Lichtenberger v. Hunt, Ortmann, Palffy etc. CA2/2

Filed 12/10/20 Lichtenberger v. Hunt, Ortmann, Palffy etc. CA2/2
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO
GRETCHEN D. B297569
LICHTENBERGER,
(Los Angeles County
Plaintiff and Appellant, Super. Ct. No. PC058175)
v.
HUNT, ORTMANN, PALFFY,
NIEVES, DARLING & MAH,
INC. et al.,
Defendants and
Respondents.
APPEAL from a judgment and orders of the Superior Court
of Los Angeles County, Stephen P. Pfahler, Judge. Affirmed.
Gretchen D. Lichtenberger, in pro. per., for Plaintiff and
Appellant.
Clark Hill, Richard H. Nakamura Jr., David Brandon and
Renee Diaz for Defendants and Respondents.
******
A paralegal hired by a law firm to assist with enforcing a
default judgment agreed to be paid by the client on a contingency
basis from the proceeds of the judgment. When the judgment
was later vacated due to what she alleges was malpractice by the
law firm, she sued the law firm and two of its lawyers for
malpractice and 11 other claims all premised on that malpractice.
The trial court dismissed her lawsuit on the grounds that she, as
a freelancer working to assist the law firm in its collection efforts,
could not sue for malpractice. We agree, and affirm.
FACTS AND PROCEDURAL BACKGROUND
I. Facts1
A. Lawsuit prior to plaintiff’s involvement
Five individuals and four companies signed a promissory
note to Harmanjit Singh (Singh). Among other things, the note
provided that Singh was entitled to attorney fees if he prevailed
in a lawsuit to collect on that note.
When the debtors defaulted on the note, Singh retained the
law firm of Hunt, Ortmann, Palffy, Nieves, Darling & Mah, Inc.
(the law firm) to represent him. Lawyers Dustin Taylor Lozano
1 We draw these facts from the operative second amended
complaint except where its allegations are contradicted by (1)
allegations in the verified original and first amended complaints
(Webb v. City of Riverside (2018) 23 Cal.App.5th 244, 256 (Webb)),
or (2) documents appended to the second amended complaint (Del
E. Webb Corp.v. Structural Materials Co. (1981) 123 Cal.App.3d
593, 604).
We also disregard the allegations that lawyers have a legal
duty to assure that paralegals get paid and that lawyers are
liable to paralegals for malpractice because these allegations are,
at bottom, legal conclusions. (E.g., Shaeffer v. Califia Farms,
LLC (2020) 44 Cal.App.5th 1125, 1140 [“a legal conclusion . . . is
neither binding nor ‘controlling’”].)
2
(Lozano) and Aaron J. Flores (Flores) were assigned to handle the
case for the law firm.
While represented by the law firm, Singh sued the five
individuals and four entities on the unpaid promissory note in
Los Angeles Superior Court; the case was Singh v. Apheta LLC,
Case No. SC123069 (the Apheta case). In the last quarter of
2014, eight of the defendants did not answer the complaint and
Singh requested—and obtained—an entry of default against
each.
On January 22, 2016, Singh—while still represented by the
law firm—filed a first amended complaint in the Apheta case.
However, the law firm did not serve any of the eight defaulted
defendants with the amended complaint.
On October 20, 2016, the trial court in the Apheta case held
a default prove-up hearing based on the original complaint even
though, by virtue of the filing of the first amended complaint, the
original complaint was no longer the operative pleading.
On October 28, 2016, the trial court entered a default
judgment against the eight defaulted defendants in the Apheta
case. In that judgment, the court awarded Singh $214,906.08 on
the promissory note, which included $69,660.78 in attorney fees.
By that time, the law firm had billed Singh approximately
$150,000 in fees.
B. Plaintiff’s work for the law firm
On November 3, 2016, the law firm contacted Gretchen D.
Lichtenberger (plaintiff) to assist in the effort to collect on the
newly entered default judgment.2 Plaintiff is an experienced
2 The second amended complaint inconsistently alleges that
Lozano reached out to plaintiff nearly two years earlier—in
December 2014 before the default judgment was entered.
3
paralegal and registered process server who specializes in such
collection work, and who had worked with the law firm and
Lozano on prior matters.
