Ryan v. Kinney CA1/3
Opinion
Filed 9/21/26 Ryan v. Kinney CA1/3 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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
FIRST APPELLATE DISTRICT
DIVISION THREE
MARTIN RYAN et al., Plaintiffs, Appellants, and Cross-respondents, A173329
v. (City & County of San Francisco ANSEL D. KINNEY, Super. Ct. No. CGC-22-601147)
Defendant, Respondent, and Cross-appellant.
Martin Ryan and Claire Ryan (collectively, plaintiffs) filed a legal malpractice action against their former attorney, Ansel D. Kinney, who represented them in their lawsuit against 1001 California Street Condominium Association (HOA) and others. The underlying lawsuit, which resulted in a settlement, alleged misrepresentation by the HOA regarding plaintiffs’ purchase of a condominium. It also alleged claims related to breach of the governing covenants, conditions, and restrictions (CC&R’s) regarding the provision of heat to the condominium and enforcement of those CC&R’s under the Davis-Stirling Common Interest Development Act (Davis- Stirling Act; Civ. Code, § 4000 et seq.; all further undesignated statutory references are to this code). We refer to this second category of claims as the “heating claims.”
After a bench trial, the court found legal malpractice on the basis that, but for Kinney’s negligence in the underlying action, plaintiffs would have recovered greater damages for their misrepresentation claim than they received in the settlement. The court did not find malpractice related to the heating claims and found plaintiffs would have owed attorney fees to the HOA on those claims.
Plaintiffs assert the court erred by finding they would have lost on the heating claims, by declining to apportion the HOA’s attorney fees to limit them to fees related to the heating claims, and by awarding interest only through the hypothetical trial date in the underlying action rather than through the date of judgment in the malpractice action. In his cross-appeal, Kinney challenges the court’s finding that plaintiffs are entitled to damages on the misrepresentation claim and its denial of his quantum meruit claim for an offset of attorney fees.
We conclude the trial court erred by failing to award prejudgment interest through the date of judgment in this action and by failing to apportion the HOA’s attorney fees (to limit them to the heating claims); we therefore remand for recalculation of damages. In all other respects, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND We begin by recounting the relevant facts and procedural history from plaintiffs’ underlying lawsuit before turning to the instant case. For ease of comprehension and meaning no disrespect, we refer to plaintiffs by their first names. Condominium Purchase In August 2014, plaintiffs purchased a condominium for $2.7 million from the Estate of George Wiley (Wiley Estate) through its trustee, Diane
Wiley. The condominium is in a 10-unit Beaux Arts-style building in the Nob Hill neighborhood of San Francisco.
Prior to the purchase, the HOA’s agent, Karen Katz, disclosed to plaintiffs in a written financial disclosure statement dated June 2014 that the HOA anticipated a “roofing project” that “might warrant a special assessment” beginning later that year. The statement indicated the HOA had approximately $100,000 in reserves.
The Wiley Estate’s realtor, Joanne Stein of Pacific Union International, Inc. (PUI), sought clarification from Katz regarding the special assessment. According to an e-mail memorializing their conversation, Katz told Stein the special assessment was to be paid by all condominium owners for a possible roof replacement. Katz informed Stein the HOA was still obtaining bids for the project, but the anticipated cost was about $300,000, and the HOA had about $100,000 in reserves.
Stein, in turn, told plaintiffs their anticipated share of the cost of the roof repair was $12,000. Stein reached that number by subtracting the HOA reserves from the $300,000 figure relayed by Katz and dividing by the condominium’s 6 percent share of the building. Stein did not disclose the background data or her calculations to plaintiffs.
Plaintiffs did not negotiate with the Wiley Estate for a lower purchase price as the $12,000 expected share was very small compared to the $2.7 million cost of the condominium. Repairs to the building began in 2015 and were more extensive and costly than plaintiffs were initially told. There were numerous repairs to the exterior of the building that were not known to plaintiffs until after they purchased the condominium. Ultimately, plaintiffs’ share of the total repair costs totaled $665,443.
Plaintiffs also learned prior to their purchase of the condominium that it had steam heat provided by a boiler in the basement. Plaintiffs were told by Stein in a September 2014 e-mail (the month after the purchase) that the steam heat was included in their HOA dues, which were then $2,760 per month. At the time, the boiler provided heat to plaintiffs’ condominium, two other condominiums, and the building’s lobby; the remaining condominiums used their own internal heating systems.
In 2015, a leak was discovered in the steam heating pipes and repaired.
Around that time, the HOA informed plaintiffs of its intent to decommission the boiler system. During an ensuing unsuccessful mediation with plaintiffs, in 2016, the HOA’s attorney signed a note stating the existing boiler would not be removed until a new heat source was installed. However, the HOA decommissioned the steam heating system in 2017 without providing an alternative heat source to plaintiffs’ condominium. Plaintiffs’ Underlying Lawsuit In 2017, through their first attorney (not Kinney), plaintiffs filed a complaint and first amended complaint against the HOA raising multiple claims. Also through their first attorney, plaintiffs filed a complaint against Stein and her agency, PUI, asserting claims for misrepresentation based on Stein’s informing them that their share of the roof repair would be only around $12,000.
In 2018, plaintiffs replaced their first attorney with Kinney, who filed second and third amended complaints in 2018 and 2019 that consolidated the claims against the HOA, Stein, and PUI, and added as a defendant Diane Wiley as trustee of the Wiley Trust.
The third amended complaint alleged claims for intentional and negligent misrepresentation regarding the $300,000 estimate provided to
plaintiffs by Stein via Katz, the HOA’s property manager. Specifically, plaintiffs averred the HOA and Katz knew the cost of the roof repair was far greater when those representations were made as the HOA had been aware of serious deficiencies in various common areas of the building, including the “building envelope,” roof, roof decks, and waterproofing membranes, for many years but had deferred necessary repairs and failed to disclose the extent of the deficiencies. They contended that Stein reported they could not access the roof to inspect it themselves as the owner of the building’s penthouse had exclusive access to the roof. Plaintiffs also alleged claims for gross negligence and breach of fiduciary duty based on the HOA’s failure to make the repairs or build adequate financial reserves for them.
Additionally, plaintiffs asserted two causes of action based in part on the HOA’s decommissioning of the steam heating system, specifically for breach of the CC&R’s and for a violation of the Davis-Stirling Act. The relevant portion of the Davis-Stirling Act provides that the covenants and restrictions “shall be enforceable equitable servitudes, unless unreasonable, and shall inure to the benefit of and bind all owners of separate interests in the development.” (§ 5975, subd. (a).)
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Filed 9/21/26 Ryan v. Kinney CA1/3 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
FIRST APPELLATE DISTRICT
DIVISION THREE
MARTIN RYAN et al., Plaintiffs, Appellants, and Cross-respondents, A173329
v. (City & County of San Francisco ANSEL D. KINNEY, Super. Ct. No. CGC-22-601147)
Defendant, Respondent, and Cross-appellant.
