Opinion
D069749
02-17-2017
TOBI BLATT et al., Plaintiffs and Appellants, v. FRANTZ LAW GROUP etc., et al., Defendants and Respondents.
Hurst & Hurst, Debra L. Hurst, Kyle Van Dyke; The Huver Law Firm and Richard A. Huver for Plaintiffs and Appellants. Butz Dunn & DeSantis, Douglas M. Butz and Joy L. Shedlosky for Defendant and Respondent Frantz Law Group. Klinedinst, Heather L. Rosing, Earll M. Pott and Leah A. Plaskin for Defendant and Respondent Keegan & Baker.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 37-2014-00004837-CU-PN-CTL) APPEAL from judgments of the Superior Court of San Diego County, Joel R. Wohlfeil, Judge. Affirmed. Hurst & Hurst, Debra L. Hurst, Kyle Van Dyke; The Huver Law Firm and Richard A. Huver for Plaintiffs and Appellants. Butz Dunn & DeSantis, Douglas M. Butz and Joy L. Shedlosky for Defendant and Respondent Frantz Law Group. Klinedinst, Heather L. Rosing, Earll M. Pott and Leah A. Plaskin for Defendant and Respondent Keegan & Baker.
Plaintiffs Tobi Blatt and Adacas Group, Inc. (Adacas) (together Plaintiffs) sued defendant law firms Frantz Law Group, a Professional Corporation (FLG) and Keegan & Baker, LLP (K&B) (together Defendants) for professional negligence and breach of contract. The trial court determined that, as a matter of law, neither FLG nor K&B had a duty to Plaintiffs and accordingly granted summary judgments in favor of Defendants. On appeal, Plaintiffs contend that, because there are triable issues of material fact as to whether an attorney-client relationship existed between Defendants and Plaintiffs, the trial court erred in granting summary judgments. We disagree and affirm.
I.
STATEMENT OF FACTS
" 'Because this case comes before us after the trial court granted a motion for summary judgment, we take the facts from the record that was before the trial court when it ruled on that motion.' " (Wilson v. 21st Century Ins. Co. (2007) 42 Cal.4th 713, 716-717 (Wilson).) We consider all the evidence in the moving and opposing papers, except evidence to which objections were made and sustained, liberally construing and reasonably deducing inferences from Plaintiffs' evidence, and resolving any doubts in the evidence in Plaintiffs' favor. (Id. at p. 717; Code Civ. Proc., § 437c, subd. (c).)
Blatt owns Adacas, which in October 2007 owned a number of retail clothing stores in northern San Diego County. At that time, wildfires spread through that area, causing billions of dollars of loss and damage to real and personal property — including losses and damages to four of Adacas's stores.
In May 2008, Blatt signed and returned an "Attorney-Client Contingent Fee Agreement" (Contingent Fee Agreement) to the law firm of Macaluso & Associates, APC (M&A). The six-page Contingent Fee Agreement identified the client as "Adacas Group, Inc[.]/Tobi Blatt" and the attorney as M&A, describing the scope of engagement as follows: "Client is hiring Attorney to represent Client for any claims that Client may have against the party or parties responsible for injuries and/or damages sustained by Client arising from San Diego Gas and Electric (SDG&E)/Sempra Energy Co., 2007 San Diego Witch-Creek Wildfires." (Some capitalization omitted.)
Blatt had received a mail solicitation from Attorney Todd E. Macaluso, in which he offered to represent people who suffered losses from the October 2007 fires. Blatt already knew Attorney Macaluso, because he and his wife were customers of Adacas. After Blatt received Macaluso's solicitation, she saw Macaluso in one of her stores, and she asked him about representing her and Adacas with regard to their fire-related losses.
Almost a month later, Blatt had not heard anything from anyone at M&A. When Blatt telephoned M&A's office, Macaluso's paralegal told her that he could not locate the Contingent Fee Agreement. The paralegal explained to Blatt that he would send her a new agreement, pursuant to which (according to Blatt) she and Adacas "would receive representation by two law firms in addition to Mr. Macaluso."
The Contingent Fee Agreement was eventually found, since the copy in the record on appeal is fully executed — with Macaluso "accept[ing]" the engagement on what appears to be September 30, 2008. (Capitalization omitted.)
In late June 2008, Blatt received a cover letter from the paralegal transmitting a proposed "Retainer Agreement and Lien" (Retainer Agreement). The eight-page Retainer Agreement identified the client as "Tobi Blatt" and the attorneys collectively as FLG, K&B and M&A, and the signature page contained signature blocks for Blatt, FLG (by James P. Frantz), K&B (by Patrick N. Keegan) and M&A (by Todd E. Macaluso). The Retainer Agreement described the scope of the engagement as follows: "to represent Client as a plaintiff and a representative of a class of individuals that have incurred fire related damage. The class action will allege violations of state consumer and/or common law by San Diego Gas & Electric Company (SDG&E) and seeks relief in the form of property damages incurred by Client and the Class." The paralegal's cover letter explained to Blatt: "Please sign where indicated and return to me . . . . We will begin working on your case immediately."
In addition to standard attorney retention language, the eight pages included a one-page "Waiver of Conflict of Interest"; a one-page "Acknowledgment of No Conflict of Interest with Potential Defendant"; and a two-page "Rights and Responsibilities of the Class Representative in Class Action Litigation." (Some capitalization omitted.)
