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Manley v. Burunsuzyan

California Court of Appeals, Second District, Fourth Division
Jul 23, 2008
No. B196369 (Cal. Ct. App. Jul. 23, 2008)



APPEAL from a judgment of the Superior Court of Los Angeles County No. BC328530, Victor E. Chavez, Judge.

Dempsey & Johnson, Arlene M. Turinchak and Michael D. Dempsey for Plaintiff and Appellant.

Law Offices of Maro Burunsuzyan and Maro Burunsuzyan; Veatch Carlson and Dawn M. Flores-Oster for Defendants and Respondents.

We concur: EPSTEIN, P. J., SUZUKAWA, J.



In California, an oral referral fee agreement between attorneys is enforceable. (Mink v. Maccabee (2004) 121 Cal.App.4th 835, 838.) The only writing that is required is one signed by the client, consenting to the fee-sharing agreement. (Ibid; Rules of Prof. Conduct, rule 2-200.)

Rule 2-200 provides, in relevant part: “(A) A member shall not divide a fee for legal services with a lawyer who is not a partner of, associate of, or shareholder with the member unless: [¶] (1) The client has consented in writing thereto after a full disclosure has been made in writing that a division of fees will be made and the terms of such division; and [¶] (2) The total fee charged by all lawyers is not increased solely by reason of the provision for division of fees and is not unconscionable as that term is defined in rule 4-200.”

This appeal follows a jury trial in which the jury found that no oral referral agreement existed between two attorneys. The appeal primarily challenges the trial court’s ruling permitting the defense to offer expert testimony that the custom and practice in the legal community is to reduce referral agreements to writing. While we conclude this evidence should not have been admitted, we find that the error was non prejudicial. We also reject claims that the trial court abused its discretion in finding that the defense had properly designated its expert witness and that the trial court improperly limited cross-examination of the defendant. We therefore affirm the judgment.


1. Factual Overview

Plaintiff Marshall Manley (plaintiff) is an attorney. His son, Chasen Manley (Chasen), sought a lawyer to prosecute a personal injury action. Chasen eventually hired Maro Burunsuzyan and the Law Offices of Maro Burunsuzyan (collectively defendant) to handle the case. Plaintiff claims that defendant orally agreed to pay him 25 percent of her contingency fee in return for referring the case to her and assisting her with the case. Defendant eventually settled the case for $2.2 million and received a 40 percent contingency fee of $880,000. Plaintiff sought 25 percent of defendant’s fee: $220,000. Defendant refused to pay, denying any agreement to pay a referral fee. Plaintiff proceeded to trial on the theory of breach of an oral contract.

He was an inactive member of the California State Bar during the relevant time period.

Prior to trial, plaintiff dismissed his cause of action for quantum meruit.

2. The Plaintiff’s Case

On April 16, 2002, plaintiff’s 25-year old son Chasen was injured in an altercation at a sports bar, Johnny Foxx’s Pub and Nightclub. Chasen asked plaintiff to find an attorney to file a personal injury action against the bar. Pursuant to plaintiff’s recommendation, Chasen retained the firm of Gradstein, Luskin & Van Dalsem to represent him on a contingency fee basis. The written retainer agreement included no provision for a referral fee and there was no oral agreement for a referral fee. Several months later, Chasen and plaintiff became dissatisfied with the firm’s representation and sought other counsel. Plaintiff suggested that Chasen speak to Browne Greene of Greene, Broillet & Wheeler. Chasen spoke with Greene but did not hire that firm. (Plaintiff never sought a referral fee from Greene, Broillet & Wheeler.)

Chasen’s mother (and plaintiff’s former wife) Tonya Manley spoke to defendant, her long-time friend, about the case. Defendant requested a meeting. Defendant, Chasen and his mother met at defendant’s office. Chasen described the operative facts to defendant. Defendant told Chasen that she was an experienced personal injury attorney and very interested in handling the lawsuit. Chasen stated that he needed first to consult with plaintiff (his father) before making a final decision to hire her.

Defendant had represented Chasen during his high school years when he was involved in an automobile accident. In addition, defendant had twice successfully represented Tonya Manley.

