Madison> >Harbor> v. Tong

 

 

 

 

 

 

 

 

Filed 6/14/13  Madison Harbor v. Tong CA4/3

 

 

 

 

 

 

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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opinion has not been certified for publication or ordered published for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

 

FOURTH APPELLATE
DISTRICT

 

DIVISION THREE

 

 
>

MADISON HARBOR, ALC,         Plaintiff, Cross-defendant, and Respondent,               v.   TU MY TONG,         Defendant, Cross-complainant, and Appellant,   ROBERT SABAHAT et al.,   Cross-defendants and Respondents.

G046191            (Super. Ct. No. 06CC07137)            O P I N I O N

 

                        Appeal from a judgment
of the Superior Court
of href="http://www.adrservices.org/neutrals/frederick-mandabach.php">Orange
County, Derek W. Hunt, Judge. 
Affirmed in part, reversed in part, and remanded with directions.

                        Tu My Tong, in pro.
per., for Defendant, Cross-complainant, and Appellant.

                        Madison
Harbor, Ali Parvaneh and Jenos
Firouznam-Heidari for Plaintiff, Cross-defendants, and Respondents.

For the third time, we are
asked to resolve an appeal in a case with approximately $30,000 to $40,000 in
unpaid legal bills at stake.  (See >Madison Harbor v. Tong (May 18, 2009, G039798) [nonpub. opn.]
(Tong I); Madison Harbor v. Tong (Oct.
28, 2010, G042540) [nonpub. opn.] (Tong II).)  The first two
appeals pertained to a default judgment obtained by plaintiff Madison
Harbor, ALC (Madison
Harbor), against defendant Tu My
Tong, which was ultimately set aside. 
This time, Madison Harbor
moved for summary judgment and obtained a judgment on the merits.  Tong contends the trial court wrongly granted
summary judgment, in particular with regard to her cross-complaint against Madison
Harbor and two attorneys affiliated
therewith, Robert Sabahat and Ali Parvaneh. 
We affirm in part and reverse in part.

 

FACTS

 

On
June 15, 2006, Madison
Harbor filed a complaint against
Tong, alleging Tong breached her contract with Madison
Harbor by failing to pay $30,295
for legal services rendered.  Default was
entered against Tong and the court entered a default judgment in June 2007, but
the court eventually granted a motion to set aside the default and default
judgment as void for lack of proper service of summons.  In October 2010, in Tong II, we affirmed the court’s ruling setting aside the default
and default judgment.  On April 5, 2011, Madison
Harbor filed an amended complaint
seeking $41,895.38 in damages for unpaid legal bills.

On
March 7, 2011, Tong filed a
cross-complaint against Madison Harbor,
Sabahat, and Parvaneh for breach of contract, declaratory relief, legal malpractice,
and conversion.  The court sustained a
demurrer without leave to amend as to the declaratory relief cause of action;
Tong concedes the correctness of this ruling. 


Madison
Harbor (and Sabahat and Parvaneh)
filed a motion for summary judgment in July 2011.  Madison
Harbor claimed the undisputed facts
showed that Tong maintained an outstanding balance of $41,895.38 as of March
2006, at which time the relationship between Tong and Madison
Harbor ended.  As to the cross-complaint, cross-defendants
asserted that the statute of limitations
precluded Tong’s legal malpractice cause of action, the breach of contract
cause of action was simply a set off defense to Madison Harbor’s complaint,
Tong suffered no damages as to any of her causes of action, and the conversion
cause of action failed because cross-defendants levied on property pursuant to
court order.  We will provide further
detail of the parties’ pleadings and evidentiary submissions below in the
discussion section.

The
court granted the motion for summary
judgment.  The court entered judgment
against Tong and in favor of Madison Harbor
in the amount of $40,850. 

 

DISCUSSION

 

“We
review a grant of summary judgment de novo. 
[Citation.]  We assume the role of
the trial court and redetermine the merits of the motion.”  (Calemine
v. Samuelson (2009) 171 Cal.App.4th 153, 160-161.)  In doing so, we follow a three-step
process:  (1) identify the issues as
framed by the pleadings; (2) evaluate whether the moving party has made a prima
facie showing that would support summary judgment or summary adjudication; and
(3) if the moving party has made a prima facie showing with regard to some or
all of the causes of action that are the subject of the motion, determine
whether the responding party has demonstrated the existence of a triable
factual issue with regard to those causes of action.  (Hamburg
v. Wal-Mart Stores, Inc. (2004) 116 Cal.App.4th 497, 503; Code Civ.
Proc., § 437c, subds. (p)(1), (2).)href="#_ftn1" name="_ftnref1" title="">[1]

