Abhari v. Park CA2/7

Filed 10/21/21 Abhari v. Park CA2/7
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
ZIA ABHARI, B303806
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No.
v. 19STCV13986)
HEESOK PARK et al.,
Defendants and
Respondents.
APPEAL from an order of the Superior Court of
Los Angeles County, Richard L. Fruin, Judge. Affirmed.
Christopher Weston; and Zia Abhari, in pro. per., for
Plaintiff and Appellant.
Park & Lim, Jessie Y. Kim and Dennis McPhillips for
Defendants and Respondents Heesok Park, S. Young Lim and
Dennis McPhillips.
__________________________
Zia Abhari, representing himself as he did in the trial
court,1 appeals from the order of dismissal entered after the court
sustained without leave to amend the demurrer of Heesok Park,
S. Young Lim and Dennis McPhillips to Abhari’s first amended
complaint for breach of implied contract, breach of fiduciary duty
and fraud. Abhari contends the court erroneously concluded each
of his claims was barred as a matter of law by the applicable
statute of limitations. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
1. The 2015 Lawsuit
In 2015 the law firm Park & Lim, including attorneys
Heesok Park and S. Young Lim, represented Shaoxing June
Import & Export Co. Ltd. in litigation. Abhari alleges “that legal
dispute included the business interests of Abhari . . . , which were
aligned with the interests of [Shaoxing June].” Accordingly,
Abhari paid the retainer fee to retain Park & Lim as counsel for
Shaoxing June. Abhari also made his sales agents and business
records available to the attorneys to support their litigation
efforts.
2. The 2017 Lawsuit
In December 2017 Abhari sued four of his former sales
agents, Paul Sun Yoon, Junrim Yoon, Amy Yoon and Samuel
Yoon (collectively the Yoon parties). The Yoon parties retained
Park & Lim, including Park, Lim and McPhillips (collectively
Park & Lim), to represent them in the litigation against Abhari.
1 Abhari initially retained counsel for this appeal, but
counsel withdrew prior to the filing of Abhari’s reply brief.
2
On March 7, 2018 a Park & Lim attorney filed and served a
declaration stating he had sent a letter to Abhari’s counsel to
meet and confer regarding a demurrer and had not received a
response.2 On April 5, 2018 Park & Lim filed and served a
demurrer on behalf of the Yoon defendants.
3. The Instant Lawsuit
On April 23, 2019 Abhari filed a complaint against
Park & Lim alleging breach of contract, breach of fiduciary duty
and fraud.3 The complaint alleged Abhari had been a client of
Park & Lim in connection with the 2015 lawsuit such that the
attorneys owed him duties of loyalty and confidentiality that they
violated by representing the Yoon parties in the 2017 lawsuit. In
addition, the fraud cause of action, labeled “fraud/deceit by non-
disclosure of information,” alleged Park & Lim had failed to
disclose and failed to seek Abhari’s informed consent to the
adverse representation. Park & Lim demurred to the complaint,
arguing the statute of limitations barred all claims. The trial
court agreed the causes of action were barred by the one-year
statute of limitations applicable to legal malpractice actions and
further found Abhari failed to allege fraud with sufficient
2 In conjunction with its demurrer in this action Park & Lim
filed an unopposed request for judicial notice of certain
documents filed in the 2017 litigation between Abhari and the
Yoon parties. It does not appear the trial court ruled on the
request. We take judicial notice of those documents. (See Evid.
Code, § 452, subd. (d) [court may take judicial notice of court
records].)
3 The complaint also named the Yoon parties as defendants.
They are not parties to this appeal.
3
particularity. The court sustained the demurrer with leave to
amend.
Abhari filed the first amended complaint on July 30, 2019.
The pleading contained the same causes of action and
substantially similar allegations as the initial complaint but also
included the allegation Abhari did not learn until November 2018
that Park & Lim were representing the Yoon parties in the
2017 litigation.4 Abhari also re-titled the fraud cause of action as
“actual fraud” and amended it to state Park & Lim had falsely
promised him duties of loyalty and confidentiality without any
intention of honoring those promises.
