Filed 11/4/19 (unmodified opinion attached) CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

JEAN SPRENGEL,

Plaintiff and Appellant

,

v.

GREGORY ZBYLUT , et al

. ,

Defendant s and Respondents

. B 2 82129

(Los Angeles County Super. Ct. No. BC 535584 )

ORDER MODIFYING OPINION ( NO CHANGE IN JUDGMENT)

THE COURT: IT IS ORDERED tha t the opinion filed September 10 , 2019
, modified on September 17, 2019 be corrected as follows:

1. Page 1 third paragraph, attorneys for Defendant and Respondent Gregory Zbylut, Miller Law Associates, Zachary Mayer shall include Lisa D. Malli n son

____________________________________________________________ PERLUSS

, P. J. , ZELON, J., SEGAL, J.Filed 9/10/19 (unmodified op n. attached ) ; Ordered Published 10/7/19 (order attached) ; Nonpub

. opn. modified 9/17/19 (order attached)

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

JEAN SPRENGEL,

Plaintiff and Appellant

,

v.

GREGORY ZBYLUT , et al

. ,

Defendant s and Respondents

. B 2 82129

(Los Angeles County Super. Ct. No. BC 535584 )

APPEAL from a judgment of the Superior Court of Los Angeles County, Elizabeth Allen White

, Judge

. Affirmed

. Knez Law Group and Fred J. Knez, for Plaintiff and Appellant

. Miller Law Associates, Randall A. Miller

, Lisa D. Mallinson and Amy A. Breyer for Defendant and Respondent Gregory A. Zbylut. Nemecek & Cole, Michael McCarthy, Mark Schaeffer and
T amm y Q. Gallardo, for Defendants and Respondents Vincent Cox and Leopold, Petrich & Smith

.

__________________________3 Jean Sprengel and Lanette Moh r established “Purposeful
Press LLC” to market a guidebook that Sprengel had written
about the side effects of c hemotherapy. After a management dispute arose between them, Sprengel filed a n acti on to dissolve the company, and a s eparate action alleging that Mohr had infringed her copyright s to the guidebook . Mohr, acting in her representative capacity as the manag er of Purposeful Press, retained Gregory Zbylut, Vincent Cox and Cox’s firm, Leopold, Petrich & Smith (LPS)

, to advise the company with respect to Sprengel ’s copyright claims and various other issues.
After the dissolution and copyright suits were reso lved, Sprengel filed a malpractice action against Zbylut, Cox and LPS alleging they had v iolated their professional duties by undertaking representation of Purposeful Press without her
consent, and rendering legal advice in the underlying lawsuits
that was adverse to her interests. Defendants filed motions for summary judgment arguing
that their representation of Purposeful Press did not create an attorney

- client relationship with Sprengel in her individual capacity. Sprengel, however, argued that defendants owed her a professional duty of care based on her status as a 50 percent
shareholde r of Purposeful Press

. The trial court granted the motions, and entered judgment s in defendants ’ favor. We affirm.

FACTUAL BACKGROUND
A. Formation of Purposeful Press In 2008, Jean Sprengel and Lanette Mohr agreed to form a limited liability company to adapt and market “Kaye’s Chemo Book,” a guidebook Sprengel had written about treating the side4 effects of chemotherapy. 1 Sprengel and Mohr retained Kenneth
Stream to assist them in forming the corporation, which they named Purposeful Press.
P urposeful Press’s o perati n g agreement stated that Sprengel and Mohr were each 50 percent owners of the company,
and that neither of them had “the authority to bind the Company without the consent and/or approval of the other.” The agreement further provid ed that Sprengel would make an initial investment of $5,000 in the company

, and that Mohr would provide “organizational and business planning services with an agreed

- upon value of $5,000.” The agreement identified Mohr as

“ the sole manager of the company, ” which authorized her to “Keep the books and records of the Company; “Open b ank accounts in the name of the Company”; “ Execute i nstruments and documents”; and “do and perform all other acts as may be necessary or appropriate to the conduct of the Company’s
Bu s in e ss

. ” Sprengel and Mohr w ere not entitled to any compensation from the company other than equal profit
distribution s

. Acting pursuant to her role as manager, Mohr negotiated a deal with Merck Pharmaceuticals to produce a commercialized

ver sion of “ Kaye’s Chemo Book .” During 2008 and 2009, Mohr and Sprengel worked to transform the original work into two
commercial guidebooks named the “ChemoCompanion Care
Guide ” and the “ ChemoCompanion Pocket Guide ” ( collectively the ChemoCompanio n guides)

.

1 This is the second appeal in this matter. In Sprengel v. Zbylut (2015) 241 Cal.App.4th 140, we affirmed the trial court’s order denying defendants’ special motion to strike brought pursuant to Code of Civil Procedure section 425.16.5 B. Sprengel and Mohr ’s Management Dispute s In December 2010, Mohr informed Sprengel she c ould not
continue to serve as manage r unless she began receiving a salary. In response, Sprengel told Mohr she was willing to take over manageria l duties

, and requested that Mohr turn over the corporate records. Mohr , however, retained the records, and began to exclude Spreng e l from discussion s about Purposeful
Press’s business operations. Sprengel monitored Purposeful Press’s checking account, a nd became conce rned Mohr was using corporate funds to pay for personal expenses

