Order Submitted MatterCal. Super. - 6th Dist.July 28, 2020\OOOKJONLhQUJN-a NNNMNNNNNp-AHn-tg-n-np-Ip-tp-n-n-a OONJQLh-PWNI-‘OKOOONJONLhubUJNHO SUPERIOR COURT OF CALIFORNIA COUNTY 0F SANTA CLARA ALLISON HYUNH, Case No. Plaintiff, ORDER RE: AMENDED VS. MORRISON & FOERSTER LLP; PAUL L. LION III, and DOES 1-20, inclusive, Defendants. The Demurrer to the First Amended Complaint by Defendants Morrison & Foerster LLP and Paul Lion III came on for hearing before the Honorable Peter 2022, at 9:00 a.m. in Department 19. The matter having been submitted, the Court finds and orders as follows: This is an action for professional negligence brought by Plaintiff Allison Huynh (“Plaintiff") against Defendants Paul L. Lion III and Mom'son & based on Defendants’ former representation of Plaintiff, a company formed by Plaintiff, and companies formed by Plaintiff’s husband Scott Hassan (“Hassan”). Defendant Lion is an 1 ORDER RE: DEMURRER TO FAC FEB - 8 ZUZZ Clerk 0f the Court Supfln’or urf cl Counts n “JH'Q C?ara 20CV368776 DEMURRER TO FIRST COMPLAINT H. Kirwan 0n February 3, Foerster LLP (“Defendants”) \OOOxJOxLA-wa-a NNNNNNNNNHb-ir-r-tp-AHHHHH W‘QOMAUJNHODWQQLII&UJNHO attorney employed by Mom‘son & Foerster. Plaintiff and Hassan are parties in a currently ongoing marital dissolution action, In re Marriage ofA llison Huynh and Scott Hassan, 2015-6- FL-013853. The original Complaint in this action was filed 0n July 28, 2020 and stated three causes of action, each alleged against both Defendants: 1) Breach 0f Fiduciary Duty; 2) Intentional Interference with Prospective Economic Advantage, and; 3) Negligent Interference with Prospective Economic Advantage. Defendants previously demurred to the original Complaint 0n various grounds and that demurrer was heard by the Court (Hon. Huber) on June 29, 2021. In a written order issued 0n July 7, 2021, the Court rul'ed that the one-year limitations period in CCP §340.6 “clearly” applied t0 all three causes of action alleged in the Complaint. Defendants’ demurrer to all three causes of action was sustained with 10 days’ leave to amend. The Court’s written order included the following conclusions: “The Complaint (at 1155(3) alleges that (among other things) Defendants’ representation ofHassan in the dissolution action was in and of itself a breach of fiduciary duty. “The elements of a cause of action for breach of fiduciary duty are the existence 0f a fiduciary relationship, its breach, and damage proximately caused by the breach.” (Knox v. Dean (2012) 205 Cal App 4th 417, 432.) The Complaint thus plainly alleges that Plaintiff was hanned by Defendants’ representation 0fHassan in the dissolution action, otherwise there would be no basis for alleging that this action was a 2 ORDER RE: DEMURRER TO FAC OOOOQON'Jl-PUJNH MMNMNNMNN-Ip-ap-ap-np-‘r-Ar-n-Ip-‘H OOQQkh-PDJNr-‘OGOONJQlfl-DDJNH breach of fiduciary duty. As a party t0 the litigation, Plaintiff was necessarily aware 0f Defendant Morrison & Forester associating in as counsel for Hassan in the dissolution action as soon as it occurred on March 22, 2019. (See Complaint at 1132.) Both the Complaint itself (at WSZ-S'i) and the judicially noticed material (Defendants’ exhibit 1 and Plaintiff’s exhibit A) establish that Plaintiff determined that this representation injured her, due t0 Defendant Paul Lion’s knowledge 0f her personal business and the community business, and based 0n this belief 0f injury filed her request for Mom'son & Forester t0 be disqualified as counsel for Hassan on June 28, 201 9, just over three months afier the representation 0f Hassan had begun. Accordingly, the one-year statute 0f limitation in CCP §340.6 began running by no later than June 28, 2019 and expired before the Complaint in this action was filed on July 28, 2020. “The words of the statute are quite broad, but they are not ambiguous: any time a plaintiffbrings an action against an attorney and alleges that attorney engaged in a wrongful act 0r omission, other than fraud, in the attorney’s performance of his or her legal services, that action must be commenced within a year afier the plaintifi discovers, or should have discovered, the facts that comprise the wrongful act 0r omission.” (Yee v. C/zeung (2013) 220 Cal.App.4th 184, 