Plaintiff testified that he and defendant spoke on the telephone in “[a]bout August of 2002.” She told him she charged a 40 percent contingency fee. She reiterated her qualifications and characterized the case as a “slam dunk.” According to plaintiff, he never asked for a referral fee. Instead, defendant offered him one after he asked her to reduce her contingency fee from 40 percent to 33 and 1/3 percent. Plaintiff testified that defendant said that “she did not want to reduce her contingency because it would look bad for other clients if she went below that [40 percent]. But that [she] could give me a referral fee, which would be the same thing as reducing the contingency. [She] suggested a referral fee of 25 percent. And she said also . . . that I could help her and work on the case.” Plaintiff agreed to advise Chasen to hire defendant because of the referral fee. Plaintiff intended to give the referral fee to Chasen to ensure he was adequately compensated for his injuries.

Plaintiff’s opening brief inaccurately states that he testified that she proposed a 50 percent contingency fee.

Plaintiff contacted Chasen and told him to hire defendant because of the referral fee agreement. Chasen and his mother again met with defendant at her office in August 2002. Chasen testified that defendant told him she had spoken with plaintiff and that she had “agreed to give [plaintiff] a 25 percent referral fee which will then go to [Chasen].” In a similar vein, Tonya Manley testified that defendant told them that “she had worked things out with [plaintiff] and that there would be a [25 percent referral fee]” to be paid to plaintiff. Defendant explained that she and plaintiff “would be working together on the case.”

Because Tonya Manley was unavailable at trial, portions of her deposition testimony were introduced into evidence.

Chasen signed an undated written retainer agreement. The agreement, a preprinted form, set forth a sliding scale contingency fee of 33 percent to 50 percent depending upon when recovery was obtained. However, in this instance, the fee schedule was modified by handwritten interlineations to provide for a reduced fee schedule. Defendant’s fee became 33 percent of any recovery obtained prior to mediation (as opposed to 40 percent) and 40 percent of any recovery obtained after either mediation or trial (as opposed to 45 percent or 50 percent, respectively). At trial, Chasen was unable to explain why or how his contract contained a modified fee schedule. The retainer agreement also provided that defendant would advance payment for all costs, subject to reimbursement in the event of recovery. The retainer agreement contained no reference to a referral fee. In addition, Chasen testified that defendant never furnished him with any writing about a referral fee.

Plaintiff testified that on August 24, 2002, he sent Chasen a handwritten note advising him of the 25 percent referral fee and requesting his consent to that arrangement. On August 29, Chasen signed off on the note. This note was never given to defendant during the period she represented Chasen.

The note reads: “Dear Chase, [¶] As I told you, I had a conversation with Maro [defendant], where she agreed that, for my referring your case to her and because of the work which I will do on your case, she will pay to me 25% of any contingent fee she may receive in your case. This arrangement will not increase the total fees or expenses charged to you. Because there is a requirement that the client be fully informed of the division of fee agreement and consent in writing to such agreement, will you please sign a copy of the this letter and return it to me. Remember nothing is paid unless you recover money. [¶] Love, Dad.” Under it, plaintiff had written “Understood and agreed to” with a signature line, below which appeared “Chasen Manley” and “Aug., 2002.” Chasen signed above the signature line and inserted “29” on the date line.

Plaintiff explained that because he trusted defendant, he did not prepare a written referral fee agreement for them to sign. He trusted her because she was an attorney, a long-time friend of his former wife and someone who had often expressed affection for Chasen. In addition, plaintiff did not prepare a writing because he “[h]ad no idea” if defendant would win, lose or settle the case and what the recovery would be, if any.

According to plaintiff, he assisted defendant with trial preparation by reviewing the pleadings, making suggestions for discovery to be propounded, helping prepare discovery responses, reviewing deposition testimony, locating witnesses, and developing strategy for mediation, settlement conference and trial. In addition, he covered some expenses, including payment of $7,500 to a trial consultant, after defendant told him that “since [he] was getting a referral fee, [he] should take the burden of paying some of the expenses which would not be recovered if there wasn’t a judgment.”

