Hoey v. Reiffin





















Filed 2/22/13 Hoey v. Reiffin CA1/3

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>NOT TO BE PUBLISHED IN OFFICIAL REPORTS

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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opinion has not been certified for publication or ordered published for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



FIRST
APPELLATE DISTRICT



DIVISION
THREE




>

BEVERLY M. HOEY, Plaintiff and Respondent, v. MARTIN GARDNER REIFFIN et al., Defendants and Appellants.

A135591 (Alameda County Super. Ct. No. VG11564489)

Defendants
Martin Gardner Reiffin and Suzanne Reiffin appeal in href="http://www.mcmillanlaw.com/">propria persona from the judgment for
plaintiff, attorney Beverly M. Hoey who also appears in propria persona. Hoey sued to collect fees for preparing
trusts for the Reiffins’ property. The Reiffins
mainly reargue the evidence, claiming that it should have led to a lower fee
award. But “the burden [an appellant]
must bear in seeking to upset the trial court’s determination of reasonable
attorney fees is substantial” (Shannon v.
Northern Counties Title Ins. Co. (1969) 270 Cal.App.2d 686, 688), and the
Reiffins do not carry that burden with their factual arguments. The Reiffins’ legal arguments also lack
merit. We affirm.

I. BACKGROUND

Pursuant
to an attorney-client agreement executed on June 4, 2009, and introduced into
evidence as Exhibit A, the Reiffins retained Hoey to “amend and restate [their]
existing trust and . . . create a new special needs trust” for one of
their sons. The Reiffins told Hoey that
they wanted Mechanics Bank to be their successor trustee. The Reiffins paid a retainer of $2,250, and
agreed to pay Hoey a total of $4,500 for the work, plus fees of $400 per hour
for “[m]ajor revisions requested subsequent to your review appointment.”

The
Reiffins apprised Hoey of their assets in June or July of 2009, which included
rights for certain patents being litigated against Microsoft Corporation. Apart from the patents, Hoey estimated the
Reiffins’ assets to be worth $2.5 to $3 million “because of the losses,”
presumably due to the financial crisis of 2008.
Martin told Hoey that the contested patents might be worthless, but that
he was seeking $50 million for them, and had turned down an offer of $5
million. In light of the litigation,
Mechanics Bank was unwilling to serve as trustee of property involved in the
dispute, so, instead of a single trust with special needs provisions as
initially contemplated, two trusts were required, one for the patent rights
(the patent trust) and one for the rest of the Reiffins’ property (the
non-patent trust).

Hoey
wrote the Reiffins a letter dated August 6, 2009 (Exhibit K), asking for
their agreement to pay additional charges at her $400 per hour rate. Martin was gravely ill that summer, and Hoey
“recognized the urgency to complete your estate plan as quickly and as
effectively as possible.” Hoey
wrote: “I want to bring to your
attention that the costs of the modifications to your estate planning needs
have exceeded the flat fee boundaries of services rendered (>sic) an amendment and restatement (>sic) your existing Trust. As you are aware, the trust that we are
designing is anything but simple and, pursuant to your on-going instructions, I
am currently on my 5th draft thereof.
Additionally, we have had numerous, lengthy telephone conferences, and I
have engaged in several, lengthy telephone conferences with the proposed
successor trustee of your existing trust, Mechanics Bank. I have stopped working on other people’s
projects to complete yours, and I want to give you notice of these costs and I
would like assurances from you that you intend to honor your contract and pay
me for all of my services rendered on your behalf.”

The
Reiffins wrote back on August 7 (Exhibit L), stating: “We are both cognizant of the fact that due
to Mechanics Bank’s requirements regarding the patents and the named charities,
updating the Reiffin Family Trust has become more complicated. [¶] . . . [¶] ’There is
a misunderstanding about the patents (‘603, ‘604 and prior parent (>sic) applications filed in 1982 and
1985. [¶] ’The present status
provides indispensable advantages in the litigation and cannot be changed. The present status is that the Reiffin Family
Trust received by assignment on July 5, 2008 title to the patents and
applications, with the right to damages for all infringements this date and
thereafter. The right to damages for all
infringements occurring prior to July 5, 2008 was not assigned and remains
with the assignor patentee Martin G. Reiffin.
[¶] ’This status should be set forth in the statement of trust
assets. [¶] ’To satisfy the
Mechanics Bank you may add additional provisions absolving the Bank of any duty
or liability in all civil actions relating to these patents after the demise of
both Martin and Suzanne. . . . [¶] . . . ’ [¶]
We agree to your ‘extra service’ billing and request an itemized account for
same.”

