Opinion
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County No. BC395558. Zaven Sinanian, Judge.
Hill, Farrer & Burrill, Kevin Brogan and Dean Dennis for Cross-Defendant and Appellant Greenberg, Glusker, Fields, Claman & Machtinger.
Good, Wildman, Hegness, Walley and Heidi Stilb Lewis; Foley, Bezek, Behle & Curtis and Thomas G. Foley Jr. for Defendant, Cross-Complainant and Respondent.
WOODS, J.
INTRODUCTION
This is an appeal from the trial court’s order determining that the cross-complainant’s claims against the cross-defendant law firm fell outside the ambit of Civil Code section 1714.10, subdivision (a), which imposes a prefiling requirement for claims against an attorney based on a civil conspiracy with the client, and instead fell within the subdivision (c) exceptions specifying that no prior court order is required where (1) the attorney has an independent legal duty to the plaintiff (or cross-complainant) or (2) the attorney’s acts go beyond the performance of a professional duty to serve the client and involve a conspiracy to violate a legal duty in furtherance of the attorney’s financial gain. Because the statute does not apply to the claims alleged, we affirm.
FACTUAL AND PROCEDURAL SUMMARY
In August 2008, Dorn Platz Properties, Inc., and One Carter Investors, LLC, filed a declaratory relief action against Sierra Madre Investors, LP, and CastleGrace Acquisitions, LLC. According to the complaint, in 2005, Dorn Platz and Sierra Madre entered into a written agreement providing Sierra Madre would invest $4.4 million in One Carter in exchange for an ownership interest of more than 60%, plus an option (secured by Dorn Platz’s own membership interest) under which Sierra Madre could oblige Dorn Platz to repurchase Sierra Madre’s interest subject to certain terms and within a certain timeframe.
In April 2008, pursuant to the terms of the First Amended Operating Agreement of One Carter, Sierra Madre sought to exercise its option to force Dorn Platz to repurchase Sierra Madre’s investment stake and gave notice of its intention to sell Dorn Platz’s interest in One Carter as collateral. In its complaint, Dorn Platz and One Carter sought a declaration Sierra Madre had no right to exercise the option or force the sale.
In October, Sierra Madre cross-complained against multiple entities, alleging 13 causes of action: (1) breach of the One Carter Investors Operating Agreement; (2) breach of the Equity Investment Agreement; (3) breach of the Put Agreement Options; (4) breach of the Put Guaranty; (5) breach of the Pledge Agreement; (6) intentional misrepresentation; (7) breach of fiduciary duty; (8) fraud (concealment); (9) conversion and imposition of constructive trust; (10) aiding and abetting breach of fiduciary duty; (11) declaratory relief and derivative claims for (12) breach of fiduciary duty; and (13) negligence and malpractice.
Sierra Madre alleged Dorn Platz and its president Greg Galletly received unauthorized distributions from One Carter and other investment partnerships in which these entities were partners and also obtained financing for and sold off certain real estate development projects without Sierra Madre’s knowledge or consent. On its sixth cause of action (intentional misrepresentation) and seventh cause of action (aiding and abetting and conspiracy to commit breach of fiduciary duty), Sierra Madre included as defendants attorney Howard Weinberg and law firm Greenberg Glusker Fields Claman & Machtinger, LLP, among others.
Greenberg Glusker and Weinberg demurred to Sierra Madre’s cross-complaint. The trial court sustained Greenberg Glusker’s demurrer to the sixth (intentional misrepresentation) and seventh (breach of fiduciary duty) causes of action with leave to amend. Thereafter, Sierra Madre filed a petition pursuant to Civil Code section 1714.10 in support of its claims against Weinberg and Greenberg Glusker, attaching its proposed amended cross-complaint as an exhibit (Exhibit T) along with other supporting documentation. (All undesignated statutory references are to the Civil Code.)
Although there is no mention of this statute in the notice of ruling on demurrer prepared by counsel for Howard Weinberg, Greenberg Glusker asserts in its reply brief that Sierra Madre filed a petition pursuant to Civil Code section 1714.10 because the trial court “observed that the allegations of conspiracy implicated section 1714.10” and stated that, before filing an amended pleading, Sierra Madre would have to file a Civil Code section 1714.10 petition.
