Opinion
NOT TO BE PUBLISHED
APPEAL and cross-appeal from an order and a judgment of the Superior Court of San Diego County No. GIC861159, Joan M. Lewis, Judge.
McINTYRE, J.
A jury found in favor of Roslyn Lane, LLC in its legal malpractice action against the law firm Ferrette, Alcorn, Pharies & Dorgan, and Attorneys Glen Dorgan and Gary Slater (collectively, the Law Firm). Roslyn Lane appeals, asserting that the trial court erroneously granted partial nonsuit in favor of the Law Firm, thereby precluding Roslyn Lane from obtaining recovery for certain damages incurred after the underlying case settled. The Law Firm appeals from the portion of the judgment that awarded Roslyn Lane lost rental income and certain consulting fees. We reject the parties' arguments and affirm the nonsuit order and judgment.
FACTUAL AND PROCEDURAL BACKGROUND
Roslyn Lane is a company that was formed to purchase a building located in La Jolla, California (the building). The building is situated next to the Cave Street building, a taller condominium complex. Both buildings are part of the Cave Street Homeowners Association (the HOA). The building is approved for mixed commercial and residential use. Roslyn Lane intended to convert the two story commercial building into a three story building, with the upper floors to be used for residential purposes.
Commerce Resource owns part of Roslyn Lane. Veronica Cushman is Commerce Resource's chief executive officer, secretary, and chief financial officer. Cushman also manages and controls Roslyn Lane. Commerce Resource has various clients, including Roslyn Lane, for whom it answers phones, pays bills, and provides accounting and banking services. Roslyn Lane's only employees are the contractors it hired to work on the building construction.
In November 2002, Roslyn Lane hired Attorney J. Brian O'Donnell to address problems it had with the HOA. In March or April 2003, Roslyn Lane started the remodel construction on the building. Before construction began, Commerce Resource, Roslyn Lane and two other Cushman controlled companies worked out of the building. When construction started, these companies moved into a duplex owned by Cushman. In October 2003, O'Donnell wrote the HOA's attorney a letter, complaining that substantial delays in the remodel of the building caused by the HOA forced Roslyn Lane to pay rent at two places.
On Roslyn Lane's behalf, O'Donnell filed a complaint against the HOA (the Cave Street Action). The complaint alleged that the roof of the building suffered water intrusion problems, making it impossible for Roslyn Lane to complete its planned remodel. It also alleged, among other things, that the HOA had unreasonably refused to allow the installation of an air conditioning unit on the roof of the building. As a result of these problems, Roslyn Lane claimed that it suffered damages because it had to stop construction, and continue leasing additional office space. Roslyn Lane also sought declaratory relief, including a declaration that the HOA repair the roof and approve placing the air conditioner on the roof.
About four months before the scheduled trial date in the Cave Street Action, Roslyn Lane hired the Law Firm to represent it. Attorneys Slater and Dorgan worked on the matter for the Law Firm. Trial in the Cave Street Action commenced in February 2005. On February 10, 2005, after Roslyn Lane had rested it case, Roslyn Lane and the HOA agreed to settle the matter. Later that month, Roslyn Lane hired new counsel and unsuccessfully attempted to set aside the settlement agreement.
In February 2006, Roslyn Lane filed this legal malpractice action against the Law Firm. Roslyn Lane alleged causes of action for negligence and breach of contract based on the Law Firm's failure to properly present its claims against the HOA. Among other things, Roslyn Lane claimed that the Law Firm failed to hire experts or depose necessary witnesses, and that the Law Firm's mishandling of the case forced it to enter into an unfavorable settlement. This matter proceeded to trial.
During trial, the Law Firm moved for nonsuit on the ground Roslyn Lane did not have evidence to support its claims. After Roslyn Lane closed its case in chief, the trial court denied the motion for nonsuit, but ruled that Roslyn Lane could not ask the jury for loss-of-use damages, such as lost rental income, allegedly incurred after the February 2005 settlement. Roslyn Lane presented its remaining claims to a jury, with the jury finding that the Law Firm had been negligent and breached its contract. The jury awarded the same damages on both causes of action, specifically: (1) $142,411 for lost rental income before February 2005, plus interest; (2) $12,318 for ceiling repairs, plus interest; and (3) $1,779 for expert Michael Burgess's consulting fees, plus interest. The trial court denied the Law Firm's motions for new trial and for judgment notwithstanding the verdict, denied Roslyn Lane's motion for new trial, and granted Roslyn Lane's motion for attorneys fees, prejudgment interest and costs of suit. The parties timely appealed.
DISCUSSION
I. Legal Malpractice
The elements of a legal malpractice action in a civil proceeding are: "(1) the duty of the attorney to use such skill, prudence, and diligence as members of his or her profession commonly possess and exercise; (2) a breach of that duty; (3) a proximate causal connection between the breach and the resulting injury; and (4) actual loss or damage resulting from the attorney's negligence. [Citations.]" (Coscia v. McKenna & Cuneo (2001) 25 Cal.4th 1194, 1199.) "In negligence cases arising from the rendering of professional services, as a general rule the standard of care against which the professional's acts are measured remains a matter peculiarly within the knowledge of experts. Only their testimony can prove it, unless the lay person's common knowledge includes the conduct required by the particular circumstances. [Citation.] This rule applies to legal malpractice cases. [Citation.]" (Unigard Ins. Group v. O'Flaherty & Belgum (1995) 38 Cal.App.4th 1229, 1239.)
