Opinion
B288895
11-29-2021
HENRY M. LEE LAW CORPORATION, Plaintiff and Respondent, v. OK SONG CHANG, Defendant and Appellant. AND RELATED CROSS-ACTION
Rogari Law Firm and Ralph Rogari for Defendant, Cross-complainant and Appellant. Henry M. Lee for Plaintiff, Cross-defendants and Respondents.
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County, No. BC465694 Teresa A. Beaudet, Judge. Affirmed.
Rogari Law Firm and Ralph Rogari for Defendant, Cross-complainant and Appellant.
Henry M. Lee for Plaintiff, Cross-defendants and Respondents.
HILL, J. [*]
Defendant and appellant Ok Song Chang (Chang) appeals a judgment entered pursuant to a special verdict awarding defendant and respondent Henry M. Lee Law Corporation (the Lee firm) $28,250 in litigation costs that it advanced on Chang's behalf when it represented her in a prior action. Chang also appeals the adverse judgment on her cross-complaint for breach of fiduciary duty and legal malpractice in favor of cross-defendants and respondents the Lee firm and Henry M. Lee (Lee) (sometimes collectively referred to as Lee).
We conclude that although the failure of a contingency fee agreement to comply with the requirements of Business and Professions Code section 6147 renders the retainer agreement voidable by the client and limits the attorney to recovery in quantum meruit, recovery under that theory does not preclude the attorney from recovering for the reasonable value of litigation costs that it advanced on the client's behalf. We also reject Chang's other arguments and affirm the judgment.
All further statutory references are to the Business and Professions Code, unless otherwise specified. Also, all rule references are to the Rules of Professional Conduct.
Chang points out that the Lee firm's corporate status was suspended for a period of time during the pendency of this appeal. That circumstance has no bearing on the Lee firm's present ability to participate as a respondent in this appeal. "'[T]he revival of corporate powers has the effect of validating the earlier acts and permitting the corporation to proceed with the action.'" (Moofly Productions, LLC v. Favila (2018) 24 Cal.App.5th 993, 1000.)
FACTUAL AND PROCEDURAL BACKGROUND
1. The retainer agreement.
The Lee firm represented Chang in an employment action against A-Ju Tours, Inc. (A-Ju). This action arises out of the retainer agreement that Chang signed in that action on September 11, 2008.
With respect to attorney fees, the agreement provided for a contingency fee of "50% of the gross recovery which is obtained after . . . trial . . . . Said contingency fee shall be the amount charged to pursue Client's claim through final resolution, but does not include services, if any, for an appeal or writ. Should an appeal or writ be necessary, Client will pay an additional contingency fee or hourly rate as agreed in a separate writing before the time of the appeal [or] writ."
Separately, with respect to costs, the agreement provided that '[c]lient will pay all 'costs,' . . . . Costs include, but are not limited to, filing fees, jury and court fees, deposition costs, expert fees and expenses, investigation costs, long-distance telephone charges, messenger service fees, photocopying expenses, and process server fees." The agreement also stated that "[i]rrespective of Fees or results obtained, Client will reimburse Attorney for all costs advanced."
The agreement further provided: "Client may discharge Attorney at any time and for any reason by written notice effective when received by Attorney. . . . . Notwithstanding the discharge, Client will remain obligated to pay Attorney at the agreed rate of $475 per hour for all legal services provided, and $150 to $200 per hour for all services performed by paralegals of Attorney. Further, Client will remain obligated to reimburse Attorney for all costs advanced, Client agrees that Attorney will be granted a lien against any recovery that Client obtains after Attorney's discharge, whether via another attorney or otherwise." (Italics added.)
The agreement also included a severability provision that stated: "Severability in Event of Partial Invalidity. [¶] If any provision of this agreement is held in whole or in part to be unenforceable for any reason, the remainder of that provision and of the entire agreement will be severable and remain in effect."
2. Summary of the underlying employment action; Lee, as Chang's counsel, initially obtained a favorable judgment and a $300,000 fee award in litigation against A-Ju, but the judgment and fee award ultimately were overturned on appeal.
In November 2008, Chang, represented by Lee, filed suit against A-Ju and individual defendants alleging, inter alia, various Labor Code violations. Following a jury trial, the court entered judgment in January 2011 in favor of Chang and against A-Ju for about $62,000, including $30,150 for unpaid minimum wages. The judgment granted no relief against the individual defendants.
Chang then successfully moved for an attorney fee award under Labor Code sections 226, subdivision (e), and 1194, subdivision (a). In an order filed on April 25, 2011, the trial court awarded Chang $300,000 in attorney fees.
A-Ju filed notices of appeal from the judgment and from the postjudgment order awarding attorney fees to Chang.
On May 18, 2011, Chang sent Lee a notice discharging him as her attorney, and on May 25, 2011, she filed a substitution of attorney form, substituting herself in propria persona for Lee.