“The
motion for summary judgment shall be granted if all the papers submitted show
that there is no triable issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law.  In determining whether the papers show that
there is no triable issue as to any material fact the court shall consider all
of the evidence set forth in the papers, except that to which objections have
been made and sustained by the court, and all inferences reasonably deducible
from the evidence, except summary judgment may not be granted by the court
based on inferences reasonably deducible from the evidence, if contradicted by
other inferences or evidence, which raise a triable issue as to any material
fact.”  (§ 437c, subd. (c).)  A cause of action has no merit if “[o]ne or
more of the elements of the cause of action cannot be separately established” (>id. subd. (o)(1)) or if there is “an
affirmative defense to that cause of action” (id. subd. (o)(2)).

In
her opening brief (Tong did not file a reply brief), Tong claims there were
triable issues of fact with regard to her cross-complaint.  In particular, Tong claims the statute of
limitations had not yet run on her breach of contract and malpractice claims,
and that she suffered actual monetary harm as a result of cross-defendants’
allegedly substandard representation of her interests.  Tong does not address the court’s grant of
summary judgment on Madison Harbor’s complaint or the court’s grant of summary
adjudication on the conversion cause of action in the cross-complaint.  Appellate courts limit their review to issues
specifically raised by the appellant’s briefs. 
(Reyes v. Kosha (1998) 65
Cal.App.4th 451, 466, fn. 6 [“Although our review of a summary judgment is
de novo, it is limited to issues which have been adequately raised and
supported in plaintiffs’ brief”].)  We
therefore affirm the grant of summary judgment as to the complaint.  We also affirm the grant of summary
adjudication as to Tong’s conversion cause of action in the cross-complaint.

 

>Tong’s Breach of Contract Action

Tong’s
cross-complaint includes a breach of contract cause of action.  Tong alleged that she “entered into a
retainer agreement” in April 2004. 
“Cross-defendants breached the agreement by charging an unconscionable
fee which was not related to the reasonable value of the service rendered, over
billed, billed for work not performed, and performed unnecessary work.”  Tong did not identify a damages amount or
indicate that she actually paid these allegedly improper bills.

A
party alleging breach of contract must establish the existence of a contract,
his or her own performance, the other party’s breach, and damages suffered by
the complaining party.  (>Wall Street Network, Ltd. v. New York Times
Co. (2008) 164 Cal.App.4th 1171, 1178.)

It
is undisputed that several contracts existed between the parties.  These agreements called for an hourly rate of
$195.  In 2004, Tong hired Madison Harbor
to represent her in Urban Eco Housing v.
Tong (Super. Ct. L.A., No. LASC BC 298372) (Urban Eco), a case in the Los Angeles Superior Court.  “Tong was billed and paid for those services
provided.  Sometime in 2005, Tong
discharged Madison Harbor and hired” another attorney.  “Tong later re-hired Madison Harbor and entered
into two separate agreements for legal services . . . .  The first was on or about April 26, 2005, for
legal services relating to a bankruptcy action [Doan v. Tong, BK No. LA 03-31102 TD (Doan)] and again [in the Urban
Eco action].  The second agreement
was for legal services relating to” Tong
v. Brownstein  (Super. Ct. L.A., No.
LASC BC 335295) (Brownstein), another
case in the Los Angeles Superior Court. 
Thus, in early 2005, there was a period of up to four months in which
Tong was not represented by Madison Harbor in the Urban Eco matter.

It
is undisputed that Madison Harbor provided legal services to Tong in these
three matters until early 2006.  In her
declaration, Tong recites a litany of supposed wrongs committed by Madison
Harbor (and its individual attorneys) in its representation of Tong in the >Urban Eco, Doan, and Brownstein
cases.  These alleged acts and omissions
mirror those alleged in Tong’s malpractice cause of action (e.g., failure to
take default of a party in one of the cases, failure to take certain
depositions, failure to file motion to disqualify opposing counsel).  In the Urban
Eco case, Madison Harbor supposedly paid some unspecified amount for jury
fees over the expressed wish of Tong to have a bench trial.  Madison Harbor also allegedly took $3,600
from Tong to pay sanctions to the opposing party but did not actually use the
money to pay the sanctions award. 
According to Tong’s declaration, “the firm kept the money and did not
credit my invoices.”

