Response ReplyCal. Super. - 6th Dist.July 28, 202010 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 20CV368776 Santa Clara - Civil DURIE TANGRI LLP RAGESH K. TANGRI (SBN 159477) rtangri@durietangri.com DAVID McGOWAN (SBN 154289) dmcgowan@durietangri.com BETHANY D. BENGFORT (SBN 3 12507) bbengfort@durietangri.com 217 Leidesdorff Street San Francisco, CA 941 11 Telephone: 415-362-6666 Facsimile: 4 1 5-236-6300 Attorneys for Defendants Electronically Filed by Superior Court of CA, County of Santa Clara, on 6/22/2021 2:29 PM Reviewed By: F. Miller Case #20CV368776 Envelope: 6698685 MORRISON & FOERSTER, LLP and PAUL L. LION, III SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SANTA CLARA ALLISON HUYNH, Plaintiff, V. MORRISON & FOERSTER, LLP, PAUL L. LION, III, and DOES 1-20, Inclusive, Defendants. Case N0. 20CV368776 REPLY IN SUPPORT OF DEFENDANTS’ DEMURRER TO COMPLAINT Date: June 29, 2021 Time: 9:00 a.m. Ctrm: 19 Judge: Honorable Peter H. Kirwan REPLY IN SUPPORT OF DEFENDANTS’ DEMURRER TO COMPLAINT / CASE NO. 20CV368776 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 II. III. TABLE OF CONTENTS INTRODUCTION .................................................................................................................... ARGUMENT ............................................................................................................................ A. A11 0f Plaintiff’ s Claims are Barred by the Statute 0f Limitations ............................... 1. Every Cause 0f Action is Premised 0n Conduct that Occurred Prior t0 July 28, 2019 ............................................................................................................. 2. Plaintiff Suffered Actual Injury in at Least Two Ways Prior to July 28, 2019 ................................................................................................................... 3. The Continuous Accrual Doctrine does not Apply t0 Section 340.6 ................ B. A11 of Plaintiff s Claims Directly Stem from Injury t0 a Corporation and Must be Brought as Derivative Claims ....................................................................................... C. Defendants’ Representation ofMyDream prior to its Formation (and After) did not Result in a Personal Duty t0 Plaintiff ........................................................................... D. Defendants’ Second and Third Causes of Action Fail because Defendants are Protected by Attorney Immunity .................................................................................. E. Plaintiff s Second and Third Causes of Action Fail because Defendants are not Strangers to the Economic Relationship ....................................................................... CONCLUSION ......................................................................................................................... i Page ....... 1 ....... 1 ....... 1 ....... 1 .......3 ....... 5 ....... 5 .......6 ....... 8 .......9 ..... 10 REPLY IN SUPPORT OF DEFENDANTS’ DEMURRER TO COMPLAINT / CASE NO. 20CV368776 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Page(s) Cases Benasra v. Mitchell Silberberg & Knupp LLP, 123 Cal. App. 4th 1179 (2004) ............................................................................................................... 3 Budd v. Nixen, 6 Cal. 3d 195 (1971) ............................................................................................................................... 2 Capra v. Capra, 58 Cal. App. 5th 1072 (2020), as modified (Jan. 15, 2021) .................................................................... 7 Goldstein v. Lees, 46 Cal. App. 3d 614 (1975) .................................................................................................................... 7 Gordon v. Law Ojfices 0nguirre & Meyer, 70 Cal. App. 4th 972 (1999) ................................................................................................................... 5 Granewich v. Harding, 329 Or. 47 (Or. 1999) ............................................................................................................................. 9 Haynes & Boone, LLP v. NFTD, LLC, N0. 20-0066, 2021 WL 2021453 (TeX. May 21, 2021) ...................................................................... 8, 9 Jocer Enters., Inc. v. Price, 183 Cal. App. 4th 559 (2010) ................................................................................................................. 