Beck v. Resnick

Filed 4/12/07 Beck v. Resnick CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FOURTH APPELLATE DISTRICT

DIVISION THREE

Appeal from a judgment of the Superior Court of Orange County, David A. Thompson, Judge. Affirmed.

Lounsbery Ferguson Altona & Peak, Erick R. Altona, Judith Hartwig, and Alena Shamos for Appellant.

Vogt & Resnick and Charles C. McKenna for Respondents.

* * *

Gerald V. Beck appeals from a judgment dismissing his complaint after the court sustained the demurrers of Barnet Resnick (Resnick) and Vogt & Resnick, LLP (the law firm) without leave to amend. Becks second amended complaint alleged he was a victim of age discrimination, wrongfully terminated by his fellow shareholders in JBZ, Inc. (JBZ), in violation of an employment contract. Beck named Resnick and the law firm based solely on their role as JBZs corporate counsel. We affirm, concluding the trial court correctly decided Becks complaint did not pass muster and could not be amended to do so.

FACTS

The Operative Second Amended Complaint

Becks second amended complaint set forth eight causes of action. As pertinent here, Resnick was named in the fourth cause of action for breach of contract. Resnick and the law firm were both named as defendants in the fifth cause of action for professional negligence, the seventh cause of action for intentional infliction of emotional distress, and the eighth cause of action for intentional interference with contract.

Beck alleged that in 1977 he joined JBZs predecessor architectural firm at the age of 26. His older brother, John, was the firms vice president and director of operations. Beck, like his brother John, was a back room production manager. Donald Jacobs and Eric Zuziak were hired as part of the firms plan for a phased retirement of its then namesake, Kermit Dorius.

In 1994, Beck, Jacobs, John and Zuziak purchased the firm in connection with its founders retirement and executed a Shareholder Buy-Sell Agreement. Over the years, subsequent discussions were held that resulted in an agreement to buy Johns shares upon his retirement, and the adoption of a formula to be applied in future stock redemptions. Then, in October 2003, Jacobs asked for Becks resignation, citing issues pertaining to certain projects and personnel management. Beck had known about these problems and to his mind had already resolved them satisfactorily. Jacobs and Beck initially were working towards a mutually satisfactory plan for Becks separation from JBZ. But things soon deteriorated. Beck had offered to leave JBZ in March 2004, but Jacobs abruptly sought to announce his departure at the staff meeting in mid-November or early December 2003 at the latest. On November 20, 2003, JBZ held a special meeting of its Board of Directors at which the board (other than Beck) voted to summarily terminate Becks employment effective December 9, 200[3], based on the pretext of the alleged problems and concerns, mentioned ante. The directors also voted to place Beck on paid administrative leave from the date of the meeting through the announced termination date.

In addition, Beck alleged JBZs employee manual stated it was company policy to regard discipline as an instrument for developing total job performance, and in furtherance of this policy, the shareholders had a written contract providing that if a principal did not take action upon a request by the other principals, he received a demerit or zinger; if, after three zingers, the offending principal still had not taken action, he forfeited 5 percent of his year-end bonus to charity, and each subsequent zinger pertaining to the same issue required another 5 percent forfeiture to charity.

With respect to Resnick and the law firm, Becks allegations on the four relevant causes of action were as follows:

Fourth cause of action, breach of contract against Resnick: Beck had a contract [the letter agreement]^[[1]] with Jacobs and Zuziak, partly written, partly oral and partly implied by conduct, that provided, among other things, that Jacobs would sell or transfer control of JBZ to Beck and Zuziak as part of a succession plan for JBZ and that Resnick would prepare the documents necessary to carry out such plans; implied in the contract was a covenant of good faith and fair dealing; the good faith covenant required Beck, Jacobs and Zuziak to finalize and . . . Resnick to more formally document the details of Jacobs retirement and the succession plan, refrain from doing any act that would prevent or impede Beck from enjoying the fruits of the agreements, and fairly, honestly and reasonably perform the terms of the agreements; Resnick failed to draft documents as promised in the Letter Agreement and Jacobs and Zuziak failed to finalize the details of the JBZ succession plan.

