Motion to Strike Portions of First Amended Complaint (Judge Michael E. Whitaker)

Case Number: 24SMCV00589    Hearing Date: October 6, 2025    Dept: 207

TENTATIVE RULING

DEPARTMENT 207
HEARING DATE October 6, 2025
CASE NUMBER 24SMCV00589
MOTION Motion to Strike Portions of First Amended Complaint
MOVING PARTY Defendant Klein Thomas Lee & Fresard
OPPOSING PARTIES Plaintiffs McMillan & Herrell; Shelly McMillan; and Matthew Herrell

MOTION

This case arises from a dispute among former business partners.

The Operative First Amended Complaint (“FAC”) brought by Plaintiffs McMillan & Herrell, Shelly McMillan, and Matthew Herrell (“Plaintiffs”) against Defendants Jeffrey A. Armour; Gary A. Dordick; Dordick Law Corporation; Douglas Shaffer; H. Franklin Hostetler; Kelin Thomas Lee & Fresard; Tyler D. Offenhauser; Bremer Whyte Brown & O’Meara, LLP; James F. Saunders; Bradley Gmelich & Wellerstein, LLP; Edward J. Morales; Borton Petrini, LLP; Scott L. Hengesbach; Murchison & Cumming, LLP; Nissan North America, Inc.; Automobile Club of Southern California; I-5 Towing and Recovery, LLC; Castaic Towing, Inc.; MV Towing, Inc.; HD Towing, Inc.; Rancho Cucamonga Towing, Inc.; California Towing, Inc.; Ahmad Mohammed Koudeimati; Kamal Ahmad Ghossein; Eric Finn, individually and as Successor in Interest to decedents Murdewiyanti Finn and Talent James Finn; and Asia Finn, individually and as Successor in Interest to decedent Murdewiyanti Finn, by and through her Guardian ad Litem, Eric Finn (“Defendants”) alleging eleven causes of action as follows:

(1)   Quantum meruit

(2)   Breach of fiduciary duty

(3)   Breach of partnership agreement

(4)   Breach of fiduciary duty

(5)   Imposition of constructive trust

(6)   Conversion

(7)   Intentional interference with prospective economic advantage

(8)   Negligent interference with prospective economic advantage

(9)   Aiding and abetting breach of fiduciary duty

(10)                   Accounting

(11)                   Violation of Penal Code, § 496

Defendant Klein Thomas Lee & Fresard (“KTLF”) now moves to strike punitive damages from the FAC.  Plaintiffs oppose the motion and KTLF replies.

UNTIMELY OPPOSITION

 Code of Civil Procedure section 1005, subdivision (b) provides, “All papers opposing a motion […] shall be filed with the court and a copy served on each party at least nine court days, and all reply papers at least five court days before the hearing.”  The court has discretion whether to consider late-filed papers.  (California Rules of Court, rule 3.1300(d).)

The hearing in this matter is set for October 6, 2025, and there was a court holiday on Friday, September 26, making Opposition papers due on September 22, and Reply papers due September 29, 2025.

Plaintiffs did not file the opposition until September 24.  KTLF filed a reply on September 25.

Because KTLF was still able to file a substantive reply well in advance of its September 29 filing deadline, the Court finds no prejudice here.  As such, the Court exercises its discretion and considers the late-filed opposition and objection to KTLF’s request for judicial notice.

REQUEST FOR JUDICIAL NOTICE

            KTLF requests judicial notice of the following:

Exhibit A: the State of California, County of Los Angeles Bar Association’s Fee Arbitration Findings and Award (Non-Binding) issued on November 29, 2024

Exhibit B: Nissan North America, Inc.’s substitution of attorney filed in Finn et al. v. Nissan North America, et al. bearing Los Angeles County Superior Court case number 21STCV20229, filed on September 15, 2022.

