Rees v. Laubscher
Filed 5/9/13
Rees v. Laubscher CA2/2
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opinion has not been certified for publication or ordered published for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
TWO
SAMUEL T. REES,
Plaintiff and
Appellant,
v.
BARRY R. LAUBSCHER,
Defendant and Respondent.
B237529
(Los Angeles County
Super. Ct. No. BC363173)
APPEAL
from a judgment and order of the Superior
Court of
County. Gregory W. Alarcon, Judge. Affirmed.
Samuel
T. Rees, in pro. per., for Plaintiff and Appellant.
Barry
R. Laubscher, in pro. per.; Lewis Brisbois Bisgaard & Smith and Gary M.
Lape for Defendant and Respondent.
Plaintiff
and appellant Samuel T. Rees (Rees) appeals from the
defendant and respondent Barry R. Laubscher (Laubscher) in this action for breach
of contract and for dissolution and accounting of a partnership. Rees also appeals the denial of his motion
for costs under Code of Civil Procedure section 1032 following Laubscher’s
voluntary dismissal of a cross-complaint.
We affirm the judgment and the order denying Rees’s motion for costs.
Parties
Rees
and Laubscher are both attorneys who were “of counsel†to Daar & Newman, a
professional law corporation (Daar & Newman). In 1999, Rees began providing legal services
on client matters originated by Laubscher.
The client matters included both hourly and contingent fee work, and
Laubscher paid Rees a portion of the fees collected from these clients.
A
dispute arose between the parties in connection with Laubscher’s payments to
Rees for work performed on certain contingent fee matters, including a matter
for a client named Grand Sprinkler Supply, Inc. (Grand Sprinkler).
Complaint
On
December 11, 2006, Rees
filed a verified complaint against Laubscher for breach of contract and for
dissolution of partnership and an accounting.
In his first cause of action for breach of contract, Rees alleged that
he and Laubscher entered into an agreement to represent clients through Daar
& Newman on a contingency fee basis and to divide recoveries on client
matters between them on a pro rata basis according to hours worked on the
matter, after payment of unreimbursed costs and a 12.5 percent fee to the
attorney originating the work. Rees
further alleged Laubscher owed him more than $200,000 in unpaid fees on various
matters, including the Grand Sprinkler matter.
In
his second cause of action for dissolution of partnership and an accounting,
Rees alleged that he and Laubscher formed a general partnership to provide
legal services to clients of Daar & Newman on a contingency fee basis. The terms of the partnership, Rees alleged,
were set forth in writings and emails between him and Laubscher and consisted
principally of the fee sharing arrangement described in the first cause of
action. Rees further alleged that during
the existence of the partnership, Laubscher became dissatisfied with Rees and
terminated his services. Rees prayed for
a declaration dissolving the partnership, an accounting of partnership receipts
and disbursements, appointment of a receiver to take control of the Grand
Sprinkler recovery, distribution of partnership assets, and damages.
Summary judgment motion
Laubscher
filed an answer to Rees’s verified complaint, as well as a cross-complaint for
Laubscher then moved for summary
judgment as to the causes of action asserted in Rees’s complaint on the grounds
that rule 2-200(A)(1) of the California Rules of Professional Conduct (rule
2-200) barred the causes of action; there was no legally cognizable partnership
to dissolve; and if such a partnership existed, Rees failed to name necessary
and indispensable parties.
In
support of his motion, Laubscher submitted his own declaration in which he
averred that no client, including Grand Sprinkler, had ever agreed in writing
to the fee sharing agreement alleged by Rees.
Laubscher further stated in his declaration that neither he nor Rees
were shareholders in Daar & Newman or in any other law firm; he and Rees at
all relevant times were and held themselves out to be “of counsel†to Daar
& Newman; Rees never referred in writing to his relationship with Laubscher
as a partnership before the Grand Sprinkler dispute; the alleged partnership
between Rees and Laubscher obtained no business license, had no business or
trust bank accounts, was not registered with the state bar, never issued any
K-1’s or filed any state or federal income tax forms, and had no written
partnership agreement.
Rees
opposed the summary judgment motion, arguing that triable issues of material
fact existed as to each of the elements of his claims. Rees disputed the fact that Grand Sprinkler
had never agreed in writing to his fee sharing agreement with Laubscher. He offered in opposition a retainer agreement
entered into by Grand Sprinkler and Daar & Newman (the retainer agreement)
and a separate fee sharing agreement between Daar & Newman and the Arizona
law firm of Rake & Catanese (the DN/RC agreement).
