Opinion
H044561
09-20-2019
DAVID MARKEVITCH, Plaintiff and Respondent, v. PAGANO & KASS, PC, Defendant and Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Santa Clara County Super. Ct. No. 115-CV277789)
Respondent David Markevitch, an attorney, sued his former employer, appellant Pagano & Kass, P.C. (Pagano & Kass or the Firm), alleging it had breached its agreement to pay him a percentage of total billings collected from clients he referred to the Firm for the first 12 months of the ensuing attorney-client relationship. A jury agreed and awarded Markevitch nearly $170,000 in damages. The Firm appeals, arguing that the agreement is unenforceable and, alternatively, that the verdict is unsupported by substantial evidence. We disagree and affirm.
I. BACKGROUND
A. Factual Summary
1. The Referral Fee Agreement
Markevitch was admitted to the California Bar in May 2008. After briefly working for a law firm in Los Angeles, he relocated to the Bay Area. In February 2009, the law firm of Pagano & Kass extended a written offer of employment to Markevitch. The offer letter included the following language: "You shall . . . be entitled to receive the following compensation based upon business that is directly attributable to your marketing efforts (based upon collected billings or fees, not merely issued billings) during the first twelve (12) months of the attorney-client relationship by and between The Firm and the qualifying client. . . ." A table followed, setting forth the amount to which Markevitch would be entitled as a percentage of total collected billings. The table indicated that he would be due 15 percent of the "[f]irst $6,000.00 of billings per month"; 30 percent of total collected billings "[f]rom $6,001.00 through $9,999.00 per month"; 40 percent of total collected billings "[f]rom $10,000.00 through $14,999.00 per month"; and 50 percent of total collected billings "[g]reater than $15,000.00 per month." Markevitch accepted the offer and started working at the Firm as an associate in February 2009.
Markevitch and the Firm's shareholders, James Pagano and Ian Kass, never discussed the scope of the language quoted above (the Referral Fee Agreement), the meaning of the contractual term "attorney-client relationship," or the mechanics of calculating the referral fee.
Markevitch testified that he understood the Referral Fee Agreement as applying to the 12-month period after which a referred client "hires the firm to represent it or him or her . . . ." In other words, in his view, referral fees began to accrue under the agreement, "not the day when I first introduced that person to the firm," but "[t]he day when the person hires the firm."
Kass testified that the Referral Fee Agreement applied only to hourly fee clients, and not to contingency fee clients. Kass further testified that an "attorney-client relationship" commences when an "attorney and a client believe that they are exchanging information and that the client is consulting an attorney with an expectation that the attorney will be giving them legal advice."
2. The Morin v. LoJack Class Action
Markevitch's former law school roommate and personal friend, Louis Morin, approached Markevitch with a potential claim against LoJack Corporation. Markevitch believed there was a potential for a class action lawsuit against LoJack with Morin as class representative. In June 2009, Markevitch discussed the matter with Pagano and Kass and introduced Morin to the Firm as a potential new client. The Firm began investigating Morin's potential claim in July 2009. In accordance with the Firm's practice, the attorneys recorded the time they worked on the matter.
Markevitch testified that Pagano "encouraged [him,] in the spring of 2010[,] to work with Mr. Morin and to ensure that he actually signs with the firm so we could proceed with the matter. [¶] And as he had told me, you know, I would get paid if the matter goes forward." Markevitch understood Pagano to be referring to the Referral Fee Agreement. Pagano denied having that conversation. Morin formally hired the Firm by signing a representation agreement in May 2010.
Morin, represented by Pagano & Kass, filed a putative class action against LoJack in Los Angeles County Superior Court in June 2010 (the Morin class action). LoJack removed the Morin class action to federal court.
Markevitch worked on the Morin class action until he left the Firm in mid-March 2011. Later that same month, the parties to the Morin class action reached a settlement agreement. Morin moved for attorneys' fees and costs. In support of that motion, he submitted Pagano & Kass's time sheets from July 2009 through July 2011, which showed that the Firm expended more than 50 hours on the case before the representation agreement was executed in May 2010.
