In Silver v. Boatwright Home Inspection, Inc. (2002) 97 Cal.App.4th 443, the Court of Appeal reiterated the principle that trial courts have discretion to base attorney fee awards on a pragmatic evaluation of the extent to which each party realized its litigation objectives. (Id. at p. 451; see also Santisas v. Goodin (1998) 17 Cal.4th 599, 622.) In Silver, the plaintiffs bought a home pursuant to a purchase agreement containing a fee provision. (Silver, supra, 97 Cal.App.4th at pp. 445–447.) The plaintiffs sued the sellers, an inspection firm, and other parties for breach of contract, negligence, fraud, and breach of fiduciary duty, asserting that they had suffered approximately $70,000 in damages. (Id. at pp. 446–448, 118 Cal.Rptr.2d 475.)

After the plaintiffs settled their claims against all the defendants except the inspection firm, they voluntarily dismissed the inspection firm. (Id. at pp. 447–448.) The inspection firm requested a contract-based fee award as the prevailing party, which the trial court denied. (Id. at p. 448.) The Court of Appeal affirmed, concluding that despite the judgment in the inspection firm’s favor, it had not prevailed, as the plaintiffs’ settlements secured most of the relief that they sought. (Id. at pp. 452–453.)

Here, Plaintiff and the Association obtained their litigation objectives. In bringing this action, Plaintiff sought, inter alia, Defendants’ compliance with the governing documents, an order: (1) mandating that Defendants cut or remove the offending trees; (2) enjoining the Homeowner Defendants from allowing the offending trees to grow past the fence height; and (3) requiring the Association to mandate compliance by the Homeowner Defendants. (ROA 2 [Complaint].) Plaintiff has obtained this relief. (ROA 145; see also ROA 144.) Plaintiff also received $10,000.00 from the Alinaghian-Green Homeowner Defendants. (ROA 145.) For its part, the Association settled with the Homeowner Defendants and was voluntarily dismissed by Plaintiff. (See ROA 113 and ROA 144.)

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Moreover, a conclusion that Plaintiff and the Association realized their litigation objectives encourages the public policy of settlement of cases. It is well- established that settlements are “highly favored as productive of peace and good will in the community, and reducing the expense and persistency of litigation.” (McClure v. McClure (1893) 100 Cal. 339, 343.) An award of attorney fees under the circumstances could increase the likelihood of litigation solely to establish a prevailing party.

Moving party to give notice.

58 Joslin vs. Fidelity Demurrer to Amended Complaint & Motion to Strike Portions of National Law Complaint Group Defendants, Commonwealth Land Title Insurance Company (erroneously named 24-01440293 and served as Fidelity National Law Group) (“CLTIC”) and Brian Edwards (“Edwards”) (collectively, “Defendants”)’s demurrer to Plaintiff Jeff A. Joslin’s (“Plaintiff”) First Amended Complaint (“FAC”) is OVERRULED.

Defendants’ motion to strike is GRANTED WITH LEAVE TO AMEND as to the punitive damages allegations and request for punitive damages, and DENIED in all other respects.

Defendants’ request for judicial notice of the documents filed in Third Laguna Hills Mutual v. Michael Cohen, et al. (OC Case No. 30-2017-00957937-CU-CO-NJC), is GRANTED, but as to the existence and legal effect of the orders, finding and judgment entered, and not to the truth of any factual matters asserted therein. (Fremont Indemnity Co. v. Fremont Gen. Corp. (2007) 148 Cal.App.4th 97, 113.)

First Cause of Action for Breach of Fiduciary Duty:

“[A] breach of fiduciary duty is a species of tort distinct from a cause of action for professional negligence.” (Slovensky v. Friedman (2006) 142 Cal.App.4th 1518, 1534.) The elements of a cause of action for breach of fiduciary duty are the existence of a fiduciary relationship, its breach and damage caused by that breach. (Meister v. Mensinger (2014) 230 Cal.App.4th 381, 395.)

