Opinion
G031250.
7-31-2003
DAVID HOWARD, Plaintiff and Appellant, v. DAVID J. P. KALOYANIDES et al., Defendants and Respondents.
The Walker Law Firm, Joseph A. Walker, Mary G. Finlay and Karyn S. Neue for Plaintiff and Appellant. Sedgwick, Detert, Moran & Arnold, Gregory H. Halliday and Guy J. Gorlick for Defendants and Respondents.
In this legal malpractice action, plaintiff David Howard appeals from a judgment entered after the trial court sustained, without leave to amend, defendants demurrer to the third amended complaint. Howard also appeals from the trial courts denial of his motion for reconsideration of the courts ruling on the demurrer.
In his third amended complaint, Howard alleges six theories under his first cause of action for breach of contract. The trial court properly sustained the demurrer as to all but one of Howards six theories of breach of contract. The remaining theory alleges defendants unreasonably advised Howard he could recover prevailing party attorney fees in a lawsuit against a certain third party; the facts alleged under this theory state a claim. We therefore reverse the trial courts ruling sustaining defendants demurrer, without leave to amend, to the first cause of action with regard to that theory only.
The trial court properly sustained the demurrer to Howards second cause of action for professional negligence, fourth cause of action for fraud and deceit, and fifth cause of action for breach of fiduciary duty. Because Howard failed to carry his burden of showing a reasonable possibility existed that the defects contained in these causes of action could be cured by amendment, we affirm the trial courts ruling sustaining defendants demurrer, without leave to amend, to Howards second, fourth, and fifth causes of action.
Our opinion is guided by the principle that "as a general rule in testing a pleading against a demurrer the facts alleged in the pleading are deemed to be true, however improbable they may be." (Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal. App. 3d 593, 604, 176 Cal. Rptr. 824.) In light of this standard of review for demurrers, generally requiring this court to deem the allegations of a complaint as true and to construe them liberally, we must conclude Howard stated a claim for fraud and deceit under his third cause of action. For the reasons explained below, we therefore reverse the order sustaining the demurrer, without leave to amend, to the third cause of action.
BACKGROUND
A. Howards Underlying Lawsuit Against Wildey
The following facts regarding Howards relationship with Catherine Wildey are gleaned from Howards original complaint against Wildey and are taken as true for purposes of analyzing the sufficiency of the third amended complaint. "[A] plaintiff may not discard factual allegations of a prior complaint, or avoid them by contradictory averments, in a superseding, amended pleading." (Continental Ins. Co. v. Lexington Ins. Co. (1997) 55 Cal.App.4th 637, 646.) The original complaint is properly before us pursuant to defendants request for judicial notice in support of their demurrer.
In September 1998, Howard "met" Wildey on the Internet. Between September 1998 and November 1998, Howard and Wildey regularly corresponded and developed a "personal" relationship over the Internet. They met face-to-face for the first time in November 1998. Wildey expressed her growing fondness for Howard and proposed he divorce his wife to marry Wildey.
In January 1999, Wildey told Howard she doubted his affection because he had not yet filed for divorce. She requested some form of reassurance that Howard intended to marry her. Howard offered Wildey 1,000 ounces of silver "for her to hold as a sign of [Howards] good faith - as a kind of pledge or `bond." Howard told Wildey the silver was only a loan and they agreed if Howard did not marry Wildey, she could keep the silver. At Wildeys request, less than one month later, Howard agreed to give her more silver. Howard also gave Wildey 24 gold coins, each equal to one ounce of pure gold. Wildey then asked Howard to loan her money. Howard wired $ 10,000 to Wildeys bank account. In July, Howard loaned Wildey additional money at her request and she promised she would "be there for him." During September and October 1999, Howard paid Wildey an additional $ 6,000 for " support."
In October 1999, Wildey told Howard she would not marry him, and refused to return the gold and silver he had given her or to repay the money he had loaned to her. Wildey told Howard that "she had let [Howard] off easy and that he should consider himself `very lucky because she `could have taken [him] for far more."
