Opinion
B289560
02-05-2020
KEVIN PEZESHKI, Plaintiff and Appellant, v. ROBERT MICHAEL STEPHEN SHEAHEN, Defendant and Respondent.
Kaplan, Kenegos & Kadin and Jerry Kaplan for Plaintiff and Appellant. Law Offices of Todd D. Thibodo and Todd D. Thibodo for Defendant and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. LC104560 APPEAL from a judgment of the Superior Court of Los Angeles County, Rupert Byrdsong, Judge. Affirmed. Kaplan, Kenegos & Kadin and Jerry Kaplan for Plaintiff and Appellant. Law Offices of Todd D. Thibodo and Todd D. Thibodo for Defendant and Respondent.
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INTRODUCTION
Plaintiff appeals a judgment of dismissal following the trial court's order sustaining defendant's demurrer without leave to amend. The operative first amended complaint alleges defendant, plaintiff's former criminal defense attorney, violated his professional duties and committed fraud by keeping a $100,000 advance payment after his discharge, despite performing only "minimal" work and misrepresenting the payment constituted a "true retainer" that was "nonrefundable." The trial court concluded all of plaintiff's claims were time barred under the applicable statutes of limitations and rejected plaintiff's attempt to invoke the delayed discovery rule. On appeal, plaintiff argues he alleged sufficient facts to invoke the discovery rule, relying exclusively upon the allegation that he only "discovered" the agreement he executed with defendant "did not represent a true retainer" when he "consulted with new counsel" just before filing this action.
Our Supreme Court has definitively stated the rule that controls this appeal: "[T]he uniform California rule is that a limitations period dependent on discovery of the cause of action begins to run no later than the time the plaintiff learns, or should have learned, the facts essential to his claim. [Citations.] It is irrelevant that the plaintiff is ignorant of his legal remedy or the legal theories underlying his cause of action. Thus, if one has suffered appreciable harm and knows or suspects that [another's misconduct] is its cause, the fact that an attorney has not yet advised him does not postpone commencement of the limitations period." (Gutierrez v. Mofid (1985) 39 Cal.3d 892, 897-898 (Gutierrez), second, third, and fourth italics added.) We affirm.
FACTS AND PROCEDURAL BACKGROUND
Consistent with our standard of review, we draw our statement of facts from the allegations of plaintiff's operative first amended complaint. (Czajkowski v. Haskell & White, LLP (2012) 208 Cal.App.4th 166, 173 (Czajkowski).) We assume the truth of the properly pleaded factual allegations and construe the pleading in a reasonable manner, reading the allegations in context. (Ibid.)
In August 2012, plaintiff retained defendant as his attorney to represent him in a criminal matter. He executed an agreement to pay defendant $100,000 for defendant's legal services. With respect to the $100,000 fee, the agreement states: "The retainer fee for the services of counsel is $100,000. This is due and payable at this time. This is a true retainer and it insures Mr. Sheahen's availability. It is also a flat fee, a fixed fee and a minimum fee. It is not refundable." On August 13, 2012, plaintiff paid defendant the full $100,000 fee.
In early September 2012, plaintiff discharged defendant and terminated the legal representation. During the representation, defendant had made only one court appearance on plaintiff's behalf and worked only a few hours on plaintiff's case. Despite providing only limited legal services, defendant kept the entire $100,000 fee.
On November 6, 2012, plaintiff sent defendant a letter requesting return of the "unearned portion of the retainer fee by November 26, 2012." Defendant ignored the request.
After November 2012, plaintiff sent a second letter to defendant requesting return of the unearned portion of the fee. Defendant again ignored the request.
On March 9, 2016, plaintiff sent a third letter demanding refund of the unearned portion of the fee and an accounting of the hours defendant worked on the case. On May 11, 2016, defendant refused to return the unearned portion of the fee and indicated he was entitled to retain the full fee because the agreement plaintiff signed was a "true retainer."
In August 2016, plaintiff consulted with another attorney who advised him that the agreement "did not represent a true retainer."
On August 24, 2016, plaintiff filed this action against defendant. The operative first amended complaint asserts five causes of action for (1) breach of contract; (2) breach of fiduciary duty; (3) accounting; (4) unjust enrichment; and (5) fraud. The first four causes of action are premised on allegations that plaintiff paid $100,000 to defendant for legal services; plaintiff discharged defendant in September 2012, at which point, "Defendant was legally obligated to return the unearned portion of the $100,000.00 fee"; and defendant refused to return the fee or to provide an accounting of the legal services rendered to earn the fee, despite his contractual and fiduciary obligations to do so. With respect to the fifth cause of action for fraud, the complaint alleges defendant misrepresented, in the agreement executed on August 10, 2012, that the $100,000 fee constituted a "true retainer"; and plaintiff only "discovered that the retainer agreement executed between Plaintiff and Defendant did not represent a true retainer on or about August, 2016 when he consulted with new counsel about this matter."