"'Proof of legal malpractice requires proof not only of negligence by the lawyer but also of causation, a trial within a trial to establish that, but for the lawyer's negligence, the client would have prevailed in the underlying action.' [Citations.]" (Kurinij v. Hanna & Morton (1997) 55 Cal.App.4th 853, 864.) This standard applies to litigation malpractice and transactional malpractice (Viner v. Sweet (2003) 30 Cal.4th 1232, 1244 (Viner)), and a malpractice action arising out of an attorney's alleged malpractice in causing his or her client to settle a lawsuit against a third party. (Jalali v. Root (2003) 109 Cal.App.4th 1768, 1777.) In either case, the plaintiff must establish "that but for the alleged negligence of the defendant attorney, the plaintiff would have obtained a more favorable judgment or settlement in the action in which the malpractice allegedly occurred. The purpose of this requirement, which has been in use for more than 120 years, is to safeguard against speculative and conjectural claims. [Citation.] It serves the essential purpose of ensuring that damages awarded for the attorney's malpractice actually have been caused by the malpractice. [Citation.]" (Viner, supra, 30 Cal.4th at p. 1241, italics in original.)
Finally, a claim for malpractice also requires proof of damages. "If the allegedly negligent conduct does not cause damage, it generates no cause of action in tort. [Citation.] The mere breach of a professional duty, causing only nominal damages, speculative harm, or the threat of future harm not yet realized does not suffice to create a cause of action for negligence. [Citations.]" (Budd v. Nixen (1971) 6 Cal.3d 195, 200, superseded by statute on other grounds.)
II. Roslyn Lane'sAppeal
A. Nonsuit
During trial, the Law Firm moved for nonsuit on the ground its alleged negligence did not cause Roslyn Lane's damages. The trial court denied the motion for nonsuit, but ruled that Roslyn Lane could not ask the jury for loss-of-use damages, such as lost rental income, after February 2005 because the evidence did not show that the parties could have foreseen or anticipated the events occurring after February 2005. It concluded that any damages after this point in time were highly speculative.
Roslyn Lane asserts that the trial court erroneously granted partial nonsuit in favor of the Law Firm, thereby precluding it from obtaining recovery for: (1) lost rental income damages occurring after the underlying case settled; (2) consultant fees incurred to address the Law Firm's negligence; and (3) increased construction costs caused by the Law Firm's negligence. We conclude the trial court properly granted the partial nonsuit.
1. Legal Principles Relating to Nonsuit Motions
A motion for nonsuit allows a defendant to challenge the sufficiency of plaintiff's evidence to submit the case to the jury. (Campbell v. General Motors Corp. (1982) 32 Cal.3d 112, 117.) A trial court may grant a nonsuit only when, disregarding conflicting evidence, viewing the record in the light most favorable to the plaintiff and indulging in every legitimate inference which may be drawn from the evidence, it determines there is no substantial evidence to support a judgment in the plaintiff's favor. (Mechanical Contractors Assn. v. Greater Bay Area Assn. (1998) 66 Cal.App.4th 672, 677.) We independently review a nonsuit, employing the same standards that govern the trial court. (Saunders v. Taylor (1996) 42 Cal.App.4th 1538, 1541-1542.) A motion for a nonsuit at the close of plaintiff's case must be denied "'if there is... any substantial evidence, which, with the aid of all legitimate inferences favorable to the plaintiff....'" tends to support a plaintiff's verdict. (Golceff v. Sugarman (1950) 36 Cal.2d 152, 153.) "'If there is any doubt, it is the duty of the court to let the case go to the jury.' [Citation.]" (Ibid.)
2. Evidence
a. The Cave Street Action Settlement
Mario Zanelli, the HOA's roofing expert in the Cave Street Action, prepared a proposal that included a page listing the repairs and design information. Timothy A. Marsh, Roslyn Lane's roofing expert in the Cave Street Action, wrote a letter expressing four concerns regarding the Zanelli proposal, and made suggestions to address these concerns. When the Cave Street Action settled on February 10, 2005, the parties incorporated these documents into the settlement agreement.
Specifically, the HOA agreed to repair the roof "to the scope provided for" in Zanelli's proposal, with the changes set forth by Marsh in his letter. Roslyn Lane would be allowed to observe all the repairs, and the HOA would "entertain all comments provided by [Roslyn Lane] and/or its consultants in performing the work." Among other things, the HOA agreed to reimburse Roslyn Lane for some of its out-of-pocket expenses and to repair certain items in addition to the roof. It also agreed to power-wash and stain the siding on the building. In exchange, Roslyn Lane agreed to release its pending claims and dismiss the action without prejudice to "making claims or demands in the future for acts or omissions after the date of the filing of the lawsuit."