Martin Ryan and Claire Ryan (collectively, plaintiffs) filed a legal malpractice action against their former attorney, Ansel D. Kinney, who represented them in their lawsuit against 1001 California Street Condominium Association (HOA) and others. The underlying lawsuit, which resulted in a settlement, alleged misrepresentation by the HOA regarding plaintiffs’ purchase of a condominium. It also alleged claims related to breach of the governing covenants, conditions, and restrictions (CC&R’s) regarding the provision of heat to the condominium and enforcement of those CC&R’s under the Davis-Stirling Common Interest Development Act (Davis- Stirling Act; Civ. Code, § 4000 et seq.; all further undesignated statutory references are to this code). We refer to this second category of claims as the “heating claims.”
After a bench trial, the court found legal malpractice on the basis that, but for Kinney’s negligence in the underlying action, plaintiffs would have recovered greater damages for their misrepresentation claim than they received in the settlement. The court did not find malpractice related to the heating claims and found plaintiffs would have owed attorney fees to the HOA on those claims.
Plaintiffs assert the court erred by finding they would have lost on the heating claims, by declining to apportion the HOA’s attorney fees to limit them to fees related to the heating claims, and by awarding interest only through the hypothetical trial date in the underlying action rather than through the date of judgment in the malpractice action. In his cross-appeal, Kinney challenges the court’s finding that plaintiffs are entitled to damages on the misrepresentation claim and its denial of his quantum meruit claim for an offset of attorney fees.
We conclude the trial court erred by failing to award prejudgment interest through the date of judgment in this action and by failing to apportion the HOA’s attorney fees (to limit them to the heating claims); we therefore remand for recalculation of damages. In all other respects, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND We begin by recounting the relevant facts and procedural history from plaintiffs’ underlying lawsuit before turning to the instant case. For ease of comprehension and meaning no disrespect, we refer to plaintiffs by their first names. Condominium Purchase In August 2014, plaintiffs purchased a condominium for $2.7 million from the Estate of George Wiley (Wiley Estate) through its trustee, Diane
Wiley. The condominium is in a 10-unit Beaux Arts-style building in the Nob Hill neighborhood of San Francisco.
Prior to the purchase, the HOA’s agent, Karen Katz, disclosed to plaintiffs in a written financial disclosure statement dated June 2014 that the HOA anticipated a “roofing project” that “might warrant a special assessment” beginning later that year. The statement indicated the HOA had approximately $100,000 in reserves.
The Wiley Estate’s realtor, Joanne Stein of Pacific Union International, Inc. (PUI), sought clarification from Katz regarding the special assessment. According to an e-mail memorializing their conversation, Katz told Stein the special assessment was to be paid by all condominium owners for a possible roof replacement. Katz informed Stein the HOA was still obtaining bids for the project, but the anticipated cost was about $300,000, and the HOA had about $100,000 in reserves.
Stein, in turn, told plaintiffs their anticipated share of the cost of the roof repair was $12,000. Stein reached that number by subtracting the HOA reserves from the $300,000 figure relayed by Katz and dividing by the condominium’s 6 percent share of the building. Stein did not disclose the background data or her calculations to plaintiffs.
Plaintiffs did not negotiate with the Wiley Estate for a lower purchase price as the $12,000 expected share was very small compared to the $2.7 million cost of the condominium. Repairs to the building began in 2015 and were more extensive and costly than plaintiffs were initially told. There were numerous repairs to the exterior of the building that were not known to plaintiffs until after they purchased the condominium. Ultimately, plaintiffs’ share of the total repair costs totaled $665,443.
Plaintiffs also learned prior to their purchase of the condominium that it had steam heat provided by a boiler in the basement. Plaintiffs were told by Stein in a September 2014 e-mail (the month after the purchase) that the steam heat was included in their HOA dues, which were then $2,760 per month. At the time, the boiler provided heat to plaintiffs’ condominium, two other condominiums, and the building’s lobby; the remaining condominiums used their own internal heating systems.
In 2015, a leak was discovered in the steam heating pipes and repaired.
Around that time, the HOA informed plaintiffs of its intent to decommission the boiler system. During an ensuing unsuccessful mediation with plaintiffs, in 2016, the HOA’s attorney signed a note stating the existing boiler would not be removed until a new heat source was installed. However, the HOA decommissioned the steam heating system in 2017 without providing an alternative heat source to plaintiffs’ condominium. Plaintiffs’ Underlying Lawsuit In 2017, through their first attorney (not Kinney), plaintiffs filed a complaint and first amended complaint against the HOA raising multiple claims. Also through their first attorney, plaintiffs filed a complaint against Stein and her agency, PUI, asserting claims for misrepresentation based on Stein’s informing them that their share of the roof repair would be only around $12,000.
In 2018, plaintiffs replaced their first attorney with Kinney, who filed second and third amended complaints in 2018 and 2019 that consolidated the claims against the HOA, Stein, and PUI, and added as a defendant Diane Wiley as trustee of the Wiley Trust.
The third amended complaint alleged claims for intentional and negligent misrepresentation regarding the $300,000 estimate provided to
plaintiffs by Stein via Katz, the HOA’s property manager. Specifically, plaintiffs averred the HOA and Katz knew the cost of the roof repair was far greater when those representations were made as the HOA had been aware of serious deficiencies in various common areas of the building, including the “building envelope,” roof, roof decks, and waterproofing membranes, for many years but had deferred necessary repairs and failed to disclose the extent of the deficiencies. They contended that Stein reported they could not access the roof to inspect it themselves as the owner of the building’s penthouse had exclusive access to the roof. Plaintiffs also alleged claims for gross negligence and breach of fiduciary duty based on the HOA’s failure to make the repairs or build adequate financial reserves for them.
Additionally, plaintiffs asserted two causes of action based in part on the HOA’s decommissioning of the steam heating system, specifically for breach of the CC&R’s and for a violation of the Davis-Stirling Act. The relevant portion of the Davis-Stirling Act provides that the covenants and restrictions “shall be enforceable equitable servitudes, unless unreasonable, and shall inure to the benefit of and bind all owners of separate interests in the development.” (§ 5975, subd. (a).)
The applicable CC&R’s provisions are sections 6.01 and 6.02. Section 6.01 provides it is the HOA’s responsibility to maintain “necessary utility services for the Common Area, and to the extent not separately metered or charges [sic], for the Units.” Under section 6.02, it is the owners’ responsibility to “[m]aintain, repair, replace and restore . . . water heaters and other internal installations and utilities and any other equipment that is installed for the exclusive use and enjoyment in the Owner’s Unit” and located within the unit. Plaintiffs contended the CC&R’s obligated the HOA
to provide heat to their condominium, but it had failed to provide an alternative heating system.
Around this time, Katz and her property management company were added to the proceedings via a cross-complaint filed by Stein and PUI. HOA’s Motion for Summary Judgment In February 2020, the HOA filed a motion for summary judgment (MSJ) on the third amended complaint. Plaintiffs opposed the MSJ, supported by a declaration by Kinney with exhibits attached.
Among the 10 exhibits attached to Kinney’s declaration were various documents noted above, including the June 2014 financial disclosure form stating the HOA anticipated a roofing project, the June 2014 e-mail from Stein to Katz memorializing their discussion of the estimated $300,000 cost for the roof repairs, the September 2014 e-mail from Stein stating heat is included in HOA dues, the 2016 note from the HOA’s attorney during mediation on finding an alternate heat source, and sections 6.01 and 6.02 of the CC&R’s.