With respect to Exhibit B, judicial notice may be taken of records of any court in this state.  (Evid. Code, § 452, subd. (d)(1).)  Because Exhibit B is a court record in this state, the Court may take judicial notice of it.  (Ibid.)   However, “while courts are free to take judicial notice of the existence of each document in a court file, including the truth of results reached, they may not take judicial notice of the truth of hearsay statements in decisions and court files.  Courts may not take judicial notice of allegations in affidavits, declarations and probation reports in court records because such matters are reasonably subject to dispute and therefore require formal proof.”  (Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 882 [cleaned up].)

Accordingly, the Court takes judicial notice of the existence, filing, and legal consequences of Exhibit B as a court record, but not the truth of any allegations or hearsay statements contained therein.

With respect to Exhibit A, courts can properly take judicial notice of arbitration records, pursuant to Evidence Code section 452, subdivisions (d) and/or (h).  (See Greenspan v. LADT, LLC (2010) 191 Cal.App.4th 486, 525 [“The trial court properly took judicial notice of the arbitration award” pursuant to Evid. Code, § 452, subd. (d)]; Brown v. TGS Management Co, LLC (2020) 57 Cal.App.5th 303, 308, fn. 2 [taking judicial notice of arbitration transcripts pursuant to Evid. Code, § 452, subds. (d) & (h)].)

Notwithstanding, as Plaintiffs point out in their objection, KTLF is neither a party to that arbitration, nor any party’s counsel.  As such, there is a foundational problem with the document’s authenticity.  Therefore, the Court declines to take judicial notice of Exhibit A.

ANALYSIS

  1. MOTION TO STRIKE

Any party, within the time allowed to respond to a pleading, may serve and file a motion to strike the whole pleading or any part thereof.  (Code Civ. Proc., § 435, subd. (b)(1); Cal. Rules of Court, rule 3.1322, subd. (b).)  On a motion to strike, the court may: (1) strike out any irrelevant, false, or improper matter inserted in any pleading; or (2) strike out all or any part of any pleading not drawn or filed in conformity with the laws of California, a court rule, or an order of the court.  (Code Civ. Proc., § 436, subd. (a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782.)

In ruling on a motion to strike punitive damages, “judges read allegations of a pleading subject to a motion to strike as a whole, all parts in their context, and assume their truth.”  (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.)  To state a prima facie claim for punitive damages, a plaintiff must allege the elements set forth in the punitive damages statute, Civil Code section 3294.  (College Hosp., Inc. v. Superior Court (1994) 8 Cal.4th 704, 721.)  Per Civil Code section 3294, a plaintiff must allege that the defendant has been guilty of oppression, fraud, or malice.  (Civ. Code, § 3294, subd. (a).)   As set forth in the Civil Code,

(1) “Malice” means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.  (2) “Oppression” means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.  (3) “Fraud” means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.

(Civ. Code, § 3294, subd. (c)(1)-(3), emphasis added.)

Further, a plaintiff must assert facts with specificity to support a conclusion that a defendant acted with oppression, fraud or malice.  To wit, there is a heightened pleading requirement regarding a claim for punitive damages.  (See Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1041-1042.)  “When nondeliberate injury is charged, allegations that the defendant’s conduct was wrongful, willful, wanton, reckless or unlawful do not support a claim for exemplary damages; such allegations do not charge malice.  When a defendant must produce evidence in defense of an exemplary damage claim, fairness demands that he receive adequate notice of the kind of conduct charged against him.” (G. D. Searle & Co. v. Superior Court (1975) 49 Cal.App.3d 22, 29 [cleaned up].)  In Anschutz Entertainment Group, Inc. v. Snepp, the Court of Appeal noted that the plaintiffs’ assertions related to their claim for punitive damages were “insufficient to meet the specific pleading requirement.”  (Anschutz Entertainment Group, Inc. v. Snepp (2009) 171 Cal.App.4th 598, 643 [plaintiffs alleged “the conduct of Defendants was intentional, and done willfully, maliciously, with ill will towards Plaintiffs, and with conscious disregard for Plaintiff’s rights. Plaintiff’s injuries were exacerbated by the malicious conduct of Defendants. Defendants’ conduct justifies an award of exemplary and punitive damages”]; see also Grieves v. Superior Court (1984) 157 Cal.App.3d 159, 166 [“The mere allegation an intentional tort was committed is not sufficient to warrant an award of punitive damages.  Not only must there be circumstances of oppression, fraud, or malice, but facts must be alleged in the pleading to support such a claim”].)

