Court Opinion

ID: 5129486
Source: CourtListenerOpinion
Date Created: 2021-11-24 22:03:50.045643+00
Date Added: 2024-06-11T08:23:12.141852
License: Public Domain

Filed 11/24/21 Samuels v. Hamrick & Evans CA1/3

                  NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or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.

          IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                      FIRST APPELLATE DISTRICT

                                                DIVISION THREE

 SETH SAMUELS et al.,
           Plaintiffs and Respondents,
                                                                        A158688, A158878
 v.
 HAMRICK & EVANS, LLP et al.,                                           (City & County of San Francisco
                                                                        Super. Ct. No. CGC-13-534626)
           Defendants and Appellants.

         In 2013, Seth Samuels, his brothers, and their companies (plaintiffs)
filed this malpractice action against their former attorneys, Kenneth Greene,
Raymond Hamrick, and the law firm of Hamrick & Evans (defendants).
Plaintiffs sought damages for defendants’ negligent prosecution of an action
to collect a $1.8 million judgment that plaintiffs had obtained against
Pinewave Construction, Inc. in 2005. Like the parties, we refer to this
judgment debtor as PW1 in order to distinguish it from its related company,
Pinewave Commercial Construction, Inc. (PW2).
         Plaintiffs’ malpractice case was tried to the court in late 2018. In a 90-
page statement of decision, the trial court found that defendants committed
malpractice and awarded plaintiffs damages totaling $4,502,807, plus
interest. On appeal, defendants contend the judgment against them must be
reversed because the judgment against PW1 was not collectible.

                                                               1
Alternatively, defendants contend the trial court erred by awarding
prejudgment interest. We affirm the judgment but remand this case for
recalculation of plaintiffs’ damages.
                         FACTUAL BACKGROUND
      We base our background summary on the facts and evidence set forth
in the statement of decision.
I. Plaintiffs’ Judgment Against PW1
      In 2002, plaintiffs and PW1 executed a contract pursuant to which PW1
agreed to be the general contractor for plaintiffs’ construction project on
Noriega Street in San Francisco. PW1 is owned by Eric Au, Edwin Law,
Gavin Lam, and Lawrence Lee (the PW Owners).
      In December 2003, when the Noriega project was near completion,
plaintiffs notified PW1 about significant construction defects. PW1 “tried
unsuccessfully” to correct the defects. When plaintiffs refused to make
further payments for the attempted corrections, PW1 stopped work on the
project and the PW Owners “immediately” took the following actions:
(1) they caused PW1 to pay them a shared dividend in the amount of
$200,000 by drawing on a line of credit; (2) they set up PW2 and began
transferring assets and projects to PW2; (3) they caused PW1 to “pay all of
PW2s overhead, salaries, rents and expenses.”
      In May 2004, PW1 filed a demand for arbitration of its dispute with
plaintiffs. That same month, it entered into a construction contract with a
related company, Grove Avenue Business Park LLC (Grove). PW Owner Lee
signed the contract on behalf of PW1 and PW Owner Law signed for Grove.
The Grove project was completed and sold in June 2005. “The PW1 owners
manipulated the Grove Project so as to allow Grove to keep between $1.3 and

                                        2
$1.9 million in value” by causing PW1 to undercharge Grove for PW1’s
services.
      In September 2005, plaintiffs obtained an arbitration award, which was
confirmed as a $1,799,830 judgment against PW1 in October 2005. At the
suggestion of their arbitration counsel, plaintiffs retained the law firm of
Rutan and Tucker (Rutan) to pursue collection efforts.
II. Collection Efforts During 2006–2007
      Rutan garnered substantial discovery about PW1 and PW2 despite
“fierce[] resist[ance]” from the PW Owners. Information collected by Rutan
included research into a PW1 website that hosted PW-related entities, which
“revealed projects that had been started by PW1 but which had been taken
over by PW2.” Rutan also conducted an Order of Examination (OEX) for two
PW Owners, Edwin Law and Gavin Lam. Lam’s August 2006 OEX contained
testimony establishing that “the reason PW2 was formed and the assets and
business of PW1 were transferred to it was to avoid the legal claims against
PW1.” Seventy-six boxes of records were produced during Lam’s OEX, which
included tax returns and financial statements.
      At Law’s July 2006 OEX, PW1 resisted a discovery request for
computer records, claiming that its computer systems were all sold to PW2, a
nonparty to the arbitration action. To justify this position, PW1 produced a
bill of sale dated August 3, 2005, two weeks before plaintiffs obtained their
arbitration award. Rutan’s computer expert determined that the bill of sale
was created in October 2005.
      In December 2006, Rutan filed a collection action on behalf of plaintiffs,
asserting alter ego and direct tort liability theories against PW2 and the PW
Owners. Then Rutan obtained a writ of attachment that “tied up” $500,000
of PW2 assets, and a court order requiring PW2 to produce missing

                                        3
accounting documents, electronically stored information and computer
records. In response, the PW Owners promptly filed for Chapter 11
bankruptcy on behalf of PW2, securing a stay of state court discovery. As
debtors in possession of PW2, the PW Owners enriched themselves through
transfers of PW2 assets. In November 2007, PW2’s bankruptcy was
converted to a Chapter 7 proceeding.
III. Defendants’ Representation of Plaintiffs
      In October 2007, plaintiffs retained Ken Greene to replace Rutan as
counsel in their collection action. Prior to his retention, Greene had been
advising Seth Samuels for several months, and he convinced Samuels that
Rutan “had made mistakes and overcharged him.” Greene’s attorney fee
agreement provided that he would be paid $200 per hour to continue
prosecution of the collection action, participate in the PW2 bankruptcy action,
and take any other action agreed upon by the parties. The agreement did not
contain a provision relieving Greene of his obligation to provide attorney
services in the event plaintiffs’ resources were depleted or they failed to pay
their bills. In around November 2007, Greene became a partner at Hamrick
& Evans, bringing plaintiffs’ cases with him.1
      In January 2008, the PW Owners filed motions for summary judgment
or summary adjudication in plaintiffs’ collection action. Greene obtained
multiple continuances, which delayed the hearing on these motions until
December and the July 2008 trial date until summer 2009.
      During 2008, Greene did not take any discovery relating to the pending
summary judgment motions; he did not take depositions despite plaintiffs’

      1 Defendants represented plaintiffs in two other actions arising out of
the Noriega Street project, one against Everest Insurance Company and the
other against companies responsible for defective windows. Disputes about
defendants’ representation in those cases are not before us on appeal.

