Opinion
NOT TO BE PUBLISHED
Appeal from a judgment of the Superior Court of Orange County, Super. Ct. No. 05CC05153, Charles Margines, Judge.
Law Offices of Shun C. Chen and Shun C. Chen for Plaintiffs and Appellants.
Lacey, Dunn & Do, Kevin S. Lacey and Catherine L. Sekely for Defendants and Respondents.
OPINION
FYBEL, J.
INTRODUCTION
Plaintiffs Lovan Inc. and Dennis Loo appeal from a summary judgment entered in favor of defendants Ralph Gibson Pagter, Jr., and Pagter and Miller. Plaintiffs contend the trial court erred by granting defendants’ motion for summary judgment with regard to plaintiffs’ claims for breach of fiduciary duty and legal malpractice.
We affirm. As discussed in detail post, the trial court did not err by granting summary judgment in favor of defendants because the undisputed facts show plaintiffs were not damaged as a result of defendants’ allegedly wrongful acts.
BACKGROUND
A. THE COMPLAINT
In April 2005, plaintiffs filed a complaint against defendants alleging claims for breach of fiduciary duty and legal malpractice. The complaint alleged Loo solely owned Lovan Inc., a corporation in the business of importing and distributing high-end audio and video furniture. In August 2002, plaintiffs hired Attorney Sam Wu to file a chapter 11 bankruptcy petition for Lovan in the United States Bankruptcy Court (the bankruptcy action). After Lovan’s case was converted from a chapter 11 bankruptcy case to a chapter 7 bankruptcy case, plaintiffs sued Wu and the Law Offices of Sam X. J. Wu for legal malpractice in Los Angeles County Superior Court (the Wu action). Wu was represented in the Wu action by, inter alia, Attorney Charles N. Hargraves.
The complaint in this case does not mention that plaintiffs also sued the Law Offices of Sam X. J. Wu in the Wu action. Defendants, however, produced a copy of the complaint in the Wu action in support of their motion for summary judgment which shows plaintiffs also named the Law Offices of Sam X. J. Wu as a defendant in that case.
The complaint further alleged Pagter is an attorney and a certified legal specialist in bankruptcy law, who is employed by Pagter and Miller. The complaint alleged that sometime before April 2004, Hargraves contacted Pagter on Wu’s behalf, and Pagter provided Wu and his lawyers legal advice on the bankruptcy issues presented in the Wu action. Plaintiffs alleged that on April 14, 2004, in preparation for mediation and trial in the Wu action, they contacted Pagter with the intention of retaining him as a consultant and expert witness on the bankruptcy issues. They alleged Pagter agreed to be plaintiffs’ consultant and expert witness. Plaintiffs asserted they did not know Pagter had already been retained by Wu. The complaint alleged that although Pagter “was aware LOVAN did not schedule the claim against Mr. Wu in its [bankruptcy] petition,” he failed to “advise plaintiffs to file an amended schedule to list the claim of the Wu Action.”
The complaint also stated that on April 29, 2004, plaintiffs and Wu participated in mediation at which time Hargraves “raised a ‘killer’ defense, that plaintiffs’ claim belonged to the Chapter 7 trustee of LOVAN’s estate, because plaintiffs did not include the claim in LOVAN’s schedule, and Mr. Hargraves can buy the claim from the Chapter 7 trustee for pennies on the dollar.” The complaint further stated, “Hargraves indicated if plaintiffs did not accept the carrier’s token offer, he would immediately contact the trustee to offer to buy the claim.” Consequently, the complaint alleged, “[u]nder the circumstance, and after intense negotiation, plaintiffs had to settle for a sum substantially less than an adequate and reasonable sum, and executed a general release with waiver of unknown claims in early May 2004.” Plaintiffs alleged they first discovered Pagter’s concurrent representation of plaintiffs and Wu when Pagter sent a letter to plaintiffs on June 10, 2004, stating that he declined to be their expert witness, and that he was the expert witness for Wu.
As to plaintiffs’ first cause of action for breach of fiduciary duty, the complaint alleged, “[a]s a proximate cause of the aforementioned violation, plaintiffs were damaged in a sum not yet fully ascertained, plaintiffs will seek leave of court to amend this complaint when the said sum is ascertained.” With regard to plaintiffs’ claim for negligence in the form of legal malpractice, plaintiffs alleged, “[a]s a proximate result of such negligence, plaintiffs had to settle [their] claims in [the] Wu Action for a sum substantially below the sum they would be able to obtain in the absence of defendants’ negligence. The amount of damages ha[s] not been fully ascertained, plaintiffs will amend this complaint after such damages are ascertained.”
