Opinion
B321624
06-08-2023
BRIUS, LLC, et al., Plaintiffs and Appellants, v. PATRICIA L. GLASER, et al., Defendants and Respondents
Bienert Katzman Littrell Williams, Michael R. Williams and Alexis Paschedag Federico for Petitioners and Appellants. Glaser Weil Fink Howard Avchen &Shapiro, Joel N. Klevens, Elizabeth G. Chilton; Nemecek &Cole, Jonathan B. Cole, and Claudia L. Stone for Respondents.
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County, No. 22STCP00244 Armen Tamzarian, Judge.
Bienert Katzman Littrell Williams, Michael R. Williams and Alexis Paschedag Federico for Petitioners and Appellants.
Glaser Weil Fink Howard Avchen &Shapiro, Joel N. Klevens, Elizabeth G. Chilton; Nemecek &Cole, Jonathan B. Cole, and Claudia L. Stone for Respondents.
EDMON, P. J.
Shlomo Rechnitz, Brius LLC, and Brius Management Co., Inc. (collectively Brius) had a fee dispute with its attorneys Glaser Weil Fink Howard Avchen &Shapiro LLP (Glaser Weil) and Patricia L. Glaser (Glaser). An arbitration of their dispute under the Mandatory Fee Arbitration Act (MFAA) resulted in an award in Brius's favor. Glaser Weil and Glaser rejected that award, and Glaser Weil filed a complaint alleging that Brius owed it attorney fees. Brius in turn filed a petition to confirm the award. The trial court denied Brius's petition and dismissed it. Brius appeals, contending that the award was issued against Glaser only, and because she did not comply with the MFAA's requirements about how to seek trial de novo, the petition should have been granted. We disagree and affirm the order.
BACKGROUND
I. The arbitration and award
Glaser Weil represented Brius in connection with disputes arising out of Brius's operation of skilled nursing homes. In 2020, a fee dispute arose between them. To resolve the dispute, Brius demanded mandatory, nonbinding arbitration under the MFAA (Bus. &Prof. Code, § 6200 et seq.). Initially, Jill Basinger was identified as the responsible attorney at Glaser Weil. Glaser Weil then identified Glaser as the responsible attorney.
All further undesignated statutory references are to the Business and Professions Code.
On June 25, 2021, the arbitrators issued their award. The award's introduction stated that pursuant to a petition to arbitrate an attorney-client fee dispute between "Shlomo Rechnitz, Brius LLC and Brius Management Co., Inc. (collectively 'Client') and Jill Basinger, Attorney-at-Law and Glaser Weil Fink Jacobs Howard Avchen and Shapiro LLP (collectively 'Attorney')" an arbitration was held. The introduction further noted that for the purposes of the arbitration, "the responsible attorney is Patricia L. Glaser, Attorney-at-Law, SBN 55668 . . . ('Glaser')." The arbitrators found that Brius was entitled to a refund of attorney fees and ordered the following: "Attorney, Patricia L. Glaser, Attorney-at-Law, SBN 55668, shall pay Client SHLOMO RECHNITZ, BRIUS LLC, and BRIUS MANAGEMENT CO. INC., jointly and severally, $1,122,459.35, plus interest."
Notice of the award was served on July 1, 2021.
II. The complaint and rejection
Less than 30 days later, on July 16, 2021, Glaser Weil and Glaser filed a Rejection of Award and Request for Trial after Attorney-Client Fee Arbitration (Rejection). In it they stated, "The Attorney/Respondents reject the Fee Arbitration award and request a trial ('hearing de novo') in court to resolve the dispute" over attorney fees.
Concurrently with the Rejection, Glaser Weil filed a complaint for damages against Brius seeking attorney fees. The complaint and Rejection were assigned the same superior court case number. Brius answered the complaint and filed a crosscomplaint against Glaser Weil. The parties engaged in discovery, attended a case management conference, and Brius requested a jury trial. The trial court set the matter for trial in February 2023.
III. Brius's petition to confirm the arbitration award
Before trial could occur, Brius filed a petition to confirm the arbitration award in January 2022. In the petition, Brius argued that the award was against Glaser only, and not against her law firm, Glaser Weil. Brius further argued that because Glaser was not a party to the July 16, 2021 complaint Glaser Weil had filed, Glaser had not properly sought a trial de novo under the MFAA, and therefore the award was final and should be confirmed.
Glaser Weil and Glaser responded to the petition, arguing they had timely rejected the award. They further argued that the award was against Glaser Weil and Glaser and that the July 16, 2021 complaint was brought by Glaser Weil because the attorney fees claimed were owed to it and not to Glaser individually under the engagement letter with Brius. Alternatively, they argued that Brius waived any right to seek confirmation of the award by litigating the Glaser Weil action.