Moreover, “the imposition of punitive damages upon a corporation is based upon its own fault.  It is not imposed vicariously by virtue of the fault of others.”  (City Products Corp. v. Globe Indemnity Co. (1979) 88 Cal.App.3d 31, 36.)  “Corporations are legal entities which do not have minds capable of recklessness, wickedness, or intent to injure or deceive.  An award of punitive damages against a corporation therefore must rest on the malice of the corporation’s employees.  But the law does not impute every employee’s malice to the corporation.  Instead, the punitive damages statute requires proof of malice among corporate leaders:  the officers, directors, or managing agents.”  (Cruz v. Home Base (2000) 83 Cal.App.4th 160, 167 [cleaned up].)

Plaintiffs seek punitive damages in connection with the seventh cause of action for intentional interference with prospective economic advantage.  The FAC alleges:

  1. Defendant H. Franklin Hostetler (“Hostetler”) is, and at all relevant times mentioned herein was, an attorney licensed by the State Bar of California. He practices law and was a member of the defendant law firm, Klein Thomas Lee & Fresard. Hostetler and his law firm acted as counsel for defendant Nissan North America, Inc. in the Finn case and had notice of plaintiffs’ lien.

[…]

  1. Defendant Klein Thomas Lee & Fresard (“Klein”) is, and at all relevant times mentioned herein was, an Arizona Corporation engaged in providing legal services to the public. It has a branch office in California and acted as defense counsel for defendant Nissan North America Inc. in the Finn case. Defendant Klein employed defendant Hostetler and had notice of plaintiffs’ lien.

[…]