. That same month,
Rose n contacted defendant Gregory Z b y lut about representing Purposeful Press. According to Z b y lut’s declaration, during their
initial consultation , Mohr told him s he and Sprengel were in a dispute regarding M ohr’s compensation and business

expen ditures

. Mohr then retained Zbylut to prepare Purposeful
Press’s tax filings and K

- 1 forms. In August 2011, Mohr and Rosen met with Vincent Co x to discuss representation of Purposeful Press regarding the company’s intellectual property . According to Co x’s declaration,
Mohr told him that Sprengel had threatened to terminate Purpose ful P ress’s right to s ell the ChemoCompan i on guides.
Cox and Moh r then spoke at length about t he history of Purposeful Press

, and the ChemoCompanion guides

. Mohr and
Cox signed a retainer agreement stating that Cox’s firm, Leopold
Petrich & Sm it h (LPS)

, would pr ovide Purposeful Press legal
services regarding the “[c] o nfirmation of client’s intellectual property rights in certain published and unpublished works.” Based on his discussions with Mohr and his review of Purposeful
Press ’s operation agreement, Co x formed the belief that Sprengel
and Mohr had received “incorr ect and incomplete legal advice by6 Mr. Stream” regarding the company’s ownership of the copyrights to the ChemoCompanion guides. On September 16, 2011, Cox sent a letter to Sprengel’s personal attorney , Michael Kerbs, stating that Purposeful Press had retained LPS “in connection with its intellectual property rights.” The letter acknowledged the dispute between Sprengel and Mohr, and asserted that Purposeful Press had the right to continue marketing and selling the ChemoCompan ion guide s , and develop other derivative works . The letter also cautioned Sprengel against p ursuing legal action, asserting that any such litigation would be costly for herself and the company

. Immediately a fter learning that Mohr had retained Zbylut

an d LPS to represent Purposeful Press , Sprengel withdrew $162,000 from the company’s bank account, and deposited the
funds in to a trust account maintained by her attorney. Sprengel
asserted that the t ransfer was necessary “ to prevent future improper expendi ture [s] ,” and notified Mohr she could seek

re payment “for any appropriate business e x pense s .” Sprengel also sent Mohr a letter stating that she was
revok ing any implied copyright license she had granted to Purposeful Press to exploit “Kaye’s Chemo Guide.” Shortly after receiving the letter, Cox and LPS assisted Mohr in preparing a copyright registration for the ChemoCompanion guides that listed herself, Spren gel and Purposeful Press as claimants.

C. Sprengel’s Filing of the Dissolution and Copyright Actions In September 2011 , Sprengel filed an involuntary
dissolution action aga inst Mohr and Purposeful Press. The complaint alleged Purposeful Press could no longer carry out its duties “in conformity with the

. . . Operating Agreement” because7 the “management of the company [had become] deadlocked or

su bject to internal dissension.” Sprengel also filed a federal copyr ight infringement action against Mohr asserting that she owned the copyright to the Kay
Chemo G uide and the derivative ChemoCompanion guides. The complaint alleged that although Sprengel had initially granted Purposeful Press a n implied license to sell the original and derivative works, she had subseq uently revoked the license. The complaint further alleged that Mohr, acting through Purposeful Press, had continued to market and sell the works , despite Sprengel’s revocation of the license

. After the suits were filed, Cox and Moh r signed an
amendment to the Purposeful Press retainer agreement that expand ed the scope of LPS’s legal services to include pursuing a declaratory relief action regarding the company’s “rights in its intellectual property

, ” and filing claims against Sprengel for
unlaw fully transferr ing funds from P urposeful Press’s bank

account s.

D. The Federal Copyright Proceedings
1. Mohr’ s motion to disqualify counsel for Purposeful Press In the copyright action, Mohr requested that Purposeful
Press be joined in the proceedings as a necessary par ty

. (See
Fed. Rules Civ. Proc. , rule 19). In response, Sprengel filed an

am ended c o mplaint naming P urposeful Press as a nominal defendant, and retained Thomas Foley to serve as the “neutral”

company attorney

. Mohr filed a motion to dis qualify Foley, asserting that Sprengel had no authority to select the company’s attorney

.8 The district court granted the motion, concluding that because Sprengel and Mohr were both 50 percent own ers of the

company, conflict of interest principles precluded either of them
from unilaterally select ing corporate counsel : “[U] nder California law an attorney

- client relationship arguably has been formed
between

. . . Foley and Sprengel in her representa tive capacity as a member of the Company. Given the dispute between Sprengel and Mohr, it is not clear that

. . . Foley as counsel for the Company adequately can represent the interests of all members in the Company

– i.e., Sprengel and Mohr.

. . . Foley presumably has been compensated by Sprengel

. . . . It very well may be
that

. . . F oley would be able to maintain his independence of professional judgment. But his representation of the Company still would interfere with the attorney

- client relationship between him and each of the parties in their representative capacity as a member of the Company. And, to the extent Mohr can be considered [] Foley’ s ‘client’ (again, through her 50% membership interest in the Company), she does not consent to [] Foley’ s representation .” ( Sprengel v. Mohr ( C.D. Cal., May 30, 2012, No.
CV 11

- 8742 (2012 WL 12886207, at *2.)
The court further explained that the company did not appear to need counsel because it had no discernible “ interest independent of its owners

. ” The court advised , however, that if “ a legitimate need were to arise for the Company to

. . . actively participate in this action, the parties [could] stipulate to the appointment of independent counsel. ”

2. The parties’ d iscovery disputes Sprengel served M ohr with discovery requests seeking any
communications Mohr had with Zbylut , Cox or LPS regarding Purpos e ful Press. Mohr objected to the requests based on9 attorney

