Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of San Diego County, Super. Ct. No. GIC865252 Kevin A. Enright, Judge.
NARES, J.
The law firm Fisher Thurber LLP (Fisher Thurber) and attorney David A. Fisher (Fisher) appeal the court's overruling of their demurrer to the complaint brought by Eilhys England, individually and in her capacity as executrix for the estate of Colonel David H. Hackworth, Paul Warren, David Haidak and Ben Hackworth (collectively, plaintiffs). The complaint alleges a conspiracy between Fisher and Fisher Thurber, and their clients, Larry Wiese and Therapheresis, Inc. (Therapheresis), to defraud plaintiffs by convincing them to invest in Therapheresis and Colonel Hackworth to seek cancer treatment with Wiese.
Fisher and Fisher Thurber assert that the court erred in overruling their demurrer because plaintiffs failed to comply with Civil Code section 1714.10, subdivision (a)'s (section 1714.10(a)) requirement that a plaintiff bringing an 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 involving the attorney's representation of the client, must first demonstrate it is reasonably probable that he or she will prevail on the merits of the conspiracy claim.
All further statutory references are to the Civil Code unless otherwise specified.
We conclude that the court did not err in overruling Fisher and Fisher Thurber's demurrer because (1) the alleged conspiracy did not arise from an "attempt to contest or compromise a claim or dispute"; (2) the claims alleged in the complaint fell within section 1714.10, subdivision (c)(1)'s (section 1714.10(c)(1)) exception to section 1714.10(a)'s prefiling requirement because Fisher and Fisher Thurber owed an independent legal duty to plaintiffs; and (3) the complaint alleges causes of action against Fisher and Fisher Thurber not subject to section 1714.10(a).
FACTUAL AND PROCEDURAL BACKGROUND
A. The Complaint
In May 2006 plaintiffs filed their original complaint in this matter. According to the complaint, Colonel Hackworth was a highly decorated United States Army combat veteran, serving in the Korean and Vietnam wars. Following his military service, Colonel Hackworth became a bestselling author and a columnist and commentator on military affairs. England was Colonel Hackworth's wife.
Because we are reviewing the court's overruling of defendants' demurrer, we take as true all material facts pleaded in the complaint. (Frances T. v. Village Green Owners Assn. (1986) 42 Cal.3d 490, 496, fn. 2.)
In 2003 Colonel Hackworth was diagnosed with bladder cancer. He underwent surgery in August 2003, which was followed by chemotherapy. Although he was informed his bladder cancer was resolved, subsequent testing revealed suspected lung cancer, and he thereafter underwent further surgery and chemotherapy.
In May 2004, while undergoing conventional treatment for his cancer, Colonel Hackworth and England were introduced to Wiese. Wiese represented that he had developed a "pheresis therapy" program which he claimed was a better version of a proven treatment protocol Colonel Hackworth was considering. Wiese, along with his associate from Tijuana, Raoul Morales, promised to cure Colonel Hackworth's cancer or buy him more time to live while Wiese developed refinements of his treatment. Wiese represented to Colonel Hackworth and England that while traditional treatment methods offered a 30 percent chance of recovery, his treatment promised a 50 percent likelihood of survival.
In actuality, Wiese did not have the medical expertise, experience, equipment, drugs, chemicals or medicines to provide the treatment proposed. He was not a trained physician and had never provided his proposed treatment to humans, nor tested it on animals.
At Wiese's urging, Colonel Hackworth ceased conventional treatments and began being treated by Wiese's associate, Morales. Although Wiese promised that his treatment would be forthcoming within days, he repeatedly delayed the promised treatment. Wiese represented that the delay was caused by his need to test the treatment on canines and then on himself. However, the medical device Wiese claimed to have developed was never tested on dogs or humans.
Wiese represented that his treatment device was the "[H]oly [G]rail" of cancer treatment. However, during Wiese's treatment of Colonel Hackworth with the device in a dank, mold-infested, nonsterile room of a "purported" medical clinic in Tijuana that Wiese used to avoid restrictions imposed by United States and California law, the treatment device malfunctioned, causing blood to spew from Colonel Hackworth's orifices. Colonel Hackworth went into shock and was rushed to a Mexican hospital.
