Khodayari v. Ardalan CA2/4 ( 2013 )

Filed 4/10/13 Khodayari v. Ardalan CA2/4
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FOUR
BAHMAN KHODAYARI, B239102
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. LC090227)
v.
PEZHMAN CHRISTOPHER ARDALAN
et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of Los Angeles County,
James Kaddo, Judge. Affirmed in part, reversed in part.
Bahman Khodayari, in pro. per., for Plaintiff and Appellant.
Law Office of Brett W. Wolff and Brett W. Wolff for Defendants and
Respondents.
This appeal arises from an action by Bahman Khodayari against Pezhman
Christopher Ardalan individually and Ardalan & Associates (collectively defendants) for
failing to represent him through trial in an underlying criminal matter for the flat fee of
$15,000. Plaintiff appeals from trial court orders sustaining a demurrer without leave to
amend as to 15 of his causes of action on statute of limitations grounds. He also
challenges the award of summary judgment on his remaining cause of action for breach
of contract. Plaintiff argues the statute of limitations on an action for legal malpractice
(Code Civ. Proc., § 340.61) does not apply to 15 of the causes of action, that the causes of
action did not accrue when defendants were relieved as counsel before trial of the
criminal matter, and that the statutes of limitations were tolled because he was
incarcerated and by the principles of equitable tolling. On the motion for summary
judgment, plaintiff argues that the court should have allowed evidence of an oral
agreement which differed significantly from the terms of the written retainer agreement.
As to the causes of action to which the demurrer was sustained, we conclude that
section 340.6 applies to plaintiff‘s causes of action other than his claims for fraud, which
are governed by section 338, subdivision (d). We also conclude that all the causes of
action accrued no later than the date defendants were relieved from representing plaintiff
in the underlying criminal matter. Because that date was more than three years before
this action was filed, the action is barred unless an exception or tolling applies. Since the
causes of action accrued more than one year before plaintiff was incarcerated, the tolling
provisions of section 352.1 do not apply. Nor does equitable tolling. We shall affirm the
order sustaining the demurrer.
The parol evidence submitted by plaintiff of an oral agreement was admissible
within the fraud exception to the parol evidence rule, even though it contradicts the
express terms of the written retainer agreement. Under the recent decision of our
Supreme Court in Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit
1 Statutory references are to the Code of Civil Procedure unless otherwise
indicated.
2
Assn. (2013) 55 Cal.4th 1169 (Riverisland), an issue of material fact was raised
precluding summary judgment on the breach of contract cause of action. We shall
reverse the summary judgment on that cause of action.
FACTUAL AND PROCEDURAL SUMMARY
Our factual summary is taken from the allegations of the second amended
complaint (the charging pleading) and the evidence presented on defendants‘ motion for
summary judgment.
Plaintiff operated an automobile repair business. In September 2006, he was
charged with 26 misdemeanor counts of grand theft, attempted extortion, insurance fraud,
money laundering, and violating requirements that auto repair businesses provide written
estimates and invoices and keep maintenance and repair records. On September 27,
2006, plaintiff‘s brothers, Mohammad and Behrooz Khodayari, met with defendants to
discuss retaining them to represent plaintiff on the criminal charges. This discussion was
in Farsi, the native language of the brothers and defendant Ardalan. Defendants stated
that the defense, through trial (but excluding costs of investigation and an appeal, if any)
would be $15,000. Plaintiff‘s brothers also met with other criminal defense lawyers who
said the costs of defending plaintiff through trial (excluding investigation and appeal)
would be between $20,000 and $30,000. All of these attorneys told the brothers that the
fees would have to be paid in advance and in full.
Based on the lower fee quoted by defendants, the next day, on September 28,
2006, Mohammed entered into a written attorney retainer agreement with defendants, a
copy of which was made an exhibit to the second amended complaint. He understood
that the full charge for defense through trial was $15,000 excluding appeal and
investigation costs. Plaintiff was expressly made a third party beneficiary of the
agreement. The next day, plaintiff met with defendants and signed the retainer
agreement. Based on discussion with defendants, plaintiff also understood that the
$15,000 paid in advance would cover the complete cost of defense through trial,
excluding investigation and appeal. Mohammed paid defendants $15,000 on
3
September 28, and plaintiff repaid him in November 2006. Defendants undertook the
defense of plaintiff.
The terms of the agreement between plaintiff and defendants is disputed. Based
on the oral conversations in Farsi with defendants, plaintiff and his brothers contend that
the agreement was for a flat fee of $15,000 through jury trial. But the retainer agreement
signed by both plaintiff and Mohammed expressly includes terms that conflict with this
contention. We quote portions of those terms using the original emphasis in the
agreement. It identifies Mohammed as ―PRINCIPAL‖ and plaintiff as ―CLIENT.‖ It
called for ―an initial non-refundable retaining fee of $15,000. Pursuant to California
Rules of Professional Conduct, Rule 4-200 CLIENT and PRINCIPAL understand and
accept that the subject non-refundable retaining fee is a negotiated amount between
ATTORNEY and CLIENT and the amount is not set by law, and does not include costs
incurred to third parties. Notwithstanding, ATTORNEYs, as its sole option, may give
CLIENT and PRINCIPAL a non-refundable credit in a sum of at least equal to the
maximum rate of $300.00 per hour for the first 50 hours of work.‖2
Paragraph 5 of the retainer agreement states: ―CLIENT and PRINCIPAL further
understand that said retainer fee is a minimum fee and has no relationship to the actual
services performed.‖ Paragraph 6 provides that plaintiff and Mohammed would pay
defendants $300 per hour for legal services under the agreement and that plaintiff would
pay $100 per hour for the services of paralegals or law clerks. It also warned that the
firm had not and would not ―assure CLIENT and PRINCIPAL that the retainer will be
the total fee nor can the firm even estimate what the total fee will be, and no promises
have been made to CLIENT and/or PRINCIPAL that the fee will not exceed a certain
sum. CLIENT and PRINCIPAL specifically acknowledge that ATTORNEY has made
no promises about the total amount of attorney‘s fees to be incurred by CLIENT or
2 Paragraph 5 of the agreement continues: ―This fixed, non-refundable retaining
fee is paid to ATTORNEY in light of the ATTORNEY‘s known experience, reputation
and ability. In addition, and to ensure that the ATTORNEY does not represent any
adverse interest or opposing party in the subject action.‖
4
PRINCIPAL under this agreement. Of course, the firm shall utilize its best efforts to
effectuate an expeditious and amicable resolution, but such attempts may be
unsuccessful, in which event it may be necessary to litigate this matter through a trial.‖
The agreement also provides for payment of an additional deposit after exhaustion of the
initial retainer of $15,000 and replenishment of the client trust account each time the
balance approached $1,000.