Subdivision (a) of section 1714.10 provides: “No cause of action against an attorney for a civil conspiracy with his or her client arising from any attempt to contest or compromise a claim or dispute, and which is based upon the attorney’s representation of the client, shall be included in a complaint or other pleading unless the court enters an order allowing the pleading that includes the claim for civil conspiracy to be filed after the court determines that the party seeking to file the pleading has established that there is a reasonable probability that the party will prevail in the action. The court may allow the filing of a pleading claiming liability based upon such a civil conspiracy following the filing of a verified petition therefor accompanied by the proposed pleading and supporting affidavits stating the facts upon which the liability is based....”
Subdivision (c) states that section 1714.10 “shall not apply to a cause of action against an attorney for a civil conspiracy with his or her client, where (1) the attorney has an independent legal duty to the plaintiff, or (2) the attorney’s acts go beyond the performance of a professional duty to serve the client and involve a conspiracy to violate a legal duty in furtherance of the attorney’s financial gain.”
Sierra Madre argued its attached documentary evidence established a reasonable probability it would prevail on its claims but also argued subdivision (a) did not apply as its claims fell within the exceptions set forth in subdivision (c).
According to the allegations of the proposed first amended cross-complaint, Sierra Madre holds a 62.8% interest in One Carter Investors, LLC (Carter Investors); Carter Investors’ members also include Dorn Platz among other entities, and cross-defendant CastleGrace Acquisitions, LLC, an entity formed by Weinberg, also claims an interest in One Carter Investors. Carter Investors is itself a member of other limited liability companies, such that “the relationship may be shown as follows:
“Sierra MadreCarter Investors:
“Carter InvestorsCarter SPECarter LLCOne Carter Property
“Carter InvestorsStonehouse SPEStonehouse HomesStonehouse Properties[.]”
According to the proposed cross-complaint, Howard Weinberg was an employee of Greenberg Glusker (pursuant to a written agreement attached as Exhibit A to the pleading), working in the firm’s Century City office, and “[a]t all material times, ” provided legal services as an employee of Greenberg Glusker for Dorn Platz, Galletly, Galletly’s other entities including Dorn Platz’s alter egos (defined in the pleading), Carter Investors, and related entities and acted on their behalf in the formation, operation and eventual property acquisitions and financing for those acquisitions. Greenberg Glusker provided Weinberg with secretarial and paralegal support, as well as telephone, facsimile and e-mail services; Weinberg acted as Greenberg Glusker’s agent at all material times.
In addition, Greenberg Glusker represented Maranatha High School which was (1) the seller of the One Carter property and (2) a member of Carter SPE so certain Greenberg Glusker attorneys were representing Maranatha, seller of the One Carter property, while another Greenberg Glusker attorney (Weinberg) was representing the purchaser, One Carter and related entities.
According to the allegations, the One Carter property owned by Maranatha High School consisted of six parcels in the City of Sierra Madre; one parcel included a historic house (Lot 20) and a barn (Lot 18). Maranatha had originally planned to relocate its high school campus on the One Carter property and sought entitlements from the City of Sierra Madre to construct its high school, but the City would not approve the use, and Maranatha (represented initially by another firm) filed a discrimination lawsuit against the City. Maranatha’s Board of Directors then approached Galletly (Dorn Platz’s president whose children attended the school) to develop a proposal for real estate developers to acquire the property. Maranatha then retained Greenberg Glusker to represent it in negotiations for the acquisition of the former campus of Ambassador College in Pasadena from the World Wide Church of God. Greenberg Glusker assigned Howard Weinberg to assist Maranatha with the negotiations and documentation and in obtaining financing for the acquisition transaction.
Because Maranatha did not want to purchase the entire Ambassador Campus, Sierra Madre further alleged, Weinberg suggested to Galletly that he (Weinberg) and Galletly form an entity to purchase the portion Maranatha did not want. Galletly submitted a proposal to Maranatha for development of the One Carter property, and Maranatha asked Weinberg to advise the school on the proposal. Elizabeth Watson and Greg Hankins of Greenberg Glusker began representing Maranatha in its efforts to obtain entitlements from the City of Sierra Madre to develop the One Carter property as a residential subdivision. Documents attached as exhibits to the amended cross-complaint show the documents were filed by Greenberg Glusker in this regard, and identify Weinberg at Greenberg Glusker.