Fifth cause of action, professional negligence against Resnick and the law firm: The attorneys had a duty to use such skill, prudence, and diligence that a reasonably careful attorney representing a closely held corporation would have used in similar circumstances. As corporate counsel, Vogt & Resnick and Resnick represented JBZ as a corporation, rather than any of the individual shareholders, officers, directors or employees who own or operate JBZ; Beck was a holder of JBZs common stock and an officer and director of JBZ and was entitled to have access to all communications with JBZs corporate counsel; Beck has been unable to secure and/or is excused from obtaining the current board of directors action in prosecuting a professional negligence claim, and the current board refuses to communicate except through Resnick, although it is clear the principals continue to rely on Resnicks advice with respect to Becks professional negligence claim; Resnick and the law firm failed and continue to fail to (a) properly advise JBZ regarding the need for an orderly plan of succession to avoid disruption of . . . JBZs business and hence a decline in the value of its stock, or (b) to prepare the documents legally necessary to carry out such plan. Such failure was below the standard of care for corporate counsel; the negligence of Resnick and the law firm has caused disruption of JBZs business and decline of the value of its stock, resulting in damages to JBZ and its shareholders according to proof; and if Beck succeeds in his professional negligence claim, a substantial benefit will result to JBZ in whose behalf this Cause of Action is prosecuted, entitling Beck to attorney fees incurred against JBZ.

Seventh cause of action, intentional infliction of emotional distress: [All] [d]efendants held meetings behind Becks back even though he continued to be a principal in the firm, attempted to confirm understandings that had never been reached, selected a replacement and notified Beck that his replacement had been selected while Beck was still trying to negotiate the terms for his departure, voted to abruptly terminate Becks employment just days before Thanksgiving even though he had expressed his willingness to voluntarily depart just four months later, placed him on administrative leave without giving him an opportunity to explain his absence to co-workers, valued his shares in a manner different than that which had been used upon [his brothers] retirement, delayed Becks final paychecks, delayed notifying him regarding Cal-Cobra benefits until his medical coverage had almost expired, delayed Becks access to his personnel file and withheld for nearly two months the appraisal upon which defendants ostensibly based their December 8, 2003 offer to purchase Becks shares; the alleged conduct caused Beck to suffer severe emotional distress, including but not limited to humiliation, loss of self-confidence, loss of self-esteem, loss of concentration, depression, anxiety, loss of interest in and enjoyment of life such that Beck was unable to work for a period of months and from which he continues to suffer to the date of this Complaint; defendants conduct was extreme, outrageous and vindictive as to be beyond the possible bounds of decency, and to be regarded as atrocious and utterly intolerable in a civilized community; and defendants acts were willful and malicious, intended to cause Beck emotional distress or in reckless disregard of that consequence, and their despicable conduct subjected Beck to cruel and unjust hardship.

Eighth cause of action, intentional interference with contract: The defendant principals and shareholders and Resnick and the law firm knew of Becks employment contract with JBZ and his other agreements with one or more defendants, including the Letter Agreement and the Zinger Agreement; the conduct of, inter alia, Resnick and the law firm, prevented performance or made performance of one or more of such agreements to which [they were] not a party more expensive or difficult, and to the extent any defendants were agents of the parties to the agreements, their conduct was outside the scope of such agency; the conduct of, inter alia, Resnick and the law firm was a substantial factor in causing Becks harm; and the conduct was willful and malicious, and was done with the intention of thereby depriving Beck of property or legal rights or otherwise causing Beck injury, justifying exemplary damages.