Chasen’s lawsuit went to trial. Chasen obtained a verdict in excess of $3 million. Primary insurance coverage was only $1 million. Thereafter, settlement discussions commenced with the primary insurer and the reinsurer. The matter settled in July 2004 for $2.2 million. Defendant’s 40 percent contingency fee was $880,000.

Defendant furnished Chasen with a costs/disbursement sheet in late July. The sheet contained no reference to any referral fee. Chasen never raised that omission with defendant. On August 6, Chasen signed the sheet and received his share of the settlement proceeds (60 percent minus costs advanced).

On July 27, defendant provided plaintiff with the costs/disbursement sheet. Plaintiff saw that it included no referral fee. Although plaintiff had a telephone conversation with defendant soon thereafter, plaintiff said nothing about that omission. Instead, plaintiff prepared a letter, dated September 15, for Chasen’s signature to be sent to defendant acknowledging the referral fee and consenting to disbursal of the fee to plaintiff. After Chasen signed that letter, plaintiff sent it along with a cover letter, dated October 5 to defendant. Plaintiff’s cover letter read: “Pursuant to our agreement when Chasen Manley was referred to you, please send me the agreed twenty five (25%) percent of the $880,000 fee for the referral and the work I did in [the case]. I enclose Chasen’s written consent as required by Rule 2-200 [see fn. 1, ante].)” Plaintiff conceded that his October 5 letter was the first time he provided defendant with any written documentation about the alleged referral agreement writing.

Chasen’s letter reads: “As you previously requested of me, this letter confirms that I agreed the contingent attorney fee would be split seventy-five (75%) percent to you for the work and twenty-five (25%) to [plaintiff] Marshall Manley for the referral and his work on the lawsuit I brought against Johnny Foxx’s and Reiner Beck. As you explained to me before, if and when we got a recovery in order for you to pay the 25% to Marshall you needed my written consent. This letter is my consent. I understand that this fee-sharing arrangement has not increased and will not increase the total fee charged.”

Defendant quickly replied to the October 5 letter. On October 12, she wrote Chasen and denied the existence of any agreement to pay plaintiff a referral fee. Thereafter, plaintiff never contacted defendant to discuss the disputed referral fee.

Defendant’s letter reads: “Dear Chase: [¶] I am in receipt of a letter from your father, dated October 5, 2004, wherein he claims that he had an agreement with my firm to share the firm’s attorney’s fees with respect to your case. Further, a copy of a letter dated September 10 or 15, 2004 from you claimed to have been sent to me was enclosed in the envelope containing your father’s letter. There is an overwhelming flaw in both of these letters; there was never an agreement to share the firm’s attorney’s fees with anyone. I am quite confident that you know this to be a fact. Further, I have never, as claimed by your letter of September 10 or 15, 2004 requested that you consent to such an agreement since there has never been such an agreement.”

3. The Defense Case

Defendant testified as follows. Tonya Manley, an old time friend, spoke to her about handling Chasen’s case. The three met to discuss the lawsuit. At different points, both Chasen and Tonya Manley asked defendant to reduce her fee. Defendant agreed to do so and reduced her fee as reflected on the retainer agreement signed by Chasen, that is, from 50 percent to 40 percent of any recovery obtained after mediation or trial. Defendant never spoke with plaintiff before Chasen signed the retainer agreement. Although defendant has paid referral fees in the past, she never discussed a referral fee in this case with anyone, including plaintiff. Plaintiff never requested a referral fee and never offered to help on the case in return for a fee. Plaintiff never assisted her either before, during or after trial although he did pay her trial consultant. She first saw Chasen’s August 2002 note consenting to the referral agreement (see fn. 7, ante) four months after plaintiff had sued her.

Plaintiff had testified that he “never talked to [Chasen] about whether he had negotiated a reduction in the retainer agreement for [defendant]” and that he did not “know one way or another whether [defendant] reduced her fee as a favor to . . . Tonya Manley[.] [¶] . . . [He] never discussed [it with Tonya Manley].” Plaintiff did not know why the retainer agreement between Chasen and defendant had been modified to reflect lower than usual contingency fee rates.

