Nicole Emily Jordan vs Rogers Sheffield & Campbell LLP et al

Case Number

23CV02702

Case Type

Hearing Date / Time

Mon, 07/01/2024 - 10:00

Nature of Proceedings

Demurrers (2); Motions to Strike (2)

Tentative Ruling

Nicole Emily Jordan v. Rogers, Sheffield & Campbell, LLP, et al.

Case No.  23CV02702

Hearing Date:         7/1/2024                                                         

HEARINGS: Demurrer by defendants Rogers, Sheffield & Campbell, LLP and Sheila Price to plaintiff’s First Amended Complaint

                        Motion to strike portions of plaintiff’s First Amended Complaint, by defendants Rogers, Sheffield & Campbell, LLP and Sheila Price

                                   

ATTORNEYS:          Tamineh Roshanian of Roshanian Payman PC for plaintiff Nicole Emily Jordan

                                    Kenny C. Brooks / Michael McCarthy of Nemecek & Cole for defendants

Rogers Sheffield & Campbell, LLP and Sheila Price

                                    Rachel Van Mullem / Jennifer J. Lee of County Counsel’s Office for defendant Jamie Cathleen Green

                       

TENTATIVE RULINGS:  

The Court will overrule the demurrer (a) made to the claims based upon the provision of legal services on statute of limitations grounds, (b) based upon the mitigation of damages argument; and (c) the miscellaneous additional claims of defects which were only summarily presented by defendants’ demurrer.

The Court will sustain the demurrer made by the attorney defendants based upon their provision of legal services: (a) to all causes of action to the extent they purport to assert representative claims, in having been alleged by Nicole in her capacity as successor trustee of the trust and successor-in-interest to the Estate of Virginia Jordan; (b) to all causes of action made on the ground that the allegations are insufficient to support the conclusion that the attorney defendants breached any duty of care owed to Nicole as an intended beneficiary of her parents’ trust; (c) to the cause of action for breach of fiduciary duty (to the extent it is based upon the provision of attorney services), the cause of action for breach of the duty of confidentiality, and the cause of action for constructive trust, on the basis that the facts alleged in the FAC are insufficient to support the conclusion that any fiduciary duty was owed by the attorney defendants to Nicole; and (d) to the fraud-based causes of action, made on the ground that the allegations of the FAC are insufficient to support the conclusion that Nicole could have justifiably relied on any misrepresentations or non-disclosures by the attorneys, or suffered damages from any such justifiable reliance.

The Court will sustain the demurrer made by defendant Price/Sheffield to the cause of action alleged against him in his capacity as trustee of the trust, based upon the fiduciary duty owed by a trustee to beneficiaries of a trust.

The Court’s ruling on the demurrers effectively moots the motion to strike.

While the Court has serious doubts with respect to Nicole’s ability to cure many of the defects in her FAC, the Court is inclined to permit one final opportunity for Nicole to amend her complaint to plead her best case. As articulated below, the Court will defer the issue of the length of time permitted for Nicole to file any Second Amended Complaint until the July 29, 2024, hearing on the demurrer and motion to strike filed by defendant Jamie Cathleen Green.

Background: Based upon the allegations of the original complaint and the first amended complaint, and the matters of which judicial notice has been requested: Dr. Borimir Jordan and Virginia Jordan, who were husband and wife, have three daughters, Angela Jordan Hart, Jennifer Jordan, and Nicole Jordan. [Note: Because of the multiplicity of persons with the same surname, the Court refers to members of the Jordan family by their first names for purposes of clarity. No disrespect is intended.]

In 1998, they established the Borimir and Virginia Jordan Family Trust. The trust was ultimately amended and restated by a Third Amendment to and Complete Restatement of Declaration of Trust in April 2017. It was amended by a Fourth Amendment executed in 2010, and a Fifth Amendment in 2012. The Jordans’ estate planning attorney was Homer Sheffield, with the law firm of Rogers Sheffield & Campbell, LLP.

In September 2018, the Jordans allegedly requested that Sheffield draft a Sixth Amendment to the trust, leaving significant assets to Nicole. Instead of doing so, Sheffield terminated his representation of the Jordans. The Jordans then allegedly self-drafted and executed a Sixth Trust Amendment, naming Nicole as sole successor Trustee and sole beneficiary of the Trust, thereby effectively disinheriting the Jordans’ daughters Angela and Jennifer.

Borimir passed away on March 26, 2020. Upon belatedly learning of his death, Angela sought to establish a conservatorship over her mother, based on her belief that Nicole—who had lived with her parents for some time—was abusing and neglecting Virginia. Her petition for appointment of temporary conservator for Virginia was filed in April, 2020. The Probate Court appointed Mark Watson as the temporary conservator of Virginia’s estate after hearing on October 15, 2020. Virginia passed away on November 1, 2020.

On January 27, 2021, Mark Watson petitioned the Probate Court (Case No. 21PR00040) for an order confirming himself as trustee and confirming trust assets, setting the hearing on the petition for March 18, 2021. The petition attached the Third Amendment to and Complete Restatement of Declaration of Trust, and the Fourth and Fifth Amendments thereto, which it collectively referred to as the “Trust” which the Trustee sought to confirm and administer. The petition alleged that upon Borimir’s death, the trust agreement directed the division of the trust estate into two separate shares, Trust A and Trust B, each to be administered as a separate trust. Trust B is to be established as an irrevocable subtrust, and Trust A to remain amendable and revocable by Virginia as the surviving Settlor. It contained provisions directing the manner in which the subtrust were to be administered. The petition alleged further that upon Virginia’s death, Trust A became irrevocable, and both Trust A and Trust B became terminating trusts subject to post-death administration. Successor co-trustee Pearlman declined to act as trustee, and successor co-trustee Homer G. Sheffield, Jr. on December 7, 2020, appointed Mark Watson as trustee of the trust and all sub-trusts. Watson then began post-death administration of Trust A and Trust B under the Trust, including the marshalling of assets and sending out Notices by Trustee to the beneficiaries of the Trust. The Notices by Trustee were mailed to the beneficiaries on January 7, 2021, and included copies of the Trust and all amendments thereto.

The Third and Fourth Amendments had essentially set aside specific real property and assets for Nicole and provided that the remainder would be divided between Angela and Jennifer. The Fifth Amendment added a provision for $10,000 distributions to each of three nieces who survived Virginia and Borimir, and directed that the trustees sell all remaining trust assets, including the real property, and distribute the proceeds to each living child of the Jordans in equal shares.

Watson’s Petition alleged that he had received correspondence from the Settlors’ daughter, Nicole Jordan, that the trust documents in Watson’s possession may have been amended or revoked, or that such documents did not authorize Watson to act on behalf of the trust. Watson advised the court that he had attempted to understand her allegations, but her responses were confusing and inconsistent, and she refused to provide copies of the documents she claimed superseded those under which Watson was acting. Watson therefore sought the Court’s order confirming that the trust documents attached to the petition were valid and set forth the most recent and controlling iteration of the Trust, and that Watson is the sole Trustee of the Trust.

No one opposed the petition in writing, nor did anyone appear at the March 18, 2021 hearing in opposition to the petition. After that hearing, the Probate Court granted Watson’s petition. The formal order, filed March 24, 2021, confirmed Watson as Trustee, and noted that Nicole Jordan had contended that the trust documents were amended or revoked and do not allow Watson to act on behalf of the trust, but had provided no evidence to support her claims. Under those circumstances, the Probate Court confirmed that the petition set forth the current and controlling iteration of the trust, and appointed Watson as sole trustee of the trust as amended, among other orders made on that date.

On March 15, 2022, Nicole filed a verified petition in the Probate Court trust action, seeking to establish herself as the sole successor trustee and sole beneficiary of The Borimir and Virginia Jordan Family Trust, and to establish trust assets under a Sixth Trust Amendment, which she alleged had been executed by Virginia and Borimir without assistance of counsel, on July 15, 2019. The petition sought to validate the Sixth Trust Amendment, and to invalidate the Fourth and Fifth Trust Amendments, among other requests.

Angela demurred to the petition on various grounds, including that it was time-barred. Jennifer joined in the demurrer. After a continuance by the Probate Court to permit Angela to respond to Nicole’s late-filed opposition papers, and another continuance to permit Angela to respond to Nicole’s unauthorized supplemental opposition papers, the demurrer was ultimately heard on January 19, 2023. At that time, the Probate Court sustained on statute of limitations grounds (Prob. Code, § 16061.8), without leave to amend, the demurrer to the Petition to validate the Sixth Trust Amendment, the Petition to Confirm Assets Held by Mark Watson Pass to Petitioner as the Sole Beneficiary and Successor Trustee, and the apparent sub-petitions to Invalidate the Fourth and Fifth Trust Amendments, and for Declaratory Relief. The Probate Court found that Nicole’s petition to invalidate the Fourth and Fifth Trust Amendments and to validate the Sixth Trust Amendment (and related claims) had been filed more than 10 months following the expiration of the 120-day period set forth in Probate Code section 16061.8, and was therefore barred. With respect to the petition for accounting, the Probate Court sustained the demurrer with leave to amend to the extent it sought an accounting within the terms of Probate Code section 17200(b)(7)(B) and (C).

Nicole appealed the Probate Court’s decision on March 10, 2023.

On June 22, 2023, Nicole filed her initial complaint in this action, allegedly both individually and in her capacities as successor trustee and beneficiary of The Borimir and Virginia Jordan Family Trust, and as beneficiary and successor-in-interest to the Estate of Virginia Jordan, deceased. The complaint names as defendants the law firm of Rogers, Sheffield & Campbell, LLP, Angela Jordan Hart, Jennifer Jordan, Adult Protective Services employee Jamie Cathleen Green (Green), and Amethyst Eve Sheffield and Sheila T. Price, as Co-Personal Representatives of the Estate of Homer G. Sheffield Jr., deceased (Price/Sheffield or, collectively, Sheffield).

The complaint alleged causes of action for (1) breach of fiduciary duty (vs. RSC and Sheffield), (2) breach of duty to preserve confidentiality (vs. RSC and Sheffield), (3) legal malpractice (vs. RSC and Sheffield), (4) breach of contract (vs. RSC and Sheffield), (5) intentional interference with contractual relations (vs. Angela, Jennifer, and Green), (6) breach of the implied duty of good faith and fair dealing (vs. RSC and Sheffield), (7) constructive fraud (vs. RSC and Sheffield), (8) fraud by concealment (vs. RSC and Sheffield), (9) intentional misrepresentation (vs. RSC, Sheffield, Angela and Jennifer), (10) conspiracy to defraud (vs. Angela, Jennifer, and Green), (11) negligent misrepresentation (vs. RSC and Sheffield), (12) negligence (vs. RSC and Sheffield), (13) dependent adult emotional abuse and harassment (vs. Angela, Jennifer, and Green), (14) elder emotional abuse and harassment (vs. Angela, Jennifer, and Green), (15) intentional infliction of emotional distress (vs. Angela, Jennifer, and Green), (16) reformation of trust (to confirm the existence and validity of the Sixth Amendment), and (17) declaratory relief (seeking a declaration regarding the validity of the Sixth Amendment, who should be successor trustee of the trust, and the beneficiaries and amounts of distributions from trust assets).

Defendants RSC and Price/Sheffield demurred to the complaint on various grounds, including that the action was barred by the statute of limitations applicable to actions against attorneys (Code Civ. Proc., § 340.6(a)), that Nicole had no standing to assert representative claims for damages allegedly suffered by her parents, that defendants owed no duty to Nicole, that the fraud-based claims did not allege facts to show reliance by Nicole upon any representations, that Nicole failed to mitigate her damages by timely bringing the Sixth Amendment to the attention of the Probate Court, and asserted various additional defects to specific causes of action. Defendants RSC and Price/Sheffield also moved to strike the allegations seeking attorneys fees, general damages, and punitive damages.