In its sixth cause of action for intentional misrepresentation, Sierra Madre alleged Galletly, his entities, Dorn Platz and related entities made material oral and written representations to induce Sierra Madre to invest in the Project with the intent that Sierra Madre rely on these representations, but Galletly and Dorn Platz knew the representations to be false at the time, based on a number of transactions kept secret from Sierra Madre as recounted in the cross-complaint. These entities, Weinberg and CastleGrace knew Sierra Madre would not invest any capital in the Project without the opportunity to conduct full due diligence unless there were certain safeguards in place to protect its investment and to insure no distributions were made (1) without its approval and (2) with the opportunity to require the cross-defendants to repurchase Sierra Madre’s membership interest and receive a return of its investment under such circumstances.
In late October 2005, Sierra Madre alleged, Galletly on behalf of himself and the Dorn Platz related entities represented: (1) the $2 million cash investment from Galletly and his entities and the $4.4 million received from Sierra Madre would be retained within Carter LLC to be utilized for the acquisition and development of the project; (2) none of the capital or loan proceeds would be distributed to any of the members or affiliates without Sierra Madre’s prior written approval; (3) there would be no expenditures in excess of $10,000 unless contained in a budget approved by Sierra Madre; and (4) Dorn Platz would not cause Carter Investors to enter into any agreements for the financing of the Carter LLC properties without Sierra Madre’s written approval. To induce Sierra Madre into believing such safeguards were in place, Galletly directed Weinberg to negotiate and prepare transactional documents which purported to implement these oral representations (and recounted details of the Equity Investments Agreement, the Put Agreement, the Put Guaranty and the Pledge Agreement drafted in this regard). Weinberg knew when he prepared these documents they contained false and misleading statements to induce Sierra Madre’s $4.4 million investment into the project, but he and Greenberg Glusker knowingly agreed to assist in the perpetration of this fraud. Weinberg also caused the CastleGrace cross-defendants to conspire with Galletly by providing $500,000 of equity investment to make up the difference between what Galletly had promised to invest ($2 million cash) and what Dorn Platz allegedly invested by way of an equity credit.
To this end, Sierra Madre alleged, Weinberg structured the One Carter Property purchase and sale transaction to artificially inflate the purchase price by approximately $3 million such that Sierra Madre’s $4.4 million contribution for the purchase and development of the project was actually disbursed to Galletly and related entities out of the Maranatha sale escrow. Also as a consequence, Weinberg received a personal benefit of loan fees for “brokering” the CapSource Loan, above and beyond his legal fees billed for representing the purchaser of the property, as a member of CastleGrace which had a 35% profit participation in StoneCarter Management LLC which in turn had a profit participation in One Carter SPE.
According to Sierra Madre’s allegations, Dorn Platz did not (and, at the time these representations were made, did not intend to) contribute $2 million in cash for its 28.57% interest in Carter Investors as required under the One Carter Investors Operating Agreement. Instead, Dorn Platz claimed credit for an “Equity Contribution” pursuant to an undisclosed 2003 option agreement between Dorn Platz and Maranatha which provided that Dorn Platz would take over responsibility for obtaining entitlements from the City of Sierra Madre for the One Carter Property and advance funds in return for a “split” of the net profits when the One Carter Property was sold. Sierra Madre never would have invested $4.4 million of its own funds had it known Galletly and the Dorn Platz entities were not also investing $2 million of their own money. Further, by taking unauthorized distributions from the escrow for the One Carter purchase, Galletly and his entities converted funds needed by Carter Investors to develop the project. Dorn Platz and the Galletly entities, with the aid of Weinberg and Greenberg Glusker and CastleGrace, actively concealed the true nature of Dorn Platz’s investment and the unauthorized distributions from Sierra Madre. As a result, Sierra Madre lost its $4.4 million investment and more.
Sierra Madre further alleged Greenberg Glusker also received a benefit beyond fees paid in the purchase and sale transaction by representing Maranatha because the firm also received a disbursement of $291,841.96 for fees billed earlier on unrelated legal matters performed on behalf of Maranatha. Not only did Weinberg and Greenberg Glusker receive these personal economic benefits, but also their conduct breached an independent duty owed to Sierra Madre not to conspire with Galletly and Dorn Platz in perpetrating a fraud against Sierra Madre.
