Williams v. Lucas CA2/7

Filed 1/19/24 Williams v. Lucas CA2/7

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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not been certified for publication or ordered published for purposes of rule 8.1115.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

SECOND APPELLATE DISTRICT

DIVISION SEVEN

WILBUR WILLIAMS, JR et al., B327061

Plaintiffs and Appellants, (Los Angeles County

Super. Ct.

v. No. 22STCV14857)

CAROL LUCAS et al.,

Defendants and

Respondents.

APPEAL from an order of the Superior Court of Los

Angeles County, Barbara M. Scheper, Judge. Affirmed in part,

reversed in part and remanded with directions.

Nick A. Alden for Plaintiffs and Appellants.

Loeb & Loeb and W. Allan Edmiston for Defendants and

Respondents.

__________________________

Wilbur Williams, Jr., M.D.,1 and his professional

corporation, Wilbur Williams, Jr., M.D., Inc. (the Corporation;

collectively, the Williams plaintiffs), appeal from an order of

dismissal entered as to defendants Buchalter APC and Carol

Lucas (collectively, the Buchalter defendants) after the trial

court sustained without leave to amend the Buchalter

defendants’ demurrer to the complaint. The Williams plaintiffs

asserted causes of action for conspiracy to defraud, financial elder

abuse, and declaratory relief against the Buchalter defendants

based on allegations that Lucas, an attorney and shareholder at

Buchalter, conspired with Sevana Petrosian, who was Williams’s

business partner and managed several medical clinics where

Williams conducted his medical practice, to deceive Williams into

believing Buchalter represented him and to induce him to enter

contracts that allowed Petrosian to embezzle more than $11

million dollars from the Corporation. In sustaining the

demurrer, the trial court found all claims against the Buchalter

defendants were barred by the one-year statute of limitations

governing claims against an attorney “for a wrongful act or

omission, other than actual fraud, arising in the performance of

professional services” under Code of Civil Procedure

section 340.6, subdivision (a).2

1 Williams died during the pendency of this appeal. On

May 12, 2023 we granted the motion of his widow Gail Dee Lew-

Williams to be substituted in place of Williams as his successor in

interest.

2 All further undesignated statutory references are to the

Code of Civil Procedure.

2

On appeal, the Williams plaintiffs contend the one-year

statute of limitations under section 340.6, subdivision (a), does

not apply to their claims because the gravamen of their action is

actual fraud. We agree the complaint sufficiently alleged the

Buchalter defendants conspired to commit actual fraud, such that

section 340.6 does not apply and the Corporation’s conspiracy

cause of action survives demurrer. However, Williams’s

individual conspiracy claim fails because, as alleged, only the

Corporation was defrauded. Moreover, the complaint fails to

state claims for financial elder abuse and declaratory relief.

We reverse the order of dismissal and the order sustaining

the demurrer and direct the trial court to enter a new order

overruling the demurrer to the Corporation’s cause of action for

conspiracy to defraud and sustaining without leave to amend the

demurrer to the Corporation’s remaining causes of action and

Williams’s cause of action for conspiracy to defraud.

FACTUAL AND PROCEDURAL BACKGROUND

A. The Complaint

The Williams plaintiffs filed this action on May 4, 2022

against the Buchalter defendants and Petrosian, her associates

Salina Ranjbar, Vana Mehrabian, and Staforde Palmer,

Petrosian’s wholly owned company Petrosian Esthetic

Enterprises LLC (Petrosian Esthetic), and seven limited liability

companies Petrosian formed to operate individual medical spas

under the name “SEV Laser Aesthetics” (the SEV companies;

3

collectively, the Petrosian defendants).3 The complaint alleged

six causes of action, three of which were asserted against Lucas

or the Buchalter defendants: the first cause of action for

conspiracy to defraud, the third cause of action for financial elder

abuse, and the sixth cause of action for declaratory relief.4

3 On September 22, 2021 the Williams plaintiffs filed a

petition, including a draft complaint, seeking court approval to

file an action against the Buchalter defendants for civil

conspiracy with a client pursuant to Civil Code section 1714.10.

(Wilbur Williams, Jr., M.D., et al. v. Carol Lucas, et al. (Super.

Ct. Los Angeles County, 2021, No. 20STCP03133).) On February

3, 2022 the trial court found the alleged conspiracy to defraud the

Williams plaintiffs arose from “transactional activities” carried

out by the Buchalter defendants and did not arise “from any

attempt to contest or compromise a claim or dispute” within the

scope of Civil Code section 1714.10, subdivision (a), and therefore

the Williams plaintiffs could file their complaint without

obtaining court approval.

4 The complaint also asserted causes of action for breach of

contract, breach of the covenant of good faith and fair dealing,

and conspiracy to defraud against one or more of the Petrosian

defendants. The allegations asserted against these defendants

overlap with allegations by the Williams plaintiffs in the related

actions Wilbur Williams, Jr., M.D., et al. v. Sevana Petrosian, et

al. (Super. Ct. Los Angeles County, 2020, No. 20STCV14137) and

Wilbur Williams, Jr., M.D., et al. v. Wells Fargo Bank, N.A.

(Super. Ct. Los Angeles County, 2020, No. 20STCV15993).

The Buchalter defendants request we take judicial notice of

the Los Angeles Superior Court online case summaries for these

related actions for the purpose of establishing the date on which

the actions were filed. The Buchalter defendants made a similar

request in the trial court that the court take judicial notice of

various pleadings in the related actions, but the court did not

4

As alleged in the complaint, in late 2013 Williams and

Petrosian entered into discussions for Petrosian to act as the non-

medical manager of medical spas where Williams would conduct

his practice. Williams was then 77 years old and in apparent

poor health. Williams and Petrosian “decided to act through

their respective corporations.” Williams’s longstanding

accountant, Leila Aquino, met with Petrosian to discuss the

preparation of a contract that would govern the parties’

arrangement and suggested a few law firms to assist them.