At trial, Attorney Dorgan admitted that Cushman told him that she wanted to try the Cave Street Action, that she did not want to talk about settlement, and that she felt pressured into settling the matter. He also admitted that although Cushman had made it clear that she did not want to settle the Cave Street Action, he discussed settling the matter with the HOA, and prepared a settlement document the weekend before trial began. After the Cave Street Action settled, Roslyn Lane filed a second action against the HOA seeking lost rental income and other damages. The record does not indicate the outcome of this action.
b. Post-settlement Construction Delays and Roslyn Lane's Consultants
After the Cave Street Action settled, Cushman hired Marsh to continue working as a consultant. Although Marsh had concerns regarding the roof framing when he "generally agreed" on Zanelli's proposal, and expressed those concerns to Dorgan, he did not know the full extent of the problems at that time. Marsh observed a roofing company remove the roof from the building around September 29, 2005. Marsh testified that upon seeing the roof sub-framing, "basically everyone learned that [the] sub-framing was not adequate and something different would have to be done."
Marsh admitted that when the roof was removed, he learned for the first time that the support framing was inadequate, that the lower level of the roof needed to be removed, and that a structural engineering report and architectural drawings would be necessary to complete the roof. Marsh also admitted that these issues delayed the installation of the new roof.
After Cushman learned about these issues, she wrote the roofing company a letter informing it that a structural engineering report and architectural drawings needed to be prepared to obtain a building permit. Cushman testified that she wanted her own consultants to review and comment on this material. Accordingly, Bob Carroll, the individual the HOA hired to design the roof, prepared plans and sent them to Cushman in November 2005. Cushman's consultants, Marsh, and Paul Wuesthoff, an architect located in Idaho, reviewed the plans. Cushman responded to the HOA in February 2006 regarding the additional work on the roof.
From February 2006 to August 2006, Cushman and the HOA discussed the skylight, insulation, the rain gutters and what type of nails would be used on the roof. The roofing company completed the roof in March 2007. The HOA repaired the siding after the roof repair, and partially repaired the windows, but some of the interior finish was incomplete.
Cushman hired Burgess, a mechanical engineer, to provide plans and drawings for the air conditioning unit. Burgess had been one of the HOA's expert witnesses in the Cave Street Action. Cushman wanted Burgess's opinion regarding where to place the air conditioning unit, and had him create plans and drawings placing the unit on the side of the building where the pedestrian walkway was located. Cushman also hired several other consultants to monitor the construction, including Wuesthoff for the roof drainage, and a law firm to assist with code compliance and obtaining permits for the windows and roof.
c. Merits of the Cave Street Action and the Law Firm's Handling of the Matter
At trial, Roslyn Lane presented testimony from David Peters, an expert in homeowners' association procedures, to prove that had the Cave Street Action gone to trial, it would have obtained a judgment more favorable than its settlement. Although the Law Firm retained Peters as an expert in the Cave Street Action, it never asked him to provide any opinions and he never heard from the Law Firm again. Peters testified regarding how homeowners' associations operate, and explained how the HOA fell below the standard of care as of February 10, 2005, in addressing Roslyn Lane's requests and concerns. The Law Firm does not challenge the sufficiency of the evidence establishing the HOA's improprieties. Accordingly, we do not address this evidence in detail.
Roslyn Lane also presented testimony from Alan Schonfeld, a legal malpractice expert. Schonfeld explained that attorneys must comply with ethical obligations to their clients, and also meet the standard of care for their practice. He testified that the Law Firm fell below the standard of care in several categories. Among other things, Schonfeld opined that the Law Firm did not prepare the case properly, that it failed to depose certain individuals, and did not hire expert witnesses.
Schonfeld testified that Dorgan got a few basic points of law wrong, that Slater, as the senior attorney, never checked these points, and this fell below the standard of care. For example, Dorgan believed that Cushman could not obtain monetary damages and declaratory relief in the Cave Street Action, but Schonfeld explained that the court had the power to award both. He opined that had the court granted declaratory relief, it could have told the HOA to do things a certain way or within a certain period of time. He also testified that had the court granted declaratory relief, it could have retained jurisdiction over the matter and required the HOA to pay additional damages, such as lost rent.
Schonfeld also testified that a settlement is supposed to give a client "some finality" to litigation, but that the Cave Street Action settlement agreement did not specify when things had to be done, how some things would be done, or who would make certain decisions. Schonfeld opined that the settlement agreement fell below the standard of care because it allowed the parties to provide input and continue fighting.
3. Analysis
Roslyn Lane argues that its post-February 2005 damages were recoverable against the Law Firm because it would have recovered these damages in the Cave Street Action. Specifically, Roslyn Lane asserts that the Law Firm's negligence forced it to enter into a settlement, rather than try the Cave Street Action to its conclusion. Alternatively, Roslyn Lane asserts that its post-February 2005 damages were recoverable against the Law Firm because they resulted from the Law Firm's negligence in drafting the settlement agreement.
Accordingly, this appeal presents two alternate theories as to why the trial court erred in granting a partial nonsuit on Roslyn Lane's claim for post-February 2005 damages: litigation malpractice and transactional malpractice. As discussed below, we conclude that the trial court properly granted the partial nonsuit under either theory.
a. Litigation Malpractice
In the Cave Street Action, Roslyn Lane sought a declaration that the HOA was responsible for repairing the roof. Roslyn Lane asserts that, but for the Law Firm's negligence in handling the Cave Street Action, the matter would have proceeded to judgment, and the trial court would have issued declaratory relief. It reasons that had the trial court in the Cave Street Action granted declaratory relief, it would have maintained jurisdiction over the matter until the HOA complied with its orders, and it would have ordered the HOA to continue reimbursing Roslyn Lane for its lost rent until the repairs were completed. Roslyn Lane contends that the lack of declaratory relief delayed the renovations, and caused it to lose rental income and pay increased construction costs and consultants' fees.
