Mink v. Maccabee

Filed 7/31/07 Mink v. Maccabee CA2/5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

APPEAL from a judgment of the Superior Court of Los Angeles County.

Rita J. Miller, Judge. Affirmed.

Law Offices of Thomas J. Weiss, Thomas J. Weiss, and Hurum K. Junt; Mink Law Firm and Lyle R. Mink for Plaintiff and Appellant.

Law Offices of Dan S. Maccabee and Dan S. Maccabee; Law Offices of Peter A. Schwartz for Defendant and Respondent.

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Lyle Mink appeals from the judgment entered against him and in favor of respondent Dan Maccabee, on Maccabee's complaint.[1] We affirm.

Facts[2]

Both Mink and Maccabee are lawyers. In October 1999, Maccabee referred an insurance bad faith case to Mink. The client's name was Scott Aden and the case arose out of the Northridge earthquake. The case settled in September 2000. On February 19, 2002, Maccabee sued Mink, seeking a referral fee. Maccabee alleged that in 1999, Mink promised him a reasonable referral fee, that in October or November of 2001, Mink received $400,000 in compensation for the bad faith case, and that Aden signed an acknowledgment and consent to the division of fees on or about February 15, 2002.

Mink demurred, contending that Aden's consent did not comply with Rule 2-200 of the California Rules of Professional Conduct (Rule 2-200), which provides that "(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: (1) The client has consented in writing thereto after a full disclosure has been made in writing that a division of fees will be made and the terms of such division; . . ."

The trial court sustained the demurrer on the ground that a consent obtained after the conclusion of the representation did not satisfy the rule. In an opinion filed in August of 2004, we reversed, finding that "The rule requires that the client's written consent be obtained prior to any division of fees. This simple dictate cannot reasonably be read to require the client's written consent prior to the lawyers' entering into a fee-splitting arrangement, or prior to the commencement of work, or at any time other than prior to any division of fees." (Mink v. Maccabee (2004) 121 Cal.App.4th 835, 838.)

On remand, the trial court determined that the adequacy of the consent was a question of law for the court, and would be tried first, and that the existence of an agreement between Mink and Maccabee, and the amount of the fee, if any, were questions for the jury.

At the court trial, Maccabee and Aden testified that Maccabee first referred Aden to Michael Bidart, who (in Aden's presence) said that his firm would pay a referral fee to Maccabee. Maccabee testified that Bidart promised a 25 percent fee, and Aden testified that the amount wasn't discussed, but both testified that a referral fee was acceptable to Aden.

Maccabee testified that in October 1999, when he referred Aden to Mink, he told Aden that Mink would pay a reasonable referral fee, with the amount determined by factors such as the time spent and the result obtained. Aden's testimony was that he did not recall such a discussion but that he knew about referral fees from the meeting with Bidart, and that a referral fee "was always a given."

Both Maccabee and Aden testified about the February 15, 2002 consent and disclosure form signed by Aden and referenced in the complaint, and about another consent and disclosure form, signed by Aden on April 8, 2005, both of which were entered into evidence.

In pertinent part, the February 15, 2002 form reads:

"We[3]hereby consent to a division of fees by and among the Law Offices of Lyle Mink and the Law Offices of Dan S. Maccabee. [] The terms of the division are of a payment of 20% (twenty percent) of the legal fees received by the Offices of Lyle Mink in this matter."

In pertinent part, the April 8, 2005 form reads:

"I understand that the referral fee is to be a 'reasonable' referral fee, not to exceed twenty percent (20%) of the total fee paid to Mr. Mink. I consent to a 'reasonable' referral fee, not to exceed twenty percent (20%) of the total fee paid to Mr. Mink. These are the terms of the division."

Maccabee testified that he prepared both forms, and that both were signed by Aden at his behest. On cross-examination concerning the first form, he testified that he and Mink had not agreed to the 20 percent fee disclosed in the consent, but that 20 percent was on "the low range" of reasonable fees in the Los Angeles community and was "a subset" of a reasonable fee. Maccabee also testified that he had no communication with Mink between the first and second forms, and that neither form was sent to Mink until discovery in this action.

When Aden was asked about the multiple forms he testified that "Mr. Maccabee said that he needed a clarification and he wanted something in more detail," and that "The question is why did I sign two [forms]? Simply a request was made that Mr. Maccabee was looking for clarification again of the issue," and that he consented to either a reasonable referral fee and/or a 20 percent referral fee.

Aden then authenticated a third disclosure and consent form, dated January 24, 2006, the day of his testimony. It reads:

"I hereby consent to a division of fees from the Underlying Case by and among the Law Offices of Lyle Mink and the Law Offices of Dan S. Maccabee. [] I fully and expressly consent to a fair reasonable referral fee, to be determined in the litigation between Mr. Maccabee and Mr. Mink, and paid by Mr. Mink to Mr. Maccabee. [] I also fully and expressly consent to a referral fee of thirty-three percent (33%) of the total fee paid to Mr. Mink. [] I also fully and expressly consent to a referral fee of one hundred thirty thousand dollars ($133,000) plus interest from the date Mr. Mink's fee was paid to him. [] I understand and acknowledge that referral fee will be paid in accordance with Rules of Professional Conduct Rule 2-200. [] I also consent to Mr. Maccabee being paid for the time and work he performed in the Underlying Case."