A 50 percent contingency fee on the post-trial $2.2 million settlement would have been $1.1 million. Because defendant reduced her fee to 40 percent, she instead received $880,000. The difference between $1.1 million and $880,000 is $220,000. Thus, defendant’s reduction of her contingency fee resulted in Chasen receiving an additional $220,000 for his recovery, the exact amount plaintiff claims defendant owed him.

Pursuant to plaintiff’s request, defendant furnished him with the costs/disbursement sheet. Other than noting a minor mathematical error which she corrected, plaintiff raised no objection to the document, including the omission of any referral fee.

Defendant presented an expert witness, Stanley Jacobs. Jacobs, an experienced personal injury attorney, has presented seminars to attorneys about the handling of referral fees. Jacobs testified that the custom and practice among personal injury attorneys is to give referral fees. The attorneys negotiate the amount of the referral fee, the only limitation being that the referral fee cannot result in a higher fee to the client. Over plaintiff’s objection, Jacobs testified that “the custom and practice is to always have it [the referral fee] in writing . . ., make sure the writing is authored, is originated from the lawyer who has to pay the referral fee. [¶] And that writing is either in the retainer agreement itself and/or it’s a side letter which is signed by the client acknowledging that there is a referral fee and the amount of it and signed by the lawyer who is going to receive the referral fee.”

Pursuant to plaintiff’s objection, the court struck Jacobs’s testimony about his own procedure of handling referral fees. In addition, the court did not permit Jacobs to give his opinion as to whether a referral agreement had been formed in this case. At sidebar, the court explained to counsel that it was for the jury to determine the ultimate fact of contract formation.

Jacobs had testified: “I have never in all my practice ever agreed to an oral attorneys’ fee.” The court struck the testimony and explained to the jury: “[A]n expert witness may testify with regard to the custom and practice in the community or in a state, for example. But what the individual does themselves is not necessarily the standard. [¶] The standard is what is the standard in the community.”

On cross-examination, plaintiff asked Jacobs about the percentage of referral fees that are oral. Jacobs replied: “I have discussed this with lawyers throughout the state for many, many years. I have never heard of an oral referral agreement. Never. [¶] . . . It would be a terrible business to do such a thing.” But Jacobs did concede that oral referral agreements were valid and enforceable as long as the client had given written consent to the arrangement. Jacobs opined that the handwritten note signed by Chasen on August 29, 2002 (see fn. 7, ante) would satisfy that requirement.

Lastly, Molly Murphy testified for the defense. She had worked as a trial consultant with defendant on Chasen’s case. Murphy testified that plaintiff did not assist in trial preparation, jury selection, or development of trial strategy. According to her, plaintiff gave no assistance to the prosecution of the matter. At one point during the trial, plaintiff told Murphy that “he was very upset” that Tonya Manley had referred the case to defendant “because this case was out of [her] league.” Plaintiff also made numerous comments “that he wasn’t happy with [defendant’s] trial strategy [and] didn’t think she was going in the direction that he thought was the right way to go.”

4. The Jury Instructions

The court submitted the pattern instructions about formation and breach of contract. In addition, it instructed that oral contracts are valid. Two instructions explained: “Contracts may be written or oral. Oral contracts are just as valid as written contracts” and “An agreement between a member of the State Bar and a lawyer to share fees need not be in writing. It may be oral.” As to the validity of a referral agreement, the court instructed that the client must consent in writing to the referral fee agreement; that either lawyer who is party to the referral fee agreement may provide notice to the client of the fee splitting agreement and obtain the client’s written consent; and that the client’s written consent can be obtained at any time before the referral fee is disbursed. Lastly, it instructed the jury that “[t]he portion of a contingency fee that is shared with another lawyer is not a disbursement or cost incurred in connection with the prosecution of the client’s claim. The portion of the contingency fee that is shared with another lawyer does not affect the contingency fee charged to a client or the client’s recovery.”