Blatt signed the Retainer Agreement on June 30, 2008, and had the original hand-delivered to Macaluso's office with copies and a cover note hand-delivered to the respective offices of Frantz and Keegan the next day. Macaluso signed the Retainer Agreement the following week on July 9, 2008, and delivered to Blatt a copy with his signature. Blatt understood that, by signing this new agreement and delivering the original to Macaluso with copies to Frantz and Keegan, Plaintiffs were now represented by M&A, FLG and K&B. In particular, Blatt relied on the above-quoted language from the paralegal's letter, as well as the following language from paragraph 10 of the Retainer Agreement: "This agreement will not take effect, and Attorneys will have no obligation to provide legal services, until Client returns a signed copy of the this agreement." Blatt received two subrogation notices from counsel for Hartford Casualty
Insurance Company. Blatt testified that she had both notices hand-delivered to the respective offices of M&A, FLG and K&B, and the record contains documentary confirmation of delivery of the second notice to the three firms on October 28, 2008.
The first notice is dated June 18, 2008 (which was approximately a week before Macaluso's paralegal sent Blatt the Retainer Agreement) and is addressed to "ADACAS Group, Inc. [¶] Attn: Toni [sic] Blatt." The second notice is dated October 15, 2008, and is addressed to "Blatt Beauty, LLC."
From mid-2008 through at least 2012, Blatt had periodic in-person and telephonic communications with Macaluso and others at M&A regarding the progress of her and Adacas's fire-related claims. These people reassured Blatt, explaining to her that the claims "were progressing satisfactorily and that, because of the large number of claims being made against San Diego Gas & Electric, it was going to take a long time before [the] claims reached the settlement stage." Consistently, Blatt had heard media accounts "describing the slow but steady resolution of the vast number of fire-related claims that were made against SDGE."
Until at least December 2013, Blatt continued to believe that M&A, FLG and K&B were representing her and Adacas on their fire-related claims based on the following facts: (1) Blatt signed the Retainer Agreement and delivered the original to Macaluso and copies to Frantz and Keegan; (2) Blatt received back a copy of the Retainer Agreement signed by Macaluso on behalf of M&A; (3) Blatt delivered two sets of subrogation notices to Macaluso, Frantz and Keegan; and (4) Blatt was never told that either Macaluso/M&A, Frantz/FLG or Keegan/K&B were not representing her or Adacas.
Then, in early December 2013, Blatt read a news report stating that most of the lawsuits from the 2007 fires had settled. When Macaluso did not take or return any of Blatt's calls, Blatt promptly consulted new counsel who in early January 2014 advised her that the superior court's register of actions did not contain a record of any lawsuit having been filed on her behalf related to the 2007 fires. At this point, Blatt first understood that the statute of limitations had barred Plaintiffs' fire-related claims. From mid-2008 until at least December 2013, Blatt believed that Macaluso, Franz and Keegan had been actively prosecuting fire-related claims on her and Adacas's behalf.
II.
STATEMENT OF THE CASE
In February 2014, Plaintiffs filed the underlying lawsuit, alleging causes of action for legal malpractice, breach of fiduciary duty and breach of contract against Macaluso, M&A and Does 1 through 25. In November 2014, Plaintiffs amended their complaint to name FLG as Doe 4 and K&B as Doe 5. In January 2015, Plaintiffs filed a first amended complaint, in relevant part naming FLG and K&B as defendants in causes of action for legal malpractice and breach of contract. Both of Plaintiffs' claims are based on the allegation that Defendants agreed to represent Plaintiffs in prosecuting their fire-related claims, but failed to take timely and appropriate legal action against the parties responsible for Plaintiffs' losses.
Consistent with their original complaint, in their first amended complaint Plaintiffs also alleged causes of action for legal malpractice, breach of fiduciary duty and breach of contract against Macaluso and M&A. Neither Macaluso nor M&A is a party to this appeal. (See fn. 6, post.)
FLG and K&B filed separate motions for summary judgment or, in the alternative, for summary adjudication. The principal legal issues raised in each of Defendants' motions were: (1) whether an attorney-client relationship existed between each of the Defendants, on the one hand, and both Plaintiffs, on the other hand; (2) whether the statute of limitations, Code of Civil Procedure section 340.6, subdivision (a), barred Plaintiffs' claims; and (3) whether Adacas, which was never identified as a client in the Retainer Agreement, was a client. Defendants each filed a memorandum of points and authorities, a principal declaration (Frantz on behalf of FLG, and Keegan on behalf of K&B), supporting declarations, a request for judicial notice and a separate statement and lodged numerous exhibits identified in the other documents.
Plaintiffs opposed both motions by filing as to each: a memorandum of points and authorities; declarations from Blatt and her counsel; a request for judicial notice; a separate statement; and evidentiary objections with a related motion to strike. Plaintiffs also lodged exhibits that were identified in the other documents.
In reply, Defendants each filed a memorandum of points and authorities, a supplementary declaration with exhibits, responses to Plaintiffs' separate statement and to Plaintiffs' evidentiary objections (with related motion to strike) and evidentiary objections.
Following oral argument, the court took the matter under submission, ultimately issuing a detailed ruling. The court granted both summary judgment motions on the following grounds: FLG and K&B each met its respective initial burden of establishing the lack of a duty (based on the lack of an attorney-client relationship), since neither FLG nor K&B signed the Retainer Agreement and neither FLG nor K&B had any interaction with Blatt or knowledge of Plaintiffs' fire-related claims; and Plaintiffs did not meet their responsive burden of establishing a triable issue of material fact. In reaching its decision, the court sustained in part and overruled in part the various evidentiary objections (and granted and denied in part the related motions to strike) and denied as moot the alternative motions for summary adjudication.
The court entered separate judgments in favor of FLG and K&B, and Plaintiffs timely appealed from them.