194-195.) The argument by Plaintiff in opposition that the one and only damage she ever suffered from Defendants’ alleged actions or seeks t0 recover was the $1.1 million in attorney’s fees she incurred “in thwarting the sale” in the Delaware Action (Complaint at 1137) is not a reasonable interpretation of the Complaint and contradicts the Complaint’s 3 ORDER RE: DEMURRER TO FAC NOWQQUI-hUJNH NNNNNNNNMp-HfiH-hHr-ar-Ar-tp-I OO‘QONMQUJN-‘OOOOHQLl’I-PUJNHO allegation that Defendants’ representation 0f Hassan in the dissolution action was a breach of fiduciary duty. The Complaint itself (at 115 8) alleges that as a proximate result of Defendants’ breach of fiduciary duty Plaintiff has suffered damages “in excess 0f $ 1,100,000 consisting generally of attorney and otherfees she has incurred and lost value Ofcommunity assets.” (Court’s emphasis.) The further argument in the opposition that the limitations period does not start running until the tort is completed, and that no tort alleged in the Complaint was complete until Plaintiff incurred $1.1 million in attomeys’ fees “in thwarting the sale” in the Delaware action is not a basis for overruling the demurrer. The Complaint 0n its face asserts that a breach of fiduciary duties Defendants owed Plaintiff “by virtue 0f" being attorneys occurred and was complete by March 22, 2019 when Mom'son & Forester associated in as counsel for Hassan in the dissolution action. “While inconsistent theories 0f recovery are permitted, a pleader cannot blow hot and cold as t0 the facts positively stated.” (Manti v. Gunari (1970) 5 Cal.App.3d 442, 449, internal citation omitted.) As the demurrer is sustained on statute of limitations grounds it is not necessary for the Court to consider Defendants’ other arguments in suppon 0f the demurrer at this time. Given that this is the first pleading challenge in this action and it is not apparent t0 the Court that leave to amend would be fiJtile, granting leave to amend at least once is appropriate. 4 ORDER RE: DEMURRER TO FAC KOOONJQU‘IAUJNH NNNNNNNNNI-‘r-IWHHHHHHH OOxlokhAmNr-‘OKOOO‘JONUIAUJN-‘O Plaintiff is reminded that if a demurrer is brought to an amended complaint, the Court “may consider the factual allegations ofprior complaints, which a plaintiffmay not discard 0r avoid by making contradictory averments, in a superseding, amended pleading.” (Berg & Berg Enterprises, LLC v. Boyle (2009) 178 Cal.App.4th 1020, 1034, internal quotations omitted)” (July 7, 2021 Order at pp. 8:17-10:23.) The Court on its own motion takes judicial notice ofJudge Huber’s July 7, 2021 order pursuant to Evidence Code §452(c) and (d). As a court order, it may be noticed as to its contents and their legal effect. The Court 0n its own motion also takes judicial notice 0f those documents submitted by Defendants which Judge Huber previously granted notice of, to the extent that the prior order granted judicial notice of those documents. Plaintiffs operative First Amended Complaint (“FAC”) was filed on July 23, 2021, stating the same three causes of action as the original complaint. Currently before the Court are two matters. The first is Defendants’ demurrer t0 all three claims alleged in the PAC, opposed by Plaintiff. As stated in the July 7 Order, the Court will consider the allegations of the original complaint in evaluating this demurrer. The second matter is Defendant’s motion t0 seal certain documents attached to the declaration 0f Defense Counsel Ragesh Tangri. The Court notes that Plaintiff filed a notice ofnon-opposition t0 this motion to seal on August 25, 2021. Accordingly the motion to seal is GRANTED and will not be further discussed. //// 5 ORDER RE: DEMURRER TO FAC KOOO-«lOLh-PUJNH NNNNMNNNNHHb-At-Ar-Ar-br-ay-or-fit-l OO‘JQU‘IAUJNHOKOOO‘HJQLh-fiUJN-‘o Request for Judicial Notice “Judicial notice may not be taken 0f any matter unless authorized 0r required by law.” (Evidence Code §450.) A precondition to judicial notice in either its permissive or mandatory form is that the matter t0 be noticed be relevant t0 the material issue before the Court. (Silverado Modjeska Recreation and Park Dist. v. County OfOrange (201 1) 197 Cal.App.4th 282, 307, citing People v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2.) It is the