Opinion
B294314
02-07-2020
JUNE DE LINE, Plaintiff and Respondent; GRACE DE LINE ROYER, Plaintiff and Appellant, v. KATTEN MUCHIN ROSENMAN LLP et al., Defendants and Appellants.
Murphy Rosen, Paul D. Murphy, Mark J. Nagle, and Daniel N. Csillag for Plaintiff and Appellant and Plaintiff and Respondent. Nemecek & Cole, Michael McCarthy and Vikram Sohal for Defendants and Appellants.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Los Angeles County Super. Ct. No. BC710138) APPEALS from an order and a judgment of the Superior Court of Los Angeles County, Patricia Nieto, Judge. Affirmed in part, reversed in part. Murphy Rosen, Paul D. Murphy, Mark J. Nagle, and Daniel N. Csillag for Plaintiff and Appellant and Plaintiff and Respondent. Nemecek & Cole, Michael McCarthy and Vikram Sohal for Defendants and Appellants.
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I. INTRODUCTION
Defendants Katten Muchin Rosenman LLP (Katten) and Carol Johnston appeal from an order denying their motion to compel arbitration. Plaintiff Grace De Line Royer (Grace) appeals from a judgment of dismissal following an order sustaining a demurrer without leave to amend as to her sole cause of action for professional malpractice. Both appeals concern a complaint filed by Grace and her mother June De Line (June) against defendants for professional malpractice, breach of fiduciary duty, and intentional and negligent infliction of emotional distress. We affirm the order denying the motion to compel arbitration. We also affirm the sustaining of the demurrer, but find the trial court abused its discretion by denying Grace leave to amend.
We note that Grace appealed from the order sustaining the demurrer without leave to amend, which is not directly appealable. (Hill v. City of Long Beach (1995) 33 Cal.App.4th 1684, 1695.) A judgment of dismissal was subsequently entered after Grace filed her notice of appeal. We exercise our discretion and construe the notice of appeal as an appeal from the judgment of dismissal. (Vibert v. Berger (1966) 64 Cal.2d 65, 67-68.)
Because several parties share a similar last name, we will refer to them by their first name for clarity.
II. BACKGROUND
A. Complaint
On June 13, 2018, June and Grace filed a complaint against Katten and Johnston. Because this appeal involves a demurrer, we assume the truth of all facts properly pleaded by Grace as the appellant. (State Dept. of State Hospitals v. Superior Court (2015) 61 Cal.4th 339, 346.)
Beginning in 2006, June sought legal advice from defendant Johnston, an attorney who had recently joined Katten as a partner. June consulted with Johnston regarding various estate and wealth-preservation issues, especially regarding June's home in La Jolla, California (La Jolla home). "[June] and Johnston explored various options consistent with [June's] goals of preserving and maximizing the value of [the La Jolla home] for herself and her only daughter Grace, while also trying to plan for the possibility that [June] might eventually make Los Angeles her permanent place of residence." Johnston advised June about a transaction known as an "'intercounty base year transfer.'" In 2008, Johnston explained to June that the purpose of the law was "'to allow seniors to sell the family home that they have owned for years (with low assessed value) and buy an equal or smaller place without getting reassessed up to market value.'" Johnston failed to explain to June that "to satisfy the statutory requirements, [June] had to hold each property in her personal name or the name of her trust."