The
retainer agreement states that Grand Sprinkler agreed to retain Daar &
Newman as its attorneys to prosecute certain claims against The Toro Company,
and that Laubscher, as of counsel to Daar & Newman, would be the attorney
primarily responsible for the matter.
The retainer agreement further states that Daar & Newman’s
representation would be on a full contingency fee basis for all services
performed and specifies a formula for payment to Daar & Newman a portion of
any recovery obtained on behalf of Grand Sprinkler by settlement, judgment, or
otherwise.
The
DN/RC agreement sets forth the basis upon which Daar & Newman and Rake
& Catanese agreed to share fees, if any, earned in the Grand Sprinkler
case. The two firms agreed to divide the
fees earned, after payment of unreimbursed costs and a 12.5 percent origination
fee to Daar & Newman, in proportion to the value of time spent by the
respective law firms’ personnel.
Laubscher and Rees are listed under Darr & Newman personnel at the
hourly rate of $300. Other Daar &
Newman personnel listed are Michael White at the rate of $240 per hour, Kurt
Ressler at the rate of $200 per hour, and Alisa Daniels, a legal assistant, at
the rate of $125 per hour. The agreement
also lists personnel from Rake & Catanese and their respective hourly
rates.
The
DN/RC agreement was signed by Laubscher on behalf of Daar & Newman and by
David Catanese, a partner of Rake & Catanese. The President of Grand Sprinkler, Chaim
Avraham, also signed the DN/RC agreement under the following
acknowledgment: “I am aware of the above
fee sharing agreement and hereby consent to it on behalf of Grand
Sprinkler. I understand that this
agreement does not in any way affect or change the total fees to be paid by
Grand Sprinkler in the event of a recovery, which are to be determined in
accordance with the written fee agreement between Grand Sprinkler and Daar
& Newman, which has been approved by the bankruptcy court.â€
Rees
also submitted the declaration of David Catanese, one of the signatories to the
DN/RC fee sharing agreement. Catanese
stated in his declaration that Laubscher and Rees both told him that the fee
sharing formula set forth in the DN/RC agreement was identical to that used by
Rees and Laubscher for sharing fees on other contingency matters the two of
them undertook as of counsel to Daar & Newman.
In
opposing summary judgment, Rees also disputed the absence of any written
partnership agreement between him and Laubscher and the fact that he had never
referred in writing to his relationship with Laubscher as a partnership. He offered various email exchanges between
himself and Laubscher in which they referred to each other as “partners†as
evidence to support his position.
Following
a hearing at which both parties presented argument, the trial court granted
summary judgment in Laubscher’s favor.
The court concluded that Rees’s cause of action for breach of the
alleged fee sharing agreement was barred by rule 2-200 and that the cause of
action for dissolution of partnership and an accounting failed because there
was no legally cognizable partnership to dissolve, and if there was, Rees had
failed to name necessary and indispensable parties.
Judgment and motion for costs
The
trial court denied a subsequent motion by Rees for clarification or
reconsideration of its summary judgment order.
Laubscher thereafter voluntarily dismissed his cross-complaint. Following that dismissal, Rees filed a cost
bill for $3,608.20. Laubscher moved to
strike the cost bill on the ground that Rees was not a prevailing party
entitled to costs. The trial court
issued an order striking all of Rees’s costs and entered judgment against Rees
in his action against Laubscher. This
appeal followed.
DISCUSSION
Summary
judgment is granted when a moving party establishes the right to entry of
judgment as a matter of law. (Code Civ.
Proc., § 437c, subd. (c).) A
defendant moving for summary judgment bears the initial burden of proving that
there is no merit to a cause of action by showing that one or more elements of
the cause of action cannot be established or that there is a complete defense
to that cause of action. (Code Civ.
Proc., § 437c, subd. (p)(2); Cucuzza v. City of Santa Clara (2002)
104 Cal.App.4th 1031, 1037.) Once the
defendant has made such a showing, the burden shifts to the plaintiff to show
that a triable issue of one or more material facts exists as to that cause of
action or as to a defense to the cause of action. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 849.) If the plaintiff does not make such a
showing, summary judgment in favor of the defendant is appropriate. In order to obtain a summary judgment, “all
that the defendant need do is to show that the plaintiff cannot establish at
least one element of the cause of action . . . . [T]he defendant need not himself conclusively
negate any such element . . . .†(Id. at p. 853.)