5. Closing Argument

Plaintiff’s attorney argued that the existence of the oral referral agreement was proven by the testimony of three individuals: plaintiff, Chasen, and Tonya Manley. He urged that the handwritten August 29, 2002 note, prepared by plaintiff and signed by Chasen (see fn. 7, ante) constituted a “contemporaneous written confirmation of the referral fee agreement” and the September 15, 2004 letter, also prepared by plaintiff and signed by Chasen (see fn. 8, ante) constituted Chasen’s consent to the fee-splitting arrangement. Stating that although he suspected that plaintiff now “wishes he’d had this [agreement with defendant] written,” counsel relied upon the jury instructions and Jacobs’ testimony to remind the jury that an oral referral agreement is valid and enforceable. He noted that while Jacobs had testified that the custom and practice is for referral feed agreements to be reduced to writing, defendant, who acknowledged that she paid other referral fees, had not testified that she always reduces those agreements to writing.

Defense counsel’s closing argument urged that plaintiff’s theory of an oral referral agreement was simply not credible for multiple reasons. He relied heavily upon plaintiff’s failure to ever forward to defendant the handwritten August 29, 2002 note in which Chasen consented to the referral fee agreement; plaintiff’s failure to object that the costs/disbursement sheet he received on July 27, 2004 did not include the referral fee; and plaintiff’s failure to seek a referral fee from either the law firm which first represented Chasen or Browne Greene’s firm to which Chasen spoke after he became dissatisfied with the first firm. Defense counsel made only one brief reference to Jacobs’ testimony. He stated that Jacobs had testified “this is not the way referrals are done. This is not the way they get documented. This is the problem that gets created when someone can come into court, file a lawsuit and say, hey, I had an oral agreement.” He urged the jury to use their “common sense” to evaluate the evidence and to find that plaintiff had failed to discharge his burden of proving the existence of the oral referral agreement.

He stated: “But you know the conduct of the parties will always tell you . . . who’s the truthful person and who’s the liar. Somebody is here. I know that’s hard. That’s harsh words to suggest. But, you know, they’re talking about an oral contract. . . And you gotta look at the conduct.”

Plaintiff’s rebuttal argument urged that he had been reasonable in relying upon defendant’s oral promise to pay the referral fee because of her long-standing relationship with Tonya Manley and her prior representations of both Tonya Manley and Chasen. Counsel again noted that while Jacobs had testified it was the custom and practice to reduce such agreements to writing, defendant had “not provided any evidence or any testimony from anyone that she complies with any of [those] customs or practices.” Counsel also relied upon the jury instruction that a referral fee is not a disbursement to urge that there was no significance to plaintiff’s failure to object to its absence in the costs/disbursement sheet.

The jury returned with a special verdict, finding that plaintiff and defendant had not entered into a contract.



Plaintiff first contends that the trial court abused its discretion in denying his pretrial motion to exclude any testimony by Jacobs, the defense expert witness.

1. Factual Background

Prior to trial, defendant timely designated Jacobs as an expert witness. A declaration from defense counsel explained that Jacobs would testify as “to the standard of care of attorneys relating to compliance with [the controlling rules and principles] concerning: . . . (d) fee division between and among attorneys . . . . [Jacobs would] testify as to all aspects of attorney-client relationships, duties, rights and obligations.” Plaintiff chose not to depose Jacobs.

Plaintiff’s motion in limine to exclude Jacobs’ testimony raised two grounds. Citing Code of Civil Procedure section 2034.260, plaintiff first urged that defendant’s notice of designation was “so vague as to be meaningless. It provides no notice of the substance of the testimony.” The other ground (inconsistently) conceded that plaintiff recognized that defendant intended Jacobs to testify about the custom and practice regarding referral fee agreements but urged that testimony had “no relevancy in this litigation.” Plaintiff argued that “this case [was] nothing more than a simple factual dispute [whether the parties entered into a referral agreement] that does not require any special expertise or knowledge to understand.”

Plaintiff’s motion stated: “During pretrial discovery in this litigation [defendant] disclosed she intends to call [an] expert witness to testify about custom, practice and standard of care.”

Defendant’s opposition explained: “[Jacobs] will testify that these [referral fee agreements] are almost always written contracts, and the lawyer who accepts the case acknowledges the fee and its measure in writing. Even if not required by law, the custom and practice is relevant circumstantial evidence tending to prove that where such practices cannot be shown, it is unlikely any agreement existed. The custom and practice of referral fees is to leave a paper trail, and none exists.”