However, Petrosian stated she already had contacted a lawyer,

later identified as Lucas, “who agreed to represent both parties

and prepare a contract that is fair to both parties.” Petrosian set

up a meeting with Lucas.

On April 12, 2014 Williams and Aquino met with Petrosian

and Lucas at Buchalter’s offices (April 12 meeting). Lucas did

not tell Williams that she did not represent him, nor did she ask

him if he was represented by counsel. Lucas’s statements and

conduct during the meeting led Williams and Aquino “to believe

Petrosian’s representations to them, that Lucas represented both

Parties and prepared a fair contract.” Lucas never disclosed that

she had been representing Petrosian for over a year.

rule on their request. We deny the request to take judicial notice

of any trial court records in the related actions because the

records are not relevant to our resolution of this appeal. Because

we find the Williams plaintiffs’ claims were filed within the

applicable statute of limitations, we do not reach the Buchalter

defendants’ arguments that the pleadings in the related actions

contain admissions bearing on accrual of the Williams plaintiffs’

claims.

5

During the meeting, Lucas had in front of her a

“Management Services Agreement” that she referred to a few

times. She briefly explained to Williams that the laws governing

the corporate practice of medicine prohibit non-physicians from

owning a medical practice, and then she “immediately moved to

convince and advise Dr. Williams to grant [Petrosian Esthetic] a

power of attorney and Petrosian the right to sign checks and to

pay bills,” explaining this would be necessary for Petrosian

Esthetic to operate a clinic, collect patient payments, and make

bank deposits on behalf of Williams’s medical practice. “In

reliance on Petrosian’s representation that Lucas represented

both Parties and prepared a fair contract, reinforced by Lucas’s

conduct and statements during the meeting,” on April 12, 2014

Williams signed the management services agreement without

reading it.

A copy of the executed management services agreement

between the Corporation and Petrosian Esthetic was attached to

the complaint. The recitals state the Corporation “desires to

engage the services of [Petrosian Esthetic] to perform certain

non-professional functions for [the Corporation], in order to

permit [the Corporation] to concentrate its efforts on the

Practice.”’ The “Practice” was defined as the provision of medical

cosmetic services at medical spa locations in Glendale and West

Hollywood. Under the agreement, the Corporation appointed

Petrosian Esthetic as its attorney-in-fact for a wide range of non-

medical functions, including collecting payments, making

deposits, and other banking functions on the account of the

Corporation (including making payments to Petrosian Esthetic

for management services and expenses). Petrosian Esthetic was

responsible for providing numerous services on behalf of the

6

Corporation with respect to the practice, including accounting,

financial, and legal services, the employment of non-physician

personnel, providing and maintaining furniture, fixtures and

equipment, and marketing. The agreement also provided

Petrosian Esthetic would sublease space to the Corporation.

Under the agreement, a copy of any notices served pursuant to

the agreement would be sent to the attention of Lucas at

Buchalter’s Los Angeles office.

The complaint alleged on information and belief that “from

the onset Lucas knew of Petrosian’s intent to own the Practice,

take all the profits and pay Dr. Williams some kind of salary and,

upon termination of the agreement, Petrosian intended to take

over the Practice,” and Lucas drafted the management services

agreement “in a way to allow Petrosian to achieve her intended

scheme.”

Beginning in 2016 the medical practice expanded to seven

new clinic locations, and Lucas, on behalf of Petrosian, formed

and registered the SEV companies, one for each new location.

Each of the SEV companies then entered into a management

services agreement with the Corporation regarding Williams’s

medical practice at the individual locations. Relying on

Petrosian’s representation that the seven management services

agreement were identical to the April 12, 2014 management

services agreement and that they were prepared by Lucas,

Williams signed each agreement on behalf of the Corporation,

again without reading the agreements. Each of the management

services agreements provided that the respective SEV company

would be entitled to actual out-of-pocket costs in providing

7

management services plus a management fee of 15 percent of

those costs.5

In January 2020 the Corporation received a tax form from

its credit card processing company indicating the practice had

collected credit card payments exceeding $7.5 million in 2019,

although in 2019 the Williams plaintiffs had only received

$155,000 from the Petrosian defendants. Petrosian had claimed

the $155,000 was the net profit from operations. Williams was

surprised by the disparity and consulted an attorney in February

2020. With the help of an accountant, Williams reviewed the

Corporation’s bank records and determined gross income to the

Corporation during 2019 exceeded $10.2 million, with estimated

profits of about $6 million.

On February 17, 2020 the parties mutually agreed to

terminate their relationship effective April 30, 2020. Following

the termination, Petrosian allegedly “took over” the entire

practice, including the equipment, patients and employees,

without compensating Williams, and she denied Williams access

to the clinics. The Petrosian defendants relied on a provision of

the management services agreements to claim ownership of the

practice.6

5 A copy of the October 29, 2018 management services

agreement between the Corporation and SEV Laser Aesthetics-

San Jose, LLC was attached to the complaint as an example of

the post-2018 management services agreements the Corporation

entered into with the SEV companies.

6 Paragraph 4.8 of the management services agreement

provides, “[Petrosian Esthetic] has the legal right to occupy the

space occupied by the Practice . . . and grants to [Corporation] the

8

The Williams plaintiffs calculated that between January 1,

2017 and March 31, 2020, the practice generated gross revenues

of about $20 million, with estimated overhead of $8 million, but

they only received about $400,000 in purported net profits during

this period. The complaint alleges on this basis the Petrosian

defendants embezzled about $11.4 million from the Corporation.

Moreover, in early 2020 the Petrosian defendants withdrew

about $2.2 million from the Corporation’s bank accounts,

including more than $700,000 in cash withdrawals. In response

to an inquiry from the Williams plaintiffs’ attorney about the

withdrawals, Lucas stated the funds were charged by Petrosian

as a “license fee,” and Lucas produced a set of agreements

executed in 2019 between the SEV companies and Petrosian

Esthetic under which each SEV company licensed the intellectual

property relating to the “SEV Laser” brand from Petrosian

Esthetic. Williams was previously unaware of these agreements,

under which the Petrosian defendants collected $2.1 million a

year in intellectual property license fees.