                                        4
requests that he do so; and, although he attempted to subpoena business
records from PW-related entities, all of his subpoenas were quashed due to
procedural errors. When Greene obtained a final continuance of the trial
date, he failed to request that discovery remain open, causing additional
subpoenas to be quashed as well. As a consequence of Greene’s failure to
subpoena relevant records, his chosen expert, Colin Johns, declined to testify.
      Greene failed to properly secure, prepare or disclose an expert witness
to offer opinions opposing the summary judgment motions. He told plaintiffs
he thought Colin Johns would “make a poor showing” and did not want to use
him, and he also rejected Everett Harry, another expert who Seth Samuels
had found. In October 2008, Samuels contacted Claudia Berglund who is a
forensic accountant. Greene retained Berglund and had plaintiffs pay her
$10,000. Berglund made preliminary conclusions supportive of plaintiffs’
alter ego and fraudulent transfer claims, but when Greene attempted to
amend his expert witness disclosure two days before the second session of the
summary judgment hearing, the PW Owners objected, and Greene stopped
working with Berglund. Ultimately, Greene filed a declaration by Seth
Samuels, but he failed to advise the court about Samuels’s “extensive
training in accounting, and significant experience with computerized
accounting systems.” Samuels’s declaration was deemed inadmissible on the
ground that Samuels was not qualified as an expert.
      In opposing the summary judgment motions, Greene did not utilize
evidence that had been garnered by plaintiffs before they retained Greene.
That evidence would have established the PW Owners’ control of PW-related
entities and that they made fraudulent transfers. Plaintiffs also had
persuasive evidence showing that the PW Owners “took unabashed and
repeated steps to conceal and then destroy . . . evidence from their PW

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Computer Server Network.” Although it took plaintiffs years fully to unravel
the PW Owners’ trail of wrongdoing, sufficient evidence to have defeated the
motion for summary adjudication was readily available to Greene when he
took over the case.
      In January 2009 the PW Owners were granted summary adjudication
as to most of plaintiffs’ causes of action, including the alter ego claims. In
February, Greene took the depositions of three PW Owners. Subsequently,
he filed a motion for reconsideration of the summary adjudication order,
relying on the 2009 depositions, business records from PW1, and the
declaration of a computer expert. That motion was denied as untimely.
      Despite the unfavorable summary adjudication rulings, evidence
available to Greene could have been used to prove fraudulent transfer claims
that had not been summarily adjudicated. Instead of pursuing that course,
Greene began advising plaintiffs to dismiss their case. About six weeks
before the rescheduled trial date, Greene threatened to withdraw from the
case, claiming his future bills could be as high as $150,000.
      In July and August 2009, Greene represented plaintiffs in proceedings
on their motion to establish that PW1 and the PW Owners committed
spoilation of evidence. Plaintiffs relied on evidence that when PW2 finally
complied with court orders compelling production of the computers that PW1
allegedly sold to PW2, the hard drives had all been “wiped.” The trial court
found that “massive destruction of documents” had occurred, but plaintiffs
failed to prove their spoliation claim because they did not establish that the
destroyed documents contained discoverable information that plaintiffs had
not previously received in another format.
      On August 10, 2009, plaintiffs’ collection action was dismissed without
prejudice.

                                        6
      In June 2012, defendants represented plaintiffs at a hearing regarding
plaintiffs’ proof of claim in the PW2 bankruptcy case. Plaintiffs sought to
recover the PW1 judgment pursuant to theories of successor liability, alter
ego, and fraudulent transfer of assets. The bankruptcy court overruled
objections to plaintiffs’ claim, finding that PW2 is the alter ego and successor
to PW1. Plaintiffs’ allowed claims against PW2 totaled $2,189,890. However,
the amount paid for these unsecured claims was only $222,771.
IV. Findings and Judgment in the Malpractice Action
      In October 2013, plaintiffs filed this malpractice action. A court trial
was held over fourteen nonconsecutive days between September and
November 2018, after which the court elicited post-trial submissions. A May
2019 final proposed statement of decision was adopted as the court’s final
statement of decision on June 5, 2019.
      The first set of legal issues decided by the trial court pertained to
whether defendants breached their duty of care to plaintiffs. The court found
that resolution of this issue turned on the expert testimony. (Citing CACI
600.) Plaintiffs’ expert, an attorney named William Norman, testified that
Greene’s conduct fell far below the standard of care in several ways,
including: failing to take adequate steps to oppose the summary adjudication
motions; failing to take the remaining fraudulent transfer claims to trial; and
forcing plaintiffs to dismiss their collection action by threatening to withdraw
as their counsel.
      Defendants did not elicit opinions from their designated experts as to
whether Greene breached the standard of care, relying instead solely on
Greene’s testimony. Greene claimed that the reason he did not do more work
in the collection action was because plaintiffs lacked adequate financial
resources to pay for it. The court rejected this testimony on two independent

                                         7
grounds. First, the trial evidence established that “money was not the issue.”
Throughout 2008, plaintiffs paid all bills relating to the collection action; they
paid Greene’s fees, Berglund’s expert fee at Greene’s direction, and they also
paid for discovery that Greene finally conducted in 2009. Second, and in any
event, Greene’s alleged concern about money was no excuse for committing
“an extremely serious breach of the standard of care.” Ultimately, the court
found that Norman’s “credible and believable” expert testimony established
that defendants’ conduct fell substantially below the standard of care and, to
the extent Greene’s testimony could be construed as contradicting any of
Norman’s opinions, it was “not credible or believable.”
      The other set of issues decided by the court pertains to whether
defendants’ breach of duty caused plaintiffs’ damages. Plaintiffs employed
the “trial-within-a-trial” method to show that they would have prevailed on
their alter ego claims against the PW Owners if not for Greene’s malpractice.
This theory required that plaintiffs establish “ ‘collectibility,’ ” i.e., that they
were deprived of the opportunity to collect a money judgment from a solvent
debtor. (Wise v. DLA Piper LLP (2013) 220 Cal.App.4th 1180, 1190 (Wise).)
      The parties presented conflicting expert testimony as to whether
plaintiffs would have prevailed on their alter ego claims against the PW
Owners. William Norman testified that plaintiffs would have prevailed on
these claims because they had strong evidence to establish both unity of
interests and inequitable conduct. Defendants’ expert, Heather Xitco, is a
forensic accountant who opined that the available financial records would not
have supported a conclusion that the PW Owners had an alter ego
relationship with PW1.
      The trial court concluded that Norman’s opinions on these matters
were credible and reasonable and rejected Xitco’s opinions as neither credible

