Knight v. Aqui et al

Filing 70

AMENDED FINAL PRETRIAL ORDER. Signed by Judge Jon S. Tigar on October 29, 2013. (wsn, COURT STAFF) (Filed on 10/29/2013)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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WILLIAM E. KNIGHT,

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Case No. 11-cv-06337-JST

Plaintiff,
AMENDED FINAL PRETRIAL ORDER1

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v.
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DIANE AQUI, et al.,

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Defendants.

United States District Court
Northern District of California

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A final pretrial conference was held in this matter on October 18, 2013. This Final Pretrial
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Order, issued pursuant to Federal Rule of Civil Procedure 16(e), encapsulates all matters discussed
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at the conference and by the parties in their Amended Joint Pretrial Statement, ECF No. 64.
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I.

TRIAL PROCEEDINGS
The Court will hold a bench trial in this matter on November 5 and 6, 2013, from 8:30 a.m.

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to 1:30 p.m. each day, in Courtroom 9, 19th Floor, 450 Golden Gate Ave., San Francisco,
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California. There will be two fifteen minute breaks each day.
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The only issues to be tried will be Plaintiff’s entitlement to non-economic damages and to
punitive damages. This Final Pretrial Order, in conjunction with the Court’s Order Granting

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Partial Summary Judgment, ECF No. 58, supersedes the complaint, answer, and any
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counterclaims, cross-claims, or third-party complaints, in that only the issues expressly identified
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for trial remain in the case.
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The undisputed facts identified in the Court’s Order Granting Partial Summary Judgment

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This Amended Final Pretrial Order supersedes the “Final Pretrial Order” filed yesterday, ECF
No. 69. That order incorrectly stated the Court’s prior ruling regarding the availability of
emotional distress damages and the time allotment for the parties at trial. In addition, the Court
extends the deadlines discussed below by one day.

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are binding on all parties.
Trial briefs are optional. Any party wishing to file a trial brief must do so by no later than

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October 29, 2013.
Each party will have up to four hours for opening statement, witness examination

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(including direct and cross-examination), and closing argument.

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II.

WITNESSES AND EXHIBITS
Section B.8. of this Court’s Standing Order for Civil Bench Trials, available at

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cand.uscourts.gov/jstorders, required the parties to submit “[a] list of all documents or other items

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to be offered as exhibits at trial, other than solely for impeachment or rebuttal, and a brief

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statement following each that describes: (1) its substance or purpose; (2) the identity of the

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United States District Court
Northern District of California

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sponsoring witness; and (3) whether the parties have stipulated to its admissibility and, if they

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have not, the objection to its admission, the grounds for the objection, and the position of the

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offering party.” The parties’ Joint Pretrial Statement does not comply with the Court’s Standing

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Order. Instead, the parties suggest that the material submitted in connection with Plaintiff’s

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Motion for Partial Summary Judgment constitute the entirety of the exhibit list, and that, in

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addition, if Defendant’s bankruptcy “becomes more than a possibility, Plaintiff may wish to

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develop evidence to deal with that contingency.”2 That is insufficient.
The parties are hereby ORDERED to file, by no later than October 30, 2013, a list of

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exhibits that each party intends to introduce at trial in compliance with the Standing Order.

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Except for good cause, each party is limited to the witnesses disclosed in their Joint

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Pretrial Statement and the exhibits identified in the above-discussed filing due October 30, 2013.

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Materials or witnesses used solely for impeachment need not be disclosed and may be used,

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subject to the rules of evidence.
Each party shall pre-mark trial exhibits with trial exhibit stickers. Counsel shall agree on a

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uniform method for marking exhibits.
The parties shall deliver to the courtroom deputy, no later than October 30, 2013, three sets

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If defendant does file for bankruptcy, this action will presumably be stayed. 11 U.S.C. § 362.
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of all pre-marked exhibits in clearly labeled three-ring binders, in compliance with the Court’s

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Standing Order for Civil Bench Trials.
The Court is not aware of any objections to any exhibits. If there are any such objections,

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the parties shall file them by no later than October 30, 2013.

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III.

DISPUTE CONCERNING NON-ECONOMIC DAMAGES

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The parties dispute whether Plaintiff may recover non-economic damages.

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The Amended Complaint asserts five causes of action: professional negligence, breach of
fiduciary duty, breach of contract, conversion, and negligent misrepresentation. Am. Compl., ECF

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No. 14. The prayer for relief seeks, inter alia, general damages, special damages, punitive

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damages, and any other relief the Court considers proper. Am. Compl. p. 7. The negligent

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United States District Court
Northern District of California

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misrepresentation, breach of fiduciary duty, and conversion claims include the allegation that

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Defendant’s “fraudulent conduct” was “despicable,” “oppressive,” and “in conscious disregard of

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Plaintiff’s rights.” Am. Compl. ¶¶ 26, 31, 36. The Court’s Order Granting Partial Summary

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Judgment granted summary judgment on the issue of liability with respect to each claim.

