Olivia Villalovos vs James Balster et al

Case Number

24CV00259

Case Type

Hearing Date / Time

Fri, 05/10/2024 - 10:00

Nature of Proceedings

Petition

Tentative Ruling

For all reasons discussed herein, the petition of plaintiff for an order under Civil Code section 1714.10 is denied without prejudice.

Background: 

The operative complaint filed by plaintiff Olivia Villalovos in this matter on January 18, 2024, alleges one cause of action for violation of Civil Code section 3439 et seq. against defendants James Balster (James) and Jodi Lee Balster (Jodi). (Note: Due to common surnames, the court will refer to defendants by their first names to avoid confusion. No disrespect is intended.) As alleged in the complaint, plaintiff was the victim of childhood sexual assault and other misconduct by James and Cecilia Balster (Cecilia). (Compl., ¶ 8.) James is plaintiff’s step-grandfather and Cecilia is plaintiff’s grandmother. (Ibid.) Jodi is the daughter of Cecilia. (Ibid.)

Plaintiff filed a civil lawsuit against James and Cecilia on December 18, 2022, arising from the childhood sexual abuse by James (the Abuse Action). (Compl., ¶ 10.) After plaintiff served James and Cecilia with the summons and complaint in the Abuse Action, and after the default of James was entered in the Abuse Action, James conveyed to Jodi property owned by James and located at 5047 San Vicente Drive in Santa Barbara, California (the San Vicente Property). (Id. at ¶¶ 10-13 & Exh. 1.)

Judgment was entered against James in the Abuse Action on January 8, 2024. (Compl., ¶ 14 & Exh. 2.) No amount of the judgment has been paid by James. (Id. at ¶ 14.) Plaintiff alleges that the San Vicente Property is the only asset available to pay the judgment entered against James in the Abuse Action, and that the transfer of the San Vicente Property to Jodi was made with the intent to hinder, delay, or defraud plaintiff. (Id. at ¶¶ 12, 15, 16.)

On January 22, 2024, plaintiff filed a notice of related case identifying the Abuse Action as related to the present action. On February 23, 2024, the court ordered the Abuse Action related to the present action.

Plaintiff has filed a verified petition (the petition) for an order under Civil Code section 1714.10 allowing plaintiff to file a first amended complaint (the proposed FAC) alleging a cause of action for civil conspiracy against the law firm of Thyne Taylor Fox Howard, LLP (the Law Firm). In support of the petition, plaintiff submits the declaration of her counsel, Eric A. Woosley (Woosley), who declares that he is also the attorney of record for plaintiff in the Abuse Action. (Woosley Decl., ¶ 2.) The proposed FAC is attached to the Woosley declaration as Exhibit A.

Information appearing in the Woosley declaration and exhibits thereto shows or indicates that Abuse Action was filed on December 12, 2022. (Woosley Decl., ¶ 5 & Exh. B.) On December 21, 2022, James was served with the summons and complaint in the Abuse Action. (Id. at ¶ 6 & Exh. C.) At the time of service of the summons and complaint, James was in jail awaiting trial on charges filed in Santa Barbara County Superior Court case number 22CR80011 (the Criminal Case), which arose in part from the factual allegations of the Abuse Action. (Id. at ¶ 6.)

On December 28, 2022, under a “Grant Deed To A Revocable Trust” (the December 2022 Deed), the “The James L. Balster Revocable Living Trust, U/A dated May 28, 2019” (the Living Trust) conveyed its interest in the San Vicente Property to the “JL Balster Family Trust, U/A dated December 28, 2022” (the Family Trust). (Woosley Decl., ¶ 7 & Exh. D at p. 1.) The December 2022 Deed reflects that James is the Trustee of both the Living Trust and of the Family Trust. (Ibid.) James signed the December 2022 Deed on December 28, 2022, in his capacity as Trustee. (Ibid.)

On December 29, 2022, Cecilia was served with the summons and complaint in the Abuse Action. (Woosley Decl., ¶ 6 & Exh. C.) Based on information appearing in the answer filed by Cecilia in the Abuse Action, the Law Firm is the attorney of record for Cecilia in the Abuse Action. (Id. at ¶¶ 3, 18 & Exh. N.)

On January 26, 2023, the December 2022 Deed was recorded. (Woosley Decl., Exh. D at p. 1.) Its recording was requested by the Law Firm. (Ibid.)

On February 3, 2023, after Woosley caused to be served on James a statement of damages in the Abuse Action, the default of James was entered in that action. (Woosley Decl., ¶ 10 & Exhs. F, G.) James has not moved for an order setting aside the default. (Id. at ¶ 11.)