Lucas denied ever representing Williams or the

Corporation, and she denied preparing the management services

agreements. Lucas also claimed Buchalter had never billed the

Corporation for legal services. However, in 2017 Petrosian

Esthetic paid nearly $8,000 to Buchalter, and in 2018 two of the

SEV companies paid nearly $30,000 in “legal fees” to the firm.

Thus, “Lucas has been paid dozens of thousands of dollars every

year by the [p]ractice of Dr Williams, at the same time Lucas was

right to use the Premises for the Practice for as long as this

Agreement remains in effect (the ‘Sublease’).”

9

conspiring with Petrosian against Dr. Williams and his

[p]ractice.”

The first cause of action for conspiracy to defraud sought to

void the management services agreements based on Lucas’s and

Petrosian’s false inducements to cause Williams to enter the

agreements; damages exceeding $11 million for the

embezzlement of Corporation funds pursuant to the agreements

and the overbroad powers of attorney granted to the Petrosian

defendants therein; damages for the severe emotional distress

Williams suffered as a result of the defendants’ scheme; punitive

and exemplary damages based on the defendants’ malice; and

enhanced damages pursuant to Welfare and Institutions Code

section 15657.5.

The third cause of action for financial elder abuse pursuant

to Welfare and Institutions Code section 15610 is based on the

same factual allegations regarding the Buchalter defendants’

conduct. The sixth cause of action for declaratory relief, although

asserted against both the Buchalter defendants and the

Petrosian defendants, alleges “[a]n actual controversy exists

between Plaintiffs and the [Petrosian defendants]. Plaintiffs

contend that the [Petrosian defendants] should be held liable for

Plaintiffs losses of about $11.5 million. Plaintiffs also contend

that they own the Practice, the leases to the clinics, the

equipment and the electronic communication, as well as the

website. Plaintiffs also contend that they are entitled to all the

income generated from the Practice since May 1, 2020.

Defendants contend otherwise.”

10

B. The Buchalter Defendants’ Demurrer and the Trial Court’s

Order

On July 15, 2022 the Buchalter defendants demurred to all

causes of action in the complaint. They argued the claims

against them were barred under the one-year statute of

limitations in section 340.6, subdivision (a), which governs claims

“for a wrongful act or omission, other than actual fraud, arising

in the performance of professional services” by an attorney. They

asserted that, as alleged in the complaint, the Williams plaintiffs’

claims accrued no later than February 17, 2020, when the parties

agreed to terminate their relationship based on disputes over

payments to the Corporation, but the claims against the

Buchalter defendants were not filed until May 2022.

The Buchalter defendants also argued with respect to the

conspiracy cause of action that the Williams plaintiffs failed to

sufficiently allege the Buchalter defendants were aware of, or

knowingly agreed to a “‘common and unlawful plan’” to embezzle

money from the Williams plaintiffs. Rather, “[t]hey simply allege

that Buchalter performed legal services—such as forming LLCs,

participating in an exchange of information regarding a proposed

business arrangement during an April 12, 2014 meeting, and

drafting agreements—for its client, Sevana Petrosian.”

Moreover, the “agent’s immunity rule” shielded the Buchalter

defendants from liability for acts of misconduct performed as an

agent of Petrosian, because the Buchalter defendants did not owe

an independent legal duty to Williams, and further, their acts did

not “‘go beyond the performance of a professional duty to serve

the client and [did not] involve a conspiracy to violate a legal duty

in furtherance of the attorney’s financial gain.’” In addition,

Williams’s individual claim for conspiracy failed because the

11

complaint did not allege harm he suffered given that all of the

funds were allegedly embezzled from the Corporation.

Similarly, the complaint failed to state a cause of action for

financial elder abuse because the complaint alleged

embezzlement of money only from the Corporation, not from

Williams personally. Finally, the declaratory relief cause of

action did not seek a declaration of rights to prevent a future

breach; rather, it sought redress for alleged past wrongs.

In their opposition, the Williams plaintiffs argued the

complaint adequately alleged a conspiracy to embezzle funds, and

the Buchalter defendants were not insulated by the agent’s

immunity rule because the complaint alleged tortious and

fraudulent acts by Lucas that “went far beyond the performance

of a professional duty to serve the client.” (Capitalization

omitted.) Financial elder abuse was actionable because Williams

was the sole shareholder of the Corporation, and “all the funds

deposited in the [the Corporation] were generated by his medical

practice.” The interests of Williams and the Corporation “fully

coincide,” and the two “should not be regarded as legally

distinct.” Declaratory relief was proper because the complaint

had the prospective effect “to stop any further misappropriation

of the income” from the medical practice. Finally, the one-year

statute of limitations in section 340.6 did not apply to the claims

in the complaint because the complaint did not allege a cause of

action for legal malpractice.

In their reply, the Buchalter defendants argued, in part,

that section 340.6 is not limited to claims for legal malpractice

but instead governs any claim, however styled, that depends on

proof that an attorney violated a professional obligation in the

12

course of providing professional services, as explained by the

Supreme Court in Lee v. Hanley (2015) 61 Cal.4th 1225 (Lee).

At the September 12, 2022 hearing on the demurrer, the

trial court announced its tentative ruling was to sustain the

demurrer without leave to amend.7 The court stated, “I do think

the one-year statute of limitations applies based on the Lee

versus Hanley case. And . . . according to your allegations you

discovered the facts at the latest on February 17th of 2020, but

didn’t file the suit until May 4th of 2022, which was over a year

later.” After hearing argument of counsel, the court adopted its

tentative ruling and sustained the demurrer to the causes of

action for conspiracy, financial elder abuse, and declaratory relief

without leave to amend.

