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November 30, 2010


(Santa Cruz County Super. Ct. No. CV154372)

The opinion of the court was delivered by: Trial Judge: The Honorable Robert B. Atack


Plaintiff Sherry Dang brought this action for legal malpractice against her former attorneys, defendants Alan Smith and Dennis P. Howell, and their firm, Grunsky, Ebey, Farrar & Howell, who had represented plaintiff in obtaining and attempting to collect a judgment against two men who purchased a bakery business from her and then defaulted. As initially framed, her complaint was largely predicated on defendants' failure to record a judgment lien against real property in which one of the judgment debtors held an interest as a joint tenant. Defendants moved for summary judgment on evidence establishing that they had in fact recorded a lien, but that it had been extinguished when the debtor joint tenant died. In opposition to the motion, plaintiff offered three new theories of liability, of which only one resembled anything alleged in the original complaint. Plaintiff made no attempt to demonstrate, by proposed pleading, declarations, or otherwise, that that she could truthfully plead, let alone prove, the elements of a cause of action on any of the three theories. She at no time moved, or even asked the court, for leave to amend her complaint. She offered no proposed amended pleading. She nonetheless contends on appeal that the trial court erred by failing to grant leave to amend. We reject this contention, not only because it is procedurally insupportable but because none of the proposed new theories appears to be substantively viable. Accordingly, we will affirm the judgment.


A. Events Prior to Suit

In 1995 plaintiff purchased the Mity Nice Bakery in Santa Cruz. In doing so she assumed an outstanding note for $180,000 in favor of a previous owner, one Odzak.

The business lost money at the rate of about $10,000 to $12,000 a month. In 1999 plaintiff decided, not surprisingly, to sell the bakery.*fn1 She listed it with a broker and advertised in a newspaper. Apart from the inquiry resulting in its eventual sale, she received only one serious expression of interest--from the bakery's then-manager, who lacked the money to purchase it.

In early 2000, plaintiff agreed to sell the property to a former manager, Thomas Deaton, and his partner, Robert Probst.*fn2 The agreement was reflected in a written contract of sale dated January 25, 2000. It called for the buyers to furnish a $1,000 deposit, give plaintiff a note for about $51,000, and assume two obligations including the Odzak note. Although both Deaton and Probst were married, neither of their spouses signed the agreement. Escrow was handled by Reid Schantz, a licensed attorney.*fn3 Plaintiff asserted--but neither alleged nor offered evidence to show--that she had "retained" Schantz "to broker the sale." The agreement itself recited that Schantz had drafted it "consistent with the instructions from Buyer and is solely representing the buyer in the negotiation portion of this transaction."

The buyers soon defaulted on their obligations. In August 2000, Odzak brought an action against plaintiff. In November, plaintiff retained defendants to represent her. They brought a cross-action on plaintiff's behalf against the buyers. The parties agreed to settle the cross-action by stipulating to a $314,900 judgment for plaintiff. Although the buyers' spouses had not been joined in the action, the settlement called for them to join in the stipulation, thereby subjecting themselves to the judgment. Deaton's wife signed the stipulation and was named in the judgment. But Probst's wife, Deysi Probst, refused to sign. Her name was stricken from the judgment as entered.

Defendants then undertook to collect on the judgment. On September 11, 2001--the day the judgment was entered--they recorded an abstract of judgment in Santa Cruz County. This had the effect of attaching a judgment lien onto all interests held by Robert Probst in any real property anywhere in the county. (Code Civ. Proc., §§ 697.310, subd. (a), 697.340; Ahart, Cal. Practice Guide: Enforcing Judgments and Debts (The Rutter Group 2010) ¶¶ 6:173, 6:175, pp. 6B-8, 6B-9 (rev. #1 2010) (Ahart).) Apparently the only such interest was title in a Watsonville house held by himself and his wife under a deed dated December 22, 2000, describing the grantees as "husband and wife as joint tenants".

On May 23, 2003, Robert Probst had a fatal heart attack at age 39. As discussed below, this had the effect of automatically vesting title to the entire property in Deysi Probst free of any encumbrances that had been attached only to Robert Probst's interest. Thus when Deysi Probst recorded an affidavit of death of joint tenant on August 3, 2003, she established prima facie record title in herself, free of plaintiff's judgment lien.

On June 19, 2003, Mrs. Probst filed a bankruptcy petition. It and a second petition were dismissed. A third, however, resulted in a final decree on November 16, 2004. Defendants assert, and plaintiff does not dispute, that the decree "discharged Mrs. Probst from any personal liability she might have had for the Dang judgment." Since the Deatons had already received similar relief in bankruptcy, this event seems, at least in retrospect, to have barred the last avenue by which plaintiff might have obtained any further satisfaction of her judgment.