In its ruling on the petition, the trial court first found that the award was issued jointly against Glaser and Glaser Weil. Second, the trial court observed that there were two ways to reject an award and seek trial de novo under the MFAA. If an action is already pending, then trial after arbitration is initiated by filing a rejection of the award and request for trial in that action. But if there is no action pending, trial after arbitration is initiated by commencing an action in the court having jurisdiction. Because here the complaint and Rejection were filed simultaneously, it was unclear which was filed first, and therefore it was also unclear whether there was an action pending when Glaser and her firm filed the Rejection. If there was no action pending, then the Rejection itself commenced an action. If there was an action pending by virtue of the complaint, then Glaser and her firm timely initiated trial after arbitration by filing the Rejection in that case. The trial court therefore dismissed the petition.
This was a "chicken or egg" dilemma, because the Glaser Weil complaint and the Rejection were filed concurrently, and the record does not conclusively show which was technically filed first. The Glaser Weil complaint was filed at 1:12 p.m. on July 16, 2021. The copy of the Rejection in the record on appeal does not have a time stamp. Although unimportant to our resolution of this appeal, it seems more likely that the complaint was filed first because the Rejection was given the same case number as the complaint.
Glaser and Glaser Weil have filed a request for judicial notice of documents filed in the Glaser Weil action. We deny the request for judicial notice because the documents are not relevant to our resolution of this appeal.
DISCUSSION
I. Overview of the MFAA
The MFAA provides for arbitration of attorney-client disputes over legal fees and costs. (§ 6200 et seq.; see generally Schatz v. Allen Matkins Leck Gamble &Mallory LLP (2009) 45 Cal.4th 557, 564-565.) "The MFAA establishes a system of arbitration before local bar associations in attorney fee disputes to provide 'an effective inexpensive remedy to a client which does not necessitate the hiring of a second attorney.'" (Levinson Arshonsky &Kurtz LLP v. Kim (2019) 35 Cal.App.5th 896, 900.) At the client's election, the MFAA requires an attorney to participate in arbitration. (§ 6200, subd. (c).) In the absence of an agreement making the award binding, either party "shall be entitled to a trial after arbitration if sought within 30 days" as provided in section 6204. (§ 6204, subd. (a).) A party dissatisfied with the award may, within the specified timeframe, file a rejection and request for trial in a pending action (§ 6204, subd. (b)), or, if no action is pending, file a rejection and trial request by initiating an action (§ 6204, subd. (c)). If these procedures are not timely followed, then the award becomes binding. (Giorgianni v. Crowley (2011) 197 Cal.App.4th 1462, 1468; see also Maynard v. Brandon (2005) 36 Cal.4th 364, 382.) An attorney who fails to comply with a binding arbitration award may be placed on inactive status by the State Bar. (§ 6203, subd. (d)(1).)
A party may also petition to confirm an award. (§ 6203, subd. (b).) We review an order on a petition to confirm an award de novo. (See Giorgianni v. Crowley, supra, 197 Cal.App.4th at p. 1471.)
Brius's contention that its petition should have been confirmed is based on its interpretation of the award as being issued against Glaser only. Brius then argues that because only Glaser Weil, and not Glaser, commenced an action, respondents did not comply with the MFAA, and therefore the award became binding. We address each argument in turn.
II. The arbitration award was against Glaser and Glaser Weil
Brius first contends that the arbitration award was against Glaser only and not also against Glaser Weil. We disagree.
Interpretation of a written document such as an arbitration award is a question of law subject to independent review where extrinsic evidence is unnecessary. (See Flores v. Nature's Best Distribution, LLC (2016) 7 Cal.App.5th 1, 9; see also Los Angeles Local etc. Board v. Stan's Drive-Ins, Inc. (1955) 136 Cal.App.2d 89, 94 ["The same rules apply in ascertaining the meaning of a court order or judgment as in ascertaining the meaning of any other writing."].) Under general principles of interpretation, we interpret the words in a document in their ordinary and popular sense, take the whole of the document together, and give effect to every part, if reasonably practicable, with each clause helping to interpret others. (Flores, at p. 9.)
Here, Brius bases its contention that the award was against Glaser only on the award's concluding paragraph:
Attorney, Patricia L. Glaser, Attorney-at-Law, SBN 55668, shall pay Client SHLOMO RECHNITZ, BRIUS LLC, and BRIUS MANAGEMENT CO. INC., jointly and severally, $1,122,459.35.
Brius interprets the first word in the paragraph, "Attorney," to refer to Glaser only and to exclude Glaser Weil.
