Opinion
D056028 Super. Ct. No. 37-2008-00075638-CU-PN-CTL
08-18-2011
KAYE SCHNEIDER, Plaintiff, Cross-defendant, and Appellant, v. SHARON BLANCHET et al., Defendants, Cross-complainants, and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
APPEAL from a judgment of the Superior Court of San Diego County, Charles R. Hayes, Judge. Affirmed.
Kaye Schneider (Kaye) sued Sharon Blanchet and her law firm (collectively Blanchet) for legal malpractice in a marital dissolution proceeding. Blanchet cross- complained, seeking to recover unpaid legal fees. The court granted summary judgment in Blanchet's favor on the complaint and cross-complaint, and awarded Blanchet $59,502. Kaye appeals, contending the court erred in granting summary judgment. We affirm.
We use appellant's first name to avoid confusion when discussing her husband who was a party in the underlying action. No disrespect is intended.
We deny Blanchet's motion to dismiss the appeal based on Kaye's delay in filing the notice of designation of the record.
FACTUAL AND PROCEDURAL BACKGROUND
We summarize the facts in the light most favorable to Kaye, the party opposing the summary judgment motion. (See Garcia v. W&W Community Development, Inc. (2010) 186 Cal.App.4th 1038, 1041.)
Background Information
In December 2005 Kaye retained Blanchet to represent her in an ongoing marital dissolution action with her former husband, Martin Schneider (Martin). The dissolution was acrimonious and involved numerous contested issues, including child custody, child and spousal support, and property division.
One highly disputed issue was whether Martin, a self-employed financial advisor, had overpaid his sole employee, Cathy Thomas. Kaye believed Martin had improperly compensated Thomas for the purpose of reducing the value of his business, thus breaching his fiduciary duty to the community. Martin opposed this claim, and argued the payments were proper under a commission-based employment agreement. One month before Blanchet was retained, Kaye's former attorneys had taken Thomas's deposition. At the deposition Thomas testified that she was a licensed financial advisor and her annual compensation was based on a percentage commission agreement.
In April 2006, Blanchet sent Kaye a lengthy letter. In the letter Blanchet summarized the nature of the legal services provided during the past several months. Blanchet noted that Kaye had repeatedly expressed concern about the legal fees, and stated "[w]e are at a crossroads" with respect to the need to decide whether to attempt a settlement through a JAMS mediation and/or to move forward with litigating the case. Blanchet said "[i]f we are going to litigate the case, meaning we do not reach agreements on issues, you have to decide once and for all whether or not you want me to pursue the Cathy Thomas issue."
Blanchet then explained that recovery on the breach of fiduciary claim arising from the Thomas issue is conditioned on numerous factors, including (1) prevailing on a motion to join Thomas in the dissolution action; (2) obtaining evidence to support a claim that Thomas's payments were not reasonable compensation for her work; (3) obtaining evidence that Martin benefited from his overpayments to Thomas; (4) overcoming Martin's defense that Kaye had actual knowledge of the amount of Thomas's compensation during the marriage; and (5) overcoming Martin's defense that the payments were reasonable compensation based on the parties' sales commission agreement. Blanchet stated that Kaye would likely incur substantial attorney and expert fees in proving the overpayment issue, and that although Martin would bear these costs if Kaye prevailed in full, Kaye would be required to pay them on an ongoing basis pending reimbursement and Kaye would be responsible for the fees and costs if she did not prevail.
Blanchet also discussed the possible benefits if Kaye were successful in obtaining joinder and if the discovery showed that Martin had breached his fiduciary duty by secretly benefiting from the payments to Thomas. These benefits included the recovery of approximately $1.4 million (the amount of commissions paid to Thomas from 2000 to 2005). But Blanchet emphasized the uncertain nature of the potential recovery: "We don't know what the discovery would show after joining Cathy Thomas to the action. It may show us nothing and that Marty was not diverting funds through her. However, we won't know and we will likely never know if Marty received money back from Cathy Thomas unless we file a Motion for Joinder and pursue [the] discovery." Blanchet stated that an alternative to pursuing the Thomas issue was to agree to Martin's offer of support, which may be substantially more than a finding of "needs" and a finding of "impute[d] income."