The exhibits also included two reports submitted to the HOA prior to plaintiffs’ purchase of their condominium indicating the needed repairs to the roof were extensive. First, an October 2013 “Site Watertesting [sic] Summary” sent from Aquatech Consultancy, Inc. (Aquatech) to Katz stated that there were multiple cracks observed in balusters on the roof of the building leading to leaking and that waterproofing was needed. Second, a summary by Neumann Sloat Blanco Architects LLP (Neumann Sloat) from early June 2014—prior to the date of the financial disclosure form or the
discussion between Katz and Stein regarding the estimate for the repairs— recommending the removal and repair of the entire roof structure.1 The trial court treated the MSJ as a motion for judgment on the pleadings. It dismissed the cause of action for breach of fiduciary duty, granted the motion as to the heating claims with leave to amend, and denied the motion as to the remaining causes of action. Discovery Sanctions In August 2020, Stein and PUI moved to compel discovery responses from plaintiffs, asserting plaintiffs failed to respond to various interrogatories, requests for admissions, and requests for production of documents propounded in October 2019 and March 2020.
The court granted the motion to compel and imposed monetary sanctions. The order required plaintiffs to serve verified, code-compliant responses without objections to numerous specified interrogatories and requests for production of documents and deemed certain requests for admissions admitted.
Rather than provide specific answers to the interrogatories, Kinney served a two-page answer that attached plaintiffs’ opposition to the MSJ. The answer stated plaintiffs could not answer the interrogatories “in customary manner” as they concerned allegations in the third amended complaint but plaintiffs had since filed a fourth amended complaint. It
1 Specifically, the Neumann Sloat report recommended “removing
everything down to the structural deck, patching, repairing and introducing slope as required and installing [a waterproof] membrane. This would include removing the skylight and all egress doors and a portion of the exterior finishes to integrate the membrane and existing door with new fluid applied flashings and water resistive barrier.” It also recommended repairing the balustrade as all the balusters were damaged, all new roof drains, and correcting any deficient construction.
continued: “Plaintiffs cannot be more specific about the underlying facts, the persons involved, the documents relied on, and the legal theories underlying their claims than they were in their written Opposition to the [MSJ]. Accordingly, they incorporate by reference their Opposition and any and all testimony and documents identified there as their responses to PUI’s special interrogatories.”
In response, Stein and PUI moved to compel further responses and sought evidentiary and terminating sanctions against plaintiffs. The court ordered plaintiffs to comply with the prior order to answer interrogatories without objections. Crucially for purposes of this appeal, the court imposed evidentiary sanctions precluding plaintiffs “from presenting evidence or witnesses not identified in their [MSJ] opposition papers (as to any allegations present in the current operative complaint).” Temporary Dismissal of Heating Claims As noted above, Kinney filed a fourth amended complaint in late 2020 that omitted the prior causes of action for gross negligence and breach of fiduciary duty.
The HOA demurred to the fourth amended complaint. Kinney did not file an opposition; instead, he tried to file a fifth amended complaint, which was rejected by the clerk of court. The HOA’s demurrer was sustained without leave to amend as to the heating claims.2 Thereafter, Kinney moved for relief from mistake and for permission to file a fifth amended complaint, asserting he believed he could file a successive complaint in lieu of an opposition to the demurrer. The court denied the
2 Although not relevant here, the court also granted in part PUI and
Stein’s unopposed demurrer to the fourth amended complaint.
motion for relief from mistake on both procedural and substantive grounds and denied the motion for permission to file the fifth amended complaint.
As a result of those rulings, the HOA was—for the time—the prevailing party on the heating claims, and it moved for attorney fees and costs. Kinney filed an untimely opposition, which the court ordered stricken. The court granted the HOA’s motion as unopposed and awarded the HOA $471,587.57, representing the attorney fees of $450,637.60 plus recoverable costs of $20,949.97. Ongoing Pretrial Proceedings in Underlying Action Amid these proceedings, the case was assigned for trial in December 2020.
Kinney filed an exhibit list identifying 75 proposed trial exhibits. He also filed an expert disclosure statement identifying two retained experts and three nonretained experts for trial. The retained experts were Charles Allen, to testify concerning alternatives for installing a heating system in the condominium, and Tracy McLaughlin, to testify regarding property value and damages from the repairs. The planned nonretained experts were the two authors of the Aquatech and Neumann Sloat summaries and Claire, a real estate broker, to testify regarding the lack of increase in market value in the condominium from the repairs.
The court granted the HOA’s motion in limine No. 2, to preclude from trial any evidence not referenced in plaintiffs’ opposition to the MSJ (in accordance with the evidentiary sanctions order),3 and motion in limine
3 Kinney incorrectly asserted at oral argument that the court denied
the HOA’s motion in limine No. 2. The record reflects the court tentatively granted that motion and then adopted its tentative ruling.
No. 1, to exclude evidence not turned over in discovery by November 14, 2020 (as Kinney filed late responses to the HOA’s discovery requests).
Additionally, the court granted the HOA’s motion in limine No. 6, to exclude testimony by expert witnesses Allen and McLaughlin for failure to produce them for deposition. The court denied the HOA’s motion in limine No. 3, that Claire be precluded from testifying as an unqualified expert, but it ordered her deposition. Attorney Jeffrey Judd Enlisted to Help Kinney In early 2021, Kinney brought in another attorney, Jeffrey Judd of the Buchalter Firm, initially at his own expense, to help on the case. With Judd’s help, Kinney moved for reconsideration of the order denying the motion for relief from mistake—which had been based on Kinney’s mistaken belief he could file the fifth amended complaint instead of opposing the demurrers to the fourth amended complaint—and the court granted reconsideration in January 2021.
The effect of this ruling was to resurrect the demurrers to the fourth amended complaint, which the court sustained with leave to amend. Around this time, plaintiffs retained Judd as lead trial counsel while Kinney remained on the case as cocounsel.
In February 2021, Judd and Kinney filed a fifth amended complaint.
The court sustained PUI, Stein, and Wiley’s demurrers without leave to amend, effectively dismissing the claims against them in the underlying action.
However, the court overruled the HOA’s demurrer to the fifth amended complaint, which meant plaintiffs’ heating claims were reinstated. As a result, the court also vacated the $471,587.57 award of attorney fees and costs to the HOA.
In May 2021, Judd filed the sixth (and final) amended complaint.
Underlying Lawsuit Settlement The case was reassigned to Judge Jeffrey Ross, who held a series of settlement conferences.
In August 2021, a settlement agreement was reached among all parties that had been in the underlying action, with a stipulation for settlement executed in September 2021. Under the terms of the agreement, plaintiffs received $366,500. The bulk of this sum, $320,000, came from the HOA, Katz, and Katz’s company; the remainder was comprised of $40,000 from Wiley and $6,500 from Stein. As their direct out-of-pocket litigation costs and fees for the case were $365,403, plaintiffs’ net gain in the underlying action was merely $1,097. Malpractice Proceedings In 2022, plaintiffs filed the instant malpractice lawsuit against Kinney, claiming professional negligence, breach of fiduciary duty, and breach of contract. In July 2024, the parties proceeded to trial solely on the claim for professional negligence, with plaintiffs represented by new counsel, Paul A. Frassetto. Kinney, Judd, both plaintiffs, and Brian Neumann (the Neumann Sloat summary author) testified, along with a standard of care expert for plaintiffs. The following is a summary of the relevant trial testimony.
