Filed 8/8/14 Opn filed after rehearing
CERTIFIED FOR PARTIAL PUBLICATION*
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION THREE
MICHAEL M. MOJTAHEDI, B248551
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. TC026549)
v.
FERNANDO D. VARGAS,
Defendant and Respondent.
APPEAL from judgment of the Superior Court of Los Angeles County,
William Barry, Judge. Affirmed.
Kazerouni Law Group, APC and S. Mohammad Reza Kazerouni for Plaintiff and
Appellant.
Law Office of Lawrence M. Lebowsky and Lawrence M. Lebowsky for Defendant
and Respondent.
_____________________
*
Pursuant to California Rules of Court, rules 8.1100 and 8.1110, this opinion is
certified for publication with the exception of parts 2 and 3.
INTRODUCTION
Plaintiff Michael M. Mojtahedi, the first of two attorneys to represent a pair of
clients in a personal injury matter, appeals the trial court’s judgment sustaining the
demurrer to his second amended complaint without leave to amend. In the underlying
matter, Plaintiff represented the clients until Defendant Fernando D. Vargas substituted in
as new counsel. Defendant obtained a settlement payment for the clients, which he
deposited in his client trust fund account. Plaintiff never brought an action against his
former clients to establish the reasonable cost of his attorney fees, and instead
unsuccessfully demanded payment of attorney fees from Defendant. Plaintiff
subsequently sued Defendant on the theory that he was owed a portion of the settlement
checks. The trial court sustained Defendant’s demurrer to the second amended complaint
because Plaintiff failed to establish the existence, amount, and enforceability of his
attorney fees lien in an independent action against the clients. We affirm for the same
reasons.
FACTS AND PROCEDURAL BACKGROUND
In February 2010, Vincente Ramirez Vera and Josefina Ramirez (collectively, the
clients) hired Plaintiff and his firm to represent them in a dispute with a claims adjuster
regarding personal injuries sustained in an automobile accident. The clients entered into
a written attorney-client fee contract with Plaintiff’s law firm, which included a provision
allowing the firm to assert a lien against all claims or causes of action that were subject to
Plaintiff’s representation under the contract. Plaintiff represented the clients for about
eight months. Defendant Fernando D. Vargas then contacted Plaintiff, advising him that
he was substituting into the case as new counsel for the clients. Shortly thereafter,
Plaintiff wrote to the claims adjuster, indicating that he had a lien for attorney’s fees on
future payments to the clients and requesting that any payment to the clients include
Plaintiff as a payee.
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Defendant settled the case in August 2011, and deposited the settlement checks
into his client trust fund account. Each check was made out to the clients, Plaintiff’s law
office, and Defendant’s law office as payees. When Plaintiff learned of the settlement
payment, he sent a log of his time spent on the case and a letter to Defendant demanding
$4,407 in attorney’s fees to be paid to him from the $14,500 settlement amount. In
response, Defendant offered Plaintiff $2,000 for his attorney fees. Plaintiff refused that
offer and brought the present suit against Defendant, the claims adjuster, and the two
banks that issued and deposited the settlement checks for fraud, violation of Commercial
Code sections 3110(d) and 3420, negligence, and tortuous interference with prospective
economic advantage. Plaintiff never sued his former clients to establish the amount of
his lien or that the lien was enforceable.
Defendant demurred to the second amended complaint on the grounds that
Plaintiff did not have an enforceable lien because he never established the lien amount or
its enforceability in a separate action against the clients. The trial court sustained
Defendant’s demurrer without leave to amend, relying on Valenta v. Regents of
University of California (1991) 231 Cal.App.3d 1465, 1470 (Valenta), Hansen v.
Jacobsen (1986) 186 Cal.App.3d 350, 356 (Hansen), and Bandy v. Mt. Diablo Unified
Sch. Dist. (1976) 56 Cal.App.3d 230, 234 (Bandy), all of which hold that a previously
discharged attorney must file an independent action against his client in order to enforce a
contractual attorney fees lien.
DISCUSSION
Plaintiff asserts that the court erred in sustaining the demurrer, arguing that he
does not need to file an independent action against his client to enforce the lien and
asserting that the trial court’s ruling was contrary to case law and public policy. “On
appeal from a judgment after a demurrer is sustained without leave to amend, we review
the trial court’s ruling de novo, exercising our independent judgment on whether the
complaint states a cause of action.” (Lincoln Property Co., N.C., Inc. v. Travelers
Indemnity Co. (2006) 137 Cal.App.4th 905, 911.) We treat the demurrer as admitting all
properly pleaded facts and those that are judicially noticeable, but we do not assume the
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truth of contentions, deductions or conclusions of fact or law. (Howard Jarvis Taxpayers
Assn. v. City of La Habra (2001) 25 Cal.4th 809, 814; Breneric Associates v. City of Del
Mar (1998) 69 Cal.App.4th 166, 180 (Breneric).) “We give the complaint a reasonable
interpretation, reading it as a whole and its parts in their context, to determine whether
the complaint states facts sufficient to constitute a cause of action.” (Breneric, at p. 180.)