This reading violates the rules of interpretation by divorcing the concluding paragraph from the rest of the document. The award's introductory statement, for example, defines terms thereafter used in the award. "Client" is defined as Shlomo Rechnitz, Brius LLC, and Brius Management Co., Inc. "Attorney" is defined as Jill Basinger and Glaser Weil. "Glaser" is defined as "Patricia L. Glaser." If we apply the defined terms to the award's concluding paragraph, then the concluding paragraph makes sense. That is, the first word, "Attorney," refers collectively to Jill Basinger and Glaser Weil. This also makes sense because otherwise the sentence redundantly identifies Glaser twice as an attorney, first with "Attorney" and then with "Attorney-at-Law." (See Reno v. Baird (1998) 18 Cal.4th 640, 658 [avoid interpretation that makes a word surplusage].)
Brius urges us to ignore the introductory paragraph. It points out that Jill Basinger was not the responsible attorney and therefore should not have been named in the concluding paragraph. The point is well taken but ultimately unpersuasive. Jill Basinger was initially identified as the responsible attorney, and therefore the introductory paragraph notes that the petition was initiated against her and Glaser Weil. But the introductory statement then further clarifies that for "purposes of this arbitration, the responsible party is" Glaser. Thus, while Jill Basinger was no longer the responsible attorney and technically should not have been named in the award's concluding paragraph, her inclusion is nothing more than the result of some carelessness in drafting the concluding paragraph. Such a minor error is insufficient to overcome the commonsense reading of the award as a whole.
We take the same view of the concluding paragraph's reference to "Client," a term defined collectively to include all of the clients. Notwithstanding that the defined term included all of the clients, the concluding paragraph redundantly lists them individually.
Interpreting the award to include Glaser Weil also makes sense in the context of the arbitration and the rest of the document. This was an attorney fees dispute between Brius and its attorney. Per the engagement letter, Brius's attorney was the law firm of Glaser Weil. Its named partner, Glaser, was merely the lead or responsible attorney. Thus, the award refers to the "written engagement letter with Attorney . . . which was drafted by Garland Kelley of Attorney." There appears to be no dispute that the written engagement letter was with Glaser Weil and not with any individual attorney at Glaser Weil. Accordingly, "Attorney" in the phrase "Garland Kelley of Attorney," clearly refers to Glaser Weil, otherwise the phrase makes no sense. The award also refers to Glaser individually where appropriate; for example, when it notes that the parties were represented through their "respective attorneys [in the underlying skilled nursing home disputes], Glaser for Client and Stephen M. Garcia for the plaintiffs.
Note that "attorneys" in this sentence is lower cased and therefore not a defined term.
Brius also places too much importance on the placement of the phrase "jointly and severally" in the concluding paragraph. Because the phrase immediately follows "SHLOMO RECHNITZ, BRIUS LLC and BRIUS MANAGEMENT CO. INC.," Brius reasons that "jointly and severally" refers to the payees (Brius) rather than the payors (Glaser and Glaser Weil).
To support this interpretation, Brius cites the "last antecedent rule," which provides that qualifying words, phrases, and clauses apply to the immediately preceding words and phrases and are not to be construed as extending to more remote words and phrases. (White v. County of Sacramento (1982) 31 Cal.3d 676, 680; Davis v. Fresno Unified School Dist. (2015) 237 Cal.App.4th 261, 288.) Applying this last antecedent rule here, Brius argues "jointly and severally" applies to Brius because the phrase immediately follows Brius, while Glaser and Glaser Weil are more remote.
There are, however, two exceptions to the last antecedent rule. The first exception to the rule is when several words are followed by a clause which is applicable as much to the first and other words as to the last, such that the natural construction of the language demands the clause be read as applicable to all. (White v. County of Sacramento, supra, 31 Cal.3d at pp. 680-681.) A second exception is where the entire sense of the language requires that application of the words or phrases not be restricted. (Id. at p. 681.)
The first exception does not apply here, but the second one does apply. The term "jointly and severally" is a term of liability. (See Leung v. Verdugo Hills Hospital (2012) 55 Cal.4th 291, 303.) As a term of liability, it is simply inapplicable to Brius as payee but is applicable to Glaser and Glaser Weil as payors, as they are the liable parties. Thus, the "entire sense" of the award is that Glaser and Glaser Weil are jointly and severally liable to Brius for the refund. Indeed, this construction accords not only with the usual and ordinary meaning attributed to the term (see generally Flores v. Nature's Best Distribution, LLC, supra, 7 Cal.App.5th at p. 9), but favors Brius by permitting it to satisfy the award against any of the payors.