After being released from the hospital, Colonel Hackworth returned to San Diego and continued a "plasma exchange" treatment with Morales, under Wiese's direction. Colonel Hackworth consulted with a doctor because his hands and feet had turned blue. It was discovered that the "chemo port," which was used during the treatment with Wiese and Morales, suffered from septic infection, and the doctor ordered that it be removed.
Wiese still did not commence the promised treatment, and instead directed that Colonel Hackworth receive doses of "ozonides" through an IV. When Colonel Hackworth suffered bronchial and bladder infections, Wiese directed that further doses of ozonides be given to attack the infection. Shortly thereafter, Hackworth died.
In addition to inducing England and Hackworth to treat with him, Wiese solicited them to invest in his company, Therapheresis, so that he could spend less time trying to raise money for Therapheresis and instead focus on his treatment of Colonel Hackworth and further development of his cutting-edge cancer treatments. Colonel Hackworth and England relied upon Wiese's representations and personally invested in Therapheresis, and persuaded friends and family to make investments as well. Plaintiffs each purchased stock in Therapheresis pursuant to various offering documents that contained untrue, misleading and negligent statements concerning its financial condition, technology, prospects for future regulatory approvals, and actions taken and products designed. England and Warren purchased 50 shares each, and Haidak purchased 25 shares, at a cost of $1,000 per share.
In addition to England, Warren, and Haidak, the original complaint named as plaintiffs Colonel Hackworth's sons David Joel Hackworth and Ben Hackworth. The defendants named in the original complaint were Fisher, Fisher Thurber, Wiese, Therapheresis, and Morales.
David Hackworth was subsequently dismissed as a plaintiff in the action.
The original complaint alleged 12 causes of action for: (1) wrongful death; (2) elder abuse (physical abuse and neglect); (3) elder abuse (financial abuse); (4) intentional infliction of emotional distress; (5) negligent infliction of emotional distress; (6) fraud and deceit (intentional misrepresentation of fact); (7) fraud and deceit (suppression of fact); (8) fraud and deceit (negligent misrepresentation of fact); (9) securities fraud (material misrepresentation); (10) securities fraud (joint and several liability of management principals or materially aiding personnel); (11) securities fraud (joint and several liability of materially assisting persons); and (12) breach of fiduciary duty.
Fisher and Fisher Thurber were named as defendants on the 10th, 11th and 12th causes of action for securities fraud and breach of fiduciary duty. In those causes of action the complaint alleged that Fisher owned the third largest block of common stock in Therapheresis, consisting of 5.07 percent of the common stock, and that Fisher and Fisher Thurber drafted the offering documents (or materially assisted in doing so) and advised Therapheresis in the dissemination of the offering documents. The complaint further alleged that the offering documents contained material misrepresentations and omissions, and that Fisher had acted with the intent to deceive or defraud. The complaint alleged that Fisher and Fisher Thurber knew of and failed to disclose Wiese's illegal and negligent activities, and the true nature and status of Therapheresis's treatments and finances.
The original complaint was not served on any of the defendants and plaintiffs filed a first amended complaint.
B. The First Amended Complaint
In August 2006 plaintiffs filed a first amended complaint (hereafter the complaint), the operative pleading in this matter. The complaint restated the factual allegations, recited, ante. It removed the securities fraud claims and added new causes of action.
The complaint added causes of action against Fisher and Fisher Thurber alleging a conspiracy between them and Wiese, Therapheresis, and Morales to (1) commit financial elder abuse, based upon a conspiracy and agreement to fraudulently convince Colonel Hackworth and England to invest in Therapheresis; and (2) defraud plaintiffs, based upon a conspiracy and agreement to misrepresent the status of Therapheresis's treatments and finances in order to convince Colonel Hackworth and England to pursue treatment with Wiese and invest in Therapheresis. The last overt act of the conspiracy allegedly occurred when defendants "tried to cover up their fraud by purportedly offering to repurchase the Investor Plaintiffs' shares and thereby cause the investor plaintiffs to dismiss this lawsuit."
