Lujan v. Calvo Fisher & Jacob fka Calvo & Clark

• Court: Superior Court of Guam
• Decided: September 23, 2019
• Docket: CV0818-10
• Status: Unknown

Opinion

I r 9:13

6 IN THE SUPERIOR COURT OF GUAM 7

8 DAVID LUJAN and ANNA B. LUJAN, CIVIL CASE NO. CVO81$-l0 9 Plaintiffs, 10 vs. 11 DECISION AND ORDER CALVO FISHER & JACOB LLP f/k/a - CALVO & CLARK, LLP, a Guam Limited 13 Partnership, and DOES 1 through 100, 14 Defendants. 15

16 INTRODUCTION 17 This matter comes before the Honorable Judge Arthur Barcinas upon Judgment and 18 Mandate issued by the Supreme Court of Guam on January 22, 2019, vacating and remanding 19 the Court’s Decision and Order on the Plaintiffs’ Motion to Amend and Supplement filed 20 November 10, 2015. Attorneys James M. Maher and Delia Lujan Wolf represented the 21 Plaintiffs David Lujan and Anna B. Lujan (“Plaintiffs” or “the Lujans”). Attorneys Duncan G. 22 McCully and Edward Swanson represented the Defendant Calvo Fisher & Jacob LLP 23 (“Defendant” or “CFJ”). For the reasons set forth below, the Plaintiffs’ Motion to Amend and 24 Supplement with regard to the Plaintiffs’ proposed amendment asserting a legal malpractice 25 claim in contract is DENIED. 26 BACKGROUND 27 The case history and pertinent facts in support of Plaintiffs’ Motion to Amend and 28 Supplement have been fully articulated and sequenced in great detail throughout the parties’ Decision and Order Civil Case No. CV0818-10; Lttjan, et al. v. Calvo fisher & Jacob LLP, et aL

i pleadings, the Court’s Decision and Order, and the Opinion issued in the instant matter by the 2 Supreme Court of Guam. See Mtn. to Amend. (Nov. 10, 2015); see also Opp’n (Dec. 14, 3 2015); see also Decision and Order (Mar. 21, 2016); see also Lujan v. Calvo Fisher & Jacob 4 LLP, 2018 Guam 27. Thus, the Court finds that it is not necessary to reiterate the facts of this 5 matter in its entirety and will only address the facts as it relates to the narrow issue on remand, 6 that is, the Plaintiffs’ proposed amendment asserting a legal malpractice claim in contract. 7 The Plaintiffs seek to amend their Complaint and supplement paragraph 46 under 8 Count 1 alleging Legal Negligence. The proposed amendment alleges that CFJ committed 9 malpractice in preparing the complaint in Lujan v. Girardi Keese, et al., Civil Case No. 10 CV0776-09 (“the Girardi Action”) specifically as follows: 11 Calvo & Clark breached [its] duty by their failure to provide skillful and 12 competent representation, by providing erroneous legal advice, by conducting inadequate legal research, by drafting a complaint that contained causes-of-action 13 that were either not recognized on Guam or were subject to immunity defenses which in turn resulted in dismissal. This breach directly and proximately . . . 14 caused the Plaintiffs to expend unnecessary sums of money on an action that the court dismissed before an answer had been filed and any substantive discovery had been conducted. 16

17 Proposed Compl., ¶ 46. Paragraph 47 of the Proposed Amended Complaint proceeds to allege that “[a]s a direct 18 and proximate result of the breaches, Plaintiffs suffered and continue to suffer damages.” , at 19

20 ¶ 47. These allegations were re-alleged and incorporated into Plaintiffs’ breach of contract claim. Seeld, atfl4$-50.

On March 21, 2016, the Court issued its Decision and Order denying Plaintiffs’ Motion to Amend and Supplement, finding that Mr. Lujan could not state a claim for malpractice. $ 23 Decision and Order (Mar. 21, 2016). Specifically, this Court held that the Plaintiffs failed to 24 allege and could not allege cognizable damages because: 1) the dismissal of the Girardi Action 25 did not constitute harm for the purpose of a malpractice claim, and 2) the monies paid to CFJ

and successor counsel were not recoverable malpractice damages. Id. The Plaintiffs timely 27 appealed. On December 28, 2018, the Supreme Court of Guam held that while this Court 28

Page 2 of 7 Decision and Order Civil Case No. CVO8 18-10; Lujan, et at. v. Catvo fisher & Jacob LLP, et at.

