Olivia Villalovos vs James Balster et al

Case Number

24CV00259

Case Type

Hearing Date / Time

Fri, 08/23/2024 - 10:00

Nature of Proceedings

Second Petition for Order under CCP 1714.10; CMC

Tentative Ruling

For all reasons discussed herein, the petition of plaintiff for an order under Civil Code section 1714.10 is granted. Plaintiff shall separately file and serve her first amended complaint after correcting the misnumbering of the allegations. Other than correcting the misnumbering, no modifications to the first amended complaint shall be made.

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. (Uniform Voidable Transactions Act) 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.)

As alleged in the complaint:

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.

On February 8, 2024, plaintiff filed a verified petition for an order under Civil Code section 1714.10 allowing plaintiff to file a first amended complaint alleging a cause of action for civil conspiracy against the law firm of Thyne Taylor Fox Howard, LLP (the Law Firm). On May 10, 2024, although the court found that the claims alleged fell within the initial scope of Civil Code section 1714.10, the petition was denied, without prejudice, because, among other things, the first proposed first amended complaint alleged facts which were based solely on the Law Firm’s conduct in its capacity as attorneys for its purported clients Jodi, James, and Cecilia, and that agent’s immunity applied as a bar to the claims alleged in the proposed first amended complaint. The petition was also denied on the grounds that plaintiff alleged no facts demonstrating that the claims alleged in the proposed first amended complaint fell within any exception to section 1714.10, or that plaintiffs set forth any express or implied allegations showing that the Law Firm had an independent legal duty to plaintiff.

On May 29, 2024, plaintiff filed the present petition for order under Civil Code section 1714.10.

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 second proposed first amended complaint (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., ¶ 8 & Exh. E.) 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.)

The December 28, 2022 Deed was recorded transferring the San Vicente property from “James L. Balster, as Trustee of THE JAMES L. BALSTER REVOCABLE LIVING TRUST, U/A dated May 28, 2019,” to JAMES LEE BALSTER, as Trustee of THE J L BALSTER FAMILY TRUST, U/A dated December 28, 2022.”. (Woosley Decl., ¶ 7 & 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., ¶¶ 9, 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., ¶ 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.) Neither Fox, the Law Firm, nor any entity that Fox holds an equity interest in received any money or property interests from the transfer of the San Vicente property from The James L. Balster Revocable Living Trust to the J L Balster Family Trust or from The J L Balster Family Trust to Jodi Lee Balster. (Id. at ¶ 9.)

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.) Thyne has never represented James and has never communicated with James about any subject, nor does the Law Firm have any records of any of its lawyers representing James or communicating with him. (Id. at ¶ 7.) Neither Thyne, the Law Firm, nor any entity that Thyne holds an equity interest in received any money or property interests from the transfer of the San Vicente property from The James L. Balster Revocable Living Trust to the J L Balster Family Trust or from The J L Balster Family Trust to Jodi Lee Balster. (Id. at ¶ 8.)

Analysis:

In ruling on the first petition for order, the court limited the refiling of a new petition as follows: “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.” (May 10, 2024, minute order.) To the extent that plaintiff re-argues other matters not encompassed by this limitation, the court will not re-consider those arguments. The analysis will be limited to whether plaintiff can establish an independent duty to plaintiff or show an exception to the statute.

“No 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. The court may allow the filing of a pleading claiming liability based upon such a civil conspiracy following the filing of a verified petition therefor accompanied by the proposed pleading and supporting affidavits stating the facts upon which the liability is based. The court shall order service of the petition upon the party against whom the action is proposed to be filed and permit that party to submit opposing affidavits prior to making its determination. The filing of the petition, proposed pleading, and accompanying affidavits shall toll the running of any applicable statute of limitations until the final determination of the matter, which ruling, if favorable to the petitioning party, shall permit the proposed pleading to be filed.” (Civ. Code, § 1714.10, subd. (a).)

“This section shall not apply to a cause of action against an attorney for a civil conspiracy with his or her client, where (1) the attorney has an independent legal duty to the plaintiff, or (2) 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.” (Civ. Code, § 1714.10, subd. (c).)

Plaintiff argues that the Law Firm has an independent legal duty to plaintiff. The Law Firm, while primarily arguing the merits of plaintiff’s claims, argues it does not owe an independent duty to plaintiff.

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.) (Note: Subsequent code references shall be to the Civil Code unless otherwise stated.)

“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. [Citation.]” (Berg & Berg Enterprises, LLC v. Sherwood Partners, Inc. (2005) 131 Cal.App.4th 802, 823.)

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.