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Defendant argues that Plaintiff is not entitled to non-economic damages on two grounds:

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(1) the Amended Complaint does not adequately specify “special damages” in compliance with

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Federal Rule of Civil Procedure 9(g); and (2) emotional distress damages are not recoverable in

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legal malpractice actions.

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“General damages typically are those elements of injury that are the proximate and

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foreseeable consequences of the defendant's conduct. Special damages are those elements of

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damages that are the natural, but not the necessary or usual, consequence of the defendant's

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conduct, and typically stem from and depend upon the particular circumstances of the case.”

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Wright & Miller, 5A Fed. Prac. & Proc. Civ. § 1310 (3d ed.) (footnotes omitted). The Court must

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therefore determine whether emotional distress damages are “unusual” in legal malpractice actions

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of the kind asserted here.

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The general rule in California is that “‘emotional suffering damages [are limited] to cases

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involving either physical impact and injury to plaintiff or intentional wrongdoing by defendant.’”

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Holliday v. Jones, 215 Cal. App. 3d 102, 113 (1989) (quoting Quezada v. Hart, 67 Cal. App. 3d
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754, 761 (1977).) In conformity with this general rule, “[e]motional distress damages ordinarily

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are not recoverable in a legal malpractice action if the representation concerned primarily the

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client's economic interests and the emotional injury derived from an economic loss.” Ovando v.

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Cnty. of Los Angeles, 159 Cal. App. 4th 42, 73 (2008).

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However, that general rule was developed in the context of legal malpractice actions

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challenging an attorney’s conduct of litigation, and does not apply to all claims for legal

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malpractice or breach of fiduciary duty. See Camenisch v. Super. Court, 44 Cal. App. 4th 1689,

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1697 (1996) (extending standard to negligent advice claims; characterizing precedent). “[W]here

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a plaintiff sufficiently alleges intentional or affirmative misconduct by an attorney or noneconomic
injury resulting from an attorney's professional negligence, recovery of emotional distress

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United States District Court
Northern District of California

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damages is permitted.” Smith v. Super. Court, 10 Cal. App. 4th 1033, 1040 (1992). A legal

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malpractice plaintiff need not establish “physical impact or injury” or “intentional wrongdoing or

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bad faith” in order to recover emotional distress damages. Pleasant v. Celli, 18 Cal. App. 4th 841,

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851 (1993), disapproved of on other grounds by Adams v. Paul, 11 Cal. 4th 583 (1995).

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There is no “bright line” test for determining whether emotional distress damages are

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available. In making that determination, appellate courts have examined the following factors: (1)

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the foreseeability that the client would suffer emotional distress, Pleasant, 18 Cal. App. 4th at 852;

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(2) the nature and severity of that emotional distress, Holliday, 215 Cal. App. 3d at 119; and (3)

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whether the lawyer’s conduct was intentional, Alberts v. Franklin, No. D040310, 2004 WL

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1345078, at *21 (Cal. Ct. App. June 16, 2004). Generally, emotional distress damages will be

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available where the lawyer’s conduct falls “squarely on the intentional misconduct end of that

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continuum,” id., or where the plaintiff suffers “substantial and severe emotional distress.”

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Holliday, 215 Cal. App. 3d at 112. It is also possible that an “attorney's conduct — while not

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necessarily intentional or in bad faith — is so reckless and the resulting damage is so foreseeable

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that imposition of liability is proper.” Pleasant, 18 Cal. App. 4th at 854. On the other hand, where

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the defendant’s conduct amounts to ordinary negligence, and the type of emotional harm the

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plaintiff suffers is commonplace relative to the kind of harm inflicted, emotional distress damages

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usually will not be available.
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Here, the Court cannot determine whether emotional distress damages are available until it

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has considered the evidence pertaining both to the Defendant’s state of mind and to the harm

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actually suffered by the Plaintiff. The Court will permit the parties to introduce evidence related

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to Plaintiff’s emotional distress claim.

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IV.