Kaye responded to Blanchet's letter by telling Blanchet to "go after Cathy Thomas." At about the same time, Kaye also agreed to attend a JAMS mediation. According to Kaye, she "grudgingly agreed to participate [in the mediation] because of Ms. Blanchet's assurances . . . that important issues could still be pursued even after the JAMS session . . . ."
Four months later, in August 2006, Kaye and Martin (represented by their attorneys, accountants, and tax advisors) attended a lengthy JAMS settlement conference. Blanchet submitted a 69-page settlement brief, a major portion of which pertained to Kaye's arguments on the Thomas overpayment issue. The Thomas issue was also discussed at the settlement conference. During the conference, the mediator placed Martin under oath and cross-examined him about his payments to Thomas for the purpose of allowing the parties to evaluate his credibility before a factfinder. After Martin responded to these questions, all participants, including Kaye, agreed that Martin would appear credible regarding his position that these payments to Thomas were fair compensation under the parties' employment agreement.
At the conclusion of the settlement conference, the parties signed a handwritten settlement agreement, resolving "all outstanding issues." Under this agreement, Martin agreed Kaye was entitled to: (1) title to the parties' Coronado home (and furnishings) subject to a deed of trust; (2) an automobile; (3) a retirement account with approximately $350,000; (4) $370,000 in bank accounts; (5) $6,000 per month in child support; and (6) $15,000 in monthly spousal support unmodifiable for three years, and after that modifiable only on changed circumstances. The Coronado home was appraised at $1.3 million with $536,000 in secured debt. Although Kaye repeatedly stated she wanted a larger settlement, Martin would not agree. Kaye's tax advisor told her this settlement was "probably the best [she] could do in San Diego . . . ."
Within weeks, Kaye became dissatisfied with the settlement agreement and wanted Blanchet to pursue a more favorable settlement, including obtaining title to her home without any secured debt and additional monetary benefits. Blanchet responded that Kaye had received a highly favorable settlement and that it was unlikely Martin would engage in additional settlement negotiations and the outcome after a trial was highly uncertain and a trial would be expensive.
In October 2006, Kaye retained another attorney (Alan Sternberg), to assist her in "evaluating her options" concerning the settlement agreement. Although Sternberg was not a family law practitioner or a litigator, he opined that Blanchet was unprepared on the Thomas issue at the JAMS mediation. Steinberg was not aware that Thomas's deposition had been taken.
Thereafter, Kaye directed Blanchet to request that Martin agree to numerous modifications to the settlement agreement that had been suggested by Sternberg. After Blanchet did so, Martin's counsel rejected the modifications, stating they are "without merit" and waived by Kaye's execution of the settlement agreement.
In March 2007, the court granted Blanchet's motion to be relieved as counsel. On April 23, 2007, Kaye (represented by a new counsel) signed a stipulation for entry of judgment reflecting the parties' earlier agreement. In May 2007, the court entered the stipulated judgment.
In October 2007, Kaye moved to set aside the stipulated judgment on grounds of Martin's fraud and duress at the mediation. The court denied the motion, finding "both parties were very well represented, both parties had experts to assist them, they had valuation on businesses [and] analysis of income." The court further observed: "I think what has happened is that [Kaye] now has buyer's remorse" and there was no evidence that Martin or Kaye's attorney "forced her or threatened her or intimated her or coerced her in any way into accepting the deal."
Malpractice Action
In January 2008, Kaye filed a legal malpractice complaint against Blanchet. As later articulated, the core basis of the complaint was Kaye's allegation that Blanchet failed to properly investigate and assert the Thomas issue. Kaye alleged this conduct constituted a breach of Blanchet's professional duty of care and resulted in Kaye obtaining a less favorable outcome in the dissolution action. Kaye also alleged this conduct constituted a breach of fiduciary duty. Blanchet denied these allegations and cross-complained seeking to recover outstanding attorney fees.
Blanchet then moved for summary judgment on the complaint and cross-complaint. With respect to the complaint, Blanchet argued the undisputed evidence showed she appropriately investigated and raised the Thomas issue, and even if there was a triable issue of fact on this issue, Kaye had no evidence showing she would have obtained a better result in a settlement or after a trial. Kaye opposed the motion, arguing there was a triable issue of fact on the breach and causation issues. The court granted the summary judgment motion, concluding the undisputed evidence showed no material triable issues on the causation element because Kaye failed to "present any admissible evidence showing that she would have obtained a more favorable result (judgment or settlement) if Ms. Blanchet" had more aggressively pursued the Thomas issue.