- client privilege. Sprengel brought a motion to compel arguing that Mohr was not authorized to invoke the company’s privilege against the other 50 percent owner of the company. After reviewing California authorities, the district court concluded that a corporation’ s privilege “can be asserted or waived only by [current] management .” ( Sprengel v . Mohr (C.D. Cal., Sept. 14, 2012, No. CV 11

- 8742) 2012 WL 12885115, at *4 .)
T he court then analyzed who qualified as Purposeful Press’s management for purposes of asserting the privilege : “A lthough Mohr is the sole manager, the Operating Agreement

. . . does not provide that Mohr will have total control of the Company of which she is only a 50 percent owner. On the contrary, the [ Agreement ] states that the business of the Company shall be managed by the members, and that no member has the authority to bind the Company without the approval of the other
member

. . . . I n short, Sprengel is as much a controlling member

– is as much ‘current man agement’

– of the Company as Mohr. ” ( Ibid .)
The court further held that “ where, as here, the LLC is owned and managed by two coequal memb ers, neither can assert
the LLC’ s privilege against the other. Accordingly, Mohr cannot assert the attorney

- client pr ivilege on behalf of the Company here against Sprengel. ”

3. The district court’s ruling in the c opyright action In February 2013, the district court issued its findings of
fact and conclusion s of law in the copyright action. The court found Sprengel owned the copyright s to both the Kay Chemo
Guide and th e ChemoCompanion guides

. The court further found, however, that Sprengel had granted Mohr and Pur poseful
Press an implied license to exploit those copyrights, which10 provid ed a complete defense to Sprengel’s infringement claims

. The court also found that Mohr and Purposeful Press needed Sprengel’s authorization to “develop [any] additional derivative works that incorporate protected elements of the [original works]

. ”

E. The C urrent Malpractice Action
1. Summary of the Complaint In September 2013, Sprengel filed the current lawsuit against Zbylut , Cox and LPS. The complaint alleged that when
Mohr retained the defendants to represent Purposeful Press, there was an understanding that they would “provide leg al services for the benefit of Mohr, and to the prejudice of [Sprengel], under the pretext that the legal services were for the benefit of the [c]ompany.” The complaint further alleged th at defendants had “solicited payment from the [c]ompany for their
le gal services in conjunction with the [d]issolution [c]ase and the [c]opyright [c]ase without [Sprengel’s] knowledge or consent. The legal services provided by [d]efendants in the [ d]issolution [c]ase and the [c]opyright [c]ase were primarily devoted to th e best interests of Mohr and assisting [Mohr’s attorney Rose n ] in his representation of Mohr in those cases, at the [c]ompany’s expense.” Sprengel alleged four causes of action: (1) professional negligence (malpractice); (2) breach of fiduciary duties; (3) constructive fraud; and (4) “common count for money had and
received.” In the negligence claim, Sprengel a sserted that “[b]y undertaking to provide legal services and soliciting payment from [Purposeful Press] in the [dissolution and copyright cases], [d]efendants became obligated to [Sprengel] to exercise
reasonable care and skill with the standard of care for11 attorneys

. . . . ” She further alleged defendants had breached
those professional obligations by “fail[ing] to communicate with [Sprengel] and inform [her] of material facts and information relating to the legal services provided an d charged to [Purposeful Press],” and “ violat[ing] Rules of Professional Responsibility governing

. . . conflicts of interest including the failure to obtain
written w aivers from [Sprengel] and Mohr.” Sprengel’s claim for breach of fiduciary duty similarly alleged that “by undertaking to provide legal services regarding the affairs of [Purposeful Press] including the disputes between the [c]ompany’s two 50 percent ow ners and causing the [c]ompany to pay for those legal services, a fiduciary relationship existed between [Sprengel] and [d]efendants such that [d]efendants owed to [Sprengel] the duties of honesty, good faith, undivided loyalty and full disclosure of mater ial facts . . . and were obligated to comply with all of the Rules of Professional
Conduct. . . .” Defendants allegedly breached their fiduciary duties by “ concealing a conflict of interest, ” fai ling to obtain Sprengel’s consent for payment of legal servi ces and charging Purposeful Press for legal services “calculated to benefit the interests of Mohr and prejudice [Sprengel]

. ” Sprengel’s third and fourth claims for constructive fraud and “common count for money had and received” were similarly
based on defendants’ alleged breach of professional duties they owed to Sprengel.

2. The s ummary j udgment proceedings

a. The defendants’ motions and supporting evidence Zbylut and the LPS defendants (Cox and LPS) filed motion s for summary judgment arguing that there were two reasons Sprengel ’ s claims failed as a matter of law . First, the LPS12 defendants contended that Sprengel lacked standing to pursue
her claims in a direct action because Purposeful Press “[wa]s the real party in interest. ” More specifically, the LPS defendants
asserted the allegations in Sprengel’s complaint showed she was seeking reimbursement of the funds Purposeful Press had paid to
defendants , claiming that those fees should be disgorged because : (1) she had not consented to the le gal services , as was required under the operating agreement ; and (2) the services were intended to benefit Mohr, rather than the company. According to defendants, these claims ha d to be brought as a derivative action
rather than a direct action because they effectively sought recovery of the company ’s assets

. Second

, both defendants argued that “[a]ll of Sprengel’s claims” were predicated on “the existence of an attorney

- client relationship between her and [defendants]