As alleged in the proposed FAC: [Note: The paragraphs in the proposed FAC are misnumbered. There are two paragraph Nos. 20 and two paragraph Nos. 21.]

“Defendant THYNE TAYLOR FOX HOWARD, LLP (ATTORNEYS) is a law firm with its principal place of business the City of Santa Barbara, County of Santa Barbara, State of California. ATTORNEYS represent TRANSFEREE and Cecilia Balster (hereinafter CECILIA) , PLAINTIFF’S grandmother and TRANSFEREE’S mother, who is a co-defendant with JUDGMENT DEBTOR TRANSFEROR in Doe v. James Balster and Cecilia Balster, Santa Barbara Sup. Ct. Case No. 22CV04861 (hereinafter SEXUAL ABUSE CASE).” (FAC, ¶ 4.)

“On December 21, 2022, PLAINTIFF served JUDGMENT DEBTOR TRANSFEROR with the Summons and Complaint in the SEXUAL ABUSE CASE. JUDGMENT DEBTOR TRANSFEROR was served at the Santa Barbara County Jail awaiting trial on charges stemming from the factual allegations in the SEXUAL ABUSE CASE (as well as others) in Santa Barbara Superior Court Case No. 22CR80011.” (FAC, ¶ 15.)

“According to the Grant Deed, by which THE PROPERTY was transferred to the TRANSFEREE, The JL Balster Family Trust (‘Trust’) was created on December 28, 2022. . . . ATTORNEYS created this trust for JUDGMENT DEBTOR TRANSFEROR to facilitate this transfer.” (FAC, ¶ 16.) “On this same date, December 28, 2022, according to public records, THE PROPERTY was transferred to the Trust. This deed states that ATTORNEYS requested the recording. (FAC, ¶ 17.)

“On December 29, 2022, PLAINTIFF served CECILIA with the Summons and Complaint in the SEXUAL ABUSE CASE. . . . ATTORNEYS represent CECILIA in the SEXUAL ABUSE CASE, which is ongoing as to her.” (FAC, ¶ 18.)

“On February 3, 2023, PLAINTIFF took JUDGMENT DEBTOR TRANSFEROR’S default in the SEXUAL ABUSE CASE.” (FAC, ¶ 21.) “Five days later, on February 8, 2023, JUDGMENT DEBTOR TRANSFEROR, on behalf of the newly created Trust executed a Grant Deed, conveying THE PROPERTY to TRANSFEREE.” (FAC, second ¶ 20.) “On February 15, 2023, the February 8, 2023 Grant Deed conveying THE PROPERTY to TRANSFEREE was recorded.” (FAC, second ¶ 21.)

“According to public records, on August 22, 2023, the County of Santa Barbara Department of Child Support Services filed a fraudulent transfer complaint against JUDGMENT DEBTOR TRANSFEROR and his daughter TRANSFEREE, based on the February 2023 fraudulent transfer of THE PROPERTY from James Balster to Jodi Lee Balster, Santa Barbara Superior Court Case No. 23CV03649 (‘County Fraudulent Transfer Case’).” (FAC, ¶ 22.) “ATTORNEYS represented TRANSFEREE in the County Fraudulent Transfer Case, while still representing CECILIA in the Sexual Abuse Case.” (FAC, ¶ 23.)

“JUDGMENT DEBTOR TRANSFEROR made a plea deal in November 2023, and was sentenced to 30 years in prison.” (FAC, ¶ 24.)

“According to public records, on December 6, 2023, ATTORNEYS filed a Case Management Conference Statement on behalf of TRANSFEREE in the County Fraudulent Transfer Case. . . . In that Statement, ATTORNEYS represented that THE PROPERTY was being sold.” (FAC, ¶ 25.) At the Case Management Conference, “ATTORNEYS represented to the Court that the County’s judgment against JUDGMENT DEBTOR TRANSFEROR for child-support arrearages had already been satisfied from the proceeds of the sale of THE PROPERTY. . . . Judge Anderle dismissed this fraudulent transfer case based on this false representation by ATTORNEYS.” (FAC, ¶ 26.) “The Santa Barbara County Official Records show that ATTORNEYS’ client, TRANSFEREE, has not transferred THE PROPERTY to anyone - i.e., TRANSFEREE still owns THE PROPERTY.” (FAC, ¶ 27.)

“On January 8, 2024, Santa Barbara Superior Court (Judge Geck) entered a default judgment against JUDGMENT DEBTOR TRANSFEROR in the SEXUAL ABUSE CASE in the amount of $10,000,524.10. . . . As of the date of this First Amended Complaint, JUDGMENT DEBTOR TRANSFEROR has not paid anything on the Judgment.” (FAC, ¶ 28.)