The complaint also added claims against Fisher and Fisher Thurber for (1) intentional misrepresentation, based upon material untrue and/or misleading statements and material omissions in the offering documents provided to Plaintiffs as potential investors in Therapheresis; (2) fraud, based upon material omissions from the offering documents; (3) fraud based upon misrepresentations about the value of Therapheresis as an investment and about the nature and quality of its treatments, including misrepresentations in the offering documents; and (4) legal malpractice, based upon Fisher and Fisher Thurber's participation in drafting and disseminating the Therapheresis offering documents. The complaint also restated the breach of fiduciary duty claim against Fisher and Fisher Thurber.
C. The Demurrer
Fisher and Fisher Thurber filed a demurrer seeking dismissal of all causes of action alleged against them on the basis that section 1714.10(a) required plaintiffs to comply with its prefiling requirement of showing that action had a reasonable probability of success on the merits, and plaintiffs had not complied with that requirement. Fisher and Fisher Thurber also demurred on the grounds that the conspiracy claims were barred by the "agent's immunity" rule and were impermissibly vague and uncertain. The demurrer also challenged the fraud, legal malpractice and breach of fiduciary duties claims, asserting that the claims did not state facts sufficient to state a cause of action, failed to plead facts supporting the requisite elements of the causes of action, and were impermissibly vague and uncertain.
Plaintiffs opposed the demurrer on the grounds that section 1714.10(a) did not apply to any of plaintiffs' claims. In the alternative, plaintiffs argued that even if the statute applied, their claims fell within both of the statutory exceptions to the prefiling requirements because Fisher and Fisher Thurber owed independent legal duties to plaintiffs and their actions were in furtherance of their own financial gain. Plaintiffs also argued in opposition to the demurrer that all of the claims against Fisher and Fisher Thurber stated a claim upon which relief could be granted and were properly pleaded.
D. Court's Order Overruling Demurrer
The court overruled the demurrer. The court held that section 1714.10(a) did not apply to any of plaintiffs' claims because the conspiracy claims did not "aris[e] from" any attempt to contest or compromise a claim or dispute. "Rather, as alleged, [plaintiffs'] . . . claims arise out of Wiese and Fisher's agreement to defraud decedent [Colonel Hackworth] by making false and misleading statements about and representing a false picture of [Therapheresis] which [Colonel Hackworth] relied upon in investing in the corporation." The court further held that Fisher and Fisher Thurber were not representing Wiese and Therapheresis in any claim or dispute involving Colonel Hackworth, and, accordingly, there was no effort to contest or settle any claim or dispute involving Colonel Hackworth.
The court rejected Fisher's and Fisher Thurber's argument that plaintiffs' allegation that the last overt act of the conspiracy was their offering to repurchase plaintiffs' shares in Therapheresis triggered application of section 1714.10(a). The court found that the language "arising from" in section 1714.10(a) relates to the origin of the conspiracy and not to the end of it and that the allegation regarding the offer to repurchase plaintiffs' shares was nothing more than a statement of the last overt act of the conspiracy.
The court also found that even if section 1714.10(a) could be considered to apply to plaintiffs' conspiracy or nonconspiracy claims, all of plaintiffs' claims fell within section 1714.10(c)'s exceptions because Fisher and Fisher Thurber had an independent duty not to violate the elder abuse statute and their status as attorneys did not vitiate that independent duty. Additionally, the court found that Fisher's acts were in furtherance of his own financial gain as Therapheresis's third largest shareholder over and above his compensation as an attorney and the financial gain of his law firm, Fisher Thurber.
The court rejected Fisher's and Fisher Thurber's argument that plaintiffs' claims were barred by the agent's immunity rule, finding that the financial advantage exception to that doctrine applied. Finally, the court found that each of plaintiffs' other stated causes of action against Fisher and Fisher Thurber alleged facts sufficient to constitute a cause of action.
DISCUSSION
I. STANDARD OF REVIEW
"A demurrer tests the legal sufficiency of factual allegations in a complaint." (Rakestraw v. California Physicians' Service (2000) 81 Cal.App.4th 39, 42-43.) In reviewing an order sustaining a demurrer to a cause of action, an appellate court exercises independent judgment in determining whether the complaint's factual allegations sufficiently state a cause of action. (Lazar v. Hertz Corp. (1999) 69 Cal.App.4th 1494, 1501.) We treat the demurrer as admitting all material facts that are properly pleaded. However, we do not assume the truth of contentions, deductions, or conclusions of fact or law. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318 .)
