Opposition ObjectionsCal. Super. - 6th Dist.March 9, 2015QONUI#U)N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 KEVIN R. ALLEN, SBN 237994 ALLEN ATTORNEY GROUP 2121 North California Blvd., Suite 290 Walnut Creek, CA 94596 Phone: (925) 695-4913 Fax: (925) 334-7477 kevin(a)allenattornevgroup.com Attorney for Plaintiff IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SANTA CLARA (UNLIMITED JURISDICTION) DAVID MARKEVITCH, an individual, Plaintiff, vs. PAGANO & KASS, PC, a Professional Corporation, and DOES 1 through 50, inclusive; Defendants. Case No. 1-15-CV-277789 PLAINTIFF’S OPPOSITION TO DEFENDANT’S MOTION FOR NEW TRIAL Date: October 28, 2016 Time: 9:00 a.m. Judge: Hon. Derek Woodhouse Dept: 4 11 111,1 i Markevitch v. Pagano & Kass, PC Plaintiff’s Opposition to Defendant’s Motion for New Trial AWN \OOOQONUI 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS I. INTRODUCTION AND SUMMARY OF ARGUMENT 1 II. LEGAL ARGUMENT 2 A. DEFENDANT IS NOT ENTITLED TO A NEW TRIAL ON DAMAGES AS THE $169,844.18 VERDICT IS NOT EXCESSIVE AND IS SUPPORTED BY SUFFICIENT EVIDENCE .................................................................................................................................... 2 B. THERE IS NO RIGHT TO A NEW TRIAL AS THE VERDICT WAS NOT AGAINST THE LAW ...................................................................................................................................... 7 1. The Jury’s Verdict Was Supported by Substantial Evidence and Is Not Contrary to Law. 8 2. RPC Rule 2-200 Is Inapplicable To A Referral Fee In An Employment Agreement And Class Action Jurisprudence Does Not Require That The Court Approve Such Agreements .. 11 a) Rule 2-200 Does Not Apply to Agreements with a Law Firm’s Employee ................. 12 b) Class Action Jurisprudence Does Not Require Disclosure of Bonus or Origination Fee Agreements Between Employers and Their Employee ........................................................ 15 III. CONCLUSION 15 ii Markevitch v. Pagano & Kass, PC Plaintiff’s Opposition to Defendant’s Motion for New Trial 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Cases Anderson, McPharlin & Connors v. Yee (2005) 135 Cal.App.4th 129, 133 ........................ 12, 13, 14 Bigboy v. County ofScm Diego (1984) 154 Ca1.App.3d 397 ............................................................. 2 Casella v. SouthWest Dealer Services, Inc. (2007) 157 Ca1.App.4th 1127 ....................................... 3 Chambers v. Kay (2002) 29 Ca1.4th 142 .................................................................................... 13, 14 County ofSan Joaquin v. Workers Comp. Appeals Bd. (2004) l2 Cal. Rptr 3d 406 ....................... 11 David v. Hernandez (2014) 226 Cal.App.4th 578 .............................................................................. 3 Fergus v. Sanger (2007) 150 Ca1.App.4th 552 .................................................................................. 8 Fomco, Inc. v. Joe Maggio, Inc. (1961) 55 Cal.2d 162 ...................................................................... 2 In re “Agent Orange ” Product Liability Litigation (2nd Cir. 1987) 818 F.2d 216, 224 ................. 14 Indenco, Inc. v. Evans (1962) 201 Ca1.App.2d 369 ......................................................................... 10 Jewel v. Boxer (1984) 156 Ca1.App.3d 171 ..................................................................................... 14 Ladas v. California State Auto Assn. (1993) 19 Ca1.App.4th 761 ..................................................... 9 Mark v. Spencer (2008) 166 Ca1.App.4th 219 ................................................................................. 15 McCown v. Spencer (1970) 8 Ca1.App.3d 216 ............................................................................... 7, 8 SunnilandFruit, Inc. v. Verni, (1991) 233 Ca1.App.3d 892 ......................................................... 9, 10 Transport Ins. Co. v. TIG, Inc. C0. (2012) 202 Ca1.App.4th 984 .................................................... 11 Valdez v. J. D. Diflenbaugh Co. (1975) 51 Ca1.App.3d 494 .............................................................. 3 Weddington Productions, Inc. v. Flick (1998) 60 Ca1.App.4th 793 ................................................... 9 Statutes Cal. Civil Code Section 1654 ........................................................................................................... 10 Cal. Code of Civ. Proc. § 657 .................................................................................................... 1, 2, 7 Rules California Rule of Professional Conduct Rule 2-200 ................................................................ passim California Rules of Court, rule 3.769 ............................................................................................... 15 Fed. Rule Civ. Proc. Rule 23(h) ....................................................................................................... 