Filed 5/21/14 Lifeline Funding v. Johnston CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. COURT OF APPEAL, FOURTH APPELLATE DISTRICT DIVISION ONE STATE OF CALIFORNIA

LIFELINE FUNDING, LLC, Plaintiff and Respondent,

v. CARTER JOHNSTON et al., Defendants and Appellants. D063745

(Super. Ct. No. 37-2011-000701164- CU-FR-EC)

APPEAL from a judgment of the Superi or Court of San Diego County, Joel R. Wohlfeil, Judge. Affirmed. The Law Office of Richard L. Knight and Richard L. Knight for Defendants and Appellants. Jones Day and Edward P. Swan, Jr., for Plaintiff and Respondent. Plaintiff Lifeline Funding, LLC doing business as Us Claims (Lifeline), a litigation funding company, provided litigation funding to defendants Deborah Tumlinson and Douglas Tumlinson (together, the Tumlinsons) at the request of their attorney, defendant Carter Johnston. Th at funding was sought for litigation the2 Tumlinsons and Johnston represented they filed related to damages their home in Ramona suffered as a result of a wildfire. Lifeline thereafter filed a lawsuit agai nst the Tumlinsons and Johnston claiming that the Tumlinsons, through Johnston, misreprese nted that they ha d settled their case against SDG&E for $2.49 million, and also that Johnston falsely represented that he acted as their attorney in that litigation. After a four-day bench trial, the court found the Tumlinsons and Johnston liable for fraud and the Tumlinsons liable for conversion and breach of contract, awarding Lifeline $1,559, 119 in compensatory damages, as well as punitive damages in the amount of $6,000 against Johnston and $60,000 against the Tumlinsons. On appeal, the Tumlinsons and Johnston a ssert that (1) the court erred in finding liability for fraud because Lifeline did not reasona bly rely on their misrepresentations, (2) there is no substantial evidence to suppor t liability for conversion, (3) there is no substantial evidence to suppor t liability for punitive damage s, (4) the court erred in denying Deborah Tumlinson's requ est to fire her attorney duri ng trial, and (5) the court erred in refusing to continue the trial when she was hospitali zed. We affirm. FACTUAL AND PROCEDUR AL BACKGROUND A. Factual Background Lifeline is a litigation funding company based in Moorestown , New Jersey. The Tumlinsons lived in a home in Ramona, Ca lifornia. After a wildfire damaged their residence, the Tumlinsons join ed litigation related to the fi re that was brought against SDG&E. After their original attorney, Gerald Singleton, terminated his representation of3 the Tumlinsons due to their failure to res pond to his requests for information, they represented themselves in propria persona . At no time did Johnston represent the Tumlinsons during th at litigation. Despite the fact that Johnston did not represent the Tumlinsons during the SDG&E litigation, he applied for litigation funding from Lifeline on behalf of the Tumlinsons. In applying for the funding, John ston repeatedly misrepresented that he was the Tumlinsons' attorney in the SDG&E litiga tion. In applying for th e funding, Johnston and the Tumlinsons falsely represented that they ha d settled their case ag ainst SDG&E for $2.49 million. Lifeline undertook an investigation pr ior to authorizing the funding for the Tomlinsons' litigation. Thei r representative, Rudolph DeGe orge II, spoke w ith Johnston on the phone, and Johnston confirmed the repr esentations he had pr eviously made and described the mediation conference that resu lted in the alleged settlement. DeGeorge also spoke on the phone with Mrs. Tumlinson, who provi ded the Tumlinsons' social security numbers so that Life line could ensure that the Tu mlinsons had no judgments or liens that would prevent the litigation fundin g. Mrs. Tumlinson confirmed Johnston's representations concerning the settlement. Johnston and the Tumlinsons also sent Lifeline pleadings purportedly from the SDG&E litigation with the attorney caption wh ited out to conceal th e identity of their former attorney as their repres entative in that litigation. Th ey also sent Lifeline a draft settlement agreement with a signature page th at represented Johnston was their attorney.4 The draft agreement contained a handwritten note from Mrs. Tumlinson stating that she and Mr. Tumlinson had in itialed the agreement and sent it to SDG&E. Based upon those representations, Lifelin e agreed to provide over $700,000 in funding to the Tumlinsons, in exchange for the Tumlinsons se lling to Lifeline an interest in the $2.49 million settlement they had reac hed with SDG&E. They have not repaid those funds. B. Procedural Background In October 2011 Lifeline filed a compla int against Johnston and the Tumlinsons, alleging fraud, conversion, breach of contract and