On September 12, 2022 the trial court entered an order of

dismissal in favor of the Buchalter defendants. The Williams

plaintiffs timely appealed.8

7 We previously deemed the Williams plaintiffs’ September 1,

2023 motion to augment the record to include the reporter’s

transcript of the September 12, 2022 hearing as a motion to

designate the record on appeal but deferred a ruling on the

motion. We now grant the motion.

8 The Williams plaintiffs’ notice of appeal states they are

appealing from a judgment of dismissal after an order sustaining

a demurrer. Although no judgment was entered, “[t]he order of

dismissal, signed by the trial court and entered by the court

clerk, constitutes a judgment under Code of Civil Procedure

section 581d.” (Moorer v. Noble L.A. Events, Inc. (2019)

32 Cal.App.5th 736, 741, fn 3; see § 581d [“All dismissals ordered

by the court shall be in the form of a written order signed by the

court and filed in the action and those orders when so filed shall

constitute judgments and be effective for all purposes . . . .”].)

13

DISCUSSION

A. Standard of Review

“‘In reviewing an order sustaining a demurrer, we examine

the operative complaint de novo to determine whether it alleges

facts sufficient to state a cause of action under any legal theory.’”

(Mathews v. Becerra (2019) 8 Cal.5th 756, 768; accord, T.H. v.

Novartis Pharmaceuticals Corp. (2017) 4 Cal.5th 145, 162.)

When evaluating the complaint, “we assume the truth of the

allegations.” (Brown v. USA Taekwondo (2021) 11 Cal.5th 204,

209; accord, Lee , supra, 61 Cal.4th at p. 1230; see Marina Pacific

Hotel and Suites, LLC v. Fireman’s Fund Ins. Co. (2022)

81 Cal.App.5th 96, 104-105 [“‘[W]e accept as true even

improbable alleged facts, and we do not concern ourselves with

the plaintiff’s ability to prove [the] factual allegations.’”].)

“‘“‘[A] demurrer based on an affirmative defense will be

sustained only where the face of the complaint discloses that the

action is necessarily barred by the defense.’”’” (Silva v. Langford

(2022) 79 Cal.App.5th 710, 716; see Lee, supra, 61 Cal.4th at

p. 1232 [“‘“‘A demurrer based on a statute of limitations will not

lie where the action may be, but is not necessarily, barred.

[Citation.] In order for the bar . . . to be raised by demurrer, the

defect must clearly and affirmatively appear on the face of the

complaint.’”’”].) If “‘the complaint’s allegations or judicially

noticeable facts reveal the existence of an affirmative defense, the

“plaintiff must ‘plead around’ the defense, by alleging specific

facts that would avoid the apparent defense.”’” (Esparza v.

County of Los Angeles (2014) 224 Cal.App.4th 452, 459.) The

application of an affirmative defense on demurrer based on facts

alleged in the complaint, such as the statute of limitations, is

14

subject to de novo review. (See Aryeh v. Canon Business

Solutions, Inc. (2013) 55 Cal.4th 1185, 1191.)

A dismissal entered after a demurrer has been sustained

without leave to amend “will be affirmed if proper on any grounds

stated in the demurrer, whether or not the court acted on that

ground.” (Carman v. Alvord (1982) 31 Cal.3d 318, 324; accord, Ko

v. Maxim Healthcare Services, Inc. (2020) 58 Cal.App.5th 1144,

1150.)

B. The Trial Court Erred in Sustaining the Demurrer Based

on the One-year Statute of Limitations Governing Attorney

Misconduct

Section 340.6, subdivision (a), provides in relevant part,

“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 . . . .” The Williams plaintiffs contend that contrary to

the trial court’s ruling, section 340.6, subdivision (a), does not

apply to their claims because the complaint alleges the Buchalter

defendants engaged in fraud and embezzlement. The Buchalter

defendants argue the claims against them arise solely from their

performance of legal services for their client, Petrosian, and the

“actual fraud” exception in section 340, subdivision (a), does not

apply. The Williams plaintiffs have the better argument.9

9 Because we find section 340.6, subdivision (a), does not

apply, we do not reach the Williams plaintiffs’ argument their

claims accrued later than February 2020 and were timely even

15

In Lee, supra, 61 Cal.4th at pages 1233 to 1236, the

Supreme Court examined the scope of section 340.6,

subdivision (a), in considering whether the trial court properly

sustained without leave to amend on statute of limitations

grounds the demurrer filed by an attorney (William Hanley) to

the complaint filed by his client (Nancy Lee) in an action to

recover unspent attorneys’ fees where Lee alleged Hanley

converted the funds by refusing to return them after Lee

terminated him. The Supreme Court held after examining the

legislative history that “section 340.6(a)’s time bar applies to

claims whose merits necessarily depend on proof that an attorney

violated a professional obligation in the course of providing

professional services. In this context, a ‘professional obligation’ is

an obligation that an attorney has by virtue of being an attorney,

such as fiduciary obligations, the obligation to perform

competently, the obligation to perform the services contemplated

in a legal services contract into which an attorney has entered,

under a one-year limitations period. The statutes of limitations

applicable here are all three years or longer: three years for

conspiracy to commit fraud or embezzlement (§ 338, subds. (c)(1),

(d); see Filmservice Laboratories, Inc. v. Harvey Bernhard

Enterprises, Inc. (1989) 208 Cal.App.3d 1297, 1309 [timeliness of

a civil conspiracy claim “must be determined by reference to the

statute of limitations applicable to the underlying cause of

action”]); four years for financial elder abuse (Welf. & Inst. Code,

§ 15657.7; Dennison v. Rosland Capital LLC (2020)

47 Cal.App.5th 204, 212); and three or four years for declaratory

relief (Bank of New York Mellon v. Citibank, N.A. (2017)

8 Cal.App.5th 935, 943 [“A claim for declaratory relief is subject

to the same statute of limitations as the legal or equitable claim

on which it is based.”]). It is undisputed the complaint was filed

within three years of accrual of the claims.