1. Plaintiff Must Establish the Existence, Amount, and Enforceability of the
Lien in an Independent Action Against His Clients
At issue is whether Plaintiff can enforce an attorney fees lien solely via an action
against Defendant, who holds the settlement funds in his client trust account. Without an
enforceable lien, Plaintiff cannot prove that he has a right to a portion of the settlement
money.
Unlike other liens, “an attorney’s lien is not created by the mere fact that an
attorney has performed services in a case.” (Carroll v. Interstate Brands Corp. (2002)
99 Cal.App.4th 1168, 1172 (Carroll).) An attorney’s lien is created only by an attorney
fee contract with an express provision regarding the lien or by implication in a retainer
agreement that provides the attorney will be paid for services rendered from the judgment
itself. (Ibid.) It is well established that “[a]fter the client obtains a judgment, the attorney
must bring a separate, independent action against the client to establish the existence of
the lien, to determine the amount of the lien, and to enforce it.” (Brown v. Superior
Court (2004) 116 Cal.App.4th 320, 328 (Brown) quoting, Carroll v. Interstate Brands
Corp., supra, 99 Cal.App.4th at p. 1173; accord, Valenta, supra, 231 Cal.App.3d at p.
1470; Hansen, supra, 186 Cal.App.3d at p. 356; Bandy, supra, 56 Cal.App.3d at p. 234;
Hendricks, supra, 197 Cal.App.2d at p. 589.)
Here, Plaintiff alleges that he has a contract with terms that would create a lien.
Nonetheless, Plaintiff failed to allege facts establishing that he adjudicated the existence,
value, or enforceability of his lien. Plaintiff merely asserts that he has a “detailed log
stating a lien amount of $4,407.00 based on pre-substitution time and costs expended.”
A log of Plaintiff’s time, although useful to adjudicate the reasonable value of Plaintiff’s
services in a separate action against the clients, is insufficient to establish that Plaintiff is
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entitled to a particular amount of the settlement money in his suit against Defendant.
Plaintiff admits that he never brought a separate action against his clients to litigate those
issues. Therefore, he has yet to establish the value or validity of his purported lien.
In asserting that he does not need to bring a separate action against the clients,
Plaintiff attempts to distinguish his case from Valenta, Hansen, and Bandy. Plaintiff
states that unlike those cases, Plaintiff has not filed a lien or a notice of lien in any
pending action, Plaintiff’s former clients’ personal injury matter has been resolved, and
Plaintiff’s attempt to recover his lien is ripe. All of these differences are insignificant and
fail to alter the applicability of the central principle conveyed by Valenta, Hansen, and
Bandy: the attorney’s lien is only enforceable after the attorney adjudicates the value and
validity of the lien in a separate action against his client.
Plaintiff provided the services to the clients, not to Defendant. If successful in a
declaratory relief action regarding the reasonable value of his services, Plaintiff’s fees
will be paid out of the clients’ settlement proceeds. (Hendricks, supra, 197 Cal.App.2d at
p. 589 [“An attorney’s contingent fee contract . . . only gives him a lien on his client’s
recovery.”].) Plaintiff must thus litigate with the clients to determine the reasonable cost
of the services he provided to them. Plaintiff has omitted this essential step of
establishing his entitlement to a particular portion of the settlement proceeds.
To the extent that Plaintiff distinguishes the present matter from the above-
mentioned case law by asserting that there is no actual dispute between him and his
clients regarding the amount owed to him, we conclude that even if this is true, it is
irrelevant. The Court of Appeal addressed this identical issue in Brown, supra,
116 Cal.App.4th at pages 328-330. There, an attorney sought to establish the priority of
his contractual attorney fees lien over the lien of a judgment creditor. (Id. at pp. 323-
324.) The Brown Court held that the attorney had to bring an independent action against
his client to establish the enforceability and amount of his contractual lien, and could not
simply intervene and address that issue in a dispute between the creditor and his client.
(Id. at p. 324.) Notably, the attorney seeking to enforce his lien attempted to distinguish
his case from prior cases and avoid suing his client by arguing that those cases involved a
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dispute between the attorney and the client, and in contrast, his case did not. There, the
Brown Court stated that “[w]hile it may be true that Carroll and its predecessors involved
attorney-client disputes, the rationale of those cases is not limited to such disputes.” (Id.
at p. 329.) Without first establishing a right to any portion of his client’s settlement
proceeds, Plaintiff in this case lacks any basis to assert that Defendant fraudulently
withheld any money from him.