Plaintiff agreed to assist the law firm in its effort to collect
on the default judgment in the Apheta case. Rather than bill the
law firm for “her paralegal services” at her hourly rate, plaintiff
“directly” contracted with Singh to perform “all legal support
services necessary” at the law firm’s direction and agreed to be
paid by Singh, on a contingency basis, “upon recovery of money in
satisfaction of the [default] judgment.”3 Plaintiff and Singh
signed a written Legal Services Agreement in mid-December
2016.4 Plaintiff agreed to work on a deferred and contingency
basis because the law firm either “could”—or, alternatively,
because Lozano had orally promised her he “would”—file a
motion for attorney fees in connection with enforcing the default
judgment that asked for a multiplier of the fees incurred,
including her fees.
In her work on the Apheta case, plaintiff incurred a total of
$92,147 in fees and costs comprised of her paralegal work, her
“process serving” work, and her out-of-pocket costs.
3 The second amended complaint inconsistently alleges that
plaintiff’s contract with Singh only covers her “paralegal” work,
but not her out-of-pocket costs or her process service work, which
she inexplicably alleges did not “benefit” Singh at all.
4 The second amended complaint inconsistently alleges that
Singh signed the Legal Services Agreement in March 2017 but
backdated it to December 2016, the net effect of which is to take
all of the services plaintiff provided between December 2016 and
March 2017 outside of that contract and to make the law firm
liable for those fees as part of an implied or express contract
between the law firm and plaintiff.
4
C. The default judgment unravels
In April 2017, four of the defendants named in the default
judgment moved to set that judgment aside on the ground that
they were never served with the first amended complaint.
On June 30, 2017, the trial court set aside the default
judgment in the Apheta case for those four defendants.
II. Procedural Background
A. The original complaint, first amended
complaint and demurrer
On December 19, 2017, plaintiff filed a verified complaint
suing Singh for declaratory judgment.
On May 17, 2018, plaintiff filed a verified first amended
complaint that added as defendants the law firm, Lozano and
Flores (collectively, the lawyer defendants) and added 11 new
causes of action.
The 12 causes of action alleged in the first amended
complaint fall into three general groups.
The first group consists of plaintiff’s claims for malpractice,
unfair business practices, and tortious inference with her Legal
Services Agreement with Singh. In one or all of these claims,
plaintiff alleges what boil down to eight “legal blunder[s]”
committed by the lawyer defendants in their representation of
Singh in the Apheta case—namely, that the lawyer defendants
were negligent in (1) filing the first amended complaint without
serving the eight defaulted defendants, likely due to insufficient
legal research, (2) applying for only $69,660.78 in attorney fees at
the default prove-up hearing rather than the $150,000 they had
actually incurred, (3) not competently opposing the motion to set
aside the default judgment, primarily due to their failure to
follow plaintiff’s advice or use the legal brief she drafted, (4) not
filing a motion to vacate the order setting aside the default
5
judgment, which plaintiff suggested, (5) not pursuing collection
efforts and not seeking collection-related attorney fees against
the four defendants who remained in default, (6) not negotiating
a settlement for Singh in the Apheta case, (7) not properly
supervising Lozano, and (8) charging Singh unconscionable and
“ridiculous[]” fees and “inflat[ing] their bill[s] to [an] extreme.”
The second group consists of plaintiff’s claims for theft by
false pretenses, fraud and intentional deceit, constructive fraud,
and negligent misrepresentation. These fraud-related claims are
based upon the lawyer defendants’ (1) failure to disclose to her
the invalidity of the prior default judgment, which was “based on”
the lawyer defendants’ “multiple legal mistakes” and “negligence”
“in the Apheta” case, or (2) failure to file a motion for attorney
fees in order to recover the cost of plaintiff’s services, plus a
multiplier. The lawyer defendants’ nondisclosure is what
induced plaintiff to sign the Legal Services Agreement with Singh.
