Smith v. Choate and Rueger & Choate

Filed 8/1/06 Smith v. Choate and Rueger & Choate CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

COURT OF APEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

APPEAL from a judgment of the Superior Court of San Diego County, Linda B. Quinn, Judge. Affirmed.

Dwight Smith sued Mark Choate and the Krueger & Choate law firm (collectively Choate) for legal malpractice, alleging they settled his lawsuit against his former psychiatrist, "Dr. Roe,"^[1] for substantially less than the value of the case. Choate moved for summary judgment on two grounds: first, Smith failed to prove damages because he offered no competent evidence he would have achieved a result better than the settlement; second, Smith's causes of action against Dr. Roe were time-barred under Code of Civil Procedure section 340.1, subdivision (a)^[2] because Smith reasonably should have known years earlier about the injuries Dr. Roe's sexual abuse caused him, given that Smith discussed the incidents with individuals who, by their reactions, communicated their disapproval of Dr. Roe's sexual conduct in therapy.

FACTUAL AND PROCEDURAL SUMMARY

On March 5, 2001, Dwight Smith, represented by Choate, filed a complaint against Dr. Roe alleging causes of action for medical negligence, battery/sexual assault, breach of fiduciary duty, and intentional and negligent infliction of emotional distress. The following are undisputed facts regarding Smith's lawsuit against Dr. Roe. Smith, born in October 20, 1950, began a psychotherapeutic relationship with Dr. Roe in March, 1968, when Smith was seventeen and one-half years old. The therapy ended in March, 1979. Smith's complaint alleged that during therapy Dr. Roe engaged in "prolonged, unnecessary, intimate contact, touching, probing and other inappropriate behavior" with Smith.

Smith discussed Dr. Roe's sexual conduct in therapy with a few individuals. At some time before 1972, Smith told his former girlfriend, Angela Hannan (aka Angela Goguen), about it and concluded that she believed the sexual contact in therapy was wrong. In 1977, Smith discussed with his former wife, Mary Cavoulas-Smith, that during therapy he and Dr. Roe engaged in mutual masturbation. At some time during the 1980's, Smith discussed his therapy with his current wife, Leia Smith, while they were experiencing "abandonment issues." According to Smith, "she was troubled" by his disclosure and believed Dr. Roe's sexual conduct in therapy was "highly unconventional." Smith treated with another therapist, Dr. Crocker, in the mid-1980's. Smith "willfully concealed" from Dr. Crocker any discussion regarding his therapy with Dr. Roe so as "[t]o protect Dr. Roe." In 1997, Smith discussed his therapy with Dr. Roe. with Reverend John McAndrew, his Alcoholics Anonymous sponsor. McAndrew recommended that Smith seek counseling, and opined Smith likely would perpetrate sexual abuse on others. Finally, Smith consulted a therapist, Dr. Christine Bates, in February 1998; she gave him a booklet entitled "Psychotherapy Never Includes Sex." Smith stated in his first communication with Choate that he dated his awareness of the abuse Dr. Roe caused him from the time he received this booklet.

The parties agreed to mediate the case. In mediation, Dr. Roe, in a "sworn verification of assets," valued his assets at $1,107,000. The case settled for $325,000 in September 2001. Dr. Roe also agreed to pay Smith an additional $500,000 in liquidated damages if Smith discovered Dr. Roe had misrepresented the value of an asset, or category of assets, valued at more than $25,000. Dr. Roe assigned to Smith claims against Dr. Roe's insurance carriers, and committed himself to assisting Smith's insurance-related investigations.^[3]

In February 2002, Smith, dissatisfied with the amount of his settlement, filed a lawsuit against Choate. (Smith v. Choate, et al. (Super. Ct. S. D. County, 2002, No. GIC783529).) The parties agreed Smith would dismiss the suit without prejudice and with the right to refile it on or before March 1, 2004. Smith refiled the complaint in February 2004, and alleged causes of action for professional negligence, breach of contract, and breach of fiduciary duty. (Smith v. Choate (Super. Ct. S. D. County, 2005, No. GIC825823).) Smith alleged that his underlying claim against Dr. Roe was worth $4,870,000.