Chang later retained new counsel.
On May 31, 2011, Chang (now self-represented) entered into a written agreement with A-Ju and the other defendants to stay execution of all collection activities in connection with the judgment and the $300,000 postjudgment award of attorney fees.
Because Chang had terminated Lee as her attorney and did not oppose the appeal, Lee filed a motion in the trial court seeking (1) leave to intervene in the action in order to defend the appeal, and (2) an amendment to the order awarding attorney fees, so as to make the fees payable to Lee rather than Chang. The trial court denied the motion. Lee filed a petition for writ of mandate in this court in August 2011 challenging the denial.
This court granted Lee's petition and concluded, in a published opinion, that attorney fees awarded under Labor Code sections 1194, subdivision (a) and 226, subdivision (e) are payable to the attorney rather than the party, unless an agreement provides for a different disposition of the award. (Henry M. Lee Law Corp. v. Superior Court (2012) 204 Cal.App.4th 1375, 1388.) We directed the trial court to conduct further proceedings to determine the terms of the contract between Chang and Lee and to reconsider its ruling on Lee's motion. (Id. at p. 1389.) On remand, the trial court concluded that the contract did not provide that an attorney fee award would be payable to Chang, and therefore it modified the judgment by making the award of $300,000 in attorney fees payable to Lee rather than Chang.
In August 2013, on A-Ju's appeal in the employment action, in which the Lee firm participated as a respondent, this court reversed both the judgment and the attorney fee award. We concluded, inter alia, that the evidence did not support the finding that A-Ju had failed to pay minimum wages due. The judgment against A-Ju and in favor of Chang was reversed with directions to enter a judgment awarding Chang no relief against A-Ju, and the postjudgment order awarding attorney fees was also reversed.
3. The instant action.
As indicated, shortly after the trial court awarded Chang $300,000 in attorney fees in the underlying action, Chang discharged Lee as her attorney. According to Chang, she discharged Lee in response to his letter to her dated May 11, 2011, in which he advised her that A-Ju had appealed both the judgment and the order awarding her attorney fees, and that she had been ordered to pay $15,250 in attorney fees, as well as costs in the amount of $8,474 to the individual defendants, against whom she had not prevailed.
Then, during the pendency of A-Ju's appeal from the judgment and $300,000 postjudgment award of attorney fees, Chang entered into a written agreement with A-Ju and the other defendants to stay execution of all collection activities in connection with the judgment and the postjudgment order. According to Chang, she "received absolutely zero" for that agreement.
On July 21, 2011, the Lee firm filed the instant action against Chang. The complaint sought recovery of $30,000 in damages for breach of contract, as well declaratory relief that the $300,000 in attorney fees that had been awarded in the underlying action belong to the Lee firm and could not be negotiated, settled, or compromised by Chang.
Chang filed a cross-complaint against the Lee firm and Attorney Lee, alleging they breached their fiduciary duty to Chang and committed malpractice by, inter alia, not keeping her apprised of major developments in her case, including A-Ju's offers to settle the case.
As noted, in August 2013, during the pendency of this action, the judgment against A-Ju in the employment action, as well as the postjudgment award of $300,000 in attorney fees, were reversed.
On June 22, 2016, after conducting a hearing in the instant case on the enforceability of the retainer agreement between Chang and the Lee firm, the trial court determined: the retainer agreement did not comply with section 6147, subdivision (a)(4), because it lacked a statement that the fee is not set by law but is negotiable between attorney and client; this defect made the contingency fee agreement voidable at the client's option; the Lee firm nonetheless was not precluded from recovering a reasonable fee in quantum meruit.
By the time of trial, Chang had elected to void the contract, and the Lee firm had abandoned its claim for attorney fees. The Lee firm limited its claim to recovery of the litigation costs that it had advanced in the employment action, pursuant to the retainer agreement.
A jury trial commenced on July 19, 2017. After hearing the evidence and arguments of counsel, the jury deliberated and returned special verdicts on July 28, 2017. On the Lee firm's claim, the jury found it had advanced the costs for the underlying litigation as requested by Chang, that the costs benefited Chang, and that the reasonable value of the costs was $28,250. The jury also found the Lee firm did not engage in any wrongful, inequitable, bad faith, or unconscionable behavior in its representation of Chang. On Chang's claims, the jury found that
Lee and the Lee firm were not negligent and did not breach a fiduciary duty owed to Chang.
Chang unsuccessfully moved for judgment notwithstanding the verdict (JNOV) and for a new trial.
On January 9, 2018, the trial court entered judgment in favor of the Lee firm in the amount of $28,250 on its complaint, and in favor of Lee and the Lee firm on Chang's cross-complaint. Chang filed a timely notice of appeal from the judgment.
CONTENTIONS
Chang contends the $28,250 judgment on the Lee firm's complaint should be reversed because it was not entitled to recover the litigation costs that it advanced in the employment action.
