Opinion
A118710
1-6-2009
MICHAEL B. MONTGOMERY, Plaintiff and Appellant, v. BRAZZI BUTTERWORTH & CORELL INTERNATIONAL et al., Defendants and Respondents.
Not to be Published in Official Reports
Appellant, an attorney, was hired by a relocation consultant to represent two businesses in connection with the impending condemnation of their business premises. Appellant was discharged shortly before the condemnation case went to trial. Appellant and the businesses participated in a nonbinding mandatory fee arbitration proceeding, in which appellant sought to recover the fees he contended were owed to him for his pretrial work on the condemnation proceeding. After losing the arbitration, appellant filed the present case against the businesses and the relocation consultant. Appellant settled his suit just before trial, agreeing to dismiss his case against the two businesses in exchange for a payment from the relocation consultant. As part of the settlement, appellant expressly agreed that the two businesses retained their right to seek recovery of their costs and attorney fees.
As authorized by the mandatory fee arbitration statutes, the trial court awarded the businesses the attorney fees and costs they had incurred in defending appellants suit against them. Appellant now challenges the trial courts attorney fee order on numerous grounds. We reject all of appellants arguments, and affirm the order.
factual and procedural background
Appellant, Michael B. Montgomery (Montgomery), is an attorney admitted to practice in California. Respondents, Brazzi Butterworth & Corell International (Brazzi), and Stellar Winery, LLC (Stellar), are California business entities. In 1999, Brazzi was operating a business in Napa under the name Riverfront Antique Center, while Stellar, which was owned in part by one of Brazzis principals, was planning to open a winery on the same premises. For convenience, the parties have used the term Riverfront to refer to Brazzi and Stellar collectively, and we will do the same.
Appellant was representing himself when he filed his opening brief on this appeal. In their brief, respondents argue that appellant waived his contentions on appeal by failing to support the factual statements in his opening brief with citations to the record. Respondents complaint is well taken. The California Rules of Court require that every factual and procedural statement in an appellate brief must be supported by a citation to the appellate record. (Cal. Rules of Court, rule 8.204(a)(1)(C).) "It is not the task of the reviewing court to search the record for evidence that supports the partys statement; it is for the party to cite the court to those references. Upon the partys failure to do so, the appellate court need not consider or may disregard the matter. [Citations.]" (Regents of University of California v. Sheily (2004) 122 Cal.App.4th 824, 826-827, fn. 1; see also Byars v. SCME Mortgage Bankers, Inc. (2003) 109 Cal.App.4th 1134, 1140-1141; Pringle v. La Chapelle (1999) 73 Cal.App.4th 1000, 1003-1004; Gotschall v. Daley (2002) 96 Cal.App.4th 479, 481, fn. 1.) Unfortunately, respondents brief also suffers from the same failing, as their entire three and one-half page statement of facts is supported by only three brief sets of citations to the record, the first of which does not occur until the middle of the third page.
After respondents filed their brief, appellant substituted in another attorney as counsel. In appellants reply brief, his counsel accepted respondents statement of the facts in their brief on appeal as correct. Accordingly, our statement of the facts is generally consistent with that account, as supplemented by facts established in the record. We have disregarded all statements of fact in appellants briefs that are not borne out by evidence in the record. (See Regents of University of California v. Sheily, supra, 122 Cal.App.4th at pp. 826-827, fn. 1.)
We decline to remand for supplementation of the record, as appellant requests in his reply brief. With the addition of the materials accompanying appellants unopposed motion to augment the record, which we granted on April 22, 2008, the record on this appeal is sufficient to permit us to resolve the issues raised.
In 1999, Riverfront learned that the Napa County Flood Control and Fire Protection District (the District) intended to condemn the premises on which Riverfront did business. In August 1999, Riverfront retained a firm named Relocation Consultants of America, Inc. (RCA) to act as its consultant in connection with the condemnation proceedings. RCA, in turn, retained Montgomery to handle the legal aspects of the condemnation, including representing Riverfront in the eminent domain proceedings that the District filed on January 31, 2001 (the eminent domain case). Montgomery was apparently retained on a contingent fee basis.
Montgomerys fee agreement with RCA does not appear in our record, but it is clear from both parties briefs, and from the portions of the record with which we have been provided (including the written award issued in the mandatory fee arbitration proceeding), that RCA agreed to pay Montgomery a contingency fee based on the compensation that the District paid Riverfront in the eminent domain case.