. ” Defendants
asserted , however, that under “C alifornia law [,] . . . an attorney for a corporate entity does not owe a duty of care to the company’s members by virtue of representing the company.” Thus, Sprengel’s status as a 50 percent owner of Purposeful Press

was , standing alone, insufficient to establish an attorney

- client relationship. Zbylut , Cox and Mohr provided declarations in support of
the motions clarifying that Mohr had retained the defendants to represent Purposeful Press, and r etained separate counsel ( Rosen) to rep resent her in her individual capacity. Zbylut and
Cox’s declaration s described the nature of the work they had

p erformed for the company

. Zbylut asserted h is work had consisted solely of tax preparation services, wh ile Cox stated that he had provided advice regarding Purposeful Press’s copyright13 interest s to the chemotherapy guidebooks

. Both defendants asserted they had neve r spoken directly with Sprengel

.

b. Sprengel’s opposition and supporting evidence Sprengel ’s opp osition argued that, by undertaking representation of a corporate entity comprised of two 50 percent owners, the defendants necessarily entered into an implied attorney

- client relationship with each of the owners in their individual capacities

. Sprengel further asserted that as a result
of her implied attorney

- client relationship with defendants , the y

were required to obtain her consent prior to performing any legal
services on behalf of P urposeful Press, and were precluded from taking any legal positions that were adverse to her personal
interest s

. Sprengel contended defendants had violated those obligations by accepting payment from Purposeful Press without obtaining her consent, and adv ising Mohr with respect to Sprengel’s claims in the dissolution and copyright actions. 2 Sprengel did not directly address the LPS defendants’
contention that her claims were derivative in nature, meaning she lacked standing to assert her claims in a dire ct action. Although Sprengel argued she had “standing” based on her implied attorney

- client relationship with the defendants, she did not explain why her claims were direct, rather than derivative, nor did she identify any harms she had suffe red in her in dividual capacity.

2 Sprengel’s opposition also argued the defendants were collaterally estopped from denying the existence of an attorney

client relationship based on the district court’s orders in the federal copyright action. The trial co urt rejected Sprengel’s estoppel argument, and Sprengel has not challenged that portion of the ruling in this appeal.14 In support of her opposition, Sprengel provided declarations asserting that Mohr had not obtained her consent prior to hiring defendant s to represent Purposeful Press , and that
she had never spoke n with defendants regarding their representation of the company . Sprengel further asserted that after learning of defendants’ retention, she transferred Purposeful Press’s funds out of its bank account so that no further payments could be made to them.

3. T he t rial c ourt ’s ruling
In February 2017, the court issued order s granting
defendant s ’ motion s for summary judgment. T he court agreed that Sprengel lacked standing because her claims were derivative, rather than individual, in nature . In its ana lysis, t he court explained that Sprengel’s claims were predicated on the theory that “the use of Company funds to pay for Def e ndants’ legal services was, in essence, using Plaintiff’s money to pay for
such services. ” The court further explained that the members o f

a limited liability company do not hold any “ direct ownership interest in the company’s assets, [and are not ] . . . directly injured when the company is improperly deprived of those assets.” Thus,
the court continued , “the use of Company funds . . . to pay for Defendants’ legal services . . . did not cause Plaintiff direc t financi a l injury. Instead, such injury would be derivative

. . . . [¶] . . . [¶] As such, Plaintiff does not have standing to assert any of
the causes of action as [a] direct claim.”
The court also found Sprengel had failed to establish any triable issue of fact regarding the existence of an attorney

- client relationship between herself and defendants. The court concluded that under California law, defendants’ representation15 of Purpo seful Press did not , standing alone, give rise to a professional duty of care toward Sprengel.

DISCUSSION Sprengel argues the trial co urt erred in concluding that she lacked standing to bring her claims as a direct action , and that
she failed to identify any evidence that would support a finding of an attorney

- client relationship between herself and defendants.

A. Summary Judgment and Standard of Review “‘Summary judgment is appropriate “if all the papers
submitted show that there is n o triable issue as to any material fact and that the moving party is entitled to a judgment as a
matter of law.” [Citation.]. . . . [¶] Our review is de novo. [Citation.] We liberally construe the opposing party’s evidence
and resolve all doubts in favor of the opposing party. [Citation.] We consider all evidence in the moving and opposition papers, except that to which objections were properly sustained.’ [Citation.]” ( Brown v. Goldstein (2019) 34 Cal.App.5th 418; 246 Cal.Rptr.3d 161 , 171

- 172 .)

B. Sprengel Does Not Dispute She Lacks Standing t o Seek Reimbursement of Purposeful Press’s Funds The trial court concluded Sprengel was required to bring her claims as a derivative, rather than a direct, action because the allegations in her complaint demonstrated she was seeking redress for injuries to Purposeful Press, rather than for any injury she had suffered in her individual capacity. More specifically, the Court found Sprengel was seeking reimbursement of the fees Purposeful Press had paid to defendants for their legal services.16 “Because a corporation exists as a separate legal entity, the shareholders have no direct cause of action or right of recovery against those who have harmed it. The shareholders may, however, bring a derivative suit to enforce the corporation’s rights and redress its injuries when the [corporation] fails or
refuses to do so.” ( Grosset v. Wenaas (2008) 42 Cal.4th 1100,
1108 .) “An action is deemed derivative ‘“if the gravamen of the complaint is injury to the corporation, or to the whole body of its stock and property without any severance or distribution among
indiv idual holders, or it seeks to recover assets for the corporation or to prevent the dissipation of its assets.”’ [Citation.]” ( Ibid. [ fn. O mitted ] .) “A personal claim, in contrast, asserts a right against the corporation which the shareholder

