diSibio v. Rosen, Bien & Asaro

Filed 4/25/07 diSibio v. Rosen, Bien & Asaro CA1/4

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

I.

Introduction

The law firm of Rosen, Bien & Asaro, LLP (RB&A) sought and obtained summary judgment on a cross-complaint brought by its former clients, Lewis and Mary diSibio (the diSibios) alleging causes of action for equitable indemnity and constructive trust. We affirm the summary judgment because the diSibios failed to establish any triable issue of material fact, and RB&A is entitled to summary judgment as a matter of law.

II.

Procedural and Factual Background

The diSibios initially consulted RB&A after they received a letter from the Bank of Oakland (the Bank), unilaterally changing the terms of their cash accumulator accounts. The letter stated that it was lowering the interest rates on the accounts and was adding a change to the terms clause.

When RB&A reviewed the Banks actions, it agreed the conduct was improper, and that the Bank was engaging in unlawful banking practices. RB&A also concluded that there were grounds for an action under the federal Truth in Savings Act (12 U.S.C.  4301), Californias Unfair Competition Law (Bus. & Prof. Code,  17200), and common law. On May 17, 2000, RB&A filed an action in the United States District Court for the Northern District of California (the District Court) entitled diSibio v. Bank of Oakland (U.S. Dist. Court (2000) No. C00-1764CRB) (federal action).

On March 2, 2001, the parties appeared before United States Magistrate Bernard Zimmerman for a settlement conference that lasted most of the day. When the parties reached an agreement on a framework that would settle the case, Magistrate Zimmerman produced a tape recorder and had the parties put the settlement on the record.

Counsel jointly prepared a draft of the settlement agreement. The diSibios made numerous objections and demanded that a number of terms not agreed to at the settlement conference also be included in the agreement. Based upon their objections, the diSibios refused to sign the settlement agreement.^[1] This set off a flurry of litigation.

On September 7, 2001, the District Court ordered enforcement of the settlement agreement, ruling that the official transcript of the March 2, 2001 tape-recorded statements by the parties and attorneys was a binding agreement. The diSibios appealed the District Courts ruling. On August 14, 2003, the Ninth Circuit Court of Appeals (Ninth Circuit) affirmed the District Courts ruling.

Despite the order and ruling by the Ninth Circuit, the diSibios continued to refuse to sign the settlement agreement or to comply with the District Courts earlier order enforcing the settlement. On March 11, 2004, the District Court issued an order dismissing the diSibios federal action subject to the terms and conditions of the settlement agreement. The diSibios then sought further relief from the Ninth Circuit by means of an extraordinary petition for mandamus. The court declined to consider the case on its merits, simply issuing an order holding that the diSibios had failed to demonstrate the case warranted the courts intervention.

The diSibios persistent refusal to comply with the terms of the settlement agreement produced collateral litigation. Innovative Bancorp (Innovative) initiated the underlying action against the diSibios on August 5, 2002. The complaint alleged that Innovative had entered into an agreement in 2000 whereby Innovative was going to acquire the Bank. In conducting its due diligence with regard to the purchase, Innovative became aware that the diSibios had initiated the federal action in 2000 disputing the Banks right to implement unilateral changes to the diSibios cash accumulator accounts. Innovative was concerned about the potential exposure the Litigation presented and alleged that the diSibios were aware that Innovative would not conclude its purchase of Bank unless the Litigation was satisfactorily resolved, and the case dismissed . . . .

Innovative further alleged that, in reliance on the settlement agreement, it completed its acquisition of the Bank. However, the diSibios breached the settlement agreement by failing and refusing to dismiss the federal action, thereby damaging Innovative. Innovative sought damages against the diSibios under theories including breach of contract, promissory estoppel, and the tort of deceit.

On September 20, 2004, the diSibios filed their first amended cross-complaint (FACC) in the Alameda County Superior Court. The FACC alleged six causes of action against Innovative. The trial court eventually sustained Innovatives demurrer without leave to amend on the grounds that any claims based on the facts pled in the FACC were barred by the statute of limitations and by the doctrine of res judicata.^[2]

The FACC also alleged causes of action against RB&A for breach of contract, breach of fiduciary duty, constructive trust and equitable indemnity. On January 14, 2005, the court sustained RB&As demurrer to the breach of contract and breach of fiduciary causes of action on the ground that the claims were time-barred under Code of Civil Procedure section 340.6, the applicable statute of limitations. The court overruled RB&As demurrer to the diSibios constructive trust and equitable indemnity claims.

