Filed 4/24/07 Tesoriero v. Eliaser 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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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
ROCHELLE TESORIERO, Plaintiff and Appellant, v. JAMES R. ELIASER, Defendant and Respondent. | B189945 (Los Angeles County Super. Ct. No. BC304209) |
APPEAL from a judgment of the Superior Court of Los Angeles County, Conrad R. Aragon, Judge. Affirmed.
Fuchs & Associates, Inc., Gail S. Gilfillan and John R. Fuchs for Plaintiff and Appellant.
Reback, McAndrews & Kjar, James J. Kjar, Timothy J. Gonzales and Albert E. Cressey for Defendant and Respondent.
introduction
Plaintiff Rochelle Tesoriero (Tesoriero) appeals from summary judgment in favor of defendant James R. Eliaser (Eliaser) in her action for legal malpractice which arose out of Eliasers representation of Tesoriero in a marital dissolution action. She also challenges on appeal the trial courts sustaining of a demurrer, without leave to amend, as to her cause of action for breach of fiduciary duty. We conclude that the trial court properly granted summary judgment, because Tesoriero failed to raise a triable issue as to whether, but for Eliasers alleged negligence, Tesoriero would have achieved a more favorable result in the dissolution action. We further conclude that Tesoriero did not, and cannot, plead a cause of action for breach of fiduciary duty. Therefore, we affirm.
factual and procedural background
The Filing of the Present Action and the Demurrers
Tesoriero filed her complaint for professional negligence and breach of fiduciary duty against Eliaser in October 2003. Eliaser filed a motion to strike Tesorieros request for attorney fees, and demurred to the complaint on the ground that it failed to state sufficient facts to support a cause of action for breach of fiduciary duty. The errors and omissions which formed the basis for Tesorieros first cause of action for negligence were identical to the errors and omissions which formed the basis for her second cause of action for breach of fiduciary duty. Eliaser contended that the allegations were, at most, sufficient to support the first cause of action for negligence, but were not sufficient to support a cause of action for breach of fiduciary duty.
Tesoriero filed opposition to the demurrer. Agreeing with Eliasers contention, the trial court sustained the demurrer with leave to amend. Tesoriero filed a first amended complaint, to which Eliaser again responded by filing a demurrer regarding the cause of action for breach of fiduciary duty. The trial court sustained the demurrer, this time without leave to amend, ruling that the allegations were insufficient to constitute a cause of action for breach of fiduciary duty. Eliaser then filed an answer to the first amended complaint.
The Operative Complaint
In her operative, first amended complaint, Tesoriero alleged that she filed a petition for dissolution of her marriage to Leone John Tesoriero (hereafter ex-husband), her husband of 11 years, in October 2000. She initially acted in propria persona, in consultation with attorney Patricia Ostroy. During 2001, Tesoriero retained Eliaser to represent her. Tesoriero alleged that during the time Eliaser represented her, from 2001 to late October or early November 2002, Eliaser breached the professional duties he owed to her. She alleged various deficiencies in Eliasers performance, which we summarize in the following list:
1. Eliaser failed to determine that between 1997 and 2002, ex-husband had embezzled or otherwise diverted at least $1,154,488 in community income from the spouses jointly owned business, Discount Bird & Pet Supply (Discount Bird). As a result, Eliaser failed to assert in the dissolution action the alleged misappropriation of these community property funds.
2. Eliaser did not request production of ex-husbands bank records, and failed to propound discovery and depose ex-husband to determine the amount, location, and use of the misappropriated community property funds, thus preventing Tesoriero from having sufficient evidence at trial to obtain her share of the converted income and property, in an amount in excess of $500,000.
3. Eliaser failed to retain a competent expert to determine the value of the community business.
4. Eliaser failed to seek or obtain an award of attorney fees pendente lite.
5. Eliaser failed to adequately review and comprehend an ante-nuptial agreement executed by Tesoriero prior to her marriage, pursuant to which she was contractually owed the sum of at least $55,000, in lieu of alimony.
6. Eliaser failed to conduct discovery regarding loans in the amount of $540,000 that ex-husbands nephew, Michael Monaco, claimed to have made to the Tesorieros, thereby preventing Tesoriero from having sufficient evidence at trial to prove that she took no part in obtaining those loans or using those funds.
7. Eliaser failed to challenge the purportedly false claim that certain promissory notes in the amount of $450,000 were secured by jointly owned real property, when no security interest therein had been created.
8. Eliaser failed to assert that certain obligations claimed to be from a third-party trust, the Mary C. Tesoriero Trust, were at best loans by ex-husband to the community, for which he was not entitled to recover interest.
9. Eliaser failed to assert Tesorieros right to recover one-half of the excess rent of $5,000 per month that ex-husband had taken from the community business, and failed to assert her right to recover one-half of the payments being made directly to ex-husband by Nextel, a cellular phone company, but which constituted community property.[1]
10. Eliaser negligently advised Tesoriero to accept a settlement offer made by her ex-husband that was patently unfair and did not constitute an equal division of community property as required by the Family Code. Eliaser assertedly breached his duty by failing to propose a settlement that was fair, reasonable, and in accordance with applicable law.
As a result of Eliasers deficient representation, Tesoriero alleged she was damaged in an amount likely to be in excess of $500,000, arising from the deprivation of her rightful share of the community property from the jointly owned business. She also claimed she had been forced to incur more than $100,000 in attorney fees in an effort to avoid the damages resulting from Eliasers professional negligence. Tesoriero further alleged that she suffered additional damages in an amount subject to proof at the time of trial.
The Motion for Summary Judgment
Eliaser filed a motion for summary judgment, contending that the action was barred by the statute of limitations, and that Tesoriero could not raise triable issues of material fact to prove the elements of causation and damages as to her cause of action for professional negligence. We summarize only the evidence relevant to the determinative issue on appeal: the issue of causation.