After hearing on December 11, 2023, the Court (1) sustained the RSC demurrer on statute of limitations grounds (Code Civ. Proc., § 340.6), which mooted all other grounds raised; (2) sustained the Price/Sheffield statute of limitations demurrer to all but the first cause of action for breach of fiduciary duty (given that Section 340.6 would not apply to his actions taken as successor trustee of the trust), which also mooted all other grounds raised; and (3) granted the motions to strike filed by RSC and Price. Plaintiff was permitted leave to file an amended pleading.

Plaintiff’s First Amended Complaint (FAC) was filed on January 8, 2024, again filed by Nicole allegedly individually and in her capacities as successor trustee and beneficiary of The Borimir and Virginia Jordan Family Trust, and as beneficiary and successor-in-interest to the Estate of Virginia Jordan, deceased. The FAC omitted the previously alleged causes of action for breach of contract, intentional interference with contractual relations, breach of the implied covenant of good faith and fair dealing, elder emotional abuse and harassment, and intentional infliction of emotional distress, and added causes of action for intentional interference with inheritance, and conspiracy to interfere with inheritance. Even with the elimination of five causes of action, the FAC spans 75 pages, including 55 pages (232 paragraphs) of preliminary allegations before the first cause of action is alleged. The currently-alleged causes of action include (1) breach of fiduciary duty (vs. RSC, Sheffield), (2) breach of the duty to preserve confidentiality (vs. RSC, Sheffield), (3) legal malpractice (vs. RSC, Sheffield), (4) intentional interference with inheritance (vs. RSC, Sheffield, Green, Angela, Jennifer), (5) constructive fraud (vs. RSC, Sheffield), (6) fraud by concealment (vs. RSC, Sheffield), (7) intentional misrepresentation (vs. RSC, Sheffield, Angela, Jennifer), (8) conspiracy to interfere with inheritance (vs. RSC, Sheffield, Green, Angela, Jennifer), (9) negligent misrepresentation (vs. RSC, Sheffield), (10) negligence (vs. RSC, Sheffield), (11) dependent adult emotional abuse and harassment (vs. Angela, Jennifer, Green), (12) reformation of trust (not stated against any defendant), and (13) declaratory relief (not stated against any defendant).

In response to the ruling on the statute of limitations defense, Nicole’s FAC added allegations that would trigger consideration of two of the statutory tolling provisions set forth in Code of Procedure section 340.6(a), specifically subdivision (1) [“The plaintiff has not sustained actual injury”] and (4) [“The plaintiff is under a legal or physical disability that restricts the plaintiff’s ability to commence legal action”]. (See FAC @ ¶¶ 218 (actual injury), and 229 and 333 (disability). The FAC also included allegations which contended that the doctrines of late discovery and equitable estoppel applied to preclude a statute of limitations bar. (FAC @ ¶ 228.)

RSC and Price/Sheffield Demurrer:  On March 15, 2024, RSC and Price/Sheffield, named as defendants in the first through tenth causes of action, again demurred to each of the causes of action alleged against them. To the extent that Nicole’s claims are based upon their provision of legal services, these defendants again contend that they are barred by the statute of limitations set forth in Code of Civil Procedure section 340.6, and that none of the allegations Nicole added to the FAC—and particularly her assertion that she did not suffer actual injury because of the filing and pendency of her appeal of the Probate Court decision—do not remove the statute of limitations bar, citing Laird v. Blackner (1992) 2 Cal.4th 606, 615. They assert further that Nicole lacks standing to assert representative claims regarding legal services they provided to Virginia and Borimir, because the Probate Court ruled that Watson is the trustee of their trust, not Nicole, nor was she named as executor of either of their wills, or sought to be named as their personal representative. As a result, she has no standing to bring claims on behalf of the Trust, Virginia, or Borimir.

The demurrer contends contend further that Nicole’s claims based upon their provision of legal services fail for lack of a duty. Defendants represented the Jordan parents, Virginia and Borimir, not Nicole, and lawyers do not owe fiduciary duties to non-clients. (Furia v. Helm (2003) 111 Cal.App.4th 945, 953.

Further, in the estate planning context, a drafting attorney owes only limited duties to intended beneficiaries to draft an estate plan in a manner that effectuates the clear intent of the testator (Chang v. Lederman (2009) 172 Cal.App.4th 67), and the FAC does not allege facts to show that any duty owed to her was breached, that the intent of Borimir and Virginia was clear, or that estate planning documents drafted by defendants failed to effectuate their intent. Rather, the allegation is that defendants refused to draft the Sixth Amendment which was requested, which instead was executed by the Jordans without legal assistance. They further assert that Nicole’s causes of action for constructive fraud (5th) and fraud by concealment (6th) are predicated on the failure of the defendants to disclose that they were communicating with Angela, Jennifer, and other third parties, but there was no duty of disclosure to non-client third party Nicole.

With respect to Nicole’s claims for fraud, defendants assert that the FAC does not specifically allege how Nicole could possibly have relied to her detriment on anything they did. The constructive fraud (5th) and concealment (6th) causes of action allege that defendants received bad information from Angela, Jennifer, and others, which caused them to refrain from drafting the Sixth Amendment, and had they disclosed why they were withdrawing Nicole and her parents could have responded and requested again that they draft the Sixth Amendment. Defendants characterize the argument as “beyond nonsensical,” because Nicole was a trust beneficiary, not a client, and defendants had no duty to disclose anything to her, and because the FAC confirms that the Jordans did not rely on the non-disclosure and proceeded to draft and execute a Sixth Amendment on their own. With respect to the intentional misrepresentation (7th) and negligent misrepresentation (9th) claims, defendants assert that the FAC alleges that they promised to represent the Jordans’ estate planning interests but failed to do so, with the statements being made to and relied on by the Jordan parents, not Nicole.

Defendants also demur to the entire complaint on the basis that Nicole failed to mitigate her damages, given that she was advised of the time limits and given the opportunity to bring the Sixth Amendment to the Probate Court’s attention, and inexplicably waited more than a year to do so. Had she timely done so, she could have easily evaded any damages caused by the attorneys.

Price/Sheffield demur to the breach of fiduciary duty cause of action, to the extent it is based upon conduct by Sheffield as trustee of the trust, arguing that his only actions taken in the capacity of trustee were to decline to act as trustee, appoint Watson as successor trustee, and provide Watson with relevant estate planning documents, all within a month of Virginia’s death. Watson provided Nicole with notice of the operative trust, and advised her of the time limits on her ability to challenge the operative trust, and advised the Probate Court that Nicole took the position that he was not the operative trustee and that there were additional operative amendments to the trust. Nothing Sheffield did breached any fiduciary duty owed as trustee, or caused any damage to Nicole, who failed to avoid her damages by failing to present the Sixth Amendment and challenge the operative trust documents submitted by Watson until long after the time within to do so had passed.

Finally, the attorney defendants presented a bullet list of six other defects to the FAC, presented in summary fashion.

RSC and Sheffield/Price Motion to Strike: Also on March 15, 2024, RSC and Price/Sheffield moved to strike the FAC allegations seeking “general damages” (FAC at p. 73-74, Prayer ¶¶ 2, 6, 8, 10, 13, 17, and 2, 5, 9, and 12) for “exemplary and punitive damages” (FAC at pp. 73-74, Prayer ¶¶ 4, 15, 19, 3, and 7). [Note: The Court notes that the FAC very confusingly consecutively numbered its prayers from ¶ 1 through ¶ 19, encompassing the first through sixth causes of action, and then in the seventh through thirteenth causes of action, started again at ¶ 1 and proceeded through ¶ 29.]

The motion contends that there is no entitlement to emotional distress or other non-economic damages in an action against an attorney, with the only exception being when an attorney’s negligence results in a client being wrongly incarcerated. Such damages are not recoverable when the emotional distress derives from economic loss. The motion further contends that the allegations of the FAC are insufficient to support the conclusion that the attorney defendants were guilty of malice, oppression, of fraud.

Appellate Court ruling on Nicole’s appeal of the Probate Court decision: By a decision filed on January 16, 2024, the Second District Court of Appeal, Division Six, affirmed the Probate Court decision sustaining, without leave to amend on statute of limitations grounds, the demurrer to the Petition to Validate the Sixth Trust Amendment, the Petition to Confirm Assets Held by Mark Watson Pass to Petitioner as the Sole Beneficiary and Successor Trustee, and the apparent sub-petitions to Invalidate the Fourth and Fifth Trust Amendments, and for Declaratory Relief.

Oppositions: Nicole has opposed the demurrer and motion to strike in their entirety.

ANALYSIS: For the reasons more fully articulated below: The Court will overrule the demurrers (a) to all causes of action based upon the provision of legal services, on statute of limitations grounds, based upon its failure to meet the entirety of its burden; (b) to all causes of action, based upon the contention that Nicole failed to mitigate her of damages, since mitigation of damages is not a proper ground for demurrer; and (c) the miscellaneous additional claims of defects which were only summarily presented by defendants’ demurrer.

The Court will sustain the demurrer made by the attorney defendants based upon their provision of legal services: (a) to all causes of action to the extent they purport to assert representative claims, in having been alleged by Nicole in her capacity as successor trustee of the trust and successor-in-interest to the Estate of Virginia Jordan; (b) to all causes of action made on the ground that the allegations are insufficient to support the conclusion that the attorney defendants breached any duty of care owed to Nicole as an intended beneficiary of her parents’ trust; (c) to the cause of action for breach of fiduciary duty (to the extent it is based upon the provision of attorney services), the cause of action for breach of the duty to preserve confidentiality, the cause of action for constructive trust, on the basis that the facts alleged in the FAC are insufficient to support the conclusion that any fiduciary duty was owed by the attorney defendants to Nicole (the Court notes that the 10th cause of action for negligence is based only in part on the attorney defendants’ alleged breach of fiduciary duty, and the demurrer cannot be sustained on this basis as to that cause of action because it does not apply to the entirety of the cause of action); and (d) to the fraud-based causes of action, made on the ground that the allegations of the FAC are insufficient to support the conclusion that Nicole could have justifiably relied on any misrepresentations or non-disclosures by the attorneys, or suffered damages from any such justifiable reliance.

The Court will sustain the demurrer made by defendant Price/Sheffield to the cause of action alleged against him in his capacity as trustee of the trust, based upon the fiduciary duty owed by a trustee to beneficiaries of a trust.

The Court’s ruling on the demurrer effectively moots the motion to strike.

While the Court has serious doubts with respect to Nicole’s ability to cure many of the defects in her FAC, the Court is inclined to permit one final opportunity for Nicole to amend her complaint to plead her best case. As articulated below, the Court will defer the issue of the length of time permitted for Nicole to file any Second Amended Complaint until the July 29, 2024, hearing on the demurrer and motion to strike filed by defendant Jamie Cathleen Green.

1.         Requests for judicial notice.

In support of their demurrers, the attorneys have both sought judicial notice of documents within the underlying Probate Court file, Case No. 21PR00040); Matter of Borimir and Virginia Jordan Family Trust, including (A) Petition for Order Confirming Petitioner as Trustee and Confirming Trust Assets; (B) Order Confirming Mark Watson as Trustee and Confirming Trust Assets; (C) Nicole’s Petition to (1) Establish Her as Sole Successor Trustee & Sole Beneficiary and to Establish Trust Assets Under Sixth Trust Amendment, and For Declaratory Relief; (D) Minute Order dated January 19, 2023; and (E) Opinion of the California Court of Appeal (Case No. B327289).

On June 29, 2023, one week after filing her original complaint, Jordan filed a Request for Judicial Notice, in which she seeks judicial notice of a host of various documents. Her FAC alleges that she “is filing” a Request for Judicial Notice “at the same time as this Complaint,” attaching various pleadings and orders in three other court cases in Santa Barbara County, the outcome of which she contends relates either to issues of the amount of damages, or the accrual of causes of action. (FAC @ ¶ 13). The FAC incorporates by references all documents set forth in the Request for Judicial Notice as if attached to the FAC. (FAC @ ¶ 14). No Request for Judicial Notice was filed at the same time as the FAC; the Court assumes that the FAC references are instead made to the Request for Judicial Notice which was filed on June 29, 2023.