With respect to the $28,250 in costs that the judgment awarded to the Lee firm, there is no issue on appeal as to the amount. We note that in moving for JNOV, Chang argued there was no substantial evidence that the Lee firm had advanced $28,250 in costs in the employment action. However, on appeal, Chang does not challenge that amount. Her arguments relate solely to the Lee firm's entitlement to recover the costs that it advanced. We also note the special verdict determined that Chang paid $550 of the $28,250 that Lee advanced. However, Chang does not contend the judgment failed to credit her with that amount.
In addition, Chang contends she is entitled to a new trial on her cross-complaint against Lee and the Lee firm because the trial court erred in certain evidentiary rulings and in refusing to give a jury instruction that she requested.
DISCUSSION
I.
CHANG'S APPEAL FROM THE JUDGMENT AWARDING $28,250 TO THE LEE FIRM FOR LITIGATION COSTS THAT IT ADVANCED IN THE EMPLOYMENT ACTION
1. Although the contingency fee agreement was voidable by Chang under section 6147, so as to limit the Lee firm to recovery in quantum meruit, the statute does not preclude the Lee firm from recovering in quantum meruit the litigation costs that it advanced on Chang's behalf.
Section 6147 requires a contingency fee agreement to include specified provisions, including, as relevant here, "a statement that the fee is not set by law but is negotiable between attorney and client." (Id. at subd. (a)(4).) The consequence for noncompliance with the statutory requirements is spelled out in section 6147, subdivision (b), which states: "Failure to comply with any provision of this section renders the agreement voidable at the option of the plaintiff, and the attorney shall thereupon be entitled to collect a reasonable fee." (Italics added.)
Similarly, an attorney employed under a contingency fee contract and discharged after partial performance of the contract is limited to quantum meruit recovery for the reasonable value of services rendered up to the point of the termination. (Fracasse v. Brent (1972) 6 Cal.3d 784, 791-792; Joseph E. Di Loreto, Inc. v. O'Neill (1991) 1 Cal.App.4th 149, 156.)
This provision of section 6147, subdivision (b), similar to section 6148, subdivision (c) (relating to other fee agreements), "codifies the general rule that when legal services have been provided without a valid written fee agreement, the attorney may recover the reasonable value of the services [he] performed in the action pursuant to a common count for quantum meruit." (Leighton v. Forster (2017) 8 Cal.App.5th 467, 490, italics added (Leighton).) By enacting these provisions, "the Legislature made a 'policy determination that, even if a particular fee or compensation agreement is not in writing or signed by the client, a law firm laboring under such an agreement nonetheless deserves reasonable compensation for its services.'" (Ibid., citing Huskinson v. Brown & Wolf (2004) 32 Cal.4th 453, 460-461 (Huskinson).)
The discrete issue presented here is whether quantum meruit recovery under subdivision (b) of section 6147 is limited to a reasonable fee for services rendered, or whether it extends to the reasonable value of costs that counsel advanced on a client's behalf.
a. Principles of statutory interpretation.
" 'As in any case involving statutory interpretation, our fundamental task here is to determine the Legislature's intent so as to effectuate the law's purpose.' [Citation.] 'We begin by examining the statutory language, giving it a plain and commonsense meaning. [Citation.] We do not, however, consider the statutory language in isolation; rather, we look to the entire substance of the statutes in order to determine their scope and purposes. [Citation.] That is, we construe the words in question in context, keeping in mind the statutes' nature and obvious purposes. [Citation.] We must harmonize the various parts of the enactments by considering them in the context of the statutory framework as a whole. [Citation.] If the statutory language is unambiguous, then its plain meaning controls. If, however, the language supports more than one reasonable construction, then we may look to extrinsic aids, including the ostensible objects to be achieved and the legislative history.' [Citation.]" (Skidgel v. California Unemployment Ins. Appeals Bd. (2021) 12 Cal.5th 1, 14.)
b. Historical overview; section 6147 was enacted to regulate the form of contingency fee agreements.
Section 6147 "belongs to a trio of related statutes governing fee contracts between lawyers and their clients. (Leighton, [supra, ] 8 Cal.App.5th [at p.] 483[;] Arnall v. Superior Court (2010) 190 Cal.App.4th 360, 365.) Section 6146 restricts the use of contingency fee agreements in medical malpractice actions; section 6147 regulates the form and content of contingency fee agreements outside the medical malpractice context; and section 6148 applies to fee agreements that do not involve a contingency fee. (Leighton, at p. 483.) These statutes 'operate to ensure that clients are informed of and agree to the terms by which the attorneys who represent them will be compensated.' (Huskinson & Brown v. Wolf (2004) 32 Cal.4th 453, 460; Leighton, at pp. 483- 484.)" (Pech v. Morgan (2021) 61 Cal.App.5th 841, 850, italics added (Pech).)
