Kull + Hall v. Karimi





















Filed 5/15/13 Kull + Hall v. Karimi CA2/4















NOT TO BE PUBLISHED IN THE
OFFICIAL REPORTS





California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.









IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA



SECOND APPELLATE DISTRICT



DIVISION FOUR












>

KULL + HALL LLP et al., Plaintiffs, Cross-defendants, and Respondents, v. MICHAEL A. KARIMI, Defendant, Cross-complainant, and Appellant.

B236951 (Los Angeles County Super. Ct. No. SC105372)

APPEAL
from a judgment of the Superior
Court of href="http://www.adrservices.org/neutrals/frederick-mandabach.php">Los Angeles
County, Norman P. Tarle, Judge. Affirmed as modified.

Ferguson
Case Orr Paterson and Wendy C. Lascher for Defendant, Cross-complainant, and
Appellant.

Carlsmith
Ball and Albert H. Ebright for Plaintiffs, Cross-defendants, and Respondents.

>

Appellant
Michael A. Karimi appeals from the judgment entered in favor of respondents
Kull + Hull LLP (K+H) and Robert F. Kull in an action against Karimi for unpaid
legal fees. Karimi, who had filed a
cross-complaint for breach of fiduciary
duty, legal malpractice, unjust enrichment, and other claims, contends the
jury’s favorable finding on the breach of fiduciary duty claim is fatally
inconsistent with its unfavorable finding on the legal malpractice cause of
action and mandates a new trial. He also
contends the trial court’s award of prejudgment interest to K+H was
improper. We conclude the findings on
the cross-complaint are not inconsistent, but that the award of prejudgment
interest must be stricken.



>BACKGROUND

>

Kull and Karimi had a business relationship that
preceded the events of this case. They
first met sometime after 1978 when Karimi’s company, Trans Telecom, installed a
telephone system in Kull’s home. A few
years later, Kull began representing Karimi and Trans Telecom in various legal
matters. Trans Telecom installed
telephone systems in Kull’s law offices and a restaurant that he partially
owned.

This
fee dispute primarily involves the lawsuit filed by Karimi against his parents
and siblings in 2007 (the Karimi action).href="#_ftn1" name="_ftnref1" title="">^[1] When Kull drafted the complaint in the >Karimi action, he was a partner at
Carlsmith Ball LLP (Carlsmith). However,
Kull left to form his own firm, K+H, while the Karimi action was pending and he brought the Karimi action with him to the new firm. Although Karimi never signed K+H’s proposed
fee agreement for the Karimi action,
Kull continued to represent him in that action.

In
July 2009, Karimi accepted a $20,000 settlement offer from his parents and
siblings in the Karimi action shortly
before the second trial date. On August 20, 2009, K+H sent Karimi a final invoice for $74,740.87 that
Karimi refused to pay. The final invoice
included charges of $56,322.34 for the Karimi
action and other sums for two other matters: $18,202.53 for the RJG case, and $216 for the
Trans Telecom case.href="#_ftn2"
name="_ftnref2" title="">^[2]

In
October 2009, K+H and Kull filed the present action against Karimi for attorney
fees, promissory fraud, and fraudulent concealment. In April 2010, Karimi filed a cross-complaint
for breach of fiduciary duty, legal malpractice, unjust enrichment, and other
claims.

Based
on a quantum meruit theory, the jury found that K+H was entitled to attorney
fees in two matters: (1) $56,322.34 in
attorney fees plus $1,059 in court reporter fees for the Karimi action; and (2) $18,202.53 in attorney fees for the RJG
case. To those fees, which totaled
$75,583, the trial court added $216 in stipulated attorney fees for the Trans
Telecom case, which resulted in a total fee award of $75,799. The jury found for Karimi on his cross-claims
for breach of fiduciary duty and unjust
enrichment, for which he was awarded $15,000 and $2,000, respectively.

Karimi
moved for judgment notwithstanding the verdict (JNOV) and new trial. He argued that because the jury’s finding of
breach of fiduciary duty was based on Kull’s failure to inform him of a
$150,000 settlement offer in the Karimi action, his damages for breach of
fiduciary duty should have been $130,000 (the difference between the $150,000
settlement offer that allegedly was not communicated and the $20,000 offer that
was accepted) rather than $15,000.