A trial court is vested with broad discretion in determining whether to grant declaratory relief. (Dolan-King v. Rancho Santa Fe Assn. (2000) 81 Cal.App.4th 965, 974.) "Unlike coercive relief (such as damages, specific performance, or an injunction) in which a party is ordered by the court to do or to refrain from doing something, a declaratory judgment merely declares the legal relationship between the parties. Under the provisions of the [declaratory judgment act], a declaratory judgment action may be brought to establish rights once a conflict has arisen, or a party may request declaratory relief as a prophylactic measure before a breach occurs." (Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 898 (Mycogen).)
"A declaratory judgment action provides parties with an efficient means of adjudicating a disputed issue. Often, a declaratory remedy will end the controversy between the parties. If a court finds that a plaintiff has no rights under a contract, the dispute is resolved and no further litigation is likely. If, on the other hand, the court determines that a defendant is in breach of a contract, it is likely that the defendant will comply with the contract rather than risk a subsequent suit for damages or specific performance, since the prior declaratory judgment will serve as a conclusive determination of defendant's breach. ([Code Civ. Proc.,] § 1060.)" (Mycogen, supra, 28 Cal.4th at p. 898.)
As explained below, although we agree that Roslyn Lane presented sufficient evidence in the Cave Street Action to obtain a declaratory judgment requiring the HOA to repair the roof, we conclude that the trial court in the Cave Street Action would not have thereafter granted any coercive relief because such relief was inappropriate under the law and not supported by the evidence.
Cushman testified that the building leaked continuously whenever it rained, making construction difficult. As a result, Roslyn Lane had to stop its renovations of the building because continuing "with the interior renovations would be in vain as the insulation, sheetrock, drywall, electrical wiring, etc. would have to be reworked due to incoming water and moisture as well as the rotted structural studs which need to be replaced and rework has to be performed in the office space." Thus, the evidence presented at trial revealed that the delay in repairing the roof postponed all other repairs and the building renovations.
Roslyn Lane presented evidence that it lost rental income after February 2005, and incurred additional construction costs because of the delay in completing the roof repair after the Cave Street Action settled. Roslyn Lane also presented evidence that it hired a number of consultants to either monitor the agreed upon repairs, or provide advice.
For the purposes of analysis, we conclude that the evidence is sufficient to show that but for the Law Firm's negligence in handling the Cave Street Action, the matter would have proceeded to judgment, and the trial court would have issued declaratory relief requiring the HOA to repair the roof. We disagree, however, with Roslyn Lane's contention that after granting declaratory relief, the trial court in the Cave Street Action would have continued its jurisdiction over the parties to monitor the progress of the roof repair and resolve disputes between the parties, or that it would have appointed a special master to perform such functions.
The purpose of declaratory relief is to declare rights, not execute them. (Gafcon, Inc. v. Ponsor & Associates (2002) 98 Cal.App.4th 1388, 1403.) After granting declaratory relief, a trial court's judgment is limited to relief available under the law as explained in Mycogen. A trial court cannot thereafter award coercive relief, such as damages, specific performance, or an injunction. Rather, should a plaintiff experience problems after obtaining a declaratory judgment, the appropriate procedure is to file a second action for damages or specific performance. (Mycogen, supra, 28 Cal.4th at p. 898.)
We acknowledge Schonfeld's expert testimony that had the court granted declaratory relief, it could have: (1) told the HOA to do things a certain way or within a certain period of time; and (2) retained jurisdiction over the matter and required the HOA pay additional damages, such as lost rent. As discussed below, however, there is no substantial evidence to support a conclusion that the trial court in the Cave Street Action would have done these things because the evidence does not show that the HOA caused any delay after February 2005. (Part II.A.3.b, post.)
b. Transactional Malpractice
Roslyn Lane presented evidence that the Law Firm committed transactional negligence in handling the settlement of the Cave Street Action. Schonfeld opined that the settlement agreement fell below the standard of care because it allowed the parties to provide input and continue fighting. He testified that a settlement is supposed to give a client "some finality" to litigation, but that the Cave Street Action settlement agreement did not specify when things had to be done, how some things would be done, or who would make decisions.
Where, as here, an attorney is sued for transactional negligence, the plaintiff "must show that but for the alleged malpractice, it is more likely than not that the plaintiff would have obtained a more favorable result." (Viner, supra, 30 Cal.4th at p. 1244, italics in original.) Thus, "the crucial causation inquiry is what would have happened if the defendant attorney had not been negligent." (Id. at p. 1242, italics in original.) Although the plaintiff client is not required to prove actual cause "with absolute certainty," it must introduce evidence that provides a "reasonable basis" for the conclusion. (Id. at p. 1243.)
Based on Schonfeld's testimony, a reasonable jury could have concluded that the Law Firm negligently drafted the settlement agreement because it did not specify when things had to be done, how some things would be done, or who would make decisions. Nonetheless, to obtain damages Roslyn Lane needed to show how specific time frames, more detail, or that a decision maker would have eliminated the delay in completing the building renovations. (Viner, supra, 30 Cal.4th at p. 1242.)
