the conflict waiver letter. Based on that
testimony, Block filed a motion for leave to amend his complaint.
Block proposed to add causes of action for intentional
misrepresentation, declaratory relief, and rescission, as well as
allegations to support the new causes of action.
G. The Trial Court Grants the Motions for Summary
Judgment and Denies the Motion for Leave To Amend
the Complaint
The trial court granted Raines Feldman’s and Lohr’s
motions for summary judgment. The court ruled the statute of
limitations barred Block’s action to the extent it was based on
“the failure of the deal and the subsequent arbitration” because
the allegedly actionable conduct occurred in February and March
4 Statutory references are to the Code of Civil Procedure.
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2015, respectively, and Block did not file this action until May
2016. The court rejected Block’s argument that Lohr’s continued
representation of Block on matters related to his separation from
QED tolled the statute of limitations for conduct occurring in
February and March 2015.
With respect to Lohr’s refusal to cooperate with the
arbitration in October 2015 (which occurred within a year of
Block’s filing of this action), the trial court ruled that Lohr did
not breach her fiduciary duties to Block by objecting to Block’s
subpoena and refusing to testify at the arbitration. The trial
court ruled in the alternative that any damages from the alleged
breach were speculative. Although the court had already
concluded that the alleged breaches of duty based on the
defendants’ failure to close the 2014 framework agreement were
time-barred, the trial court found the alleged damages caused by
that conduct were not speculative. The court stated the “evidence
suggesting the presence of a ‘framework’ with terms more
favorable to [Block] than the ultimate agreement that was
reached creates a non-speculative question of fact as to a
potential better deal that was defeated by Defendant’s [sic]
alleged conduct.”
Finally, the court rejected Raines Feldman and Lohr’s
argument that the court had to dismiss Block’s complaint because
their defense required them to disclose attorney-client privileged
communications. The court concluded that the communications
the defendants claimed were privileged were not “highly
material” or necessary to their defense and that they did not
show it would be fundamentally unfair to allow Block’s action to
proceed.
The trial court denied Block’s motion for leave to amend the
complaint, ruling the proposed new causes of action were based
on evidence available to Block at the time he filed the original
13
complaint. In particular, the court found that Block knew when
he filed the original complaint Lohr had taken the position she
did not represent Block personally and that Block “even
reference[d] [Lohr’s] belief in the complaint.” The court also
concluded that allowing Block to amend the complaint would
prejudice the defendants because they had already filed motions
for summary judgment. Thus, the court ruled, the motion for
leave to amend presented “a ‘moving target’” for summary
judgment.
Block timely appealed.5 Raines Feldman and Lohr filed
notices of cross-appeal from the portion of the trial court’s order
denying their motions for summary judgment on the ground the
attorney-client privilege prevented them from defending against
Block’s complaint.
H. At Oral Argument in This Court, Block Abandons
Some but Not All of His Claims
During questioning at oral argument in this court about
the bases for Block’s causes of action, counsel for Block stated
that, contrary to the allegations in the complaint, Block was not
5 On May 16, 2019 Block filed a notice of appeal purporting
to appeal from a judgment after an order granting the
defendants’ motions for summary judgment and an order denying
his motion for leave to amend the complaint. The trial court,
however, did not enter judgment until June 3, 2019. Orders
granting summary judgment or denying leave to amend are not
appealable, but in the interests of justice and efficiency, we
construe Block’s notice of appeal as filed immediately after entry
of judgment. (See H.N. & Frances C. Berger Foundation v. City of
Escondido (2005) 127 Cal. App. 4th 1, 6-7, fn. 5; Cal. Rules of
Court, rule 8.104(d)(2).)
14
claiming Raines Feldman or Lohr committed malpractice by
failing to adequately document and close the framework
agreement concerning Block’s separation from QED. Counsel for
Block said that Block “can’t force Ms. Lohr to make a party sign
the agreement.” Instead, counsel for Block argued that Raines
Feldman and Lohr breached their duties to Block beginning in
early 2015, after Block and QED had agreed to a broad release in
the framework agreement, by representing Block in a manner
contrary to his interests and creating future liabilities for him.
For example, counsel for Block stated that Lohr proposed
modifications to the general release in the framework agreement
that increased Block’s liability. As a result of counsel for Block’s
concessions at oral argument, Block has abandoned the third and
fourth bases for his causes of action for breach of fiduciary duty
and negligence (claims (c) and (d) above) to the extent they arise
from the defendants’ alleged failure to adequately document the
framework agreement and finalize the agreement in a long-form
contract.
DISCUSSION
A. Summary Judgment Principles and the Standard of
Review
A court may grant a motion for summary judgment when
“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.” (§ 437c, subd. (c); see Regents of
University of California v. Superior Court (2018) 4 Cal. 5th 607,
618.) “When a defendant moves for summary judgment in a
situation in which the plaintiff at trial would have the burden of
proof by a preponderance of the evidence, the defendant may, but
15
need not, present evidence that conclusively negates an element
of the plaintiff’s cause of action. Alternatively, the defendant
may present evidence to ‘“show[ ] that one or more elements of
the cause of action . . . cannot be established” by the plaintiff.’”
(Mattei v. Corporate Management Solutions, Inc. (2020)
52 Cal. App. 5th 116, 122; see § 437c, subd. (p)(2); Aguilar v.
Atlantic Richfield Co. (2001) 25 Cal. 4th 826, 853.) The moving
party has the burden to show that the plaintiff has not
established, and cannot reasonably expect to establish, the
elements of his or her cause of action. (Mattei, at p. 122; see
Ennabe v. Manosa (2014) 58 Cal. 4th 697, 705.)