The third group consists of plaintiff’s contract-based
claims—namely, (1) for a declaration that the lawyer defendants
were “fully responsible” for her fees and costs, (2) for breach of an
“implied contract” with Lozano, based on their past billing
practice, which was breached when the lawyer defendants
committed malpractice and did not file a motion for attorney fees
with a multiplier, (3) for breach of the implied covenant of good
faith and fair dealing attendant to an “implied contract” plaintiff
had with the lawyer defendants, which was breached when the
lawyer defendants did not “finish negotiating a settlement” “for
Singh” in the Apheta case, (4) for promissory estoppel, based on
the lawyer defendants’ promise to “claim all [her] fees and costs
in the Apheta [m]atter,” and (5) for quantum meruit based on an
“implied contract”—and, quixotically, an “express contract”—she
6
had with the lawyer defendants to compensate her for all
“services . . . performed.”
In July 2018, the lawyer defendants demurred to the first
amended complaint. Following briefing and a hearing, the trial
court in October 2018 sustained the demurrer as to all claims,
reasoning that the “gravamen” of all of plaintiff’s claims against
the lawyer defendants was “legal malpractice” in their
representation of Singh in the Apheta case, which plaintiff had no
standing to pursue because she was neither the “client” nor an
“intended beneficiary” of Singh’s contract with the lawyer
defendants for legal services. The court also identified a number
of alternative grounds for sustaining the demurrer as to
individual claims. Although the court did not grant leave to
amend for any of the claims in the first two groups or as to
plaintiff’s claim for declaratory relief against the lawyer
defendants, the court granted her leave to amend as to the breach
of contract, breach of the implied covenant of good faith,
promissory estoppel and quantum meruit claims.
B. The second amended complaint and demurrer
In November 2018, plaintiff filed a verified second amended
complaint that re-alleged a breach of contract claim against
Lozano, and re-alleged a breach of the implied covenant of good
faith and fair dealing claim, a promissory estoppel claim and a
quantum meruit claim against all of the lawyer defendants. As
detailed in the footnotes set forth above, many of the factual
allegations in the second amended complaint were inconsistent
with the factual allegations in the verified original and first
amended complaints. By virtue of these new factual allegations,
the second amended complaint sought to narrow the scope of
Singh’s responsibility for plaintiff’s fees under the Legal Services
7
Agreement so as to expand the scope of the lawyer defendants’
liability for those fees. Specifically, the second amended
complaint alleged that the Legal Services Agreement only covered
plaintiff’s fees incurred when “enforc[ing] the [default] judgment”
in the Apheta case and not “defend[ing] th[at] judgment,” that the
Legal Services Agreement only covered her “paralegal” work and
not process serving fees or her out-of-pocket costs, and that the
Legal Services Agreement only covered her services after it was
signed—all of which meant that the lawyer defendants were
liable (on inconsistent theories of implied and express contract)
(i) for all of her process service work and out-of-pocket costs and
(ii) for all of her paralegal work prior to the Legal Services
Agreement and after the motion to set aside the default judgment
was filed.
In December 2018, the lawyer defendants again demurred.
Following another full round of briefing and a hearing, the trial
court sustained the demurrer to all claims against the lawyer
defendants in the second amended complaint.5 In addition to
concluding that “[t]he gravamen of the entire Second Amended
Complaint . . . as against [the lawyer defendants] remains legal
malpractice,” the court identified a number of alternative
grounds for sustaining the demurrer as to individual claims.
Because plaintiff “fail[ed] to indicate how she [could] cure the
5 The lawyer defendants had also demurred to the
declaratory relief claim because plaintiff exceeded the scope of
the trial court’s first demurrer ruling by amending that claim in
the second amended complaint; however, because that claim was
asserted against Singh and not against the lawyer defendants,
the trial court ruled that the lawyer defendants lacked standing
to demur.
8
defects in her pleading,” the court sustained the demurrer
without leave to amend.
C. Judgment, order for costs and appeal
After the trial court entered judgment dismissing plaintiff’s
second amended complaint against the lawyer defendants, and
after the court awarded the lawyer defendants $1,674.69 in costs,
plaintiff filed this timely appeal.6
DISCUSSION
In this appeal, plaintiff argues that the trial court erred (1)
in sustaining the demurrers to the first and second amended
complaints, (2) in denying her motion to deem admitted the 206
requests for admission she served on the lawyer defendants, and
(3) in awarding the lawyer defendants $150 in nonrefundable
jury fees as costs. We will address the first and third issues
because our resolution of the first renders the second moot. (See
Hood v. Hacienda La Puente Unified Sch. Dist. (1998) 65
Cal.App.4th 435, 437 [affirming order of dismissal on demurrer
renders antecedent discovery ruling moot].)