A. Eliasers Evidence on Summary Judgment
1. Facts Relating to the Dissolution Action
In his separate statement of undisputed facts, Eliaser set forth the following facts regarding the litigation of the dissolution action.
The dissolution action was filed in October 2000. Tesoriero acted in propria persona until May 2001, when she retained Eliaser. Sometime between 2000 and 2002, Tesoriero and/or Eliaser retained a forensic accountant, Kohn, a CPA, and they turned over to him information and documents that had been obtained informally. Tesoriero hoped to be awarded the community property pet store business and the ownership rights to the property on which it operated, with as little financial encumbrance as possible.
Ex-husband was represented in the dissolution action by attorney Marshall Zolla. Zolla made two settlement offers regarding the property division that involved awarding the business and property rights to Tesoriero, subject to four notes held by Michael Monaco, ex-husbands nephew, and two notes held by the Mary C. Tesoriero Trust,[2]in return for an equalizing payment of $250,000 and other consideration. Tesoriero rejected these offers.
In August 2002, Tesoriero became dissatisfied with Eliasers representation and contacted Fuchs. During the first week in September 2002, she signed a retainer agreement with his firm. At that time, trial was set for November 14, 2002. On September 12, 2002, Zolla sent ex-husbands final offer to Eliaser, who passed it on to Fuchs. Fuchs wrote to Zolla on September 18, 2002, informing Zolla of his retention by Tesoriero and his anticipated substitution into the case, and rejecting the settlement proposal.
On September 20, 2002, Eliaser filed a motion for reimbursement of attorney fees (the Borson motion).[3]Pursuant to Fuchss request of September 24, 2002, Eliaser hand-delivered Tesorieros file to Fuchs the same day. However, Fuchs declined to file the substitution of attorney form until after the Borson motion was heard in mid-October.
Fuchs filed a motion on September 25, 2002 to continue the trial and mandatory settlement conference dates; the hearing on the motion was scheduled for October 16, 2002.
By letter dated September 26, 2002, Fuchs advised Zolla that Eliaser had signed a substitution and turned over the file. On October 7, 2002, Fuchs wrote to Zolla: We have determined from the books and records that during the last three years, Mr. Tesoriero has taken out $230,000 more from the store than Mrs. Tesoriero, and that the amount does not include the cash he regularly takes or certain other payments that may be reflected on checks that he was supposed to turn over to Mrs. Tesoriero, but are suddenly missing.
The discovery cutoff date was October 15, 2002. On October 16, 2002, the motion to continue the trial date and reopen discovery and the Borson motion were heard. The court continued the trial date, but declined to reopen discovery. Fuchs filed the substitution of counsel form on that date. As to the Borson motion, in which Tesoriero simply requested that the trial court retain jurisdiction over the matter of her attorney fees and decide the issue at the time of trial, the court granted the motion.
Fuchs filed a witness list on behalf of Tesoriero on October 22, 2002, stating that Dennis Rose, (a certified public accountant), would testify as to financial accounting issues regarding the operation of Discount Bird, and its income and cash flow issues, and Wayne Scott, (a certified general appraiser), would testify as to the value of the property on which Discount Bird was located. Fuchs also filed an exhibit list for trial, on October 24, 2002.
Trial of the underlying dissolution case took place between March and June of 2003, and the court issued its ruling on August 29, 2003. The courts statement of decision was filed on February 8, 2005.
2. The Statement of Decision and Judgment of Dissolution
In support of his summary judgment motion, Eliaser produced the family courts statement of decision in the dissolution action and the notice of ruling regarding attorney fees.[4]
In the statement of decision, the family court in the dissolution action awarded Tesoriero $57,697 pursuant to the provision in the ante-nuptial agreement regarding spousal support. The court interpreted the provision as indicating that spousal support payments were to stop accruing on the date Tesoriero filed the petition for dissolution, rather than the date the judgment of dissolution was entered.
The family law court accepted Tesorieros expert appraisers valuation that the real property on which Discount Bird was located was worth $945,000. The ex-husbands expert testified that the business operated on the property had a net value of $257,000, but the court found his testimony had little weight. The trial court noted that Tesorieros expert, Robert Berry, had effectively impeached the methods used by ex-husbands expert. Because he was presented as a rebuttal expert only, Berry had not been permitted to provide an opinion as to the value of the business. The trial court rejected Tesorieros testimony regarding the value of the business as having no foundation. Given the state of the evidence, the court was unable to find a preponderance of the evidence as to the issue of the value of the business. The court determined that the marketplace should be determinative of the value, and ordered the business sold in order to divide equally this portion of the community property.
Regarding ex-husbands diversion of cash from the business, the court noted that ex-husband admitted keeping the ledger books produced by Tesoriero, in which he documented the money that he under reported on his income tax returns ($1,154,488) between 1997 and 2002. He testified that 80 percent of the money was used to pay cash wages to employees, to purchase birds and other merchandise, and for living expenses, and that Tesoriero also used the money. He kept no records to document these expenses from the diverted cash receipts. Ex-husband testified that the books were accessible to Tesoriero and that he told her he was keeping the alternate set of books with the actual revenue; Tesoriero testified that she did not receive the information. The court concluded that it was not prepared to credit her testimony over his to reach a preponderance of the evidence, and as the burden of persuasion was on her as the party seeking to prove breach of fiduciary duty, she failed to satisfy that burden. The court therefore denied Tesorieros request for an additional allocation of community property to her pursuant to Sections 1100 and 1101 of the Family Code.[5]
The court found that the four Monaco loans were community obligations incurred to finance the community business, and accordingly, ordered the debts divided equally, with each party to be responsible for one-half. The court also found the two Mary C. Tesoriero Trust loans were used to acquire and advance the community business, and therefore divided them equally. The court noted that [w]ere the Court to order payment to the creditors from a specific source, it would be enforcing the contractual rights of those creditors, who are not before the Court. The Court lacks jurisdiction to do so, and therefore does not do so.