possesses as an individual apart from the corporate entity: ‘If the injury is not incidental to an injury to the corporation, an
individual cause of action exists.’ [Citation.]” ( Denevi v. LGCC,
LLC (2004) 121 Cal.App.4th 1211, 1222 ( Denevi ) .) “[T]he principles of derivative lawsuits applicable to corporations likewise apply to a limited liability compan[ies].” ( PacLink Communications Intern., Inc. v. Superior Court (2001) 90 Cal.App.4th 958, 963 ( PacLink ) .) Sprengel ’s appellate briefing does not challeng e the cour t’s conclusion that she cannot bring a direct action to recover the corporate funds that Purposeful Press paid to defendants for
their legal services

. This appa rent concession is well taken. Claims seeking to recover corporate assets from a third party a re generally deemed to be derivative in nature. ( PacLink , supra, 90 Cal.App.4th at p. 964 [claim alleging LLC had been “improperly deprived of . . . assets,” causing a “diminution in the value of [individual member’s] interest” was derivativ e ] ; see also Marsh et17 al., Marsh’ s Cal. Corp. Law (4th ed. 2000) § 15.11[A][1], pp. 15

- 61, 64.) Thus, t o the extent defendants unlawfully solicited and accepted payment from Purposeful Press for legal services that
were not authorized by the company’s management, or were otherwise intended to benefit Mohr in her personal capacity, a derivative action is the appropriate remedy.
S prengel disputes, however, the trial court’s finding that the only form of injury she has alleged in this case consists of

“ fraudulent use of Company funds for [payment of legal services intended for] Mohr’s benefit.” According to Sprengel, her claims
also allege defendants breached the ir duty of loyalty to her by providing advice and counsel to Mohr regarding the company’s use of Sprengel’s c opyrights to the chemotherapy guidebooks

, which forced S prengel to expend funds to litigate the copyright
and dissolution actio n s

. State d more simply , Sprengel contends the legal services defendants provided to Mohr forced her to incur expenses to defend her personal copyrights. Although Sprengel’s complaint does not expressly identify
the expenses she incurred in litigating the underlying action s as a form of damages, those claims are fairly implied from her pleading s and the materials she submitted in opposition to the motions for summary judgment

. Sprengel’s complaint repeatedly asserts that, by providing legal services “ in conjunction with the [d]issolution [c]ase and the [c]opyright [c]ase ,” defendant s breached their duty of loyalty to Sprengel , and violated their duty
to avoid conflicts of interest. The declarations Spreng e l provided
in the summary judgment proceedings further a ssert that, as a
result of defendants’ conduct, she was “forced to retain attorneys
and incur fees and costs.” These allegations make clear that18 Sprengel is seeking redress for the fees that defendants allegedly caused her to incur in defending her copyrights.
It is also clear that this form of injury i s personal , rather than derivative, because it involves rights that Sprengel allegedly possessed as “ an individual apart from the corporate entity .” ( Denevi, supra

, 121 Cal.App.4th at p. 1222 .) Specifically, she alleges that as a result of the defendants’ breach of their professional duties, she was forced to defend copyrights she owned in her personal capacity.

C. Sprengel Has Presented No Evidence that Would Support a Finding of an Implied Attorney

- Client Rela tionship Sprengel acknowledges that , to prevail on the aspects of her claims that she has standing to pursue, she must establish the existence of an attorney

- client relationship between herself
and defendants. She further concedes that she never entered into

an express agreemen t with any of the defendants. She contends, however, that an “implied” attorney

- client relationship existed
between herself and defendants based on her status as a 50 percent owner of Purposeful Press.
The existence of an attorne y

- client relationship involves a question of law that we review de novo. However , any conflic t in
the evidence of an attorney

- client relationship is a question of
fact for the trial court to decide, which we uphold if supported by
substantial evidence

. ( See Responsible Citizens v. Superior Court (1993) 16 Cal.App. 4th 1717, 1733 ( Responsible Citizens ) ; Meehan v. Hopps (1956) 144 Cal.App.2d 284, 287 ( Meehan .)19 1. Summary of applicable law

a. General rule of no duty to shareholders
G enerally, when “ representing a corpor ation, an attorney’ s client is the corporate entity, not individual shareholders or directors, and the individual shareholders or directors cannot presume that corporate counsel is protecting their interests.” ( La
Jolla Cove Motel & H otel Apartments, Inc. v. Superior Court (2004) 121 Cal.App.4th 773, 784.) “An attorney representing a corporation does not become the representative of its stockhold ers merely because the attorney’ s actions on behalf of the corporation
also benefit the st ockholders; as attorn ey for the corporation,
counsel’ s first duty is to the corporation.” ( Skarbrevik v. Cohen, England & Whitfield (1991) 231 Cal.App.3d 692, 70 3 ( Skarbrevik ) ; see also Meehan , supra, 144 Cal.App.2d at p. 290 [“ The attorney for a corporat ion represents the corporation. . . .
He in nowise represents the officers personally ”] ).) These principles are reflected in California’s Rules of
Professional Conduct

, former R ule 3

- 600
, which govern ed the represent ation of an organization at the time the events at issue
in this case occurred

