Mula v. Mula-Stouky

Background

Paul Mula, Jr. sued members of his family, court-appointed conservators, attorneys, law firms, and others. He alleged that they participated in a racketeering conspiracy involving assets from the Ogier Trust and Stouky Trust that he says were intended for him. The first amended complaint asserted 12 claims, including racketeering, breaches of fiduciary duty, aiding and abetting, conspiracy, unjust enrichment, interference with an inheritance expectancy, unfair competition, a Fair Debt Collection Practices Act claim, legal malpractice, and conversion.

This order addressed only Kristofer Biorn’s motion to dismiss. Mula alleged that he retained Biorn in 2012 for advice about 2005 transfers of real property from the Ogier Trust. According to the complaint, Biorn advised him that claims concerning those transfers were time-barred, did not tell him that the transfers were ineffective, and did not tell him about 2006 probate proceedings. Mula alleged that he later learned about the 2006 order in June 2019.

Legal standard

Biorn moved under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. The court accepted the complaint’s factual allegations as true for purposes of deciding the motion. Although Biorn’s memorandum briefly referred to Rule 12(b)(1), the court considered only the properly noticed and briefed Rule 12(b)(6) motion.

Rulings on Biorn’s claims

The court granted Biorn’s motion as to Claim 1, the racketeering claim. The complaint alleged that the defendants engaged in a pattern of wrongful conduct involving the trusts, but the only conduct alleged against Biorn concerned his 2012 legal services. The court found no facts suggesting that Biorn’s alleged malpractice was part of or advanced the alleged racketeering conspiracy.

The court granted the motion as to Claim 5, the claim that Biorn aided and abetted a breach of fiduciary duty. The complaint alleged that Patricia Bye breached duties as trustee, but it did not allege that Biorn actually knew of the breach, substantially assisted or encouraged it, or substantially contributed to the resulting harm.

The court granted the motion as to Claim 6, the civil-conspiracy claim. Although the complaint alleged that all defendants knowingly participated in a common scheme, it did not provide facts showing that Biorn knew Bye planned to breach her fiduciary duties or joined that scheme knowing its unlawful purpose.

As to Claim 11, the legal-malpractice claim, the court found that the complaint appeared to show that the claim was barred by California’s four-year limitations period for attorney negligence. The alleged negligence occurred in 2012, while Mula filed suit in 2021. The court explained that the complaint did not allege facts supporting tolling based on an attorney’s willful concealment because it did not allege that Biorn knew the relevant circumstances in 2012 or concealed them.

Mula argued that the claim was based on actual fraud and therefore governed by a different limitations period. The court rejected that argument as the complaint was framed, finding that the complaint did not allege that Biorn knew the circumstances concerning the transfers and probate order when he provided legal services. The final order nevertheless granted Biorn’s motion as to Claim 11 with leave to amend.

Disposition

The court granted Biorn’s motion to dismiss with leave to amend as to all claims asserted against him—Claims 1, 5, 6, and 11. Mula’s deadline to amend was set for 30 days after the court ruled on the last of the three motions to dismiss filed by defendants. The order terminated docket entry 59. It did not decide the claims against the other defendants.