To
be successful, cross-defendants’ motion for summary judgment on the
cross-complaint needed to (1) disprove at least one element of each of Tong’s
causes of action, or (2) establish an affirmative defense to Tong’s causes of
action.  (§ 437c, subd.
(p)(2).)  In the section of their
separate statements pertaining to Tong’s breach of contract cause of action,
cross-defendants and Tong merely repeat the debate from the Madison Harbor
breach of contract cause of action. 
Cross-defendants cite the existence of contracts, the alleged performance
of Madison Harbor by performing all work instructed by Tong, and the failure of
Tong to pay her bills.

Tong
disputed each alleged fact by claiming Madison Harbor (and its attorneys) “did
not perform competently and did not perform as promised.”  Tong cited her own declaration as the basis
for the dispute.  These citations refer
once again to the same list of perceived negligent acts and omissions by
cross-defendants in the course of their representations of Tong.  Tong claims she was damaged by cross-defendants
actions and omissions because she lost on her cross-complaint in the >Urban Eco case, her settlement was
insufficient in the Brownstein case,
and she had to hire new counsel in all three cases.  Our review of the entire record suggests that
Tong’s breach of contract cause of action is duplicative of her malpractice
cause of action.  Thus, as correctly
determined by the trial court, Tong’s breach of contract cause of action can
survive the summary judgment motion only to the extent that her malpractice
cause of action survives the motion.

 

Tong’s
Legal Malpractice Cause of Action

As
noted above, Tong’s cross-complaint also includes a cause of action for legal
malpractice.  “In a legal malpractice
action arising from a civil proceeding, the elements are (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.) 

Tong
alleges she retained cross-defendants in February 2004 and that they committed
a variety of negligent acts at unspecified times in several different cases
that are only vaguely referenced (i.e., did not take the defaults of defendants
in the Urban Ecco case, failed to
take the default of Michael Henschel in an unspecified case, failed to take the
deposition of a key witnesses in several cases, failed to obtain a judgment in
the Doan case, engaged in
unauthorized settlement negotiations, advised Tong to file for bankruptcy,
advised Tong to enter into disadvantageous settlements, paid jury fees in a
case in which Tong wanted a bench trial, kept $3,600 from Tong that should have
been used to pay a sanctions award, provided the wrong time for a hearing, did
not seek to disqualify opposing counsel in the Brownstein case, inaccurately told Tong that Brownstein did not
have insurance, and did not file a lawsuit against Michel Rone).  Tong allegedly suffered unspecified damages
as a result of cross-defendants’ alleged professional negligence.

Cross-defendants
moved for summary adjudication of the malpractice cause of action based primarily
on the theory that the statute of limitations had run.  The court granted summary adjudication on
this ground as to both the malpractice and breach of contract causes of
action.  “An action against an attorney
for a wrongful act or omission, other than for actual fraud, arising in the
performance of professional services shall be commenced within one year after
the plaintiff discovers, or through the use of reasonable diligence should have
discovered, the facts constituting the wrongful act or omission, or four years
from the date of the wrongful act or omission, whichever occurs first.”  (§ 340.6, subd. (a).)  Even if a party pleads breach of contract
against an attorney, the section 340.6, subdivision (a) one year statute of
limitations applies if the gravamen of the claim is legal malpractice.  (Quintilliani
v. Mannerino (1998) 62 Cal.App.4th 54, 65-67.)  The statute of limitations can be tolled in
certain specified circumstances, including, as relevant here, “(1) The
plaintiff has not sustained actual injury” or “(2) The attorney continues to
represent the plaintiff regarding the specific subject matter in which the
alleged wrongful act or omission occurred.” 
(§ 340.6, subd. (a)(1)(2).)

The
summary judgment papers, including the parties’ respective separate statements,
make clear that the one-year statute of limitations began running as early as
January 2006 and by August 2007 at the very latest.  The claims at issue are against attorneys for
wrongful acts and omissions that occurred during the performance of
professional services.  It is undisputed
that cross-defendants’ representation of Tong ceased in early 2006.  Madison Harbor claims it withdrew as counsel
in March 2006; Tong claims she terminated the representation in January
2006.  It is also undisputed that Tong
knew in 2006 about the potential claims she asserted in her cross-complaint, in
that she claims to have fired Madison Harbor because of its alleged errors and
omissions and she wrote a letter to her attorney in November 2006 discussing the
filing of a cross-complaint against Sabahat. 
Finally, although one could certainly posit actual injury occurred
earlier, it is undisputed that Tong had suffered all of her “actual injury” as
of August 2007 at the very latest, when the last of the three actions at issue
either settled or had judgment entered in Tong’s favor.  The essence of Tong’s claim is that
cross-defendants prejudiced the amount of her recovery and unnecessarily
increased her attorney fees in the three litigation matters at issue. 

