John W Ambrecht vs Marc A DePaco et al

Case Number

24CV00773

Case Type

Hearing Date / Time

Fri, 01/17/2025 - 10:00

Nature of Proceedings

CMC; Judgment on the Pleadings

Tentative Ruling

For all reasons discussed herein, the motion of defendants Mark DePaco and DT Law Partners for judgment on the pleadings is denied.

Background:

Plaintiff John W. Ambrecht (Ambrecht) filed a first amended complaint (FAC) in this action on April 15, 2024, alleging five causes of action against defendants Mark A. DePaco (DePaco) and DT Law Partners, LLP, (DT Law): (1) breach of contract; (2) conversion; (3) breach of fiduciary duty; (4) accounting; and (5) elder abuse. As alleged in the operative FAC:

Ambrecht is an 80 year old attorney whose practice deals primarily with estate planning. (FAC, ¶ 8.) In June 2021, Ambrecht joined DT Law pursuant to an agreement under which Ambrecht would keep his book of business and receive 100 percent of collected billables less agreed upon overhead costs. (Id. at ¶ 9.) Under the agreement, neither DePaco nor DT Law would make any profit from Ambrecht’s clients during the time that Ambrecht continued to work, and for any matter Ambrecht brought in but did not work on, Ambrecht would receive 20 percent of the fees collected from that client.. (Id. at ¶¶ 10 & 12.) In 2022 and 2023, DePaco and DT Law collected money from Ambrecht’s clients but did not remit amounts owed to Ambrecht. (Id. at ¶ 13.)

On June 7, 2024, DePaco and DT Law filed an answer to the FAC generally denying its allegations and asserting twenty-three affirmative defenses.

Also on June 7, 2024, DePaco, DT Law, and Renee C. DePaco (Renee) filed a cross-complaint against Ambrecht, Leticia Martinez (Martinez), and Ambrecht & Martinez, LLP (AML), alleging eight causes of action: (1) breach of contract {against Ambrecht only); (2) fraud and deceit (against Ambrecht, Martinez, and AML); (3) negligent misrepresentation (against Ambrecht, Martinez, and AML); (4) conversion (against Ambrecht only); (5) intentional interference with contractual relationships (against Ambrecht, Martinez, and AML); (6) breach of the implied covenant of good faith and fair dealing (against Ambrecht, Martinez, and AML); (7) breach of fiduciary duty (against Ambrecht only); and (8) intentional infliction of emotional distress (against Ambrecht only). (Note: Due to common surnames, the Court will refer to certain parties by their first names to avoid confusion.)

On July 25, 2024, DePaco, DT Law, and Renee filed a first amended cross complaint (the FACC) alleging six causes of action: (1) breach of contract (against Ambrecht only); (2) conversion (against Ambrecht only); (3) breach of fiduciary duty (against Ambrecht only); (4) intentional infliction of emotional distress (against Ambrecht only); (5) fraud (against Martinez only); and (6) conversion (against Ambrecht and AML). As alleged in the operative FACC:

In November 2020, Ambrecht approached DT Law about a potential working relationship between AML and DT Law. (FACC, ¶ 13.) In December 2020, Ambrecht and DT Law discussed an arrangement whereby DT Law would acquire and make available to Ambrecht an adjoining suite (Suite J), in exchange for Ambrecht reimbursing DT Law for the cost of Suite J, collecting client fee revenue, paying operating costs, and transitioning Ambrecht’s book of business to DT Law once Ambrecht wound down his practice. (Id. at ¶ 15.) On July 1, 2021, Ambrecht relocated his practice to Suite J pursuant to the parties’ agreed upon arrangement. (Id. at ¶ 17.)

The arrangement agreed to by the parties was modified in July 2021 when DT Law assumed, in exchange for an administrative fee, many of Ambrecht’s direct operational costs and streamlined Ambrecht’s billing and collections to permit Ambrecht to start process of winding down AML. (FACC, ¶¶ 19 & 21.) By August 2021, DT Law was the direct employer of Ambrecht’s team. (Id. at ¶ 20.)

Ambrecht never paid the administrative fee to DT Law. (FACC, ¶ 21.) DT Law also discovered that Ambrecht had directed his personnel to transfer certain payment obligations to DT Law without DT Law’s approval or knowledge. (Id. at ¶ 22.)

The parties’ arrangement was again modified in August 2021, which required a written amendment to the partnership agreement of DT Law to admit Ambrecht into the partnership as an income only, non-equity partner. (FACC, ¶¶ 25-26.) As a non-equity partner, Ambrecht received guaranteed monthly payments without regard to billable hours or collections, and DT Law was willing to provide certain discretionary compensation to Ambrecht, reflecting that DT Law was directly liable for all costs, expenses, management, and operations leaving Ambrecht free to wind down the operations of AML. (Id. at ¶¶ 28-31.) Following this amendment to the partnership agreement of DT Law, Ambrecht was not liable for any business loss of, or entitled to any profit generated by, DT Law apart from the discretionary payments. (Id. at ¶ 33.)