On February 8, 2023, the Family Trust conveyed its interest in the San Vicente Property to Jodi under a Grant Deed (the February 2023 Deed) which was signed by James on the same date and in his capacity as Trustee. (Woosley Decl., ¶ 11 & Exh. H, p. 1.) The Law Firm also requested the recording of the February 2023 Deed, which was recorded on February 15, 2023. (Ibid.) Information appearing in the February 2023 Deed reflects that no consideration was paid for the San Vicente Property. (Ibid.)

On August 22, 2023, the County of Santa Barbara (the County) filed as case number 23CV03649, a “Complaint To Void A Fraudulent Transfer Of Real Property Pursuant To The Uniform Voidable Transactions Act” against James and Jodi (the County Action). (Woosley Decl., ¶ 13 & Exh. I.) In the County Action, the County alleges that on November 5, 2018, it filed an abstract of support judgment against the real property of James (the County Judgment). (Woosley Decl., Exh. I [complaint] at ¶ 5 & Exh. 2.) The County further alleges that the conveyance of the San Vicente Property from the Family Trust to Jodi under the February 2023 Deed was fraudulent and made with the intent to hinder or delay James’ creditors including the County, and that James has no other property out of which the County can satisfy its claims. (Id. at ¶¶ 8-10 & Count One, ¶¶ 1 & 3.)

In November 2023, James was sentenced to a 30-year prison term in the Criminal Case, which James is now serving. (Woosley Decl., ¶ 6.)

 

On December 6, 2023, the Law Firm filed in the County Action a case management conference statement on behalf of Jodi stating that “James … transferred a home to Jodi … with a lien attached. The home is being sold and the lien will be satisfied.” (Woosley Decl., ¶¶ 14 & 15 & Exh. K [case management statement].) The recorder’s transcript of a case management conference held in the County Action on December 20, 2023, reflects that at that conference, the Law Firm stated that a check to the County which paid the County’s account in full came “directly from the client … from the proceeds of the sale of [a] closing.” (Woosley Decl., ¶ 16 & Exh. L at p. 5, ll. 14-28.) The recorder’s transcript also reflects that the County confirmed it was waiting for the referenced check to clear. (Id. at p. 6, ll. 1-5.)

On January 8, 2024, a court judgment by default was entered against James in the Abuse Action (the default judgment). (Woosley Decl., ¶ 17 & Exh. M.) Woosley declares that James has not paid anything towards the default judgment. (Id. at ¶ 17.) Woosley further declares that the San Vicente Property is the only significant asset from which the default judgment might be partially satisfied, but that plaintiff cannot execute on that property because James conveyed it to Jodi. (Id. at ¶¶ 17, 18.) Woosley also states that the Law Firm has informed him that the carrier insuring the San Vicente Property has declined to defend or indemnify James or Cecilia in the Abuse Action. (Id. at ¶ 18.)

Woosley asserts that, because the County Judgment was satisfied, plaintiff had no standing to intervene in the County Action. (Woosley Decl., ¶ 22.) At no time did the Law Firm inform the court of the Abuse Action, the default of James entered in the Abuse Action, the pending County Action, or that plaintiff wished to execute against the San Vicente Property or any proceeds from its sale. (Ibid.) Though the Law Firm represented Jodi in the County Action and simultaneously represents Cecilia in the Abuse Action, it never filed a notice of related case. (Woosley Decl., ¶¶ 19, 20.)

In addition, Woosley declares that the official records of the County do not show a subsequent transfer of the San Vicente Property from Jodi to any other person. (Woosley Decl., ¶ 23.) Woosley contends that because Jodi still owns the San Vicente Property, the Law Firm falsely represented to the court that the San Vicente Property had been sold thereby preventing plaintiff from intervening in the County Action and from preserving either the San Vicente Property or the proceeds from its sale in order to satisfy the default judgment. (Id. at ¶ 24.)

Woosley contends that, at the time the Law Firm represented Jodi in the County Action and Cecilia in the Abuse Action, the Law Firm simultaneously represented James in preparing the Living Trust, the Family Trust, the December 2022 Deed, and the February 2023 Deed. (Woosley Decl., ¶ 19.) Woosley maintains that the Law Firm aided and abetted the fraudulent transfer of the San Vicente Property by James to Jodi. (Id. at ¶ 25.)

To support its opposition to the petition of plaintiff, the Law Firm submits the declaration of Justin D. Fox (Fox), who declares that he is a partner with the Law Firm who represented Jodi in connection with the formation of a trust and the transfer of real property. (Fox Decl., ¶¶ 1 & 3.) Fox is not aware of anyone else at the Law Firm who worked on these two matters. (Id. at ¶ 3.) Fox further declares that he has never represented James or communicated with him at any time. (Id. at ¶ 4.)