“ATTORNEYS were aware that JUDGMENT DEBTOR TRANSFEROR and TRANSFEREE planned to engage in a fraudulent transfer.” (FAC, ¶ 31.) ATTORNEYS agreed with JUDGMENT DEBTOR TRANSFEROR and TRANSFEREE and intended that the wrongful act be committed.” (FAC, ¶ 32.)

“ATTORNEYS were not just aware of the fraudulent transfer but agreed to cooperate with JUDGMENT DEBTOR TRANSFEROR and TRANSFEREE in the fraudulent transfer and actively participated with the JUDGMENT DEBTOR TRANSFEROR and TRANSFEREE in planning, facilitating and finalizing the fraudulent transfer.” (FAC, ¶ 33.) “This active assistance includes: A. Preparing and arranging for execution of deeds for THE PROPERTY; B. Preparing at least on trust for transfer of THE PROPERTY; and C. Representing to the Court, and opposing counsel, that THE PROPERTY had been sold when it had not.” (FAC, ¶ 34.) These acts all occurred while ATTORNEYS: (1) represented three intertwined individuals, JUDGMENT DEBTOR TRANSFEROR, CECILIA and TRANSFEREE; and (2) were aware of the SEXUAL ABUSE CASE, JUDGMENT DEBTOR TRANSFEROR’S default, the County’s Fraudulent Transfer Case . . . and the criminal case against JUDGMENT DEBTOR TRANSFEROR. The dates of the documents prepared by ATTORNEYS, compared with the dates of the relevant events in the SEXUAL ABUSE CASE, paint a clear picture of ATTORNEYS’ intentional acts in fraudulently transferring THE PROPERTY.” (FAC, ¶ 36.)

“ATTORNEYS owed PLAINTIFF an independent duty to not aid and abet JUDGMENT DEBTOR TRANSFEROR and TRANSFEREE to fraudulently transfer THE PROPERTY since they were aware that THE PROPERTY was JUDGMENT DEBTOR TRANSFEROR’S only asset, that JUDGMENT DEBTOR TRANSFEROR was in default in a case in which a $10,000,000 judgment was being sought, that JUDGMENT DEBTOR TRANSFEROR was currently in custody, and that TRANSFEREE was acquiring the PROPERTY for no consideration.” (FAC, ¶ 37.)

The additional facts alleged in the proposed FAC, as opposed to those alleged in the first petition, are sufficient to establish the existence of an independent duty to plaintiff, at least for purposes of filing the FAC against the Law Firm. This falls under one of the exceptions contained in section 1714.10, subdivision (c).

“ ‘Lawyers are subject to the general law. If activities of a nonlawyer in the same circumstances would render the nonlawyer civilly liable . . ., the same activities by a lawyer in the same circumstances generally render the lawyer liable. . . .’ [Citation.]” (Shafer v. Berger, Kahn, Shafton, Moss, Figler, Simon & Gladsone (2003) 107 Cal.App.4th 54, 69.)

“When an attorney “ ‘actively participate[s] in conduct that [goes] way beyond the role of legal representative’ ” [citation], he or she may be liable for wrongdoing to the same extent as a nonattorney. A license to practice law does not shield an attorney from liability when he or she engages in conduct that would be actionable if committed by a layperson. An attorney who commits such conduct may be liable under a conspiracy theory when the attorney agrees with his or her client to commit wrongful acts.” (Rickley v. Goodfriend (2013) 212 Cal.App.4th 1136, 1153.)

“As explained in one treatise: “ ‘Attorneys are expected to stay within the bounds of law in representing their clients and advising about an appropriate course of action. . . . Counsel who circumvent established legal channels to accomplish a desired result, participating with the client in a scheme to dispossess the other spouse of his or her claimed property or possessory rights, are not performing the ‘ “normal services of an attorney.” ’ Conduct of this sort exposes counsel to a host of tort claims — including a cause of action for attorney-client conspiracy.’ ” [Citations.]” (Id. at p. 1154.)

While Law Firm disputes plaintiff’s allegations, and the court has no reason to question the integrity of any of the attorney’s involved in this action, the allegations of the proposed FAC described above, and the inferences that can be drawn from the allegations, are sufficient to allow plaintiff’s action to proceed against Law Firm at the pleading stage. Plaintiff has sufficiently pled a duty owed to plaintiff and that Law Firm actively engaged in conspiratorial conduct in connection with the transfer of 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.

Plaintiff’s petition will be granted.