5 Jones v. H. F. Ahmanson & C0., 1 Cal. 3d 93 (1969) ................................................................................................................................. 6 Jordache Enters. v. Brobeck, Phleger & Harrison, 18 Cal. 4th 739 (1998) .................................................................................................................... 3, 4, 5 M’Guinness v. Johnson, 243 Cal. App. 4th 602 (2015) ................................................................................................................. 7 Manion v. Nagin, 394 F.3d 1062 (8th Cir. 2005) ................................................................................................................ 7 Oaks Mgmt. Corp. v. Superior Court (Ayyad), 145 Cal. App. 4th 453 (2006) ................................................................................................................. 7 Panoutsopoulos v. Chambliss, 157 Cal. App. 4th 297 (2007) ................................................................................................................. 8 Rakestraw v. California Physicians ’ Serv. , 81 Cal. App. 4th 39 (2000) ..................................................................................................................... 4 ii REPLY IN SUPPORT OF DEFENDANTS’ DEMURRER TO COMPLAINT / CASE NO. 20CV368776 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Redfearn v. Trader Joe ’s C0., 20 Cal. App. 5th 989 (2018) Jesse ex rel. Reinecke v. Danforth, 169 Wis. 2d 229 (Wis. 1992) Rose v. Hudson, 153 Cal. App. 4th 641 (2007) .. Schuster v. Gardner, 127 Cal. App. 4th 305 (2005) .. Truong v. Glasser, 181 Cal. App. 4th 102 (2009) .. Woods v. Superior Court (Woods), 149 Cal. App. 3d 931 (1983) Statutes Cal. CiV. Proc. Code § 340.6 ......... Cal. CiV. Proc. Code § 340.6(a)(1) Cal. CiV. Proc. Code § 340.6(a)(2) Rules Cal. R. Profl Conduct 1.13 ........... ............................................................................................................. 10 ............................................................................................................... 7 ............................................................................................................... 5 ............................................................................................................... 6 ............................................................................................................... 4 ............................................................................................................... 7 ........................................................................................................... 1,5 ............................................................................................................... 6 iii REPLY IN SUPPORT OF DEFENDANTS’ DEMURRER TO COMPLAINT / CASE NO. 20CV368776 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I. INTRODUCTION Plaintiff’ s Opposition seeks t0 walk back the Complaint by deleting allegations that show the Complaint is both time-barred and a disguised derivative claim, either 0f Which would be case dispositive. Plaintiff mischaracterizes the Complaint as “primarily” directed toward conduct occurring after the critical date, ignoring the many allegations regarding conduct occurring before that date. Plaintiff asserts that she did not suffer injury before the critical date because she did not have t0 pay the legal fees associated with her (pre-critical date) motion to disqualify Defendants in the family court, but that argument rests on a false characterization 0f the family court’s order, which (i) requires her t0 pay $20,000 0f her own legal fees each month and (ii) provides that fees over that amount are advanced (not ultimately paid for) by the other party t0 that action. Plaintiff also selectively ignores all of the allegations in the Complaint regarding the “10st value” of her community assets, arguing instead that her sole claim t0 damages is 0n fees she incurred “personally.” With regard to duty, Plaintiff argues that Defendants represented her personally by Virtue of their representation of MyDream, but then later argues that Defendants are strangers t0 the economic relationship between her and Hassan because they did not represent either party by Virtue of their representation of the various family companies. Plaintiff” s arguments cannot be reconciled with the Complaint, the law, or her other arguments, and the demurrer should be sustained. II. ARGUMENT