Kull
and K+H sought to set aside Karimi’s $15,000 damages award in their motion for
JNOV. They argued that the finding of
liability for breach of fiduciary duty was inconsistent with the finding of no
liability for malpractice. They sought
to set aside the $15,000 damages award on the cross-complaint as inconsistent
with the jury’s rejection of the malpractice claim.

The
trial court denied both motions for JNOV and Karimi’s motion for new
trial. It stated that although the jury
had no obligation to explain its finding of breach of fiduciary duty, Karimi’s
testimony had provided a “host of” reasons, “many of which are listed in the
cross-complaint.”href="#_ftn3"
name="_ftnref3" title="">^[3] The trial court noted that “[m]any of the
acts and omissions listed in the cross-complaint and testified to at trial by
the cross-complainant, were not quantified during the testimony or trial
arguments, and it was up to the jury to determine the monetary value of any
deficiency once they determined that there was a breach of a fiduciary duty. A reasonable interpretation of the jury’s
decision, supported by substantial evidence, reflects their determination that
there were one or more breaches that were relatively minor, amounting to a
value of $15,000.”

The
trial court granted K+H’s motion for prejudgment interest from August 20, 2009, the date of the final invoice, to September 1, 2011, the date of the hearing on the motions for JNOV and
new trial. After adding $15,344.38 in
prejudgment interest to the $75,799 fee award, which resulted in a total fee
award of $91,143.38, the court deducted the $15,000 award for breach of
fiduciary duty against Kull and the $2,000 award for unjust enrichment against
K+H, which resulted in a net judgment, exclusive of costs, of $74,143.38.



>DISCUSSION

>

I. The Liability Findings Are Not
Inconsistent

Karimi argues on appeal that the liability findings on
the cross-complaint are inconsistent because he “did not ask the jury to award
damages for any breach of fiduciary duty other than failure to convey the
settlement offer.” He contends that
“[e]ven where verdicts are supported by substantial evidence, if they are
inconsistent they cannot stand, because a factfinder may not make inconsistent
determinations of fact based on the same evidence. . . . This case is not about whether there is
sufficient evidence to support the verdict.
It is about the jury’s apparent misunderstanding of the issues before
it, evidenced by its conflicting liability findings.”

In
order to determine what issues were before the jury, we begin by examining the
relevant jury instructions. The jury was
instructed in relevant part that “[a]n attorney owes what is known as a
fiduciary duty to his client. A
fiduciary duty imposes on an attorney a duty to act with the utmost good faith
in the best interest of his client.
[¶] Rule 3-500 [of the California
Rules of Professional Conduct] provides a member shall keep a client reasonably
informed about significant developments relating to the employment or
representation, including promptly complying with reasonable requests for
information and copies of significant documents when necessary to keep the
client so informed. [¶] A settlement offer, whether written or oral,
by the opposing parties in a lawsuit is a significant development which a
lawyer must promptly communicate to the client.
Only the client can determine whether and how to respond to a settlement
offer.”

The
jury was further instructed: “In
California, attorneys are obligated to comply with the California Rules of
Professional Conduct. These rules, among
other things, define certain fiduciary duties of lawyers. A violation of such a rule which is the
proximate result of harm to the client is a breach of fiduciary duty. [¶]
Michael Karimi claims he was harmed because Mr. Kull breached a
fiduciary duty. To establish this claim,
Michael Karimi must prov[]e all the following:
[¶] One, that Mr. Kull breached a
fiduciary duty. [¶] Two, that Michael Karimi was harmed. [¶]
Three, that Mr. Kull’s conduct was a substantial factor in causing
Michael Karimi’s harm.”

As to
damages, the jury was instructed: “If
you decide that Mr. Karimi has proved his claim against Robert Kull, you also
must decide how much money will reasonably compensate Mr. Karimi for the harm. This compensation is called damages. The amount of damages must include an award
for each item of harm that was caused by Robert Kull’s wrongful conduct, even
if the particular harm could not have been anticipated. [¶]
Mr. Karimi does not have to prove the exact amount of damages that will
provide reasonable compensation for the harm; however, you must not speculate
or guess in awarding damages.”