                                          8
nor believable. Findings in support of these rulings included that Norman’s
qualifications are superior to Xitco’s qualifications: Norman is an attorney
with more than 40 years of experience litigating complex commercial cases, of
which 75 involved alter-ego issues; Xitco is an accountant who focused
exclusively on financial matters. Further, Norman’s opinions are supported
by a comprehensive analysis of the relevant chronological facts, while Xitco
based her opinion on the sole fact that complete financial records were not
available, ignoring other pertinent facts and events that occurred before and
after plaintiffs obtained the 2005 judgment.
      The court also independently reviewed the evidence admitted as part of
the trial within a trial and concluded that plaintiffs should have prevailed on
their alter ego claims. In reaching this conclusion, the court made an express
finding that “[t]here was a unity of interest between and ownership between
[the PW Owners] and the corporation PW1 which enabled them to take PW1
assets and transfer them either to themselves or other entities as to which
they were owners which resulted in a serious inequity of PW1 being unable to
pay a judgment for 1.8 million.” The court also found that if not for Greene’s
malpractice, a judgment in the underlying case should have been obtained in
mid-2008.
      Next, the court found that plaintiffs carried their burden of proving
that the judgment they should have obtained in mid-2008 would have been
collectible. Mr. Norman, the only expert who testified as to this issue, offered
the opinion that a judgment against the PW Owners would have been
collectible. The court found that Norman was “extremely well qualified to
express an opinion on collectability” and that his “factual testimony” about
this matter was “extremely strong and credible because of his background,
experience and knowledge of specific facts in this case.” For example, he

                                       9
testified about the PW Owners’ interests in other PW-related projects,
including a 50,000-square foot office condominium building in Santa Clara
known as the Pearl Gateway Project, valued at over $15 million, and another
project referred to as the “Jiagmen China project,” which had been built
without a construction loan and was worth between $10 and $15 million.
Norman also based his opinion on the work-product of Berglund, plaintiffs’
expert in the collection action, which showed that PW1 had a substantial
interest in the Grove project because it had improperly transferred $1.9
million to that project.
      The court also “performed its own analysis” and found “as a fact” that
the $1.8 million judgment was collectible. The court supported this finding
with three additional categories of evidence. First, financial statements
produced at trial showed that two of the PW Owners, Au and Lee,
“collectively had a net worth of $4,621,559 and collectively [had] cash and
stocks and bonds and real property excluding their homes, of $2,260,959.”
The court found that Greene could have taken steps to ensure that the
October 2005 judgment was collectible from the PW Owners by attaching
these funds in 2007, after he took over the case.
      Second, the PW owners’ conduct during the PW2 bankruptcy
proceedings was additional evidence of their solvency. In 2009, the
bankruptcy trustee filed a motion for sanctions against the PW Owners for,
among other things, intentionally destroying PW1 business records in order
to cover up transfers of assets from PW1 to PW2, and for causing improper
pre-petition and post-petition payments from the PW2 bankruptcy estate. In
2010, the PW Owners elected not to defend the trustee’s “well-prepared
motion,” and paid $660,000 to settle the trustee’s claims against them. The
fact that these individuals had resources to pay the settlement was

                                      10
“persuasive evidence” that they could have paid a judgment in plaintiffs’
collection action if defendants had met their standard of care and brought the
case to trial on the original trial date in mid-2008. Moreover, the court found,
if the alter ego claims had been proven in plaintiffs’ case, bankruptcy estate
assets would not have been depleted litigating these same issues, and there
would have been more funds available to pay plaintiffs as creditors of PW2.
In this regard, the court observed that $500,000 of the sanctions settlement
was paid to the trustee and his attorney for their work on the motion.
      Third, the court found, evidence that the PW1 owners deliberately
destroyed documents and records in order to conceal their transfers of assets
from PW1 to PW2 supported a finding that the PW Owners “at all times had
effective ownership of assets of sufficient value that the judgment in the case-
within-the-case would have been collectable.”
V. Calculation of Damages and Entry of Judgment
      The court found that because defendants’ malpractice was the cause of
plaintiffs’ failure to collect the October 2005 judgment in 2008, plaintiffs’
damages are equal to the amount of that judgment plus interest at the legal
rate. In calculating the unpaid balance of the 2005 judgment, the court gave
defendants credit for two partial payments: $28,284, which had been
“collected directly” from the PW Owners/entities; and $222,867, which
plaintiffs received from the PW2 bankruptcy trustee. The court also adjusted
its calculation of accrued interest on the 2005 judgment to reflect the fact
that the judgment was renewed in February 2015. Applying these criteria,
the court determined that, as of February 20, 2019, damages caused by
defendants’ negligent failure to collect the 2005 judgment totaled $4,502,807.
      Judgment was entered on June 5, 2019. The court ordered that
judgment be rendered in favor of plaintiffs and against defendants in the

                                       11
amount of $4,502,807 plus interest, for a total amount of $4,596,857 as of the
date of entry of judgment.
                                  DISCUSSION
I. The Collectibility Findings Were Not Error
      Defendants contend the judgment against them must be reversed
because there is insufficient evidence that they caused plaintiffs damage.
Defendants concede that plaintiffs would have obtained a judgment in 2008
in their collection action against the PW Owners (i.e., a hypothetical 2008
judgment) if not for defendants’ malpractice. But they contend there is no
substantial evidence such a judgment was collectible. (See Garretson v.
Harold I. Miller (2002) 99 Cal.App.4th 563, 569 (Garretson) [trier of fact’s
collectibility findings are reviewed for substantial evidence]; Wise, supra, 220
Cal.App.4th at p. 1191 [same].)
      A. Legal Principles
      “ ‘In civil malpractice cases, the elements of a cause of action for
professional negligence are: “(1) the duty of the attorney to use such skill,
prudence and diligence as members of the profession commonly possess; (2) a
breach of that duty; (3) a proximate causal connection between the breach
and the resulting injury; and (4) actual loss or damage.” ’ ” (Blanks v.
Seyfarth Shaw LLP (2009) 171 Cal.App.4th 336, 356–357 (Blanks).)
      The causation and damages elements of malpractice require the
plaintiff to establish that “but for the defendant’s negligent acts or omissions,
‘the plaintiff would have obtained a more favorable judgment or settlement in
the action in which the malpractice allegedly occurred.’ ” (Blanks, supra, 171
Cal.App.4th at p. 357.) To satisfy these requirements in the present case,
plaintiffs employed the trial-within-a-trial method, which requires the
current trier of fact to “ ‘ “determine what a reasonable judge or fact finder