During the time Fox assisted in preparing a trust and property transfer for Jodi, Fox had no understanding that James had been accused of molesting plaintiff or that the transfer of property was being made for an improper purpose, and did not work on or discuss any litigation matters involving James or his family. (Fox Decl., ¶¶ 5, 7, 8.) It is Fox’s experience that intra-family property transfers without consideration are common. (Id. at ¶ 6.)

The Law Firm also submits the declaration of John J. Thyne III (Thyne), who declares that he is a senior partner with the Law Firm. (Thyne Decl., ¶ 1.) Thyne affirms that he represented Jodi in the County Action. (Id. at ¶ 3.) Thyne further states that he never represented to the court in the County Action that the property transferred from James to Jodi to pay a debt owed to the County was the San Vicente Property, nor did Thyne believe that the court or the County understood that Thyne was referring to the San Vicente Property. (Id. at ¶¶ 4, 5.) In addition, Thyne did not work on or discuss with other lawyers of the Law Firm any transactional matters involving any family members of the Balster family. (Id. at ¶ 6.)

Analysis:

Civil Code section 1714.10 “was intended to weed out the harassing claim of conspiracy that is so lacking in reasonable foundation as to verge on the frivolous.” (Evans v. Pillsbury, Madison & Sutro (1998) 65 Cal.App.4th 599, 604.) Under its provisions, “[n]o cause of action against an attorney for a civil conspiracy with his or her client arising from any attempt to contest or compromise a claim or dispute, and which is based upon the attorney’s representation of the client, shall be included in a complaint or other pleading unless the court enters an order allowing the pleading that includes the claim for civil conspiracy to be filed after the court determines that the party seeking to file the pleading has established that there is a reasonable probability that the party will prevail in the action.” (Civ. Code, § 1714.10, subd. (a).) (Note: Subsequent code references shall be to the Civil Code unless otherwise stated.)

A party seeking to file a pleading that claims liability against an attorney based on a civil conspiracy must file “a verified petition therefor accompanied by the proposed pleading and supporting affidavits stating the facts upon which the liability is based.” (Civ. Code, § 1714.10, subd. (a).) The court must also permit the party against whom the action is proposed to submit an opposition to the petition. (Ibid.)

The petition of plaintiff is verified and is supported by a copy of the proposed FAC and the Woosley declaration which includes the purported facts upon which the alleged liability of the Law Firm is based. In addition, the Law Firm was served with the petition and has submitted its opposition thereto. Therefore, the court finds that plaintiff has complied with the procedural requirements set forth in section 1714.10, subdivision (a).

“Applying section 1714.10 … requires the court to initially determine whether the pleading falls either within the coverage of the statute” and whether the proposed pleading “states a viable claim for conspiracy against the attorney.” (Berg & Berg Enterprises, LLC v. Sherwood Partners, Inc. (2005) 131 Cal.App.4th 802, 818 (Berg).) “To determine whether section 1714.10 applies to the proposed FAC, the court liberally construes its allegations, including facts that may be inferred from those expressly alleged, and gives the proposed FAC, together with any exhibits thereto, a fair reading. (Rickley v. Goodfriend (2013) 212 Cal.App.4th 1136, 1141-1142 (Rickley).)

In the proposed FAC, plaintiff alleges one cause of action for violation of Civil Code section 3439 et seq. (the Uniform Voidable Transactions Act or the Act) against James, Jodi, and the Law Firm. The proposed FAC includes much of the factual assertions appearing in the Woosley declaration and in the original complaint as more fully discussed above. In the proposed FAC, plaintiff further alleges that the Law Firm represented Jodi in the County Action, represents Cecilia in the Abuse Action, and represents James. (Woosley Decl., Exh. A at ¶¶ 3-5 & 10.) Plaintiff also alleges that Law Firm was aware of the Abuse Action, the default entered against James in the Abuse Action, the County Action, and the Criminal Case. (Id. at ¶ 10.) As to James, plaintiff alleges that the Law Firm created the Family Trust for James in order to facilitate the transfer of the San Vicente Property to Jodi. (Id. at ¶ 21.)