Kinney’s Testimony Kinney’s testimony regarding the underlying series of events largely mirrored the above recitation. He further stated that, although he included 75 exhibits on his trial exhibit list, he did not intend to use most of them at trial. However, upon questioning as to the significance of numerous exhibits on the trial exhibit list that were subject to the evidentiary sanctions—which we refer to as “excluded exhibits” as the court found they would have been
excluded from trial in the underlying action—Kinney acknowledged several had evidentiary value, particularly for proving damages and knowledge of the HOA as to the need for repairs. For example:
One excluded exhibit listed the breakdown of the special assessments made by plaintiffs for building repairs, which was intended to be the evidence of what plaintiffs paid and when they paid it (relevant to the misrepresentation claims). That exhibit also included a column detailing the total amount of interest that plaintiffs would have been due on their damages. Other excluded exhibits contained further evidence of repair costs and a late fee incurred by plaintiffs because of Kinney’s advice not to pay one of the special assessments.
Additional excluded exhibits included various documents supporting plaintiffs’ claim that the HOA knew about and deferred work on significant repairs for the building prior to plaintiffs’ condominium purchase.
Another excluded exhibit was a comparative market analysis prepared by Claire showing the condominium had not appreciated in value since their purchase, which was intended to counter a claim that plaintiffs were not entitled to recover for their costs of the repairs.
Moreover, Kinney inadvertently left out from the exhibit list an October 2013 Aquatech “Site Observation Summary” (different from the water testing summary), which would have been evidence of the author’s opinion that the entire balustrade needed to be removed, repaired, and replaced.
Neumann’s Testimony Neumann testified regarding his inspection of the roof and summary of inspection sent to the HOA in June 2014, which detailed the significant work needed on the roof and the high costs involved in such repairs. He estimated
the cost of just the roof and balustrade repair at the time was close to $1.5 million as the entire roof and balustrade needed to be replaced. Neumann fully informed Katz and the HOA of the scope of repairs he believed were necessary in 2014.
Ultimately, after discovering significant issues with other aspects of the building beyond just the roof and balustrade, the repairs required covering the building in scaffolding and netting for multiple years.
Judd’s Testimony Judd testified that, when he was working on the underlying action, he believed plaintiffs’ heating claims were very strong but heard contrary views in settlement discussion.
Further, although he believed some of the information that had been excluded from trial in the underlying action (due to the evidentiary sanctions) could be presented at trial through witness testimony, the orders precluding evidence were a “big problem.” Judd agreed documentary evidence would have been stronger than merely soliciting testimony from the percipient witnesses, such as Katz.
Jamie Uziel’s Testimony Plaintiffs’ standard of care expert, Jaime Uziel, identified three areas in which he believed Kinney breached the standard of care. First, by failing to properly respond to PUI and Stein’s written discovery requests and comply with the orders on the motions to compel, instead providing a one-paragraph response and attaching the opposition to the MSJ. As a result of this, instead of the 75 exhibits Kinney had included in the trial exhibits list, plaintiffs were limited to the 10 documents attached to the opposition to the MSJ. Further, the failure to respond to the interrogatory asking for facts related to damages could result in those facts being excluded from trial.
Second, Kinney breached the standard of care by deciding not to oppose the demurrers to the fourth amended complaint and instead attempting to file a fifth amended complaint without obtaining leave of court to do so.
Third, Kinney erred by failing to make plaintiffs’ expert witnesses available for deposition, which meant they could not be presented at trial.
Martin’s Testimony Martin and Claire wished to go to trial but, according to Martin, decided to settle “when it was explained to us that most of our evidence was gone, and that the experts that we had hired and that we valued were no longer in the case, and then Joanne Stein was out of the case, and Wiley, the lady that sold us our unit, was out of the case, and what we would have to do to bring them back into the case.”
Martin stated they moved out of the building in 2015 due to the construction and wound up commuting from Sausalito to San Francisco to take their daughter to school. They could not rent the condominium because they did not have heat. It took six years, from 2017 to 2023, to install code- compliant heat. Even when they moved in, they had separate meters in the unit for electricity and gas.
If he and Claire knew what the HOA had known at the time of the purchase, they would not have bought the condominium.
Claire’s Testimony Claire and Martin purchased the condominium so that their daughter could attend a nearby school. She listed the apartment for rent in 2023 after the heat was installed, and they were able to rent it out in 2024.
Claire also provided testimony regarding the exhibits that were excluded from trial under the evidentiary sanctions order that was consistent with Kinney’s explanation of the exhibits.
Claire stated that, if it were not for the evidentiary sanctions and exclusions of experts, they would have rejected the settlement offer and proceeded to trial. Judge Ross frequently brought the sanctions and excluded experts up during the settlement negotiations and reminded them they did not have “anything” to go forward in trial with and no witnesses to present. It was her recollection that these statements referred to both the heating and misrepresentation claims. Statement of Decision In December 2024, the trial court found Kinney’s professional negligence caused plaintiffs to settle the underlying case against the HOA for less than they would have been awarded in settlement or at trial absent the negligent representation. The court noted Kinney did not contest that he breached the standard of care or offer any expert witness testimony on the issue.
Applying the “case-within-a-case” approach, it found plaintiffs would have prevailed in the underlying case on the misrepresentation claim. The court rejected Kinney’s assertion that, under Filbin v. Fitzgerald (2012) 211 Cal.App.4th 154 (Filbin), plaintiffs could not prove their damages were caused by his professional negligence. Rather, it found his negligence “severely compromised” the misrepresentation action and led them to settle instead of pursuing the claims at trial. However, it found plaintiffs would have lost on the heating claims at trial regardless of Kinney’s negligence because the court based its decision on its interpretation of CC&R’s sections 6.01 and 6.02; there was no evidence relevant to its determination excluded from trial due to Kinney’s negligence.
The court awarded plaintiffs a total of $215,871.60. As further detailed below, the court offset the $1,054,228.60 it found plaintiffs should have
recovered for the misrepresentation claim by (1) the $471,587 in estimated HOA attorney fees on the heating claims and (2) the $366,500 settlement amount to arrive at a total of $215,871.604 in damages awarded to plaintiffs.
On the misrepresentation claim, plaintiffs were awarded $669,055 for their out-of-pocket losses for the building repair ($681,055 paid for special assessments minus the $12,000 they expected to spend on such repairs) plus prejudgment interest of $145,173.60. The prejudgment interest was calculated at a 10 percent rate (on the $669,055) from when the assessments were fully paid in July 2019 up to a hypothetical date a judgment would have been entered after trial, which it calculated to be September 10, 2021. The court also awarded damages for loss of use of the condominium that was proximately caused by the misrepresentation, which it calculated to be $240,000. Thus, the court found plaintiffs should have recovered a total of $1,054,228.60 on their successful misrepresentation claim.
