Jones v. Feldsott

• Decision Date: 11 October 2017
• Docket Number: G053974
• Parties: DONNA JONES, Plaintiff and Appellant, v. STANLEY FELDSOTT et al., Defendants and Respondents.
• Court: California Court of Appeals Court of Appeals

DONNA JONES, Plaintiff and Appellant, v. STANLEY FELDSOTT et al., Defendants and Respondents.

G053974

COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION THREE

October 11, 2017

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Super. Ct. No. 30-2014-00758872)

OPINION

Appeal from a judgment of the Superior Court of Orange County, Geoffrey T. Glass, Judge. Affirmed.

Law Offices of Mark B. Plummer and Mark Brennan Plummer for Plaintiff and Appellant.

Feldsott Lee Pagano & Canfield, Martin L. Lee and Stanley Feldsott for Defendants and Respondents.

INTRODUCTION

Donna Jones appeals from a judgment in favor of the law firm of Feldsott & Lee (Feldsott) and Stanley Feldsott. Feldsott represented Jones and another owner in an arbitration against the homeowners' association (HOA) of their condominium complex, after the HOA levied an emergency special assessment against their units. Feldsott persuaded the arbitrator the assessments were improper. After the arbitrator made an interim decision in the homeowners' favor, but before he ruled on their entitlement to attorney fees and costs, the parties agreed to a universal settlement of $50,000.

Jones then got into a dispute with Feldsott about how much of the $50,000 was coming to her. She ultimately claimed the fees of the experts used at the arbitration should be paid out of the settlement. Feldsott's position was that she was entitled to be reimbursed for her court costs (which did not include the experts' fees) and for the $6,000 she had paid to retain the firm. This sum amounted to about $16,000. The remaining $34,000, per the retainer agreement, would be the firm's attorney fees. Feldsott had not hired the experts and did not feel responsible for paying their fees.

When this dispute could not be resolved, Feldsott filed an interpleader action, naming Jones and the other homeowner, and deposited the amount equal to the costs and the retainer with the Los Angeles Superior Court. This case was heard and appealed, and the reviewing court has issued its opinion.

Jones sued Feldsott and Stanley Feldsott individually in Orange County Superior Court for professional negligence, breach of fiduciary duty, and conversion, the conversion claim stemming from filing the interpleader. After a six-day court trial, the court held in favor of the defendants, finding that Jones had not proved her case. In particular, the court held Feldsott did not have a conflict of interest disqualifying it from obtaining its fees and it had not represented to Jones that she could collect expert fees out of any award or settlement.

Jones' formulation of the issues on appeal has made review extremely difficult, so we have relied on the causes of action as pleaded in her complaint in organizing the following opinion. Substantial evidence supports the trial court's conclusion that Jones did not carry her burden of proof with respect to negligence or breach of fiduciary duty. Both the litigation privilege and res judicata prevent us from reopening any issue relating to the interpleader. Therefore we therefore affirm the judgment.

FACTS

Jones owns two condominiums in a complex located in Long Beach. In early 2012, she received a notice from the HOA informing all owners of an emergency special assessment. Plaster had fallen off one condo's balcony, and the HOA decided all the balconies had to be demolished and rebuilt on an emergency basis. The special assessment in total was $500,100; Jones' original share totaled $16,000 for her two units, payable in the summer of 2012.

Jones believed the demolition on an emergency basis was unnecessary, and she enlisted the help of a contractor of her acquaintance, Carl Modugno, to check out it out.¹ Modugno in turn asked a civil engineer, Mark Rieser, to assist him. The two visited the complex on several occasions between February and September 2012, during which time they observed the demolition and reconstruction of the balconies. Both Modugno and Rieser were of the opinion there was no emergency.²

In October 2012, Jones sought out Feldsott to represent her against the HOA in an effort to get her assessment canceled. She signed a retainer agreement withthe firm. As relevant here, the retainer agreement provided she would pay a flat fee of $6,000. Any recovery of attorney fees above that amount would go to the firm.³

Jones asked Stanley Feldsott if other condominium owners could join in the litigation. He told her they could, and the fee would not be increased because it made no difference whether the firm represented one owner or multiple owners. The work would be the same.