Thus,
the one-year statute of limitations began running by August 2007 (if not
earlier) as a matter of law.  It was not
tolled by any of the statutory exceptions, as it is undisputed that Madison
Harbor’s representations of Tong ended in early 2006 and Tong had suffered any
“actual injury” by August 2007 at the latest. 
(See Croucier v. Chavos (2012)
207 Cal.App.4th 1138, 1146-1150 [statute of limitations precluded claim
against prior attorney for not collecting on judgment before being replaced by
new counsel].)

It
is also undisputed that the cross-complaint was not filed until March 7, 2011,
approximately five years after cross-defendants’ representation of Tong ended
and more than three years after the last possible date for the accrual of
“actual injury.”  Tong filed a motion for
leave to file a cross-complaint on August 17, 2009, but the hearing was vacated
in light of a pending appeal (Tong II)
of the court’s order setting aside the entry of default and default
judgment.  Of course, even if Tong had filed
her cross-complaint on August 17, 2009, it would have been untimely, as August
2009 is two years after August 2007. 
(§ 340.6, subd. (a).)

Tong’s
contention at the trial court and on appeal is that Madison Harbor’s filing of
its initial complaint in June 2006 tolled the statute of limitations.  “It has consistently been held that the
commencement of an action tolls the statute of limitations as to a defendant’s
then unbarred cause of action against the plaintiff, ‘relating to or depending
upon the contract, transaction, matter, happening or accident upon which the
action is brought, . . .’”  (>Trindade v. Superior Court (1973) 29
Cal.App.3d 857, 860; see Jones v.
Mortimer (1946) 28 Cal.2d 627, 633 [“The statute of limitations is not
available to plaintiff as to defendants’ counterclaim if the period has not run
on it at the time of commencement of plaintiff’s action even though it has run
when the counterclaim is pleaded”]; 3 Witkin, Cal. Procedure (5th ed. 2008)
Actions, § 448, p. 571 [“The statute is a bar to the defendant’s
affirmative claim only if the period has already run when the complaint is
filed.  The filing of the complaint
suspends the statute during the pendency of the action, and the defendant may
set up his or her claim by appropriate pleading at any time”].)

The
court correctly granted summary adjudication on the malpractice cause of action
(and the breach of contract action, for that matter) to cross-defendants
Sabahat and Parvaneh.  The principle
underlying the rule cited by Tong is that “‘“‘the plaintiff has [by filing the complaint] thereby waived the
[statute of limitations] claim and permitted the defendant to make all proper
defenses to the cause of action pleaded.’”’ 
[Citations.]  Since new parties
cannot be said to have engaged in any sort of waiver, the rule does not apply
to them.”  (Boyer v. Jensen (2005)> 129 Cal.App.4th 62, 70.)  Sabahat and Parvaneh did not file a complaint
against Tong.  The statute of limitations
ran with regard to Tong’s malpractice and breach of contract claims against
Sabahat and Parvaneh.

With
regard to Madison Harbor, on the other hand, Tong is correct.  By filing its complaint against Tong in June
2006, Madison Harbor waived the right to assert a statute of limitations
defense to a claim brought by Tong that could have been filed in June
2006.  Even if the statute of limitations
began running in January 2006, Tong’s cross-complaint would have been timely
had it been filed in June 2006. 

In
its appellate brief, Madison Harbor argues that Tong’s claims actually all
arose out of Madison Harbor’s initial representation of Tong in 2004 and early
2005 in the Urban Eco case (and not
the subsequent 2005 to 2006 representations). 
But this assertion is not established in the separate statement or
accompanying evidence presented by the parties. 
Although Tong is not clear in pointing to specific dates in her
accusations and evidence, it is at the very least a triable question of fact as
to when the alleged acts and omissions occurred in each of the three underlying
matters in which Madison Harbor represented Tong.  Despite Tong’s reference to her retainer
agreement with Madison Harbor in 2004 (and not the subsequent retainer
agreements in 2005), Tong’s list of alleged acts and omissions constituting
malpractice traverses all of the Madison Harbor representations, not merely the
one representation that ended in 2005. 
Moreover, it appears that even claims based solely on Madison Harbor’s
initial representation in the Urban Eco
case would be timely, as Madison Harbor was engaged to work on the same matter
again in 2005 and 2006 after ending its representation for several months in
early 2005.  Even if the statute of
limitations ran for up to four months in early 2005, it was tolled once Madison
Harbor began working again on the Urban
Eco matter.  (§ 340.6, subd.
(a)(2) [statute tolled while “[t]he attorney continues to represent the
plaintiff regarding the specific subject matter in which the alleged wrongful
act or omission occurred”].)

