Hagendorf v. Conway

Filed 2/28/07 Hagendorf v. Conway CA2/3

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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 THREE

APPEAL from a judgment of the Superior Court of Los Angeles County, Allan J. Goodman, Judge. Affirmed.

Douglas T. Richardson for Defendant, Appellant and Cross-Respondent Dean Zanetos.

Law Offices of Hagendorf & Abernethy, Wayne Hagendorf and D. Scott Abernethy for Plaintiff, Respondent and Cross-Appellant, Wayne Hagendorf.

_________________________

INTRODUCTION

Attorney Wayne Hagendorf (Hagendorf) sued Dean Zanetos (Zanetos) for unpaid attorney fees. The trial court awarded Hagendorf $36,130, and thereafter awarded Hagendorf $77,414.96 in attorney fees and costs. Zanetos appealed from the judgment entered against him and Hagendorf filed a protective cross-appeal. We affirm the judgment and pursuant to Hagendorfs request, dismiss the cross-appeal.

FACTUAL AND PROCEDURAL BACKGROUND

1. The underlying facts.

Following the usual standard of review after a trial on the merits, we view the facts in the light most favorable to the judgment. (US Ecology, Inc. v. State of California(2005) 129 Cal.App.4th 887, 908.)

Hagendorf was a certified public accountant. He was also an attorney, licensed in four jurisdictions to practice law. Hagendorf was a national lecturer who had published many articles and written two books. Over the years, Hagendorf performed legal services for Gary Conway (Conway) and Zanetos, and their companies (Ambush Entertainment Corp., World Television Distribution, Inc., and Silver Canyon Winery). When Hagendorf rendered services it was understood that the two entrepreneurs, Conway and Zanetos, would be responsible for the attorney fees.

On March 3, 1993, Hagendorf entered into a written fee agreement with Conway and Zanetos. The fee agreement was signed by Hagendorf, Conway, and Zanetos.^[1] The fee arrangement was modified as reflected in an April 21, 1995, written fee agreement.^[2] The fee agreements were intended to obligate Conway and Zanetos personally. In 1993 and 1995, Hagendorfs usual hourly rate was $250 per hour.

Neither fee agreement complied with Business and Professions Code section 6148. The 1993 fee agreement failed to discuss whether Hagendorf had errors and omissions insurance. The 1995 fee agreement was not signed by Conway or Zanetos.

From the fall of 1992 through February 1996, Hagendorf performed legal services for Conway and Zanetos. Hagendorf regularly submitted invoices requesting payment of fees. There were no objections to the bills, which did not reflect all services rendered. According to Hagendorf, the unpaid bills showed that for the period of December 17, 1994 through December 17, 1996, he had not been paid for 183.5 hours of service.

While employed by Zanetos and Conway, Hagendorf performed legal services on a wide range of more than 70 matters. However, the majority of his time was involved with complex litigation. For example, there was protracted litigation involving a $100,000 note, a commission dispute, and litigation involving copyright issues.

2. The complaint and arbitration.

Hagendorf claimed he was owed attorney fees. On December 17, 1996, Hagendorf filed a lawsuit against Conway, Zanetos, Ambush Entertainment Corporation, and World Television Distribution, Inc.

In July 1997, Hagendorfs fee dispute was heard through the Los Angeles County Bar Association Fee Dispute Resolution program. It resulted in an award to Hagendorf in the sum of $19,645.25.

Thereafter, the parties other than Zanetos agreed to resolve the matter by paying Hagendorf $8,500. Zanetos was not involved in the settlement and it did not absolve him of his personal obligations. The settlement is documented in an April 6, 1998, general mutual release.

Zanetos, acting alone, requested trial de novo. If Zanetos was unsuccessful in obtaining a result in the trial de novo better than that in the arbitration award, the trial court would then be permitted to award Hagendorf attorney fees and costs. (Bus. & Prof. Code, 6204, subd. (d).)^[3]

3. The first trial and the first appeal.

The matter went to trial against Zanetos only. Judgment was entered in favor of Hagendorf in the sum of $19,795.25, less $8,500 for the amount Hagendorf had received in settlement. Upon Hagendorfs motion (Bus. & Prof. Code,  6204, subd. (d)), Hagendorf was awarded $13,518.70 in attorney fees.