                                       12
would have done. . . .” [Citation.] Even though “should” and “would” are
used interchangeably by the courts, the standard remains an objective one.
The trier of fact determines what should have been, not what the result
would have been, or could have been, or might have been, had the matter
been before a particular judge or jury.’ ” (Ibid., italics omitted.)
      As part of its trial-within-a-trial case, the plaintiff must “prove that
careful management” of the underlying case “would have resulted in a
favorable judgment and collection thereof, as there is no damage in the
absence of these latter elements.” (DiPalma v. Seldman (1994) 27
Cal.App.4th 1499, 1506–1507.) “In this sense, collectibility of the
hypothetical underlying judgment . . . is a component of the plaintiff’s current
case relating to damages, as caused by the current negligent attorney
defendant.” (Wise, supra, 220 Cal.App.4th at p. 1191.)
      Proving collectibility invariably requires “ ‘a showing of the debtor’s
solvency.’ ” (Wise, supra, 220 Cal.App.4th at p. 1190.) “ ‘The loss of a
collectible judgment “by definition means the lost opportunity to collect a
money judgment from a solvent [defendant] and is certainly legally sufficient
evidence of actual damage.” ’ ” (Ibid.) The inquiry is not just a question of
technical solvency, as it focuses more broadly on evidence of the defendant’s
“ability to pay a judgment or some part of it.” (Hecht, Solberg, Robinson,
Goldberg & Bagley LLP v. Superior Court (2006) 137 Cal.App.4th 579, 591
(Hecht).)
      Collectibility is a fact-intensive inquiry, which “ ‘ “looks to the actual
circumstances to determine whether the judgment ‘would have been
collectable.’ ” [Citation.] It is not enough for a plaintiff to present
speculation or assumptions about an underlying defendant’s ability to
respond in damages, as opposed to proof of same.’ ” (Wise, supra, 220

                                        13
Cal.App.4th at p. 1191.) On the other hand, absolute certainty is not
required. (Ibid.) “Admissible evidence on collectibility can include
information about the basic solvency of the defendant in the underlying case,
as shown by its assets, net worth or available proceeds from investments.”
(Hecht, supra, 137 Cal.App.4th at p. 591.)
      B. Analysis
      In concluding that a hypothetical 2008 judgment against the PW
Owners would have been collectible, the trial court referenced four categories
of evidence: Norman’s expert opinion; personal financial statements of two of
the PW Owners; the PW Owners’ conduct in the bankruptcy case; and
evidence that the PW Owners deliberately concealed their assets from
plaintiffs and the courts. Defendants contend that each category of evidence
is either inadmissible or insufficient to establish collectibility. We address
defendants’ arguments with the caveat that the issue on appeal is whether
all the evidence considered together substantially supports the judgment.
            1. Expert Evidence
      During Norman’s direct testimony, plaintiffs’ counsel asked for
Norman’s expert opinion as to whether the PW Owners “actually had assets
that could have been collected” if not for defendants’ breach of their standard
of care. Norman responded that a $2 million judgment divided among the
four individuals “was clearly collectible at the time.” Norman also opined
that, although a judgment would not have been collectible from PW1 in 2008,
that entity would also have had sufficient money to pay plaintiffs’ judgment if
it had been “honestly run,” and the PW Owners had not transferred the
company assets.
      Defendants attempt in various ways to discredit Norman’s opinions.
For example, they contend erroneously that Norman did not “even opine on

                                       14
collectibility,” ignoring the testimony summarized here. They also argue that
the court did not qualify Norman to offer an opinion on the issue of
collectibility. Again, the record shows otherwise. During voir dire, Norman
testified that his 40 years’ experience practicing law includes handling
malpractice cases as well as alter ego and fraudulent transfer cases and he
has been qualified as an expert on the subject of attorney conduct “on a
number of occasions.” After defendants declined to voir dire, the court found
that Norman was qualified without limiting its finding to a specific issue.
More importantly, the court soon followed this by asking whether Norman’s
testimony as an expert on “malpractice” would include the following opinions:
(1) defendants violated the standard of care in presenting the underlying
case; (2) if defendants had acted within the standard of care, the underlying
case would have been proved; and (3) plaintiffs would have collected money if
not for the defendants’ breach of duty. Norman confirmed he would offer
these opinions without drawing any objection from the defendants. “[T]he
qualification of a witness to state his or her opinion is waived by failure to
object to the testimony when offered.” (569 E. County Boulevard LLC v.
Backcountry Against the Dump, Inc. (2016) 6 Cal.App.5th 426, 437, fn. 12.)
      Defendants’ substantive objection to Norman’s opinion is that he
allegedly relied on speculative factors and assumptions not supported by the
record. The testimony of a single witness, including an expert witness, may
constitute substantial evidence, but “when an expert bases his or her
conclusion on factors that are ‘speculative, remote or conjectural,’ or on
‘assumptions . . . not supported by the record,’ the expert’s opinion ‘cannot
rise to the dignity of substantial evidence’ and a judgment based solely on
that opinion ‘must be reversed for lack of substantial evidence.’ ” (Wise,
supra, 220 Cal.App.4th at pp. 1191–1192.)

                                       15
      Wise provides a useful example of an expert opinion unsupported by the
evidence. (Wise, supra, 220 Cal.App.4th 1180.) The plaintiffs obtained a
malpractice judgment against their former attorneys who helped them secure
a money judgment against Mr. Cheng for defaulting on a loan but then failed
to advise them of the necessity to renew the judgment. (Id. at p. 1183.) The
malpractice judgment was reversed on appeal, however, because there was
“no evidence” the Cheng judgment would have been collectible even if it had
been renewed. (Ibid.)
      The Wise plaintiffs’ trial expert, a collections attorney, testified that the
Cheng judgment was collectible in the past and would be collectible in the
future. (Wise, supra, 220 Cal.App.4th at p. 1192.) This testimony did not
constitute substantial evidence of collectibility because it was premised on
“an incorrect legal theory” that plaintiffs could have employed “reverse
piercing” to reach funds that third party investors had paid to corporate
entities operated by Cheng. (Id. at p. 1193.) Although the expert gave
additional reasons for his collectibility opinions, none carried evidentiary
weight. (Id. at p. 1194.) For example, the expert speculated that Cheng
owned part of his home but the trial evidence showed that he did not. The
expert also suspected that Cheng had money hidden in foreign bank accounts
and assumed that he “had significant financial resources” because he had
taken multiple trips to China, but there was no evidence to support these
assumptions. Because the expert’s collectibility opinion “relied purely on
speculation or assumptions unsupported by the record,” a judgment based
solely on that opinion was reversed for lack of substantial evidence. (Ibid.)
      In contrast to Wise, Norman’s expert opinions do not depend on any
invalid legal theory; there is no dispute on appeal that the PW Owners are
alter egos of the PW-related entities and that they fraudulently transferred