. (See Cal. Rules of Prof. Conduct, former
Rule 3

- 600 [effective Septemb er 14, 1992 to October 31, 2018 ].) 3 Subdivision ( A

) of former Rule 3

- 600 provide d

, in relevant part :

“ In representing an organization, a [lawyer] shall conform his or her representation to the concept that the client is the

3 During the pendency of this appeal, the Supreme Court approved new Rules of Professional Conduct. The current rule governing the repre sentation of an organization

, Rule 1.13
, contain s language that is substantially identical to the subdivisions of former Rule 3

- 600 that we cite here. (Se e Cal. Rules of Prof. Conduct, R ule 1.13 ( a ) and ( f ).)20 organization itself

. . . . ” Subdivision ( D ) further provided that,

“ In dealing with an organization’s directors, officers, employees, members, sha reholders, or other constituents, a [lawyer] shall explain the identity of the client for whom the [lawyer] acts, whenever it is or becomes apparent that the organization’s interests are or may become adverse to those of the constituent(s)
with whom the [lawyer] is dealing .”
In Skarbrevik

, supra , 231 Cal.App.3d 692, the court applied
these principles in conclud ing that a corporate attorney owed no professional dut y t o a mino rity shareholder who claimed that the value of his shares had been fraudulently diluted. The evidence
at trial showed the majority shareholder s had initially agreed to purchase plaintiff’s 2 5 percent share of the company for $500,000. Several months later, however, the majority shareholders refused to make the payment, asserting that the company’s attorney had advised them they were not legally required to make the payment. The attorney the n advised the majority shareholders with respect to a stock issuance plan that substantially diluted the value of plaintiff’s ownership interest. A jury found the attorney and his law firm had breached their professional duties to the plaintiff. The appel late court reversed, explaining that a “corporate counsel’s direct duty is to the client corporation, not to the shareholders individually, even though the legal advice rendered to the corporation may affect the shareholders.” ( Skarbrevik,

supra , 231 Cal. App.3d at p. 704.) The court acknowledged case law from other jurisdictions holding that an attorney for a closely

- held corporation may owe professional duties to individual owners with whom he or she has had “close interaction.” ( Id . at p. 705.)21 The c ourt concluded , however, that no such interaction had
occurred in the current case . Instead, the evidence showed the plaintiff had “no contact” with the corporate attorney, and had no “basis . . . to place faith, confidence or trust in [the attorney] to

p rotect his interests . . ., particularly after he was told . . . [the] attorney[ had] advi[sed the majority shareholders] . . . not to pay him for his shares.” ( Skarbrevik, supra , 231 Cal.App.3d at

p. 705.) The court further explained that “[ t ] he fact that the [attorney] could have foreseen the adverse consequences of his advice and its impact on pl aintiff [was] not sufficient justification for fixing liability on him to a nonclient shareholder under these
circumstanc es.” ( Id . at p. 707.)

b. Case law addressing implied attorney

- client relationships in the context of partnerships In Responsible Citizens , supra, 16 Cal.App.4th 1717

, the

court held that, at least under some circumstances, an attorney’s representation of a partnership may create an implied attorney

client relationship with the individual partners. T he defendant
in Responsible Citizens sought to dis qualify the plaintiff’s attorney because the attor ney had previously represented the defendant’s partnership in an unrelated matter. The trial court granted the disqualification order “based on . . . the legal conclusion that representation of a partnership automatically creates an attorney

- client relati onship with the individual partners.” ( Id . at p. 1721.) The appellate court reversed, concluding that the trial

court had erred in finding that an attorney ’s representation of a partnership “necessarily includes representation of the individual partners .” ( Responsible Citizens, supra

, 16 Cal.App.4th at

p. 1735.) The court further held, however, that an attorney for a22 partnership may, through his or her conduct, enter into an “implied” attorney

- client relationship to represent the interests of
the individual partners. ( Id. at p. 1732.) T he court set forth a “[ non ] exhaustive ” list of “factors which might support, or undercut, implication of an attorney

- client relationship with an individual partner in any particular case. The type and size of
the partnershi p obviously have a bearing.

. . . So do the n ature and scope of the attorney’ s engagement by the partnership. The kind and extent of contacts, if any, between the attorney and the individual partner might be important factors. The same is true as to the attorney’s access to information (e.g., partnership financial information) relating to the individual partner’s interests.” ( Id . at p. 1733 .) The court emphasized that “primary attention should be given to whether the totality of the circumst ances, including the parties’ conduct, implies an agreement by the partnership attorney not to accept other representations adverse to the individual partner’s personal interests.” ( Responsible Citizens

, supra, 16 Cal.App.4th at p. 1733.) The court reman ded the
matter with directions that the trial court weigh those factors in assessing whether an implied attorney

- client relationship had
been formed

. In Johnson v. Superior Court (1995) 38 Cal.App.4th 463 ( Johnson ), the court applied Responsible Citizen s ’s multi

- factor test in assessing whether there was sufficient evidence to support a finding that the attorney for a partnership had an implied attorney

- client relationship with each of the partners. The partnership at issue in Johnson owned a single asset that
consisted of a lease to an industrial park. During the lease period

, the general partner , acting on behalf of the partnership,23 entered into an option to purchase the property from the
land owner on terms that were bene ficial to t he partnership

. Shortly thereafter, the general partne r sent the limited partners
a le tter stating that they need ed to contribute additional capital
to the partnership , or, alternatively, sell their interest back to the partnership. The letter did not di sclose the partnership ’s option agreement with the land owner