On October 18, 1999, Howard retained the Law Offices of Diana L. Martinez, the predecessor of defendant Martinez & Kaloyanides (the Firm), to research and institute a civil action to recover the money Howard had loaned to Wildey, based on her alleged misrepresentations. The Firm and Howard entered into an agreement entitled "Attorney-Client Fee Agreement (Civil Hourly)" and signed by David J. P. Kaloyanides, whereby the Firm agreed to provide "those legal services reasonably required" to represent Howard in "instituting an action to recover money loaned based on misrepresentations made to [Howard] by a third party" (the Agreement). The Agreement provided "the scope of services under this Agreement will include, if necessary, the filing of a court action, and [the Firm] will represent [Howard] until settlement or judgment, by way of arbitration or trial, is reached. [The Firm] will oppose any motion for new trial or any other post-trial motions filed by an opposing party, and will make any appropriate post-trial motions on [Howards] behalf."
The Agreement further provided the Firm "shall have the option to withdraw from the case at any time: (a) with [Howards] consent; (b) upon court approval; (c) if the financial obligations are not met by [Howard]; or (d) if [Howard] has misrepresented or failed to disclose material facts to [the Firm], refuses to cooperate with [the Firm] or under any other circumstances that would render [the Firms] continuing representation unlawful or unethical. In the event of such withdrawal by [the Firm], [Howard] shall not be relieved from paying all costs and fees for services rendered to that date or advanced on behalf of [Howard]."
On October 27, 1999, defendants, on behalf of 60-year-old Howard, filed a complaint for fraud, negligent misrepresentation, and common counts against 42-year-old Wildey.
B. Wildeys Cross-complaint, Howards First Guilty Plea, and the Addendum
On March 2, 2000, Wildey filed a motion for leave to file a cross-complaint against Howard for assault and battery. (Howards complaint against Wildey and Wildeys cross-complaint against Howard are collectively referred to as the Wildey action.) Wildey alleged that after she told Howard she wanted no further contact with him, he followed her to her car, refused to allow her to close the car door, and struck Wildey in the eye and nose with a closed fist. On March 21, Howard pleaded guilty to misdemeanor battery in violation of Penal Code section 242 for having "willfully & unlawfully used force or violence upon the person of Catherine Wildey on 10-13-99 in Orange County." On March 24, the trial court granted Wildeys motion for leave to file a cross-complaint.
On March 28, 2000, the Firm (by Kaloyanides) and Howard signed an addendum to the Agreement (Addendum). The Addendum stated Howard was indebted to the Firm for $ 6,400 in attorney fees. The Addendum provided the Firm waived and released the amount owed by Howard to the Firm in exchange for a flat fee of $ 10,000 that "shall cover all legal fees for legal services provided by [the Firm] from the effective date of this Addendum through the conclusion of the civil action Howard v. Wildey currently pending . . ., including any and all cross-complaints that have been or may in the future be brought by the defendant Catherine Wildey." The Addendum further provided, "All other provisions of the [Agreement] shall remain in force and effect and shall govern the parties relationship except as expressly modified by this Addendum."
C. The Trial Court Proceedings and Howards Second Guilty Plea
On April 27, 2000, the trial court granted Wildeys motion for judgment on the pleadings with leave to amend, as to Howards complaint. On May 30, the Firm, on behalf of Howard, filed a first amended complaint alleging claims against Wildey for fraud, negligent misrepresentation, and common counts.
On July 13, 2000, the trial court tentatively granted defendants motion to be relieved as counsel of record for Howard. The courts final ruling on October 11 stated, "A serious and substantial breakdown in the attorney-client relationship has occurred." On October 18, Howard pleaded guilty to misdemeanor violation of Penal Code section 653m (telephone calls or contact by electronic communication device with intent to annoy) because he had made "willful and unlawful harassing telephone calls to David Kaloyanides" on July 28 and August 3, 2000. Also on October 18, the trial court issued a criminal protective order prohibiting Howard from, inter alia, stalking, harassing, threatening, or committing violence upon Kaloyanides, directly or indirectly contacting Kaloyanides or coming within 300 yards of him, his home, his workplace, or his childrens school.
On January 11, 2001, the trial court sustained Wildeys demurrer to Howards first amended complaint without leave to amend.
On August 20, 2001, Howard settled the Wildey action by agreeing to pay Wildey $ 2,500.
