Susan Smyth, et al., v. Mullen & Henzell L.L.P

Case Number

22CV03893

Case Type

Hearing Date / Time

Wed, 04/17/2024 - 10:00

Nature of Proceedings

1. Plaintiffs’ Motion for Relief from Failure to Timely File Motion to Strike Costs; and, 2. Plaintiffs’ Motion to Strike Costs

Tentative Ruling

For Plaintiffs Susan Smyth, Pedro Baltadano, Martin Engriser, and Don McIntyre: Louis Pacella, Stephen L. Cohen, The Pacella Law Group                                  

For Defendant Mullen & Henzell L.L.P.: Jeffrey A. Charlston, Robert D. Hoffman, Charlston, Revich, Harris & Hoffman LLP

RULING

For the reasons set forth herein:

1. Plaintiffs’ motion for relief from failure to timely file motion to strike costs, is granted.
2. Plaintiffs’ motion to strike costs is denied. Costs are awarded in favor of Defendant Mullen & Henzell and against Plaintiffs, jointly and severally, in the amount of $19,710.79.

Background

On October 6, 2022, Plaintiffs Susan Smyth (Smyth), Pedro Baltadano (Baltadano), Martin Engriser (Engriser), and Don McIntyre (McIntyre) (collectively, Plaintiffs) filed their original complaint in this action asserting one cause of action for intentional interference with expected inheritance (IIEI claim).

On January 11, 2023, Plaintiffs filed their operative pleading, their first amended complaint (FAC), asserting the same cause of action against Defendant Mullen & Henzell L.L.P. (Defendant or M&H) only.

As alleged in the FAC:

Plaintiffs were close friends of Edward J. Charvet, Jr. (decedent). (FAC, ¶ 15.) Decedent spent nearly all his time with Plaintiffs and repeatedly told Plaintiffs he wished for them to inherit his estate. (Id. at ¶¶ 14, 15.) Decedent died on August 22, 2021. (Id. at ¶ 10.) At his death, decedent was “unmarried[,] had one (1) child . . . who was adopted out as a child and with whom decedent had no relationship[,] had no siblings, living or deceased, and had no blood-line family with whom he had a relationship or that he was even aware existed.” (Id. at ¶ 14.)

While decedent was alive and after discovering that decedent was the target of attempted elder abuse, Smyth made an appointment with Jana S. Johnston (Johnston) who is a partner in Defendant’s law firm. (FAC, ¶¶ 9, 16, 17.) Johnston consulted with Smyth and decedent in June 2014. (Id. at ¶ 18.) During the consultation, Johnston recommended the creation of a trust. (Id. at ¶ 19.) Decedent informed Johnston that he did not know who his heirs were and did not know the name of his son who was given up for adoption as a child. (Ibid.) When asked to whom he wanted to leave his assets, decedent told Johnston that he wanted to leave his assets to his friends who decedent identified as Plaintiffs. (Ibid.) Johnston acknowledged decedent’s desire to name his friends as the beneficiaries of the trust. (Ibid.) Johnston recommended Sharon C. Kennedy of Sharon Kennedy Estate Management (Kennedy) as a professional fiduciary to oversee the trust. (Ibid.) Decedent agreed to name Kennedy as the trustee of the trust.

On June 13, 2014, Johnston emailed Smyth regarding the status of the drafting of trust, stating that “[t]he trust is not a simple or standard agreement in that we are drafting special provisions specifically to address [decedent’s] wishes, preferences, and unique circumstances.” (FAC, ¶ 21 & exhibit B.) On July 2, 2014, Smyth drove decedent to Defendant’s offices to meet with Johnston for the purpose of signing the trust. (Id. at ¶ 23.) The Edward Charvet, Jr. Revocable Trust (the revocable trust) was executed by decedent on July 2, 2014. (Id. at ¶¶ 10, 23 & exhibit A.) Kennedy is named as the trustee of the revocable trust. (Id. at ¶ 10 & exhibit A.) Concurrent with the signing of the revocable trust, decedent executed a pour-over will prepared by Defendant and naming the revocable trust as its residual beneficiary. (Id. at ¶¶ 25, 27 & exhibit D.) Decedent also executed grant deeds transferring title to properties located in Santa Barbara and Ventura County to the revocable trust. (Id. at ¶ 24 & exhibits C-1 through C-4.)

The revocable trust is a standard trust that leaves all assets to decedent’s “heirs”. (FAC, ¶ 22.) The only modification to a traditional revocable living trust is language specifically disinheriting decedent’s biological son. (Ibid.) The will executed by decedent makes no reference to the general testamentary power of appointment referenced in section 5.2.3 of the revocable trust. (Id. at ¶ 27.) Plaintiffs have not discovered any other will executed by decedent that exercised the testamentary power of appointment referenced in section 5.2.3 of the revocable trust. (Id. at ¶ 28.) Plaintiffs believe that Johnston’s June 13, 2014, email referencing special provisions to address decedent’s unique circumstances were designed to deceive decedent, through Smyth, as to the identity of the named beneficiaries of the revocable trust. (Id. at ¶¶ 22, 44.) Johnston drafted the revocable trust in contravention to decedent’s intent with the goal of deriving an improper benefit from decedent’s estate in the form of a deprivation of Plaintiffs’ expectation of an inheritance due to internal perceptions of them, which they otherwise would have received. (Id. at ¶ 47.) Had Defendant prepared the revocable trust in a manner consistent with decedent’s wishes, there is a reasonable certainty that Plaintiffs would have received the inheritance they were promised and expected. (Id. at ¶ 48.)

