Steiner v. The Palms Homeowners Association

1. CASE # CASE NAME HEARING NAME HEARING ON MOTION TO VACATE DISMISSAL 664.6 AND ENTRY JPMORGAN CHASE BANK, CVPS2405283 JUDGMENT UNDER TERMS OF N.A. VS NJEGOVEC STIPULATION SETTLEMENT BY JPMORGAN CHASE BANK, N.A. Tentative Ruling: No tentative ruling. Motion granted. Proposed order and proposed judgment signed by the court.

2. CASE # CASE NAME HEARING NAME HEARING RE: MOTION TO STRIKE COMPLAINT ON 1ST AMENDED STEINER VS THE PALMS COMPLAINT FOR OTHER REAL CVPS2600913 HOMEOWNERS PROPERTY (OVER $35,000) OF ASSOCIATION STEPHEN ANTHONY STEINER BY RHONA KAUFFMAN Tentative Ruling: Motion to Strike is MOOT in light of court’s ruling on the Demurrer to the 1st Amended Complaint.

3. CASE # CASE NAME HEARING NAME HEARING RE: DEMURRER ON 1ST STEINER VS THE PALMS AMENDED COMPLAINT FOR OTHER CVPS2600913 HOMEOWNERS REAL PROPERTY (OVER $35,000) OF ASSOCIATION STEPHEN ANTHONY STEINER BY RHONA KAUFFMAN Tentative Ruling: A general demurrer lies where the pleading does not state facts sufficient to constitute a cause of action. (CCP § 430.10(e).)

In evaluating a demurrer, the court gives the pleading a reasonable interpretation by reading it as a whole and all of its parts in their context. (Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125.) The court assumes the truth of all material facts which have been properly pleaded, of facts which may be inferred from those expressly pleaded, and of any material facts of which judicial notice has been requested and may be taken. (Crowley v. Katleman (1994) 8 Cal.4th 666, 67.) However, a demurrer does not admit contentions, deductions or conclusions of fact or law. (Daar v. Yellow Cab Company (1967) 67 Cal.2d 695, 713.) If the complaint fails to state a cause of action, the court must grant the plaintiff leave to amend if there is a reasonable possibility that the defect can be cured by amendment. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)

7th Cause of Action Legal Malpractice: The elements of a cause of action for legal malpractice are: (1) an attorney-client relationship; (2) a negligent act or omission; (3) causation; and (4) damages. (Slovensky v. Friedman (2006) 142 Cal.App.4th 1518, 152.) To prevail in a legal malpractice action, simply showing the attorney erred is not enough. (Filbin v. Fitzgerald (2012) 211 Cal.App.4th 154, 166.) The plaintiff must also establish that “but for the alleged malpractice, it is more likely than not that the plaintiff would have obtained a more favorable result.” (Ibid.; see also Viner v. Sweet (2003) 30 Cal.4th 1232, 1244.) Plaintiff must prove that actual loss or damage was sustained as a result of the attorney’s negligence. (Williams v. Wraxall (1995) 33 Cal.App.4th 120, 130.)

In ruling on the previous demurrer, the court found the original Complaint did not sufficiently allege the element of damages to support this cause of action. It was unclear how Kauffman’s representation of Plaintiff resulted in a diminished value of Plaintiff’s home or how Plaintiff lost the opportunity to pursue his claims against the HOA when that is precisely what he is doing in the current action. In Opposition to the present motion, Plaintiff cites FAC ¶¶ 60, 64, 113-117.

