Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of San Diego County No. 37-2008-00093751- CU-PN-CTL, Joan M. Lewis, Judge.
McINTYRE, J.
James J. Filicia appeals from a judgment dismissing DLA Piper US, LLP (DLA Piper) and John H. Heuberger (collectively with DLA Piper, the DLA Attorneys) from this action after the trial court sustained a demurrer to his first amended complaint (FAC) without leave to amend. In the FAC, Filicia alleges causes of action for professional malpractice, breach of fiduciary duty, and fraud, all stemming from Filicia's claim that the DLA Attorneys concealed from him that he would be individually responsible for attorney fees. Filicia contends the trial court erred in sustaining the demurrer on multiple grounds, and the demurrer should have been disregarded because it was not timely filed in the trial court. The DLA Attorneys filed a motion to dismiss this appeal contending that Filicia did not designate an adequate and complete record. We deny the motion to dismiss and affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
Because the challenged ruling arises in the context of a demurrer, we accept as true the material factual allegations of the FAC. (Olszewski v. Scripps Health (2003) 30 Cal.4th 798, 806.) We also accept as true all matters properly subject to judicial notice (Blank v. Kirwan (1985) 39 Cal.3d 311, 318), but do not accept "contentions, deductions, or conclusions of fact or law." (Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125.) The following factual recitation is taken from the allegations of the FAC:
In February 2007, DLA Piper filed an action seeking reimbursement for attorney fees incurred in representing Filicia and Richard J. McGorrian, another defendant in this action and Filicia's business partner. Judgment was entered against Filicia and McGorrian in May 2008. In concluding that DLA Piper was entitled to recover its fees, the court found that, although Filicia and McGorrian did not sign engagement letters, they individually requested that Heuberger, an attorney with DLA Piper, provide legal services for a business transaction.
Filicia contends that, after the judgment was entered in the collection action, he learned that McGorrian and Heuberger had a plan to conceal from him his potential exposure to DLA Piper's fees. In July 2008, Filicia received a letter from McGorrian to the trial judge in the collection action. In that letter, McGorrian stated that he wanted to convey additional information that did not come out at trial. McGorrian informed the judge that after he told Heuberger that he did not personally have the ability to pay attorney fees and Filicia did not want personal liability, Heuberger told him to tell Filicia that DLA Piper was only representing their company, not Filicia and McGorrian individually. In July 2008, McGorrian also signed a declaration in support of a motion for a new trial in which he stated that Heuberger told him that DLA Piper would only attempt to collect from his partners and that he should make his partners believe that only their company retained DLA Piper.
In October 2008, Filicia filed an action against the DLA Attorneys and McGorrian, wherein he asserted causes of action for professional malpractice and breach of fiduciary duty, and sought to recover the attorney fees that he paid as a result of the judgment in the collection action. After a demurrer was sustained with leave to amend, Filicia filed his FAC on March 20, 2009. In addition to the causes of action asserted in his original complaint, Filicia's FAC included a cause of action for fraud. On April 28, 2009, the DLA Attorneys again responded with a demurrer. After hearing argument, the trial court sustained the demurrer to the FAC without leave to amend.
DISCUSSION
I. Motion to Dismiss Appeal
The DLA Attorneys move to dismiss Filicia's appeal on the grounds that Filicia failed to comply with California Rules of Court, rules 8.124(d) and 8.144(a)-(c), by failing to use the proper appendix format, and rule 8.124(b)(1), by failing to include certain documents in his appendix.
The DLA Attorneys correctly point out that Filicia failed to strictly comply with California Rules of Court, rules 8.124 and 8.144. Although parties who proceed in propria persona, like Filicia, are not exempt from these rules (see Nwosu v. Uba (2004) 122 Cal.App.4th 1229, 1246-1247), and Filicia himself is a licensed attorney, we nonetheless deny the DLA Attorneys' request to dismiss the appeal. Here, the relevant facts are those specified in the FAC, which is included in the record before us, and Filicia's challenges to the trial court's ruling are readily discernable from his brief; in fact, the matter has been fully briefed on appeal by both sides. Under these circumstances, we exercise our discretion to consider the merits of the appeal. (Cal. Rules of Court, rule 8.204(e)(2)(C); see also Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 237.)
II. Demurrer
A. Standard of Review
We review an order sustaining a demurrer without leave to amend de novo (Blank v. Kirwan (1985) 39 Cal.3d 311, 318), assuming the truth of all properly pleaded facts as well as facts inferred from the pleadings, and give the complaint a reasonable interpretation by reading it as a whole and its parts in context. (Palacin v. Allstate Ins. Co. (2004) 119 Cal.App.4th 855, 861.) However, we give no credit to allegations that merely set forth contentions or legal conclusions. (Financial Corp. of America v. Wilburn (1987) 189 Cal.App.3d 764, 768-769.) A complaint will be construed "liberally... with a view to substantial justice between the parties." (Code Civ. Proc., § 452.) If the complaint states a cause of action on any possible legal theory, we must reverse the trial court's order sustaining the demurrer. (Palestini v. General Dynamics Corp. (2002) 99 Cal.App.4th 80, 86.) Whether a plaintiff will be able to prove its allegations is not relevant. (Alcorn v. Anbro Engineering, Inc. (1970) 2 Cal.3d 493, 496.)