A. All 0f Plaintiff’s Claims are Barred by the Statute 0f Limitations 1. Every Cause of Action is Premised 0n Conduct that Occurred Prior t0 July 28, 2019 Each cause 0f action in Plaintiff s Complaint is barred by the statute 0f limitations set forth in California Code 0f Civil Procedure section 340.6; she has not set forth a plausible argument t0 the contrary. Plaintiff first argues in her Opposition that she “did not discover the wrongful conduct giving rise to the damages she is claiming until . . . after the July 28, 2019 ‘critical date’ defendants identify for statute of limitations purposes.” Opp’n 3. The Complaint refutes this claim. It alleges that Plaintiff “learned Within the last two years 0f the facts showing Defendants’ systematic and continuous involvement in trying to circumvent her interests by effectuating transactions that depleted 0r devalued 1 REPLY IN SUPPORT OF DEFENDANTS’ DEMURRER TO COMPLAINT / CASE NO. 20CV368776 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 community assets.” Compl. fl 57 (emphasis added). And it makes clear that that means “more than a year ago,” by citing t0 Defendant Morrison & Foerster’s representation 0f Hassan in March 2019 as one of the critical dates in supplying this knowledge. Id. Plaintiffknew as 0f March 22, 2019 that Defendants were undertaking representation adverse to her interests. Id. 1H] 55, 57. And while Plaintiff argues that she “did not receive, or have any way t0 obtain, documentationfl showing defendants’ continued involvement in other transactions until Hassan produced them in discovery in the divorce case in early 2020,” Opp’n 3, this argument is belied by the fact that the Complaint cites to a public news article published in February 2016 as the source of her information regarding Defendants” allegedly wrongful conduct concerning Willow Garage. Compl. W 49-50. Plaintiff argues that she had no duty t0 inquire into this conduct until her relationship with Defendants was “repudiated” or she became “aware 0f facts that would make a reasonably prudent person suspicious of the fiduciary.” Opp’n 5-6. But she does not dispute that this standard was met either When Plaintiff fired Defendants as MyDream’s counsel in March 2016, see Compl. fl 27 or, at the latest, when Defendant Morrison & Foerster undertook t0 represent Hassan adverse to Plaintiff in the Dissolution Action in March 2019, see id. 1] 55. Plaintiff thus has n0 excuse for Why she waited until July 28, 2020 to file a complaint based 0n conduct that occurred over three years prior and about which she either knew or should have known over a year prior. Plaintiff next argues that her claims are not time-barred because her “primary item 0f damages” is the $1.1 million Plaintiff spent to thwart the sale 0f Suitable, and she did not incur these damages until after July 28, 2019. Opp’n 3. The Complaint refutes this argument as well. It claims damages in the form 0f the “10st value of community assets” and other “attorney fees and costs” she may have incurred as a result 0f Defendants’ alleged wrongful conduct. Compl. 1N 58, 67, 76. The argument also is irrelevant because Plaintiffmay not extend the limitations period by focusing on some subset of alleged harm. A cause 0f action for attorney misconduct typically “arises . . . before the client sustains all, 0r even the greaterpart, of the damages occasioned by [the] attorney’s negligence.” Budd v. Nixen, 6 Cal. 3d 195, 201 (1971) (emphasis added). Once the client “discover[s] his attorney’s negligence” and “suffer[s] some damage, the client must institute his action Within the time prescribed in the statute of limitations. . . .” Id. (emphasis added). Accordingly, the statute 0f limitations began t0 run When Plaintiff learned that Defendants were acting against her interests and she suffered any injury as a result 2 REPLY IN SUPPORT OF DEFENDANTS’ DEMURRER TO COMPLAINT / CASE NO. 20CV368776 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 0f these actions, regardless of whether she later sustained further damage arising from the same wrongful conduct, and the standard for injury is 10w. See Jordache Enters. v. Brobeck, Phleger & Harrison, 18 Cal. 4th 739, 749 (1998) (explaining that the question ofWhether “actual injury” has occurred focuses “on the fact of injury” rather than the amount). Finally, Plaintiff suggests that the sale of Suitable should be Viewed as a separate, independently wrongful act subject t0 its own statute 0f limitations. Opp’n 3-4. That