When Aden was asked "What are the limits of your consent?" he answered "Limits of my consent is it doesn't impact me." He similarly testified that he believed that Maccabee should get a fee, but that the amount was "an internal dispute between counsel," and of no concern to him.

Maccabee then moved to supplement or amend his complaint, and leave to do so was granted. The amended complaint, dated January 25, 2006, alleges that Aden consented to the referral fee on February 15, 2002, on April 8, 2005, and on January 24, 2006, and also alleges, on information and belief, that Aden "may execute additional consents at any time prior to the determination by the trier of fact of the amount of the reasonable referral fee . . . ." The motion for leave to amend indicated that the additional consent would conform to and be executed contemporaneously with the trier of fact's determination of the amount.

Mink demurred to the new complaint, and at his request the court took judicial notice of the three consents already in evidence. Mink's argument on demurrer was (inter alia) that the varying terms of the consents, especially when compared to the allegation of the complaint, meant that there had been no "full disclosure . . . of . . . the terms of such division," and thus no consent under Rule 2-200. The court overruled the demurrer.

The parties proceeded to the jury trial. The jury heard evidence about the bad faith case, including the services Mink performed, Mink's bills, the services Maccabee performed, and the settlement. The jury also heard evidence on Mink's suit against Aden for fees, and on other litigation between Mink and Maccabee.

On the agreement to pay a referral fee, Mink testified that in October 1999, Maccabee asked for such a fee, and that he refused. Maccabee testified to the contrary, that that the two agreed that a reasonable fee would be paid, with the amount to depend on such factors as the time spent and the result obtained.

The three consents were entered into evidence, although we can see testimony on only the first two, from Maccabee, who testified that the 20 percent referenced in the first consent "could have been" his deal with Mink, if 20 percent was a reasonable amount, and that the April 2005 consent was executed because Mink "didn't like" the earlier consent.

In addition, each side presented evidence on referral fees. For Mink, Ralph Williams, a practicing lawyer and mediator, testified that it was his practice to put the referral fee agreement in the engagement letter, and on cross-examination testified that referral fees ranged from ten percent to a third, depending on the profitability of the representation, the length of the relationship with the referring lawyer, and the amount of effort it took to produce the result. Mink himself testified that he had never paid or received a referral fee, and that lawyers do not expect to be paid for referrals and do not expect to pay referral fees.

For Maccabee, another lawyer, Brain Kabateck, testified that during the relevant period he practiced in the insurance bad faith area and dealt with hundreds of referrals, and that referral fees ranged between twenty percent and a third. Maccabee also called attorney and arbitrator Eric Epstein, who testified that referral fees could be written or oral, and that he had surveyed the leading insurance bad faith firms in Los Angeles County, and determined a referral fee of between 20 and 25 percent was paid on insurance bad faith claims arising out of the Northridge earthquake.

On May 1, 2006, on a special verdict, the jury found that Mink and Maccabee entered into an oral contract for Mink to pay a referral fee to Maccabee and that the fee payable "under the circumstances of this case," was $87,500. On the same day, judgment was entered in favor of Maccabee in that amount.

In June, the court held a final hearing on the adequacy of the disclosure under Rule 2-200. For that hearing, Maccabee submitted another consent form, signed by Aden on May 26, 2006, that is, after the judgment.

It begins with language identical to January 1, 2006 consent: "I hereby consent to a division of fees from the Underlying Case by and among the Law Office of Lyle Mink and the Law Office of Dan S. Maccabee. [] I fully and expressly consent to a fair reasonable referral fee, to be determined in the litigation between Mr. Maccabee and Mr. Mink, and paid by Mr. Mink to Mr. Maccabee." It then reads "I also fully and expressly consent to a referral fee of eighty-seven thousand five hundred dollars ($87,500) plus interest from the date Mr. Mink's fee was paid to him."

The court found, as a final order, that Rule 2-200 had been complied with, noting that "I do not know it was adequate before [the May 26, 2006 consent] was signed, but I'm finding that at least as of the time that [the May 26, 2006 consent] was signed, consent is adequate."

Discussion

Mink's chief argument on appeal is that Aden's repeated consents did not satisfy Rule 2-200 because they were "generic consents" to any fee Maccabee could obtain from Mink, and did not include disclosure and consent to the actual terms of the fee division.

"[T]he purpose of rule 2-200's disclosure and consent requirements is to safeguard the right of clients to know how their legal fees will be determined and the extent of, and the basis for, their attorneys' sharing of fees." (Huskinson & Brown v. Wolf (2004) 32 Cal.4th 453, 459.) "'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.' (Margolin v. Shemaria (2000) 85 Cal.App.4th 891, 903.) Moreover, '[r]equiring the client's written consent to fee sharing impresses upon the client the importance of his or her consent, and of the right to reject the fee sharing.' (Ibid.)" (Chambers v. Kay (2002) 29 Cal.4th 142, 156-157.)