Choate moved for summary judgment, which the trial court granted on the sole ground that Smith's claimed damages were speculative.

DISCUSSION

A.

Smith contends Choate did not meet its initial burden of proof for purposes of summary judgment. He alternatively contends he demonstrated the existence of a triable issue of fact regarding the damages caused to him when Choate purportedly failed to "investigate [Dr. Roe's] available insurance." We disagree with both contentions.

"The grant and denial of summary judgment or summary adjudication motions are subject to de novo review." (Nakamura v. Superior Court (2002) 83 Cal.App.4th 825, 832.) This court applies the same analysis as the trial court. We identify the issues framed by the pleadings, determine whether the moving party has negated the nonmoving party's claims, and determine whether the opposition has demonstrated the existence of a triable issue of material fact. Summary judgment is appropriate if all the papers submitted show there is no triable issue of fact and that the moving party is entitled to judgment as a matter of law. (§ 437c, subd. (c).)

"To prevail on summary judgment . . . the defendant must show that the plaintiff both has not established and cannot reasonably expect to establish a prima facie case. A defendant can meet the former burden merely by showing the absence of evidence of [the claimed harm]. But that is not enough. The defendant must also show, by direct or circumstantial evidence, that the plaintiff cannot reasonably expect to obtain a prima facie case. This latter showing, however, is not impossibly difficult. If a plaintiff has had the full opportunity to obtain discovery and to present all available evidence in support of a . . . claim, and still has failed to establish a prima facie case, the trial court may reasonably infer that the plaintiff cannot do so. If the plaintiff cannot present a prima facie case, a nonsuit at trial would be inevitable." (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 374 (conc. opn. of Chin, J.) quoted approvingly in Aguilar v. Richfield Co. (2001) 25 Cal.4th 826, 854.)

"In order to establish a cause of action for legal malpractice the plaintiff must demonstrate: (1) breach of the attorney's duty to use such skill, prudence, and diligence as other members of the profession commonly possess and exercise; (2) a proximate causal connection between the negligent conduct and the resulting injury; and (3) actual loss or damage resulting from the negligence." (Thompson v. Halvonik (1995) 36 Cal.App.4th 657, 661 (Thompson).) A plaintiff must prove that, but for the negligence of the attorney, a better result could have been obtained in the underlying action. (California State Auto. Assn. Inter-Ins. Bureau v. Parichan, Renberg, Crossman & Harvey (2000) 84 Cal.App.4th 702, 710 (California State Auto.), dissaproved of on other grounds by Viner v. Sweet (2003) 30 Cal.4th 1232, 1244, fn 5.) The purpose of this [case-within-a-case] methodology is to avoid damages based on pure speculation and conjecture. (California State Auto., supra, at p. 710.)

Smith contends Choate failed to present evidence that Smith could not establish the terms of the insurance policies. However, Smith's responses to special interrogatories demonstrate Smith was unable to do so. Interrogatory number 48 asked, "Do you contend that [Dr. Roe] had more assets than were disclosed in the course of the settlement?" Smith responded, "Yes." Interrogatory number 49 asked , "If your response to Special Interrogatory No. 48 is yes, state all facts upon which you base your contention." Smith responded, "[T]he information requested is equally available to all parties in Dr. Roe's deposition transcript." This response did not suffice to establish a triable issue of fact regarding the existence of additional assets or Choate's failure to include such assets in the settlement.

Special interrogatories numbers 68, 69, and 70, respectively, inquired about the settlement amount Smith believed he should have obtained, and asked Smith to identify specific evidence that Dr. Roe would have been able to pay or would have offered that amount. Smith responded only that he should have been paid $4,870,000, but he had no specific evidence Dr. Roe would have offered it or was able to pay it all. Again, Smith's responses were "woefully inadequate and [provided] little more than a wish list of damages unsupported by evidence." (Barnard v. Langer (2003) 109 Cal.App.4th 1453, 1461-1463.)