is incorrect as a matter of both fact and law. First, the Complaint alleges that “Defendants’ conduct relating to Suitable Technologies is not an isolated incident but instead part 0f a larger pattern and practice,” making it clear that the sale of Suitable cannot be Viewed as separate from Defendants’ other allegedly wrongful conduct. Compl. fl 48. Second, courts have found that a cause of action for the breach of a duty of loyalty-a finding of which is essential t0 every cause of action in the Complaint-arises as soon as the attorney undertakes an adverse representation, regardless of any subsequent actions related t0 that representation. See Benasm v. Mitchell Silberberg & Knupp LLP, 123 Cal. App. 4th 1179, 1189 (2004) (explaining that a breach 0f the duty of loyalty occurs as soon as an attorney undertakes to represent a party adverse t0 its former client, not When it later files suit or takes action against the former client). Defendants’ conduct in structuring the sale 0f Suitable is thus not an independent breach of the duty 0f loyalty, but rather relates back to Whenever Defendant first “accept[ed] a representation” contrary t0 Plaintiff’ s interests. Id. The Complaint alleges that that was at least as early as March 22, 2019. Compl. fl 55. 2. Plaintiff Suffered Actual Injury in at Least Two Ways Prior t0 July 28, 2019 Plaintiff next argues that the statute of limitations should be tolled under section 340.6(a)(1) because she did not suffer any actual injury until she incurred fees in the Derivative Action. See Opp’n 2-5. On the face 0f the Complaint, however, Plaintiff suffered at least two injuries prior t0 July 28, 2019: (1) the depletion of Willow Garage, a “community asset,” When Defendants gave away “valuable intellectual property” prior to 2016, see Compl. 1W 49-50; and (2) the resources she expended and the fees she necessarily incurred when “forc[ed] . . . to move to disqualify Defendant as Hassan’s counsel” in June of 2019. Id. fl 33; see also P1.’s RJN EX. 1. As explained in Defendants’ Opening Brief, Plaintiff was on inquiry notice of Defendants’ conduct relating to Willow Garage as early as 2016 and at the latest in March of 2019. Opening Br. 7. While Plaintiff argues that she “does not know if those other 3 REPLY IN SUPPORT OF DEFENDANTS’ DEMURRER TO COMPLAINT / CASE NO. 20CV368776 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 transactions will produce actual injury” because she has not yet established her right t0 the underlying assets, Opp’n 3, the Complaint is necessarily premised 0n the allegation that she did have a community property interest in those assets, and that Defendants’ conduct did in fact deplete those assets. See Compl. 1] 50. Plaintiff s argument that her claim is timely because it might be wrong is nonsensical. On a demurrer, the court must treat all properly pleaded facts alleged in the Complaint as true. Rakestraw v. California Physicians ’ Serv., 81 Cal. App. 4th 39, 42 (2000). Plaintiff also argues that neither injury counts because: (1) Hassan was ordered by the court in the Dissolution Action to pay her attorney fees, Opp’n 4; and (2) she may be able t0 recover the full value 0f her lost community interest in the Dissolution Action, id. at 3. First, Plaintiff s characterization 0f the court’s order in the Dissolution Action is false. The order, which was the result of a stipulation between the parties, requires only that Hassan advance Plaintiff’ s attorney fees until a final resolution 0n the allocation 0f fees at trial. See Request for Judicial Notice in Support 0f Defendants’ Demurrer Reply (“RJN”) EX. 1 at 1N 1, 8-9.1 Regardless of the ultimate decision 0n fee allocation between the parties, Plaintiff has still incurred an obligation to ensure that her attorneys are paid. See Truong v. Glasser, 181 Cal. App. 4th 102, 115 (2009) (the client sustains actual injury When it “obtain[s] and obligate[s] t0 pay new counsel” to remedy the consequences of attorney misconduct). In addition, the stipulation requires that Plaintiffpay $20,000 0f her own attorney fees each month. RJN EX. 1 1] 3. This necessarily includes the relevant proportion 0f fees directed towards Plaintiff s attorneys’ work on the Disqualification Motion in the months prior to June 28, 2019. Second, Plaintiff’ s argument that she has suffered no actual injury because her financial injury may ultimately be obviated or reduced has been explicitly rejected by the Supreme Court. The Court has made clear that “when malpractice results in the loss 0f a right, remedy, 0r interest, or in the imposition 0f a liability, there has been actual injury regardless ofwhetherfuture events may aflect the permanency offhe injury 0r the amount ofmonetary damages eventually incurred.” Jordache, 18 Cal. 4th at 750 (emphasis added) (citation omitted). Indeed, the Supreme Court specifically “rejected the claims that actual injury should be defined by a monetary amount and that the limitations period should be tolled if 1 In assessing whether to sustain a demurrer, the court may consider “matters that may be judicially noticed,” such as a court order. Rakestraw, 81 Cal. App. 4th at 42. 