The Demurrer and Ruling

All defendants, including Resnick and the law firm, demurred to the respective causes of action on grounds of failure to state facts sufficient to constitute a cause of action against the demurring defendants (Code Civ. Proc.,  430.10, subd. (e)),[2] uncertainty ( 430.10, subd. (f)), and inability to ascertain the nature of the contract ( 430.10, subd. (g)).

In its minute order entered on October 7, 2005, as it pertains to Resnick and the law firm, the court sustained without leave to amend their respective demurrers to the fourth, fifth, seventh, and eighth causes of action on grounds of failure to state facts sufficient to constitute a cause of action and uncertainty. Thereafter, judgment was entered in favor of Resnick and the law firm,[3] and Beck timely noticed this appeal.

DISCUSSION

Our only task in reviewing a ruling on a demurrer is to determine whether the complaint states a cause of action. Accordingly, we assume that the complaints properly pleaded material allegations are true and give the complaint a reasonable interpretation by reading it as a whole and all its parts in their context. [Citations.] We do not, however, assume the truth of contentions, deductions, or conclusions of fact or law. (Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125; Bougere v. County of Los Angeles (2006) 141 Cal.App.4th 237, 241 [We review de novo a judgment of dismissal following the sustaining of a demurrer without leave to amend, exercising our independent judgment as to whether a cause of action has been stated as a matter of law].)

Beck complains he was not given a sufficient number of opportunities to amend his complaint. However, the burden of proving a reasonable possibility of cure by amendment is squarely on the plaintiff (Blank v. Kirwan (1985) 39 Cal.3d 311, 318), and Beck does not suggest what additional facts he might be able to plead to resuscitate his action. Therefore, his challenge to the courts ruling depends upon the adequacy of the allegations in the existing pleading.

Fourth Cause of Action for Breach of Contract

Beck contends his fourth cause of action for breach of contract is good against Resnicks demurrer because the letter agreement to which it refers constitutes a contract between Resnick and him. That is, in his August 30, 2002 letter memorializing the essence of an understanding among Jacobs, Beck, and Zuziak, Resnick promised to perform professional work for Beck personally when he asked the three to sign their approval at the bottom of the letter and return it so that he could prepare different alternative payment arrangement models for your review, as well as begin the drafting of documents. According to Beck, Resnicks failure to keep his promise constitutes a breach of contract.

Beck acknowledges Resnick was not, strictly speaking, a party to the letter agreement among Jacobs, Beck, and Zuziak, but he contends Resnick was the drafter. Were uncertain what significance this might have, and Beck does not explain it.

Beck argues, [W]hen an attorney promises to provide legal services, a contract is necessarily formed, but Beck cites no authority for this broad, unqualified assertion, and we have found none.[4] Moreover, Beck admits he was not Resnicks client: To wit, in his fifth cause of action for professional negligence, Beck alleges Resnick and the law firm were corporate counsel, represent[ing] JBZ as a corporation, rather than any of the individual shareholders, officers, directors or employees who own or operate JBZ. Nor does Beck explain how a contractual relationship arose between him and Resnick simply by virtue of the latters statement to JBZ principals that there was still work to be done regarding the buy-out agreement, such as preparation of different alternative payment arrangement models for the principals to review and drafting of formal documents. The absence of any explanation is perhaps best explained by Becks allegation, in the very same paragraph in which he alleged Resnicks breach, that Jacobs and Zuziak failed to finalize the details of the JBZ succession plan. Where the parties to a deal fail to finalize the details, it is difficult, if not impossible, to imagine how the attorney could have drafted the alleged documents as promised in the letter agreement.

