Opinion
B324420
09-26-2024
GEORGE BOYADZHYAN, Plaintiff and Appellant, v. GERAGOS &GERAGOS, APC, et al., Defendants and Respondents GERAGOS &GERAGOS, APC, et al., Plaintiffs and Respondents, v. GEORGE BOYADZHYAN, Defendant and Appellant.
Mazur &Mazur and Janice R. Mazur for Plaintiff, Defendant and Appellant. Geragos &Geragos and Tina Glandian for Defendants, Plaintiffs and Respondents.
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County, No. BC671202, 19STCV15685 David Sotelo, Judge.
Mazur &Mazur and Janice R. Mazur for Plaintiff, Defendant and Appellant.
Geragos &Geragos and Tina Glandian for Defendants, Plaintiffs and Respondents.
EGERTON, J.
George Boyadzyhyan (plaintiff) appeals from a judgment in favor of Geragos &Geragos, APC (the firm) and two of its attorneys, Mark Geragos and Ben Meiselas (collectively, respondents) following a bench trial. Plaintiff paid the firm a $100,000 retainer fee to represent him in a multi-million-dollar business dispute. The retainer agreement also included a contingent fee arrangement. About two months later, when respondents had not yet filed the lawsuit plaintiff wanted, plaintiff terminated the representation. He sued respondents for return of the $100,000 retainer, malpractice, and other causes of action. After plaintiff recovered $3 million in a settlement of his business dispute, respondents sued plaintiff for their quantum meruit attorney fees.
The trial court found the $100,000 was a nonrefundable, "true retainer" plaintiff had paid to secure respondents' availability-not for future legal services-and plaintiff failed to prove his other causes of action. The court found in favor of respondents on their quantum meruit claim and awarded them $109,183.33 plus prejudgment interest.
On appeal, plaintiff argues the trial court erred in finding the $100,000 was a true retainer; the $100,000 is unconscionable in any event, and the unearned portion must be refunded; respondents failed to meet their burden to prove their quantum meruit claim was reasonable; and the court prejudicially erred in admitting evidence of plaintiff's character. We conclude the court erred in finding the retainer agreement met the strict requirements of a true retainer agreement. The court, however, did not err in finding respondents demonstrated they performed legal services for plaintiff worth $109,183.33, minus $463.33 for a few entries calculated at higher hourly rates. We thus remand the matter for the court to apply the $100,000 plaintiff already paid respondents as an offset to the reduced quantum meruit award. We also conclude the court did not prejudicially err in admitting the character evidence.
FACTS AND PROCEDURAL BACKGROUND
1. Plaintiff's underlying business dispute
Plaintiff is a self-described Armenian immigrant who came to this country in 1992. He established several drug and alcohol treatment facilities in California doing business as LLMS, LLC. He sold the business for $16 million in 2016 to LLMS Acquisition Holdings, LLC (LLMS). LLMS apparently formed a new entity to run the facilities. The parties agreed plaintiff would be paid half of the sale price plus monthly payments consisting of $49,000 in "rents," six percent of the portion of the purchase price he did not receive, and benefits related to transportation costs.
The court's statement of decision and documentation relating to the sale refer to the buyer as LLMS. The court referred to the new entity as "New State"; plaintiff testified he sold the business to New State Capital Partners: we use "buyer" to refer to either.
Plaintiff also was to stay on as CEO of the newly formed entity under a separate employment agreement. As part of the sale, plaintiff made certain representations and warranties about the financial status of the treatment centers and agreed to a non-compete provision.
A number of issues arose between the parties, leading to plaintiff's resignation as CEO on November 1, 2016. The parties accused each other of serious breaches of the purchase agreement. Plaintiff claimed the buyer had" 'cut [him] out' of LLMS Board Meeting attendance" and sent him a termination letter on November 1, 2016. The buyer also stopped making required monthly payments to plaintiff.
Plaintiff's business lawyer Lee Sacks tried to resolve the issues with the buyer. He exchanged a series of letters and emails with buyer's counsel between February and April 2017. Sacks's efforts were unsuccessful. Plaintiff testified he decided to "hire someone that can . . . open up a complaint and move forward . . . with my demands in my case." Sacks had never filed a lawsuit. Plaintiff "was looking for someone [who could] file a lawsuit as soon as possible" for him. Plaintiff testified he decided on Geragos because, "[f]irst of all, he was Armenian," and he had "seen him."
2. Plaintiff's retention of the firm
Plaintiff contacted the firm through its online portal on April 11, 2017. He wrote: "I sold my business in 2016 for 20.4 million, I was paid 8.4 million, they are giving me hard time, they are not kipping [sic] their word and honesty, so I want to file a complaint, can Mr. Geragos represent my case?" Meiselas contacted plaintiff. At the time, he was a senior associate, about to become a partner. Meiselas and Geragos met with plaintiff at the firm's office to discuss his case. In advance of their meeting, plaintiff emailed Meiselas the purchase agreement and related documents. He also gave Meiselas and Geragos Sacks's earlier correspondence with buyer's counsel.
Plaintiff clarified the business was "evaluated for $20.4 million but . . . sold for 16-point-something."
Plaintiff testified that, at this initial meeting, Meiselas and Geragos quoted him a price of $100,000 for "[t]heir full attention and filing the lawsuit as soon as possible." He testified there was no mention of a true retainer, "only that a $100,000 payment would cover 'all of Geragos' legal costs.'" According to Meiselas, they discussed plaintiff's "disputes" and "generally talk[ed] about what retention c[ould] look like, but there w[ere] no firm promises or contracts or agreements entered into there." Plaintiff told them he had outside counsel (Sacks), and they should speak to him about it.
On Thursday, April 27, 2017, in an email sent at 4:31 p.m., Meiselas asked associate Alex Alarcon to draft a retainer agreement between the firm and plaintiff. Meiselas wrote: "Need a retainer drafted immediately for hybrid $100k flat fee true retainer and 20 percent of total recovery . . . pre-trial and 25 percent of recovery if the matter proceeds to trial . . . mean[ing] a final status conference takes place." Two hours later, at 6:30 p.m., Alarcon emailed a draft of the agreement to plaintiff, copying Meiselas, Geragos, and Gaby Preciado, the office manager.
Alarcon was admitted to the California bar in December 2015 and had been working for the firm since March 2016.
The next morning, Friday, April 28, 2017, Alarcon emailed an "updated retainer agreement" to plaintiff at 11:33 a.m., copying the same parties. An email from Alarcon to plaintiff at 2:27 p.m., again copying the same parties, states, "Here is the latest update, per your phone conversation with Ben [Meiselas]." Finally, at 3:50 p.m., Alarcon emailed plaintiff and Sacks, copying Meiselas, Geragos, and Preciado, "the latest update." That is the last email transmitting the retainer agreement.
The attachments to Alarcon's emails were not part of the trial record.
Plaintiff testified he did not review the retainer agreements attached to Alarcon's emails. He admitted he forwarded them to Sacks but testified he never had an opportunity to discuss the terms of the agreement with Sacks. Meiselas testified they "went back and forth with Lee Sacks on the terms [and] put those terms into a retainer agreement that was ultimately signed by the parties." As Meiselas was out of state, he relayed "the various edits" to the agreement to Alarcon. Alarcon testified he discussed revisions with Sacks but did not remember what changes were made.
A firm intern went to plaintiff's office on the afternoon of April 28, 2017, to pick up the $100,000 check and retainer agreement. Christina Wallis, plaintiff's then-employee, testified she received an email from plaintiff on April 28 with the retainer agreement. Plaintiff was out of town. Following plaintiff's earlier instructions, she printed the agreement, put it in an envelope with the $100,000 check plaintiff had given her, and gave the envelope to the intern.
The operative retainer agreement, dated April 28, 2017- and addressed to plaintiff at his email address-sets forth the terms of the firm's representation. Under the heading "Scope of Service," the agreement provides plaintiff hired the firm to provide legal services "only arising out of the dispute" between plaintiff and defendants (meaning LLMS and other entities). The firm in turn agreed to provide "those legal services reasonably required to represent" plaintiff in that dispute- through any trial and post-trial motions-including "any crosscomplaint" defendants might raise against plaintiff.