“‘A defendant has the initial burden to show that
undisputed facts support summary judgment based on the
application of an affirmative defense.’” (Drexler v. Petersen (2016)
4 Cal. App. 5th 1181, 1188.) “A defendant moving for summary
judgment based on the affirmative defense of the statute of
limitations carries its burden by presenting evidence establishing
that the plaintiff’s claim is time barred.” (Genisman v. Carley
(2018) 29 Cal. App. 5th 45, 49; see The Police Retirement System of
St. Louis v. Page (2018) 22 Cal. App. 5th 336, 340.) “‘It then falls
to plaintiff[ ] to counter with evidence creating a dispute about a
fact relevant to that defense.’ [Citation.] That is, the plaintiff
must submit evidence that would allow a ‘reasonable trier of fact
[to] find in plaintiff[’s] favor on the statute of limitations issue.’”
(Genisman, at p. 49; see Aguilar v. Atlantic Richfield Co., supra,
25 Cal.4th at pp. 850-851.) If a defendant presents evidence
establishing an action was time-barred, and the plaintiff did not
effectively dispute any of the relevant facts, the court properly
granted summary judgment. (Genisman, at p. 49; see § 437c,
subd. (p)(2).)
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“We review a grant of summary judgment de novo and
decide independently whether the facts not subject to triable
dispute warrant judgment for the moving party as a matter of
law.” (Mattei v. Corporate Management Solutions, Inc., supra,
52 Cal.App.5th at p. 122; see Hampton v. County of San Diego
(2015) 62 Cal. 4th 340, 347.) “The reviewing court ‘liberally
constru[es] the evidence in favor of the party opposing the motion
and resolv[es] all doubts about the evidence in favor of the
opponent.’ [Citation.] Similarly, ‘any doubts as to the propriety
of granting a summary judgment motion should be resolved in
favor of the party opposing the motion.’” (Ghazarian v. Magellan
Health, Inc. (2020) 53 Cal. App. 5th 171, 182; see Reid v. Google,
Inc. (2010) 50 Cal. 4th 512, 535.)
B. Raines Feldman and Lohr Did Not Demonstrate That
All of Block’s Damages Claims Were Speculative
In determining whether certain types of injuries Block
alleged were caused by Raines Feldman’s and Lohr’s alleged
negligence, the trial court concluded some damages were
speculative while others were not. As a result, both sides
challenge the trial court’s rulings on causation and damages.
1. Applicable Law
To prevail on a legal malpractice claim, a plaintiff must
prove “‘a proximate causal connection between the breach and
the resulting injury’” and “‘actual loss or damage resulting from
the attorney’s negligence.’” (Namikas v. Miller (2014)
225 Cal. App. 4th 1574, 1581.) “‘In the legal malpractice context,
the elements of causation and damage are particularly closely
linked.’ [Citation.] The plaintiff must prove, by a preponderance
of the evidence, that but for the attorney’s negligent acts or
17
omissions, he would have obtained a more favorable judgment or
settlement in the action in which the malpractice allegedly
occurred. [Citations.] This standard requires a ‘trial-within-a-
trial’ of the underlying case, in which the malpractice jury must
decide what a reasonable jury or court would have done if the
underlying matter had been tried instead of settled. [Citation.]
This method ‘“is the most effective safeguard yet devised against
speculative and conjectural claims. . . . It is a standard of proof
designed to limit damages to those actually caused by a
professional’s malfeasance.”’” (Id. at p. 1582; see Viner v. Sweet
(2003) 30 Cal. 4th 1232, 1241 [requiring the plaintiff to “establish
that but for the alleged negligence of the defendant attorney, the
plaintiff would have obtained a more favorable judgment or
settlement” serves “the essential purpose of ensuring that
damages awarded for the attorney’s malpractice actually have
been caused by the malpractice”].)
“Because causation is a question of fact for the jury, it
ordinarily cannot be resolved on summary judgment. [Citation.]
In legal malpractice claims, the absence of causation may be
decided on summary judgment ‘only if, under undisputed facts,
there is no room for a reasonable difference of opinion.’”
(Namikas v. Miller, supra, 225 Cal.App.4th at p. 1583.)
2. Block’s Damages Caused by Lohr’s Refusal To
Cooperate in the Arbitration Are Speculative as
a Matter of Law
The trial court found Block’s claim based on Lohr’s refusal
to testify at the arbitration lacked merit as a matter of law
because Block “provided nothing more than speculation to
indicate that he would have obtained a better arbitration result
had [Lohr] testified.” The trial court explained that Block’s
18
allegations invited speculation about whether the arbitrator
would overrule Lohr’s objections to Block’s subpoena, whether
Block would have prevailed at arbitration had Lohr testified, and
whether Block still would have settled the dispute if Lohr had
agreed to testify. As Raines Feldman and Lohr argue, these
multiple layers of uncertainty support the trial court’s ruling that
“it would be entirely speculative to conclude that [Block] would
have received a better result” had Lohr testified in the
arbitration proceeding.
Block argues the damages caused by Lohr’s refusal to
testify in the arbitration are not speculative as a matter of law
for several reasons. First, Block argues the trial court failed to
consider evidence showing Raines Feldman refused to allow Lohr
to testify, which made her a hostile witness that “no litigator
would want to compel” to testify. This evidence does not diminish
the mental gymnastics required to conclude Block would have
achieved a better result in the arbitration had Lohr testified.
Second, Block argues the trial court ignored evidence Lohr also
failed to cooperate with Block in preparing for the arbitration.