Undeterred, Beck protests that under Civil Code section 1559, he was a third party beneficiary of the letter agreement contract between JBZ and Resnick, and as such, he had a right to enforce Resnicks promise to draft documents for JBZs ownership transition plan. But the only case cited for this theory is Embury v. King (N.D. Cal. 2001) 191 F. Supp.2d 1071, 1078, in which a third party beneficiary claim was stated by a professor who alleged the university had submitted a grant application, i.e., an offer to contract, to the National Institute of Health, the offer was accepted when the grant was approved, the grant funds were specifically earmarked for plaintiffs salary, and the university failed to distribute the funds to plaintiff. The Embury plaintiff clearly fell within a defined category of intended third party beneficiaries. (See Rest.2d Contracts, 302 [(1) Unless otherwise agreed between promisor and promisee, a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either [] (a) the performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary; or [] (b) the circumstances indicate that the promisee intends to give the . . . promised performance].) Beck, however, cannot be so categorized under the factual allegations, and thus the pleading shows he is, at most, an incidental beneficiary, without the right to enforce the alleged contract. (Ibid. [(2) An incidental beneficiary is a beneficiary who is not an intended beneficiary].)

Without facts establishing the existence of a contract between Beck and Resnick, Beck has no viable claim for breach of contract. And without an underlying contract, Beck has no basis for a claim for breach of the implied covenant of good faith and fair dealing. (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 36 [absent a contract, the implied covenant has nothing upon which to act as a supplement, and should not be endowed with an existence independent of its contractual underpinnings].) The court properly sustained Resnicks demurrer to the fourth cause of action without leave to amend.

Fifth Cause of Action for Professional Negligence

As noted, ante, in his cause of action for professional negligence, Beck alleges Resnick and the law firm represented JBZ, not the individuals. This constitutes a conclusive admission there was no attorney-client relationship between Beck and Resnick and/or the law firm. Thus, he concedes he cannot maintain a professional negligence claim on his own behalf.[5]

Beck argues he is not asserting a personal claim, but he has a right to maintain an equitable derivative action [for professional malpractice] on behalf of JBZ . . . . He claims the gravamen of his cause of action is that Resnick and the law firm failed to meet the standard of care of corporate counsel in several respects, causing a disruption of JBZs business and a decline in the value of its stock, and if he succeeds in his suit, a substantial benefit will accrue to JBZ in which he will participate only by virtue of his shares in the company.

A derivative suit is a suit brought on behalf of a corporation for injury to the corporation, often for breach of fiduciary duty, mismanagement or other wrongdoing by corporate officers or directors, or for wrongs against the corporation by third parties. [Citation.] An action is derivative if the gravamen of the complaint is injury to the corporation, or to the whole body of its stock and property without any severance or distribution among individual holders, or it seeks to recover assets for the corporation or to prevent the dissipation of its assets. (Vega v. Jones, Day, Reavis & Pogue (2004) 121 Cal.App.4th 282, 297 (Vega).) In a derivative action, [t]hough it is named as a defendant, the corporation is the real plaintiff and it alone benefits from the decree; the stockholders derive no benefit therefrom except the indirect benefit resulting from a realization upon the corporations assets. (McDermott, Will & Emery v. Superior Court (2000) 83 Cal.App.4th 378, 382 (McDermott).)

Solely for the purpose of argument, we will assume Beck has adequately pleaded a derivative claim seeking to recover on behalf of JBZ for injury done by Resnick and the law firm as corporate counsel. That does not mean Beck is home free. On the contrary, McDermott is an immovable obstacle preventing Beck from going forward with his professional negligence cause of action.

In McDermott, the reviewing court, observing that any lawsuit by a shareholder against corporate counsel for damage to the corporation must be derivative in nature (McDermott, supra, 83 Cal.App.4th at p. 384), held that such an action cannot be prosecuted. Noting issues of attorney-client privilege are necessarily raised by such a lawsuit (ibid.), the McDermott court observed, It is the corporation, and not the shareholder, who is the holder of the privilege (id. at p. 383), and California courts have refused to carve out a shareholder exception to the attorney-client privilege, even in a derivative action. (Id. at p. 385.) The court then explained the reason for the rule: We simply cannot conceive how an attorney is to mount a defense in a shareholder derivative action alleging a breach of duty to the corporate client, where, by the very nature of such an action, the attorney is foreclosed, in the absence of any waiver by the corporation, from disclosing the very communications which are alleged to constitute a breach of that duty. Thus, while we decline to view a shareholder derivative action in the same vein as an [impermissible] assignment [of the corporations malpractice claim to dissident shareholders], the rationale used to prohibit all assignments of legal malpractice actions, on the ground attorneys would be unable to defend such actions in the absence of a waiver of the privilege by their own client, applies with equal force here. (Ibid.)