Finally, Brius argues that its interpretation of the award accords with the MFAA's purpose, which Brius says is to make individual attorneys liable. To show that this is the MFAA's purpose, Brius cites section 6203, subdivision (d)(1). That section provides that the State Bar may enforce a fee award by placing a noncompliant attorney on involuntary or inactive status until it is paid. (§ 6203, subd. (d)(1).) Based on this, Brius reasons that the MFAA's purpose is to make individual attorneys and not law firms liable for paying fee refunds to clients. However, the enforcement or penalty provision in section 6203, subdivision (d)(1), merely helps to ensure payment by imposing a consequence on the responsible attorney in the event of nonpayment. The section does not evidence an intent by the MFAA's drafters to exclude law firms from liability for fee awards. Moreover, Brius's argument makes little sense: why would the MFAA limit sources of redress, especially where, as here, the law firm, and not the individual attorney, may be the deeper or more accessible pocket? In short, the MFAA's actual purpose of providing a speedy and relatively inexpensive remedy to clients who have a fee dispute with their attorneys does not support Brius's argument. (Levinson Arshonsky &Kurtz LLP v. Kim, supra, 35 Cal.App.5th at p. 900.)
III. Glaser and Glaser Weil complied with section 6204, subdivision (c)
As we have said, the MFAA provides two ways in which a party dissatisfied with an arbitration award may seek trial de novo. If there is an action pending, "trial after arbitration shall be initiated by filing a rejection of arbitration award and request for trial after arbitration in that action within 30 days after service of notice of the award." (§ 6204, subd. (b).) If "no action is pending, the trial after arbitration shall be initiated by the commencement of an action in the court having jurisdiction" within 30 days after service of notice of the award. (§ 6204, subd. (c).)
The trial court found that Glaser and Glaser Weil complied with section 6204, subdivision (c), because their Rejection commenced an action within the meaning of that subdivision. We would phrase it somewhat differently: under the circumstances here, the Rejection in combination with the Glaser Weil complaint satisfied section 6204, subdivision (c), as we now explain.
A key aspect of section 6204, subdivision (c) (as well as subdivision (b)) is that clear notice be given that the award is being rejected. (Shiver, McGrane &Martin v. Littell (1990) 217 Cal.App.3d 1041.) The absence of such notice was the problem in Shiver. In that case, a law firm demanded fees from its clients, Robert and Joyce Littell, who then initiated nonbinding arbitration under the MFAA. The arbitrator awarded the law firm fees. (Id. at p. 1044.) Robert Littell then filed a complaint for damages for legal malpractice against William McGrane, one of the law firm's attorneys. (Ibid.) The Court of Appeal found that the legal malpractice action did not satisfy section 6204, subdivision (c), because the malpractice action was brought by Robert Littell alone against McGrane, did not mention the arbitration award, and did not indicate the fees challenged in the malpractice action were the same as awarded by the arbitrator. (Id. at p. 1045.) "Finally, and most importantly, the filing of the malpractice action would not necessarily inform respondent [law firm] that appellants intended to challenge the arbitration award. It would not be inconsistent for appellants to let the arbitration award stand and seek compensation for malpractice, as an indirect method of recovering the fees paid pursuant to the arbitration award. A malpractice action, in which appellants were more clearly on the offensive, might be seen as a better vehicle through which to press their claims than a more 'defensive' action challenging the arbitration award to respondent." (Ibid.)
In contrast to Shiver, Glaser Weil and Glaser informed Brius that they challenged the award by jointly filing the Rejection. Glaser Weil then commenced an action by filing its complaint for damages/attorney fees, as required by section 6204, subdivision (c). The Rejection and complaint therefore informed Brius that the award was being challenged.
The Judicial Council has approved the procedure followed by Glaser and Glaser Weil of filing a rejection and a complaint where no action is pending. The Judicial Council's interpretation of a statute, as reflected in a mandatory form, is not binding on courts but it is persuasive. (In re M.B. (2011) 201 Cal.App.4th 1057, 1063; Sara M. v. Superior Court (2005) 36 Cal.4th 998, 1011.) Judicial Council Form ADR-104, Rejection of Award and Request for Trial After Attorney-Client Fee Arbitration requires that a box be checked to indicate if there is a pending action or a new action. For a pending action, the form states, "A court case concerning the attorney-client fee dispute involved in the arbitration is already pending, and this Rejection of Award and Request for Trial is being filed in that action." (Judicial Council Forms, form ADR-104.) For a new action, the form states, "This Rejection of Award and Request for Trial is being filed with a complaint commencing a new action. (A request for trial must be filed in a pending case or with a complaint commencing a new action.)" (Ibid.) The form thus contemplates that a rejection will be filed where no action is pending and where one is pending.