But Block does not explain how Lohr’s unspecified cooperation
would have bolstered his position in the arbitration or how her
noncooperation made his damages any less speculative. Third,
Block argues the trial court ignored evidence Lohr falsely
testified in a deposition she had never represented Block in
connection with the separation agreement. Again, whether Lohr
testified truthfully did not make it any easier to resolve the
speculation inherent in determining whether, but for Lohr’s
transgressions, she would have testified, would have testified
truthfully about her representation of Block, and would have
helped Block obtain a more favorable arbitration decision or
settlement.
19
3. Raines Feldman and Lohr Did Not
Demonstrate Block’s Damages Caused by Lohr’s
Representation After December 2014 Are
Speculative as a Matter of Law
Although the trial court ruled Block’s action based on
Raines Feldman’s and Lohr’s representation of Block prior to
March 2015 was time-barred, the court nevertheless found the
damages their alleged breaches of duty caused were not
speculative. The trial court stated that Block’s “evidence
suggesting the presence of a ‘framework’ with terms more
favorable to [him] than the ultimate agreement . . . create[d] a
non-speculative question of fact as to a potential better deal that
was defeated by [Raines Feldman and Lohr’s] conduct.”
As discussed, however, Block has now abandoned his
claims Raines Feldman and Lohr committed malpractice by
failing to obtain a better deal for Block (i.e., part of claim
labeled (c) and all of claim labeled (d) in the complaint). And his
claims related to Lohr’s refusal to cooperate with the arbitration
and acknowledge her representation of Block (claims labeled (e)
and (f) in the complaint) are speculative. At oral argument
counsel for Block did not abandon Block’s claim that Raines
Feldman and Lohr “creat[ed] open issues and uncertainties that
led to subsequent, costly litigation between the parties” (the other
part of the claim labeled (c)). But counsel for Block argued Lohr
created those uncertainties by “modify[ing] the language in a
release that had already been agreed to [in the framework
agreement].” Without holding Raines Feldman and Lohr
responsible for failing to finalize the long-form agreement with a
broad release, Block cannot prove this conduct caused him any
damages. Moreover, if the framework agreement’s broad release
is enforceable, then Lohr’s attempts to “modify” the release are
20
not relevant to (or are at best extremely remote and speculative
causes of) Block’s damages.
Block’s remaining claims are that after December 2014
Lohr (through Raines Feldman) represented him
“notwithstanding a clear conflict of interest emanating from [her]
representation of [QED]” and “negotiat[ed] new deals for Block
outside [QED] that [QED] contended were in violation of Block’s
obligations” (claims labeled (a) and (b) in the complaint). In the
absence of Block’s (abandoned) claims arising from the failure of
the framework agreement, these two remaining claims
essentially collapse into one based on Lohr’s representation of
Block in connection with deals that allegedly increased his
liability to QED and caused him to incur additional attorneys’
fees, because Block has not identified any other conduct that
resulted in nonspeculative damages. Under this theory, Block’s
damages are not the difference between the 2014 framework
agreement and the November 2015 settlement agreement.
Instead, the measure of Block’s damages is the additional
liability and attorneys’ fees created by Lohr’s representation of
Block after December 2014 when Lohr represented both Block
and QED. Raines Feldman (joined by Lohr) argued in its motion
for summary judgment Block could not prove Lohr’s alleged
malpractice caused these damages because there was no
evidence that, had Lohr advised Block to obtain permission from
QED to enter into these deals, QED would have given Block such
permission. The trial court did not address this argument or
grant Raines Feldman’s motion for summary judgment on this
ground.
To defeat the motions for summary judgment, however,
Block did not have to present evidence QED would have given
him permission to enter into the deals QED claimed were
unauthorized. Block only needed to create a triable issue of
21
material fact regarding whether he would not have committed
QED to such deals had Lohr told him to seek QED’s prior
authorization, or at least advised him authorization was an issue.
And Block did just that. Block stated in his declaration he
believed he had authority “to proceed with projects in which [he]
was involved at [the time he began negotiating his separation
from QED], including projects on which [he] had worked at QED,”
such as Dirty Grandpa and others. Block stated Lohr knew, “as
she claimed to be counsel to [QED], that [QED] took the position
that [he] did not have authority to work on or finance these
projects elsewhere without [QED’s] consent.” And Lohr’s email to
Shapiro in December 2014 suggesting QED narrow the release in
the long-form agreement shows that Lohr discussed the scope of
Block’s authorization with QED. In addition, Block submitted
evidence showing Lohr continued to “counsel[ ] and assist[ ]”
Block on matters related to Dirty Grandpa (and other projects)
that could have “expos[ed] him to liability to QED” and “resulted
in [QED] suing Block.”
Meanwhile, QED sued Block for working on those very
projects and deals. QED’s March 2015 arbitration demand
alleged Block entered into certain agreements without QED’s
authorization, including deals relating to Dirty Grandpa. And
the November 2015 settlement agreement reduced Block’s share
of the back-end fee from Dirty Grandpa, required Block to
transfer to QED certain assets and rights related to Dirty
Grandpa, and required Block to pay QED $1.5 million. To the
extent these liabilities (and attorneys’ fees resulting from the
arbitration and settlement) were attributable to deals Lohr
negotiated or documented on Block’s behalf after December 2014,
a trier of fact could conclude Lohr’s alleged malpractice caused
Block’s damages. (See Viner v. Sweet, supra, 30 Cal.4th at
p. 1241.)
22
To sum up, Block has one claim remaining that he has not
abandoned or that is not speculative as a matter of law: Lohr
through Raines Feldman breached her duties to Block in
representing him in transactions with third parties after
December 2014 that increased his potential liability to QED and
caused him to incur attorneys’ fees. We now consider whether
Raines Feldman and Lohr are entitled to summary judgment on
that claim on the other grounds raised by the motion: Whether
the claim is barred by the statute of limitations or because Raines
Feldman and Lohr cannot defend themselves against the claim
without revealing attorney-client privileged communications.