At trial, plaintiff denied he signed, or authorized anyone to sign, the agreement. Wallis testified she did not sign it. The intern and Preciado testified the agreement was signed when Preciado took it out of the envelope the intern had picked up from plaintiff's office. For purposes of this appeal only, plaintiff does not dispute the trial court's finding that he authorized an individual to sign the retainer agreement. We thus accept the court's finding and need not discuss or consider the evidence on this issue.
Under the heading "Attorneys' Fees," the agreement states:
"[Plaintiff] agrees to pay [the firm] a fixed fee of $100,000.00, which shall be paid upon signing of the Agreement.
"Said Fee is a TRUE RETAINER which covers not only the legal services to be rendered, but also secures [the firm's] representation and reputation to assist you with this matter. A TRUE RETAINER is not based upon actual time spent on the case or the number of hours billed.
Rather, the Fee ensures the availability of a high-profile and nationally recognized law firm to represent [plaintiff] in the above-referenced matter. The Fee is NOT REFUNDABLE , even if the case resolves immediately, [plaintiff] does not pursue the case, or [plaintiff] obtains new counsel. The payment for the TRUE RETAINER is deposited directly into [the Firm's] general account and is earned, in full, upon receipt.
"In addition to the true retainer above, [plaintiff and the firm] shall enter into a hybrid contingency agreement, which shall not include the monthly payments of $49,000.00 which are currently being paid by Defendant to [plaintiff]. [Plaintiff] agrees to pay [the firm] as compensation for services rendered in connection with said representation on a contingency basis as follows:"
20 percent of any recovery received before a final status conference (meaning a trial readiness conference), and 25 percent of any recovery received after a final status conference.
The integrated agreement includes other provisions, such as plaintiff's obligation to pay "all costs and expenses incurred in litigating this case."
3. The firm's representation of plaintiff
After the firm received plaintiff's check, they began work on plaintiff's case. During the representation, Meiselas and Geragos communicated with plaintiff through text messages, telephone conversations, and in-person meetings. On May 12 and May 30, 2017, Geragos sent a demand letter to defendants' counsel and a reply to counsel's response, respectively, concerning defendants' breach of the purchase agreement, demand to inspect the company's "books and records," and payments owed to plaintiff. Meiselas and Geragos also had several telephone conversations with defendants' counsel. They arranged for plaintiff's participation in-and prepared him for-a (telephonic) board meeting on June 2, 2017, "to obtain additional financial information." Geragos "was successful in restoring the insurance and car payments to [plaintiff] that LLMS had previously stopped."
Plaintiff did not participate in the call. He testified he had health issues. Meiselas testified plaintiff told him he had gotten into a dispute with the hotel where he was staying and could not make the meeting, but told the other side he was sick.
Meiselas and Geragos reviewed the underlying purchase, operating, and employment agreements, and financial records provided to them "in response to [the] [b]ooks and [r]ecords request" and "analyzed the underlying data to make a recommendation to [plaintiff] on the best approach to solving the dispute." They also investigated fraud allegations defendants had made against plaintiff about "allegedly inaccurate financial records he had provided for the valuation of the company or the companies he sold to LLMS."
Meiselas and Geragos researched causes of action for a potential complaint. Geragos "recommended [plaintiff] consider Receivership or Involuntary Bankruptcy, as one method to address the underlying dispute, which [plaintiff] outright rejected." Geragos believed an involuntary bankruptcy or receivership would force a quicker result for plaintiff and avoid drawn out litigation.
It was during this time that plaintiff terminated the firm's representation. On June 6, 2017, LLMS and other defendants filed a complaint against plaintiff for breach of representations and warranties, fraud, breach of his non-compete and non-solicitation covenants, and other causes of action. Plaintiff wanted Meiselas and Geragos to file a lawsuit "asap." Plaintiff was to meet with Meiselas at the firm, but Meiselas was detained. After waiting, plaintiff was told Meiselas would not be available for another two hours. He sent Meiselas the following text message: "I'm out of here! [¶] I'm firing due to moral and undependable practice."
The next day, after an exchange of further text messages and a call to plaintiff from Geragos that afternoon after he got out of court, Geragos texted they would "get a draft complaint to [plaintiff] before Monday for his review." Geragos and Meiselas were working on the complaint over the weekend. In response to plaintiff's inquiry on Sunday evening, June 11, 2017, Geragos told plaintiff they were researching the possibility of simultaneously forcing defendants into bankruptcy. Plaintiff did not want Geragos to spend time on research. He wanted to "just move on with [the] lawsuit." Plaintiff terminated the firm's representation as of June 22, 2017, when he picked up his file. The firm did not file a complaint.
4. The current action
Plaintiff sued the firm, Geragos, and Meiselas on August 7, 2017. He filed his operative second amended complaint on March 16, 2018. Plaintiff alleged causes of action for cancellation of retainer agreement, breach of fiduciary duty and professional negligence, breach of contract, fraud, negligent misrepresentation, rescission, conversion, and declaratory relief. On May 6, 2019-after plaintiff settled his underlying business dispute against defendants for $3 million through a receivership-respondents filed a complaint against plaintiff for quantum meruit, defamation, and fraud. The court consolidated the two cases on October 9, 2019.
The court sustained plaintiff's demurrer to the fraud claim.
The court held a bench trial on the consolidated cases from May 23 through May 26, 2022. Plaintiff and respondents testified, as did their current and/or former employees, and presented documents the court received into evidence.
The parties also presented competing expert testimony about the nature of the parties' retainer agreement. Plaintiff's expert Stanley Lamport, a lawyer, testified first. In the court's words, he opined "the use of the phrase 'fixed fee' was fatal to any clear and unambiguous intent of the parties of a 'true retainer' and that the agreement's use of the phrase 'not only the legal services to be rendered' was also a fatal reference destroying the nature and intent of a True Retainer." Lamport explained, "the minute you make . . . something you are calling a true retainer applicable to the payment of legal services"-which, in his opinion, this agreement did-"it is not a true retainer."
Respondents' expert David Parker, also a lawyer, interpreted the agreement-in the court's words-based on its" 'four corners,'" existing case law and the rules, and the fact plaintiff was represented by personal counsel "who negotiated, reviewed, and made numerous revisions to the retainer agreement." As the court noted, Parker explained "the term 'fixed fee' did not even appear in the [rules] at the time the agreement was signed" and "when considered in the context of the retainer agreement, refer[red] to a fixed or specified amount of money paid as the True Retainer fee, not a 'Fixed Fee' retainer agreement." The agreement also expressly defined the fee as "a True Retainer." (Boldface type and capitalization omitted.)
Parker also countered Lamport's opinion that the phrase," 'which covers not only the legal services to be rendered,' destroys the 'true retainer' nature of the agreement." Parker explained, when viewing the agreement in its totality, that phrase "simply referr[ed] to the subject matter of the true retainer because it doesn't say that the true retainer is going to be credited against fees that are due later." Parker noted the next sentence states "it's not based on actual time spent," and thus the fee was "not based on services" or "in exchange for services." Parker opined the true retainer agreement was "bulletproof" given the remainder of the paragraph explained the fee was not refundable-even if the case resolved immediately or the client decided not to pursue it or to retain new counsel, was earned on receipt, and would be deposited directly into the lawyer's operating account. He also noted the agreement provided for the payment of legal services "separately on a contingency basis."
Both experts also testified to the reasonableness of the value of respondents' services underlying their quantum meruit claim, as did Geragos and Meiselas. Respondents claimed they provided $109,183.33 in legal services to plaintiff.
At the conclusion of the testimony, the court directed counsel to file proposed statements of decision by July 29, 2022, which they did. The court filed its proposed statement of decision on September 6, 2022, finding plaintiff failed to prove all of his causes of action, and finding in favor of respondents on their quantum meruit claim. Plaintiff filed objections.
In its statement of decision, the trial court found plaintiff's testimony "that he never had a single discussion with Sac[k]s about the retainer agreement [wa]s simply not credible." Based on the agreement, the experts' testimony, the parties' testimony, and other evidence presented at trial, the trial court found "the only reasonable interpretation of the retainer agreement -a document negotiated, edited and revised by attorneys- is what is repeatedly and unambiguously expressed in the document-it is a non-refundable 'True Retainer' which was earned upon receipt by Geragos." The court further found "[t]he overwhelming evidence in the case undercuts [plaintiff's] testimony and demonstrates that Geragos remained available to [plaintiff] and indeed attempted to represent him in a complex business dispute; however, [plaintiff] lacked the patience or rationality for effective representation." The court also found the uncontroverted testimony demonstrated respondents' legal services had value and were reasonable.