I. Demurrer
“In reviewing a trial court’s order sustaining a demurrer
without leave to amend, we must ask (1) whether the demurrer
was properly sustained, and (2) whether leave to amend was
properly denied.” (Schep v. Capital One, N.A. (2017) 12
Cal.App.5th 1331, 1335.) The first question requires us to
6 Although plaintiff’s declaratory relief against Singh
remains pending and is set for trial in 2021, we have jurisdiction
over this appeal because the order sustaining the demurrer
without leave to amend renders the judgment final as between
plaintiff and the lawyer defendants. (Nguyen v. Calhoun (2003)
105 Cal.App.4th 428, 437; Tinsley v. Palo Alto Unified School
Dist. (1979) 91 Cal.App.3d 871, 880.)
9
“independently evaluate whether the operative complaint states
facts sufficient to state a cause of action” (Alborzian v. JPMorgan
Chase Bank, N.A. (2015) 235 Cal.App.4th 29, 34), and in so doing,
we accept as true “all material facts properly pled” in that
complaint, although we discount and ignore pled facts that are
contrary to those pled in prior complaints or contrary to
documents subject to judicial notice (Winn v. Pioneer Medical
Group, Inc. (2016) 63 Cal.4th 148, 152; Evans v. City of Berkeley
(2006) 38 Cal.4th 1, 20; Webb, supra, 23 Cal.App.5th at p. 256).
The second question “requires us to decide whether ‘“‘there is a
reasonable possibility that the defect [in the operative complaint]
can be cured by amendment.’”’” (McClain v. Sav-On Drugs (2017)
9 Cal.App.5th 684, 695, affd. (2019) 6 Cal.5th 951.) Because
plaintiff proffers no suggestion on how to further amend her
complaint and because we perceive no viable way to do so, the
propriety of the dismissal order in this case turns entirely on
whether her complaint states one or more viable causes of action.
We independently agree with the trial court that none of
the 12 causes of action plaintiff alleges against the lawyer
defendants is viable because (1) those 12 claims are all premised
on the lawyer defendants’ commission of legal malpractice while
representing Singh in the Apheta case, and (2) the lawyer
defendants’ duty of competent representation is owed to Singh,
and not to plaintiff.7
A. Plaintiff’s claims are all premised on the
attorney defendants’ alleged malpractice
In evaluating whether a plaintiff has stated a claim against
a particular defendant, what matters is the “gravamen” of that
7 This conclusion obviates any need to evaluate the trial
court’s alternative grounds for sustaining the demurrers.
10
claim—not its label. (Rubin v. Green (1993) 4 Cal.4th 1187, 1196;
Peterson v. Cellco Partnership (2008) 164 Cal.App.4th 1583,
1595.) “‘The gravamen, or essential nature . . . of a cause of
action is determined by the primary right alleged to have been
violated . . .’ [Citation.]” (Chen v. Berenjian (2019) 33
Cal.App.5th 811, 820-821.) “[T]he primary right” is, in turn,
defined as the “plaintiff’s right to be free from the particular
injury” or “harm” “suffered,” no matter which legal theory is
being asserted or which remedy is being sought to redress that
injury or harm. (Crowley v. Katleman (1994) 8 Cal.4th 666, 681
(Crowley); Boeken v. Philip Morris USA, Inc. (2010) 48 Cal.4th
788, 797-798.) Because “‘the invasion of one primary right gives
rise to a single cause of action’” (Bay Cities Paving & Grading v.
Lawyers’ Mutual Ins. Co. (1993) 5 Cal.4th 854, 860 (Bay Cities),
quoting Slater v. Blackwood (1975) 15 Cal.3d 791, 795), the
violation of a single primary right cannot be split into multiple
claims in a single lawsuit or split across multiple lawsuits
(Crowley, at p. 681; Bay Cities, at p. 860).
The primary right at issue in a claim for legal malpractice
is the right not to be injured by “the failure of an attorney ‘to use
such skill, prudence, and diligence as lawyers of ordinary skill
and capacity commonly possess and exercise . . . .’” (Neel v.