The core of Smith's claim for damages is the purported existence of Dr. Roe's insurance coverage that could indemnify Smith for the harm Dr. Roe caused him. Smith sought and obtained one year's delay in prosecuting his legal malpractice claim. Nonetheless, the record fails to explain why Smith was unable to avail himself of the time and opportunity to conduct discovery and produce competent evidence regarding Dr. Roe's available assets and insurance coverage. Smith submitted certificates of insurance, but no insurance policies that stated the terms of coverage and any exclusions. It was not reasonably likely Smith could provide evidence of the scope of such coverage, given that he failed to do so three years after he first filed the legal malpractice action.

Smith's attorney conceded at the hearing regarding the court's tentative ruling that Smith offered no evidence regarding damages: He stated, "The primary argument in [Choate's] reply brief is that [Smith] has failed to prove the scope of Doctor Roe's insurance coverage. And in accordance with that, [Choate] set forth some argument as to what constitutes admissible evidence regarding the contents of a loss of or destroyed policy. And all those arguments are interesting, and I agree, it's certainly true that [Smith] has not proven the scope of Doctor Roe's coverage." (Emphasis added.) In a similar vein, Smith states in his opening brief, "In this case [Smith] was entitled to not present any evidence and have the motion denied upon this ground, because the burden of proof never shifted." Smith's argument fails. Choate did prove Smith could not make out a prima facie case and, when the burden shifted to Smith, he provided no evidence a triable issue existed regarding damages. A party cannot avoid summary judgment based on mere speculation and conjecture, but instead must produce admissible evidence raising a triable issue of fact. (Crouse v. Brobeck, Phleger & Harrison (1998) 67 Cal.App.4th 1509, 1524.)

B.

Smith's claim for damages was pleaded as follows: Choate "failed to properly investigate [Dr. Roe's] available insurance. In fact, [Dr. Roe] had three insurance policies that would have covered [Smith's] claims. [Choate was] provided with information by [Dr. Roe] and his counsel that should have made [Choate] aware of the existence of those policies and the fact that there had been no denial of coverage by the insurance companies in question." The answer to the complaint asserted the following affirmative defense: "[T]he causes of action in the Complaint, and each of them, are uncertain and ambiguous as to identity, nature, and terms of the contract and/or contractual relationship upon which [Smith bases his] claim for damages against [Choate]."

At issue here is the element of damages. "[I]t is black-letter law that damages may not be based upon sheer speculation of surmise, and the mere possibility or even probability that damage will result from wrongful conduct does not render it actionable. [Citations.] As often emphasized, it is the uncertainty as to the fact of damage rather than its amount which negatives the existence of a cause of action based on either breach of contract and/or negligence." (Ventura County Humane Society v. Holloway (1974) 40 Cal.App.3d 897, 907.)

Assuming, arguendo, Smith established that Dr. Roe's insurance covered Smith's claimed injuries, it is mere speculation that the insurance companies would have settled with Smith under more favorable terms than Dr. Roe's settlement with Smith. The opposition to the summary judgment motion included a declaration by Edward Susolik, Esq., an expert regarding litigation and insurance claims. Among other things, Susolik stated, "In my opinion, [Smith] would have been able to convince Dr. Roe's insurers to offer a substantial amount in excess of $325,000 to settle [Smith's] claim. The insurers likely would have offered their policy limits of $1,400,000, that would be addition [sic] to the settlement payment from Dr. Roe." The declaration was supported by copies of certificates of insurance regarding Dr. Roe's insurance coverage and a "specimen copy APA insurance policy."