The evidence revealed that repairing the roof was the limiting step in completing the building renovations. (See Part II.A.3.a, ante.) The evidence, however, does not show that after settling the Cave Street Action, the HOA caused the delay in repairing the roof by acting unreasonably or in bad faith. Marsh did destructive testing of the roof, knew there were problems with it, yet he "generally agreed" with Zanelli's scope of repair. Marsh informed Dorgan about his concerns, but never told anyone that further destructive testing needed to be done. "[E]veryone learned" that additional plans and drawings would be necessary when the roofer actually removed the roof in September 2005.
Expert witness Peters did not testify regarding the conduct of the HOA after February 10, 2005. Additionally, there is no evidence that the HOA delayed in hiring a roofer or preparing plans; rather, after Cushman received the plans and her consultants reviewed them, she responded to the HOA in February 2006. Thereafter, the parties discussed a number of details regarding the roof repair until August 2006. Ultimately, the HOA completed the roof seven months later. The parties, however, do not address the HOA's actions during that time period and our review of the record does not indicate that the HOA caused any delay after August 2006.
The evidence shows that the HOA did not cause any post-settlement delay. Rather, the condition of the roof and the need for additional plans delayed the roof repair, and thus all of the building renovations. Roslyn Lane failed to cite evidence showing how time frames, more detail or listing a decision maker in the Cave Street Action settlement agreement would have eliminated or significantly reduced the delay in completing the renovations. Accordingly, Roslyn Lane failed to show that it would not have suffered the claimed damages but for the Law Firm's negligence. (Viner, supra, 30 Cal.4th at p. 1242.)
Moreover, it is entirely speculative that the parties could have agreed on specific time frames, additional details or a decision maker on certain matters in the settlement agreement. Although "[a]n express concession by the other parties to the negotiation that they would have accepted other or additional terms is not necessary" (Viner, supra, 30 Cal.4th at pp. 1242-1243), Roslyn Lane needed to present some evidence that the HOA would have agreed to settle the Cave Street Action on different terms. (See Orrick Herrington & Sutcliffe v. Superior Court (2003) 107 Cal.App.4th 1052, 1058 [the plaintiff produced no evidence showing his ex-wife would have settled for less than she did, or that ex-wife would have agreed to a settlement that included the terms he claims were omitted]; Marshak v. Ballesteros (1999) 72 Cal.App.4th 1514, 1519 [plaintiff alleging his attorney negligently settled his marital dissolution case "must also prove that his ex-wife would have settled for less than she did"]; Thompson v. Halvonik (1995) 36 Cal.App.4th 657, 663 [plaintiff failed to "demonstrate that but for [the attorney's] delay, [the plaintiff's] underlying case would have settled at all, let alone at an earlier date, for the same amount, or with the same structure"].) Roslyn Lane failed to present any evidence on that point.
Additionally, although expert witness Schonfeld opined that the settlement agreement fell below the standard of care because it allowed the parties to provide input regarding the repairs, there is no evidence suggesting that Roslyn Lane would have agreed to the settlement agreement if the terms allowing it to observe and comment on the repairs had been omitted. Rather, Roslyn Lane took full advantage of these terms. Additionally, Cushman's active involvement in the Cave Street Action suggests she would not have agreed to the settlement had it not included such terms.
Roslyn Lane failed to offer substantial, affirmative evidence that the Law Firm's failure to include certain provisions in the Cave Street Action settlement agreement caused its damages, or that the HOA would have agreed to different settlement terms. Accordingly, it failed to show that the Law Firm caused its post-February 2005 damages. We therefore conclude that the trial court properly granted nonsuit on Roslyn Lane's post-February 2005 damages.
B. Expert Fees as Damages
1. Background
The parties stipulated that the trial court would decide all issues regarding attorneys fees and costs after the jury returned its verdict. Pursuant to this stipulation, Roslyn Lane moved to recover its fees and costs in the Cave Street Action, and in prosecuting the malpractice action. As part of this motion, Roslyn Lane asserted that it could recover the fees incurred by experts Marsh, Steve Schraibman and Cameron Duncan as damages. After considering various declarations, exhibits, and hearing testimony, the trial court concluded that Roslyn Lane could not recover these fees because it brought the experts into the matter at the outset of the litigation to assess the damages and testify at trial. Roslyn Lane appeals this ruling, contending it is not supported by substantial evidence.
2. Standard of Review
We review the sufficiency of the evidence under the substantial evidence test, viewing the whole record in the light most favorable to the prevailing party, giving the ruling the benefit of every reasonable inference and resolving all conflicts in its favor. (Oregel v. American Isuzu Motors, Inc. (2001) 90 Cal.App.4th 1094, 1100.) Evidence is substantial if it is of "ponderable legal significance" and is "reasonable, credible and of solid value." (Roddenberry v. Roddenberry (1996) 44 Cal.App.4th 634, 651.) While inferences may support a judgment, "the inference must be a reasonable conclusion from the evidence and cannot be based upon suspicion, imagination, speculation, surmise, conjecture or guesswork. [Citation.]" (Beck Development Co. v. Southern Pacific Transportation Co. (1996) 44 Cal.App.4th 1160, 1204.)