In January or February 2002, Riverfront discharged Montgomery as its counsel in the eminent domain case. In place of Montgomery, Riverside retained Gary Roach (Roach), the attorney who has continued to represent Riverfront through the pending appeal. On July 3, 2002, the eminent domain case was settled, in the midst of trial, by the Districts agreement to pay Riverfront $ 800,000 plus interest and costs.
On July 26, 2002, Montgomery sent Riverfront a notice of its right to fee arbitration, and informed it that he intended to seek fees of $320,000 for his work on the condemnation and the eminent domain case. Roach responded by requesting nonbinding fee arbitration.
The fee arbitration proceedings were held on February 24, 2004. RCA, which also had not paid Montgomery for his work on the condemnation and the eminent domain case, was not a party to the fee arbitration. On April 6, 2004, a majority of the fee arbitration panel found that Riverfront did not owe Montgomery any fees, because Montgomery had no written fee agreement with Riverfront, and there was no evidence that Montgomery had expected to be paid for his work by any party other than RCA.
After the fee arbitration award was issued, on May 4, 2004, Montgomery filed suit in Napa County Superior Court (the attorney fee case) against Riverfront and RCA, as well as Roach, again seeking to recover fees for his work in connection with the condemnation and the eminent domain case. Roach obtained summary judgment in his favor on December 16, 2005, and continued to represent Riverfront in the attorney fee case.
Trial in the attorney fee case commenced on September 15, 2006. On September 19, 2006, the case settled. In the settlement, Montgomery agreed to dismiss his case against all of the defendants with prejudice, and to bear his own costs and fees. RCA agreed to pay Montgomery $15,000; to dismiss its cross-complaint; and to bear its own costs and fees. As part of the settlement, Riverfront retained its right to seek an award against Montgomery of costs and attorney fees for the defense of the attorney fee case. A judgment was entered in accordance with the terms of the settlement on November 13, 2006.
On March 15, 2007, Riverfront filed a motion for a determination that it had been the prevailing party in the attorney fee case, and for an award of its attorney fees and costs under Business and Professions Code section 6204, subdivision (d). On July 10, 2007, the trial court granted the motion, awarding Riverfront attorney fees in the amount of $120,000, and costs in the amount of $7,097.99. This timely appeal ensued.
Business and Professions Code section 6204, subdivision (d) (section 6204(d)) is part of the statutory scheme governing mandatory attorney fee arbitration (the mandatory fee arbitration statutes). (Bus. & Prof. Code, §§ 6200 et seq.) Section 6204(d) provides: "The party seeking a trial after arbitration shall be the prevailing party if that party obtains a judgment more favorable than that provided by the arbitration award, and in all other cases the other party shall be the prevailing party. The prevailing party may, in the discretion of the court, be entitled to an allowance for reasonable attorneys fees and costs incurred in the trial after arbitration, which allowance shall be fixed by the court. In fixing the attorneys fees, the court shall consider the award and determinations of the arbitrators, in addition to any other relevant evidence."
discussion
As Montgomery acknowledges in his reply brief, we review the trial courts order in this case for abuse of discretion. The applicability of this standard is particularly clear in this case, since the governing statute, section 6204(d), expressly states that in a matter subject to the mandatory fee arbitration statutes, it is up to the discretion of the court whether to award attorney fees to the party prevailing at trial after the arbitration has been held.
A. Consent to Attorney-Client Business Transaction
Montgomerys first argument appears to be that the judgment should be reversed because Riverfront signed written consents (waivers) under rule 3-300 of the California Rules of Professional Conduct. Montgomery contends he was unaware that the waivers had been signed by Riverfront until they were produced to him in discovery by RCA. He acknowledges, however, that the waivers were produced to him during the pendency of the attorney fee case; indeed, they were attached to his third amended complaint in that case, which was the operative pleading at the time it went to trial. Thus, it is clear from the record that Montgomery chose to settle the attorney fee case on the merits after, and despite, the belated disclosure of the signed waivers.
Rule 3-300 of the Rules of Professional Conduct was evidently deemed applicable to Montgomerys representation of Riverfront because of the nature of his contingent fee arrangement. (See fn. 2, ante.) The rule provides: "A member shall not enter into a business transaction with a client; or knowingly acquire an ownership, possessory, security, or other pecuniary interest adverse to a client, unless each of the following requirements has been satisfied: [¶] (A) The transaction or acquisition and its terms are fair and reasonable to the client and are fully disclosed and transmitted in writing to the client in a manner which should reasonably have been understood by the client; and [¶] (B) The client is advised in writing that the client may seek the advice of an independent lawyer of the clients choice and is given a reasonable opportunity to seek that advice; and [¶] (C) The client thereafter consents in writing to the terms of the transaction or the terms of the acquisition."