Paragraph 13 of the agreement provides defendants could withdraw at any time as
permitted under the State Bar Rules of Professional Conduct, including the failure of
plaintiff to pay attorney fees or costs. There is no integration clause in the retainer
agreement.
Beginning in late January 2007, defendants demanded additional money (up to
$100,000), to represent plaintiff through trial. Defendants asked to withdraw from
representing plaintiff, but he strongly objected because he believed he had already paid
for representation through trial. At a meeting to discuss the situation, plaintiff alleges
defendants threatened to share privileged information about defendant with other parties,
including opposing counsel and the prosecutor in the criminal case proceeding against
plaintiff. Plaintiff alleges that defendants threatened that he would have to remain in
custody indefinitely if they were not allowed to withdraw, and would suffer other dire
consequences. Intimidated, plaintiff offered an additional $5,000 to defendants.
Defendants wrote to plaintiff, claiming that the relationship between the parties had
become strained, and that they would move to be relieved as counsel. That motion was
filed on February 15, 2007.
On March 1, 2007, the court in the underlying criminal case heard defendants‘
motion to be relieved as counsel for plaintiff based on a conflict of interest. After seeing
a copy of correspondence in which the Ardalan firm demanded additional money from
plaintiff, the court asked for assurances that the claimed conflict was not based on a fee
dispute. Ardalan responded that he could not reveal the nature of the conflict without
violating attorney-client privilege. The court asked plaintiff whether he waived that
privilege for the purpose of determining the conflict of interest on which the motion to be
5
relieved was based. Plaintiff declined to waive the privilege. Since the privileged
information could not be disclosed, the court granted the motion to relieve defendants.
Defendants refunded $923.81 of the original $15,000 paid by Mohammed.
Plaintiff alleges he spent $34,000 on new counsel, and that he had to remain in
custody for additional time because trial was delayed. He was convicted of some of the
charges against him on August 1, 2008. Plaintiff was incarcerated from July 11, 2008
through June 23, 2009, and again from November 10, 2009 through December 15, 2009.
While in custody, other prisoners told plaintiff that he might have a basis for suit against
defendants. After his release, in 2010 plaintiff sought the advice of several attorneys
regarding an action against defendants.
Plaintiff filed a complaint against defendants on June 23, 2010. He alleged causes
of action for breach of contract and fraud. After defendants demurred, plaintiff filed a
first amended complaint, alleging 16 causes of action. Defendants demurred on the
grounds the causes of action were barred by the applicable statutes of limitations and that
they were inadequately pleaded. The court overruled the demurrer to the first cause of
action for breach of contract, but sustained it with leave to amend as to the remaining
causes of action. Plaintiff filed his second amended complaint alleging the same sixteen
causes of action. Defendants again demurred to the second through sixteenth causes of
action on the grounds that they were barred by the applicable statute of limitations and
did not state a cause of action. This time, the demurrer was sustained without leave to
amend on the ground the causes of action were barred by the statute of limitations.
After answering the second amended complaint, defendants moved for summary
judgment on the single remaining cause of action for breach of contract. Plaintiff‘s first
ex parte application to continue the motion to allow completion of outstanding discovery
was granted, but his second motion on the same ground was denied. Plaintiff filed
opposition to the summary judgment motion.
The trial court granted the motion, ruling that the written retainer agreement
provided for a nonrefundable retainer of $15,000 to be billed in $300 increments, and
expressly stated that no promise was made about the total amount of attorney fees to be
6
charged for plaintiff‘s defense. The court concluded the parol evidence rule barred
alteration of the written agreement by oral representations dealing with the same terms.
The court also ruled the retainer agreement expressly permitted defendants to withdraw
from representing plaintiff at any time allowed by State Bar rules. It concluded that
defendants withdrew from the representation based on a breakdown in the attorney-client
relationship. The court also ruled in favor of defendants on the alternative ground that
plaintiff was collaterally estopped from claiming that the withdrawal of defendants was a
breach of contract. Defendants were ordered to give notice and submit a proposed order
and judgment.
Defendants submitted a proposed order granting the summary judgment motion
which was signed by the trial court. That order stated that defendants were entitled to
judgment as a matter of law, and that ―Judgment be entered providing that Defendants
ARDALAN & ASSOCIATES and P. CHRISTOPHER ARDALAN recover from
Plaintiff their costs in this litigation.‖ Plaintiff then filed a request for a statement of
decision. The trial court responded that its minute order was ―the ruling and order of the
Court. . . .‖ Plaintiff filed a timely appeal.