II. APPLICABLE AUTHORITY
A. Section 1714.10(a)
Section 1714.10(a) states: "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." (Italics added.)
Section 1714.10(a) "was intended to weed out the harassing claim of conspiracy that is so lacking in reasonable foundation as to verge on the frivolous." (Evans v. Pillsbury, Madison & Sutro (1998) 65 Cal.App.4th 599, 604 (Evans).) Failure to obtain such a court order is a defense that may be raised on demurrer. (§ 1714.10, subd. (b).)
B. Statutory Exceptions
In addition to the requirement that the alleged conspiracy arise from an "attempt to contest or compromise a claim or dispute," there are two statutory exceptions to the prefiling requirement of section 1714.10(a). Section 1714.10(a) does "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." (§ 1714.10(c)(1) & (c)(2).)
These two exceptions in section 1714.10(c)(1) and section 1714.10(c)(2) track the limits on attorneys' liability for conspiracy as delineated by the California Supreme Court in Doctors' Co. v. Superior Court (1989) 49 Cal.3d 39 (Doctors'). As the high court in Doctors' explained, a cause of action for conspiracy between an attorney and his or her client is not viable "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.) This is an application of the "agent's immunity rule," which holds that "'[a]gents and employees of a corporation cannot conspire with their corporate principal or employer where they act in their official capacities on behalf of the corporation and not as individuals for their individual advantage.' [Citation.] The rule 'derives from the principle that ordinarily corporate agents and employees acting for or on behalf of the corporation cannot be held liable for inducing a breach of the corporation's contract since being in a confidential relationship to the corporation their action in this respect is privileged.' [Citation.]" (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 512, fn. 4.)
However, in Doctors' the California Supreme Court also discussed two situations in which a conspiracy claim may lie against an attorney. First, "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', supra, 49 Cal.3d at p. 46.) The court held the agent's immunity rule "does not preclude the subjection of agents to conspiracy liability for conduct which the agents carry out 'as individuals for their individual advantage' and not solely on behalf of the principal [citation]." (Id. at p. 47.) A second exception to immunity lies for "claims against an attorney for conspiring with his or her client to cause injury by violating the attorney's own duty to the plaintiff." (Ibid.)
Under the exception provided by section 1714.10(c)(1), an attorney, just like any other person, owes a duty to abstain from committing actual fraud. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 346; Pavicich v. Santucci (2000) 85 Cal.App.4th 382, 395 (Pavicich) ["if 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"].) Thus, where a complaint alleges an attorney injured the plaintiff by making an express misrepresentation, the plaintiff can state a valid claim against the attorney for conspiracy and the requirements of section 1714.10 do not apply. (§ 1714.10, subd. (c)(1); Shafer v. Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone (2003) 107 Cal.App.4th 54, 74-75, 84 [insurer's attorney misrepresented scope of coverage provided to insured]; Pavicich, supra, 85 Cal.App.4th at pp. 386, 397-398 [attorney for venture misrepresented project's litigation woes to potential investor]; see also Berg & Berg Enterprises, LLC v. Sherwood Partners, Inc. (2005) 131 Cal.App.4th 802, 818 (Berg & Berg) [petition procedure of section 1714.10 does not apply to any viable conspiracy claim against an attorney].)
Further, under section 1714.10(c)(2) the prefiling approval requirement does not apply if the lawyer took action "in excess of his or her official representative capacity in service to his or her client" and "violated a legal duty running to the plaintiff . . . in furtherance of the lawyer's own financial advantage." (Berg & Berg, supra, 131 Cal.App.4th at p. 833.) An improper financial advantage is "a personal advantage or gain that is over and above ordinary professional fees earned as compensation for performance" of the legal representation. (Id. at p. 834.)
C. Exception for Causes of Action Other Than for Conspiracy
In Alden v. Hindin (2003)110 Cal.App.4th 1502 (Alden), the plaintiff sued an attorney, a law firm, and the attorney's former client for malicious prosecution and conspiracy without filing a petition under section 1714.10(a). (Alden, supra, 110 Cal.App.4th at p. 1504.) The law firm and attorney demurred. Although the trial court found that the cause of action for malicious prosecution did not allege a conspiracy between the defendant attorneys and their client, the court sustained the demurrer as to the entire complaint based upon section 1714.10(a). (Alden, supra, 110 Cal.App.4th at p. 1506 .)