On October 4, 2022, the court entered judgment- in accordance with its proposed statement of decision- in favor of respondents and against plaintiff in the amount of $109,183.33 on the quantum meruit claim plus prejudgment interest of $36,464.23. The court entered judgment in favor of plaintiff and against respondents on their claim for defamation. Plaintiff appealed.
DISCUSSION
1. Contract interpretation and standards of review
Attorney-client fee agreements" 'are evaluated at the time of their making [citation] and must be fair, reasonable and fully explained to the client. [Citations.] Such contracts are strictly construed against the attorney. [Citations.]'" (M'Guinness v. Johnson (2015) 243 Cal.App.4th 602, 617 (M'Guinness).) Thus, "[a]ny ambiguity in a retainer agreement is construed in favor of the client and against the attorney." (Banning Ranch Conservancy v. Superior Court (2011) 193 Cal.App.4th 903, 913 (Banning Ranch); see also M'Guinness, at p. 617 [" 'any uncertainties [are resolved] in favor of a fair and reasonable interpretation' "].)
Traditional principles of contract interpretation apply to client retainer agreements (M'Guinness, supra, 243 Cal.App.4th at p. 617), the chief of which is the basic goal to give effect to the parties' mutual intent at the time of contracting (Banning Ranch, supra, 193 Cal.App.4th at p. 913)." 'When a contract is reduced to writing, the parties' intention is determined from the writing alone, if possible. [Citation.] "The words of a contract are to be understood in their ordinary and popular sense." '" (Ibid.) "The language of a contract is to govern its interpretation, if the language is clear and explicit, and does not involve an absurdity." (Civ. Code, § 1638.) "The whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other." (Civ. Code, § 1641; Zalkind v. Ceradyne, Inc. (2011) 194 Cal.App.4th 1010, 1027 (Zalkind) ["To the extent practicable, the meaning of a contract must be derived from reading the whole of the contract, with individual provisions interpreted together, in order to give effect to all provisions and to avoid rendering some meaningless."].) "An interpretation that leaves part of a contract as surplusage is to be avoided." (Rice v. Downs (2016) 248 Cal.App.4th 175, 186 (Rice).)
When the meaning of the language "is reasonably susceptible to either [party's] interpretation," the court also may consider extrinsic evidence, "including the surrounding circumstances of the negotiations; the contract's object, nature, and subject matter; and the parties' subsequent conduct." (VFLA Eventco, LLC v. William Morris Endeavor Entertainment, LLC (2024) 100 Cal.App.5th 287, 301.) "If, in light of the extrinsic evidence, the language is reasonably susceptible to the interpretation urged, the extrinsic evidence is then admitted to aid the court in its role in interpreting the contract. [Citations.] When there is no material conflict in the extrinsic evidence, the trial court interprets the contract as a matter of law.... If, however, there is a conflict in the extrinsic evidence, the factual conflict is to be resolved by the [fact finder]." (Wolf v. Walt Disney Pictures &Television (2008) 162 Cal.App.4th 1107, 1126-1127.) Nevertheless, extrinsic evidence is not admissible to "flatly contradict the express terms of the agreement." (Winet v. Price (1992) 4 Cal.App.4th 1159, 1167; Consolidated World Investments, Inc. v. Lido Preferred Ltd. (1992) 9 Cal.App.4th 373, 379 (Consolidated) [contract language is not reasonably susceptible to a reading that contradicts the contract's express terms].)
"The threshold issue of whether to admit the extrinsic evidence-that is, whether the contract is reasonably susceptible to the interpretation urged-is a question of law subject to de novo review. [Citations.] [¶] The ultimate construction placed on the contract might call for different standards of review. When no extrinsic evidence is introduced, or when the competent extrinsic evidence is not in conflict, the appellate court independently construes the contract. [Citations.] When the competent extrinsic evidence is in conflict, and thus requires resolution of credibility issues, any reasonable construction will be upheld if it is supported by substantial evidence." (Founding Members of the Newport Beach Country Club v. Newport Beach Country Club, Inc. (2003) 109 Cal.App.4th 944, 955-956.) Otherwise, as this is an appeal from a judgment based on a statement of decision following a bench trial, we review the trial court's legal conclusions de novo and its findings of fact for substantial evidence. (McPherson v. EF Intercultural Foundation, Inc. (2020) 47 Cal.App.5th 243, 257 (McPherson).) We defer to the trial court's credibility determinations. (See ibid.; Southern California Edison Co. v. Severns (2019) 39 Cal.App.5th 815, 826 [credibility determination resolving conflicting testimony was "province of the trial court"].)
2. True retainer agreements
The main issue on appeal is whether the court correctly found the $100,000 retainer fee plaintiff paid the firm was a nonrefundable, "true retainer" under California law.
" '[T]rue'" retainer agreements, also known as" 'classic'" or" 'general'" retainer agreements, "involve clients who pay an engagement retainer fee to secure ongoing legal representation for a specified period of time." (Banning Ranch, supra, 193 Cal.App.4th at pp. 916-917, citing Baranowski v. State Bar (1979) 24 Cal.3d 153, 164, fn. 4 (Baranowski) [under classic retainer client pays a sum of money "to secure an attorney's availability over a given period of time"]; see also Rules Prof. Conduct, rule 1.5(d) ["A true retainer is a fee that a client pays to a lawyer to ensure the lawyer's availability to the client during a specified period or on a specified matter, but not to any extent as compensation for legal services performed or to be performed."].)
Future references to "rules" are to the Rules of Professional Conduct. Although rule 1.5(d) defining "true retainer" did not go into effect until November 2018, after the parties entered the retainer agreement here, it essentially adopted the definition from then-existing case law. The then-current rules referred to a true retainer as one paid "solely" for ensuring the attorney's availability. (See former rule 3-700(D)(2), eff. Sept. 14, 1992 to Oct. 31, 2018 (former rule 3-700(D)(2).)
Such agreements, "in essence, are option agreements: in exchange for the payment of an engagement retainer fee, the attorneys commit themselves to take on future legal work, regardless of inconvenience, client relations or workload constraints. '[L]awyers make two present sacrifices at the time of signing a general retainer agreement: they reallocate their time so that they can stand ready to serve the general retainer client to the exclusion of other clients and they give up their right to be hired by persons with interests that conflict with the general retainer client, thus again [forgoing] potential income.'" (Banning Ranch, supra, 193 Cal.App.4th at p. 917.)
The attorney thus earns the true or general retainer fee on its payment "since the attorney is entitled to the money regardless of whether he actually performs any services for the client." (Baranowski, supra, 24 Cal.3d at p. 164, fn. 4.) Accordingly, the ethical rule requiring an attorney whose employment has been terminated to return "any part of a fee paid in advance that has not been earned" does not apply "to a true retainer fee which is paid solely for the purpose of ensuring the availability of the member for the matter." (Former rule 3-700(D)(2), italics added; see also current rule 1.16(e)(2), eff. Nov. 1, 2018 [similar].) An attorney, therefore, may charge a client a" 'true' retainer for the purpose of securing the attorney's availability for a specified period of time [citation] and an hourly, contingent, or fixed fee for specific work performed during the retainer period." (Tuft et al., Cal. Practice Guide: Professional Responsibility &Liability (The Rutter Group 2023) ¶ 5:319 (hereafter Cal. Practice Guide: Prof. Responsibility), cited by trial court.)
In contrast," 'advance fee[s],'" sometimes called" 'security retainers,'" are fees a client pays to a lawyer in advance for legal work to be performed in the future. (See ABA Com. on Ethics and Prof. Responsibility, formal opn. No. 505 (2023) p. 2 (hereafter ABA formal opn. No. 505).) They "remain[ ] [the] property of the [client] until the attorney applies [the advance] to charges for services actually rendered, and any unearned funds are returned to the [client]." (In re Montgomery Drilling Co. (Bankr. E.D.Cal. 1990) 121 B.R. 32, 38; former rule 3-700(D)(2); rule 1.16(e)(2).) Finally, a "flat fee" is "a fixed amount that constitutes complete payment for the performance of described services regardless of the amount of work ultimately involved, and which may be paid in whole or in part in advance of the lawyer providing those services." (Rule 1.5(e), eff. Nov. 1, 2018.)Former rule 3-700(D)(2) and rule 1.16(e)(2)-requiring the return of unearned advanced fees-apply to flat fees.