Plaintiff further argues that to require an attorney to institute an action against his
former clients in order to enforce his lien would “have a chilling effect on attorney-client
relationships.” The Court of Appeal also explained why this was incorrect in Brown,
supra, 116 Cal.App.4th at page 333. There, the attorney argued that requiring him to
bring a separate action against his client to enforce the lien, when there was no conflict or
dispute between him and the client regarding the fees, “would require him to violate the
Rules of Professional Conduct and the Business and Professions Code and commit a tort
because such an action would be ‘without just cause.’ ” (Ibid.) The Brown Court
explained that this was not so: “[b]y requiring [the attorney] to bring a separate action to
enforce his lien, we do not mean to suggest that he must sue [his client] for breach of
contract.” (Ibid.) The Court stated that given the lack of any controversy between the
attorney and client, a declaratory relief action under Code of Civil Procedure section
1060, seeking a declaration of the attorney’s rights with respect to his client, was
appropriate. (Ibid.)
Likewise, by seeking a declaration regarding the reasonable value of his services
rendered, Plaintiff will address the issue without subjecting his former clients to damages.
Importantly, this procedure also gives the court an opportunity to evaluate the value and
quantity of Plaintiff’s services with the relevant parties: Plaintiff and his former clients.
Despite case law requiring Plaintiff to bring a separate declaratory relief action
against the clients, Plaintiff has not sought such relief. Plaintiff therefore has failed to
establish the existence, amount, and enforceability of his lien on the settlement money.
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2. Plaintiff Cannot Prove Damages, an Essential Element of Each Cause of
Action
Damages is an essential element of fraud, negligence, and tortuous interference
with prospective economic advantage (Plaintiff’s first, fourth, and fifth causes of action).
(See Gil v. Bank of America, N.A. (2006) 138 Cal.App.4th 1371, 1381 [“The elements of
fraud [include] resulting damage.”]; Melton v. Boustred (2010) 183 Cal.App.4th 521, 529
[“The elements of a cause of action for negligence are duty, breach, causation, and
damages.”]; Winchester Mystery House, LLC v. Global Asylum, Inc. (2012) 210
Cal.App.4th 579, 596 [“The elements of a claim of interference with economic advantage
and prospective economic advantage [include] economic harm to the plaintiff
proximately caused by the acts of the defendant.”].) Additionally, under Commercial
Code section 3420, a “plaintiff may only recover for that portion of the instrument in
which he has an interest.” (Stenseth v. Wells Fargo Bank (1995) 41 Cal.App.4th 457,
466.) Plaintiff never adjudicated his interest in the settlement checks, so he cannot prove
that he has any interest to recover in his action against Defendant. To the extent that
Plaintiff attempts to assert a cause of action under Commercial Code section 3110(d),
which identifies the person(s) to whom an instrument is payable, the same rationale
applies. Because Plaintiff lacks an enforceable interest in the settlement check, he cannot
recover any portion of the settlement money under the Commercial Code, with respect to
his second and third causes of action.
Thus, Plaintiff has not alleged sufficient facts to prove damages, a critical element
of each cause of action. We therefore affirm the trial court’s order sustaining the
demurrer to the second amended complaint.
3. The Court Did Not Abuse Its Discretion in Denying Leave to Amend
Lastly, we address the trial court’s denial of leave to amend. “If we see a
reasonable possibility that the plaintiff could cure the defect by amendment, then we
conclude that the trial court abused its discretion in denying leave to amend. If we
determine otherwise, then we conclude it did not.” (Campbell v. Regents of University of
California (2005) 35 Cal.4th 311, 320.) Plaintiff bears the burden of proving that there is
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a reasonable possibility he can cure the defect by amendment. (Maxton v. Western States
Metals (2012) 203 Cal.App.4th 81, 95.) To satisfy this burden, Plaintiff must show
“ ‘ “in what manner he can amend his complaint and how that amendment will change
the legal effect of his pleading” ’ ” by clearly stating not only the legal basis for the
amendment, but also the factual allegations to sufficiently state a cause of action. (Ibid.)
In support of his argument for leave to amend, Plaintiff argues that he “has made
sufficient allegations to support a prima facie case for each and every cause of action that
is subject to this appeal” and that the second amended complaint was “a good faith effort
by Appellant to plead his valid claim against [Defendant].” Plaintiff requests that “[i]f
this Court believes the allegations against [Defendant] are not clear,” he be given leave to
amend the second amended complaint “in the interest of justice.” Plaintiff makes no
other substantive arguments with regard to this issue.
Failing to meet his burden, Plaintiff does not state how he would amend his
complaint to allege sufficient facts to support his alleged causes of action. Rather,
Plaintiff indicates that an amendment would clarify his allegations. The clarity of his
allegations is not at issue. Short of a declaratory judgment regarding the reasonable value
of his services in a separate action against his clients, Plaintiff lacks a right to claim any
part of the settlement money. Because Plaintiff has not shown the manner in which he
can amend his complaint and how that amendment would change the legal effect of his
pleading, we affirm the trial court’s denial of leave to amend.
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DISPOSITION
The judgment is affirmed. Defendant Fernando D. Vargas is awarded his costs on
appeal.
CERTIFIED FOR PARTIAL PUBLICATION
KITCHING, J.
We concur:
KLEIN, P. J.
ALDRICH, J.
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