Here, Aden from the outset accepted the idea of fee sharing, then repeatedly consented, in writing, to payment of a fee. It is true that his initial consent, to a 20 percent fee, was not to the actual terms of the referral agreement, which, as found by the jury, was to a reasonable fee. However, on two subsequent occasions, Aden amended his consent to clarify that he knew that a reasonable referral fee would be paid, and that he consented to a reasonable referral fee. The purpose of Rule 2-200 is to safeguard the client's rights. The rule was fully satisfied.

Mink also argues that an agreement to pay a reasonable fee is too vague to be enforced. "'Where a contract is so uncertain and indefinite that the intention of the parties in material particulars cannot be ascertained, the contract is void and unenforceable. [Citation.]' (California Lettuce Growers v. Union Sugar Co. (1955) 45 Cal.2d 474, 481; see Civ. Code, 1598.)" "To be enforceable, a promise must be definite enough that a court can determine the scope of the duty and the limits of performance must be sufficiently defined to provide a rational basis for the assessment of damages." (Ladas v. CaliforniaState Auto. Assn. (1993) 19 Cal.App.4th 761.)

We think the Mink-Maccabee agreement to pay a reasonable referral fee is definite enough. "The fact that the amount of reasonable costs (in this case, fees) must be determined thereafter does not render the offer fatally uncertain." (Elite Show Services, Inc. v. Staffpro, Inc. (2004) 119 Cal.App.4th 263, 269 [inclusion of agreement to pay reasonable attorney fees does not render settlement offer too uncertain to be enforced under Code of Civil Procedure section 998].) The intent of the parties was to pay the kind of fee common in the legal community. The amount was to be determined based on such factors as the time spent and the result achieved. Several lawyers testified on standard referral fees in the legal community, that is, that the fees could be as low as ten percent and as high as a third. One such witness, Williams, testified that relevant factors in determining a fee included the factors as time spent and result obtained, exactly the factors which Maccabee testified were part of his agreement with Mink. Thus, the amount of the fee could be ascertained -- as it in fact was -- with reference to the standards of the Los Angeles legal community.

Neither Rochlis v. Walt Disney Co. (1993) 19 Cal.App.4th 201 overruled on other grounds in Turner v. Anheuser-Busch, Inc. (1994) 7 Cal.4th 1238, 1251, nor Ladas v. CaliforniaState Auto. Assn., supra, 19 Cal.App.4th 761, cited by Mink, compel a different result.

In Ladas, the unenforceable promise was "An amorphous promise to 'consider' what employees at other companies [were] earning" when setting commission rates. In finding the promise unenforceable, the court noted the numerous uncertainties which would defeat enforcement of the promise, asking "By what standard would a court or a jury determine that the company failed to meet its obligation to 'consider' commissions earned by competitors?" and concluding that "The nature of the obligation asserted provides no rational method for determining breach or computing damages. (Ladas v. CaliforniaState Auto. Assn., supra, 19 Cal.App.4th at p. 771.) We see no such problems here.

Nor is Rochlis on point. It is an employment case in which the employee alleged breach of employment contract and constructive discharge. The Court rejected the claims, finding the at-will employment and that no constructive discharge. The Court then considered the employee's claims that there were additional contractual promises and found that the alleged promises were "simply too vague and indefinite to be enforceable. For example, promises to pay salary increases or bonuses which are 'appropriate' to Rochlis's responsibilities and performance or that Rochlis would have an 'active and meaningful' participation in creative decisions are not capable of enforcement in a court of law." (Rochlis v. Walt Disney Co., supra, 19 Cal.App.4th at pp. 213-214.) As the Supreme Court later stated, Rochlis thus held that "courts will not enforce vague promises about the terms and conditions of employment that provide no definable standards for constraining an employer's inherent authority to manage its enterprise. It is to be expected that many alleged employer promises will be unable to cross this threshold of definition to become enforceable contract claims." (Scott v. Pacific Gas & Electric Co. (1995) 11 Cal.4th 454, 473, disapproved on other grounds in Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 352, fn. 17.) Of course, there are no such considerations here.

Finally, we turn to Mink's contention that the award was not supported by the evidence. He cites Epstein's testimony that 20 to 25 percent would have been a reasonable referral fee in this case, and argues that Epstein, who was not familiar with some aspects of the underlying case, did not have enough information to competently offer that opinion. The argument ignores the fact that Epstein testified that referral fees are in general, in the Los Angeles legal community, 20 to 25 percent, and that other lawyers testified to similar ranges. Even if Epstein should not have testified about a reasonable fee in this case, the jury's verdict was supported by the evidence concerning the underlying case (including the evidence that Maccabee worked on the underlying case) and referral fees in the local legal community.

Disposition

The judgment is affirmed.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

ARMSTRONG, J.

We concur:

TURNER, P. J.

MOSK, J.

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[1]Actually, a cross-complaint in other litigation between the parties, not relevant here.

[2]Maccabee's motion to augment the record with a June 22, 2006 minute order in this case, and a brief submitted for that hearing, is granted.

[3]This form signed by Aden individually and as trustee of the Marian C. Aden Trust, one of the parties in the underlying litigation.