Although the then-existing rules did not define "flat fee," flat or fixed fees generally were understood-as the current definition provides-to" 'embrace[ ] all work to be done, whether it be relatively simple and of short duration, or complex and protracted.'" (ABA formal opn. No. 505, supra, at p. 4, fn. 14, citing ABA Com. on Ethics and Prof. Responsibility, informal opn. No. 1389 (1977); see also, e.g., Richmond, Understanding Retainers and Flat Fees (2009) 34 J. Legal Prof. 113, 132 [describing a flat fee as "an advance fee payment intended to compensate a lawyer for all work to be done on a matter or a discrete aspect thereof, regardless of the time required or the complexity of the assignment"].)
Regardless of its designation as a nonrefundable or true retainer, if a retainer is paid as an advance for legal services to be performed, it must be returned to the client on termination of the attorney's employment to the extent the attorney has not earned the fee-in other words, performed the services the fee was to cover. (In the Matter of Lais (Review Dept. 1998) 3 Cal. State Bar Ct. Rptr. 907, 922-923 [reversing hearing judge's finding that characterization of retainer fee as a" 'fixed, non-refundable retaining fee' paid 'for the purpose of assuring the availability of [the attorney] in this matter'" made fee a true retainer not subject to return under former rule 3-700(D)(2), explaining nonrefundable characterization was not determinative].)
The agreement there stated the attorney's fees were to consist of a $2,750 retainer fee "plus $275 per hour for his services after the initial 10 hours of work." (In the Matter of Lais, supra, 3 Cal. State Bar Ct. Rptr. at p. 923.) The court found the $2,750 fee thus was intended "to cover the initial 10 hours of [the attorney's] work." (Ibid.) The client also testified she understood the fee to be an advance payment for services, and the attorney's bills showed the $2,750 as a credit. (Ibid.)
As explained in a local bar publication, "the rarity of the true retainer is self-evident. Most clients would be unwilling to pay money to have a lawyer merely be available without actually receiving any legal service.... The true retainer is more commonly used when it is important for the client to assure the availability of a specialist in a particular field, a powerhouse firm, or an attorney with a towering reputation, even though no services are currently required." (Sall, Navigating Fees and Retainers: A Sea of Change (May 2021) 63 Orange County Lawyer 50, 52 (hereafter Navigating Fees &Retainers) [explaining "[u]nlike advance fee deposits, which relate to the performance of future legal services, a true retainer is one paid only to secure the availability of the lawyer"]; see also Bain v. Weiffenbach (Fla.Dist.Ct.App. 1991) 590 So.2d 544, 545 [explaining "a lawyer of towering reputation just by agreeing to represent a client may cause a threatened lawsuit to vanish and thereby obtain a substantial benefit for the client and be entitled to keep the entire amount [of a substantial nonrefundable retainer] paid to him"]; ABA formal opn. No. 505, supra, at p. 3, fn. omitted [explaining true retainers" 'are quite rare,' and have 'largely disappeared from the modern practice of law' "].)
3. The agreement cannot be interpreted as a "true retainer" based on its express terms
Plaintiff contends the plain language of the agreement "precludes it from being a 'true retainer'" because the agreement expressly states the $100,000 fee also covers future legal services and "describes a 'flat fee.'" Respondents contend that, "contrary to the phrases [plaintiff] isolates and cherry-picks from the [r]etainer [a]greement, a reading of the entire document makes clear that the $100,000 fee was paid solely to secure Geragos' availability for a particular matter" and all legal services would be compensated separately on a contingency fee basis. To resolve these competing interpretations, we first look to the plain language of the agreement. We also consider whether the extrinsic evidence presented at trial demonstrates the agreement is reasonably susceptible to either party's interpretations.
The plain language of the retainer agreement includes language necessary to establish a true retainer. The agreement identifies the "fixed fee of $100,000" as a "true retainer." (Boldface type and capitalization omitted.) It explains "[a] true retainer" is not based on actual time spent on the case or the number of hours billed but "ensures the availability of a high-profile and nationally recognized law firm to represent" plaintiff in his business dispute. (Boldface type and capitalization omitted.) The agreement also states the fee is earned on receipt and nonrefundable, "even if the case resolves immediately" or plaintiff "does not pursue the case" or "obtains new counsel." These are the hallmarks of a nonrefundable "true retainer." (See generally Baranowski, supra, 24 Cal.3d at p. 164, fn. 4; Navigating Fees &Retainers, supra, 63 Orange County Lawyer at p. 52.)
Yet, the very first sentence describing the nature of the $100,000 fee expressly states it "covers not only the legal services to be rendered, but also secures [the firm's] representation and reputation to assist you [meaning plaintiff] with this matter." (Italics added; boldface type omitted.) Restated positively, we read the provision to state the $100,000 fee both "covers . . . the legal services to be rendered" by the firm and "secures [the firm's] representation" of plaintiff-and the imprimatur of its reputation-in the matter, i.e., plaintiff's business dispute with defendants. A reasonable client would interpret the phrase the fee "covers . . . the legal services to be rendered" to mean the fee pays for the legal services the firm will provide. The term "but also secures," in turn, implies the fee also ensures or guarantees the firm's availability to represent plaintiff in the matter described in the agreement. Thus, the plain language appears to state the $100,000 fixed fee serves two purposes: to pay for future legal services and to guarantee the firm will be available to represent plaintiff in his business dispute with defendants. To constitute a true retainer, however, the fee cannot be designated as payment for any legal services at all. (See, e.g., State Bar Com. on Mandatory Fee Arb., Arbitration Advisory No. 2011-01 (Jan. 28, 2011) p. 2 <https://www.calbar. ca.gov/Portals/0/documents/mfa/arbAdvisories/2011-01_ EnforcementOfNon RefundableRetainerProvisions_r.pdf> [as of Sept. 25, 2024], archived at <https://perma.cc/3AQM-BQFL> (hereafter Arbitration Advisory No. 2011-01), cited by trial court [noting "the key defining characteristic of a 'true' or 'classic' retainer is that it is paid solely to secure the availability of the attorney over a given period of time and is not paid for the performance of any other services"]; see also former rule 3-700(D)(2) [return of unearned fee paid in advance not required for a true retainer fee "paid solely for the purpose of ensuring the availability" of the lawyer for the matter]; rule 1.16(e)(2) [same].)
The Merriam-Webster Unabridged online dictionary's definition of: (1) "cover" includes "to be adequate to defray or compensate: defray the cost of: pay for: balance"; (2) "render" includes "to do (a service) for another"; "to hand over to another (as the intended recipient): deliver, transmit"; and (3) "secure" includes "to give certitude to: assure"; "to put beyond hazard of losing or of not receiving: guarantee"; "to bring about: effect, produce." (Ibid. (2024) <https://unabridged.merriam-webster.com /unabridged/cover>; <https://unabridged.merriam-webster.com/ unabridged/render>; <https://unabridged.merriam-webster.com/ unabridged/secure> [as of Sept. 25, 2024], archived, respectively, at <https://perma.cc/XK9T-8JSJ>; <https://perma.cc/XL9B-ZZQW>; <https://perma.cc/SHT3-76EP>.)
Accordingly, the express language of the agreement precludes us from construing the $100,000 fee as a true retainer under both the former and current rules, as well as our high court's definition.
To reconcile this language, the court considered the parties' experts' testimony. The court found respondents' expert's opinion more persuasive. The court found Parker "credibly disputed Lamport's opinion that the phrase, 'which covers not only the legal services to be rendered,' destroy[ed] the 'true retainer' nature of the agreement." The court implied Lamport's opinion was flawed because he based it on "only the first two sentences" under the" 'Attorneys' Fees'" section of the retainer agreement, rather than the entirety of the contract.
Thus, the court agreed with Parker's opinion that the phrase "legal services to be rendered" referred to the subject matter of the representation when considering the agreement as a whole. In effect, the court adopted Parker's view that the $100,000 "fixed fee" was not in exchange for specified services but paid "in consideration of availability relating to a subject matter." The court found Lamport's "misinterpretation" of the amount of the true retainer as a" 'fixed fee'" and the "subject matter of the retention as 'legal services to be rendered,' [wa]s contrary to the clear intent of the parties here and [did] not vitiate the unambiguous intent of the contract and the agreement of the parties; that the agreement is a True Retainer."