Defendant filed a demurrer, arguing the one-year statute of limitations for attorney malpractice under Code of Civil Procedure section 340.6 barred the first four causes of action, and the three-year statute of limitations for fraud under Code of Civil Procedure section 338 barred the fifth cause of action.
The trial court sustained the demurrer without leave to amend, and entered a judgment of dismissal for defendant. Plaintiff filed a timely appeal.
DISCUSSION
On an appeal from a judgment of dismissal following an order sustaining a demurrer without leave to amend, " 'we review the complaint de novo to determine whether it contains sufficient facts to state a cause of action. [Citation.] "We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law." [Citation.] The trial court exercises its discretion in declining to grant leave to amend. [Citation.] If it is reasonably possible the pleading can be cured by amendment, the trial court abuses its discretion by not granting leave to amend. [Citation.] The plaintiff has the burden of proving the possibility of cure by amendment.' " (Czajkowski, supra, 208 Cal.App.4th at p. 173.)
Plaintiff's appeal concerns application of the discovery rule to claims he concedes would otherwise be time barred under the applicable statutes of limitations. As he states in his opening brief, "[t]he application of the delayed discovery rule is the crux of the dispute in the instant case."
Plaintiff does not dispute that the one-year statute of limitations under Code of Civil Procedure section 340.6 applies to his first four causes of action arising out of defendant's alleged breach of his professional responsibilities, and the three-year statute of limitations under Code of Civil Procedure section 338, subdivision (d) applies to his fifth cause of action for fraud. Nor does plaintiff dispute that, absent the benefit of delayed accrual under the discovery rule, his claims accrued in 2012, when defendant represented that the $100,000 advance fee constituted a "true retainer" and, on that basis, withheld return of the "unearned" funds after his discharge.
"A plaintiff must bring a claim within the limitations period after accrual of the cause of action." (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 806 (Fox); Code Civ. Proc., § 312 ["Civil actions, without exception, can only be commenced within the periods prescribed in this title, after the cause of action shall have accrued."].) "Generally speaking, a cause of action accrues at 'the time when the cause of action is complete with all of its elements.' " (Fox, at pp. 806-807.)
"An important exception to the general rule of accrual is the 'discovery rule,' which postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action." (Fox, supra, 35 Cal.4th at p. 807.) "A plaintiff has reason to discover a cause of action when he or she 'has reason at least to suspect a factual basis for its elements.' " (Ibid., italics added.) "Under the discovery rule, suspicion of one or more of the elements of a cause of action, coupled with knowledge of any remaining elements, will generally trigger the statute of limitations period." (Ibid.)
"The discovery rule only delays accrual until the plaintiff has, or should have, inquiry notice of the cause of action. The discovery rule does not encourage dilatory tactics because plaintiffs are charged with presumptive knowledge of an injury if they have ' " 'information of circumstances to put [them] on inquiry' " ' or if they have ' " 'the opportunity to obtain knowledge from sources open to [their] investigation.' " ' " (Fox, supra, 35 Cal.4th at pp. 807-808, first italics added, fn. omitted.) "In other words, plaintiffs are required to conduct a reasonable investigation after becoming aware of an injury, and are charged with knowledge of the information that would have been revealed by such an investigation." (Id. at p. 808, italics added.)
"In order to rely on the discovery rule for delayed accrual of a cause of action, '[a] plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.' [Citation.] In assessing the sufficiency of the allegations of delayed discovery, the court places the burden on the plaintiff to 'show diligence'; 'conclusory allegations will not withstand demurrer.' " (Fox, supra, 35 Cal.4th at p. 808, italics omitted.)
The operative complaint shows on its face that plaintiff's causes of action were complete with all their elements in September 2012—almost four years before plaintiff filed this action—when defendant withheld the "unearned" portion of the $100,000 advance payment after plaintiff discharged defendant as his attorney. Plaintiff does not dispute that his claims would be barred without the benefit of the discovery rule, but he contends he alleged sufficient facts to invoke delayed accrual. Specifically, he argues: "The [first amended complaint] alleges that Plaintiff relied upon the misrepresentations of Defendant that the $100,000 fee represented a true retainer and [was] non-refundable and, on that reliance, did not file suit in this matter until August, 2016, when Plaintiff discovered through a subsequent attorney that the retainer [agreement] was not a true retainer [agreement] and that Defendant [owed] Plaintiff a duty to account for and refund any unearned fees." (Italics added.) The allegations do not show the " 'reasonable diligence' " necessary to meet plaintiff's pleading burden. (Fox, supra, 35 Cal.4th at p. 808.)
