Judge Bruce G. Iwasaki, Case Number: 23STCV12418, Date: 2024-02-22 Tentative Ruling

This is an action for legal malpractice. Plaintiff Joel D. Kettler retained Defendants FLP Law Group LLP, formerly known as Fredman Lieberman Pearl, LLP (FLP), Howard S. Fredman (Fredman), Marc A. Lieberman (Lieberman), and Mark J. Pearl (Pearl) (collectively, Defendant FLP) in an underlying litigation arising from Kettler’s actions as the power-of-attorney for Donna and Daniel Gould in helping them manage their financial affairs and personal assets (Underlying Action). During the trial in the Underlying Action, Kettler fired Defendant FLP and alleges that he was then forced to settled the action as result of Defendants’ malpractice.

The operative First Amended Complaint contains causes of action for (1.) legal malpractice, (2.) intentional misrepresentation, (3.) negligent misrepresentation, (4.) breach of contract, (5.) common count, and (6.) breach of fiduciary duty.

On August 31, 2023, Cross-Complainant Fredman filed a Cross-Complainant for (1.) breach of contract, (2.) breach of covenant of good faith and fair dealing, (3.) quantum meruit, and (4.) common count.

On October 4, 2023, Cross-Complainant Fredman moved for summary adjudication of the first cause of action for breach of contract in the Cross-Complaint. Cross-Defendant Kettler opposed the motion.

“The party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) A triable issue of material fact exists if the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof. (Ibid.)

“When deciding whether to grant summary judgment, the court must consider all of the evidence set forth in the papers (except evidence to which the court has sustained an objection), as well as all reasonable inferences that may be drawn from that evidence, in the light most favorable to the party opposing summary judgment.” (Avivi v. Centro Medico Urgente Medical Center (2008) 159 Cal. App. 4th 463, 467; Code Civ. Proc., § 437c, subd. (c).)

Cross-Complainant Fredman moves for summary adjudication of the first cause of action for breach of contract in the Cross-Complaint. Cross-Complainant argues there are no triable issues of material fact in dispute and no affirmative defenses to the breach of contract claim.

The elements of a breach of contract cause are: “(1) existence of the contract; (2) plaintiff's performance or excuse for nonperformance; (3) defendant's breach; and (4) damages to plaintiff as a result of the breach.” (CDF Firefighters v. Maldonado (2008) 158 Cal.App.4th 1226, 1239.)

In support of the motion for summary adjudication, Cross-Complainant Fredman submits evidence that Kettler entered into a written fee agreement with Fredman Lieberman Pearl LLP (FLP) on December 6, 2016, pursuant to which Kettler hired Fredman and FLP to represent him in the then pending, Underlying Action. (XCSS 2.) Further, FLP assigned all of its rights under that agreement to Fredman. (XCSS 1.) Thereafter, Kettler breached the agreement by failing to compensate FLP or Fredman under the terms of the written contract pursuant to the accompanying invoices and by refusing FLP’s demand in May 2022 that he timely pay all sums then owing and provide a deposit for preparing for and completing trial. (XCSS 3-4.) As a result, FLP, and Fredman as its assignee, suffered damages in the amount of $424,329.15 in unpaid attorney fees. (XCSS 6.)

This evidence is sufficient to shift Cross-Complainant’s initial burden on this cause of action.

In opposition, Cross-Defendant Kettler challenges the elements of breach and damages on multiple grounds.

First, Cross-Defendant Kettler argues there is triable issue of material fact as to whether Cross-Complainant Fredman billed Kettler excessively. Cross-Defendant provides two examples of “overbilling.” (Opp., 11:13-22.)

However, these examples are not cited in or raised in Cross-Defendant’s response to the separate statement. Thus, this argument is unsupported by any evidence. (City of Pasadena v. Superior Court (2014) 228 Cal.App.4th 1228, 1238, fn. 4 [“ ‘ “[T]his is the Golden Rule of Summary Adjudication: if it is not set forth in the separate statement, it does not exist” ’ ”] [emphasis in original].)

Moreover, Cross-Defendant Kettler cites no legal authority that excessive billing for work actually performed need not be paid under a breach of contract claim.

The reply, however, does concede that the billing entry for May 27, 2021 was in error and should be reduced from 30 hours to three hours, requiring an overall reduction in damages of $10,800. (Reply, p. 7, fn. 2.)

Next, Cross-Defendant Kettler argues that there is a triable issue of material fact as to whether Cross-Complainant Fredman actually performed the work for which FLP billed Kettler.