D. Howards Legal Malpractice Action
On September 7, 2001, Howard filed a legal malpractice action. On May 28, 2002, Howard filed a third amended complaint against Kaloyanides, Martinez, and the Firm for breach of contract, professional negligence, fraud, and breach of fiduciary duty. Defendants filed a demurrer and a motion to strike portions of Howards third amended complaint; the trial court sustained defendants demurrer without leave to amend. The trial court denied Howards motion for reconsideration of the ruling on the demurrer. Howard appealed the trial courts judgment dismissing his lawsuit against defendants and order denying his motion for reconsideration.
DISCUSSION
A. Standard of Review
"In reviewing the sufficiency of a complaint against a general demurrer, we are guided by long-settled rules. `We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed. [Citation.] Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action." (Blank v. Kirwan (1985) 39 Cal.3d 311, 318, 216 Cal. Rptr. 718, 703 P.2d 58.)
B. Judicial Notice
Defendants filed a request for judicial notice in support of their demurrer to Howards third amended complaint. Howard did not object to the request. The trial courts order sustaining defendants demurrer without leave to amend did not specify whether the court granted defendants request for judicial notice. Code of Civil Procedure section 430.30, subdivision (a) authorizes a trial court to consider, as a ground for a demurrer, any matter which the court must or may judicially notice. Evidence Code section 452, subdivision (d) provides that judicial notice may be taken of court records from another court case. But for purposes of a demurrer, "judicial notice of other court records and files is limited to matters that are indisputably true." (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2002) P 7:15, p. 7-8.) Therefore, with regard to defendants request for judicial notice in support of their demurrer, on appeal we consider orders, judgments, and admissions by Howard in earlier pleadings contained in other court files that we may properly take judicial notice of in our review of the trial courts order.
C. Did the Trial Court Err by Sustaining Defendants Demurrer? Howard contends the trial court erred by sustaining defendants demurrer to each of the five causes of action contained in Howards third amended complaint. We review each cause of action in turn. 1. First Cause of Action for Breach of Contract
In order to state a cause of action for breach of contract, a plaintiff must allege the existence of a contract, the plaintiffs performance, the defendants failure to perform the contract unless such performance is excused or justified, and the plaintiff sustained damages as a result of the breach. (BAJI No. 10.85 (8th ed. 1994).) "For the purpose of determining the effect of a complaint, its allegations are liberally construed, with a view toward substantial justice." (Stevens v. Superior Court (1999) 75 Cal.App.4th 594, 601; see also Code Civ. Proc., § 452; Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 43, fn. 7, 960 P.2d 513.)
The trial court sustained defendants demurrer to Howards first cause of action on the ground: "Plaintiff has alleged numerous breaches in this cause of action, but still no facts are alleged that Defendant[]s breached certain terms of a Contract. As argued by Defendant[]s, this cause of action appears to be nothing more than [a] legal malpractice cause of action. SUSTAINED." Applying the appropriate standard of review discussed above, we examine whether the first cause of action states facts sufficient to constitute a cause of action for breach of contract.
The first cause of action alleges Howard and the Firm had entered into the Agreement in October 1999 and the Addendum in March 2000. Both the Agreement and the Addendum were attached as exhibits to the third amended complaint. The first cause of action alleges that under the Agreement (1) Howard agreed to retain the Firm "to represent [Howard] in the following matter: research and institute a civil action to recover money loaned based on misrepresentation to [Howard]"; (2) the Firm agreed to "provide those legal services reasonably required to represent [Howard] in prosecuting the MATTER as set forth in Paragraph 7, and will take reasonable steps to keep [Howard] informed of significant developments, and to respond promptly to [Howards] inquires [sic] and communications"; and (3) the Firm agreed to "represent [Howard] in instituting an action to recover money loaned on misrepresentations made to [Howard] by a third party." The first cause of action further alleges the scope of the Firms services under this Agreement "will include, if necessary, the filing of a court action, and [the Firm] will represent [Howard] until settlement or judgment, by way of arbitration or trial, is reached."
The Addendum provided that a flat fee, to be paid by Howard, " shall cover all legal fees for legal services provided by [the Firm] from the effective date of this Addendum through the conclusion of the civil action Howard v. Wildey. . ., including any and all cross-complaints that have been or may in the future be brought by the defendant Catherine Wildey."