Park & Lim again demurred, arguing Abhari had
constructive notice of their representation of the Yoon parties in
March 2018 when the declaration regarding the demurrer was
filed and served on Abhari’s counsel. Accordingly, the one-year
limitations period for legal malpractice actions had elapsed prior
to the filing of Abhari’s complaint. Park & Lim also argued, to
the extent a longer limitations period applied to the fraud cause
of action, Abhari had failed to allege fraud with sufficient
particularity. In opposition to the demurrer Abhari did not
dispute that his counsel was aware in March 2018 that Park &
Lim was representing the Yoon parties, nor did Abhari contest
the conclusion that his attorney’s knowledge could be imputed to
4 It appears Abhari’s counsel in the 2017 lawsuit passed
away in July 2018. In November 2018 McPhillips sent Abhari an
email stating that, in light of the attorney’s death, McPhillips
had been instructed by the court to inform him of an upcoming
case management conference. Abhari contends he did not know
of Park & Lim’s representation of the Yoon parties until
McPhillips’s email.
4
him. Instead, Abhari argued the applicable statute of limitations
postponed accrual of his cause of action until he suffered actual
injury, which did not occur until November 2018 when he
personally learned of Park & Lim’s representation of the Yoon
parties, requested they withdraw as counsel and they refused.
Abhari also argued he had pleaded fraud with sufficient
particularity.
After hearing argument from counsel, the trial court
sustained the demurrer without leave to amend.5 In its written
ruling the court stated Abhari had failed to cure the defects
previously identified in the complaint. The court found the one-
year limitations period applied to all three causes of action and
the statute had begun to run, at the latest, by April 10, 2018
(five days after the demurrer was filed in the 2017 lawsuit). In
rejecting Abhari’s argument he did not suffer actual injury until
personally learning of Park & Lim’s representation, the court
stated, “If that reasoning could support delayed discovery, then
one could avoid triggering of the [statute of limitations] for years
merely by waiting to make a demand for withdrawal of
representation. In fact, [Abhari] was damaged when the
allegedly adverse representation began, and the [statute of
5 There was no court reporter present for the hearing on the
demurrer. In his notice of appeal Abhari stated he intended to
use a settled statement as the record of the oral proceedings in
the trial court pursuant to California Rules of Court,
rule 8.137(b). Ultimately, the parties could not agree on a settled
statement, and the trial court declined to certify a statement.
Regardless, a settled statement is not necessary where, as here,
our review is de novo. (See Hood v. Gonzales (2019)
43 Cal.App.5th 57, 80.)
5
limitations] was triggered when [Abhari] was first put on notice
of that representation.”
DISCUSSION
1. Standard of Review
A demurrer tests the legal sufficiency of the factual
allegations in a complaint. We independently review the superior
court’s ruling on a demurrer and determine de novo whether the
complaint alleges facts sufficient to state a cause of action or
discloses a complete defense. (Mathews v. Becerra (2019)
8 Cal.5th 756, 768; T.H. v. Novartis Pharmaceuticals Corp. (2017)
4 Cal.5th 145, 162.) We assume the truth of the properly pleaded
factual allegations, facts that reasonably can be inferred from
those expressly pleaded and matters of which judicial notice has
been taken. (Evans v. City of Berkeley (2006) 38 Cal.4th 1, 20;
Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.)
However, we are not required to accept the truth of the legal
conclusions pleaded in the complaint. (Mathews, at p. 768; Zelig
v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126.) We
liberally construe the pleading with a view to substantial justice
between the parties. (Code Civ. Proc., § 452; Ivanoff v. Bank of
America, N.A. (2017) 9 Cal.App.5th 719, 726; see Schifando, at
p. 1081 [complaint must be read in context and given a
reasonable interpretation].)
A demurrer based on an affirmative defense will be
sustained only where the face of the complaint and matters
judicially noticed clearly disclose the defense or bar to recovery.