The Court of Appeal reversed in part, holding that the failure to obtain prior approval to file the complaint pursuant to section 1714.10(a) did not affect the malicious prosecution cause of action. Even though the conspiracy cause of action "may have been redundant of the malicious prosecution cause, . . . the latter was independently and sufficiently stated." (Alden, supra, 110 Cal.App.4th at p. 1507 .) The appellate court explained that the clause in section 1714.10(a) which states "the pleading that includes the claim for civil conspiracy" may not be reasonably read to mean that the entire complaint must be dismissed merely because the plaintiff failed to obtain prefiling approval as to the one cause of action which pleads conspiracy. (Alden, supra, 110 Cal.App.4th at p. 1507 .)
The Alden court went on to state that noncompliance with section 1714.10(a) would not "require dismissal of otherwise exempt causes of action, for actual fraud [citation], breach of fiduciary duty [citation], or for that matter any other claims against the attorney" simply because a conspiracy cause of action, which is subject to section 1714.10, was alleged among them. (Alden, supra, 110 Cal.App.4th at p. 1508 .) "There is no evidence that the drafters of section 1714.10 intended such a gratuitously destructive result, and the language of subdivision (b) clearly shows that they did not." (Alden, supra, at p. 1508.)
III. ANALYSIS
A. The Claims Did Not Arise Out of an Attempt To Contest or Compromise a Claim or Dispute
Here, plaintiffs' conspiracy claims do not arise from an "attempt to contest or compromise a claim or dispute" as required by section 1714.10(a). (§ 1714.10(a).) Rather, accepting the complaint's allegations as true, as we must, they arise from Wiese and Fisher and Fisher Thurber's agreement to defraud Colonel Hackworth and England by making false representations and misleading statements and representing a false picture of Therapheresis and Wiese's cancer treatments, which plaintiffs relied upon in investing in Therapheresis, and England and Colonel Hackworth relied on in deciding to accept Wiese's cancer treatment. At the time Wiese, Fisher and Fisher Thurber induced plaintiffs to invest in Therapheresis and Colonel Hackworth commenced treatment with Wiese there was no claim or dispute between the parties, Fisher and Fisher Thurber were not representing Wiese and Therapheresis in regards to any such claim or dispute, and the alleged conspiracy did not arise out of any attempt to "contest or compromise" such a claim or dispute.
The plain language of section 1714.10(a) reveals that it was intended to apply to situations where 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. Section 1714.10 was enacted to prevent the use of such "frivolous conspiracy claims that were brought as a tactical ploy against attorneys and their clients that were designed to disrupt the attorney-client relationship." (Berg & Berg, supra, 131 Cal.App.4th at p. 816.)
Despite the fact that the alleged conspiracy did not arise from any attempt to contest or compromise a claim or dispute, Fisher and Fisher Thurber assert section 1714.10(a) is applicable because the last overt act of the conspiracy was alleged to have been defendants' attempt "'to cover up their fraud by purportedly offering to repurchase the [plaintiffs'] shares in Therapheresis in an effort to convince [plaintiffs] to dismiss this lawsuit.'" Because this allegation referenced actions taken by defendants after the dispute arose and the complaint was filed, and alleged an attempt to resolve the dispute with plaintiffs, they assert the terms of section 1714.10(a) are triggered. This contention is unavailing.
Section 1714.10(a) does not apply to cases where the "last overt act" of the conspiracy is an attempt to contest or compromise a claim or dispute. Rather, it only applies to conspiracies arising from such actions. "The phrase 'arising out of' is equated with origination, growth or flow from the event." (Hartford Accident & Indem. Co. v. Civil Service Employees Ins. Co. (1973) 33 Cal.App.3d26, 32.) The term "arise" means "to spring up, originate, come into being or notice; to become operative, sensible, visible, or audible; to present itself." (Black's Law Dict. (6th ed. 1990) p. 108, col. 1; see also Palmer v. Agee (1978) 87 Cal.App.3d 377, 386 ["'arise' means to originate from specified source or to come into being"].) The conspiracy claims alleged here did not "arise from" defendants' alleged offer to repurchase the investor plaintiffs' shares. They originated from defendants' alleged fraudulent activity that induced the plaintiffs to invest in Therapheresis and Colonel Hackworth to treat with Wiese. It is undisputed that there was no attempt to contest or compromise a claim or dispute at that time, as there was no claim or dispute.