Court that determines relevance, not the parties. As noted above the Court on its own motion has taken judicial notice of Judge Huber’s prior order pursuant to Evidence Code §§452(c) and (d). The Court also on its own motion takes judicial notice 0f those documents submitted for judicial fioticc by Defendants (as exhibits 1-8) with the prior demurrer 0n April 16, 2021 that Judge Huber granted judicial notice of in the prior order. Exhibit 1 is a copy of excerpts from Plaintiff’s request to disqualify Mom'son & Foerster as counsel in the marital dissolution action filed on June 28, 201 9. Exhibit 2 is a copy 0f a brief excerpt fiom the transcript 0f a December 13, 201 9 court hearing 0n a motion for preliminary injunction brought by Plaintiff in a related Delaware action, Huynh v. Hassan, C.A. N0. 2019- 0893-JTL (“Delaware Action”). The request for preliminary injunction was denied. Exhibit 3 is a copy 0f excerpts from a bankruptcy petition filed in the federal bankruptcy court for the District 0f Delaware 0n February 26, 2020 in another related action, In re Suitable Technologies, Ina, Case No. 20-1 0432 (MFW) (“Bankruptcy Action”). Exhibit 4 is a copy 0f excerpts from an April 20, 2020 order issued in the Bankruptcy Action. ‘Exhibit 5 is a copy of excerpts from a 6 ORDER RE: DEMURRER TO FAC \OOOKJQkh-bUJNp-u NNNNNNNNNI-IHHHHp-I-Ap-Hr-a OOQQLh-PUJN-‘OWOOQQLI‘IAUJNHQ Notice of Objection t0 Proof of Claim by the debtor in the Bankruptcy Action on September 30, 2020. The debtor objected to a claim made by Allison Huynh. Exhibit 6 is a copy of excerpts from an August 20, 2020 Order issued‘in the Bankruptcy Action. Exhibit 7 consists of copies of further excerpts from the same order. Exhibit 8 is a copy of a Notice of Withdrawal 0f Claim and Reservation of Rights filed by Allison Huynh in the Bankruptcy Action on October 13, 2020. As 0n the prior demurrer notice 0f exhibit 1 is GRANTED pursuant to Evidence Code §452(d) only, and only 0f the existence and filing date of the request to disqualify counsel. Notice cannot be and is not taken of the contents 0f the declarations fiom Plaintiff‘s Counsel Pierce O’Donnell and Plaintiff attached to the request, or arguments in the points and authorities dependent upon the contents of the attached declarations. Notice of the contents of these documents is DENIED as declarations cannot be judicially noticed as to the truth 0f their contents. (See Oh v. Teachers Ins. & Annuity Assn. ofAmerfca (2020) 53 Cal.App.5th 71, 79-81 [truth 0f contents 0f court records cannot be judicially noticed]; Intengan v. BAC Home Loans Servicing LP (2013) 214 Cal.App.4th 1047, 1057 [court may take judicial notice of existence of declaration but not of facts asserted in it]; Bach v. McNelis (1989) 207 Cal.App.3d 852, 865 [court may not notice the truth of declarations or affidavits filed in court proceedings); Garcia v. Sterling (1985) 176 Cal.App.3d I7, 22 [“Although the existence of statements contained in a deposition transcript filed as part 0f the court record can be judicially noticed, their truth is not subject t0 judicial notice.”]) 7 ORDER RE: DEMURRER TO FAC OOOOQONLH$UJNH N N N [Q N [\J [\J [\J {\J v-A r-I n-I r-I p-a r-I r-A r-t n- n-I- OO N.) O\ U1 A DJ [\J '-‘ O KO m fl ON Ln -b DJ M D-I Notice 0f exhibits 2, 4, 6 and 7 is GRANTED pursuant to Evidence Code §452(c) only. Notice of exhibits 3, 5 and 8 is GRANTED pursuant t0 Evidence Code §452(d) only. These documents can only be noticed as t0 their existence and filing date and not the truth of their contents. Plaintiff” s reguest With the opposition t0 this demurrer Plaintiff has submitted a request for judicial notice of two documents (attached as exhibits A & B to the request) identical to the one submitted in opposition t0 the prior demurrer on June 16, 2021. Once again, Evidence Code §452(g) and (h) have n0 application to this material. Notice 0f exhibit A (another excerpt from the same request t0 disqualify counsel filed by Plaintiff in the marital dissolution action 0n June 28, 2019, including declarations from Plaintiff and Counsel) is GRANTED solely pursuant t0 Evidence Code §452(d). Neither the contents 0f the declarations 0r any arguments based 0n the contents of those declarations have been