Montgomerys brief does not include any argument or authority demonstrating how the existence or contents of the waivers, or their belated disclosure, affects the correctness of the trial courts discretionary determination that Riverfront is entitled to its attorney fees. He has therefore waived the right to rely on this issue on appeal. (Moulton Niguel Water Dist. v. Colombo (2003) 111 Cal.App.4th 1210, 1215 ["Contentions are waived when a party fails to support them with reasoned argument and citations to authority."]; Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-785.)
Even if we were to reach the merits, we see no reason to reverse the trial courts order on this ground. Under the plain language of section 6204(d), the trial court had discretion to award Riverfront its fees in the attorney fee case, because Montgomery initiated the case following a statutory fee arbitration, and did not obtain, in that case, "a judgment more favorable than that provided by the arbitration award . . . ." Nothing about the existence or belated disclosure of the waivers changes those facts, which are the sole predicate for the trial courts discretion to award fees as it did here.
B. Riverfronts Obligation to Pay Fees
Montgomerys next argument is that he should not be obligated to pay Riverfronts attorney fees in the attorney fee case because it did not actually incur any such fees. He points to the absence of any declaration from Riverfronts principals that they were actually obligated to pay any of the fees for which Roach billed Riverfront in the attorney fee case, and to a remark involving indemnification that was made at the time of the settlement of the attorney fee case by Mr. Brazzi, who was a principal of both Brazzi and Stellar. Based on these facts, he speculates that Roach is actually seeking recovery of Riverfronts attorney fees for his own account, rather than on Riverfronts behalf.
Specifically, during the proceedings on September 19, 2006, while the settlement in the attorney fee case was being placed on the record, when the court asked Mr. Brazzi whether he agreed to the settlement on behalf of his companies, Mr. Brazzi responded, "Yes, I do believe we have been indemnified from any cost from us for what is moving forward here." The court responded, "But that is not part of the stipulation," and the matter was not discussed further.
Even if Montgomerys speculation were true—a factual question we need not and do not resolve—his argument could not succeed, because it misconstrues the principles of law applicable to situations like those in this case. When a statute authorizes an award of attorney fees to the prevailing party in an action, it is legally irrelevant whether the party would be obligated to pay any such fees if no award were made. (See Lolley v. Campbell (2002) 28 Cal.4th 367, 374-375 [under various fee-shifting statutes, publicly as well as privately funded legal services providers are entitled to awards of reasonable attorney fees]; Rosenaur v. Scherer (2001) 88 Cal.App.4th 260, 283-285 [defendants who filed successful anti-SLAPP motion were entitled to award of attorney fees even though counsel represented them on partial pro bono basis; court would not "presume the Legislature intended to create a disparity between defendants who advance their own attorney fees and those whose counsel look to an outside source for payment. In each case, the fees have accrued and can be recovered."]; Macias v. Hartwell (1997) 55 Cal.App.4th 669, 675-676 [rejecting argument that prevailing party was not entitled to attorney fee award because representation was provided by union]; see also PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1091-1094 [entity represented by in-house counsel may recover attorney fees under Civ. Code, § 1717, subd. (a), even though it has not paid those fees].) Thus, even if Roach did not intend to collect his fees from Riverfront in the absence of an award by the court, this would not change the legal propriety of the fee award.
Moreover, Montgomery chose to sue Riverfront to collect the fees he claimed were owed to him, thus forcing Riverfront to retain counsel to defend itself against Montgomerys claim. Montgomery is therefore in no position to argue on this appeal that he should not have to pay Riverfront any fees, because Roach was actually defending himself in the court below. Accordingly, the cases cited by Montgomery involving self-represented litigants are inapposite. (See, e.g., Trope v. Katz (1995) 11 Cal.4th 274 [attorney who chooses to litigate in propria persona in action to enforce contract containing attorney fee provision cannot recover attorney fees under Civ. Code, § 1717]; Taheri Law Group v. Evans (2008) 160 Cal.App.4th 482, 493-494 [self-represented litigant, even if litigant is an attorney, cannot recover attorney fees after prevailing on anti-SLAPP motion].)