The court also granted summary judgment on Blanchet's cross-complaint for unpaid fees. As discussed in more detail below, the court found the undisputed facts showed Kaye owed Blanchet $59,502 in fees, interest, and costs, and rejected Kaye's argument that a portion of these fees constituted an unlawful penalty.
DISCUSSION
I. Review Standard
When a defendant moves for summary judgment, the defendant "bears the burden of persuasion that there is no triable issue of material fact and that [the defendant] is entitled to judgment as a matter of law." (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850 (Aguilar).)A defendant satisfies this burden by showing one or more elements of the cause of action cannot be established, or that there is a complete defense to that cause of action. (Ibid.)This burden can be met by relying on the plaintiff's factually inadequate discovery responses if these responses show the plaintiff "will be unable to prove its case by any means." (Weber v. John Crane, Inc. (2006) 143 Cal.App.4th 1433, 1439.)
When a plaintiff moves for summary judgment, the plaintiff bears the burden of proving each element of the causes of action entitling the plaintiff to judgment. "[I]f a plaintiff who would bear the burden of proof by a preponderance of evidence at trial moves for summary judgment, [the plaintiff] must present evidence that would require a reasonable trier of fact to find any underlying material fact more likely than not— otherwise, he would not be entitled to judgment as a matter of law, but would have to present his evidence to a trier of fact." (Aguilar, supra, 25 Cal.4th at p. 851.)
Once a moving party meets his or her initial burden, " 'the burden shifts to the [opposing party] . . . to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.' " (Aguilar, supra, 25 Cal.4th at p. 849.) To satisfy this burden, the opposing party must present admissible evidence and may not rely upon the allegations or denials of its pleading. (Ibid.)
We review a summary judgment de novo. (Buss v. Superior Court (1997) 16 Cal.4th 35, 60.) In doing so, we strictly scrutinize the moving party's papers so that all doubts as to whether any material, triable issues of fact exist are to be resolved in favor of the party opposing summary judgment. (Barber v. Marina Sailing, Inc. (1995) 36 Cal.App.4th 558, 562.) "Because a summary judgment denies the adversary party a trial, [the motion] should be granted with caution." (Colores v. Board of Trustees (2003) 105 Cal.App.4th 1293, 1305.)
II. Summary Judgment on Kaye's Complaint
A. Legal Principles Governing Causation
An essential element of a legal malpractice claim is a proximate causal connection between the negligent conduct and the resulting injury. (Thompson v. Halvonik (1995) 36 Cal.App.4th 657, 661.) Under California law, the plaintiff must "prove this causation element according to the 'but for' test, meaning that the harm or loss would not have occurred without the attorney's malpractice . . . ." (Viner v. Sweet (2003) 30 Cal.4th 1232, 1235, 1241.) Thus, when the "legal malpractice involves negligence in the prosecution or defense of a legal claim, the case-within-a-case methodology must be used. More specifically, for purposes of [a] case [involving] settlement of litigation, the plaintiff must prove his [or her] opponent in the underlying litigation would have settled for less, or that following a trial, plaintiff would have obtained a judgment more favorable than the settlement." (Orrick Herrington & Sutcliffe v. Superior Court (2003) 107 Cal.App.4th 1052, 1054 (Orrick); see Blanks v. Seyfarth Shaw LLP (2009) 171 Cal.App.4th 336, 357.) "This method of presenting a legal malpractice lawsuit," which requires a determination of the merits of the underlying lawsuit, "may be complicated, but it avoids speculative and conjectural claims." (Blanks, at p. 357.)
B. Analysis
The essence of Kaye's legal malpractice claim was her assertion that if Blanchet had properly investigated and asserted the Thomas issue, Kaye would have received title to her home with no debt, $700,000 in the retirement account, and all of her attorney fees. However, in moving for summary judgment, Blanchet presented facts showing Kaye has no evidence to support her claim that she would have received these benefits if Blanchet had appropriately pursued the Thomas issue. This showing satisfied Blanchet's burden to show Kaye could not establish the causation element of her malpractice claim.