15 iii Markevitch v. Pagano & Kass, PC Plaintiff’s Opposition to Defendant’s Motion for New Trial \OOOQQ 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I. INTRODUCTION AND SUMMARY OF ARGUMENT Defendant Pagano & Kass APC’s (“Defendant” or “P&K”) Motion for New Trial argues that the verdict is against the law and that the jury awarded excessive damages. Defendant argues that the verdict is against the law and that it is excessive because it apparently contends the parties disagreement over how to interpret certain language in the agreement means there was no agreement in the first instance. However, this confuses the concepts 0f contract formation with interpretation. The cases cited by Defendant in its motion all involve instances where parties failed to agree on the essential element of a contract by not addressing it in any way whatsoever or agreeing to address it the future. In those instances the trier of fact essentially had n0 language to interpret. Those cases are easily distinguishable as the referral fee agreement in this matter specifically described how a referral fee would be calculated, i.e., as a percentage of business generated during each month of the first twelve-months of the attorney- client relationship. The parties present different interpretations 0f this language. And the Civil Code provides rules for how to interpret a contract under these exact circumstances. Indeed, these rules form the basis for the Judicial Council of California Civil Jury Instructions (CACI) which were provided to the jury in this case (CACI Nos. 3 14-3 1 8). As shown herein when the Civil Code rules and CACI instructions for contract formation/interpretation are applied to the language of the agreement and the evidence presented at trial Defendant has not shown that the jury “clearly should have reached a different verdict or decision.” Cal. Code of CiV. Proc. § 657. Defendant also argues that the verdict is against the law because Plaintiffs referral bonus compensation is somehow precluded by California Rule of Professional Conduct Rule 2-200, which requires client consent to fee agreements between attorneys at different firms, and class action jurisprudence, which requires fee agreements between attorneys at different firm to be submitted to the court for approval. As Plaintiff is seeking compensation arising fiom an employment agreement with and for work performed for Pagano & Kass, PC these requirements simply do not apply as a matter of law. This argument was denied when made in Defendant’s February 2016 Motion for Summary Judgment because there was no legal basis for it. It should be 1 Markevitch v. Pagano & Kass, PC Plaintiff’ s Opposition to Defendant’s Motion for New Trial U‘IhUJN \OOONON 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 denied again here. For the reasons stated herein (and in the accompanying Opposition to Defendant’s Motion for New Trial, which is incorporated herein through reference) the Defendant’s Motion for Judgment Notwithstanding Verdict should be denied. II. LEGAL ARGUMENT A. DEFENDANT IS NOT ENTITLED T0 A NEW TRIAL ON DAMAGES AS THE $169,844.18 VERDICT IS NOT EXCESSIVE AND IS SUPPORTED BY SUFFICIENT EVIDENCE Defendant seeks a new trial 0n damages based upon its argument that the jury’s award of $169,844.18 is both excessive and unsupported by sufficient evidence. “The right to a new trial is purely statutory ...” Fomco, Inc. v. Joe Maggio, Inc. (1961) 55 Cal.2d 162, 166; Marriage ofHerr (2009) 174 Cal.4th 1463, 1465, 1471. A new trial cannot be granted unless an error was prejudicial or results in a miscarriage ofjustice. See California Constitution, Article VI, section 13. One ground for a new trial is “excessive damages.” See CCP Section 657(5). This ground asks for a new trial solely on the issue of damages with findings regarding liability left intact. “A new trial shall not be granted upon the ground of ...excessive 0r inadequate damages, unless after weighing the evidence the court is convinced from the entire record, including reasonable inferences therefrom, that the court 0r jury clearly should have reached a different verdict or decision.” CCP § 657 (emphasis added). “The judge is not permitted to substitute his judgment for that of the jury on the question of damages unless it appears from the record that the jury verdict was improper.” Bigboy v. County 0f San Diego (1984) 154 Cal.App.3d 397. A new trial can also be based upon “insufficiency of the evidence to justify the verdict or other decision ...” See CCP § 657(6). “A new trial shall not be granted upon the ground of insufficiency of the evidence to justify the verdict 0r other decision unless after weighing the evidence the court is convinced fiom the entire record, including reasonable inferences therefrom, that the court or jury My should have reached a different verdict or decision.” CCP § 657 (emphasis added). The Court can consider the credibility of witnesses and draw reasonable 2 Markevitch v. Pagano & Kass, PC Plaintiff’s Opposition to Defendant’s Motion for New Trial 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 inferences contrary to those drawn by the jury. See Valdez v. J. D. Diflenbaugh C0. (1975) 51 Cal.App.3d 494, 512; see Casella v. South West Dealer Services, Inc. (2007) 157 Cal.App.4th 1127, 1159-1 160-trial court has power “to disbelieve witnesses, reweigh the evidence, and draw reasonable inferences therefrom contrary to those of the trier of fact” (internal quotes omitted); see also David v. Hernandez (2014) 226 Cal.App.4th 578, 588]. Defendant has failed t0 satisfy its burden to show that the jury clearly should have reached a different verdict in regards to the damages awarded to Plaintiff or that the jury verdict was improper. The evidence reflects as follows: On February 6, 2009 P&K extended a written offer of employment to plaintiff David Markevitch as an associate