The trial court denied plaintiff’s motion, ruling that Jacobs could testify about the custom and practice regarding referral fees.

2. Discussion

Plaintiff first urges that the trial court abused its discretion in permitting Jacobs to testify because defendant had failed to provide “a narrative statement . . . that the general substance of his testimony would be that the custom and practice in Los Angeles was for referral fee arrangements to be in writing.” We are not persuaded.

The purpose of section 2034.260 of the Code of Civil Procedure is to give the opposing party fair notice of the subject areas the expert will address at trial. In that way, the party can decide whether to depose the expert and can adequately prepare for cross-examination at trial of the expert. (Bonds v. Roy (1999) 20 Cal.4th 140, 146-147.) Here, one of the topics noted in defendant’s designation of Jacobs was “fee division” agreements. Further, plaintiff’s motion in limine to exclude Jacobs’ testimony conceded that he knew its purpose: to testify about the custom and practice regarding referral fee agreements. Lastly, plaintiff’s motion in limine never urged that the notice of designation impaired his ability to prepare for trial. Based upon all of these circumstances, we conclude that to the extent the motion in limine claimed the defense designation of Jacobs was insufficient, the trial court did not abuse its discretion in denying the motion.

In relevant part, subdivision (c) of section 2034.260 provides that a designation of an expert witness “shall contain: [¶] . . . [¶] (2) A brief narrative statement of the general substance of the testimony that the expert is expected to give.”

Whether the trial court should have granted the motion in limine because Jacobs’ testimony was irrelevant is an issue we address below.


Plaintiff next contends that the trial court erred when it permitted Jacobs to testify about custom and practice because such evidence “is never relevant to prove whether an agreement was or was not made.” (Emphasis deleted.) On that point, plaintiff is correct.

The general principle is that evidence of custom and usage in a trade can be offered to interpret, but not to create, contractual terms. (1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 755, pp. 846-848.) Consequently, a plaintiff may not offer evidence of custom and usage to prove a contract was made when the defense denies the existence of an agreement. (Rabin v. Craft (1950) 100 Cal.App.2d 808, 811; Ghiselin v. John Hancock etc. Ins. Co. (1947) 79 Cal.App.2d 438, 441; Hanley v. Marsh & McLennan, etc., Ltd. (1941) 46 Cal.App.2d 787, 798.) Nor may a plaintiff offer evidence of custom and usage to prove that “his version of the terms of the contract was more probable than defendants’ [version.]” (Williams v. Elliott (1954) 127 Cal.App.2d 357, 364-365.)

Particularly relevant to this case is the rule that a defendant may not offer evidence of custom and usage to prove that a contract was not formed. (Dutton D. Co. v. United States F. & G. Co. (1934) 136 Cal.App. 574 (Dutton). In Dutton, the plaintiff alleged that the defendant had orally agreed to obtain workers’ compensation insurance for it on an annual basis. When the defendant failed to obtain the insurance one year, the plaintiff sued for breach of contract and prevailed following a jury trial. (Id. at pp. 576-578.) On appeal, the defense contended the trial court had erred in refusing to permit it “to introduce evidence to show that the custom and usage in the insurance world was not to enter into oral contracts of compensation insurance.” (Id. at p. 578.) The defense urged “that such evidence would have created a circumstance tending to show that the officers of the defendant corporation never made the alleged contract.” (Ibid.) The appellate court rejected the contention. It held that because evidence of custom is admissible only to interpret a contract, the defendant’s evidence was not admissible to establish no contract had been formed. (Id. at pp. 578-579.)

Dutton’s holding suggests that it was error to permit Jacobs to testify as an expert that the custom and practice in the (personal injury) legal community is to reduce referral fee agreements to writing. As defendant conceded in her opposition to plaintiff’s motion in limine to bar Jacobs’ testimony, she offered the evidence to establish that because the custom and practice is to put such agreements into writing, no referral agreement had been formed in this case since no writing reflecting the agreement existed.