In making this argument, Cross-Defendant Kettler argues that he had marshalled critical documents, witnesses, or testimony for trial, but FLP failed to present this evidence at trial. For example, Fredman billed Kettler for witness preparation for witnesses that were never called to testify at trial. (Opp., 11:23-14:26.)

“A party cannot avoid summary judgment based on mere speculation and conjecture [citation], but instead must produce admissible evidence raising a triable issue of fact. [Citation.]” (Crouse v. Brobeck, Phleger & Harrison (1998) 67 Cal.App.4th 1509, 1524; see also Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 163.)

Here, FLP’s decision not to present certain evidence at trial does not create an inference that it did not perform the work in preparing this evidence for trial. That is, there is no evidence suggesting that such a decision was not strategic rather than a complete failure to perform the work billed at all.

Third, Cross-Defendant claims FLP breached the parties’ Engagement Letter by invoicing Kettler for more than $6,000 in a single month.

Paragraph 7 of the Engagement Letter provides, “if fees and costs incurred in a single month exceed $6,000, then those fees and costs in excess of $6,000 shall be rolled over to and included in the next statement. The maximum fees and costs due and payable by Client in a single month shall be the sum of $6,000.” (XDMF 39.)

Cross-Defendant misinterprets the terms of the Engagement Letter by selectively quoting its terms.

It is true that Paragraph 7 of the Engagement Letter provided for periodic statements for fees and costs incurred which were to be payable within 30 days of their mailing date, “except that if fees and costs incurred in a single month exceed[ed] $6,000, then those fees and costs in excess of $6,000 shall be rolled over to and included in the next statement. The maximum fees and costs due and payable by Client [Kettler] in a single month shall be the sum of $6,000.”

However, Fredman’s evidence is that Kettler thereafter failed to pay the minimum sums required by the fee agreement. (XCSS 3.)

More importantly, Paragraph 4 of the Engagement Letter provides that, “Once a trial or arbitration date is set on remand, Client shall pay all sums then owing and deposit the attorneys’ fees estimated to be incurred in preparing for and completing the trial or arbitration, as well as the jury fees or arbitration fees, expert witness fees and other costs likely to be assessed. Client agrees to pay all deposits within 30 days of Attorneys’ demand.” (XCSS 4.)

Fredman’s evidence also demonstrates that, in 2022, when a final trial date was set, Fredman demanded payment of all sums then owing and a sum for estimated trial expenses, but Kettler rejected that demand. (XCSS 4.) By the time Kettler terminated FLP’s representation in June 2022, Kettler owed FLP a sum in excess of $400,000. (XCSS 6.)[1]

Kettler’s interpretation ignores the entirety of the Engagement Letter, which must be read as a whole, giving effect and meaning to each paragraph. Thus, Kettler’s argument here fails to raise a triable issue of material fact in dispute.

Kettler also suggests that Fredman failed to perform all his obligations under the contract by failing to mediate his claims.

Paragraph 9 of the Engagement Letter also provides, “If a dispute arises out of or relating to any aspect of this Agreement between attorneys and Client, or the breach thereof, Attorneys and Client agree to first attempt in good faith to settle the dispute by private mediation or fee mediation provided in Southern California by local bar association programs before resorting to arbitration, litigation, or any other dispute resolution procedure.” (XDMF 40.)

Courts often strictly construe mediation clauses against parties who sued without first complying with the mediation requirement. (See, e.g., Lange v. Schilling (2008) 163 Cal.App.4th 1412, 1414 [“We agree with other courts that the [mediation] agreement means what it says: plaintiff's failure to seek mediation precludes an award of attorney fees”]; Frei v. Davy (2004) 124 Cal.App.4th 1506, 1516 [“To recover attorney fees under [a real property purchase agreement with a mediation requirement], a party cannot commence litigation before attempting to resolve the matter through mediation”]; accord, Van Slyke v Gibson (2007) 146 Cal.App.4th 1296, 1299; Johnson v. Siegel (2000) 84 Cal.App.4th 1087, 1101 [“seeking mediation is a condition precedent to the recovery of attorney fees”].)

Here, in opposition, Kettler submits evidence that Freman has refused to mediate the claims at issue in this action. (XDMF 87-90.)

In reply, Fredman submits evidence that he had agreed to mediation before Jill Sperber in January 2024, when Kettler refused to proceed with the mediation. (Reply, 4 [citing emails attached as Exhibit A].) The reply then submits rebuttal evidence in the form of over thirty pages of emails, without citation to any specific pages of this evidence.

The issue of compliance with the mediation prerequisite is a disputed material fact as to whether Fredman performed all of his obligations under the Engagement Letter. That is, whether Fredman can satisfy all the elements of his breach of contract claim. Thus, whether Fredman complied with the mediation clause is a factual issue that defeats the motion for summary adjudication.