DISCUSSION
I
The trial court sustained the demurrer to the second amended complaint on statute
of limitations grounds with the exception of the first cause of action for breach of
contract. The parties disagree about when plaintiff‘s claims accrued, and whether the
tolling provisions of section 352.1 or equitable tolling extended the limitations period.
A. Basic Principles
The difficulties in bringing a demurrer based on statute of limitations grounds
were discussed by the court in Coalition for Clean Air v. City of Visalia (2012)
209 Cal.App.4th 408: ―(1) trial and appellate courts treat the demurrer as admitting all
material facts properly pleaded and (2) resolution of the statute of limitations issue can
involve questions of fact. Furthermore, when the relevant facts are not clear such that the
7
cause of action might be, but is not necessarily, time-barred, the demurrer will be
overruled. [Citation.] Thus, for a demurrer based on the statute of limitations to be
sustained, the untimeliness of the lawsuit must clearly and affirmatively appear on the
face of the complaint and matters judicially noticed. [Citation.]‖ (Id. at p. 420, fns.
omitted.)
Following established standards, we take the allegations of the operative
complaint as true and consider whether the facts alleged establish that plaintiff‘s claims
are barred as a matter of law. (Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th
1185 (Aryeh).) Since defendants are asserting a statute of limitation defense, they bear
the initial burden of demonstrating that plaintiff‘s claims are barred by the applicable
period. Thereafter, the burden shifts to the plaintiff to demonstrate that his claims survive
based on one or more nonstatutory exceptions to the basic limitations period. (Id. at
p. 1197.)
B. Applicable Statute of Limitations
―‗To determine the statute of limitations which applies to a cause of action it is
necessary to identify the nature of the cause of action, i.e., the ―gravamen‖ of the cause of
action.‘ [Citation.] The nature of the cause of action and the primary right involved, not
the form or label of the cause of action or the relief demanded, determine which statute of
limitations applies. [Citations.]‖ (Carter v. Prime Healthcare Paradise Valley LLC
(2011) 198 Cal.App.4th 396, 412.) This is a legal issue subject to de novo review. (Vafi
v. McCloskey (2011) 193 Cal.App.4th 874, 880 (Vafi).)
Defendants claim that all of plaintiff‘s causes of action derive from the claim of
legal malpractice and are barred by the one-year period of section 340.6. Based on that
premise, they contend that the causes of action accrued before plaintiff was incarcerated
and therefore the tolling provisions of section 352.1 (legal disability due to incarceration)
do not apply. Plaintiff disagrees, arguing that he brought a number of causes of action in
addition to his claim for professional negligence and that they are governed by other,
longer limitations periods.
8
We first determine whether section 340.6 applies to plaintiff‘s causes of action as
defendants contend. Section 340.6, subdivision (a) applies to ―[a]n action against an
attorney for a wrongful act or omission, other than for actual fraud, arising in the
performance of professional services. . . .‖ (See also Vafi, supra, 193 Cal.App.4th at
pp. 881–883 [applying one-year limitation period of section 340.6 to cause of action for
malicious prosecution].) ―In all cases other than actual fraud, whether the theory of
liability is based on the breach of an oral or written contract, a tort, or a breach of a
fiduciary duty, the one-year statutory period [section 340.6] applies.‖ (Levin v. Graham
& James (1995) 37 Cal.App.4th 798, 805 (Levin).) This rule was applied in Levin to bar
a lawsuit alleging various causes of action, all of which were based on professional
negligence or legal malpractice. (Id. at pp. 804–805; see also Callahan v. Gibson, Dunn
& Crutcher (2011) 194 Cal.App.4th 557, 567, fn. 5 [breach of fiduciary duty]; Quintillani
v. Manerino (1998) 62 Cal.App.4th 54, 67–70 [causes of action for breach of fiduciary
duty and negligent misrepresentation] (Quintillani).)
1. Fraud Causes of Action
Section 340.6, subdivision (a) includes an express exception for causes of action
based on ―actual fraud‖ by an attorney. The fifth, sixth, seventh, eighth, and ninth causes
of action are based on fraud and deceit. The fifth cause of action for fraud alleges that
defendants fraudulently promised to represent plaintiff through trial in the criminal matter
for a $15,000 flat fee. The sixth cause of action for intentional misrepresentation and
seventh cause of action for concealment are based on the same allegation, with the
additional allegation that defendants said that the written retainer agreement would reflect
the flat fee agreement. The tenth cause of action for negligent misrepresentation also is
based on these two allegations. The eighth cause of action for deceit alleges that
defendants ―intentionally and willfully, through their fraudulent conduct, also deceived
Plaintiff with the intent to induce Plaintiff to alter his position to his injury and risk.‖ The
ninth cause of action for constructive fraud alleges that defendants gained an unfair
advantage over plaintiff by reason of their fiduciary relationship, and that defendants
9
breached that relationship. It does not allege whether this conduct was intentional or
negligent.