attorney of the firm. Exhibit “E’” at 41:20-42: 17. Plaintiff accepted the written offer 0f employment and started working for the firm on or around February 16, 2009. See Ex. “I;2” Ex. “E” at 48:18-49:15. As reflected in signed offer, Plaintiff was promised a referral fee for business he originated: You shall be entitled to receive the following compensation based upon business that is directly attributable to your marketing efforts (based upon collected billings or fees, not merely issued billings) during the first twelve (12) months of the attorney-client relationship by and between The Firm and the qualifying client: TOTAL COLLECTED BILLINGS PERCENTAGE DUE YOU First $6,000.00 of billings per month; Fifteen Percent (15%) of total From $6,001.00 to $9,999.00 per month; Thirty Percent (30%) oftotal From $10,000 to $14,999.00 per month; Forty Percent (40%) of total Greater than $15,000 per month Fifty Percent (50%) of Total. There were essentially two disputes regarding the language of the referral fee agreement. First, the parties presented different testimony regarding when the “attorney-client relationship” started for purposes of measuring the twelve-month period covered by the provision. Plaintiff testified that, consistent with common usage, the attorney-client relationship started when the client hired or retained the firm, which occurred 0n May 27, 2010. Ex. “E” at p. l Unless noted otherwise all exhibits herein are attached to the Declaration of Kevin R. Allen ISO of Plaintiff’ s Opposition to Defendant’s Motion for New Trial (“Allen Decl.”). 2 The signed offer letter was admitted during trial as Plaintiff’s Exhibit “2.” See Ex. “E” at 48:18-49:15. 3 Markevitch v. Pagano & Kass, PC Plaintiffs Opposition to Defendant’s Motion for New Trial 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 57:15-27.3 The fee agreement with Pagano & Kass was a financial arrangement premised on billing so it made sense that the attorney-client relationship discussed in the fee agreement was a financial relationship and occurred when the client actually hired the firm and became financially obligated to the firm in some way. Ex. “E” at p. 93:1 1-94228. Prior to signing a retainer “there were no obligations in terms 0f pursuing the case on either side.” Ex. “E” at p. 53:18-22. There would have been no class action or fee award as Pagano & Kass did not did not have another class representative for the LoJack case. Ex. “F” at p. 12: 1-4. Defendant acknowledged they were under no obligation to file a lawsuit for a client, such as Morin, until there was signed retainer. Ex. “E” at 1 14: 12-24. In contrast Defendant’s principals testified that the “attorney-client relationship” meant the first date the attorney-client privilege attached to a communication. Ex “F” at p. 15:5-13. However, questions about when the privilege attached were dependent on a variety of circumstances including whether Mr. Markevitch was acting as an agent of the firm at the time of a communication. See Ex. “E” at 111:12-28. Defendant admitted that the attorney-client privilege was a “very fluid concept” and that that there was no way to identify a specific date that the privilege starts in every instance. Ex “F” at l4:28-15:4. Defendant also described the events and criteria for what it takes for the privilege to attach in different, often-conflicting ways. Mr. Pagano testified that the privilege arises at “the time we develop a relationship where the mutual expectation of the client and our firm is a relationship that it call on us to be privileged, puts duties on us.” Ex. “E” 14:12-17. Defendant testified that privilege arises when “an attorney and a client believe that they are exchanging information and that the client is consulting an attorney with an expectation that the attorney will be giving them legal advice.” Ex See “E” at 111212-22. Defendant also indicated that privilege may or may not attach solely from a communication to the firm as it depends on whether communication “indicates that they knew there’s an attorney/client relationship there.” See “E” at p. 123: 13-22. 3 Defendant acknowledged they were formally hired/retained by Mr. Morin on May 27, 2010. Ex. “E” at pp. 115: 12-25. 4 Markevitch v. Pagano & Kass, PC Plaintiff’s Opposition to Defendant’s Motion for New Trial AWN “GNU! 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Defendant suggested the twelve-month period started on June 12, 20094 which was Mr. Morin emailed the firms Defendants also suggested that the jury could use a July 1, 2009 start date instead apparently because this was earliest time frame covered by their billings submitted to the Distn'ct Court. Ex. “F” at 19214-201156 The implication was made the jury could also use December or January 2010 as this was the firm apparently decided to take Morin as a client. Ex. “E” at 116:16-1 17:1. Mr. Kass testified that Mr. Morin was tracked as a “potential client” until he retained the firm at which point the firm actually started to bill time to the client. Ex. “E” at 120:8- 27. The parties agreed that the fees had to be collected before Plaintiff was entitled t0 a referral fee and the fees would be based upon how much business was generated within the first twelve- months of the attorney-client relationship. However, they presented conflicting evidence regarding whether or not the fees actually had to be collected during the first “twelve-months” of the attorney client