On December 7, 2011, the federal district court approved the settlement agreement and awarded $415,000 in attorneys' fees and associated legal expenses to Pagano & Kass as class counsel "to be paid entirely by LoJack."
Markevitch requested that the Firm pay him his portion of the attorneys' fees awarded in the Morin class action by email dated June 30, 2012. The Firm denied that he was entitled to any compensation under the Referral Fee Agreement, reasoning that the attorney-client relationship with Morin began in June 2009 and the Firm did not collect any fees until January 2012.
At trial, Markevitch testified that, for purposes of the Referral Fee Agreement, the Firm's attorney-client relationship with Morin began when Morin signed the representation agreement in May 2010. Markevitch further testified that, according to his calculations, he was entitled to $169,844.18 under the Referral Fee Agreement for referring Morin to the Firm. He based his calculation on the time sheets the Firm had submitted to the federal district court in connection with Morin's motion for attorney fees. Markevitch determined the number of hours that each attorney had billed and, using each attorney's hourly rate, calculated the fees incurred each month "from May 2010 to May 2011." He then "applied the table from [his employment] contract letter and made the calculation of. . . [his] share." Specifically, "if the billing for the month was . . . under $6,000, then [he used] 15 percent" as his cut; "[i]f it was between $6[,000] and $10,000, [he used] 30 percent" as his cut; "if it was between [$]10[,000] and $15,000, [he used] 40 percent" as his cut; "and then anything above $15,000, [he used] 50 percent" as his cut. Markevitch discounted the amount he calculated by 5 percent because he understood that the federal district court judge had approved 95 percent of the Firm's fees.
Pagano testified that the Firm's attorney-client relationship with Morin began in June 2009 when Morin "sent us an email where he put on the top of the email [']privileged and confidential[']. And in exchange for that we agreed to evaluate his case, give him advice, upon which we expected him to rely." Kass testified that Markevitch's calculations did not comply with the terms of the Referral Fee Agreement. Kass said that Markevitch was entitled to just 15 percent of the first $6,000 in fees collected each month, "30 percent of the . . . next $4,000," "40 percent of the next $5,000," and 50 percent of anything over $15,000. Pagano testified that Kass had calculated Markevich's referral fee to be $7,220.81 based on the 12-month time period beginning in June 2009.
B. Procedural History
On March 9, 2015, Markevitch filed suit against Pagano & Kass in Santa Clara County Superior Court alleging breach of the employment agreement, Labor Code violations, intentional misrepresentation, and unfair and unlawful business practices in violation of the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.). The trial court sustained a demurrer to the causes of action alleging Labor Code violations without leave to amend. In December 2015, the Firm moved for summary judgment arguing, among other things, that the Referral Fee Agreement was unenforceable under former rule 2-200 of the California Rules of Professional Conduct and rule 23(h) of the Federal Rules of Civil Procedure. On February 8, 2016—the day before Markevitch filed his opposition to the summary judgment motion—Morin consented in writing to the division of fees as called for by the Referral Fee Agreement. The trial court denied the Firm's motion for summary judgment.
In August 2016, the case proceeded to a jury trial that concluded in a special verdict awarding Markevitch $169,844.18. The trial court denied the Firm's posttrial motions for a new trial and for judgment notwithstanding the verdict. The court granted Markevitch's requests for $214,016.25 in attorneys' fees and $9,187.25 in costs pursuant to Labor Code section 218.5, as well as his request for $83,102.58 in prejudgment interest. On January 12, 2017, the court entered judgment in favor of Markevitch in the amount of $476,150.26. The Firm was served with the Notice of Entry of Judgment on February 9, 2017 and timely appealed on March 24, 2017.
