Case Name: Robert Moore and Mary Ann Richards v. Steven Hoffman
Case No.: 19CV342390
Currently before the Court is Defendant Hoffman’s motion for summary judgment.
Plaintiffs Richard G. Moore (“Moore”) and Mary Ann Roberts (“Roberts;” collectively, “Plaintiffs”) retained Defendant Steven D. Hoffman (“Hoffman”) to represent them in a prior civil action (case no. 16CV299932) against Banker’s Insurance Company (“BIC”), among others, arising from alleged unlawful collection practices and fraud after Roberts obtained a bail bond to secure Moore’s release from jail.
Defendant Hoffman allegedly withheld BIC’s response to a demand letter in order to lure Plaintiffs into spending thousands of dollars on a lawsuit. Defendant Hoffman charged Plaintiffs an unconscionable fee, withheld documents, failed to fully advise Plaintiffs, placed his own financial interest ahead of Plaintiffs, conducted costly unapproved actions, and did not provide Plaintiffs competent legal representation. Plaintiffs allege that Hoffman told them on January 17, 2018 that he intended to substitute out of the case. Hoffman substituted out of the prior action on February 13, 2018 and new counsel (Derek Decker) substituted in on March 28, 2018. The case later ended in a settlement.
Plaintiff’s original complaint was filed on February 1, 2019, less than a year after Hoffman substituted out as their counsel, and stated claims for legal malpractice and breach of contract. Their operative First Amended Complaint (“FAC”) was filed on August 2, 2019. It states claims for: 1) Legal Malpractice (against Hoffman and Does); 2) Breach of Contract (an attorney-client fee contract, against Hoffman and Does), and; 3) Breach of Fiduciary Duty (against Hoffman and Does) based on the same allegations as the first two claims.
In the FAC Plaintiffs allege that Hoffman among other things “negligently and/or recklessly withheld a response to a demand letter to BIC,” in order to lure them into spending thousands of dollars on a law suit after they had told him they only wanted a demand letter sent, and “failed to act competently, failed to communicate a settlement offer, suppressed evidence, failed to avoid interests adverse to Plaintiffs’ and failed to communicate a significant development in the suit.” (FAC at ¶¶12-13.) They also allege that they only learned of the response to the demand letter when Hoffman sent it to them by accident on June 27, 2017 (a year after it had been sent to Hoffman) by which point they had spent approximately $50,000 in legal fees in the belief that there had never been a response to the demand letter. Plaintiffs allege that their contract with Hoffman stipulated that attorney’s fees sufficient to cover trial costs would be deposited once a trial date was set, and that Hoffman breached this provision by attempting to convince them—after he had been caught concealing the response to the initial demand letter—that they had to deposit this money with him before any trial date was set. (FAC at ¶¶42-45.)
The FAC also alleges that Hoffman suggested to Plaintiffs several times that they might want a less expensive attorney and in late September 2017 Plaintiffs informed Hoffman that they may have to seek other, less expensive, counsel due to the high costs of Hoffman’s representation. “After significant communication over several months between Hoffman and Plaintiffs’ regarding cost, negotiations and strategy, Hoffman informed Plaintiffs on January 17, 2018, that he intended to substitute out of the case. That substitution occurred on February 13, 2018, and Plaintiffs’ new counsel, Derek Decker, substituted in on March 28, 2018.” (FAC at ¶18.)
Requests for Judicial Notice
A precondition to judicial notice in either its permissive or mandatory form is that the matter to be noticed be relevant to the material issue before the Court. (Silverado Modjeska Recreation and Park Dist. v. County of Orange (2011) 197 Cal.App.4th 282, 307, citing People v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422 fn. 2.) Both sides have submitted requests for judicial notice.
- Defendant Hoffman’s request
With the motion Hoffman has submitted a request for the Court to take judicial notice of the fact that Plaintiffs’ original complaint was filed on February 1, 2019, supported by a copy of the face page of that pleading which is submitted as Exhibit I to the declaration of Defense Counsel Bruce MacLeod. Notice of this face page is GRANTED pursuant to Evidence Code §452(d) (court records) only.