The court stayed the remainder of action as to Macaluso and M&A.
III.
DISCUSSION
Plaintiffs' principal argument on appeal is straightforward: Based on the evidence and an inference from the evidence presented, M&A, FLG and K&B formed a joint venture to represent a number of fire victims, and Blatt and Adacas are among the victims the joint venture agreed to represent. In addition, Plaintiffs argue that the trial court erred in overruling their objections to Defendants' assertion of the attorney-client privilege in response to Plaintiffs' discovery requests and in denying Plaintiffs' related motion to strike certain portions of Frantz's and Keegan's declarations that Plaintiffs contended were related to the withheld discovery responses.
We review de novo whether the trial court erred in granting the motions for summary judgment. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 860 (Aguilar).) A defendant is entitled to a summary judgment on the basis that the "action has no merit" (Code Civ. Proc., § 437c, subd. (a)(1)) only where the court is able to determine from the evidence presented that "there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law" (id., § 437c, subd. (c)). A cause of action "has no merit" if one or more of the elements of the cause of action cannot be established. (Id., § 437c, subd. (o).)
Thus, a defendant like FLG or K&B has the burden of persuasion that one or more elements of the cause of action at issue "cannot be established." (Code Civ. Proc., § 437c, subd. (p)(2); Aguilar, supra, 25 Cal.4th at pp. 849, 850, 853-854.) To meet this burden, the defendant has the initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact. (Aguilar, at p. 850.) If the defendant meets this burden, then the burden of production shifts to the plaintiff to establish the existence of a triable issue of material fact. (Id. at pp. 850-851.)
The court must consider "all inferences reasonably deducible from [the] evidence." (Code Civ. Proc., § 437c, subd. (c).) "An inference is a deduction of fact that may logically and reasonably be drawn from another fact or group of facts found or otherwise established in the action." (Evid. Code, § 600, subd. (b).) However, a plaintiff does not meet its responsive burden of establishing a triable issue of material fact with an inference "unless the inference is reasonable. And an inference is reasonable if, and only if, it implies the [fact to be proven] is more likely than defendant's proffered explanation." (Cucuzza v. City of Santa Clara (2002) 104 Cal.App.4th 1031, 1038, italics added (Cucuzza) [discrimination claim]; accord, Aguilar, supra, 25 Cal.4th at p. 857 [to defeat defense motion for summary judgment, plaintiff's inference must establish fact to be proven "more likely than" defendant's fact to be proven] [antitrust claim]; Block v. Golden Eagle Ins. Corp. (2004) 121 Cal.App.4th 186, 191 (Block) ["An inference is reasonable if and only if it implies the existence of an element more likely than the nonexistence of that element."] [insurance bad faith claim].)
Both Defendants argue that there is no express contract by which either of them agreed to represent either Blatt or Adacas. Plaintiffs do not contend otherwise on appeal, acknowledging that neither FLG nor K&B signed the Retainer Agreement or otherwise affirmatively agreed to represent them. Accordingly, Defendants met their initial burden of production by making a prima facie showing of the nonexistence of any triable issue of material fact as to duty. (Aguilar, supra, 25 Cal.4th at p. 850.) The burden of production now shifts to Plaintiffs to establish the existence of a triable issue of material fact as to duty. (Id. at pp. 850-851.)
Plaintiffs argue that based on the evidence and a reasonable inference from the evidence, FLG, K&B and M&A had a joint venture to represent certain fire victims, and Blatt and Adacas were among the victims the joint venture agreed to represent. According to Plaintiffs, once the joint venture was formed, any one of the joint venturers could legally bind the joint venture; thus, M&A's acceptance of the Retainer Agreement was the joint venture's acceptance of the Retainer Agreement. Alternatively, Plaintiffs argue that an inference from the evidence raises a triable issue of material fact as to whether the joint venture, as opposed to just M&A, accepted Plaintiffs as clients. A. M&A, FLG and K&B Formed a Joint Venture
"From a legal standpoint, [partnerships and joint ventures] are virtually the same." (Weiner v. Fleischman (1991) 54 Cal.3d 476, 482 (Weiner).) A joint venture is a general partnership, typically formed by business entities to undertake a particular project rather than one intended to continue indefinitely. (See ibid.; Chambers v. Kay (2002) 29 Cal.4th 142, 151 (Chambers).) Because each venturer is jointly liable to creditors for the obligations of the enterprise, one joint venturer (e.g., FLG or K&B) may be liable to third parties (e.g., Plaintiffs) for the act of another joint venturer (e.g., M&A) with respect to the enterprise, regardless of the agreements among or between the joint venturers themselves. (McClung v. Saito (1970) 4 Cal.App. 3d 143, 150; Orlopp v. Willardson Co. (1965) 232 Cal.App.2d 750, 754; see Corp. Code, §§ 16301, subd. (1), 16306, subd. (a).) In particular, this liability extends to the tort of one joint venturer that is acting in furtherance of the enterprise. (See Orosco v. Sun-Diamond Corp. (1997) 51 Cal.App.4th 1659, 1670 (Orosco).)
In Chambers, supra, 29 Cal.4th 142, our Supreme Court discussed the differences between joint ventures and law partnerships for purposes of the application of rule 2-200(A)(1) of the California Rules of Professional Conduct to the attorney principals in the enterprise. (Chambers, at pp. 151-155.) While Chambers highlights special ethical considerations for attorneys who attempt to enter into joint venture agreements, in this appeal we express no opinion on such issues.