4 REPLY IN SUPPORT OF DEFENDANTS’ DEMURRER TO COMPLAINT / CASE NO. 20CV368776 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the injury is, in some way, remediable.” Id. Thus, just because Plaintiff was 0r could be later compensated for her injury, this does not change the fact that she “sustained actual injury,” thus triggering the statute of limitations. 3. The Continuous Accrual Doctrine does not Apply t0 Section 340.6 Plaintiff lastly argues that the statute of limitations did not begin t0 run because Defendants” structuring 0f the sale 0f Suitable constituted a continuing Violation, thus tolling the statute 0f limitations under the continuous accrual doctrine. Opp’n 5-6. The continuous accrual doctrine, however, does not apply to causes of action under section 340.6. See Jocer Enters., Inc. v. Price, 183 Cal. App. 4th 559, 569 (2010) (“[O]ur Supreme Court has held that the Legislature intended to disallow tolling under any circumstances not enumerated in section 3406.”); see also Rose v. Hudson, 153 Cal. App. 4th 641, 655 (2007) (“In no event Will the statute 0f limitations for legal malpractice be tolled unless the tolling provisions contained in the statute apply, . . . .”) (citation omitted). Section 340.6(a)(2) specifically enumerates that the statute of limitations is tolled when “[t]he attorney continues to represent the plaintiff regarding the specific subj ect matter in Which the alleged wrongfiJI act or omission occurred,” but does (C not contemplate continuous accrual in any other circumstances. Because the statute’s explicit tolling provisions [are] exclusive,” Gordon v. Law Ufices 0nguirre & Meyer, 70 Cal. App. 4th 972, 977 n.5, 974 (1999), any other version of the continuous accrual doctrine cannot apply here. Accordingly, all 0f Plaintiff s causes of action are barred by the statute 0f limitations, and the Court need not reach the remaining issues. B. All 0f Plaintiff’s Claims Directly Stem from Injury to a Corporation and Must be Brought as Derivative Claims Even if the statute of limitations did not apply, however, all of Plaintiff s causes of action are independently barred because Plaintiff is required t0 bring them as derivative claims. Plaintiff argues that she need not bring her claims as a derivative action because she incurred the attorney fees in the Derivative Action “personally.” Opp’n 6. This argument ignores the Complaint’s allegation that Plaintiff also seeks t0 recover the “lost value 0f community assets.” Compl. 1H] 58, 67, 76. Moreover, Plaintiff s entire claim for these damages rests on the theory that Defendants’ actions decreased the value 0f her community assets, thus forcing her t0 incur fees “to prevent the dissipation of [the] assets.” 5 REPLY IN SUPPORT OF DEFENDANTS’ DEMURRER TO COMPLAINT / CASE NO. 20CV368776 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Schuster v. Gardner, 127 Cal. App. 4th 305, 313 (2005) (citation omitted). These damages (fees allegedly incurred t0 prevent or remedy supposed damage t0 the corporation) thus were “incidental to damages to the corporation,” and so bar an individual cause of action. Id. The sole case that Plaintiff cites in support, Jones v. H. F. Ahmanson & C0., 1 Cal. 3d 93 (1969), is inapposite. In that case, the plaintiff contended that the defendants breached their fiduciary duties to the minority shareholders by creating and operating a holding company in a way that benefited maj ority shareholders and harmed minority shareholders. Id. at 101, 107. As the Supreme Court noted, the stipulated facts demonstrated that the decreased value t0 the plaintiff’ s stock was not the result 0f an injury t0 the corporation, but rather, the dilution 0f the minority shareholders’ interest relative t0 the majority shareholders’ interest. Id. at 106-07. Here, Plaintiff admits that the “relief sought in Delaware-preventing a below-value asset sale-would benefit Suitable as distinguished from its Shareholders,” Opp’n 6, and thus that her fees were directly incurred as a result of an injury to the corporation, and not just to herself as a shareholder. Ahmanson therefore does not apply. C. Defendants’ Representation of MyDream prior to its Formation (and After) did not Result in a Personal Duty to Plaintiff Plaintiff” s first cause of action is barred for a third, independent reason because it is premised on Defendants having a fiduciary duty to Plaintiff personally, and not just t0 MyDream, the corporation she founded. Compl. 