relationship. Such a reading of the provision would preclude it from applying to contingency cases or class action cases such as the Morin lawsuit that Plaintiff referred to Defendant. Plaintiff testified that the referral fee amount was calculated based on the amount 0f billings that the new business generated in the first twelve-months of the attorney-client relationship provided that the firm was paid for that work. Ex. “E” at pp. 45:23-44:10. If the firm was never paid he was not entitled to a referral fee. Ex. “E” at p. 46:1 1-14. Plaintiff had no reason to believe it did not apply to a class action or contingency cases. Ex “E” at p 46:25-47z7. Defendant contends that the “collected” language means the billings had to be collected within the first twelve months of the attorney-client relationship and that the referral fee only applied to hourly cases. See Ex. “E” at pp. 10425-15; 108:23-28. This is inconsistent with the plain 4 Defendant offered an exhibit to show the jury what the damages would be using this date. See Ex. “F” at 18:18-25. 5 It is unclear why privilege would attach to an email from Mr. Morin but not an online submission from a potential client. See “E” at p. 123:13-22 (It depend on whether the communication “indicates that they knew there’s an attorney/client relationship there”) 6 Defendant offered an exhibit to show the jury what the damages would be using this date. See Ex. “F” at 1928-2026. 5 Markevitch v. Pagano & Kass, PC Plaintiff s Opposition to Defendant’s Motion for New Trial 1o 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 reading of the language of the agreement. The disputed provision -- “based upon collected billings, not merely issued billings” -- appears offset in parenthesis from the remainder of the contract and before the “twelve-mont ” time frame in the provision. Parenthesis are typically used t0 clarify or as an aside regarding 7and would normally appear immediately after whatever language the parenthetical is clarifying or impacting. Additionally, if this is what the agreement meant it would have just said “collected fees” and not even referenced “billings” or “issued billings.” Defendant’s interpretation is also inconsistent with the parties’ conduct and the purpose of the agreement as a whole, which was to encourage Plaintiff to refer clients to the firm and was not limited t0 hourly work. Pagano & Kass knew of Plaintiff’s experience with contingency product liability and employment cases (Ex. “E” at 31:3-7) and hired him to work on existing contingency fee and class action cases (Ex. “E at pp. 104321-105222) and 0n “any cases we had” See Ex. “E” at pp. 109:5-9. The fee agreement did not exclude class actions or contingency fee cases. See Ex. “I.” Mr. Kass testified that he just “didn’t think” of putting language in the agreement excluding class actions or contingency fee cases. Ex. “E” at 109:1-4. Pagano & Kass never told Mr. Markevitch that the referral fee did not cover class actions. Ex. “E” at pp. 47:5-7, 115:21-23. Mr. Markevitch accepted the job because of the referral fee agreement. Ex. “E” at p. 4728-28. The only reason Mr. Markevitch brought Morin to the firm was the referral fee agreement. Ex. “E” at 54:4-11. He personally spent over 350 hours working up the case (Ex. “E” at 58:22-59:2) which ultimately generated a $415,000 fee award. Ex. “E” at p. 64: 1-9, 65:10-19. To the extent the language regarding when the fees had to be “collected” was ambiguous such ambiguity should be construed against Pagano & Kass as the drafter of the agreement. See Civil Code 1654. (“In cases of uncertainty not removed by the preceding rules, the language of a contract should be interpreted most strongly against the palty who caused the uncertainty to exist”). The jury adopted Plaintiff‘s argued for interpretation for when the attomey-client 7 See California Style Manual (4th ed.) § 4:56 (“Parentheses and brackets are used to indicate extraneous, explanatory, incidental, and interpolated matter.”) 6 Markevitch v. Pagano & Kass, PC Plaintiff‘s Opposition to Defendant’s Motion for New Trial 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 relationship started (i.e., May 27, 2010 date Morin hired Pagano & Kass) and that the award amount was based on billings from that business during the subsequent twelve-month period. The amount it awarded was not excessive and not against the law. In fact, it is the exact same amount Plaintiff asked for in his Complaint in this matter. At trial David Markevitch testified how he performed the calculations: I actually determined the number of hours that the firm spent on the Morin case starting in May of 2010...8 for every month I calculated the [hours spent by each biller]. And then each one of the attorneys had an hourly rate...And based upon those calculations I had the number of hours spent by each lawyer for each month from May 2010 t0 May 2011... I knew the total amount for months, and then I applied the table from my contract. Ex. “E at 78:28-79:27. Plaintiff determined that his share was $169,844.18. Ex. “E” at pp. 79:28-80:01. Defendant did not offer any evidence contradicting Plaintiff’s calculations regarding the bonus amount if the agreement covered the twelve-month period starting when Morin hired Pagano & Kass, i.e., May 27, 2010 t0 May 27, 201 1. See “E” at 127:22-128225. Defendant was specifically asked whether it challenged Plaintiffs math and refused/failed to do