Fisher and Fisher Thurber assert that we should interpret the term "arising from" to have the same meaning as that same term contained in Code of Civil Procedure section 425.16, the anti-SLAPP statute protecting a person's right of petition or free speech, which has similar language, and also requires a determination there is a probability of success on the merits before such an action may proceed. Court's have interpreted the term "arising from" in that statute to mean a cause of action that "was based on an act in furtherance of the defendant's right of petition or free speech." (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 78.)
Code of Civil Procedure section 425.16, subdivision (b)(1) provides: "A cause of action against a person arising from any act of that person in furtherance of the person's right of petition or free speech under the United States or California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim." (Italics added.)
However, defining the term "arising from" to mean "based on" is consistent with the definitions stated above. The alleged conspiracy in this case is not "based on" actions Fisher and Fisher Thurber took after the complaint was filed, but rather the actions they took in inducing plaintiffs to invest in Therapheresis and Colonel Hackworth to treat with Wiese. The "basis" of something is: "[A]nything upon which something is based; fundamental principle; groundwork." (Random House Dict. (2d ed 1993) p. 174.) Thus, the terms "a cause of action arising from" and a "cause of action based upon" are largely synonymous as both look to the foundation, origin or root of the claim.
The "last overt act" allegation by contrast is merely a required allegation in conspiracy claims to denote the running of the statute of limitations. (See Aaroe v. First American Title Ins. Co. (1990) 222 Cal.App.3d 124, 128.) It certainly does not form the basis, foundation or gravamen of the cause of action. For this reason, as a case interpreting the anti-SLAPP statute has explained, it does not trigger a prelitigation merits determination: "[I]t is the principal thrust or gravamen of the plaintiff's cause of action that determines whether the anti-SLAPP statute applies [citation], and when the allegations referring to arguably protected activity are only incidental to a cause of action based essentially on nonprotected activity, collateral allusions to protected activity should not subject the cause of action to the anti-SLAPP statute." (Martinez v. Metabolife Internat., Inc. (2003) 113 Cal.App.4th 181, 188.)
Defendants assert that regardless of the origin of the conspiracy, because the repurchase offer allegations alleged an attempt to compromise a claim, and thus triggered the statute, the entire cause of action was subject to section 1714.10(a). In support of this contention defendants cite Evans, supra, 65 Cal.App.4th 599. In that case, a limited partnership and its general partner were represented by a law firm. An attorney at the law firm was both an officer of the general partner and a limited partner. The limited partnership and its general partner filed a declaratory relief action against two limited partners concerning the nature of their investments. The latter parties cross-complained against the limited partnership, its general partner, the lawyer, and his law firm. One cause of action alleged a conspiracy between the attorney and the law firm. The trial court overruled their demurrer to the conspiracy claim, but the Court of Appeal reversed. (Id. at pp. 601-602.)
In doing so, the Court of Appeal in Evans first noted there was "no question that the civil conspiracy cause of action . . . was one 'arising from an[] attempt to contest or compromise a claim or dispute, and which is based upon the attorney's representation of the client' within the plain language of [section 1714.10(a)]." (Evans, supra, 65 Cal.App.4th at p. 604.) The issue before the Court of Appeal concerned whether section 1714.10(c)'s exceptions applied. As for the first exception, the court concluded the cross-complaint contained "no allegations that can reasonably be construed as raising the issue of independent duties appellants . . . owed to respondents as limited partners . . . ." (Evans, supra, 65 Cal.App.4th at p. 605 .) The court agreed the second exception would "reach respondents' complaint against [the attorney]," but not the law firm, as he was alleged to be acting for his personal financial advantage. (Id. at p. 607.) The court then stated, "The difficulty is that the tainted and the permissible were conjoined in a single cause of action in respondents' amended cross-complaint." (Id. at p. 607.) Because section 1714.10(a) is triggered against any "cause of action" in a pleading, "[i]nsofar as section 1714.10 is concerned, respondents' civil conspiracy count must survive or fall as a single unit. In this case it fails because it includes [the law firm], which is entitled to the protections of the prefiling procedures. The conspiracy cause of action was therefore an unauthorized filing . . . ." (Evans, supra, 65 Cal.App.4th at p. 607.)