Pursuant to Revenue and Taxation Code section 69.5, subdivision (a): "(1) Notwithstanding any other provision of law, pursuant to subdivision (a) of Section 2 of Article XIII A of the California Constitution, any person over the age of 55 years, or any severely and permanently disabled person, who resides in property that is eligible for the homeowners' exemption under subdivision (k) of Section 3 of Article XIII of the California Constitution and Section 218 may transfer, subject to the conditions and limitations provided in this section, the base year value of that property to any replacement dwelling of equal or lesser value that is located within the same county and is purchased or newly constructed by that person as his or her principal residence within two years of the sale by that person of the original property, provided that the base year value of the original property shall not be transferred to the replacement dwelling until the original property is sold. [¶] (2) Notwithstanding the limitation in paragraph (1) requiring that the original property and the replacement dwelling be located in the same county, this limitation shall not apply in any county in which the county board of supervisors, after consultation with local affected agencies within the boundaries of the county, adopts an ordinance making the provisions of paragraph (1) also applicable to situations in which replacement dwellings are located in that county and the original properties are located in another county within this state." According to the Board of Equalization, "[a]s of November 7, 2018, . . . ten counties in California have an ordinance enabling the intercounty base year value transfer[,]" including Los Angeles County. (Cal. State Bd. of Equalization, Transfer of Base Year Value for Persons Age 55 and Over - Propositions 60/90 <http://www.boe.ca.gov/proptaxes/prop60-90_55over.htm> [as of Feb. 7, 2020], archived at < https://perma.cc/XX8N-BAHV>.)
"For [June], this base year transfer concept was a critical piece of [real] estate planning that would set her and her daughter up for the future. Because of the ability to maintain the assessed value of the original property for a new home, [June] would be allowed to permanently move to Los Angeles, should she choose to, and live in a home with the same approximate value as the La Jolla . . . home without increasing the annual property taxes. . . . Moreover, under the laws governing transfer of homes to heirs at death, [June] would now have the ability to transfer her home to her daughter Grace at death at the same lower assessed value.[] Over Grace's lifetime, this would save her millions of dollars as well."
Real property is reassessed "when purchased, newly constructed, or a change in ownership has occurred . . . ." (Cal. Const., art. XIII A, § 2, subd. (a).) However, "[f]or purposes of subdivision (a), the terms 'purchased' and 'change in ownership' do not include the purchase or transfer of the principal residence of the transferor in the case of a purchase or transfer between parents and their children, as defined by the Legislature . . . ." (Id., subd. (h)(1); see also Rev. & Tax. Code, § 63.1, subd. (a)(1)(A).)
Johnston and June had several discussions about how to accomplish the base year transfer. They discussed the possibility of June buying the home of Donald, June's brother, on Mandeville Canyon Road, which was held by a company called Farmhouse LLC. In September 2013, Donald purchased a small house on Queens Road in Los Angeles. Johnston had assisted Donald in creating a limited liability company called North House LLC to hold the Queens Road home. Johnston and June discussed the possibility of June purchasing the Queens Road home. June informed Johnston: "'Confirming that we are creating an LLC in time for Friday closing: North House LLC[.] And when we get to La Jolla, that will be South House LLC.'" Johnston did not inform June that holding title as a limited liability company would not accomplish the intended goal of the base year transfer.
In early 2015, June decided to sell the La Jolla home and escrow closed on May 19, 2015. June thus had only two years in which to purchase her new home or lose out on the base year transfer. In April 2017, June found a replacement home in Los Angeles (Los Angeles home). On April 21, 2017, June opened escrow. She then contacted Johnston by e-mail, writing: "'Hi . . . , I'm selling my house and buying another so need an LLC. How fast can this be done? We close escrow [M]ay 9!!'" Johnston responded, "'No problem.'" On approximately May 12, 2017, escrow on the Los Angeles home closed. June held title to the Los Angeles home through a limited liability company, which Johnston helped create.
In June 2017, June submitted a form to the Los Angeles County Assessor's Office, requesting that the property tax base of the La Jolla home be transferred to the Los Angeles home. On September 8, 2017, June's assistant contacted the Assessor's Office to confirm the status of the transfer and was told it had been denied because the Los Angeles home had been purchased by a limited liability company. June subsequently received notice of the rejection and immediately contacted Johnston.
In an exchange of text messages, Johnston indicated that they should not have used a limited liability company to purchase the Los Angeles home. On September 13, 2017, Johnston spoke with June and suggested creating a fraudulent deed with a backdated sale date. Johnston later discussed creating an installment land sale contract purporting to show that the limited liability company had sold the Los Angeles property to June's trust immediately. June expressed discomfort with these plans.