Matter to be judicially noticed must be relevant to the issues in the case. (Mangini v. R.J. Reynolds Tobacco Co. (1994) 7 Cal.4th 1057, 1063, disapproved on other grounds by In re Tobacco Cases II (2007) 41 Cal.4th 1257, 1276.)

Pursuant to Evidence Code section 452(d), judicial notice may be taken of the records of any state court. However, not all matters contained in court records are indisputably true, and while the existence of any document in a court file may be judicially noticed, the truth of matters asserted in such documents is not necessarily subject to judicial notice. (Copenbarger v. Morris Cerullo World Evangelism, Inc. (2018) 29 Cal.App.5th 1, 14.) A court cannot take judicial notice of the truth of hearsay statements just because they are part of a court record or file. (Kilroy v. State of California (2004) 119 Cal.App.4th 140, 145-147.)

The Court will take judicial notice of the existence of all such documents, but not necessarily of the truth of matters asserted in such documents.

2.         Standards on demurrer.

The court’s task in ruling on a demurrer is to determine whether the complaint states a cause of action. (People ex rel. Lungren v. Superior Court (1996) 14 Cal.4th 294, 300.) A demurrer admits the truth of all material facts properly pleaded (Aubry v. Tri-City Hosp. Dist. (1992) 2 Cal.4th 962, 966-967), no matter how unlikely or improbable they may be (Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604), or how unlikely it will be that plaintiff will be able to prove the claim (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213-214). The court also assumes the truth of all reasonable inferences that may be drawn from the properly pleaded facts. (Reynolds v. Bement (2005) 36 Cal.4th 1075, 1083.) The assumption of truth does not apply, however, to contentions, deductions, or conclusions of law or fact. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) A demurrer tests the pleadings alone and not the evidence or other extrinsic matters, and therefore lies only where the defects appear on the face of the pleading or are judicially noticed. (Id.)

Where the allegations of the complaint or matters of which judicial notice may be taken reveal a defense to the action, such as a statute of limitations bar, the plaintiff must “plead around” the defense by alleging specific facts which would avoid the apparent defense. Absent such allegations, the complaint is subject to demurrer for failure to state a cause of action. (See Gentry v. eBay, Inc. (2002) 99 Cal.App.4th 816, 825; Lee v. Escrow Consultants, Inc. (1989) 210 Cal.App.3d 915, 917, 921-922.) Similarly, where plaintiff relies on a theory of fraudulent concealment to save a cause of action that otherwise appears on its face to be time-barred, he or she must specifically plead facts that, if proved, would support the theory. (Mills v. Forestex Co. (2003) 108 Cal.App.4th 625, 641.

3.         Standards on motion to strike.

On motion to strike, a court can strike out any irrelevant, false, or improper matter inserted in a pleading. (Code Civ. Proc., §§ 435, subd. (b)(1); 436, subd. (a).) Just as with a demurrer, the grounds for a motion to strike must appear on the face of the pleading or from matter which the court may take judicial notice. (Code Civ. Proc., § 437, subd. (a).) A demand for judgment requesting relief not supported by the allegations of the complaint or cross-complaint is an “immaterial allegation,” and is considered “irrelevant matter” subject to a motion to strike. (Code Civ. Proc., §§ 431.10, subds. (b)(3), (c), and 436, subd. (a).)

Demurrer by RSC and Price

1.         Statute of limitations demurrer to claims based upon provision of legal services.

In light of this Court’s prior ruling that Nicole’s claims against RSC and Price/Sheffield related to their provisions of legal services were barred by the limitations period set forth in Code of Civil Procedure section 340.6(a), Nicole’s FAC included allegations that attempted to invoke certain of the statutory tolling provisions set forth in Section 340.6(a)—specifically the fact that her claim was tolled until she sustained actual injury (Section 340.6(a)(1), which was within one year prior to filing the action, and that the statute was tolled during the period she was under a legal or physical disability which restricted her to ability to commence the action (Section 340.6(a)(4))—as well as that defendants were equitably estopped from asserting the statute of limitations against her. In response, RSC and Price/Sheffield have reasserted their contention that the causes of action based upon their provision of legal services to the Jordans are barred by the statute of limitations.

            A.        Legal authority.

                        1.         Statutes of limitation, generally.

An injury suffered by reason of a defendant’s conduct gives rise to a single cause of action, regardless of how many theories are pled by the complaint. Where the injury is suffered by reason of an attorney’s professional negligence, the gravamen of the claim is legal malpractice, regardless of whether it is pled in tort or contract. (Quintilliani v. Mannerino (1998) 62 Cal.App.4th 54, 65.) The gravamen of a complaint and the nature of the right sued on, rather than the form of the action or relief demanded, determines which statute of limitation applies. (Id. at p. 66, citing Day v. Greene (1963) 59 Cal.2d 404, 411.) 

The applicable statute of limitations does not begin to run until the cause of action accrues, i.e., the party owning it is entitled to begin and prosecute an action thereon. (Romano v. Rockwell International, Inc. (1996) 14 Cal.4th 479, 487.)

                        2.         Section 340.6(a).

Code of Civil Procedure section 340.6 provides, in relevant part:

(a) An action against an attorney for a wrongful act or omission, other than for actual fraud, arising in the performance of professional services shall be commenced within one year after the plaintiff discovers, or through the use of reasonable diligence should have discovered, the facts constituting the wrongful act or omission, or four years from the date of the wrongful act or omission, whichever occurs first. If the plaintiff is required to establish the plaintiff's factual innocence for an underlying criminal charge as an element of the plaintiff's claim, the action shall be commenced within two years after the plaintiff achieves postconviction exoneration in the form of a final judicial disposition of the criminal case. Except for a claim for which the plaintiff is required to establish the plaintiff's factual innocence, the time for commencement of legal action shall not exceed four years except that the period shall be tolled during the time that any of the following exist:

(1) The plaintiff has not sustained actual injury.

(2) The attorney continues to represent the plaintiff regarding the specific subject matter in which the alleged wrongful act or omission occurred.

(3) The attorney willfully conceals the facts constituting the wrongful act or omission when those facts are known to the attorney, except that this subdivision shall toll only the four-year limitation.

(4) The plaintiff is under a legal or physical disability that restricts the plaintiff's ability to commence legal action.

(5) A dispute between the lawyer and client concerning fees, costs, or both is pending resolution under Article 13 (commencing with Section 6200) of Chapter 4 of Division 3 of the Business and Professions Code. As used in this paragraph, “pending” means from the date a request for arbitration is filed until 30 days after receipt of notice of the award of the arbitrators, or receipt of notice that the arbitration is otherwise terminated, whichever occurs first. [Emphasis added.]

If exemptions are specified in a statute, the court may not imply additional exemptions unless there is a clear legislative intent to the contrary. (Lee v. Hanley, supra, citing Sierra Club v. State Board of Forestry (1994) 7 Cal.4th 1215, 1230.) In enacting Section 340.6(a), the language used by the Legislature reflected its express intent to disallow tolling under any circumstances not enumerated in the statute. (Laird v. Blacker (1992) 2 Cal.4th 606, 618.)

The discovery rule, expressly incorporated into the one-year period under the terms of Section 340.6(a), only acts to postpone accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action. (Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1192.) If a plaintiff relies upon the discovery rule, the complaint (petition) must specifically allege facts showing “(1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.” (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 808.) Where the essential facts are undisputed, the issue of whether the discovery rule applies may be determined on summary judgment, demurrer, or motion for judgment on the pleadings. (Id at p. 810.)

(a)        Broad application of Section 340.6 to all actions against attorneys, resolution of which depends upon proof that an attorney violated a professional obligation in the course of providing professional services.

While Section 340.6 clearly applies to malpractice claims, it also governs other claims or causes of action asserted against attorneys, the merits of which necessarily depend on proof that an attorney violated a professional obligation in the course of providing professional services. (Lee v. Hanley (2015) 61 Cal.4th 1225, 1236-1237.) In this context, a “professional obligation” is an obligation that an attorney has by virtue of being an attorney, such as fiduciary obligations, the obligation to perform competently, the obligation to perform the services contemplated in a legal services contract into which an attorney has entered, and the obligations embodied by the Rules of Professional Conduct. (Id. at p. 1237.) By contrast, Section 340.6(a) does not bar a claim for wrongdoing that does not require proof that the attorney has violated a professional obligation (e.g., a garden-variety theft), even if the theft occurs while the attorney and the victim are discussing the victim’s legal affairs. (Ibid.)

Section 340.6(a) does not bar a claim arising from an attorney’s performance of services that are not “professional services,” meaning services performed by an attorney which can be judged against the skill, prudence and diligence commonly possessed by other attorneys. (Ibid, citing Quintilliani v. Mannerino (1998) 62 Cal.App.4th 54, 64.) It does not apply to claims involving an attorney’s provision of services unrelated to the practice of law. (Ibid, citing Quintilliani, supra, which involved an attorney’s provision of concert promotion services.) It does apply, however, to an attorney’s provision of nonlegal professional services governed by the attorney’s professional obligations, such as accounting, bookkeeping, and holding property in trust. (Id, at p. 1238.) Misconduct does not “arise in” the performance of professional services for purposes of section 340.6(a) merely because it occurs during the period of legal representation, or because the representation brought the parties together and thus provided the attorney the opportunity to engage in the misconduct, and does not even necessarily apply whenever a plaintiff’s allegations, if true, would entail a violation of an attorney’s professional obligations, since those obligations are varied and often overlap with obligations that all persons subject to California laws have (e.g., an obligation not to sexually batter others, which is prohibited by both Civil Code section 1708.5(a), and the California Rules of Professional Conduct). (Id.)

For purposes of Section 340.6(a), the question is not simply whether a claim alleges misconduct that entails the violation of a professional obligation, but whether the claim, in order to succeed, necessarily depends on proof that an attorney violated a professional obligation as opposed to some generally applicable nonprofessional obligation. (Lee v. Hanley, supra, 61 Cal.4th at p. 1238.)

For example, if fiduciary obligations arise solely from an attorney-client relationship, the statute of limitations for legal malpractice is applicable to a cause of action for breach of fiduciary duties. (Quintilliani v. Mannerino, supra, 62 Cal.App.4th at p. 67, citing Pompilio v. Kosmo, Cho & Brown (1995) 39 Cal.App.4th 1324 [since the breach of fiduciary duty cause of action concerned attorney’s acts and omissions while representing plaintiff, it sounded in legal malpractice].) Further, where claims for breach of contract, rescission, constructive fraud, elder abuse, and negligent infliction of emotional distress are based upon a claim that an attorney did not provide the full range of professional services for which he was paid, or that the services he performed were not of the quality or skill for which he was paid, such claims are subject to Section 340.6(a). (Austin v. Medicis (2018) 21 Cal.App.5th 577, 587, 589.)

By its own terms, Section 340.6(a) does not govern claims for “actual fraud.” To fall within this exception to Section 340.6(a), however, the pleading must do more than simply allege that the attorney’s conduct was fraudulent, malicious, and oppressive, and must allege facts establishing that the conduct at issue in fact constituted fraud. (Radovich v. Locke-Paddon (1995) 35 Cal.App.4th 946, 979.) Courts have generally applied the three-year limitation period of Code of Civil Procedure section 338(d) to actions for fraud against attorneys. (Prakashpalan v. Engstrom, Lipscomb & Lack (2014) 223 Cal.App.4th 1105, 1123.) Section 338(d) also codifies the delayed discovery rule, providing that a cause of action for fraud is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud. The Quintilliani court limited the application of the “actual fraud” exception to causes of action for intentional fraud, specifically finding it not applicable to constructive fraud resulting from negligent misrepresentation. (Quintilliani v. Mannerino, supra, 62 Cal.App.4th at pp. 69-70.)