On appeal, Kaye does not contend Blanchet did not meet her burden, but instead argues the court erred in granting summary judgment because she presented "material disputed facts" that the alleged malpractice caused her to suffer damages. In support, Kaye cites to Blanchet's April 2006 letter discussing the advantages and disadvantages of asserting a breach of fiduciary duty claim against Martin.
This letter does not create a triable issue of fact on the causation issue. In the letter, Blanchet provided an opinion as to the potential damages recoverable if Kaye prevailed on the breach of fiduciary duty issue after a trial. Blanchet did not suggest there was merit to the claim, but merely outlined the steps necessary to determine whether the claim was viable and examined the costs and benefits of pursuing the claim as opposed to reaching a settlement in the matter. There is no information in the letter from which a reasonable trier of fact could infer it was likely Kaye would have prevailed on a claim against Martin if she had pursued and asserted such claim. Likewise, the letter contains no information showing Martin would have agreed to a settlement that would provide Kaye with greater benefits if Blanchet had conducted further investigation and obtained additional information pertaining to the breach of fiduciary duty issue.
Absent facts showing the underlying breach of fiduciary claim had merit and that Kaye would have obtained a more favorable result but for the alleged malpractice, Kaye did not meet her summary judgment burden to show a triable issue of fact on the causation element. (See Viner v. Sweet, supra, 30 Cal.4th at p. 1241; Orrick, supra, 107 Cal.App.4th at p. 1058 [summary judgment proper where "[plaintiff] produced no evidence showing his ex-wife would have settled for less than she did, or that, following a trial, he would have obtained a judgment more favorable than the settlement"]; Jalali v. Root (2003) 109 Cal.App.4th 1768, 1777 [because plaintiff "made no attempt to show she could have done better if she hadn't accepted the settlement, there is no causal relationship between her acceptance of the settlement and any pecuniary loss"]; Marshak v. Ballesteros (1999) 72 Cal.App.4th 1514, 1518-1519 [summary judgment proper where plaintiff failed to "prove that his ex-wife would have settled for less than she did, or that following trial, a judge would have entered judgment more favorable than that to which he stipulated"].)
In arguing for a different result, Kaye relies on Orrick, supra, 107 Cal.App.4th 1052 and Sindell v. Gibson, Dunn & Crutcher (1997) 54 Cal.App.4th 1457 (Sindell). Orrick supports the trial court's ruling, and Sindell is factually distinguishable.
In Orrick, a husband and wife signed a settlement agreement in a dissolution action, but the husband later sought to set it aside. (Orrick, supra, 107 Cal.App.4th at p. 1055.) After the court refused to vacate the agreement, the husband sued his attorneys, alleging their negligence led him to enter into a defective settlement agreement. (Ibid.)The attorneys moved for summary judgment, arguing the husband could not prove they caused him to suffer any damages. (Ibid.) The trial court denied the attorneys' motion based on the husband's evidence showing he incurred attorney fees in seeking to overturn the settlement. (Id. at pp. 1055-1056.) The appellate court reversed, finding the court should have granted the attorneys' summary judgment motion because the husband "produced no evidence showing his ex-wife would have settled for less than she did, or that following a trial, he would have obtained a judgment more favorable than the settlement." (Id. at p. 1058.)
In reaching this conclusion, the Orrick court rejected the husband's reliance on Sindell to support his argument that he was entitled to recover his attorney fees incurred after the settlement. (Orrick, supra, 107 Cal.App.4th at pp. 1059-1060; Sindell, supra, 54 Cal.App.4th 1457.) In Sindell, the court recognized that if an attorney error results in a third party lawsuit against the former client, the fees paid to defend the lawsuit are recoverable damages in a malpractice action. (Sindell, supra, at p. 1470.) The Orrick court found this principle inapplicable because "neither [the husband's] ex-wife nor his current wife, nor the taxing authorities nor the securities regulators have made claims against [the husband]," and therefore the husband was not compelled to incur legal fees in his futile attempt to overturn the settlement. (Orrick, supra, at p. 1060.) The Orrick court noted that "[i]f [the attorneys'] alleged errors had required [the husband] to act to protect his interests by bringing or defending an action against a third person, he might have a tort cause of action against [the attorneys]." (Ibid.)