                                        16
assets out of PW1 in order to avoid having to pay the 2005 judgment. Nor do
defendants establish that Norman’s opinions are predicated on speculation or
unproven assumptions. Norman demonstrated to the trier of fact that he has
extensive knowledge of the historical facts and provided concrete examples
supportive of his conclusion that the 2005 judgment was collectible from the
PW Owners in 2008. In this regard, Norman testified that the 2009
depositions of the PW Owners, which could have been taken in 2008 if
Greene had been diligent, showed that the “individuals owned substantial
shares in a number of real estate projects” including the Jiagmen China
project and the Pearl Gateway project. Norman also based his opinion on the
trial-within-a-trial testimony of Berglund and Harry, which established that
the PW Owners transferred somewhere between $1.5 and $1.9 million from
PW1 to other PW-related entities “owned by the four men.”
      Defendants contend that Norman’s opinion is speculative because there
is no evidence in the trial record that the PW Owners’ interests in either
Jiagmen China or Pearl Gateway had sufficient value to enable them to pay a
$1.8 million judgment in 2008. First, we reject the suggestion that Norman
was required to proffer documentation of facts relied on to support his
opinion, particularly when defendants did not challenge that opinion at trial.
Second, Norman did not opine that a judgment would have been collectible
directly from these two sources but used the projects as examples of interests
that the PW Owners held in other PW-related entities and projects. The trial
record contains undisputed evidence of the PW Owners’ personal ownership
interests in multiple PW-related companies and in the real estate assets of
those companies. This evidence provides record support for Norman’s expert
opinion that the PW Owners were not only solvent but had the ability to pay
a $1.8 million judgment.

                                      17
      Insisting that Norman’s opinion is not supported by the trial evidence,
defendants contend that “[s]imply showing that a defendant had many
assets, or a high income, is not sufficient evidence of collectibility.” For this
proposition, defendants cite Garretson, supra, 99 Cal.App.4th 563. In that
case, the plaintiff was injured when she turned on an air compressor at the
dental office where she worked and experienced a shock. Her first attorney
pursued a workers’ compensation claim but never advised her she had a
potential personal injury claim against third parties responsible for the
incident. (Id. at pp. 565–566.) After plaintiff hired a new attorney, she sued
her former lawyer for malpractice.
      At the Garretson plaintiff’s trial within a trial, her theory was that her
injury was caused by a defective switch installed by an electric company,
under the supervision of a contractor and of Dr. Ask, who owned the dental
practice where the incident occurred. (Garretson, supra, 99 Cal.App.4th at
p. 567.) Plaintiff used evidence supportive of this theory to argue that the
defendant committed malpractice by failing to recognize and preserve her
personal injury claim against these third parties. The jury agreed, but the
trial court granted the defendant judgment notwithstanding the verdict
(JNOV). Affirming the judgment on appeal, the Garretson court held that
“the issue of collectibility was not tried. No evidence was presented by
plaintiff to establish collectibility of any judgment that might have been
obtained but for defendant’s negligence, and no argument was made to the
jury on the subject. This failure of proof on the part of plaintiff warranted
entry of [JNOV].” (Id. at p. 573.)
      The Garretson court rejected the plaintiff’s appellate argument that the
JNOV was not warranted because the jury at her trial within a trial could
have concluded that a personal injury judgment against Dr. Ask was

                                        18
collectible even though the issue was not expressly addressed. (Garreston,
supra, 99 Cal.App.4th at p. 572.) Plaintiff theorized that evidence Dr. Ask
had a successful dental practice would support a finding that he was “ ‘a
significant income earner,’ ” and the fact that he owned his office building
was additional evidence of collectibility. (Ibid.) The court rejected these
arguments because the plaintiff produced no evidence of the doctor’s income,
expenses, debts or insurance assets, and it was not possible to determine
from the record whether the doctor “had any positive net income, net worth,
or other means of satisfying the judgment.” (Ibid.)
      In the present case, defendants maintain that this case presents
“precisely the situation” as Garretson. Not true. Since the Garretson plaintiff
did not offer any evidence to establish collectibility, that case obviously does
not address what evidence an expert may consider in forming an opinion
about the matter. Nor does Garretson support defendants’ notion that
evidence a debtor has “many assets, or a high income” can never be sufficient
to support a finding by the trier of fact that a judgment would have been
collectible. The core problem in Garretson is that the collectibility issue was
never litigated. By contrast here, plaintiffs offered evidence including expert
evidence to prove collectibility and, although defendants elected to ignore the
issue, the trial court made an express finding that a hypothetical judgment
against the PW Owners would have been collectible. Nothing in Garretson
precludes us from concluding that Norman’s expert opinion constitutes
substantial evidence supporting the collectibility finding.
            2. Personal Financial Statements
      As noted, the trial court did not just rely on Norman’s expert opinion
but conducted an independent review that disclosed additional evidence of
collectibility. For example, the court found two of the four individual PW

                                       19
Owners had sufficient net worth and attachable assets to pay between them
the $1.8 judgment. This finding is supported by the June 30, 2006 personal
financial statements of Eric Au and Lawrence Lee. As of that date, Au
reported a net worth of $3,415,400, Lee reported a net worth of $1,807,159,
and both individuals reported having no current liabilities. These statements
also show the PW Owners owned attachable assets (i.e., not their homes) that
had a collective value of more than $2,200,000.
      Defendants contend the personal financial statements are not
substantial evidence of collectibility for three distinct reasons. First,
defendants posit that this evidence is inadmissible hearsay. The record
shows that the financial statements were identified and subsequently offered
into evidence during Seth Samuels’s trial testimony. Samuels testified that
this evidence was produced during discovery in the plaintiffs’ collection action
against the PW Owners. It was found in a locked QuickBooks file after
plaintiffs obtained the password from the PW2 bankruptcy trustee in April
2008. After Samuels described printing copies of these statements, the trial
court overruled defendants’ hearsay objection and admitted them into
evidence.
      On appeal, defendants renew their hearsay objection, contending
erroneously that neither the plaintiffs nor the court “identified any hearsay
exception.” The statement of decision contains an entire subsection
addressing this issue. There the court explains that evidence offered as part
of the trial within a trial must be analyzed differently than evidence offered
to establish a breach of the standard of care because in the trial within a
trial, the PW Owners are considered the defendants. Therefore, the court
found, statements by PW Owners are admissible pursuant to the party
admission exception to the hearsay rule. (Citing Kessler v. Gray (1978) 77