B. Analysis
Filicia challenges the trial court's ruling on the demurrer to his FAC on multiple grounds: (1) the trial court should have disregarded the demurrer because it was not timely filed; (2) the trial court improperly found that the FAC constitutes a collateral attack on the judgment in DLA Piper's prior collection action; (3) the trial court erred in finding that the FAC is barred by the doctrine of collateral estoppel; (4) the trial court erred in finding that Filicia's claims should have been asserted by way of a compulsory cross-complaint in DLA Piper's collection action; and (5) the trial court erred in finding that the FAC is barred by the statute of limitations. We discuss these issues in turn below:
1. Timeliness of Demurrer
Filicia contends that the trial court should have disregarded the DLA Attorneys' demurrer because it was filed after the deadlines set forth in California Rules of Court, rule 3.1320(j)(2) (requiring defendant to respond within 10 days to an amended complaint filed after a demurrer is sustained with leave to amend) and Code of Civil Procedure, section 430.40 (requiring a response to a complaint within 30 days of service of the complaint). The DLA Attorneys do not dispute that the demurrer was filed more than 30 days after service of the FAC, but claim that the trial court was within its discretion to rule on the demurrer.
The trial court has discretion to consider untimely demurrers and may enlarge the time for filing a demurrer "so long as its action does 'not affect the substantial rights of the parties.'" (McAllister v. County of Monterey (2007) 147 Cal.App.4th 253, 281-282.) In fact, courts generally have discretion to consider late-filed pleadings. (See, e.g., Gitmed v. General Motors Corp. (1994) 26 Cal.App.4th 824, 828 [a court has discretion to strike an amended complaint that is not timely filed after a demurrer is sustained with leave to amend]; Iverson v. Superior Court (1985) 167 Cal.App.3d 544, 549 [holding court had discretion to consider tardy opposition filings]; Avila v. Chua (1997) 57 Cal.App.4th 860, 865-869 [court had discretion to grant relief from summary judgment when opposition not timely filed due to mistake of counsel].)
Here, we conclude that the trial court's decision to entertain the demurrer to the FAC did not affect Filicia's substantial rights. There is no evidence in the record indicating that Filicia attempted to have judgment entered by default prior to the filing of the demurrer or that he was prejudiced in any way by the delay. Accordingly, the trial court acted within its discretion in considering the DLA Attorneys' demurrer to the FAC.
2. Collateral Attack on Prior Judgment
Although a court has equitable jurisdiction to set aside a judgment based on extrinsic fraud (Olivera v. Grace (1942) 19 Cal.2d 570, 575), one who challenges a judgment on that basis must show that by virtue of the fraud he was "'... deliberately kept in ignorance of the action or proceeding, or in some other way fraudulently prevented from presenting his claim or defense.' [Citation.]" (Parage v. Couedel (1997) 60 Cal.App.4th 1037, 1044.) "'Fraud is intrinsic and not a valid ground for setting aside a judgment when the party has been given notice of the action and has had an opportunity to present his case and to protect himself from any mistake or fraud of his adversary, but has unreasonably neglected to do so. [Citation.]... Where the defrauded party failed to take advantage of liberal discovery policies to fully investigate his or her claim, any fraud is intrinsic fraud.' [Citation.]" (In re Marriage of Varner (1997) 55 Cal.App.4th 128, 140.) Except in limited circumstances not present here, a party's introduction of perjured testimony or false documents or its concealment of material evidence constitutes intrinsic rather than extrinsic fraud and thus will not support a collateral attack on the resulting judgment or order. (E.g., Parsons v. Tickner (1995) 31 Cal.App.4th 1513, 1532; Kachig v. Boothe (1971) 22 Cal.App.3d 626, 634; Jorgensen v. Jorgensen (1948) 32 Cal.2d 13, 19-20.)
Here, although Filicia styled his FAC as one for malpractice, breach of fiduciary duty and fraud, the FAC is, in reality, an attempt to recover the attorney fees that Filicia paid as a result of the judgment in DLA Piper's collection action. Filicia's claims are based on the contention that the DLA Attorneys and McGorrian concealed information regarding his responsibility for attorney fees, not that any fraud by the DLA Attorneys precluded him from participating in the trial. Filicia's allegations are a classic example of "intrinsic" fraud, especially as he had an opportunity to investigate DLA Piper's claim that he was individually responsible for its fees and discover the alleged misconduct. (See Kachig v. Boothe, supra, 22 Cal.App.3d at pp. 633-634.) In accordance with the principles discussed above, intrinsic fraud does not provide a basis to challenge the underlying judgment. (In re Marriage of Varner, supra, 55 Cal.App.4th at p. 140.) Accordingly, the trial court did not err in sustaining the demurrer on the basis that Filicia's current action constitutes a collateral attack on a prior judgment.