However, erroneous admission of evidence does not require a reversal unless the error “resulted in a miscarriage of justice.” (Evid. Code, § 353, subd. (b).) “In civil cases, a miscarriage of justice should be declared only when the reviewing court, after an examination of the entire cause, including the evidence, is of the opinion that it is reasonably probable that a result more favorable to the appealing party [here, plaintiff] would have been reached in the absence of the error. [Citations.]” (O’Hearn v. Hillcrest Gym & Fitness Center, Inc. (2004) 115 Cal.App.4th 491, 500.) “Prejudice from error is never presumed but must be affirmatively demonstrated by the appellant. [Citations.] Whether an error is reversible depends on the facts and circumstances of the particular case under review. [Citations.]” (Brokopp v. Ford Motor Co. (1977) 71 Cal.App.3d 841, 853-854.)

Considering the entire record—the evidence, the jury instructions and the closing arguments—we conclude that it is not reasonably probable that absent Jacobs’ testimony, plaintiff would have prevailed. We explain.

Plaintiff correctly notes that the trial was essentially a credibility contest. Although three witnesses (plaintiff, plaintiff’s son Chasen, and plaintiff’s former wife Tonya Manley) testified that defendant stated that she agreed to pay a referral fee to plaintiff, the bias of each witness was self-evident, from a financial stake in the outcome to a familial relationship. Defendant’s testimony denied any such contract existed. The jury implicitly resolved the credibility dispute in defendant’s favor when it found no contract had been formed. Hence, the issue becomes whether Jacobs’ testimony tilted the balance against plaintiff. We believe it did not for several reasons.

Jacobs’ testimony about custom and practice was quite brief. He simply testified that the custom and practice is to reduce referral fee agreements to writing. The court did not permit Jacobs to testify about his own practice or to give his opinion on the ultimate issue whether the parties had formed a contract. Thus, plaintiff errs when he now claims that Jacobs testified “if there was no writing there was no agreement.” Furthermore, on cross-examination, Jacobs gave testimony favorable to plaintiff’s case: oral referral agreements are enforceable and Chasen’s August 2002 note constituted a valid consent to the fee-splitting arrangement.

In addition, the court never instructed the jury that the evidence of practice and custom could be used circumstantially to establish no contract had been formed. Instead, it correctly instructed on the general principle that an oral contract is valid and the specific principle that an oral referral agreement between lawyers is valid and enforceable.

Plaintiff’s assertion that that defendant’s “closing argument [was] based on Jacobs’ testimony” is not supported by the record. Defense counsel made only one reference to Jacobs’ testimony (which we have set forth in toto above). Significantly, defense counsel’s closing argument never asked the jury to draw the impermissible inference that given the practice and custom of reducing referral fee agreements to writing, it could reasonably infer no contract existed here because there was no writing. And plaintiff’s closing argument relied upon the favorable portions of Jacobs’ testimony (e.g., an oral referral agreement is valid) to argue that the absence of a writing did not preclude recovery. In addition, plaintiff attacked the relevancy of Jacobs’ testimony by noting that defendant had failed to produce any evidence that she complied with the custom and practice of entering only into written referral agreements.

Lastly, except for the testimony from plaintiff and his family that defendant had agreed to pay the referral fee, the evidence (direct and circumstantial) did not support plaintiff’s theory of the case. Everyone, including plaintiff’s witnesses, agreed that it was Tonya Manley’s reference, not plaintiff’s, that induced Chasen to seek out defendant to handle his case. Hence, it would not be reasonable to believe that defendant would agree to pay plaintiff a referral fee, particularly given plaintiff’s concession that he had not sought a referral fee from the prior firms Chasen had hired or consulted. Further, the modification to the written retainer agreement established that defendant had reduced her contingency fee to handle Chasen’s case from 40 percent to 50 percent, netting $220,000 more in recovery for Chasen. (See fn. 11, ante.) The failure of either plaintiff or Chasen to explain that modification undermined their claim that defendant had also agreed to pay defendant a referral fee. And the fact that defendant never received the handwritten document establishing Chasen’s consent to the fee-splitting arrangement until after plaintiff had sued her cast suspicion on plaintiff’s claim that it was actually created in 2002.