                                    (b)       Tolling and estoppel

(i)         Actual injury

Section 340.6(a) is tolled, notwithstanding knowledge of wrongdoing, until there is resulting actual injury. (Code Civ. Proc., § 340.6, subd. (a)(1).) Actual injury can occur when the client incurs out-of-pocket damages as a result of the attorney’s negligence (see Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 18 Cal.4th 739, 752-754 (Jordache)), and can occur when the plaintiff sustains the loss, diminution or substantial impairment of a right or remedy.  (Adams v. Paul (1995) 11 Cal.4th 583, 589-591 and fn. 5.) What matters is discovery of the fact of damage, not its amount. (Jordache, supra, 18 Cal.4th at pp. 742-743.) Injury or damage ends the tolling under Section 340.6(a)(1) even where it is not recognized by the plaintiff. (Croucier v. Chavos (2012) 207 Cal.App.4th 1138, 1148.) Any appreciable and actual harm flowing from the attorney’s negligent conduct establishes a cause of action, even before all or even most of the damages occasioned thereby have been sustained. (Budd v. Nixen (1971) 6 Cal.3d 195, 201; Jordache, supra, 18 Cal.4th at p. 750.) Once actual harm is sustained, neither difficulty in proving damages nor uncertainty as to their amount tolls the Section 340.6 statute of limitations. (Id. at p. 752.) When an attorney’s malpractice results in an adverse judgment against the client, the client’s appeal of the judgment does not toll the statute of limitations. (Laird v. Blacker (1992) 2 Cal.4th 606, 614-615.)

(ii)        Legal or physical disability restricting plaintiffs’ ability to commence legal action

Section 340.6(a)(4) does not contain any terms defining or explaining precisely what sort of “legal or physical disability that restricts the plaintiff’s ability to commence legal action.” However, courts have construed the reference to legal disability in Section 340.6(a)(4) as having imported the generally-applicable tolling rules in Section 352, at least with respect to its former provisions related to imprisonment, which are now set forth in Section 352.1. (See Austin v. Medicis (2018) 21 Cal.App.5th 577, 589.) Further, in opposition to the demurrer, Nicole suggests that Section 352 “essentially codifies the delayed discovery rule as applicable to persons with diminished capacity.”

Section 352(a) provides, in relevant part: “If a person entitled to bring an action . . . is, at the time the cause of action accrued either under the age of majority or lacking the legal capacity to make decisions, the time of the disability is not part of the time limited for the commencement of the action.”

Former versions of Section 352 referred to a plaintiff’s insanity, rather than a lack of legal capacity. For tolling purposes, case law determined “insanity” to mean “a condition of mental derangement which renders the sufferer incapable of caring for his property or transacting business, or understanding the nature or effects of his acts.” (Hsu v. Mt. Zion Hospital (1968) 259 Cal.App.2d 562, 571, citing Pearl v. Pearl (1918) 177 Cal. 303, 307.) .) Such tolling would continue until the plaintiff was restored to sanity. (Feeley v. Southern Pac. Transp. Co. (1991) 234 Cal.App.3d 949, 953.) No equivalent of actual psychiatric illness must be present. (Feeley v. Southern Pacific Transportation Co. (1991) 234 Cal.App.3d 949, 952 [finding a comatose condition to be sufficient mental condition rendering plaintiff incapable, so as to trigger application of the tolling provision].)

By its terms, the Section 340.6(a)(4) tolling provision during such time as the plaintiff “is under a legal or physical disability that restricts the plaintiff’s ability to commence legal action” (emphasis added) appears to be broader than the Section 352(a) tolling during such period as a plaintiff is “lacking the legal capacity to make decisions.” However, the standards for determining the scope of its application—whether for purposes of determining whether application of the tolling provision has been adequately alleged and must be determined by the jury at trial, or for use by the jury in determining the existence of tolling at trial—have not been suggested by the parties, and have not at this time been determined by the Court.

                        (iii)       Fraudulent concealment / equitable estoppel.

The doctrine of fraudulent concealment tolls the statute of limitations where a defendant, through deceptive conduct, has caused a claim to grow stale. (Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1192, citing Regents of University of California v. Superior Court (1999) 20 Cal.4th 509, 533.)

Equitable estoppel is invoked where plaintiff was aware of his or her claim during the statutory period, but was lulled into inaction by the defendant’s misrepresentations. In such cases, a defendant will be estopped from pleading a statute of limitations defense. (See Sagehorn v. Engle (2006) 141 Cal.App.4th 452, 460.)

Estoppel to plead the statute of limitations defense must be distinguished from equitable tolling of a limitations statute. Under equitable tolling, courts will generally relieve a plaintiff from a statute of limitations bar when, possessing several legal remedies, the plaintiff, reasonably and in good faith, pursues one designed to lessen the extent of his injuries or damage. (Addison v. State of California (1978) 21 Cal.3d 313, 317-318.)

Because of the policies underlying equitable tolling and equitable estoppel, and because the tolling provisions of Section 340.6 have been held to be exclusive, equitable tolling is inapplicable to actions against attorneys which are subject to the limitations period of Section 340.6, while equitable estoppel may permissibly be applied. As discussed in Leasequip, Inc. v. Dapeer (2002) 103 Cal.App.4th 394, tolling is concerned with the point at which the limitations period begins to run and with the circumstances in which the running of the limitations period may be suspended. Equitable estoppel is not concerned with the running or suspension of the statute of limitations, and comes into play only after the limitations period has run and addresses itself to the circumstances in which a party will be estopped from asserting the statute of limitations as a defense to an admittedly untimely action because his conduct has induced another into forbearing suit within the applicable limitations period. Its application is wholly independent of the limitations period, and takes life from the equitable principle that no man will be permitted to profit from his own wrongdoing in a court of justice. As a result, equitable estoppel can apply to Section 340.6(a), even though its statutory tolling provisions have been held to be exclusive. (Leasequip, Inc. v. Dapeer (2002) 103 Cal.App.4th 394, 406-407, citing Battuello v. Battuello (1998) 64 Cal.App.4th 842, 847-848.) 

            B.        Analysis.

The Court will overrule the demurrer made on statute of limitations grounds, based upon its failure to meet its burden that the claims made by Nicole which are based upon defendants’ provision of legal services to the Jordans are barred on their face.

In sustaining the statute of limitations demurrer interposed by these defendants to Nicole’s original complaint, this Court found that the petition she filed in the Probate Court, of which defendants had requested judicial notice, made clear that she had full knowledge of her claims against both RSC and attorney Sheffield more than a year prior to her filing of the action. It then engaged in an extensive analysis of the allegations of each of the causes of action alleged against them, to determine whether they were based upon the breach of a professional obligation of an attorney, such that the limitations provisions set forth in Section 340.6(a) would bar the claims. In those demurrers, Price/Sheffield had not differentiated between the claims made against Sheffield based upon his actions as estate planning attorney for the Jordans, and his actions as trustee of the Jordans’ trust. Consequently, the court overruled the Price Sheffield demurrer for breach of fiduciary duty, given that a trustee also owes a fiduciary duty, and liability for breach of a trustee’s fiduciary duty does not of necessity arise from the breach of a professional obligation of an attorney, simply because an attorney was acting as the trustee. However, the Court found that all causes of action other than those for actual, intentional fraud arising from the provision of professional legal services were barred pursuant to the terms of Section 340.6(a), based upon the allegations made in the complaint. Further, the Court separately evaluated the causes of action based upon intentional fraud to determine whether they were well pleaded, such that the three-year statute of limitations for fraud set forth in Code of Civil Procedure section 338(d) would instead apply. Finding that the causes of action were not well pleaded, the Court also found that they were barred.

In sustaining the statute of limitations demurrer, the court allowed Nicole leave to amend, in order to provide her the opportunity to attempt to plead around the statute of limitations bar. In preparing her FAC, Nicole added allegations which invoked claims that she had not suffered damages until the Court of Appeal affirmed the Probate Court’s sustaining of the demurrer to her petition without leave to amend (§ 340.6(a)(1)), that she was under a legal or physical disability which restricted her ability to commence legal action (§ 340.6(a)(4)), and realleged that the doctrines of late discovery and equitable estoppel precluded application of the statute of limitations bar.

In addressing the current demurrer, and its contention that Nicole did not suffer injury from the attorney defendants’ conduct until the Court of Appeal affirmed the Probate Court’s decision sustaining the demurrer to her Probate Court Petition without leave to amend, the Court necessarily finds that the Court of Appeal decision has no relevance to the time at which Nicole suffered injury from the attorney defendants’ alleged conduct. Rather, it appears to this Court that Nicole legally suffered the loss, diminution, or substantial impairment of any rights she had under the Sixth Amendment, upon the expiration of the 120-day limitations period set forth in Probate Code section 16061.8. Prior to that date, Nicole could have timely attempted to challenge the Third Amendment to and Complete Restatement of Declaration of Trust, and the Fourth and Fifth Amendments thereto, which the Probate Court found constituted the current and controlling iteration of the trust, and presented the Sixth Amendment to the Probate Court. As the Probate Court found, that period expired on May 7, 2021. Given the fact that the Probate Court had, by that date, already found that the Sixth Amendment was not the controlling iteration of the trust, it was on that date that Nicole suffered the loss, diminution, or substantial impairment of any rights she had under the Sixth Amendment, which would constitute injury or damage for purposes of Section 340.6(a)(1). (See Adams v. Paul (1995) 11 Cal.4th 583, 589-591.)

As far as Nicole’s discovery of the alleged wrongdoing of the attorney defendants, Nicole’s FAC sets forth the body of what she alleges was her fax sent to Sheffield on December 1, 2021—almost 7 months after Nicole lost all rights under the purported Sixth Amendment—in which she claimed that Angela and Jennifer had approached Sheffield to aid in controlling the Jordans, that the Jordans had asked Sheffield to assist them in stopping the harassment by Angela and Jennifer and to remove them from the trust, that he refused to do so and “fired” them as clients, her contention that this also constituted his removal as their trustee, her belief that Sheffield betrayed her parents and was doing the bidding of Angela and Jennifer, and her statement that she was hiring her own attorney to stop the harassment. (FAC @ ¶ 39) This allegation alone shows knowledge of the basic set of facts underlying the current action, as of December 1, 2021.

Further, the Court notes that Nicole’s Probate Court petition was filed several months later on March 15, 2022. In that Petition, Nicole provided extensive detail with respect to the involvement of RSC and Sheffield in providing estate planning services for her parents, Borimir and Virginia. The allegations covered the Jordans’ request that Sheffield draft a Sixth Amendment to their trust, containing the provisions that were ultimately included in the Sixth Amendment which Nicole attempted to present to the Probate Court at that time, including the attorneys’ allegedly improper discussions with Jennifer and Angela and their alleged lies to and manipulation of Sheffield and others; Sheffield’s alleged breaches of fiduciary duties owed to the Jordans when he refused to prepare the requested Sixth Amendment and instead withdrew as their estate planning attorney; extensive discussions of the communications between the Jordans and Sheffield during the relevant period; allegations that the Sixth Amendment was “signed” by Virginia and Borimir without assistance of counsel; articulates Sheffield’s’ alleged actions as successor trustee of the trust; and Nicole’s claim that the statute of limitations to challenge the validity of the Fourth and Fifth Trust Amendments and to admit the Sixth Trust Amendment into probate was tolled in part because of her late discovery of Sheffield’s breach of fiduciary duty, violation of attorney-client privilege, conspiracy with Angela and Jennifer and others to stop the Jordans from revoking or amending the Fifth Amendment, and his allegedly invalid nomination of Mark Watson as successor trustee.