The trial court sustained Choate's objections that Susolik's declaration was both speculative and related to legal issues, which are not the proper subject of expert testimony. (See Devin v. United Services Auto. Assn. (1992) 6 Cal.App.4th 1149, 1156-1157, fn. 5; Dart Industries, Inc. v. Commercial Union Ins. Co. (2002) 28 Cal.4th 1059, 1068-1069.) Smith has not challenged that evidentiary ruling on appeal; therefore, any issues concerning its correctness have been waived. (Lopez v. Baca (2002) 98 Cal.App.4th 1008, 1015.) Here, as in a similar case, "[A]ctual harm from respondents' conduct is only a subject of surmise, given the myriad of variables that affect settlements of . . . malpractice actions. 'The mere probability that a certain event would have happened, upon which a claim for damages is predicated, will not support the claim or furnish the foundation of an action for such damages.' " (Thompson, supra, 36 Cal.App.4th at p. 663.)

Smith is in a similar situation to the plaintiff in Marshak v. Ballesteros (1999) 72 Cal.App.4th 1514, 1518 (Marshak), who unsuccessfully attempted to set aside a settlement he had reached in his marriage dissolution action. He then sued his attorney, alleging she negligently failed to object to the valuation of certain assets, resulting in a loss of $337,000. In response to a summary judgment motion, the plaintiff simply alleged that the case was worth more than he settled it for. He proffered no evidence to establish the value of his case other than his own declaration, and he did not prove his ex-wife also would have settled for an agreement more favorable to him. (Marshak, supra, at p. 1519.) Both the trial and appellate courts concluded he had failed to offer evidence of damages: "In order to prevail in his legal malpractice action, plaintiff must prove that the dissolution action would have resulted in a better outcome had defendant recommended that he reject the settlement offer. Plaintiff must prove what that better outcome would have been. . . . 'Damage to be subject to a proper award must be such as follows the act complained of as a legal certainty.' " (Id., at p. 1518.)

Smith argues he would have had a chance to "establish causation through trying the legal malpractice action to verdict if the jury found [Choate] were negligent and awarded [Smith] damages in excess of the amount of $325,000." But Smith's failure to raise a triable issue of fact regarding damages foreclosed trial on this issue. "The purpose of federal summary judgment law, which is identical to the purpose of ours, is to provide courts with a mechanism to cut through the parties' pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute." (Aguilar v. Richfield Co,. supra, 25 Cal.4th at p. 854.)

Because we affirm the judgment on the basis Smith did not meet his burden of proof to demonstrate a triable issue of fact as to the certainty of damages, we need not address the statute of limitations issue.

DISPOSITION

The judgment is affirmed. Mark Choate and Krueger & Choate are awarded costs on appeal.

O'ROURKE, J.

WE CONCUR:

NARES, Acting P. J.

McDONALD, J.

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Analysis and review provided by La Mesa Real Estate Attorney.

^[1] Under the terms of a confidential settlement agreement, the psychiatrist's identity has not been disclosed in either the trial court or this court.

^[2] Statutory references are to the Code of Civil Procedure. Section 340.1 subdivision (a) states: "In an action for recovery of damages suffered as a result of childhood sexual abuse, the time for commencement of the action shall be within eight years of the date the plaintiff attains the age of majority or within three years of the date the plaintiff discovers or reasonably should have discovered that psychological injury or illness occurring after the age of majority was caused by the sexual abuse whichever period expires later[.]"

^[3] Paragraph 5 of the settlement agreement states, "[Dr. Roe] hereby assigns, to the extent allowable by law, all rights, claims and benefits he has or may have against his E&O and liability insurance carriers arising out of the failure of the insurers to provide [Dr. Roe] with a defense and to indemnify [Dr. Roe] against the claims made by Smith in Case No. G/C 762863. [Dr. Roe] further agrees to provide Smith's attorney with whatever documents and other information he has concerning his E&O and liability insurance coverage and to cooperate with reasonable requests from Smith's attorney with whatever documents and other information he has concerning his E&O and liability insurance coverage and to cooperate with reasonable requests from Smith's attorney should smith elect to pursue any of the assigned claims."