Filed 12/14/17 Assadian v. Parsi CA4/3






NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FOURTH APPELLATE DISTRICT

DIVISION THREE


HAMID R. ASSADIAN,

Plaintiff and Appellant,

v.

REZA PARSI et al.,

Defendants and Respondents.


G054037

(Super. Ct. No. 30-2013-00677626)

O P I N I O N

Appeal from an order of the Superior Court of Orange County, Nathan R. Scott, Judge. Affirmed.
Donna Bader for Plaintiff and Appellant.
Law Office of Julie M. McCoy and Julie M. McCoy for Defendants and Respondents.
* * *
This is a dispute over an award of attorney fees in a rather atypical context. The court determined the contract between the parties, plaintiff Hamid R. Assadian and defendants Reza Parsi, Manatel Communication & Energy, Inc., and Tele-Free Iran (collectively defendants) was illegal and unenforceable because Assadian had been engaged in the unauthorized practice of law while performing the contract.
After further proceedings we will discuss below, the court awarded defendants approximately $347,000 in attorney fees. Assadian argues this was error, asserting that an attorney fee award under a contract is improper when the contract has been deemed illegal, and further, the amount awarded was erroneous and unreasonable. We find that this case falls into an exception to the general rule under which illegal contracts are entirely unenforceable, and conclude Assadian’s lack of specific argument in the trial court as to the amount of the fees waives the issue on appeal.
I
FACTS
Assadian’s second amended complaint (the complaint) alleged he was a “business consultant who provides a variety of consulting services to individuals and companies.” In 2011, defendants had entered into a written consulting contract (the consulting contract or the contract) with him. The brief, three paragraph contract stated Assadian would provide consulting services for $125 per hour, and “[i]n the event of any litigation between the parties, the prevailing party will be entitled to reasonable attorney’s fees and all costs incurred in enforcing this Agreement.” Assadian alleged that he provided “countless hours of services,” and as an example set forth circumstances under which defendants were involved in litigation against their former law firm. Assadian helped “translate communications, documents, meetings with experts, and discovery responses.” Allegedly at the request of defendants’ attorneys, he was “included on most, if not all, communications between the Defendants and their attorneys . . . for the purpose of helping with translation. Thus, much of the evidence supporting Plaintiff’s countless hours of work is confidential or protected by the attorney-client privilege between Defendants and their attorneys . . . .”
About a month after entering into the contract, the complaint alleged, Parsi asked Assadian if he could pay a fixed monthly sum instead of hourly fees. Assadian agreed Parsi would pay $4,000 a month against the running balance of hourly fees, but defendants were liable for fees over $4,000 per month. A memorandum of understanding was signed by the parties and documented the $4,000 per month term. This memorandum, however, did not expressly state defendants’ liability for excess hourly fees.
According to the complaint, for about two years, defendants paid on time. They informed Assadian in September 2013 that they would no longer pay Assadian’s fees or any outstanding balance. The complaint alleged defendants had an outstanding balance of at least $73,317.24 for work Assadian performed under the contract.
In 2013, Assadian filed the instant action. The operative complaint alleges breach of contract, fraudulent transfers, and entitlement to payment under a quantum meruit/unjust enrichment theory. Assadian requested, among other things, attorney fees and costs. In their answer, in addition to other defenses, defendants alleged Assadian engaged in the unauthorized practice of law and that the contract was void.
In May 2015, Parsi filed a first amended cross-complaint (the cross-complaint) alleging three claims for breach of contract. The claim for breach of written contract was as to the consulting contract. One claim for breach of oral contract was for loans Parsi allegedly made to Assadian totalling approximately $9,500. The other claim for breach of oral contract related to the memorandum of understanding and an alleged oral modification of the consulting contract.
The cross-complaint also included causes of action for the unauthorized practice of law (Bus. & Prof. Code, § 6125), and unfair business practices (Bus. & Prof. Code, § 17200). Parsi alleged Assadian undertook the performance of legal services for Parsi, including “reading and analyzing trial transcripts, drafting and filing motions . . . providing legal advice, evaluating the merit of an appeal and malpractice case.” Parsi also alleged Assadian told him “what to say, ask and demand” from his attorneys. He asserted “Assadian acted like a lawyer and did things that Parsi’s attorneys . . . had also done.” One of his bills reflected that Assadian charged Parsi for case evaluation, and alleged he charged for reviewing special verdict forms, jury instructions, and a settlement offer. Parsi sought at least $50,000 for breach of the consulting contract and the unauthorized practice of law, as well as costs and attorney fees. With respect to the unfair business practices claim, he sought restitution, disgorgement, and injunctive relief. Assadian’s answer also requested attorney fees and costs.
In December 2015, prior to trial, the trial court issued a ruling with respect to the complaint’s claims for breach of contract and quantum meruit, stating the contract “is illegal and calls for the practice of law. The Court will allow [possible] recovery on the quantum meruit cause of action.” The court further found “there is no valid contract,” but proceeding on the quantum meruit was permitted because Assadian performed services that could have been performed by a non-lawyer.
The case was submitted to the jury on the complaint’s quantum meruit claim and the cross-complaint’s claim for loans of $9,500 made from Parsi to Assadian. The jury returned a special verdict form finding that Assadian had performed services for defendants as requested, but that defendants had paid for them. Asked for the reasonable value of Assadian’s services, the jury left the question blank, therefore declining to award him anything more than what had already been paid. With respect to the cross-complaint, the jury found Assadian and Parsi had entered into a contract to lend money, and Assadian failed to perform the contract, damaging Parsi in the amount of $9,500.
Additional issues were briefed and submitted for determination by the court, including whether Assadian had committed the unauthorized practice of law; whether the consulting contract was illegal, void, and unenforceable; and whether Parsi was entitled to restitution and/or an injunction against Assadian for the unauthorized practice of law.
The court issued an order in February 2016. The court rejected Parsi’s unfair business practices claim in part because Parsi had failed to separate what services were performed that could have been performed by a non-lawyer, and therefore had not carried his burden of demonstrating what amounts should be subject to disgorgement. The quantum meruit claim had been properly placed before the jury, the court decided, because “even when a contract that includes a provision for legal services is determined to be illegal and thereby unenforceable, a party may seek quantum meruit recovery for lawful services rendered.” The court also found a permanent injunction unnecessary. The court ordered Parsi, as the prevailing party, to submit a proposed statement of decision.