Finally, Cross-Defendant Kettler argues that there is a triable issue of material fact arising from Cross-Defendants’ legal malpractice claim.

“In the legal malpractice context, the elements of causation and damage are particularly closely linked.” (Hecht, Solberg, Robinson, Goldberg & Bagley LLP v. Superior Court (2006) 137 Cal.App.4th 579, 591.) The plaintiff must prove, by a preponderance of the evidence, that but for the attorney's negligent acts or omissions, he would have obtained a more favorable judgment or settlement in the action in which the malpractice allegedly occurred. (Viner v. Sweet (2003) 30 Cal.4th 1232, 1241.) This standard requires a “trial-within-a-trial” of the underlying case, in which the malpractice jury must decide what a reasonable jury or court would have done if the underlying matter had been tried instead of settled. (Mattco Forge, Inc. v. Arthur Young & Co. (1997) 52 Cal.App.4th 820, 834.) This method “ ‘is the most effective safeguard yet devised against speculative and conjectural claims.... It is a standard of proof designed to limit damages to those actually caused by a professional's malfeasance.’ ” (Jalali v. Root (2003) 109 Cal.App.4th 1768, 1773–1774.)

Therefore, “[i]t is not enough for [the plaintiff] to simply claim ... that it was possible to obtain a better settlement or a better result at trial. The mere probability that a certain event would have happened will not furnish the foundation for malpractice damages.” (Barnard v. Langer (2003) 109 Cal.App.4th 1453, 1462.) “ ‘Damage to be subject to a proper award must be such as follows the fact complained of as a legal certainty.’ [Citation.]” (Marshak v. Ballesteros (1999) 72 Cal.App.4th 1514, 1518.) In other words, the plaintiff must show that “[he] would certainly have received more money [or had to pay less] in settlement or at trial.” (Slovensky v. Friedman (2006) 142 Cal.App.4th 1518, 1528 [italics added]; see Thompson v. Halvonik (1995) 36 Cal.App.4th 657, 662–664 [evidence fails to show that but for that attorney's delay in handling action, case would have settled sooner or on more favorable terms].)

“The requirement that a plaintiff need prove damages to ‘a legal certainty’ is difficult to meet in any case. It is particularly so in ‘settle and sue’ cases...,” which are inherently speculative. (Filbin v. Fitzgerald (2012) 211 Cal.App.4th 154, 166.) “[T]he amount of a compromise is often ‘an educated guess of the amount that can be recovered at trial and what the opponent was willing to pay or accept. Even skillful and experienced negotiators do not know whether they received the maximum settlement or paid out the minimum acceptable. Thus, the goal of a lawyer is to achieve a “reasonable” settlement, a concept that involves a wide spectrum of considerations and broad discretion. [¶] Theoretically, any settlement could be challenged as inadequate, and the resolution is likely to require a trial.’ ” (Barnard v. Langer, supra, 109 Cal.App.4th at pp. 1462–1463, fn. 13.)

Here, Cross-Defendant alleges that, in the underlying litigation, FLP failed to call critical witnesses at trial – including Sherey Gould, Judith Ribenstein-Kettler and Dr. Edward O’Connor. (XDMF 46-64.) Kettler also argues that important documents and demonstratives were not presented at trial. (XDMF 46-74.) As a result of these failures and despite having damages in the amount of $2,000,000 (XDMF 75), Kettler was “forced” to settle his case for $15,000. (XDMF 76.)

Legal malpractice may be asserted as an offset against an attorney's claim to recover fees. (Safine v. Sinnott (1993) 15 Cal.App.4th 614, 618-619.)

Here, however, Cross-Defendant Kettler’s evidence fails to raise a triable issue of material facts demonstrating legal malpractice. That Kettler believes certain witnesses and evidence were critical to his case and that presenting this evidence would have resulted in a different outcome in the Underlying Action is alone insufficient to demonstrate a breach of the duty of care and resulting damages. (Crouse v. Brobeck, Phleger & Harrrison (1998) 67 Cal.App.4th 1509, 1534–1535 [recognizing application of general rule that plaintiff in legal malpractice case must present expert testimony on violation of standard of care, but finding burden did not shift because attorney defendants did not meet their initial burden to present affirmative evidence that they did not violate the standard].)

The motion for summary adjudication is denied based on the existence of a triable issue of material fact in dispute regarding the mediation requirement.

Cross-complainant’s motion for a continuance of the hearing is denied as moot.

[1] Further, the Engagement Letter also states that “when Attorneys’ services conclude, all unpaid charges will be immediately due and payable.” (Fredman Decl., Ex. A, ¶ 12.)