“The attorney-client relationship is a fiduciary relation of the very highest character imposing on the attorney a duty to communicate to the client whatever information the attorney has or may acquire in relation to the subject matter of the transaction. [Citations.]” (Beery v. State Bar (1987) 43 Cal.3d 802, 813.) “An attorney owes all clients . . . duties of undivided loyalty and diligence, among other fiduciary duties.” (White Mountains Reinsurance Co. of America v. Borton Petrini, LLP (2013) 221 Cal.App.4th 890, 902.)

A client's unilateral right to control the outcome of the client's case includes the “right to settle or refuse to settle a claim.” (Matter of Guzman (Rev.Dept. 2014) 5 Cal. State Bar Ct.Rptr. 308, 314; see CRPC 1.2(a); Amjadi v. Brown (2021) 68 Cal.App.5th 383, 388-389—attorney's settlement of case over client's objection was voidable by client, and clause in retainer agreement giving attorney “sole discretion” to evaluate and accept settlement offer was void.)

The FAC alleges the existence of an attorney-client relationship giving rise to fiduciary duties of loyalty, disclosure, communication, and avoidance of conflicts of interest. (FAC, ¶¶ 7-9.) The FAC further alleges that Defendants breached those duties by failing to disclose conflicts of interest, concealing material information and communications, attempting to force Plaintiff to accept a settlement contrary to his express instructions, and executing and concealing a purported settlement agreement without Plaintiff’s knowledge or consent. (FAC, ¶¶ 10-16.)

These allegations concern breaches of duties of loyalty, disclosure, and conflict-free representation, rather than merely the quality of Defendants’ legal services, and are sufficient to support a claim for breach of fiduciary duty. Plaintiff further alleges that, as a result of Defendants’ unauthorized settlementrelated conduct and concealment of material information, he lost the ability to recover attorney’s fees and litigation costs, incurred additional legal expenses, suffered reputational and business harm, and jeopardized a potential malicious prosecution claim. (FAC, ¶¶ 17(A)-(E), 18.)

Defendants argue that the FAC fails to adequately allege breach, causation, or damages because judicially noticeable records purportedly establish that the dismissal of the underlying complaint was unilateral and that counsel’s signature was not required to effectuate the dismissal. However, Plaintiff’s claim is not based solely on the dismissal itself. Rather, the FAC alleges that Defendants entered into and concealed an unauthorized settlement-related agreement without Plaintiff’s knowledge, consent, or authorization, despite his express instructions not to settle the case. (FAC, ¶¶ 10, 15-17.)

Plaintiff further alleges resulting damages, including lost attorney's fees and costs, additional legal expenses, reputational and business harm, and impairment of a potential malicious prosecution claim. (FAC, ¶¶ 17(A)-(E), 18.) Whether Plaintiff can ultimately establish that such damages were proximately caused by Defendants' conduct presents a merits issue not properly resolved at the pleading stage. (State Dept. of State Hospitals v. Superior Court (2015) 61 Cal.4th 339, 353 [proximate cause is ordinarily a question of fact that cannot be decided as a matter of law based solely on the allegations of a complaint].)

The FAC adequately alleges a cause of action for breach of fiduciary duty. Thus, the demurrer to the first cause of action is OVERRULED.

Second Cause of Action for Professional Negligence:

To prevail on a professional negligence claim against an attorney, the former client must prove (1) the breach of the applicable duty of care; and (2) proximate causation between the conduct and the resulting injury. (See Paul v. Patton (2015) 235 Cal.App.4th 1088, 1095 and Kemper v. County of San Diego (2015) 242 Cal.App.4th 1075, 1079.) Plaintiff must show that but for the attorney's negligence, the harm would not have occurred; or the negligence was a concurrent independent cause of the harm. (Viner v. Sweet (2003) 30 Cal.4th 1232, 1240-1241.)