At
trial, Suzanne described the additional work required of Hoey as
“[m]inimal.” She testified: “[Hoey] had already updated the non-patent
trust. All she had to do was take out
the patent part of it and do another trust the same as the first one, but with
the change with patents instead of the other assets and change the
trustee.” The court did not believe this
testimony.

In
its “Verdict Granting Judgment to Plaintiff” filed April 5, 2012,href="#_ftn1" name="_ftnref1" title="">[1]
the court found: “The defendants offered
evidence that the contract, as modified, did not include an agreement for an
hourly fee on any but a limited scope of work/issues, however the substance of
Exhibit ‘L’ does not support such an interpretation of the agreement. Further, the testamentary evidence of such a
limited agreement did not persuade the court that the agreement to pay for
services on an hourly fee basis was so limited.”

Hoey
worked throughout August 2009 preparing the trusts, which were signed on
August 28. The non-patent trust was
admitted into evidence as Exhibit X. The
patent trust was not introduced. Hoey
testified that, after the Reiffins’ August 7 letter, Suzanne “continually
faxed” her documents concerning the trusts, and that she “did my best to make
sure that they understood everything that I was doing.” Hoey testified: “There wasn’t anything . . .
orally, in writing stop, don’t do this work.
In fact, it was we’ve got to get this thing accomplished and get this
done. As to explanations, when I would
talk to Suzanne and she wanted explanations as to why . . . did I do
this, and why did I do that, they were all explained.”

On
September 29, 2009, Hoey sent the Reiffins a bill for $32,339.80, detailing her
services and costs. The Reiffins replied
on October 6, 2009, saying that they “were shocked and appalled” by the
charges. Hoey sent the Reiffins letters
on December 30, 2009, and January 21, 2010, explaining her work. In March 2011, Hoey sued the Reiffins for
damages of $32,339.80 for breach of contract.
The case was tried to the court.
The court entered a judgment for $28,135 against the Reiffins,
disallowed Hoey’s claims for interest and costs, and explained its decision as
follows:

“
. . . The elements of a breach of contract cause of action have all
been proven.

“1. That plaintiff and defendants entered into a
contract for plaintiff’s professional services was proven by Exhibit ‘A’ and
the modification to Exhibit ‘A’ occurring with Exhibit ‘K’ and Exhibit ‘L.’

“2. That plaintiff performed all (or
substantially all) of the things the Contract required of her was proven by the
estate plan found in Exhibit ‘X.’

“3. That defendants did not pay the fees billed
by plaintiff was not contested.

[¶]
. . .

“The
Court makes the following findings of fact:

“Plaintiff
and defendants entered into . . . agreement for professional services
to be provided by plaintiff to defendants.
That agreement, dated June 4, 2009, liquidated the attorney fee to
plaintiff in the sum of $4,500, but contemplated a shift to an hourly rate in
the event of any of several contingencies.
One of them, ‘[m]ajor revisions requested subsequent . . . ‘
is the only contingency relevant to this case.

“There
were major revisions to the scope of the work that arose subsequent to the
contracting, and by letter modification on August 7, 2009, the defendants
agreed to shift the fees earned by plaintiff from the flat fee arrangement to
the hourly fee arrangement listed in the contract.

“It
is manifestly unfortunate that defendants did not inquire and plaintiff did not
advise that the scope of the change was huge.
The first notice to defendants of the actual cost of the trusts they had
requested be prepared was after all the work was completed. The defendants had agreed to the billing
arrangement modification with the mistaken assumption that the extra amount of
work was of a minimal nature. The
plaintiff knew otherwise but neglected to advise her clients that their
circumstances necessitated the kind of estate plan that generally costs in the
$30,000 ─ $50,000 range.

“The
evidence is persuasive that the plaintiff justifiably believed, based on
information provided by defendants, that defendants owned an asset (patent(s))
with a value between five million and fifty million dollars and that the
defendants were involved in litigation with Microsoft regarding the
patents. The evidence is persuasive that
plaintiff believed, based on information provided by the defendants, that the
defendants desired the Mechanics Bank to administer the trust after both
defendants die.

“Both
of those beliefs were probably incorrect.
The patent litigation needed to be favorably resolved before the patents
had any large value, and the litigation would be extremely difficult to pursue
if Mr. Reiffin were to die. And,
the defendants, while desiring that Mechanics Bank be the successor trustee,
were not and are not insistent on that choice.