A joint venture, like a partnership, may be formed by the parties' oral agreement or inferred by the parties' conduct and statements; thus, the existence of a joint venture relationship is a question of fact dependent on the intentions of the parties. (Pellegrini v. Weiss (2008) 165 Cal.App.4th 515, 525; Weiner, supra, 54 Cal.3d at pp. 482-483; Scottsdale Ins. Co. v. Essex Ins. Co. (2002) 98 Cal.App.4th 86, 91.) " 'There are three basic elements of a joint venture: the members must have joint control over the venture (even though they may delegate it), they must share the profits of the undertaking, and the members must each have an ownership interest in the enterprise.' " (Scottsdale, at p. 91.)
Relying on certain evidence in the record, Plaintiffs contend that Macaluso, Frantz and Keegan formed a joint venture for M&A, FLG and K&B to provide legal representation to certain victims of the October 2007 wildfires — including Plaintiffs.
We have not considered as factual assertions any statements in the parties' briefs that are based on an unverified complaint filed in 2010 by FLG and K&B against M&A, Macaluso and others. Because "pleadings are allegations, not evidence," they "do not suffice to satisfy a party's evidentiary burden." (Soderstedt v. CBIZ Southern California, LLC (2011) 197 Cal.App.4th 133, 154.) We disagree with Plaintiffs' contention that, in his deposition testimony, "Keegan endorsed the accuracy of the allegations contained in the [2010 unverified c]omplaint."
In their respective briefs, FLG and K&B initially attempt to establish that they and M&A did not have an agreement to form a joint venture as to all of their respective fire victim clients. For example, the uncontradicted testimony is that "FLG represented hundreds of clients with Fire-related damage, [yet] only 40 or so of these clients were jointly represented by FLG, K&B and M&A." Plaintiffs have confirmed that they do not contend — and have never contended — that FLG, K&B and M&A created such a global joint venture to represent all three firms' clients with fire-related claims.
M&A, FLG and K&B agreed that they would jointly litigate certain cases related to the fires. For example, Frantz testified that the Retainer Agreement accurately "memorializ[ed] the extent of our [FLG, K&B and M&A's] relationship" to act as cocounsel "on a case-by-case basis" for certain clients with fire-related claims. Citing specific provisions in the Retainer Agreement and Frantz's deposition testimony, Plaintiffs suggest that for all clients subject to the Retainer Agreement, the sharing of profits and losses, joint control over the cases and joint ownership interest in the enterprise — i.e., the elements necessary to form a joint venture — are present. We will assume, without deciding or expressing an opinion, that the record supports Plaintiffs' suggestion that (or, at a minimum, raises a triable issue of material fact whether) the Retainer Agreement reflects some of the terms of a joint venture for M&A, FLG and K&B to represent certain clients with claims following the 2007 fires. (See fn. 7, ante.)
From this premise, Plaintiffs present two major arguments: (1) under the Corporations Code, M&A alone could bind the joint venture to represent Plaintiffs, and once the joint venture had the obligation to represent Plaintiffs, FLG and K&B became jointly and severally liable for the obligations of the venture; and (2) in any event, because the joint venture procedures were "largely followed with respect to [P]laintiffs," there is a triable issue of material fact as to whether the joint venture in fact agreed to represent Plaintiffs. Neither argument, however, has merit. B. The Corporations Code Does Not Provide a Basis on Which to Reverse the Summary Judgment
Plaintiffs correctly assert that one joint venturer can bind the joint venture as to joint venture business under Corporations Code section 16301, subdivision (1). (MacLeod v. Fox West Coast Theatres Corp. (1937) 10 Cal.2d 383, 387-388 [citing predecessor statute, Civ. Code, former § 2403, subd. (1)].) Applying that principle here, Plaintiffs argue: Because M&A signed and returned the Retainer Agreement to Blatt, the joint venture necessarily agreed to represent Plaintiffs; and because the joint venture agreed to represent Plaintiffs, under Corporations Code section 16306, subdivision (a), each of the joint venturers is jointly and severally liable for the obligations of the joint venture — including the torts of joint venturer that are committed in furtherance of the enterprise (see Orosco, supra, 51 Cal.App.4th at p. 1670).
Subject to a condition that is inapplicable here, "[e]ach partner is an agent of the partnership for the purpose of its business. An act of a partner, including the execution of an instrument in the partnership name, for apparently carrying on in the ordinary course the partnership business or business of the kind carried on by the partnership binds the partnership, unless the partner had no authority to act for the partnership in the particular matter and the person with whom the partner was dealing knew or had received a notification that the partner lacked authority." (Corp. Code, § 16301, subd. (1).)
Subject to exceptions that are inapplicable here, "all partners are liable jointly and severally for all obligations of the partnership unless otherwise agreed by the claimant or provided by law." (Corp. Code, § 16306, subd. (a).)
At least one problem with Plaintiffs' analysis is the assumption that Corporations Code section 16301 applies. In order for the agency principles of subdivision (1) to apply to "the execution of an instrument" — i.e., in order for M&A to bind the joint venture (and thus FLG and K&B) to the Retainer Agreement — the execution must be "in the partnership name." (Corp. Code, § 16301, subd. (1), italics added.) Here, because there is no mention of a partnership or joint venture in the Retainer Agreement in the text or the signature block, the agreement was not executed "in the partnership name." (Ibid.) Accordingly, by its express terms, Corporations Code section 16301, subdivision (1) does not apply to the Retainer Agreement and, therefore, the agency principles contained in section 16301, subdivision (1) likewise do not apply to the Retainer Agreement.