The FAC alleges the existence of an attorney-client relationship giving rise to a duty of care, breaches of that duty based on Defendants' alleged conflicts of interest, failure to disclose material information, attempted withdrawal shortly before trial, and unauthorized settlement-related conduct, as well as resulting damages. (FAC, ¶¶ 20-23.)

Defendants argue that the claim is deficient because it fails to allege facts showing a breach of the applicable standard of care, causation, or legally cognizable damages, and because judicially noticeable records purportedly establish that the dismissal of the underlying action was unilateral and not caused by Defendants’ conduct. However, “[a]n attorney's duty, the breach of which amounts to negligence, is not limited to his failure to use the skill required of lawyers. Rather, it is a wider obligation to exercise due care to protect a client's best interests in all ethical ways and in all circumstances.” (Day v.

Rosenthal (1985) 170 Cal.App.3d 1125, 1147.) The FAC alleges that Defendants breached those duties by failing to disclose conflicts of interest, concealing material information and communications, attempting to force Plaintiff to accept a settlement contrary to his express instructions, and executing and concealing a purported settlement agreement without Plaintiff’s knowledge or consent. (FAC, ¶¶ 10-16.) These allegations are sufficient at the pleading stage to allege a breach of the applicable standard of care.

Further, whether Plaintiff can ultimately establish causation and damages is not appropriately resolved on demurrer.

Defendants also argue that the professional negligence claim is duplicative of the breach of fiduciary duty claim because both causes of action arise from the same underlying facts. However, the fact that two causes of action arise from the same conduct does not render them duplicative as a matter of law. An attorney’s conduct may give rise to both fiduciary-duty and professional-negligence theories where the same acts constitute both a breach of fiduciary obligations and a breach of the applicable standard of care. (See, e.g., T & R Foods, Inc. v. Rose (1996) 47 Cal.App.4th Supp. 1, 7-8.) Moreover, when a pleader is uncertain as to what facts may ultimately be established, California law permits pleading in the alternative and even inconsistent theories of liability. (Mendoza v. Rast Produce Co., Inc. (2006) 140 Cal.App.4th 1395, 1402.)

The FAC alleges facts sufficient to state a cause of action for professional negligence. Further, the second cause of action is not uncertain, ambiguous, or unintelligible such that Defendants cannot reasonably respond. Accordingly, the demurrer to the second cause of action is OVERRULED.

Defendants move to strike portions of the FAC:

(1) Paragraph 17A, lines 16-23: “Plaintiff informed Defendants that Plaintiff had accumulated legal fees and costs during this lawsuit before Defendants agreed to take over the Prior Case, Plaintiff paid legal fees for legal services he received while Plaintiff was pro-per at the onset of the case. Plaintiff also had costs and expenses that he paid during the time he was pro-per and during the Prior Case. Since Defendants settled the Prior Case without Plaintiff’s consent, knowledge, or approval, Plaintiff can no longer recover these legal expenses for among other reasons, Civil Code § 1717 has reciprocal attorney’s fees that would have been recovered without Defendants unauthorized settlement;”

(2) Paragraph 17B, lines 24-26: “Plaintiff paid legal fees for work performed on this complaint to his attorney representing him in this cross-complaint. Because of Defendants hidden agreement and unauthorized settlement, Plaintiff can no longer recover these expenses;”

(3) Paragraph 17C, lines 1-5: “Defendant's actions of refusing to represent Plaintiff just days before trial required Plaintiff to pay substantial legal fees to get his cross-complaint attorney prepared for trial, covering the time period from November 8, 2023 through the filing of the hidden settlement agreement on November 16, 2023. Since Defendants hidden agreement and unauthorized settlement, Plaintiff can no longer recover these expenses;”