As
the above instructions make clear, the jury was asked to decide whether Kull’s
alleged failure to inform him of his brother’s $150,000 settlement offer was a
breach of fiduciary duty. However, this
does not mean that the liability findings are inconsistent. As the trial court correctly pointed out in its
denial of Karimi’s motion for JNOV and new trial, there was evidence to support
the breach of fiduciary duty finding that had nothing to do with the purported
settlement offer.

Karimi
testified, for example, that Kull failed to respond to his requests for
detailed billing statements until two weeks before the trial date in this
case. He testified that he had raised
this issue while Kull was at Carlsmith, and again after Kull moved to K+H. Nevertheless, Kull did not provide the
requested billing information until shortly before this trial began: “Q Did
you complain? [¶] A Of
course. [¶] Q Did
Mr. Kull, during the time he represented you, provide greater detail in those
bills? [¶] A When
he was representing, no, he didn’t.
[¶] Q At some point did he break the bills down,
putting in time segments for individual entries? [¶]
A Yes, he did. [¶] Q When did he do that? [¶]
A I think two weeks ago, three
weeks ago. [¶] Q Just
before the trial? [¶] A
Yes. [¶] Q Did
you object to some of Kull + Hall’s charges and services? [¶]
A I did have some objections, but
I wanted for him to give me the detail billing so I can figure how much I
should object to.”

Karimi
also described an instance when he had asked Kull to respond to his family’s
expert witness designation, but Kull had ignored his request until the time had
expired, which added to his litigation expenses: “Q Did
you raise an issue about a hearing Bob Kull failed to appear at? [¶]
A Oh, yes. [¶]
. . . [¶] Q
. . . Was there an expert witness who you wanted to
disqualify? [¶] A
Yes. [¶] . . . [¶]
. . . He filed — he didn’t object to that expert witness, and
then the other side said your time has expired.
Then he had to file a motion for reconsideration, I guess. [¶]
Q Did you object to being charged
for that work? [¶] A
Yes. [¶] Q Why
did you think it was unfair for you to have to pay for that work? [¶] A Well, few reasons. Number one, when he send me the designation,
I shoot him an email saying, hey, this guy, you need to object because we
consulted with him. He has a lot of our
information. Practically same day. He ignored it. He didn’t pay attention. I even told him couple more times you need to
object. And then, eventually, time
passed and he said I need to file a motion.
I go, it’s — you are doing it on my dime. You got to do it right. Now you got to do double work. It didn’t make sense.”

When
the breach of fiduciary duty finding is viewed in light of Karimi’s testimony
that Kull had ignored his requests for detailed billing information and for a
timely response to his family’s expert witness designation, it is clear that
Kull’s liability for breach of fiduciary duty could reasonably have been based
on conduct unrelated to the disputed settlement offer. As a result, we reject Karimi’s contention
that the liability findings on the cross-complaint were fatally inconsistent.



II. The Prejudgment Interest Award Was
Improper

Business and Professions Code
section 6148 provides that attorney fee agreements in excess of $1,000 must be
in writing. Because there was no written
fee agreement for the Karimi action,
K+H was forced to rely on a quantum meruit theory to recover its fees.

Karimi
contends that prejudgment interest on K+H’s quantum meruit award was improper
because the amount of attorney fees was never fixed by a written agreement and
remained uncertain until the jury rendered its verdict. K+H responds that “recovery of interest on the quantum meruit
cause of action is permitted because the K+H claim was for a sum certain.”

The
award of prejudgment interest is governed by section 3287, subdivision (a) of
the Civil Code (section 3287), which provides:
“Every person who is entitled to
recover damages certain, or capable of being made certain by calculation, and
the right to recover which is vested in him upon a particular day, is entitled
also to recover interest thereon from that day, except during such time as the
debtor is prevented by law, or by the act of the creditor from paying the
debt. This section is applicable to
recovery of damages and interest from any such debtor, including the state or
any county, city, city and county, municipal corporation, public district,
public agency, or any political subdivision of the state.”

Under section 3287, “if
the defendant does not know or cannot readily ascertain damages, it is
incumbent on the plaintiff to provide the defendant with some statement and
supporting data from which the defendant can make the necessary
determination.” (Levy-Zentner Co. v. Southern Pac. Transportation Co. (1977) 74
Cal.App.3d 762, 798.)