- Plaintiffs’ request
With their opposition Plaintiffs have submitted a request for the Court to take judicial notice of the Sept, 7, 2018 determination letter they received from the enforcement unit of the state bar regarding a complaint they had made against Hoffman. A copy of the letter is attached as Exhibit A. Notice of the letter is GRANTED pursuant to Evidence Code §452(c) (official acts) only.
This letter stated that the bar had completed its investigation into Plaintiffs’ allegations of professional misconduct against Hoffmann. It stated that it had decided not to pursue disciplinary charges against him because it “cannot proceed with disciplinary charges unless we can present evidence and testimony in court, sufficient to prove by clear and convincing evidence that the attorney has committed a violation of the State Bar Act or the Rules of Professional Conduct. The violation must be serious enough to support both a finding of culpability and the imposition of professional discipline. . . . However, we did conclude that there is substantial evidence of a violation of the Rules of Professional Conduct, rule 3-500, and Business and Professions Code section 6068(m) [failure to keep client reasonably informed about significant developments]. We do not find substantial evidence that Mr. Hoffman intentionally failed to disclose this information, but we do find substantial evidence that he failed to adequately provide the information to you. . . . [W]e have decided that your complaint is best resolved by issuing Mr. Hoffman a warning letter as provided for in the State Bar Rules of Procedure. . . . The warning letter does not constitute the imposition of professional discipline.”
- Court’s Motion
On its own motion the Court takes judicial notice pursuant to Evidence Code §452(d) (court records) of the two substitution of attorney forms filed by Hoffman in the prior action, case no. 16CV299932. Both forms (one for Moore, one for Peters) were filed on February 13, 2018 and have signatures dated February 12, 2018.
Motion for Summary Judgment
The pleadings limit the issues presented for summary judgment and such a motion may not be granted or denied on issues not raised by the pleadings. (See Government Employees Ins. Co. v. Sup. Ct. (2000) 79 Cal.App.4th 95, 98; Laabs v. City of Victorville (2008) 163 Cal.App.4th 1242, 1258; Nieto v. Blue Shield of Calif. Life & Health Ins. (2010) 181 Cal.App.4th 60, 73 [“the pleadings determine the scope of relevant issues on a summary judgment motion.”].) The moving party bears the initial burden of production to make a prima facie showing that there are no triable issues of material fact. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.)
The moving party’s declarations and evidence will be strictly construed in determining whether they negate or disprove an essential element of a plaintiff’s claim “in order to resolve any evidentiary doubts or ambiguities in plaintiff’s (or opposing party’s) favor.” (Johnson v. American Standard, Inc. (2008) 43 Cal. 4th 56, 64, parentheses added.) While the same standards of admissibility govern both, the opposition declarations are liberally construed while the moving party’s evidence is strictly scrutinized. (Saelzler v. Advanced Group 400 (2001) 25 Cal. 4th 763, 768.) The moving party may generally not rely on additional evidence filed with its Reply papers. (See Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1537-38 [“The general rule of motion practice . . . is that new evidence is not permitted with reply papers. This principle is most prominent in the context of summary judgment motions . . .”]; see also Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th 243, 252; San Diego Watercrafts, Inc. v. Wells Fargo Bank, N.A. (2002) 102 Cal.App.4th 308, 316.)
“A defendant seeking summary judgment must show that at least one element of the plaintiff’s cause of action cannot be established, or that there is a complete defense to the cause of action. … The burden then shifts to the plaintiff to show there is a triable issue of material fact on that issue.” (Alex R. Thomas & Co. v. Mutual Service Casualty Ins. Co. (2002) 98 Cal.App.4th 66, 72; internal citations omitted.) “There is a triable issue of material fact if, and only if, the evidence would allow a reasonable finder of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.” (Aguilar, supra, at p. 850.)