B. THE MOTION FOR SUMMARY JUDGMENT
In April 2006, defendants moved for summary judgment or alternatively for summary adjudication of issues. Defendants argued plaintiffs’ claims failed because, inter alia, the undisputed facts showed plaintiffs could not prove that any act by or omission of Pagter caused plaintiffs any damage.
In connection with the motion, the parties produced evidence showing that in March 2004, before the mediation, Wu served an amended answer and a second amended answer in the Wu action, each containing as the sixth affirmative defense plaintiffs’ failure to schedule their claim against Wu in the bankruptcy action as barring them “from any recovery . . . [against Wu] by virtue of the doctrines of judicial, collateral and/or equitable estoppel.” Plaintiffs’ counsel, Shun Chen, contacted Pagter about this case on April 14, 2004. Before that conversation, Pagter already had spoken with Hargraves. On May 10, after the mediation, Chen contacted the bankruptcy trustee’s counsel to secure the trustee’s consent to abandon plaintiffs’ claim against Wu. Chen confirmed the trustee was not interested in pursuing plaintiffs’ claim against Wu on behalf of Lovan’s estate. Chen thereafter filed an application in the bankruptcy court requesting that the court reopen the bankruptcy action to afford Lovan the opportunity to amend Schedule B to include its claim against Wu. On May 18, 2004, the bankruptcy court granted Lovan’s request to reopen the bankruptcy action. Plaintiffs and Wu settled their dispute, and, on May 27, plaintiffs filed a request for dismissal as to the complaint in the Wu action with prejudice.
The trial court granted defendants’ summary judgment motion, stating in relevant part: “Moving parties have met their burden of proof in negating the element[s] of causation and damages as to both the professional negligence and the breach of fiduciary duty causes of action. 1) Causation—The undisputed evidence shows that the defendants in the underlying action filed two amended answers containing the affirmative defense of judicial estoppel, ‘including the failure to list the present action against defendant as an asset in the Chapter 7 proceedings’ well before any relationship was established between plaintiffs and these moving parties. Thus, plaintiffs were put on notice that their former counsel, Mr. Wu, intended to rely on this defense. Mr. Pagter’s alleged failure to mention this defense in his conversation with plaintiffs’ attorney did not affect the latter’s knowledge of this defense and did not affect his capability to represent his clients against this defense. 2) Damages—Plaintiffs do not dispute that the trustee in bankruptcy abandoned the claim at issue and that they succeeded in reopening the bankruptcy case and amending their schedule to include the malpractice claim against Mr. Wu. Likewise, plaintiffs do not dispute that the claim was settled and the action was dismissed. Thus, plaintiffs received all legal remedies available to them. They would have had the same result if they had never contacted Mr. Pagter. The foregoing analysis mandates the conclusion that the breach of fiduciary duty cause of action likewise cannot be maintained. There is no triable issue of material fact that damages were proximately caused by Mr. Pagter as a result of breach of any duty.”
Judgment was entered in favor of defendants. Plaintiffs appealed.
DISCUSSION
“A trial court properly grants summary judgment where no triable issue of material fact exists and the moving party is entitled to judgment as a matter of law. [Citation.] We review the trial court’s decision de novo, considering all of the evidence the parties offered in connection with the motion (except that which the court properly excluded) and the uncontradicted inferences the evidence reasonably supports. [Citation.] In the trial court, once a moving defendant has ‘shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established,’ the burden shifts to the plaintiff to show the existence of a triable issue; to meet that burden, the plaintiff ‘may not rely upon the mere allegations or denials of its pleadings . . . but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to that cause of action . . . .’ [Citations.]” (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476-477.)
We begin by reviewing the elements of the two claims contained in the complaint. “‘The elements of a cause of action for breach of fiduciary duty are: (1) existence of a fiduciary duty; (2) breach of the fiduciary duty; and (3) damage proximately caused by the breach. [Citation.]’” (Slovensky v. Friedman (2006) 142 Cal.App.4th 1518, 1534.) “[T]here are four essential elements of a professional negligence claim: ‘(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. [Citations.]’” (Osornio v. Weingarten (2004) 124 Cal.App.4th 304, 319.)
Therefore, in order to prevail on either claim, plaintiffs were required to show by evidence they were damaged as a result of defendants’ alleged wrongful conduct.