However, as the court found plaintiffs would not have prevailed on the heating claims regardless of any actions by Kinney, it determined the award of damages had to be offset by the attorney fees the HOA would have been due as the prevailing party on those claims. The court stated “the closest estimate” it could reach was the $471,587 granted to the HOA in fees and costs in the underlying action when the HOA was temporarily the prevailing party on the heating claims (though that order was subsequently vacated). The court declined to allocate between the heating and misrepresentation fees as it “would be difficult at best.” The court also found an offset was
4 This amount is $270 less than the $216,141.60 we reach from these
calculations. We encourage the court to take this discrepancy into account when recalculating damages upon remand.
appropriate to account for the $366,500 plaintiffs received for settling the underlying action.
Finally, though Kinney requested $75,000 in quantum meruit attorney fees as an offset against any damages, the court found he failed to present evidence that he was entitled to such fees.
Judgment was entered on January 8, 2025. Plaintiffs moved for a new trial, but the order (granting new trial solely so that the parties could litigate apportionment of attorney fees on the heating claims) was vacated as void because it was entered after the 75-day statutory time limit.
Plaintiffs appealed from the January judgment and Kinney crossappealed . We permitted plaintiffs to file a supplemental brief limited to “whether the trial court erred by awarding attorney’s fees to respondent.”
DISCUSSION
A “ ‘settle and sue’ ” attorney malpractice case such as this one involves a former client suing on the basis that the settlement was less than it should have been due to the attorney’s negligence. (Filbin, supra, 211 Cal.App.4th at p. 157.)
In a legal malpractice action arising from a civil proceeding, the plaintiff must establish “(1) the duty of the attorney to use such skill, prudence, and diligence as members of his or her profession commonly possess and exercise; (2) a breach of that duty; (3) a proximate causal connection between the breach and the resulting injury; and (4) actual loss or damage resulting from the attorney’s negligence.” (Coscia v. McKenna & Cuneo (2001) 25 Cal.4th 1194, 1199.) The elements of causation and damage are closely linked. (Namikas v. Miller (2014) 225 Cal.App.4th 1574, 1582 (Namikas).)
Plaintiffs in a malpractice action must establish by a preponderance of the evidence that, but for the attorney’s negligent acts or omissions, they would have obtained a more favorable judgment or settlement in the underlying lawsuit. (Namikas, supra, 225 Cal.App.4th at p. 1582.) “This standard requires a ‘trial-within-a-trial’ of the underlying case, in which the malpractice jury [or judge in a bench trial] must decide what a reasonable jury or court would have done if the underlying matter had been tried instead of settled.” (Ibid.)
“In reviewing a judgment based upon a statement of decision following a bench trial, we review questions of law de novo. [Citation.] We apply a substantial evidence standard of review to the trial court’s findings of fact. [Citation.] Under this deferential standard of review, findings of fact are liberally construed to support the judgment and we consider the evidence in the light most favorable to the prevailing party, drawing all reasonable inferences in support of the findings.” (Thompson v. Asimos (2016) 6 Cal.App.5th 970, 981 (Thompson).)
“A single witness’s testimony may constitute substantial evidence to support a finding. [Citation.] It is not our role as a reviewing court to reweigh the evidence or to assess witness credibility. [Citation.] ‘A judgment or order of a lower court is presumed to be correct on appeal, and all intendments and presumptions are indulged in favor of its correctness.’ ” (Thompson, supra, 6 Cal.App.5th at p. 981.) After a bench trial, we must infer the trial court impliedly made every factual finding necessary to support its decision. (Ibid.)
The parties raise challenges to the court’s substantive findings as to the misrepresentation and heating claims, as well as to its calculation of damages. We address the issues in turn.
I. Challenges to Substantive Findings on Misrepresentation and Heating Claims Kinney argues the court erred by finding that, due to his negligence, plaintiffs received less in the underlying lawsuit than they otherwise would have on their misrepresentation claim. Plaintiffs aver the court incorrectly found they would not have succeeded on their heating claims. We are not convinced by either contention.
A. Substantial Evidence Supports the Court’s Misrepresentation Findings Kinney agrees that plaintiffs would have prevailed at trial on their misrepresentation claim. His position is that the court erred by finding his actions—specifically, those resulting in evidentiary sanctions—caused plaintiffs to settle the underlying action for less than they would have otherwise received in settlement or at trial. Simply put, he argues that plaintiffs were not damaged by his actions.
The trial court found plaintiffs had every intention of taking the case to trial and that their settlement demand never fell below one million dollars prior to their learning about the evidentiary sanctions during the settlement conference. It further found that, because of Kinney’s negligence, plaintiffs’ expert witnesses were excluded and their documentary evidence was reduced to only a few documents that did not contain any proof of their damages from the misrepresentation. (Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1239 & fn. 4 [an essential element of both intentional and negligent misrepresentation is resulting damages].)5 Hence, due to Kinney’s
5 Though the underlying action alleged causes of action for both
intentional and negligent misrepresentation, the trial court appears to have focused on the claim of intentional misrepresentation. As damages are required for either claim, the distinction is immaterial to our analysis.
mismanagement of the case, plaintiffs’ case was severely compromised and they opted to settle for the amount offered rather than pursue the case at trial.
The court’s findings are supported by substantial evidence. Plaintiffs testified they planned to proceed to trial and only settled because of the evidentiary sanctions. Kinney’s and Claire’s testimonies demonstrated the evidence included in the trial exhibit list that was excluded due to the evidentiary sanctions provided the sole documentary evidence of damages for plaintiffs’ misrepresentation claim.
And, contrary to Kinney’s contention, it was not just Claire’s testimony but his own description of this evidence that supported the court’s conclusion. For example, Kinney testified exhibit 95 broke down the special assessments paid by plaintiffs for building repairs over four phases and several years. He testified exhibits 96 and 97 contained further evidence of costs incurred by plaintiffs due to additional repairs and a late fee levied as a result of his advice not to pay an assessment. Claire’s description of these exhibits was consistent with Kinney’s.
All these exhibits were excluded from trial as they were not part of the MSJ opposition. More importantly, as Kinney concedes, none of the exhibits that were attached to the MSJ opposition provided any evidence of plaintiffs’ damages from the misrepresentation claim. Therefore, the court’s finding of detriment due to the lack of documentary evidence to prove damages, an essential element of a misrepresentation claim (Alliance Mortgage Co. v. Rothwell, supra, 10 Cal.4th at p. 1239 & fn. 4), is plainly supported by substantial evidence.
In arguing to the contrary, Kinney asserts plaintiffs’ evidence of damages was not hampered by the evidentiary sanctions because a pretrial
ruling in the underlying action permitted plaintiffs to testify as to their opinions on the value of the property. Putting aside that evidence of property value was intended to counter any claim that damages should be offset by appreciation in value, Kinney misses the point, which is whether there was substantial evidence in support of the judgment.
Here, there is copious support in the record for the court’s finding that numerous documents with significant evidentiary value to plaintiffs’ misrepresentation claims against the HOA were not available due to his professional negligence, and that the unavailability of those documents for trial was a significant factor in the settlement. Whether or not plaintiffs could testify as to the value of the property does not negate the absence of this significant documentary evidence, along with the absence of experts due to Kinney’s negligence, and the impact of these absences on settlement decisions.6
6 Kinney contends that Claire’s deposition in the underlying action
“covered [the] damage claims in exhaustive detail.” The deposition transcript is not part of the record on appeal. Its presumed existence does not undercut the import of the lack of documentary and expert evidence.