We agree reference to the $100,000 as a "fixed fee" is not fatal to construing the fee as a true retainer, but we cannot reasonably interpret the phrase "covers not only the legal services to be rendered" simply to refer to the subject matter of the retention. Although we derive the meaning of a contract by interpreting it as a whole, we also must seek to avoid a construction that would render part of it as surplusage. (See Rice, supra, 248 Cal.App.4th at p. 186 [court must view language in light of contract as a whole and"' "not use a 'disjointed, singleparagraph, strict construction approach,'" '" but should avoid an interpretation that leaves part of the contract as surplusage]; Zalkind, supra, 194 Cal.App.4th at p. 1027 [contract should be interpreted to avoid rendering some provisions meaningless].) If we were to interpret "covers not only the legal services to be rendered" to refer to the subject matter of the representation- while also interpreting securance of the firm's availability to be the fee's sole purpose-we either would create a surplusage or render part of the sentence meaningless.
If we substitute "subject matter of the representation" for "legal services to be rendered," the provision would state: The fee not only covers the subject matter of the representation "but also secures [the firm's] representation and reputation to assist you with this matter." As "this matter" is the subject matter of the representation, the first half of the sentence would become redundant. If what the firm really meant was that the fee covers its availability to provide the described legal services, then a surplusage is created in the second half of the sentence. In effect, the sentence would provide the fee covers not only the firm's availability to provide (render) the legal services described in the agreement (the subject matter of the representation), but also secures the firm's representation of plaintiff in "this matter"- the representation of plaintiff in this matter, of course, consisting of the legal services described in the agreement.
To avoid this redundancy, respondents' interpretation would require us to excise the phrase "covers not only the legal services to be rendered, but also." That phrase would be unnecessary if the $100,000 fee were intended as payment for the firm's availability alone. Without it, the agreement would have stated: "Said Fee is a TRUE RETAINER which secures [the firm's] representation and reputation to assist you with this matter." No mention of "legal services to be rendered"- if we interpret that phrase to mean "the subject matter of the representation"-would be necessary as the agreement already described the subject matter of the representation in the initial "Scope of Service" section.
The trial court did not rely on the expert's opinion alone in interpreting the agreement. The court found the testimony, and other evidence presented at trial, confirmed this was the parties' intent. The court stated, "Based on [plaintiff's] testimony in court and the conduct presented, it [was] clear to this fact-finder that [plaintiff] sought out one of the California's most well-known and high profile trial lawyers, which to [plaintiff] also meant 'a trusted Armenian'-(and a famous one to boot) to jolt LLMS into cooperation. [Plaintiff] paid $100,000 for the availability of Geragos &Geragos, specifically for Mark Geragos, Esq." The court found plaintiff's testimony demonstrated he "was clear[ly] expecting the mere mention of his new lawyer-MARK GERAGOS! would have an instant or immediate effect on LLMS and their attorneys' attitude towards him."
In reaching its conclusion, the court expressly found plaintiff was "not . . . reliable as a witness," and his "testimony was self-serving and inaccurate." Accordingly, having implicitly found Geragos and Meiselas credible-noting, for example, Geragos corroborated Meiselas's testimony on several points- the court resolved conflicts in the testimony in respondents' favor. We will not reweigh that evidence and defer to the court's express and implicit credibility findings. (RMR Equipment Rental, Inc. v. Residential Fund 1347, LLC (2021) 65 Cal.App.5th 383, 392 ["When witnesses give conflicting factual accounts and the fact finder makes credibility assessments to resolve these conflicts, we defer to the fact finder's determinations."]; McPherson, supra, 47 Cal.App.5th at p. 257.)
Plaintiff's text messages to Meiselas and Geragos alone show he expected them to be available to him, not just during working hours, but on nights and weekends. Plaintiff also testified that, after he was made to wait for hours for his scheduled appointment with Meiselas-shortly before he terminated the firm's representation-he said," 'I just paid all this money now not to wait for you guys for three hours here.'" The court reasonably could infer that statement revealed plaintiff's expectation that the $100,000 fee paid for respondents' availability.
Meiselas's and Geragos's testimony also supports the court's finding. For example, Meiselas testified plaintiff came to the office several times without calling in advance. And Geragos testified plaintiff "had a number of different issues, . . . and he kept imploring me that he wanted my time, he wanted me available, that he wanted to be able to pick my brain as well .... [Plaintiff] wanted to retain me under what we call a true retainer, so for all of the other things or all of the other tasks and litigation-related advice that he wanted, basically somebody to carve out time to be available." After he "looked through [the] text messages," Geragos recalled there were times he was in court but met plaintiff at the office afterward, and he believed he met with plaintiff after hours and on weekends. In the court's words, "Throughout his conversations with [p]laintiff, it became clear to Geragos, he testified, that [plaintiff] primarily wanted 'my time,' he wanted 'access to me,' so we reduced the agreement to a True Retainer."
Nevertheless, the lawyers' testimony and plaintiff's conduct do not reasonably support construing the agreement to state the $100,000 fee compensated the firm exclusively for its availability and not for any of its legal services, as the ethical rules governing attorneys practicing in this state provide. (Former rule 3-700(D)(2); rule 1.5(d); see Cal. Practice Guide: Prof. Responsibility, supra, ¶ 5:260.3 ["[i]f an advance fee is intended as a prepayment for actual services to be rendered in the future, it is not a true retainer, even if the client believes he or she is also guaranteeing the attorney's availability"].) Respondents may have intended the $100,000 fee to secure only their availability but that is not what they wrote. Instead, they conflated the rendering of legal services on the matter with their availability and reputation. Yet, a lawyer hired to provide legal services necessarily must be available to provide them. (See Brickman &Cunningham, Nonrefundable Retainers: A Response to Critics of the Absolute Ban (1995) 64 U.Cin. L.Rev. 11, 42-70, appen. at 59 ["A lawyer hired by a client to . . . litigate a claim . . . necessarily agrees to be available to perform the service that she has undertaken to perform. Since every lawyer provides assurance of availability every time she agrees to perform a service, then allowing the lawyer to charge separately for that assurance of availability is simply and solely allowing the lawyer to charge a nonrefundable retainer."].) As a result, the extrinsic evidence here cannot be introduced to show the $100,000 fee compensated respondents for their availability alone and not for any future legal services. To do so would contradict the express terms of the agreement, which provide the fee is paid for both legal services and the firm's availability. (See, e.g., Consolidated, supra, 9 Cal.App.4th at p. 379 [giving example of contradictory terms: "if the contract calls for the plaintiff to deliver to defendant 100 pencils by July 21, 1992, parol evidence is not admissible to show that when the parties said 'pencils' they really meant 'car batteries' or that when they said 'July 21, 1992' they really meant [']May 13, 2001['] "].) Accordingly, we cannot agree with the trial court's conclusion that the "$100,000 was paid solely for Mark Geragos' availability as a 'True Retainer,' and it was understood and expressly agreed that any legal services by Geragos would be compensated separately on a contingency basis." (Italics added.)
Nowhere does the agreement state plaintiff is to pay the $100,000 fixed fee solely to secure the firm's (or Mark Geragos's) availability. The California Practice Guide on Professional Responsibility, as cited by the trial court, recommends a true retainer agreement include the following language: "Client agrees to pay Attorney a retainer in the amount of $__ to secure Attorney's availability to Client for the period __to__ (or for the following matter __(describe matter)). Said retainer is earned by Attorney on receipt and is not paid as compensation for the performance of legal services in the future." (Cal. Practice Guide: Prof. Responsibility, supra, Form 5:B, final italics added.) Conspicuously absent from the agreement here, however, is any affirmative statement that the $100,000 is not compensation for the firm's future legal services. In any event, such a provision would contradict the agreement's express statement that the $100,000 covers the legal services to be rendered. In effect respondents' interpretation would require us to read "only" where the contract states "also."