After discovery was conducted, RB&A filed a motion for summary judgment/adjudication on the sole remaining causes of action alleged against RB&A for constructive trust and equitable indemnity. In its moving papers, RB&A argued that an examination of the substance of the diSibios equitable indemnity claim will reveal that it is nothing more than a time-barred breach of fiduciary duty cause of action and that, as a matter of law, the diSibios have not stated a tenable equitable indemnity claim. Moreover, [i]mposition of a constructive trust is a remedy and not a cognizable cause of action.

The court granted RB&A summary judgment, finding RB&A has met its burden of showing that the diSibios causes of action for Constructive Trust and Equitable Indemnity have no merit by showing that one or more elements of the causes of action cannot be established, and the diSibios have demonstrated no triable issue of fact to the contrary. After judgment in favor of RB&A was filed on August 29, 2005, this appeal followed.

III.

DISCUSSION

A. Summary Judgment Law and the Standard of Review

[I]n moving for summary judgment, a defendant . . . has met his burden of showing that a cause of action has no merit if he has shown that one or more elements of the cause of action . . . cannot be established, or that there is a complete defense to that cause of action. Once the defendant . . . has met that burden, the burden shifts to the plaintiff . . . to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. The plaintiff . . . may not rely upon the mere allegations or denials of his pleadings to show that a triable issue of material fact exists but, instead, must set forth the specific facts showing that a triable issue of material fact exists as to that cause of action or a defense thereto.. . . (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 849.) Similarly, a party opposing a motion for summary judgment may not overcome the moving partys prima facie showing by merely asserting that a fact is disputed without citation to evidence that actually controverts the moving partys factual statement. (Cal. Rules of Court, rule 3.1350(f).)

We independently review the trial courts decision to grant summary judgment, using the same three-step analysis as the trial court: (1) identifying the issues framed by the pleadings; (2) determining whether the defendant negated the plaintiffs claims; and (3) deciding whether the plaintiff demonstrated the existence of a triable, material factual issue. (Silva v. Lucky Stores, Inc. (1998) 65 Cal.App.4th 256, 261.)

B. The Cross-Complaints Cause of Action for Equitable Indemnity

The diSibios filed a cross-complaint against RB&A asserting a cause of action for equitable indemnity. The diSibios alleged that if they were found liable to Innovative, they were entitled to indemnity from RB&A by reason of RB&As breaches of duty in its representation of the diSibios during the settlement negotiations with the Bank and the prejudicial impact of those breaches on the diSibios ability to defend and prosecute this case.^[3]

As recently set out by the court in Stonegate Homeowners Assn. v. Staben (2006) 144 Cal.App.4th 740:  [T]he doctrine of comparative equitable indemnity is designed to do equity among defendants. Under the equitable indemnity doctrine, defendants are entitled to seek apportionment of loss between the wrongdoers in proportion to their relative culpability so there will be equitable sharing of loss between multiple tortfeasors.  [Citation.] A condition of equitable indemnity is that there must be some basis for tort liability against the proposed indemnitor, usually involving breach of a duty owed to the underlying plaintiff. [Citation.] The doctrine applies only among defendants who are jointly and severally liable to the plaintiff. [Citation.] (Id. at p. 751; see also Forensis Group, Inc. v. Frantz, Townsend & Foldenauer (2005) 130 Cal.App.4th 14, 28 [[U]nless the prospective indemnitor and indemnitee are jointly and severally liable to the plaintiff there is no basis for indemnity.].)

The diSibios cross-complaint for equitable indemnity sought an equitable sharing of responsibility for the loss that Innovative allegedly suffered when the diSibios refused to execute the settlement agreement. When pressed at oral argument on the summary judgment motion to more fully describe the equitable indemnity cause of action alleged against RB&A, counsel explained that what were talking about is indemnity for the damages that [Innovative] Bancorp might have against my client because of the way the whole settlement process is screwed up.

When examined in its proper light, the diSibios equitable indemnity claim fails for several independent reasons. First, because RB&A was neither a concurrent nor a joint tortfeasor with the diSibios with respect to Innovatives alleged damages, there is no basis for indemnity. (See Munoz v. Davis (1983) 141 Cal.App.3d 420, 425 (Munoz) [Whatever confusion may have existed in the case law of equitable indemnity [citation], one point stands clear: there can be no indemnity without liability. In other words, unless the prospective indemnitor and indemnitee are jointly and severally liable to the plaintiff there is no basis for indemnity.]; Seamens Bank v. Superior Court (1987) 190 Cal.App.3d 1485, 1491 [applying Munoz, supra, 141 Cal.App.3d 420, to reject claim for equitable indemnity].)