Madison
Harbor also argues that Tong’s cross-complaint is unrelated to the
complaint.  “It is not clear whether the
. . . rule [tolling the running of the statute of limitations upon filing of a
complaint] applies to cross-complaints against plaintiff unrelated to ‘the contract, transaction, matter, happening or
accident’ alleged in the complaint ([§ 428.10, subd. (a)]) (so-called
‘permissive’ cross-complaints).” 
(Rylaarsdam & Turner, Cal. Practice Guide:  Civil Procedure Before Trial Statute of
Limitations (The Rutter Group 2013) ¶ 8:250, p. 8-31 (rev. #1, 2012).)  But this argument is belied by common
sense.  Madison Harbor sued Tong for
unpaid legal fees arising out of the 2005 retainer agreements.  Tong is suing Madison Harbor for acts and
omissions by Madison Harbor in the course of representing Tong in three matters
covered by those 2005 retainer agreements. 
Thus, even if the relation-back rule is limited to claims related to the
underlying complaint, Tong’s causes of action are related to Madison Harbor’s
complaint.

Madison
Harbor made one final attack on Tong’s malpractice claim — a lack of evidence
of damages.  “Unless a party suffers
damage, i.e., appreciable and actual harm, as a consequence of his attorney’s
negligence, he cannot establish a cause of action for malpractice.  Breach of duty causing only speculative harm
is insufficient to create such a cause of action.  [Citation.] 
‘[D]amages may not be based upon sheer speculation or surmise, and the
mere possibility or even probability that damage will result from wrongful
conduct does not render it actionable.’” 
(Thompson v. Halvonik (1995)
36 Cal.App.4th 657, 661–662.)

Madison
Harbor attempted to establish a prima facie case of lack of damages by
introducing evidence that Tong achieved favorable results in each of the three
cases in which Madison Harbor represented Tong. 
Tong asserted in her separate statement that she did not obtain these
results because of Madison Harbor. 
Moreover, Tong stated in her declaration that she would have achieved
better results had Madison Harbor performed up to snuff, that she had to pay
other attorneys to get up to speed, and that Madison Harbor took $3,600 from
her without using it as instructed (to pay off a sanctions award).  Tong also claims she lost a cross-complaint
in one of her cases and failed to obtain a judgment against a defendant in the >Urban Ecco case.  It is true that Tong’s declaration is
somewhat vague.  But Tong’s evidence
demonstrates the shallowness of Madison Harbor’s showing.  Just because Tong succeeded to some extent in
the three underlying actions does not mean she did not suffer damages as a
result of Madison Harbor’s alleged acts and omissions.  Madison Harbor failed to establish there was
no triable issue of fact as to damages.

Because
Madison Harbor failed to prove there was no triable issue as to the element of
damages or the statute of limitations affirmative defense, the court erred by
granting summary adjudication as to the malpractice cause of action against
Madison Harbor.href="#_ftn2" name="_ftnref2"
title="">[2]

DISPOSITION

 

The
judgment is affirmed in part, reversed in part, and remanded for further
proceedings in conformity with this opinion. 
The grant of summary judgment on Madison Harbor’s complaint is
affirmed.  Cross-defendants Sabahat and
Parvaneh are entitled to summary judgment on the cross-complaint; the judgment
is affirmed insofar as it dismisses with prejudice the action against Sabahat
and Parvaneh.  Moreover, the court
properly granted Madison Harbor’s motion for summary adjudication on the
conversion cause of action in the cross-complaint; this aspect of the judgment
is affirmed.  However, the court
incorrectly granted summary judgment on the remainder of Tong’s
cross-complaint.  The judgment is
therefore reversed in part in accordance with this opinion.  In the interests of justice, the parties
shall bear their own costs on appeal.

 

 

 

                                                                                    IKOLA,
J.

 

WE CONCUR:

 

 

 

O’LEARY, P.
J.

 

 

 

RYLAARSDAM,
J.