Hoffman moves for summary judgment only on three grounds, arguing that Plaintiffs (1) “have no admissible evidence to support their claims that Defendant violated the standard of care”; (2) “Plaintiffs cannot show that any action taken by Defendant was the proximate cause of any recoverable damages,” and (3) “[A]ll of the claims are barred by the statute of limitations contained in [CCP] §340.6.” (Notice of Motion at 1:24-2:2.)
Defendant Hoffman’s motion is a motion for summary judgment only. As such, the motion could not be granted unless Hoffman established an absence of triable issues of material fact as to all three causes of action. He has not done so as, at a minimum, triable issues remain as to the FAC’s legal malpractice claim. Accordingly, Defendant Hoffman’s motion is a motion for summary judgment is DENIED.
“In order to establish a cause of action for legal malpractice the plaintiff must demonstrate: (1) breach of the attorney’s duty to use such skill, prudence, and diligence as other members of the profession commonly possess and exercise; (2) a proximate causal connection between the negligent conduct and the resulting injury; and (3) actual loss or damage resulting from the negligence.” (Carlton v. Quint (2000) 77 Cal.App.4th 690, 699; see also CACI No. 600.)
Addressing the three grounds raised in the Notice of Motion in the order they are addressed by the parties, Hoffman has failed to establish that, as he argues in the motion, the legal malpractice claim (or other claims) are time-barred by the one-year statute of limitations set forth in CCP §340.6 because both his representation of Plaintiffs and any tolling ended by no later than January 17, 2018.
CCP §340.6 sets forth the statute of limitations for any action against an attorney arising in the performance of professional services, and it applies to all three causes of action in the FAC. (See Khodayari v. Mashburn (2011) 200 Cal.App.4th 1184, 1190 [deeming claims for fraud, negligence, breach of fiduciary duty, intentional infliction of emotional distress, abuse of process, and breach of contract to all be claims for legal malpractice and upholding the trial court’s order sustaining a demurrer without leave to amend on the basis that all claims were time-barred under the statute].) “’ [T]he nature of a cause of action does not depend on the label the plaintiff gives it or the relief the plaintiff seeks but on the primary right involved.’ Here, it is clear that the primary right involved in all of [plaintiff’s] claims is ‘the right to competent legal representation,’ and thus . . . all are properly characterized as claims for legal malpractice.” (Khodayari, supra, at p. 1090, internal citations omitted.)
The Supreme Court in Lee v. Hanley (2015) 61 Cal.4th 1225, 1229 held that “section 340.6(a) applies to a claim when the merits of the claim will necessarily depend upon proof that an attorney violated a professional obligation—that is, an obligation the attorney has by virtue of being an attorney—in the course of providing professional services. Such claims brought more than one year after the plaintiff discovers or through reasonable diligence should have discovered the facts underlying the claim are time-barred by section 340.6(a) unless the plaintiff alleged actual fraud.” (Emphasis in original.) The Court later stated that “section 340.6(a)’s time bar applies to claims whose merits necessarily depend upon proof that an attorney violated a professional obligation in the course of providing professional services. In this context, a ‘professional obligation’ is an obligation that an attorney has by virtue of being an attorney, such as fiduciary obligations, the obligation to perform competently, the obligation to perform the services contemplated in a legal services contract into which an attorney has entered, and the obligations embodied in the Rules of Professional Conduct.” (Id. at pp. 1236-1237.)
The statute states in pertinent part that an action for malpractice against an attorney for a “wrongful act or omission, other than for actual fraud, arising in the performance of professional services shall be commenced within one year after the plaintiff discovers, or through the use of reasonable diligence should have discovered, the facts constituting the wrongful act or omission, or four years from the date or the wrongful act or omission, whichever occurs first.” The running of the statute shall be tolled during any of the following, “(1) The plaintiff has not sustained actual injury; (2) The attorney continues to represent the plaintiff regarding the specific subject matter in which the alleged wrongful act or omission occurred; (3) The attorney willfully conceals the wrongful act or omission occurred, and; (4) The plaintiff is under a legal or physical disability which restricts the plaintiff’s ability to commence legal action.”