breach of the cove nant of good faith and fair dealing. Prior to tr ial, the Tumlinsons and Johnston agreed to waive their right to a jury trial. Thereafter, Lifeline brought a motion seek ing to disqualify Johnston as the Tumlinsons' counsel based upon the fact he wa s also named as a defendant in the case. The Tumlinsons opposed the motion, asserting they made an "informed decision" to retain him as counsel and that disqualification would force them to "seek other counsel and bring a new attorney up to date at great expense." Based upon the Tumlinson's position, the court denied Lifeline's motion. However, on the first day of trial the Tu mlinsons asked to fire Johnston and find new counsel. The court denied the motion as a delay tactic. Thereafter, Mrs. Tumlinson claimed to be ill. On the second day of tr ial, Mrs. Tumlinson cl aimed to have fainted outside the courtroom and the court continue d the trial until the fo llowing day while she and Mr. Tumlinson went to the hos pital. On the third and four th days the court refused to5 continue the trial further while the Tumlinsons chose to rema in at the hospital and were represented in court by Johnston. The cour t permitted Johnston to present as testimony the Tumlinsons' depositions, to the extent th ey did not invoke the Fifth Amendment. At the conclusion of trial, the court fo und the Tumlinsons and Johnston liable for fraud, and the Tumlinsons liable for convers ion and breach of cont ract, and issued a statement of decision detailing its findings. In doing so, the court concluded that the Tumlinsons and Johnston made false or misl eading representations with knowledge of their falsity, and that Lifeline actually relied on those representations. On the issue of whether Lifeline's reliance was r easonable, the court found the ev idence to be conflicting. The court noted that (1) had Lifeline conduc ted its own search of the SDG&E litigation file, it would have discovered that Johnston was not the Tomlins ons' attorney; (2) if Lifeline had requested a fully executed settle ment agreement defendants could not have produced one; and (3) Lifeline's own investiga tion revealed that the Tumlinsons had tax liens of over $50,000. The court compared that with the evidence that (1) Johnston, an attorney with no history of discipline, corroborated the Tumlins ons' misrepresentations that he represented them in the SDG&E litigation and that there was a substa ntial settlement with an imminent distribution date; (2) the Tu mlinsons and Johnston concealed their misrepresentations by sending pleadings w ith attorney informa tion whited out; and (3) Johnston told Lifeline that the mediation th at resulted in the settlement was partially confidential, explaining why they coul d not provide a fully executed settlement agreement.6 Ultimately, the court reso lved the conflicting eviden ce in favor of Lifeline, concluding that Lifeline was en titled to assume that Johnst on would uphold his legal and ethical duties to counsel his c lients to do only legal and ethical acts and to use only those means consistent with the truth. DISCUSSION I. REASONABLE RELIANCE TO SUPPORT FRAUD CLAIM The Tumlinsons do not contend that th at they did not intentionally mislead Lifeline to obtain funding. Instead, they asse rt that they are not liable for fraud because Lifeline did not reasonably rely on their inte ntional misrepresentations. This contention is unavailing. A. Applicable Authority When reliance is an element of a cause of action, that re liance must be reasonable. ( Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1239.) "Reliance exists when the misrepresentation or nondisclosure was an immediate cause of the plaintiff's conduct which altered his or her legal relati ons, and when without such misrepresentation or nondisclosure he or she would not, in a ll reasonable probability, have entered into the contract or other transaction." ( Ibid .) "Except in the rare case where the undisputed facts leave no room for a reasonable difference of opi nion, the question of whether a plaintiff's reliance is reasonable is a question of fact." ( Blankenheim v. E. F. Hutton & Co. (1990) 217 Cal.App.3d 1463, 1475.) " 'A lawyer communicating on behalf of a client with a nonclient may not . . . [¶] . . . knowingly make a false statement of mate rial fact . . . to the nonclient . . . .'7 [Citation.] . . . 'A misrepresentation can oc cur through direct statement or through affirmation of a misrepresentation of anot her, as when a lawyer knowingly affirms a client's false or misleading statement.' " ( Shafer v. Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone (2003) 107 Cal.App.4th 54, 69, quoting Rest.3d Law Governing Lawyers, § 98, com. c, p. 58.) Shafer further noted: " 'In general, a lawyer who makes a fraudulent misrepresentation is subject to lia bility to the injured person when the other elements of the tort are established . . . .' [Citation.] This ru le 'applies equally to statements made to a sophis ticated person, such as to a lawyer representing another client, as well as to an unsophi sticated person.' [Citation.] 'Misrepresentation is not part of proper legal assistance . . . .' " ( Shafer , supra , at pp. 69-70, quoting Rest.3d, supra, § 98, com. g, p. 59, com. b, p. 58, § 56, com. f, p. 418.) We review a court's factual findings unde r the substantial evidence standard of review. ( Ermoian v. Desert Hospital (2007) 152 Cal.App.4th 4 75, 500-501.) "Under the substantial evidence standard of review, our review begins and ends with the determination as to whether, on the entire record, there is substantial evidence, contradicted or uncontradicted, which will support the trial cour t's factual determinations. [Citations.] Substantial evidence is evidence of po nderable legal significance, reasonable in nature, credible, and of so lid value. [Citation.] The s ubstantial evidence standard of review applies to both express and implied findings of fact made by the court in its statement of decision." ( Id. at p. 501.)8 B. Analysis As we have discussed, ante , the evidence shows that the Tumlinsons and Johnston repeatedly misreprese nted that Johnston was the Tum linson's attorney in the SDG&E litigation and that the Tumlinsons had se ttled their case against SDG&E for $2.49 million. The Tumlinsons and Johnston assert, how ever, that Lifeline did not reasonably rely on these misrepresentations because its representative, DeGeorge, was an attorney with experience in these types of matters and because DeGeorge discovered that Mrs. Tumlinson had lied about not ha ving tax liens. The judge did consider these facts and concluded that they weighed against Lifelin e's position. Ultimatel y, however, the court concluded that the Tumlinsons and Johnston's concealment of the truth of more relevant facts, such as Johnston's re presentation he represented the Tumlinsons in the SDG&E litigation and that $2.49 million was forthcoming, outweighe d those facts. In assessing whether substantial evidence supports the co urt's findings, we " ' "do not reweigh the evidence or exercise independent judgment, bu t merely determine if there are sufficient facts to support the findings of the trial court." ' " ( In re I.J. (2013) 56 Cal.4th 766, 773.) Further, Tumlinsons and Johnston's cont ention that Lifeline's investigation was negligent is unavailing becaus e they committed intentional fraud: " 'Negligence on the part of the plaintiff in failing to discover the falsity of a statement is no defense when the misrepresentation was intentional rather than negligent.' " ( Alliance Mortgage Co. v. Rothwell, supra, 10 Cal.4th at pp. 1239-1240.)9 The Tumlinsons and Jo hnston's citation to Carpenter v. Hamilton (1936) 18 Cal.App.2d 69 for the proposition that, havi ng undertaken its ow n investigation and discovered the falsity of one representation, Lifeline may not rely on other statements made by them is unavailing. As the Ca lifornia Supreme Court explained in in Shearer v. Cooper (1943) 21 Cal.2d 695, 704, the rule announced in Carpenter was "to close the door to false claims of reliance" and cannot be applied to "afford with impunity the opportunity for fraud." Here the question is whether Lifeline's re liance was reasonable, not whether Lifeline actually relied on the misrepresentations. It is undisputed that Lifeline relied on their representations. More over, as we have noted, negligence in discovering the falsity of a representation is no defense when the misrepresentation was intentional. ( Alliance Mortgage Co. v. Rothwell, supra, 10 Cal.4th at pp. 1239-1240.) Similarly, the Tumlinsons ' and Johnston's reliance on Guido v. Koopman (1991) 1 Cal.App.4th 837 ( Guido ) for the proposition that as an a ttorney DeGeorge could not have reasonably relied on "legal matters " is unavailing. There, the Court of Appeal held that an attorney, who was injured while horseback riding, coul d not avoid a signed liability release based on the fact the owner of the equestrian facility st ated the release was "meaningless." ( Id. at p. 841.) The Court of Appeal concluded that any such reliance was not reasonable as a matter of law. ( Id. at pp. 843-844.) Guido does not assist the Tumlinsons and J ohnston. First, whether a release is valid is a legal conclusion. A plaintiff "may not justifiably rely up on mere statements of opinion, including legal conclusions dr awn from a true set of facts." ( Seeger v. Odell10 (1941) 18 Cal.2d 409, 414.) Here, by contrast, the Tumlinsons and Johnston represented