In its seventh cause of action for breach of fiduciary duty, Sierra Madre alleged Dorn Platz, as managing member of Carter Investors, owed Sierra a fiduciary duty which included a duty to disclose known facts and not to take a personal gain at the expense of Carter Investors and other members of Carter Investors. Weinberg, individually and as Greenberg Glusker’s agent, aided and abetted the breaches of fiduciary duty by creating transactional documents structuring the One Carter Property purchase transaction such that $4.4 million of Sierra Madre’s funds were credited as “consideration” paid for the property being sold by Maranatha but were actually disbursed to Galletly and related entities in breach of the Equity Investment Agreement and Carter Investors Operating Agreement.
According to Sierra Madre’s allegations, Weinberg prepared the Equity Investment Agreement and related agreements and the One Carter Operating Agreement as amended and knew Galletly promised Dorn Platz and his entities would personally invest $2 million cash and further Sierra Madre had the right to “put” its interest when material representations in those documents turned out to be false and when additional capital calls were made without notice to Sierra Madre. Nevertheless, Weinberg caused CastleGrace to aid and abet Galletly’s breaches of duty in causing CastleGrace to pay 25% of Dorn Platz’s investment in Carter Investors and to participate in two capital calls. Weinberg kept CastleGrace’s initial investment and subsequent capital calls secret from Sierra Madre with the intent of aiding Dorn Platz’s and Galletly’s breaches of fiduciary duty.
In its opposition, Greenberg Glusker argued the petition was defective, claimed protection under the “agent’s immunity rule, ” and said it owed no fiduciary duty to Sierra Madre. After taking the matter under submission, the trial court issued an 11-page ruling, determining that section 1714.10 did not apply and permitting the filing of the cross-complaint.
The trial court found the allegations of Sierra Madre’s cross-complaint fell within the exceptions to the application of section 1714.10. “As a consequence of the 1 Carter Property sale and escrow, Weinberg through his membership interest in CastleGrace LLC received a personal benefit in the form of a profits interest for CastleGrace LLC in CarterStone Management LLC and also a $200,000 loan placement fee, above and beyond his fees billed for representing the purchaser of the property, One Carter LLC.... In addition, Greenberg Glusker received a benefit because it also received a payment of $291,841.96 for delinquent attorneys’ fees billed to Maranatha on unrelated legal matters involving the obtaining of entitlements on the 1 Carter Property and representing Maranatha in litigation against the City of Sierra Madre. Weinberg’s and Greenberg Glusker’s conduct breached an independent duty owed to Sierra Madre to not participate in a fraud and also constituted colluding with a disloyal fiduciary.”
“In short, the allegations of the complaint against Weinberg and Greenberg Glusker are that Weinberg, acting as an employee of Greenberg Glusker or at least in concert with it, as ‘of counsel, ’ structured the relevant purchase transaction in a manner which effectively siphoned off both funds and beneficial interests from Sierra Madre’s participation in favor of their clients Dorn Platz, Galletly and the Galletly entities all the while concealing that this was happening. In exchange for their aid, Weinberg received a share of the Galletly/Dorn Platz profits from the transaction and Greenberg Glusker received a gratuitous payment of delinquent fees against a separate client’s account. These allegations plead a scheme that is not a run-of-the-mill retaliatory allegation against opposing counsel in litigation. Therefore, the court finds the statute does not apply. Therefore, the court shall permit the proposed first amended cross-complaint (now likely the second amended cross-complaint) to be filed. The court’s ruling does not address the legal sufficiency of the cross-complaint.”
Greenberg Glusker appeals from the trial court’s July 27, 2009, order ruling on Sierra Madre’s Verified Petition pursuant to Civil Code section 1714.10.
DISCUSSION
We examined the law governing civil conspiracy and the application of section 1714.10 in our decision in Favila v. Katten Muchin Rosenman LLP (2010) 188 Cal.App.4th 189. “Civil conspiracy is not an independent tort.... ‘Standing alone, a conspiracy does no harm and engenders no tort liability. It must be activated by the commission of an actual tort.’” (Id. at p. 206, citations omitted.) “‘The essence of the [conspiracy] claim is that it is merely a mechanism for imposing vicarious liability; it is not itself a substantive basis for liability.’” (Ibid., citation omitted.) “‘Knowledge of the planned tort must be combined with intent to aid in its commission.’” (Ibid., citation omitted.)
“Section 1714.10 establishes special procedural requirements that must be satisfied before certain types of claims can be asserted against an attorney based on an alleged conspiracy between the attorney and his or her client. The statute as it currently reads is the product of legislative reaction to several appellate decisions.” (Favila, supra, 188 Cal.App.4th at p. 207.) In Favila, supra, 188 Cal.App.4th 189, we reviewed the development of this area of law “as helpful to an understanding of the statute’s limited scope and proper application....” (Id. at pp. 207-209.)