Beck argues his case is factually distinguishable from the McDermott case because the latter involved only five of the approximate 1,200 shareholders, and none were officers or directors, therefore none were privy to the communications between the corporation and its counsel. Here, by contrast, Beck asserts that until he was frozen out, he was an officer and director of JBZ, a closely held corporation with only three shareholders. He was entitled to receive all communications Resnick and the law firm had with JBZ, and he had participated in discussions and received confidential correspondence and other documents pertaining to that issue. Beck reasons he was either the holder of the attorney-client privilege concerning ownership divestiture and transition, or alternatively, . . . JBZ had waived the privilege as to that subject.

The waiver argument does not work because, under Evidence Code section 952, communications between attorney and client remain confidential so long as the information is disclosed to no third persons other than those who are present to further the interest of the client in the consultation or those to whom disclosure is reasonably necessary for the transmission of the information or the accomplishment of the purpose for which the lawyer is consulted, and includes a legal opinion formed and the advice given by the lawyer in the course of that relationship. On its face, the pleading shows the applicability of the statute, where all alleged communications were to further the interest of the client, JBZ, and in the presence of its principals, i.e., those to whom disclosure was reasonably necessary for the transmission of the information or the accomplishment of the purpose for which Resnick and the law firm were retained as corporate counsel.

Becks authority in support of his waiver assertion, Sony Computer Entertainment America, Inc. v. Great American Insurance Co. (N.D. Cal. 2005) 229 F.R.D. 632, is inapt. There, the disclosure was made to a person for whom disclosure was not reasonably necessary for the accomplishment of the purpose for which the lawyer was consulted.

Becks act of bringing the lawsuit on behalf of the corporation would necessarily, but improperly, expose privileged information to others not entitled to receive it, such as the court, other lawyers, outside witnesses, jurors, and citizens who may enter the public courtroom to view the trial as a pastime. (See Evid. Code, 915, subd. (a) [court is not permitted to require disclosure of information protected by the attorney client privilege in order to rule on the claim of privilege].) That Beck also had access to the information does not foreclose JBZs right to bar further disclosure. Thus, the McDermott case is apt, thereby barring the derivative action for professional negligence.

Insofar as Beck argues he was the holder of the privilege, he is just plain wrong. By statute, as relevant here, holder of the privilege means [t]he client . . . . (Evid. Code,  953, subd. (a).) The client in this case is JBZ. (See also National Football League Properties, Inc. v. Superior Court (1998) 65 Cal.App.4th 100, 107-108 [[T]here is no shareholder exception to the corporate attorney-client privilege in California. . . .  [] Thus, [e]ven where counsel for a closely held corporation treats the interests of majority shareholders and the corporation interchangeably, it is the attorney-client relationship with the corporation that is paramount for purposes of upholding the attorney-client privilege against a minority shareholders challenge] italics added.)

As another alternative argument, Beck contends the letter agreement demonstrates Resnick and the law firm were not necessarily providing legal advice, but merely business advice, negotiating assistance and drafting services regarding ownership divestiture and transition. Thus, argues Beck, citing Chicago Title Ins. Co. v. Superior Court (1985) 174 Cal.App.3d 1142, 1154 (Chicago Title) and Montebello Rose Co., Inc. v. Agricultural Labor Relations Bd. (1981) 119 Cal.App.3d 1, 32 (Montebello), the defendants legal activities became so intertwined with wholly business or commercial activities that those functions merged, eliminating the attorney-client privilege altogether.