(See Favila v. Katten Muchin Rosenman LLP (2010)
188 Cal.App.4th 189, 224; see also Stella v. Asset Management
Consultants, Inc. (2017) 8 Cal.App.5th 181, 191; Marina Tenants
6
Assn. v. Deauville Marina Development Co. (1986) 181 Cal.App.3d
122, 130-132.) If “‘the complaint’s allegations or judicially
noticeable facts reveal the existence of an affirmative defense, the
“plaintiff must ‘plead around’ the defense, by alleging specific
facts that would avoid the apparent defense. Absent such
allegations, the complaint is subject to demurrer for failure to
state a cause of action.”’” (Esparza v. County of Los Angeles
(2014) 224 Cal.App.4th 452, 459.)
“‘Where the complaint is defective, “[i]n the furtherance of
justice great liberality should be exercised in permitting a
plaintiff to amend his [or her] complaint.”’” (Aubry v. Tri-City
Hospital Dist. (1992) 2 Cal.4th 962, 970-971.) We determine
whether the plaintiff has shown “in what manner he [or she] can
amend [the] complaint and how that amendment will change the
legal effect of [the] pleading.” (Goodman v. Kennedy (1976)
18 Cal.3d 335, 349.) “[L]eave to amend should not be granted
where . . . amendment would be futile.” (Vaillette v. Fireman’s
Fund Ins. Co. (1993) 18 Cal.App.4th 680, 685; see generally
Ivanoff v. Bank of America, N.A., supra, 9 Cal.App.5th at p. 726;
Graham v. Bank of America, N.A. (2014) 226 Cal.App.4th 594,
618 [the burden of proving a reasonable possibility that the
complaint’s defects can be cured by amendment “‘“is squarely on
the plaintiff”’”].)
2. Abhari’s Causes of Action for Breach of Contract and
Breach of Fiduciary Duty Are Time-barred
The statute of limitations for legal malpractice is set forth
in Code of Civil Procedure section 340.6, subdivision (a)
(section 340.6(a)), which provides: “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
7
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.”6 Section 340.6(a) further provides, “[T]he time for
commencement of legal action shall not exceed four years except
that the period shall be tolled during the time that any of the
following exist: [¶] (1) The plaintiff has not sustained actual
injury. . . .”
“Actual injury occurs when the client suffers any loss or
injury legally cognizable as damages in a legal malpractice action
based on the asserted errors or omissions. . . . [S]ection 340.6,
subdivision (a)(1), will not toll the limitations period once the
client can plead damages that could establish a cause of action for
legal malpractice.” (Jordache Enterprises, Inc. v. Brobeck,
Phleger & Harrison (1998) 18 Cal.4th 739, 743 (Jordache).) “The
fact of injury or damage need not be recognized or noticed by the
6 The time bar of section 340.6(a) “applies to claims whose
merits necessarily depend on proof that an attorney violated a
professional obligation in the course of providing professional
services.” (Lee v. Hanley (2015) 61 Cal.4th 1225, 1236-1237.)
This generally includes claims for breach of fiduciary duty and
breach of contract arising out of an attorney’s provision of
professional services. (See Britton v. Girardi (2015)
235 Cal.App.4th 721, 732-733 [section 340.6(a), applies to claims
for “breach of fiduciary duty arising out of the performance of an
attorney’s professional duties”]; Levin v. Graham & James (1995)
37 Cal.App.4th 798, 805 [in action alleging wrongful act or
omission of attorney arising out of performance of professional
services, “whether the theory of liability is based on the breach of
an oral or written contract, a tort, or a breach of a fiduciary duty,
the one-year statutory period applies”].)
8
plaintiff.” (Britton v. Girardi (2015) 235 Cal.App.4th 721, 733;
accord, Foxborough v. Van Atta (1994) 26 Cal.App.4th 217, 227
[“[a]ctual injury must be noticeable, but the language of the
tolling provision does not require that it be noticed”].) In
assessing whether an actual injury has occurred the Supreme
Court has distinguished between “an actual, existing injury that
might be remedied or reduced in the future, and a speculative or
contingent injury that might or might not arise in the future.”