so. Id. Accordingly, there is no evidence to weigh against Plaintiff's calculations. For the reasons stated above the verdict was supported by sufficient evidence and was not otherwise excessive. As Defendant cannot show that that the court or jury clearly should have reached a different verdict or decision (CCP § 657) the motion for new trial must be denied. B. THERE IS NO RIGHT T0 A NEW TRIAL AS THE VERDICT WAS NOT AGAINST THE LAW Another ground for a new trial is that a jury verdict is against the law. A Court does not weigh evidence when determining whether the “against law” ground is applicable. The “against law” ground applies only when the evidence is without conflict in any material point and insufficient as a matter of law to support the verdict. McCown v. Spencer (1970) 8 Cal.App.3d 216, 8 The lodestar billing report Plaintiff relied on was prepared by Pagano & Kass and included all hours worked by all of Defendant’s attorneys on the Morin lawsuit. Ex. “F” at 6826-13. 7 Markevitch v. Pagano & Kass, PC Plaintiff’s Opposition to Defendant’s Motion for New Trial .p QONUI 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 229; see Fergus v. Sanger (2007) 150 Cal.App.4th 552, 567-569(finding verdict was not “against law” because it was supported by substantial evidence)]. Defendant raises the same two arguments it raises in its accompanying Motion for Judgment Notwithstanding Verdict. First, it argues that the parties’ different interpretations of the timing provision for the referral fee meant there was no contract. Second it argues that the compensation owed to Plaintiff fi'om his employment with Pagano & Kass constituted a fee split between lawyers subject to Cal. RPC 2-200. These arguments fail for the same reasons set forth it he opposition to Defendant’s Motion for Judgment Notwithstanding Verdict. 1. The Jgry’s Verdict Ms Supported bv Sgbstantial Evidence and Is Not Contrafl t0 Law Defendant’s motion argues that the parties’ different interpretations 0f language in the referral fee agreement somehow means there was never an agreement in the first place? However the fact that the parties presented different explanations for what certain words means does not mean as a matter of law that a contract did not exist 0r that Defendant should relieved from its obligations under that agreement”) As a preliminary matter the “against law” ground applies only when the evidence is without conflict in any material point and insufficient as a matter of law t0 support the verdict. McCown v. Spencer (1970) 8 Ca1.App.3d 216, 229. As shown below there is conflicting testimony regarding what certain ambiguous provisions in the contract meant. Accordingly, a new trial cannot be granted on this basis. Even assuming for sake of argument that the evidence was without conflict in any material point Defendant has not shown that a disagreement over the ambiguous term in this contract 9 This is also contradicted by Defendant’s opening statement which seemingly concedes there was a valid agreement between the parties and they simply have different interpretations of language therein. See Ex. “E” at 30218-312. This is also contradicted by Defendant’s pretrial brief which acknowledged the parties entered into a contract and argues for a certain interpretation of the language. See Ex. “I” 10 Plaintiff incorporates his arguments from the Opposition to the Defendant’s Motion for Judgment 0n the Pleadings. 8 Markevitch v. Pagano & Kass, PC Plaintiff’s Opposition to Defendant’s Motion for New Trial MAWN \DOON 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 necessarily means there was no contract as a matter of law. Defendant cites cases where the parties failed t0 agree on the essential element 0f a contract by failing to address it in any appreciable way or agreeing to address it in a fiJture agreement. Under such circumstances a court or trier of fact did not any basis to know what was agreed to and could not apply rules 0f contract interpretation because there was nothing to interpret. Under such circumstances a court or trier of fact did not any basis to know what was agreed to and could not apply rules of contract interpretation because there was nothing to interpret. For example, Ladas v. California State Auto Assn. (1993) 19 Cal.App.4th 761, 771, involved insurance sales representatives who claimed that their employer had breached a contract t0 “consider” parity with other insurance companies in setting compensation rates. The Ladas court held that a promise to “consider” what employees at other companies are earning is not definite enough to give rise to the level of a contractual duty.”” Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793 involved a sound editing company (Weddington) and a former employee (Flick) who left the company but attempted to continue t0 use the company’s library of recorded sounds. The parties entered into a one-page memorandum settlement agreement that provided the parties would “formalize” additional material terms and would enter into a licensing agreement and provide for “fillly paid up license.” Id. at p. 799. The settlement agreement failed to explain what the terms of the license were or what was intended by “fully paid up license.” Id. The appellate court held that the licensing agreement was a material term of the settlement: “If there was no licensing contract, then there was no contract at all.” Id., at p. 815. Banner Entertainment, Inc. v, Superior Court (1998) 62 Cal.App.4th 348 involved an attempt to enforce the arbitration clause of an unsigned written agreement that, by its terms, indicated it was not effective until certain additional terms were negotiated and the agreement was signed. Id. at p. 358. In Sunniland Fruit, Inc. v. Verni, (1991) 233 Cal.App.3d 892, the court found that certain ll Id. at 771 (“By what standard would a court or a jury determine that the [employer] failed to meet its obligation to ‘consider‘ commissions earned by competitors?...What would be the relevant market on which such a duty would be predicated?... The nature of the obligation asserted provides no rational method for determining breach or computing damages.’ The court thus found no contract”) 9 Markevitch v. Pagano & Kass, PC Plaintiffs Opposition to Defendant’s Motion for New Trial UI-PUJN flm 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 language providing for a $150,000 “interest-free loan” was not ambiguous and, therefore, the Parole Evidence rule precluded extrinsic evidence by one party that the moneys were instead a minimum guaranteed price. Id. at 898-899. In the present matter we have ambiguous language (i.e., “attomey-client relationship”) that is reasonably susceptible to different meanings “[p]arol evidence may be admitted t0 explain the meaning of a writing when the meaning urged is one to which the written contract term is reasonably susceptible or when the contract is ambiguous.” Id. A11 of these cases are clearly distinguishable from the present matter where the contract include specific language (“attorney-client relationship”) that is capable of interpretation using the tenets provided for by the Civil Code and their associated CACI instructions. To wit, there is a CACI instruction for contract interpretation regarding disputed words (CACI No. 314), the meaning of ordinary words (CACI No. 315) and technical words (CAC No. 316), construction 0f contract as a whole (CACI N0. 317), and construction by conduct (CACI No. 318).” The jury was also presented with CACI No. 320 which told them that “[i]f, after considering these instructions, you still cannot agree on the meaning of the words, then you should interpret the contract against Pagano & Kass, PC since it caused the uncertainty.” Defendant barely addresses the rule of interpretation set forth in Cal. Civil Code Section 1654 which forms the basis for CACI No. 320 (construction against the drafter”). See Civil Code 1654. (“In cases 0f uncertainty not removed by the preceding rules, the language of a contract should be interpreted most strongly against the party who caused the uncertainty t0 exist”). Pagano & Kass admits it drafted the agreement.” The cases it cites to argue against application of Civil Code Section 1654 (Motion for Judgment Notwithtstanding Verdict at FN 3) are off point and in fact support Plaintiff’s position. In Indenco, Inc. v. Evans (1962) 201 Ca1.App.2d 369 the ambiguous terms in the contract at issue “were admittedly arrived at by negotiations between two parties.” In the present matter the employment agreement was not 12 Defendant argues in its Motion for Judgment Notwithstanding Verdict that it was Plaintiff’s obligation to prove “the parties shared an understanding of the provision” citing Civil Code Section 1636. This again attempts to confuse contract formation and interpretation. Civil Code Section 1636 governs contract interpretation and supports CACI No. 3 14 (Meaning of Disputes Words). ‘3 Ex. “”E at pp. 9828-992 10 Markevitch v. Pagano & Kass, PC Plaintiff‘s Opposition to Defendant’s Motion for New Trial \IO\ m 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 negotiated and there is no evidence whatsoever that any negotiations took place. In County ofSan Joaquin v. Workers Comp. Appeals Bd. (2004) 12 Cal. Rptr 3d 406 the appellate court refused t0 construe an ambiguous provision against the drafter for the simply reason that the other party did not even “identify an ambiguity to be interpreted” and “simply want[ed] to nullify” the provision. Id. at 410. “A party attacking a meaning succeeds only if the attacker can propose an alternative, plausible, candidate of meaning.” Id. In contrast Plaintiff proffered an alternative meaning which was more than plausible given Plaintiffs testimony and the resulting jury verdict and Defendant’s own concession that Plaintiff’s construction of the relevant clause is plausible. See Motion for New Trial at p. 7:2-3 (“...Defendant accepts Plaintiffs construction of this clause in the Referral Fee Provision as plausible. . .”) 2. RPC Rule 2;200 Is Ingpplicable To A Referral Fee In An Emplovment Agreement And Class Action Jgrispru_dence Does Not Require That The Court Approve Such Agreements Defendant argues that Rule of Professional Responsibility 2-200’s disclosure and consent obligations excuse them from having to pay Plaintiff the referral fee. Additionally they argue that they should be excused fiom paying the referral fee because there is no evidence they disclosed the referral fee with former employee David Markevitch to the United Stated District Court in the Morin v. LoJack matter. Both arguments fail for the simply reason that Plaintiff David Markevitch is seeking compensation from the time he was employed as an associate by Pagano & Kass and compensation agreements between an employee and employer are not subject to Rule 2-200 or the requirements applying t0 fee agreements in class action cases. Defendant raised this same argument in its February 23, 2016 Motion for Summary Judgment.” The Court denied the MSJ since Plaintiff is seeking unpaid compensation arising from work performed as an employee associate of Pagano & Kass.” An Ordering denying an MSJ based on a finding of a triable of issue of fact does not, by definition, preclude that issue from being raised at trial. See Transport Ins. C0. v. TIG, Inc. C0. (2012) 202 Cal.App.4th 984, 1009). 