C. Block Created Triable Issues of Material Fact
Regarding Whether the Defendants’ Continuing
Representation Tolled the Statute of Limitations
What remains of Block’s causes of action for breach of
fiduciary duty, negligence, and breach of oral contract is the
claim based on Raines Feldman’s and Lohr’s representation of
Block after December 2014 in connection with deals that QED
claimed were unauthorized. Counsel for Block stated at oral
argument that Lohr’s actionable conduct (through Raines
Feldman) occurred as early as January and February 2015.
Because QED’s March 2015 arbitration demand alleged that
QED did not authorize certain agreements Block entered into on
QED’s behalf and demanded Block pay QED monetary damages,
Block discovered at that time, or through the use of reasonable
diligence should have discovered, the facts constituting Lohr’s
alleged wrongful conduct. Thus, Block had one year under
section 340.6, subdivision (a), or until March 2016, to sue to
recover damages caused by the wrongful acts Block alleges Lohr
committed in early 2015. Because Block did not file this action
23
until May 2016, his claim for those damages is barred unless the
statute of limitations is tolled.
Block argues that Raines Feldman’s and Lohr’s continued
representation of him on related matters tolled the statute of
limitations under section 340.6, subdivision (a)(2). Block
submitted sufficient evidence to create triable issues of material
fact on this issue.
1. Applicable Law
Section 340.6, subdivision (a), provides the statute of
limitations for actions arising from legal malpractice. (See
Nguyen v. Ford (2020) 49 Cal. App. 5th 1, 11-12, 17 (Nguyen)
[section 340.6, subdivision (a), applies to any causes of action that
depend “‘on proof that an attorney violated a professional
obligation’ . . . notwithstanding how they are styled”]; Bergstein v.
Stroock & Stroock & Lavan LLP (2015) 236 Cal. App. 4th 793, 819
[“‘[w]hen determining which statute of limitations applies to a
particular action, a court considers what the principal purpose or
“gravamen” of the action is, rather than the form of action or the
relief demanded’”].) Legal malpractice causes of action are timely
if “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 . . . .” (§ 340.6,
subd. (a).)
Section 340.6, subdivision (a)(2), tolls the statute of
limitations “during the time that . . . [¶] [t]he attorney continues
to represent the plaintiff regarding the specific subject matter in
which the alleged wrongful act or omission occurred.” The
purpose of this provision is “‘to “avoid the disruption of an
attorney-client relationship by a lawsuit while enabling the
attorney to correct or minimize an apparent error, and to prevent
24
an attorney from defeating a malpractice cause of action by
continuing to represent the client until the statutory period has
expired.”’” (Nielsen v. Beck (2007) 157 Cal. App. 4th 1041, 1048
(Nielsen); accord, Beal Bank, SSB v. Arter & Hadden, LLP (2007)
42 Cal. 4th 503, 511.)
“Section 340.6(a)(2) does not provide a standard for
determining when an attorney’s representation in a ‘specific
subject matter’ terminates, thus ending the tolling period.”
(Nguyen, supra, 49 Cal.App.5th at p. 12; see Nielsen, supra,
157 Cal.App.4th at pp. 1048-1049 [neither section 340.6 nor its
legislative history states a standard to determine when an
attorney’s representation of a client regarding a specific subject
matter continues or when the representation ends].) “In the
absence of specific statutory guidance, courts have developed a
number of principles to direct the inquiry.” (Nguyen, at p. 12.) In
general courts consider whether an attorney defendant continued
to represent the plaintiff after the plaintiff discovered the alleged
malpractice, and if so, whether the continued representation
encompassed the specific subject matter giving rise to the alleged
malpractice. (See Nielsen, at pp. 1052-1053.) Whether an
attorney continued to represent the plaintiff regarding the
specific subject matter is generally a question of fact, but the
court can decide the issue as a matter of law if the undisputed
facts support only one conclusion. (Nguyen, at p. 14; Gonzalez v.
Kalu (2006) 140 Cal. App. 4th 21, 31.)
25
2. Block Submitted Evidence Creating Triable
Issues of Fact Regarding Whether Raines
Feldman and Lohr Continued To Represent
Him
Block contends there were triable issues of fact regarding
whether Lohr, through Raines Feldman, continued to represent
him after March 2015. “‘“An attorney’s representation of a client
ordinarily ends when the client discharges the attorney or
consents to a withdrawal, the court consents to the attorney’s
withdrawal, or upon completion of the tasks for which the client
retained the attorney.”’” (Nguyen, supra, 49 Cal.App.5th at p. 13;
see GoTek Energy, Inc. v. SoCal IP Law Group, LLP (2016)
3 Cal. App. 5th 1240, 1246; Nielsen, supra, 157 Cal.App.4th at
p. 1049.) “[T]he inquiry into when representation has terminated
does not focus on the client’s subjective beliefs about whether the
attorney continues to represent him or her in the matter.
Instead, the test is objective and focuses on the client’s
reasonable expectations in light of the particular facts of the
attorney-client relationship. ‘In deciding whether an attorney
continues to represent a client, we do not focus “‘on the client’s
subjective beliefs’”; instead, we objectively examine “‘evidence of
an ongoing mutual relationship and of activities in furtherance of
the relationship.’”’” (Nguyen, at p. 14; see GoTek Energy, at
p. 1248; Shaoxing City Maolong Wuzhong Down Products, Ltd. v.