(Jordache, at p. 754; see Adams v. Paul (1995) 11 Cal.4th 583,
589 (plur. opn. of Arabian, J.) [“the fact of damage rather than
the amount is the relevant consideration. [Citation.] In addition,
the character or quality of the injury must be manifest and
palpable”]; Foxborough, at p. 227 [“when malpractice results in
the loss of a right, remedy, or interest, or in the imposition of a
liability, there has been actual injury regardless of whether
future events may affect the permanency of the injury or the
amount of monetary damages eventually incurred”].)
“[T]here are no short cut ‘bright line’ rules for determining
actual injury under section 340.6. [Citations.] Instead, actual
injury issues require examination of the particular facts of each
case in light of the alleged wrongful act or omission.” (Jordache,
supra, 18 Cal.4th at p. 761, fn. 9.) “[D]etermining when actual
injury occurred is predominantly a factual inquiry. [Citations.]
When the material facts are undisputed, the trial court can
resolve the matter as a question of law.” (Id. at p. 751.)
The material facts here are undisputed. On April 5, 2018
Park & Lim demurred on behalf of the Yoon parties in the 2017
lawsuit and served the demurrer by mail on Abhari’s attorney.
In the absence of any allegation to the contrary, it is presumed
the document was received by Abhari’s counsel shortly after
9
April 5, 2018. (See Evid. Code, § 641 [“[a] letter correctly
addressed and properly mailed is presumed to have been received
in the ordinary course of mail”]; AO Alfa-Bank v. Yakovlev (2018)
21 Cal.App.5th 189, 212 [“proof that a letter was properly mailed
‘creates a presumption that it reached its destination in usual
time and was actually received by the person to whom it was
addressed’”].) For Abhari’s malpractice claims to be timely
pursuant to section 340.6(a), they would need to have been filed
one year after the attorney received the demurrer, or early
April 2019.7 Even presuming slow mail delivery, it would not be
reasonable to infer an 18-day transit time (from Los Angeles to
Irvine) such that the April 23, 2019 filing would have been
timely.
7 On appeal Abhari argues imputing knowledge from his
attorney to him personally of Park & Lim’s alleged ethical
breaches is a “questionable notion” and an “unbridgeable
stretch.” Even if not forfeited for failing to raise the issue in the
trial court (see Sea & Sage Audubon Society, Inc. v. Planning
Com. (1983) 34 Cal.3d 412, 417 [issues not raised in trial court
cannot be raised for the first time on appeal]) and failing to cite to
legal authority on appeal (see Cal. Rules of Court,
rule 8.204(a)(1); Allen v. City of Sacramento (2015)
234 Cal.App.4th 41, 52 [“[w]hen legal argument with citation to
authority is not furnished on a particular point, we may treat the
point as forfeited and pass it without consideration”]), the
argument fails on the merits. (See Stalberg v. Western Title
Ins. Co. (1991) 230 Cal.App.3d 1223, 1231 [attorney’s knowledge
of claim imputed to client and triggered limitations period];
see also Baxter v. State Teachers’ Retirement System (2017)
18 Cal.App.5th 340, 367 [“[i]ncluded among the types of
information that may be imputed from agent to principal are
facts used to determine the date of accrual of a statute of
limitations”].)
10
Abhari argues that, even if knowledge was imputed to him
in early April 2018, the statute of limitations was tolled because
he did not suffer actual injury until November 2018 when he
personally learned of Park & Lim’s involvement in the 2017
lawsuit and requested they withdraw their representation of the
Yoon parties. Abhari states it was not until then that he “began
to suffer actual damage in the form of anger, anxiety, chagrin,
frustration, humiliation, and the need for medication.” The
parties agree the alleged malpractice occurred at the time Park &
Lim began representing the Yoon parties in an action adverse to
Abhari. The dispute here arises over whether the actual injury
occurred concurrently with the attorneys’ wrongdoing, or not
until the onset of Abhari’s emotional suffering.
Abhari is correct that in some circumstances legal
malpractice may not immediately result in actual injury. As
discussed, “[t]he legislative scheme . . . toll[s] the limitations
period if the plaintiff has not sustained any actual injury.
