Opinion
A157259
06-14-2021
ACELA CORTESE, Plaintiff and Appellant, v. JOHN SHERWOOD, Individually and as Trustee, etc., Defendant and Respondent.
NOT TO BE PUBLISHED
San Francisco City and County Super. Ct. No. PTR-16-300479
BURNS, J.Acela Cortese appeals from the trial court's denial of her motion for leave to file a conspiracy claim against John Sherwood, her family's attorney. The court reasoned that the claim was precluded by Civil Code section 1714.10, which prohibits the filing of certain claims alleging conspiracy between an attorney and a client unless the plaintiff first establishes a reasonable probability of prevailing and obtains a prefiling order. Although section 1714.10 is inapplicable to conspiracy claims that allege the attorney violated an independent legal duty owed to the plaintiff, the court concluded that Cortese's petition failed to adequately allege that Sherwood violated such a duty. We conclude that, in light of our obligation to construe Cortese's pleading liberally (Pavicich v. Santucci (2000) 85 Cal.App.4th 382, 398 (Pavicich)), her allegations were minimally sufficient to satisfy section 1714.10, subdivision (c). We therefore reverse.
Undesignated statutory references are to the Civil Code.
Background
A.
As alleged in her fourth amended petition, Cortese is the stepdaughter of Robert Naify (Robert), who was married to Cortese's mother, Francesca P. Naify Cortese (Francesca). During their 23-year marriage, Robert and Francesca accumulated substantial wealth, much of which was community property. After Francesca died, Robert was the executor of her estate and the successor trustee of her trust. Francesca's will provided that her share of the community property from the marriage would be distributed to her trust. Under the terms of Francesca's trust, Robert was the sole beneficiary during his lifetime, with the remaining assets to be distributed to Cortese and Cortese's sister, Christina Cortese (Christina), after Robert's death.
Sherwood was Robert's longtime attorney and friend. Sherwood also represented Francesca, Christina, and Cortese “over the years, ” including by negotiating with Cortese's creditors.
Cortese alleges that Robert breached his fiduciary duties, including by underfunding Francesca's trust, misrepresenting the value of Francesca's community property, and inducing Cortese to sign an unfair and invalid agreement to terminate Francesca's trust. She further alleges that Sherwood assisted Robert and participated in these breaches.
In addition, Cortese alleges that because Sherwood is her former attorney, he had a duty not to use her confidential information - learned in the course of serving as her attorney - to her detriment. She alleges that Sherwood violated that duty by relying on confidential information relating to her financial circumstances in assisting Robert in his efforts to deprive her of rights to the proceeds of Francesca's trust.
B.
Section 1714.10, subdivision (a) provides that a pleading may not include a “cause of action against an attorney for a civil conspiracy with his or her client arising from any attempt to contest or compromise a claim or dispute, and which is based upon the attorney's representation of the client” unless the plaintiff obtains an order from the court allowing the pleading after the court determines that the plaintiff has established a reasonable probability of prevailing. Section 1714.10, subdivision (c) in turn provides, as relevant here, that “[t]his section shall not apply to a cause of action against an attorney for a civil conspiracy with his or her client, where... the attorney has an independent legal duty to the plaintiff.” The Legislature enacted section 1714.10 to address “the use of frivolous conspiracy claims that were brought as a tactical ploy against attorneys and their clients and that were designed to disrupt the attorney-client relationship.” (Berg & Berg Enterprises, LLC v. Sherwood Partners, Inc. (2005) 131 Cal.App.4th 802, 816 (Berg).)
We recently construed the statute in an appeal concerning Christina's claims against Sherwood. (Cortese v. Sherwood (2018) 26 Cal.App.5th 445 (Cortese).) In that opinion, we explained that section 1714.10 relies on the rationale that an agent cannot be held “ ‘ “ ‘liable for conspiring with the principal when the agent is acting in an official capacity on behalf of the principal.' ”' ” (Cortese, supra, 26 Cal.App.5th at p. 454.) Thus, an attorney cannot be held liable for conspiring with the attorney's client to violate a duty owed by the client. However, as section 1714.10, subdivision (c) reflects, an attorney may be held liable for conspiring with a client to violate a duty personally owed by the attorney. (See Cortese, supra, 26 Cal.App.5th at pp. 454-455; see also Doctors' Co. v. Superior Ct. (1989) 49 Cal.3d 39, 47.)