In their reply brief, Plaintiffs argue that Corporations Code section 16301, subdivision (1) applies when one partner executes a contract "on behalf of the partnership." (Italics added.) However, for the statute to apply, it requires that the partner execute the contract "in the partnership name." (Ibid., italics added.) Tellingly, Plaintiffs do not suggest that Macaluso's signature in a signature block for M&A — especially with unsigned signature blocks for FLG and K&B — is "the execution of an instrument in the partnership name." (Ibid.)
Similarly, under California common law, "a contract, when signed by an individual, is presumed to be the paper of the individual partner whose name is signed to it, and the burden of proof is upon the holder to show affirmatively that the signature was intended for the signature of the [partnership]." (Refinite Sales Co. v. Fred R. Bright Co. (1953) 119 Cal.App.2d 56, 62, italics added.) Here, the Retainer Agreement is signed by Macaluso on behalf of only the alleged individual partner, M&A. Given that the Retainer Agreement (initiated by M&A) contains a separate signature block for each of the other two alleged joint venturers (FLG and K&B), Plaintiffs have not met their burden of raising a triable issue of material fact as to whether M&A intended Macaluso's signature to be a signature on behalf of the joint venture.
Without an application of the agency principles provided in Corporations Code section 16301, subdivision (1), the representation of Plaintiffs pursuant to the Retainer Agreement is not a joint venture obligation. Without a joint venture obligation, the joint and several liability provided for in Corporations Code section 16306, subdivision (a) — on which Plaintiffs rely to establish the potential liability of FLG and K&B — does not apply. C. Plaintiffs Did Not Meet Their Responsive Burden of Establishing a Triable Issue of Material Fact as to Whether FLG or K&B Agreed to Represent Blatt or Adacas
Acknowledging that neither FLG nor K&B expressly agreed to represent Plaintiffs pursuant to the partially executed Retainer Agreement, Plaintiffs contend that, because the admissible evidence establishes that the joint venture procedures were "largely followed with respect to [P]laintiffs," there is a triable issue of material fact as to whether FLG and K&B in fact agreed to represent Plaintiffs, even though neither Frantz (on behalf of FLG) nor Keegan (on behalf of K&B) signed the Retainer Agreement. According to Plaintiffs, if Frantz and Keegan actually agreed that the joint venture would represent Plaintiffs, the fact that FLG and K&B never signed the Retainer Agreement does not affect the joint venture's (and thus FLG's and K&B's) responsibility for properly prosecuting Plaintiffs' fire-related claims.
FLG and K&B do not dispute that they agreed with M&A to jointly represent certain clients in prosecuting their claims for fire-related damages, as evidenced by the Retainer Agreement. However, Defendants' position is that neither Blatt nor Adacas is among the clients Defendants agreed to represent jointly with M&A. More specifically, according to Defendants, the evidence confirms that neither FLG nor K&B agreed to represent — jointly with M&A or otherwise — Blatt or Adacas.
Both Frantz and Keegan testified that the Retainer Agreement was only to be used after FLG (through Frantz), K&B (through Keegan) and M&A (through Macaluso) expressly agreed to work together on behalf of a specific client. This was done on a case-by-case basis. Both Frantz and Keegan described a vetting process that each personally conducted on behalf of his respective firm for every potential joint client before he would consider jointly working with the other two firms under the terms of the Retainer Agreement. However, neither Frantz nor Keegan ever vetted — let alone agreed to represent — Blatt or Adacas. Indeed, the uncontradicted evidence is that neither Frantz (or anyone at FLG) nor Keegan (or anyone at K&B) ever heard of Blatt or Adacas until FLG and K&B were served with process in this lawsuit in late 2014.
At a minimum, this process included a conflicts check and consideration of the potential client's claims and damages.
Consistently, although Blatt's Retainer Agreement contains separate signature blocks for Blatt, M&A, FLG and K&B, the document contains the signatures of only Blatt (for herself alone) and Macaluso (on behalf of M&A). The signature blocks for FLG and K&B are blank. There is no mention of Adacas anywhere in the document, including the signature block. Neither Frantz nor Keegan ever saw this partially executed Retainer Agreement until after his law firm was served with process in this lawsuit in November 2014. Finally, neither Frantz nor Keegan (1) ever consented to an attorney-client relationship between his respective firm and either of Plaintiffs or (2) ever authorized Macaluso to act for or in the name of FLG or K&B for purposes of accepting clients.
This is significant. Plaintiff relies on the following language from paragraph 10 of the Retainer Agreement: "This agreement will not take effect, and Attorneys will have no obligation to provide legal services, until Client returns a signed copy of the this agreement." Notably, Defendants emphasize the remaining two sentences in paragraph 10: "Client shall receive a fully executed copy of this agreement within one week of receipt by Attorneys as acknowledgement that Client's documentation has been received and that Client will be represented pursuant to the terms of this agreement. If Client does not receive an executed copy of the agreement within the prescribed time, Client should contact Attorneys in writing or by phone at the address or telephone number below." (Italics added.) Thus, according to Defendants, without evidence that Blatt ever received a fully executed copy of the Retainer Agreement (and Blatt does not contend such a copy exists), neither of them acknowledged that Blatt would be represented under the terms of the Retainer Agreement; i.e., neither of them accepted Blatt as a client, and Blatt never presented evidence that she contacted anyone to inquire further.
Based on the foregoing evidence, we agree with the trial court that Defendants met their initial burden of showing the nonexistence of a triable issue of material fact. Because neither of Defendants agreed to represent either of Plaintiffs, no attorney-client relationship existed between either of Defendants and either of Plaintiffs (and, therefore, no duty owed by either of Defendants to either of Plaintiffs). Thus, we now determine whether Plaintiffs met their responsive burden of establishing the existence of a triable issue of material fact.