1 analyzed the Plaintiffs’ proposed amendment as a tort claim, the Court abused its discretion in 2 denying Plaintiffs’ Motion to Amend and Supplement by failing to also address the Plaintiffs’ 3 proposed legal malpractice claim in contract claim. g Lujan v. Calvo fisher & Jacob LLP, 4 2018 Guam 27. Accordingly, the Supreme Court remanded the matter to address Plaintiffs’ 5 proposed amendment asserting a legal malpractice claim in contract. Id, at ¶ 17. 6 DISCUSSION 7 I. Motion to Amend 8 As a preliminary matter, Guam law provides, that “[u]pon motion of a party, the court 9 may, upon reasonable notice and upon such terms as are just, permit the party to serve a 10 supplemental pleading setting forth transactions or occurrences or events which have happened it since the date of the pleading sought to be supplemented.” Guam R. Civ. P. 15(d). The factors 12 the Court may consider when ruling on a motion to amend or supplement include the presence 13 or absence of undue delay, bad faith. . . undue prejudice to the opposing party. . . or futility of 14 the proposed amendment. ç Guam R. Civ. P. 15(a) (emphasis added); see also see also M 15 Elec. Corp., 2016 Guam 35 ¶ 42 (citing Forman v. Davis, 371 U.S. 178, 182). As the Supreme 16 Court of Guam explained in their Opinion on the instant matter, “[a] motion to amend is futile 17 when the complaint as amended would be subject to dismissal.” Lujan, 2018 Guam 27 ¶ 13 18 (citations omitted). In other words, in determining futility, a court must analyze the proposed 19 amendment similar to that of motion to dismiss. (citing Krainski v. Nevada ex rel. Bd. Of 20 Regents of Nev. Sys. Of Higher Educ., 616 F.3d 963, 972 (9th Cir. 2010). Thus, in doing so, 21 the court must accept all well-pleaded factual allegations as true and view them in the light 22 most favorable to the pleading party. First Hawaiian Bank v. Manley, 2007 Guam 2 ¶ 9. The 23 court must then look to the specific allegations in the complaint to determine whether they 24 plausibly support a legal claim for relief. Lujan, 2018 Guam 27 ¶ 13 (citing Anderson v. 25 Suiters, 499 F.3d 1228, 1238 (10th Cir. 2007). 26 Upon remand, this Court ordered the parties to submit supplemental briefing addressing 27 the outstanding issues identified in the Supreme Court of Guam’s Opinion and Judgment in 28 Lujan, 2018 Guam 27. The parties were encouraged to rely solely on the evidence previously

Page 3 of 7 Decision and Order Civil Case No. CV0818-10; Lujan, etal. v. Calvo Fisher & Jacob LLP, etal.

i presented, and reference only those exhibits already submitted, if the parties determine that the 2 Court can reach a sound decision based on the current record. Order (May 9, 2019). If the 3 parties however, determined new or supplemental evidence was needed to respond to the 4 narrow issue on remand, the Court gave the parties an opportunity to supplement the record by 5 evidentiary hearing. Neither party however, thought an evidentiary hearing was necessary and 6 chose to rely solely on the current record before the Court. 7 IL Plaintiffs’ Legal Malpractice Claim in Contract 8 The Supreme Court of Guam, in applying California jurisprudence to legal malpractice 9 claims, now recognizes causes of action for legal malpractice in both tort and in contract. 10 Lujan, 201$ Guam 27 ¶ 15. In analyzing claims for legal malpractice, the Supreme Court of 11 Guam has cited several California cases as persuasive authority. See Gayle v. Hemlani, 2000 12 Guam 25 ¶(J[ 27-30, 45. Thus, this Court will similarly rely on California case law. 13 Generally, the elements of a claim for legal malpractice are: (1) an attorney-client 14 relationship; (2) a negligent act or omission; (3) causation; and (4) damages. Kuriniiu v. Hanna 15 & Morton, 55 Cal. App. 4th $53 (Ct. App. 1997). Application of a legal malpractice claim 16 however, is complicated by the hybrid contract-tort nature of such claims. Jackson v. Rogers 17 & Wells, 210 Cal. App. 3d 336, 342 (Ct. App. 19$9) (emphasis added). As the Supreme Court 18 of California explained in Ncci: 19 Legal malpractice consists of the failure of an attorney to use such skill, prudence, 20 and diligence as lawyers of ordinary skill and capacity commonly possess and exercise in the performance of the tasks which they undertake. When such failure 21 proximately causes damage, it gives rise to an action in tort. Since in the usual case, the attorney undertakes to perform his duties pursuant to a contract with the 22 client, the attorney’s failure to exercise the requisite skill and care is also a breach 23 of an express or implied term of that contract. Thus legal malpractice generally constitutes both a tort and a breach of contract. 24