Stated differently, an action for equitable indemnity is premised upon a joint legal obligation to another for damages. [Citation.] (Childrens Hospital v. Sedgwick (1996) 45 Cal.App.4th 1780, 1787 (Childrens Hospital).) Thus, a defendant/indemnitee may in an action for indemnity seek apportionment of the loss on any theory that was available to the plaintiff upon which the plaintiff would have been successful. (GEM Developers v. Hallcraft Homes of San Diego, Inc. (1989) 213 Cal.App.3d 419, 430; Leko v. Cornerstone Bldg. Inspection Service (2001) 86 Cal.App.4th 1109, 1115.)

The diSibios equitable indemnity claim lacks the essential element of common liability to an injured person. [Citations.] (Childrens Hospital, supra, 45 Cal.App.4th at p. 1787.)  [I]f the evidence establishes that a defendant is not a concurrent tortfeasor responsible in any way for the plaintiffs injuries, another defendant may not pursue a claim for indemnity against that defendant.. . . (Ibid., citing Frank v. State of California (1988) 205 Cal.App.3d 488, 494, italics omitted.)

An attorney typically owes no duty to a clients adversary. (Munoz, supra, 141 Cal.App.3d at p. 430.) The only facts proffered by the diSibios as the basis for their claim for equitable indemnity have to do with RB&As alleged breach of duty tothem in negotiating and advising them to enter into a settlement with Innovative. Because there appears to be no identifiable theory that Innovative could press to recover damages against RB&A, summary judgment is appropriate.^[4]

Nevertheless, in the diSibios opening brief they argue their equitable indemnity claim is viable because RB&A constantly encouraged the Banks lawyers to believe that settlement was at hand (or had been achieved), no matter what the diSibios were telling RB&A. Over and over, RB&A withheld the diSibios true thinking, leading the Bank to believe that the diSibios were on the brink of accepting settlement when in fact the diSibios had ordered RB&A to cease negotiations, rebuff all offers, and proceed with litigation.

This assertion is nothing more than yet another attempt to relitigate allegations of misconduct by RB&A directed against the diSibios during the settlement negotiations, which previously have been conclusively decided against the diSibios. Indeed, in fashioning his order dismissing the diSibios federal action, District Court Judge Charles Breyer addressed the diSibios effort to overturn the settlement based on their counsels alleged improper conduct. Judge Breyer found no merit to [the diSibios] argument, and sees no basis for overturning its earlier determination that the settlement agreement is valid and enforceablea conclusion that was affirmed on appeal. RB&As exoneration from liability in the federal action for any alleged misdeeds during the settlement proceedings precludes the diSibios from relitigating these issues again in the instant proceeding. (Childrens Hospital, supra, 45 Cal.App.4th at pp. 1787-1788.) The diSibios have no claim for equitable indemnity against RB&A and the trial court correctly ruled RB&A was entitled to granting summary judgment on this cause of action.^[5]

C. The Cross-Complaints Cause of Action for Constructive Trust

By the diSibios own description, the main issue on summary judgment concerning the constructive trust cross-claim was whether RB&As receipt of attorney[] fees in the underlying matter constituted, in whole or in part, unjust enrichment, such that a constructive trust should be imposed on the entire amount received by RB&A, pending resolution of this litigation . . . .

A constructive trust cannot exist unless there is evidence that property has been wrongfully acquired or detained by a person not entitled to its possession. [Citations.] (Communist Party v. 522 Valencia, Inc. (1995) 35 Cal.App.4th 980, 991.) The diSibios contend they have a viable claim against RB&A for imposition of a constructive trust on all or some of the fees paid to RB&A as a remedy for the firms alleged breach of fiduciary duty and violation of the Rules of Professional Conduct. But the diSibios provide no reply to RB&As argument that the constructive trust claim on this basis is barred because it is based on the same breach of fiduciary duty claim which was dismissed on demurrer on statute of limitations grounds. The diSibios thus appear to have abandoned this contention.

