Blecher Collins Pepperman & Joye, P.C. v. Mireskandari

• Decision Date: 27 October 2016
• Docket Number: B263619
• Court: California Court of Appeals Court of Appeals
• Parties: BLECHER COLLINS PEPPERMAN & JOYE, P.C., Plaintiff and Respondent, v. SHAHROKH MIRESKANDARI et al., Defendants and Appellants.

BLECHER COLLINS PEPPERMAN & JOYE, P.C., Plaintiff and Respondent, v. SHAHROKH MIRESKANDARI et al., Defendants and Appellants.

B263619

COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION TWO

October 27, 2016

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Los Angeles County Super. Ct. Nos. BC540650 & BC542523)

APPEAL from a judgment and an order of the Superior Court of Los Angeles County. Suzanne G. Bruguera, Judge. Affirmed.

Esner, Chang & Boyer, Stuart B. Esner and Joseph S. Persoff for Defendants and Appellants.

Blecher Collins & Pepperman, Maxwell M. Blecher and Howard K. Alperin for Plaintiff and Respondent.

* * * * * * Appellants Shahrokh Mireskandari (Mireskandari) and Paul Baxendale-Walker (Baxendale-Walker) are former solicitors in the United Kingdom who were suspended from the practice of law in 2008. Mireskandari and Baxendale-Walker (together, the former solicitors) subsequently came to the United States to file lawsuits, including some designed to collaterally attack their suspension. One of the law firms the former solicitors hired to represent them in some of their U.S.-based litigation sued them for not paying their bills; the former solicitors sued back for malpractice and breach of fiduciary duty. The trial court sustained a demurrer to the former solicitors' lawsuit without leave to amend, and awarded the law firm its unpaid fees after a bench trial. The former solicitors appeal both rulings. We conclude there was no error and affirm both judgments.

FACTS AND PROCEDURAL BACKGROUND

I. Facts

A. Suspension from practice in United Kingdom

Mireskandari and Baxendale-Walker were duly licensed solicitors in the United Kingdom until 2008. That year, the Law Society of England and Wales (Law Society) and the Solicitors Regulatory Authority (Regulatory Authority) suspended their licenses to practice for ethical violations.¹

B. Retention of Blecher firm

In August 2012, the former solicitors retained respondents Blecher Collins Pepperman & Joye, P.C. (the Blecher firm) to represent them in several lawsuits. Although the Blecher firm only possessed a copy of the written retainer agreement signed by Mireskandari, Mireskandari told the firm orally and in writing that Baxendale-Walker had also signed the agreement.

Under the retainer agreement, the Blecher firm specifically agreed to represent both former solicitors at a reduced hourly rate and for a small contingency fee in alawsuit already pending in the Central District of California against the Law Society, the Regulatory Authority, several of their officials and others.² In that lawsuit, the former solicitors alleged that they had been suspended solely because they were "outspoken minority solicitors," and sought more than $5 million in damages for violations of the Racketeer Influenced and Corrupt Organizations Act (RICO) (18 U.S.C. § 1961), violations of the Computer Fraud and Abuse Act (18 U.S.C. § 1030), defamation, and intentional interference with contractual relations (the RICO Action).

The retainer agreement also contemplated that the Blecher firm might represent the former solicitors in other matters, but at the firm's regular billing rates. The Blecher firm did just that: (1) it filed two applications with Mireskandari as the lead plaintiff, one in the Central District of California and another in the Southern District of California, to compel discovery "for use in a proceeding in a foreign or international tribunal" pursuant to section 1782 of title 28 of the United States Code (1782 Applications); and (2) it began representing Mireskandari in a lawsuit already pending in the Los Angeles Superior Court against Luxe Hotel alleging violations of the Unruh Civil Rights Act (Civ. Code, § 51 et seq.) (Luxe Hotel Action).

The retainer agreement also provided that any fee dispute would be subject to arbitration, and that "[t]he arbiter(s)" of that dispute "shall have the discretion to order that the costs of arbitration, including the arbiter(s)' fees, other costs and reasonable attorneys' fees, shall be borne by the losing party."

C. Non-payment of fees and termination of attorney-client relationship

By March 2013, the former solicitors had run up nearly $400,000 in unpaid legal fees. At that point, the Blecher firm informed Mireskandari that it would be "fil[ing] a motion to withdraw in the next few days."