25 Neel v. Magana, Olney, Levy, Cathcart & Gelfand, 6 Cal.3d 179, 1$0-1$1 (1971). Simply put, legal malpractice can be a claim either in tort or in contract, depending on 26 the circumstances. See Orrick Herrington & Sutcliffe LLP v. Superior Court, 107 Cal. App. 4th 27 1052, 1060 (2003). Here, the Plaintiffs breach of contract claim alleges Mr. Lujan was damaged 28

Page 4 of 7 Decision and Order Civil Case No. CVO81$-10; Lujan, eta!. v. Calvo fisher & Jacob LLP, et aL

i by the dismissal of the Girardi Action and by an alleged overpayment of fees to CFJ. However, 2 as the Defendants’ argue, the Plaintiffs’ breach of contract action fails for the same reasons this

3 Court found the tort cause of action failed — failure to allege causation and damages. 4 First, a plaintiff alleging legal malpractice must prove a “case-within-a-case.” Mattco 5 Forge, Inc. v. Arthur Young & Company, 52 Cal. App. 4th $20, $3 1-37 (1997). In other words, 6 a malpractice plaintiff must show that, “but for” the negligence of the attorney, he could have

7 obtained a better result in the underlying action. Orrick Herrington, 107 Cal. App. 4th 1052,

8 1057 (2003). The purpose of this requirement is “to avoid damages based on pure speculation 9 and conjecture. Id.; see also Budd v. Nixen. 491 P. 2d 433 (1971) (breach of a lawyer’s duty io that only causes nominal damages or speculative or uncertain harm does not support a 11 malpractice cause of action). Thus, before Plaintiff can claim damages based on the dismissal of

12 the Girardi complaint, Plaintiff must also allege causation, i.e., that but for CFJ’s breach, 13 Plaintiff would have obtained a better result or, in other words, would have prevailed in the 14 Girardi Action.

15 Here, the Plaintiffs accuse the Defendant of committing malpractice by failing “to 16 provide skillful and competent representation, by erroneous legal advice, by conducting

17 inadequate legal research, by drafting a complaint that contained causes-of-action that were is either not recognized on Guam or were subject to immunity defenses which resulted in

19 dismissal.” Proposed Compl., at ¶ 46. This is an allegation that the Defendant negligently

20 asserted causes of action that, if the court in the Girardi Action was correct, Mr. Lujan never

21 had in the first place. Put another way, Mr. Lujan alleges CFJ’s breach consisted of bringing

22 meritless claims that had no chance of succeeding from the start. Further, the Plaintiffs have not

23 alleged and do not allege that but for CFJ’s alleged breach, a better outcome would have 24 resulted. See Onick Herrington, 107 Cal. App. 4th 1052, 1057 (2003). Accordingly, because the

25 Plaintiffs do not and cannot allege that they would have obtained a better result but for CfJ’s

26 alleged breach, Plaintiffs’ malpractice claim is thus, not any more cognizable in contract than it

27 was in tort. See Decision and Order (Mar. 21, 2016).