  1. On or about January 3, 2021, Eric Finn retained M&H to represent Finn and his minor daughter, Asia Finn, in their wrongful death and survival claim arising from a traffic collision on October 18, 2020. On the day of the collision, Finn, who was driving, and his family members were proceeding northbound in lane 5 on State Route 14 Freeway in Santa Clarita, California.
  2. Finn’s vehicle, a 2015 Nissan Sentra stalled, became disabled and was rear-ended by a speeding tow truck. Finn’s wife, Murdewiyanti Finn, and his 17-year old son, Talent James Finn, were both killed in the horrific collision; Asia Finn, then 12 years old, and her father miraculously survived it.
  3. Seeking compensation for the wrongful death of his wife and son, Finn initially hired attorney Narbeh Shirvanian of The Shirvanian Law Firm to represent him. However, Finn became dissatisfied with Shirvanian when, without filing a lawsuit against any of the potential defendants, Shirvanian advised Finn to settle all his claims for $750,000, an amount Finn considered woefully inadequate, given the enormity of his loss. The settlement offered to Shirvanian for Finn was from the owners of the particular tow truck that killed Finn’s kin.
  4. On January 3, 2021, Finn retained the services of Plaintiffs, M&H. Soon after taking on the case and learning the details of the accident, particularly the out-of-the-blue and seemingly inexplicable stalling of Finn’s vehicle, attorney McMillan diligently began extensively researching possible prior similar accidents and claims against Nissan North America, the manufacturer of the Sentra model.
  5. McMillan’s research involved combing through records of vehicle recalls, National Transportation and Safety Administration reports and records, insurance claims and verdicts, as well as poring over records of the Department of Transportation, a regimen of extensive research calculated and designed to maximize the potential outcome of Finn’s claims.
  6. McMillan’s extensive digging unearthed that Nissan had developed, designed, manufactured, distributed, marketed, advertised and sold Finn’s dangerously defective 2015 Nissan Sentra without disclosing that the vehicle’s Continuously Variable Transmission (“CVT”) was defective; and that the Department of Transportation’s NHTSA received and informed Nissan of thousands of complaints related to the defectiveness of its CVT.
  7. In addition to the product liability research and discovery, McMillan combed through the records of state corporate filings, county DBA records and found that the particular tow truck which killed Finn’s wife and son, was part of a fleet of trucks owned and run by defendants Koudemati and Ghossein, and that their towing business operations were more expansive than earlier disclosed to Shirvanian. Their operations had liability insurance coverage, including umbrella coverage, far in excess of the one policy that covered the truck which rear-ended Finn’s car and the financial means to pay for greater damages.
  8. Based on these findings, M&H informed and assured Finn his wrongful death claim was potentially worth more than the settlement Shirvanian had urged him to accept, and that M&H would vigorously prosecute the claim to ensure he obtained compensation that would be financially more meaningful and reflective of his enormous and grievous losses.
  9. In keeping with the assurances M&H made to Finn, McMillan engaged in a wide ranging and extensive research for an expert on the issues implicated in the product defect aspect of the case. She found and retained expert witness William Mark McVea, Ph.D., P.E., of KBE, Inc., in Fair Haven, New York.
  10. The choice of Dr. McVea was a tactically critical decision because McVea had been a retained expert in similar stalled Nissan vehicle cases, and had provided expert testimony that appeared to have made a big difference in the successful outcome of the lawsuits. Dr. McVea would serve as the primary expert witness throughout the litigation of Finn’s case against Nissan.
  11. Having researched and developed the theory of the case, the architecture and structure of the litigation strategy against Nissan, and having expanded the scope of deep pocketed defendants, M&H filed its complaint against Nissan and five tow truck companies, including the defendant Automobile Club of Southern California (AAA), which had licensed the operation of, and contracted for services with, the various tow truck entities. M&H continued to work diligently on the matter, and on or about January 5, 2022, filed a first amended complaint.
  12. Plaintiffs are informed and believe and thereon allege that during Armour’s plot to interfere with M&H’s contract with Finn, Armour spoke with defendant Dordick about the details of the case, its facts, the work M&H had been doing on it, its potential value and other intellectual property and the business methods details M&H had developed to maximize the successful outcome of the case.
  13. Plaintiffs are further informed and believe, and thereon allege that defendant Dordick and DLC encouraged Armour to execute the plan to transfer the case to defendant DLC where they would work on the case from where plaintiffs had developed it.
  14. To facilitate this plan, Armour stole a laptop computer owned by M&H which he and others working on the case had been assigned to use and downloaded M&H‘s files in the Finn case along with other proprietary form files, without the consent, knowledge and or permission of M&H.
  15. On or about February 8, 2022, Finn forwarded a letter to M&H via email, terminating the contract of representation by M&H as his attorneys. In the emailed letter, Finn instructed M&H to cease work on his case. It is noteworthy that prior to Finn’s email dated February 8, 2022, Finn had never expressed dissatisfaction to M&H of the work, handling or management of his case.
  16. Plaintiffs are informed and believe, and thereon allege, that the letter terminating the contract for legal services was written, word-for-word, by defendant Armour for transmission to Plaintiffs.
  17. Immediately following the letter informing M&H of the termination of the legal services contract, M&H received a Substitution of Attorney form which had been signed by Finn and Dordick on February 7, 2022, substituting defendants Dordick and DLC as his new attorneys in the case. M&H signed the substitution and provided Finn’s entire case file to defendants Dordick and DLC, who had requested it.
  18. On or about February 10, 2022, and February 17, 2022, Plaintiffs served and filed a Notice of Lien to secure payment for legal services rendered in Finn’s wrongful death case, a true and correct copy of which is attached hereto, marked as “Exhibit A” and made a part hereof. The Notice of Lien is in the public record, docketed on the Court’s Case Summary docket, dated February 17, 2022. Plaintiffs’ lien expressly demanded that M&H be named as a payee on any check or draft issued in partial or full settlement in the case.
  19. In 2023, Finn reached settlement agreements, first with the tow truck defendants, and shortly thereafter with defendant Nissan, of his wrongful death and survivors’ case. M&H was not served with a notice of settlement either by defendants Dordick and DLC, or any counsel representing defendants in the Finn case. M&H is informed that on November 30, 2023, by and through the parties’ stipulation, the court ordered sealed the Nissan settlement amount. Plaintiffs allege the parties’ stipulation to seal the settlement amount was calculated to keep Plaintiffs in the dark of the fact and the amount of the settlement.
  20. After serving notice of their lien a second time in 2024, an attorney from defendant DLC finally contacted plaintiff Matthew Herrell and informed him of the settlement the prior year and an alleged settlement amount. Despite repeated correspondence with counsel for Nissan, Nissan and its attorneys failed and refused to inform Plaintiffs of the amount of the settlement proceeds or to provide any information regarding the disposition and or disbursement to DLC, Armour, or Dordick, of the settlement funds.
  21. Plaintiffs are further informed and believe, and thereon allege, that the settlement payments have been made to defendant Dordick Law Corporation by the Finn case settling Defendants and their attorneys without protecting or honoring the known lien of M&H. To date, M&H has received no legal fees for services rendered in the case from the settlements.
  22. On January 3, 2021, when Finn retained Plaintiffs, he executed a written retainer agreement with M&H (“the Retainer Agreement”), a true and correct copy of which is attached hereto marked as “Exhibit B.” and made a part hereof. Among other provisions, the Retainer Agreement provided the following terms:

“Attorney agrees to represent Client on a contingency basis in accordance with the following schedule:

  1. Thirty-five percent (35%) of the gross recovery in the matter if the matter is settled without filing a lawsuit or demand for arbitration;
  2. Forty percent (40%) of the gross recovery if a lawsuit or demand for arbitration is filed, including trial of the matter;
  3. If no recovery is obtained, no fee shall be payable to Attorney.”
  4. Plaintiffs fully complied with their obligations to represent Finn and his daughter in the Finn case. While M&H has received reimbursement of its costs in the amount of $44,425.58, M&H has not received any attorney’s fees for the services it rendered to Finn and his daughter on the case.
  5. On or about January 26, 2023, M&H mailed and emailed a Notice of Client’s Right to Fee Arbitration to Finn and Asia. Plaintiffs have received no response to the Notice.
  6. From on or about January 3, 2021 to February 8, 2022, Armour and Plaintiffs were not in an independent co-counsel relationship. They were in a partnership agreement whereby Armour was working on the Finn case SOLELY in his capacity as a general partner of the M&H-Armour partnership to work the Finn case. The object and purpose of the M&H-Armour partnership was legal representation of the Finns in the catastrophic vehicle accident that killed their kin. During this period Plaintiffs were the only attorneys retained by the Finns to represent them in the accident case. Armour was not retained by the Finns during this period and his legal services were rendered in the name of, and on behalf of his partnership with M&H.
  7. Pursuant to the M&H-Armour partnership agreement, M&H was to required to pay all the costs incurred in the case, including court costs, investigation fees, expert witness fees, and other related litigation expenses. At formation, the partners including Armour agreed that upon recovery in the lawsuit all such costs would be refunded to M&H and all profits received would be shared equally between M&H and Armour.
  8. Pursuant to the partnership agreement, Armour participated in client communications, legal research, drafting of pleadings, and management of the case and all aspects of the case with attorneys from M&H. The partners appeared jointly in correspondence, pleadings and court filings under the name of M&H, and held themselves out as representing Finn solely through the M&H law firm.
  9. Plaintiffs and Armour entered into an oral partnership agreement for the express purpose of jointly representing the Finns in the vehicle accident case. The partnership included an agreement to share profits, jointly manage and control the litigation to represent the Finns as a unified team, and to maintain the partnership until the Finn case resolve either by settlement or trial.

  1. Without notice to or consent from the Plaintiffs, Armour secretly formed a new partnership with outside attorneys (Dordick and DLC), while still a fiduciary of the partnership with M&H. Armour then induced the clients to terminate the services of M&H. The clients exercised their right to terminate M&H’s services. IMMEDIATELY thereafter, Armour continued to work on the same case with his new partner, Dordick and DLC. All the work that Armour and his new partners continued to handle for the Finns was the “unfinished business” of Armour’s original partnership with M&H.