Magana, Olney, Levy, Cathcart & Gelfand (1971) 6 Cal.3d 176,
180-181; Bay Cities, supra, 5 Cal.4th at p. 860 [“primary right”
underlying malpractice claim is “the right to be free of negligence
by [one’s own] attorney”]; Khodayari v. Mashburn (2011) 200
Cal.App.4th 1184, 1191 [same].)
All three groups of claims asserted by plaintiff in the first
and second amended complaints involve the invasion of the same
primary right—that is, plaintiff’s purported right not to be
11
injured by the lawyer defendants’ negligence in representing
Singh in the Apheta case. (Bay Cities, supra, 5 Cal.4th at p. 860.)
The malpractice, unlawful business practices, and tortious
interference claims are all directly premised upon one or more
“legal blunder[s]” or excessive billing practices committed by the
lawyer defendants. The fraud claims are each based on the
lawyer defendants’ failure to disclose to plaintiff their prior
malpractice in representing Singh or their concurrent
malpractice in not seeking attorney fees (plus paralegal fees)
with a multiplier. And the breach underlying each of the
contract-based claims, including the breach of an equitable duty
to compensate plaintiff in the absence of a contract, was caused
or necessitated by the lawyer defendants’ allegedly deficient
representation of Singh. As to each of these claims, plaintiff is
effectively saying, “I did not get paid because the lawyer
defendants committed malpractice when they were representing
Singh in the Apheta case.” The alleged malpractice by the lawyer
defendants is the linchpin of each of plaintiff’s claims: If the
malpractice claim fails, the rest of her claims necessarily fail.
(See Lynch v. Warwick (2002) 95 Cal.App.4th 267, 273-274
[breach of contract claim fails when it is based on malpractice,
and malpractice claim is invalid]; Kracht v. Perrin (1990) 219
Cal.App.3d 1019, 1022-1023 & fn. 3 [same, as to constructive
fraud claim]; Jackson v. Rogers & Wells (1989) 210 Cal.App.3d
336, 349 (Jackson); cf. Brooks v. Shemaria (2006) 144
Cal.App.4th 434, 440-441 [breach of contract claim survives,
despite invalid malpractice claim, because it is based on “the
right to be billed in accordance with the terms of the retainer
agreement” irrespective of any attorney negligence].)
Plaintiff resists this conclusion with three arguments.
12
First, she notes that plaintiffs are generally allowed to
plead alternative theories, such that it is wrong to conclude that
her legal malpractice claim “automatically subsumes all other
causes of action.” Although a plaintiff is generally free to plead
alternative—and even legally inconsistent—legal theories in a
complaint (Newport Harbor Ventures, LLC v. Morris Cerullo
World Evangelism (2016) 6 Cal.App.5th 1207, 1222-1223; Berman
v. Bromberg (1997) 56 Cal.App.4th 936, 944-945), she may not do
so where, as here and as explained above, the purportedly
alternative theories involve an invasion of the same primary
right (Bay Cities, supra, 5 Cal.4th at p. 860). Further, our
conclusion that all of plaintiff’s claims arise from the same
primary right not to be injured by the lawyer defendants’
malpractice is derived from our examination of the primary right
underlying plaintiff’s malpractice claim and of the specific
allegations underlying each of plaintiff’s other claims; we did not
rely on any notion that malpractice “automatically subsumes”
other claims.
Second, plaintiff contends that her fraud claims, at a
minimum, arise from a primary right other than the right not to
be harmed by an attorney’s malpractice. For support, she cites
Jackson, supra, 210 Cal.App.3d at pp. 344-345 and Goodman v.
Kennedy (1976) 18 Cal.3d 335, 346 (Goodman). Jackson and
Goodman merely held that an attorney may be sued for fraud
when he or she makes fraudulent statements to third parties that
are unrelated to his or her competence as an attorney. (Accord,
Shafer v. Berger, Kahn, Shafton, Moss, Figler, Simon &
Gladstone (2003) 107 Cal.App.4th 54, 69-70.) But these cases are
not relevant where, as here, the alleged fraudulent nondisclosure
is the failure to disclose one’s malpractice, which turns on
13
whether there was, in fact, malpractice. In such cases, as
Jackson itself held, the fraud claim involves the same primary
right as the malpractice claim. (Jackson, at pp. 346-347.)
