From Casetext: Smarter Legal Research

Moyer v. Vaught

California Court of Appeals, First District, Second Division
Sep 22, 2008
No. A120305 (Cal. Ct. App. Sep. 22, 2008)

Opinion


CHARLES MOYER, Plaintiff and Appellant, v. JON R. VAUGHT et al., Defendants and Respondents. A120305 California Court of Appeal, First District, Second Division September 22, 2008

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

Alameda County Super. Ct. No. RG06257152.

Lambden, J.

Charles Moyer, a certified public accountant (CPA), sought legal assistance from Jon R. Vaught and his law firm Vaught & Boutris LLP (law firm) to assist him in his filing of bankruptcy. Subsequently, Moyer learned that the lien by the State Board of Equalization on his property was not discharged by the bankruptcy order. He sued Vaught and his law firm for legal malpractice. The lower court granted summary judgment against Moyer’s complaint, finding that he had not produced evidence to raise a triable issue of fact that he had suffered any injury. He appeals, and we affirm the lower court’s judgment.

BACKGROUND

Moyer, a CPA, filed a legal malpractice lawsuit against Vaught and his law firm on February 27, 2006, in connection with legal advice he received regarding the filing of his bankruptcy. The bankruptcy resulted after Moyer incurred debts while a partner in a business called Impact Microfilming, which failed and closed down in 1992. While the business was operating, Moyer was responsible for the payment of the payroll and business taxes, but he failed to make the payments as required. As a result, substantial federal and state tax liens were placed against his residence.

Moyer retained Vaught in April 2000 to represent him in an already pending bankruptcy and with issues related to the secured and unsecured creditors. Vaught testified that Moyer’s “biggest concern at that point in time was the fact that he had a secured creditor [named Victor Sargent] who was holding a promissory note that had come due and [who] wanted to foreclose on his home[.] [Moyer] was very concerned about losing his home.” Moyer, too, testified that his intent was “to hang on to the house by outliving the liens [by the Internal Review Service]” and to have “the [State] Board of Equalization lien be released[.]” Moyer stated that the encumbrances, including the debt to the Internal Revenue Service (IRS), on the property exceeded its value.

Vaught assisted Moyer in getting multiple liens removed from his property, in dealing with dischargeable debt, and in refinancing a note held by Sargent who was threatening foreclosure on Moyer’s home. Moyer received a discharge of debt on August 30, 2000.

On October 26, 2004, Vaught informed Moyer in writing that it was unlikely that the State Board of Equalization lien would go away. On February 28, 2005, Moyer received a letter from the State Board of Equalization, which stated that his liability totaled $329,651.19. It further reported that the record indicated “that these tax liens [had] not been satisfied and they attach[ed] to real property acquired prior to [his] bankruptcy filing. These liens [were] statutory and survive[d] the bankruptcy discharge.”

Moyer filed a complaint for legal negligence and breach of contract against Vaught and his law firm on February 27, 2006. He asserted that at the time his bankruptcy closed in September 2000, his residence was worth approximately $450,000, and his potential liability to the State Board of Equalization was approximately $200,000. He claimed negligence based on the following actions by Vaught and his law firm: their advising him that the taxes owed to the State Board of Equalization “would either ‘go away’ or that, at most, [he] would have to pay only a relatively small amount of money to satisfy the lien asserted by the Board of Equalization” and their failure to advise him “of the likelihood that the Board of Equalization would not ‘go away’ and that if so, [he] would be faced with a substantial liability to the Board of Equalization, and that the lien by the Board of Equalization against [his] residence would remain and accrue interest, and that [he] ultimately [would] have to pay this debt to satisfy the lien.” Moyer further alleged that, had he received the correct advice, he “could have purchased another residence not subject to the Board of Equalization lien, or taken other action, such as, renting a home. However, because of [the negligence of Vaught and his law firm, he] continued paying the mortgage and other expenses of his house for many years.”

Vaught and his law firm filed a motion for summary judgment against Moyer’s complaint. The trial court granted the motion on May 16, 2007, finding that Moyer had only presented evidence of “speculative damages” and therefore had not established any injury. The court entered judgment on October 24, 2007.

Moyer filed a timely notice of appeal.