(4) Paragraph 17D, lines 6-10: “Plaintiff, who makes a living as a financial advisor, now has a record of settling a fraud action, which Plaintiff is now required to disclose to clients that ask about Plaintiff’s litigation history. This has and will cost Plaintiff to sustain loss of business income, goodwill, business reputation, and tainted Plaintiff history with a public record of a settlement of a fraud action;”

(5) Paragraph 17E, lines 11-13: “Plaintiff's cause of action for Malicious Prosecution is now in jeopardy because of Defendant's hidden settlement agreement that was entered into without Plaintiff's knowledge or approval;”

(6) Paragraph 19 in its entirety: “The conduct of Defendants, and each of them, was willful, malicious, and a conscious disregard for Plaintiff’s rights. Accordingly, Plaintiff is seeking the imposition of punitive damages to punish the conduct of Defendants, and each of them, and deter such conduct in the future;” and

(7) Item 2, line 8, in the prayer for relief, for punitive damages.

General Legal Authority:

The court may “[s]trike out any irrelevant, false, or improper matter inserted in any pleading.” (Code Civ. Proc., § 436, subd. (a).)

A motion to strike may lie where the facts alleged do not rise to the level of “malice, fraud or oppression” required to support a punitive damages award. (See Turman v. Turning Point of Central Calif., Inc. (2010) 191 Cal.App.4th 53, 63— allegations of gender discrimination did not show defendant acted with requisite state of mind for punitive damages.)

In ruling on a motion to strike, the allegations in the complaint are considered in context and presumed to be true: “[J]udges read allegations of a pleading subject to a motion to strike as a whole, all parts in their context, and assume their truth.” (Clauson v. Sup.Ct. (Pedus Services, Inc.) (1998) 67 Cal.App.4th 1253, 1255.)

Damages in the Prior Action:

The FAC alleges that Defendants concealed conflicts of interest, failed to communicate material information, acted contrary to Plaintiff's instructions regarding settlement, and entered into a settlement-related agreement without Plaintiff's knowledge or consent. (FAC, ¶¶ 10-16.) The FAC further alleges that, as a result of Defendants' conduct, Plaintiff lost the ability to recover attorney's fees and costs, incurred additional legal expenses, suffered reputational and business harm, and jeopardized a potential malicious prosecution claim. (FAC, ¶ 17(A)-(E).)

Defendants move to strike these allegations of damages arising from the Prior Action, arguing that they are legally unavailable, speculative, or not proximately caused by Defendants' conduct. However, as discussed above, these arguments go to causation and the ultimate recoverability of the claimed damages, rather than whether the allegations are improper on their face. At the pleading stage, the Court cannot determine as a matter of law that Plaintiff cannot prove damages arising from the alleged conduct.

Defendants also argue that Plaintiff cannot recover attorney's fees allegedly incurred in this action under paragraph 17(B). However, paragraph 17(B) does not clearly allege that Plaintiff seeks attorney's fees incurred in prosecuting this action against Defendants. Rather, it may reasonably be construed as alleging that Plaintiff incurred attorney's fees in connection with his cross-complaint in the underlying litigation and lost the ability to recover those fees as a result of Defendants' alleged conduct. (See FAC ¶ 17(B).)

Accordingly, the motion to strike FAC paragraphs 17(A), 17(B), 17(C), 17(D), and 17(E) is DENIED.

The FAC alleges that Defendants concealed conflicts of interest, failed to disclose material information, acted contrary to Plaintiff's instructions concerning settlement, and entered into a settlement-related agreement without Plaintiff's knowledge or consent. (FAC, ¶¶ 10-16.) However, the FAC does not allege specific facts showing conduct that constitutes malice, oppression, or fraud within the meaning of Civil Code section 3294. Instead, it alleges only in conclusory terms that Defendants acted willfully, maliciously, and in conscious disregard of Plaintiff's rights. (FAC, ¶ 19.)

Accordingly, the motion to strike paragraph 19 and Item 2 of the prayer for relief is GRANTED with leave to amend.