Finally, we disagree with respondents' apparent view that the agreement met the strict standards of a true retainer because, as Parker discussed, it explained the fee was not based on actual time spent or number of hours billed and included a separate contingent fee provision. First, a fixed or flat fee for legal services also would not be based on time spent on the matter. Accordingly, that the agreement did not provide for the firm to bill against the $100,000 or state the $100,000 covered a certain number of hours-as in cases where so-called nonrefundable fees were found not to constitute true retainers- does not conversely render the fee here to have been paid solely for the attorneys' availability. (See T &R Foods, Inc. v. Rose (1996) 47 Cal.App.4th Supp. 1, 7, cited by trial court [$25,000 retainer was not a true retainer where agreement provided fees would be charged against the $25,000 and client was required to replenish the retainer monthly to maintain a $25,000 credit]; In the Matter of Lais, supra, 3 Cal. State Bar Ct. Rptr. at pp. 922-923 [nonrefundable fee not a true retainer where it covered first 10 hours of work].)
As for the separate contingency fee provision, the agreement provides that, "[i]n addition to the true retainer above," the parties "shall enter into a hybrid contingency agreement." Plaintiff agreed to pay the firm "as compensation for services rendered in connection with said representation" a contingent fee of either 20 or 25 percent, depending on the timing, of any "settlement, arbitration award, or judgment." As the trial court noted, a hybrid fee agreement may require a client to pay a true retainer" 'for the purpose of securing the attorney's availability for a specified period'" and a contingent fee" 'for specific work performed during the retainer period.'" (Quoting Cal. Practice Guide: Prof. Responsibility, supra, ¶ 5:319.) The court found the "separate provision for payment on a contingency basis 'as compensation for services,'" was "further evidence" the agreement was a" 'True Retainer.'" (Referencing Arbitration Advisory No. 2011-01, supra, at p. 2 ["In a true retainer situation, if the attorney's services are eventually needed, those services would be paid for separately, and no part of the retainer would be applied to pay for such services."].) A hybrid contingency, however, also may consist of a flat fee plus a percentage of recovery. (See, e.g., Navigating Fees &Retainers, supra, 63 Orange County Lawyer at p. 53 [noting that when "a contingency fee arrangement is a hybrid of a percentage recovery and a flat fee," under rules 1.5(e) and 1.15(a), any unearned portion of the flat fee will be subject to refund "if the relationship ends before the contingency representation is completed"].) Again, if the agreement intended the firm's compensation for "services rendered" to consist only of a contingent fee, there would have been no need to refer to the $100,000 fee as "cover[ing] . . . the legal services to be rendered." Reading those provisions together, we interpret the agreement to require plaintiff to compensate the firm for its legal services through a hybrid fee consisting of the $100,000 retainer plus 20 to 25 percent of any monetary recovery plaintiff achieved.
We are mindful the court found plaintiff's independent counsel Sacks "disclosed" the terms of the "True Retainer agreement" to him. We defer to the court's finding, which the record supports. Meiselas testified he had "multiple conversations" with Sacks about a true retainer, and Sacks understood the true retainer "was for our availability only, . . . and that you were guaranteeing the high-profile firm to be available for you." The court found plaintiff's testimony he never discussed the retainer agreement with Sacks not credible. The court also found it "curious[ ]" that plaintiff did not call Sacks as a witness "to contradict the witness testimony that he negotiated and revised the retainer agreement with [the firm]." Although plaintiff's independent counsel reviewed the agreement, and understood the nature of a true retainer, we cannot construe the $100,000 fee as one. The case law and rules are clear: a retainer fee is not a true retainer if any part of it is paid for the provision of legal services; it must be paid only to secure the lawyer's availability. Based on its express terms-and strictly construing the agreement against the firm as we must-the $100,000 fee here applied to both. (M'Guinness, supra, 243 Cal.App.4th at p. 617.)
4. The record supports finding the reasonable value of respondents' legal services was $108,720
Although we have concluded the $100,000 was not a true retainer, respondents would have had to refund the fee on their discharge only to the extent they had not earned it. (Former rule 3-700(D)(2); current rule 1.16(e)(2); see also ABA formal opn. No. 505, supra, at p. 4, fn. 13 [explaining" 'hybrid' fees or retainers," consisting of" 'a putative general retainer that is denominated as both for availability and for services,' . . . is likely to be considered by courts to be 'fully refundable to the extent not earned by services rendered' "].) Of course, plaintiff also was to compensate the firm through a contingent fee. Because plaintiff fired the firm before the contingency could occur, the firm could recover in quantum meruit the reasonable value of services rendered up to the time of discharge that exceeded the $100,000 plaintiff already paid. (Mardirossian &Associates, Inc. v. Ersoff (2007) 153 Cal.App.4th 257, 272 (Mardirossian).)
Plaintiff contends the $100,000 fee was unconscionable and the $109,183.33 quantum meruit fee respondents "charged" was unreasonable. Accordingly, we consider the evidence relating to respondents' quantum meruit claim to determine if the record supports the court's finding that respondents demonstrated the reasonable value of their legal services was $109,183.33, entitling them to the difference between that amount and the $100,000 they already had received.As we have concluded the $100,000 fee cannot be construed as a nonrefundable true retainer, we need not consider plaintiff's contention that the firm's retention of the fee was unconscionable.
Because we conclude the record supports the court's finding that the reasonable value of respondents' services exceeded the $100,000 fee, we need not consider plaintiff's contention respondents violated former rule 3-700(D)(2) and breached their fiduciary duty to plaintiff by not refunding all or part of the $100,000 fee on their discharge. Moreover, plaintiff has abandoned and/or forfeited his breach of fiduciary duty and professional negligence claim based on respondents having failed to deposit the $100,000 fee in a client trust account under former rule 4-100. Plaintiff did not raise the issue in his proposed statement of decision or in his objections to the trial court's proposed statement of decision. (See Golden Eagle Ins. Co. v. Foremost Ins. Co. (1993) 20 Cal.App.4th 1372, 1380 ["any defects in the trial court's statement of decision must be brought to the court's attention through specific objections to the statement itself"].) Nor has plaintiff addressed the issue on appeal. (Swain v. LaserAway Medical Group, Inc. (2020) 57 Cal.App.5th 59, 72 (Swain) [" '" 'Issues not raised in an appellant's brief are [forfeited] or abandoned.'"' "].)
We review a trial court's determination of the reasonableness of claimed attorney fees for abuse of discretion. (See PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 10941096 [attorney fees awarded under contractual fee provision].)
We review the court's underlying factual determinations for substantial evidence. (Mardirossian, supra, 153 Cal.App.4th at p. 273.)
a. Respondents' legal services had value for plaintiff
Plaintiff contends the firm "failed to provide the services for which they were retained and failed to provide any significant work product or value to the client during the period of their retention." Plaintiff argues he specifically retained respondents to file a lawsuit against defendants, but they never did despite their repeated promises and plaintiff's entreaties; and respondents provided no evidence of "any value or benefit" plaintiff received from their representation as the only work product they produced was "a couple of letters."
First, we reject-as did the trial court-plaintiff's contention that respondents did not earn their claimed fees- or the fee was unconscionable or unreasonable-because they did not file a lawsuit against defendants during the two months they represented him. Plaintiff testified he hired Geragos because he wanted someone to "file a lawsuit as soon as possible" against defendants. The record shows plaintiff repeatedly asked Meiselas and Geragos about filing a lawsuit and no lawsuit was filed before plaintiff fired them. Based on our review of the record, however, respondents' failure immediately to file a lawsuit on plaintiff's behalf did not constitute a failure to provide the agreed upon legal services. As the court concluded-having found plaintiff an unreliable witness who gave "self-serving and inaccurate" testimony-respondents "remained available to [plaintiff] and indeed attempted to represent him in a complex business dispute."
For example, Meiselas testified he was "trying to determine the accurate information that was out there about th[e] dispute, see if there could be a resolution before pursuing a litigation, and ultimately pursuing a litigation path to make sure that the facts that [he] alleged and pled would be the accurate facts." He testified "the key thing" was to ensure "there was accurate data, because as much as [plaintiff] wanted a complaint to be filed quickly, if the complaint was wrong and the complaint had materially false information, it would be unethical, number one, to file it; and then number two, it would be harmful to his claims and causes of action if there was incorrect information in there." Plaintiff had told Meiselas the numbers in the financial records defendants produced "d[id]n't make sense." Meiselas thus "felt [he] didn't have the accurate data." As discussed, Meiselas wanted plaintiff to get the necessary data at the June 2, 2017 board meeting plaintiff missed.