Third, plaintiff asserts that her quantum meruit claim, at a
minimum, arises from a primary right other than attorney
malpractice. We reject this assertion for several reasons. To
begin, the quantum meruit claim plaintiff has pled is necessarily
premised on the lawyer defendants’ malpractice: “But for [the
lawyer defendants’] failure to act as any prudent attorney would
act,” she alleges, “[plaintiff] would have been paid in full by now”
(and maybe more, if a multiplier were applied). Further,
quantum meruit, as an equitable remedy, is unavailable “where
it would frustrate the law or public policy” (Ochs v. PacifiCare of
California (2004) 115 Cal.App.4th 782, 794), and for the reasons
discussed below, allowing plaintiff to recover in quantum meruit
in this case would effectively turn lawyers into guarantors of
payment for their freelance contractors, even where, as here, the
contractors have signed written contracts with others for
compensation for those services.
B. Plaintiff cannot state a claim for malpractice
against the attorneys who retained her
To state a claim for legal malpractice, a plaintiff must
allege that the lawyer owed her a duty and breached that duty by
substandard representation. (Coscia v. McKenna & Cuneo (2001)
25 Cal.4th 1194, 1999.) The viability of plaintiff’s claim for legal
malpractice—and, by extension, all her remaining claims
premised on malpractice—turns on whether the lawyer
defendants owed her a duty to perform competently. (Goldberg v.
Frye (1990) 217 Cal.App.3d 1258, 1267 [“Absent duty there can be
no breach and no negligence” and malpractice].) The question of
duty is ultimately a question of public policy, and hence a
14
question of law we review de novo. (Goodman, supra, 18 Cal.3d
at p. 342; Christensen v. Superior Court (1991) 54 Cal.3d 868,
885.)
As a general rule, a lawyer owes a duty of competence and
loyalty only to the client who retains that lawyer. (Borissoff v.
Taylor & Faust (2004) 33 Cal.4th 523, 529-530.) This is because,
in the ordinary case, the client and the lawyer have signed a
retainer agreement and thus share a privity of contract. (Buckley
v. Gray (1895) 110 Cal. 339, 342-343, overruled in part on other
grounds as stated in Lucas v. Hamm (1961) 56 Cal.2d 583(Lucas); Giacometti v. Aulla, LLC (2010) 187 Cal.App.4th 1133,
1137 [“The general rule is that privity of contract is a requisite to
a professional negligence claim”].)
This general rule is not without its exceptions. Courts have
recognized that a lawyer may owe a duty of competence and
loyalty to third parties other than the client when (1) the third
party is the intended beneficiary of the legal work performed by
the attorney, either because (a) the lawyer and client have
expressly designated that third party as an intended beneficiary
in the retainer agreement (Bily v. Arthur Young & Co. (1992) 3
Cal.4th 370, 406, fn. 16), or (b) “the very nature” of the work the
attorney was retained to perform for the client is for the benefit
of the third party (Goodman, supra, 18 Cal.3d at p. 342; Lucas,
supra, 56 Cal.2d at pp. 589-891 [applying exception to named
beneficiary in a will]; Osornio v. Weingarten (2004) 124
Cal.App.4th 304, 323-324 [same]; Bucquet v. Livingston (1976) 57
Cal.App.3d 914, 917-923 [applying exception to trust
beneficiaries]); or (2) the attorney and client intend that the third
party is to rely on the attorney’s legal work (Goodman, at p. 343,
fn. 4 [so noting]; Roberts v. Ball, Hunt, Hart, Brown & Baerwitz
15
(1976) 57 Cal.App.3d 104, 111 [same]). However, the fact that a
third party would or could benefit from the lawyer’s competent
representation of the client is not enough to extend the duty of
competence and loyalty to that third party. (B.L.M. v. Sabo &
Deitsch (1997) 55 Cal.App.4th 823, 832; see also Moore v.
Anderson Zeigler Disharoon Gallagher & Gray (2003) 109
Cal.App.4th 1287, 1294-1295 (Moore) [attorney does not owe duty
to possible will beneficiary who might benefit from attorney’s
duty to ensure that testator is competent to execute will];
Goodman, at p. 339 [attorney representing stock sellers does not
owe duty to the buyers of that stock to advise them regarding
consequences of stock transaction]; St. Paul Title Co. v. Meier
(1986) 181 Cal.App.3d 948, 951-952 [attorney representing buyer
in real estate transaction does not owe duty to escrow company in
drafting escrow instructions].)