“These
facts however, as reasonably believed by the plaintiff, ratcheted up the work
needed by defendants on their estate plan for two reasons: First, the need to draft a trust that the
Mechanics Bank would agree to administer required a huge investment of time and
interaction with the bank’s employee.
Second, if the estate was in danger of a significant estate tax consequence
absent a sophisticated estate plan, an estate planning attorney would be quite
remiss to not draft something to address that contingency.

“Perhaps
all of the failure of communication by defendants and by plaintiff would either
not have occurred or would have been minimized if Mr. Reiffin had not
become extremely ill in mid August 2009.
This circumstance justifiably caused plaintiff to accelerate the time
frame for completion of the work, and the documents were completed and signed
in late August 2009.

“The
estate plan was not the ‘simple trust’ the defendants initially asked plaintiff
to prepare, but it was the type of estate plan called for in an estate with
assets as understood by plaintiff which accomplished their estate planning
goals.”

II. DISCUSSION

A. Arguments Based on the Evidence

The
reasonableness of an attorney fee is a question of fact (Anderson v. Brady (1957) 151 Cal.App.2d 545, 557) involving
numerous considerations. Some of them
are specified in Rule 4-200 of the State Bar Rules of Professional conduct,
which provides: “(A) A member shall not enter into an agreement
for, charge, or collect an illegal or unconscionable fee. [¶] (B)
Unconscionability of a fee shall be determined on the basis of all the
facts and circumstances existing at the time the agreement is entered into
except where the parties contemplate that the fee will be affected by later
events. Among the factors to be
considered, where appropriate, in determining the conscionability of a fee are
the following: [¶] (1) The amount of the fee in proportion to the
value of the services performed.
[¶] (2) The relative sophistication of the member and the
client. [¶] (3) The novelty and
difficulty of the questions involved and the skill requisite to perform the
legal service properly.
[¶] (4) The likelihood, if
apparent to the client, that the acceptance of the particular employment will
preclude other employment by the member.
[¶] (5) The amount involved and the results obtained. [¶] (6) The time limitations imposed by
the client or by the circumstances.
[¶] (7) The nature and length of the professional relationship with
the client. [¶] (8) The experience,
reputation, and ability of the member or members performing the services. [¶] (9) Whether the fee is fixed or
contingent. [¶] (10) The time and
labor required. [¶] (11) The
informed consent of the client to the fee.”href="#_ftn2" name="_ftnref2" title="">[2]

“Verdicts
and judgments for the reasonable value of attorneys’ services are usually
upheld. The only basis for reversal
would be that the amount was so large (or so small) as to ‘shock the
conscience’ and suggest that passion and prejudice influenced the
determination. However, the factors to
be considered . . . give such wide discretion to the trial court or
jury that attempts to show an abuse on appeal are seldom successful.” (1 Witkin, Cal. Procedure (5th ed. 2008)
Attorneys, § 205, p. 275 (Witkin).)
Under the abuse of discretion standard that governs here, our review of
the evidence extends no further than to determine whether there were reasonable
grounds for the trial court’s decision.
Resolution of an attorney fee dispute “ ‘ “will not be
reversed merely because reasonable people might disagree. ‘An appellate tribunal is neither authorized
nor warranted in substituting its judgment for the judgment of the trial
judge.’ [Citations.]” ’ ” (Christian
Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1323 (>Christian).) “[T]he appellate court will not try the issue
de novo . . . .” (1 Witkin, >supra, Attorneys, § 205, pp. 275-276.)

Hoey
supported her fee claim with detailed billing records, including entries for
work not charged. Before the Reiffins
agreed to pay Hoey additional hourly fees, they had received her letter
confirming the urgency of the project and advising that she had stopped working
for other clients in order to complete it – factors that favored recovery of
the amount billed. (Rules Prof. Conduct,
rules 4-200(B)(4), (B)(6).) The court
could reasonably find that Hoey’s communications with Mechanics Bank were
necessary to obtain the Bank’s agreement to serve as successor trustee as the
Reiffins wished. The court could also
reasonably find that the overall amount of time Hoey spent on the trusts was
appropriate in view of the value Martin placed on his patents. (Rules Prof. Conduct, rule 4-200(B)(1).) The Reiffins introduced no evidence that
called into question the court’s finding that Hoey’s work “accomplished their
estate planning goals.” (Rules Prof.
Conduct, rule 4-200(B)(5).) While we
recognize that substantial fees were awarded, in light of the work involved we
cannot say they were so excessive as to be “shocking” or indicative of passion
or prejudice. (1 Witkin, >supra, Attorneys, § 205,
p. 275.) Accordingly, we cannot
conclude the decision was an abuse of discretion.