We
review the trial court’s grant of summary judgment de novo and decide
independently whether the facts not subject to triable dispute warrant judgment
for the moving party as a matter of law.
(Intel Corp. v. Hamidi (2003) 30 Cal.4th 1342, 1348; Code Civ.
Proc., § 437c, subd. (c).) We review the
trial court’s determination that Rees was not a prevailing party entitled to
costs under Code of Civil Procedure section 1032 for abuse of discretion. (Arias
v. Katella Townhouse Homeowners Assn., Inc. (2005) 127 Cal.App.4th 847,
852.)
Rees
challenges the trial court’s determination that rule 2-200 barred his cause of
action for breach of contract. Rule 2-200 requires full disclosure to a client of any fee sharing
arrangement between lawyers who are not partners, associates, or shareholders,
and a signed written consent by the client.
It 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:
after a full disclosure has been made in writing that a division of fees will
be made and the terms of such division; and
increased solely by reason of the provision for division of fees and is not
unconscionable as that term is defined in rule 4-200.â€
Failure
to comply with the client disclosure and written consent requirements of rule 2‑200
renders the fee sharing agreement unenforceable. (Chambers
v. Kay (2002) 29 Cal.4th 142, 158-160 (Chambers).)
1. No triable issue regarding
client disclosure or consent
Rees contends his fee sharing
agreement with Laubscher is set forth in the DN/RC agreement, which complies
with rule 2-200 because it was both disclosed to and signed by Grand Sprinkler.
The DN/RC agreement is not evidence
of a fee sharing agreement between Rees and Laubscher. The DN/RC agreement, on its face, is between
Daar & Newman and Rake & Catanese, not between Laubscher and Rees. The DN/RC agreement sets forth a method by
which Daar & Newman and Rake & Catanese agreed to share fees on the
Grand Sprinkler case. It does not set
forth any method for Laubscher and Rees to share fees, nor does it disclose the
existence of any fee sharing agreement between them.
The terms of the DN/RC agreement are
not the same as the terms of the fee sharing agreement alleged in Rees’s
complaint. In paragraph 13 of the
verified complaint, Rees alleges that Laubscher, as the “originating partyâ€
would be paid a 12.5 percent origination fee.
The DN/RC agreement, in contrast, states that a 12.5 percent origination
fee will be paid to Daar & Newman, and not to Laubscher.
Rees contends both his declaration
and the declaration of David Catanese establish that the DN/RC agreement was
intended to govern the division of fees not only between Daar & Newman and
Rake & Catanese, but also between Laubscher and Rees. Neither Rees’s declaration nor Catanese’s
declaration raises a triable issue as to whether Grand Sprinkler knew of or
consented to the alleged fee sharing agreement between Rees and Laubscher. Catanese’s understanding of the fee sharing
agreement is not relevant, because disclosure to Catanese was not disclosure to
Grand Sprinkler. Although Rees argues
that disclosure to Catanese satisfies the client disclosure requirement of rule
2-200 because Catanese’s knowledge of the fee sharing agreement should be
attributable to Grand Sprinkler, his argument conflicts with the purpose of the
notice and consent requirements of rule 2-200.
That purpose, our Supreme Court has explained, is to allow a client the
opportunity to reject a proposed fee sharing:
“‘Just as a client has a right to know how his or her attorney’s
fees will be determined, he or she also has a right to know the extent of, and
the basis for, the sharing of such fees by attorneys. Knowledge of these matters helps assure the client
that he or she will not be charged unwarranted fees just so that the attorney
who actually provides the client with representation on the legal matter has
“sufficient compensation†to be able to share fees with the referring attorney.
. . .’ [Citation.] Moreover, ‘[r]equiring the client’s written
consent to the fee sharing agreement impresses upon the client the importance
of his or her consent, of the right to reject the fee sharing.’ [Citation.]â€
(
156-157, fn. omitted, quoting Margolin v.
Shemaria (2000) 85 Cal.App.4th 891, 903.)
Rees presented no evidence that
raises a triable issue as to whether Grand Sprinkler or any other client knew
of and consented to the alleged fee agreement between him and Laubscher.