Plaintiff does not fall into either of these exceptions. She is
not—and, indeed, cannot be—the intended beneficiary of the
attorney-client relationship between the lawyer defendants and
Singh. She concedes she is not expressly named as an intended
beneficiary in the retainer agreement. Nor could she be, either
as a matter of logic or basic temporal mechanics. That is because
Singh retained the lawyer defendants to represent him back in
2014, more than two years before plaintiff was brought on to
assist in the effort to collect on the judgment. Plaintiff was
indisputably not an intended beneficiary of the 2014 retainer
agreement. Nor did Singh retain the lawyer defendants with the
intent of having third parties like plaintiff—that is, paralegals
hired to help with collection efforts that might or might not be
necessary at some point in the future—rely on the lawyer
defendants’ work. At most, plaintiff would have financially
16
benefitted if the lawyer defendants’ actions had not left the
default judgment open to successful attack, but that is not
enough to create a duty.
Plaintiff nevertheless argues that a lawyer has a “duty to
assure” that any and all freelance professionals who assist a
lawyer in representing a client are “compensated for [their]
work.” Plaintiff offers two internally inconsistent rationales for
her proffered duty—namely, that (1) the freelancer’s work puts
the freelancer “in privity with the client,” and (2) the freelancer’s
work renders the freelancer “the practical and legal equivalent of
a ‘client.’” This argument invites us to recognize a new duty upon
lawyers to assure that the professionals with whom they sub-
contract are fully compensated notwithstanding whatever other
payment arrangements those professionals make.
This is an invitation we respectfully decline.
To be sure, courts have the power to expand the duty owed
by lawyers and to thereby expand the universe of plaintiffs who
might be able to sue for legal malpractice. “‘The determination
whether in a specific case the [lawyer] will be held liable to a
third person not in privity is a matter of policy and involves the
balancing of various factors.’” (Bily, supra, 3 Cal.4th at p. 397.)
When it comes to expanding the scope of the duty not to be
negligent in practicing law to third parties, the relevant factors
are (1) “the extent to which the transaction was intended to affect
the [third party] plaintiff,” (2) whether “the recognition of” a
duty—and liability—to the third-party plaintiff “would impose an
undue burden on the legal profession,” (3) “the likelihood that
imposition of liability might interfere with the attorney’s ethical
duties to the client,” (4) “the foreseeability of harm to” the third-
party plaintiff, (5) “the degree of certainty that the [third-party]
17
plaintiff [has] suffered injury,” (6) “the closeness of the connection
between the [attorney’s] conduct and the injury suffered,” (7) “the
moral blame attached to the [attorney’s] conduct,” and (8) “the
policy of preventing future harm.” (Ibid.; Lucas, supra, 56 Cal.2d
at p. 589; Berg & Berg Enterprises, LLC v. Sherwood Partners,
Inc. (2005) 131 Cal.App.4th 802, 832 (Berg & Berg); Chang v.
Lederman (2009) 172 Cal.App.4th 67, 77, 83, fn. 7; Moore, supra,
109 Cal.App.4th at pp. 1294-1295.)
We nevertheless decline to exercise our authority to create
a duty that would require lawyers to ensure that the freelance
professionals they hire to assist them in representing clients are
fully compensated for their work. We reach this conclusion for
four reasons.
First, the underlying transaction between lawyer and client
that gives rise to the need to hire freelance professionals is in no
way intended to benefit those professionals.