The court found that for a period of 10 months after the date of separation, ex-husband withdrew $5,000 per month from the business as rent, from which he paid his nephew $3,450 in principal and/or interest on the community obligations. The court stated the difference was excess rent, and found that Tesoriero was entitled to be reimbursed for one-half of those funds, or $775 per month, in the amount of $7,750.
The court had initially reserved jurisdiction over the issue of attorney fees and costs. On August 30, 2005, it issued its ruling, denying both parties requests for attorney fees and sanctions.
3. Tesorieros Discovery Responses
In his separate statement, Eliaser also referred to relevant discovery responses by Tesoriero that indicated she had no evidence to support her professional negligence claim. To wit, in response to the special interrogatories propounded by Eliaser, in which he requested that she identify any writings or documents which supported each specific allegation of negligent conduct set forth in Tesorieros operative complaint, Tesoriero categorically stated that she had produced all responsive documents within her attorneys custody and control that constituted her attorneys non-privileged files in the marital dissolution action and the action filed by the Monacos against the Tesorieros.
Accordingly, Eliaser pointed out that in Tesorieros responses to interrogatories, she failed to identify what she contends would have been discovered if Eliaser had conducted formal discovery in the dissolution action. For example, asked to identify all writings which supported her contention that Eliaser failed to provide competent legal representation and to determine the nature and extent of all assets, Tesoriero responded that she had produced all responsive documents within her attorneys custody and control that constituted her attorneys non-privileged files in the marital dissolution action and the action filed by the Monacos against the Tesorieros. She merely stated her belief that if Eliaser had obtained all of [ex-husbands] bank account records, she would have located and determined the full amount of the embezzlements, thefts, conversions and diversions of community funds by [ex-husband] from 1992 through 2002, and she would thereby have obtained evidence of concealment and misappropriation to prove her right to recover at least half of that amount. [Tesoriero] would also have obtained evidence to use to impeach [ex-husbands] testimony at trial that he used the embezzled funds, at least in part, for community purposes. Similarly, if Eliaser had propounded discovery on [ex-husband] or the Monacos regarding these loans, she would [have] obtained significant admissible, persuasive and relevant evidence regarding these loans, which she could have used to assist in settlement or could have used at trial, to show that these were and are not community obligations.
4. Fuchss Representation of Tesoriero in the Monaco Action
Finally, Eliaser submitted as an undisputed material fact that Fuchs also represented Tesoriero in the related action filed by the Monacos against the Tesorieros regarding enforcement of the four Monaco notes, which resulted in the court holding those notes enforceable. Fuchs was also plaintiffs counsel in another related matter.
B. Tesorieros Opposition to Summary Judgment and Her Separate Statement
Tesoriero filed her own separate statement of disputed, undisputed, and additional facts in opposition to the motion for summary judgment. The statement is notable for its paucity of tangible facts and reliance instead on argument and conclusions. We extract such evidence from the statement and supporting documents as we can.
Mark Kohn, a forensic accountant, was retained by Tesoriero during the time she was represented by Eliaser. In his initial report, he stated that $836,000 in deposits made by ex-husband to the Mary C. Tesoriero Trust needed to be clarified. On June 18, 2001, Kohn submitted to Eliaser a list of additional documents he needed in order to search for the money ex-husband had purportedly embezzled over a ten-year period. Eliaser asked Zolla for the documents, but Zolla refused, asserting that Tesoriero was not entitled to them. Eliaser threatened to conduct formal discovery, but never did so. As a result, Kohn was never able to complete his forensic investigation, and [Tesoriero] was never able to determine where [ex-husband] had deposited the $1,154,488 that he was found at trial to have diverted from community income.
Tesoriero asserted that she had provided the documents to Eliaser to prove the embezzlement of more than $1.0 million, but Eliaser did nothing to find the money. According to Tesoriero, it was established that ex-husband had diverted $1,154,488 from Discount Bird, but Tesoriero was unable to prove concealment and misappropriation because Eliaser did not conduct discovery, did not obtain the additional documents requested by Kohn, and did not bring a motion for an accounting under section 1101.
Tesoriero stated that she told Eliaser about the income from the Nextel cellular antenna that ex-husband was diverting to himself and pocketing, including during the pendency of the dissolution action, but he did nothing about it. [A]s a direct and proximate result, [Tesoriero] has suffered damages of at least $25,000 and probably more.
Further, Eliaser was advised that [ex-husband] was paying $5,000 per month to himself, paying $3,500 to his nephew on the loans and pocketing $1,500 per month for himself, as the excess rent, but Eliaser again did nothing to pursue [Tesorieros] right to half of this money. Although [Tesoriero] was awarded $17,500 [sic] of this money at trial, she incurred substantial legal fees to recover that amount, and there are thousands of dollars from this money that she has yet to recover, all of which has caused her damage proximately resulting from Eliaser[s] failure to protect her rights.
Tesoriero claimed that [b]ecause Eliaser failed to obtain full ownership of Discount Bird and the Property for [Tesoriero], Judge Ouderkirk [the family law judge in the dissolution action] ordered these assets sold, and [Tesoriero] has spent the better part of the last two years trying to obtain full ownership of these assets, including filing for Writ relief, trying to enforce a contract to buy [ex-husbands] half of the business and filing an appeal from the Judgment and Statement of Decision.