―One of the forms of ‗[a]ctual fraud‘ is ‗[a] promise made without any intention of
performing it.‘ (Civ. Code, § 1572, subd. 4; see Lazar v. Superior Court (1996)
12 Cal.4th 631, 638 [‗An action for promissory fraud may lie where a defendant
fraudulently induces the plaintiff to enter into a written contract‘]; 5 Witkin, Summary of
Cal. Law (10th ed. 2005) Torts, § 781, pp. 1131–1132.)‖ (Riverisland, supra, 55 Cal.4th
at p. 1173, fn. 3.) The gravamen of these causes of action is that defendants promised to
represent plaintiff for a flat fee in order to induce plaintiff and his brother to enter into the
retainer agreement, but that they did not intend to keep that promise. We conclude that
the causes of action for fraud, intentional misrepresentation, and concealment come
within the express exception of section 340.6 and are instead governed by the three-year
statute of limitations for fraud. (§ 338, subd. (d).) Before discussing the accrual of those
causes of action and any applicable tolling, we turn to the causes of action for negligent
misrepresentation and constructive fraud.
These causes of action require a different analysis. In Quintilliani, supra,
62 Cal.App.4th 54, the court held that the exception for actual fraud in section 340.6 was
not intended to apply to a cause of action for constructive fraud resulting from negligent
misrepresentation. The court reasoned that a claim for constructive fraud may arise out
of a breach of fiduciary duty, regardless of intent or motive, and that the Legislature
intended only to except acts of actual fraud from the scope of section 340.6. (Id. at
pp. 69–70.) Based on that rationale, the cause of action for negligent misrepresentation is
governed by section 340.6. As noted, plaintiff does not allege whether the cause of
action for constructive fraud was based on intentional or negligent conduct. If
intentional, the conduct would come within the fraud exception to section 340.6; if
negligent, it would come under section 340.6. But as we explain below, all the causes of
action accrued more than three years before the complaint was filed, and are barred by
the applicable statute of limitations.
10
2. Failure to Perform Services Through Trial
The second cause of action alleges: ―Defendants were improperly and unjustly
enriched as a result of receiving monies for a scope of services that Defendants were
unwilling to, and did not, perform in the amount of the Contract Loss.‖ An unjust
enrichment claim based on mistake or fraud is subject to the delayed discovery rule, and
accrues when the aggrieved party discovers the facts constituting the fraud or mistake.
(Federal Deposit Ins. Corp. v. Dintino (2008) 167 Cal.App.4th 333, 350 (Dintino).)
The gravamen of the third cause of action for money had and received appears to
be the same. Paragraph 48 alleges: ―On or about January 29, 2007 and continuing
through March 1, 2007, Defendants repeatedly defaulted on their obligations under the
Agreement for monies received and owed to Plaintiff. Such amount of the Contract Loss
still remains unpaid to Plaintiff and outstanding.‖ Paragraph 21 of the complaint,
incorporated by reference into the third cause of action, defines ―Contract Loss‖ as the
net amount of $14,076.19 Mohammed paid to defendants to represent plaintiff.3
The gravamen of these causes of action is that defendants did not perform the full
scope of professional services for which they were paid. The one-year statute of
limitations in section 340.6 applies to a cause of action for unjust enrichment seeking
restitution of legal fees paid for allegedly deficient advice. (Favila v. Katten Muchin
Rosenman (2010) 188 Cal.App.4th 189, 223 (Favila).) The same reasoning applies to
plaintiff‘s cause of action for unjust enrichment based on failure to provide legal services
under the agreement of the parties. Like the unjust enrichment claim, the gravamen of
the cause of action for money had and received is that defendants were paid for legal
services that they did not perform. Such a claim is governed by section 340.6. (Levin,
supra, 37 Cal.App.4th at pp. 804–805 [cause of action for refund of legal fees constitutes
claim for legal malpractice subject to section 340.6.].)
3This figure is based on the original $15,000 payment minus the $923.81 refund
paid by defendants after they were relieved by the trial court.
11
3. Breach of Implied Covenant
The fourth cause of action is for breach of the implied covenant of good faith and
fair dealing. It alleges that defendants breached the covenant and incorporates the
preceding 53 paragraphs. Because it incorporates the other allegations of the complaint
as the basis for this cause of action, it is based on a wrongful act or omission other than
fraud in the performance of professional services and is governed by section 340.6.
(Favila, supra, 188 Cal.App.4th at p. 223.)
4. Negligence
The eleventh cause of action is for negligence and the twelfth is for professional
negligence. Both allege that defendants breached their duty to use ordinary care and
skill. The twelfth cause of action specifically alleges that defendants had a duty to
provide legal services and that in breaching that duty, defendants did not meet the
standard of ordinary care, particularly by wrongfully attempting to withdraw from the
criminal matter. In his opening brief, plaintiff concedes that section 340.6 applies to the
twelfth cause of action. As to the eleventh cause of action, no concession is made.
Instead, plaintiff argues that the statute of limitations was tolled while he was imprisoned.
We conclude that both causes of action are governed by section 340.6 because they arise
from professional services rendered by defendants. (§ 340.6, subd. (a).)
5. Breach of Fiduciary Duty
The thirteenth cause of action alleges that defendants breached their fiduciary duty
to plaintiff, in particular by wrongfully moving to withdraw from the criminal matter and
by threatening, harassing and intimidating him. He alleges that defendants‘ conduct was
tantamount to abandonment of a client. In Quintilliani, supra, 62 Cal.App.4th 54, 68, the
court concluded: ―Since most claims for breach of fiduciary obligations can be restated
as a claim for attorney malpractice, and since the fiduciary obligations here arose out of
the attorney-client relationship, we find that section 340.6 applies to such claims.‖ (See
also Stoll v. Superior Court (1992) 9 Cal.App.4th 1362, 1368; Levin, supra, 37
Cal.App.4th at p. 805.) We agree with this analysis and conclude section 340.6 applies.