Further, at oral argument, Kinney relied heavily on an August 23, 2021 e-mail from Judd to plaintiffs, just before the settlement was reached, indicating Judge Ross discussed various potential estimates for damages on the misrepresentation claim without referencing the evidentiary sanctions. Kinney avers this supports his claim that the evidentiary sanctions did not hamper plaintiffs’ ability to prove damages as to misrepresentation or cause them to settle for less than they would have received at trial.
Again, Kinney’s assertion misconstrues our role in reviewing a ruling for substantial evidence; we are tasked with determining whether there is credible evidence that supports the court’s ruling, not whether a piece of evidence could lead to a contrary finding. (See In re Marriage of Nelson (2025) 115 Cal.App.5th 904, 915 [“In reviewing a substantial evidence challenge, we ignore all contrary evidence and determine whether the evidence the court relied upon was substantial as defined by the law.”].)
And we are not persuaded by Kinney’s vague contentions that expert witnesses were needed to explain how the excluded evidence impacted plaintiffs’ misrepresentation claims in the underlying lawsuit. Kinney fails to identify what kind of expert plaintiffs should have called and we do not see why the trial court or a jury would need expert evidence to understand how the excluded evidence related to the misrepresentation claim. (See McCoy v. Gustafson (2009) 180 Cal.App.4th 56, 100, 99 [expert testimony is not necessary “ ‘to a plaintiff’s case where the fact sought to be proved is one within the general knowledge of laymen’ ”; it is only required where “ ‘ “the matter in issue is one within the knowledge of experts only and not within the common knowledge of laymen” ’ ”].)
Finally, Kinney’s continued attempt to liken this case to Filbin is unavailing. In Filbin, the court concluded a legal malpractice action failed because of the lack of any nexus between the attorney’s representation and the decision to settle. (Filbin, supra, 211 Cal.App.4th at p. 172.) “No past decision by [the attorney] hobbled [the plaintiffs]” in deciding whether to proceed to trial or settle. (Id. at p. 171.)
Kinney’s assertion that, as in Filbin, there was no “ ‘lingering impairment’ ” (Filbin, supra, 211 Cal.App.4th at p. 171) from the evidentiary sanctions is without merit. As we have explained, the court’s finding that Kinney’s actions “severely compromised” plaintiffs’ claim—particularly as to the lack of evidence of damages—and led them to mitigate their losses by settling rather than proceed to trial is well supported.
B. Substantial Evidence Supports the Court’s CC&R’s Findings At this juncture, it is worth a reminder that it was on plaintiffs to prove their professional negligence claim against Kinney, in other words, to prove that conduct by Kinney caused them to settle their heating claims for an
amount lower than they would have recovered at trial or via settlement absent his negligent representation. Without “a proximate causal connection between the breach and the resulting injury,” there is no case for negligent misrepresentation. (Coscia v. McKenna & Cuneo, supra, 25 Cal.4th at p. 1199.)
But plaintiffs’ briefing on the heating claims focuses exclusively on their interpretation of the CC&R’s, without consideration of any extrinsic evidence, rather than on any actions by Kinney that caused them to lose the heating claims. This makes sense as plaintiffs and the HOA maintained throughout the course of the proceedings that the CC&R’s sections were unambiguous—though of course their interpretations of those sections were at odds in regard to whether the HOA was obligated to provide a heat source once the prior heat source was no longer available.
Therefore, and without objection, the sole evidence relied upon by the court was the relevant CC&R’s sections, sections 6.01 and 6.02. Those sections were attached to the MSJ opposition and thus not excluded from trial due to the evidentiary sanctions. Accordingly, plaintiffs have not met their burden of demonstrating that Kinney’s actions resulted in a less favorable outcome on the heating claims.7 (Namikas, supra, 225 Cal.App.4th at p. 1582.)
7 Plaintiffs asserted at oral argument that Kinney’s actions caused
them to lack evidence of damages on the heating claims in the underlying action. However, we decline to find plaintiffs have met their burden to prove professional negligence when their briefing on those claims centered solely on the language of the CC&R’s, which they do not, and cannot, contend were excluded from the underlying action due to Kinney. Regardless, the court’s finding that plaintiffs would not have succeeded on the heating claims, which we uphold for the reasons we explain herein, was not premised on the lack of evidence of damages.
As a result, plaintiffs instead argue Kinney somehow lulled them into not adequately arguing the applicability of the CC&R’s because Kinney opined that their heating claims had merit and never argued—including in the professional negligence bench trial—that their condominium was separately metered for heat.
Despite this assertion, plaintiffs do not demonstrate that Kinney deprived them of an opportunity to litigate this issue at the professional negligence trial. There is no evidence that Kinney prevented plaintiffs from providing arguments to bolster the strength of their heating claims, which they knew the trial court was tasked with assessing in the “case-within-a- case” before it. As the court stated: “[Plaintiffs] were well aware that interpretation of the CC&Rs as a question of law was at issue here and had ample opportunity to address the issue during trial and in post-trial briefing.”
Being “well aware” of the issue, plaintiffs chose through their counsel to proceed under the theory that the CC&R’s were clear and unambiguous and did not seek to argue that extrinsic evidence would have been needed to make their case in the underlying lawsuit. That was their strategy, independent of Kinney. And it was a strategy decided upon after going through settlement proceedings in which the settlement judge shared his views that they would lose their heating claims based on the language of the CC&R’s.
Once plaintiffs went to trial on the professional negligence claim, the trial judge reviewed the CC&R’s and reached the conclusion that, on their face, they did not require the HOA to provide heating to plaintiffs’ condominium because their condominium was “separately metered” for heat under CC&R’s section 6.01. She is correct.
We interpret CC&R’s according to the usual rules of contract interpretation. (Harvey v. The Landing Homeowners Assn. (2008) 162 Cal.App.4th 809, 817 (Harvey).) “The language of the CC&R’s governs if it is clear and explicit, and we interpret the words in their ordinary and popular sense unless a contrary intent is shown.” (Ibid., citing § 1644.) Where the trial court’s interpretation of the CC&R’s does not turn on the credibility of extrinsic evidence, we independently interpret its meaning. (Harvey, at p. 817.)
The question at trial was “whether a replacement heating system was the responsibility of the HOA under section 6.01 as a utility not separately metered or charged.” CC&R’s section 6.01(a) states the HOA’s “Maintenance Responsibilities” include: “Water, sewer, garbage, electrical, telephone, gas and other necessary utility services for the Common Area, and to the extent not separately metered or charge[d] for the Units.” (Boldface added.) The parties do not dispute that heat is a necessary utility service and that the HOA had to maintain heat if it was not separately metered or charged.
Based on the plain language of the CC&R’s, the court concluded the HOA was not required to provide an alternate heat source to plaintiffs after removing the boiler because their condominium “contained separate meters for gas and electricity—the very utilities that power heating systems—even if the existing gas and electricity systems were not being used for heat when the boiler system was decommissioned.”
Plaintiffs concede that their condominium had separate meters for gas and electricity. However, they argue that, despite having gas and electricity meters, their condominium was not “separately metered” for heat. As this contention was wholly unsupported by any evidence regarding the existence
of a separate “heating meter” and the lack of such a meter for their condominium, it was properly rejected by the court.