Tesoriero contended that Fuchs was unable to propound any discovery or take any depositions because discovery was closed prior to the date Fuchs substituted into the case as Tesorieros counsel of record. Tesoriero asserted that Zolla initially refused to discuss the issues with Fuchs because he was not counsel of record until the substitution form was filed on October 16, 2002. This response by Zolla indicates that had Fuchs propounded discovery or sought to take a deposition of [ex-husband] prior to the filing of the Substitution, Zolla would not have responded or allowed it, because he continued to recognize Eliaser as the sole counsel of record for [Tesoriero].
Fuchs wrote a letter dated October 7, 2002 to Zolla, in which he raised the issue of the unequal distribution of income after the filing of the Petition, an issue which Eliaser had completely ignored. Fuchs also raised the issue of the embezzlements, another issue that had been raised by Eliaser but then dropped and completely ignored by him, resulting in a loss of community property to [Tesoriero] of more than $577,000, plus interest. Fuchs also refuted the fiction that Zolla had asserted to Eliaser, and that Eliaser believed, that all relevant documents have been produced, refuted the assertion that there was a deal, when in fact there was not, although Eliaser may have agreed to a settlement offer without [Tesorieros] permission, and raised the issue of the Nextel income, another issue which had been raised by Eliaser and then dropped, costing [Tesoriero] at least $30,000 in separate property income and $25,000 in electricity reimbursements due to the Store.
Tesoriero alleged that she had incurred legal fees and costs to Fuchs in excess of $400,000, as a direct and proximate result of Fuchss efforts to fix the mistakes made by Eliaser. Tesoriero asserted that the total damages proximately caused by Eliasers negligence amounted to more than $1,400,000.
Tesoriero asserted as fact that the family law court in the underlying dissolution action made many rulings that were contrary to law and constitut[ed] an abuse of his discretion, including without limitation the refusal to reopen discovery, the denial of [Tesorieros] Motion for Attorneys Fees pendente lite, the denial of [Tesorieros] Motion for an Accounting, the refusal to allow [Tesorieros] business valuation expert [to] provide an opinion on value at trial, the improper allocation of the burden of proof on [Tesoriero] to show concealment and misappropriation of the $1,154,488 diverted from community income by [ex-husband], the orders requiring that the Store and the Property be sold on the open market, rather than awarded to [Tesoriero], the refusal to enforce the executed contract for [Tesoriero] to purchase [ex-husbands] half interest in Discount Bird for $125,500, the granting of [ex-husbands] motion for a weekly accounting, after he sold his interest in the Store, and the refusal to award [Tesoriero] $5,000 per year in lieu of support for the entire duration of the marriage. Eliaser never raised the issue of the ante-nuptial agreement to Tesoriero or Zolla.
According to Tesoriero, Eliaser never sought attorney fees pendente lite, despite the obvious disparity in the spouses separate property holdings. Fuchs made a motion for attorney fees, but the motion was deferred until the time of trial; the issue was not decided until August 2005, when the court declined to award attorney fees to either party.
As to Fuchss representation of Tesoriero in the Monaco action, Tesoriero asserted that if Eliaser had brought the Monacos into the Dissolution Action, the notes would have been fully resolved in that action, without an additional expenditure of $130,000 in legal fees and costs. In fact, because of Eliasers negligence in representing [Tesoriero], a joint and several judgment has been entered against her, for $750,000, thereby making her responsible for the entire community debt, rather than just her half.
Tesoriero also acknowledged that Fuchs represented her in a related action against ex-husband and his daughter and son-in-law (the Comptons), brought in an attempt to specifically enforce a contract for the sale of ex-husbands half interest in the community business to Tesoriero.
C. Eliasers Reply to the Opposition
Eliaser filed extensive evidentiary objections to the evidence Tesoriero submitted in opposition to the motion for summary judgment. He also submitted the transcript of Tesorieros deposition, taken on October 18, 2005 in the present matter. Tesoriero in turn objected to the presentation of new evidence accompanying Eliasers reply.
D. The Trial Courts Ruling Granting Summary Judgment
The trial court granted summary judgment on the ground that Tesoriero failed to raise a triable issue of material fact on the issue of causation.[6] The court found that Fuchs was unable to undertake or complete any discovery on Tesorieros behalf in the underlying action. Therefore, the issue whether Eliaser negligently failed to complete discovery while he represented Tesoriero and before the discovery cut-off date was an issue subject to substantial controversy upon disputed evidence. However, the court noted that an analysis of the causation aspect of the malpractice case required consideration of whether, had Eliaser conducted discovery, evidence would have been discovered that would have established that ex-husband embezzled and concealed community funds. The court noted that the family law court in the dissolution action concluded that Tesoriero failed to produce evidence to prove that community funds were misappropriated or concealed by her ex-husband. The family law court did not conclude, as asserted by Tesoriero, that the ex-husband had diverted and embezzled community funds.
The trial court concluded: Tesoriero has produced no evidence to support her contention that evidence existed, what that specific evidence was (including its tangible form), that it was discoverable by Eliaser and that it would have tended to prove her ex-husbands misappropriations and concealments of community assets. The court continued: If there was no evidence to discover, then Eliasers failure to conduct discovery resulted in no loss of evidence to Tesoriero. . . . [] Because Tesoriero has the burden of proving the existence and discoverability of such evidence to prove malpractice, her failure to present evidence on the point is fatal to the proximate causation argument of her professional malpractice cause of action. [] Stated otherwise, it may be below the standard of care for an attorney to fail to conduct discovery. (Interestingly, neither side offers expert testimony on this standard of care issue.) Even if the standard of care requires more discovery than Eliaser conducted, it must still be proven that pursuing further discovery would have yielded probative evidence that would have altered the outcome of the trial in the Dissolution Action. The court granted the motion on that ground. The trial court further noted that [t]he persistent flaw in the opposition is its failure to establish causation; thus, Tesorieros (and counsels) arguments that Eliasers professional services caused harm, . . . are based on speculation, not tangible, specific evidence.[7]
discussion
I. Summary Judgment of the Professional Negligence Claim
A. Legal Standard
Summary judgment is granted when the moving party satisfies the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law. . . . There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850 (Aguilar), fn. omitted.)