Again, this same set of facts underlies the claims made against the attorney defendants in the current action. As a result, the date of filing of Nicole’s Probate Petition is the very latest date upon which any reasonable argument could be based that Nicole had discovered the facts constituting the attorney defendants’ allegedly wrongful acts or omissions, thereby triggering the one-year limitations period set forth in Section 340.6(a). This action was filed on June 22, 2023, well more than a year after Nicole’s Probate Petition—reflecting such discovery—was filed on March 15, 2022, and more than a year-and-a-half after Nicole sent the December 1, 2021 fax to Sheffield accusing him of malfeasance in his representation of her parents. Consequently, unless Nicole can bring the action within one of the tolling provisions of Section 340.6(a), her action is barred by its one-year limitations period.

[Note: The Court notes that the FAC added causes of action for intentional interference with expected inheritance, and conspiracy to interfere with inheritance, both of which are alleged against RSC and Price/Sheffield. Since they are based upon the same general set of facts as the other causes of action against these defendants, and proof of the cause of action against the attorney defendants would be dependent upon proof that Sheffield violated a professional obligation, the claims are subject to the limitation set forth in Section 340.6, and the identical analysis applies to these causes of action, in arriving at the dates upon which Nicole suffered harm, and discovered the alleged wrongful acts of the attorney defendants.]

Nicole would have the Court believe that the statute did not begin to run until she had pursued both her untimely Probate Petition and her appeal of the Probate Court’s ruling against her. However, the pursuit of one remedy in an attempt to lessen the extent of one’s injuries or damages does not toll the Section 340.6(a) limitations period, since its tolling provisions are exclusive (Laird v. Blacker (1992) 2 Cal.4th 606, 618), and equitable tolling (which is, by definition, the pursuit of one remedy in an attempt to lessen the extent of one’s injuries or damages) is therefore inapplicable to Section 340.6(a). (Leasequip, Inc. v. Dapeer (2002) 103 Cal.App.4th 394, 406-407, citing Battuello v. Battuello (1998) 64 Cal.App.4th 842, 847-848.)

There are no allegations in the FAC that would support the conclusion that Nicole was aware of her claim during the statutory period, but was lulled into inaction by any alleged misrepresentations made by RSC or Sheffield, which could act to preclude application of the statute of limitations bar at the pleading stage through the application of the doctrine of equitable estoppel. Indeed, the arguments set forth in her petition and opposition to the demurrer in the Probate Court made clear that she was well aware of the involvement of RSC and Sheffield in the circumstances that resulted in her filing that petition. Consequently, while equitable estoppel can be applied to actions governed by Section 340.6(a), it is inapplicable under the allegations of the FAC.

This brings the Court to the issue of whether or not the limitations period of Section 340.6(a) is tolled because Nicole was, for some period of time, under a legal or physical disability that restricted her ability to commence legal action. Nicole’s FAC added allegations to supplement those contained in her original complaint, in expressly contending that she was under a legal or physical disability that restricted her ability to commence legal action. (See, e.g., ¶¶ 229, 333-335.)

The demurrer filed by RSC and Price/Sheffield ignored Nicole’s allegations, and failed to address the possible application of Section 340.6(a)(4) to the claims she alleged against them based upon their provision of legal services to the Jordans. In failing to address the issue, the demurrer fails to meet its burden of showing that Nicole’s claims based upon their provision of legal services are barred on the face of the complaint. Defendants’ attempt to ever-so-briefly contest the issue through a few sentences contained in their reply papers (Reply at p. 3, lines 4-11), which fails to discuss or address any standards to be used to assess application of subdivision Section 340.6(a)(4), does not and cannot legally cure this defect. The Court cannot and will not sustain a demurrer on a basis not reflected in or fully supported by its moving papers; to do so would be a violation of Due Process. Consequently, the Court will overrule demurrer made on statute of limitations grounds.

As a result, the Court must now address the multitude of other claims raised by the RSC and Price/Sheffield demurrer.

2.         Demurrer based upon Nicole’s lack of standing to assert representative claims.

Nicole’s FAC alleges that it is being brought by Nicole (a) individually, (b) as successor trustee and beneficiary of The Borimir and Virginia Jordan Family Trust, and (c) as beneficiary of and successor-in-interest to the Estate of Virginia Jordan, deceased. The attorney defendants have demurred to the FAC, contending that Nicole lacks standing to assert her representative claims, i.e., the claims she is asserting on behalf of the Trust, and as successor-in-interest to her deceased mother, Virginia, which appear to be the bulk of her claims.

            A.        Principles of Standing

Except as otherwise provided by statute, every action must be prosecuted in the name of the real party in interest. (Code Civ. Proc., § 367.) Generally, the real party in interest is the person who has the right to sue under substantive law; the person who owns or holds title to the claim or property involved, as opposed to others who may be interested or benefitted by the litigation. (Gantman v. United Pac. Inc. Co. (232 Cal.App.3d 1560, 1566.)

If a plaintiff’s lack of standing to sue appears on the face of the complaint or from matters judicially noticeable, a general demurrer lies for failure to state a cause of action in this plaintiff, even though a cause of action may be stated in favor of someone else. (County of Fresno v. Shelton (1998) 66 Cal.App.4th 996, 1009.)

                        1.         Standing under a trust.

An estate or trust is not a legal entity, and has neither capacity nor standing to sue. Title to estate or trust assets is held by an executor, administrator or trustee, on behalf of the beneficiaries. As to claims held by an estate or trust, the executor, administrator, or trustee is the real party in interest. (Code Civ. Proc., § 369, subd. (a); O’Flaherty v. Belgum (2004) 115 Cal.App.4th 1044, 1062.)

The beneficiary of a trust generally is not the real party in interest on claims belonging to the trust, and may not sue in the name of the trust. (Saks v. Damon Raike & Co.(1992) 7 Cal.App.4th 419, 427.) If the actual trustee has breached his or her duties to the trust, an action may be maintained by a beneficiary against the trustee and/or any party who participated in or benefitted from the trustee’s breach of trust. (See, e.g., Estate of Bowles (2008) 169 Cal.App.4th 684, 694.) Further, a beneficiary has standing to sue for the trustee’s breach of fiduciary duty to the settlor of a revocable trust, once the settlor’s death has rendered it irrevocable, to the extent that such violation harmed the beneficiaries’ interests. (See Estate of Giraldin (2012) 55 Cal.4th 1058, 1062, 1071.)

                        2.         Standing as successor in interest to a decedent.

Claims belonging to a decedent at the time of death may be maintained by the decedent’s personal representative. If there is no personal representative, the claim may be maintained and an action commenced by the decedent’s successor in interest. (Code Civ. Proc., §§ 377.30, 377.34.) The “decedent’s successor in interest” is defined to mean the beneficiary of the decedent’s estate or other successor in interest who succeeds to a cause of action or to a particular item of the property that is the subject of a cause of action. (Code Civ. Proc., § 377.11.)

Under Code of Civil Procedure section 377.32(a), a person seeking to commence an action as the decedent’s successor in interest “shall execute and file an affidavit or a declaration under of penalty of perjury under the laws of this state” stating all of the following:

(1) The decedent's name.

(2) The date and place of the decedent's death.

(3) “No proceeding is now pending in California for administration of the decedent's estate.”

(4) If the decedent's estate was administered, a copy of the final order showing the distribution of the decedent's cause of action to the successor in interest.

(5) Either of the following, as appropriate, with facts in support thereof:

(A) “The affiant or declarant is the decedent's successor in interest (as defined in Section 377.11 of the California Code of Civil Procedure) and succeeds to the decedent's interest in the action or proceeding.”

(B) “The affiant or declarant is authorized to act on behalf of the decedent's successor in interest (as defined in Section 377.11 of the California Code of Civil Procedure) with respect to the decedent's interest in the action or proceeding.”

(6) “No other person has a superior right to commence the action or proceeding or to be substituted for the decedent in the pending action or proceeding.”

(7) “The affiant or declarant affirms or declares under penalty of perjury under the laws of the State of California that the foregoing is true and correct.”

Further, under Section 377.32(c), a certified copy of the decedent’s death certification must be attached.

Under Parsons v. Tickner (1995) 31 Cal.App.4th 1513, 1523-1524, while the affidavit or declaration need not be filed as a condition precedent to commencing or continuing an action belonging to the decedent, the failure to file the affidavit or declaration could subject the action to a plea in abatement.

            B.        Application

Nicole purports to sue as beneficiary and successor trustee of her parents’ trust. Of course, given the orders which have been made in the Probate Court, she is not the successor trustee of her parents’ trust. She was named as successor trustee in the Sixth Amendment to the Trust, but lost all rights under the Sixth Amendment when she failed to timely present it to the Probate Court, resulting in the Third Amendment and Restatement of the Trust, the Fourth Amendment to the Trust, and the Fifth Amendment to the Trust, being found by the Probate Court to constitute the operative trust. Nicole is not the successor trustee under the operative trust. Therefore, she has no legal right to sue on behalf of the trust, as its trustee.

Neither does the FAC name the operative trust’s successor trustee (Mark Watson) as a party defendant, or contend that the successor trustee has breached any duties he owed to the trust. (The Court will separately address Nicole’s claims that Sheffield, as successor trustee, breached fiduciary duties owed to her as a beneficiary of the trust (See Section 6 below); those claims would be personal to Nicole, and not representative claims on behalf of the trust.)

Further, while Nicole has purported to sue as the successor in interest to the Estate of Virginia Jordan, deceased, she has not complied with the requirements of Section 377.32, rendering the FAC subject to demurrer based upon Nicole’s lack of standing to assert any claims as Virginia’s successor in interest. Additionally, there exists considerable question whether she could sufficiently comply with its requirements so as to be permitted to pursue Virginia’s alleged claims in this action, particularly with respect to the requirement that the plaintiff declare, under penalty of perjury, that no other person has a superior right to commence the action or proceeding. (Code Civ. Proc., § 377.32, subd. (a)(6).) Certainly, Section 377.32 permits more than one person to commence suit on a decedent’s cause of action, as successors in interest to the decedent, but under the allegations of the current FAC, it appears virtually certain that Virginia’s other heirs would not join Nicole in pursuing the claims she contends she is pursuing on behalf of her mother.

In her opposition papers, Nicole appears to contend that a party can have standing in an action against an attorney, even where no attorney-client relationship exists, if the individual had a legally recognizable expectation of confidentiality. In support of that contention, she cites DCH Health Services Corp. v. Waite (2002) 95 Cal.App.4th 829, 832; Lynn v. George (2017) 15 Cal.App.5th 630, 636-637; and Great Lakes Construction, Inc. v. Bowman (2010) 186 Cal.App.4th 1437 (no pinpoint citation given). Nicole’s cited cases are inapplicable to the claims set forth in her complaint.

All three cases related to disqualification of an attorney in pending litigation, and the circumstances under which an attorney may owe a recognized duty of non-confidentiality to a non-client sufficient to provide the non-client with standing to seek to disqualify the attorney. These are far different circumstances from the current case, wherein non-client Nicole is seeking to stand in the shoes of her parents in imposing liability upon the attorney defendants based upon their provision of legal services to her parents.

The DCH Health Services case expressly recognized that lawyers owe no general duty of confidentiality to non-clients, and involved a contention that the wife of the attorney which the party sought to disqualify (who was also an attorney) owed a duty of confidentiality to a corporation for which she and the party moving for disqualification had both once acted as corporate directors. The Lynn case involved claims that preliminary communications with the attorney by a prospective client gave rise to a duty of confidentiality which provided standing to seek the attorney’s disqualification. The Great Lakes case involved contractors with no prior relationship to the attorneys seeking to disqualify them based upon a claimed conflict of interest in the attorneys’ joint representation of other parties to the action.  