Zanetos appealed from the judgment. On November 1, 2000, in Hagendorf v. Conway, Case No. B134641 (Case No. B134641), we held that the written fee agreements did not meet the requirements of Business and Professions Code section 6148 because the 1993 contract did not contain any references to errors and omissions insurance and the 1995 contract was not signed by both Hagendorf and Zanetos. Thus, the contracts were voidable at the option of Zanetos, and Hagendorf was entitled to collect a reasonable fee.^[4] We reversed and remanded to the trial court for a new trial. We held that [i]f Hagendorf makes a proper showing in a new trial, he will be able to collect the reasonable value of his services. We also held that Zanetos was personally liable when we stated that we reject Zanetoss argument that there was no substantial evidence to support the conclusion that he was personally liable for the attorney fees. Zanetos signed the first agreement personally and not in a representative capacity. Hagendorf testified it was his understanding and intent to enter into the fee agreement with Conway and Zanetos individually. This evidence was sufficient to prove Zanetoss personal liability. (Case No. B134641, supra, [p. 14, fn. 9].)

4. The second trial and the instant appeal.

On remand, a two‑day court trial was held in August 2004. The trial court awarded Hagendorf $36,130 for services rendered. The trial court explained its reasoning in a statement of decision. The trial court applied a two‑year statute of limitations and held that the relevant time period was the two years preceding the December 17, 1996 filing of the complaint . . . . The trial court found Hagendorf was entitled to be compensated for 183.5 hours at $250 per hour, or $45,850 subject to the offset of $9,720, leaving a balance owed of $36,130.^[5](The $9,720 offset was for the $8,500 received in settlement and for certain expenses such as rent.) The trial court also held that Hagendorf was entitled to costs of suit pursuant to statute.

Thereafter, Hagendorf filed a motion for attorney fees and costs pursuant to Business and Professions Code section 6204, subdivision (d). The trial court awarded Hagendorf $75,000 in attorney fees and $2,414.96 in costs.

Zanetos appealed from the judgment rendered against him in the sum of $36,130, plus $77,414.96 in attorney fees and costs.

Hagendorf has filed a cross-appeal, primarily contesting the trial courts statute of limitations ruling. Hagendorf contends he is also entitled to be paid for an additional 809.5 hours of work. However, Hagendorf states he will dismiss his appeal if we uphold the verdict against Zanetos.^[6]

DISCUSSION

1. Zanetos substantial evidence contentions with regard to the quantum meruit award are not persuasive.

Zanetos challenges the trial courts factual findings that Hagendorf was entitled to quantum meruit for services rendered. Accordingly, the proper scope of review is the deferential substantial evidence standard. (US Ecology, Inc. v. State of California, supra, 129 Cal.App.4th at p. 908.) Under this standard of review, our duty begins and ends with assessing whether substantial evidence supports the verdict. [Citation.] [The] reviewing court starts with the presumption that the record contains evidence to sustain every finding of fact. [Citation.] We review the evidence in the light most favorable to the respondent, resolve all evidentiary conflicts in favor of the prevailing party and indulge all reasonable inferences possible to uphold the [factfinders] verdict. [Citation.] (Ibid.)

First, Zanetos argues the April 6, 1998, release barred recovery from him. Zanetos suggests no recovery against him could be made because the April 6, 1998 release specified that Ambush parties were being released upon the payment of $8,500, and that he was an Ambush party. However, Hagendorf testified he understood that both Conway and Zanetos were responsible for all bills and that Zanetos was not involved in the settlement. Further, there was evidence from a declaration signed by Conway that he had entered into the settlement on his behalf and on behalf of the two corporations, and that Zanetos had walked away from the settlement by refusing to sign the settlement agreement. This evidence provides substantial evidence to support the trial courts factual finding that the April 6, 1998, release did not extinguish Zanetos personal obligations to pay for services rendered by Hagendorf.

Second, Zanetos contends the evidence did not establish the reasonable value of the services rendered by Hagendorf. Zanetos asserts that Hagendorfs general descriptions of the services rendered and the general billing statements were insufficient to prove the types of services rendered. Zanetos argues Hagendorfs testimony and the bills lacked sufficient specificity. For example, Zanetos notes that Hagendorf was unable to describe the exact efforts undertaken on any particular case.

In determining the reasonableness of an attorney fee award, the courts may evaluate a number of circumstances. Among other factors, the courts examine the nature, difficulty, and importance of the litigation, the amount involved, the results obtained, the skills required and employed by the attorney, the success of the attorneys efforts, the attorneys learning, age, experience in the particular type of work demanded, and the time consumed. (Martino v. Denevi (1986) 182 Cal.App.3d 553, 558; In re Marriage of Cueva (1978) 86 Cal.App.3d 290, 296; c.f. Rules Prof. Conduct, rule 4-200.)