Preliminarily, we reject Plaintiffs' argument that the trial court should have "recognized" — and the related implication that on our de novo review we should recognize — that a jury could easily discredit the declaration testimony of Frantz and Keegan (that Plaintiffs were not the clients of FLG or K&B). Procedurally, Plaintiffs forfeited consideration of this argument by failing to raise it both in the trial court and in their opening brief in this court. (North Coast Business Park v. Nielsen Construction Co. (1993) 17 Cal.App.4th 22, 28-29 [following the grant of summary judgment, appellant may not adopt a new theory on appeal]; GoTek Energy, Inc. v. SoCal IP Law Group, LLP (2016) 3 Cal.App.5th 1240, 1247, fn. 2 ["The contention is forfeited because it was not made in client's opening brief."].) Substantively, in order to raise an issue as to the moving party's credibility in summary judgment proceedings, the opposing party "must set forth specific facts demonstrating ' "such weaknesses, implausibilities, inconsistencies, incoherences, or contradictions in the [moving party's sworn statements] that a reasonable factfinder could rationally find them 'unworthy of credence.' " ' " (Cucuzza, supra, 104 Cal.App.4th at p. 1038.) Plaintiffs' presentation on appeal here fails to meet this standard.
We begin with Plaintiffs' acknowledgement that there is no direct evidence that Defendants (or either of them) agreed to represent Plaintiffs (or either of them). Suggesting that "the process" for the joint venture to accept a client was "largely followed" with respect to Plaintiffs, Plaintiffs argue that a jury could reasonably infer — i.e., there is a triable issue of material fact as to whether — Frantz and Keegan agreed that the joint venture would represent Plaintiffs.
According to Frantz and Keegan, for purposes of the joint venture, the procedure to accept a potential client (and thereby create an attorney-client relationship) included the following: Frantz, Keegan and Macaluso would each agree that his respective firm would accept the potential client; the attorney who originated the potential client would send the potential client the Retainer Agreement to review; the potential client would sign and return the agreement to the originating attorney; the originating attorney would sign the agreement and forward it to the other two attorneys for their signatures; once the Retainer Agreement contained all necessary signatures, the originating attorney would provide the client and the other two firms with a fully executed copy.
From this general procedure, Plaintiffs argue that a jury could infer that Frantz and Keegan agreed that the joint venture would represent Plaintiffs based on the following case-specific facts: Macaluso originated Plaintiffs as clients; as the originating attorney, Macaluso sent Blatt the Retainer Agreement to sign; Blatt signed the agreement; Blatt delivered her signed copy to M&A (and FLG and K&B); and M&A signed and returned the (partially executed) Retainer Agreement to Blatt. At oral argument, Plaintiff's counsel emphasized that Macaluso signed and returned the Retainer Agreement (with M&A, FLG and K&B as the attorneys), as opposed to another copy of the Contingent Fee Agreement (with only M&A as the attorney). According to counsel, a reasonable jury could infer that Macaluso would have done so only if the joint venture had agreed to the representation, because the substitution of agreements was against Malcaluso's financial interest: Under the Retainer Agreement, M&A, FLG and K&B would share the attorney fees, whereas under the Contingent Fee Agreement, M&A would have received all attorney fees.
Where, as here, a plaintiff opposes summary judgment by arguing defendant moves for summary judgment and the plaintiff argues that a triable issue of fact is raised by an inference from evidence, the appellate court first determines whether the record contains evidence that supports (1) the plaintiff's inference, and (2) the defendant's explanation. If so, then the appellate court determines whether the plaintiff's inference is "reasonable" — i.e., whether it implies the fact to be proven is more likely than the defendant's explanation. (See Cucuzza, supra, 104 Cal.App.4th at p. 1038; Aguilar, supra, 25 Cal.4th at p. 857; Block, supra, 121 Cal.App.4th at p. 191.)
We have already determined that Plaintiffs' inference is supported by evidence, and we now turn to Defendants' explanation and supporting evidence. As we explain, the inference that Plaintiffs posit is not "reasonable," because it does not more likely imply that Defendants agreed the joint venture would represent Plaintiffs than Defendants' explanation of the facts, discussed post. Accordingly, Plaintiffs did not meet their responsive burden of establishing a triable issue of material fact.
1. Blatt and Adacas
Defendants' proffered explanation is that, when Macaluso's paralegal could not find the Contingent Fee Agreement that Blatt signed and returned in May 2008, the paralegal erred by sending Blatt the Retainer Agreement instead of another copy of the Contingent Fee Agreement without discussing the matter with and receiving authorization from at least Macaluso. In support of their explanation, Defendants rely on the following uncontradicted evidence: (1) neither Frantz nor Keegan (the only individual authorized to accept a wildfire client on behalf of his respective firm) nor anyone else at FLG or K&B ever heard of Blatt or Adacas until service of this lawsuit, and (2) the Retainer Agreement does not contain the signature of either Frantz or Keegan.
Given Defendants' explanation (that Macaluso's paralegal merely sent the wrong agreement), Plaintiffs' inference (that FLG and K&B accepted Plaintiffs as joint venture clients) is simply not reasonable under the appropriate standard. That is because Plaintiffs' inference does not suggest that the existence of an attorney-client relationship "is more likely than [D]efendant[s'] proffered explanation." (Cucuzza, supra, 104 Cal.App.4th at p. 1038; accord, Aguilar, supra, 25 Cal.4th at p. 857; Block, supra, 121 Cal.App.4th at p. 191.)