Evans is distinguishable from the instant action as in that case it was undisputed that the entire cause of action arose from an attempt to contest or compromise a claim or dispute within the terms of section 1714.10(a). As we have discussed, ante, in this case the conspiracy claims do not, and the addition of the repurchase offer allegations do not trigger application of section 1714.10(a). Evans only held that where a conspiracy cause of action that is subject section 1714.10(a) is pleaded against a party to whom no exception applied, and one who did adequately plead an exception, the entire cause of action must fail. We do not have that situation here.
Finally, a demurrer asserting section 1714.10 as a defense is governed by the standards applicable to general demurrers. (Pavicich, supra, 85 Cal.App.4th at p. 389; see also Evans, supra, 65 Cal.App.4th at pp. 606-607 .) Thus, to the extent the allegation of Fisher and Fisher Thurber's postfiling conduct standing alone would be subject to section 1714.10(a) because dismissal of that allegation would not dispose of the entire cause of action, it is not properly the subject of a demurrer. (Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1046-1047 [defective part of cause of action not ground for demurrer].)
B. The Section 1714.10 (c)(1) Exception Applies
Because we hold the action does not arise from an attempt to contest or compromise a claim and the exception provided by section 1714.10(c)(1) applies, we need not determine whether the exception provided by section 1714.10(c)(2), the "personal financial gain" exception, also applies. We note, however, that it is an open question whether this exception applies as the Therapherasis stock Fisher received was compensation for legal work he performed on their behalf. To fall within the section 1714.1(c)(2) exception, the defendant must have a personal financial interest "over and above monetary compensation received in exchange for professional services actually rendered on behalf of a client." (Berg & Berg, supra, 131 Cal.App.4th at p. 836.)
As stated above, Fisher and Fisher Thurber had an independent duty "to abstain from injuring [plaintiffs] through express misrepresentation." (Pavicich, supra, 85 Cal.App.4th at p. 397.)
For example, in Pavicich, supra, 85 Cal.App.4th at page 389, the defendant was the attorney for a corporation, limited partnership and an individual shareholder. With his help, a shareholder sought an infusion of cash for the business. The attorney helped induce an individual to invest in the enterprise. The deal went bad, and the investor sued the attorney and his client for conspiring to hide the truth about the risks of the investment. The plaintiff did not prepetition the court under section 1714.10(a) for leave to sue the attorney, and the attorney filed a demurrer on that basis. The court overruled the demurrer, and the attorney appealed. (Pavicich, supra, 85 Cal.App.4th at pp. 386-388.)
The Court of Appeal affirmed, holding section 1714.10(a) did not apply because the attorney owed an independent legal duty to the plaintiff not to commit fraud. The attorney violated this duty by misrepresenting to the plaintiff the lack of risk to the investment. (Pavicich, supra, 85 Cal.App.4th at pp. 397-398.)
In this case as well, the allegations of the complaint establish that it is subject to the "independent legal duty" exception contained in section 1714.10(c)(1). Both conspiracy counts, conspiracy to defraud and conspiracy to commit elder abuse, allege independent legal duties on the part of Fisher and Fisher Thurber: not to defraud plaintiffs and not to commit elder abuse in violation of Welfare and Institutions Code section 15610.30. They allegedly conspired with Wiese and Therapheresis to commit these wrongs. Thus, the fact that Fisher and Fisher Thurber were also acting as counsel for Therapheresis is of no moment.
C. Nonconspiracy Causes of Action Are Not Subject to Section 1714.10
It is also clear that the claims other than conspiracy are not affected by section 1714.10. In addition to two causes of action for conspiracy, plaintiffs have alleged three causes of action for fraud, one cause of action for legal malpractice, and one for breach of fiduciary duty against Fisher and Fisher Thurber. As discussed, ante, such nonconspiracy claims do not trigger section 1714.10(a). (Alden, supra, 110 Cal.App.4th at p. 1508.)