On February 21, 2023, Defendant filed its demurrer and motion to strike as to the FAC. Defendant argued that the IIEI claim was barred by the one-year statute of limitations of Code of Civil Procedure section 366.3, and otherwise failed to allege facts sufficient to state that claim.

On March 22, 2023, the Court overruled the demurrer and denied the motion to strike.

On April 5, 2023, Defendant filed its answer to the complaint generally denying the allegations thereof and asserting 19 affirmative defenses.

Related to this case is probate action Case No. 23PR00189. That action was filed by Sharon Kennedy, through her attorneys M&H, as a petition for instructions to determine deceased settlor’s heirs and identify beneficiaries of the trust. M&H was not a party to the probate action nor was that action consolidated with the present action.

On November 27, 2023, as the result of private mediation, a settlement was reached in the probate case whereby Plaintiffs agreed to dismiss the civil action with prejudice in exchange for the sum of $5,000,000.00.

Plaintiffs filed a request for dismissal with prejudice, in this action, on January 24, 2024. M&H filed and served a memorandum of costs on February 2, 2024, seeking prevailing party total costs of $19,710.79.

Plaintiffs’ counsel mis-calendared the correct deadline to file a motion to strike costs. The motion was required to be filed and served no later than February 21, 2024. On February 20, 2024, Plaintiffs’ counsel realized the calendaring error and requested an extension of time to March 1, 2024. M&H declined the request for an extension.

Plaintiffs filed the present motions for relief from failure to timely file a motion to strike, and to strike M&H’s costs on March 1, 2024, arguing that Plaintiffs were the prevailing party.

M&H opposes both motions.

Analysis

            Motion for Relief from Failure to Timely File Motion to Strike Costs

“Any notice of motion to strike or to tax costs must be served and filed 15 days after service of the cost memorandum. If the cost memorandum was served by mail, the period is extended as provided in Code of Civil Procedure section 1013. If the cost memorandum was served electronically, the period is extended as provided in Code of Civil Procedure section 1010.6(a)(4).” (Cal. Rules of Court, rule 3.1700(b)(1).)

“The party claiming costs and the party contesting costs may agree to extend the time for serving and filing the cost memorandum and a motion to strike or tax costs. This agreement must be confirmed in writing, specify the extended date for service, and be filed with the clerk. In the absence of an agreement, the Court may extend the times for serving and filing the cost memorandum or the notice of motion to strike or tax costs for a period not to exceed 30 days.” (Cal. Rules of Court, rule 3.1700(b)(3); Italics added.)

Plaintiffs base their motion for relief on Code of Civil Procedure section 473, subdivision (b). That section provides: “The Court may, upon any terms as may be just, relieve a party or his or her legal representative from a judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect.” (Italics added.)

M&H argues that Plaintiffs are not entitled to relief because Plaintiffs are not seeking relief from a judgment, dismissal, order, or other proceeding taken against them through mistake, inadvertence, surprise, or excusable neglect. The filing of a motion to strike or tax costs would be considered an “other proceeding.”

“ ‘Delay (or failure) to challenge a costs bill waives any objection to the costs claimed thereon. However, the Court presumably has discretion to grant relief under [Code of Civil Procedure section] 473 for ‘ “inadvertence” ’ or ‘ “excusable neglect” ’ to consider late-filed motions.’ ” [Citation.]” (Douglas v. Willis (1994 27 Cal.App.4th 287, 290.)

In the current situation, the granting of relief pursuant to Code of Civil Procedure section 473, subdivision (b) is discretionary. The Court accepts Plaintiffs’ representation that the failure to file the motion to strike was the result of a calendaring error. M&H has not shown how it would be prejudiced by allowing Plaintiffs to late-file their motion to strike costs, and M&H has filed a substantive opposition to the motion.

Plaintiffs’ motion for relief from failure to timely file their motion to strike will be granted.

            Motion to Strike Costs

“Except as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding.” (Code Civ. Proc., § 1032, subd. (b).)

Code of Civil Procedure section 1032, subdivision (a)(4), provides, in relevant part, “‘[p]revailing party’ includes the party with a net monetary recovery, a Defendant in whose favor a dismissal is entered, a Defendant where neither Plaintiff nor Defendant obtains any relief, and a Defendant as against those Plaintiffs who do not recover any relief against that Defendant. If any party recovers other than monetary relief and in situations other than as specified, the “ ‘prevailing party’ ” shall be as determined by the Court, and under those circumstances, the Court, in its discretion, may allow costs or not and, if allowed, may apportion costs between the parties on the same or adverse sides pursuant to rules adopted under Section 1034.”

Plaintiffs seek to strike all of M&H’s claimed costs arguing that M&H is not the prevailing party because Plaintiffs received a net monetary recovery in the probate action. Plaintiffs are not moving to tax any of the costs and, by not doing so, implicitly concede that the claimed costs are reasonable, necessary, and that if M&H was the prevailing party, M&H would be entitled to all the claimed costs.

Although M&H was not a party to the probate action, as part of the settlement of that action, Plaintiffs agreed to dismiss the current action against M&H with prejudice. There was no agreement by M&H that it would not seek costs in this case.

Plaintiffs’ argument that they are the prevailing party, in this action, because they obtained a net recovery in the probate case, is without merit. As stated above, M&H was not a party to that action. The relief sought in the probate action was not the same relief that was sought in the current action. In this action, as set forth above, Plaintiffs were attempting to recover directly from M&H based on a claim of intentional wrongdoing on the part of M&H resulting in a cause of action for IIEI.

Dismissal was entered in favor of M&H and Plaintiffs did not receive any monetary recovery in this case. Plaintiffs’ motion to strike costs will be denied. M&H shall recover its claimed costs in the amount of $19,710.79.