as fact that they had settle d with SDG&E. Second, the validity of the release was verifiable in Guido , particularly by an attorney who used releases in her law practice. ( Guido, supra, 1 Cal.App.4th at p. 843.) Here, by contrast, the Tumlinsons and Johnst on represented that th e settlement could not be corroborated because of its confidentiality cl ause. "[W]hen a fact is peculiarly within the knowledge of the person making the repres entation and not within the knowledge of the person to whom it is made, the latter has the right to rely upon the representation of the former respecting such fact." ( Bank of America National Trust & Savings Assn. v. Greenbach (1950 98 Cal.App.2d 220, 234.) II. CONVERSION CLAIM AND AWARD OF PUNITIVE DAMAGES The Tumlisons assert that because th e fraud claim was not supported by the evidence, the claims for conve rsion and punitive damages lik ewise fail. Thus, because we have concluded there is substantial ev idence of reasonable reliance to support the fraud claim, this cont ention is unavailing. III. DENIAL OF REQUEST TO FIRE ATTORNEY JOHNSTON AND FOR CONTINUANCE The Tumlinsons and Johnst on assert the court erred in denying Mrs. Tumlinson's request to fire her attorney dur ing trial and in not continuing the trial while she was in the hospital. We reject these contentions.11 A. Applicable Authority As the Court of Appeal stated in County of San Bernardino v. Doria Mining & Engineering Corp. (1977) 72 Cal.App. 3d 776, 783-784 ( Doria ): " 'Parties litigant have no absolute right to insist upon a change of co unsel at the last moment before the time set for the commencement of the tr ial, where such change of counsel requires a continuance in order that the case may be pr operly prepared for trial.' " "We cannot permit the courts to become a sanctuary for chronic procrastination and irresponsibility on the part of either litigants or their atto rneys. The trial judge must assert his power and 'vigorously insist upon cases being heard and determined with as great promptness as the exigencies of the case will permit.' " ( Doria, supra, 72 Cal.App.3d at pp. 780-781.) We review the trial court's denial of a continuance under the abuse of discretion standard. ( Lerma v. County of Orange (2004) 120 Cal.A pp.4th 709, 716.) B. Analysis Here, the court properly exercised its discretion in denying Mrs. Tumlinson's request for a continuance to retain new coun sel as a delay tactic. A party waiting until the date of a hearing to move for a contin uance to obtain new counsel has the appearance of a "delaying tactic." ( In re Marriage of Falcone v. Fyke (2008) 164 Cal. App.4th 814, 823.) This is particularly so gi ven that the Tumlisons had earlier opposed Lifeline's motion to disqualify Johnston. Further, the c ourt acted within its discretion in denying the motion given that Lifeline' s representative DeGeorge had flown from New Jersey to California, prepared for trial, and secured witnesses in reliance on the trial date.12 The court also did not abuse its discreti on when it refused to continue the trial when Mrs. Tumlinson purportedly fainted and then went to th e hospital. A party's illness "does not ipso facto require" a continuance. ( Kalmus v. Kalmus (1951) 103 Cal.App.2d 405, 414, overruled on other grounds in Hudson v. Hudson (1959) 52 Cal.2d 735, 738- 742.) "[T]he court may take into consideration the legal su fficiency of the showing in support of the motion and the good faith of the moving party." ( Ibid. ) The court noted that Mrs. Tumlinson appeared to be a reluctant participant in her trial. As Lifeline pointed out, Mrs. Tumlinson also used purporte d health issues as a delay tactic in her SDG&E litigation, which led to her original a ttorney terminating his representation. Further, the Tumlinsons' choi ce to absent themselves fro m the trial after the court denied their request for a continuance does no t show the court abused its discretion. The Tumlinsons were represented by Johnston, who continued to represent them in their absence. A civil litigant represented by coun sel has no constitutional right to be present at trial. ( Province v. Center for Women's Health & Family Birth (1993) 20 Cal.App.4th 1673, 1686, overruled on other grounds in Heller v. Norcal Mutual Ins. Co. (1994) 8 Cal.4th 30, 41.) Finally, the court agreed to admit Mrs. Tumlinson's deposition testimony as to matters in which she did not invoke the Fifth Amendment. The court also agreed to admit Mr. Tumlinson's deposition testimony if he voluntarily chose to be absent from the trial. For all the foregoing reasons, we conclude the court did not abuse its discretion in denying the request for a continuance of trial.13 DISPOSITION The judgment is affirmed. Costs on appeal to Lifeline.

NARES, J. WE CONCUR:

McCONNELL, P. J.

IRION, J.