It appears that defendants labored for some time under the misapprehension that plaintiff's judgment lien had survived the death of Robert Probst. Thus Smith wrote to plaintiff on the day after Mrs. Probst's bankruptcy decree, stating that he had requested notice of other encumbrances or actions against the property and anticipated its eventual sale in foreclosure. On February 11, 2005, he wrote again recommending that she attend a foreclosure sale, then scheduled for March, and purchase the property. This advice of course assumed that she still had an encumbrance on the property, when in fact--as defendants now concede--her encumbrance had been extinguished. Smith still seemed to be under this impression when, on May 2, 2005, he wrote to plaintiff advising her that a foreclosure sale was to take place in about three weeks and that he planned to be there, with her, "to answer any questions you may have during the sale."

Meanwhile plaintiff apparently undertook to secure financing for a bid on the property. On or about May 5, she received a preliminary title report indicating that title was held in fee by "Deysi Probst, surviving joint tenant." The report stated that the only recorded "conveyance of the land within [the past 24] months," was the "Affidavit - Death of Joint Tenant (by Surviving Spouse)" recorded by Deysi Probst on August 3, 2003. Smith declared that after receiving a copy of this report he "phoned the title officer to inquire why the Dang judgment did not show up as an exception to title." The title officer explained that "since the property was held in joint tenancy with right of survivorship, First American Title was willing to insure that the lien only attached to Robert Probst's share of the property. When Mr. Probst died the title company was also willing to insure that he had no further interest in the property and there was nothing for the judgment lien to attach. The title officer cited legal authority, which I researched and found to reasonably support First American Title's position."*fn4

On June 6, plaintiff and defendants held a meeting memorialized three days later in a letter by Smith. He wrote that the judgment lien had been listed by Mrs. Probst in bankruptcy filings and by title insurers in earlier preliminary reports, and that defendants had "pursued that security interest." The situation had now changed, he wrote, in that "First American is willing to insure title to a buyer free and clear of your judgment lien." He advised her against any further attempt to pursue collection from Mrs. Probst. Among the reasons cited was that in order to prevail, plaintiff would "need to carve out an exception in the law for your unique circumstances," an endeavor which, in his opinion, "would not be successful." Smith then observed that plaintiff had recovered some of her losses through other collection efforts and by taking a "tax bad debt write off." He concluded by suggesting that the lack of a better result was attributable to the failure to include the purchasers' wives as co-signers on the original purchase agreement.

B. Proceedings

Plaintiff filed a verified complaint on May 26, 2006, asserting causes of action for legal malpractice, breach of fiduciary duty, misrepresentation, breach of contract, intentional infliction of emotional distress, and "conspiracy." In the complaint she alleged on her own knowledge and under penalty of perjury various matters that she could not actually know of her own knowledge, some of which proved to be contrary to fact. (See Code Civ. Proc., § 446, subd. (a) [by verifying pleading, party certifies "that the same is true of his own knowledge, except as to the matters which are therein stated on his or her information or belief . . . ."].) These included repeated allegations that no lien "was ever recorded" by defendants "against the real property of the Purchasers." She further alleged that the only security interest defendants created in her favor was "a personal property lien filed with the Secretary of State." She specifically alleged that "[d]efendants did not record a lien or Abstract of Judgment against the Probst real property located in Santa Cruz County . . . ." However she also alluded to defendants' "failure to secure the judgment by lien against the Probst property," their "failure to fully secure the judgment," and "the loss of her lien on the Probst property."

Defendants moved for summary judgment or, in the alternative, summary adjudication of specific causes of action. Their primary contentions were that (1) judicially noticeable public records conclusively refuted plaintiff's allegation that defendants never recorded a lien against the Probst house; and (2) they did not misadvise plaintiff in saying there was no way to satisfy her judgment against the Probst house. Defendants acknowledged that whatever interest they had secured by recording the abstract of judgment was "extinguished" when Mr. Probst died, but they asserted that when this occurred they were "taking steps to collect the judgment, including bringing Mrs. Deysi Probst into the case."

In opposition to the motion, plaintiff conceded that her professional negligence claim could not be maintained "under the theory of the complaint." However, she contended, defendants' motion "contain[ed] the seeds of [its] own destruction" because it supported a finding that defendants had negligently permitted Mr. Probst's interest in the property to be extinguished by his death. Plaintiff declared that defendants took no steps to avert such an event and never advised her of the risk that it might happen. Further, plaintiff asserted, defendants' conduct could be found to constitute professional negligence in two additional respects: their advice concerning the advisability of suing plaintiff's previous attorney, Reid Schantz, for failing to join the purchasers' wives in the purchase agreement; and their failure to advise that "no contract was ever formed" because of the failure of a condition precedent.*fn5

In reply, defendants argued that plaintiff was "attempt[ing] to create a new and different case than the one alleged in her verified complaint, [one] which is contrary to those allegations and [to] her sworn testimony in deposition and respon[ses] to interrogatories." They cited authorities concerning the prohibition against contradicting the allegations of one's own pleadings, the effect of judicial admissions, and the consequences for perjury, as well as the role of pleadings in framing the issues on summary judgment. They further contended that plaintiff's new theories of negligence were not colorable. The failure to prevent extinction of the lien was not actionable, they argued, because they could ...

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