A defendant moving for summary judgment bears an initial burden of production to make a prima facie showing that one or more elements of the cause of action cannot be established, or that there is a complete defense. He may sustain this burden by showing that the plaintiff does not have, and cannot reasonably obtain, evidence to prove one or more elements of the cause of action by a preponderance of the evidence. If he succeeds, the burden of production shifts to the plaintiff to make a prima facie showing that a triable issue of material fact exists as to the cause of action. (See Aguilar, supra, 25 Cal.4th at pp. 850-851.) The plaintiff . . . may not rely upon the mere allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to that cause of action or a defense thereto. (Code Civ. Proc., 437c.)
In determining whether a triable issue of material fact exists, the court must strictly construe the moving partys papers. However, the opposing partys evidence must be liberally construed to determine the existence of a triable issue of fact. All doubts as to whether any material, triable issues of fact exist are to be resolved in favor of the party opposing summary judgment. (Barber v. Marina Sailing, Inc. (1995) 36 Cal.App.4th 558, 562; see Aguilar, supra, 25 Cal.4th at p. 843.)
In this case, Eliaser moved for summary judgment, in part, on the basis that Tesoriero could not raise triable issues of material fact to prove the elements of causation and damages as to her cause of action for professional negligence. Of course, it is a well-established requirement in negligence cases that the plaintiff establish causation by showing either (1) but for the negligence, the harm would not have occurred, or (2) the negligence was a concurrent independent cause of the harm. (Viner v. Sweet (2003) 30 Cal.4th 1232, 1241 (hereafter Viner).) In a litigation malpractice action, the plaintiff must establish that but for the alleged negligence of the defendant attorney, the plaintiff would have obtained a more favorable judgment or settlement in the action in which the malpractice allegedly occurred. The purpose of this requirement, which has been in use for more than 120 years, is to safeguard against speculative and conjectural claims. (Mattco Forge, Inc. v. Arthur Young & Co. (1997) 52 Cal.App.4th 820, 832-834.) It serves the essential purpose of ensuring that damages awarded for the attorneys malpractice actually have been caused by the malpractice. (Id. at p. 834.) (Viner, supra, at p. 1241.) As noted by the Viner court: In both litigation and transactional malpractice cases, the crucial causation inquiry is what would have happened if the defendant attorney had not been negligent. This is so because the very idea of causation necessarily involves comparing historical events to a hypothetical alternative. [Citations.] (Id. at p. 1242.)
[C]ausation . . . is ordinarily a question of fact which cannot be resolved by summary judgment. The issue of causation may be decided as a question of law only if, under undisputed facts, there is no room for a reasonable difference of opinion. [Citation.] [Citation.] The question about what would have happened had [the lawyer] acted otherwise is one of fact unless reasonable minds could not differ as to the legal effect of the evidence presented. [Citation.] (Kurinij v. Hanna & Morton (1997) 55 Cal.App.4th 853, 864.)
B. The Trial Court Properly Granted Summary Judgment
In the instant case, Eliasers evidence (which we have summarized in detail, above) met his initial burden of showing that Tesoriero did not have, and could not reasonably obtain, evidence to prove the element of causation by a preponderance of the evidence. (Aguilar, supra, 25 Cal.4th at pp. 850-851.) Eliaser contended that Tesoriero could not demonstrate that but for Eliasers alleged negligence, Tesoriero would have achieved better results in the dissolution action. As evidence of that contention, Eliaser pointed to Tesorieros discovery responses indicating she had no other documents other than what she had already produced, and the existing documents did not serve to prove that but for Eliasers conduct, Tesoriero would have achieved more favorable results at trial. In addition, viewing the allegations of negligence in light of the judgment of dissolution revealed that either Tesoriero did not suffer the damage alleged, or she had no tangible evidence to demonstrate that Eliaser was chargeable with the particular results achieved.
Based on Eliasers showing, the burden of production shifted to Tesoriero. Tesoriero, however, failed to meet her burden of producing evidence to show that a triable issue of material fact existed as to whether, but for Eliasers alleged acts of negligence, she would have obtained a more favorable result in the dissolution action. As the trial court correctly concluded, Tesoriero attempted to show causation from Eliasers purported negligence not by evidence, but by pure speculation. The showing, therefore, is insufficient to resist summary judgment. We discuss each allegation of negligence in turn, and note the deficiencies in Tesorieros showing.[8]
1. Failure to Pursue Discovery Regarding Embezzled Funds
Tesoriero alleged that Eliaser failed to determine that between 1997 and 2002, ex-husband had embezzled or otherwise diverted at least $1,154,488 in community income from the jointly owned business, and as a result, Eliaser failed to assert in the dissolution action the alleged misappropriation of these community property funds. According to Tesoriero, Eliaser failed to request production of ex-husbands bank records, and failed to propound discovery and depose ex-husband to determine the amount, location, and use of the misappropriated community property funds. This failure purportedly prevented Tesoriero from having sufficient evidence at trial to obtain her share of the converted income and property, in an amount in excess of $500,000. Tesoriero also alleges that ex-husband purportedly continued to embezzle money even during the time Eliaser represented Tesoriero. Fuchs was unable to conduct discovery into these matters because he substituted into the case after the discovery cut-off date passed, and the family law court denied the motion to reopen discovery that he filed on her behalf.