                                        20
Cal.App.3d 284, 290–291; Mattson v. Schultz (7th Cir. 1998) 145 F.3d 937,
940; see also Evid. Code, § 1220.) Failing to acknowledge this express ruling
by the trial court, defendants forfeit any claim it was error.
      Defendants’ second contention is that the PW Owners’ personal
financial statements cannot be substantial evidence of collectibility because
there was a two-year “ ‘gap’ ” period between these statements and the time
when plaintiffs should have collected their judgment, and plaintiffs failed to
prove that the financial condition of these individuals did not change during
that period. As authority for imposing this burden on plaintiffs, defendants
cite Akin, Gump, Strauss, Hauer & Feld v. NDR (Tex. 2009) 299 S.W.3d 106
(Akin). (See also Webb v. Stockford (Tex.App. 2011) 331 S.W.3d 169, 178
(Webb) [applying Akin].)
      Akin was a malpractice action against the Akin Gump law firm for
failing competently to represent the plaintiff in litigation arising out of
plaintiff’s contract dispute with Panda Energy International Corporation and
several of its subsidiaries (Panda), which resulted in a series of judgments in
favor of the Panda entities. (Akin, supra, 299 S.W.3d at pp. 106, 109.) In the
malpractice case, a jury found in favor of plaintiff, awarding damages that
included attorney fees plaintiff had paid in the Panda litigation as well as a
hypothetical judgment that plaintiff should have recovered from Panda
International and/or its subsidiary Panda Global. (Id. at p. 106.) The Texas
Supreme Court found that attorney fees were recoverable as damages but
there was insufficient evidence that a judgment against Panda would have
been collectible. (Ibid.)
      The collectibility issue addressed in Akin was limited to the question
whether a judgment would have been collectible against the parent
corporation Panda International because there was no dispute on appeal that

                                        21
subsidiary Panda Global was insolvent and no judgment could be collected
from it. (Akin, supra, 299 S.W.3d at p. 111.) The Akin court concluded the
trial evidence did not establish that Panda International could have accessed
sufficient funds to pay a judgment at the time the underlying case was
decided. (Id. at pp. 111 & 115.) In reaching this conclusion, the court
articulated the principle that when a plaintiff relies on evidence of
collectibility on a date prior to the final judgment in the underlying case, the
evidence must also show “a reasonable probability that the . . . defendant’s
financial condition did not change during the time before a judgment was
signed in a manner that would have adversely affected collectibility.” (Id. at
p. 114.) Without evidence covering this “gap time period,” the court
explained, the factfinder would have to speculate about how intervening
events affected the judgment debtor’s finances. (Ibid.)
      Here, defendants argue that Akin compels the conclusion that the trial
court’s collectibility finding is speculative because the PW Owners’ 2006
personal financial statements predate by two years the judgment that
plaintiffs should have obtained against them, and there is no evidence that
the financial condition of these individuals did not deteriorate during the
two-year gap period. Defendants cite no California authority approving or
applying the gap period requirement discussed in Akin, and we need not
decide whether such a requirement might sometimes be appropriate in light
of the material distinctions between Akin and this case. Dispositive for the
Texas court was that the Akin plaintiff relied primarily on evidence that
nonparty Panda entities had assets to pay the judgment but failed to
establish that those resources were accessible by Panda International. Here
there is no dispute that the PW Owners are the alter egos of PW1 and PW2
and that they fraudulently transferred assets between these and other PW-

                                       22
related entities in order to avoid paying plaintiffs damages arising from the
defective construction of the Noriega project. Further, in contrast to Akin,
the plaintiffs in this case proffered expert evidence of collectibility, which by
itself substantially supports the trial court’s finding. And in Akin, there was
evidence of the “financial deterioration of the Panda entities and projects”
during the gap time (Akin, supra, 299 S.W.3d at p. 117), evidence that finds
no parallel in the record in this case. In light of these differences, we do not
find Akin persuasive authority here.
      Defendants’ final complaint about the PW Owners’ personal financial
statements is that the trial court erred by speculating that Greene could have
successfully attached the personal assets of the PW Owners in 2007. The
trial court did not speculate about this matter, but made express findings
that Greene could and should have moved to attach personal assets of the PW
Owners no later than November 2007. The court based these findings on
evidence that the reason plaintiffs were denied a writ of attachment against
the PW Owners in December 2006 was because at that time they did not have
the evidence to establish the PW Owners were individually culpable for the
2005 judgment, but by the time Greene took over the case in October 2007,
plaintiffs had collected additional evidence that could have been used to
obtain a writ of attachment against the property of the PW Owners. Personal
financial statements were part of that evidence, although the court gave
many other examples, including an expert declaration outlining the PW
Owners’ falsification of evidence, QuickBooks files of PW1 and PW2, and
other documentary proof of fraudulent transfers instigated by the PW
Owners. Defendants offer no response to these findings.

                                        23
            3. Bankruptcy-Related Payments
      The trial court found that a 2009 sanctions motion that the PW2
bankruptcy trustee filed against the PW Owners is probative evidence of
collectibility in two ways: (1) the “well-prepared” motion depleted bankruptcy
estate resources that would otherwise have been available to pay creditor
claims, including plaintiffs’ approved claim for the October 2005 judgment;
and (2) the fact that the PW Owners paid $660,000 to settle the motion in
2010, was evidence they had resources to pay a judgment in 2008.
      Defendants dispute these findings on the ground that there is no
evidence the PW Owners actually paid the $660,000 settlement with their
own funds, suggesting the money could have been borrowed or gifted to them.
We are not persuaded by defendants’ speculation; the fact that the settlement
was paid in 2010 is circumstantial evidence that the PW Owners were
solvent and had the ability to pay a 2008 money judgment. Evidence
pertaining to the sanctions motion is also relevant to show another way that
defendants’ malpractice caused plaintiffs’ damages. If Greene had
competently opposed the summary adjudication motions and secured a
judgment against the PW Owners in 2008, the funds used by the bankruptcy
trustee to prove the fraudulent transfers and alter ego claims would have
been available to pay a larger portion of the October 2005 judgment, thus
reducing the unpaid balance and increasing the likelihood of collectibility
from the individual PW Owners.
            4. Deliberate Destruction of Asset Evidence
      Defendants do not dispute that the PW Owners destroyed documents in
order to conceal asset transfers from PW1 to themselves and their other
companies. However, they contend that the trial court erred by relying on
this evidence to support its collectibility finding. Specifically, defendants

                                       24
argue that because the evidence showing what assets were transferred was
actually destroyed, it would be “utter speculation” to conclude that the
transferred assets were of sufficient value to pay the judgment in mid-2008.
      Defendants’ logic does not withstand scrutiny. The trial court did not
find that the judgment was collectible from any specific asset that was
transferred out of PW1; it found that the PW Owners’ deliberate destruction
of evidence documenting these transfers was relevant evidence of
collectibility. We agree. The fact that the PW Owners were actively hiding
their assets is relevant to prove they had funds to pay the 2005 judgment
both before and after defendants should have secured a judgment against
them in 2008. To analogize, no reasonable homeowner would secure
worthless baubles in a safe.
      Importantly, the issue on appeal is whether all the evidence considered
together substantially supports the finding that a judgment against the PW
Owners would have been collectible, not whether any specific item of evidence
is sufficient by itself to support this finding. Here, we affirm the trial court’s
collectability finding because Norman’s expert testimony, along with other
evidence discussed by the trial court, constitutes substantial evidence that a
hypothetical judgment against the PW Owners would have been collectible.
As best we can tell, defendants made a strategic decision to ignore the issue
of collectibility at trial. They did not object to Norman’s expert opinion or
cross-examine him about it. Nor, apparently, did they elicit testimony or
offer evidence suggesting that the PW Owners were personally insolvent or
that their personal financial situations deteriorated at any relevant time.
Although plaintiffs had the burden to prove collectibility at trial, on appeal
all doubts are resolved in favor of the judgment. (Citizens Business Bank v.
Gevorgian (2013) 218 Cal.App.4th 602, 613.)

