Arnall v. Superior Court

• Decision Date: 22 November 2010
• Docket Number: No. B225264.,B225264.
• Citation: 118 Cal.Rptr.3d 379,10 Cal. Daily Op. Serv. 14, 599,190 Cal.App.4th 360
• Court: California Court of Appeals Court of Appeals
• Parties: Dawn ARNALL et al., Petitioners, v. The SUPERIOR COURT of Los Angeles County, Respondent; Alan D. Liker, Real Party in Interest.

190 Cal.App.4th 360 118 Cal.Rptr.3d 379 10 Cal. Daily Op. Serv. 14,599 2010 Daily Journal D.A.R. 17,619 Dawn ARNALL et al., Petitioners, v. The SUPERIOR COURT of Los Angeles County, Respondent; Alan D. Liker, Real Party in Interest. No. B225264. Court of Appeal, Second District, Division 4, California. Nov. 22, 2010.

**380 Reed Smith, Margaret M. Grignon, Peter J. Kennedy and Judith E. Posner, Los Angeles, for Petitioners Dawn Arnall and RoDa Drilling.

Buchalter Nemer, Kalley R. Aman, Los Angeles, and Efrat M. Cogan for Petitioner Ameriquest Mortgage Company.

No appearance for Respondent.

Baker & Hostetler, Peter W. James, Thomas D. Warren and Lisa I. Carteen, Los Angeles, for Real Party in Interest Alan D. Liker.

MANELLA, J.

*363 In real party in interest Alan D. Liker's action to recover his fees under his service contracts with petitioners, the trial court denied petitioners' motion for summary adjudication. Petitioners seek a writ directing the trial court to vacate the denial of summary adjudication and to enter a new order granting the motion. We grant the petition for writ of mandate.

FACTUAL AND PROCEDURAL BACKGROUND

There are no material disputes regarding the following facts: Liker is an attorney who specializes in taxation matters and complex business transactions. In December 2005, Liker entered into a service agreement with petitioners Dawn Arnall and Ameriquest Mortgage Company (Ameriquest agreement). The agreement obliged Liker to provide advisory services aimed at minimizing "the adverse economic impact" arising from specified taxable income. Under the fee provisions, Liker was to receive a stipend of $20,000 per month for nine months, and a "[s]uccess [f]ee" amounting to two percent of specified reductions in "adverse economic impact" and other "economic savings." In January 2007, the parties modified the Ameriquest agreement. As modified, the agreement acknowledged that Liker had provided services after the original nine-month period; extended the agreement's effective period to December 31, 2009; and permitted Ameriquest and Arnall to end **381 Liker's monthly stipend when he became entitled to a $2 million success fee.

In March 2007, Liker entered into a second service agreement with Arnall and petitioner RoDa Drilling, L.P. (RoDa agreement).¹ Under the agreement, Liker was to provide advisory services in connection with certain oil and gas investments. The agreement provided that Liker was to receive a $20,000 monthly stipend until December 31, 2009 (subject to conditions not relevant here), and a success fee amounting to one percent of specified recoveries and sales proceeds.

In June 2009, petitioners terminated Liker's services and averred that the service agreements were void under Business and Professions Code section 6147.² On January 28, 2010, Liker filed his first amended complaint against *364 petitioners, asserting a claim for breach of the RoDa agreement, and claims for breach of the implied covenant of good faith and fair dealing, recovery in quantum meruit, and declaratory relief regarding the Ameriquest and RoDa agreements. The complaint alleged that when Liker requested his success fees under the agreements, petitioners improperly contended that the agreements were void.

Petitioners sought summary adjudication on Liker's claims, with the exception of his claims for recovery in quantum meruit. They maintained that the agreements were void under section 6147 for want of a statutorily required statement, namely, that the success fees were "not set by law but [were] negotiable between attorney and client" (§ 6147, subd. (a)(4)). In denying summary adjudication, the trial court relied on Franklin v. Appel (1992) 8 Cal.App.4th 875, 892, 10 Cal.Rptr.2d 759 ( Franklin), in which the appellate court concluded that the then-effective version of section 6147 was inapplicable to "contingency fee agreements outside the litigation context." On June 23, 2010, petitioners filed their petition for writ of mandate, prohibition, or other appropriate relief. We issued an alternative writ of mandate and temporary stay on September 1, 2010.

DISCUSSION

Petitioners contend that the trial court erred in denying summary adjudication. We agree.

A. Governing Principles

"An order denying a motion for summary adjudication may be reviewed by way of a petition for writ of mandate. [Citation.] Where the trial court's denial of a motion for summary judgment will result in trial on non-actionable claims, a writ of mandate will issue. [Citations.] Likewise, a writ of mandate may issue to prevent trial of non-actionable claims after the erroneous denial of a motion for summary adjudication. [¶] Since a motion for summary judgment or summary adjudication 'involves pure matters of law,' we review a ruling on the motion de novo to determine whether the moving and opposing papers show a triable issue of material fact. [Citations.] Thus, the appellate court need not defer to the trial court's decision. ' "We are not bound by the trial court's stated reasons, if any, supporting its ruling; we review the ruling, not its rationale." ' [Citations.]" ( Travelers Casualty & Surety Co. v. Superior Court (1998) 63 Cal.App.4th 1440, 1450, 75 Cal.Rptr.2d 54, fn. omitted.)