These various arguments by Tesoriero rely on the assumption that ex-husbands bank records and deposition testimony would have demonstrated that he kept the diverted money for his personal use. That assumption, however, is purely speculative, for several reasons. First, in the dissolution action, the family law court concluded that Tesoriero failed to show that she did not benefit from use of the diverted money. Tesoriero has produced no evidence showing how ex-husbands bank records or deposition testimony would have altered that conclusion.
Second, according to the statement of decision in the dissolution action, ex-husband testified during trial that 80 percent of the unreported income was used to pay cash wages to employees, to purchase birds and other merchandise, and for living expenses, and that Tesoriero also used the money. Tesoriero has made no showing he would have testified differently if deposed.
Third, the family court credited ex-husbands testimony that he kept no records to document these expenses from the diverted cash receipts. Tesoriero has produced no evidence to show that further discovery would have led to a different conclusion. Indeed, we note that it was in ex-husbands interest to produce such documents in the dissolution action if he had them.[9]
In short, Tesoriero has failed to raise a triable issue whether conducting additional discovery would have produced any evidence to dispute husbands account of how at least 80 percent of the money was used. Further, Tesoriero has produced no evidence to show (and the statement of decision does not state) what use husband claimed he made of the remaining 20 percent of the money. There is no evidence to indicate that ex-husband used it in a manner that would be chargeable against him, or that would lead to discoverable evidence.
In order to defeat summary judgment, Tesoriero was required to produce evidence to raise a triable issue of fact as to the existence and discoverability of evidence that would demonstrate that ex-husband diverted the unreported income for his personal use. (Viner, supra, at pp. 1241-1242.) She has not done that. Asserting the speculative assumption that his bank records would reveal the details of his wrongdoing is insufficient to establish that Eliasers failure to propound discovery caused Tesoriero to suffer harm.
Moreover, if Eliasers failure to conduct discovery was not demonstrably the cause of Tesorieros failure to be awarded at least half of the unreported income, Eliaser also cannot be liable for the additional legal fees incurred by Tesoriero in seeking to reopen discovery and in making a motion for an accounting. Tesoriero has not shown that bringing those motions was warranted as being likely to lead to the discovery of pivotal evidence, had they been granted.
2. Excess Rent and Nextel Payments
According to Tesoriero, Eliaser was negligent in that he failed to assert Tesorieros right to recover one-half of the approximately $1,500 per month in excess rent that ex-husband had taken from the community business. Similarly, he also failed to assert her right to recover one-half of the $1,150 Nextel payments being paid directly to ex-husband, but which constituted community property.
As to the excess rent money, the court in the dissolution action in fact awarded Tesoriero $7,750, representing her half of the excess rent money for a 10-month period. It is therefore unclear what harm Tesoriero allegedly suffered by Eliasers failure to assert her entitlement to that money while he represented her in the dissolution case. She does not demonstrate how Eliasers assertion of her entitlement to that money would have led to a more favorable result. She would have incurred attorney fees had he pursued that money on her behalf, just as she did when Fuchs represented her and did so. She also does not explain how or why early settlement and avoidance of trial would have been more likely if she had demanded entitlement to even more money early on in the case.[10] If her theory is that the amount of the award was too low, and that discovery would have demonstrated that ex-husband wrongfully diverted the community money for his personal use for a lengthy period of time, again she fails to raise a triable issue of fact as to the existence and discoverability of evidence that would have changed the result. (Viner, supra, at pp. 1241-1242.) Blanket reference to ex-husbands bank records does not suffice.
Regarding the payments from Nextel, although Tesoriero raised the issue at the dissolution trial, the family law court did not address it in its statement of decision. This was an apparent oversight, and a matter for Tesorieros counsel in the dissolution action to pursue to ensure that the family law court addressed it. In any event, Tesoriero has not demonstrated how Eliasers failure to address the issue while he represented her resulted in any harm. As with the excess rent issue, Tesoriero would have incurred attorney fees for Eliaser to address the issue, just as when trial counsel in the dissolution action (Fuchs) did so. If Tesoriero had asserted entitlement to additional money, there is no showing that early settlement and avoidance of trial would have been more likely.
3. The Monaco Notes
Tesoriero also alleged that Eliaser failed to conduct discovery regarding promissory notes in the amount of $540,000 that ex-husbands nephew, Michael Monaco, claimed to have made to the Tesorieros, thereby preventing Tesoriero from having sufficient evidence at trial to prove that she took no part in obtaining those loans or using those funds. According to Tesoriero, Eliaser failed to challenge the purportedly false claim that promissory notes in the amount of $450,000 were secured by the community real property, when in fact no security interest therein had been created. Tesoriero also asserted that Eliaser was negligent in failing to seek the joinder of the Monacos in the dissolution action, with the result that the Monacos filed a separate action against her and her ex-husband, in which a judgment of joint and several liability was entered in the amount of $750,000. Tesoriero argues that a $90,000 note should have been adjudged to be ex-husbands separate debt, and that of the remaining promissory notes in the amount of $450,000, half should have been assigned to her as her separate debt. Had the Monacos been joined in the dissolution action, Tesoriero asserts, she would not have incurred separate attorney fees of $150,000 in the Monaco action.
None of Tesorieros assertions raises a triable issue of material fact. Regarding Eliasers failure to pursue discovery, Tesoriero had the opportunity to conduct discovery and otherwise fully litigate all issues pertaining to the Monaco notes in the Monaco action. She asserts that her ex-husbands bank records would have shown that he used the loan proceeds for things other than the purchase and improvement of the community business property, but again this assertion is purely speculative. Other than that, she does not identify any evidence that she could have obtained in the dissolution action, had the discovery deadline not passed, that she was unable to obtain in the Monaco action. Certainly the fact she did not prevail in the Monaco action is not attributable to any failures on Eliasers part.