12
6. Intentional Infliction of Emotional Distress
The fourteenth cause of action for intentional infliction of emotional distress is
based on allegations that defendants threatened, intimidated, and harassed plaintiff
regarding their desire to withdraw from representing plaintiff in the criminal matter.
Section 340.6 applies to all causes of action arising from an attorney‘s provision of
professional services other than actual fraud, including tort theories. (Levin, supra,
37 Cal.App.4th at p. 805.) Section 340.6 applies to this cause of action.
7. Abuse of Process
The fifteenth cause of action alleges that ―on January 28, 2007, and again on or
about March 1, 2007, Defendants acted intentionally and willfully using the legal process
to threaten, intimidate and harass Plaintiff as stated herein. [¶] . . . The purpose of such
conduct by Defendants was in furtherance of the desire of Defendants to withdraw from
representation of Plaintiff in the Criminal Matter or otherwise obtain additional monies
from Plaintiff. [¶] . . . As a result of such abuse of process by Defendants, Plaintiff
suffered injuries and damages, including Contract Loss, being compelled to retain new
counsel, expending Additional Fees and incurring Emotional Loss and Income Loss.‖
―‗The common law tort of abuse of process arises when one uses the court‘s
process for a purpose other than that for which the process was designed.‘ (Rusheen v.
Cohen [(2006)] 37 Cal.4th [1048,] 1056.) ‗To succeed in an action for abuse of process,
a litigant must establish that the defendant (1) contemplated an ulterior motive in using
the process, and (2) committed a willful act in the use of the process not proper in the
regular conduct of the proceedings.‘ (Id. at p. 1057.)‖ (JSJ Limited Partnership v.
Mehrban (2012) 205 Cal.App.4th 1512, 1522.)
The rationale of Vafi, supra, 193 Cal.App.4th 874 is instructive. In that case, the
court concluded that the one-year limitation period of section 340.6 applied to a cause of
action for malicious prosecution. It reasoned: ―There is no language in the statute which
exempts malicious prosecution claims from the limitations period. We are not persuaded
by Vafi‘s argument that the Legislature was required to amend the statute to expressly
add malicious prosecution to the reach of the statute. Indeed, ‗if exemptions are specified
13
in a statute, we may not imply additional exemptions unless there is a clear legislative
intent to the contrary.‘ [Citation.]‖ (Id. at p. 881.) The court rejected the plaintiff‘s
argument that section 340.6 means ―malpractice‖ when it refers to ―‗a wrongful act or
omission.‘‖ (Id. at p. 882.) It held: ―If the Legislature wanted to limit the reach of
section 340.6 to malpractice actions between clients and attorneys, it could easily have
done so. Absent express legislative intent that it meant . . . malpractice when it referred
to a wrongful act or omission, we are left only to interpret the plain meaning of the words
in the statute. [Citation.] In any event, courts have consistently applied section 340.6 to
various tort and contract actions. [Citations.]‖ (Id. at pp. 882–883.)
We agree with the Vafi court that the broad language of section 340.6 was
intended by the Legislature to encompass all tort actions other than actual fraud,
including abuse of process. Section 340.6 applies to this claim.
8. Unfair Business Practices
The sixteenth cause of action alleges that defendants ―engaged in unlawful, unfair
and fraudulent business practices as stated herein‖ in violation of Business and
Professions Code section 17200 et seq. (the unfair competition law). Plaintiff alleges the
business practices caused him to suffer damages when he was compelled to retain new
counsel and pay additional attorney fees, as well as incurring emotional and income loss.
This cause of action repackages plaintiff‘s allegations against defendants based on
―wrongful acts or omissions arising in the performance of professional services‖ (§ 340.6,
subd. (a)) and therefore comes within the one-year limitations period.
In summary, we conclude that the one-year period of section 340.6, subdivision
(a) applies to each of plaintiff‘s causes of action with the exception of the fifth through
seventh causes of action for fraud, and the ninth cause of action for constructive fraud
because that cause of action does not allege whether the conduct of the defendants was
intentional or negligent. As we explain next, the uncertain gravamen of the ninth cause
of action makes no difference because whether based on intentional or negligent conduct,
all the causes of action accrued at the same time and are therefore barred by the
applicable limitations period.
14
C. Accrual
We begin with accrual under section 340.6 because it governs most of the causes
of action. ―‗It is well settled that the one-year limitations period of section 340.6 ―‗is
triggered by the client‘s discovery of ―the facts constituting the wrongful act or
omission,‖ not by his discovery that such facts constitute professional negligence, i.e., by
discovery that a particular legal theory is applicable based on the known facts. ―It is
irrelevant that the plaintiff is ignorant of his legal remedy or the legal theories underlying
his cause of action.‖‘‖‘ (Peregrine Funding, Inc. v. Sheppard Mullin Richter & Hampton
LLP (2005) 133 Cal.App.4th 658, 685.)‖ (Croucier v. Chavos (2012) 207 Cal.App.4th
1138, 1146–1147.)
As he alleges, plaintiff discovered that defendants did not intend to represent him
for a flat fee of $15,000 in January 2007 when defendants demanded additional payment
to continue with the defense. At the latest, he discovered the basis for his claims when
defendants were relieved as counsel by the trial court in the criminal matter on March 1,
2007. The same time frame applies to his claims of intimidation and harassment, which
allegedly occurred from January 2007 through March 1, 2007. Plaintiff filed his original
complaint more than three years later, on June 23, 2010.