**382 As the material facts are undisputed, the key issues before us concern the application of section 6147. To the extent we must construe section 6147 *365 and related provisions, established principles guide our inquiry. "The objective of statutory interpretation is to ascertain and effectuate legislative intent. To accomplish that objective, courts must look first to the words of the statute, giving effect to their plain meaning." ( In re Jerry R. (1994) 29 Cal.App.4th 1432, 1437, 35 Cal.Rptr.2d 155.) However, "the words must be construed in context, and provisions relating to the same subject matter must be harmonized to the extent possible. [Citation.]" ( Lungren v. Deukmejian (1988) 45 Cal.3d 727, 735, 248 Cal.Rptr. 115, 755 P.2d 299.) In addition, "[b]oth the legislative history of the statute and the wider historical circumstances of its enactment may be considered in ascertaining the legislative intent." ( Dyna-Med, Inc. v. Fair Employment & Housing Com. (1987) 43 Cal.3d 1379, 1387, 241 Cal.Rptr. 67, 743 P.2d 1323.)

B. Section 6147

Section 6147 belongs to a trio of related statutes governing fee contracts between lawyers and their clients.³ In 1975, the Legislature enacted section 6146, which limits contingency fee agreements in medical malpractice actions.⁴ (Historical and Statutory Notes, 3B, Pt. 3 West's Ann. Bus. & Prof.Code (2003 ed.) foll. § 6146, pp. 335-336; Franklin, supra, 8 Cal.App.4th at p. 886, 10 Cal.Rptr.2d 759.) In 1982, the Legislature enacted section 6147 to regulate the form and content of contingency fee agreements outside the medical malpractice context. ( Franklin, supra, 8 Cal.App.4th at p. 887, 10 Cal.Rptr.2d 759.) Four years later, the Legislature enacted section 6148, which applies to "any case not coming within [s]ection 6147" (§ 6148, subd. (a)), with exceptions not relevant here (e.g., §§ 6148, subd. (d), 6147.5).⁵

**383 *366 Our focus is on section 6147, which specifies in subdivision (a) that "[a]n attorney who contracts to represent a client on a contingency fee basis" is obliged to ensure that the contract is "in writing" and meets other requirements.⁶ Pertinent here is subdivision (a)(4), which mandates that a contingency fee contract outside the scope of section 6146 must contain "a statement that the fee is not set by law but is negotiable between attorney and client." Subdivision (b) of section 6147 further provides: "Failure to comply with any provision of this section renders the agreement voidable at the option of the plaintiff, and the attorney shall thereupon be entitled to collect a reasonable fee."

C. Trial Court's Ruling

We begin by examining the trial court's ruling. In seeking summary adjudication, petitioners argued that both fee agreements were voidable at their option under section 6147, subdivision (b), because the agreements lacked the statement mandated in section 6147, subdivision (a)(4). The trial court denied summary adjudication on a ground neither raised nor briefed by the parties, reasoning that the fee agreements fell outside section 6147 because they "contemplate[ ] payment for savings from tax-related services." *367 In so concluding, the court relied on the holding in Franklin, namely, that the version of section 6147 operative when Franklin was decided did not apply to contingency fee agreements "outside the litigation context" ( Franklin, supra, 8 Cal.App.4th at p. 892, 10 Cal.Rptr.2d 759).

The denial of summary adjudication cannot be affirmed on the basis of Franklin. As then effective, section 6147 stated in subdivision (a) that it applied when "[a]n attorney who contracts to represent a plaintiff on a contingency fee basis" (italics added); in addition, section 6147 contained numerous references to the client as a "plaintiff." ⁷ **384 ( Franklin, supra, 8 Cal.App.4th at p. 885, fn. 4, 10 Cal.Rptr.2d 759.) In Franklin, a married couple engaged an attorney to assist them in some real estate transactions. ( Id. at pp. 880-881, 10 Cal.Rptr.2d 759.) Their agreement contained a contingency fee provision, but lacked the statement regarding the fee's negotiability required in section 6147, subdivision (a)(4). ( Franklin, at p. 883, 10 Cal.Rptr.2d 759.)

Despite the statement's absence, the appellate court determined that the agreement was not voidable because it fell outside former section 6147. ( Franklin, supra, 8 Cal.App.4th at pp. 890-892, 10 Cal.Rptr.2d 759.) Applying the canons of statutory interpretation, the court reasoned that the occurrence of the term "plaintiff" in former section 6147 limited the provision to contingency fee agreements "involving plaintiffs in litigation matters." ( Franklin, at pp. 879, 890-892, 10 Cal.Rptr.2d 759, italics deleted.) Nonetheless, recognizing...