The one-year limitations period is triggered when the client discovers, or through the use of reasonable diligence should have discovered, the facts constituting the wrongful act or omission and suffers actual injury. (Peregrine Funding, Inc. v. Sheppard, Mullin, Richter & Hampton, LLP (2005) 133 Cal.App.4th 658, 685; Levin v. Graham & James (1995) 37 Cal.App.4th 798, 805; Pompilio v. Kosmo (1995) 39 Cal.App.4th 1324, 1328 [“discovery of facts essential to malpractice and the suffering of actual harm from the malpractice establish a cause of action and start the statute of limitations”].) “Actual injury” occurs “when the plaintiff suffers any loss or injury legally cognizable as damages in a legal malpractice action based on the asserted errors or omissions.” (Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 18 Cal.4th 739, 743.)
Here, the FAC at ¶17 admits that Plaintiffs learned on July 27, 2017 that Hoffman had concealed from them the existence of a response to the demand letter that he had received a year earlier, and that as a consequence of this failure to disclose they had spent several thousands of dollars that they might not have had to. This is arguably knowledge of injury. However, it is undisputed that the representation continued for several months, so the running of the statute of limitations was tolled. “Continuity of representation ultimately depends, not on the client’s subjective beliefs, but rather on evidence of an ongoing mutual relationship and of activities in furtherance of the relationship.” (Worthington v. Rusconi (1994) 29 Cal.App.4th 1488, 1498.) “The continuing representation provision applies only when the continuing representation involves the specific subject matter as to which the negligence occurred, and is not applicable when there is a continuing relationship between the client and the attorney involving only unrelated matters. . . . The test for whether the attorney has continued to represent a client on the same specific subject matter is objective, and ordinarily the representation is on the same specific subject matter until the agreed tasks have been completed or events inherent in the representation have occurred.” (Crouse v. Brobeck, Phleger & Harrison (1998) 67 Cal.App.4th 1509, 1528, citing Worthington, emphasis added.)
“The period is tolled even if the client is aware of the attorney’s negligence.” (Gonzalez v. Kalu (2006) 140 Cal.App.4th 21, 28.) “Where the attorney unilaterally withdraws or abandons the client, “the representation ends when the client actually has or reasonably should have no expectation that the attorney will provide further legal services.” (Id. at 30.) “That may occur upon the attorney’s express notification to the client …, or, if the attorney remains silent, may be inferred from the circumstances.” (Id. at 30-31.) “After a client has no reasonable expectation that the attorney will provide further legal services … the client is no longer hindered by a potential disruption of the attorney-client relationship and no longer relies on the attorney’s continuing representation, so the tolling should end.” (Id. at 31.) Courts have also held that tolling may apply even where the client is interviewing potential replacement counsel as “the court will not use that occurrence as a benchmark which, standing alone, signals the termination of the attorney and the client’s relationship.” (Nielsen v. Beck (2007) 154 Cal.App.4th 1041, 1049, internal citation omitted.)
Here in addition to the fact that the original complaint was filed within a year of Hoffman’s formal withdrawal from the prior case on February 13, 2018, Hoffman’s own evidence (exhibit E to his declaration) establishes that a triable issue remains as to when any tolling ceased as exhibit E indicates that he suggested to Plaintiffs that he would represent them at least through February 7, 2018. Plaintiffs have submitted evidence (the declaration of Plaintiff Moore) stating that during the discussions over the mutual decision to withdraw Hoffman informed them in writing (an email) that he would not file any motion to withdraw until after February 7, 2018. Plaintiffs also submit evidence (exhibit G to the Moore declaration) that Hoffman billed them for legal services through January 26, 2018, well after the date he claims the representation and any tolling ended.
