Joaquim Finato v. Keith Fink and Associates ( 2020 )

FILED
NOT FOR PUBLICATION
FEB 18 2020
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
JOAQUIM FINATO, No. 18-55044
Plaintiff-counter- D.C. No.
defendant-Appellant, 2:16-cv-06713-RGK-AJW
v.
MEMORANDUM*
KEITH ALLEN FINK; SARAH
HERNANDEZ,
Defendants-Appellees,
KEITH FINK AND ASSOCIATES,
Defendant-counter-claimant-
Appellee.
Appeal from the United States District Court
for the Central District of California
R. Gary Klausner, District Judge, Presiding
Argued and Submitted June 12, 2019
Submission Vacated July 3, 2019
Resubmitted February 14, 2020
Pasadena, California
Before: FERNANDEZ, WARDLAW, and BYBEE, Circuit Judges.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Joaquim Finato appeals the district court’s decisions on a series of claims he
brought against Keith A. Fink & Associates (“KFA”) based on KFA’s
representation of him in a suit against his former employer. The parties are
familiar with the facts so we do not repeat them here. Finato filed a complaint
claiming malpractice, breach of contract, breach of fiduciary duty, intentional
interference with contractual and economic relations, restitution, and declaratory
relief. KFA countersued for breach of contract and brought a quantum meruit
claim for services rendered. The court dismissed all of Finato’s claims under
Federal Rule of Civil Procedure 12(b)(6) except his breach of contract and
declaratory relief claims. The parties filed cross-motions for summary judgment,
and the court rejected Finato’s remaining breach of contract and declaratory relief
claims, along with KFA’s breach of contract claim. Prior to trial, Finato moved for
sanctions against KFA for failing to provide computation of its damages in its
initial disclosures as required by Rule 26(a)(1)(iii), which the court denied.
Despite Finato’s demand for a jury trial, the district court conducted a bench trial
on the remaining quantum meruit claim. The one-day trial addressed only the
amount of fees owed, and following trial, the court granted KFA attorneys’ fees of
$22,250.
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On appeal, Finato argues that the district court erred by (1) finding that KFA
met its burden of proof on the quantum meruit claim; (2) denying Finato’s motion
for Rule 37 sanctions; (3) granting KFA summary judgment on his breach of
contract and declaratory relief claims; (4) dismissing his malpractice, restitution,
and breach of fiduciary and contractual duties claims without leave to amend;
(5) finding his malpractice and breach of fiduciary duty claims time-barred;
(6) finding his intentional interference with contract claim barred by litigation
immunity; and (7) rejecting Finato’s request for a jury trial on the quantum meruit
claim.
1. The district court did not err by finding that KFA met its burden of proof
on its quantum meruit claim. We review whether a party met its burden of proof
for clear error. Wash. Mut., Inc. v. United States, 856 F.3d 711, 721 (9th Cir.
2017). We apply California law to the merits of a quantum meruit claim when
sitting in diversity. See Simler v. Conner, 372 U.S. 221, 222 (1963). Under
California law, to succeed on a quantum meruit claim, a party must show (1) that
the plaintiff performed certain services for the defendant, (2) their reasonable
value, (3) that they were rendered at defendant’s request, and (4) that they are
unpaid. Haggerty v. Warner, 252 P.2d 373, 377 (Cal. Ct. App. 1953). KFA
established that it completed legal work for Finato on his claim against his
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employer, at his request. KFA also presented testimony regarding the hours
worked, the fees charged, and how it benefitted Finato’s case against his former
employer. The court properly weighed the facts in finding that KFA met its burden
of proof, and thus we do not have “a definite and firm conviction that a mistake has
been committed.” Exxon Co. v. Sofec, Inc., 54 F.3d 570, 576 (9th Cir. 1995)
(citation omitted).1
2. The district court did not err by denying Finato’s motion for Rule 37
sanctions. We review a district court’s decision on “the imposition of discovery
sanctions under Rule 37 for abuse of discretion,” Fjelstad v. Am. Honda Motor
Co., 762 F.2d 1334, 1337 (9th Cir. 1985), giving “particularly wide latitude to the
district court’s discretion,” Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d
1101, 1106 (9th Cir. 2001). Under Rule 26(a)(1)(A)(iii), a party must provide in
its initial disclosures “a computation of each category of damages claimed by the
disclosing party—who must also make available for inspection . . . the documents
or other evidentiary material . . . on which each computation is based.” If it does
not, the party may be subject to Rule 37 sanctions, “unless the failure to disclose is
1
Finato also argues the court should have dismissed KFA’s quantum meruit
claim because it did not file a separate action to establish the lien and amount.