16

and the obligations embodied in the Rules of Professional

Conduct.” (Lee, at pp. 1236-1237.)

By contrast, the Lee court reasoned, “[S]ection 340.6(a) does

not bar a claim for wrongdoing—for example, garden-variety

theft—that does not require proof that the attorney has violated a

professional obligation, even if the theft occurs while the attorney

and the victim are discussing the victim’s legal affairs.” (Lee,

supra, 61 Cal.4th at p. 1237.) Moreover, section 340.6 does not

apply merely because an attorney’s misconduct “occurs during

the period of legal representation or because the representation

brought the parties together and thus provided the attorney the

opportunity to engage in the misconduct. . . . Nor does

section 340.6(a) necessarily apply whenever a plaintiff’s

allegations, if true, would entail a violation of an attorney’s

professional obligations. The obligations that an attorney has by

virtue of being an attorney are varied and often overlap with

obligations that all persons subject to California’s laws have. . . .

For purposes of section 340.6(a), . . . the question is whether the

claim, in order to succeed, necessarily depends on proof that an

attorney violated a professional obligation as opposed to some

generally applicable nonprofessional obligation.” (Lee, at

p. 1238.)10

10 The Supreme Court in Lee, supra, 61 Cal.4th at page 1236

emphasized that section 340.6, subdivision (a), was designed “so

that the applicable limitations period for such claims would turn

on the conduct alleged and ultimately proven, not on the way the

complaint was styled,” citing appellate decisions applying

section 340.6. subdivision (a), to malpractice-based claims against

attorneys styled as claims for breach of fiduciary duty (e.g.,

Prakashpalan v. Engstrom, Lipscomb & Lack (2014)

17

Based on these principles, the Lee court held the trial court

erred in sustaining the demurrer to Lee’s complaint without

leave to amend because although “Lee’s allegations, if true, would

show that Hanley has violated certain professional obligations in

the course of providing professional services” (and any claim

based on this violation would be time-barred), the complaint

could “also be construed to allege a claim for conversion whose

ultimate proof at trial may not depend on the assertion that

Hanley violated a professional obligation. Thus, on at least one

reasonable construction of the complaint, at least one of Lee’s

claims is not time-barred.” (Lee, supra, 61 Cal.4th at pp. 1229-

1230; see id. at p. 1240 [“Of course, Lee’s allegations, if true, may

also establish that Hanley has violated certain professional

obligations, such as the duty to refund unearned fees at the

termination of the representation (Cal. Rules of Prof. Conduct,

rule 3-700(D)(2)), just as an allegation of garden-variety theft, if

true, may also establish a violation of an attorney’s duty to act

with loyalty and good faith toward a client.”].)

The trial court here erred in finding the Supreme Court’s

decision in Lee required application of section 340.6,

subdivision (a). The complaint, like the complaint in Lee, can be

reasonably construed to allege Lucas violated obligations she

owed to the Williams plaintiffs under California law not to

defraud them, and not simply her professional obligations as an

attorney. The central allegations against the Buchalter

defendants are that Lucas “knew of Petrosian’s intent to own the

223 Cal.App.4th 1105, 1121-1122), malicious prosecution (e.g.,

Yee v. Cheung (2013) 220 Cal.App.4th 184, 195-196), and breach

of contract (e.g., Southland Mechanical Constructors Corp. v.

Nixen (1981) 119 Cal.App.3d 417, 427).

18

Practice, take all the profits and pay Dr. Williams some kind of

salary and, upon termination of the agreement, Petrosian

intended to take over the Practice,” and Lucas drafted the

management services agreement “in a way to allow Petrosian to

achieve her intended scheme.”11 Specifically, Lucas knew

Williams had been misinformed by Petrosian that Lucas was

representing both parties, Lucas perpetuated the

mispresentation during the April 12 meeting through her words

and conduct, and she took advantage of the misrepresentation to

induce Williams to sign the management services agreements

and to execute powers of attorney. Contrary to the argument by

the Buchalter defendants, the allegations that Lucas conspired

with Petrosian to deceive and defraud Williams go beyond the

performance of ordinary legal services.12

11 Buchalter does not dispute its liability for Lucas’s conduct

under principles of respondeat superior.

12 The Buchalter defendants also argue that Williams’s claims

must fail because the Buchalter defendants did not “derive any

personal financial benefit from [their] legal work ‘over and above’

and ‘monetary compensation’ that Buchalter received as payment

for professional services.” But “‘“[i]t is not essential to liability

that the person charged with fraud should have received any

benefit therefrom.”’” (Fort v. Board of Medical Quality Assurance

(1982) 136 Cal.App.3d 12, 19-20; accord, Lone Star Security &

Video, Inc. v. Bureau of Security & Investigative Services (2012)

209 Cal.App.4th 445, 457.)

19

Certainly, Lucas’s alleged misconduct could constitute

violations of her professional obligations, “such as fiduciary

obligations, the obligation to perform competently, the obligation

to perform the services contemplated in a legal services

contract . . . and the obligations embodied in the Rules of

Professional Conduct” (Lee, supra, 61 Cal.4th at p. 1237), and

further, the misconduct occurred in the course of Lucas’s legal

representation, which provided the opportunity to deceive

Williams (id. at p. 1238). But the Williams plaintiffs do not need

to prove any professional violation to prevail. Rather, they have

alleged a garden-variety fraudulent scheme. Indeed, the

complaint would be essentially unchanged if Lucas were simply

an actor who came to the April 12 meeting pretending to be a

lawyer who would protect Williams’s interests, while tricking

Williams into signing the agreement. This would be consistent

with the allegation in the complaint that Lucas’s statements and

conduct during the meeting led the Williams plaintiffs to believe

she drafted the management services agreement.

