Opinion
D047347.
7-13-2009
RICHARD A. SCHATZ, Plaintiff and Respondent, v. ALLEN MATKINS LECK GAMBLE & MALLORY LLP, Defendant and Appellant.
Not to be Published in Official Reports
In Schatz v. Allen Matkins Leck Gamble & Mallory LLP (2009) 45 Cal.4th 557, 575 (Schatz I), the California Supreme Court reversed this court and held the mandatory fee arbitration act (MFAA; Bus. & Prof. Code, § 6200 et seq.) did not impliedly supersede the California Arbitration Act (CAA; Code Civ. Proc., § 1280 et seq.). Under the MFAA, a client has the right to nonbinding arbitration of a fee dispute, and ordinarily has the right to a trial de novo after nonbinding arbitration. (Schatz I, supra, at p. 565.) Under Schatz I, however, a client who elects nonbinding arbitration of a dispute under the MFAA, but who entered into a binding arbitration before the dispute arose, is not entitled to a trial de novo. Rather, if nonbinding arbitration under the MFAA does not resolve the matter, it proceeds to binding arbitration under the parties contract. (Id. at p. 573-575.)
In Schatz I, the court remanded the case to this court to address two contentions of plaintiff, Richard A. Schatz, M.D., that we were not required to consider in our earlier opinion: (1) whether the binding arbitration clause here applies to the particular legal services at issue, and (2) whether the law firms conduct equitably estops it from pursuing binding arbitration. (Schatz I, supra, 45 Cal.4th at p. 575, fn. 4.) We find his contentions lack merit, and thus we reverse the order and remand the matter to the trial court for further proceedings in accordance with the Supreme Courts decision in
Schatz I.
FACTUAL AND PROCEDURAL BACKGROUND
In a February 1999 agreement, Dr. Schatz retained Allen Matkins Leck Gamble & Mallory (Allen Matkins) to represent him in a dispute with a Dr. and Mrs. Palmaz concerning the assignment of income from a partnership (partnership dispute). The agreement stated it would also pertain to "any additional matters we handle on your behalf or at your direction." The agreement contained a binding arbitration clause.
In February 2000, without entering into another retainer agreement, Dr. Schatz retained Allen Matkins to represent him in an easement dispute with a different party or parties affecting the rear access road to his Rancho Santa Fe estate (easement dispute). Between April 2000 and May 2003. Dr. Schatz paid Allen Matkins $179,088.69 in fees and costs incurred in the easement dispute. He did not dispute any of the bills. Dr. Schatz quit paying legal fees in May 2003 because he claimed Allen Matkins had a conflict of interest. Allen Matkins tried the case on his behalf and obtained a favorable result.
Dr. Schatz did not respond. In a January 2004 letter to Dr. Schatz, Allen Matkins invoked the binding arbitration clause in the retainer agreement in the Palmaz matter. He exercised his right under the MFAA to nonbinding arbitration, and in May 2005 the arbitrators ruled in favor of Allen Matkins. The ruling states the "conflict of interest (the concurrent representation of [Dr. Schatzs] title insurer by [Allen Matkinss] Orange County office with regard to labor matters), if it existed at all, was technical and not egregious, imputed and not direct, and in no manner affected the quality or value of the legal services [he] received." Further, the ruling states Dr. Schatzs behavior, in allowing Allen Matkins to proceed to trial on his behalf, constituted a waiver, and the firms fees were reasonable and fully recoverable both under the retainer agreement and on a quantum meruit basis.
Dr. Schatz then sought a trial de novo under the MFAA. In response, Allen Matkins petitioned the court for an order compelling binding arbitration under the retainer agreement. The court denied the petition, determining that under the MFAA a client is entitled to a trial de novo despite having signed a pre-dispute binding arbitration clause. On appeal, we upheld the courts ruling. On remand from our high court, the question is whether there are alternative grounds to affirm the trial courts order denying Allen Matkinss motion to compel binding arbitration.
I
Scope of Binding Arbitration Clause
Dr. Schatz contends the arbitration clause does not apply to the easement dispute, because the clause appears in a retainer agreement for representation on the partnership dispute. The retainer agreement, however, expressly applies to "any additional matters we handle on your behalf or at your direction." It is undisputed that after Dr. Schatz originally retained Allen Matkins, it handled the easement dispute for him at his direction.
Dr. Schatz asserts the retainer agreement is ambiguous because the words "we handle" could mean "we now handle," and thus the agreement applies only to matters Allen Matkins handled at or about the same time as the agreement was signed. (Italics added.) He cites Lane v. Wilkins (1964) 229 Cal.App.2d 315, 323, which states the "`general rule is that in construing contracts between attorneys and clients concerning compensation if there is any ambiguity as to the intent of the parties that construction should be adopted which is most favorable to the client. [Citation.] " "Contract interpretation presents a question of law which this court determines independently. [Citations.] [¶] A contract must be interpreted to give effect to the mutual, expressed intention of the parties. Where the parties have reduced their agreement to writing, their mutual intention is to be determined, whenever possible, from the language of the writing alone." (Ben-Zvi v. Edmar Co. (1995) 40 Cal.App.4th 468, 472-473.) Contract provisions are ambiguous "only if they are capable of two or more reasonable constructions." (Vons Companies, Inc. v. United States Fire Ins. Co. (2000) 78 Cal.App.4th 52, 58.) "The function of the court in interpreting an instrument `is simply to ascertain and declare what is in its terms or in substance contained therein, not to insert what has been omitted, or to omit what has been inserted. [Citations.] Language cannot be found to be ambiguous in the abstract and courts are `not to strain to create an ambiguity where none exists. [Citation.]" (E.M.M.I., Inc. v. Zurich American Ins. Co. (2004) 32 Cal.4th 465, 484, dis. opn. of Kennard J.) "We do not have the power to create for the parties a contract that they did not make and cannot insert language that one party now wishes were there." (Vons Companies, Inc. v. United States Fire Ins. Co., supra, 78 Cal.App.4th at p. 59.)