A triable issue clearly remains under the objective standard as to whether, regardless of problems in the attorney-client relationship, Hoffman either agreed to continue to represent Plaintiffs through February 7, 2018 or created a reasonable expectation that he would do so. As a result a triable issue clearly remains as to whether any tolling continued well past January 17, 2018. Apart from this there is also a triable issue as to whether the representation itself continued past January 17 through January 26 and perhaps until February 12, 2018—when Plaintiffs and Hoffman signed the substitution of attorney forms which were filed in the prior case on February 13, 2018. Since the original complaint in this action was filed on February 1, 2019 Hoffman has failed to demonstrate that this action is time-barred by CCP §340.6.
Hoffman has also failed to establish that no triable issue exists as to whether his alleged professional negligence caused Plaintiffs’ damages.
“In a client’s action against an attorney for legal malpractice, the client must prove, among other things, that the attorney’s negligent acts or omissions caused the client to suffer some financial harm or loss. When the alleged malpractice occurred in the performance of transactional work (giving advice or preparing documents for a business transaction), must the client prove this causation element according to the ‘but for’ test, meaning that the harm or loss would not have occurred without the attorney’s malpractice? The answer is yes.” (Viner v. Sweet (2003) 30 Cal.4th 1232, 1235.) “In both litigation and transactional malpractice cases, the crucial causation inquiry is what would have happened if the defendant attorney had not been negligent. This is so because the very idea of causation necessarily involves comparing historical events to a hypothetical alternative.” (Id., at 1242, emphasis in original.) “In transactional malpractice cases, as in other cases, the plaintiff may use circumstantial evidence to satisfy his or her burden. An express concession by the other parties to the negotiation that they would have accepted other or additional terms is not necessary. And the plaintiff need not prove causation with absolute certainty. Rather, the plaintiff need only ‘‘introduce evidence which affords a reasonable basis for the conclusion that it is more likely than not that the conduct of the defendant was a cause in fact of the result.’’” (Id. at 1242-1243.) “[W]e conclude that, just as in litigation malpractice actions, a plaintiff in a transactional malpractice action must show that but for the alleged malpractice, it is more likely than not that the plaintiff would have obtained a more favorable result.” (Id. at p. 1244.)
“In California civil litigation, a preponderance of the evidence is the default burden of proof. (Evid. Code, § 115.) No published legal malpractice case using the term ‘legal certainty’ expressly states the default burden of proof is replaced by a standard higher than preponderance of the evidence.” (Masellis v. Law Office of Leslie F. Jensen (2020) 50 Cal.App.5th 1077; 264 Cal.Rptr.3d 621.) “Requiring proof that something is ‘more likely than not is a preponderance of the evidence standard.” (Id., 264 Cal.Rptr.3d at 632.)
Plaintiffs’ malpractice claim resembles a “transactional” one as it alleges a negligent failure to provide material information to the client prior to a complaint being filed, rather than allege that a specific decision during litigation was negligent. Plaintiffs state in sworn declarations (and allege in the FAC) that they had a specific agreement with Hoffman that a complaint would be filed only if BIC did not respond to the demand letter and a complaint would need to be filed for the purpose of “waking them up.” A response to the demand letter was received, but Hoffman either intentionally or negligently failed to advise Plaintiffs of its existence or provide it to them for an entire year. Because Plaintiffs did not know there was any response to the demand letter (or what it stated) they agreed to the filing of a complaint and paid Hoffman’s fees for a year. As the State Bar concluded, Hoffman was negligent in his role as an attorney (and fiduciary) by failing to provide his clients material information he possessed and knew they had requested in order to determine how to proceed. Not only is there a triable issue as to whether “but for” this failure to provide material information, Plaintiffs would have pursued the litigation with Hoffman at that time or though different counsel (on a contingency basis for example); there is also a triable issue as to whether “but for” Hoffman’s depletion of their finances for a year it was more likely than not that Plaintiffs, with other counsel, would have been able to obtain a better result than the settlement they received because they would have had the financial resources to continue litigating rather than being unable to continue financing the case.