All three cases reversed trial court disqualifications of attorneys, with DCH and Great Lakes finding no standing to seek such disqualification, and Lynn finding insufficient evidence to support the existence of a confidential, non-client relationship. The cases are patently inapplicable, and have no bearing on the question of Nicole’s standing to pursue claims against the attorney defendants based upon their provision of professional estate planning services to her parents.

For all of the foregoing reasons, the Court will sustain the demurrer to the FAC, to the extent it challenges Nicole’s standing to pursue any claims belonging either to the trust or to Virginia’s estate.

3.         Demurrer based upon defendants’ contentions that they owed no duty to Nicole.

Defendants have demurred to Nicole’s claims, to the extent they are brought on her own behalf as an individual, on the basis that she was not their client, and that (a) no fiduciary duty was therefore owed to her, and (b) the FAC contains insufficient facts to allege the violation of the limited duty they owed to her as a beneficiary of her parents’ estate plan.

            A.        An attorney’s duty to non-clients

                        1.         Fiduciary duty

 A fiduciary or confidential relationship can arise when confidence is reposed by persons in the integrity of others, and if the latter voluntarily accepts or assumes to accept the confidence, he or she may not act so as to take advantage of the other’s interest without that person’s knowledge or consent. (Tri-Growth Centre City, Ltd. v. Silldorf, Burdman, Duignan & Eisenberg (1989) 216 Cal.App.3d 1139.) The relationship between attorney and client is a fiduciary relation of the highest character, and binds the attorney to most conscientious fidelity. (Cox v. Delmas (19893) 99 Cal. 104, 123.) The basic fiduciary obligations are two-fold: undivided loyalty and confidentiality. (Pierce v. Lyman (1991) 1 Cal.App.4th 1093, 1101 (Pierce).)

The predicate of an attorney’s fiduciary obligations is the existence of an attorney-client relationship. (Ibid.) The developing concept of expanded privity, resulting in an attorney’s liability for negligence to one other than his client, has not included an attorney’s fiduciary obligations. Although the concept of expanded privity may result in an ordinary duty of care in favor of a third person, there is no implied attorney-client relationship or imposed fiduciary obligations. (Ibid.) Consequently, where no attorney-client relationship exists between the and the trust beneficiaries, no fiduciary obligations exist between them. (Ibid; see also, Furia v. Helm (2003) 111 Cal.App.4th 945, 953.)

The Pierce court did find, however, that where the trustees’ attorneys assisted the trustees in breaching the trustees’ fiduciary duties owed to the beneficiaries of the trust, through their dissipation of the assets of a testamentary trust through improper and imprudent investments made by the trustees, the beneficiaries could maintain an action not only against the trustees, but also against the attorneys who participated in the trustees’ breaches of the trust for colluding or conspiring with the fiduciary to breach the fiduciary’s duty. (Pierce, supra, 1 Cal.App.4th at pp. 1102-1106.)

Further, attorneys retained by their primary clients to represent third parties also owe a fiduciary duty to the third party they are hired to protect. (See Schick v. Lerner (1987) 193 Cal.App.3d 1321, 1330.)

As a result of these authorities, an attorney does not owe fiduciary duties to non-clients. However, an attorney may owe a fiduciary duty to a third party he or she was hired by a primary client to represent and protect. Further, an attorney for a fiduciary such as a trustee, may be held liable for the attorney’s active participation in that fiduciary’s breaches of the fiduciary duties he or she owes to others.

                        2.         Ordinary duty of care.

An attorney will normally be held liable for malpractice only to the client with whom the attorney stands in privity of contract, and not to third parties. (Borissoff v. Taylor & Faust (2004) 33 Cal.4th 523, 529, citing Goodman v. Kennedy (1976) 18 Cal.3d 335, 342-344.) However, the strict privity test for professional liability was rejected in Biakanja v. Irving (1958) 49 Cal.2d 647, 650, wherein the California Supreme Court found that a notary who had negligently allowed a will to be improperly attested owed a duty of reasonable care to the person to whom the will left the decedent’s entire estate, when the lack of proper attestation resulted in that person only obtaining a one-eighth intestate share of the estate, rather than the entire estate. The court found that the determination whether in a specific case the defendant will be held liable to a third person not in privity is a matter of policy, and involves the balancing of various factors, including the extent to which the transaction was intended to affect the plaintiff, the foreseeability of harm to the plaintiff, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant’s conduct and the injury suffered, the moral blame attached to the defendant’s conduct, and the policy of preventing future harm.

In Lucas v. Hamm (1961) 56 Cal.2d 583, 589, the California Supreme Court found that, in applying the Biakanja factors to determine whether an estate planning attorney may be liable to non-client intended beneficiaries of a deceased testator for losses resulting from the attorney’s negligence in drafting a will, it was also necessary to consider whether the recognition of such liability would impose an undue burden on the legal profession. It held that the extension of liability under such circumstances did not unduly burden the legal profession, and that application of the Biakanja factors supported recognition of a beneficiary’s cause of action for professional negligence against the attorney under those circumstances. The Court noted that one of the main purposes which the transaction between the attorney and the testator intended to accomplish was to provide for the transfer of the property to the plaintiffs; the damage to plaintiffs in the event of invalidity of the bequest was clearly foreseeable; that damage became certain upon the death of the testator without change of that will; that plaintiffs would have received the intended benefits but for the asserted negligence of defendant; and if persons such as plaintiffs were not permitted to recover for the loss resulting from negligence of the draftsman, no one would be able to do so and the policy of preventing future harm would be impaired. (Ibid.)

The principle was reaffirmed by the California Supreme Court in Heyer v. Flaig (1969) 70 Cal.2d 223 (disapproved on other grounds in Laird v. Blacker (1992) 2 Cal.4th 606, 617), in which the court explained that the basis for tort liability to an intended beneficiary in the absence of privity with the defendant attorney was a breach of a duty owed by the attorney directly to the beneficiary. It stated: “When an attorney undertakes to fulfill the testamentary instructions of his client, he realistically and in fact assumes a relationship not only with the client but also with the client's intended beneficiaries. The attorney's actions and omissions will affect the success of the client's testamentary scheme; and thus the possibility of thwarting the testator's wishes immediately becomes foreseeable. Equally foreseeable is the possibility of injury to an intended beneficiary. In some ways, the beneficiary's interests loom greater than those of the client. After the latter's death, a failure in his testamentary scheme works no practical effect except to deprive his intended beneficiaries of the intended bequests ... only the beneficiaries suffer the real loss.” (Heyer, at p. 228.)

These principles were applied to permit suit by a trust beneficiary in Bucquet v. Livingston (1976) 57 Cal.App.3d 914, when the trust was negligently drafted in such a manner that it failed to obtain the benefits to the intended beneficiaries (the avoidance of federal estate and state inheritance taxes) sought by the settlor in having it originally drafted by the attorney.

In Radovich v. Locke-Paddon (1995) 35 Cal.App.4th 946, the court found that the defendant attorney, in preparing a new will for a client who died two months later without executing the will, did not owe a duty of care to the plaintiff (the client’s husband) as a potential beneficiary named in the unsigned will. Noting that the will would have been effective, and faults in draftsmanship did not lead to decedent’s failure to sign, the court reasoned that the imposition of liability in such a case could improperly compromise the attorney’s primary duty of undivided loyalty to his or her client. Rather, the court found there were both practical and policy reasons for requiring more evidence of commitment than is furnished by a mere direction to prepare a will containing specified provisions. From a practical standpoint, testators frequently change their minds more than once after meeting with the attorney. From a policy standpoint, there is a potential for misunderstanding, and proof is difficult, given that the only person who can say what was intended has died.

The case of Chang v. Lederman (2009) 172 Cal.App.4th 67, is functionally similar to the current case. In that case, an attorney had prepared a revocable trust and a first amendment to the trust of his terminally ill client, in which the client’s companion was made the beneficiary of specific property and a designated sum of money, and the client’s only child was the beneficiary of the residue of the trust estate. After the execution of both the trust and the first amendment to the trust, the client married his companion. Months later, the client asked his estate planning attorney to revise his trust to leave the entire trust estate to his new wife. The attorney refused, and advised the client to obtain a psychiatric evaluation before making any changes to his estate plan. The client died without making any further amendments to his trust. In the subsequent action brought by the new wife against the trustee in probate court alleging causes of action including breach of fiduciary duty and professional negligence, the trial court ultimately sustained the trustee’s demurrer, without leave to amend, finding that the estate planning attorney did not owe a duty to a potential beneficiary with respect to the trustor’s alleged plan to revise the trust documents to increase the gift the beneficiary, and that the absence of duty defeated both the legal malpractice and breach of fiduciary duty claims.

The Court of Appeal affirmed that decision. After tracing the development of the law with respect to estate planning attorneys’ liability to intended beneficiaries, the Chang court found that, while several of the Biakanja factors would point toward extending the attorney’s duty of care to the new wife, consideration of the question of whether extension of liability would impose an undue burden on the profession mandate rejection of the argument that estate planners owe a duty of care to unnamed potential beneficiaries. (Chang, supra, 172 Cal.App.4th at pp. 76-84.) It noted that the California Supreme Court in Lucas, supra had not recognized a general duty of care enforceable either by all potential third-party beneficiaries or by intended beneficiaries once expressly named in an estate planning document, but rather recognized only a limited duty by the intended beneficiary to exercise ordinary care and skill to properly effectuate a bequest expressly set forth in the testamentary document. (Ibid.) It quoted the decision in Heyer v. Flaig as explaining that although the duty accrues directly in favor of the intended testamentary beneficiary, the scope of the duty is determined by reference to the attorney-client context, and the duty is simply to act with due care as to the interests of the intended beneficiary as reflected in a failed or challenged will or trust.

The Chang court ultimately held that a testator’s or settlor’s attorney owes no duty to an expressly named beneficiary based upon an allegation that the testator or settlor intended to revise his or her estate plan to increase the bequest to the beneficiary, and would have done so but for the attorney’s negligence, finding that the recognition of any such duty would expose attorneys to impossible duties and limitless liability because the interests of potential beneficiaries are always in conflict. Because the new wife’s allegation that she was the intended beneficiary of the entirety of the settlor’s estate was not based on an express bequest in an executed will or trust, the court concluded that the attorney owed her no duty of care, and her claims for both legal malpractice and breach of fiduciary duty failed as a matter of law. (Chang, supra, 172 Cal.App.4th at p. 86.)

            B.        Application

There are no facts alleged in the FAC that would support the conclusion that Nicole was ever the client of the attorney defendants, or that the attorney defendants were ever hired by Borimir and Virginia to directly represent Nicole. In fact the FAC repeatedly acknowledged that the attorney defendants were in fact the long-time estate planning attorneys for Borimir and Virginia. There are also no facts alleged that would support a conclusion that the attorney defendants aided or abetted some other fiduciary in breaching fiduciary duties owed by that fiduciary to Nicole. Consequently, under the facts alleged in the FAC, the attorney defendants owed no fiduciary duty to Nicole, and have no liability to her for breach of fiduciary duty.

With respect to a general duty of care, the facts as currently alleged in the FAC are insufficient to support the conclusion that the attorney defendants breached any duty of care that they might have owed to Nicole, as a beneficiary of Borimir and Virginia’s estate plan. The attorney defendants are not alleged to have defectively drafted any version of the Jordans’ trust in a manner that thwarted the Jordans’ intent within that trust document. Rather, the FAC contends that in 2018, at such time as the Third Amendment and Restatement, Fourth Amendment, and Fifth Amendment had all been executed and were in place (which had the effect of providing small monetary amounts to three nieces of the Jordans, and dividing the residue of the trust estate equally among Angela, Jennifer, and Nicole, and designating Sheffield and Justin M. Pearlman as successor co-trustees, to serve upon the deaths of both of the Jordans as settlors), the Jordans changed their minds again and asked Sheffield to prepare yet another amendment which instead effectively disinherited Angela and Jennifer, left the entire trust estate to Nicole, and made Nicole the sole successor trustee. The FAC alleges that Sheffield refused to do so, resigned as the Jordans’ estate planning attorney, and returned the original trust documents to them. In doing so, the FAC contends that Sheffield gave the Jordans “the impression” that he had also resigned as successor trustee. It alleges that the Jordans on July 15, 2019, then executed a Sixth Amendment leaving the entire trust estate to Nicole and making her sole successor trustee, without attorney representation.