considered. Notice of exhibit B (once again a brief excerpt from the transcript 0f the August 16, 2019 court hearing in the marital dissolution action on the request to disqualify) is GRANTED solely pursuant to Evidence Code §452(c). Demurrer t0 the FAC The function 0f a demurrer is t0 test the legal sufficiency 0f a pleading. (Trs. 0f Capital Wholesale Elec. Etc. Fund v. Shearson Lehman Bros. (1990) 221 Ca1.App.3d 617, 621.) Consequently, “[a] demurrer reaches only t0 the contents 0f the pleading and such matters as may be considered under the doctrine ofjudicial notice.” (South Shore Land C0. v. Petersen (1964) 226 Ca1.App.2d 725, 732, internal citations and quotations omitted; see also CCP § 8 ORDER RE: DEMURRER TO PAC ,_. OWOO'xJONU'I-bwlx) 430.30, subd. (a); Cansino v. Bank ofAmerica (2014) 224 Cal.App.4th 1462, 1474 [rejecting allegation contradicted by judicially noticed facts]. .) While “[a] demurrer admits all facts properly pleaded, [it does] not [admit] contentions, deductions or conclusions 0f law or fact.” (George v. Automobile Club 0fSouthern California (201 1) 201 Cal.App.4th 1112, 1120.) A demurrer will lie where the allegations and matters subject to judicial notice clearly disclose a defense 0r bar t0 recovery. (Casterson v. Superior Court (2002) 101 Cal.App.4th 177, 183.) As the prior Order stated where a demurrer is to an amended complaint, the Court “may consider the factual allegations ofprior complaints, which a plaintiffmay not discard 0r avoid by making contradictory averments, in a superseding, amended pleading.” .(Berg & Berg Enterprises, LLC v. Boyle (2009) 178 Cal.App.4th 1020, 1034 (internal quotations omitted.) “Under the sham pleading doctrine, plaintiffs are precluded from amending complaints to omit harmful allegations, without explanation, from previous complaints to avoid attacks raised in demurrers or motions for summary judgment.” (Deveny v. Entropin, Inc. (2006) 139 Ca1.App.4th 408, 425.) Generally, “a party may not allege inconsistent facts in his pleading in the same case.” (Katz v. Feldman (1972) 23 Cal.App.3d 500, 504.) Thus, the sham pleading doctrine applies where a pany files an amended pleading with allegations inconsistent with those asserted in a pn'or pleading. When that occurs, the court may disregard the inconsistent allegation. (Vallejo Development C0. v. Beck Deve[0pment C0. (1994) 24 Ca1.App.4th 929, 946.) The Court cannot consider extrinsic evidence when ruling on a demurrer. Therefore, except to the extent the required meet and confer efforts are discussed, the Court has not 9 ORDER RE: DEMURRER TO PAC OOOONJONUWADJNI-I NNNNNNNNNv-I-Ih-Ap-AHH-a-IHb-d W‘Jomhwwfloomqmmhmw" considered either declaration submitted by Defense Counsel Ragesh Tangri or the attached exhibits. Defendants demurrer to all three causes of action in the FAC on several grounds, including that they are all barred by the applicable statute of limitations. (See August 24, 2021 Notice of Demurrer and Demurrcr.) Defendants’ demurrer to all three causes 0f action 0n the ground that they are time-barred by applicable statute of limitations-the one year statute of limitations in CCP §340.6--is SUSTAINED. As stated in the prior order, in evaluating this demurrer to an amended complaint the Coun will continue to consider (and Plaintiff remains bound by) the allegations in the original complaint at 1H] 32 & 52-58 that establish (along with Plaintiff‘s own request for judicial notice ofher June 2019 request to disqualify) that Plaintiff was aware 0f Defendant Morrison & Forester associating in as counsel for Hassan in the dissolution action as soon as it occurred 0n March 22, 2019 and determined that this representation injured her, due t0 Defendant Paul Lion’s knowledge ofher personal business and the community business, and based 0n this belief 0f injury filed her request for Mom'son & Forester t0 be disqualified as counsel for Hassan on June 28, 20 19, thereby representing to the Court (see CCP §128.7(b)) that she had been and would continue to be injured by this representation), just over three months afier the representation of Hassan had begun. 