C. Waiver of Attorney Fee Claim in Answer to Complaint
Montgomerys next argument is that Riverfront waived any claim to its attorney fees. This argument is based on the fact that Riverfront included a prayer for such fees in its answer to Montgomerys second amended complaint, but then omitted that demand in its answer to Montgomerys third amended complaint.
Montgomery points to no statute, rule of court, or case authority holding that a defendants failure to include a prayer for statutory attorney fees in its answer waives its right to be awarded fees to which it is otherwise entitled. In fact, the law is to the contrary. (See T.E.D. Bearing Co. v. Walter E. Heller & Co. (1974) 38 Cal.App.3d 59, 64 [party entitled to attorney fees by statute could recover them as costs notwithstanding failure to plead and prove them as contract damages], superseded by statute on other grounds as stated in Harbour Landing-Dolfann, Ltd. v. Anderson (1996) 48 Cal.App.4th 260, 264-265 [former distinction between contractual and statutory attorney fees with respect to inclusion in costs awarded to prevailing party was eliminated when Code Civ. Proc., § 1033.5, was amended in 1990 to provide that costs include attorney fees authorized by contract, statute, or law].) This argument is therefore without merit.
D. Error in Arbitration Ruling
Montgomery also attacks the fee arbitration award, both on the ground that at the time of the arbitration, he did not have copies of the waivers that Riverfront signed, and on the ground that the award was wrong as a matter of law. This argument ignores the fact that the arbitration was nonbinding, and by the time the attorney fee case went to trial, Montgomery admittedly had obtained the waivers.
In any event, the settlement of the attorney fee case moots Montgomerys challenges to the nonbinding fee arbitration award. Accordingly, none of Montgomerys challenges to the fee arbitration award has any bearing on the propriety of the trial court order from which he now appeals.
E. Riverfronts Status as Prevailing Party
Montgomery further argues that because his attorney fee lien on the eminent domain proceeds was recognized in the amount of $25,000, and he then recovered an additional $15,000 directly from RCA under the terms of the settlement in the attorney fee case, the trial court should not have ruled that Riverfront was the prevailing party in the attorney fee case and therefore entitled to its fees.
In ruling on this contention, we are bound to apply the plain language of section 6204(d). The statute contemplates an attorney fee arbitration between two parties, followed by a trial as between those same two parties. Accordingly, in determining whether Montgomery received a more favorable judgment in the settlement of the attorney fee case than he did in the fee arbitration award, we look only to his recovery as against Riverfront, and do not consider his recovery against RCA, which was not a party to the arbitration. As against Riverfront, Montgomery recovered nothing under the fee arbitration award, and nothing under the settlement of the attorney fee case. Thus, it cannot be said that his pursuit of litigation after the arbitration led to a more favorable result for him. The statute therefore required the trial court to treat Riverfront as the prevailing party under section 6204(d).
F. Failure to Consider Relevant Facts
Finally, Montgomery argues in his opening brief that the trial court erred in failing to consider various facts. Montgomery provides no authority, however, demonstrating how the assertedly overlooked facts were material to the trial courts determination that Riverfront was the prevailing party in the attorney fee case. Nor does he explain how the referenced facts establish an abuse of the trial courts discretion in awarding Riverfront its fees.
Accordingly, we need not address these arguments on their merits. (See Moulton Niguel Water Dist. v. Colombo, supra, 111 Cal.App.4th at p. 1215; Badie v. Bank of America, supra, 67 Cal.App.4th at pp. 784-785.)
G. Arguments Raised in Reply Brief
In his reply brief, Montgomery raises two additional arguments that were not discussed in his opening brief on appeal. The first of these is that the trial courts attorney fee award should be reversed because it was not entered by the same judge who tried the case. Arguments raised for the first time in a reply brief need not be addressed absent a showing of good cause for the partys failure to raise them earlier. (City of Oakland v. Hassey (2008) 163 Cal.App.4th 1477, 1490; Campos v. Anderson (1997) 57 Cal.App.4th 784, 794, fn. 3.) Montgomery has not presented us with any reason for his failure to make this argument in his opening brief (or, for that matter, in the trial court), and none appears. Accordingly, we decline to address Montgomerys first argument on its merits.
The second argument Montgomery makes for the first time in his reply brief is that section 6204(d) cannot be the basis for an award of attorney fees in this case—and, indeed, the fee arbitration proceedings were a nullity, and the arbitration award was void for lack of jurisdiction—because Montgomery had no attorney-client relationship with Riverfront. Montgomery contends that this argument raises an issue of subject matter jurisdiction, which can be raised at any time, and thus was not waived due to his failure to argue it in the trial court or in his opening brief.