[Citation.] As a result, a plaintiff who actually or constructively
discovered the attorney’s error, but who has suffered no damage
to support a legal malpractice cause of action, need not file suit
prematurely.” (Jordache, supra, 18 Cal.4th at pp. 757-758;
see Callahan v. Gibson, Dunn & Crutcher LLP (2011)
194 Cal.App.4th 557, 574-575 [“alleged negligence in drafting the
succession and termination provisions in the partnership
agreement created only a potential for harm” until six years later
when events triggered dissolution provision and potential harm
“ripened into actual injury”].)
On the other hand, under section 340.6(a), “discovery of
damage is not a necessary component of actual injury.”
(Jordache, supra, 18 Cal.4th at p. 762.) In other words, a party
11
may be actually injured by his or her attorney’s conduct without
knowing such injury has occurred. (See Worton v. Worton (1991)
234 Cal.App.3d 1638, 1652 [“[p]laintiff sustained actual injury
upon entry of the judgment of dissolution . . . which was before
she discovered the facts constituting the wrongful omission by
[counsel] alleged to constitute professional negligence”].)
Where, as here, the former attorneys’ alleged wrongdoing is
the representation of an adverse party without consent, the
actual injury is the representation itself because presumptive in
that representation is the likelihood of divulging the former
client’s confidential information. (See Benasra v. Mitchell
Silberberg & Knupp LLP (2004) 123 Cal.App.4th 1179, 1187 [“a
breach of duty of loyalty . . . occurs whether or not confidences are
actually revealed in the adverse action”]; American Airlines, Inc.
v. Sheppard, Mullin, Richter & Hampton (2002) 96 Cal.App.4th
1017, 1043 [“‘[t]he actual use or misuse of confidential
information is not determinative; it is the possibility of the
breach of confidence which controls’”]; cf. City National Bank v.
Adams (2002) 96 Cal.App.4th 315, 327 [“if the nature of the
representation is such that confidences could have been
exchanged between the lawyer and the client, courts will
conclusively presume they were exchanged, and disqualification
will be required”].) While Abhari’s alleged emotional distress
may also have been a consequence of the attorneys’ misconduct,
actual injury for purposes of a professional negligence claim
consisted of Park & Lim’s alleged violations of the duties of
loyalty and confidentiality owed to former clients. That injury
occurred when Park & Lim accepted the representation of the
Yoon parties in the 2017 lawsuit, and Abhari is deemed to have
known about such representation in early April 2018. The fact
12
Abhari may not have suffered emotional distress until later does
not toll the statute of limitations. (See Shaoxing City Maolong
Wuzhong Down Products, Ltd. v. Keehn & Associates, APC (2015)
238 Cal.App.4th 1031, 1038 [plaintiffs’ subjective belief they had
not been injured was “irrelevant to the question of whether
actual injury has been sustained”]; see also Adams v. Paul, supra,11 Cal.4th at p. 591, fn. 5 [“[i]n some circumstances, the loss or
substantial impairment of a right or remedy itself may constitute
actual injury and may well precede quantifiable financial costs”].)
3. Abhari’s Cause of Action for “Actual Fraud” Is Time-
barred
Abhari’s third cause of action is labelled, “Actual Fraud”
and alleges, almost in its entirety, that Park & Lim promised to
“provide to . . . Abhari the duty of loyalty and the duty of
confidentiality as a client” which was “a false promise when it
was made, as neither Defendant Park, nor Defendant Lim, nor
Defendant McPhillips had any intention of honoring that
promise.” Abhari argues that, because this cause of action
alleges “actual fraud,” it is not subject to the one-year statute of
limitations set forth in section 340.6(a).8
“[T]o determine the statute of limitations which applies to a
cause of action it is necessary to identify the nature of the cause
of action, i.e., the ‘gravamen’ of the cause of action.” (Hensler v.
City of Glendale (1994) 8 Cal.4th 1, 22; accord, Smith v. Ben
Bennett, Inc. (2005) 133 Cal.App.4th 1507, 1525.) “The nature of
the cause of action and the primary right involved, not the form
8 The statute of limitations for fraud is contained in Code of
Civil Procedure section 338, subdivision (d), which provides a
three-year limitations period.