However, this is not grounds for dismissal, see Little v. Amber Hotel Co., 136 Cal.
Rptr. 3d 97, 109 (Ct. App. 2012), and the quantum meruit claim in this case
satisfied that requirement.
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‘substantially justified or harmless.’” Ingenco Holdings, LLC v. Ace Am. Ins. Co.,
921 F.3d 803, 821 (9th Cir. 2019) (quoting Fed. R. Civ. P. 37(c)(1)).
Finato moved for sanctions on the ground that KFA provided no notice of its
claimed fees or how they were computed in its Rule 26 disclosures, but instead
presented them for the first time at trial. KFA’s Rule 26 disclosures were brief and
not at all detailed. But if Finato believed the computations needed to be more
specific, he should have filed a motion to compel, not a Rule 37 motion for
sanctions. Cf. Patelco Credit Union v. Sahni, 262 F.3d 897, 913 (9th Cir. 2001)
(finding the defendants’ Rule 37 motion was, “in essence, a motion to compel
discovery from plaintiffs,” and thus any “failure to obtain the requested documents
[was] due to [defendants’] own lack of diligence” in not filing a motion to compel).
In addition, Finato signed the final pretrial order, which explicitly stated that “[a]ll
disclosures under [Rule] 26(a)(3) have been made.” Even if KFA violated Rule
26, any failure to disclose was harmless. The court had all the evidence before it at
trial, including KFA’s estimates and the witnesses’ testimonies regarding the hours
they worked, and Finato failed to show how not having this information prior to
trial harmed his case. Thus, the district court did not abuse its discretion in
denying Finato’s Rule 37 motion for sanctions.
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3. The district court did not err by granting summary judgment to KFA on
Finato’s breach of contract and declaratory relief claims. We review a district
court’s decision on a motion for summary judgment de novo. Hamilton Materials,
Inc. v. Dow Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007). First, Finato
argues that the court erred in finding that KFA did not assert a lien on fifty percent
of the individual settlement. The only evidence supporting this assertion is his and
his wife’s testimony that KFA orally told them it wanted fifty percent of the
contingency fee. However, this testimony is directly contradicted by the notice of
lien itself, which stated that KFA asserted the lien “pursuant to the parties[’]
written contract to pay attorneys’ fees,” with no mention of the contingency fee.
Second, Finato argues the court erred in finding that KFA did not abandon him.
This is directly contradicted by his complaint, in which he stated, “[p]laintiff
terminated the attorney–client relationship.”
4. The district court did not err in dismissing without leave to amend
Finato’s claims of malpractice, restitution, and breach of fiduciary and contractual
duties. “Dismissal without leave to amend is improper unless it is clear, upon de
novo review, that the complaint could not be saved by any amendment.” Thinket
Ink Info. Res., Inc. v. Sun Microsystems, Inc., 368 F.3d 1053, 1061 (9th Cir. 2004).
Finato’s claims rest on allegations that KFA entered into a “collusive” settlement
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agreement, “simultaneously represent[ed] two clients with diametrically opposed
legal and pecuniary interests,” released and superseded his claims, and sought fifty
percent of Finato’s individual settlement. Finato provides no evidence showing
that the class settlement agreement was “collusive.” The record shows that it was a
beneficial settlement to the class plaintiffs. In addition, while KFA represented
both Finato and the class, they had the same legal and pecuniary interest in the
settlement. Finato chose to opt out of the settlement, and retained new counsel
when he did; at no point did KFA represent two parties with “diametrically
opposed” interests. Lastly, KFA’s lien did not breach any fiduciary or contractual
duty—KFA did not seek fifty percent of the individual settlement, but rather only
the reasonable value of its services, which did not breach the contract. Finato
argues he should be allowed to amend his complaint to provide “further
elaboration of the grounds for asserted damages,” but he does not explain how he
would do so—nor could he without directly contradicting the facts he already
alleged. Finato’s claims cannot be saved by any amendment, and the district court
did not err in dismissing them without leave to amend.