The
Reiffins’ appeal focuses primarily on evidence they contend should have led to
a smaller award. But their focus is
misplaced because we must uphold the trial court’s decision if it was
reasonable, “ ‘[e]ven though contrary findings could have been made . . . .’ ” (Christian,
supra, 165 Cal.App.4th at
p. 1323.)

For
example, the Reiffins say that Hoey’s alleged mistaken belief that “judgments
are not enforceable” led her to expend excessive time on the trust revision,
and is “the major error upon which [they] rely.” In her December 30, 2009, letter to the
Reiffins explaining her work on the trusts, Hoey identified estate tax
liability that could arise from values placed on the patents in the litigation
as “a big issue in your overall estate plan.”
Hoey said she was concerned that Martin might reach a substantial
settlement with Microsoft, and that the trusts would have insufficient assets
to pay estate taxes on the settlement “if Microsoft dragged payment of the
settlement beyond the due date for payment of the estate taxes.” Hoey reiterated her concerns in a
January 21, 2010, letter, adding that “Microsoft . . . often
. . . drags out the payment of . . . damages
. . . .” Hoey testified
that she had been advised by three patent attorneys that this was Microsoft’s
practice. The Reiffins contend that
Hoey’s concern about delayed payment of damages was illusory because Rules 62
and 69 of the Federal Rules of Civil Procedure (28 U.S.C.) provide for prompt
enforcement of federal court judgments.

However,
Hoey’s concerns were not confined to delayed payment of judgments. Counsel for Mechanics Bank testified that the
Internal Revenue Service would value the patent litigation for estate tax
purposes before it was concluded, and she and Hoey testified that they were
concerned about the tax liability in that situation. That concern is apparent on review of the
non-patent trust, where the Reiffins acknowledged that estate tax liability
associated with the patents could reduce or eliminate funding of the special
needs trust and gifts the Reiffins contemplated, even if the patent litigation
was only in settlement negotiations at the time of a settlor’s death.href="#_ftn3" name="_ftnref3" title="">[3] The Reiffins state that the patents had been
held to be invalid in 2003, and thus the IRS was powerless to attribute any
value to them until they were reinstated in a new judgment. But they provide no legal authority to
support their proposition, or evidence that they apprised Hoey of it.

Thus,
Hoey’s allegedly mistaken beliefs about the enforceability of judgments and
Microsoft’s practices in paying them were, at most, misconceptions about
peripheral matters. The Reiffins
maintain that Hoey either committed “perjury when she testified that she spent
only ‘ten minutes’ ” worrying that Microsoft might not promptly pay a
settlement, or “fraud” when she billed hours for her work on that problem. But the Reiffins have not shown Hoey’s
concern about potential estate tax liability due to the patent litigation to be
spurious. It was understandable why she
would worry that the bank, as possible successor trustee of the non-patent
trust, would insist on language addressing the consequences of potential estate
tax liability to its satisfaction.

The
Reiffins observe that Hoey falsely claimed in her December 2009 and
January 2010 letters to have secured an agreement from the bank, reflected
in the trust documents, to loan the patent trust the money necessary to pay the
potential estate tax. Hoey went so far
as to claim that she thereby saved the Reiffins “hundreds of thousands of
dollars in penalty and interest payments to the IRS,” and deserved a “bonus”
for this part of her work. However, the
bank’s counsel testified that the bank did not agree to make such a loan, and
never would have so agreed, and Hoey admitted at trial that her letters were
mistaken about that alleged agreement.
But the amount Hoey may have billed for negotiating this nonexistent
loan agreement was not established at trial, and any such negotiation would
have been very brief given the bank’s unwillingness to make the proposed
loan. Thus, the court could have
reasonably concluded that Hoey’s erroneous claim to have obtained a loan
agreement did not compel reduction of her bill.

The
Reiffins note that Hoey’s December 30 letter purported to be “a detailed
explanation of why I continued to negotiate with Mechanics’ Bank
. . . after you had instructed me not to.” The letter argued that Hoey was ethically
obligated to act in the Reiffins’ best interests, and explained, among other
things, that she had to communicate with the bank to obtain its agreement to
act as successor trustee. In their
October 6, 2009, letter complaining to Hoey about her bill, the Reiffins stated
that they instructed Hoey in an August 6 telephone conference not to
engage in any patent-related negotiations with the bank. However, in their letter of August 7,
the Reiffins implicitly authorized such negotiations when they directed Hoey to
add patent-related language to the trusts that would satisfy the bank. Moreover, Hoey testified that she kept the
Reiffins apprised of her work, which included communications with the bank, and
that they never told her to stop what she was doing. Thus, the evidence did not compel reduction
of the bill on the ground that Hoey’s communications with the bank were
unauthorized.