2. No triable issue as to
existence of partnership
Rees next argues that a triable
issue exists as to whether the alleged fee sharing agreement was exempt from
rule 2-200 because he and Laubscher were partners. Rule 2-200 does not restrict the division of
fees between a member of the State Bar and a lawyer who is “a partner of,
associate of, or shareholder with†that member.
(Rule 2-200.)
A “partnership†is defined in the
Corporations Code as “an association of two or more persons to carry on as coowners
a business for profit under Section 16202, predecessor law, or comparable law
of another jurisdiction . . . .†(Corp.
Code, § 16101, subd. (9).) “Generally, a
partnership connotes co-ownership in partnership property, with a sharing in
the profits and losses of a continuing business. [Citation.]â€
(Chambers, supra, 29 Cal.4th
at p. 151, fn. omitted.)
Rees failed to present evidence
raising any triable issue as to whether he and Laubscher were partners. There was no evidence that Rees and Laubscher
were co-owners of a law firm or law office.
It is undisputed that neither of them was a shareholder in Daar &
Newman or in any other law firm. The
sworn allegations in Rees’s verified complaint establish that he and Laubscher
were both “of counsel†to Daar & Newman during the relevant time
period. There is no evidence that the
parties agreed to share and in fact shared any “profits.†Rather, the evidence shows an agreement to
divide, and division of, “fees†paid by clients. Evidence that Rees and Laubscher sometimes
referred to one another as “partners†in email correspondence, without more, is
insufficient to raise a triable issue as to the existence of a partnership.
3. Unpled theories not presented
below
Rees contends summary judgment was
improperly granted because he has viable causes of action for quantum meruit
and breach of fiduciary duties. Rees
failed to allege causes of action for quantum meruit or breach of fiduciary
duty and failed to argue those theories when opposing summary judgment in the
trial court below. He accordingly
forfeited the right to do so in this appeal.
(Perez v. Grajales (2008) 169
Cal.App.4th 580, 591-592 [arguments raised for the first time on appeal are
deemed forfeited]; Conroy v. Regents of
University of California (2009) 45 Cal.4th 1244, 1254 [to create a triable
issue of material fact, opposition evidence must be directed to issues raised
by the pleadings].)
partnership and accounting
As discussed in section II.A.2 above, Rees presented no evidence
that raises a triable issue as the existence of a partnership between him and
Laubscher. Summary judgment was
therefore properly granted as to Rees’s cause of action for dissolution of
partnership and an accounting.
contends the trial court erred by denying his motion for costs as the
prevailing party under Code of Civil Procedure section 1032 after Laubscher
voluntarily dismissed his cross-complaint against him. Code of Civil Procedure section 1032,
subdivision (b) states that “a prevailing party is entitled as a matter of
right to recover costs in any action or proceeding.†Code of Civil Procedure section 1032,
subdivision (a)(4) defines “prevailing party†to include “a defendant in whose
favor a dismissal is entered.â€
Not all voluntary dismissals,
however, make the defendant a “prevailing party†for purposes of cost recovery
under the statute. “[T]he issue of
whether a voluntary dismissal was truly entered ‘in favor’ of the defendant can
arise in a variety of procedural settings, may involve questions of fact
[citation], and is in any event a matter best left to the sound discretion of
the trial court [citations].†(
Cal.App.4th 1115, 1130.) In the instant
case, because Laubscher prevailed on all of the causes of action Rees asserted
against him before dismissing his cross-claims against Rees, Rees cannot be
said to have “prevailed†against Laubscher, even though the cross-complaint
against him was dismissed. (See
cases].)
The trial court did not abuse its
discretion by denying Rees’s motion for costs.
The judgment is affirmed, as is the
order denying Rees’s motion for costs.
Laubscher is awarded his costs on
appeal.
NOT TO BE PUBLISHED IN THE
OFFICIAL REPORTS.
___________________________,
J.
CHAVEZ
We concur:
___________________________, Acting P. J. ___________________________, J.*
ASHMANN-GERST FERNS
________________________________________________________________________
* Judge of the Los Angeles Superior
Court, assigned by the Chief Justice pursuant to article VI, section 6 of the
California Constitution.
title="">[1] Because
Grand Sprinkler was the debtor in a chapter 11 bankruptcy proceeding, its
retention of Daar & Newman and its subsequent retention of Rake &
Catanese as co-counsel required the approval of the bankruptcy court. Grand Sprinkler obtained the bankruptcy
court’s approval to do so. The Grand
Sprinkler case was settled in January 2005.