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5. The court did not err in finding that Finato’s malpractice and breach of
fiduciary duty claims were barred by the one-year statute of limitations.2 Cal. Civ.
Proc. Code § 340.6(a). We review a motion to dismiss under Rule 12(b)(6) de
novo. Baker v. McNeil Island Corr. Ctr., 859 F.2d 124, 127 (9th Cir. 1988).
“[T]he one-year limitations period that commences when the plaintiff actually or
constructively discovers the attorney’s wrongful act or omission is no longer tolled
after the plaintiff sustains actual injury, i.e., when the plaintiff can plead a legal
malpractice cause of action.” Jordache Enters., Inc. v. Brobeck, Phleger &
Harrison, 958 P.2d 1062, 1069 (Cal. 1998). The district court explained that any
harm from Finato’s alleged “loss of his wrongful termination claim and
representative status” and “the cost of additional litigation to enforce the Individual
Settlement” occurred, at the latest, when he reached the individual settlement on
July 1, 2015. He filed his malpractice and breach of fiduciary duty claims over a
year later, on September 7, 2016.
Finato asserts that the injury did not occur until the state court “refus[ed] to
enforce the terms of the 2015 settlement agreement.” This argument is foreclosed
2
Finato also argues it is improper to dismiss a claim on statute-of-limitations
grounds under Rule 12(b)(6), because it is an affirmative defense. This is
incorrect; a court may address a statute-of-limitations defense when ruling on a
12(b)(6) motion. See U.S. ex rel. Air Control Techs., Inc. v. Pre Con Indus., Inc.,
720 F.3d 1174, 1178 (9th Cir. 2013).
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by Jordache Enterprises, in which the California Supreme Court explained that
“[t]here is no requirement that an adjudication or settlement must first confirm a
causal nexus between the attorney’s error and the asserted injury.” Id. at 1071.
Rather, the statute of limitations begins whenever there is “injury or harm
recoverable in a legal malpractice action.” Id. at 1080. In Jordache Enterprises,
the plaintiff had a cause of action when he discovered the firm’s negligence—not
when he received a final settlement in the case. Id. at 1073. Here, Finato alleges
that his injury was caused by the cost of additional litigation to recover his
individual claim, of which he was well aware when he entered his individual
settlement. At that point his alleged injury was no longer “speculative or
inchoate,” and he had a claim for actual damages. See id. at 1066.
6. The district court did not err by finding that the litigation privilege barred
Finato’s interference with contractual relations claim under California Civil Code
§ 47(b). The California Supreme Court explained in Silberg v. Anderson, 786 P.2d
365, 371 (Cal. 1990) (en banc), that “[t]he only exception to application of
[§ 47(b)] to tort suits” is “for malicious prosecution actions”—not interference
with contractual relations, which Finato is claiming here. More specifically, in
Olszewski v. Scripps Health, 69 P.3d 927, 950 (Cal. 2003), the California Supreme
Court explained that “the assertion of liens as authorized by validly enacted
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California statutes is shielded by the litigation privilege.” Although KFA’s right is
not directly prescribed by statute like in Olszewski, KFA “undoubtedly had a legal
right to assert the liens” based on its implied contract with Finato. Id. Therefore,
the district court did not err by finding the claim barred by the litigation privilege.
7. The district court did not violate Finato’s Seventh Amendment rights by
holding a bench trial. Regardless of whether a quantum meruit claim is legal or
equitable, the trial concerned only the reasonable amount of attorneys’ fees, which
is an equitable claim that does not carry a Seventh Amendment right to a jury trial.
See Hale v. U.S. Tr., 509 F.3d 1139, 1147 (9th Cir. 2007); Schmidt v. Zazzara, 544
F.2d 412, 414 (9th Cir. 1976).
AFFIRMED.
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