Geragos also testified plaintiff "became fixated on filing a complaint," but Geragos "was wary of doing that right out of the box." He was "apprehensive that [they] were going to get dragged or mired in litigation and [he] knew . . . -or at least [he] suspected, that was the last thing that [plaintiff] wanted." Geragos was familiar with defense counsel's firm and how it handled litigation. He believed an involuntary bankruptcy or receivership would be more expeditious and recommended to plaintiff that they explore that path. Moreover, Geragos testified he had hoped the June 2 "principals only" board meeting he had helped to arrange would diffuse the situation between the parties and lead to mediation. The court could infer the firm was waiting for the meeting to take place before filing a lawsuit on behalf of plaintiff. Plaintiff did not attend that meeting, however, and discharged the firm a short time later, before a lawsuit could be filed. As discussed, on Sunday, June 11, Geragos told plaintiff a draft lawsuit would be ready for him the next day by 5 p.m. Geragos testified he believed no lawsuit was provided to plaintiff because he did not "show up to the appointment," presumably to go over the draft. Accordingly, that respondents did not file a lawsuit does not detract from their quantum meruit claim.
Plaintiff does not challenge on appeal the court's other findings that he did not establish any damages, legal malpractice, or other tortious conduct by respondents based on their failure to file a suit on his behalf. (See Swain, supra, 57 Cal.App.5th at p. 72.) Our interpretation of the retainer agreement does not affect those rulings.
Second, the record supports the trial court's finding that respondents' legal services were of value to plaintiff, regardless of the amount of "work product" plaintiff received. The evidence supports the court's findings that the firm "worked diligently with a difficult client, fulfilling their duties under the [retainer] agreement." As the court noted, the record shows Geragos successfully restored monthly payments to plaintiff that LLMS had stopped; Geragos and Meiselas spent time and effort analyzing data-and attempted to obtain more accurate data, including by arranging for plaintiff's participation in the board meeting-to recommend to plaintiff the best approach to resolve his business dispute; investigated the fraud allegations against plaintiff; and researched causes of action for a potential complaint.
Moreover, the court rejected plaintiff's expert's opinion that plaintiff's case" 'involved a business dispute that [did] not appear to encompass any novel or difficult issues.'" As the court noted, "[t]he evidence established the contrary: the underlying matter involved three successive firms, a fifth amended complaint, several years of litigation with allegations of mutual respective breaches of the purchase agreement, and ultimately, a $3 million resolution through Receivership." That Geragos first suggested that idea, "further demonstrate[ed]," in the court's view, "the value of the legal services provided."
Indeed, Geragos testified he refreshed his recollection about the "sheer number of documents" they had to go through "to get a handle on" plaintiff's business dispute. "The more [Geragos] got into the case, it became apparent . . . there was some risk with the . . . buyer being undercapitalized or at least going through some shenanigans where there would be some undercapitalization." Geragos's and Meiselas's review of the documents lead Geragos to believe that, "if we were going to file a suit, . . . there was a pathway to getting this into an involuntary bankruptcy or in the alternative, a receivership." Geragos believed that was a way they could "expedite matters."
Geragos also discussed some of the complexities of plaintiff's case. He testified "[t]he biggest problem with [plaintiff's] case . . . was you had a bunch of Delaware entities with California law controlling." Geragos said he "didn't want to be in a situation where we misfile something, and next thing we know we were at court, and I had to get ahold of Delaware counsel for it," which he believed "would set [plaintiff] off." It certainly wouldn't expedite matters.
Accordingly, substantial evidence supports the court's findings that respondents performed legal services for-and were available to-plaintiff in accordance with the agreement, they performed the work they said they did, and the legal services they performed benefitted plaintiff.
b. The record supports the trial court's finding that respondents' claimed fees were reasonable
Plaintiff also argues respondents' claimed hours and rates on the invoice they prepared for their quantum meruit claim were unreasonable." 'The most useful starting point for determining the amount of a reasonable fee is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate. This calculation provides an objective basis on which to make an initial estimate of the value of a lawyer's services. The party seeking an award of fees should submit evidence supporting the hours worked and rates claimed.' [Citation.] However, providing evidence as to the number of hours worked and rates claimed is not the end of the analysis in such a quantum meruit action. The party seeking fees must also show the total fees incurred were reasonable. Factors relevant to that determination include '[t]he nature of the litigation, its difficulty, the amount involved, the skill required in its handling, the skill employed, the attention given, the success or failure of the attorney's efforts, the attorney's skill and learning, including his [or her] age and experience in the particular type of work demanded.'" (Mardirossian, supra, 153 Cal.App.4th at p. 272.) Expert testimony is appropriate to assist the fact finder in determining the reasonableness of the claimed fees. (Ibid.)
Respondents admittedly did not maintain contemporaneous records of the hours spent and work performed on plaintiff's case, as their compensation was not based on actual time spent, but the prepaid $100,000 fee (that they thought was a true retainer) and a contingency fee. Rather, after respondents learned plaintiff had recovered a $3 million settlement from defendants, Meiselas created an invoice-dated April 17, 2019-to support respondents' quantum meruit claim. According to the invoice, the firm spent 127.33 hours providing legal services to plaintiff from April 30, 2017 through June 11, 2017, for a total value of $109,183.33, based on the attorneys' hourly rates. The invoice identifies Geragos's hourly rate as $1,500, Meiselas's as $750, and other attorneys' as $350 and $650.
Meiselas testified that, to create the invoice, he "looked through the e-mails, . . . looked at the messages, . . . asked people at the office when [plaintiff] was there." He "tried to conduct a level of due diligence of when [plaintiff] was there and make the best estimate [he] could at that time," erring on the side of "underestimat[ing] the hours." Geragos also testified the time reflected on the invoice was a "rough[ ] total[ ]" of his time and was "way conservative." He testified, "[T]here is no way that I only spent 30-somewhat hours on this case. That is not even a fraction of what I spent." Both Meiselas and Geragos testified about the work they performed, which we have discussed. Meiselas also testified the hourly rates listed on the invoice for himself and Geragos were their "prevailing billable rate[s]" at the time they provided the services. Respondents' expert Parker acknowledged the time entries on the recreated invoice were "obviously estimates." He testified, however, that attorneys regularly do not track their time in contingency cases, and commonly recreate their hours for a quantum meruit claim following their discharge. Parker agreed there is no obligation for attorneys to keep track of their time under a contingency or hybrid contingency agreement.
Plaintiff makes much of the fact the invoice was created two years after the fact and included "vague, rounded time descriptions, . . . suggest[ing] that the invoice [did] not accurately reflect the work performed and the time expended." In California, however, "there is no legal requirement that an attorney supply billing statements to support a claim for attorney fees." (Mardirossian, supa, 153 Cal.App.4th at p. 269 [contingency fee attorney not required to maintain billing records].) An attorney's testimony as to the number of hours worked is sufficient evidence to support an award of attorney fees, as long as it is based on personal knowledge of the time spent and fees incurred. (Ibid.) Respondents did that here.
Plaintiff also seems to contend respondents spent excessive hours, such as on research, given Geragos's and Meiselas's experience and the lack of work product the firm gave him. Again, the record supports the court's finding that the time respondents spent on the matter was reasonable given the complexities in plaintiff's case and the issues that arose. The record also supports the court's implied finding that respondents were not inefficient. For example, as the court found, Geragos testified that, after the missed June 2 meeting, the firm explored causes of action for plaintiff by reviewing exemplars from other lawsuits the firm had filed, to avoid "reinvent[ing] the wheel." Moreover, the court expressly rejected plaintiff's expert Lamport's opinion that the invoice's charges seemed excessive because its entries did not include drafting or creation of other work product, and the firm did not give the client a draft complaint or research file. The court found Lamport's position was "neither evidence nor expert testimony, as it lack[ed] both a legal and factual foundation." The court rejected the testimony as "a baseless assertion by a paid expert attempting to serve his client." Accordingly, the court did not err in finding the hours respondents spent on plaintiff's matter were reasonable.
Plaintiff also argues respondents' invoice seeks reimbursement for 9.5 to 10 hours helping him with an immigration issue involving his mother that he did not ask respondents to perform. He testified he and his mother had been U.S. citizens for about 20 years. Meiselas and Geragos both recalled plaintiff needed immediate assistance with an immigration issue with which the firm helped him. Geragos also testified plaintiff's lawyer corrected him at his deposition that the issue had been with plaintiff's mother-in-law, not his mother. Plaintiff also argues he never entered into a new written agreement for this work despite the parties' retainer agreement stating new matters would require one. Respondents concede they had no separate written agreement. Nevertheless, an attorney may recover the reasonable value of his services in quantum meruit even without a written agreement. (Huskinson v. Brown & Wolf (2004) 32 Cal.4th 453, 458 [party need not prove existence of contract to recover in quantum meruit but must show services were rendered and parties expected work would be compensated].) We can infer the trial court found Meiselas's and Geragos's testimony credible, the issue was with plaintiff's mother-in-law, rather than his mother, and all parties expected the firm would be compensated for its work.