Hagendorf testified about his experience and education, including that he was licensed to practice law in four jurisdictions. He described the range of the cases handled and detailed the specific work involved in a number of those matters, including a case that involved a $100,000 note and a few copyright cases. Hagendorfs files were contained in a number of boxes that had been delivered to Zanetos. Hagendorf also submitted into evidence Exhibits 5 and 10. These exhibits were Hagendorfs bills sent over the years summarizing the efforts expended on the different cases. Exhibits 5 and 10 listed the amount of time spent according to the specific case, and often described the exact action taken, such as time expended on written correspondence. Some of the bills were missing. According to Hagendorf, during the relevant two‑year period of time, he expended at least 183.5 hours of services on more than 70 cases. Hagendorf also testified that his bills did not account for all services because he had understated the efforts taken. Hagendorf explained that when these bills were sent, no one ever disputed them and that more detailed billing was not required because he was in constant contact with Zanetos and Conway, who were always aware of the services being performed. Additionally, Conway testified that he had no reason to believe that the hours of services charged on the bills were not performed by Hagendorf. Further, Exhibits 5 and 10 reflected the money Hagendorf had received over the years.

With regard to the fair market value of Hagendorfs services, the Honorable Jack Goertzen, retired, testified as an expert. Justice Goertzen testified that more detailed billings were not required because Hagendorf was in constant contact with his clients and that Zanetos and Conway were familiar with the services being rendered. Neither Zanetos nor Conway objected to the billings. There was no evidence that Zanetos or Conway questioned Hagendorfs accounting methodology. Justice Goertzen also testified that the customary hourly rate for attorneys in the Los Angeles area for the pertinent time frame was $250 per hour for an attorney of Hagendorfs background. Additionally, Hagendorf testified his usual hourly rate in 1993 and 1995 was $250 per hour.

Thus, there was testimony by Hagendorf as to his education and experience, the hours he expended, types of work performed, the number of cases handled, and the types and complexity of the cases handled. There was testimony as to the reasonable value of services. The testimony was corroborated by Exhibits 5 and 10. This evidence is substantial evidence to support the trial courts decision. (Martino v. Denevi, supra, 182 Cal.App.3d at p. 559 [attorneys testimony as to number of hours worked on case is sufficient evidence to support an award of attorney fees, even in absence of detailed time records].)

Third, Zanetos contends that 94.5 hours of the 183.5 hours of legal services were expended solely and exclusively for Conway in connection with the RTC matter. Zanetos argues that the RTC matter had nothing to do with the Ambush parties or Zanetos. Thus, Zanetos suggests the award should be reduced by $23,625 (94.5 x $250). However, the bill to which Zanetos points (Exhibit 5, page 02) is directed to Conway and Zanetos and Hagendorf testified that both men were responsible for that work. Additionally, we found in the first appeal that Zanetos was liable for all billings.

Lastly, Zanetos notes that the trial court added the hours delineated in the billing statements and concluded that Hagendorf had accounted for 173 hours, and not 183.5 as testified to by Hagendorf. (See fn. 5.) Thus, Zanetos argues he should only be responsible for 173 hours worth of services. However, the trial court calculated the award based upon 183.5 hours in light of Hagendorfs testimony that his bills understated the actual services rendered, and that some of the bills were missing. In light of this evidence and because the trial courts expertise in assessing requests for attorney fees is also a factor that can be considered (see In re Marriage of Jovel (1996) 49 Cal.App.4th 575, 588; In re Marriage of Ananeh-Firempong (1990) 219 Cal.App.3d 272, 280), we cannot conclude the record lacked substantial evidence to support this finding.

There was substantial evidence to support the trial courts decision that Zanetos owed Hagendorf $36,130 for services rendered.^[7]

2. We need not address Zanetos contention with regard to the attorney fees and costs award.

Business and Professions Code section 6204, subdivision (d) permits the trial court to award attorney fees to the prevailing party if that party obtained a judgment more favorable than that provided by the arbitration award. (See fn. 3.)

Zanetos asks that we reverse the attorney fees and costs (Bus. & Prof. Code, 6204, subd. (d)) award if we reverse the underlying verdict. Because we find substantial evidence supports the underlying verdict, we will not reverse the attorney fees and costs award.