1W 52, 66, 75. Plaintiff argues that Defendants necessarily represented both MyDream and Plaintiff because “Defendants could not be counsel to just the corporation when the corporation did not exist and defendants were advising the principal on the very subj ect of What legal form the business should take.” Opp’n 8. This argument posits that corporations may never be formed Without counsel personally representing shareholders, but n0 case so holds. Plaintiff offers no substantive analysis for disputing the rule that a corporation accedes t0 all client rights upon formation. It is true that the leading cases are from outside California, id. at 9, but it does not follow that California law is different. Plaintiff offers no reason t0 believe it is. That some duties may form before representation, Opp’n 8, is irrelevant t0 the identity of the client. See, e.g., Cal. R. Prof’l Conduct 1.13 (organization is client in entity representation). Plaintiff further ignores that the formal retention agreement made it clear that Defendants were representing MyDream, and not Plaintiff personally. Compl. fl 26. 6 REPLY IN SUPPORT OF DEFENDANTS’ DEMURRER TO COMPLAINT / CASE NO. 20CV368776 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 In any case, the reasoning behind the leading cases 0n this issue-Jesse ex rel. Reinecke v. Danforth, 169 Wis. 2d 229 (Wis. 1992) and Manion v. Nagin, 394 F.3d 1062, 1068 (8th Cir. 2005)- applies equally in California. In both 0f those cases the courts held that, even though an attorney may represent an individual personally before a corporation is formed, if the representation is limited to the creation of that corporation, then the “lawyer’s pre-incorporation involvement With the person is deemed to be representation of the entity, not the person.” Manion, 394 F.3d at 1069 (citing Jesse, 169 Wis. 2d at 241). The rule was created to prevent the very situation presented in this case: “dual representation” 0f a corporation and a corporate constituent With potentially conflicting interests. Jesse, 169 Wis. 2d at 240- 41. The rule was grounded in the relevant state rules about the representation of corporations, Which “mak[e] clear that the attorney’s duty attaches t0 the entity, not its constituents.” Manion, 394 F.3d at 1068. This is also the rule in California. M’Guinness v. Johnson, 243 Cal. App. 4th 602, 622 (2015) (“[A]n attorney for a corporation’s first duty is t0 the corporate entity”). Plaintiff also argues that Defendants owe her a duty 0f loyalty because “[a]n attorney representing a presumptively community entity cannot later choose sides and act 0n behalf of one spouse against the other, . . . .” Opp’n 9. The cases Plaintiff cites, however, make it clear that this obligation stems from the attorney’s duty t0 the corporation, not t0 any particular Spouse. See, e.g., Woods v. Superior Court (Woods), 149 Cal. App. 3d 931, 935 (1983) (agreeing that the attorney owes “undivided loyalty t0 the corporation and cannot take sides in a serious dispute between its owners.”); Goldstein v. Lees, 46 Cal. App. 3d 614, 622 (1975) (denying fee claim by former corporate counsel who represented shareholder in proxy fight 0n ground that representation was inconsistent With duty of confidentiality). Woods is particularly inapposite. The case involved disqualification, not civil liability, and the court employed an “appearance of impropriety” standard that is not consistent with subsequent case law. E.g., Oaks Mgmt. Corp. v. Superior Court (Ayyad), 145 Cal. App. 4th 453, 471 (2006) (“To any extent the court felt there was arguably an appearance of impropriety, in California that is not a sufficient ground for disqualification of an attorney”). As the court 0f appeal noted recently in Capra v. Capra, 58 Cal. App. 5th 1072, 1096-97 (2020), as modified (Jan. 15, 2021): We respectfully disagree With Woods’s statement that the attorney, as counsel for the closely held family corporation, “necessarily” represented both husband’s and wife’s interests if that statement is taken out of its context. Even in a closely held corporation, the company’s attorney owes a duty 0f loyalty to the corporation, not the shareholders. 