Nor did the court abuse its discretion in finding the hourly rates the firm charged were reasonable. To be sure, the rates were high-especially for Geragos at $1,500 per hour. Plaintiff presented no evidence, however, demonstrating it was unreasonable for a high-profile firm with a national reputation to charge the rates it did. Lamport opined the high-end hourly rate in 2017 for a lawyer admitted to practice in 2011 was $500-$550, and $800-$850 for a lawyer practicing since the early 1980s. But Lamport did not take into consideration the high visibility and reputation of Geragos and his firm, nor the high demand for his and his firm's services. Indeed, as the trial court found, plaintiff hired Geragos because he was "a well-known and high-profile trial lawyer," who could give plaintiff "instant respect" and "possible jolting attention from [his] opponent."
Respondents, in contrast, presented evidence supporting the court's finding that the firm's rates were reasonable. Parker testified that, although high, the rates for Geragos and Meiselas "were . . . within the market." He noted "lawyers with even less experience at major law firms in downtown Los Angeles" charged those rates. In Parker's opinion, although the firm was not as large as those major firms, when "look[ing] at" what the Geragos firm attorneys "do and their experience and the reputation and so forth," their rates were "within market at the high end." Geragos testified he had "represented some of the most notable people in the world," had been president of the national trial lawyers and criminal trial lawyers of America associations, and had been named lawyer of the year by California Lawyer Magazine in both the criminal and civil arenas. He and his firm were "AV rated preeminent." As the trial court stated, Geragos testified that in 2000 he and his firm expanded their criminal practice "to include civil litigation primarily representing plaintiffs with a focus on business litigation, including disputes against undercapitalized companies involving [r]eceivership and [b]ankruptcy"-the issues plaintiff's case raised. Meiselas also testified about his experience.
As plaintiff notes, however, two of Meiselas's time entries- .75 hours on May 30 and 3 hours on June 10-are billed at $850 per hour instead of $750 per hour, for a total of $637.50 and $2,550, respectively. Geragos's May 30 time entry for .33 hours is billed at $1,750 per hour instead of $1,500 per hour, and the stated charge is $583.33. When asked about the different rates, Parker testified he did not recall seeing the fluctuation between the hourly rates, but if he saw it, he "would assume it was a typographical error." As there is no other explanation for the change in rates on these three time entries, we can infer the $850 and $1,750 rates were stated in error. Accordingly, those three time entries should be recalculated at Meiselas's $750 and Geragos's $1,500 rates. Based on our calculations, that would reduce the $109,183.33 total value of the firm's services by $463.33 for a total of $108,720.
Even if Geragos's hourly rate were $1,750, the amount billed is too high: $1,750 multiplied by .33 is $577.50, not $583.33.
5. Plaintiff has failed to show the court prejudicially erred in admitting evidence of his character
Plaintiff also contends the judgment must be reversed because the trial court improperly admitted evidence of his alleged alcoholism and difficult character. We review a trial court's evidentiary rulings for abuse of discretion. (See, e.g., People v. Chhoun (2021) 11 Cal.5th 1, 26.) We will not reverse a judgment for the erroneous admission of evidence, however, unless the error "resulted in a miscarriage of justice." (Cal. Const., art. VI, § 13; Evid. Code, § 353, subd. (b).) We will find a miscarriage of justice only if, after examining the entire case, we are of the opinion that" 'it is reasonably probable that a result more favorable to the appealing party would have been reached in the absence of the error.'" (Cassim v. Allstate Ins. Co. (2004) 33 Cal.4th 780, 800.) "Prejudice from error is never presumed but must be affirmatively demonstrated by the appellant." (Brokopp v. Ford Motor Co. (1977) 71 Cal.App.3d 841, 853-854.) To meet his burden on appeal, therefore, plaintiff must show it is reasonably probable the court would have reached a result more favorable to him had the evidence not been admitted.
During the trial, over plaintiff's objection, the trial court allowed the firm's office manager Preciado to testify plaintiff appeared drunk once when he came to the office: he smelled of alcohol, his eyes were bloodshot, and he looked at Preciado's breasts, making her uncomfortable. In allowing the testimony, the court stated, "[plaintiff] has indicated he was at the office many times and has very little recollection of what he did there while he was there, and this is part of the Gestalt of that."
Plaintiff filed a motion in limine seeking to exclude evidence of his alleged alcoholism and objected at trial when the witnesses testified.
Meiselas testified plaintiff was "a challenging client." Over plaintiff's continued objection, Meiselas testified plaintiff was seen drinking in the restaurant in the firm's building before coming up to the office. Meiselas further testified "[a] lot of the paralegals and other lawyers" complained to him about their "discomfort in their interactions" with plaintiff. Meiselas testified plaintiff also made antisemitic remarks to him.Geragos testified plaintiff "was clearly struggling with mental health issues," and he believed plaintiff "had relapsed," implying plaintiff had addiction issues.
A text message plaintiff sent to Geragos and Meiselas- that is in one of plaintiff's exhibits-states, "Ben he jewed me."
As plaintiff notes, the court sustained a relevance objection when plaintiff's counsel asked Meiselas if he ever had been sued for malpractice. Plaintiff's counsel asked why his client's inebriation was relevant but information bearing on Meiselas's ability was not. The court explained the evidence of plaintiff's alleged addiction was "not all that meaningful to this court." The court stated he had "great respect for people that are dealing with addiction," based on his experience with opening "a drug court," and his life experience with other individuals. The court reassured counsel it "kn[ew] how to put things into place," and would give the testimony about plaintiff the weight he-"not some other judge"-thought it deserved.
Plaintiff argues the evidence of his alleged alcohol use and difficult character was not relevant to the issues before the court. Plaintiff also argues that, "[n]otwithstanding the court's comments indicating that such evidence was not very meaningful, the court's impression of [plaintiff] was clearly negatively impacted," based on the court's comments in its statement of decision. The court quoted Geragos's testimony that plaintiff failed to attend the June 2, 2017 board meeting "perhaps because of a health issue, 'his own demons' and possibly because he had 'relapsed.'" The court also quoted Geragos's testimony that "LLMS people repeated that [plaintiff] seemed 'out of control' or 'unhinged.'" Plaintiff also notes the court found he "was not credible, demonstrated a 'marked lack of rationality' and 'lacked patience or rationality for effective representation.' "
We need not determine whether the court erred in admitting the above evidence as plaintiff has failed to demonstrate prejudice. Here, the trial court-not a jury- was the finder of fact. The court explained the evidence was not that meaningful to it. We reject plaintiff's contention that the court's comments in its statement of decision demonstrate the court formed a negative opinion of plaintiff due to the testimony about his alleged alcoholism and difficult character. The court's reference to plaintiff seeming" 'out of control' or 'unhinged,'" related to what Geragos testified the defendants' principals had told him, through counsel, when he was trying to set up the June 2 board meeting to bring the parties together. It was not Geragos's characterization, nor the court's own characterization of plaintiff. The court's statement of decision also includes the reason plaintiff gave for missing the June 2 board meeting- a health issue-not just Geragos's opinion plaintiff possibly had relapsed or was dealing with his own "demons." Most importantly, the court heard plaintiff's testimony and observed his demeanor firsthand. We can infer the court's findings as to plaintiff's lack of credibility, lack of rationality, and lack of patience were based on plaintiff's own testimony. Meiselas's and Geragos's testimony unrelated to plaintiff's character, and plaintiff's own text messages, also support the court's findings.
Plaintiff has failed to demonstrate there was a reasonable probability the court's judgment, or any part of it, would have been different had the character evidence been excluded. Accordingly, even if the court erred, there was no prejudice.
DISPOSITION
The judgment is reversed in part and remanded.
On remand the court is to enter a new judgment awarding respondents $8,720 and to recalculate the prejudgment interest on that amount. The remainder of the judgment is affirmed.
The parties are to bear their own costs on appeal.
We concur: EDMON, P. J. ADAMS, J.