Moreover, as we discuss below, the first cause of action for

conspiracy to defraud adequately states a claim for intentional

fraud; thus, even if the claim arose from the provision of legal

services, the claim falls within the “actual fraud” exception in

section 340.6. (See Quintilliani v. Mannerino (1998)

62 Cal.App.4th 54, 69-70 [“the exception for actual fraud in

section 340.6 was intended to apply to intentional fraud, not

constructive fraud resulting from negligent misrepresentation”];

accord, Nguyen v. Ford (2020) 49 Cal.App.5th 1, 17 [same].) The

Buchalter defendants do not cite, and we are not aware of any,

case holding that an otherwise sufficient cause of action for

intentional fraud by an attorney is subject to section 340.6’s one-

20

year statute of limitations. (Cf. Lee, supra, 61 Cal.4th at p. 1239

[“Section 340.6(a) applies to claims that necessarily depend on

proof that an attorney violated a professional obligation in the

course of providing professional services unless the claim is for

actual fraud.”].)

C. The Complaint Adequately Pleaded the First Cause of

Action for Conspiracy To Defraud

“Civil conspiracy is not an independent tort. [Citation.]

‘Standing alone, a conspiracy does no harm and engenders no tort

liability. It must be activated by the commission of an actual

tort.’” (Favila v. Katten Muchin Rosenman LLP (2010)

188 Cal.App.4th 189, 206 (Favila); accord, Applied Equipment

Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 511.)

“‘[T]he basis of a civil conspiracy is the formation of a group of

two or more persons who have agreed to a common plan or design

to commit a tortious act.’ [Citations.] The conspiring defendants

must also have actual knowledge that a tort is planned and

concur in the tortious scheme with knowledge of its unlawful

purpose.” (Kidron v. Movie Acquisition Corp. (1995)

40 Cal.App.4th 1571, 1582; accord, Favila, at p. 206.)

“Knowledge and intent ‘“may be inferred from the nature of the

acts done, the relation of the parties, the interest of the alleged

conspirators, and other circumstances.”’” (Favila, at p. 206.)

The elements of fraud are (1) a misrepresentation;

(2) knowledge of its falsity; (3) intent to induce another’s reliance

on the misrepresentation; (4) justifiable reliance; and

(5) resulting damage. (Conroy v. Regents of University of

California (2009) 45 Cal.4th 1244, 1255; Cohen v. Kabbalah

Centre Internat., Inc. (2019) 35 Cal.App.5th 13, 20.) To survive a

21

demurrer, a plaintiff must allege facts constituting each element

of fraud with particularity. (Kalnoki v. First American Trustee

Servicing Solutions, LLC (2017) 8 Cal.App.5th 23, 35; Robinson

Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 993

[“fraud must be pled specifically; general and conclusory

allegations do not suffice”].) “‘“This particularity requirement

necessitates pleading facts which ‘show how, when, where, to

whom, and by what means the representations were tendered.’”’”

(People ex rel. Allstate Insurance Company v. Discovery Radiology

Physicians, P.C. (2023) 94 Cal.App.5th 521, 548; see Robinson, at

p. 993 [“This particularity requirement necessitates pleading

facts which ‘show how, when, where, to whom, and by what

means the representations were tendered.”’”].)

Here, the complaint alleges each element of fraud with

adequate particularity: (1) in advance of the April 12 meeting at

Buchalter, the Petrosian defendants misrepresented to Williams

that Lucas represented both parties and drafted a fair agreement

to allow Petrosian to be the business manager of Williams’s

practice; (2) Petrosian and Lucas knew this to be false, and Lucas

knew that Petrosian intended “to own the [p]ractice, take all the

profits and pay Williams some kind of salary and, upon

termination of the agreement, Petrosian intended to take over

the practice”; (3) Lucas intended to induce Williams’s reliance by

failing at the April 12 meeting to disclose that Buchalter

previously represented Petrosian, making statements and acting

in a manner that led Williams to believe she was representing

him,13 representing that the management service agreement and

13 Although the allegation that Lucas made statements at the

meeting and acted in a manner that led Williams to believe she

22

powers of attorney were necessary for Petrosian to manage the

practice while misrepresenting the laws regulating the corporate

practice of medicine; (4) Williams, who was elderly and in

apparent poor health, “reinforced by [Lucas’s] conduct in the

meeting, . . . was convinced by Lucas’s arguments and executed

the MSA without reading it”; and (5) the Corporation was

damaged through the diversion of the practice’s income and theft

of its assets. Moreover, the complaint specifically alleged Lucas

had actual knowledge of the fraudulent scheme and coordinated

with Petrosian to achieve its purposes, supporting conspiracy

liability. (Favila, supra, 188 Cal.App.4th at p. 206.)

The Buchalter defendants contend the cause of action for

conspiracy to commit fraud is barred by the agent’s immunity

rule. Under the agent’s immunity rule, “[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.” (Doctors’ Co. v. Superior Court (1989) 49 Cal.3d

39, 44 (Doctors’ Co.); accord, Favila, supra, 188 Cal.App.4th at

p. 208.) In Doctors’ Co., the Supreme Court held that the

claimant, whose malpractice claims against his doctor were

successfully tried to a jury, could not state a claim against the

attorney for the doctor’s insurer and the insurer’s expert for

conspiring with the insurer to violate an Insurance Code

was representing him lacks sufficient particularity, standing

alone, to allege the inducement element, it is sufficient in

combination with the allegation that Lucas falsely advised

Williams that he had to sign the management services agreement

and powers of attorney for Petrosian to manage the practice.

23

provision requiring good faith efforts to settle a valid claim

“[b]ecause the noninsurer defendants [(the attorney and expert)]

are not subject to that duty [under the Insurance Code] and were

acting merely as agents of the insurer ‘and not as individuals for

their individual advantage.’” (Doctors’ Co., at p. 45.) But the

court clarified, “It 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.” (Id. at p. 46.) Also, 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.)