The FAC alleges that after Virginia’s death (at a time when Borimir had already died), Sheffield provided Virginia’s Conservator, Mark Watson, with the Third, Fourth, and Fifth Amendments to the Jordans’ trust, and advised Mr. Watson that as Conservator he was entitled to be appointed successor trustee. Shortly thereafter, Sheffield indicated that he was declining to act as successor trustee, Mr. Pearlman also resigned as successor trustee, and Sheffield appointed Watson as successor trustee. On January 7, 2021, Mr. Watson sent Notices by Trustee to the trust beneficiaries, enclosing copies of the Third, Fourth, and Fifth Amendments (as the operative version of the trust), which advised each of the beneficiaries that they could not bring an action to contest this trust more than 120 days from the date of the notification by the trustee, or 60 days from the date on which a copy of the terms of the trust was mailed or personally delivered to them during that 120-day period, whichever was later. On January 27, 2021, Mr. Watson then petitioned the Probate Court to have himself confirmed as trustee, and the Third, Fourth, and Fifth Amendments confirmed as the operative trust.

While Nicole corresponded with Mr. Watson to advise him that there was another version of the trust, she refused to provide him with a copy of it, despite multiple requests that she do so. Mr. Watson’s petition to the Probate Court fully advised the court of those facts. As a result, the Probate Court confirmed the Third, Fourth, and Fifth Amendments as the operative trust. Nicole did not seek to invalidate those documents as the operative trust, and present the alleged Sixth Amendment to the Probate Court, until March 15, 2022, long after the expiration of the 120-day period within which she was required to do so. Consequently, the Probate Court sustained Angela’s demurrer to Nicole’s petition without leave to amend, and that decision was affirmed by the Court of Appeal.

There is no contention made in this action that the attorney defendants had any involvement in preparation of the Sixth Amendment. There is no contention made in this action that the attorney defendants had any involvement in Nicole’s failure to timely present the Sixth Amendment to the Probate Court, such that the Probate Court could potentially have determined it to be the effective version of the Jordans’ trust—indeed, the allegations of the FAC make clear that Sheffield had resigned as the Jordans’ estate planning attorney in 2018, and immediately upon Virginia’s death provided what he believed to be the relevant trust documents to Watson. The contention instead appears to be that Sheffield should not have resigned as the Jordans’ estate planning attorney in 2018, and should instead have drafted the Sixth Amendment in a manner that left the entire trust estate to Nicole and made her sole successor trustee.

Under the authorities discussed above, however, Sheffield had no duty or obligation to do so, regardless of his reasons for declining (i.e., concerns about undue influence exerted over the Jordans, etc.). Indeed, pursuant to the holding in Chang v. Lederman, supra, a settlor’s attorney owes no duty to an expressly named beneficiary based upon an allegation that the settlor intended to revise the estate plan to increase the bequest to the beneficiary, and would have done so but for the attorney’s negligence. Indeed, the Chang court, after analyzing California Supreme Court authority, concluded that recognizing any such duty would expose attorneys to impossible duties and limitless liability because the interests of potential beneficiaries are always in conflict. (Chang, supra, 172 Cal.App.4th at p. 86.)

Here, Sheffield had drafted the earlier and operative trust documents at the Jordans’ behest, each of which provided at least some portion of their trust estate to each of their three children. The recognition of any duty by the attorney defendants, owed to Nicole, to prepare a subsequent trust document which disinherited the Jordans other children and provided the entire trust estate to Nicole, would have conflicted with duties owed to the other prior beneficiaries—the gifts to whom were, in fact, expressly set forth in documents competently drafted by Sheffield. The Chang court noted, as did the California Supreme Court in Heyer v. Flaig, supra, that an estate planning attorney’s duty is simply to act with due care as to the interest of the intended beneficiary, as reflected in a failed or challenged will or trust which the attorney had drafted. Where no such express bequest (here, providing the entire trust estate to Nicole, to the exclusion of her siblings and other beneficiaries) was made in an executed will or trust prepared by the attorney, the attorney owes no duty of care.

The allegations of the FAC therefore do not legally create any fiduciary duty owed by the attorney defendants to Nicole, nor do they create any ordinary duty of care by the attorney defendants to have undertaken to prepare the Sixth Amendment. They certainly also owed no duty to Nicole, years after Sheffield’s resignation as the Jordans’ estate planning attorney, to ensure that she timely presented to the Probate Court the Sixth Amendment they had no involvement in drafting.

Consequently, to the extent the causes of action alleged in the FAC are based upon any of these duties, the demurrer must be sustained.

4.         Demurrer to fraud-based causes of action.

Nicole has allege causes of action for constructive fraud, fraud by concealment, intentional misrepresentation, and negligent misrepresentation. Because constructive fraud is not considered traditional fraud, and applies only in the fiduciary or confidential duty context, it is not particularly comparable to other traditional fraud-based claims. Even so, it is alleged by Nicole in a manner which was similar to her allegation of the cause of action for fraudulent concealment, and is apparently therefore addressed with the fraud-based claims in defendants’ demurrer. As a result, the Court will address it along with the remaining fraud-based claims.

Defendants have demurred to the fraud-based claims, contending that there are no specific allegations to show how anything they did could possibly have caused her to rely to her detriment on anything they said or failed to say. First, in the constructive fraud and concealment causes of action, Nicole alleges that defendants refrained from drafting the Sixth Amendment requested by her parents, because of information the defendants received from Angela, Jennifer, and others, and should have disclosed to the Jordans the reason they were withdrawing rather than drafting the requested Sixth Amendment, so that Nicole and the Jordan parents could have responded and again requested that they draft the Sixth Amendment. Defendants argue that the claims fail, because Nicole was a trust beneficiary and not the attorneys’ client, and they had no duty to disclose anything to her, nor could she have relied on any lack of disclosure to which she was not entitled. They argue further that the Jordan parents did not rely upon any purported non-disclosure, and in fact on their own executed the Sixth Amendment to the trust that they had allegedly requested defendants to draft.

Second, in the intentional and negligent misrepresentation causes of action, they contend that Nicole alleges that the attorney defendants promised the Jordan parents that they would represent their estate planning interests, but then failed to do so. They note that the allegations provide that the statements were made to the parents and not to Nicole, and relied on by the parents and not Nicole. As to Nicole individually, the attorney defendants therefore contend that the claims are missing the previously-articulated elements of reliance and damages (i.e., that nothing they represented caused her to rely to her detriment.)

 

            A.        Pleading fraud.

With respect to each form of fraud, each element of fraud must be alleged factually and specifically, and the policy of liberal construction of pleadings will not be invoked to sustain a pleading that is defective in any material respect. (Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal.App.3d 1324, 1331.) The rule arose because allegations of fraud involve a serious attack on character, and fairness to the defendant demand that he or she should receive the fullest possible details of the charge in order to  prepare his or her defense. (Hill Transportation Co. v. Southwest Forest Industries (1968) 266 Cal.App.2d 702, 707.)

With respect to fraudulent concealment, the fraud consists of the suppression of fact by one who is bound to disclose it, or who gives information of other facts that are likely to mislead for want of communication of that fact. (Civ. Code, § 1710, subd. (3)); People v. Highland Fed. Sav. & Loan (1993) 14 Cal.App.4^th 1692, 1718.) Concealment is actionable generally under four circumstances: (1) when the defendant is in a fiduciary relationship with the plaintiff; (2) when the defendant had exclusive knowledge of material facts not known to the plaintiff; (3) when the defendant actively conceals a material fact from the plaintiff; and (4) when the defendant makes partial representations but also suppresses some material facts. (Bank of America Corp. v. Superior Court (2011) 198 Cal.App.4^th 862, 870-871.) Specific factual pleading of fraudulent concealment would necessarily entail the pleading of all facts necessary to establish one or more of the circumstances giving rise to the duty to disclose.

Intentional misrepresentation involves affirmative making of a false representation with knowledge of its falsity or reckless disregard of the truth, with intent to induce another to rely on the representation, justifiable reliance, and resulting damage. (See Lazar v. Superior Court (1996) 12 Cal.4^th 631, 638.) Specific pleading of intentional misrepresentation requires the pleading of facts to show how, when where, to whom, and by what means the representations were made. (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 74.)

Negligent misrepresentation is a form of deceit which, from a pleading standpoint, differs from intention misrepresentation only in the element of scienter, in requiring only that the pleading set forth facts sufficient to support the conclusion that the false representation was made without reasonable ground for believing it to be true. (See Gagne v. Bertran (1954) 43 Cal.2d 481, 487, 488; see also Civ. Code, §§ 1710, subd. (2), and 1572, subd. (2)) To be actionable, a negligent misrepresentation must ordinarily pertain to past or existing facts. (See Tarmann v. State Farm Mutual Automobile Insurance Company (1991) 2 Cal.App.4th 153, 158.)

Reliance exists when the misrepresentation or nondisclosure was an immediate cause of the plaintiff’s conduct which altered his or her legal relations, and when without such misrepresentation or nondisclosure he or she would not, in all reasonable probability, have entered into the contract or other transaction. (Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1239.) Reliance can be shown in a fraudulent omission case by establishing that had the omitted information been disclosed, the plaintiff would have been aware of it and behaved differently. (Hoffman v. 162 North Wolfe LLC (2014) 228 Cal.App.4th 1178, 1193-1194.) In essence, reliance does not exist unless a plaintiff pleads and proves that, because he did not know the truth, he relied on the false representation (or omission of the truth) by altering his legal position in some manner, e.g.¸ by entering into a transaction he would not have been involved in, but for his reasonable reliance on the false representation. (See 5 Witkin, Cal. Proc. (5th edition), Pleading, § 730 Actual Reliance: Causal Connection Between Belief and Action. (2008); 2020 update.) In establishing actual reliance, the plaintiff must show that the reliance was reasonable by showing that (1) the matter was material in the sense that a reasonable person would find it important in determining how he or she would act, and (2) it was reasonable for the plaintiff to have relied on the misrepresentation. (Hoffman v. 162 North Wolfe LLC, supra, 228 Cal.App.4th at p. 1194.)

Finally, constructive fraud is a unique species of fraud applicable only to a fiduciary or confidential relationship. As a general principle, it comprises any act, omission or concealment involving a breach of legal or equitable duty, trust or confidence which results in damage to another even though the conduct is not otherwise fraudulent. Most acts by an agent in the breach of his fiduciary duties constitute constructive fraud. The failure of the fiduciary to disclose a material fact to his principal, which is known or should be known to the fiduciary, may constitute constructive fraud. Additionally, a careless misstatement may constitute constructive fraud, even though there is no fraudulent intent. See (Assilzadeh v. California Federal Bank (2000) 82 Cal.App.4th 399, 415, quoting Salahutdin v. Valley of California, Inc. (1994) 24 Cal.App.4th 555, 563.)

B.        Application.

Taking the last matter (constructive fraud) first, the Court notes that because it has already found that the allegations of the FAC are insufficient to support the existence of a fiduciary duty owed by the attorney defendants to Nicole, and because constructive fraud is only legally applied in the context of a fiduciary/confidential relationship, the FAC necessarily fails to state a cause of action for constructive fraud. Consequently, the demurrer to the fifth cause of action for constructive fraud will be sustained.