3. Analysis
Expert fees incurred for repair or expert investigative services that were not litigation costs may be awarded as part of tort damages. (Stearman v. Centex Homes (2000) 78 Cal.App.4th 611, 623-625 (Stearman).) In Stearman, the two experts distinguished between their litigation and investigative costs, and sought recovery only for investigative work. (Id. at p. 623.)
As a threshold matter, on an appeal challenging the sufficiency of the evidence, appellant's opening brief must set forth all the material evidence on point and show how and why it is insufficient. (Huong Que, Inc. v. Luu (2007) 150 Cal.App.4th 400, 409.) In this appeal, Roslyn Lane neglected to summarize any of the material evidence. (Id. at pp. 409-410 [appellant cannot shift burden of presenting all material evidence to respondent, nor is appellate court required to undertake independent examination of record when appellant "has shirked his responsibility in this respect" (internal quotes omitted).] An appellant who fails to set forth in its brief all the material evidence on the point is deemed to have waived its challenge. (Nwosu v. Uba (2004) 122 Cal.App.4th 1229, 1246.) While Roslyn Lane failed its obligation to cite the material evidence, the Law Firm did summarize the evidence it deemed favorable to the trial court's ruling. Accordingly, we exercise our discretion to decide this issue on its merits.
O'Donnell retained Schraibman in the Cave Street Action as an expert witness on construction and architectural matters to evaluate the repairs needed at the building and provide a cost estimate and scope of repair. He also retained Marsh to provide expert testimony on the condition of the roof, scope of repair, and cost of repair. He did not remember giving Marsh any instructions and assumed that the Law Firm directed Marsh's work. O'Donnell also retained Duncan, a structural engineer, to examine the stability of the building based on earlier fire damage. Roslyn Lane, however, dismissed the fire damage claim before trial.
In November 2004, Attorney Dorgan began directing Marsh and Schraibman's work. Dorgan testified that Marsh and Schraibman acted only as testifying litigation experts, and that he directed Marsh and Schraibman to perform certain tasks to prepare to testify at trial, not for the purpose of effectuating repairs.
This evidence is sufficient to support the trial court's ruling that Roslyn Lane could not recover the fees of expert witnesses Marsh, Schraibman and Duncan as damages.
III. The Law Firm's Appeal
A. Lost Rental Income
The settlement agreement in the Cave Street Action did not address Roslyn Lane's lost rental income. Accordingly, in this action, Roslyn Lane sought to recover as special damages, pre-February 2005 lost rent, i.e., income it would have made by renting the building before the Cave Street Action settled. Roslyn Lane claimed that the Law Firm's malpractice forced Roslyn Lane to settle the Cave Street Action, and had the Cave Street Action been properly prepared and proceeded to trial, it would have recovered damages for lost rents. The jury agreed that Roslyn Lane could recover these damages.
On appeal, the Law Firm claims that the evidence does not support the award of pre-February 2005 lost rent. The Law Firm asserts that the evidence did not show: (1) that Law Firm fell below the standard of care by not presenting the lost rent claim, or (2) that Roslyn Lane lost any residential rent. It also claims that, as a matter of law, Roslyn Lane did not lose a meritorious claim given the fact it still had the right to the lost rental income from the HOA after the Cave Street Action settled.
1. Evidence
Consistent with the substantial evidence standard of review (see Part II.B.2, ante), we summarize the evidence in a manner that resolves all conflicts and draws all reasonable inferences in favor of the jury's verdicts.
Cushman hired the Law Firm to prosecute the Cave Street Action on September 15, 2004. The case evaluation prepared by the Law Firm in October 2004, noted that the complaint included a claim for general and special damages. The evaluation mentioned that the expenses Roslyn Lane incurred in renting other property, and profits it lost due to the condition of the building, might be recoverable as special damages. However, the Law Firm did not anticipate having such a claim ready for trial unless the information to support these damages was readily available. Accordingly, Dorgan recommended seeking a trial continuance to prepare a claim for special damages. The Law Firm prepared a pretrial case evaluation three months later, but this evaluation did not address general or special damages.
Cushman testified that after Roslyn Lane purchased the building, it rented the building to the seller for 2 months, and then to Commerce Resource for about 18 months. However, the building had not been rented to tenants since March 2003, and Roslyn Lane has received no income from the building since that date. Cushman testified that Roslyn Lane kept records showing rental income that it derived from renting the building to Commerce Resource.
Cushman claimed that she informed Slater in October 2004 that Roslyn Lane planned to rent the proposed residential portion of the building on a short-term basis. She also informed him that after purchasing the building, Roslyn Lane rented it to the seller for $5,000 a month. Cushman believed that the building would produce more rental income once Roslyn Lane had the residential portion of the building constructed and rented.
After her meeting with Slater, Cushman discussed with Dorgan what Roslyn Lane paid in rent elsewhere, but did not discuss renting the building. Cushman testified that Dorgan never asked her about the fair market rent for the building, but that she would have told him had he asked. She explained to the jury that she was willing to provide the Law Firm with any information needed to evaluate her damage claims, but that she left it to the Law Firm to determine the proper request for damages based on nonuse of the building.