We therefore conclude that it is not reasonably probable that a result more favorable to plaintiff (a jury finding he had entered into an oral referral fee agreement) would have been reached in the absence of Jacobs’ testimony. There being no miscarriage of justice, the trial court’s ruling permitting Jacobs to testify about custom and practice does not require reversal of the judgment.


Lastly, plaintiff contends that the trial court erred in sustaining a defense objection to one question he posed to defendant during cross-examination. We find no error.

1. Factual Background

At the close end of plaintiff’s cross-examination of defendant, plaintiff’s attorney marked for identification four cancelled checks. The following exchange then occurred:

“Q. [Plaintiff’s Counsel]: Miss Burunsuzyan, you are familiar with what Exhibits 12 through 15 are?

“A. Yes, I am.

“Q. These are copies of the fronts and backs of referral fee checks that you have paid to

“[Defense Attorney]: Your Honor, we object. This is all irrelevant. . . .

“(The following proceedings were held at sidebar:)

“THE COURT: What are these, sir?

“[Plaintiff’s Attorney]: During discovery, and it’s in her deposition, I can find it if we need to, but during discovery, we asked that she state to whom she had paid referral fees and for what cases. And she refused on the ground of attorney-client privilege.

“We made a motion [and defendant was] ordered [to] produce all documents relating to the payment of referral fees.

“The only documents that were produced were these checks. No client consents and no referral – written referral fee agreements were produced.


“[Plaintiff’s Attorney]: So if there’s any claim by her that – and I haven’t heard any such claim, but if there’s any claim by her that she always and inevitably and invariably gets a signed referral fee.

“THE COURT: There’s been no such testimony. Objection sustained.

“[Plaintiff’s Attorney]: I take it, then, that I have permission to reopen if there is any such testimony?

“THE COURT: You can ask for permission and [it] may very well be granted.

“[Plaintiff’s Attorney]: Thank you, Your Honor.” (Italics added.)

At that point, defendant concluded her testimony. Thereafter, plaintiff offered no evidence (in any form) that defendant claimed to always reduce referral fee agreements to writing.

1. Discussion

Plaintiff now contends that the trial court refused to allow him “to question [defendant] whether she complied with her own claimed custom and practice that fee-sharing agreements are always in writing.” We disagree.

To the extent that plaintiff is claiming that the trial court limited his ability to cross-examine defendant about whether she complied with the custom and practice testified to by Jacobs of putting referral fee agreements into writing, the record is to the contrary. At the beginning of cross-examination, plaintiff elicited defendant’s concession that she had paid referral fees in the past. However, plaintiff asked no follow up questions to determine whether those payments were based upon oral or written referral fee agreements. Consequently, the record does not support his claim that the trial court improperly limited his ability to cross-examine on that issue.

At deposition, defendant had testified that she always reduced referral fee agreements to writing. Neither party referred to this testimony during trial.

To the extent that plaintiff is claiming that the trial court erred in sustaining the defense objection to the question about the four checks paying referral fees, we find no error. After defense counsel raised a relevancy objection, plaintiff properly conceded that defendant had not testified that she always reduced fee referral agreements to writing. The trial court stated that if evidence were introduced to that effect, it would reconsider allowing plaintiff to question defendant about whether there were any written referral agreements to support the referral payments evidenced by the four checks. But thereafter, plaintiff failed to produce such evidence. Having failed to establish the necessary predicate for the question—a predicate plaintiff conceded was appropriate—plaintiff cannot now complain that any error occurred.


The judgment is affirmed. Respondents to recover costs on appeal.

At trial, plaintiff presented a photocopy of the note. He claimed he could not find the original.

Summaries of

Manley v. Burunsuzyan

California Court of Appeals, Second District, Fourth Division
Jul 23, 2008
No. B196369 (Cal. Ct. App. Jul. 23, 2008)
Case details for

Manley v. Burunsuzyan

Case Details

Full title:MARSHALL MANLEY, Plaintiff and Appellant, v. MARO BURUNSUZYAN, et al.…

Court:California Court of Appeals, Second District, Fourth Division

Date published: Jul 23, 2008


No. B196369 (Cal. Ct. App. Jul. 23, 2008)