II. DISCUSSION
A. Basic Rules of Appellate Review
In conducting our appellate review, we presume that a judgment or order of a lower court is correct. " 'All intendments and presumptions are indulged to support [the judgment] on matters as to which the record is silent, and error must be affirmatively shown.' " (Denham v. Superior Court (1970) 2 Cal.3d 557, 564; In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133.) Therefore, a party challenging a judgment or an appealable order "has the burden of showing reversible error by an adequate record." (Ballard v. Uribe (1986) 41 Cal.3d 564, 574.) We may properly treat as abandoned arguments that are unsupported by citation to authority or by "any pertinent or intelligible legal argument." (Berger v. Godden (1985) 163 Cal.App.3d 1113, 1119.)
B. Enforceability of the Referral Fee Agreement
The Firm contends that the Referral Fee Agreement is unenforceable because it violates former rule 2-200 of the California Rules of Professional Conduct and the Federal Rule of Civil Procedure governing attorneys' fee awards in class actions.
Revised and renumbered Rules of Professional Conduct went into effect November 1, 2018. < http://www.calbar.ca.gov/Attorneys/Conduct-Discipline/Rules/Rules-of-Professional-Conduct > [as of Sept. 17, 2019], archived at: https://perma.cc/U2GB-FXQB. Under the new rules, rule 1.5.1 governs fee divisions among lawyers.
1. Former Rule 2-200 of the California Rules of Professional Conduct
a. Legal Principles and Standard of Review
Former rule 2-200 provided, in relevant part: "A member [of the State Bar of California] shall not divide a fee for legal services with a lawyer who is not a partner of, associate of, or shareholder with the member unless: [¶] (1) The client has consented in writing thereto after a full disclosure has been made in writing that a division of fees will be made and the terms of such division; and [¶] (2) The total fee charged by all lawyers is not increased solely by reason of the provision for division of fees and is not unconscionable as that term is defined in rule 4-200."
"The purpose of [former] rule 2-200 [was] to protect clients from their attorneys' potential conflicts of interest created by fee-sharing agreements. [Citation.] Such agreements have the potential to motivate an attorney to charge excessive fees or to make tactical decisions unfavorable to the client's interests. [Citation.] [Former r]ule 2-200 alleviate[d] these risks by requiring the attorneys to disclose, and obtain the client's written consent to, the fee-sharing arrangement. 'Such information may affect the client's level of confidence in the attorneys and is indispensable to the client's ability to make an informed decision regarding whether to accept the fee division and whether to retain or discharge a particular attorney.' [Citation.] In this way, [former] rule 2-200 protect[ed] the public and promote[d] confidence in the legal profession. [Citation.]" (Barnes, Crosby, Fitzgerald & Zeman, LLP v. Ringler (2012) 212 Cal.App.4th 172, 180.)
"The interpretation of [former] rule 2-200 presents a question of law that is subject to our independent review." (Chambers v. Kay (2002) 29 Cal.4th 142, 148.)
b. The Referral Fee Agreement is Enforceable Under Former Rule 2-200
Pagano & Kass contends that, because Markevitch was no longer an associate with the Firm at the time he sought to enforce the Referral Fee Agreement, its enforcement would violate former rule 2-200. Markevitch responds that former rule 2-200 does not apply because he was an associate of the Firm both at the time the Referral Fee Agreement was executed and when he referred Morin to the Firm. We need not resolve the parties' dispute as to whether former rule 2-200 governs in these circumstances. Even if it does, its requirements were satisfied such that it does not preclude the enforcement of the Referral Fee Agreement.
Morin consented in writing to the division of fees as called for by the Referral Fee Agreement. His consent was not obtained until after the instant lawsuit was filed. But case law establishes that former rule 2-200 required only "that the client's written consent be obtained prior to any division of fees[,] . . . [and not] prior to the lawyers' entering into a fee-splitting arrangement, or prior to the commencement of work, or at any time other than prior to any division of fees." (Mink v. Maccabee (2004) 121 Cal.App.4th 835, 838; Cohen v. Brown (2009) 173 Cal.App.4th 302, 320 [same].) The fees had not yet been divided at the time Morin signed the written consent.