On September 22, 2017, Johnston sent June a letter that was addressed to "Ms. June De Line," and stated, in part, "if we cannot get to a place where you are comfortable with my continuing representation of you, it may be time for us to sever our attorney-client relationship and for you to engage other counsel." Johnston further stated that defendants had no responsibility for the failure of the base year transfer, as Johnston was only responsible for creating a limited liability company for June. Johnston ended the letter by stating that defendants reserved all "rights, remedies [and] claims" against June.
Grace and June filed a complaint that alleged, as the first cause of action, professional malpractice against Katten and Johnston. The complaint alleged that an attorney-client relationship had been formed between June and defendants to "assist [June] in developing and executing a plan to maximize the value of [June's] most significant asset—her La Jolla home—to allow [June] to transfer the tax basis of her La Jolla home to a comparably valued home in Los Angeles to the benefit of [June] and her heirs." The complaint specifically alleged that "Grace was an intended third-party beneficiary of those [legal] services." Plaintiffs alleged that they had been damaged, "includ[ing] but . . . not limited to (i) the incremental cost to [June] and her daughter, Grace, of paying a substantially increased property tax bill each year for the remainder of their collective lives . . . ." Plaintiffs also alleged they suffered severe humiliation, mental anguish, and emotional and physical distress, and sought punitive damages.
The complaint's second cause of action was alleged by June alone, and claimed that defendants breached their fiduciary duty to her by advising her to participate in a scheme to submit false documents to a governmental agency, and by putting her at risk for actions designed to relieve defendants of their malpractice.
The third and fourth causes of action were also alleged by June alone, and claimed that defendants intentionally and negligently inflicted emotional distress upon her by pressuring her to defraud a governmental agency and intimidating her from filing a lawsuit. B. Motion to Compel Arbitration
On July 16, 2018, defendants moved to compel June to arbitrate the action. In support, defendants cited a February 9, 2006, retainer agreement (retainer agreement), which was signed by Donald. Prior to joining Katten in February 2006, Johnston was an attorney at O'Melveny & Myers LLP (O'Melveny). Johnston declared that while at O'Melveny, she was retained by June and Donald to represent them in estate planning and business matters. June was Donald's business manager. In February 2006, June contacted Johnston to ask about transferring their case matters from O'Melveny to Katten. Katten had a general policy that prohibited its attorneys from representing new clients without a written retainer agreement. Johnston informed June that "a new retainer agreement was required in order for me to continue the representation." June agreed and "asked that [Johnston] send her a copy of Katten's retainer agreement and [June] would review it and have it signed by Donald since Katten's invoices were to be issued in his name."
On February 9, 2006, defendants sent a retainer agreement, which was in the form of a letter, to "Mr. Donald DeLine." The salutation read, "Dear Donald," and described the "[s]cope of engagement" as: "You have retained us to represent you in your estate planning. If the scope of our work changes, we will discuss with you an appropriate amendment to this agreement." The retainer agreement also contained an arbitration clause, which provided in pertinent part: "You and the Firm [Katten] agree that all disputes arising out of or relating to this agreement or our professional services (including any claim that we have not adequately or properly performed the services for which we were retained), other than fee disputes . . . , shall be submitted to binding arbitration before a retired judge of the Los Angeles County Superior Court or the United States District Court for the Central District of California, who shall be acceptable to both sides." Donald signed the retainer agreement.
Defendants acknowledged that June did not sign the retainer agreement. They argued, however, that June should be compelled to arbitrate as a nonsignatory under theories of agency, third-party beneficiary, and equitable estoppel. June opposed the motion. On November 16, 2018, the trial court issued its ruling denying defendants' motion. Defendants timely appealed. D. Demurrer
Also on July 16, 2018, defendants demurred to Grace's professional malpractice cause of action. Defendants asserted that they owed no duty of care to Grace because Grace was not their client. Defendants, citing Chang v. Lederman (2009) 172 Cal.App.4th 67 (Chang) and other cases, asserted that attorneys have a duty of care to nonclients only for intended beneficiaries of executed wills and trusts, or when an attorney's actions are directed toward the third party and intended to induce action by the third party. Defendants argued neither exception applied here. Defendants further contended no leave to amend should be granted because Grace could never cure the defect. Grace countered that, pursuant to the complaint's allegations, she was June's intended beneficiary and defendants thus owed her a duty of care.