Tesoriero correctly notes that if the Monacos had been joined in the dissolution action, the issues regarding the promissory notes could have been resolved without the additional expense of a separate action. (See Glade v. Glade (1995) 38 Cal.App.4th 1441, 1451 [family law court has broad powers to permit joinder where a third party claims or controls an interest subject to disposition in the proceeding]; see also Cal. Rules of Court, rules 5.150, 5.154, subds. (a) & (c), 5.158, subd. (b); Hogoboom & King, Cal. Practice Guide: Family Law (The Rutter Group 2006) 3:452, pp. 3-144.2 to 3.145 (hereafter Hogoboom & King).) In addition, had the Monacos been joined as claimants in the dissolution action, the family law court could have assigned half of the community debt to each spouse as his or her separate debt upon dissolution, instead of their being held jointly and severally liable for the entire debt. ( 2551 [For the purposes of division and in confirming or assigning the liabilities of the parties for which the community estate is liable, the court shall characterize liabilities as separate or community and confirm or assign them to the parties in accordance with Part 6 (commencing with Section 2620).].)
Tesorieros claim must fail as a matter of law, however, because the request for joinder could have been brought by Fuchs, her trial attorney.[11] Joinder may be sought at any time during pendency of the proceeding. (Hogoboom & King, supra, 3:457, p. 3-150.) True, early joinder is ordinarily advisable to ensure prompt disposition of the matter, and a joinder motion filed on the eve of trial is more likely to be denied as unduly delaying the proceedings (ibid.). However, Tesorieros trial attorney (Fuchs) had the opportunity to remedy Eliasers failure to request joinder, but did not make an attempt. In defense of his failure to make such a motion, Fuchs asserts that joinder is discretionary and is to be rarely invoked, citing Schnabel v. Superior Court (1994) 30 Cal.App.4th 758, 762-763. If so, Eliasers filing of a joinder motion would likely have been unsuccessful, and Tesoriero cannot raise a triable issue whether, but for Eliasers failure to file the motion, Tesoriero would have achieved a better result as to the Monaco notes.
Alternatively, Tesoriero argues that it is a factual question whether a joinder motion filed early by Eliaser would have more likely met with success than one filed later by Fuchs. Tesoriero notes that Eliaser did not present expert testimony in support of his motion for summary judgment addressing that factual issue. However, as we have previously concluded, Eliaser effectively demonstrated in his motion for summary judgment that Tesoriero did not possess evidence of causation, and thus the burden of production shifted to Tesoriero. She did not present evidence in the form of expert testimony to create a triable issue of fact as to whether a joinder motion filed by Eliaser would have more likely met with success than one filed by Fuchs.
Notably, in its statement of decision the family law court stated: [w]ere the Court to order payment to the creditors from a specific source, it would be enforcing the contractual rights of those creditors, who are not before the Court. The Court lacks jurisdiction to do so, and therefore does not do so.[12] Thus, the court was aware of the legal repercussions of the Monacos not having been joined, and there is nothing in the record on summary judgment to show that the court would have denied a joinder motion brought by Tesorieros trial attorney. Indeed, unlike the discovery cut-off date, which elapsed before trial counsel formally substituted into the case, there was no deadline for filing a joinder motion. Trial counsel substituted into the case in October 2002, and trial commenced in March 2003.
Under these circumstances, Tesoriero failed to raise a triable issue whether but for Eliasers failure to join the Monacos, Tesoriero would have obtained a more favorable result. In short, Eliaser cannot be held liable for failing to seek the Monacos joinder, where he ceased to represent Tesoriero and was replaced by Fuchs at a time when a joinder motion still could have been filed and likely would have met with success. The situation here is analogous to that in Steketee v. Lintz, Williams & Rothberg (1985) 38 Cal.3d 46, in which the Supreme Court held that an attorney could not be held liable for legal malpractice by failing to file an action prior to the expiration of the statute of limitations because he ceased representing the client and was replaced by other counsel, who could have brought the action, before the statute ran on the clients action. (Id. at p. 57.) We reach the same conclusion based on the facts presented here.[13] Eliaser cannot be held liable for his failure to join the Monacos where he was replaced by Fuchs, who could have brought a joinder motion, and where Tesoriero has made no showing that a motion by Fuchs would have been unsuccessful. Thus, Eliaser is not chargeable with the joint and several liability to which Tesoriero was subjected as a result of the separate Monaco action, nor for the attorney fees she incurred in defending that action.
4. Mary C. Tesoriero Trust Notes
Tesoriero alleged that Eliaser failed to assert that certain obligations claimed to be from a third-party trust (the Mary C. Tesoriero Trust, which was in fact owned by ex-husband as his separate property) were at best loans by ex-husband to the community, for which he was not entitled to recover interest. However, the record shows that Tesoriero had the opportunity to, and did, fully litigate at trial the nature of these obligations and their proper disposition. There are no specific documents indicated in her responses to Eliasers interrogatories or elsewhere that Eliaser failed to discover that would have resulted in a more favorable outcome for her at trial on these issues. Tesoriero has not presented any facts to support her contention that settlement and avoidance of trial would have been more likely had Eliaser raised these issues earlier in the proceedings.
5. Failure to Retain an Expert Qualified to Determine the Value
of the Business
Tesoriero further alleged that Eliaser failed to adequately protect and preserve her rights in the community property she jointly owned with ex-husband by failing to retain a competent expert to determine the value of the community business. Because Eliaser had not retained or designated any valuation experts, Fuchs was precluded from using one at trial to establish valuation and was only able to use one to rebut the inflated value of the Store to which [ex-husbands] expert testified. Tesoriero contends that as a result, the family law court ordered the Discount Bird business sold in order to determine its value.