The undisputed evidence shows plaintiffs did not sustain any damage as a result of defendants’ alleged wrongful conduct. It is undisputed that as early as March 2004, plaintiffs were served with notice Wu intended to assert plaintiffs’ failure to schedule the Wu action in the bankruptcy action as a defense in the Wu action. Wu served an amended answer to plaintiffs’ complaint on March 15, 2004, and a second amended answer on March 31, each of which contained the following affirmative defense: “Plaintiffs’ conduct bars it from any recovery herein by virtue of the doctrines of judicial, collateral and/or equitable estoppel. Plaintiffs made various sworn submissions and statements during the bankruptcy action which contradict or conflict with submissions or statements made in the present action, including the failure to list the present action against defendant as an asset in the Chapter 7 proceedings.”
Even if we ignore the undisputed evidence that plaintiffs were on notice Wu would assert this defense during the parties’ mediation on April 29, 2004, and even if we assume Pagter owed plaintiffs a duty to advise them of their options in dealing with that defense sometime after he was contacted by Chen on April 14 and before the mediation on April 29, the undisputed evidence shows plaintiffs were not damaged by Pagter’s assumed omission.
It is undisputed Pagter was contacted by Chen on April 14, 2004. By that date, Pagter had already advised Hargraves about “the key bankruptcy issue in the underlying case, i.e., judicial estoppel.” This sequence of events precludes plaintiffs from claiming they sustained damages recoverable from defendants simply because Pagter had already advised Wu.
Although plaintiffs asserted in the complaint and in their responsive separate statement in opposition to the motion for summary judgment that at the mediation, Hargraves threatened to approach the trustee in the bankruptcy action and offer to purchase plaintiffs’ claim in the Wu action for “pennies on the dollar,” this did not occur. In their responsive separate statement, plaintiffs stated, “Hargraves did not offer to purchase the claim.” Instead, the record shows Lovan obtained a court order reopening the bankruptcy action, affording it the opportunity to add the Wu action to the appropriate schedule. Thereafter, plaintiffs settled the Wu action and dismissed their complaint with prejudice.
Defendants therefore showed that plaintiffs could not establish the causation or damages elements for their claims, causing the burden to shift to plaintiffs to show the existence of a triable issue of material fact with regard to these two elements. As we next discuss, plaintiffs failed to do so.
In an effort to create a triable issue of material fact, plaintiffs identified the following fact: “Plaintiffs went to mediation on April 29, 2004, without knowing the judicial estoppel defense.” But as discussed ante, the undisputed evidence in the court record itself shows plaintiffs were on notice of this defense through Wu’s served amended answers. Further, the record does not show that it made any difference that plaintiffs supposedly were not actually aware of the defense at the mediation—plaintiffs immediately took action to eliminate the defense by having the bankruptcy action reopened. Plaintiffs do not argue they would not have needed to take such action had Pagter advised them of the defense on April 14. Furthermore, plaintiffs have not produced any evidence showing that they were unable to amend the schedule or that they had any further difficulties in light of their delayed actual awareness of the defense.
Plaintiffs cited Chen’s declaration to support an additional “fact” that during mediation, “[p]laintiffs found out they could not take any action but to settle the claim for pennies on the dollar in the [Wu action] to avoid losing the claim.” Defendants objected to this portion of Chen’s declaration, and the trial court sustained defendants’ objections on grounds, inter alia, it lacked proper foundation, lacked relevance, and was speculative. Plaintiffs contend the trial court abused its discretion in sustaining defendants’ objections to this evidence. We review the trial court’s ruling on evidentiary objections in connection with the summary judgment motion for abuse of discretion. (Hall v. Time Warner, Inc. (2007) 153 Cal.App.4th 1337, 1348, fn. 3; Mitchell v. United National Ins. Co. (2005) 127 Cal.App.4th 457, 467.)
The trial court did not abuse its discretion in excluding Chen’s statement because it is irrelevant. The undisputed evidence shows Lovan was successful in having the bankruptcy action reopened so that it would have the opportunity to amend the appropriate schedule to add its claim against Wu. Thus, any leverage Wu might have had at the mediation was eliminated. To the extent Chen’s declaration was intended to state that plaintiffs did in fact settle with Wu “for pennies on the dollar in the underlying case to avoid losing the claim,” such a statement is without any factual or legal foundation or explanation, and entirely speculative. (See Knapp v. Doherty (2004) 123 Cal.App.4th 76, 99 [“‘Speculation, however, is not evidence’ that can be utilized in opposing a motion for summary judgment”].)
DISPOSITION
The judgment is affirmed. Respondents shall recover costs on appeal.
WE CONCUR: SILLS, P. J., RYLAARSDAM, J.