Chicago Title involved a discovery issue. In moving to compel various deponents to answer questions concerning their communications with regional counsel, the cross-complaining bank contended that 1) [the cross-defendant title insurer] had waived the [attorney-client] privilege by suing the Bank on grounds [of collaboration and conspiracy to carry out a $300 million fraudulent transaction scam] to which the communications were relevant; 2) the dominant purpose of some of the communications was not to obtain legal advice; and 3) the communications were in aid of a crime or fraud and thus constituted an exception to the privilege under Evidence Code section 956. (Chicago Title, supra, 174 Cal.App.3d at p. 1148.) In passing, the Chicago Title court noted, It is settled that the attorney-client privilege is inapplicable where the attorney merely acts as a negotiator for the client, gives business advice or otherwise acts as a business agent. (Id. at p. 1151.) The court then went on confine [its] analysis to those situations where in-house counsel is acting in his legal capacity. (Ibid.) We fail to appreciate the significance of Chicago Title here, where the cause of action does not allege business agent facts, but is clearly for breach of the professional standard of care and is denominated Professional Negligence. In short, Chicago Title does not support the proposition for which Beck cites it, i.e., that the attorney-client privilege does not apply because Resnick and the law firm were not performing legal services.

Equally inapt is the Montebello case, where one of the questions was whether written communications between an employer and his attorney-negotiator concerning pending collective bargaining negotiations are within the attorney-client privilege or any other recognized privilege. (Montebello, supra, 119 Cal.App.3d at p. 7.) In answer, the court noted the attorney-client privilege does not apply to communications to an attorney who is transacting business that might have been transacted by another agent who is not an attorney (id. at p. 32), but the privilege attaches when the dominant purpose [is] for transmittal to an attorney in the course of professional employment. (Ibid.) The court concluded, Since Montebellos labor negotiations could have been conducted by a nonattorney, it is self-evident that communications with [the attorney] relating to the conduct of those negotiations were not privileged unless the dominant purpose of the particular communication was to secure or render legal service or advice. The fact that some of the communications involved strategy decisions regarding conduct of the negotiations which may have had legal significance with regard to a future unfair labor practice charge, i.e., the alleged failure to negotiate in good faith, does not mean that the dominant purpose of these communications was of a legal nature. (Ibid.) Montebello does not advance Becks argument because the allegations of the operative pleading relate solely to Resnick and the law firms performance of professional services, i.e., they allegedly failed to comply with the attorneys standard of care in preparing memoranda of understanding, agreements, contracts, and/or other legal documents.

Finally, with respect to the professional negligence cause of action, Beck asserts he was an intended third party beneficiary of Resnick and the law firms legal services and thus entitled to sue for professional negligence. He admits he did not identify that theory in his professional negligence claim, but contends he pleaded the necessary factual allegations to survive demurrer, and he contends, inter alia, that Biakanja v. Irving (1958) 49 Cal.2d 647, 650 (Biakanja) demonstrates the viability of his third party beneficiary claim. We disagree.

In the Biakanja decision, our Supreme Court stated: The determination whether in a specific case the defendant will be held liable to a third person not in privity is a matter of policy and involves the balancing of various factors, among which are the extent to which the transaction was intended to affect the plaintiff, the foreseeability of harm to him, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendants conduct and the injury suffered, the moral blame attached to the defendants conduct, and the policy of preventing future harm. (Biakanja, supra, 49 Cal.2d at p. 650.) Subsequent decisions have considered and weighed these factors where a nonclient sues an attorney. We find no need to compile an anthology: Suffice to acknowledge the general principle that an attorney may owe a duty to a third person, and may be liable if the third person who was intended to be benefited by his performance is injured by his negligent execution of that duty (Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (1976) 57 Cal.App.3d 104, 110 (Roberts)), and that the duty is imposed because public policy requires that the attorney exercise his position of trust and superior knowledge responsibly so as not to affect adversely persons whose rights and interest are certain and foreseeable. (Heyer v. Flaig (1969) 70 Cal.2d 223, 229, disapproved on another ground in Laird v. Blacker (1992) 2 Cal.4th 606, 617.)