Shortly after the Supreme Court decided Doctors’ Co., the

Legislature amended Civil Code section 1714.10 (setting forth

prefiling requirements for certain claims against an attorney

alleging a civil conspiracy with his or her client) to add

subdivision (c), which sets forth the two exceptions to the agent’s

immunity rule articulated in Doctors’ Co. and provides that they

are likewise exceptions to the prefiling requirements for civil

conspiracy claims. Under subdivision (c), the prefiling

requirements do not apply to a 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” where:

“(1) the attorney has an independent legal duty to the plaintiff, or

(2) the attorney’s acts go beyond the performance of a

24

professional duty to serve the client and involve a conspiracy to

violate a legal duty in furtherance of the attorney’s financial

gain.” (Civ. Code, § 1714.10, subd. (c); see Favila, supra,

188 Cal.App.4th at p. 209.)14

The allegations of the complaint are sufficient to establish

the conspiracy claim is not barred by the agent’s immunity rule

because Lucas (and Buchalter) had an independent legal duty not

to defraud Williams. As discussed, the complaint alleges Lucas

schemed to defraud the Williams plaintiffs by her statements and

conduct at the April 12 meeting, which led Williams to believe

she represented him and Petrosian, and she induced Williams to

believe the management services agreement and broad powers of

attorney were necessary for Petrosian Esthetic to operate the

medical clinic. “It is well established that an attorney has an

independent legal duty to refrain from defrauding nonclients.”

(Rickley v. Goodfriend (2013) 212 Cal.App.4th 1136, 1151 [Civil

Code section 1714.10 did not apply because attorneys had an

independent legal duty to third parties when holding client funds

in a trust account with respect to dispersal of the funds to the

clients and third parties]; see id. at p. 1153 [“A license to practice

law does not shield an attorney from liability when he or she

engages in conduct that would be actionable if committed by a

layperson. An attorney who commits such conduct may be liable

14 Although the Buchalter defendants in their demurrer

argued the Williams plaintiffs’ civil conspiracy claim was barred

by the agent’s immunity rule under Civil Code section 1714.10, as

we observed in Favila, supra, 188 Cal.App.4th at page 209, Civil

Code section 1714.10 only applies to the prefiling requirement,

providing “at best, . . . only an additional procedural safeguard

against meritless claims.”

25

under a conspiracy theory when the attorney agrees with his or

her client to commit wrongful acts.”]; accord, Burtscher v.

Burtscher (1994) 26 Cal.App.4th 720, 727 [Civil Code

section 1714.10 did not apply because “attorney Hobbs resorted to

self-help . . . in going onto the property and unilaterally retaking

possession in circumstances where a lawyer would be serving a

notice to quit, filing an unlawful detainer action and getting a

court order. Hobbs actively participated in conduct that went

way beyond the role of legal representative: self-help is not the

practice of law.”].)

D. Williams Fails To State an Individual Cause of Action for

Conspiracy To Defraud the Corporation

In their demurrer the Buchalter defendants argued, as they

do on appeal, that Williams cannot state an individual cause of

action for conspiracy because the complaint does not allege any

harm to him personally from the conspiracy: instead, the parties

are alleged to have “acted through their respective corporations,”

and all of the revenues and assets of the practice were taken from

Corporation.15 The Williams plaintiffs did not address this

argument in their opposition to the demurrer, and they do not

address it in their opening or reply briefs on appeal. They have

15 The complaint includes a conclusory allegation that

Williams suffered “severe emotional distress” as a result of the

Buchalter defendants’ misconduct, seeking damages on that

basis. But there are no particularized allegations as to how the

Buchalter defendants caused emotional distress and how the

distress manifested. In any event, the Williams plaintiffs do not

argue the emotional distress allegation is sufficient to support an

individual claim.

26

therefore forfeited this contention. (See Tiernan v. Trustees of

Cal. State University & Colleges (1982) 33 Cal.3d 211, 216, fn. 4

[issue not raised on appeal “deemed waived”]; Swain v.

LaserAway Medical Group, Inc. (2020) 57 Cal.App.5th 59, 72

[“‘“‘Issues not raised in an appellant’s brief are [forfeited] or

abandoned.’”’”].) Although the trial court did not reach the issue,

the demurrer to Williams’s individual cause of action for

conspiracy to defraud was properly sustained. (Carman v.

Alvord, supra, 31 Cal.3d at p. 324.)

E. The Complaint Fails To State a Cause of Action for

Financial Elder Abuse

Financial elder abuse occurs when a person “[t]akes,

secretes, appropriates, obtains or retains real or personal

property of an elder,” or assists in these activities, either “for a

wrongful use or with intent to defraud, or both,” or “by undue

influence.” (Welf. & Inst. Code, § 15610.30, subds. (a)(1), (3).) An

“‘[e]lder’” is “any person residing in this state, 65 years of age or

older.” (Id., § 15610.27.)

The complaint fails to state a claim for financial elder

abuse because it does not allege funds were taken from a person

over 65—as alleged, the unauthorized withdrawals, embezzled

profits, and misappropriated assets were all taken from the

Corporation.16 “It is fundamental that a corporation is a legal

16 There are circumstances in which the taking of property

not held directly by an elder may be actionable. (See Welf. &

Inst. Code, § 15610.30, subd. (c) [financial elder abuse occurs

“when an elder or dependent adult is deprived of any property

right . . . , regardless of whether the property is held directly or

by a representative of an elder or dependent adult.”].) However,

27

entity that is distinct from its shareholders.” (Grosset v. Wenaas

(2008) 42 Cal.4th 1100, 1108; accord, Presta v. Tepper (2009)

179 Cal.App.4th 909, 914 [a corporation is a “‘“distinct legal

entity separate from its stockholder and from its officers”’”]; see

Hilliard v. Harbour (2017) 12 Cal.App.5th 1006, 1015 [plaintiff

did not have standing to sue for financial elder abuse because his

claim did not “originate in circumstances independent of his

status as a shareholder in the [c]ompanies, and his claim

therefore cannot be deemed personal”].)