7 REPLY IN SUPPORT OF DEFENDANTS’ DEMURRER TO COMPLAINT / CASE NO. 20CV368776 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiff has thus failed to establish that Defendants owed any duty t0 herpersonally, as opposed t0 MyDream as their corporate client. D. Defendants’ Second and Third Causes of Action Fail because Defendants are Protected by Attorney Immunity Plaintiff’ s second and third causes of action are barred for the additional and independent reason that Defendants are protected from liability for these claims by attorney immunity. Plaintiff argues that the doctrine of attorney immunity cannot apply to her second and third causes 0f action for three reasons: (1) the immunity is not relevant to California law; (2) Defendants represented the “family companies,” and not Hassan; and (3) Defendants used “wrongful means” t0 advance their client’s obj ectives by way 0f their breach of their fiduciary duties t0 Plaintiff. Opp’n 11-13. Plaintiff is incorrect. First, as the Texas Supreme Court recently explained in Haynes & Boone, LLP v. NFTD, LLC, N0. 20-0066, 2021 WL 2021453, at *7 (TeX. May 21, 2021) (publication pending), the doctrine 0f attorney immunity stems from English common law, and to this day, “no jurisdiction has found a duty of care based 0n negligent services by an attorney to an adverse party.” (citation omitted). Plaintiff cites to n0 California case that suggests that the doctrine 0f attorney immunity does not apply in California, and indeed, the premise of attorney immunity is instantiated in the requirement in California that a plaintiff can only state a Viable claim for a lawyer’s conspiracy With a client “if the attorneys” actions went beyond their role as attorneys acting 0n behalf 0f” the client. Panoutsopoulos v. Chambliss, 157 Cal. App. 4th 297, 306 (2007). While Plaintiff suggests that “there is n0 justification for cloaking the attorney’s conduct in privilege” if “the attorney’s conduct is independently wrongful,” Opp’n 13, the privilege is designed t0 protect “an attorney’s conduct [that] may be wrongful but still fall[s] within the scope of client representation.” Haynes & Boone, 2021 WL 2021453, at *8 (citation omitted). Second, the fact that Defendants represented Suitable and Willow Garage in these transactions, and not Hassan, is irrelevant. For one thing, the Complaint alleges that Defendants represented Hassan by way of their representation of family companies. See, e.g., Compl. 1N 28-29, 62, 70-71. For another, Plaintiff’ s claims stem from her allegations that Defendants” conduct in the “transfer, giveaway, mismanagement, depletion, dilution, and devaluation 0f the community assets” interfered With her prospective economic advantage. Id. 1N 63, 72. The structure, management, and sale 0f the family 8 REPLY IN SUPPORT OF DEFENDANTS’ DEMURRER TO COMPLAINT / CASE NO. 20CV368776 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 companies’ assets “is part of the discharge of the lawyer’s duties in representing” its corporate clients. Haynes & Boone, 2021 WL 2021453, at *8 (emphasis omitted) (citation omitted). Because the alleged conduct was “Within the scope 0f its representation” 0f the family companies, Defendants are “protected by attorney immunity.” Id. For this reason, Plaintiff’s reliance on Granewich v. Harding, 329 Or. 47 (Or. 1999), is inapposite. The plaintiff in that case alleged that lawyers were secondarily liable for actions taken by non-clients Whom the lawyers had agreed t0 assist in the context 0f a control dispute among shareholders. The Complaint in this case alleges the attempted dilution of company assets and seeks damages in the form 0f dilution of those assets, Which Plaintiff alleges was the subj ect of corporate representation. Finally, Plaintiff s claim that Defendants breached their fiduciary duties t0 her does not actually establish that Defendants used “wrongful means” in their representation 0f Suitable 0r Willow Garage. Indeed, the means Plaintiff alleges they used-structuring sales, and managing assets-are all rather ordinary in the course of representing a corporation. As explained by the Texas Supreme Court, “Whether attorney immunity applies