After the amendment to the DT Law partnership agreement, Ambrecht demanded that DT Law provide services to clients with whom DT Law had no fee or representation agreements, failed to assist with any clients or potential clients of DT Law, focused only on his own client income, and refused to bring in any new clients to DT Law. (FACC, ¶¶ 34-39.) Ambrecht also asserted politically conservative right wing views and conspiracy theories which caused fright, grief, shame, humiliation, embarrassment, anger, worry, and anxiety to the staff of DT Law. (Id. at ¶¶ 40-41.)

After partner David Tappeiner left DT Law, Ambrecht claimed that he was entitled to 100 percent of the income from Ambrecht’s clients, misrepresented the content of communications from Tappeiner regarding whether Ambrecht was entitled to a share of the general profits of DT Law, defrauded DT Law into making discretionary 2023 year-end bonus payments for personnel who had already planned their departure, refused to review or approve client pre-bills from October 2023 through December 2023, continued to receive guaranteed monthly payments, threatened DT Law with regard to the collection of certain accounts receivable, informed clients not to pay DT Law because it belonged to AML, failed to satisfy insurance obligations, saddled DT Law with costs that DT Law would not have assumed without Ambrecht’s book of business, and departed from DT Law with Beverly Robison (Robison) and Martinez to commence the full time operation of AML. (FACC, ¶ 46.)

On September 10, 2024, DePaco and DT Law (collectively, the DePaco parties) filed a motion for judgment on the pleadings as to the first and fifth causes of action alleged in the FAC. The motion is opposed by Ambrecht.

Analysis:

A defendant may make a motion for judgment on the pleadings on the grounds that the complaint “does not state facts sufficient to constitute a cause of action against that defendant.” (Code Civ. Proc., § 438, subd. (c)(1)(B)(ii).) Grounds for the motion must “appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice.” (Code Civ. Proc., § 438, subd. (d).)

“A motion for judgment on the pleadings is analogous to a general demurrer.” (Westly v. California Public Employees’ Retirement System Bd. of Administration (2003) 105 Cal.App.4th 1095, 1114-1115 [also noting that the “issue is whether the complaint raises an issue that can be resolved as a matter of law”].) The court “must accept as true all material facts properly pleaded, but does not consider conclusions of law or fact, opinions, speculation, or allegations contrary to law or facts that are judicially noticed.” (Stevenson Real Estate Services, Inc. v. CB Richard Ellis Real Estate Services, Inc. (2006) 138 Cal.App.4th 1215, 1219-1220.) The court gives the complaint at issue “a reasonable interpretation by reading it as a whole and all of its parts in their context” without regard to whether a plaintiff can prove the claims alleged. (Lance Camper Manufacturing Corp. v. Republic Indemnity Co. (1996) 44 Cal.App.4th 194, 198.)

“[J]udgment on the pleadings must be denied where there are material factual issues that require evidentiary resolution.” (Schabarum v. California Legislature (1998) 60 Cal.App.4th 1205, 1216.) Further, “leave to amend should be granted if there is any reasonable possibility that the plaintiff can state a good cause of action.” (Gami v. Mullikin Medical Center (1993) 18 Cal.App.4th 870, 876.)

The first cause of action for breach of contract:

The DePaco parties contend that Ambrecht fails to allege in the FAC facts showing whether the purported agreement between the parties is oral or written, fails to attach to the FAC a copy of the alleged agreement, and fails to plead the agreement or its material terms in haec verba. For these reasons, the DePaco parties effectively contend, Ambrecht has failed to state facts sufficient to constitute a cause of action for breach of contract.

“A cause of action for breach of contract requires pleading of a contract, plaintiff’s performance or excuse for failure to perform, defendant’s breach and damage to plaintiff resulting therefrom. [Citation.] A written contract may be pleaded either by its terms—set out verbatim in the complaint or a copy of the contract attached to the complaint and incorporated therein by reference—or by its legal effect. [Citation.]” (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1489.)

Ambrecht alleges in the FAC that in June 2021, when Ambrecht joined DT Law, he entered into written and oral agreements with DePaco and DT Law, the terms of which include that Ambrecht would “work at DT [Law] but would keep his book of business, and that all of [Ambrecht’s] clients would remain his; and that the money generated from them would be his.” (FAC, ¶¶ 9 & 15-16.) Ambrecht further alleges that the parties agreed that DePaco and DT Law “would not make or take any profit from [Ambrecht’s] clients during the time he continued to work”, that for “legal matters which [Ambrecht] worked, it was agreed that [Ambrecht] would receive 100% of the collected billables, less the agreed-upon overhead costs”, and that while working at DT Law, Ambrecht would receive 20 percent of fees collected for any client or matter that Ambrecht brought in but did not work on. (Id. at ¶¶ 12 16.) The “agreed-upon overhead costs” are alleged to include Ambrecht’s salary, the salaries for a “team of people” Ambrecht brought from his practice, Ambrecht’s share of rent and malpractice insurance, and costs for file storage and support staff salaries. (Id. at ¶ 11.)