Whether by the attorneys’ alleged concealment of their communications with Nicole’s sisters, which Nicole contends caused the attorney defendants to refuse to prepare the Sixth Amendment for the Jordans, or through the attorneys’ alleged representations that they would represent the Jordans’ estate planning interests, and then refusing to prepare the Sixth Amendment, Nicole’s fraud claims are gravely problematic. As noted by the attorney defendants’ demurrer, the allegations of the FAC do not support the existence of any reliance by either the Jordans or Nicole, on any of the affirmative representations or non-disclosures, or any damage arising from any such reliance, because the Jordans in fact drafted their own Sixth Amendment, which contained the identical terms (i.e., leaving the entire trust estate to Nicole, and making her sole successor trustee) which Nicole claims any Sixth Amendment which should have been prepared by the attorney defendants would have contained. To the extent that Nicole suffered any damage, it was not through any actions of the attorneys. Rather, it was through Nicole’s own actions in failing to timely present to the Probate Court the Sixth Amendment she alleges that her parents executed, that Nicole lost any rights she might have obtained had the Sixth Amendment been found by the Probate Court to be the operative version of her parents’ trust.

By failing to allege any facts that would support the conclusion that either the Jordans or Nicole relied to their detriment on any representations or non-disclosures by the attorney defendants, the fraud-based claims fail to state causes of action, requiring that the demurrer to these claims be sustained.

5.         Demurrer based upon Nicole’s failure to mitigate her damages.

The attorney defendants separately demurrer to the FAC on the ground that Nicole failed to mitigate her damage. They cite Agam v. Garva (2015) 236 Cal.App.4th 91, 111, for the proposition that “every plaintiff” is required to mitigate their damages and will not be able to recover damages that could have been avoided with reasonable efforts. They further cite Steketee v. Linz (1985) 38 Cal.3d 46, for the proposition that an attorney is not liable for damages that could have been avoided with subsequent action taken in a matter. They then contend that because Nicole waited too long to bring the Sixth Amendment to the Probate Court’s attention, she failed to mitigate her damages. Defendants do not explain how or why this is an appropriate argument to raise on demurrer.

Defendants’ argument rather overstates the actual holdings of the cases they cite. What the Agam case actually holds is that the doctrine of mitigation of damages holds that a plaintiff who suffers damage as a result of a breach of contract has a duty to take reasonable steps to mitigate those damages, and will not be able to recover for any losses which thus could have been avoided through ordinary care and reasonable exertion. However, the duty to mitigate does not require an injured party to do what is unreasonable or impracticable, whether a plaintiff acted to reasonably mitigate damages is a factual matter to be determined by the trier of fact, and the defendant has the burden of proving a plaintiff failed to mitigate damages. (Agam, supra, citing Valle de Oro Bank v. Gamboa (1994) 26 Cal.App.4th 2686, 2691, and Powerhouse Motorsports Group, Inc. v. Yamaha Motor Corp. U.S.A. (2013) 221 Cal.App.4th 867, 884.)

Steketee is not a mitigation of damages case at all, and merely holds that “[a]n attorney cannot be held liable for failing to file an action prior to the expiration of the statute of limitations if he ceased to represent the client and was replaced by other counsel before the statute ran on the client’s action.” (Steketee v. Linz, supra, 38 Cal.3d at p. 57.)

The concept of mitigation of damages relates to the amount of damages for which a defendant may be liable, and where it is applicable, it provides the defendant with a set-off in the amount of the damages that the plaintiff could have avoided through reasonable efforts. However, the doctrine is not absolute, and in fact provides that a plaintiff is not required to mitigate damages if financially unable to do so (Berge v. International Harvester Co. (1983) 242 Cal.App.3d 152), and a plaintiff is not required to incur expenses in trying to mitigate damages that are out of proportion to the damages that result from the defendant’s breach (Dutra v. Cabral (1947) 80 Cal.App.2d 114), among other limitations.

Further, although the principle is applicable beyond breach of contract causes of action (see, e.g., Candari v. Los Angeles Unified School District (2011) 193 Cal.App.4th 402, 409 [finding in a wrongful termination context that a terminated employee is obligated to mitigate damages by obtaining other employment, but need not accept employment that is not comparable or substantially similar to the lost job]), defendants have made no effort to establish that it is truly applicable to “every plaintiff,” as they argue (supported only by a breach of contract case citation), in every context.

More importantly, however, defendants have failed to establish that a failure to mitigate damages is something which can be raised on demurrer. Pursuant to Code of Civil Procedure section 430.10, the sole grounds upon which a pleading may be challenged by demurrer are:

(a) The court has no jurisdiction of the subject of the cause of action alleged in the pleading.

(b) The person who filed the pleading does not have the legal capacity to sue.

(c) There is another action pending between the same parties on the same cause of action.

(d) There is a defect or misjoinder of parties.

(e) The pleading does not state facts sufficient to constitute a cause of action.

(f) The pleading is uncertain. As used in this subdivision, “uncertain” includes ambiguous and unintelligible.

(g) In an action founded upon a contract, it cannot be ascertained from the pleading whether the contract is written, is oral,

or is implied by conduct.

(h) No certificate was filed as required by Section 411.35. [Applicable only to certain malpractice actions.]

The doctrine of mitigation of damages is a challenge to a particular measure of damages, and a Section 430.10 makes clear that it is not appropriately raised on demurrer.

It appears to the Court that defendants were attempting to contend that any acts or omissions by them as estate planning attorneys for Borimir and Virginia bore no causal relationship to Nicole’s alleged injuries or damages, under the circumstances alleged in the complaint. However, the demurrer did not make that contention in a manner that was sufficiently clear to Nicole to protect her due process right to respond, nor did it clearly establish that the allegations of the FAC would be legally insufficient to state any cause of action against them, as a result of such contention. Consequently, the Court cannot consider such an argument at this time, without violating Nicole’s due process rights.

For all of these reasons, the Court will overrule the demurrer to the extent it is based upon Nicole’s alleged failure to mitigate her damages.

6.         Demurrer to claims based upon Sheffield’s actions as trustee of the Jordans’ trust.

Nicole’s first cause of action for breach of fiduciary duty purports to include claims against Sheffield in his capacity as successor trustee of the Jordans’ trust, as well as his capacity as estate planning attorney for the Jordans. Price/Sheffield has demurred to the cause of action, to the extent it is based upon Sheffield’s actions as trustee of the Jordans’ trust, contending it fails to allege sufficient facts, for several reasons. First, Price/Sheffield contends that he was named as successor trustee in the Fourth Amendment, and his only acts as successor trustee were to decline to act as successor trustee, to appoint Watson as successor trustee, and to provide Watson with the relevant estate planning documents, all of which were done within a month of Virginia’s death.

Second, it was Watson who then provided the notice to Nicole that the operative trust included only the Third, Fourth, and Fifth Amendments, and advised her that any contest to these documents as the operative trust must be raised within 120 days. He then filed a petition to confirm himself as successor trustee, and to confirm that the operative version of the trust was comprised of the Third, Fourth, and Fifth Amendments. The petition fully advised the Probate Court that Nicole had taken the position in correspondence that Watson was not the duly-authorized successor trustee, and that there were additional operative amendments to the trust. She did not, however, oppose the petition or appear at the hearing.

Sheffield contends that none of the acts establish either breach of any fiduciary duty owed by Sheffield as successor trustee, or the causation of any harm to Nicole. All he did as successor trustee was appoint Watson, and Watson provided notice to Nicole of his understanding of what the trust included, gave her the opportunity to state otherwise, and notified the court of her position. Sheffield’s only action as successor trustee therefore did not breach any fiduciary duty owed to Nicole as a beneficiary of the trust, and did not cause Nicole’s claimed damages. Rather, her damages were caused by her own failure to timely present to the Probate Court the Sixth Amendment allegedly executed by her parents.

In opposition to the demurrer, Nicole appears to contend that she alleged in the FAC that Sheffield lacked the authority to appoint Mark Watson as successor trustee of the trust. This is apparently because, when he “resigned” as estate planning attorney for the Jordans in 2018 and refused to follow instructions to prepare the Sixth Amendment, he gave Nicole and the Jordans the impression and/or led them to believe that he had also resigning as successor trustee of the trust. She further asserts that the court must accept as true on demurrer her allegation that Sheffield lacked authority to appoint Mark Watson as successor trustee.

In reply, Price/Sheffield reiterates that the only action Sheffield was alleged to have taken as successor trustee was to appoint Watson, which is neither improper nor does it provide any causal link to any damages allegedly suffered by Nicole.  

While Nicole contends that this Court must accept as true that Sheffield lacked authority to appoint Mark Watson as successor trustee of her parents’ trust, Nicole fails to appreciate that this is a legal conclusion, and the assumption of the truth of allegations on demurrer does not apply to contentions, deductions, or conclusions of law or fact. (Blank v. Kirwan (1985) 39 Cal.3d ;311, 318.)

More importantly, even if the Court were to accept as true Nicole’s contention that Sheffield lacked authority to appoint Mark Watson as successor trustee, Price/Sheffield is correct that there is no causal link between that act and any of Nicole’s claimed damages. Even if Sheffield did lack authority to appoint Mark Watson as trustee, Nicole did not timely object to Mark Watson’s appointment as trustee, nor did she timely object to the Third, Fourth, and Fifth Amendments as constituting the operative version of the Jordans’ trust, despite being provided an opportunity to do so, and being expressly advised of the time within which she must object to the Third, Fourth, and Fifth Amendments as constituting the operative trust. It was her own failure to do so that resulted in her claimed damages, in being deprived of any benefits of the Sixth Amendment allegedly executed by her parents.

Consequently, the first cause of action for breach of fiduciary duty fails to state a valid cause of action against Sheffield, in his capacity as trustee of the Jordans’ trust, requiring that the Price/Sheffield demurrer to this cause of action be sustained.

7.         Defendants’ miscellaneous other claims.

Defendants included what can be described as a “punch list” of additional claimed defects in Nicole’s FAC, which they only summarily described. The Court declines to address defects raised in this manner. In any event, there is no need to do so, as the Court’s other rulings on the attorney defendants’ demurrer effectively moot those challenges.

8.         Summary and effect of demurrer rulings.

The resolution of the various grounds for demurrer has had the effect of sustaining, on one or more bases, the attorney defendants’ demurrers to each of the causes of action alleged against them, including the breach of fiduciary duty cause of action to the extent it also encompasses Sheffield’s conduct as trustee of the trust.

While the Court has serious doubts with respect to Nicole’s ability to cure many of the defects in her FAC, the Court is inclined to permit one final opportunity for Nicole to amend her complaint to plead her best case. The Court notes that Nicole’s counsel has requested 3-4 months to complete a discovery process that she contends is necessary for her to be able to prepare an amended pleading. The Court notes that nearly two months have passed since counsel made that representation in her declaration accompanying Nicole’s opposition to the demurrer, so only 1-2 months should remain in that period.

The Court has continued the demurrer and motion to strike filed by defendant Jamie Cathleen Green to July 29, 2024, as a result of workload/caseload issues within the court. The Court will defer the issue of how long a period plaintiff may be allowed to file her Second Amended Complaint until the hearing on defendant Green’s demurrer and motion to strike. By that time, no more than 1 month should remain in counsel’s estimate of the time she would need. The Court might be inclined to grant 30 days’ leave to amend at that time, in response to the attorney defendants’ demurrer and motion to strike (the Court has not yet had an opportunity to fully evaluate Green’s demurrer and motion to strike, and has not yet reached any opinion on whether they will be successful in any respect). To the extent that plaintiff’s counsel seeks any additional time beyond that 30 days, she should be prepared to specify why she needs that additional time, what the discovery process has produced or what she believes it will produce, and how such information relates to the claims she has asserted in this action.

Motion to strike  Because the Court has sustained various demurrers by the attorney defendants to the entirety of plaintiff’s FAC, that ruling has mooted the motion to strike. To the extent that Nicole continues to allege entitlement to non-economic and punitive damages in any subsequently filed Second Amended Complaint, that entitlement will be evaluated based upon the allegations in that pleading.