The question directly pertinent to Becks appeal was presented in Skarbrevik v. Cohen, England & Whitfield (1991) 231 Cal.App.3d 692, that is, the liability of counsel of a close corporation to a minority shareholder for professional negligence. (Id. at p. 695.) Holding that the defendant attorneys owed no legal duty to plaintiff (ibid.), the court relied, in part, on an Illinois case in which, as here, an employee and minority shareholder of a closely held corporation sued the corporations attorney, alleging that the attorney had failed to inform the minority shareholder of fraudulent financial dealings by two corporate officers and majority shareholders which resulted in harm to him as a minority shareholder. (Id. at p. 706.) The Skarbrevik court noted, with approval, In affirming the trial courts dismissal of the action, the [Illinois] appellate court found that the plaintiff had failed to present any authority in which a corporate attorney, even when representing a closely held corporation, has been held to be implied to have an attorney-client relationship with the shareholders arising from his position as corporate counsel. (Ibid.)

We will not further lengthen this already expansive discussion by parsing the precise facts of Skarbrevik or the Illinois case to which it alludes. We simply note that Beck alleges Resnick and the law firm failed and continue to fail to (a) promptly advise JBZ regarding the need for an orderly plan of succession to avoid disruption of . . . JBZs business and hence a decline in the value of its stock, or (b) to prepare the documents legally necessary to carry out such plan and failed follow through with prepar[ing] different alternative payment arrangement models . . . as well as begin the drafting of documents. In light of the criteria analysis of Biakanja, supra, 49 Cal.2d at p. 650 (the extent to which the transaction was intended to affect the plaintiff, the foreseeability of harm to him, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendants conduct and the injury suffered, the moral blame attached to the defendants conduct, and the policy of preventing future harm), we conclude the complaint does not allege facts giving rise to the attorneys liability for professional negligence. Specifically, the allegations demonstrate that the transaction giving advice, preparing documents to smooth the transition, calculating formulae for the buy-out was intended for the benefit of JBZ, and only incidentally for Beck; the allegations do not show an implied attorney-client relationship on which Beck was entitled to rely; whether Beck suffered injury from the attorneys alleged failure to act remains uncertain; and the allegations reveal no moral blame, much less identify or give rise to an inference that there is a harm-preventing policy to be served by exposing the attorneys to the suggested tort liability.

Seventh Cause of Action for Intentional Infliction of Emotional Distress

The elements of a cause of action for intentional infliction of emotional distress are (1) outrageous conduct by the defendant, (2) intention to cause or reckless disregard of the probability of causing emotional distress, (3) severe emotional suffering, and (4) actual and proximate causation of the emotional distress. (Molko v. Holy Spirit Assn. (1988) 46 Cal.3d 1092, 1120, superseded by statute on another ground as stated in Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 853, fn. 19.) Conduct is extreme and outrageous when it exceeds all bounds [of decency] usually tolerated by a decent society, [and is] of a nature which is especially calculated to cause, and does cause, mental distress . . . . (Molko v. Holy Spirit Assn., supra, 46 Cal.3dat p. 1122.) Where reasonable men may differ, it is for the jury, subject to the control of the court, to determine whether, in the particular case, the conduct has been sufficiently extreme and outrageous to result in liability. (Id. at p. 1123.)