                                        25
II. The Court Did Not Err By Awarding Interest Damages
      Defendants contend that even if a judgment against the PW Owners
would have been collectible, the trial court erred by finding that plaintiffs’
malpractice damages include interest that accrued on the 2005 judgment up
until entry of judgment in this case. Defendants argue that plaintiffs may
not recover any interest that accrued on the 2005 judgment after mid-2008,
when Greene failed to obtain a judgment against the PW Owners in the
collection case.
      The 2005 judgment is the core component of plaintiffs’ malpractice
damages because they proved at their trial within a trial that they would
likely have collected that judgment from the PW Owners in or after 2008 if
not for defendants’ malpractice. “Interest accrues at the rate of 10 percent
per annum on the principal amount of a money judgment remaining
unsatisfied.” (Civ. Proc. Code, § 685.010.) And, since interest on the unpaid
balance of the 2005 judgment at a rate of 10 percent would have been
recoverable in the collection action, postjudgment interest on the 2005
judgment is part of the damages caused by defendants’ malpractice. Thus,
defendants concede that interest on the 2005 judgment accrued at a rate of
10 percent per annum at least until mid-2008 when the hypothetical
judgment should have been secured against the PW Owners.
      The issue on appeal is whether plaintiffs incurred additional
recoverable damages during the period from mid-2008 until entry of the
malpractice judgment in 2019. Defendants contend that postjudgment
interest on the 2005 judgment was capped as of the date of the hypothetical
judgment because the “ever-increasing value” of that judgment after mid-
2008 is not attributable to the defendants’ malpractice. Plaintiffs counter
that defendants’ malpractice and the damage caused thereby did not stop in

                                       26
mid-2008. They take the view that since the 2005 judgment was never
satisfied, interest that continued to accrue after 2008 is also part of their
recoverable damages.
      To start, we reject defendants’ premise that their malpractice did not
cause plaintiffs any damages after entry of a hypothetical judgment against
the PW Owners in or around mid-2008. Findings by the trier of fact show
that defendants’ inadequate representation continued beyond that date,
causing the abandonment of viable fraudulent transfer claims in 2009, and
contributing to the diminishment of plaintiffs’ unsecured bankruptcy claim
against PW2. For these reasons, the defendants’ motion for a new trial due
to excessive damages was denied. In its order denying that motion, the court
found that plaintiffs’ malpractice damages include interest on the 2005
judgment until entry of the malpractice judgment in June 2019. We affirm
the finding that interest accruing on the 2005 judgment constitutes damages,
although we conclude that only part of the award can be justified as
postjudgment interest.
      Under the trial-within-a-trial mechanism that was used to prove
causation and damages in this malpractice case, the 2005 judgment would
have been collected and satisfied in 2008 and, at that point, postjudgment
interest would cease to accrue. Pertinent provisions of the Code of Civil
Procedure establish that when a money judgment is satisfied in full,
postjudgment interest ceases to accrue. (Civ. Proc. Code, §§ 685.010–685.030;
see Bell v. Farmers Ins. Exchange (2006) 137 Cal.App.4th 835, 839–840.)
These statutes reflect the “underlying reasons for awarding postjudgment
interest,” which are to “ ‘compensate[] the judgment creditor for the loss of
use of the money until the judgment is paid and [to act] as an incentive for
the judgment debtor to pay the judgment promptly.’ ” (Felczer v. Apple Inc.

                                       27
(2021) 63 Cal.App.5th 406, 418; see also Bruning v. United States (1964) 376
U.S. 358, 360.) By a parity of reasoning, defendants contend that the date of
the hypothetical judgment against the PW Owners effectively capped the
accrual of postjudgment interest for purposes of calculating damages caused
by the failure to obtain a judgment against the PW Owners. Defendants’
reasoning is sound as far as it goes.
      But defendants ignore the fact that the 2005 judgment was not actually
satisfied in 2008 precisely because of their malpractice. To the extent that
the vehicle of a hypothetical 2008 judgment limits the accrual of
postjudgment interest on the 2005 judgment, it also fixes the date upon
which plaintiffs had a vested claim against these malpractice defendants.
Civil Code section 3287, subdivision (a) states: “A person who is entitled to
recover damages certain, or capable of being made certain by calculation, and
the right to recover which is vested in the person upon a particular day, is
entitled also to recover interest thereon from that day, except when the
debtor is prevented by law, or by the act of the creditor from paying the debt.”
Thus, when postjudgment interest on the 2005 judgment ceased to accrue,
prejudgment interest on the 2019 malpractice judgment began to accrue.
(Civ. Code, § 3287, subd. (a).)
      Anticipating our conclusion, defendants contend that plaintiffs are not
entitled to any prejudgment interest under the circumstances presented here.
These arguments are not persuasive. Defendants contend first that plaintiffs
forfeited their right to prejudgment interest, citing North Oakland Medical
Clinic v. Rogers (1998) 65 Cal.App.4th 824, 830–831. That case stands for
the proposition that a party cannot claim prejudgment interest for the first
time in a cost bill filed after entry of judgment. The rule does not apply here,
where plaintiffs sought prejudgment interest in their complaint and were