14 See Ex. “G” [Defendant’s MSJ]. 15 See Ex. “H” [Court’s ruling denying MSJ]. 11 Markevitch v. Pagano & Kass, PC Plaintiff’s Opposition to Defendant’s Motion for New Trial UI-bUJN \OOOQON 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 However, there was no dispute of fact at the summary judgment stage on this issue. Indeed the Court’s ruling found that Defendant’s argument failed as a matter 0f law since the requirements Defendant argued for simply did not existm Defendant cites no case law showing that a legal finding in earlier proceeding on a dispositive motion, not linked to a dispute 0f fact, can be set aside by the court in the same proceeding. Assuming arguendo that the Court needs to consider this legal issue again the case law and legal authorities previously relied on by the Court in denying Defendant’s Motion for Summary Judgment on this issue have not changed. a) Rule 2-200 Does Not Apply to Agreements with a Law Firm’s Employee The California Court 0f Appeal held that fee-sharing agreements while attorneys are formally associated d0 not need to be disclosed under Rule 2-200. See Anderson, McPharZin & Connors v. Yee (2005) 135 Ca1.App.4th 129, 133. In Anderson, the agreement “was made between Yee on the one hand and his partners on the other.” (Id.) Yee, a lawyer, became an AMC partner in 2001, at which time AMC and Yee executed a partnership agreement. .. Accordingly, each partner hereby agrees that if such partner departs from the firm and, subsequent to such departure, renders legal services (directly 0r through any law firm with which such partner associates subsequent to departure) with respect to any ‘Open Files’ (as that term is hereinafter defined), such partner shall pay over to the firm, as liquidated damages, an amount equal to 25% of the revenues for all legal services rendered on Open Files for 24 months after the departing partner leaves the firm, payable to the firm as received by such partner or such Associated Firm. As used herein, the term ‘Open Files’ means all pending matters with respect to which the firm has been engaged to perform legal services as of, or prior to, the date of the partner[‘s] departure from the firm. ...” 16 See Ex. “H” [Court’s ruling denying MSJ] (“The parties’ agreement, Plaintiff’s performance, and at least some of Defendant’s work on the Class Action that gave rise to the fee award occurred during his employment. Thus, even though he has been terminated, the disclosure and consent requirements [of PRC Rule 2-200] do not apply....Nothing in the Federal Rules 0f Civil Procedure... or other legal authorities cited by Defendant suggests that, under these circumstances, an associate must disclose a fee sharing agreement to the court [in a class action] if he or she is tenninated before the fees are paid.”) 12 Markevitch v. Pagano & Kass, PC Plaintiff’s Opposition to Defendant’s Motion for New Trial 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Yee terminated his partnership interest in AMC 0n April 19, 200.2. During the next 24 months and thereafter, he was a partner at Wolfe & Wyman (from April 22, 2002, to April 30, 2003) and then at Yee & Belilove (May 1, 2003 t0 the present). When Yee parted company with AMC, clients with 27 “Open Files” went with him to Wolfe & Wyman, then some went with him to Yee & Belilove. During the relevant 24-month period, those clients paid $ 526,635.80 in attorneys’ fees on the “Open Files,” 25 percent ofwhich is $ 13 1,658.95. (Id. at 131-132 [emphasis added].) The fees, which were calculated as a percentage of the revenue on open files, were not collected until after Yee was no longer partnered with the others who would collect fees. The Court of Appeal held that the contract “cannot be viewed as an agreement by Yee or by AMC with a lawyer ‘who is not [his] partner.”’ Id. quoting Rule 2-200]. “As the trial court observed, the State Bar of California and the Supreme Court (by approving the Rules of Professional Conduct) were apparently satisfied ‘that fee splitting agreements entered into yilflg members were partners did not need client c0nsent.’” Anderson, supra, 135 Cal.App.4th at p. 133 [emphasis added]. The Anderson Court made clear that Rule 2-200 simply did not apply. “Yee’s arguments all assume that rule 2-200(A) applies to this case. As we have explained, it does not.” Id. Rule 2-200 does not apply to a law firm’s agreement with its partner just as it does not apply to an agreement with its associate. The disclosure requirements for a law firm’s partners are the same as the requirements for associates. See Rule 2-200 (“shall not divide a fee for legal services with a lawyer who is not a partner 0f associate 0]? 