Motion: Application for Right to Attach Order and Writ of Attachment. Moving party Plaintiff Stradling Yocca Carlson & Rauth, P.C.  Responding Party Defendant Consumerdirect, Inc.

Ruling:  The Application for Right to Attach and Writ of Attachment are DENIED. Defendants’ Objection to Evidence are OVERRULED.

Plaintiff is incorrect that the Application has already been granted. On 10/3/16, the court did not grant the Application. The Minute Order stated, “Defendants request a continuance of the motion. Continuance granted.” The hearing was continued to 10/17/16. On 10/11/16, the court continued the hearing again to 10/24/16.

Fixed or Readily Ascertainable Sum: “[A]n attachment will lie upon a cause of action for damages for a breach of contract where the damages are readily ascertainable by reference to the contract and the basis of the computation of damages appears to be reasonable and definite. [Citations.] The fact that the damages are unliquidated is not determinative. [Citations.] But the contract sued on must furnish a standard by which the amount due may be clearly ascertained and there must exist a basis upon which the damages can be determined by proof.’”CIT Grp. / Equip. Fin., Inc. v. Super DVD, Inc. (2004) 115 Cal. App. 4th 537, 540.

Even though this case concerns two promissory notes, the amount is undetermined.  Vannak Kho, the comptroller of ConsumerDirect declared that the balance Plaintiff demanded was incorrect. (Page 2, lines 3- 4). David Coulter, the C.E.O., declared that the balance demanded was incorrect. (Page 14, lines 15-16).  I believe after a proper accounting, Plaintiffs would either owe funds in return or a very significant adjustment would be made.” (Page 15, lines 14-15).  Therefore, the amount of the claim is not fixed or reasonably certain.

Probable Validity of Claim: “’The plaintiff must establish ‘the probable validity of the claim upon which the attachment is based.’. . . ‘A claim has ‘probable validity’ where it is more likely than not that the plaintiff will obtain a judgment against the defendant on that claim.’” Goldstein v. Barak Const. (2008) 164 Cal. App. 4th 845, 852.  Plaintiff did not address this issue, but merely assumed that it would prevail on the two promissory notes.

Warning to Seek Advice from Independent Counsel: After Plaintiff had represented Defendants; it required that the client renegotiate the fee arrangement.  Defendants had questioned Plaintiff’s practice of billing for multiple attorneys, when one attorney would be more appropriate. Coulter vigorously complained about the billing. (Page 2, lines 16-25).

Rule of Professional Responsibility, Rule 3-300 requires that “A member shall not enter into a business transaction with a client; or knowingly acquire an ownership, possessory, security, or other pecuniary interest adverse to a client, unless each of the following requirements has been satisfied:

(A) The transaction or acquisition and its terms are fair and reasonable to the client and are fully disclosed and transmitted in writing to the client in a manner which should reasonably have been understood by the client; and

(B) The client is advised in writing that the client may seek the advice of an independent lawyer of the client’s choice and is given a reasonable opportunity to seek that advice; and

(C) The client thereafter consents in writing to the terms of the transaction or the terms of the acquisition.”

 

“The relation between attorney and client is a fiduciary relation of the very highest character, and binds the attorney to most conscientious fidelity—uberrima fides. . . . Accordingly, ‘[a]ll dealings between an attorney and his client that are beneficial to the attorney will be closely scrutinized with the utmost strictness for any unfairness.’” Fair v. Bakhtiari (2011) 195 Cal. App. 4th 1135, 1140–41.

“Rule 3–300 does not itself ‘provide a basis for civil liability’ . . . but its statutory counterpart—Probate Code section 16004—erects a presumption that transactions between an attorney and client “by which the [attorney] obtains an advantage” are a breach of the attorney’s fiduciary duty and are the product of undue influence.” Ferguson v. Yaspan (2014) 233 Cal. App. 4th 676, 684–85. “The presumption is rebutted by a showing that (1) ‘the dealing was fair and just, and [(2)] the client was fully advised.’” Ibid, 685.

Defendant Coulter stared that “Plaintiffs did NOT recommend or remotely suggest, in any fashion, that I should or even had the right to have the Notes reviewed by other counsel.” (page, 3, lines 22-23). By executing the promissory notes, the client may be in a worst position to challenge the amount of the billing. Plaintiff failed to show that its clients were warned or that the promissory notes were fair to the clients. Defendants contend that the promissory notes were signed under duress.

 

Conflict of Interest: Defendants contended that Plaintiff was representing an adverse party simultaneously.  Plaintiff also represented Michael Colaco, which created a conflict of interest. (Page 9, line 13- page 10, line 24).  Plaintiff did not address this issue either.

 

Rule 3–310(C)(3) provides that an attorney “shall not, without the informed written consent of each client … [r]epresent a client in a matter and at the same time in a separate matter accept as a client a person or entity whose interest in the first matter is adverse to the client in the first matter.” (Italics added.) ‘Informed written consent’ means the client’s … written agreement to the representation following written disclosure.” (Rule 3–310(A) (2).) (Emphasis added).

 

A contract in violation of Rule 3–310(C) is against the public interest. “Rule 3–310 and conflict of interest rules are designed to ‘assure the attorney’s absolute and undivided loyalty and commitment to the client and theprotection of client confidences.’” Sharp v. Next Entertainment, Inc. (2008) 163 Cal.App.4th 410, 427. (Emphasis added). “Fee agreements that violate the Rules of Professional Conduct may be deemed unenforceable on public policy grounds.”Cotchett, Pitre & McCarthy v. Universal Paragon Corp. (2010) 187 Cal.App.4th 1405, 1417.