On November 20, 2018, the trial court sustained defendants' demurrer without leave to amend. The trial court concluded that any connection between defendants' conduct and injury to Grace was too speculative to support a finding that defendants owed her a duty of care. The court concluded that there was no reasonable probability that Grace could successfully cure the defect in the complaint and thus denied her any leave to amend. A judgment of dismissal was entered on December 21, 2018.
The judgment of dismissal as to Grace's cause of action is a final judgment between Grace and defendants. (Morehart v. County of Santa Barbara (1994) 7 Cal.4th 725, 741.)
III. DISCUSSION
A. Order Denying Motion to Compel Arbitration
Defendants contend the trial court erred by denying their motion to compel arbitration. "'The party seeking to compel arbitration bears the burden of proving the existence of a valid arbitration agreement.' [Citations.] 'Although California has a strong policy favoring arbitration [citations], our courts also recognize that the right to pursue claims in a judicial forum is a substantial right and one not lightly to be deemed waived. [Citations.] Because the parties to an arbitration clause surrender this substantial right, the general policy favoring arbitration cannot replace an agreement to arbitrate.' [Citation.] Courts therefore recognize that the right to arbitration depends on a contract. 'Even the strong public policy in favor of arbitration does not extend to those who are not parties to an arbitration agreement or who have not authorized anyone to act for them in executing such an agreement.'" (Young v. Horizon West, Inc. (2013) 220 Cal.App.4th 1122, 1128; Suh v. Superior Court (2010) 181 Cal.App.4th 1504, 1512 (Suh).)
"'"'There is no uniform standard of review for evaluating an order denying a motion to compel arbitration. [Citation.] If the court's order is based on a decision of fact, then we adopt a substantial evidence standard. [Citations.] Alternatively, if the court's denial rests solely on a decision of law, then a de novo standard of review is employed. [Citations.]'"' [Citation.] The issue of whether a third party is bound by an arbitration agreement is a question of law." (Avila v. Southern California Specialty Care, Inc. (2018) 20 Cal.App.5th 835, 839-840; Suh, supra, 181 Cal.App.4th at p. 1512.)
Here, it is undisputed that June did not sign the retainer agreement. "There are circumstances in which nonsignatories to an agreement containing an arbitration clause can be compelled to arbitrate under that agreement. As one authority has stated, there are six theories by which a nonsignatory may be bound to arbitrate: '(a) incorporation by reference; (b) assumption; (c) agency; (d) veil-piercing or alter ego; (e) estoppel; and (f) third-party beneficiary[.]' [Citations.]" (Suh, supra, 181 Cal.App.4th at p. 1513; accord, Benaroya v. Willis (2018) 23 Cal.App.5th 462, 469.)
Defendants present three theories that they argue compel June to arbitrate. Each is inapplicable.
1. Agency
Defendants assert June should be compelled to arbitrate as Donald's agent. According to defendants, June acted as Donald's agent and her interests were "so intertwined" with his that it was difficult to distinguish between the two. In the general sense, defendants are correct: June does not dispute that she was Donald's business manager and acted as his agent in business dealings. But, here, June sued in her individual capacity, not as Donald's agent. She did not allege any causes of action pertaining to legal services performed by defendants for Donald, and instead contended that defendants had breached their fiduciary duty to her, had negligently and intentionally inflicted emotional harm to her, and encouraged her to participate in a fraudulent scheme after the accessor's office rejected her request to transfer the tax base from the La Jolla home to the Los Angeles home. June did not allege that Donald was an owner of the La Jolla home at the time it was sold, or an owner of the Los Angeles home, and defendants do not present any evidence to the contrary. The causes of action alleged by June thus concern defendants' representation of June and her interests, not Donald's. Accordingly, even if June was otherwise an agent of Donald, the theory of agency does not support a finding that June is bound by the arbitration clause here. (See Fuentes v. TMCSF, Inc. (2018) 26 Cal.App.5th 541, 551 [concluding that defendant agent could not invoke arbitration clause between the plaintiff and principal because the plaintiff's "claims are made against [defendant] in [defendant's] own capacity, not in its (supposed) capacity as [the principal's] agent"].)