3. Collateral Estoppel
A court may sustain a general demurrer based on res judicata when the facts showing the doctrine applies are within the allegations of the complaint or matters subject to judicial notice. (Frommhagen v. Board of Supervisors (1987) 197 Cal.App.3d 1292, 1299.) Under the doctrine of res judicata, a valid final judgment on the merits in a defendant's favor bars further litigation on the same cause of action. (Takahashi v. Board of Education (1988) 202 Cal.App.3d 1464, 1473.) Collateral estoppel, a secondary aspect of res judicata, bars a party from litigating an issue that was litigated and determined in a prior proceeding. (Id. at pp. 1473-1474.) The bar against further litigation on the same cause of action is referred to as "claim preclusion" and the collateral estoppel aspect of res judicata is referred to as "issue preclusion." (Mata v. City of Los Angeles (1993) 20 Cal.App.4th 141, 149, fn. 7.)
"The doctrine of collateral estoppel precludes relitigation of an issue previously adjudicated if: (1) the issue necessarily decided in the previous suit is identical to the issue sought to be relitigated; (2) there was a final judgment on the merits of the previous suit; and (3) the party against whom the plea is asserted was a party, or in privity with a party, to the previous suit." (Producers Dairy Delivery Co. v. Sentry Ins. Co. (1986) 41 Cal.3d 903, 910.) "'If the matter was within the scope of the action, related to the subject-matter and relevant to the issues, so that it could have been raised, the judgment is conclusive on it despite the fact that it was not in fact expressly pleaded or otherwise urged.'" (Warga v. Cooper (1996) 44 Cal.App.4th 371, 377-378.)
Here, even though Filicia's particular causes of action were not litigated in the collection action, the premise of each cause of action (Filicia's knowledge regarding his individual liability for attorney fees) was litigated and decided. Specifically, as Filicia points out in his FAC, the court in the collection action determined that Filicia was individually responsible for the attorney fees because he independently requested legal services from Heuberger; thus, the court entered judgment against Filicia. Any cause of action which is based on Filicia's contention that he did not know that he was individually responsible for attorney fees is barred by the doctrine of collateral estoppel because the issue was litigated and determined in the collection action.
4. Compulsory Cross-Complaint
Code of Civil Procedure section 426.30, subdivision (a), provides:
"Except as otherwise provided by statute, if a party against whom a complaint has been filed and served fails to allege in a cross-complaint any related cause of action which (at the time of serving his answer to the complaint) he has against the plaintiff, such party may not thereafter in any other action assert against the plaintiff the related cause of action not pleaded[, subject to certain exceptions not applicable in this case]."
To promote judicial economy, the compulsory cross-complaint statute requires parties to litigate all conflicting claims between them that arise out of the same transaction in a single lawsuit. (Flickinger v. Swedlow Engineering Co. (1955) 45 Cal.2d 388, 393.) To this end, section 426.30, subdivision (a), bars a second lawsuit between the same parties on a "related cause of action" that could have been pled in the first action. A "related cause of action" is one that "arises out of the same transaction, occurrence, or series of transactions or occurrences" as the causes of action alleged in the plaintiff's complaint. (Code Civ. Proc., §§ 426.30, subd. (a), 426.10.)
Here, Filicia does not argue that his claims are not related to those raised by DLA Piper in the collection action. Rather, Filicia asserts that his claims do not fall within the compulsory cross-complaint rule because they were unknown to him until after judgment was entered against him, and thus did not exist at the time he answered the complaint in the collection action. However, as Filicia points out, DLA Piper sought reimbursement from Filicia individually and judgment was entered against him. Accordingly, at the point when DLA Piper filed the collection action, Filicia knew that DLA Piper was seeking to make him personally responsible for its fees, and any claims against DLA Piper or defenses regarding Filicia's individual liability for the fees should have been asserted at that time. The fact that Filicia may have learned of additional details concerning his claims after judgment was entered does not justify his failure to comply with the compulsory cross-complaint rule.