Former section 6147, similar to the present section, was added by Statutes 1982, chapter 415, section 2. (See Notes, Deering's Ann. Bus. & Prof. Code, foll. § 6147.) In Franklin v. Appel (1992) 8 Cal.App.4th 875, this court recounted the legislative history of former section 6147 as follows: "Section 6147 had its origins in a proposed amendment to section 6146, which already had limited contingency fees in medical malpractice actions. As introduced, Assembly Bill No. 490 would have deleted the references in section 6146 to 'health care provider[s]' and would have expanded section 6146 to limit contingent fees in 'any action for injury or damages against any person based upon that person's negligence.' (Legis.Counsel's Dig., Assem. Bill No. 490, introduced Feb. 12, 1981 (1981-1982 Reg.Sess.), orig. italics deleted; see Yates v. Law Offices of Samuel Shore (1991) 229 Cal.App.3d 583, 592.) [¶] Assembly Bill No. 490 subsequently was amended to add a new section, section 6147, to the Business and Professions Code, leaving section 6146 unchanged. Assembly Bill No. 490, as amended January 25, 1982, no longer sought to impose a ceiling on contingency fees in nonmedical malpractice actions. Instead, it required 'an attorney who contracts to represent a plaintiff on a contingency fee basis to provide a copy of the contract to the client and to include in the contract a statement disclosing the contingency fee rate, a statement as to how disbursements and costs will affect the fee and the client's recovery, and certain other disclosure statements.' (See Legis.Counsel's Dig., Assem. Bill No. 490 (1981-1982 Reg.Sess.) amended Jan. 25, 1982.)" (Franklin v. Appel, at pp. 886-887.)
c. Section 6147, subdivision (b), does not preclude counsel from recovering reasonable costs as part of a recovery in quantum meruit.
Chang contends that section 6147, subdivision (b), by specifying that an attorney is "entitled to collect a reasonable fee," implicitly prohibits an attorney from recovering the reasonable value of costs that were advanced on the client's behalf. We are not persuaded. As explained below, quantum meruit serves to prevent unjust enrichment, and recovery may be had for the reasonable value of both goods and services bestowed, at a defendant's request, and that benefited the defendant. Further, an interpretation of the statute that would compel a forfeiture of costs is disfavored. Given these principles, we reject Chang's argument that section 6147, subdivision (b), by allowing counsel to collect a reasonable fee, implicitly prohibits counsel from recovering the reasonable value of costs that counsel advanced on a client's behalf.
We begin with the recognition that the "underlying idea behind quantum meruit is the law's distaste for unjust enrichment." (Maglica v. Maglica 1998) 66 Cal.App.4th 442, 449 (Maglica).) Quantum meruit "refers to the well-established principle that 'the law implies a promise to pay for services performed under circumstances disclosing that they were not gratuitously rendered.'" (Huskinson, supra, 32 Cal.4th at p. 458.)
"[I]n order to recover under a quantum meruit theory, a plaintiff must establish both that he or she was acting pursuant to either an express or implied request for such services from the defendant and that the services rendered were intended to and did benefit the defendant. One court summarized the rule as follows: 'The theory of quasi-contractual recovery is that one party has accepted and retained a benefit with full appreciation of the facts, under circumstances making it inequitable for him to retain the benefit without payment of its reasonable value.' (Truestone, Inc. v. Simi West Industrial Park II (1984) 163 Cal.App.3d 715, 724; see also 1 Witkin, Summary of Cal. Law (9th ed.1987) Contracts §§ 112-114, pp. 137-139.) [¶] The importance of the 'benefit' part of the rule was stressed in a recent decision by one of our sister courts, Maglica, [supra, ] 66 Cal.App.4th 442[:] 'The classic formulation concerning the measure of recovery in quantum meruit is found in Palmer v. Gregg [(1967)] 65 Cal.2d 657 [(Palmer)]. Justice Mosk, writing for the court, said: "The measure of recovery in quantum meruit is the reasonable value of the services rendered provided they were of direct benefit to the defendant." [Citations.] . . . . [¶] The idea that one must be benefited by the goods and services bestowed is thus integral to recovery in quantum meruit; hence courts have always required that the plaintiff have bestowed some benefit on the defendant as a prerequisite to recovery. [Citation.]' (Maglica, supra, 66 Cal.App.4th at pp. 449-450.)" (Day v. Alta Bates Medical Center (2002) 98 Cal.App.4th 243, 248-249, italics ours, original italics omitted.)
Given the equitable rationale for quantum meruit recovery (Maglica, supra, 66 Cal.App.4th at p. 446, fn. 2), and its application to both goods and services (id. at p. 450), it follows that when a retainer agreement is voided for noncompliance with section 6147, an attorney may seek recovery in quantum meruit of both the reasonable value of services rendered and the reasonable value of costs that the attorney advanced.