The Firm says Morin's consent is insufficient to satisfy former rule 2-200 because he "was not an individual client, rather, he was a representative of a putative class." According to the Firm, in the class action context, a class representative client's consent to a fee-splitting arrangement must be tendered to the court in which the class action is pending in connection with the court's consideration of class counsel's fees. But the Firm cites no authority for that position, which we accordingly deem forfeited. (Tellez v. Rich Voss Trucking, Inc. (2015) 240 Cal.App.4th 1052, 1066 ["When an appellant asserts a point but fails to support it with reasoned argument and citations to authority, we treat the point as forfeited"].)
2. The Federal Rules of Civil Procedure
Alternatively, the Firm argues that any division of the fees awarded it in the Morin class action, including pursuant to the Referral Fee Agreement, had to be approved by the district court in that action. In the Firm's view, Markevitch's failure to request fees he claims he is due under the Referral Fee Agreement in the Morin class action precludes him from enforcing the agreement in this later action.
a. Legal Principles
Federal Rule of Civil Procedure 23(h) provides that, "[i]n a certified class action, the court may award reasonable attorney's fees and nontaxable costs that are authorized by law or by the parties' agreement." Courts must assess the reasonableness of the fee award "even if the parties have already agreed to an amount." (In re Bluetooth Headset Prods. Liability Litig. (9th Cir. 2011) 654 F.3d 935, 941.)
In common fund class actions, "the parties settle for the total amount of the common fund and shift the fund to the court's supervision. The plaintiffs' lawyers then apply to the court for a fee award from the fund. [Citations.]" (Staton v. Boeing Co. (9th Cir. 2003) 327 F.3d 938, 969-970.) "During the fee-setting stage of common fund class action suits . . . , '[p]laintiffs' counsel, otherwise a fiduciary for the class, . . . become[s] a claimant against the fund created for the benefit of the class.' [Citation] This shift puts plaintiffs' counsel's understandable interest in getting paid the most for its work representing the class at odds with the class' interest in securing the largest possible recovery for its members. Because 'the relationship between plaintiffs and their attorneys turns adversarial at the fee-setting stage, courts have stressed that when awarding attorneys' fees from a common fund, the district court must assume the role of fiduciary for the class plaintiffs.' [Citation.] As a fiduciary for the class, the district court must 'act with "a jealous regard to the rights of those who are interested in the fund" in determining what a proper fee award is.' " (In re Mercury Interactive Corp. Securities Litigation (9th Cir. 2010) 618 F.3d 988, 994.)
In view of the foregoing, federal courts have held—in the context of common fund class actions—that "district courts may refuse to accept a fee allocation agreement [among co-counsel] whenever there is good cause to do so," including where "the agreement [is] inconsistent with the interests of the class because it might encourage premature settlement" and where the agreement "does not accurately reflect the amount of work performed by the various attorneys." (In re FPI/Agretech Securities Litigation (9th Cir. 1997) 105 F.3d 469, 473; see In re "Agent Orange" Product Liability Litigation (2d Cir. 1987) 818 F.2d 216, 222-223 [in common fund class actions, private fee-sharing agreements among class counsel are subject to district court oversight in "its role of assuring reasonableness in the awarding of fees in equitable fund cases"].)
Not all class actions involve common funds. In those that do not, class counsel's "fees are not paid out of the plaintiffs' recovery, and the attorney in seeking his fee is not acting in any sense adversely to the plaintiffs' interest." (Prandini v. National Tea Co. (3d Cir. 1978) 585 F.2d 47, 53.) Accordingly, private fee-sharing agreements do not implicate the interests of the class in non-common fund class actions in the manner that they do in common fund class actions.
b. The Firm Fails to Show Error by the Trial Court
The Firm argues that Markevitch was required to seek fees in connection with the settlement of the Morin class action and that his failure to do so bars his current action to enforce the Referral Fee Agreement. For that argument, the Firm relies on the rule of Agent Orange and FPI/Agretech that a district court, in its role of protector of the rights of the class, may reject private fee-sharing agreements among class counsel. But as noted above, Agent Orange and FPI/Agretech involved common funds and the unique considerations that arise in the context of such cases. The Firm does not contend, let alone show, that the Morin class action was a common fund case or that the class members' recovery was in any way impacted by the fee award or the Referral Fee Agreement. Thus, the Firm fails to show that Agent Orange and FPI/Agretech apply here.