During her deposition in the Cave Street Action, Cushman stated that she purchased the building because "I just fell in love with it when I saw it and I thought that [it] would be a wonderful place to have my office and have my home upstairs." During trial in the instant action, Cushman explained this answer, stating that she did fall in love with the building and that it would be a wonderful place for a home and for Commerce Resource to have its office, but not her personal office or home. She testified that even if she had lived in the residential space, she would have paid fair market rent to Roslyn Lane.
At trial, Dorgan testified that he initially considered the possibility that Roslyn Lane could recover special damages for its inability to use the building, either for moving its business or for lost rental value. He also stated that the cost to rent substitute premises was the correct measure of damages for Roslyn Lane based on Cushman's representation that she planned to live in the building. Consequently, Dorgan prepared a written statement of damages seeking Roslyn Lane's out-of-pocket expenses of $2,500 a month for seven months. However, the attorney for the HOA did not recall receiving a written demand for loss of use damages from Roslyn Lane.
Dorgan understood that Roslyn Lane's expenses of $2,500 a month addressed only the commercial portion of the building, and did not include the proposed residential portion of the building. He testified that Cushman never told him that she planned to rent the building to a third party. He understood, however, that if a client marketed property to the open public and could not rent the property based on the fault of another, that the client could recover damages for the fair market rental value of the property. Dorgan admitted that he never told Cushman that he did not plan to pursue a damage claim on Roslyn Lane's behalf for the residential portion of the building. Additionally, he testified that he never consulted with an expert to help him determine Roslyn Lane's lost rent or lost income because he did not need an economist to add up roughly seven months of the rent that Cushman paid elsewhere.
Expert witness Schonfeld believed that the Law Firm fell below the standard of care because "[t]here were damages that Roslyn Lane had that were not presented, such as their loss of use of the property. That was a big issue. That was not presented, or it was presented minimally and without really much thought, it seemed like." Schonfeld also testified that the Law Firm fell below the standard of care because it caved in and gave up during the middle of the Cave Street Action.
Robert Caringella, a real estate appraiser, presented his opinion regarding the fair market rent of the building. Caringella testified that fair market rent for the entire building in 2005 to 2006 would be $8,000 per month, broken down as $3,500 per month for the commercial portion of the building and $4,500 per month for the residential portion of the building. He also estimated the total fair market rent for 2004 and 2007, respectively, to be $7,600 and $8,400. Caringella testified that the party who actually lived in the building was irrelevant to his estimation of fair market rent.
Dr. Patrick Kennedy, an economist, testified regarding the economic losses Roslyn Lane suffered as a result of the Law Firm's malpractice. He used Caringella's fair market rent figures to determine that Roslyn Lane lost rent in the amount of $148,992 from January 2004 to August 2005. Dr. Kennedy factored in interest, and the possibility that the property would be vacant for about 4 percent of the time, which is typical for a mixed residential and commercial building. The jury ultimately awarded Roslyn Lane $142,411 for lost rental income before February 2005, plus interest, the amount Roslyn Lane argued during closing.
2. Analysis
The Law Firm argues that there were two methods to determine Roslyn Lane's loss-of-use damages, either showing the lost rental value of the building, or what it cost Roslyn Lane to rent space elsewhere. The Law Firm contends it correctly identified loss-of-use damages in the form of replacement rent, and that Roslyn Lane did not present any expert testimony showing how the Law Firm fell below the standard of care by not pursuing loss-of-use damages based on pre-February 2005 lost rental income. We reject its contention.
In its initial case evaluation, Law Firm acknowledged the claim for special damages in the complaint, it also recognized the possibility of loss of use damages based on (1) expenses Roslyn Lane incurred in renting other property, and (2) profits it lost due to the condition of the building. Dorgan testified that although two methods existed to calculate loss of use damages, the cost to rent substitute premises was the correct measure of damages for Roslyn Lane based on Cushman's representation that she planned to live in the building. Accordingly, the Law Firm argues that it properly "presented" a claim for loss of use in the Cave Street Action based on the cost to rent substitute premises. The record, however, does not show that the trier of fact considered that claim before the Cave Street Action settled.
Notably, the Law Firm's pretrial case evaluation did not mention general or special damages. Schonfeld's expert testimony explained this omission. He testified that Dorgan erroneously believed that Cushman could not obtain monetary damages and declaratory relief in the Cave Street Action. He opined that Dorgan's failure to check such a basic legal issue and the Law Firm's failure to present a loss-of-use claim on behalf of Roslyn Lane fell below the standard of care. Thus, the Law Firm's argument that the jury needed expert testimony to explain the different methodologies to compute loss of use damages misses the point. Rather, the jury could reasonably conclude that the Law Firm committed malpractice by failing to present any loss of use claim in the Cave Street Action.
The Law Firm next argues that substantial evidence does not support Roslyn Lane's contention that it lost residential rent. It points out that although Cushman testified that she planned to rent the residential portion of the building, this testimony contradicted her sworn deposition testimony that she thought the building would be a wonderful place to have her home and office. Cushman, however, explained her deposition testimony during trial, and the perceived contradiction went to the weight of the evidence not its admissibility. (Hall v. Bakersfield Community Hotel Corp. (1942) 52 Cal.App.2d 158, 161.) In any event, Cushman testified that she would have paid fair market rent to Roslyn Lane had she lived in the residential space.