Jones attempted to get other condominium owners to join with her, but only Christine Frau ultimately agreed to do so. Frau paid Jones $3,000 as her share of the flat fee, and, following Jones' instruction, she wrote a letter to Feldsott asking to have her name added to the proceedings.

The dispute went to arbitration with JAMS, and Jones and Frau prevailed. The assessment was reversed as to them, and the arbitrator invited them to apply for attorney fees and costs. Feldsott submitted a memorandum of costs for $12,358, which included the usual items for service of process and photocopies. It also included approximately $10,000 for JAMS fees and $800 for court reporters for the arbitration hearing itself. The cost bill did not include any amounts for expert witness fees. Feldsott also planned to put in for approximately $64,000 in attorney fees.

Before the arbitrator ruled on the fees and costs, the parties entered into settlement negotiations, with Jones kept completely in the loop. The HOA at first offered $42,000 - $12,000 for costs and $30,000 for attorney fees. With Jones' and Frau's approval, Feldsott rejected the fee portion offer, deciding to allow the arbitrator to set its fees.⁴ The HOA then raised the offer to $50,000, which was accepted. After somechanges insisted on by Jones, she signed the settlement agreement on November 25, 2013.

Feldsott then undertook to refund the initial $6,000 fee and pay out the amounts from the cost bill. The rest it kept as its attorney fees.

At this point, things went south. Jones demanded the return of all fees and costs she had paid (leaving nothing for Frau) and stated that "the experts must be paid for services rendered." In addition, Jones began dunning Frau for half of the expert fees, which totaled about $8,000. Jones told Frau she would apply the $3,000 refund Frau was due to the amount owing, leaving Frau with an additional $1,175 to pay. She also told Frau that she expected Frau to pay half of the interest on the amounts Jones had fronted for the litigation.

Frau then emailed Feldsott in some distress, explaining she had been under the impression that $3,000 was all she had to pay. Jones had never told her she could be liable for additional amounts to pay experts or anything else. Frau offered to walk away from the $3,000 reimbursement if Jones would release her from any obligation to pay more money. Jones refused.

Perceiving a dispute had developed between its two clients, Feldsott informed them that it could not get involved. It gave Jones and Frau the choice between sending it joint directions as to how to divide up the settlement money owing to them or telling it to hold the amount in its trust account until they decided how to divide it. If they could not agree to one of these options, Feldsott would interplead the net amount of the cost recovery and the $6,000.

Jones would not agree to release Frau, so Feldsott filed a complaint in interpleader in Orange County Superior Court, an action Jones had transferred to Los Angeles Superior Court. The amount interpleaded was $16,637, which broke down to Jones' initial fee payment of $6,000 and $12,358 recovered from the arbitration as costs, minus $1,721 in costs Feldsott had advanced. The Los Angeles Superior Court grantedFeldsott's motion to be discharged in interpleader, dismissing the firm and granting it attorney fees of $9,655. The Second District Court of Appeal affirmed the order.⁵

Jones originally filed a cross-complaint in the Los Angeles interpleader case, but, faced with Feldsott's demurrer, motion to strike, and motion for sanctions, she dismissed the cross-complaint and filed this suit in Orange County, essentially duplicating her Los Angeles cross-complaint. Her first amended complaint contained causes of action for professional negligence, breach of fiduciary duty, and conversion. The case was tried to the court over six days in May 2016, during which time Jones, Stanley Feldsott, Modugno, and Frau testified. Jones also had an expert, John Adams, who testified as to the standard of care.

The court issued its ruling on July 6, 2016. It first dealt with the issues in terms of Jones' damages.⁶ The court identified 10 categories of damages: expert fees and costs from the arbitration, together with interest; Feldsott's attorney fees from the arbitration; fees and costs relating to the interpleader and its appeal, including the value of Jones' time ($75,000); emotional distress and loss of quality of life; and punitive damages.

The court held Jones had not proven emotional distress or punitive damages, nor had she shown damages stemming from Feldsott's interpleader. The court further observed that the fees awarded in the interpleader were set by the Los Angeles Superior Court; it refused to reconsider those fees.⁷

The court next dealt with the damages for the breach of fiduciary duty claim. It held Jones had not proven the elements of the breach by preponderance of the evidence. The "conflict" Jones alleged between herself and Frau did not develop until after the arbitration was over...