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Knight v. Aqui

United States District Court, N.D. California

September 5, 2013

DIANE AQUI, et al., Defendants

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[Copyrighted Material Omitted]

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For William E. Knight, Plaintiff: Bruce Edward Krell, Jerome M. Garchik, Michael Byron Cohen, Law Offices of Bruce E. Krell, San Francisco, CA.

For Diane Aqui, Defendant: Daniel Walter Hager, Edward Donald Haas, Russell Samuel Roeca, Roeca Haas Hager LLP, San Francisco, CA.


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JON S. TIGAR, United States District Judge.

In this legal malpractice action, Plaintiff William E. Knight moves for partial summary

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judgment against Defendant Diane Aqui on the question of liability pertaining to each of Knight's causes of action for professional negligence, breach of fiduciary duty, breach of contract, conversion, and negligent misrepresentation, and on the question of whether Aqui is jointly and severally liable with her co-Defendants for " special damages" in the amount of $102,300.18.


A. Procedural Background

Plaintiff William Knight filed this action in December 2011 against his former attorneys, Defendants Diane Aqui and Mark D. Jordan. Plaintiff also named Jordan's estate as an additional Defendant, as Jordan is now deceased. ECF No. 1. The operative First Amended Complaint, (" FAC" ), ECF No. 14, asserts five causes of action: professional negligence, breach of contract, fraudulent misrepresentation, conversion, and breach of fiduciary duty.

The Court has subject matter jurisdiction over the action pursuant to 28 U.S.C. § 1332 because Plaintiff is a citizen of South Carolina, Defendants are citizens of California, and the amount in controversy exceeds $75,000.

Defendant Aqui answered the original complaint on January 12, 2012, ECF No. 4, and the First Amended Complaint on August 21, 2012, ECF No. 16. Defendants Jordan and his estate have not appeared and are not subject to the instant motion.

B. Undisputed Facts

Defendants Aqui and Jordan represented Plaintiff Knight in an action styled Knight v. Doubleshot, Inc., in Sonoma County Superior Court, Case No. SVC 241748. FAC ¶ 9. Plaintiff retained Aqui and Jordan in March 2007. Plaintiff's contingency agreement with Defendants, executed March 29, 2007, provided that Defendants would receive a contingency fee of forty percent of " the total amount realized by way of settlement and/or litigation" if the case resolved after the court set a trial date. Retainer Agr., Cohen Decl. ISO Mot. for Partial SJ, Ex. D, ECF No. 50-4. Nothing in the retainer agreement addresses when Defendants would receive their contingency fee in relation to Knight receipt of settlement funds; nor does the agreement address installment payment settlements. Id. Both Aqui and Jordan signed the agreement. Id.

Defendants filed the underlying action, in which Knight was plaintiff, in October 2007. FAC ¶ 9. On or about April 28, 2009, Aqui allegedly advised Knight to settle the case for $550,000, to be paid in installment payments by Doubleshot, Inc., the defendant in that action. Id. According to Plaintiff, Aqui " negligently failed to obtain any personal guaranty of the installment payments from the chief and controlling shareholder of Doubleshot, Inc., Alan Shulman." [1] Id.

The settlement agreement provided that Doubleshot " hereby agrees to make payment to Plaintiff WILLIAM E. KNIGHT in the amount of five hundred and fifty thousand dollars ($550,000.00)." The agreement provided for an initial payment of $150,000 payable to " William E. Knight and Trust Account of Attorney Diane Aqui," followed by four payments payable in the same manner in the amount of $33,333.33, followed by eight payments payable only to " William E. Knight" in the amount of $33,333.33. Settlement Agr., Cohen Decl. ISO Mot. for Partial SJ, Ex. E, ECF No. 52 pp. 1-2. The agreement

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also provided: " All checks shall be mailed to Attorney Diane Aqui, 1612 Fourth Street, Stanta Rosa, CA 95404." Settlement Agr. p. 2.

Following execution of the settlement agreement, Doubleshot sent payments totaling $254,999.99 to Aqui. FAC ¶ 10; Aqui Depo. p. 54:17-22 (ECF No. 50 p. 25). Doubleshot then suspended payments and became insolvent. Id.; Knight Decl. ISO Mot. for Partial SJ, ECF No. 49 ¶ 2. Aqui and Jordan paid themselves $204,300.78 from the settlement proceeds, and distributed $50,699.81 to Knight. Knight Decl. ¶ 3. Knight had originally received nothing, but, after discussing the matter with Aqui, Aqui agreed to " compromise" her position and agreed to disburse the approximately fifty thousand dollars to Knight. Knight Decl. ¶ 4. Knight agreed to the compromise because Aqui advised him that his attorneys were legally entitled to forty percent of the total amount promised, to be paid before Knight received any portion of his share. Knight Decl. ¶ 4.

No written document provided for Aqui to take her entire fee from the settlement proceeds before Knight received anything. Rather, Aqui testified that Knight " acquiesced to the disbursement of the settlement funds by signing the settlement agreement and the stipulated judgment." Aqui Depo. p. 92:4-6 (ECF No. 55-1 p.16).

Knight then filed this lawsuit. According to Plaintiff, Defendants breached the agreement and committed professional negligence by " (a) falsely advising Plaintiff that the contingency agreement required that the attorney be paid before the Plaintiff received anything; (b) failing to advise Plaintiff, when he raised questions about this, to seek independent counsel in regard to the adversarial relationship between the parties as to the subject of those questions; and (c) remitting to Plaintiff only $50,699.81 out of the $254,999.99 actually collected, instead of the $151,259.66 owed to Plaintiff . . . minus $2,900.55 in costs." FAC ¶ 11. According to the First Amended Complaint, Knight demanded, and Aqui refused to pay him, the rest. Id.

Defendant Jordan died December 21, 2010, and Aqui continued to represent Plaintiff until at least ...

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