Howard alleges defendants breached the Agreement and/or the Addendum in several ways. We determine whether the facts alleged under each theory state a claim. We intend our determination with regard to each theory to constitute the law of the case after remand. "The determination that a pleading is sufficient or insufficient is clearly one of law, and is governing in the retrial or appeal where the pleading is substantially the same." (9 Witkin, Cal. Procedure (4th ed. 1997) Appeal, § 903, p. 938.)
The first cause of action alleges defendants failed to make a claim in the Wildey action based on Civil Code section 1590, notwithstanding Howards allegation he had informed defendants of sufficient facts pertaining to Howard giving Wildey money and personal property. Civil Code section 1590 states: "Where either party to a contemplated marriage in this State makes a gift of money or property to the other on the basis or assumption that the marriage will take place, in the event that the donee refuses to enter into the marriage as contemplated or that it is given up by mutual consent, the donor may recover such gift or such part of its value as may, under all of the circumstances of the case, be found by a court or jury to be just." Civil Code section 43.4 states: "A fraudulent promise to marry or to cohabit after marriage does not give rise to a cause of action for damages."
Although the first amended complaint filed by defendants on behalf of Howard in the Wildey action did not specifically cite to Civil Code section 1590, two causes of action contained therein for fraudulent misrepresentation and negligent misrepresentation alleged Howard loaned money to Wildey, based on her misrepresentations which included her desire to marry Howard. The first amended complaint alleged "[Wildey] then proposed that [Howard] divorce his wife so he could make plans to marry [Wildey]." Howards claim for fraudulent misrepresentation did not seek to recover damages because Wildey fraudulently promised to marry Howard in violation of Civil Code section 43.4, but sought to recover money loaned to Wildey, based on her misrepresentations. Howards first amended complaint stated Wildey "made these representations with the intention to deceive and defraud Plaintiff and to induce Plaintiff to act in reliance on these representations or with the expectation that Plaintiff would so act in the manner alleged above, specifically, to pay her the $ 10,000." We construe the first amended complaint to include a claim under Civil Code section 1590; therefore defendants did not breach the Agreement or the Addendum due to failure to allege a cause of action based on Civil Code section 1590.
Second, the first cause of action alleges defendants "never provided the agreed upon legal services through the conclusion of the said civil action against Wildey, and further, defendants never provided services as to the cross-complaint which Wildey filed in that civil action . . . ." But the Agreement stated the Firm had the option to withdraw from Howards case "upon court approval" and the Addendum did not modify this provision or otherwise render it unenforceable. The court granted defendants motion to be relieved as counsel of record for Howard, thereby excusing defendants from further performance under the Agreement and the Addendum.
Next, the first cause of action alleges that after defendants withdrew from representing Howard in October 2000, they "failed to refund monies which had been paid by plaintiff to defendants . . . for certain specifically described legal services, including legal services which had not yet been provided." Howard failed to allege he was entitled to a refund. Pursuant to the Agreement, the Firm could withdraw from representing Howard upon court approval. Defendants obtained the trial courts approval to withdraw from the Wildey action. The Agreement provided: "In the event of such withdrawal by [the Firm], [Howard] shall not be relieved from paying all costs and fees for services rendered to that date or advanced on behalf of [Howard]." (Italics added.) Although the Addendum modified the Agreement from an hourly rate to a flat fee, it expressly provided that all other terms of the Agreement remained in effect.
Fourth, the first cause of action alleges defendants "unilaterally determined that defendants would not oppose the dilatory noticed motion of Defendant Wildey to file a most dilatory cross-complaint and so advised counsel for Wildey and further filed a notice of non-opposition to such motion with the court." Howard pleaded no facts regarding how defendants strategy decision breached the Agreement or the Addendum. Although Howard concludes that Wildeys efforts to file a cross-complaint were dilatory, he failed to plead any facts that show defendants decision not to oppose those efforts was unreasonable. Furthermore, Howard admitted Wildeys cross-complaint was compulsory, thereby undermining his conclusion that defendants failure to oppose Wildeys efforts to file such a cross-complaint was unreasonable.
Fifth, the first cause of action alleges defendants "charged and received from plaintiff $ 7,500 for research and preparation of three motions to compel discovery in the Wildey action, each of which motion defendants thereafter wrongfully elected, without the knowledge or consent of plaintiff, not to pursue." Howard failed to plead any facts showing defendants decision not to pursue the three motions was unreasonable or otherwise breached the Agreement or the Addendum.