DISCUSSION

I. Standard of Review

In the present case, Moyer appeals from the trial court’s grant of summary judgment against his claims for legal malpractice and breach of contract. The court properly grants summary judgment if the record establishes no triable issue as to any material fact and the moving party is entitled to a judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).) “[T]he party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact; if he carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact. . . . A prima facie showing is one that is sufficient to support the position of the party in question. [Citation.]” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850-851, fns. omitted.) Although the burden of production shifts, the moving party always bears the burden of persuasion. (Id. at p. 850.) “There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.” (Ibid.) We review the record de novo. (Id. at p. 860.)

In his reply brief, Moyer asserts that Vaught incorrectly cites the standard of review as set forth in Celotex Corp. v. Catrett (1986) 477 U.S. 317, 325. He argues that the federal courts, unlike the California courts, permit a grant of summary judgment based on the plaintiff’s citing no evidence to support a causal element of the claim. (See Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 849 [“summary judgment law in this state now conforms, largely but not completely, to its federal counterpart”].) He points out that under California law: a “defendant must show that the plaintiff does not possess needed evidence, because otherwise the plaintiff might be able to establish the elements of the cause of action; the defendant must also show that the plaintiff cannot reasonably obtain needed evidence, because the plaintiff must be allowed a reasonable opportunity to oppose the motion (Code Civ. Proc., § 437c, subd. (h)).” (Aguilar, at p. 854, fn. omitted.)

In our review of the lower court’s grant of summary judgment, we apply the standard as set forth in Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th 826. As we explain below, Vaught and his law firm presented evidence that Moyer suffered no actual injury and thus the burden shifted to Moyer to make a prima facie showing of the existence of a triable issue of material fact that he had suffered an actual injury. (See id. at pp. 850-851.)

II. Evidence of the Injury

Moyer alleged breach of contract and legal negligence in his complaint. The elements of a legal malpractice action are: (1) the duty of the attorney to use such skill, prudence, and diligence as members of his or her profession commonly possess and exercise; (2) a breach of that duty; (3) a proximate causal connection between the breach and the resulting injury; and (4) actual loss or damage resulting from the attorney’s negligence. (Coscia v. McKenna & Cuneo (2001) 25 Cal.4th 1194, 1199.) Negligent conduct “causing only nominal damages, speculative harm, or the threat of future harm—not yet realized—does not suffice to create a cause of action for negligence.” (Budd v. Nixen (1971) 6 Cal.3d 195, 200.) Although there must be an actual injury, the actual amount of damages do not have to be certain. (Grisham v. Philip Morris USA, Inc. (2007) 40 Cal.4th 623, 642.) Similarly, in a breach of contract claim, Moyer must establish damages resulting from the breach of contract.

Here, Moyer claimed that his injury was that he continued to pay a mortgage of almost $3,000 a month on a house with a state lien of $329,000. He alleged in his complaint that, had he been provided the correct advice regarding the lien by the State Board of Equalization, he would have abandoned his current property and either rented another home or purchased a different property that would not have been encumbered with the debt. The trial court found that Vaught and his law firm presented evidence of no actual injury and that Moyer provided no credible evidence to support the element of actual loss or damages; the court determined that the only evidence Moyer submitted regarding damages was speculative. As already noted, a legal malpractice action cannot be based on a speculative or conjectural claim; the damages must have actually been caused by the malpractice. (Viner v. Sweet (2003) 30 Cal.4th 1232, 1241.) Thus, we review the record to determine whether Vaught and his law firm met their burden of production and, if so, whether Moyer submitted evidence of a prima facie case of injury that was not simply speculative.

In their summary judgment motion, Vaught and his law firm asserted that Moyer sought advice to help him keep the home and thus his intent was always to keep the house because the IRS liens would follow him to a new home and he did not have the capital to purchase another home. According to Vaught, even if Moyer had been provided with information about the lien by the State Board of Equalization, he would not have abandoned his current property.

In support of their argument of no actual injury, Vaught and his law firm submitted evidence that Moyer intended to retain his property and could not afford to purchase another property. Vaught testified that Moyer told him that his ultimate goal was to save his house. It was undisputed that, at the time he consulted with Vaught, Moyer had a secured creditor who held a promissory note on his home. The promissory note had come due, and the creditor was threatening to foreclose on the property. Vaught testified that Moyer told him that he wanted to hold onto his home and that he could not afford another property.