Parsi subsequently filed a motion for attorney fees and costs as the prevailing party under Civil Code section 1717. His primary argument was that he was the prevailing party, and the court had discretion to award attorney fees despite the contract’s illegality. Parsi requested $346,993.39, Parsi’s motion included extensive documentation, including legal bills. In addition, arguing fees were not permitted due to the illegal contract, Assadian’s opposition included a short section arguing the fees sought were excessive for several reasons, but did not specify any specific portion of Parsi’s legal fees or amounts that should not be permitted.
The trial court granted Parsi’s motion, finding the amount sought was a “reasonable lodestar calculation of attorney fees incurred prosecuting and defending intertwined claims.” As to Assadian’s claim that the amount sought was excessive and unreasonable, the trial court determined that argument failed for lack of specificity. Assadian now appeals from the order awarding attorney fees.
II
DISCUSSION
Entitlement to Fees
The legal basis of an attorney fee award is a question of law, subject to de novo review. (Connerly v. State Personnel Bd. (2006) 37 Cal.4th 1169, 1175.)
“California follows the ‘American rule,’ under which each party to a lawsuit ordinarily must pay his or her own attorney fees. [Citations.] Code of Civil Procedure section 1021 codifies the rule, providing that the measure and mode of attorney compensation are left to the agreement of the parties ‘[e]xcept as attorney’s fees are specifically provided for by statute.’” (Musaelian v. Adams (2009) 45 Cal.4th 512, 516.)
Section 1717, subdivision (a), states, in pertinent part: “In any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs. . . .”
“Ordinarily, in an action on a contract providing for an award of attorney fees, Civil Code section 1717 entitles the prevailing party to attorney fees, even when the party prevails on the ground that the contract is inapplicable, invalid, unenforceable, or nonexistent, if the other party would have been entitled to attorney fees had it prevailed. [Citation.] This general rule ‘serves to effectuate the purpose underlying section 1717,’ which was enacted to establish mutuality of remedy where a contractual attorney fee clause makes recovery of fees available for only one party. [Citation.]” (Yuba Cypress Housing Partners, Ltd. v. Area Developers (2002) 98 Cal.App.4th 1077, 1081.)
“[A] different rule applies where a contract is held unenforceable because of illegality.” (Bovard v. American Horse Enterprises, Inc. (1988) 201 Cal.App.3d 832, 843.) “A party to a contract who successfully argues its illegality stands on different ground than a party who prevails in an action on a contract by convincing the court the contract is inapplicable, invalid, nonexistent or unenforceable for reasons other than illegality.” (Id. at p. 843.) Generally, courts will “withhold relief under the terms of an illegal contract or agreement which is violative of public policy. [Citations.]” (Tri-Q, Inc. v. Sta-Hi Corp. (1965) 63 Cal.2d 199, 218.)
The purpose of this rule is “intended to prevent the guilty party from reaping the benefit of his wrongful conduct, or to protect the public from the future consequences of an illegal contract.” (Tri-Q, Inc. v. Sta-Hi Corp., supra, 63 Cal.2d at p. 218.) The policy rationale behind this rule is deterrence – to refuse to give aid to parties who enter into an illegal bargain. (Lewis & Queen v. N.M. Ball Sons (1957) 48 Cal.2d 141, 150.)
The rule, however, is not absolute; it is subject to a “wide range of exceptions.” (Emmons, Williams, Mires & Leech v. State Bar (1970) 6 Cal.App.3d 565, 569.) Courts have recognized one such exception when both parties are not equally blameworthy. “Because of the harsh results that might be visited on innocent parties to a contract when their agreement is voided for illegality, courts have fashioned exceptions [to a rule of invalidity]. . . . [¶] . . . [¶] Perhaps the most common exception to the rule of invalidity . . . is the in pari delicto [doctrine]. At its most fundamental level, the exception allows an illegal contract to be enforced ‘so long as the party seeking its enforcement is less morally blameworthy than the party against whom the contract is being asserted . . . .’” (McIntosh v. Mills (2004) 121 Cal.App.4th 333, 347.)
Assadian relies heavily on Bovard v. American Horse Enterprises, Inc., supra, 201 Cal.App.3d 832, to support his position that the attorney fees provision in the consulting contract should not be enforced. That case, however, involved situation where the contracts entered into by the parties were entirely unenforceable due to their illegal objects, specifically, the manufacture of drug paraphernalia. (Id. at pp. 837-838.) Both parties, the buyer and the seller, were equally morally blameworthy.
In Medina v. Safe-Guard Products, Inernat., Inc. (2008) 164 Cal.App.4th 105, by contrast, the plaintiff was the attempted purchaser of an insurance contract from a company not licensed to sell in California. (Id. at p. 108.) This court determined that the in pari delicto doctrine applied, stating “obviously an innocent consumer who buys an insurance contract from an unlicensed insurance company is far ‘less morally blameworthy’ than the company that does not disclose its unlicensed status prior to contracting.” (Id. at p. 110.)
“The rule that the courts will not lend their aid to the enforcement of an illegal agreement or one against public policy is fundamentally sound. The rule was conceived for the purposes of protecting the public and the courts from imposition. It is a rule predicated upon sound public policy. But the courts should not . . . blindly extend the rule to every case where illegality appears somewhere in the transaction. The fundamental purpose of the rule must always be kept in mind, and the realities of the situation must be considered. Where, by applying the rule, the public cannot be protected because the transaction has been completed, where no serious moral turpitude is involved, where the defendant is the one guilty of the greatest moral fault, and where to apply the rule will be to permit the defendant to be unjustly enriched at the expense of the plaintiff, the rule should not be applied.” (Norwood v. Judd (1949) 93 Cal.App.2d 276, 288-289; see Maudlin v. Pacific Decision Sciences Corp. (2006) 137 Cal.App.4th 1001, 1013.)
Assadian proffers several reasons why we should not apply the in pari delicto doctrine here. He argues no punitive damages were sought or awarded; the trial court made no findings that he engaged in fraud; he performed a number of legitimate activities and was allowed to pursue his quantum meriut claim; “[a]t almost all times” he performed his work under the direction of defendants’ attorneys; nobody complained about his activities at the time; defendants’ request for disgorgement was denied; Assadian did not hold himself out as an attorney; this was an isolated transaction; defendants did not suffer damages as a result; and his work did not result in sanctions or punitive damages against him. None of these persuade us that Assadian is not the far more blameworthy party here. He was the one whose activities resulted in the contract being found illegal. He does not provide evidence or allege that defendants asked for, directed, encouraged, or insisted that he perform such activities. Accordingly, he is far more “‘morally blameworthy’” (Medina v. Safe-Guard Products, Internat., Inc., supra, 164 Cal.App.4th at p. 110) than defendants. There is simply no valid reason for not holding Assadian to account for that behavior and enforcing the consulting contract against him to the extent that it permits defendants to recover attorney fees. To find otherwise would be fundamentally unjust.