The discovery rule of accrual applies to the fraud causes of action as well under
section 338, subdivision (d). ―‗[T]he uniform California rule is that a limitations period
dependent on discovery of the cause of action begins to run no later than the time the
plaintiff learns, or should have learned, the facts essential to his claim.‘ [Citation.] Thus,
for example, the statute of limitations in a cause of action for fraud ‗commences to run
after one has knowledge of the facts sufficient to make a reasonably prudent person
suspicious of fraud, thus putting him on inquiry . . . .‘ [Citations.]‖ (Cleveland v.
Internet Specialties West, Inc. (2009) 171 Cal.App.4th 24, 31.) Thus plaintiff had
knowledge that defendants did not intend to represent him through trial before March 1,
2007 when they were relieved as counsel.
Plaintiff argues that his claims did not accrue until he ―had a reasonable basis or
opportunity to discover claims against Defendants‖ and that he ―did not reasonably
15
discover that he had any legal basis for claims against Defendants until late 2009, after he
was released from incarceration.‖ He contends: ―As a lay person under criminal charges
in 2007 and 2008, Plaintiff did not have access to legal resources or even the records of
his own case with Defendants (for example, Plaintiff only obtained in late 2009 a copy of
the transcript from the date when Defendants withdrew from representation of Plaintiff in
2007) to be able to identify the wrongdoing.‖ This argument is contrary to the rule that
the cause of action accrues when the plaintiff knows the factual basis for his claim, not
when the plaintiff appreciates the legal theories or remedies that might be pursued.
Plaintiff cites Bledstein v. Superior Court (1984) 162 Cal.App.3d 152, 171, for the
proposition that as a criminal defendant he was not likely to discover his cause of action
against his former counsel until another lawyer reviewed that lawyer‘s conduct. But the
basis for the malpractice action in Bledstein was a claim that the plaintiff‘s attorney
committed malpractice by advising him to plead guilty to a narcotics charge. In contrast,
in this case, the basis for plaintiff‘s claim was easily discovered—defendants took the
position that the $15,000 paid was only a retainer and not a flat fee for defense through
trial. That is the time that plaintiff must have understood that he was wronged, and
therefore is the time he knew or should have known that a cause of action might be
available against the defendants under these circumstances.
Thus, all of plaintiff‘s causes of action were time-barred because they were
brought after the applicable statute of limitations had expired, unless the relevant periods
were tolled.
D. Tolling Under Section 352.1
Plaintiff invokes the tolling accorded a person who is incarcerated for all or a
portion of the limitations period. Section 352.1 allows a person who ―is, at the time the
cause of action accrued, imprisoned on a criminal charge, or in execution under the
sentence of a criminal court for a term less than for life, . . .‖ a maximum of two years
16
tolling.4 (Italics added.) (Rose v. Hudson (2007) 153 Cal.App.4th 641, 648, fn. 6.) It
runs from the date of sentencing. (Carlson v. Blatt (2001) 87 Cal.App.4th 646, 650.)
The second amended complaint alleged that plaintiff was incarcerated from July 11, 2008
through June 23, 2009, and again from November 10, 2009 through December 15, 2009,
a period of 363 days. Under section 352.1, the limitations period applicable to each of
plaintiff‘s causes of action would have been extended by 363 days, but only if the cause
of action accrued while he was incarcerated. As we have discussed, all of plaintiff‘s
claims accrued no later than March 1, 2007, before he alleges he was incarcerated. Since
appellant was not incarcerated when his causes of action accrued, the tolling provision
does not apply.
E. Equitable Tolling
Plaintiff claims that the limitations period was extended by equitable tolling. The
principles of equitable tolling do not apply to an action governed by section 340.6.
(Gordon v. Law Offices of Aguierre & Meyer (1999) 70 Cal.App.4th 972, 979–980.)
We next consider whether equitable tolling extended the period in which plaintiff
could bring his fraud causes of action. ―‗Equitable tolling is a judge-made doctrine
―which operates independently of the literal wording of the Code of Civil Procedure‖ to
suspend or extend a statute of limitations as necessary to ensure fundamental practicality
and fairness. [Citations.]‖ (In re Marriage of Zimmerman (2010) 183 Cal.App.4th 900,
911.) Plaintiff bears the burden of proving that this doctrine applies. (Id. at p. 912.) In
his opposition to the demurrer, plaintiff did not argue equitable tolling.5 Because he did
not, it was not preserved for appeal. (Ibid.)
4 Section 352.1, subdivision (a) provides in pertinent part: ―If a person entitled to
bring an action . . . is, at the time the cause of action accrued, imprisoned on a criminal
charge, or in execution under the sentence of a criminal court for a term less than for life,
the time of that disability is not a part of the time limited for the commencement of the
action, not to exceed two years.‖ (Italics added.)
The only reference to ―equity‖ in plaintiff‘s opposition to the demurrer is his
5
argument that ―[t]he Court should consider equitable considerations in its review of the
17
Even if we were to consider the merits of the argument, plaintiff has failed to
plead the prerequisites for its application. ―‗To establish that equitable tolling applies, a
plaintiff must prove the following elements: fraudulent conduct by the defendant
resulting in concealment of the operative facts, failure of the plaintiff to discover the
operative facts that are the basis of its cause of action within the limitations period, and
due diligence by the plaintiff until discovery of those facts. [Citations.]‘ (Federal
Election Com’n v. Williams (9th Cir. 1996) 104 F.3d 237, 240–241.)‖ (Sagehorn v.