Plaintiff further asserts in the proposed FAC that the San Vicente Property is the only significant asset available to satisfy the default judgment. (Woosley Decl., Exh. A at ¶ 41-42.) The Law Firm is alleged to have provided active assistance to James in effecting the transfer of the San Vicente Property to Jodi by preparing and arranging for the execution of deeds and the creation of a trust, and by misrepresenting to the court that the San Vicente Property was sold. (Id. at ¶¶ 8-9.) Plaintiff further asserts that the transfer of the San Vicente Property by James to Jodi “was made without consideration, and with actual fraud on the part of [James], and with the intent to hinder, delay, or defraud creditors of [James], including [plaintiff], in that the transfer was made to [Jodi], an insider who is the daughter of the [James].” (Id. at ¶ 38.) The purpose of the transfer of the San Vicente Property as alleged by plaintiff was to render James judgment proof. (Id. at ¶¶ 8, 38.) In addition, plaintiff alleges that, despite the Law Firm’s awareness of plaintiff’s claims, the default of James in the Abuse Action, and the lack of other assets, Law Firm “aided and abetted” James and Jodi to facilitate the purportedly fraudulent transfer. (Id. at ¶ 39.)

“In order to maintain an action for conspiracy, a plaintiff must allege that the defendant had knowledge of and agreed to both the objective and the course of action that resulted in the injury, that there was a wrongful act committed pursuant to that agreement, and that there was resulting damage. [Citation.] Civil conspiracy is not an independent tort. [Citation.] Rather, it is a ‘ “legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration.” [Citation.]’ [Citation.] ‘The major significance of a conspiracy cause of action “lies in the fact that it renders each participant in the wrongful act responsible as a joint tortfeasor for all damages ensuing from the wrong ... regardless of the degree of his activity. [Citations.]” ’ [Citation.] The essence of the claim is that it is merely a mechanism for imposing vicarious liability; it is not itself a substantive basis for liability. Each member of the conspiracy becomes liable for all acts done by others pursuant to the conspiracy, and for all damages caused thereby.” (Berg, supra, 131 Cal.App.4th at p. 823.)

The allegations of the proposed FAC described above demonstrate that Law Firm is not alleged to have engaged in any act apart from alleged conspiratorial conduct in connection with the transfer the San Vicente Property for the purported fraudulent purpose of hindering or delaying plaintiff’s ability to satisfy the default judgment with either the San Vicente Property or the proceeds from its sale. Furthermore, the alleged conduct of the Law Firm as further discussed above arises out of its representation of Jodi, Cecilia, and purported representation of James. Therefore, the court finds that the claims alleged in the proposed FAC fall within the initial scope of section 1714.10.

The allegations of the proposed FAC, including facts that may be inferred from those expressly alleged, reflect that the Law Firm was acting in its representative capacity as counsel for James, Jodi, and Cecilia, when it engaged in what plaintiff alleges was conspiratorial conduct with respect to the preparation and recordation of documents necessary to effect the transfers of the San Vicente Property on behalf of its alleged clients James and Jodi and in making representations to the court in the County Action on behalf of Jodi. (Cf. Aghaian v. Minassian (2020) 59 Cal.App.5th 447, 460 (Aghaian) [noting that plaintiffs did not allege conduct undertaken in a representative capacity based in part on allegations that attorney had signed deed].) For example, there are no allegations from which it can be inferred that the Law Firm was acting in any capacity other than as Jodi’s attorneys in the County Action and as Cecilia’s attorneys in the Abuse Action. Further, on its face the proposed FAC includes allegations that the Law Firm was acting in its capacity as James’ attorney with respect to the preparation of documents to facilitate the transfer of the San Vicente Property to Jodi. Therefore, a reasonable interpretation of the proposed FAC demonstrates that plaintiff seeks to assert conspiracy claims against the Law Firm based on its participation and assistance in what plaintiff alleges is a fraudulent transfer of the San Vicente Property from James to Jodi, based solely on the Law Firm’s conduct in its capacity as attorneys for its purported clients Jodi, James, and Cecilia.

“The relationship of attorney and client is one of agent and principal.” (Shafer v. Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone (2003) 107 Cal.App.4th 54, 69.) Under the agent’s immunity rule, “[a] cause of action for civil conspiracy may not arise … if the alleged conspirator, though a participant in the agreement underlying the injury, was not personally bound by the duty violated by the wrongdoing and was acting only as the agent or employee of the party who did have that duty.” (Doctors’ Co. v. Superior Court (1989) 49 Cal.3d 39, 44; Berg, supra, 131 Cal.App.4th at p. 817.) The rule “requires that the alleged conspirator agent already owe the duty to the plaintiff according to substantive law principles before his or her liability through conspiracy may be established.” (Berg, supra, 131 Cal.App.4th at p. 825.) Because the allegations of the proposed FAC demonstrate that the Law Firm was acting as the agent of Jodi, James, and Cecilia, and because the conspiracy claim alleged against Law Firm in the proposed FAC arises solely from the Law Firm’s representation of James or Jodi in connection with the transfer of the San Vicente Property, the agent’s immunity rule applies here to bar the claims alleged in the proposed FAC.