In their reply brief, Plaintiffs attempt to bolster their position by citing to 11 additional items of evidence that Plaintiffs contend further support the inference that Defendants accepted Plaintiffs as joint venture clients. However, the amount of evidence in support of the inference is not what we consider in determining reasonableness; otherwise, we would be weighing the evidence — which, of course, we may not do (Aguilar, supra, 25 Cal.4th at p. 856). Rather, we consider what Plaintiffs' inference "could show or imply to a reasonable trier of fact" (ibid., italics omitted) and determine whether — in comparison with Defendants' explanation (supported by admissible evidence) — Plaintiffs' proffered inference "implies the [issue to be proven] is more likely than [D]efendant[s'] proffered explanation." (Cucuzza, supra, 104 Cal.App.4th at p. 1038; accord, Aguilar, at p. 857; Block, supra, 121 Cal.App.4th at p. 191.) In this regard, we have already concluded that Plaintiffs' inference does not suggest that the existence of an attorney-client relationship is more likely than an errant transmission of the Retainer Agreement by Macaluso's paralegal to Blatt.
2. Adacas
On an independent legal basis, the trial court properly granted summary judgment against Adacas. Because it is not named as a party to the Retainer Agreement, Adacas has the burden to establish that it was an intended beneficiary of the agreement. (Cline v. Homuth (2015) 235 Cal.App.4th 699, 705.) Adacas did not meet its burden here.
The Retainer Agreement does not mention Adacas anywhere. Indeed, the agreement and the signature block identify the "Client" only as "Tobi Blatt," and the two attached conflict of interest forms have signature blocks solely for "Tobi Blatt." Accordingly, neither the joint venturers' general procedure for accepting clients nor the specific Retainer Agreement here contain evidence or an inference from evidence that Frantz or Keegan knew of Adacas's alleged involvement.
Blatt testified that, at the time she received the Retainer Agreement, she noted that it identified the only client as "Tobi Blatt." She was not concerned, however, since Adacas "does business as 'Tobi Blatt.' " Having the "impression and belief" that the Retainer Agreement applied to both her and Adacas, Blatt signed the agreement on one line above the name "Tobi Blatt."
In contrast, the Contingent Fee Agreement that Blatt signed less than two months earlier identified the client as "Adacas Group Inc[.]/Tobi Blatt," and the signature block identified Blatt as the "Authorized Representative."
However, Blatt's testimony — even liberally construing it as we must (Wilson, supra, 42 Cal.4th at p. 717) — does not contain evidence or an inference from evidence that Frantz or Keegan had any knowledge that Blatt considered Adacas to be a client of the joint venture under the Retainer Agreement. The lack of such evidence is fatal to Adacas's claim, because the standard is not Blatt's intent, but what Defendants understood Blatt's intent to have been. (Lucas v. Hamm (1961) 56 Cal.2d 583, 591 ["the promisor [Defendants] must have understood that the promisee [Blatt] had such intent"].) In part, that is because as a matter of contract law "the undisclosed intentions of the parties are, in the absence of mistake, fraud, etc., immaterial." (Brant v. California Dairies (1935) 4 Cal.2d 128, 133.)
Finally, Plaintiffs' operative complaint does not place at issue whether Adacas was an intended beneficiary of Blatt's retention of the joint venture. To the contrary, Plaintiffs affirmatively allege that, pursuant to the Retainer Agreement, "Blatt and Adacas retained Macaluso, [M&A, FLG and K&B] to jointly represent them in connection with losses they sustained . . . ." Under well-recognized summary judgment procedure, Defendants met their initial burden by directing their evidence and arguments to the claims as raised in the operative complaint. (Metromedia, Inc. v. City of San Diego (1980) 26 Cal.3d 848, 885 ["On motion for summary judgment the pleadings define the issues"], revd. on other grounds, Metromedia, Inc. v. San Diego (1981) 453 U.S. 490.) Plaintiffs' suggestion in opposition to Defendants' motions that Adacas was an intended beneficiary of the Retainer Agreement is not a substitute for an amendment to the complaint (Hutton v. Fidelity National Title Co. (2013) 213 Cal.App.4th 486, 493) — for which Plaintiffs never asked leave of court. D. The Trial Court Did Not Err in Overruling Plaintiffs' Objections to (and Denying Plaintiffs' Motion to Strike) Frantz's and Keegan's Testimony
In support of FLG's motion, Frantz testified that for each case in which the three firms agreed to represent a client, a retainer agreement "was always signed by the client and each of our three firms," and "[a] fully executed copy of the retainer agreement was provided to each firm and to the client." Similarly, in support of K&B's motion, Keegan testified: "for every case in which K&B agreed to jointly represent a client, retainer agreements were signed by the client, Mr. Macaluso, Mr. Frantz, and me"; and "[M&A], FLG, and K&B would enter into signed retainer agreements when they agreed to jointly represent a client."
In the trial court, Plaintiffs filed objections to (and moved to strike) the above-quoted statements — and many more — from both Frantz's and Keegan's declarations on the basis that FLG and K&B refused to allow discovery regarding clients that FLG and K&B acknowledged were jointly represented by the three firms. In particular, Plaintiffs wanted copies of the retainer agreements for all jointly represented clients. Plaintiffs argued that Defendants' refusal to supply the requested discovery responses has "stiff-arm[ed] [P]laintiffs' efforts to conduct confirmatory discovery." More specifically, Plaintiffs' argument is that Defendants should not be allowed to use the attorney-client privilege first as a sword (to support their statements that in each case in which they agreed to jointly represent a client with M&A, all three firms would sign the retainer agreements) and then as a shield (to preclude discovery of the terms of those same retainer agreements).