Keehn & Associates, APC (2015) 238 Cal. App. 4th 1031, 1038
(Shaoxing City).) “Representation ends ‘“‘when the client actually
has or reasonably should have no expectation that the attorney
will provide further legal services.’”’” (Nguyen, at p. 14.) “In
other words, tolling under the continuous representation
exception ends when ‘“‘a client has no reasonable expectation that
the attorney will provide further legal services.’”’” (Ibid.)
26
Continuing representation can toll the limitations period
even though the client is aware of the attorney’s negligence and
consults another attorney. (Nielsen, supra, 157 Cal.App.4th at
p. 1049; O’Neill v. Tichy (1993) 19 Cal. App. 4th 114, 120-121.) For
example, “evidence that an attorney continued to bill a client for
work related to the matter defeated summary judgment over the
application of section 340.6(a)(2), notwithstanding evidence that
another attorney had taken over the representation.” (Nguyen,
supra, 49 Cal.App.5th at p. 14; see O’Neill, at p. 121.)
“Conversely, a Court of Appeal found as a matter of law that the
continuous tolling exception did not apply where the attorney had
substituted out as counsel and it was ‘undisputed’ that the
attorney did not provide legal advice, perform work, send bills, or
appear on behalf of the plaintiff after the attorney substitution.”
(Nguyen, at p. 14; see Shaoxing City, supra, 238 Cal.App.4th at
p. 1039 [“the relationship can continue—notwithstanding the
withdrawal and substitution—if the objective evidence shows
that the attorney continues to provide legal advice or services”].)
Block contends Lohr, through Raines Feldman, continued
to represent him on numerous matters related to the alleged
malpractice after March 2015. Block submitted evidence (and
the defendants do not appear to deny, at least for purposes of
their motions for summary judgment) Lohr continued to provide
legal services to him or his companies. To apply the continuous
representation exception to Block’s action, however, Lohr must
have provided those services through Raines Feldman and on
behalf of Block personally.6
6 If Lohr provided such services through LHR Enterprises
and not Raines Feldman, the statute of limitations may be tolled
against Lohr and LHR Enterprises, but not Raines Feldman.
27
Block submitted sufficient evidence to create triable issues
of material fact on both questions. Block submitted emails
concerning Lohr’s work on Dirty Grandpa in 2014, in which she
copied Mogin, and Mogin joined a “kickoff call” for Dirty Grandpa
on October 2, 2014. Block stated in his declaration that Lohr
confirmed to him that Mogin and other Raines Feldman
attorneys were involved in the negotiations relating to Dirty
Grandpa. The January 12, 2015 conflict waiver letter shows
Raines Feldman represented Block in some capacity; otherwise,
the firm would not have required Block to waive conflicts created
by Raines Feldman’s representation of QED. Indeed, Block “as
an individual” was a party to the conflict waiver, and Lohr signed
the letter “on behalf of” Raines Feldman. The evidence submitted
by Block showing Lohr continued to provide him services after
March 2015 does not directly refer to Raines Feldman or any
other Raines Feldman attorney, but those services involved the
same or similar matters as those on which Mogin was previously
involved, and Lohr was of counsel at Raines Feldman at the time.
Finally, Lohr’s objections to Block’s subpoena in connection with
the arbitration stated that she “acted as the attorney for the
parties,” which included Block as an individual. Taken together,
this evidence created triable issues of material fact regarding
whether Lohr and Raines Feldman continued to represent Block
after March 2015 and within one year before he filed this action.
3. Block’s Evidence Created Triable Issues of
Material Fact Regarding the Scope of Raines
Feldman’s and Lohr’s Representation After
March 2015
Courts have variously described the connection required
between the “specific subject matter in which the alleged
28
wrongful act or omission occurred” and the subject matter in
which an attorney continues to represent the client for purposes
of the continuous representation tolling provision in section
340.6, subdivision (a)(2). Courts generally interpret “specific
subject matter” to include “different, but related, actions.” (Jocer
Enterprises, Inc. v. Price (2010) 183 Cal. App. 4th 559, 571.) For
example, courts have held section 340.6, subdivision (a)(2), tolled
the statute of limitations when the continuing matter is
“intertwined and related, having overlapping objectives and
purposes” (Nielsen, supra, 157 Cal.App.4th at p. 1054), arose
“from the same event” (ibid.; see Gold v. Weissman (2004)
114 Cal. App. 4th 1195, 1200), sought “to protect the interests
acquired by the client in the original transaction” (Crouse v.
Brobeck, Phleger & Harrison (1998) 67 Cal. App. 4th 1509, 1530),
is affected by the client’s position in the original matter (Lockley
v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001)
91 Cal. App. 4th 875, 890), or presented “unsettled” matters
“tangential” to the original matter (Kelly v. Orr (2016)
243 Cal. App. 4th 940, 949; see Lockton v. O’Rourke (2010)
184 Cal. App. 4th 1051, 1063 [“the representation is on the same
specific subject matter until the agreed tasks have been
completed or events inherent in the representation have
occurred”]).
In ruling on the motions for summary judgment, the trial
court defined the original matter as “the failed QED separation
deal” and ruled there was no evidence linking the services Lohr
continued to provide Block to his separation deal. Block’s
reframed complaint, as described by counsel for Block at oral
argument, focuses less on the failed long-form agreement and
more on Lohr’s allegedly conflicted representation of Block after
29
Block and QED agreed to the terms of the framework. And Block
submitted evidence showing that after May 2015, and as late as
October 2015, well within the one-year limitations period, Block
sought and Lohr gave advice concerning Block’s rights in projects
including Dirty Grandpa and others. For example, Block
submitted evidence showing Lohr advised him in connection with
a collection account management agreement, distribution deals,
and a sales fee for Dirty Grandpa. These appear to be the same
types of deals that QED alleged in the March 2015 arbitration
demand Block had no authorization to enter. Lohr’s
representation of Block in the distribution and other agreements
for Dirty Grandpa indicate the later deals were “intertwined and
related, having overlapping objectives and purposes” (Nielsen,
supra, 157 Cal.App.4th at p. 1054), arose “from the same event,”
namely the production of Dirty Grandpa and other projects Block
began while still employed by QED (Gold v. Weissman, supra,
114 Cal.App.4th at p. 1200), and were incomplete tasks “inherent
in the [prior] representation” (Lockton v. O’Rourke, supra,
184 Cal.App.4th at p. 1063). Block therefore created a triable
issue of fact whether Lohr later represented Block on the same
specific subject matter from which Block’s allegations of
malpractice arose.