Here, after assessing her pleadings, the trial court concluded that Cortese did not adequately plead that Sherwood breached an independent legal duty. The court therefore denied Cortese's motion for leave to file the second cause of action in her fourth amended petition, and it denied Sherwood's motion to strike her fourth amended petition as moot.
Discussion
The operative question is whether Cortese's pleadings fall within the exception in section 1714.10, subdivision (c), permitting a civil conspiracy claim against an attorney who has an independent legal duty to the plaintiff. We review de novo whether Cortese has sufficiently pled a claim within the meaning of section 1714.10, subdivision (c). (See Berg, supra, 131 Cal.App.4th at p. 822.) We conclude that Cortese sufficiently alleged that Sherwood owed her a duty as her former attorney and harmed her in breaching that duty.
A.
As an initial matter, the parties disagree on whether a court is limited to the pleadings or, instead, may also consider affidavits or other evidence. We agree with Cortese that, at this stage of the case, the court must determine whether the exception applies by considering the pleadings alone.
Sherwood mistakenly relies on section 1714.10, subdivision (a), which requires a party alleging specified civil conspiracy claims against an attorney to demonstrate, based on “supporting affidavits, ” that the claim has a “reasonable probability” of succeeding. However, the requirements of section 1714.10, subdivision (a) do not apply to “[a] complaint setting forth either exception specified in section 1714.10(c).” (Central Concrete Supply Co., Inc. v. Bursak (2010) 182 Cal.App.4th 1092, 1100; see § 1714.10, subd. (c) [“This section shall not apply to a cause of action against an attorney for a civil conspiracy with his or her client, where” an exception applies].) Determining whether an exception in section 1714.10, subdivision (c) is applicable “pivots... on whether the proposed pleading states a viable claim for conspiracy against the attorney.... If such a claim is stated, the analysis ends before reaching evidentiary considerations.” (Berg, supra, 131 Cal.App.4th at p. 818.)
We therefore consider whether the allegations in Cortese's petition bring her second cause of action within the “independent legal duty” exception of section 1714.10, subdivision (c). In so doing, we do not consider Sherwood's arguments that the evidence in the record undermines Cortese's allegations.
B.
1.
Cortese's petition alleges that “over the years, ” Sherwood served as her attorney, but it provides no specific details concerning when he represented her. The only detail Cortese provides about the nature of that representation is that “among other things, over the years John had represented Acela in negotiations with Acela's creditors.” Cortese further alleges that Sherwood “gained access to Acela's confidential information through that representation, including Acela's lack of financial sophistication, Acela's lack of financial resources (including Acela's future earning potential), and the circumstances surrounding Acela's desperate financial situation.” Based on these circumstances, Cortese alleges that, as her former attorney, Sherwood owed her a duty not to use her confidential information to her detriment in his representation of Robert.
Further, Cortese's petition alleges that Sherwood breached this duty “by taking confidential information used in John's representation of [Cortese] into account in formulating a plan of action on Robert's behalf against [Cortese].” Sherwood “exploited [her] confidential information in assisting Robert to gain an unfair advantage over [her], including by assisting Robert in deceiving [her] regarding the intentional underfunding of Francesca's Trust and by negotiating on Robert's behalf to induce [her] to sign a one-sided and invalid trust termination agreement.”
2.
Although her allegations are quite general, Cortese has sufficiently alleged that Sherwood breached his duty as her former attorney not to use her confidential information to her detriment.
Assuming, as we must, the truth of Cortese's allegations (Pavicich, supra, at 85 Cal.App.4th at p.385), and in light of our obligation to construe her pleadings liberally (id. at p. 398), Sherwood had a duty not to use information he learned about Cortese's lack of financial sophistication or desperate financial circumstances in the course of assisting Robert in defrauding her by underfunding the trust and negotiating the trust termination agreement. (See Costello v. Buckley (2016) 245 Cal.App.4th 748, 753 (Costello) [“ ‘ “[T]he lawyer must refrain not only from divulging the client's secrets or confidences, but also from acting for others in any matters where such secrets or confidences or knowledge of the client's affairs acquired in the course of the earlier employment can be used to the former client's disadvantage.”' ”]; Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 822-823 [“It is well established that the duties of loyalty and confidentiality bar an attorney... from using a former client's confidential information in the course of ‘making decisions when representing another client,' [and] also from ‘taking the information significantly into account in framing a course of action' ”]; Rules Prof. Conduct, rule 1.9(c)(1); Bus. & Prof. Code, § 6068, subd. (e)(1).)