The record on appeal contains a limited number of filings from the Morin class action. Based on our review of those filings, it appears that the Morin class action did not involve a common fund. The district court's order approving the class action settlement awarded Pagano & Kass fees "to be paid entirely by LoJack." Thus, it appears that the attorneys' fees were paid directly by the class action defendant and not out of a common fund for the benefit of the class members. Kass's declaration in support of the motion for attorney fees described the settlement as follows: "The Agreement, which the Court has preliminarily approved, provides that all class members that submit a valid and timely claim form will receive a 12 month extension of the term of the LoJack Limited Recovery Warranty from it, commencing upon the date of the Final Approval of the Settlement. That Limited Recovery Warranty allows for persons to submit a request for a refund of the purchase price of the LoJack unit, up to $595.00 for LRS without an Early Warning System, and up to $695.00 for LRS with an Early Warning System, and up to the purchase price of a Second Owner's Program purchased from Lojack, if a motorcycle so equipped is stolen and not recovered within 24 hours. If a class member's motorcycle was stolen prior to the date of the Final Approval of the Settlement, LoJack will provide an extension of 12 months of the terms of the Limited Recovery Warranty from the class member's date of installation (extending the class member's total warranty time period from 24 to 36 months from the date of installation); thus, the owner may obtain a warranty payment if his or her motorcycle was stolen and not recovered during the 12 months following the expiration of the Limited Recovery Warranty." The foregoing description does not mention the establishment of a common fund or the payment of a lump sum settlement by the class action defendant, as is typical in common fund cases.
Nor does the Firm establish that an attorney fee dispute arising after settlement and award of fees in a class action is not cognizable merely because of its timing. Put differently, the Firm cites no pertinent authority indicating that the remedy it sought—refusal to enforce the Referral Fee Agreement and judgment in the Firm's favor—was appropriate. The Firm relies on Mark v. Spencer (2008) 166 Cal.App.4th 219 (Mark), but that reliance is misplaced. In Mark, "[t]he complaint sought enforcement of an agreement between [plaintiff] and defendant[, both attorneys,] to divide fees awarded to them as cocounsel representing the plaintiffs in an earlier class action lawsuit [adjudicated in state court]." (Id. at p. 223.) Rule 3.769(b) of the California Rules of Court expressly requires that "[a]ny agreement, express or implied, that has been entered into with respect to the payment of attorney's fees or the submission of an application for the approval of attorney's fees . . . be set forth in full in any application for approval of the dismissal or settlement of an action that has been certified as a class action." The plaintiff in Mark had failed to comply with rule 3.769(b). Mark adopted a "prophylactic rule" that failure to fully disclose a fee-splitting agreement when petitioning for approval of a class action settlement, in violation of rule 3.769(b), bars later enforcement of such an agreement. (Mark, supra, at p. 228.)
All further references to rules are to the California Rules of Court.
Here, the underlying class action was adjudicated in federal court, where rule 3.769(b) did not apply. Accordingly, the prophylactic rule announced in Mark has no application. And the Firm cites no case applying a similar prophylactic rule in the context of a federal class action. Mark is also distinguishable in that there the plaintiff was actively involved in the class action settlement and application requesting attorney fees, and thus had every opportunity to bring the private fee-splitting agreement to the court's attention, but did not. Markevitch no longer was involved in the Morin class action at the time of the attorney fee request.