0r shareholder with the member”). There is r10 distinction between disclosure requirements for partners and for associates. Thus, the Anderson decision applies and warrants a ruling that there was n0 need to disclose any fee sharing agreement between Mr. Markevitch and P&K. “Rather, rule 2-200’s language, reasonably read, appears to encompass any division of fees where the attorneys working for the client are not partners or associates of each other, or are not shareholders in the same law firm.” Chambers v. Kay (2002) 29 Cal. 4th 142, 148. A client has no right to dictate how a law firm distributes a fee award internally among employees or partners. “Once the client’s fee is paid t0 an attorney, it is of no concern to the client 13 Markevitch v. Pagano & Kass, PC Plaintiff’s Opposition to Defendant’s Motion for New Trial 10 11 12 13 14 15 16 l7 18 19 20 21 22 23 24 25 26 27 28 how that fee is allocated among the attorney and his or her former partners.” Anderson, supra, 135 Cal. App. 4th at p. 133 [Jewel v. Boxer (1984) 156 Cal. App. 3d 171, 178]. As in Anderson, Rule 2-200 does not apply in this case because Mr. Markevitch was an employee of P&K at the time services were performed. The cases cited by Defendant lack the key fact present here: the attorney’s status as an employee of the law firm. Chambers, supra, 29 Cal. 4th at p. 145 [“even though Chambers and Kay worked together in Weeks and a few other cases, they were not members of the same law firm as defined by the Rules of Professional Conduct. ...not an agreement to employ Chambers as an associate”]; In re “Agent Orange” Product Liability Litigation (2nd Cir. 1987) 818 F.2d 216, 224 [“Finally, we do not find class counsel to have formed an ad hoc partnership. They merely are a group of individual lawyers and law firms associated in the prosecution of a single lawsuit, and they lack the ongoing relationship that is the essential element of attorneys practicing as partners.”].) Because none of Defendant’s authorities involve the key fact at issue here-that is, Mr. Markevitch’s status as an employee during all times he worked on the LoJack matter-Defendant has not supported its argument that the fee agreement needed to be disclosed. The purpose of Rule 2-200 supports Plaintiff’s position that the Rule does not apply to an agreement between the law firm of record and its employee. According to the California Supreme Court, the purpose of Rule 2-200 is to provide clients with information necessary to accept or retain representation. See Chambers, supra, 29 Cal.4th at p. 157 (“Such information may affect the client’s level of confidence in the attorneys and is indispensable to the client’s ability to make an informed decision regarding whether to accept the fee division and whether to retain or discharge a particular attorney”) In contrast Rule 2-200’s function would not be served by disclosure of how a law firm intends to compensate its associates because the client would not have the right to instruct a law firm to terminate an associate from its employment. Thus, the purpose behind Rule 2-200- allowing a client to reject participation of a new law firm-would not be furthered by requiring that law firms disclose how fees will be divided internally because a client has no right to tell its counsel of record to fire a particular employee. Accordingly, the purpose of Rule 2-200 supports 14 Markevitch v. Pagano & Kass, PC Plaintiffs Opposition to Defendant’s Motion for New Trial QQUI4>LHN 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the plain meaning interpretation that compensation agreements between a law firm and its employees need not be disclosed to clients. b) Class Action Jurisprudence Does Not Require Disclosure of Bonus or Origination Fee Agreements Between Employers and Their Employee The Morin v. Lojack matter was a class action pending in the United States District Court Defendant. Defendant contends that FRCP Rule 23(h) bars the enforcement of the contract because Plaintiff did not submit a separate application for a fee award to the court in the Class Action. However, Plaintiff acted as an associate employed by Defendant’s firm when he referred Morin’s business and Defendant earned fees in the Class Action. Defendant’s reliance on California authority (such as California Rules of Court, rule 3.769) is misplaced because that rule only applies to cases in the superior courts of California. See Cal. Rules of Court, Rule 3.10. The Lojack Class Action was heard before a U.S. District Court and governed by the Federal Rules of Civil Procedure. Similarly, Defendant’s reliance 0n Mark v. Spencer (2008) 166 Cal.App.4th 219 (“Mark”) is misguided because it involves California Rules of Court, rule 3.769. Mark, supra, at pp. 223-224. 17 Regardless all of the work performed by Plaintiff on the LoJack case was as an associate of Pagano & Kass. There is nothing in the Federal Rules of Civil Procedure or other legal authorities cited by Defendant that suggests that, under these circumstances, an associate of a law firm who is terminated must disclose an origination bonus in his employment agreement to the District Court in order to seek that unpaid compensation. III. CONCLUSION For the reasons stated herein, Plaintiff asks that the Court deny Defendant’s motion. Dated: October 17, 2016 Res tfully submitted, By: Kevin Allen, Esq. Allen Attorney Group Counsel for Plaintiff l7 Even if Mark v. Spencer did apply the court found that a fee sharing agreement must be disclosed to the court only when it is within the scope of Rule 2-200(A). Mark, supra, at pp. 223- 229. 15 Markevitch v. Pagano & Kass, PC Plaintiff’s Opposition to Defendant’s Motion for New Trial