D. The Attorney-client Privilege Does Not Preclude
Raines Feldman and Lohr from Defending
Themselves in This Action
Because we conclude that Block’s action is not time-barred
and that some of his claimed damages are not speculative, we
consider whether, as Raines Feldman and Lohr contend, the trial
court erred in refusing to dismiss Block’s complaint on the ground
they could not defend themselves without disclosing attorney-
30
client privileged communications between them and QED. The
trial court ruled Raines Feldman and Lohr “failed to clearly show
that privileged information is ‘highly material’ to [their]
defenses” and that fundamental fairness dictated dismissal. The
court’s analysis centered on Raines Feldman and Lohr’s
argument they had to reveal privileged information, including
“communications with QED, the drafts [of the separation
agreement] Raines Feldman prepared that were not shared with
Block, and Raines Feldman’s internal communications about
those drafts” to show their actions did not derail the separation
agreement.
But again, Block no longer claims Raines Feldman and
Lohr are liable for derailing the separation agreement, and
neither Raines Feldman nor Lohr argued in the trial court or on
appeal they cannot defend against Block’s allegations that they
“represent[ed] Block notwithstanding a clear conflict of interest
emanating from their representation of [QED]” or “negotiat[ed]
new deals for Block outside [QED] that [QED] contended were in
violation of Block’s obligations” to QED without revealing
privileged information. Therefore, Raines Feldman and Lohr
forfeited that argument. (See Johnson v. Greenelsh (2009)
47 Cal. 4th 598, 603; Colyear v. Rolling Hills Community Assn. of
Rancho Palos Verdes (2017) 9 Cal. App. 5th 119, 137, fn. 5.) And
even if not forfeited, the argument lacks merit.
1. Applicable Law
The court in Dietz v. Meisenheimer & Herron (2009)
177 Cal. App. 4th 771 (Dietz) identified four factors a court should
consider before dismissing a case on the ground that “a defendant
attorney’s due process right to present a defense would be
violated by the defendant’s inability to disclose a client’s
confidential information if the action were allowed to proceed.”
31
(Id. at p. 792; see Reilly v. Greenwald & Hoffman, LLP (2011)
196 Cal. App. 4th 891, 904.) “First, the evidence at issue must be
the client’s confidential information, and the client must be
insisting that the information remain confidential.” (Dietz, at
p. 792.) Second, the confidential information at issue must be
“highly material” to the defendant’s defenses. (Ibid.) Third,
“before dismissing a case on due process grounds, the trial court
must determine whether it is able to effectively use ‘ad hoc
measures from [its] equitable arsenal,’ including techniques such
as ‘sealing and protective orders, limited admissibility of
evidence, orders restricting the use of testimony in successive
proceedings, and, where appropriate, in camera proceedings,’ so
as to permit the action to proceed.” (Id. at p. 793, quoting
General Dynamics Corp. v. Superior Court (1994) 7 Cal. 4th 1164,
1191.) “Finally, a trial court should consider whether it would be
‘fundamentally unfair’ to allow the action to proceed.” (Dietz, at
p. 793.)
In general, “a court may take the extraordinary step of
dismissing a plaintiff’s claim on the ground that an attorney
defendant’s due process right to present a defense is
compromised by the defendant’s inability to present confidential
information in support of that defense only in the rarest of cases,
after the court has considered all of the factors discussed above.”
(Dietz, supra, 177 Cal.App.4th at p. 794.) Dismissing an action
“whenever a lawyer’s ethical duties prevented the lawyer from
presenting evidence having any relevance to the action, without
respect to the materiality of the evidence” would render “the
‘drastic action’ of dismissal” commonplace. (Id. at p. 792; see
People ex rel. Herrera v. Stender (2012) 212 Cal. App. 4th 614,
646.)
32
2. The Dietz Factors Do Not Support Dismissal
We assume for purposes of this appeal that QED supplied
confidential information relevant to Raines Feldman’s and Lohr’s
defense and that QED has not waived the attorney-client
privilege to allow Raines Feldman or Lohr to disclose it.7 With
regard to the second Dietz factor, Block’s remaining claim does
not for the most part depend on QED’s communications with
Raines Feldman or Lohr. The evidence relating to this claim
primarily involves communications between and among Block,
Lohr, and the third parties with whom Lohr communicated on
Block’s behalf, with the exception of evidence reflecting Lohr’s
knowledge that QED disapproved of certain deals Block pursued.
As discussed, however, Block submitted in opposition to the
motion for summary judgment an email showing Lohr likely had
knowledge of the scope of Block’s authority to enter into deals
concerning projects he began while employed by QED. Thus, any
other privileged communications relevant to Raines Feldman’s
and Lohr’s defense are not “highly material” under Dietz. (See
Dietz, supra, 177 Cal.App.4th at p. 795 [“merely because some
evidence that might be beneficial to the defendant is protected by
a privilege and is therefore not subject to discovery and/or may
not be introduced in evidence” is not sufficient to dismiss an
entire action]; id. at p. 794 [rejecting the argument that due
process required dismissal if the defendant is “prevented . . . from
7 Block disputes whether QED instructed Raines Feldman to
maintain the confidentiality of QED’s communications with
Raines Feldman and Lohr.