In 2006, June instructed Johnston to prepare a joint tenancy deed to transfer the title of June's separate La Jolla home to June and Donald as joint tenants. In 2009, June instructed Johnston to prepare another deed to transfer the title of the La Jolla back to June as her separate property. The record does not indicate the La Jolla home was anything other than June's sole property at the time it was sold in 2015.
2. Third-party beneficiary
Defendants next assert that June is a third-party beneficiary of the retainer agreement and thus must be compelled to arbitrate. "'"Whether a third party is an intended beneficiary . . . to the contract involves construction of the parties' intent, gleaned from reading the contract as a whole in light of the circumstances under which it was entered."'" (Epitech, Inc. v. Kann (2012) 204 Cal.App.4th 1365, 1371-1372, quoting Neverkovec v. Fredericks (1999) 74 Cal.App.4th 337, 349.)
Here, the retainer agreement does not reference June as an intended third-party beneficiary. Rather, the retainer agreement is in the form of a letter addressed to "Mr. Donald DeLine," bears the salutation "Dear Donald," and states: "Scope of engagement. You have retained us to represent you in your estate planning." The only reasonable interpretation of the agreement is that "[y]ou" refers to Donald and "us" refers to defendants. Again, the causes of action in the complaint concern defendants' legal services to June regarding June's property. As the trial court found, and supported by substantial evidence, "there is no evidence that [June] [received] any substantial benefit from the retainer [agreement]" relating to the causes of action in the complaint.
Defendants seem to argue that because June benefitted generally from her relationship with Donald, including, as declared by Johnston, by having Katten invoice June's legal bills to Donald, she was a third-party beneficiary to the retainer agreement. We disagree. Extrinsic evidence of the payment arrangement does not change our interpretation of the unambiguous language of the retainer agreement. "A third party beneficiary is someone who may enforce a contract because the contract is made expressly for his benefit. [Citation.] The mere fact that a contract results in benefits to a third party does not render that party a 'third party beneficiary.'" (Matthau v. Superior Court (2007) 151 Cal.App.4th 593, 602; accord, Jensen v. U-Haul Co. of California (2017) 18 Cal.App.5th 295, 301.) Accordingly, the third-party beneficiary exception does not apply to compel June to arbitrate.
3. Equitable estoppel
Finally, defendants contend June must be compelled to arbitrate because she relied upon the retainer agreement as the basis for her attorney-client relationship with defendants, and therefore should be estopped from denying that she is bound by that agreement's arbitration clause. Defendants rely upon the allegation that June sought Johnston's legal advice in 2006, which was around the time when Donald signed the retainer agreement, in support of their argument that the attorney-client relationship between June and defendants derived from that agreement. "When a plaintiff brings a claim which relies on contract terms against a defendant, the plaintiff may be equitably estopped from repudiating the arbitration clause contained in that agreement." (JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222, 1239 (JSM Tuscany); Boucher v. Alliance Title Co., Inc. (2005) 127 Cal.App.4th 262, 269.) "A nonsignatory plaintiff can be compelled to arbitrate a claim even against a nonsignatory defendant, when the claim is itself based on, or inextricably intertwined with, the contract containing the arbitration clause." (JSM Tuscany, supra, 193 Cal.App.4th at p. 1241.)