In re Community Bank of Northern Virginia Mortgage Lending Practices Litigation (3d Cir. 2018) 911 F.3d 666, a case that is factually similar to this one, undermines the Firm's position that Markevitch is barred from enforcing the Referral Fee Agreement. There, a fee dispute arose between a law firm and its former associate after the final order approving the class settlement and fee award was entered by the federal district court. (Id. at pp. 667-668.) The firm filed a state court breach of contract action against its former associate, alleging that he owed the firm a portion of the fees he had received in the federal class action. The former associate "moved the District Court to stay the state case and confirm his fee award. The [District] Court exercised ancillary jurisdiction over the state contract dispute, stayed the state case, and granted [the former associate's] motion, concluding that [the firm] was not entitled to any portion of the fee [the former associate] had received . . . ." (Id. at p. 668.) On appeal, the Third Circuit held that the district court had erred in exercising ancillary jurisdiction over the state contract dispute. Significantly, the Third Circuit rejected the former associate's position that the "district court's role as a fiduciary for [the] class" justified its exercise of ancillary jurisdiction, reasoning that "the District Court satisfied its duty to thoroughly review fee applications . . . , there ha[d] been no challenge to the reasonableness of the $8.4 million fee award . . . , [and] the class members' recovery was fixed and it would not be reduced by how [the former associate] may split the fee award he received. In short, those to whom the Court owed a fiduciary duty are in no way impacted by th[e] private fee-splitting dispute." (Id. at p. 673, fn. 7.) Similarly, here we are aware of no challenge to the reasonableness of the fee award in the Morin class action and the Firm does not show that the class members' recovery could have been impacted by a division of that award by the Firm and Markevitch.
In sum, the Firm has failed to carry its burden on appeal to affirmatively show error.
C. Sufficiency of the Evidence
Lastly, the Firm maintains that the jury's interpretation of the Referral Fee Agreement and its resulting damage award are not supported by sufficient evidence. Even under Markevitch's reading of the Referral Fee Agreement, the Firm says, the relevant 12-month period began on July 1, 2009—the date from which the district court awarded the Firm fees in the Morin class action.
1. Background
The amount of damages to which Markevitch is entitled depends on what constituted "the first twelve (12) months of the attorney-client relationship by and between The Firm and" Morin under Referral Fee Agreement. At trial, the parties disputed the meaning of the phrase "attorney-client relationship," as it is used in the Referral Fee Agreement, as well as the relevant 12-month time period. Markevitch testified that an attorney-client relationship begins when a client hires a law firm and that Morin hired the Firm when he signed a representation agreement in May 2010. Markevitch further testified that, accordingly, the relevant 12-month period began in May 2010. And he calculated that he was due $169,844.18 based on the Firm's billings during the ensuing 12 months.
Kass testified that an "attorney-client relationship" commences when an "attorney and a client believe that they are exchanging information and that the client is consulting an attorney with an expectation that the attorney will be giving them legal advice." Kass said the Firm's attorney-client relationship with Morin began in June 2009, when Morin asked the Firm to do work for him. Pagano similarly testified that the attorney-client relationship between the Firm and Morin began in June 2009, when Morin "sent [the firm] an email where he put on the top of the email privileged and confidential. And in exchange for that we agreed to evaluate his case, give him advice, upon which we expected him to rely." Pagano testified that Kass calculated Markovich's referral fee to be $7,220.81 based on the 12-month time period beginning in June 2009.
2. Principles of Contract Interpretation and Standard of Review
"When the parties dispute the meaning of a contract term, the trial court's first step is to determine whether the term is ambiguous . . . ." (Curry v. Moody (1995) 40 Cal.App.4th 1547, 1552.) If it is, extrinsic evidence of the contracting parties' intent may be introduced. Such "[e]xtrinsic evidence can include the surrounding circumstances under which the parties negotiated or entered into the contract; the object, nature and subject matter of the contract; and the subsequent conduct of the parties." (Cedars-Sinai Medical Center v. Shewry (2006) 137 Cal.App.4th 964, 980 (Cedars-Sinai).) " 'The parties' undisclosed intent or understanding is irrelevant to contract interpretation.' [Citation.]" (Ibid.)