Section 1714, subdivision (a) provides: “No cause of action against an attorney for a civil conspiracy with his or her client arising from any attempt to contest or compromise a claim or dispute, and which is based upon the attorney’s representation of the client, shall be included in a complaint or other pleading unless the court enters an order allowing the pleading that includes the claim for civil conspiracy to be filed after the court determines that the party seeking to file the pleading has established that there is a reasonable probability that the party will prevail in the action. The court may allow the filing of a pleading claiming liability based upon such a civil conspiracy following the filing of a verified petition therefor accompanied by the proposed pleading and supporting affidavits stating the facts upon which the liability is based. The court shall order service of the petition upon the party against whom the action is proposed to be filed and permit that party to submit opposing affidavits prior to making its determination. The filing of the petition, proposed pleading, and accompanying affidavits shall toll the running of any applicable statute of limitations until the final determination of the matter, which ruling, if favorable to the petitioning party, shall permit the proposed pleading to be filed.”
“Section 1714.10 was originally enacted in 1988 in response to the Court of Appeal’s decision in Wolfrich Corp. v. United Services Automobile Assn. (1983) 149 Cal.App.3d 1206 [197 Cal.Rptr. 446] (Wolfrich), which held, although an insurance company’s attorneys could not be sued directly for violating Insurance Code section 790.03, they could be sued for conspiring with their client to commit unfair or deceptive acts or practices prohibited by the code. (Wolfrich, at p. 1211.) To prevent the assertion of conspiracy claims against attorneys ‘as a tactical ploy, particularly in actions against insurance companies’ (College Hospital Inc. v. Superior Court (1994) 8 Cal.4th 704, 718 [34 Cal.Rptr.2d 898, 882 P.2d 894]), former section 1714.10 required a prefiling judicial determination of probable merit for any claim against an attorney alleging the attorney had conspired with his or her client. (Stats. 1988, ch. 1052, § 1, pp. 3407–3408;... see Pavicich v. Santucci (2000) 85 Cal.App.4th 382, 390–391 [102 Cal.Rptr.2d 125] (Pavicich).)” (Favila, supra, 188 Cal.App.4th at pp. 207-208, footnotes omitted.)
“In 1989, however, the Supreme Court in Doctors’ Co. v. Superior Court (1989) 49 Cal.3d 39 [260 Cal.Rptr. 183, 775 P.2d 508] (Doctors’ Co.) disapproved Wolfrich, holding no claim for conspiracy to violate the Insurance Code could be maintained against an attorney retained by an insurance company to assist in the defense of an insured against a third party claim. (Id. at p. 41.) The court relied on the doctrine, commonly referred to as the ‘agent’s immunity rule, ’ that ‘[a] cause of action for civil conspiracy may not arise … if the alleged conspirator, though a participant in the agreement underlying the injury, was not personally bound by the duty violated by the wrongdoing and was acting only as the agent or employee of the party who did have that duty.’ (Id. at p. 44.) The court held, ‘[b]ecause the noninsurer defendants are not subject to [the only statutory duty toward plaintiff claimed to have been breached] and were acting merely as agents of the insurer “and not as individuals for their individual advantage” [citation], “they cannot be held accountable on a theory of conspiracy.”’ (Id. at p. 45.)” (Favila, supra, 188 Cal.App.4th at p. 208.)
“The court explained, however, ‘[i]t remains true, of course, that under other sets of circumstances “[attorneys] may be liable for participation in tortious acts with their clients, and such liability may rest on a conspiracy” [citations]. For example, an attorney who conspires to cause a client to violate a statutory duty peculiar to the client may be acting not only in the performance of a professional duty to serve the client but also in furtherance of the attorney’s own financial gain.’ (Doctors’ Co., supra, 49 Cal.3d at p. 46.) Additionally, a claim may lie ‘against an attorney for conspiring with his or her client to cause injury by violating the attorney’s own duty to the plaintiff.’ (Id. at p. 47.)