. The general partner retained the defendant attorney to advise him and the partnership whether any additional disclosures had to be made to the limited partners regarding the option to purchase the land . The attorney drafted a second letter informing the limited partners that they were required to either provide additional capital

, or accept the general partner’s buyout proposal. The general partner sent the letter out on his letterhead; there was no indication that the letter had been prepared or reviewed by the defendant. T he limited partners
elected to sell their partnership interest s back t o the general partner ; the general partner then executed the option to p urchase the property, and subsequently resold the property for a substantial profit. The limited partners filed suit against the general partner
and the attorney for failing to disclose the land purchase agreement . The attorney moved for summary judgmen t
, arguing that he had been retained to represent the general partner and partnership, and had no attorney

- client relationship with the limited partner s

. The trial court granted the motion, noting that there was no express agreement to represent the plain tiffs , and
that plaintif fs had never had ever had any co ntact with the defendant, or otherwise r elied on his advice.24 The appellate court reversed, concluding there were triable
issues of fact whether the plaintiffs and defendant had an implied attorney

- cl ient relationship. The court acknowledged
that several of the factors set forth in Responsible Citizens weighed against an attorney

- client relationship. Specifically, the evidence showed the limited partners had not had any contact with the attorney, the y had not directly relied on the attorney’s
advice and had no prior relationship with him. Moreover, there was no evidence the attorney had access to any confidential information regarding the partner’s in dividual finances

, or their
desire to remain in the partnership.
The co urt concluded, however, that other factors
nonetheless raised a triable issue of fact regarding the existence of an attorney

- client relationship. First, the attorney knew the limited partners had no knowledge of the p artnership’s option to purchase the property . Second, the attorney also knew the
limited partners w ere likely to rely on the letter he had drafted

, and that the omission of material facts might affect their decision
whether to sell their partnership inter est

. Third, t he court found
that the “primary factor ” weighing in favor of an attorney

- client relationship consisted of “ the nature of representation that [ the attorney ] had rendered ” to the partnership. ( Johnson, supra , 38 Cal.App.4th at p. 478.) The c ourt explained that the attorney had specifically been “ retained to re present the partnership interests” with respect to the land sale. ( Ibid .) The evidence indicated, however, that the attorney ’s actions were intended to
benefit the general partner at t he expense of the limited
partners . As stated by the court, “ T his is a case, we are convinced, in which the undertaking by [the attorney] to represent the partnership, generally, imposed upon him an25 obligation of loyalty to the partnership and to all partners in terms of their entitlement to benefits from the partner ship

. . . . ” ( Id. at p. 479.)

2. Sprengel has presented no evidence that would support the finding of an implied attorney

- client relationship Sprengel argues that

, under the factors and analysis set
forth in Responsible Citizens , there are triable issues of fact
whether she had an implied attorney

- client relationship with
defendants based on their representation of Purposeful Press

. Sprengel ’s argument relies primarily on the first factor set forth
in Responsible Citizens

, effectively asserting that defendan ts’ decision to undertake representation of an LLC that was owned by two 50 percent shareholders necessarily gave rise to an
individual client

- attorney relationship with each of the two shareholders. Defendants do not challenge Responsible Citizens ’s and
J

ohnson’s holding s that an implied attorney

- client relationship may be formed between t he attorney for a corporate entity and
the entities ’ individual constituents

. 4 They argue, however, that

a pplying the factors set forth in those decisions

, Sprengel has produced no evidence t hat would support a finding of an

attorn ey

- client relationship between herself and defendants

. We

agree.

4 Although Responsible Citizens involved a partnership, the decision does not contain any language limiting its h olding to partnerships, and substantial portions of the decision analyze corporation s and partnership s interchangeably. ( Responsible Citizens, supra , 16 Cal.App.4th at pp. 1 726

- 1729.)26 As Sprengel correctly notes, Purposeful Press ’s status as a n

e ntity comprised of only two 50 percent shareholders is a factor
that weigh s in support of an attorney

- client relationship

. (S ee also Johnson

, supra , 38 at p. 476 [“ The argument is that representation of [an entity with] few members may suggest an individual representation of the members ”] ; see also Woods v. Superior Court (1983) 149 Cal.App.3d 93 1, 936 [“ the atto rney of a . . . business [owned by a husband and a wife] . . . should not represent one owner against the othe r in a dissolution action ”]. )
Several other factors , however, clearly “undercut the implication” of an implied attorney

- client relationship between Sprengel and
defendant. ( Responsible Citizens, supra , 16 Cal.App.4th at

p. 1733.)
First

, it is important to clarify the nature of the implied attorney

- client relationship that Sprengel alleg es she formed
with defendants. Unlike in Johnson , Sprengel is not merely asserting that , as attorneys for Purposeful Press, defendants had

a professional duty to protect the individual interests and
benefits she held in Purposeful Press as a shareholder

. ( Compare Johnson, supra , 38 Cal.App.4th at p. 479 [“ the undertaking

. . . to represent the partnership, generally, imposed [the attorney] . . . an obligation of loyalty to

. . . all partners in terms of their entitlement to benefits from the partnership. . . .” ].) Indeed,
aside from the derivative claims that seek recovery of the corporate funds defendants received from Purposeful Press

, which Sp rengel lacks standing to pursue (see ante , pp. 14

- 16)

, Sprengel has not identified any harm that defendants’ representation of Purposeful Press is alleged to have caused to her in her representative capacity as a shareholder