Ambrecht further alleges that he performed all acts required by the agreements further described above and in the FAC. (FAC, ¶ 17.) As further alleged in the FAC, DePaco and DT Law collected money from Ambrecht’s clients in 2022 and 2023. (Id. at ¶ 13.) DePaco and DT Law breached the agreements in the Fall of 2022, by failing to pay and keeping for themselves “hundreds of thousands of dollars” owed to Ambrecht under the agreements. (Id. at ¶¶ 13 & 18.)

Though the allegations of the first cause of action are not a model of clarity, uncertainty is not grounds for a motion for judgment on the pleadings. (Code Civ. Proc., § 438, subd. (c)(1)(B).) Moreover, to the extent the allegations of the FAC as to the cause of action for breach of contract are in some respects uncertain, these ambiguities may be clarified in discovery. (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)

Giving the FAC a reasonable interpretation, and accepting as true facts which may be inferred from those expressly alleged, the allegations described above are sufficient for pleading purposes to permit an inference that the agreements at issue were made orally and in writing. Allegations which set forth what Ambrecht contends are the essential terms of the agreements with respect to the nature of the amounts owed and not paid to Ambrecht are also sufficient notwithstanding whether Ambrecht can prove these allegations. (Miles v. Deutsche Bank Nat’l Trust Co. (2015) 236 Cal.App.4th 394, 401-402; Aragon-Haas v. Family Security Ins. Services, Inc. (1991) 231 Cal.App.3d 232, 239.)

Ambrecht has also, for present purposes, sufficiently alleged his performance under the purported oral and written agreements, and the acts which constitute the alleged breach of these agreements by DePaco and DT Law and which caused monetary damage to Ambrecht. (See, e.g., FAC, ¶¶ 13 & 19.)

For all reasons further discussed above, Ambrecht has alleged facts sufficient to constitute a cause of action for breach of contract. Therefore, the Court will deny the motion as to the first cause of action alleged in the FAC.

The fifth cause of action for elder abuse:

The DePaco parties contend that Ambrecht has failed to allege facts sufficient to show undue influence by DePaco, or any intent by DePaco to defraud Ambrecht, and that the allegations of the FAC constitute legal conclusions which are insufficient to state a claim for financial elder abuse.

Under Welfare and Institutions Code section 15600 et seq., an “elder” is defined as “any person residing in this state, 65 years of age or older.” (Welf. & Inst. Code, § 15610.27.) Financial abuse of an elder occurs when a person or entity “[t]akes, secretes, appropriates, obtains, or retains real or personal property of an elder” for a “wrongful use” or with “intent to defraud”, or by undue influence. (Welf. & Inst. Code, § 15610.30, subds. (a)(1) & (3).) A party may engage in elder abuse by misappropriating property to which an elder is entitled under a contract. (Paslay v. State Farm General Ins. Co. (2016) 248 Cal.App.4th 639, 656 (Paslay).) “[T]o establish a ‘wrongful use’ of property to which an elder has a contract right, the elder must demonstrate a breach of the contract, or other improper conduct.” (Id. at p. 657.)

Ambrecht alleges in the FAC that he was over the age of 65 when the purported breach of the agreements by DT Law occurred. (FAC, ¶ 35.) As further discussed above, because Ambrecht has sufficiently alleged a cause of action for breach of contract, Ambrecht has also, for present purposes, sufficiently pleaded a cause of action for elder financial abuse. (Paslay, supra, 248 Cal.App.4th at p. 656.) Therefore, the Court will deny the motion as to the fifth cause of action for elder abuse.

Ambrecht’s opposition to the motion:

Ambrecht contends in his opposition to the motion that the DePaco parties have failed to submit a proper declaration demonstrating that they met and conferred with Ambrecht in accordance with Code of Civil Procedure section 439. Ambrecht further contends that the motion is deficient because DT Law fails to state whether it is made under Code of Civil Procedure section 438 or under the common law, and because it provides limited legal authority which relates only to a demurrer.

Though it is not necessary for the Court to address these procedural arguments considering its ruling on the present motion, the Court does not find that the motion is deficient for the reasons asserted by Ambrecht. For example, a motion for judgment on the pleading is analogous to a general demurrer. Therefore, references in the motion to legal authority addressing demurrers is not improper or unpersuasive.

Furthermore, though the meet and confer declaration of attorney Richard D. Carter (Carter) submitted in support of the motion does not state the means by which the DePaco parties met and conferred with Ambrecht, it substantially complies with the requirements of Code of Civil Procedure section 439, subdivision (a)(3)(A), which does not require the moving party to identify all of the specific allegations at issue or legal support for the claims. Moreover, a “determination by the court that the meet and confer process was insufficient shall not be grounds to grant or deny the motion for judgment on the pleadings.” (Code Civ. Proc., § 439, subd. (a)(4).)