“Following the decision in Doctors’ Co., the Legislature debated whether the need for section 1714.10 had been eliminated. (See Sen. Com. on Judiciary, com. on Sen. Bill No. 820 (1991–1992 Reg. Sess.) May 7, 1991, p. 4 [‘[i]t is unknown whether there is a need for pleading hurdles to protect attorneys from the type of civil conspiracy claims permitted under the Doctors’ Company rational[e]’]; Pavicich, supra, 85 Cal.App.4th at p. 393.) Ultimately, the statute was amended in 1991 to apply only to situations in which it was alleged an attorney had engaged in a conspiracy with his or her client ‘arising from any attempt to contest or compromise a claim’(Stats. 1991, ch. 916, § 1, p. 4108) and to create, in a new subdivision (c), exceptions from the procedural requirements of section 1714.10 for the two situations described in Doctors’ Co.: ‘where (1) the attorney has an independent legal duty to the plaintiff, or (2) the attorney’s acts go beyond the performance of a professional duty to serve the client and involve a conspiracy to violate a legal duty in furtherance of the attorney’s financial gain.’ (See generally Pavicich, supra, 85 Cal.App.4th at pp. 393–394 [discussing legislative history of 1991 amendment to § 1714.10].)
As we noted in Favila, “This phrase suggests section 1714.10, subdivision (a)’s pleading hurdle applies only to situations in which the alleged conspiracy arose from the attorney’s representation of his or her client in a previous or current legal dispute or litigation with the plaintiff.” (Favila, supra, 188 Cal.App.4th at p. 209, fn. 16.)
“As the phrase is used in section 1714.10, subdivision (c), an attorney’s ‘independent legal duty to the plaintiff’ includes the ‘duty to abstain from injuring the plaintiff through express misrepresentation.’ (Doctors’ Co., supra, 49 Cal.3d at p. 48 [describing Younan v. Equifax Inc. (1980) 111 Cal.App.3d 498 [169 Cal.Rptr. 478] in which ‘agents were held subject to liability for conspiracy to commit actual fraud...’]; see Pavicich, supra, 85 Cal.App.4th at p. 397 [plaintiff permitted to sue attorney for conspiring with client because attorney had a duty to plaintiff to not commit fraud]; Shafer v. Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone [(2003) 107 Cal.App.4th [54, ] 84 [plaintiffs permitted to sue attorney for conspiring with insurance company to commit actual fraud because attorney ‘had a duty to refrain from injuring [plaintiffs] through express misrepresentation’].)
“The net effect of the agent’s immunity rule as articulated in Doctors’ Co., supra, 49 Cal.3d 39, and the statutory exceptions to the section 1714.10 procedural requirements now contained in subdivision (c) is to render that section practically meaningless.... If the plaintiff seeks to plead a conspiracy claim against an attorney based on fraud or virtually any other common law tort theory, the claim falls within section 1714.10, subdivision (c)(1); the procedural requirements of section 1714.10, subdivision (a), do not apply (that is, the plaintiff need not demonstrate a probability of prevailing on the merits); and the statute serves no screening function whatsoever. Similarly, even if the duty allegedly breached is one owed by the client but not the attorney (for example, the client has a fiduciary duty to the plaintiff), if the plaintiff alleges facts (or provides a factual description in the petition for leave to file the complaint) sufficient to negate the agent immunity rule at the pleading stage (by averring the attorney was acting outside his professional capacity and for his own personal gain), section 1714.10, subdivision (c)(2), excepts the pleading from subdivision (a)’s evidentiary requirements; and the statute again does not allow any preliminary evaluation of the merits of the case. (See Panoutsopoulos v. Chambliss (2007) 157 Cal.App.4th 297, 304 [68 Cal.Rptr.3d 647] [‘the exceptions in section 1714.10, subdivision (c) have the effect of exempting any viable attorney-client claims from section 1714.10’s requirements’]; Pavicich, supra, 85 Cal.App.4th at p. 395 [‘[W]hen an attorney is acting in his or her official capacity, there are only the situations articulated in Doctors’ Co., in which an attorney could be liable for conspiring with his or her client. Of course, these situations are specifically excepted from section 1714.10’s scope.’]; Berg [& Berg Enterprises, LLC v. Sherwood Partners, Inc. (2005)] 131 Cal.App.4th [802, ] 818 [§ 1714.10’s ‘gatekeeping function applies only to attorney-client conspiracy claims that are not viable as a matter of law in any event’].)” (Favila, supra, 188 Cal.App.4th at pp. 208-209.)