Fisher and Fisher Thurber rely upon Berg & Berg, supra, 131 Cal.App.4th 802in asserting that the nonconspiracy claims must be dismissed under section 1714.10(a). In that case, the plaintiff was the largest creditor of a debtor corporation, sued the assignee of the debtor's assets for the benefit of its creditors. The plaintiff later sought leave to amend its complaint to name the assignee's law firm as a defendant in causes of action for declaratory relief, accounting, waste of corporate assets, and conspiracy to waste corporate assets. The essence of the plaintiff's claims was that the law firm had performed unnecessary and unreasonable services and charged excessive fees for those services, which were paid by the assignee from the assigned assets. (Berg v. Berg, supra, at p. 813.) The assignee, represented by the law firm, opposed the plaintiff's motion for leave to amend, arguing that the plaintiff had failed to comply with section 1714.10 or meet its burden of proof of showing a probability of success on the merits. The trial court granted leave to amend without deciding the section 1714.10 issues. The assignee and law firm appealed the order granting leave to amend. (Berg & Berg, supra, 131 Cal.App.4th at pp. 809-810.)
The Court of Appeal reversed, holding that all of the claims stated against the law firm were subject to section 1714.10(a): "[T]he amendments outlined the factual basis for the conspiracy claim in introductory, general allegations that were incorporated into every cause of action. More fundamentally, all the allegations regarding [the law firm's] conduct, regardless of the label on the cause of action, arose out of its agreement to represent [its client] and conduct in which it jointly engaged with its client . . . in the course of that legal representation. And the actual claim for conspiracy merely repeated allegations against [the law firm] that were first leveled elsewhere in the pleading. Under these circumstances, the factual basis for the conspiracy claim-which is derivative in any event-is so intertwined with the other causes of action pleaded against [the law firm] that it is not severable for purposes of our review under section 1714.10. In other words, all the claims alleged against [the law firm] involve conduct that falls within the ambit of the statute regardless of the labels attached to the particular causes of action. . . . Anything less would afford incomplete review of the attorney-client conspiracy issues based on the way in which [the plaintiff] opted to plead its amended claims, which as against [the law firm], would all give rise only to vicarious and conspiratorial, as opposed to direct, liability for its joint conduct with its client." (Berg & Berg, supra, 131 Cal.App.4th at pp. 820-821, italics added.)
In this case, plaintiffs have stated claims against Fisher and Fisher Thurber alleging direct, not merely vicarious, liability. Plaintiffs alleged Fisher and Fisher Thurber made misrepresentations concerning Therapheresis in the offering documents they prepared and failed to disclose the true facts concerning Therapheresis's financial condition and prospects, and Wiese's cancer treatments. As discussed, ante, in this case plaintiffs have alleged sufficient facts to state an independent duty owed to by Fisher and Fisher Thurber to plaintiffs, over and above the duty owed to their client Therapheresis. (See Alden, supra, 110 Cal.App.4th at p. 1506 ["Although directed at both the client . . . and her attorneys . . . the malicious prosecution cause of action did not charge the attorneys with liability for conspiring with their client. Rather, it alleged the attorneys themselves had acted without probable cause and with malice in bringing suit against plaintiff"].)
D. Agent's Immunity Defense
Fisher and Fisher Thurber assert that plaintiffs' claims are barred by the "'agent's immunity rule'" because (1) they acted within the course and scope of their agency relationship on behalf of Therapheresis; and (2) they did not owe an independent duty to plaintiffs. We reject this contention.
As discussed, ante, section 1714.10 is a codification of the "agent's immunity rule" as laid out in Doctors', supra, 49 Cal.3d 39. That rule does not apply where, as specified in section 1714.10(c)(1) and (2), the attorney and/or law firm (1) owe an independent duty to the plaintiff; or (2) have a personal financial interest in the matter over and above their compensation as attorneys. As we have already concluded that plaintiffs' allegations as to Fisher and Fisher Thurber fall within the exception provided by section 1714.10(c)(1), the agent's immunity rule does not apply.
DISPOSITION
The order overruling defendant Fisher and Fisher Thurber's demurrer is affirmed. Plaintiffs shall recover their costs on appeal.
WE CONCUR: McCONNELL, P. J., IRION, J.