As the trial court found, however, "[p]laintiff's theory of the case, and the supporting facts, require that the parties were not acting pursuant to Donald's retainer agreement, but a second, unwritten contract between June and [d]efendants directly." Indeed, the complaint did not reference the retainer agreement as the basis for June's attorney-client relationship with defendants. Further, Johnston's September 22, 2017, letter to June referred to the existence of an attorney-client relationship between defendants and "you," which, in the context of the letter, was a clear reference to June, and not Donald. Indeed, the September 22, 2017, letter was addressed to June alone and did not make any reference to defendant's separate representation of Donald. Thus, the trial court's conclusion that June had an attorney-client relationship that was separate from the relationship memorialized in the retainer agreement was supported by substantial evidence and the trial court did not err in denying defendants' motion to compel arbitration. B. Order Sustaining Demurrer
Grace contends the trial court erred by sustaining defendants' demurrer. "On appeal from an order dismissing an action after the sustaining of a demurrer, we independently review the pleading to determine whether the facts alleged state a cause of action under any possible legal theory. [Citations.] We give the complaint a reasonable interpretation, 'treat[ing] the demurrer as admitting all material facts properly pleaded,' but do not 'assume the truth of contentions, deductions or conclusions of law.' [Citations.] We liberally construe the pleading with a view to substantial justice between the parties." (Chang, supra, 172 Cal.App.4th at pp. 75-76; accord, Paul v. Patton (2015) 235 Cal.App.4th 1088, 1095 (Paul).)
"The elements of a claim for professional negligence are[:] '"(1) the duty of the professional to use such skill, prudence, and diligence as other members of his profession commonly possess and exercise; (2) a breach of that duty; (3) a proximate causal connection between the negligent conduct and the resulting injury; and (4) actual loss or damage resulting from the professional's negligence."' [Citation.] While negligence is ordinarily a question of fact, the existence of a duty is generally a question of law that may be addressed by demurrer." (Paul, supra, 235 Cal.App.4th at p. 1095; Chang, supra, 172 Cal.App.4th at p. 76.)
As noted, defendants demurred to Grace's cause of action for legal malpractice because she did not allege she was their client and she did not plead any facts that supported finding she was an intended third-party beneficiary such that defendants owed her a duty of care. "Generally, '"an attorney owes a duty of care, and is thus answerable in malpractice, only to the client with whom the attorney stands in privity of contract."' [Citation.] However, courts have extended an attorney's duty of care to nonclients—including will and trust beneficiaries—in limited circumstances." (Paul, supra, 235 Cal.App.4th at pp. 1095-1096.)
Grace contends the trial court erred because, although Grace was not a client of defendants, she was an "intended beneficiary" and defendants thus owed her a duty of care. In support, Grace cites the factors enumerated in Biakanja v. Irving (1958) 49 Cal.2d 647 (Biakanja) and Lucas v. Hamm (1961) 56 Cal.2d 583 (Lucas), namely: "'"[(1)] the extent to which the transaction was intended to affect the plaintiff [(beneficiary)], [(2)] the foreseeability of harm to [her], [(3)] the degree of certainty that the plaintiff suffered injury, [(4)] the closeness of the connection between the defendant's . . . conduct and the injury[,] . . . [(5)] the policy of preventing future harm[,]" . . . and [(6)] "whether the recognition of liability . . . would impose an undue burden on the profession."'" (Paul, supra, 235 Cal.App.4th at p. 1096; Osornio v. Weingarten (2004) 124 Cal.App.4th 304, 330.)