Sixth, the first cause of action alleges defendants erroneously advised Howard that he would be entitled to an award of attorney fees and costs in the Wildey action should he obtain a favorable judgment. The claim further alleges "no legal [or] factual basis exists for the said incorrect legal advise [sic] that plaintiffs attorneys fees could be lawfully recouped from Wildey or be made part of any award or judgment against Wildey." Howard alleges the Firm breached the portion of the Agreement, providing that the Firm "will provide those legal services reasonably required to represent [Howard] in prosecuting the MATTER as set forth in Paragraph 7," by rendering allegedly erroneous advice to Howard. Defendants brief on appeal does not address this allegation of breach, and nothing contained in defendants request for judicial notice contradicts Howards allegation.
The first cause of action further alleges this breach caused Howard to sustain damages, stating, "Such erroneous legal advice caused plaintiff to be damaged in excess of $ 30,000 as follows: but for such erroneous advice plaintiff Howard would not have been willing to incur attorney fees in excess of $ 30,000 in the Wildey civil action as thereafter paid by plaintiff to defendants herein. If plaintiff Howard had been properly advised that his attorneys fees could not be recoverable as part of an award against Wildey should Plaintiff have prevailed in his action against Wildey, plaintiff Howard would not have agreed to pay or paid such excessive and exorbitant and unnecessary fees in excess of $ 30,000 charged to him by defendants . . . . As a proximate and legal result thereof, plaintiff has been damaged in an amount in excess of $ 30,000 plus interest thereon, all in accordance with proof at time of trial."
At oral argument, defendants suggested this allegation might have resulted from Howards misunderstanding of the Firms advice concerning possible recovery of punitive damages against Wildey if he prevailed. That might very well be true. But on a demurrer, we must deem the facts of the third amended complaint as true, however improbable. (Del E. Webb Corp. v. Structural Materials Co., supra, 123 Cal. App. 3d 593, 604.) "It is not the ordinary function of a demurrer to test the truth of the plaintiffs allegations or the accuracy with which he describes the defendants conduct. A demurrer tests only the legal sufficiency of the pleading. [Citation.] It `admits the truth of all material factual allegations in the complaint . . .; the question of plaintiffs ability to prove these allegations, or the possible difficulty in making such proof does not concern the reviewing court." (Committee on Childrens Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213-214, 197 Cal. Rptr. 783, 673 P.2d 660.) Thus, we conclude Howard stated a claim for breach of contract on the theory defendants unreasonably advised him that he could recover prevailing party attorney fees against Wildey, and on this theory alone.
2. Second Cause of Action for Professional Malpractice
"The elements of a cause of action in tort 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 professionals negligence." (Budd v. Nixen (1971) 6 Cal.3d 195, 200, 98 Cal. Rptr. 849, 491 P.2d 433.)
The trial court sustained defendants demurrer to Howards claim for professional malpractice, stating, "As argued by Defendants, there are no facts alleged in this cause of action to support [the] causation element. This is an identical claim as the 1st cause of action."
The second cause of action states "as a result of the said written instruments being entered into, an attorney-client relationship existed between plaintiff, as client, and defendants, as clients attorneys, commencing on October 18, 1999 and not ending until on or after October 11, 2000." The second cause of action further states that during the same time period, "defendants assumed a duty to act with due care, skill, competence and diligence in their legal representation of plaintiff in handling plaintiffs civil action against third party Wildey."
The second cause of action alleges defendants breached their professional duty to Howard in three ways: (1) defendants, on Howards behalf, failed to allege a claim under Civil Code section 1590 in the Wildey action; (2) defendants unilaterally and without Howards approval decided not to oppose Wildeys motion to file a cross-complaint; and (3) defendants falsely informed Wildeys attorney that Howard intended to kill Wildey. Facts pleaded under each of Howards theories of professional negligence fail to state a claim.
As discussed above with regard to Howards first cause of action for breach of contract, we construe Howards first amended complaint in the Wildey action to allege a cause of action under Civil Code section 1590. Thus, Howard cannot state a claim for professional negligence on the ground defendants failed to assert such a claim. Also as discussed above, Howard did not state facts showing defendants failure to oppose Wildeys motion for leave to file a cross- complaint was unreasonable or below the standard of care. Howard also fails to plead causation because even if defendants opposed Wildeys motion, Howard does not allege the trial court would have denied the motion. Thus, Howards claim for professional negligence does not survive demurrer on this theory either.