Specifically, Vaught reported that Moyer told him the following: “[H]e had no way of purchasing another [house], and that became more evident as time went on because he eventually lost his job. He was working for Ireland, San Filippo when he first came to me. He subsequently lost that job. I can’t remember how or why. [¶] He started working on his own, and he wasn’t doing very well, and he became more concerned about losing his house because he didn’t have any cash for the down payment and he probably wouldn’t qualify for a loan.” Vaught further clarified: “He was very concerned about not being able to purchase another piece of property under the circumstances. [¶] I mean, at that point in time, he already had filed two bankruptcies . . . .”

Additionally, Vaught testified that, although the State Board of Equalization debt could not be enforced against a new property, the IRS liens would follow Moyer to his new property because they were not discharged. Vaught explained: “That’s the reason that he couldn’t walk away from the property. That’s why he told me that he wouldn’t walk away from the property because, if he went out and bought another piece of property, even though the State Board of Equalization liens wouldn’t have attached, the IRS liens would have.”

Neither party discloses the amount of the IRS liens.

Vaught and his law firm also submitted the deposition testimony of Moyer in support of their motion for summary judgment. Moyer testified that the plan was for him to stay in his home and not try to transfer it until the IRS liens expired. He acknowledge that, with the IRS liens, the encumbrance on his property exceeded its value. Without the IRS liens, he testified that the encumbrance did not exceed the value of the house. He admitted that, as of the time of his deposition, the IRS liens had expired. He elaborated: “Almost from the minute I hired [Vaught]. I mean, the whole plan was to wait out the IRS and have the Board of Equalization lien be released which, again, he always said they would do, and I just—I was going to hang on to the house by outliving the liens.”

Further, Moyer’s testimony established that he did not have money for a down payment. Moyer testified that he had filed “about five” bankruptcies. He explained that he filed his fifth bankruptcy on his own because he did not “have the money to make a house payment.”

Three of the bankruptcies were part of a single plan.

Additionally, Moyer’s claim that he would have abandoned the property and rented another home contradicted his testimony that his intent was to keep the property. Vaught argues that Moyer’s mortgage payment of less than $3,000 was not likely to be more than rent on a home. Further, Moyer’s claim was not supported by the record because, once Moyer learned in 2004 that the state lien against his property was not going to be released, he did not abandon his property and rent another place. As of the time of his deposition, he still owned the property.

Moyer argues that Vaught and his law firm did not meet their initial burden of production and claims that they presented no evidence to support their motion for summary judgment. He maintains that the lower court incorrectly placed the burden of persuasion on him. Moyer contends that Vaught and his law firm merely speculated that his rental payments would be equal to his mortgage payments and that he did not have the money for a down payment for his home.

We agree that Vaught and his law firm did not present evidence that Moyer’s mortgage payment was equal to rent, but they presented evidence that Moyer did not want to abandon his property and that he did not abandon it even after learning in 2004 that the state lien on his property was not going to be released. With regard to Moyer’s desire to keep the property, Vaught and his law firm furnished the court with the deposition testimony of both Vaught and Moyer that Moyer’s intent from the beginning was to keep his home. The deposition testimony of both Moyer and Vaught is evidence. (See Leslie G. v. Perry & Associates (1996) 43 Cal.App.4th 472, 482.) Further, Moyer’s numerous bankruptcies provided evidence that he did not have money for a down payment. Vaught and his law firm submitted evidence that Moyer’s financial situation, including his last bankruptcy that arose from his inability to pay his mortgage, prevented him from purchasing another home.

Once Vaught and his law firm presented evidence that Moyer’s intent was to keep his property and that he did not have the capital to purchase another property, the lower court correctly found that Moyer had the burden of presenting some credible evidence to raise a triable issue of fact that he was actually injured. We agree that Vaught and his law firm retained the burden of persuasion, but Moyer had the burden of production. (See Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at pp. 850-851.)

Moyer maintains that he suffered an actual injury because one of his options, had he known the state lien would not have been released, was that he would have abandoned his home and rented another home. He, however, presented no evidence that he would have benefited from abandoning his property. In his complaint, Moyer alleged that at the time that his bankruptcy closed in September 2000, his residence was worth approximately $450,000 and his potential liability to the State Board of Equalization was approximately $200,000. He further asserted that the loan, at the time he filed his complaint, with interest, was about $329,000. He admitted in his pleading that, since 2000, the value of his house “ha[d] greatly appreciated and the obligation claimed by the Internal Revenue Service ha[d] become unenforceable because of the passage of time elapsed.” Given that Moyer admitted that his home had “greatly appreciated” since 2000, he would have lost this appreciated value if he had abandoned his home. He presented no evidence that he would have saved more than the appreciated value of his home had he rented a property in 2000. Accordingly, he failed to submit any evidence to support an actual injury based on his abandoning his home and renting another place.