Applying the Lucas/Biakanja factors, we conclude Grace has failed to sufficiently allege in her complaint that defendants owed her a duty of care. The second factor, foreseeability of harm to Grace, and the third factor, the degree of certainty that Grace has suffered injury, weigh against finding a duty of care. Grace alleges that June intended Grace to inherit the family home and cites Heyer v. Flaig (1969) 70 Cal.2d 223, disapproved on other grounds in Laird v. Blacker (1992) 2 Cal.4th 606, 617, to argue that defendants were thus charged with fulfilling June's "testamentary instructions." The complaint, however, alleged that defendants had negligently advised June on how to effect a base year transfer. It did not allege that defendants had negligently prepared a will or a trust or that Grace has inherited the Los Angeles home. It thus remains uncertain whether June will maintain the Los Angeles home until her death, will transfer the home to Grace at the time of her death, and whether the laws at the time of June's death will remain as they are today and result in Grace paying a higher tax on the home. In other words, it was reasonably foreseeable to defendants that their alleged legal malpractice would harm June, but it was not reasonably foreseeable that their malpractice would also harm Grace.
We are unpersuaded by Grace's citation to Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1056, for the proposition that "unlike the chance of winning at trial or the chance of winning a horserace, the chance of inheriting is not inherently speculative." Beckwith v. Dahl, supra, 205 Cal.App.4th 1039 is inapposite as that citation involved the tort of intentional interference with expectation of inheritance.
Similarly, the fourth factor, the closeness of the connection between the defendants' conduct and the injury, weighs against finding a duty of care on the facts alleged here, as any injury to Grace is speculative. As the trial court found, "Grace has not been harmed, as she has not inherited anything from June, as June is still very much alive. The [c]ourt thus also cannot conclude that there is a sufficient closeness of the connection between [d]efendants' conduct and Grace's injury, which requires speculative future conduct by June bequeathing her property to Grace, and June's death."
The fifth factor, the policy of preventing future harm, also weighs against imposing a duty of care on the facts alleged in the complaint. Grace argues that public policy is served by imposing a duty of care on defendants whose legal malpractice affects intended third-party beneficiaries. However, such policy is not served when the actual client can, and does, sue the offending attorney for legal malpractice. For instance, in Burger v. Pond (1990) 224 Cal.App.3d 597 (Burger), the plaintiff sued a defendant attorney for negligent infliction of emotional distress. (Id. at p. 599.) Plaintiff alleged that defendant was negligent in representing plaintiff's husband in a divorce proceeding from his first wife. (Ibid.) The plaintiff argued that despite the lack of an attorney-client relationship with the defendant, she was entitled to recover for emotional distress because she was the intended beneficiary of the defendant's legal services to her husband. (Id. at p. 601.) The trial court granted summary judgment in favor of the defendant, finding plaintiff's argument to be legally insufficient. (Ibid.) The Court of Appeal affirmed, concluding: "[defendant attorney's] liability for alleged professional negligence clearly extends to [the plaintiff's husband]. This is not a situation like that presented in Lucas . . . where the attorney's professional negligence comes to light only after the client-testator is dead, such that if the third party, intended beneficiary is not entitled to recover, no one may do so. [(Lucas, supra, 56 Cal.2d at p. 589.)] Thus, by not extending [the attorney's] liability to include plaintiff, we do not abrogate our related responsibility of promoting professional competence and skill among attorneys in the performance of their duties. [Plaintiff's husband] is a party to this action and, if he proves [the attorney's] negligence, will hold [the attorney] accountable for his failure to perform his duties with reasonable competence." (Burger, supra, 224 Cal.App.3d at p. 606.) Here, defendants will not avoid liability for their alleged misconduct if we affirm the demurrer. Grace's mother, June, is a party to this action and is suing defendants for legal malpractice. Accordingly, the fifth factor disfavors finding the imposition of a duty of care on defendants on the facts alleged here.