As a “preliminary observation, ” Greenberg Glusker asserts it is not vicariously liable for Weinberg’s conduct as Sierra Madre argues. Acknowledging the “strikingly similar” arguments addressed in PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384 (PCO), Greenberg Glusker nevertheless insists Sierra Madre’s reliance on this authority is misplaced as the case is factually distinguishable. We disagree.
In PCO, supra, 150 Cal.App.4th 384, the plaintiffs alleged Robert Shapiro and his law firm Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (Christensen, Miller) appeared as a criminal defendant’s counsel of record in federal criminal proceedings. According to the plaintiffs’ further allegations, Shapiro—acting for himself as well as Christensen, Miller—obtained several duffel bags full of cash which belonged to the plaintiffs and used this money to pay the fees of Shapiro and Christensen, Miller. (Id. at pp. 388-389.) Christensen, Miller filed a motion for summary judgment, arguing it could not be held vicariously liable for Shapiro’s conduct.
The firm presented evidence Shapiro was a nonequity partner in the firm; he maintained his criminal practice separate and apart from the firm; and he deposited the funds he received for representing the criminal defendant in his own separate account. (PCO, supra, 150 Cal.App.4th at pp. 389, 392.) However, there was other evidence, including a retainer agreement between the criminal defendant and Christensen, Miller (signed by Shapiro but also referencing the hourly fees of another attorney “of counsel” to the firm) relating to the federal charges. (Id. at pp. 392-393.)
According to Greenberg Glusker, this case must be distinguished because “there was a very clear and concise separate retainer between Dorn Platz and Weinberg.” Greenberg Glusker relies on the following language in the court’s discussion of law firm vicarious liability in PCO, supra, 150 Cal.App.4th 384: “Unless there is an agreement to the contrary, the retention of an attorney in a law firm constitutes the retention of the entire firm.... When a client retains a lawyer with such an affiliation, the lawyer’s firm assumes the authority and responsibility of representing that client, unless the circumstances indicate otherwise[.]” (Id. at p. 392, citations and internal quotations omitted.) In Greenberg Glusker’s view, the 2005 retainer agreement purporting to limit Dorn Platz’s representation to Weinberg alone, notwithstanding his “Of Counsel” status with Greenberg Glusker and use of offices within the firm, is dispositive.
Contrary to Greenberg Glusker’s characterization, however, the PCO case did not turn on the retainer agreement alone. Based on the court’s review of all of the evidence before it, the PCO court found “a reasonable jury could conclude that Shapiro participated in removing the money from the [criminal defendant’s] residence in an effort to help a client of the Christensen Firm post bail and to ensure that the Christensen Firm’s fees were paid or at least indirectly to serve the interests of the Christensen Firm.” (PCO, supra, 150 Cal.App.4th at p. 394.) “Moreover, any separate practice by Shapiro while he also was a partner in the Christensen Firm would not necessarily immunize the Christensen Firm from liability. ‘“‘[W]here the employee is combining his own business with that of his employer, or attending to both at substantially the same time, no nice inquiry will be made as to which business he was actually engaged in at the time of injury, unless it clearly appears that neither directly nor indirectly could he have been serving his employer.’”’” (PCO, supra, 150 Cal.App.4th at p. 394, quoting Farmers Ins. Group v. County of Santa Clara (1995) 11 Cal.4th 992, 1004, italics added, additional citation omitted.)
In this case, in addition to the retainer agreement between Weinberg and Dorn Platz, there is a prior retainer agreement between Dorn Platz and Greenberg Glusker, dated August 27, 1997, also stating, “Unless otherwise agreed in writing, the terms of engagement confirmed in this letter will also apply to any additional matters we handle on your behalf or at your direction.” We granted Sierra Madre’s request for judicial notice of Greenberg Glusker’s invocation of and reliance upon the 1997 retainer agreement between Greenberg Glusker and Dorn Platz in a related (now dismissed) appeal (B220641). That agreement is signed by Elizabeth Watson on behalf of Greenberg Glusker. According to Sierra Madre’s allegations, both Watson and Weinberg represented Maranatha and worked on the proposal to develop the One Carter Property at issue. According to Sierra Madre’s pleading, transactions were structured in such a way that Greenberg Glusker would be paid for its outstanding fees due from Maranatha.