The evidence was undisputed that
Karimi had requested detailed billing information for fees that were not
covered by any written agreement.
According to Karimi’s testimony, the parties “never came to an
agreement” as to Kull’s hourly rate at K+H.
Karimi testified that Kull kept “changing the rates” from $380 to $350
to $300 to $275. Although Karimi had
sought written confirmation of the $275 hourly rate, he testified that he
“didn’t agree” to that rate, but simply wanted it in writing because Kull kept
“changing his rates.”

Without a written fee agreement
setting forth Kull’s hourly rate, K+H was forced to prove that its fees were
reasonable. It is unclear how Karimi
could be expected to know whether the fees set forth in the final billing statement
were reasonable when, according to his testimony, his requests for detailed
billing statements were ignored, his request to respond to his family’s expert
witness designation went unheeded until the time had expired, and Kull kept
changing his billing rate.

We find the court’s discussion of
section 3287 in Conderback, Inc. v. Standard Oil Co. (1966) 239
Cal.App.2d 664 (Conderback) to be
instructive: “Under this section
interest cannot be awarded prior to judgment when the amount of damages cannot be
ascertained except on conflicting evidence.
[Citations.] The rationale of
such rule is that where a defendant does not know what amount he owes and
cannot ascertain it except by accord or judicial process, he cannot be in
default for not paying it. [Citations.] However, when the exact sum of the
indebtedness is known or can be ascertained readily the reason suggested for
the denial of the interest does not exist.
[Citation.] If the amount owing
can be calculated and determined from statements rendered by the plaintiff to
the defendant and those statements are found to be true and correct, it is a
matter of mere calculation and prejudgment interest can be awarded. [Citation]”
(Id. at pp. 689-690.)

The court in Conderback further stated that Standard Oil “could not determine
what was owing until it had received from plaintiff some statement with
supporting data from which it could make the determination. Conderback argues that after it presented its
final bill in March 1963 it submitted its invoices, shop records and books to
Standard. We are not persuaded that
defendant was able to ascertain the exact amount due from this data, since
plaintiff, who was presumably familiar with both its own data and its own pricing
formula, arrived at several different results.
Indeed, as previously mentioned, Conderback’s principals, apparently
concluding that their previous efforts at billing had not achieved certitude,
as late as the latter part of January 1963 undertook a complete reauditing of
the entire project. In the course of the
reaudit, a Conderback accountant made a miscalculation resulting in a figure
$16,652.35 in excess of the amount subsequently admitted by Conderback as the
true amount. It is noteworthy that in
its original complaint Conderback prayed for general damages in the sum of
$139,256.92; in its amended complaint in the sum of $171,026.80; in its bill of
particulars in the same amount; and that finally at the trial in June 1964, it
amended its prayer to the sum of $154,374.45, for which a verdict was
returned. We do not believe that under
all the circumstances it can be said that the exact sum due Conderback could
have been readily ascertained by Standard.
We conclude that the allowance of interest prior to judgment was
improper.” (Conderback, supra,> 239 Cal.App.2d at pp. 690-691, fn.
omitted.)

Based
on the evidence in this case, we find that as in Conderback, the exact sum due K+H could not have been readily
ascertained by Karimi without a jury verdict.
Accordingly, we conclude that the award of prejudgment interest was
improper.

Finally,
we decline respondents’ invitation to award prejudgment interest pursuant to
section 3287, subdivision (b). That
subdivision was added in 1967 to allow an award of prejudgment interest, “but
only for a limited time period and only if the trial court finds it reasonable
in light of the factual circumstances of a particular case.” (Lewis
C. Nelson & Sons v. Clovis United Sch. Dist. (2001) 90 Cal.App.4th 64,
69.) Respondents cite no authority for
the proposition that we may exercise our discretion at this juncture where they
failed to ask the trial court to do so in the first instance.

DISPOSITION



> The award of prejudgment
interest is stricken from the judgment.
The judgment, as modified, is affirmed.
The parties are to bear their own costs
on appeal.



>NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS







SUZUKAWA,
J.



We concur:







EPSTEIN, P.
J.







WILLHITE,
J.