We are also not persuaded by Filicia's argument that his claims do not fall within the compulsory cross-complaint rule because his damages did not accrue until judgment was entered in the prior action. To support his argument, Filicia relies on E. L. White, Inc. v. City of Huntington Beach (1978) 21 Cal.3d 497 (E. L. White). However, Filicia's reliance on E. L. White is misplaced. In E. L. White, the court concluded that a claim for implied indemnity was not a compulsory cross-complaint because of the well-settled principle that a claim for implied indemnity does not accrue until the indemnitee suffers actual loss through payment. (Id. at p. 506.) Unlike the situation in an indemnity case, Filicia's claims did exist at the time that DLA Piper filed its collection action. Filicia's failure to pay attorney fees until after judgment was rendered against him does not relieve him from having to assert related claims in the prior action as such relief would be contrary to the policy requiring claims flowing from a common source to be litigated in a single action. (See Kittle Mfg. Co. v. Davis (1935) 8 Cal.App.2d 504, 513.)
Lastly, Filicia correctly points out that his claims were not compulsory against Heuberger because Heuberger was not a party to DLA Piper's collection action. (Code Civ. Proc., § 426.30, subd. (a).) However, the claims against Heuberger are barred for other reasons set forth in this opinion. (Ante, Part II(B)(2), (3).)
5. Statute of Limitations
Code of Civil Procedure section 340.6, subdivision (a), sets forth the applicable statute of limitations for legal malpractice actions:
"An action against an attorney for a wrongful act or omission, other than for actual fraud, arising in the performance of professional services shall be commenced within one year after the plaintiff discovers, or through the use of reasonable diligence should have discovered, the facts constituting the wrongful act or omission, or four years from the date of the wrongful act or omission, whichever occurs first.... [I]n no event shall the time for commencement of legal action exceed four years except that the period shall be tolled during the time that any of the following exist: [¶]... [¶] (3) The attorney willfully conceals the facts constituting the wrongful act or omission when such facts are known to the attorney, except that this subdivision shall toll only the four-year limitation." (Italics added.)
Section 340.6 applies to both legal malpractice and breach of fiduciary duty claims against an attorney. (Stoll v. Superior Court (1992) 9 Cal.App.4th 1362, 1363.) "The statute of limitations to be applied is determined by the nature of the right sued upon, not by the form of the action or the relief demanded." (Day v. Greene (1963) 59 Cal.2d 404, 411.)
"[T]he statute of limitations begins to run when the plaintiff suspects or should suspect that her injury was caused by wrongdoing, that someone has done something wrong to her.... A plaintiff need not be aware of the specific 'facts' necessary to establish the claim; that is a process contemplated by pretrial discovery. Once the plaintiff has a suspicion of wrongdoing, and therefore an incentive to sue, she must decide whether to file suit or sit on her rights. So long as a suspicion exists, it is clear that the plaintiff must go find the facts; she cannot wait for the facts to find her." (Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1110-1111.)
Here, Filicia argues that his claims are timely because he filed them within one year of discovering the facts constituting the DLA Attorneys' wrongful conduct, and that his fraud claim does not fall within the limitations period set forth in Code of Civil Procedure section 340.6. Filicia asserts that he did not discover the alleged wrongdoing until McGorrian wrote a letter to the court in July 2008. However, the statute of limitations starts to run when the injured party suspects or should suspect the wrongdoing. (Jolly v. Eli Lilly & Co., supra, 44 Cal.3d at p. 1110.) We conclude that the limitations period started to run in February 2007 when DLA Piper filed its complaint in the collection action. At that point, Filicia should have suspected the alleged wrongdoing because DLA Piper was seeking to recover attorney fees from him individually. Filicia did not file his complaint in the current action until October 2008. Accordingly, his complaint was not timely.
We are not persuaded by Filicia's argument that Code of Civil Procedure section 340.6 does not bar his fraud claim. Filicia's fraud claim is based on the same facts as his claims for legal malpractice and breach of fiduciary duty. The fact that Filicia labeled the claim as "fraud" does not permit him to avoid the applicable statute of limitations. However, even if the fraud claim was timely asserted, the entire complaint is barred for other reasons discussed herein.
C. Leave to Amend
While the decision to sustain or overrule a demurrer is a legal ruling subject to de novo review, the granting of leave to amend involves an exercise of the trial court's discretion. (Lazar v. Hertz Corp. (1999) 69 Cal.App.4th 1494, 1501.) "[T]he burden of showing [abuse of discretion] rests upon the appellant and... [w]here an appellant does not indicate, either in the trial court or in this court, the manner in which the complaint is proposed to be amended, an abuse of discretion is not shown." (Hilton v. Board of Supervisors (1970) 7 Cal.App.3d 708, 716.) Filicia did not indicate how his FAC can be amended to state a proper cause of action. Thus, Filicia failed to meet his burden. And, where, as here, the nature of plaintiff's claim is clear but no liability exists as a matter of law, leave to amend should be denied because no amendment can change that result. (Berkeley Police Assn. v. City of Berkeley (1977) 76 Cal.App.3d 931, 942.)
DISPOSITION
The judgment is affirmed. Respondents shall recover their costs on appeal.
WE CONCUR: McDONALD, Acting P.J., AARON, J.