  1. Under California’s “unfinished business” doctrine, a withdrawing partner may not appropriate for personal benefit the profits of ongoing partnership matters commenced before withdrawal. Armour violated and breached this doctrine and duty. Consequently, all proceeds or funds derived from Armour’s work on the Finn case subsequent to his withdrawal from the partnership with the plaintiffs belong to that partnership and must be held in trust for the benefit of the partnership between M&H and Armour.

  1. The wrongful conduct of Armour includes the following:

  1. a) forming a competing partnership with Dordick and DLC during the existence of the partnership with M&H;

  1. b) breach of the express and implied agreement to jointly continue the representation of the Finn clients;

  1. c) continuing to work on the same legal matter to the exclusion of the Plaintiffs; and

  1. d) failing and refusing to share the profits obtained and derived from the partnership business – finished and unfinished. As a consequence of the tort Defendants’ wrongful actions herein alleged, M&H has been deprived of the prompt payment of its attorney’s fees, lost the use of said funds and, further, M&H had to obtain the services of counsel to recover the attorney’s fees owed to them, all of which has resulted in damages to M&H for which the tort Defendants are liable.

[…]

  1. There were economic relationships between Plaintiffs and their former clients, Eric Finn and Asia Finn, and these relationships had produced and were likely to produce future economic benefits to Plaintiffs.

  1. The Defendants knew of these economic relationships.

  1. The Defendants engaged in wrongful conduct as set forth above, by, among other things, with full knowledge of Plaintiffs’ lien for attorney’s fees for their work in the Finn case, concealing from Plaintiffs and refusing to disclose to Plaintiffs the fact of and amount of the Finn case settlement when the case settled in 2023, failing to honor Plaintiffs’ filed and known lien, distributing the settlement proceeds in the Finn case to DLC and Armour without honoring M&H’s known lien, and failing to hold in trust the settlement proceeds due to Plaintiffs, and other acts, that were designed to disrupt Plaintiffs’ economic relationships.

  1. Plaintiffs allege that one of the wrongful acts which constitutes the interference with Plaintiffs’ prospective economic advantage is the payment of settlement funds by the Tow truck company defendants, their principals Koudeimati and Ghossein, Nissan and AAA to DLC and the Finns, in complete and malicious disregard of a known lien held by Plaintiffs on said settlement funds.

  1. Plaintiffs further allege that the payment of the settlement funds, by these defendants, to DLC and the Finns, with knowledge of Plaintiffs’ attorneys fee lien, sufficiently shows a deliberate and intentional interference with Plaintiffs’ prospective economic advantage.

  1. By engaging in the above-mentioned conduct, these defendants intended to withhold Plaintiffs’ earned attorney’s fees and thereby disrupt the relationship between Plaintiffs and their former clients or knew that disruption of the relationship was certain to occur.

  1. Plaintiffs’ business relationships were disrupted, Plaintiffs were harmed by the disruptions, Plaintiff suffered injury and damages as a result of these defendants’ actions, and these defendants’ wrongful conduct, as alleged above, was a substantial factor in causing Plaintiffs’ harm.

  1. The wrongful conduct of these defendants set forth above was perpetrated upon Plaintiffs intentionally, willfully, fraudulently, in conscious disregard of Plaintiffs’ rights and safety and with a callous indifference to the injurious consequences which were substantially certain to occur and was shameful, despicable and deplorable. The wrongful conduct of these defendants set forth above was perpetrated upon Plaintiffs maliciously, with the intention by these defendants to cause injury to Plaintiffs and was despicable conduct carried on by these defendants with a willful and conscious disregard of the rights, interests or safety of Plaintiffs. The wrongful conduct of these defendants set forth above was also oppressive in that it was despicable conduct that subjected Plaintiffs to unjust hardship in conscious disregard to Plaintiffs’ rights. Such despicable conduct was base, vile and contemptible. Plaintiffs are further informed and believe that each business or corporate employer, through its officers, directors and managing agents, and each individual defendant, had advance knowledge of the wrongful conduct, and after becoming aware of their wrongful conduct, each corporate defendant by and through its officers, directors and managing agents, and each individual defendant authorized and ratified the wrongful conduct herein alleged. Therefore, Plaintiffs seek exemplary and punitive damages against these defendants in an amount according to proof.