Amount of Fees
“‘The “experienced trial judge is the best judge of the value of professional services rendered in his court, and while his judgment is of course subject to review, it will not be disturbed unless the appellate court is convinced that it is clearly wrong”’ —meaning that it abused its discretion.” (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095.)
In the trial court, Assadian offered two reasons why the fees sought were excessive. He claimed that despite Parsi’s claims to the contrary, the costs of litigation were not his fault, but due to defendants’ actions. Second, he argued that the amount of damages recovered is an important factor in determining a reasonable fee. The trial court rejected these arguments because they were general challenges to the reasonableness of the fees and lacked specificity. The trial court was correct and well within its discretion.
“‘In challenging attorney fees as excessive because too many hours of work are claimed, it is the burden of the challenging party to point to the specific items challenged, with a sufficient argument and citations to the evidence. General arguments that fees claimed are excessive, duplicative, or unrelated do not suffice. Failure to raise specific challenges in the trial court forfeits the claim on appeal.’ [Citation.] The trial court was familiar with the issues in this case. Because plaintiff did not point to the specific items challenged, with a sufficient argument and citations to the evidence, in support of its contention that the amount of awarded attorney fees was excessive, plaintiff forfeited this claim on appeal. [Citation.]” (Lunada Biomedical v. Nunez (2014) 230 Cal.App.4th 459, 488.)
Such is the case here. In the trial court, Assadian made two general objections to the amount of the attorney fees requested without specifying, based on the evidence, which items he was challenging and how much the request should be reduced. The trial court properly rejected Assadian’s argument, and any argument as to the excessive nature of the fee award is waived on appeal.

III
DISPOSITION
The order is affirmed. Defendants are entitled to their costs on appeal.



MOORE, ACTING P. J.

WE CONCUR:



FYBEL, J.



IKOLA, J.