The Williams plaintiffs argued in their opposition to the

demurrer to the elder abuse claim that the trial court should

treat the alleged embezzlement from the Corporation as if the

funds were taken from Williams because Williams was the sole

owner of the Corporation, their interests “fully coincide,” and the

two “should not be regarded as legally distinct.” On appeal, they

cite general authorities defining alter ego liability. The Williams

plaintiffs misapprehend the alter ego doctrine.

“‘“Under the alter ego doctrine, . . . where a corporation is

used by an individual or individuals, or by another corporation, to

perpetrate fraud, circumvent a statute, or accomplish some other

wrongful or inequitable purpose, a court may disregard the

corporate entity and treat the corporation’s acts as if they were

done by the persons actually controlling the corporation.”’”

a “‘representative’” is narrowly defined as “a person or entity that

is either . . . : [¶] (1) [a] conservator, trustee, or other

representative of the estate of an elder or dependent adult [or]

[¶] (2) [a]n attorney-in-fact of an elder or dependent adult who

acts within the authority of the power of attorney.” (Id.,

§ 15610.30, subd. (d).) The Corporation does not fall within this

definition of a representative.

28

(Toho-Towa Co., Ltd. v. Morgan Creek Productions, Inc. (2013)

217 Cal.App.4th 1096, 1106; accord, Postal Instant Press, Inc. v.

Kaswa Corp. (2008) 162 Cal.App.4th 1510, 1517-1518.) “Thus,

alter ego is used to prevent a corporation from using its statutory

separate corporate form as a shield from liability only where to

recognize its corporate status would defeat the rights and

equities of third parties; it is not a doctrine that allows the

persons who actually control the corporation to disregard the

corporate form.” (Communist Party v. 522 Valencia, Inc. (1995)

35 Cal.App.4th 980, 994; accord, Butler America, LLC v. Aviation

Assurance Co. LLC (2020) 55 Cal.App.5th 136, 147.)

As alleged, Williams and Petrosian “decided to act through

their respective corporations,” and the Buchalter defendants

fraudulently induced Williams to enter into the management

services agreements and execute powers of attorney on behalf of

the Corporation. The Petrosian defendants withdrew money

from the Corporation’s bank accounts, overbilled the Corporation

for management services and reimbursements, and claimed

ownership of the Corporation’s assets. The complaint does not

allege the Corporation is Williams’s alter ego, and the fact

Williams was the sole owner of the Corporation does not make

the Corporation his alter ego, let alone bring a corporation within

the scope of the elder abuse law.

F. The Complaint Fails To State a Cause of Action for

Declaratory Relief Against the Buchalter Defendants

“‘A complaint for declaratory relief is legally sufficient if it

sets forth facts showing the existence of an actual controversy

relating to the legal rights and duties of the parties under a

written instrument or with respect to property and requests that

29

the rights and duties of the parties be adjudged by the court.’”

(Market Lofts Community Assn. v. 9th Street Market Lofts, LLC

(2014) 222 Cal.App.4th 924, 931.) “‘Declaratory relief operates

prospectively, serving to set controversies at rest. If there is a

controversy which calls for a declaration of rights, it is no

objection that past wrongs are also to be redressed; but there is

no basis for declaratory relief where only past wrongs are

involved.’” (Baldwin v. Marina City Properties, Inc. (1978)

79 Cal.App.3d 393, 407; accord, Gafcon, Inc. v. Ponsor &

Associates (2002) 98 Cal.App.4th 1388, 1403.) The remedy of

declaratory relief is unavailable where a “plaintiff has a fully

matured cause of action for money, if any cause exists at all.”

(Jackson v. Teachers Ins. Co. (1973) 30 Cal.App.3d 341, 344;

accord, Canova v. Trustees of Imperial Irrigation Dist. Employee

Pension Plan (2007) 150 Cal.App.4th 1487, 1497 [“Where, as

here, a party has a fully matured cause of action for money, the

party must seek the remedy of damages, and not pursue a

declaratory relief claim.”].)

The complaint alleges the Petrosian defendants, aided by

the Buchalter defendants, embezzled money from the

Corporation and, after the April 30, 2020 termination of the

relationship, used the management services agreements to

exclude Williams and take over the practice. The declaratory

relief cause of action alleges a controversy exists “between the

Plaintiffs and the Petrosian Defendants” (a defined term in the

complaint that does not include the Buchalter defendants)

because the Williams plaintiffs contend they sustained losses of

$11.5 million, they own the practice, including the leases,

equipment, and intangible property, and they “are entitled to all

30

the income generated from the [p]ractice since May 1, 2020,”

whereas the defendants dispute those contentions.

The complaint therefore fails to allege an actual

controversy respecting prospective rights between the Williams

plaintiffs and the Buchalter defendants. The Buchalter

defendants’ alleged role in defrauding the Corporation may be

redressed with damages. To the extent there is a prospective

dispute about ownership of the practice and future revenues it

may generate, this dispute lies with the Petrosian defendants,

not the Buchalter defendants. There is no allegation the

Buchalter defendants have asserted any interest in the practice

and its assets.17

DISPOSITION

The order of dismissal is reversed. The matter is

remanded to the trial court with directions to vacate the order

sustaining the demurrer to the complaint without leave to

amend and to enter a new order overruling the demurrer as to

the first cause of action for conspiracy to commit fraud asserted

by the Corporation but sustaining the demurrer without leave

to amend as to the first cause of action for conspiracy to

commit fraud asserted by Williams individually, the third

cause of action for financial elder abuse, and the sixth cause of

17 The Williams plaintiffs do not request leave to amend their

individual cause of action for conspiracy to defraud or their

causes of action for financial elder abuse and declaratory relief,

nor do they articulate how they could amend their complaint.

31

action for declaratory relief. The parties are to bear their own

costs on appeal.

FEUER, J.

We concur:

SEGAL, Acting P. J.

MARTINEZ, J.

32