Finding that, under the circumstances, Defendants were not asserting the attorney-client privilege both as a sword and as a shield, the trial court overruled Plaintiffs' objections and denied their related motions to strike.
We begin our analysis with the understanding that " ' "[t]he privilege which protects attorney-client communications may not be used both as a sword and a shield." ' " (People ex rel. Herrera v. Stender (2012) 212 Cal.App.4th 614, 647.) That is because of " 'the inherent unfairness' " of allowing the holder of the privilege either (1) to assert a claim that the attorney cannot adequately dispute or defend without disclosing confidential materials provided by the holder of the privilege (e.g., ibid.), or (2) to assert the privilege in discovery and then waive the privilege at trial (e.g., Xebec Development Partners, Ltd. v. National Union Fire Ins. Co. (1993) 12 Cal.App.4th 501, 569).
Generally, the trial "court's evidentiary rulings made on summary judgment are reviewed for an abuse of discretion." (Walker v. Countrywide Home Loans, Inc. (2002) 98 Cal.App.4th 1158, 1169.) That said, in Reid v. Google, Inc. (2010) 50 Cal.4th 512, our Supreme Court expressly left open the question of whether evidentiary rulings in connection with summary judgment motions are reviewed under a de novo or an abuse of discretion standard. (Id. at p. 535.) Under either standard, the trial court here did not err in overruling Plaintiffs' evidentiary objections as to (and denying Plaintiffs' motion to strike) portions of Frantz's and Keegan's declarations.
First, in the evidentiary objections and motions to strike that Plaintiffs filed in opposition to the summary judgment motions, Plaintiffs did not present any evidence in support of their position. Thus, the trial court did not have a factual record — e.g., Plaintiffs' discovery requests and Defendants' objections — on which it could have granted the requested relief. As a corollary, Plaintiffs have not directed (and cannot direct) us to substantial evidence in the record that suggests, let alone establishes, trial court error.
Second, there is no indication that, in response to Defendants' assertion of the attorney-client privilege during discovery, Plaintiffs attempted to meet and confer or to file a motion to compel. Without such efforts, there is no telling whether a compromise could have been reached, whether the information could have been obtained elsewhere, whether the information could have been provided in a redacted form, or whether the signature pages of the other clients' retainer agreements are in fact privileged.
Third, Plaintiffs did not seek a continuance of the hearing on the summary judgment motion in order to obtain the discovery elsewhere or to otherwise test the validity of Defendants' assertion of privilege. (See Code Civ. Proc., § 437c, subd. (h).) Plaintiffs' failure to seek relief under this statute suggests that the evidence Plaintiffs contend was improperly withheld could not establish "facts essential to justify opposition." (Ibid.)
"If it appears from the affidavits submitted in opposition to a motion for summary judgment or summary adjudication, or both, that facts essential to justify opposition may exist but cannot, for reasons stated, be presented, the court shall deny the motion, order a continuance to permit affidavits to be obtained or discovery to be had, or make any other order as may be just. The application to continue the motion to obtain necessary discovery may also be made by ex parte motion at any time on or before the date the opposition response to the motion is due." (Code Civ. Proc., § 437c, subd. (h).)
Fourth, even if we overlook the above-described procedural deficiencies, substantively Defendants did not assert the attorney-client privilege as a sword. Defendants did not affirmatively assert the privilege and then later waive it; nor could they, since they are not the holders of the privilege asserted. (See Evid. Code, § 953 [client is " 'holder of the privilege' "].) Likewise, Defendants did not first introduce into evidence confidential information and then assert the attorney-client privilege as a shield to providing related confidential information. Rather, Frantz and Keegan initially described the process by which their firms accepted joint clients with M&A and later refused to provide discovery responses that they contended were subject to the attorney-client privilege held by third parties. At best, the discovery Plaintiffs allegedly sought would have supplied a basis on which to impeach Frantz's or Keegan's testimony, yet where a party is otherwise entitled to summary judgment, "summary judgment shall not be denied on grounds of credibility." (Code Civ. Proc., § 437c, subd. (e).)
In their opening brief, Plaintiffs describe their efforts as an attempt "to conduct confirmatory discovery." (Italics added.)
Finally, we are precluded from reversing the judgments based on the allegedly erroneous admission of evidence, because Plaintiffs have not established how any such error here "resulted in a miscarriage of justice." (Cal. Const., art. VI, § 13; Evid. Code, § 353, subd. (b); see Code Civ. Proc., § 475 [for reversal, error must be "prejudicial"].) That is to say, Plaintiffs have not suggested, let alone demonstrated, that the motions for summary judgment would have been denied had Defendants' testimony regarding the process of accepting joint clients not been considered. Irrespective of the challenged testimony, Frantz and Keegan testified unequivocally that Plaintiffs were not clients of FLG or K&B — which was sufficient to meet Defendants' initial burden and to shift to Plaintiffs the burden of establishing the existence of a trial issue of material fact.
For the foregoing reasons, the trial court did not err in overruling Plaintiffs' objections to (or denying Plaintiffs' motion to strike) Frantz's or Keegan's testimony regarding the retainer agreements for clients other than Plaintiffs whom M&A, FLG and K&B agreed to jointly represent.
DISPOSITION
The judgments filed December 4, 2015, in favor of Frantz Law Group, A Professional Corporation, and Keegan & Baker, LLP, are affirmed. Frantz Law Group, A Professional Corporation, and Keegan & Baker, LLP, are entitled to costs on appeal.
IRION, J. WE CONCUR: NARES, Acting P. J. O'ROURKE, J.