Second, imposing a duty upon lawyers to assure that the
freelance professionals they retain are fully compensated—even
when the professionals, like plaintiff herself, may have willingly
agreed to alternative payment arrangements—effectively turns
lawyers into guarantors. A lawyer faced with the knowledge that
he or she is the ultimate backstop for the payment of all fees
incurred by freelance professionals may prompt the lawyer to
make different tactical decisions (e.g., not hiring a freelance
professional, limiting their billable hours) that harm the client’s
interest. At a minimum, these considerations divert a lawyer’s
attention away from his or her ultimate duty of loyalty to the
client; at worst, they divide the lawyer’s loyalty. Neither is
acceptable. (Goodman, supra, 18 Cal.3d at p. 344 [duty that
“‘would prevent [the lawyer] from devoting his [or her] entire
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energies to his [or her] client’s interests’” is undesirable]; Bily,
supra, 3 Cal.4th at p. 411, fn. 18 [same, as to duty that “divert[s]
a lawyer’s attentions from the service of the client”]; Berg & Berg,
supra, 131 Cal.App.4th at p. 832 [duty that would “put [lawyer]
in an untenable and conflicted ethical position vis-à-vis [his or
her] own client” is undesirable]; see generally Fireman’s Fund
Ins. Co. v. McDonald, Hecht & Solberg (1994) 30 Cal.App.4th
1373, 1379 [noting attorney’s “duty of undivided loyalty . . . in
representing the client”].)
Third, creating this new duty does not give the lawyer any
greater incentive to perform competently for his or her client, as
the threat of a malpractice action (or ethical sanction) already
provides such incentive. (Accord, Bily, supra, 3 Cal.4th at p. 404.)
Lastly, the recognition of this duty would still require the
freelance professional to prove malpractice and thus may lead to
inconsistent verdicts should a jury find that the same acts by the
lawyer were not negligent vis-à-vis the client, but were negligent
vis-à-vis the paralegal.
These considerations are no doubt why courts have held
that a prior attorney cannot sue his former client’s successor
counsel for malpractice when the successor’s poor representation
reduced the prior lawyer’s shared fee (Mason v. Levy & Van
Bourg (1978) 77 Cal.App.3d 60, 67-68), and why freelance
accountants cannot sue the attorney who hired them for
malpractice in not reviewing their work closely enough (Mattco
Forge, Inc. v. Arthur Young & Co. (1995) 38 Cal.App.4th 1337,
1356-1357).
II. Motion to Tax $150 Nonrefundable Jury Fee
The prevailing party in a lawsuit is entitled to its costs,
which include jury fees. (Code Civ. Proc., §§ 1032, subd. (b),
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1033.5, subd. (a)(1).) Here, after the trial court sustained the
demurrer to the second amended complaint without leave to
amend and entered a judgment of dismissal, the lawyer
defendants sought, among other costs, $150 in nonrefundable
jury fees. Plaintiff moved to tax this cost on the ground that the
lawyer defendants had the right to apply for a refund of that fee,
and thus should not be entitled to collect it from her. The trial
court denied plaintiff’s motion to tax that cost. We review the
denial of a motion to tax costs for an abuse of discretion. (Gibson
v. Bobroff (1996) 49 Cal.App.4th 1202, 1209.)
The trial court did not abuse its discretion in requiring
plaintiff to pay the $150 in nonrefundable jury fee as costs
because plaintiff’s argument to the contrary is utterly frivolous.
Code of Civil Procedure section 631, subdivision (b) requires that
at least one party to a civil case “pay a nonrefundable fee” of $150
to “offset the costs to the state of providing juries in civil cases.”
(Code Civ. Proc., § 631, subd. (b).) It is undisputed that the
lawyer defendants paid that nonrefundable fee. Plaintiff urges
that Code of Civil Procedure 631.3, subdivision (a) provides that
“[n]otwithstanding any other law,” a party may seek a refund of
“deposited jury fees” if “that party waives a jury or obtains a
continuance of the trial, or the case is settled” (id., § 631.3, subd.
(a)), and from this argues that the lawyer defendants should have
sought a refund of their $150 jury fee from the court rather than
seeking it as a cost from her. What plaintiff ignores is that
subdivision (c) of section 631.3 specifically says that the
“nonrefundable” jury fee requirement set forth in section 631,
subdivision (b) “is not subject” to the refund remedy “[in] this
section.” (Id., § 631.3, subd. (c).) This plain language forecloses
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plaintiff’s argument, including her argument that failure to
refund the jury fees is “unreasonable.”
DISPOSITION
The judgment, discovery order, and post-judgment order of
costs are affirmed. The lawyer defendants are entitled to their
costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
______________________, J.
HOFFSTADT
We concur:
_________________________, P. J.
LUI
_________________________, J.
CHAVEZ
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