Brius, however, makes too much of Glaser's absence from the complaint. As respondents argue, the complaint serves a different or additional purpose than the Rejection. The Rejection gave notice to Brius that the award was being rejected and a trial de novo sought. Glaser and Glaser Weil thus rejected the award's order to refund over $1 million to Brius as the resolution to the fee dispute. The complaint then put the fee dispute back to square one, with Glaser Weil claiming that Brius owes it $464,861.92 in attorney fees and costs. (See generally Aguilar v. Lerner (2004) 32 Cal.4th 974, 991 [if arbitration doesn't resolve dispute, then "MFAA has played its role, and the matter would continue without it"] [conc. opn. of Chin, J.]; Maynard v. Brandon, supra, 36 Cal.4th at p. 373 [where MFAA award timely rejected, trial is conducted de novo as if no arbitration had occurred].)
Nor does Loeb v. Record (2008) 162 Cal.App.4th 431 (Loeb), support Brius's argument that a law firm and its individual attorney primarily responsible for a matter must both be parties to an action for attorney fees to satisfy section 6204. In Loeb, Attorney (defined as the law firm and its attorney of record) represented Client in a personal injury action, which resulted in a judgment in Client's favor. (Id. at p. 435.) When a dispute arose between Attorney and Client over how attorney fees were to be distributed from the personal injury judgment, they arbitrated the dispute under the MFAA. (Ibid.) The arbitrator awarded Attorney its fees and costs. Client objected to the arbitration award by filing, in the personal injury action, a motion in opposition to Attorney's notice of lien for fees that had been filed in that case. (Id. at p. 435.)
Brius cites Loeb, supra, 162 Cal.App.4th 431 in connection with its argument about section 6204, subdivision (b), that Glaser had to be a party to the Glaser Weil complaint to satisfy the "action pending" requirement in that subdivision.
The court considered whether the personal injury action and the Attorney's notice of lien was an "action pending" within the meaning of section 6204, subdivision (b). The court found that "action pending" referred to a lawsuit in which the parties included the attorney and the client who had their fee dispute arbitrated. (Loeb, supra, 162 Cal.App.4th at p. 445.) Although such a requirement was not explicitly stated in sections 6203 and 6204, it was implied because a court must have personal jurisdiction over the parties to the fee dispute. (Loeb, at p. 445.) Because Attorney was not a party to the personal injury action, the personal injury action was not an "action pending."
In our view, Loeb supports the conclusion that Glaser did not have to be party to the Glaser Weil action. The Loeb court's decision hinged on the requirement that a court have personal jurisdiction over the parties to the attorney fees dispute. That was not the case in Loeb because neither the law firm nor the individual attorney was a party to the personal injury action. But that is not the case here. Here, Glaser Weil, the attorneyentity that filed the complaint, was also a party to the fee dispute. Hence, the trial court presiding over the Glaser Weil action has personal jurisdiction over parties to the attorney fees dispute. Loeb did not hold that an individual attorney, as opposed to a law firm, must be a party to the commenced action or a pending one. The court had no occasion to address that issue because it defined Attorney to include the law firm and its attorney of record, neither of which was a party to the personal injury action. (Loeb, supra, 162 Cal.App.4th at p. 436, fn. 2.)
Glaser was not a necessary or indispensable party to the Glaser Weil complaint, either under the MFAA or otherwise. Per the engagement letter, Glaser Weil was Brius's attorney. As such, Glaser Weil was the proper party to pursue a claim for attorney fees against its former client Brius. Brius cites no persuasive authority that the lead attorney or attorney of record must also be a plaintiff to a complaint to recover attorney fees owed to the law firm, and nothing in the MFAA so dictates.
We thus conclude it is of no moment that Glaser did not join the Glaser Weil action as a party. What is instead key is, as the trial court noted, that the complaint and the Rejection gave explicit "notice of an action intended to challenge the arbitration award." Brius could not have been in any doubt that Glaser and Glaser Weil were rejecting the award and asking for a trial de novo. Indeed, Brius actively litigated the Glaser Weil action, thereby demonstrating its understanding that the award had been rejected.
Because we have found that Glaser and Glaser Weil complied with section 6204, subdivision (c), we need not address their alternative arguments that Brius waived any right to seek confirmation of the award and that they also complied with section 6204, subdivision (b).
DISPOSITION
The order denying appellants' petition is affirmed. Respondents may recover their costs on appeal.
We concur: LAVIN, J. HEIDEL, J. [*]
[*] Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.