The circumstances here are identical to Orrick and distinguishable from Sindell. As with the husband in Orrick, Kaye did not proffer any evidence showing her former spouse would have agreed to a more favorable settlement if Blanchet had conducted the additional investigation before the settlement conference. Kaye also did not present any evidence to establish the merits of the omitted breach of fiduciary duty claim showing she would have prevailed on this claim at trial. Likewise, as with the Orrick husband, Kaye incurred legal fees in an attempt to overturn the settlement agreement, but there was no showing she was compelled to incur these fees as a result of an attorney error. Kaye argues this case is similar to Sindell because it involved a "third person (Cathy Thomas)." However, it is not the mere involvement of a third person that was the basis of the Sindell holding; instead, the court's rationale was based on the "tort of another" principle that recovery is permitted against a defendant whose negligence results in a lawsuit against the plaintiff or requires the plaintiff to bring a lawsuit against another party. (Sindell, supra, 54 Cal.App.4th at p. 1470.) There are no facts supporting this theory in this case.
Kaye contends the court erred in sustaining Blanchet's objections to Kaye's declaration on the basis that Kaye's statements contradicted her deposition testimony. However, for purposes of this appeal, we have considered Kaye's statements in her declaration as admissible evidence and have concluded that even assuming the admissibility of these statements, Kaye failed to show a triable issue of fact that she suffered injury from the alleged malpractice. We thus do not reach the merits of Kaye's challenge to the court's evidentiary ruling.
III. Court's Summary Judgment on Blanchet's Cross-Complaint
Kaye also contends the court erred in granting summary judgment on Blanchet's cross-complaint, which sought unpaid attorney fees and related costs.
In support of her summary judgment motion on the cross-complaint, Blanchet presented billing records showing Kaye owed $59,502, consisting of about $45,000 in legal fees and costs, and about $14,000 in interest charges. These billing records were consistent with statutes requiring attorney fee bills to "clearly state the basis" for the bill and to include "the amount, rate, basis for calculation, or other method of determination. . . ." (Bus. & Prof. Code, § 6148, subd. (b).)
Blanchet also presented evidence showing Kaye initialed each page of a written retainer agreement that imposed a 1.5 percent interest rate on balances 30 days past due and provided that billing disputes must be submitted in writing within 10 days of receiving an invoice. The retainer agreement stated the agreed interest rate was "intended as liquidated damages" and that "separate calculation of actual damages for each instance of late payment would be extremely difficult and impracticable." The evidence further showed Blanchet never timely disputed a specific charge.
Based on this record, the court found the evidence established Kaye owed Blanchet $59,502 for legal fees, interest, and costs under the retainer agreement. On appeal, Kaye argues the court erred in granting summary judgment because the liquidated damages provision was unreasonable. However, she does not proffer any arguments or legal authority for this position. Instead, without citing to the record, Kaye states that she "defers to the arguments set out in the pleadings below for the Court's de novo review."
By failing to provide any factual citation or legal authority for her argument, Kaye has waived the issue. (See Garrick Development Co. v. Hayward Unified School Dist. (1992) 3 Cal.App.4th 320, 334; Banning v. Newdow (2004) 119 Cal.App.4th 438, 455 [attempted "incorporation of trial court arguments in an appellate brief is inappropriate"]; Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 294, fn. 20.) Every appellate brief must " 'contain a legal argument with citation of authorities on the points made. If none is furnished on a particular point, the court may treat it as waived, and pass it without consideration.' [Citation.]" (McComber v. Wells (1999) 72 Cal.App.4th 512, 522-523.)
In any event, we have reviewed Kaye's arguments asserted in the summary judgment proceedings, and determine the court did not err in rejecting Kaye's challenges. Kaye's arguments that the late payment charge was unreasonable and unenforceable under the circumstances are without merit. (See Civ. Code, § 1651.)
DISPOSITION
Judgment affirmed. Appellant to pay respondents' costs on appeal.
HALLER, J. WE CONCUR: HUFFMAN, Acting P. J. MCDONALD, J.