(FAC ¶¶ 20, 22, 46-76, 119-126.)

            Thus, while the FAC contains various allegations of wrongdoing, particularly on the part of Armour, it does not allege that KTLF, the law firm representing Nissan in the underlying case, committed any wrongdoing by failing to disclose the Finn settlement to the opposing party’s former counsel, or that Nissan’s litigation counsel somehow acted “with a  callous indifference to the injurious consequences which were substantially certain to occur” as all of KTLF’s work in connection with the litigation would necessarily have occurred after the collision occurred.

            In opposition, Plaintiffs clarify that KTLF was notified of their lien, but failed to honor it in connection with the settlement.  But the FAC primarily alleges that Dordick and DLC had written notice of the lien and a fiduciary obligation to disclose it to M&H, yet failed to do so or comply with the rules for disbursement of the settlement funds:

  1. Defendants Gary Dordick and DLC engaged in wilful, deliberate and knowing violations of the State Bar of California’s Rules of Conduct, ethical obligations and fiduciary duties. Dordick and DLC received settlement proceeds of $12,000,000 in the Finn case. Prior to disbursement, all the Defendants had received written notice of Plaintiffs’ lien for legal services rendered. Despite this notice, Dordick and DLC failed and refused to comply with California Rules of Professional Conduct, Rule 1.15, which required them to notify Plaintiffs of the receipt of funds in which Plaintiffs had a known interest and to provide a full accounting. Instead of complying with California’s mandatory rules, these Defendants concealed from Plaintiffs their receipt of the funds.

  1. Upon information and belief, it is herein alleged that they disbursed portions of the settlement proceeds to Armour and others without the consent of the Plaintiffs. When Plaintiffs discovered the concealment and requested information about the disbursements and an accounting of the funds, Dordick, DLC and Armour refused to provide either. This refusal has continued to the present day, constituting an ONGOING and flagrant violation of their statutory and ethical duties.

  1. As licensed attorneys in the State of California, Dordick and Armour are required to be familiar with, and periodically certify their knowledge of ethical responsibilities in connection with the handling of client funds, including disputed funds received by attorneys. Based on these continuing certifications, it is obvious that the failure by Dordick, DLC and Armour to provide timely notice to Plaintiffs of the receipt of the settlement funds, the wrongful disbursement, and the continuing refusal to provide an accounting constitutes DELIBERATE violations and refusal to comply with the State Bar’s Rules of Professional Conduct.

  1. All the other Defendants, except Eric Finn and Asia Finn, are liable to Plaintiffs based on their prior knowledge of Plaintiffs’ lien and subsequent failure to honor and protect Plaintiffs’ interest. The issuing of the settlement checks to Dordick, DLC and Armour without including the names of Plaintiffs and without notifying Plaintiffs, constitutes an interference with the prospective economic advantage of Plaintiffs.

  1. Following the settlement and after having received attorney’s fees believed to be in excess of $5,000,000, Armour, Dordick and DLC ignored, breached and violated professional rules by concealing and failing to disclose the fact and amount of the settlement when the case settled in 2023 and the attorney’s fees were paid to them. More importantly, defendants who were professionally and legally obligated to honor M&H’s lien for attorney’s fees failed to do so, and disbursed the settlement funds to the Finns, Armour, Dordick and DLC in disregard of plaintiffs’ known lien.

  1. DLC and Dordick breached their fiduciary duty owed as a successor attorney to Plaintiffs, the predecessor attorneys, who had served DLC and Dordick with Notice of Plaintiffs’ lien for attorney’s fees. (Johnstone v. State Bar (1966) 64 Cal.2d. 153, 155- 56).