Controlling authority is clear: "[T]he uniform California rule is that a limitations period dependent on discovery of the cause of action begins to run no later than the time the plaintiff learns, or should have learned, the facts essential to his claim." (Gutierrez, supra, 39 Cal.3d at p. 897, citing, e.g., Miller v. Bechtel Corp. (1983) 33 Cal.3d 868, 875 [fraud or mistake in contract]; Neel v. Magana, Olney, Levy, Cathcart & Gelfand (1971) 6 Cal.3d 176, 190 [legal malpractice].) It is therefore "irrelevant that the plaintiff is ignorant of his legal remedy or the legal theories underlying his cause of action[;] . . . if one has suffered appreciable harm and knows or suspects that [another's wrongdoing] is its cause, the fact that an attorney has not yet advised him does not postpone commencement of the limitations period." (Gutierrez, at p. 898, italics added.) This principle is consistent with the "general rule that in a professional malpractice context, accrual does not await '[plaintiff's] discovery [that the facts constituting the wrongful act or omission] constitute professional negligence, i.e., [his] discovery that a particular legal theory is applicable based on the known facts.' " (Curtis v. Kellogg & Andelson (1999) 73 Cal.App.4th 492, 501 [accounting and legal malpractice]; Worton v. Worton (1991) 234 Cal.App.3d 1638, 1650 [applying Gutierrez rule to legal malpractice claim].) Under this controlling rule, plaintiff's reliance on the allegation that he did not "discover" his causes of action until he "consulted with new counsel about this matter" is insufficient to invoke the discovery rule to delay the accrual of his claims.
Nevertheless, plaintiff argues he should not be held to the uniform rule of reasonable diligence, because he "relied" upon the advice of defendant—plaintiff's then-lawyer and fiduciary—that the advance payment constituted a nonrefundable "true retainer." Based on this alleged reliance, plaintiff maintains he "did not know of or even suspect wrongdoing." The argument is contrary to his complaint's allegations.
According to his complaint, two months after discharging defendant in September 2012, plaintiff sent defendant a letter on November 6, 2012, "requesting that Defendant return the unearned portion of the retainer fee by November 26, 2012." He alleges defendant did not respond. The complaint then alleges that, sometime after November 2012, plaintiff sent defendant a second letter "requesting the return of the unearned portion of the retainer fee," and again defendant did not respond. According to the complaint, it was only after defendant rejected a third letter demanding a refund, sent in March 2016, that plaintiff finally consulted another attorney and "discovered" he had a legal claim for relief.
As these allegations demonstrate, plaintiff was aware or at least "suspect[ed] that an injury ha[d] been wrongfully caused" in November 2012, when he sent the initial letter requesting return of the allegedly unearned fees. (Fox, supra, 35 Cal.4th at p. 808.) Thus, to invoke the discovery rule, plaintiff was required to allege facts showing an " 'inability to have made earlier discovery despite reasonable diligence.' " (Ibid., italics added; see also id. at pp. 807-808 [under the discovery rule, "plaintiffs are charged with presumptive knowledge of an injury if they have ' " 'information of circumstances to put [them] on inquiry' " ' or if they have ' " 'the opportunity to obtain knowledge from sources open to [their] investigation' " ' " (fn. omitted)].) Nothing in the complaint or plaintiff's appellate briefs discloses why he was able to consult an attorney about the retainer agreement in 2016, but unable to consult an attorney in 2012 when his suspicion first arose. And, because there is no conceivable allegation that could cure this deficiency, the trial court reasonably exercised its discretion to deny leave to amend.
In his opening brief, plaintiff attempts to draw a distinction between the first two letters, which he characterizes as "request[s]," and the third letter, which he says was a "demand." The distinction makes no substantive difference. Plaintiff's requests establish at least a suspicion of wrongdoing, and the distinction between a request and a demand does nothing to establish his "inability to have made earlier discovery despite reasonable diligence." (Fox, supra, 35 Cal.4th at p. 808.) Indeed, even if the distinction made a substantive difference, plaintiff does not explain why he was unable to make a "demand" in 2012. Plaintiff's argument fails to establish reversible error.
DISPOSITION
The judgment is affirmed. Defendant Robert Michael Stephen Sheahen is entitled to his costs.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
EGERTON, Acting P.J. We concur:
DHANIDINA, J.
Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.