Additionally, even assuming there is any ambiguity in section 6147, subdivision (b), as to whether it permits recovery of the reasonable value of litigation costs, the issue is readily resolved by settled principles of law. It is established that "the law traditionally disfavors forfeitures and statutes imposing them are to be strictly construed. [Citation.]" (People v. United Bonding Ins. Co. (1971) 5 Cal.3d 898, 906.) Therefore, we decline to read section 6147, subdivision (b), as implicitly requiring the forfeiture of costs that counsel advanced on a client's behalf whenever a contingency fee agreement fails to comply with the requirements of the statute.
Here, the trial court proceeded in accordance with these principles. The jury was duly instructed on the Lee firm's claim for recovery of litigation costs as follows: "Lee Corp claims that Chang owes it money for the costs it paid for Chang. To establish this claim, Lee Corp must prove all of the following: [¶] 1. That Chang requested, by words or conduct, that Lee Corp pay costs for the benefit of Chang; [¶] 2. That Lee Corp paid the costs as requested; [¶] 3. That Chang has not paid Lee Corp for the costs; [¶] 4. The costs paid were intended to and did benefit Chang, and [¶] 5. The reasonable value of the costs were paid."
The special verdict resolved those issues. The jury determined the following: (1) Chang requested the Lee firm to advance costs for the litigation with A-Ju; (2) the Lee firm advanced the litigation costs as requested by Chang; (3) Chang benefited from the costs that the Lee firm advanced; and (4) $28,250 was the reasonable value of the costs that the Lee firm advanced for Chang's benefit.
As noted (see fn. 4, ante), Chang does not contend on appeal that the $28,250 valuation is unsupported by the evidence. Rather, her theory is simply that section 6147 prohibits counsel from recovering costs as part of a recovery in quantum meruit. However, as we have stated, we do not construe section 6147 as restricting quantum meruit recovery to the reasonable value of counsel's legal services. Therefore, we reject Chang's challenge to the Lee firm's recovery of reasonable costs in quantum meruit.
d. The authorities cited by Chang do not advance her posit ion.
Contrary to Chang's argument, Gutierrez v. Girardi (2011) 194 Cal.App.4th 925 (Gutierrez) does not stand for the proposition that where a client voids a fee agreement, the law firm is only entitled to recover a reasonable fee but not costs. In this regard, Gutierrez simply states: "If there was no written contract between Gutierrez and G & K, then the agreement between the parties was voidable at Gutierrez's option, and G & K was only entitled to collect a reasonable fee. (Bus. & Prof. Code, § 6147, subd. (b) & § 6148, subd. (c).) Further, as a fiduciary, G & K was not allowed to deduct unwarranted costs from the settlement proceeds and was required to comply with its ethical obligations regarding client trust accounts. G & K thus did not have a carte blanche with respect to attorney fees and costs it deducted from the settlement proceeds merely because there allegedly was no written fee agreement." (Gutierrez, supra, 194 Cal.App.4th at pp. 932-933, fns. omitted.)
Thus, Gutierrez reflects that in addition to collecting a reasonable fee, counsel was entitled to deduct appropriate costs from the proceeds of a settlement, notwithstanding the failure by counsel to prepare a written fee agreement in compliance with statute.
Palmer, supra, 65 Cal.2d 657, on which Chang also relies, merely stands for the proposition that personal expenses incurred in performing services are not recoverable in a quantum meruit claim. There, the plaintiff, a resident of Palm Springs, spent an extended period of time in Los Angeles as a friend's caregiver. The Supreme Court held that plaintiff was entitled to recover in quantum meruit the reasonable value of the services rendered, but that plaintiff could not recover in quantum meruit the $400 expense that plaintiff incurred to employ a gardener to care for her Palm Springs home during the period she was in Los Angeles, because plaintiff's personal gardening expenses conferred no direct benefit on her friend. (Id. at pp. 659-661.)
Here, the costs in the employment action that the Lee firm incurred were incurred for Chang's benefit-they were not personal expenses of the Lee firm. Therefore, Palmer's prohibition on recovery of personal expenses has no application to the Lee firm's quantum meruit claim.
e. Chang's other arguments relating to the Lee firm's recovery of litigation costs are meritless.
(1) Obligation to pay costs was not contingent on the outcome of the employment action.
Chang contends the voided contract called for the Lee firm to be paid for its services only if the contingency of a recovery occurred. The argument is meritless. Leaving aside the fact that the retainer agreement is inoperative due to its noncompliance with section 6147, the retainer agreement did not condition payment of costs on the outcome of litigation, stating that "[i]rrespective of Fees or results obtained, Client will reimburse Attorney for all costs advanced."
(2) Alleged noncompliance with rule 3-300.
Chang contends the retainer agreement's noncompliance with former rule 3-300, Avoiding Interests Adverse to a Client, precludes the Lee firm from recovering costs. The argument is meritless because, as set forth below in part II, section 2, of the Discussion, Chang failed at trial to establish a violation of rule 3-300.