At the very least, based on the allegations of Sierra Madre’s cross-complaint regarding Dorn Platz’s representation by both Weinberg and Greenberg Glusker in connection with the series of transactions underlying Sierra Madre’s claims, PCO makes clear that we cannot conclude as a matter of law Greenberg Glusker is not vicariously liable for the conduct of Weinberg as an attorney with the firm given the nature of Weinberg’s relationship to the firm as well as the clients involved in these transactions. (PCO, supra, 150 Cal.App.4th at pp. 391-394.)
Because Sierra Madre alleges facts supporting its theory Greenberg Glusker is vicariously liable for Weinberg’s conduct as an attorney with the firm and further alleges Weinberg conspired with the clients (1) to commit fraud through intentional misrepresentations and (2) to breach the clients’ fiduciary duties to Sierra Madre for his (Weinberg’s) own personal gain, it follows that section 1714.10’s prefiling requirement does not apply in this case.
Greenberg Glusker ignores the fact a claim properly lies “against an attorney for conspiring with his or her client to cause injury by violating the attorney’s own duty to the plaintiff.” (Favila, supra, 188 Cal.App.4th at p. 208.) In agreeing to put up its $4.4 million investment, Sierra Madre has alleged, it relied upon the representations of various safeguards Weinberg knew to be false when he drafted them into the transaction agreements and would not have invested had it known Dorn Platz never intended to honor these safeguards. “[I]f, as alleged here, an attorney commits actual fraud in his dealings with third parties, the fact that he did so in the capacity of attorney does not relieve him of liability. [Citations.]” (Pavicich, supra, 85 Cal.App.4th at p. 395.) Similarly, where an “attorney gives his client a written opinion with the intention that it be transmitted to and relied upon by the plaintiff in dealing with the client[, ]... the attorney owes the plaintiff a duty of care in providing the advice because the plaintiff’s anticipated reliance upon it is ‘the end aim of the transaction.’ [Citation.]’ [Citation.]” (Ibid.)
Moreover, according to Greenberg Glusker, the “financial advantage exception” (§ 1714.10, subd. (c)(2)) is inapplicable as the only benefit it received was the payment of attorney’s fees for its representation of a client (Maranatha, not Dorn Platz). Again, leaving to one side the issue of Greenberg Glusker’s receipt of fees (from a different client relating to a prior representation) as a result of the transaction involving Sierra Madre and Dorn Platz, Greenberg Glusker ignores Sierra Madre’s allegations of Weinberg’s personal financial gain (including “loan fees” for representing the purchaser of the property as well as profit participation as a member of one of the entities involved in the transactions). “[E]ven if the duty allegedly breached is one owed by the client but not the attorney (for example, the client has a fiduciary duty to the plaintiff), if the plaintiff alleges facts... sufficient to negate the agent immunity rule at the pleading stage (by averring the attorney was acting outside his professional capacity and for his own personal gain), section 1714.10, subdivision (c)(2), excepts the pleading from subdivision (a)’s evidentiary requirements; and the statute again does not allow any preliminary evaluation of the merits of the case.” (Favila, supra, 188 Cal.App.4th at p. 210, citations omitted.)
The trial court was correct in finding section 1714.10 to be inapplicable here.
Because Weinberg raised the prefiling requirement of section 1714.10 in his original demurrer and Greenberg Glusker joined in the arguments raised in Weinberg’s demurrer (in addition to filing its own), we reject Sierra Madre’s argument Greenberg Glusker waived the right to invoke any argument under section 1714.10.
DISPOSITION
The order is affirmed. Sierra Madre is entitled to its costs of appeal.
We concur: PERLUSS, P. J.ZELON, J.
Pursuant to subdivision (b), “Failure to obtain a court order where required by subdivision (a) shall be a defense to any action for civil conspiracy filed in violation thereof. The defense shall be raised by the attorney charged with civil conspiracy upon that attorney's first appearance by demurrer, motion to strike, or such other motion or application as may be appropriate. Failure to timely raise the defense shall constitute a waiver thereof.”
Under subdivision (c), however, section 1714.10 “shall not apply to a cause of action against an attorney for a civil conspiracy with his or her client, where (1) the attorney has an independent legal duty to the plaintiff, or (2) the attorney’s acts go beyond the performance of a professional duty to serve the client and involve a conspiracy to violate a legal duty in furtherance of the attorney’s financial gain.”
We deny Greenberg Glusker’s request for judicial notice of the trial court’s ruling on Weinberg’s subsequent demurrer to the seventh cause of action in the cross-complaint for breach of fiduciary duty.