.27 She does not assert, for exa mple, that defendants aided Mohr in devaluing her share of the company , or otherwise negatively affected any benefit s she derived from Purposeful
Press

. 5 Instead, Sprengel alleges defendants caused harm to personal interests that she held separate from th e corporation

, and that were adverse to the corporation

. Sp ecifically, she alleges defendants breached the ir duty of loyalty by assisting Mohr and Purposeful Press in claiming ownership over

c opyrights that Sprengel owned in her personal capacity, causing
her to expend funds to defend those personal ly

- held copy rights

. Sprengel has cited no authority suggesting that , standing alone, an attorney’s representation of a closely

- held corporation gives
rise to professional duties to the individual shareholders with respect to personally

- held rights that are both separate from, and adverse to, the corporation itself.
S econd, even if there were circumstances under which a corporate attorney might owe such a duty to individual
shareholde rs, no such circumstances are present here. W hen

5 Sprengel’s appellate brief ing contends there is evidence that defendants aided Mohr in attempt ing to “ force ” Sprengel out of the company. The only evidence s he cites in support of that claim , however, is an email from Z b y lut to Mohr’s person al attorney confirming that the operating agreement contained no mechanism that permitted Sprengel or Mohr to unilaterally eject the other from the company. The email proposed , however, that Mohr offer Sprengel the corporation’s existing fu nds, then $162, 000, in exchange for Sprengel ’s ownership interest s in the company and the copyrights. The con tents of the email make clear Z b y lut was simply proposing a potential settlement offer that could resolve the management dispute. There is no evidence this prop osal was ever acted upon, and Sprengel has not set forth

any injury she suffered as a result of the proposal.28 assessing the existence of an implied attorney

- client relationship between a corporate attorney and the entity’s individual
members , the key inquiry is whether “ the totality of the
circu mstances” implies an agreement that the corporate attorney
will not act adverse ly to the individual shareholder’s interests with respect to the issues in dispute

. ( Responsible Citizens

, supra , 16 Cal.App.4th at p. 1733.) Stated differently, we must assess whether the partie s conducted themselves in a way that would reasonably cause a shareholder to believe the attorney
would protect the shareholder’s individual interests. (See
Sk a r b r evik, supra, 231 Cal.App.3d at p. 707.)
The evidence in this case demonstrates that Sprengel never believed, or had any reason to believe, defendants were acting to protect her personal interests

, or had impliedly agreed to avoid representations that were adverse to those interests. Shortly
aft er the L PS defendants agreed to represent Purposeful Press, they sent Sprengel’s attorney a letter asserting that she was not
the sole owner of the copyrights, and that she had no authority to unilaterally withdraw the company’s right to publish the guideb ooks. The attorneys made clea r to Sprengel from the outset that their representation to her was adverse in nature. Moreover, Sprengel ’s declarations assert that upon learning Mohr had retained defendants to represent Purposeful Press, she immediately transferred the company’s assets out of
its bank account to block any further payments to defendants

. She then filed multiple lawsuits against Mohr in which she was represented by her own attorney. Sprengel’s declarations confirm she never spoke with defendants directly , never relied on their legal advice and never shared any confidential information with29 them. Indeed, to the extent she had any interactions with defendants, those interactions were adversarial in nature

. This is simply not a case where the parties’ conduct could be deemed to imply an agreement that defendants w ould not undertake representation that was adverse to Sprengel. The
adversarial nature of their relatio nship was clear from the time they were retained by Purposeful Press.

DISPOSITION
The judgment is affirmed

. Respondents shall recover their costs on appeal.

ZELON, J.

We concur:

PERLUSS

, P. J.

SEGAL , J.Filed 9/17/19 (order modifying nonpub. opn.)

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

JEAN SPRENGEL,

Plaintiff and Appellant,

v.

GREGORY ZBYLUT, et al.,

Defendants and Respondents. B282129

(Los Angeles County Super. Ct. No. BC535584)

ORDER MODIFYING OPINION (NO CHANGE IN JUDGMENT)

THE COURT: IT IS ORDERED that the opinion filed September 10, 2019 be corrected as follows:

2. Page 1 third paragraph, attorneys for Defendant and Respondent Gregory Zbylut, Miller Law Associates, Zachary Mayer shall replace Lisa D. Mallison.

3. Page 1 fourth paragraph, attorney Tammy Q. Gallardo of Nemecek & Cole shall be corrected to read Tommy Q. Gallardo.

____________________________________________________________ PERLUSS

, P. J. , ZELON, J., SEGAL, J.Filed 10/7/19

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALI FORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

JEAN SPRENGEL,

Plaintiff and Appellant,

v.

GREGORY ZBYLUT, et al.,

Defendants and Respondents. B282129

(Los Angeles County Super. Ct. No. BC535584)

ORDER CERTIFIYING OPINION FOR PUBLICATION

THE COURT:
The opinion in this case filed September 10, 2019 and
modified on September 17, 2019 was not certified for publication.
It appearing the opinion meets the standards for publication
specified in California Rules of Court, rule 8.1105(c), the request
by a n on

- party pursuant to California Rules of Court, rule
8.1120(a) for publication is granted.
IT IS HEREBY CERTIFIED that the opinion meets the
standards for publication specified in California Rules of Court,
rule 8.1105(c); and2 ORDERED that the words “ Not to be Published in the
Official Reports” appearing on page 1 of said opinion be deleted
and the opinion herein be published in the Official Reports.

____________________________________________________________ PERLUSS, P. J., ZELON, J., SEGAL, J.