                                        28
awarded interest on the 2005 judgment in a statement of decision that was
reviewed by both parties prior to its adoption. (See Segura v. McBride (1992)
5 Cal.App.4th 1028, 1041.)
      Defendants also contend that Civil Code section 3287, subdivision (a)
does not apply because damages were not certain or capable of being made
certain until the malpractice judgment was entered in 2019. Defendants
reason that because there was conflicting evidence on issues pertaining to
their liability, the amount of money they owed to the plaintiffs could not have
been made certain until after that liability was established.
      “ ‘Generally, the certainty required of Civil Code section 3287,
subdivision (a), is absent when the amounts due turn on disputed facts, but
not when the dispute is confined to the rules governing liability.’ ” (Shell Oil
Co. v. National Union Fire Ins. Co. (1996) 44 Cal.App.4th 1633, 1651; see also
Hartford Accident & Indemnity Co. v. Sequoia Ins. Co. (1989) 211 Cal.App.3d
1285, 1305–1307.) Thus, for example, damages are “ ‘capable of being made
certain . . . where there is essentially no dispute between the parties
concerning the basis of computation of damages if any are recoverable but
where their dispute centers on the issue of liability giving rise to damage.’ ”
(Fireman’s Fund Ins. Co. v. Allstate Ins. Co. (1991) 234 Cal.App.3d 1154,
1173–1174.) Moreover, even when the plaintiff proposes alternative formulas
for calculating damages, all of which are disputed, prejudgment interest is
recoverable so long as the amount of damages is ascertainable under each
alternative theory and all that is required is a legal determination about
what measure applies. (Shell Oil Co., at p. 1651.)
      In the present case, the primary disputed issues at trial were whether
defendants breached their duty of care to plaintiffs and whether that breach
caused plaintiffs damages. As discussed, collectibility is a component of

                                       29
causation when the breach of duty is the failure to collect a judgment, and
collectability was disputed at trial. But there has never been a dispute
among these parties that the plaintiffs’ loss derives from the failure to collect
the 2005 judgment. The amount of that judgment and the accrual of
postjudgment interest up to the date of the hypothetical 2008 judgment are
ascertainable with mathematical certainty. (See Mussetter v. Lyke (1998) 10
F.Supp.2d 944, 965 [applying California law].) Defendants concede as much
by attempting to use that formula to limit their liability for damages caused
by their malpractice. Defendants nonetheless contend that damages were not
certain or capable of being made certain because the measure of damages—
what plaintiffs would have collected from PW1 in mid-2008—would decline if
the trial court found the original judgment to be only partially collectible.
But defendants point to nothing in the record that makes this argument more
than theoretical—no evidence that partial collectability was argued in the
trial court or supported by substantial evidence. We therefore decline to
entertain it here.
      In addition, or alternatively, even as to unliquidated claims for tort
damages, the court sitting as trier of fact has discretion to award
prejudgment interest under Civil Code section 3288. (Bullis v. Security
Pacific National Bank (1978) 21 Cal.3d 801, 814, fn. 16.) “Prejudgment
interest is awarded to compensate a party for the loss of the use of his or her
property.” (Id. at p. 815.) Interest awarded under section 3288 accrues from
the time plaintiff incurs the loss. (Michelson v. Hamada (1994) 29
Cal.App.4th 1566, 1588; Piutau v. Fed. Express Corp. (2003) 2003 U.S.Dist.
Lexis 6830 *21 [applying California law].)
      In sum, the trial court did not err in awarding prejudgment interest on
the amount plaintiffs would have recovered in 2008, absent defendants’

                                       30
malpractice. Either because the recoverable amount was fixed as of mid-2008
or because these are tort damages, prejudgment interest is proper. (See Civ.
Code, §§ 3287, subd. (a); 3288).
III. Damages Must Be Recalculated
      Finally and more persuasively, defendants contend that even if
plaintiffs are entitled to prejudgment interest, the damages award is
excessive for several reasons. First, all interest damages were calculated at a
rate of 10 percent per annum. The statement of decision adopts the plaintiffs’
calculation of damages, which is quite difficult to decipher but does appear to
calculate all components of interest damages at a rate of 10 percent per
annum. Defendants contend that prejudgment interest cannot exceed
7 percent per annum because plaintiffs’ malpractice claim was not “based in
contract.”
      When an action is not based on a contract, “the rate of prejudgment
interest should be that fixed by article XV, section 1 of the California
Constitution; namely, 7 percent per annum.” (Children’s Hospital & Medical
Center v. Bonta (2002) 97 Cal.App.4th 740, 775.) However, in an action on a
contract, when the contract does not stipulate a legal rate of interest, “the
obligation shall bear interest at a rate of 10 percent per annum after a
breach.” (Civ. Code, § 3289.)
      Our Supreme Court has found that “legal malpractice constitutes both
a tort and a breach of contract.” (Neel v. Magana, Olney, Levy, Cathcart &
Gelfand (1971) 6 Cal.3d 176, 180–181.) And here, the plaintiffs’ malpractice
complaint contains causes of action for breach of contract, as defendants
concede. However, according to the statement of decision, “[d]uring trial of
this matter, Plaintiffs confirmed that they are only pursuing their claims for
Professional Negligence and are dismissing their other causes of action.”

                                       31
Thus, we agree with defendants that prejudgment interest on the malpractice
judgment must be calculated at a rate of 7 percent per annum rather than
the 10 percent per annum interest rate applicable to contract claims.2
      Defendants also point out other aspects of the damages calculation that
are either erroneous or indecipherable. For example, the calculation uses a
2015 renewed judgment that was obtained against PW1 to increase the
principal amount of the malpractice judgment, which is an error since
postjudgment interest on the 2005 judgment stopped accruing in 2008.
Furthermore, the two partial recoveries of the 2005 judgment that plaintiffs
received are deducted from a running total of malpractice damages as if they
were paid in 2015, instead of accounting for those recoveries when they
actually happened in 2006 and 2013.
      Although these objections by defendants are well taken, defendants do
not propose an alternative calculation of damages that includes an award of
prejudgment interest on the hypothetical 2008 judgment. For their part,
plaintiffs ignore problems with the damages calculation, shedding no light on
how interest components of the award might be justified or explained. As the
trier of fact in this case, the trial court must recalculate plaintiffs’ damages,
distinguishing between postjudgment interest on the 2005 judgment, and
prejudgment and postjudgment interest on the malpractice judgment,
accounting for credits when they occurred, and clarifying other ambiguities in

      2 Plaintiffs object that this reduction in rates means defendants’
malpractice has unjustifiably cost them three percentage points in the
interest they were otherwise guaranteed on the original judgment. But the
original judgment was collectable only from unscrupulous businessmen
intent on hiding assets, while the malpractice judgment is against a different
set of defendants.

                                        32
the calculation previously adopted. (See Thompson v. Asimos (2016)
6 Cal.App.5th 970.)
                                               DISPOSITION
         The judgment of liability is affirmed but the damages award is vacated
and this matter is remanded to the trial court for a recalculation of plaintiffs’
damages that is consistent with this opinion. The parties are to bear their
own costs on appeal.

                                                                   TUCHER, P.J.

WE CONCUR:

FUJISAKI, J.
RODRIGUEZ, J.

Samuels et al. v. Hamrick & Evans, LLP et al. (A158688, A158878)

                                                          33