Finally, the sixth factor, whether recognizing liability would impose an undue burden on the profession, also weighs against finding that the complaint sufficiently alleged defendants owed Grace a duty of care. Even assuming that we were to accept June's assertion that she intended, at the time of her purchase of the Los Angeles home, to transfer the home upon her death to Grace, and even further assuming that absent defendants' negligence, Grace would have been able to pay taxes on the lower tax rate of the La Jolla home, Grace has not yet suffered any harm. Indeed, a finding that an attorney who advised a client on an intercounty base year transfer is liable to the client's child, based upon the client's assertion that he or she intends for a particular child to inherit the home, would result in an undue burden on the profession. "The difficulty . . . is that any disappointed potential beneficiary—even a total stranger to the testator—could make factual allegations similar in most respects to those in the . . . complaint; and, without requiring an explicit manifestation of the testator's intentions, the existence of a duty—a legal question—would always turn on the resolution of disputed facts and could never be decided as a matter of law. If a complaint alleges the decedent intended to benefit the plaintiff and the lawyers responsible for the decedent's estate plan were aware of that intent, no more would be required to survive a demurrer." (Chang, supra, 172 Cal.App.4th at p. 83.) "For this reason, we conclude, as have the other appellate courts to consider a similar issue, the sixth factor—whether extension of liability would 'impose an undue burden on the profession' [citation]—mandates rejection of the argument that estate planners owe a duty of care to unnamed potential beneficiaries." (Id. at page 84.) Accordingly, we conclude the trial court did not err by sustaining defendants' demurrer as to Grace's cause of action. C. Leave to Amend
"'Where the complaint is defective, "[i]n the furtherance of justice great liberality should be exercised in permitting a plaintiff to amend his complaint, and it ordinarily constitutes an abuse of discretion to sustain a demurrer without leave to amend if there is a reasonable possibility that the defect can be cured by amendment. [Citations.]"' [Citations.] This abuse of discretion is reviewable on appeal 'even in the absence of a request for leave to amend' [citations] . . . ." (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 970-971). "The burden is on the plaintiff to demonstrate how he or she can amend the complaint . . . . Plaintiff can make this showing in the first instance to the appellate court." (Lee v. Los Angeles County Metropolitan Transportation Authority (2003) 107 Cal.App.4th 848, 854.)
Here, Grace argues that she can allege that she was one of the "two specifically named beneficiaries under June's restated trust that Johnston drafted." "[C]ourts have found a duty [owed by an attorney to a nonclient] where the executed testamentary document itself reflects the testator's undisputed intent that the plaintiff receive a specific benefit." (Paul, supra, 235 Cal.App.4th at p. 1098; see also Chang, supra, 172 Cal.App.4th at p. 82 ["California decisions recognize an enforceable duty of care in cases involving a negligently drafted or executed testamentary instrument when the plaintiff was an expressly named beneficiary of an express bequest"]; Bucquet v. Livingston (1976) 57 Cal.App.3d 914, 921 ["An attorney may be liable to testamentary beneficiaries only . . . if due to the attorney's professional negligence the testamentary intent in a legal instrument is frustrated and the beneficiaries clearly designated by the testator lose their legacy as a direct result of such negligence"].)
Based on the record, which does not include June's trust, we do not find as a matter of law that there is no reasonable possibility that Grace can cure the deficiencies in her cause of action. Accordingly, the trial court abused its discretion by denying her leave to amend.
Defendants request that this court take judicial notice of June's trust. Defendants contend judicial notice may be taken pursuant to Evidence Code section 452, subdivision (h) as "[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy." The parties did not file June's trust before the trial court. The request is denied.
Defendants also contend Grace's opening brief violates rule 8.204(a)(2)(C) of the California Rules of Court, which provides that an appellant's opening brief must "[p]rovide a summary of the significant facts limited to matters in the record." In her statement of facts, Grace listed facts from the record commingled with facts that she could allege. Defendants contend that Grace's statement of facts should be disregarded. We exercise our discretion to disregard Grace's noncompliance with the California Rules of Court. (Cal. Rules of Court, rule 8.204(e)(2)(C) [stating that a reviewing court may "[d]isregard the noncompliance" of a filed brief]; Critzer v. Enos (2010) 187 Cal.App.4th 1242, 1258, fn. 12.)
IV. DISPOSITION
The order denying the motion to compel arbitration is affirmed. The judgment of dismissal is reversed, and the matter remanded to the trial court with instructions to grant Grace leave to amend the complaint. The parties are to bear their own costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
KIM, J. We concur:
RUBIN, P. J.
BAKER, J.