As we have already noted, Beck has not stated an actionable claim against Resnick or the law firm in the fourth or fifth causes of action, thus we look to the allegations of the seventh cause of action to determine whether the pleading of intentional infliction of emotional distress can survive. The pleading does not measure up to the standard. The allegations show nothing more than a garden-variety corporate dispute during a changing of the guard: Beck was terminated from his employment four months before the date on which he intended to leave voluntarily; no one gave him advance notice that he would have to leave ahead of his schedule; his final paychecks were delayed for an unspecified period of time, as was his access to his personal files; his shares were not valued as his brothers had been when his brother retired; he had to wait two months to see the appraisal on which JBZ offered to buy his shares of stock; and his medical coverage almost expired due to defendants delays. Reasonable minds could not differ as to whether this conduct exceeds the bounds of decency tolerated in a civilized society. As a matter of law, it does not, and we need not consider other elements of the emotional distress claim.

Eighth Cause of Action for Intentional Interference with Contract

Beck has not raised any argument pertaining to the courts sustaining the demurrer of Resnick and the law firm to the eighth cause of action for intentional interference with contract. We deem the issue waived and pass it without consideration.

No Reasonable Possibility of Amendmentto Cure Defects

Where a demurrer has been sustained without leave to amend, [t]he judgment must be affirmed if any one of the several grounds of demurrer is well taken. [Citations.] [Citation.] . . . [I]t is an abuse of discretion to sustain a demurrer without leave to amend if the plaintiff shows there is a reasonable possibility any defect identified by the defendant can be cured by amendment. [Citation.] [Citations.] Nevertheless, if no liability exists as a matter of law, we must affirm that part of the judgment sustaining the demurrer, and if the plaintiff cannot show an abuse of discretion, the trial courts order sustaining the demurrer without leave to amend must be affirmed. (Gutkin v. University of Southern California(2002) 101 Cal.App.4th 967, 975-976.)

The allegations of the second amended complaint do not state facts sufficient to constitute a cause of action under any of Becks theories of recovery. Because Resnick and the law firm have no liability as a matter of law, the court properly sustained their demurrer. And because Beck has not shown how the complaint could be amended to state a viable cause of action, he has not demonstrated an abuse of discretion in the court sustaining the demurrer without leave to amend. We therefore affirm the judgment.

DISPOSITION

The judgment is affirmed. Resnick and the law firm shall recover their costs on appeal.

IKOLA, J.

WE CONCUR:

RYLAARSDAM, ACTING P. J.

FYBEL, J.

Publication courtesy of California pro bono legal advice.

Analysis and review provided by La Mesa Property line Lawyers.

[1] The letter agreement is correspondence dated August 30, 2002, sent by Resnick, memorializing the essence of an understanding among Jacobs, Beck, and Zuziak, pertaining, inter alia, to Jacobs divestiture of his ownership interest in JBZ, Beck and Zuziaks purchase of shares, recapitalization of JBZ, and voting control. Resnick noted that the parties to the agreement needed further discussion in regard to certain issues, and asked Jacobs, Beck, and Zuziak to sign their approval at the bottom of the letter and return it to Resnick so he could prepare different alternative payment arrangement models for your review, as well as begin the drafting of documents. All further references to the letter agreement are to this correspondence.

[2] All further statutory references are to the Code of Civil Procedure unless otherwise stated.

[3] Beck settled his claims against JBZ and the individual shareholders and dismissed his action against them.

[4] Indeed, California courts refuse to enforce gratuitous promises, as the allegations seem to indicate is the case here. (See, e.g., Jara v. Suprema Meats, Inc. (2004) 121 Cal.App.4th 1238, 1249-1251, and cases cited therein.)

[5] (See 1 Witkin, Cal. Evidence (4th ed. 2000) Hearsay,  97, p. 799 [A judicial admission in a pleading (either by affirmative allegation or by failure to deny an allegation) is . . . not merely evidence of a fact; it is a conclusive concession of the truth of a matter and has the effect of removing it from the issues. See also Kirby v. Albert D. Seeno Construction Co. (1992) 11 Cal.App.4th 1059, 1066, fn. 4 [A judicial admission (by affirmative allegation in a pleading) is a conclusive concession of the truth of the matter admitted].)