Finally, the second cause of action alleges defendants were professionally negligent by creating and sending an anonymous letter to Wildeys counsel, which stated:
"July 27, 2000
"Dear Mr. Hall,
"I usually dont do this sort of thing, but I think someone should do something.
"I live next door to David Howard. He told me you are Cathy Wildeys lawyer. I know that he was having some kind of relationship with Cathy but I dont know much about that. He told me that he is now suing her.
"I know that he was arrested for hitting Cathy. I was supposed to testify at his trial but I never did. David told me that he made some kind of deal and had to do some community service.
"Awhile ago I was talking to David. He was pissed off about the lawsuit. He told me that he was going to get Cathy one way or another. I wasnt sure what he meant but then he told me that he had a gun with some kind of special bullets that he got from Cathys son.
"I am worried that he might be thinking about hurting Cathy because he said something about the police not knowing about the gun.
"I dont want to get involved because I live near David. If he has a gun and is planning something illegal, I am worried he might do something to me or my family.
"I just thought you should know."
The second cause of action further alleges Kaloyanides telephoned an attorney associated with Wildeys attorney and told him that Howard "intended to kill Catherine Wildey, which also was not true as then known to defendant Kaloyanides."
Paragraph 34 of the third amended complaint alleges "none of the contents of the letter [were] true" (italics added). But, importantly, the third amended complaint also alleges in paragraph 53 some of the contents of the letter were true because "the said letter contains attorney privileged information and confidential information unknown to Daryl Nishioka or any other third person other than Defendant Kaloyanides." Thus, the third amended complaint admits that assertions in the letter were based on attorney-client communications from Howard to his lawyers. We view this admission as dispositive of the claims under the second cause of action because of the application of Evidence Code section 956.5.
Evidence Code section 956.5 states, "There is no privilege under this article if the lawyer reasonably believes that disclosure of any confidential communication relating to representation of a client is necessary to prevent the client from committing a criminal act that the lawyer believes is likely to result in death or substantial bodily harm." The third amended complaint alleges warnings concerning dangers posed by Howard to Wildey were based in part on privileged information communicated by Howard to his lawyers. Therefore, Howards allegations that defendants created and published the letter and that Kaloyanides told an attorney for Wildey Howard intended to kill Wildey cannot serve as the basis of a claim for professional negligence.
In view of Howards admission referred to above, and notwithstanding paragraphs 60 and 61 of the third amended complaint, the second cause of action does not allege sufficient facts to state a cause of action. The facts alleged do not support a conclusion that defendants had no reasonable belief disclosure of the information was necessary to prevent Howard from committing a criminal act which defendants believed would likely result in death or substantial bodily harm. (Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125, 271 Cal. Rptr. 146, 793 P.2d 479 [In reviewing a ruling on demurrer, "we do not, however, assume the truth of contentions, deductions, or conclusions of fact or law"].)
Thus, the letter and the phone call are covered by Evidence Code section 956.5, and therefore cannot be the bases of a professional negligence claim.
3. Third Cause of Action for Fraud and Deceit
"The essential allegations of an action for fraud are a misrepresentation, knowledge of its falsity, intent to defraud, justifiable reliance, and resulting damage. [Citation.] Every element of the cause of action for fraud must be alleged in the proper manner and the facts constituting the fraud must be alleged with sufficient specificity to allow defendant to understand fully the nature of the charge made." (Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (1976) 57 Cal. App. 3d 104, 109, 128 Cal. Rptr. 901.)
In sustaining the demurrer to Howards third and fourth causes of action for fraud and deceit, the trial court stated: "3rd and 4th causes of action (fraud) Plaintiff still has not alleged these causes of action with required specificity as to who did what, when and where. The complaint does not meet specificity requirements as none of these paragraphs states which Defendant said or did what, when or where representation was made. SUSTAINED."