The Law Firm also argues that the evidence did not show that Roslyn Lane would have rented out the residential portion of the building "continuously." Dr. Kennedy, however, assumed that the property would not be continuously rented and took this factor into consideration when calculating Roslyn Lane's damages.
Finally, the Law Firm claims that Roslyn Lane suffered no damages because it did not lose a meritorious claim. It asserts that there was no statute of limitations problem, and that Roslyn Lane eventually filed a second action against the HOA to recover its lost rental income. We disagree.
The measure of damages in a legal malpractice action involving an attorney's failure to bring a claim is "the value of the claim lost." (Smith v. Lewis (1975) 13 Cal.3d 349, 361, disapproved on other grounds in In re Marriage of Brown (1976) 15 Cal.3d 838, 851, fn. 14.) Here, although the jury knew that Roslyn Lane eventually filed a second action against the HOA to recover its lost rents, the Law Firm presented no evidence showing that Roslyn Lane prevailed in that action and recovered its lost rents from the HOA. Thus, the jury reasonably concluded that Roslyn Lane lost a meritorious claim based on the Law Firm's breach of contract or negligence, and that the Roslyn Lane suffered damages in the amount it awarded.
B. Burgess Consulting Fees
1. Facts
In the Cave Street Action, Roslyn Lane sought a declaration allowing it to place an air conditioning unit on the roof of the building. It alleged that the HOA acted unreasonably by rejecting placement of an air conditioning unit anywhere on the roof. The case evaluation prepared by the Law Firm in October 2004 noted that Roslyn Lane's success on this claim turned on whether the HOA investigated the noise level of the proposed air conditioning unit and whether the unit constituted a sight nuisance for the neighboring Cave Street building. In the settlement agreement, Roslyn Lane agreed to dismiss its claim regarding placement of the air conditioning unit without prejudice to its right to submit a plan for installation of a unit on the ground near the driveway. If the HOA rejected this plan, it had the right to submit a plan for placement of a unit on the roof or any other location.
Burgess testified on behalf of the HOA in the Cave Street Action. After the Cave Street Action settled, Cushman hired Burgess to provide plans and drawings for the air conditioning unit. She wanted Burgess's opinion regarding where to place an air conditioning unit; and he created plans and drawings placing a unit on the pedestrian walkway side of the building. In this action, Roslyn Lane sought to recover the consulting fees it paid Burgess for this purpose in 2007. The jury awarded Roslyn Lane $1,779 for these fees.
2. Analysis
The Law Firm asserts this portion of the judgment must be reversed because Roslyn Lane was not entitled to present or recover Burgess's post settlement fees in the Cave Street Action. Roslyn Lane responds that in the Cave Street Action, it sought a declaration to place an air conditioning unit on the roof of the building. Roslyn Lane reasons that had it been successful in obtaining such a declaration, it would have been unnecessary to hire Burgess. We agree with Roslyn Lane.
The Law Firm does not challenge the sufficiency of the evidence showing that the HOA acted unreasonably in addressing the air conditioning issue, or that the Law Firm fell below the standard of care in presenting the air conditioning issue in the Cave Street Action. Briefly, the evidence supports the jury's implied conclusions on these issues.
Expert witness Peters testified that the HOA acted "grossly below the standard of care" in responding to the air conditioning issue by waiting ten months to respond to Roslyn Lane's request, not seeking independent advice concerning whether an air conditioning unit on the roof would constitute a noise nuisance, not looking at mockups to determine if the air conditioning unit would be a visual nuisance, and by telling Roslyn Lane it did not need an air conditioning unit because the building was close to the ocean. In addition, expert witness Schonfeld testified that the Law Firm fell below the standard of care in presenting the air conditioning issue in the Cave Street Action by failing to designate any experts to prove that an air conditioning unit on the roof would not be noisy or block views from the Cave Street building.
From this evidence, the jury reasonably concluded that but for the Law Firm's negligence, Roslyn Lane would have obtained a declaration in the Cave Street Action allowing installation of its proposed air conditioning unit on the roof. (CACI No. 601.) Armed with such a declaration, Roslyn Lane would not have needed to retain Burgess to examine other locations for an air conditioning unit. Thus, the jury reasonably concluded that Roslyn Lane could recover Burgess's consulting fees as special damages because the Law Firm "'knew or reasonably should have known of the special circumstances leading to such harm.'" (CACI No. 351.)
Finally, the Law Firm contends that Burgess's consulting fees are not damages because Roslyn Lane's plans called for a large "48" air conditioning unit on the building roof. Thus, there were no plans showing a smaller air conditioning unit in any location, and Roslyn Lane would have incurred the expense to draw up the plans under any circumstance. We disagree.
William Ivey, a mechanical engineer and an expert in air conditioning systems, testified that the city approved Roslyn Lane's original plans for a "48" air conditioning unit. Had the trial court in the Cave Street Action issued a declaration requiring the HOA to allow installation of the city approved air conditioning unit on the roof, Roslyn Lane would not have incurred Burgess's fees to prepare plans placing a different air conditioning unit in another location.
Accordingly, we affirm the damage award for Burgess's 2007 consulting fees.
DISPOSITION
The order granting partial nonsuit and the judgment are affirmed. Each party shall bear its own costs on appeal.
WE CONCUR: HALLER, Acting P. J., O'ROURKE, J.