Engle (2006) 141 Cal.App.4th 452, 460–461.) As we have discussed, plaintiff became
aware of the operative facts regarding defendants‘ refusal to defend him for a flat fee of
$15,000 and their alleged efforts to intimidate and harass him, no later than March 1,
2007. The doctrine of equitable tolling does not apply under these circumstances.
The complaint in this action was filed after the limitations periods of section 340.6
and 338, subdivision (d) had expired. Those periods were not extended by tolling under
either section 352.1 or equitable tolling. The demurrer to the second through sixteenth
causes of action was correctly sustained. Although plaintiff argues he should have been
granted leave to amend, he has not presented any supported basis to avoid the bar of the
statute of limitations.
II
Plaintiff argues he raised triable issues of material fact precluding summary
judgment on the cause of action for breach of contract. That cause of action alleges that
defendants repeatedly assured plaintiff that the entire cost of defense through jury trial
would be $15,000. He alleges that beginning on January 29, 2007 (when the fee dispute
began) through March 1, 2007 (when defendants were relieved as counsel), defendants
―defaulted with respect to providing services and legal representation to Plaintiff through
Demurrer, and should consider that as professional attorneys in a position of trust and
confidence vis-à-vis Plaintiff (a lay person, indigent and of little English-speaking
ability), the oppressive and fraudulent conduct of Defendants (as alleged in the SAC)
should not operate to deprive Plaintiff of the ability to bring forth the merits of his case
before the Court.‖
18
the conclusion of a jury trial in the Criminal Matter.‖ He also alleged defendants
breached section 4 of the agreement which obligated them to reasonably represent him in
the criminal matter.
Defendants‘ motion for summary judgment contended that there was no breach of
contract because Ardalan‘s motion to withdraw was consistent with the terms of the
agreement and Rules of Professional Conduct. They also argued that plaintiff‘s
allegations of oral representations contrary to the terms of the written agreement could
not be the basis for a breach of contract claim under the parol evidence rule. In his
opposition and separate statement of disputed facts, plaintiff contradicted these
contentions, submitting declarations by himself and his brothers regarding their
understanding, based on oral representations by defendant Ardalan in Farsi, that the
charge for defense of the criminal charges through trial was a flat fee of $15,000
(excluding costs of investigation and appeal). Based on this evidence, plaintiff took the
position that the written retainer agreement did not memorialize the actual agreement of
the parties because it provided for billing beyond an initial $15,000 retainer payment.
―‗A defendant is entitled to summary judgment if the record establishes as a matter
of law that none of the plaintiff‘s asserted causes of action can prevail.‘ [Citation.] We
review the trial court‘s decision de novo, determining independently whether the facts not
subject to dispute support summary judgment. (Intel Corp. v. Hamidi (2003) 30 Cal.4th
1342, 1348.) Doubts are resolved in favor of the party opposing the judgment, and we
are not bound by the trial court‘s reasons for the summary judgment ruling. [Citations.]‖
(Aleman v. Airtouch Cellular (2012) 209 Cal.App.4th 556, 567.)
A. Parol Evidence
―The parol evidence rule is codified in Code of Civil Procedure section 1856 and
Civil Code section 1625. It provides that when parties enter an integrated written
agreement, extrinsic evidence may not be relied upon to alter or add to the terms of the
writing. (Casa Herrera, Inc. v. Beydoun (2004) 32 Cal.4th 336, 343 (Casa Herrera).)
‗An integrated agreement is a writing or writings constituting a final expression of one or
more terms of an agreement.‘ (Rest.2d Contracts, § 209, subd. (1); see Alling v.
19
Universal Manufacturing Corp. (1992) 5 Cal.App.4th 1412, 1433.)‖ (Riverisland, supra,
55 Cal.4th at p. 1174.)
Although the written retainer agreement did not include an express integration
clause, there was partial integration as to the terms of payment to defendants. ―An
integration may be partial as well as complete. In other words, the parties may intend a
writing to finally and completely express certain terms of their agreement rather than the
agreement in its entirety. [Citation.] When only part of the agreement is integrated, the
parol evidence rule applies to that part.‖ (Hayter Trucking, Inc. v. Shell Western E&P,
Inc. (1993) 18 Cal.App.4th 1, 14; Founding Members of the Newport Beach Country
Club v. Newport Beach Country Club, Inc. (2003) 109 Cal.App.4th 944, 953–954.)
Whether an integration was intended is a question for the court to decide which we
independently review. (Singh v. Southland Stone, U.S.A., Inc. (2010) 186 Cal.App.4th
338, 352–353.) ―A writing may, but need not, expressly state that it is intended as an
integration. [Citation.] In addition to the terms of the writing, a court should also
consider the surrounding circumstances, including prior negotiations, and the nature of
the purported collateral agreement to determine whether it is reasonable to conclude that
the collateral agreement was intended to be part of the bargain. [Citation.]‖ (Id. at
p. 353.) In light of the extensive, and detailed provisions of the retainer agreement
regarding fees, we conclude it was intended to be an integration.
A fraud exception to the parol evidence rule is codified at section 1856,
subdivision (g): ―This section does not exclude other evidence of the circumstances
under which the agreement was made or to which it relates, as defined in Section 1860, or
to explain an extrinsic ambiguity, or otherwise interpret the terms of the agreement, or to
establish illegality or fraud.‖ (Italics added.)
In Riverisland, the Supreme Court overruled Bank of America etc. Assn. v.