Tesorieros witness list in the dissolution action was filed immediately upon Fuchss entering into the case (six days after the substitution form was filed), and Tesoriero contends Fuchs did not have time to select an expert. Kohn, the expert retained by Eliaser, was not qualified because he was an accountant and not qualified to value a business. Fuchs later retained a qualified expert, Robert Berry, but because he had not been designated, he was only allowed to rebut the testimony of ex-husbands expert witness.
We note that Fuchs timely designated Dennis Rose, (a certified public accountant), to testify as to financial accounting issues regarding the operation of Discount Bird, and its income and cash flow issues. Fuchs also designated Wayne Scott, (a certified general appraiser), to testify as to the value of the property on which Discount Bird was located. Tesoriero does not explain why these experts were retained and designated early, but Berry was not.
More importantly, Tesoriero did not submit in opposition to summary judgment a declaration by Berry stating what Berrys substantive testimony on valuation would have been, despite having been invited in Eliasers special interrogatories to submit any writings substantiating her allegations of malpractice in this regard. Having failed to produce evidence to show what Berrys testimony would have been, Tesoriero has failed to show that a triable issue of fact exists as to whether, but for Eliasers failure to designate a qualified expert, the outcome after trial would have been more favorable. (Viner, supra, at pp. 1241-1242.)
Finally, Tesoriero makes the entirely speculative assertions that the dissolution case would have settled before trial if Eliaser had retained a business valuation expert; that she has suffered economic loss because so much time has elapsed, and presumably the value of the business has increased; and that it is more expensive for Tesoriero to try to purchase the business. There is, in short, no evidence to support these assertions, and we need not discuss them further.
6. Failure to Request Attorney Fees Pendente Lite
Tesoriero contends that Eliaser committed malpractice by failing to seek an award of attorney fees pendente lite. She asserts that ex-husbands income and expense declaration indicated that he was worth $1.5 million, while Tesorieros net worth was less than $100,000. Fuchs argued that he requested attorney fees pendente lite a month before trial, but the family law court ruled that the issue would have to await trial. When the family law court finally decided the issue, attorney fees were awarded to neither party.
In opposition to Eliasers summary judgment motion, Tesoriero asserted below that Despite clear evidence of Plaintiffs need for attorneys fees pendente lite and Johns ability to pay such fees, Eliaser refused to seek attorneys fees pendente lite, so that Plaintiff could adequately protect her rights and pursue her remedies in the dissolution action.
However, the record contains no such evidence of need on Tesorieros part. The reporters transcript of the Borson hearing, held on the same day Fuchs substituted into the case, indicates that Tesoriero was current on her payment of counsel fees. There is no evidence in the record to support the notion that the dissolution case would have been tried differently if only Tesoriero could have afforded to do so. As such, once again evidence of causation is lacking. Tesoriero has not presented any triable issues of fact tending to show that she was denied meaningful access to legal representation. (See 2030.) The only evidence to which Tesoriero directs our attention -- the spouses respective income and expense declarations merely shows a disparity of income. But disparity of income is only one factor among many that are considered in deciding whether a fee award is appropriate. (See 2032; In re Marriage of Jovel (1996) 49 Cal.App.4th 575, 588.)
7. Failure to Demand Payments Required Under the
Ante-Nuptial Agreement
It is undisputed that an ante-nuptial agreement existed, pursuant to which upon separation Tesoriero was to receive, in lieu of spousal support, $5,000 for each year of the duration of the marriage, as long as Tesoriero did not seek additional spousal support payments. Eliaser never raised the issue of the ante-nuptial agreement to Tesoriero or ex-husbands dissolution counsel. Tesoriero claimed that Eliaser was thereby negligent.
However, Tesoriero was in fact awarded $57,000 by the family law court, pursuant to the terms of the ante-nuptial agreement. Fuchs argued that she was entitled to payments up until the time of dissolution, and that issue was heavily litigated; ex-husband disagreed and also countered with the argument that she had waived her right to the support payments. The family law court interpreted the relevant clause in the ante-nuptial as indicating that entitlement to the payments stopped accruing on the date of separation rather than the time of dissolution. But presumably the court would have interpreted the same language in exactly the same manner if the issue had arisen two years earlier when Eliaser represented Tesoriero. In all probability ex-husbands counsel would have done so as well had Eliaser pressed the issue as part of a settlement proposal. Tesoriero has not demonstrated that Eliasers failure to raise the issue caused her any damage. Had he raised the issue, Tesoriero would have incurred attorney fees just as she did when Fuchs pursued the issue.
Tesorieros theory of causation and damage simply does not survive scrutiny. Tesoriero contends that because Eliaser completely missed the issue and therefore recommended she accept a settlement offer that did not include it, she was forced to change lawyers and pay the new lawyer to familiarize himself with the case and identify what issues had been missed. It is undisputed that Tesoriero came to disagree with Eliasers approach to settling the matter and therefore chose to change lawyers. However, Tesoriero has produced no evidence to indicate that the matter would have settled if Eliaser had proposed a more favorable counter-offer and pressed for even more money. There is, therefore, no evidence that but for Eliasers alleged failures, Tesoriero would have enjoyed a more favorable outcome, nor that the outcome of the trial was unfavorable owing to Eliasers alleged failures.
We conclude that the trial court properly granted summary judgment in Eliasers favor. As to each alleged instance of professional negligence by Eliaser, Tesoriero failed to raise a triable issue whether, but for that alleged negligence, Tesoriero would have achieved a more favorable result in the dissolution action.
II. The Demurrer as to the Breach of Fiduciary Duty Claim
Finally, Tesoriero contends on appeal that the trial court abused its discretion by sustaining, without leave to amend, Eliasers demurrer as