D. Outcome of lawsuits where the Blecher firm had provided representation

Although the Blecher firm filed a third amended complaint for the former solicitors in the RICO Action, the federal district court in May 2013 dismissed the claims in that Action against the Law Society, the Regulatory Authority and their officials after concluding that they were barred by the Foreign Sovereign Immunities Act (FSIA) (28 U.S.C. § 1604). The former solicitors appealed, and the Ninth Circuit Court of Appeals affirmed the dismissal with respect to the Law Society and Regulatory Authority, but reversed the dismissal with respect to the officials of those two bodies because FSIA applies to foreign entities but not their officials. (Mireskandari v. Mayne (9th Cir. 2015) 599 Fed.Appx. 677, 677-678.) On remand, the district court concluded that the former solicitors' lawsuit against the Law Society's and Regulatory Authority's officials was barred by the doctrine of common law immunity.

Mireskandari had mixed results with the 1782 Applications. The application filed in the Southern District of California was granted. The application filed in the Central District of California was denied, and his appeal of that denial was dismissed as moot because Mireskandari "discontinued his appeal in the United Kingdom," foreclosing the need for any discovery to assist with that "foreign" "proceeding." (Mireskandari v. Solicitors Regulation Auth. (9th Cir. 2015) 599 Fed.Appx. 676, 676-677.)³

Mireskandari voluntarily dismissed the Luxe Hotel Action in February 2014.

II. Procedural History

In March 2014, the Blecher firm sued the former solicitors for breaching the retainer agreement and prayed for the $355,872.08 in unpaid fees (because by then Mireskandari had paid $50,000 toward the outstanding balance) (the Fee Action). In April 2014, the former solicitors sued the Blecher firm for malpractice and breach of fiduciary duty (the Malpractice Action). The two Actions were consolidated.

A. Malpractice Action

1. The operative, first amended complaint

In the operative, first amended complaint (FAC), the former solicitors alleged that the Blecher firm had committed the following acts of malpractice: (1) as to the RICO Action, the firm "failed properly to consider the application and effect of the [FSIA] and particularly ignored the commercial exception" to FSIA; (2) as to the 1782 Application in the Central District of California, the application "was denied and is currently on appeal"; (3) as to the Luxe Hotel Action, the firm "missed a court appearance without any justification, and took no action on the case for several months, to the detriment of [] Mireskandari and his legal interests"; (4) as to unspecified matters, Maxwell Blecher (of the Blecher firm) "sent copies of confidential and privileged emails to opposing counsel," "fell asleep at meetings (but nevertheless billed for the time)" "[o]n several occasions," "delegated responsibility for handling cases to lawyers with insufficient knowledge and experience," and engaged in "excessive" billing and refused to "further expla[in] . . . the charges."⁴

With respect to causation on the malpractice claim, the FAC alleged: "But for the negligence of [the Blecher firm], plaintiffs would have obtained more favorable results in the actions identified in the complaint. Had defendant acted competently, the [RICO] matter would not have been dismissed with prejudice, and the appeal presently pending before the Ninth Circuit would not have been required. Had defendant acted competently, the Los Angeles 1782 application would not have been denied. In the Luxe[Hotel] matter, the negligence by [the Blecher firm] caused [] Mireskandari additional expense and caused unnecessary delay in the prosecution of his claim."⁵

In the FAC, the former solicitors also alleged that the Blecher firm had breached its fiduciary duties to them by (1) not acting competently, as required by rule 3-110 of the California Rules of Professional Conduct; (2) by not maintaining confidential information, as required by Business and Professions Code section 6068, subdivision (e); (3) by breaching the duties of loyalty and confidentiality to Mireskandari; and (4) by engaging in excessive and unconscionable billing, as prohibited by rule 4-200 of the California Rules of Professional Conduct. Only one specific factual allegation supported this claim—namely, that the firm had "threatened to file a motion for leave to withdraw as counsel" in the RICO Action in "May 2013" in order to "coerc[e]" the former solicitors "into paying" their unpaid legal bills.

2. Ruling on demurrer

The Blecher firm demurred to the FAC in October 2014.

Although the former solicitors did not oppose the demurrer, the trial court evaluated the demurrer on its merits. The court examined the FAC's malpractice allegations, and ruled that the FAC "did not allege facts showing [the Blecher firm's] alleged malpractice caused their injuries and/or facts showing 'that but for the alleged malpractice, it is more likely than not . . . [they] would have obtained a more favorable result.'" (Italics in original.) The court also examined the FAC's breach of fiduciary duty allegations, and ruled that the FAC "did not allege facts showing how [the Blecher firm] breached the Rules of Professional Conduct a...