Though we recognize the HOA had historically supplied heat to plaintiffs’ condominium through the boiler system, nowhere do the CC&R’s require the HOA to provide heat to the individual units once the boiler system was decommissioned. Such a requirement is certainly not in section 6.01. And plaintiffs’ reliance on section 6.02 of the CC&R’s is of no assistance as that section provides that it is the owners’ responsibility to “[m]aintain, repair, replace and restore . . . water heaters and other internal installations and utilities and any other equipment that is installed for the exclusive use and enjoyment in the Owner’s Unit.” Section 6.02 does not shed light on the critical question of whether the HOA is required to provide heat to each unit. Instead, it simply provides that if a unit has individual equipment and utilities the owners (not the HOA) must maintain them.
As plaintiffs’ condominium undisputedly had separate meters for gas and electricity (the utilities that power heat), we conclude their condominium was “separately metered” for heat under the “ordinary and popular sense” of the words (Harvey, supra, 162 Cal.App.4th at p. 817; § 1644) and the CC&R’s, including section 6.01, did not require the HOA to provide heat to their condominium. Therefore, the HOA was not responsible for providing heat to plaintiffs’ condominium and the trial court did not err.
However, as we discuss in part II.C., post, the court should have apportioned the HOA’s fees to be limited to solely the heating claims. II. Challenges to Damages Calculations Kinney contends the court erred by finding he failed to prove entitlement to an offset for attorney fees. We find his argument unavailing.
Plaintiffs assert the court erred by failing to award prejudgment interest through the time of the judgment in this case (as opposed to the hypothetical judgment date in the underlying action) and by failing to apportion the attorney fees to only the HOA’s heating claims. On these points, we agree.
A. Substantial Evidence Supports Finding that Kinney Failed To Prove Entitlement to Quantum Meruit Fees Kinney sought an offset of attorney fees on a quantum meruit basis as he never signed the fee agreement with plaintiffs.
Assuming the attorney fee agreement was voided, “the attorney may recover the reasonable value of the services [he or] she performed in the action pursuant to a common count for quantum meruit.” (Leighton v. Forster (2017) 8 Cal.App.5th 467, 490; Bus. & Prof. Code, § 6148, subd. (c) [attorney entitled to collect “a reasonable fee”].)
Providing evidence of the number of hours worked and rates claimed is a useful starting point but not the end of the analysis in a quantum meruit action as the party seeking fees must also show they were reasonable. (Mardirossian & Associates, Inc. v. Ersoff (2007) 153 Cal.App.4th 257, 272.) “Factors relevant to that determination include ‘[t]he nature of the litigation, its difficulty, the amount involved, the skill required in its handling, the skill employed, the attention given, the success or failure of the attorney’s efforts, the attorney’s skill and learning, including his [or her] age and experience in the particular type of work demanded.’ [Citations.] Because evidence and analysis of all these factors can be a ‘formidable undertaking’ [citation], expert testimony in a quantum meruit action for attorney fees is appropriate to assist the fact finder.” (Ibid.)
We review the court’s findings on Kinney’s quantum meruit claim for substantial evidence (see Fergus v. Songer (2007) 150 Cal.App.4th 552, 567) and find no error.
1. Additional Relevant Background Kinney submitted an exhibit at trial listing his billing statements for plaintiffs from March 2018 through April 2021 for attorney fees (at an hourly rate of $350) plus costs, totaling, by our calculations, around $391,500. He also submitted a document showing plaintiffs had paid him $167,779.14, which appears to be the total fees and costs billed through March 25, 2020.
At trial, Kinney’s sole testimony regarding the quantum meruit claim was as follows. The rate of $350 per hour was below market. He was paid $167,000 by plaintiffs. “[B]eyond that, [he] billed $153,664.59.” Kinney then went through and removed some of the bills because he did not want to spend more time justifying them or arguing about it.
Specifically, he removed some entries related to “endless motions to bifurcate,” one bill from October 2020, and apparently one from July 2020. He then “[took] out basically everything, until then we get to the spring, April—let me see the last bill—I took out three bills totaling $178,500. . . . [¶] So the remainder from the 253[,000] taking out the 178[,000] is $75,164. That’s work I did.” He also paid $5,500 for two deposition transcripts after the case was over.
Kinney presented no expert testimony or other evidence in support of his quantum meruit claim. He submitted a fee agreement that was signed by plaintiffs in 2018 but not signed by him.
The trial court found Kinney failed to establish he was entitled to attorney fee offset because he “presented no evidence to support a finding that
his services benefited his clients in an amount greater than $167,779 they had already paid.”
2. Analysis
Kinney argues the billing exhibits and his testimony were sufficient to establish his entitlement to his claimed attorney fee offset. We conclude the court’s finding that Kinney failed to demonstrate he was entitled to recover more than the over $167,000 already paid by plaintiffs is supported by substantial evidence.
As an initial matter, we note Kinney asserts the bills totaled over $421,000, whereas the bills in the exhibit he cites to appear to total around $391,500. Regardless, Kinney did not present any testimony or evidence explaining how he arrived at the roughly $178,000 he was deducting from the bill request other than to vaguely suggest that amount related to motions to bifurcate and mention two months’ bills from 2020.
More crucially, Kinney did not meet his burden to establish the additional fees he sought were reasonable. (Mardirossian & Associates, Inc. v. Ersoff, supra, 153 Cal.App.4th at p. 272.) He made no attempt to undertake the “ ‘formidable’ ” task of presenting evidence or testimony describing the nature of the litigation, its difficulty, the skill and attention employed, or his experience in this type of work. (See ibid.) Nor did he offer expert testimony to assist the court in making such determinations, which the court appropriately noted was missing when denying the quantum meruit claim. (See ibid.)
Accordingly, substantial evidence supports the court’s finding that Kinney failed to prove he was entitled to an offset of attorney fees from the award of damages to plaintiffs.
B. Plaintiffs Are Entitled to Prejudgment Interest up to the Date of the Malpractice Judgment Plaintiffs assert that, while the court properly awarded prejudgment interest on damages through the hypothetical date judgment would have been entered after trial in the underlying action (September 10, 2021), it should have also awarded interest through the entry of judgment in this case. We agree.
As a reminder, the court awarded plaintiffs $669,055 for their out-ofpocket losses on special assessments paid for the building repair and also awarded prejudgment interest at a rate of 10 percent per annum from July 2019 through September 10, 2021, adding $145,173.60 in interest to the $669,055 award. It found prejudgment interest was appropriate under both sections 3287 and 3288 and cited section 3289 for the 10 percent rate.
Section 3287, subdivision (a), provides that “[a] person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in the person upon a particular day, is entitled also to recover interest thereon from that day.” Section 3288 allows for prejudgment interest to be awarded in the discretion of the jury, or judge in a bench trial, “ ‘[i]n an action for the breach of an obligation not arising from contract.’ ” (Michelson v. Hamada (1994) 29 Cal.App.4th 1566, 1586; see id. at pp. 1586–1588.)