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DISPUTE CONCERNING PRE-JUDGMENT INTEREST
The parties dispute in their Joint Pretrial Statement whether the pre-judgment interest rate

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that applies to Plaintiff’s damages stems from California’s rate for pre-judgment interest for

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contract claims (ten percent), see Cal. Civ. Code § 3289, or for tort claims (seven percent), see

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Cal. Civ. Code § 3287; Cal. Const. Art. 15 § 1. The parties cite no authority regarding which rate

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United States District Court
Northern District of California

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applies when a Plaintiff asserts both contract and non-contract claims.
The question of which interest rate applies depends on whether Plaintiff will elect his

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contract or his tort theory of liability. See Great W. Drywall, Inc. v. Roel Const. Co., Inc., 166

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Cal. App. 4th 761, 770 (2008) (discussing effect of election of remedy on prejudgment interest);

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Michelson v. Hamada, 29 Cal. App. 4th 1566, 1586 (1994) (applying tort interest rate to fraud

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claim and contract interest rate to contract claim where election was not required). “An election

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does not occur by the assertion of an inconsistent allegation, but by the acceptance of an actual

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benefit from an alternative theory which would render unfair continued pursuit of the alternative.”

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Perry v. Robertson, 201 Cal. App. 3d 333, 341–42 (1988). Generally, where alternative theories

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arising out of the same set of facts would result in different recoveries, the one “more favorable to

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the injured party should be applied.” Id. at 340 (quotation omitted). Plaintiff is correct that,

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should he pursue his non-contract theories of liability, he may pursue compound interest at the

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constitutional seven percent rate for non-contract actions. See Michelson, 29 Cal. App. 4th at

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1586–87 (holding compound interest may be awarded by trial court or jury in breach of fiduciary

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duty case).

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The Court cannot determine which interest rate will apply until Plaintiff makes his

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election, which he is entitled to do at the conclusion of trial. Also, the question of whether

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Plaintiff is entitled to compound interest is in the discretion of the Court, and the Court cannot

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determine that question until the conclusion of trial.
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V.

MISCELLANEOUS
Plaintiff filed this action against three Defendants: Diane Aqui, Mark D. Jordan, deceased,

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and the Estate of Mark D. Jordan. Plaintiff only served Defendant Aqui. At the Final Pretrial
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Conference, the Court dismissed Mr. Jordan and the Estate of Mark D. Jordan, but took under
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submission the question of whether the dismissal is with prejudice after Plaintiff requested that the
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dismissal be without prejudice. The Court now dismisses Plaintiff’s claims against Mr. Jordan

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and his estate with prejudice for failure to prosecute, pursuant to Federal Rule of Civil Procedure
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41(b). See Villegas v. City of Gilroy, 363 F. Supp. 2d 1207, 1208 n. 1 (N.D. Cal. 2005) aff'd, 484
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F.3d 1136 (9th Cir. 2007), aff'd sub nom. Villegas v. Gilroy Garlic Festival Ass'n, 541 F.3d 950
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(9th Cir. 2008) (dismissing defendants who were never served at summary judgment stage) (citing
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William W. Schwarzer, A. Wallace Tashima & James M. Wagstaffe, Federal Civil Procedure

United States District Court
Northern District of California

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Before Trial § 16:431 (2004) (“Although Rule 41 nominally requires a motion by defendant, the
court possesses inherent power to dismiss sua sponte, without notice or hearing, ‘to achieve the
orderly and expeditious disposition of cases’”)).

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The Court examines the following five factors in considering dismissal as a sanction for
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failure to prosecute: “(1) the public's interest in expeditious resolution of litigation; (2) the court's

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need to manage its docket; (3) the risk of prejudice to the defendants; (4) the public policy
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favoring disposition of cases on their merits; and (5) the availability of less drastic alternatives.”

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Yourish v. California Amplifier, 191 F.3d 983, 990 (9th Cir. 1999). Dismissal is appropriate when
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four factors support dismissal, or when three “strongly” support dismissal. Id.
“[T]he public's interest in expeditious resolution of litigation always favors dismissal.” Id.
Now, on the eve of trial, it does so “strongly.” The Court’s need to manage its docket also favors
dismissal. In addition, the Court finds that Plaintiff’s failure timely to serve the Complaint

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prejudiced the Defendants. See Anderson v. Air W., Inc., 542 F.2d 522, 525 (9th Cir. 1976)
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(“Delay [of one year] in serving a complaint is a particularly serious failure to prosecute because it
affects all the defendant's preparations.”). Finally, though public policy always favors disposition

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of cases on their merits, the first three factors strongly support dismissal, as does the last one,
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because no lesser alternative would rectify the prejudice that would occur should Plaintiff proceed
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through trial without the participation of Mr. Jordan’s estate, only to pursue claims against the

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estate in the future. See id. (“There is no requirement that every single alternate remedy be

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examined by the court before the sanction of dismissal is appropriate. The reasonable exploration

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of possible and meaningful alternatives is all that is required.”).

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For the foregoing reasons, the Court hereby DISMISSES with prejudice Plaintiff’s claims
against Mark D. Jordan and the Estate of Mark D. Jordan.
IT IS SO ORDERED.
Dated: October 29, 2013

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United States District Court
Northern District of California

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______________________________________
JON S. TIGAR
United States District Judge

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