depends 0n the kind of conduct at issue rather than the alleged wrongfulness 0f said conduct,” and “immunity applies When a non-client’s claim is based on an attorney’s conduct within the scope ofhz's representation ofhis clients” as opposed t0 conduct that is “foreign t0 the duties ofa lawyer.” Haynes & Boone, 2021 WL 2021453, at *9 (internal quotation marks omitted) (citations omitted). Because Plaintiff has not pled factual allegations that would demonstrate that Defendants were acting outside the scope 0f their representation of the family companies, attorney immunity applies. E. Plaintiff’s Second and Third Causes 0f Action Fail because Defendants are not Strangers t0 the Economic Relationship Plaintiff’ s second and third causes of action are also independently barred because, 0n the face of the Complaint, Plaintiff has failed to show that Defendants are “strangers” t0 the economic relationship as required by the claims. The Complaint alleges that: (1) Defendants represented Plaintiff personally during her and Hassan’s marriage, Compl. 1H] 28-29; (2) Defendants represented Hassan personally during and after Plaintiff and Hassan’s marriage, id. 1W 28-29, 62, 70-71; and (3) Defendants represented the “family companies” underlying her economic relationship with Hassan. Id. 1] 29. Nevertheless, 9 REPLY IN SUPPORT OF DEFENDANTS’ DEMURRER TO COMPLAINT / CASE NO. 20CV368776 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiff argues that Defendants are somehow still strangers to that relationship. Opp’n 13-14. Plaintiff’s explanation that she meant t0 only allege that Defendants represented the family companies, id., makes n0 sense. First, all three 0f Plaintiff s causes of action are premised 0n her allegation that Defendants owed her a duty 0f loyalty because they represented her personally in connection with the formation of MyDream. Compl. 1H 52, 66, 75. Second, Plaintiff alleges throughout the Complaint that Defendants also represented Hassan by way of their representation of the family companies, and that they acted in his interests when structuring the allegedly wrongful transactions. See, e.g., id. 1N 28-29, 62, 70-71. Finally, even if Plaintiff did allege only that Defendants represented the family companies, the family companies are still part 0fthe economic relationship between her and Hassan. This is a far cry from Plaintiff s only cited case in support, where the agents in question were agents t0 a party that acknowledged that it was not party t0 the underlying contract. See Opp’n 13 (citing Asahei Kasei Pharma Corp. v. Actelion, 222 Cal. App. 4th 945, 961-968 (2013)). Because on the face 0f the Complaint Defendants are not “stranger[s] for purpose of the tort of intentional interference” with contract 0r prospective economic advantage, Redfearn v. Trader Joe ’s Ca, 20 Cal. App. 5th 989, 1003 & n. 6 (2018), Plaintiff’s second and third causes 0f action fail as a matter of law. III. CONCLUSION Based on the foregoing reasons, the demurrer should be sustained and Plaintiff’ s claims in the Complaint should be dismissed With prejudice. Dated: June 22, 2021 DURIE TANGRI LLP By: /s/Ragesh K. Tangri RAGESH K. TANGRI Attorneys for Defendants MORRISON & FOERSTER, LLP and PAUL L. LION, III 1 0 REPLY IN SUPPORT OF DEFENDANTS’ DEMURRER TO COMPLAINT / CASE NO. 20CV368776 A ©00fl0‘xU1 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE I am employed in Los Angeles County, State 0f California, in the office of a member of the bar 0f this Court, at Whose direction the service was made. I am over the age 0f eighteen years, and not a party to the within action. My business address is 953 East 3rd Street, Los Angeles, CA 90013. On June 22, 2021, I served the following documents in the manner described below: m REPLY IN SUPPORT OF DEFENDANTS’ DEMURRER TO COMPLAINT BY ELECTRONIC SERVICE: By electronically mailing a true and correct copy through Durie Tangri’s electronic mail system from mrubalcaba@durietangri.com t0 the email addresses set forth below. Walter J. Lack Steven C. Shuman Engstrom, Lipscomb & Lack, P.C. 10100 Santa Monica Boulevard Suite 1200 Los Angeles, CA 90067-41 13 Email: Wlack@elllaw.com sshuman@elllaw.com Attorney for Plaintiff ALLISON HUYNH I declare under penalty 0f perjury under the laws of the State of California that the foregoing is true and correct. Executed on June 22, 2021, at San Francisco, California. r a...vw‘ ary Ann ubalcaba 11 REPLY IN SUPPORT OF DEFENDANTS’ DEMURRER TO COMPLAINT / CASE NO. 20CV368776