  1. After Armour, Dordick and DLC took the case that Plaintiffs had developed, they converted the monetary proceeds of the sweat and efforts of Plaintiffs’ professional work and resources on the case for their own benefit.

  1. Dordick and DLC breached their fiduciary duty to inform prior counsel, M&H, of the fact and the amount of the settlement when it was reached in 2023. In re Riley (3 Cal. State Bar Ct.Rptr. 91, 111-15 (Rev. Dep’t 1994); Cal. Form. Opn.)

  1. Dordick and DLC received money on behalf of Plaintiffs’ law firm, a third party who they knew held an attorney’s fee lien. Dordick and DLC owed Plaintiffs a fiduciary duty to hold the funds, subject to the lien, in trust and their conversion of such funds is a breach of the trust. (Johnstone v. State Bar (1966) 64 Cal.2d. 153, 155-56).

(FAC ¶¶ 3-12.)

            With respect to KTLF’s notice of and obligations under the lien, the FAC merely alleges:

  1. The settling defendants – those liable under the wrongful death claim – and their respective counsel are sued here for their failure to protect and honor Plaintiffs’ lien for attorney’s fees after receiving notice of plaintiffs’ fee lien. Notwithstanding having timely notice of Plaintiffs’ fee lien, the settling defendants intentionally released the settlement funds to Dordick, Armour and DLC in disregard of the known lien. The settling defendants and their attorneys are liable to Plaintiffs for interference with prospective economic advantage because, after receiving notice of M&H’s fee lien and costs filed in the case, they paid Finn and his new attorneys, Dordick, DLC and Armour, the full settlement proceeds despite their knowledge of the fee lien. (Robert S. Levin v. Gulf Insurance Group, et al., (1999) 69 Cal.App.4th 1282, 1287-1288).

(FAC ¶ 12.)

The Court finds these allegations woefully insufficient to state a claim for punitive damages against KTLF.  There are no specific allegations concerning who at KTLF received written notice of the lien, when they received it, how they received it, etc., much less that whoever received and disregarded such notice was one of KTLF’s corporate leaders, as is required to impose punitive damages on an entity.

  1. LEAVE TO AMEND

 

A plaintiff has the burden of showing in what manner the complaint could be amended and how the amendment would change the legal effect of the complaint, i.e., state a cause of action. (See The Inland Oversight Committee v. City of San Bernardino (2018) 27 Cal.App.5th 771, 779; PGA West Residential Assn., Inc. v. Hulven Int’l, Inc. (2017) 14 Cal.App.5th 156, 189.) A plaintiff must not only state the legal basis for the amendment, but also the factual allegations sufficient to state a cause of action or claim. (See PGA West Residential Assn., Inc. v. Hulven Int’l, Inc., supra, 14 Cal.App.5th at p. 189.) Moreover, a plaintiff does not meet his or her burden by merely stating in the opposition to a demurrer or motion to strike that “if the Court finds the operative complaint deficient, plaintiff respectfully requests leave to amend.” (See Major Clients Agency v Diemer (1998) 67 Cal.App.4th 1116, 1133; Graham v. Bank of America (2014) 226 Cal.App.4th 594, 618 [asserting an abstract right to amend does not satisfy the burden].)

Here, Plaintiffs have failed to meet this burden as they do not address whether leave should be granted if the motion to strike is granted.

CONCLUSION AND ORDER

For the reasons stated, the Court sustains KTLF’s motion to strike Plaintiffs’ request for punitive damages as to KTLF without leave to amend, but without prejudice to Plaintiffs later moving for leave to amend, should discovery uncover evidence supporting a claim for punitive damages in the future.

Further, the Court orders KTLF to file and serve an Answer to the FAC on or before October 27, 2025.

KTLF shall provide notice of the Court’s ruling and file the notice with a proof of service forthwith.

DATED:  October 6, 2025                                                     __/s/_________________________

                                                                                          Michael E. Whitaker

                                                                                          Judge of the Superior Court