Sherwood incorrectly contends that because Robert had access to the same information, Sherwood had no duty to protect it or refrain from using it. To the contrary, information learned during the course of the representation, including publicly available information and information that is merely embarrassing, may constitute a client secret that an attorney must protect and refrain from using against the client. (See Cal. State Bar Formal Opn. No. 2016-195 [“A lawyer's duty of confidentiality is broader than the attorney-client privilege, and embarrassing or detrimental information learned by a lawyer during the course of his representation of a client must be protected as a client secret even if the information is publicly available.”]; Costello, supra, 245 Cal.App.4th at pp. 751-752 [where attorney acquired information about former client's romantic relationship with new client, and the information could be used to former client's disadvantage in litigation by new client against former client, attorney's disqualification was required]; see also In the Matter of Johnson (Review Dept. 2000) 4 Cal. State Bar Ct. Rptr. 179, 185 [former client's felony conviction was protected client secret where it was not easily discoverable, even though it was matter of public record].)
Further, information about how a client's mind works can constitute confidential information that an attorney must refrain from using to the client's detriment. (See ABA Formal Opn. No. 92-367 (Oct. 16, 1992) p. 4 [“to the extent a lawyer's general familiarity with how a client's mind works is relevant and useful information, it may also be disqualifying information within the contemplation of [Model] Rule 1.8(b), which generally prohibits a lawyer from using information relating to the representation of a client to the disadvantage of the client... ”].) Thus, “certain categories of confidential information obtained in a prior matter or relationship... are inherently likely to have the potential for adverse use in any contested matter. Such information includes, but is hardly limited to, the former client's financial and emotional ability to withstand litigation, past settlement patterns, and the priority of certain of his or her needs over others (e.g., cash flow, emotional satisfaction, tax deferral, etc.).” (Cal. State Bar Formal Opn. No. 1984-84; see also ABA Formal Opn. No. 92-367 (Oct. 16, 1992).)
Here, Sherwood allegedly represented Robert in a capacity that was adverse to Cortese, which enabled Sherwood to rely on his knowledge and experience that Cortese was unlikely to investigate any misrepresentations they made due to her financial circumstances and lack of sophistication. Although Sherwood disputes whether he in fact gained such information from his prior representation of Cortese or relied on that information, for present purposes we must assume her allegation that he did so is true.
We are cognizant that Cortese's allegations are threadbare. They include no details about the nature, extent, and timing of Sherwood's prior representations and few details about the confidential information or Sherwood's use of it. However, a pleading is not defective as a matter of law merely because it “could be made more certain by more precise pleading.” (Skopp v. Weaver (1976) 16 Cal.3d 432, 440-441.) Cortese's pleading “ ‘contain[s] “sufficient particularity and precision to acquaint the defendants with the nature, source and extent of [the] cause of action.”' ” (County of Santa Clara v. Superior Court (2009) 171 Cal.App.4th 119, 126; see also ibid. [“ ‘[A plaintiff] need not particularize matters “presumptively within the knowledge of the... defendant.”' ”].) Whether Cortese can prove that Sherwood owed and breached a duty is another matter.
Similarly, we conclude that Cortese's petition adequately alleges that she was harmed by Sherwood's breach. (See Prakashpalan v. Engstrom, Lipscomb & Lack (2014) 223 Cal.App.4th 1105, 1128 [damages are an element of claim for breach of fiduciary duty].) Cortese alleges that, as a result of Sherwood's misconduct, she was deprived of her rightful share of the trust and induced to sign an invalid trust termination agreement. Sherwood contends that because her petition also alleges that Robert, as her stepfather, had access to the same information about her financial circumstances, Robert could have accomplished the same ends without Sherwood's assistance. However, whether and to what extent Sherwood's reliance on confidential information he gleaned from his representations of Cortese “over the years” actually caused her harm are questions for the factfinder.
In sum, we reverse the trial court's order denying Cortese leave to file her second cause of action.
C.
In her reply brief, Cortese raises an alternative argument that Sherwood had an independent duty not to defraud her and her second cause of action states a claim for fraud against him. Because she has forfeited this argument by failing to raise it in her opening brief, we decline to consider it. (See Walters v. Boosinger (2016) 2 Cal.App.5th 421, 437, fn. 19 [declining to consider argument that complaint properly stated a claim under alternate theory because appellant raised it for the first time in reply brief].)
Disposition
The order denying Cortese's motion for leave to file the second cause of action in her fourth amended petition is reversed.
We concur SIMONS, ACTING P.J., RODRIGUEZ, J. [*] [*] Judge of the Superior Court of Alameda County, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.