In addition, though section 1714.10 does not apply where “the attorney has an independent legal duty to the plaintiff” or “the attorney’s acts go beyond the performance of a professional duty to serve the client and involve a conspiracy to violate a legal duty in furtherance of the attorney’s financial gain”, plaintiff has alleged no facts demonstrating that the claims alleged in the proposed FAC fall within any exception to section 1714.10. (Civ. Code, § 1714.10, subd. (b); see also Rickley, supra, 212 Cal.App.4th at p. 1149 [conspiracy claims are proper if the attorney violates his or her own duty to the plaintiff].) For example, there are no allegations showing that the Law Firm conspired to violate a legal duty in furtherance of its own financial gain. (See Civ. Code, § 1714.10, subd. (c)(1); Aghaian, supra, 59 Cal.App.5th at p. 461 [exception to section 1710.10 applied based on allegations that attorney lived at the subject property and sought to preserve assets for his own inheritance].) The court further notes that, in the motion, plaintiff expressly states “[t]hat plaintiffs in the Aghaian case were not required to comply with the requirements of Civil Code section 1714.10 does not matter here”, indicating that plaintiff does not intend to allege facts establishing an exception under subdivision (c)(2) of section 1714.10.

There are also no express or implied allegations in the proposed FAC showing that the Law Firm had an independent legal duty to plaintiff. Under the Act, and relevant here, a transfer by a debtor is voidable if it was made “[w]ith actual intent to hinder, delay, or defraud any creditor of the debtor”, “[w]ithout receiving a reasonably equivalent value in exchange for the transfer” and the debtor “believed or reasonably should have believed that the debtor would incur, debts beyond the debtor’s ability to pay as they became due.” (Civ. Code, § 3439.04, subd. (a)(1) & (2).)

Plaintiff does not allege facts giving rise to a duty under the Act that the Law Firm owed to plaintiff. Instead, the allegations of the FAC as further discussed above show that the Law Firm’s role with respect to the transfer of the San Vicente Property was limited to assisting, participating in, and aiding and its client, James, to transfer the property to another client, here Jodi, in its capacity as counsel for James and Jodi. Though plaintiff alleges that James and Jodi made the transfer to avoid plaintiff’s claims and the default judgment, these allegations are merely descriptive of the conduct of James and Jodi as the Law Firm’s clients, and fail to state a cause of action for civil conspiracy against the Law Firm itself. (Westamco Investment Co. v. Lee (1999) 69 Cal.App.4th 481, 487.)

In addition, plaintiff offers no reasoned argument to demonstrate how the allegations of the proposed FAC give rise to an independent duty owed by the Law Firm to plaintiff under the Act or otherwise. For this reason, plaintiff has also failed to demonstrate that plaintiff can state a viable cause of action against Law Firm under section 1714.10, subdivision (c)(1). (Berg, supra, 131 Cal.App.4th at p. 817.)

For all reasons discussed above, the allegations of the proposed FAC show that the Law Firm was acting within the scope of its professional responsibilities as counsel for James and Jodi with respect to its alleged role in effecting or aiding in the transfer of the San Vicente Property to Jodi. Plaintiff also has not demonstrated that an exception under section 1714.10 applies here. Therefore, as the agent’s immunity rule applies here to bar the claims alleged in the proposed FAC, the court will deny the petition.

Notwithstanding whether plaintiff can allege or demonstrate the existence of an attorney-client relationship between James and the Law Firm (see, e.g., Koo v. Rubio’s Restaurants, Inc. (2003) 109 Cal.App.4th 719, 729; People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135), there exists some question as to whether plaintiff’s claim against the Law Firm arises from an attempt to contest or compromise a claim or dispute for purposes of section 1714.10, or whether the Law Firm’s conduct with respect to the transfer of the San Vicente Property constitutes transactional activities. (See, e.g., Stueve v. Berger Kahn (2013) 222 Cal.App.4th 327, 331.) To the extent plaintiff seeks or intends to assert claims against the Law Firm which are based on an independent duty or that fall within an exception to section 1714.10, the court’s ruling herein is without prejudice to a procedurally and substantively appropriate future motion to amend the complaint that may be filed by plaintiff. Nothing herein shall be construed by either party as an indication as to whether the court is or would be inclined to grant or deny any future motion for leave to amend.