33
presenting ‘any of the relevant evidence that may bolster the
defense’”].)8
The trial court did not make a specific finding on the third
Dietz factor: the availability of ad hoc measures, such as privilege
logs and protective orders, to permit the action to proceed. (See
Dietz, supra, 177 Cal.App.4th at p. 793.) But the trial court
suggested Raines Feldman and Lohr could have shown privileged
information was “highly material” to their defense (the second
Dietz factor) without exposing any such information “via a
privilege log or other means, but [they] failed to do so.” Raines
Feldman and Lohr argue the trial court erred because they
submitted a privilege log in connection with a motion to compel
8 Raines Feldman and Lohr argue Solin v. O’Melveny &
Myers (2001) 89 Cal. App. 4th 451 requires dismissal if any
evidence relevant to their defense strategy is privileged. Unlike
the information in this case or in Dietz, the clients’ information in
Solin was critical to the defense because the information was the
basis for the defendant’s allegedly negligent advice. (Solin, at
p. 463; see id. at pp. 460-461 [the content of the privileged
communication was “‘likely to prove outcome determinative
before a jury’”].) Because “the central disputed issues” in Solin
were “‘incapable of complete resolution without breaching the
attorney-client privilege,’” due process required dismissal. (See
id. at pp. 466-467.) The same cannot be said of Block’s allegation
that Lohr’s conflicted representation increased his liability to
QED, which is based on Lohr’s negotiations and communications
with third parties, not communications with QED. (See
Dietz, supra, 177 Cal.App.4th at pp. 792-793 [distinguishing
Solin and holding the defendants’ privileged information was not
highly material because they could “present ‘a[ ] meaningful
defense’” without “disclos[ing] privileged or confidential
information”]; see also Reilly v. Greenwald & Hoffman, LLP,
supra, 196 Cal.App.4th at p. 904.)
34
Block filed in discovery. Raines Feldman and Lohr, however,
made no mention of the privilege log in their motions for
summary judgment. Instead, Raines Feldman and Lohr argued
only that Block’s suggestion the defendants seek “a sealing order
allowing the privileged communications to be used” is barred by
California law. Raines Feldman and Lohr, however, had the
burden to show that sealing and protective orders, in camera
proceedings, or other procedural mechanisms would not have
been enough to allow the action to proceed. (See General
Dynamics Corp. v. Superior Court, supra, 7 Cal.4th at p. 1191;
Dietz, at p. 793.) They did not meet their burden.
Finally, fundamental fairness weighs against dismissal.
“Fundamental fairness in this context is an extension of the
principle that, ‘[t]he privilege which protects attorney-client
communications may not be used both as a sword and a shield.’”
(Dietz, supra, 177 Cal.App.4th at p. 793.) The court in Dietz
“noted the inherent unfairness in allowing a plaintiff to bring a
claim, which, by its very nature necessitates a defense based on
confidential information, where the plaintiff has either directly
supplied such confidential information to the defendant, as in
Solin [v. O’Melveny & Myers (2001) 89 Cal. App. 4th 451], or where
the plaintiff seeks to derivatively represent a third party who has
supplied such information to the defendant, as in” McDermott,
Will & Emery v. Superior Court (2000) 83 Cal. App. 4th 378.
(Dietz, at p. 793; see Solin, at p. 463; see also McDermott, at
p. 384.) Like the plaintiff in Dietz, Block did not supply any
confidential information relevant to Raines Feldman’s and Lohr’s
defense to Block’s remaining claim. (See Dietz, at p. 797 [the
“plaintiff in this case did not participate in the sharing of
confidential information with the defendant attorney”].) Because
Block’s action “does not involve the affirmative use of the
confidential information” (ibid.), notions of fundamental fairness
35
do not dictate dismissal of Block’s action. This is not one of the
rare cases where dismissal is appropriate.
E. The Trial Court Should Allow Block To Refile His
Motion for Leave To Amend
1. Relevant Proceedings
Block filed a motion for leave to amend his complaint on
February 11, 2019, over two years after he filed his original
complaint and two months after Raines Feldman and Lohr filed
their motions for summary judgment. Block based his motion on
what he characterized as newly discovered information from
Lohr’s January 2019 deposition in which, according to Block, she
testified she made knowingly false statements in the January 15,
2015 conflict waiver letter. In particular, Block stated he learned
in the deposition Lohr falsely stated in the conflict waiver letter
she represented Block individually in matters related to the
separation agreement between Block and QED. Block argued
that he relied to his detriment on Lohr’s false representations
and that, had Lohr been truthful, he would not have signed the
conflict waiver letter and would not have consented to Raines
Feldman’s representation of QED. Based on this evidence, Block
proposed to add, among other things, a cause of action for
intentional misrepresentation.
Raines Feldman and Lohr opposed Block’s motion, arguing
Block had known since filing the original complaint Lohr had
taken the position she never represented Block personally.9
9 Raines Feldman and Lohr also argued the proposed first
amended complaint was a sham pleading and failed to allege
facts constituting a cause of action because Block could not
establish a causal relationship between the alleged
36
Raines Feldman and Lohr cited Block’s allegation in the original
complaint that Lohr “took the outrageous and patently false
position that she had never represented Block,” an October 2015
email from counsel for Lohr stating Lohr had never represented
Block personally, and Lohr’s verified written discovery responses
from March 2017 that stated: “Lohr has never represented
[Block] personally, whether through LHR Enterprises, Raines
Feldman, or otherwise. She has never had a written engagement
agreement with [Block] to represent him personally, in
connection with his separation from [QED] or otherwise. She has
never billed [Block], personally, for any services in connection
with the separation or otherwise.” Raines Feldman and Lohr
argued that “Block’s delay in seeking leave to amend is reason
alone to deny his motion” and that Block’s delay prejudiced them
because he filed his motion in response to their motions for
summary judgment.