Page 5 of 7 Decision and Order . Civil Case No. CVO8 1$-tO; Lujan, et at. v. Catvo Fisher & Jacob LLP, et al. . 1 Second, the Plaintiffs allege two types of monetary injury: 1) the money paid to the 2 Defendant for allegedly negligent legal work; and 2) the money paid to subsequent counsel after 3 the discharge of the Defendant. Even assuming arguendo that the Defendant’s representation of 4 Mr. Lujan in the Girardi Action was negligent, Plaintiff still cannot state cognizable damages in 5 a legal malpractice in contract action. As the Court expounded on in its March 21, 2016 6 Decision and Order, attorney’s fees paid to an allegedly offending attorney or successor counsel 7 are not recoverable as malpractice damages unless the fees are paid to correct an error of 8 discharged counsel. Orrick Herrington, 107 Cal. App. 4th 1052 (2003). While it is true that 9 the Orrick court allowed the plaintiffs breach of contract claim to proceed, it clearly 10 distinguished that claim as a fee dispute. See Id. at 1054 (emphasis added); see also Tana v. 11 Professionals Prototype I Ins. Co., 47 Cal. App. 4th 1612, 1617 (1996) (fee disputes are separate 12 and distinct from a malpractice in contract claim). 13 Here, as this Court previously recognized in its March 21, 2016 Decision and Order, Mr. 14 Lujan has consistently argued in favor of the causes of action set forth in the Girardi Complaint 15 drafted by the Defendant, through pleadings, motion memoranda, and oral argument before the 16 Superior Court, and now in a specially granted interlocutory appeal to the Supreme Court. Sc 17 Decision and Order (Mar. 21, 2016). The Plaintiffs, upon discharging the Defendant, were not 18 obliged to actively oppose the Girardi Action defendant’s efforts to dismiss those causes of 19 action, and to incur fees owed to new counsel to do so. Nor were Plaintiffs obliged to appeal the 20 Girardi court’s dismissal of those causes of action to the Supreme Court of Guam. The Court 21 notes the discrepancy between the Plaintiffs’ argument that the Defendant’s malpractice forced 22 Mr. Lujan to spend money to engage new counsel, with the events of the Girardi Action, where 23 Mr. Lujan has continued to make the arguments first made on his behalf by the Defendant. In 24 other words, following the discharge of the Defendant, Plaintiffs’ legal expenditures in the 25 Girardi Action have not been made to “untangle the [D]efendant’s error.” $ç Jordache 26 Enterprises. Inc. v. Brobeck, Phieger & Harrison, 958 P.2d 1062 (Cal. 1998). Thus, the 27 expenditures have been made voluntarily, to carry out a legal strategy that depends on arguing

Page 6 of 7 Decision and Order Civil Case No. CV08 18-10; Lujan, et at. v. C’alvo Fisher & Jacob LLP, et at.

1 that the causes of actions in the Girardi complaint, drafted by the Defendant, were valid and 2 properly pleaded all along. 3 Accordingly, the Plaintiffs have not and cannot claim damages that are cognizable in an 4 action for legal malpractice in contract. The expenditure of legal fees, first to the Defendant 5 itself, and then to successor counsel, do not amount to actual loss or damage resulting from the 6 attorney’s breach. Thus, the Plaintiffs cannot state a claim for legal malpractice in contract, so 7 amendment of the complaint is futile. 8 Further, in response to the Court’s order for supplemental briefing on remand, the 9 Plaintiff offered, at best, a conclusory assertion that “because of [CfJ’s] negligently-pled 10 complaint on the Lujans’ behalf, unnecessary litigation resulted.” $ Pl.’s Response and Supp. ii Brief (Jun. 7, 2019). Without more, the arguments advanced do not satisfy the elements 12 necessary to establish the Plaintiffs’ claim for legal malpractice in contract. 13 finally, the Court acknowledges Defendant’s Second Request for Judicial Notice in 14 Support of Submission on Remand filed June 19, 2019. However, the Court notes that the Is Defendant’s submission, in advancing their res judicata argument, goes beyond the narrow 16 scope of this remand and is nonetheless, not necessary to the resolution of this matter. Thus, the 17 Court need not and does not address the Defendant’s alternative arguments contained in their 18 supplemental briefs. 19 CONCLUSION 20 for the reasons set forth above, the Plaintiffs’ Motion to Amend and Supplement is 21 DENIED as futile.

IT IS SO ORDERED__SEP 23 2919 23

CC fl I 27

HONORABLE ARTHUR R. BARCINAS 28 r14-,&-’J Judge, Superior Court of Guam

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