(3) Election of remedies doctrine.
Chang contends the Lee firm elected its remedies by intervening in the employment action, and thus, after the judgment in that action was reversed, the Lee firm was not entitled to proceed with this action to recover costs from her. The election of remedies "doctrine generally holds that if a plaintiff elects a particular remedy in lieu of an alternative and inconsistent remedy and thereby gains an advantage to the detriment of the defendant, the plaintiff thereafter is precluded from pursuing the alternative remedy. [Citations.]" (Fassberg Construction Co. v. Housing Authority of City of Los Angeles (2007) 152 Cal.App.4th 720, 759.)
Here, while the Lee firm did intervene in Chang's employment action against A-Ju, the Lee firm did not pursue any alternative or inconsistent remedies as against Chang. The Lee firm pursued its claims for costs against Chang solely by way of the instant action. Therefore, Chang's reliance on the election of remedies doctrine is misplaced.
(4) The Lee firm's failure to invoice Chang for costs.
Chang contends the Lee firm was barred from recovering costs because it failed to send her monthly invoices for costs. We note, however, that the retainer agreement did not state that Chang would receive monthly invoices for costs-it merely stated "Costs advanced by Attorney will be separately billed to Client[.]"
Further, this issue was resolved by the jury, which heard from Lee as follows: "[T]he reason we don't invoice our clients as the costs are going is because you're out of a job. . . . So what do we do? We actually deduct the cost from the gross recovery . . . . That way we wait until the end."
Waiver is generally a question of fact to be determined by the jury. (Old Republic Ins. Co. v. FSR Brokerage, Inc. (2000) 80 Cal.App.4th 666, 679.) Here, the jury, as the trier of fact, reasonably concluded the Lee firm's decision not to send monthly invoices for costs did not amount to a waiver of its right to recover costs from Chang.
II.
CHANG'S CONTENTIONS RELATING TO HER CROSS-COMPLAINT
Chang contends she is entitled to a new trial on her cross-complaint because the trial court committed evidentiary error and instructional error. As discussed below, these arguments lack merit.
1. Evidentiary issues.
a. Standard of appellate review.
Evidentiary rulings are reviewed for an abuse of discretion. (Carnes v. Superior Court (2005) 126 Cal.App.4th 688, 694.) "'The abuse of discretion standard of review applies to any ruling by a trial court on the admissibility of evidence.' [Citation.] 'Under this standard, a trial court's ruling will not be disturbed, and reversal of the judgment is not required, unless the trial court exercised its discretion in an arbitrary, capricious, or patently absurd manner that resulted in a manifest miscarriage of justice.'" (Employers Reinsurance Co. v. Superior Court (2008) 161 Cal.App.4th 906, 919.)
Thus, even if evidence was erroneously admitted, the judgment is not reversible unless the appellant meets its burden to establish a reasonable probability that a result more favorable to appellant would have been reached in the absence of the error. (Evid. Code, § 353; Grail Semiconductor, Inc. v. Mitsubishi Electric & Electronics USA, Inc. (2014) 225 Cal.App.4th 786, 799 (Grail).) Likewise, a judgment will not be reversed "by reason of the erroneous exclusion of evidence unless the court which passes upon the effect of the error or errors is of the opinion that the error or errors complained of resulted in a miscarriage of justice[.]" (Evid. Code, § 354.)
b. No merit to claim of error relating to admission of certain testimony by Lee.
Chang contends that while on the witness stand, Lee made an improper plea for sympathy, coupled with an irrelevant and false attack on Chang's counsel. Chang asserts that Lee was permitted to testify emotionally about the medical hardships his wife and daughter experienced while he was representing Chang, and that Lee was allowed to attack Chang's current counsel, Mr. Rogari, for not agreeing to a continuance of the trial back when he was defense counsel for A-Ju in the employment action. In this regard, Lee testified at trial that his wife suffered a massive stroke in 2010 ("I was stuck with my duty of loyalty to Ms. Chang in preparing for trial, and taking care of my wife"), and that the trial court had denied his request for a "short continuance . . . because Mr. Rogari objected."
The record reflects that Chang unsuccessfully objected to this testimony as irrelevant and hearsay. Chang then moved to strike the testimony and requested that the jury be instructed to disregard it because "it ha[d] nothing to do with the issue before this court, and it was [a] blatant call to sympathy and passion and prejudice of the jury." The trial court rejected Chang's requests that it do so.
Chang later raised this same issue on her motion for new trial. In its order denying new trial, the trial court set forth its rationale for admitting the testimony as follows:
"Chang next argues that Lee's tearful testimony about his wife's stroke, the difficulty it caused him, and opposing counsel's refusal to continue Chang's trial, was irrelevant. She also argues it was misconduct in that it purposefully disregarded the rules of evidence in an attempt to improperly arouse the jury's prejudice, sympathies, and passions. [Citation.] The Court found during the trial, and finds now, that Lee's testimony was relevant to the question of his loyalty to Chang. Contrary to Chang's contention, Lee's loyalty throughout his relationship to Chang was relevant to his loyalty after the underlying trial was over. Moreover, the Court does not find that his emotional testimony constituted a purposeful attempt to arouse the jury's passions and sympathies in a blatant disregard of the rules of evidence."