Plaintiff alleges: • Paragraph 60: Since “Kauffman failed to timely use the November 2023 inspection report to seek comprehensive remediation, emergency relief, or other decisive legal action before the HOA entrenched its position that Plaintiff and/or his counsel had caused delay, Plaintiff was forced to pay $12,102 out of pocket in July 2024 for biohazard cleanup and repairs to render the unit habitable and saleable”; • Paragraph 64: Plaintiff seeks damages proximately caused by Kauffman’s alleged professional negligence, breach of fiduciary duty, and fraud/concealment, including “the $3,859.85 in fees paid for deficient and allegedly conflicted representation; loss of timely pre-sale remediation and settlement leverage against the HOA; a substantial contribution to the $12,102 Plaintiff paid for biohazard remediation after Kauffman delayed the report, failed to seek decisive relief, and advised Plaintiff to personally pay; additional exposure, distress, and loss of use during the period in which timely attorney action would have been expected to compel remediation or emergency relief; and worsened property-sale posture to the extent caused by delayed remediation and lost legal leverage.” • Paragraph 113: “Kauffman knew or should have known that delay in transmitting the November 2023 inspection report and delay in responding to the HOA’s September 14, 2023 position would prejudice Plaintiff because the HOA had already attempted to characterize the matter as resolved, had proposed limited Phase 2 work, and had attempted to shift responsibility for portions of the problem to Plaintiff.” • Paragraph 114: Plaintiff alleges the November 2023 inspection report “provided independent third-party evidence confirming extensive contamination and the need for comprehensive remediation” which Plaintiff alleges would have put the HOA under greater pressure to undertake remediation or negotiate with Plaintiff had Kauffman promptly transmitted the report to the HOA.

Plaintiff alleges in January and March 2024, the HOA’s counsel cited delay in responding as a reason the HOA would take no further action regarding Plaintiff’s unit. Plaintiff alleges this reduced Plaintiff’s leverage and “made it more difficult to secure HOA-funded remediation.” • Paragraph 115-117: Plaintiff alleges he suffered the following damages: “(a) $3,859.85 in legal fees paid to Kauffman for representation that Plaintiff alleges was deficient and materially impaired; (b) all or a substantial portion of the $12,101 in remediation costs Plaintiff paid in July 2024 after Kauffman failed to timely use the November 2023 inspection report, failed to seek decisive relief, and advised Plaintiff to personally pay for remediation; (c) lost value of timely pre-sale injunctive or settlement relief against the HOA; (d) additional loss of use, distress, and exposure during the period in which competent and conflict-free counsel would have promptly acted on the November 2023 report; and (e) worsened property- sale posture and diminution damages to the extent caused by delayed remediation and loss of legal leverage.”

Plaintiff alleges he lost pre-suit leverage and negotiating position during the period when comprehensive remediation and emergency relief remained realistically available. (¶¶114, 117.) In ruling on a demurrer, the demurrer admits the truth of all material facts properly pleaded, meaning all ultimate facts alleged. (Serrano v. Priest (1971) 5 Cal.3d 584, 591; 290 Division (EAT), LLC v. City & County of San Francisco (2022) 86 Cal.App.5th 439, 452.) However, a demurrer does not admit contentions, deductions, or conclusions of law or fact. (Ibid.)

It is Plaintiff’s contention that he was put in a less advantageous negotiating position because of Kauffman’s failure to transmit the November 2023 report. Plaintiff also contends the HOA would have “faced substantially greater pressure” to remediate or negotiate with him had Kauffman presented the November 2023 report in a timely fashion. (¶114.) Plaintiff concluded that he would have been in a better position to sell his property or negotiate a settlement with the HOA had Kauffman acted differently. (FAC ¶115.)

Importantly, Plaintiff has not alleged ultimate facts to support these contentions and conclusions. The FAC is still deficient in alleging damages.

8th Cause of Action Breach of Fiduciary Duty: “The elements of a cause of action for breach of fiduciary duty are the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach.” (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith (1998) 68 Cal. App. 4th 445, 483) A fiduciary relationship exists when confidence is reposed by persons in the integrity of others, who voluntarily accept the confidence and therefore cannot act so as to take advantage of the others' interests without their knowledge or consent. (Tri-Growth Centre City Ltd. v.

Silldorf, Burdman, Duingnan & Eisenberg (1989) 216 Cal. App. 3d 139) “The essence of a fiduciary or confidential relationship is that the parties do not deal on equal terms, because the person in whom trust and confidence is reposed and who accepts that trust and confidence is in a superior position to exert unique influence over the dependent party.” (Barbara A. v. John G. (1983) 145 Cal. App. 3d 369, 383.)