B. Other Arguments

The
Reiffins contend that the court’s findings were too conclusory to permit
meaningful appellate review of the decision.
We disagree. The court gave a
reasoned explanation showing that the decision was not beyond
“ ‘ “ ‘ “ ‘the bounds of reason, all of the
circumstances before it being
considered.’ ” ’ ” ’ ”
(Christian, >supra, 165 Cal.App.4th at p. 1323.)

The
Reiffins argue that “jurisdiction over this controversy lies exclusively with
the federal courts because the sole genuine dispute involves the legal effect
of the Federal Rules of Civil Procedure on settlement judgments entered in
federal patent infringement actions litigated exclusively in the federal
courts.” The Federal Rules of Civil
Procedure have little to do with this case.
It is a breach of contract action to collect an attorney fee, and is
properly brought in state court. (1
Witkin, supra, Attorneys, § 209,
p. 279.)

The
Reiffins argue that there was no “meeting of the minds” here as required for
formation of a contract because, as the trial court found, they did not
appreciate the extent of the work they were asking Hoey to perform. A contract may be rescinded based on a unilateral
mistake of fact if, among other things, enforcement of the contract would be
unconscionable. (Donovan v. RRL Corp. (2001) 26 Cal.4th 261, 282.) But the Reiffins have not shown that they
sought rescission of the contract in the trial court, and cannot properly raise
this new defense for the first time on appeal.
(Eisenberg et al., Cal. Practice Guide:
Civil Appeals and Writs (The Rutter Group 2012) ¶ 8:231, p. 8-156
(rev. #1 2011); see also 5 Witkin, supra,
Pleading, § 1093, p. 523 [facts establishing right to rescind must be
specially pleaded].)

The
Reiffins suggest the judge was biased against them, observing that at one point
he admonished Martin not to ask “stupid questions.” Their brief states that the court’s
“injudicious ad hominem insults . . . have been unprecedented in Mr. Reiffin’s
experience of sixty-four years of litigation before a wide assortment of
federal judges ranging from Learned Hand to newly appointed district judges,
and including fifteen years as the principal patent trial attorney for IBM.”

The
admonition the Reiffins single out occurred when Martin attempted to ask Hoey
about section 6(a) of the original attorney-client agreement, which authorized
hourly-rate charges in addition to the specified flat fee for “[e]xtra
conferences with you, your family, or other parties beyond your initial
consultation, review, and execution conferences.” Section 6(a) was one of several providing for
additional hourly charges, including 6(c), the one that applies in this case,
for “[m]ajor revisions requested subsequent to your review appointment.”href="#_ftn4" name="_ftnref4" title="">[4]


The
Reiffins write: “The trial judge did not
understand that the contract (Exhibit A) expressly limited billing on an hourly
basis to a period ‘beyond . . . the execution conference’ which took
place on August 28, 2009. However,
Ms. Hoey switched to an hourly basis on August 6, 2009, contrary to the
contract.” But the Reiffins, not the
trial judge, are mistaken. Services
after the execution conference were just one category of additional hourly fees
permitted under the contract, and that category was essentially irrelevant here
because only $80 of the hourly fees Hoey charged were incurred after the
August 28 execution conference.

When
Martin broached section 6(a) of the contract with Hoey at trial, the court took
judicial notice that “August the 6th precedes August the 29th,” and
asked Martin to “get to something that is relevant.” When Martin responded with another question
about section 6(a), the court interjected:
“Mr. Reiffin, look. I know
that you are not an experienced trial lawyer, but I have got to decide who is
right and who is wrong in this case. You
are not helping me to understand who is right and who is wrong in this case by
asking stupid questions. Okay? [¶] If you want to argue that the
contract is ambiguous, led you astray, you can save that for argument, but when
it’s perfectly clear to me that this person’s motivation for switching you to a
different fee basis is not based on the fact that you had already finished, had
your stuff done, had your execution conference, and then came back for some
changes later, which is what clearly this is referring to. So look, we are going to try to do this where
you are asking the questions that might actually help me understand who is
right and who is wrong here. And don’t
waste your time, my time, her time, her time, his time and her time on stuff
that doesn’t help you.”

The
court’s remarks, in context, were merely expressions of “understandable
frustration” and do not demonstrate bias.
(People v. Brown (1993) 6 Cal.4th 322, 337; Hall v. Harker (1999) 69 Cal.App.4th 836, 843.)

III.
DISPOSITION

The
judgment is affirmed.









_________________________

Siggins,
J.





We concur:





_________________________

McGuiness, P. J.





_________________________

Pollak, J.