We find no ambiguity. Rather, the phrase "any additional matters we handle on your behalf or at your direction" unambiguously encompasses any additional work Dr. Schatz may hire Allen Matkins to handle on his behalf, including the easement dispute. To any extent it would arguably help Dr. Schatz, we may not insert the word "now" into the retainer agreement.
Dr. Schatz also claims the arbitration clause is inapplicable because Allen Matkins was required to enter into a separate retainer agreement for the easement litigation. He cites Business and Professions Code section 6148, subdivision (a), which provides in part: "In any case not coming within Section 6147 [contingency fee contracts] in which it is reasonably foreseeable that total expense to a client, including attorney fees, will exceed one thousand dollars . . ., the contract for services in the case shall be in writing." Dr. Schatz submits that the word "any" requires a new fee agreement for each matter. He does not, however, provide any legal authority for that proposition. "[P]arties are required to include argument and citation to authority in their briefs, and the absence of these necessary elements allows this court to treat appellants . . . issue as waived." (Interinsurance Exchange v. Collins (1994) 30 Cal.App.4th 1445, 1448.)
Further, subdivision (d)(2) of Business and Professions Code section 6148 provides that no written agreement is required when the parties agreement as to fees is "implied by the fact that the attorneys services are of the same general kind as previously rendered to and paid for by the client." The 1999 retainer agreement indicates Dr. Schatz retained Allen Matkins to represent him in litigation in the partnership dispute, and the easement dispute also involved litigation. Dr. Schatz obviously understood Allen Matkins would charge fees per the 1999 retainer agreement, as he never challenged the amount of its bills and regularly paid the bills for more than three years until he raised an issue unrelated to the retainer agreement. It appears that no written fee agreement was required under this scenario, and thus the 1999 written agreement certainly suffices. We conclude Allen Matkins met its burden of proving the existence of a valid binding arbitration clause, and that the clause covers the easement dispute. (Larian v. Larian (2004) 123 Cal.App.4th 751, 760.)
II
Equitable Estoppel
Dr. Schatz also contends Allen Matkins is equitably estopped from enforcing the binding arbitration clause because it led him to believe it would allow him a trial de novo under the MFAA if he disagreed with the result of the nonbinding arbitration he elected.
Dr. Schatz relies on a March 23, 2004 letter that Jeffrey Patterson, of Allen Matkins, sent to Dr. Schatzs attorney, Joseph Schatz, which states: "We understand the position you have taken on behalf of Dr. Schatz that the engagement letter he signed with our firm does not require [him] to arbitrate the current fee dispute. We do not agree with your analysis. Nevertheless, pursuant to sections 6200 through 6206 of the California Business & Professions Code, we hereby offer Dr. Schatz the opportunity to have this dispute resolved via arbitration through the San Diego County Bar Association. I enclose for your information and consideration a package containing an application for such arbitration, local rules, and instructions for the use of this procedure. [¶] Please let me know within 10 business days of this letter whether Dr. Schatz is amenable to resolving the fee dispute through the Bar Association arbitration procedure." According to Dr. Schatz, through this letter "Patterson unmistakably offered to be bound by" Business and Professions Code section 6204, which provides that in the absence of the parties agreement to be bound by the arbitration of a fee dispute, "either party shall be entitled to a trial" after arbitration. (Bus. & Prof. Code, § 6204, subd. (a).)
Dr. Schatz also cites the April 5, 2004 letter by attorney Schatz to Patterson, which states: "This letter responds to your letter to me dated 23 March 2004 abandoning your demand that Dr. Schatz submit to binding arbitration by a retired judge." The letter also states "Dr. Schatz does want `to have the dispute decided in accordance with [his] statutory rights to non-binding fee arbitration, and, if he so elects, trial de novo before a jury." Dr. Schatz notes that Pattersons responsive letter of May 25 "does not contend or offer any suggestion that Attorney Schatz letter of 5 April had memorialized anything," and he argues that "[i]n reliance on . . . Pattersons representations on behalf of . . . Allen Matkins, [he] to his detriment paid the $3,500 arbitration filing fee to the San Diego County Bar Association . . . and thereafter attended the . . . arbitration."
We find no merit to Dr. Schatzs position. "Equitable estoppel . . . requires that the party asserting the estoppel must have been ignorant of the facts, and must have detrimentally relied upon the words or conduct of the adverse party." (Ordorica v. Workers Comp. Appeals Bd. (2001) 87 Cal.App.4th 1037, 1048, italics added.) Accordingly, attorney Schatzs statements are immaterial. The MFAA authorized Dr. Schatz to elect nonbinding arbitration, which he did. Allen Matkins merely abided by his election. Pattersons letters did not forfeit the firms right to a subsequent binding arbitration under the retainer agreement, and it was not giving Dr. Schatz legal advice. He had his own attorney to advise him as to the MFAA, its interplay with the CAA, and enforceability of the binding arbitration clause. As Allen Matkins points out, Dr. Schatz "is now trying to estop Allen Matkins based on [its] compliance with [Dr.] Schatzs own demand."
DISPOSITION
The order is reversed and the matter is remanded to the trial court for further proceedings in accordance with the Supreme Courts decision in Schatz I. Allen Matkins is entitled to costs on appeal.
WE CONCUR:
HUFFMAN, J.
AARON, J.