Again, the court previously found Plaintiff had not sufficiently alleged damages as a result of Kauffman’s alleged breach of a fiduciary duty to Plaintiff. The FAC alleges: “Kauffman’s fiduciary breach caused damages separate from and in addition to the original infestation. The breach deprived Plaintiff of the ability to make an informed choice of counsel, deprived him of conflict-free advocacy during the period when decisive action was needed, allowed the HOA to use alleged delay and lack of communication as a defense theme, and contributed to Plaintiff’s later need to personally pay for remediation and sell under a worsened posture.” (¶123.)

This cause of action stems from Plaintiff’s allegation that Kauffman failed to disclose her prior relationship with Guralnick and Gilliland LLP, the firm representing the HOA in this matter. Plaintiff alleges that had Kauffman promptly disclosed her prior relationship with HOA’s counsel, Plaintiff would have “retained conflict-free counsel before the critical November 2023 inspection-report period, and such counsel would have promptly transmitted the report, demanded comprehensive remediation, preserved Plaintiff’s leverage, and sought emergency relief if the HOA refused to act.” (¶122.)

Allegations of what a different attorney would have done had Plaintiff hired someone else instead of Kauffman are purely speculative. It is not clear how Kauffman’s failure to disclose her prior employment with Guralnick and Gilliland led to Plaintiff being damaged in any way separate from Kauffman’s alleged malpractice, which is a distinct cause of action. Once again, Plaintiff makes conclusions of fact about what would have happened if Kauffman had disclosed her previous employment. Plaintiff has not alleged ultimate facts to support his claim for damages as a result of Kauffman’s alleged breach of fiduciary duty.

9th Cause of Action Fraud and Concealment: The elements of fraud are: (1) misrepresentation or concealment, (2) knowledge of falsity, (3) intent to defraud, (4) justifiable reliance, and (5) resulting damage. (Lovejoy v. AT&T Corp. (2004) 119 Cal. App. 4th 151, 157-158.) “Generally, fraud actions are subject to strict requirements of particularity in pleading.” (Furia v. Helm (2003) 111 Cal. App. 4th 945, 956.) This means that every element of the cause of action must be pled factually and specifically and the policy of liberal pleading does not apply. (Quelimane Co. v.

Stewart Title Guaranty Co. (1998) 19 Cal. 4th 26, 47.) This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Lazar v. Superior Court (1996) 12 Cal. 4th 631, 645.) The specificity requirements of fraud is “relaxed when it is apparent from the allegations that the defendant necessarily possesses knowledge of the facts.” (Quelimane Co. v. Steward Title Guaranty Co. (1998) 19 Cal. 4th 26, 27.)

In ruling on the previous demurrer, the court again found the issue in the original Complaint was Plaintiff had not sufficiently alleged damages. Plaintiff alleges Kauffman concealed her prior relationship with Guralnick and Gilliland LLP and attorney Wayne Guralnick. (¶127.) Plaintiff alleges Kauffman had a duty to disclose this prior relationship (¶128) but did not do so because she intended to induce Plaintiff to retain her and continue that representation. (¶130.) Plaintiff alleges he would have “acted differently had the concealed facts been disclosed” by not retaining Kauffman or discharging her earlier. (¶133.) Plaintiff alleges “Kauffman’s concealment caused concrete damages” which are the same as the damages alleged in connection with the seventh cause of action for professional negligence. (¶134.)

The FAC is still deficient as there is not any clear nexus between Plaintiff’s damages and Kauffman’s failure to disclose her previous employment with Guralnick and Gilliland. Plaintiff speculates that had Kauffman disclosed her previous employment, Plaintiff would have hired a different attorney who would have handled the matter differently and ultimately Plaintiff would have been able to procure a better result for himself. This is entirely speculative and amounts to a factual conclusion. A pleading cannot be based on a factual conclusion but rather must rely on ultimate facts alleged in support of the cause of action.

Defendant Rhona S. Kauffman’s Demurrer to the 1st Amended Complaint as to the 7th, 8th and 9th Causes of Action, SUSTAINED, with leave to amend.

Plaintiff to file amended complaint within 30 days. No further amendments will be permitted.

Case Management Conference continued to 11.23.26.