In reply, Block drew a distinction between knowing that
Lohr had previously taken the position she did not represent
Block personally and learning that Lohr knowingly made false
statements in the conflict waiver letter to induce him to sign it.
Block stated he believed Lohr previously claimed she did not
represent Block to get out of having to testify at the arbitration,
but he did not realize until her deposition in January 2019 she
used false statements to induce Block to sign the conflict waiver
misrepresentation and his damages. Because the trial court
agreed with Raines Feldman and Lohr’s argument that Block’s
delay in filing his motion until after they had filed their motions
for summary judgment was prejudicial, the trial court did not
consider, and no party reasserts, these other reasons for denying
Block’s motion for leave to amend.
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letter, presumably to allow her and Raines Feldman to represent
a more lucrative client, QED.
The trial court denied the motion, finding that Block
“discovered nothing new regarding the truthfulness of Ms. Lohr’s
conflict letter representations” and that Block could have
included the proposed new causes of action in the original
complaint. The court concluded Block’s “delay in presenting
these amendments are unwarranted and prejudicial to
defendants in light of the pending summary judgment motions.”
2. Applicable Law
“‘[S]ection 473, subdivision (a)(1) permits a court, “in
furtherance of justice,” to “allow a party to amend any pleading
. . . in any . . . respect.”’” (Duchrow v. Forrest (2013)
215 Cal. App. 4th 1359, 1377.) “‘“Courts must apply a policy of
liberality in permitting amendments at any stage of the
proceeding, including during trial, when no prejudice to the
opposing party is shown.”’” (Eng v. Brown (2018) 21 Cal. App. 5th
675, 706; see Duchrow, at p. 1377.)
“‘Generally, “the trial court has wide discretion in
determining whether to allow the amendment, but the
appropriate exercise of that discretion requires the trial court to
consider a number of factors: ‘including the conduct of the moving
party and the belated presentation of the amendment. [Citation.]
. . . . The law is well settled that a long deferred presentation of
the proposed amendment without a showing of excuse for the
delay is itself a significant factor to uphold the trial court’s denial
of the amendment.’”’” (Eng v. Brown, supra, 21 Cal.App.5th at
pp. 706-707.) “‘“‘The law is also clear that even if a good
amendment is proposed in proper form, unwarranted delay in
presenting it may—of itself—be a valid reason for denial.’”’” (Id.
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at p. 707; see Duchrow v. Forrest, supra, 215 Cal.App.4th at
p. 1377; Fair v. Bakhtiari (2011) 195 Cal. App. 4th 1135, 1147.)
“On the other hand, where there is no prejudice to the adverse
party, it may be an abuse of discretion to deny leave to amend.”
(Fair, at p. 1147.) The appellant has the burden of establishing
an abuse of discretion. (Eng, at p. 707.)
3. On Remand Block Should Have an Opportunity
To Ask for Leave To Amend His Complaint
Block argues the trial court abused its discretion in denying
his motion for leave to amend the complaint because the court
based its ruling on the erroneous finding that Block discovered
nothing material during Lohr’s January 2019 deposition. Block
argues it was not until Lohr’s deposition that he learned Lohr
knowingly made false statements in the conflict waiver letter by
stating she represented Block personally. Block contends his
earlier knowledge Lohr denied ever personally representing
Block was not sufficient to state a cause of action for intentional
misrepresentation. Thus, Block argues, he did not delay in
seeking leave to amend the complaint.
Even if Lohr’s deposition testimony was not a critical
(missing) element of Block’s proposed cause of action for
intentional misrepresentation, our reversal of the judgment
affects the ruling on Block’s motion for leave to amend. The trial
court denied the motion for two reasons: (1) Block waited too
long to file his motion for leave to amend and (2) Block filed his
motion after the defendants filed their motions for summary
judgment, which prejudiced the defendants. On the latter issue,
the trial court cited Melican v. Regents of University of
California (2007) 151 Cal. App. 4th 168, where the court affirmed
the denial of an oral request to amend the complaint during the
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hearing on a motion for summary judgment. (Id. at p. 177.) The
court in Melican stated: “It would be patently unfair to allow
plaintiffs to defeat [the defendant’s] summary judgment motion
by allowing them to present a ‘moving target’ unbounded by the
pleadings.” (Id. at p. 176.)
Because the motions for summary judgment are no longer
pending, however, the basis for the trial court’s finding of
prejudice no longer exists. There is only the delay in seeking
leave to amend, which may or may not be sufficient to justify
denial of the motion. It is unclear from the record, which
indicates the trial court relied equally on the fact the motions for
summary judgment were pending and on Block’s delay in seeking
leave to amend, whether the court would have denied Block’s
motion if the court had denied the motions for summary
judgment. Therefore, on remand, the trial court should allow
Block, if he chooses, to refile his motion for leave to amend his
complaint.
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DISPOSITION
The judgment is reversed. The orders granting the motions
for summary judgment and denying the motion for leave to
amend are vacated. The trial court is directed to enter new
orders denying the motions for summary judgment and to allow
Block to refile his motion for leave to amend. The parties are to
bear their costs on appeal.
SEGAL, Acting P. J.
We concur:
FEUER, J.
DILLON, J.*
* Judge of the Los Angeles Superior Court, assigned by the
Chief Justice pursuant to article VI, section 6 of the California
Constitution.
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