Howards third cause of action for fraud and deceit alleges defendants "wrongfully induced plaintiff to enter into the October 18, 1999, contract with defendants . . . upon the fraudulent representations then made by defendant Kaloyanides on or about October 18, 1999 to plaintiff Howard at Newport Beach, California, that all attorneys fees paid by plaintiff to defendants would be recoverable in a judgment against third party Wildey under then existing California law should plaintiff secure judgment in his favor against Wildey." The third cause of action alleges Kaloyanides knew his representation to Howard was false.
The third cause of action further alleges Howard would not have entered into the Agreement or paid the fees and costs required under the Agreement but for defendants misrepresentation. It also alleges Howards reliance on the misrepresentation was justified and the misrepresentation proximately and legally caused him to be damaged in a sum of $ 30,000 in attorney fees and costs paid to defendants.
Defendants contend the third cause of action does not state a claim for fraud because Kaloyanidess statement was an unactionable legal opinion. But the cause of action alleges Kaloyanides knew Howard could not recover attorney fees in the Wildey action, there was no legal or factual basis for Howards recovery of attorney fees, and Kaloyanides falsely told Howard that he could recover attorney fees in order to induce him to enter into the Agreement.
We conclude the third cause of action states a claim for fraud. In Seeger v. Odell (1941) 18 Cal.2d 409, 414, 115 P.2d 977, our Supreme Court stated a plaintiff "may not justifiably rely upon mere statements of opinion, including legal conclusions drawn from a true state of facts [citations] unless the person expressing the opinion purports to have expert knowledge concerning the matter or occupies a position of confidence and trust." (Italics added.) Seeger v. Odell has been repeatedly cited for this proposition by Courts of Appeal. (See Blankenheim v. E. F. Hutton & Co. (1990) 217 Cal. App. 3d 1463, 1474, 266 Cal. Rptr. 593; Harazim v. Lynam (1968) 267 Cal. App. 2d 127, 132-133, 72 Cal. Rptr. 670.) In Gagne v. Bertran (1954) 43 Cal.2d 481, 489, 275 P.2d 15, our Supreme Court similarly held, "even if defendants statement was an opinion, plaintiffs justifiably relied thereon. Defendant held himself out as an expert, plaintiffs hired him to supply information concerning matters of which they were ignorant, and his unequivocal statement necessarily implied that he knew facts that justified his statement."
In light of these authorities and the standard of review on demurrer, we conclude Howard stated a claim for fraud and deceit in the third cause of action. Howard must prove these allegations before prevailing on his claim.
4. Fourth Cause of Action for Fraud and Deceit
The fourth cause of action alleges defendants entered into the Addendum without any intention of performing. It further alleges defendants intended to collect Howards flat fee of $ 10,000 paid in exchange for defendants legal services through the conclusion of the Wildey action, but did not intend to continue representing Howard once they received his payment.
The Addendum stated "all other provisions of the [Agreement] shall remain in force and effect and shall govern the parties relationship except as expressly modified by this Addendum." The Addendum did not modify the terms of the Agreement regarding the Firms right to withdraw from representing Howard under certain conditions. As discussed above, the Agreement provided the Firm "shall have the option to withdraw from the case at any time . . . upon court approval." The Agreement further provided "in the event of such withdrawal by [the Firm], [Howard] shall not be relieved from paying all costs and fees for services rendered to that date or advanced on behalf of [Howard]."
The Firms withdrawal from representing Howard was consistent with the terms of the Agreement and the Addendum, and thus the fourth cause of action does not allege a false statement of fact by defendants. Therefore, the trial court properly sustained defendants demurrer to the fourth cause of action.
5. Fifth Cause of Action for Breaches of Fiduciary Duties
"In order to plead a cause of action for breach of fiduciary duty, there must be shown the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach. The absence of any one of these elements is fatal to the cause of action." (Pierce v. Lyman (1991) 1 Cal.App.4th 1093, 1101.) "The relation between attorney and client is a fiduciary relation of the very highest character, and binds the attorney to most conscientious fidelity . . . . [Citation.] `The basic fiduciary obligations are twofold: undivided loyalty and confidentiality. Although the phrasing . . . is varied and often dependent upon the context of particular circumstances, this rule exists in every jurisdiction in the United States." (Id. at p. 1102.)
The trial court sustained defendants demurrer to Howards fifth cause of action, stating: "Defendants argue that disclosure alleged in this cause of action is not privileged under [Evidence Code section] 956.6 [sic]. The disclosure alleged in this cause of action is that Plaintiff had a gun and intended to threaten or kill Ms. Wildey. SUSTAINED."