We note that, though plaintiffs at times frame their claim as one for postjudgment interest, they correctly acknowledge their request is “technically” one for prejudgment interest—that is, interest preceding the judgment in the malpractice action—on their out-of-pocket losses for the
special assessments as they have been denied the use of those funds since they were paid in 2019 through the judgment in this case.8 “From a plaintiff’s perspective, prejudgment interest compensates for the loss of the use of the money during the period between the assertion of the claim and the rendition of judgment. . . . [¶] From the defendant’s perspective, the certainty requirement promotes equity because liability for prejudgment interest occurs only when the defendant knows or can calculate the amount owed and does not pay.” (Watson Bowman Acme Corp. v. RGW Construction, Inc. (2016) 2 Cal.App.5th 279, 293 (Watson).)
Therefore, the award of prejudgment interest focuses on a defendant’s knowledge of the amount of a plaintiff’s claim. (Watson, supra, 2 Cal.App.5th at p. 294.) Only if the defendant had actual knowledge of the amount owed or could have computed that amount from reasonably available information should prejudgment interest be awarded. (Ibid.)
“Under this test for certainty as to amount, a dispute or denial of liability does not make the amount of damages uncertain. [Citation.] As stated by our Supreme Court: ‘Generally, the certainty required of Civil Code section 3287, subdivision (a), is absent when the amounts due turn on disputed facts, but not when the dispute is confined to the rules governing liability.’ ” (Watson, supra, 2 Cal.App.5th at p. 294, quoting Olson v. Cory (1983) 35 Cal.3d 390, 402.)
8 To the extent plaintiffs seek postjudgment interest under Code of
Civil Procedure section 685.010, which provides that interest accrues at the rate of 10 percent annually “on the principal amount of a money judgment remaining unsatisfied” (Code Civ. Proc., § 685.010, subd. (a)(1)), plaintiffs apparently ask us to assume the judgment would have remained unsatisfied in the underlying action. We have no basis for making such a speculative conclusion and decline to do so.
We conclude that, whether under section 3287 or 3288, plaintiffs are entitled to prejudgment interest on their out-of-pocket losses related to the misrepresentation claim through the time judgment was entered in the malpractice action as their inability to use those funds did not end when the hypothetical judgment would have been entered in the underlying action. Instead, that loss of use continued until the court awarded damages in the instant case. Further, the loss amount was calculable from reasonably available information and therefore meets the test for certainty. (Watson, supra, 2 Cal.App.5th at p. 294.)
Importantly, we must distinguish between two different periods of loss of use: first, between the time the special assessments were paid in July 2019 until September 2021 (when trial would have happened but the settlement was instead executed); and second, between September 2021 and the January 2025 judgment in the malpractice action.
The trial court correctly found the first period of loss was attributable to the HOA’s misrepresentation and was reasonably certain as the HOA could have calculated plaintiffs’ unexpected expenditures on special assessments up until the time judgment would have hypothetically been entered in the underlying action. We see no reason to doubt the court’s finding that plaintiffs’ out-of-pocket losses during this first period of loss was $669,055.
The second period of loss was attributable to Kinney; but for his professional negligence, plaintiffs would have had access to their out-ofpocket losses between September 2021 and January 2025. However, plaintiffs were partially compensated in September 2021 via the $366,500 they received in the settlement. Therefore, their losses attributable to the unexpected special assessments must be offset by the settlement amount.
Further, the court incorrectly found this amount was not certain. There is no reason Kinney could not have computed these losses with readily available information, especially given he had represented plaintiffs for years and was quite aware of the basis for their misrepresentation claim.
Also, contrary to the court’s finding that interest under section 3288 was inappropriate for the second period of loss because the malpractice claim was not one for oppression, fraud, or malice, the court could have awarded prejudgment interest for both periods of loss under section 3288 (in addition to section 3287) as both the misrepresentation claim and the professional negligence claim were based in tort.9 (See Bullis v. Security Pacific National Bank (1978) 21 Cal.3d 801, 814 [“a party does not have to prove both a breach of a noncontractual obligation and oppression, fraud or malice” to be awarded prejudgment interest under § 3288].)
Finally, the court incorrectly calculated the rate of interest at 10 percent. The court cited section 3289 as the basis for that rate, but that statute applies only to contracts, not tort. When an action is not based on a contract, “the rate of prejudgment interest should be that fixed by article XV, section 1 of the California Constitution; namely, 7 percent per annum.” (Children’s Hospital & Medical Center v. Bonta (2002) 97 Cal.App.4th 740, 775.) Accordingly, the proper interest rate for both the first and second period of loss is 7 percent.
As the trier of fact in the malpractice action, the court must recalculate the prejudgment interest in this case, accounting for the settlement amount as an offset and applying the correct interest rate, upon remand.
9 Although plaintiffs also pled breach of contract in the legal
malpractice action, they proceeded to trial only on the claim of professional negligence.
C. Remand Is Appropriate for Apportionment of the HOA’s Attorney Fees Plaintiffs aver the court should have apportioned the HOA’s attorney fees when calculating damages. They contend apportionment was required as the heating claims (which allowed for recovery of attorney fees) and misrepresentation claims (which did not) were factually and legally distinct. Plaintiffs further note the same law firm represented the HOA and Katz and assert only the HOA, but not Katz, was entitled to recover attorney fees as Katz was not a party to the heating claims.
We conclude remand is appropriate for the court to apportion attorney fees to be limited to only the HOA’s portion of the heating claims. (See Charton v. Harkey (2016) 247 Cal.App.4th 730, 743–744 [“ ‘ “When a prevailing party has incurred costs jointly with one or more other parties who are not prevailing parties for purposes of an award of costs, the judge must apportion the costs between the parties.’ ” ’]; Akins v. Enterprise Rent-A-Car Co. (2000) 79 Cal.App.4th 1127, 1133 (Akins) [“When a cause of action for which attorney fees are provided by statute is joined with other causes of action for which attorney fees are not permitted, the prevailing party may recover only on the statutory cause of action.”].)
Kinney’s argument that the court’s estimate of the HOA’s attorney fees was “drastically low” involves findings of fact that are not properly made by this court in the first instance. Further, his assertion that there is no way to separate the legal work associated with the various claims—citing Akins, supra, 79 Cal.App.4th at page 1133 (allocation not required when liability issues “so interrelated that it would have been impossible to separate them into claims for which attorney fees are properly awarded and claims for which they are not”)—calls for conjecture.
In any event, we note that “Akins stands only for the proposition that no formal allocation of hours is required”; it does not prevent the trial court from allocating fees based on a determination of the reasonable value of services attributed to the causes of action for which attorney fees are allowed—here, the heating claims. (Track Mortgage Group, Inc. v. Crusader Ins. Co. (2002) 98 Cal.App.4th 857, 868.) We leave such factual determinations for the trial court to make upon remand.
Finally, we decline the parties’ invitation to determine which party bears the burden of proof on remand.
DISPOSITION
The judgment based on the December 18, 2024 statement of decision is reversed as to the court’s calculation of interest and the failure to apportion attorney fees in the underlying action. In all other respects, the judgment is affirmed. The matter is remanded for the limited purposes of recalculating the prejudgment interest, consistent with this opinion, and litigating the apportionment of attorney fees to only the HOA’s portion of the heating claims, to the extent reasonably possible. The parties shall bear their own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(3), (5).)
PETROU, J.
WE CONCUR:
TUCHER, P. J.
FUJISAKI, J.
A173329 / Ryan v. Kinney
Ryan v. Kinney CA1/3 (Ryan v. Kinney CA1/3) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.