The trial court's written order amply explained the basis of its ruling. By suing Lee for breach of fiduciary duty, Chang had put in issue Lee's loyalty to her. Therefore, we conclude that the trial court acted within the bounds of its discretion in admitting the challenged testimony, which was offered to show that Lee faithfully discharged his duty to Chang.
Further, an appellant must also demonstrate that any error, if it occurred, was prejudicial. (Grail, supra, 225 Cal.App.4th at p. 799.) Chang's opening brief simply asserts in conclusory fashion that "[t]he admission of this testimony, and the concurrent failure to admonish Lee[, ] was error." Thus, Chang has not met her appellate burden to establish that she would have obtained a more favorable result absent the alleged error.
c. No merit to claim of error relating to exclusion of evidence relating to Lee's 2012 State Bar proceedings.
Chang contends the trial court erred in refusing to allow her to present evidence of Lee's 2012 communications with the State Bar, which she argues would have shown that Lee had failed to communicate A-Ju's settlement offers to her.
Because we conclude the trial court acted within its discretion in excluding this evidence, we need not address Lee's argument that Chang's contention is moot. Lee has argued that Chang's contention is moot because the State Bar proceedings against Lee have been dismissed.
(1) Procedural history.
Before trial, the court granted Lee's motion in limine to exclude "evidence regarding the State Bar proceedings . . . and testimony regarding such proceedings, . . . pursuant to Evidence Code Section 352 based upon the undue consumption of time, jury confusion and undue prejudice that the Court finds will result if this evidence and testimony is admitted at the trial of this action."
The trial court reiterated this ruling at trial, stating "we would have to basically be doing a whole trial of the State Bar proceedings within this case in order to fully permit him to defend himself in a manner that would be appropriate, and that would cause undue confusion and consumption of time to a great degree. So I'm not going to change my ruling."
The trial court again addressed the issue in its order denying new trial, stating: "Chang argues that the Court erred in excluding evidence of Chang's State Bar complaint regarding Henry M. Lee and the subsequent State Bar proceedings as they are not privileged or confidential, and that the probative value of the evidence outweighed any undue prejudice caused by its admission. Whether or not the evidence was privileged or confidential, Chang has not adequately shown in her motion how the probative value of the evidence outweighs the undue prejudice admitting it would cause to [Lee]. The Court has found that the State Bar evidence would cause such undue consumption of time, jury confusion, and undue prejudice as to be properly excluded under Evidence Code § 352. A jury could very well be unduly confused in making up their own minds regarding the evidence in front of them, and be influenced by charges or filings made by the State Bar. Moreover, the statements made by Lee to the State Bar were not necessarily as clear-cut as Chang makes them out to be; this lack of clarity could further confuse a jury. Accordingly, the motion is denied on this ground."
Because we conclude the trial court properly excluded the evidence pursuant to Evidence Code section 352, it is unnecessary to address Lee's argument that the State Bar records were privileged.
(2) No abuse of discretion in trial court's ruling.
Evidence Code "[s]ection 352 allows the trial court to exclude otherwise relevant evidence 'if its probative value is substantially outweighed by the probability that its admission will (a) necessitate undue consumption of time or (b) create substantial danger of undue prejudice, of confusing the issues, or of misleading the jury.' The scope of the trial court's discretion in determining whether to exclude otherwise relevant evidence pursuant to section 352 is 'broad,' and reviewed for abuse of discretion. (People v. Clark (2011) 52 Cal.4th 856, 893.)" (Meeks v. Autozone, Inc. (2018) 24 Cal.App.5th 855, 867.) The test for abuse of discretion is whether the trial court exceeded the "bounds of reason." (Bustos v. Global P.E.T., Inc. (2017) 19 Cal.App.5th 558, 563.)
Here, it was not beyond the bounds of reason for the trial court to conclude that the probative value of evidence relating to the State Bar proceedings was substantially outweighed by the probability that its admission would necessitate an undue consumption of time and risk confusing the issues. Among other things, the State Bar proceedings were a collateral matter, and there was no showing that that matter had been resolved adversely to Lee.
2. No merit to claim of instructional error.
Lastly, Chang contends the trial court erred in refusing to give the jury an instruction on negligence per se based on a violation of former rule 3-300 of the Rules of Professional Conduct.
The current rule is rule 1.8.1.