13
or label of the cause of action or the relief demanded, determine
which statute of limitations applies.” (Carter v. Prime Healthcare
Paradise Valley LLC (2011) 198 Cal.App.4th 396, 412; accord,
Smith, at p. 1525; Hydro-Mill Co., Inc. v. Hayward, Tilton &
Rolapp Ins. Associates, Inc. (2004) 115 Cal.App.4th 1145, 1153;
see Jefferson v. J.E. French Co. (1960) 54 Cal.2d 717, 718.)
“‘Promissory fraud’ is a subspecies of the action for fraud
and deceit. A promise to do something necessarily implies the
intention to perform; hence, where a promise is made without
such intention, there is an implied misrepresentation of fact that
may be actionable fraud.” (Lazar v. Superior Court (1996)
12 Cal.4th 631, 638; accord, Behnke v. State Farm General
Ins. Co. (2011) 196 Cal.App.4th 1443, 1453 [the elements of
promissory fraud are “(1) a promise made regarding a material
fact without any intention of performing it; (2) the existence of
the intent not to perform at the time the promise was made;
(3) intent to deceive or induce the promisee to enter into a
transaction; (4) reasonable reliance by the promisee;
(5) nonperformance by the party making the promise; and
(6) resulting damage to the [promisee]”].) “As with any other
form of fraud, each element of a promissory fraud claim must be
alleged with particularity.” (Rossberg v. Bank of America, N.A.
(2013) 219 Cal.App.4th 1481, 1498; accord, Beckwith v. Dahl
(2012) 205 Cal.App.4th 1039, 1060; see Lazar, at p. 645 [“fraud
must be pled specifically; general and conclusory allegations do
not suffice”].)
Abhari’s conclusory allegation Park & Lim had no intention
of upholding their duties of confidentiality and loyalty is
insufficient to properly allege a promissory fraud claim. “Rather,
‘something more than nonperformance is required to prove the
14
defendant’s intent not to perform his promise.’” (Tenzer v.
Superscope, Inc. (1985) 39 Cal.3d 18, 30 [“for example, . . .
fraudulent intent has been inferred from such circumstances as
defendant’s insolvency, his hasty repudiation of the promise, his
failure even to attempt performance, or his continued assurances
after it was clear he would not perform”]; accord, Riverisland
Cold Storage, Inc. v. Fresno-Madera Production Credit Assn.
(2013) 55 Cal.4th 1169, 1183 [“the intent element of promissory
fraud entails more than proof of an unkept promise or mere
failure of performance”].) Otherwise, any breach of contract
claim could be transformed into a fraud claim merely by alleging
a pre-contract intent not to perform. In the absence of any
particularized allegations concerning Park & Lim’s intent in 2015
not to uphold their promise when and if they were hired by the
Yoon parties at some point in the future, Abhari’s claim is just
that—an alternative pleading of his breach of contract and
breach of fiduciary duty claims.9 Accordingly, the one-year
statute of limitations applies.
4. The Trial Court Did Not Abuse Its Discretion in Denying
Leave To Amend
Abhari has not requested leave to amend, nor has he
explained how, if given the opportunity, he could amend his
complaint to cure his failure to timely present his claims. Under
these circumstances it was not an abuse of discretion for the trial
court to deny leave to amend. (See Schifando v. City of
9 Even if Abhari’s third cause of action was not subject to the
one-year statute of limitations, the demurrer was properly
sustained for failure to allege sufficient facts to support the
inference Park & Lim never intended to perform their promises.
15
Los Angeles, supra, 31 Cal.4th at p. 1081 [“plaintiff has the
burden of proving that an amendment would cure the defect”];
Graham v. Bank of America, N.A., supra, 226 Cal.App.4th at
p. 618 [same].)
DISPOSITION
The order of dismissal is affirmed. Park & Lim are to
recover their costs on appeal.
PERLUSS, P. J.
We concur:
SEGAL, J.
FEUER, J.
16