10 ORDER RE: DEMURRER TO FAC OOOO‘xJQUl-PUJNH NNMNNNNNNHv-Iv-‘v-‘p-op-nr-‘r-tflfi WQONM-bUJNHOKOOONQUl-PMNH As stated in the pn'or order, for purposes of the one-year statute of limitations in CCP §340.6, “[a]ctual injury” occurs “when the plaintiff suffers any loss 0r injury legally cognizable as damages in a legal malpractice action based on the asserted errors or omissions.” (Jordaclze Enterprises, Inc. v. Brobeck, Plu’eger & Harrison (1998) 18 Ca1.4th 739, 743. Court’s emphasis.) “An existing injury is not contingent 0r speculative simply because future events may affect its permanency 0r the amount ofmonetary damages eventually incurred.” (Id. at p. 754.) Therefore, it remains the case that the one-year statute of limitations began running by n0 later than June 28, 2019 and expired before the original complaint in this action was filed. The allegations in the FAC at 1136 that Plaintiff “suffered no monetary loss 0r other actual injury from Defendant entering an appearance 0n behalf 0f Hassan in the dissolution action,” and at 1156a) that “this representation, per se, did not cause Plaintiff any monetary damage or actual injury” are not a basis for overruling this demurrer. Both allegations are a) legal conclusions the Court would not be required to accept as true even if this were the first pleading challenge in this case, and b) clear examples of a sham pleading inconsistent with the allegations 0f the original complaint that attempt t0 evade the conclusions the prior order reached based 0n the Complaint’s factual allegations. Plaintiff’s argument in the opposition that the one-year limitations period should be considered tolled by a “continuing tort” is unpersuasive as a) tolling is not alleged in the FAC, and b) tolling ofCCP §340.6 is expressly limited to the circumstances enumerated in the statute. (See Laird v. Blacker (1992) 2 Ca1.4th 606, 618 (Laird) where the California Supreme Court 11 ORDER RE: DEMURRER TO FAC \OOO‘xlONL/‘I-h 10 11 12 13 14 15 16 17 18 I9 20 21 22 23 24 25 26 27 28 wrote: “Section 340.6, subdivision (a), states that ‘in no event’ shall the prescriptive period be tolled except under those circumstances specified in the statute. Thus, the Legislature expressly intended t0 disallow tolling under any circumstances not enumerated in the statute.”) Based 0n Laird, subsequent courts have refused t0 apply the doctrine 0f equitable tolling to claims against attorneys. (See Gordon v. Law Oflices onguirre & Meyer (1999) 70 Cal.App.4th 972.) Further leave to amend is DENIED as it is now apparent that Plaintiff cannot allege claims for Breach of Fiduciary Duty, Intentional Interference with Prospective Economic Advantage, and Negligent Interference with Prospective Economic Advantage against these Defendants that are not time-barred by the one-year statute 0f limitations in CCP §340.6. As the demurrer is sustained on the basis 0f the statute 0f limitations argument it is not necessary for the Court to consider Defendants’ other grounds for demurrer. \ I i .- H . ‘4. | l- L-Dm Z- 9 1'” 2' 2" Peter H. Kirwan Judge 0fthe Superior Court Dated: 12 ORDER RE: DEMURRER TO PAC SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA DOWNTOWN COURTHOUSE 191 NORTH FIRST STREET SANjosE, CALIFORNIA 95113 CIVIL DIVISION C urt ' Hz C RE: Allison Huynh vs Paul Lion, Ill et al E [Y Case Number: 20CV368776 PROOF OF SERVICE Order RE: Demurrer to First Amended Complaint was delivered to the parties listed below the above entitled case as set forth In the sworn declaration below. If you, a party represented by you. or a witness to be called on behalf of that party need an accommodation under the American with Disabilities Act. please contact the Court Administrator's office at (408) 882-2700. or use the Court’s TDD line (408) 882-2690 or the VoicefrDD California Relay Service (800) 735-2922. DECLARATION 0F SERVICE BY MAIL: | declare that l sewed this notice by enclosing a true copy in a sealed envelope‘ addressed to each person whose name is shown below. and by depositing the envelope with postage fully prepaid. in the United States Mail at San Jose, CA on Febmary 08, 2022. CLERK OF THE COURT. by Audrey Nakamoto. Deputy. cc: WalterJ Lack 10100 Santa Monica Blvd 16th Floor Los Angeles CA 900674107 David Floyd McGowan 217 Leidesdon‘f St San Francisco CA 94111 cw-9027 REV 12/08/16 PROOF OF SERVICE