Pendergrass (1935) 4 Cal.2d 258 (Pendergrass). Pendergrass had limited the fraud
exception to the parol evidence rule by requiring that evidence offered to prove fraud
―must tend to establish some independent fact or representation, some fraud in the
procurement of the instrument or some breach of confidence concerning its use, and not a
20
promise directly at variance with the promise of the writing.‖ (Id. at p. 263, italics
added.) Characterizing Pendergrass as ―an aberration,‖ the Supreme Court ―reaffirm[ed]
the venerable maxim stated in Ferguson v. Koch [(1928)] 204 Cal. [342,] 347: ‗[I]t was
never intended that the parol evidence rule should be used as a shield to prevent the proof
of fraud.‘‖ (Riverisland, supra, 55 Cal.4th at p. 1182.)
In Riverisland, the plaintiffs alleged they negotiated an agreement to restructure
their debt to a production credit association. They alleged that the representative of the
credit association told them that their loan would be extended for two years in exchange
for additional collateral consisting of two ranches. These assurances were repeated when
they signed the restructuring agreement, which they signed where tabbed for their
signatures without reading it. But the agreement actually provided for only three months
forbearance and identified eight parcels as additional collateral. (Riverisland, supra, 55
Cal.4th at p. 1173.) The plaintiffs sued for fraud, negligent misrepresentation, rescission
and reformation of the restructuring agreement. The trial court granted summary
judgment on the ground that the fraud exception to the parol evidence rule did not allow
admission of promises at odds with the terms of a written agreement. (Ibid.) The
gravamen of the plaintiffs‘ causes of action was that the written restructuring agreement
did not reflect the actual agreement between the parties.
At oral argument, counsel for defendants argued that Riverisland has no
application here because plaintiff does not challenge the validity of the contract, but
instead seeks to modify its terms to reflect an oral understanding. We do not read
Riverisland so narrowly. As in that case, here the gravamen of the breach of contract
cause of action is that the written retainer agreement does not memorialize the actual
agreement reached between plaintiff and defendants. Plaintiff‘s claim is that he had an
agreement with defendants to receive representation through trial for a flat fee of $15,000
but that defendants breached that agreement by preparing a written retainer agreement
contrary to this agreement and then refusing to represent him through trial for $15,000.
This is a viable cause of action even though the separate causes of action for fraud and
misrepresentation are barred by the statute of limitations. Under the reasoning of
21
Riverisland, parol evidence was admissible to raise a triable issue of material fact as to
whether defendants agreed to represent plaintiff through trial for the $15,000 flat fee or
whether the written retainer agreement memorialized the actual agreement of the parties.
In opposition to summary judgment, plaintiff submitted the declarations of his
brothers Mohammed and Behrouz, which were identical.6 We liberally construe
plaintiff‘s evidence under the rules governing summary judgment. (Theiler v. Ventura
County Community College Dist. (2011) 198 Cal.App.4th 852, 857.) The declarations
state that, based on the respective declarants‘ conversation with defendant Ardalan in
Farsi, ―he made us believe he will represent until one jury trial for $15,000.00, he said
other costs such as investigation is not part of $15,000.00 (his fees). He wanted the
money up front, same as others . . . .‖ A reasonable inference from these declarations is
that defendant Ardalan represented to plaintiff‘s brothers that he would defend plaintiff
through the criminal trial for a flat fee of $15,000, payable in advance, exclusive of
investigation and appeal.
Under the rule of Riverisland, this was admissible and sufficient evidence to raise
a triable issue of material fact as to whether defendants breached the agreement of the
parties by demanding more than $15,000 to represent plaintiff through the criminal trial.
Summary judgment must be reversed on this ground.
Defendants also argue that they were entitled to summary judgment because
plaintiff was collaterally estopped to claim the agreement was breached by their wrongful
withdrawal in the criminal trial. They claim that this issue was decided by the criminal
court, which granted their motion to be relieved as counsel.
We disagree. ―‗―‗The prerequisite elements for applying the doctrine [of collateral
estoppel] to either an entire cause of action or one or more issues are the same: (1) A
claim or issue raised in the present action is identical to a claim or issue litigated in a
prior proceeding; (2) the prior proceeding resulted in a final judgment on the merits; and
6
Plaintiff also refers to his own declaration submitted in opposition to the motion
for summary judgment, but it is not in the record on appeal.
22
(3) the party against whom the doctrine is being asserted was a party or in privity with a
party to the prior proceeding.‘‖‘ (Boeken v. Philip Morris USA, Inc. (2010) 48 Cal.4th
788, 797, italics omitted.)‖ (Phillips v. Sprint PCS (2012) 209 Cal.App.4th 758, 770.)
The issue raised here, whether defendants‘ withdrawal constituted a breach of the
agreement with plaintiff is not identical to the issue before the criminal court, which was
whether to relieve defendants from representing plaintiff in the criminal matter.
Collateral estoppel does not apply.
In opposition to the motion for summary judgment, and on appeal, plaintiff
asserted that the contract contained unconscionable terms. This argument was
inconsistent with the allegations of the complaint, which had no cause of action based on
unconscionability. For that reason, we do not reach this argument.
Since we conclude that the summary judgment on the breach of contract cause of
action must be reversed in light of Riverisland, supra, 55 Cal.4th 1169, we need not and
do not reach plaintiff‘s arguments regarding the trial court‘s refusal to grant a second
continuance of the summary judgment motion to allow further discovery. Since
Riverisland was decided while this case was on appeal, the trial court did not have an
opportunity to determine its impact on the timeliness of the breach of contract cause of
action. It may do so on remand.
DISPOSITION
The order sustaining the demurrer to the second through sixteenth causes of action
of the second amended complaint is affirmed. Summary judgment in favor of defendants
is reversed. Each side is to bear its own costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
EPSTEIN, P. J.
We concur:
WILLHITE, J. MANELLA, J.
23