Further, as already stressed, all of the evidence indicates that Moyer’s principal interest was in keeping his home. Indeed, the first sentence of his reply brief in this court states: “Cutting through all the points of contention there is one issue on which both appellant and respondents agree: Mr. Moyer did not want to lose his home.” In any event, Moyer’s claim that he would have rented is not supported by the record, as he did not abandon his property and rent a home once he learned in 2004 that the state lien was not going to be released.

Alternatively, Moyer maintains that he would have abandoned his property and purchased another one had he known that the state lien would not be released. Moyer states in his reply brief that he did not know that by making monthly mortgage payments he was building “equity for the state tax lien.” In support of this assertion, Moyer stated at his deposition that he would have purchased a property in his wife’s name, although he admitted that he never discussed this with her because he never thought he needed to do so. Moyer, however, presented no evidence that his wife had the money to purchase a home. Thus, given this backdrop of his admitted financial difficulty, his mere assertion that his wife would have purchased a home is simply speculation and conjecture.

The only other support for his claim that he would have purchased another property is Moyer’s own testimony where he claims that he would have given up the property and purchased different housing had he known that the state lien would not be released. However, Moyer’s own testimony as well as his numerous bankruptcies provided evidence that he did not have sufficient money for a down payment. His assertions about what he would have done contradict the evidence in the record and do not constitute evidence; Moyer must show “ ‘specific facts’ ” (Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 767) in support of his declarations.

Finally, Moyer argues that Vaught and his law firm merely established uncertainty as to the amount of damages, but they needed to show that he did not suffer any injury. He contends that the lower court erred in requiring him to establish with some level of certainty that he would have made money had he walked away from the encumbered property and purchased different property. As already emphasized, we conclude that Vaught and his law firm met their burden of presenting evidence that Moyer did not suffer any actual injury and the burden of production shifted to Moyer. Other than making various assertions and claims, Moyer submitted no evidence to raise a triable issue of fact that he suffered an actual injury. Accordingly, we affirm the lower court’s judgment that Moyer’s claim of actual injury is speculative and not supported by evidence of specific facts.

In his reply brief, Moyer cites two cases that discuss when a plaintiff suffers an actual injury for purposes of the running of the statute of limitations. (Foxborough v. Van Atta (1994) 26 Cal.App.4th 217; Van Dyke v. Dunker & Aced (1996) 46 Cal.App.4th 446.) In Foxborough, the court held that the statute of limitations began to run when the plaintiff suffered a loss of a right, remedy, or interest, “regardless of whether future events may affect the permanency of the injury or the amount of monetary damages eventually incurred.” (Foxborough, supra, at p. 227.) The court concluded that any alleged injury to the plaintiff had occurred outside the statute of limitations period. (Ibid.) Similarly, the court in Van Dyke was concerned with the running of the statute of limitations for negligent tax advice and concluded that the claim accrued when the client first learned that the advice was erroneous and suffered a detriment that was not merely potential or tentative. (Van Dyke, supra, at pp. 453-455.) Neither of these cases on the statute of limitations is relevant, as both cases were concerned with when the plaintiff first learned of the loss of a right, remedy, or interest. Neither case was concerned with the question presented here, which is whether the record contains evidence of a triable issue of fact that the plaintiff suffered an actual injury.

DISPOSITION

The judgment is affirmed. Moyer is to pay the costs of appeal.

We concur: Kline, P.J., Haerle, J.


Summaries of

Moyer v. Vaught

California Court of Appeals, First District, Second Division
Sep 22, 2008
No. A120305 (Cal. Ct. App. Sep. 22, 2008)
Case details for

Moyer v. Vaught

Case Details

Full title:CHARLES MOYER, Plaintiff and Appellant, v. JON R. VAUGHT et al.…

Court:California Court of Appeals, First District, Second Division

Date published: Sep 22, 2008

Citations

No. A120305 (Cal. Ct. App. Sep. 22, 2008)