Without deciding whether or not the issue is jurisdictional, we will exercise our discretion to address it on the merits. Montgomery contends that the mandatory fee arbitration statutes apply only as between attorney and client, citing National Union Fire Ins. Co. v. Stites Prof. Law Corp. (1991) 235 Cal.App.3d 1718 (Stites). In Stites, an attorney (Stites) was retained by an officer of a bank to defend him in litigation arising out of the banks failure. The bank had purchased an insurance policy from National Union Fire Insurance Company (National) under which National agreed to cover the costs incurred by the bank in indemnifying its officers in suits arising out of their employment. Pursuant to this policy, National agreed to pay the bank officers reasonable defense costs in the lawsuit. After the underlying litigation settled, National disputed the amount of fees that Stites claimed for defending the officer, and instituted an arbitration under the mandatory fee arbitration statutes. The arbitrators ruled that National did not owe Stites any fees, because his claim was excessive and partially fraudulent.
Nationals petition to confirm the award was denied by the trial court on the ground that fee disputes between an insurer and its insureds Cumis counsel (San Diego Federal Credit Union v. Cumis Ins. Society, Inc. (1984) 162 Cal.App.3d 358) are not subject to arbitration under the mandatory fee arbitration statutes. In affirming this result, the Court of Appeal held that the mandatory fee arbitration statutes only govern disputes between attorneys and their clients, and that for this purpose, National was not Stitess client because National had a duty to indemnify the bank, not to defend the officer; National did not hire Stites; Stites had no duty to National; and National had no right to control the litigation of the defense. (Stites, supra, 235 Cal.App.3d at pp. 1726-1728.)
In our view, the present case is distinguishable from Stites on several grounds. First, in the present case, it was Montgomery who sent Riverfront a notice of its right to arbitrate under the mandatory fee arbitration statutes, thus implicitly treating Riverfront as his client. Moreover, the arbitration award indicates that Montgomery took the position in the fee arbitration proceedings that Riverfront "was his client in fact" despite the absence of any written fee agreement between them.
At oral argument, Montgomerys counsel characterized the arbitration award as having rejected this position. The record belies this interpretation of the award. The arbitrators found that Montgomery did not have a fee agreement with Riverfront, and that there was no privity of contract between them, but they also found that Montgomery "had a written fee agreement with RCA for the payment by RCA of a contingency fee to [Montgomery] for legal services . . . provided by [Montgomery] for [Riverfront]." (Italics added.) It also noted that Montgomery was "claim[ing] payment due from [Riverfront] for the reasonable value of his legal services . . . for services rendered which benefited [Riverfront]." Thus, although the arbitrators found that, under the fee agreement Montgomery had with RCA, he had agreed to look to RCA rather than to Riverfront for payment, they did not find that he had no attorney-client relationship with Riverfront.
Most importantly, although both Stites and the present case involve a tripartite relationship between the fee payor, the attorney, and the party to whom the legal services were rendered, the analogy between the two breaks down when it comes to the identity of the parties to the fee dispute. In Stites, it was the party that had agreed to pay the attorneys fees (i.e., National) that was engaged in a dispute with the attorney over the amount of those fees. Here, the dispute was between the attorney and the party that was supposed to benefit directly from his services (i.e., Riverfront), not the third party who had agreed to pay for those services (i.e., RCA). The holding in Stites was that a third-party fee payor does not enjoy the benefit of the mandatory fee arbitration statutes when the payor is not the attorneys client. This holding does not apply here, where the fee dispute is between the attorney and the party for whose benefit the attorneys legal services were rendered. It is entirely consistent with both the language and the legislative intent of the mandatory fee arbitration statutes to treat such a party as the attorneys client. Accordingly, we reject Montgomerys contention that the fee arbitrators lacked subject matter jurisdiction over his dispute with Riverfront.
Nothing in the language of section 6204(d) expressly requires that the parties to litigation challenging a mandatory fee arbitration award have been in an attorney-client relationship in order for the court to award attorney fees to the prevailing party in that litigation.
disposition
The order awarding respondents their attorney fees and costs is affirmed. Respondents are awarded their costs on appeal, including attorney fees for this appeal, in an amount to be determined by the trial court.
We concur:
Sepulveda, J.
Rivera, J.