CONCLUSION

We have upheld the judgment against Zanetos. In his cross‑appeal, Hagendorf contends he was entitled to additional sums, primarily because the trial court erred in its statute of limitations ruling. We have not addressed the issues contained in Hagendorfs cross appeal pursuant to his request. Hagendorf states that [d]espite Hagendorfs entitlement to many thousands of additional dollars as a result of the trial courts improper limitation of hours, he is nonetheless willing to trade the time and expense of another remand for an affirmation of the current judgment so that the endless string of trials and appeals may finally come to an end, only 10 years after the filing of the suit and only 13 years after services were actually rendered.

In light of Hagendorfs request, we have dismissed Hagendorfs cross-appeal. Additionally, we will not remand to the trial court for an additional attorney fees and costs award.

DISPOSITION

The judgment is affirmed. Hagendorfs cross‑appeal is dismissed. Hagendorf is awarded costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

ALDRICH, J.

We concur:

KLEIN, P. J.

CROSKEY, J.

Publication Courtesy of San Diego County Legal Resource Directory.

Analysis and review provided by El Cajon Property line attorney.

^[1] The 1993 contract obligated Hagendorf to provide 40 hours of financial and legal services per month, in exchange for a two thousand dollar ($2,000) nonrefundable monthly retainer. Additionally, Hagendorf was to receive office space. The contract specified what was to occur if Hagendorf provided less or more than 40 hours of services in a particular month. The agreement obligated Conway and Zanetos to pay Hagendorf additional sums for past services rendered. For all future transactions, Hagendorf was to receive a percentage of proceeds accruing to Ambush, Conway and Zanetos, or of equity ownership as acquired by Ambush, Conway and Zanetos.

^[2] The 1995 agreement was in the form of a letter drafted by Hagendorf. It stated that $15,525 was owed to Hagendorf for past services rendered and specified a payment schedule. Future services were to be provided at the hourly rate of $125, the rate to be contingent upon timely payment of the bill. Further, [i]f in any month the bill [was] not timely paid, then the billing rate [would] permanently increase by $25 for all future services and [would] retroactively apply to the services performed in the month of the late bill. For all future transactions, Hagendorf was to receive a percentage of the proceeds accruing to Ambush, Conway and Zanetos, or of equity ownership as acquired by Ambush, Conway and Zanetos.

^[3] Business and Professions Code section 6204, subdivision (d) reads: (d)  The party seeking a trial after arbitration shall be the prevailing party if that party obtains a judgment more favorable than that provided by the arbitration award, and in all other cases the other party shall be the prevailing party. The prevailing party may, in the discretion of the court, be entitled to an allowance for reasonable attorneys fees and costs incurred in the trial after arbitration, which allowance shall be fixed by the court. In fixing the attorneys fees, the court shall consider the award and determinations of the arbitrators, in addition to any other relevant evidence.

^[4] All three versions of Business and Professions Code section 6148 discussed in our prior opinion stated that the failure to comply with their provisions, renders the agreement voidable at the option of the client, and the attorney shall, upon the agreement being voided, be entitled to collect a reasonable fee.  (Bus. & Prof. Code, 6148, subd. (c), italics added.) (Case No. B134641, supra, [at p. 10].)

^[5] The trial court stated in part: The best evaluation of plaintiffs testimony is that he devoted himself (part time) to legal matters on behalf of [defendants], rendered appropriate legal services, and gave defendants full value for the services he rendered or greater value, as he did not record or bill all of the time he devoted to their matters. Plaintiff claims a total of 183.5 hours for legal services rendered in this time period. The Courts review of the relevant exhibits yields 173 hours, with the qualification that a few bills are missing. Thus, plaintiffs claimed total number of hours is sufficiently corroborated by his testimony with the support of the extant bills. As a direct consequence of the foregoing, plaintiff is entitled to all of the number of hours claimed.

^[6] We have taken notice of documents from the bankruptcy court showing that Zanetos has filed for bankruptcy and the automatic stay has been terminated to allow this appeal to be adjudicated. The parties have provided us with a copy of the settlement in the bankruptcy court between Zanetos and Hagendorf that turns on our decision.

^[7] Zanetos also questions some of the accounting methodology, even though he did not do so during his relationship with Hagendorf. Zanetos contends Hagendorf has recovered twice because he has already been paid for some of the services rendered. Zanetos couches this argument in claims of unjust enrichment. Zanetos further suggests that he should have been credited with moneys paid to Hagendorf for the $2,000 retainer. These two arguments are refuted by Hagendorfs testimony that when he received money, he credited the funds received to the oldest outstanding debt and that the billings accurately reflected all money owed.