However, on this appeal the diSibios have raised an additional basis for the constructive trust claim. They now argue that RB&A withheld a portion of the sum that should have been paid to the diSibios as costs reimbursement and therefore a constructive trust should be imposed on the disputed amount ($2,839) as a remedy for the alleged conversion of that sum.

As pointed out by RB&A, the diSibios never pleaded a cause of action for conversion nor made such a contention at any time during the trial court proceedings. More to the point, in their opposition to the summary judgment motion the diSibios did not argue that a constructive trust should be imposed on the unpaid costs. In fact they asserted that it appeared an agreement [could] be reached with respect to that issue. What remains at issue under this cause of action the diSibios argued, is whether RB&As receipt of attorney[] fees in the underlying matter constitutes, in whole or in part, unjust enrichment . . . . (Italics added.)

Consequently, the diSibios did not present any evidence to the trial court below to dispute RB&As contention that RB&A had reimburse[d] the diSibios in full for all costs they had advanced to RB&A. (Italics added.) In reviewing a summary judgment ruling on appeal,  [w]e may consider only those facts which were before the trial court, and disregard any new factual allegations made for the first time on appeal. Thus, unless they were factually presented, fully developed and argued to the trial court, potential theories which could theoretically create triable issues of material fact may not be raised or considered on appeal. [Citations.]  (Peart v. Ferro (2004) 119 Cal.App.4th 60, 70.) Undoubtedly, the cost reimbursement issue turns on a question of disputed fact and, thus, it may not be considered for the first time on appeal.^[6] We conclude there is no basis for reversing the trial courts grant of summary judgment on the diSibios constructive trust claim.

IV.

Disposition

The judgment is affirmed. Costs to RB&A.

_________________________

Ruvolo, P. J.

We concur:

_________________________

Reardon, J.

_________________________

Rivera, J.

Publication Courtesy of California attorney referral.

Analysis and review provided by Vista Property line attorney.

^[1] In the instant action, the diSibios claim that, without their approval, RB&A and the Banks attorneys agreed that the March 27, 2001 version of the settlement agreement was final and treated the case as settled.

^[2] The diSibios appealed that ruling. We affirmed in a nonpublished opinion (Innovative Bancorp v. diSibio (Apr. 18, 2006) A109391), concluding that the diSibios attack on the settlement of the Federal Action is barred by res judicata, and that the claims they seek to relitigate against Innovative in the FACC have been released by that earlier settlement. (Id. at p. 2.)

^[3] The doctrine of equitable indemnity is generally based on a duty owed to the underlying plaintiff [citations], although vicarious liability [citation] and strict liability [citation] also may sustain application of equitable indemnity. In addition, implied contractual indemnity between the indemnitor and the indemnitee can provide a basis for equitable indemnity. [Citation.] (BFGC Architects Planners, Inc. v. Forcum/Mackey Construction, Inc. (2004) 119 Cal.App.4th 848, 852 (BFGC Architects Planners). As the diSibios cross-complaint against RB&A alleges breach of duty, we surmise that the diSibios seek indemnity under that theory and we limit our discussion accordingly.

^[4] Innovative does not claim it was harmed by any of RB&As conduct during the settlement proceedings. In fact, in answering special interrogatories, Innovative expressly denied that RB&A was responsible for any of the damages alleged in Innovatives complaint against the diSibios. (See Allis-Chalmers Corp. v. Superior Court (1985) 168 Cal.App.3d 1155, 1158-1159 [no claim for indemnity if defendant is not liable to plaintiff due to plaintiffs factual admissions in action against defendant].)

^[5] RB&A argues at length that the diSibios claim for equitable indemnity is time-barred under Code of Civil Procedure section 340.6 because their indemnity claim was not filed within one year after they discovered RB&As alleged malpractice and breach of fiduciary duty. However, a suit for equitable indemnity is not precluded by the fact that it has the effect of resurrecting liability which would otherwise be barred by the statute of limitations. (Crouse v. Brobeck, Phleger & Harrison (1998) 67 Cal.App.4th 1509, 1547.)

^[6] At the hearing on RB&As motion for summary judgment, the diSibios counsel indicated that the parties had reached an oral settlement agreement whereby RB&A would reimburse the diSibios for the total amount of costs allegedly due and owing. However, at the time of the hearing, the amount had not yet been paid. Counsels statement to the court that the diSibios had not been fully reimbursed for the costs they had advanced is wholly insufficient to create a triable issue of material fact on summary judgment regarding the diSibios cost reimbursement claim.