When conflicting extrinsic evidence is introduced as to the meaning of the contract term, such that "ascertaining the intent of the parties at the time the contract was executed depends on the credibility of [the] extrinsic evidence, that credibility determination and the interpretation of the contract are questions of fact that may properly be resolved by the jury." (City of Hope National Medical Center v. Genentech, Inc. (2008) 43 Cal.4th 375, 395.) In those circumstances, we apply the substantial evidence standard of review and uphold "any reasonable construction . . . as long as it is supported by substantial evidence." (Winet v. Price (1992) 4 Cal.App.4th 1159, 1166.)
"When applying the substantial evidence test, 'the power of the appellate court begins and ends with a determination whether there is any substantial evidence, contradicted or uncontradicted, which supports the finding.' [Citation.] Evidence is 'substantial' for purposes of this standard of review if it is of ponderable legal significance, reasonable in nature, credible, and of solid value. [Citation.] The testimony of a single witness, even if that witness is a party to the case, may constitute substantial evidence. [Citation.]" (Consolidated Irrigation Dist. v. City of Selma (2012) 204 Cal.App.4th 187, 200-201.)
3. The Verdict is Supported by Substantial Evidence
Here, the trial court concluded that the contract term "attorney-client relationship" was ambiguous. No one challenges that threshold determination on appeal. The jury heard conflicting extrinsic evidence of the parties' subsequent conduct. Specifically, Markevitch testified that Pagano "encouraged [him,] in the spring of 2010[,] to work with Mr. Morin and to ensure that he actually signs with the firm so we could proceed with the matter. [¶] And as he had told me, you know, I would get paid if the matter goes forward." Pagano denied making those statements. Given that conflicting extrinsic evidence, the court properly allowed the jury to interpret the Referral Fee Agreement.
Over the defense's objection, the trial court also permitted the parties to testify to their " 'undisclosed . . . understanding [of the disputed term, despite its apparent] irrelevan[ce] to [the] contract['s] interpretation.' [Citation.]" (Cedars-Sinai, supra, 137 Cal.App.4th at p. 980.) The Firm does not challenge the admission of that evidence on appeal.
The jury construed the term "attorney-client relationship" to mean the contractual relationship between the Firm and the client established by the signing of a representation or retainer agreement. That construction is supported by substantial evidence. Markevitch's testimony that Pagano stated Markevitch "would get paid" if Morin signed a representation agreement gave rise to the reasonable inference that the signing of the agreement created the attorney-client relationship and triggered the 12-month period for the referral fee.
The Firm relies on isolated portions of Markevitch's testimony linking the Referral Fee Agreement to the receipt of fees for its contrary argument. Specifically, the Firm points to Markevitch's testimony that "[t]his contract is about sharing in the fees. It's about bringing business to the Firm." The Firm also cites Markevitch's testimony that the Referral Fee Agreement meant he "was going to have an opportunity to share" in "the business" or the "substantive work" of the Firm that "turn[ed] into money." The Firm says that the foregoing testimony establishes that the 12-month period for the Morin referral fee began running in July 2009, because the attorney fee award in the Morin class action compensated the Firm for work it performed starting in that month.
The Firm's argument fails for two reasons. First, the Firm disregards Markevitch's testimony that it is the formal hiring of a firm by a client that establishes the requisite attorney-client relationship. More importantly, as the Firm itself argued below, Markevitch's subjective, undisclosed interpretation of the contract is not relevant.
III. DISPOSITION
The judgment is affirmed. Markevitch shall recover his costs on appeal.
/s/_________
ELIA, ACTING P. J. WE CONCUR: /s/_________
BAMATTRE-MANOUKIAN, J. /s/_________
MIHARA, J.