The fifth cause of action alleges defendants breached their fiduciary duty to Howard by (1) disclosing confidential information to third parties that Howard owned a handgun (although Howard had informed Kaloyanides that he had thrown the handgun away); (2) drafting the unsigned writing described, ante, in C.2., which falsely expressed a fear Howard intended to harm Wildey, and then sending it to Wildeys attorney; (3) Kaloyanidess act of contacting an attorney associated with Wildeys counsel and falsely informing him that Howard intended to kill Wildey; and (4) Kaloyanidess act of filing a complaint against Howard for telephone harassment without a "factual basis" in response to Howards repeated requests for a full accounting of fees paid to defendants.
Howards first three theories cannot serve as the basis of a claim for breach of fiduciary duty. For the same reasons described above, the first three listed communications are protected under Evidence Code section 956.5.
With regard to Howards fourth theory of breach of fiduciary duty, Howard pleaded guilty to making harassing telephone calls to Kaloyanides. Thus, Howards theory defendants breached their fiduciary duty to him by Kaloyanidess act of filing a criminal complaint for telephone harassment against Howard without a factual basis cannot state a claim either. "[A] pleading valid on its face may nevertheless be subject to demurrer when matters judicially noticed by the court render the complaint meritless." (Del E. Webb Corp. v. Structural Materials Co., supra, 123 Cal. App. 3d 593, 604-605 ["The court will take judicial notice of records such as admissions . . . when considering a demurrer, only where they contain statements of the plaintiff or his agent which are inconsistent with the allegations of the pleading before the court"].)
D. Howard Waived Any Challenge to the Trial Courts Denial of His Motion for Reconsideration.
Howards notice of appeal states that in addition to appealing from the judgment dismissing this case, Howard appeals from the trial courts order denying his motion for reconsideration entered on September 6, 2002. However, Howards opening and reply briefs do not address his motion for reconsideration or the trial courts ruling on that motion. Therefore, Howard has waived this issue. "When an appellant fails to raise a point, or asserts it but fails to support it with reasoned argument and citations to authority, we treat the point as waived." (Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-785.)
E. Did the Trial Court Abuse Its Discretion by Sustaining Defendants Demurrer Without Leave to Amend?
When a demurrer is sustained without leave to amend, "we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm. [Citations.] The burden of proving such reasonable possibility is squarely on the plaintiff." (Blank v. Kirwan, supra, 39 Cal.3d 311, 318.) Howard solely contends the trial court abused its discretion by sustaining defendants demurrer without leave to amend because Howard pleads sufficient facts to constitute each of his five causes of action in the third amended complaint. As discussed above, we conclude Howards third amended complaint does not allege sufficient facts to state a claim for (1) the first cause of action for breach of contract, except on the theory defendants unreasonably advised Howard that he could recover prevailing party attorney fees against Wildey, (2) the second cause of action for professional negligence, (3) the fourth cause of action for fraud and deceit, and (4) the fifth cause of action for breach of fiduciary duty. Because Howard does not argue there is a reasonable possibility the defects in his pleading of these claims can be cured by amendment, we conclude the trial court did not abuse its discretion by sustaining defendants demurrer to these claims without leave to amend.
DISPOSITION
We reverse the trial courts order sustaining defendants demurrer to the first cause of action solely on the theory defendants unreasonably advised Howard he could recover prevailing party attorney fees in a lawsuit against Wildey. We affirm the trial courts order sustaining defendants demurrer to the first cause of action without leave to amend with regard to all other theories alleged in support of that cause of action. We affirm the trial courts order sustaining defendants demurrer to Howards second, fourth, and fifth causes of action without leave to amend. We reverse the trial courts order sustaining defendants demurrer to Howards third cause of action. We remand the matter and direct the superior court to reinstate Howards first and third causes of action, as limited by this opinion. In the interests of justice, no party shall recover costs on appeal.
WE CONCUR: OLEARY, ACTING P.J., ARONSON, J. --------------- Notes: Following oral argument, Howard submitted two letters directly to this court regarding the appeal. Because Howard is represented by counsel, Howards letters were not filed but were instead forwarded to his counsel of record. Counsel for defendants and respondents were so advised.