It is settled that a party is entitled to have the jury instructed on each viable legal theory supported by substantial evidence if the party requests a proper instruction. (Soule v. General Motors Corp. (1994) 8 Cal.4th 548, 572.) However, a court may refuse a proposed instruction that is erroneous, misleading, or otherwise improper. (Orichian v. BMW of North America, LLC (2014) 226 Cal.App.4th 1322, 1333.) As discussed below, the requested instruction was not supported by the evidence and thus was properly refused.
a. Procedural history.
Chang requested that the following instruction be given: "Rule of Professional Conduct 3-300 states: [¶] A member shall not knowingly acquire a security or other pecuniary interest adverse to a client, unless each of the following requirements has been satisfied: [¶] (A) The 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 client's choice and is given a reasonable opportunity to seek that advice; and [¶] (C) The client thereafter consents in writing to the terms of the acquisition. [¶] A violation of this law has been established and is not an issue for you to decide. [¶] However, you must decide whether the violation was a substantial factor in harming Chang. [¶] If you decide that the violation was a substantial factor, then you must find that Lee Corp. and Lee were negligent." (Italics added.)
The trial court refused to give the requested instruction on the ground that Chang had failed to present any evidence at trial to establish the predicate that a violation of rule 3-300 had occurred.
Chang's counsel disagreed and argued that the instruction was proper. Counsel contended that in the court's pretrial ruling on the enforceability of the contract between Chang and Lee, the court already had found that Lee had violated rule 3-300, and therefore, there was no need for Chang to present expert testimony on that issue at trial. Counsel stated: "Your honor, I had the best expert. You made a ruling, a decision."
The trial court rejected Chang's argument, stating the prior "ruling was that [the contract] was voided and they now know that she voided it." The court added, "I lived through that. I know all the rationale that went into it." We agree.
b. No error in refusal to give the proposed instruction; Chang has misconstrued the pretrial ruling, which merely determined that the contingency fee agreement was voidable and that the Lee firm nonetheless was entitled to recover the reasonable value of its services in quantum meruit.
The issue is resolved by reviewing the June 22, 2016 order concerning the enforceability of the contract. In that pretrial order, the trial court determined the retainer agreement did not comply with section 6147, subdivision (a)(4), because it lacked a statement that the fee is not set by law but is negotiable between attorney and client, but that the Lee firm was nonetheless entitled to collect a reasonable fee and could pursue recovery in quantum meruit.
The order then stated: "Chang presents a number of other theories with respect to the unenforceability of the Agreement. However, none of these theories preclude [the Lee firm] from qμantum meruit recovery as a matter of law. For example, Chang argues that the Agreement is unenforceable because [the Lee firm] failed to comply with [rule 3-300]. Fee agreements by which the attorney obtains an 'ownership, possessory, security or other pecuniary interest adverse to the client' must comply with [rule] 3-300. That [r]ule requires 'fair and reasonable' terms, full disclosure in writing, written advice to consult independent counsel (and a reasonable opportunity for the client to do so), and the client's written consent. [(Rule 3-300.)] [Rule 3-300] compliance is not required for a charging lien securing a contingency fee. (Plummer v. Day/Eisenberg, LLP (2010) 184 Cal.App.4th 38, 49.) However, an attorney's lien against a client's future recovery to secure hourly legal fees is an 'adverse interest' requiring compliance with [rule] 3-300. (Fletcher v. Davis (2004) 33 Cal.4th 61, 71.) Here, the Agreement grants [the Lee firm] a lien against Chang's future recovery to secure hourly legal fees. (Agreement ¶ 5.) Thus, [the Lee firm] was required to comply with [rule] 3-300. There is no indication that [the Lee firm] complied. In any event, a [r]ule 3-300 violation only renders the lien unenforceable; it does not invalidate the underlying fee agreement or preclude the attorney from recovering the agreed-upon contractual fee." (Italics added.)
Chang's reliance on the above ruling is misplaced. The issue before the court on the pretrial motion was the enforceability of the retainer agreement, not the enforceability of the lien. The trial court addressed the lien only in the context of responding to, and rejecting, Chang's argument that the retainer agreement was unenforceable due to a violation of rule 3-300. The trial court ruled that a rule 3-300 violation would only render the lien unenforceable, but would not preclude an attorney from recovering fees for services rendered.
The trial court's earlier statement in the pretrial ruling that "[t]here is no indication that [the Lee firm] complied [with rule 3-300]" did not purport to adjudicate that issue in advance of the jury trial. The court's ruling did not relieve Chang from establishing at trial that a violation of rule 3-300 had occurred, nor did it foreclose the Lee firm from showing at trial that it had in fact complied with rule 3-300. Simply stated, the court's pretrial statement that it did not appear that 3-300 had been satisfied was insufficient for the jury to be instructed that "a violation of this law has been established and is not an issue for you to decide."
Therefore, the trial court properly refused to give the requested instruction.
DISPOSITION
The judgment is affirmed. Respondents shall recover their costs on appeal.
We concur: EDMON, P.J. EGERTON, J.
[*] Judge of the Santa Barbara County Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.