Plaintiffs are not required to establish to a legal certainty that they would have gotten a better settlement in the prior action in order to defeat summary judgment, as the Supreme Court’s Viner decision and the recent Masellis decisions make clear. “An attorney’s liability, ‘as in other negligence cases, is for all damages directly and proximately caused by his negligence.’ It is only where the alleged malpractice consists of mishandling a client’s claim that the plaintiff must show proper prosecution of the matter would have resulted in a favorable judgment and collection thereof.” (DiPalma v. Seldman (1994) 17 Cal.App.4th 1499, 1507, internal citations omitted.)
The Court cannot weigh credibility on summary judgment. The credibility of Plaintiffs’ statements as to what they would have done if Hoffman had not failed to present them with the material information they had requested before the complaint in the prior action was filed is a matter for a jury to assess.
Finally, Hoffman has failed to establish that no triable issues remain as to whether he violated the standard of care applicable to an attorney.
In most cases, a plaintiff must prove the issues of the applicable standard of care and breach of the standard of care by expert testimony. (Lipscomb v. Krause (1978) 87 Cal.App.3d 970, 975-976 (Lipscomb); Unigard Ins. Group v. O’Flaherty & Belgum (1995) 38 Cal.App.4th 1229, 1239 (Unigard); Wilkinson v. Rives (1981) 116 Cal.App.3d 641, 647 (Wilkinson); Wright v. Williams (1975) 47 Cal.App.3d 802, 810; see Flatt v. Super. Ct. (1994) 9 Cal.4th 275, 297 [whether an attorney breached her duty of care by failing to render certain advice could be resolved on summary judgment only by expert evidence regarding the standard of care].)
The Court finds that this case is not one in which expert testimony is required. Therefore it is not necessary for the Court to consider Hoffman’s novel argument that, despite the State Bar’s findings, there is no evidence that any violation of his duty of care and caused damages because he, as an “expert” witness, opines as much in his supporting declaration.
Expert testimony is not required in rare cases where the failure of the attorney is so clear that reasonable minds could not differ, or the nature of the omission is such that a trier of fact would not require the assistance of an expert to understand why it did, or did not, violate the standard of care. (Unigard, supra, 38 Cal.App.4th 1at p. 1239; Allied Properties v. John A. Blume & Associates (1972) 25 Cal.App.3d 848, 858; see Wilkinson v. Rives, supra, at p. 648 [noting existence of exception to requirement of expert testimony, but finding it inapplicable].) Examples of the exceptional circumstances in which no expert testimony is needed to establish a violation of the standard of care include a total failure to conduct any research on a point of law (Stanley v. Richmond (1995) 35 Cal.App.4th 1070, 1093) or advising a client to commit an act that is a violation of the Penal Code (Goebel v. Lauderdale (1989) 214 Cal.App.3d 1502, 1509).
Here the nature of the alleged breach of the duty of care (Hoffman’s failure, for an entire year, to disclose the existence or contents of the response to the demand letter, material information that his clients’ expressly requested they be notified of before a complaint was filed) is both so clear a failure that “reasonable minds cannot differ” that it would constitute a breach of duty and also the type of failure “that a trier of fact would not require the assistance of an expert to understand why it did, or did not, violate the standard of care.” This is particularly the case as the FAC alleges (at ¶12) and Plaintiffs state in their declarations that they initially only wanted to send a demand letter, and that the decision of what further action to take would depend on whether a response was received, and that this was expressly stated to Hoffman. Even if it were assumed for purposes of argument that Hoffman had met his initial burden to show no breach of the applicable duty of care by submitting his own “expert” declaration, Plaintiffs’ declarations and the letter from the State Bar’s enforcement unit would be more than enough to demonstrate that triable issues remained.
The Court notes that Plaintiffs submitted an objection to Hoffman’s “expert” declaration with their opposition. This objection does not comply with Rule of Court 3.1354 and is not accompanied by a proposed order. As the Court has determined that this case is not one in which expert testimony is required it is not necessary for the Court to rule on this objection. “In granting or denying a motion for summary judgment or summary adjudication, the court need rule only on those objections to evidence that it deems material to its disposition of the motion. Objections to evidence that are not ruled on for purposes of the motion shall be preserved for appellate review.” (CCP §437c(q).)