Law Offices of Gary Kurtz v. Markowitz, B291880

CourtCalifornia Court of Appeals
PartiesLAW OFFICES OF GARY KURTZ, Plaintiff and Respondent, v. PHILIP MARKOWITZ, Defendant and Appellant.
Docket NumberB291880
Decision Date22 October 2020

LAW OFFICES OF GARY KURTZ, Plaintiff and Respondent,
PHILIP MARKOWITZ, Defendant and Appellant.



October 22, 2020


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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. No. LC103719)

APPEAL from a judgment of the Superior Court of Los Angeles County, Rupert A. Byrdsong, Judge. Reversed and remanded with directions.

Law Offices of Jeffrey A. Cohen and Jeffrey A. Cohen; Marcus, Watanabe & Enowitz, David M. Marcus and Daniel J. Enowitz for Defendant and Appellant.

Gabriel Law Group, Jonathan G. Gabriel, David S. Mayes; Law Offices of Gary Kurtz and Gary Kurtz for Plaintiff and Respondent.


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Philip Markowitz appeals from a judgment after a bench trial entered in favor of the Law Offices of Gary Kurtz.1 Kurtz, who provided legal representation to Markowitz and his wholly owned company Four Star General Properties, LLC (Four Star), sued Markowitz for breach of contract over unpaid attorneys' fees. Markowitz contends the trial court erred in entering judgment for Kurtz because substantial evidence does not support the court's finding the parties entered a written engagement agreement or the court's determination of damages. Markowitz also asserts the trial court erred in failing to address his affirmative defenses in its statement of decision. He further contends the court erred in excluding from evidence an order denying sanctions in the action in which Kurtz represented him.

Substantial evidence supports the trial court's findings the parties entered into a written engagement agreement and Markowitz breached the contract. However, substantial evidence does not support the trial court's calculation of damages. The trial court also erred in failing to address in its statement of decision Markowitz's affirmative defense seeking an offset for Kurtz's asserted legal malpractice. We reverse and remand for the trial court to address Markowitz's affirmative defense of legal malpractice and to recalculate the amount of damages.

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A. Kurtz's Representation of Four Star and Markowitz in the Blue Water Action2

In the early 2000's Markowitz partnered with Blue Water Sunset, LLC (Blue Water Sunset) to form three limited liability companies (the LLC's) to invest in a parking facility for freight trucks. In June 2004 Blue Water Sunset sued Markowitz and the LLC's to dissolve the companies and distribute their assets based on allegations Markowitz misappropriated income and conveyed the LLC's assets to Four Star.3 (Blue Water Sunset, LLC v. First View, LLC (Super. Ct. L.A. County, 2014, No. BC316696) (Blue Water action).) Four Star was later joined as a defendant. The trial court in the Blue Water action appointed a receiver, and in October 2005 the court transferred the property owned by Four Star into the receivership.

In December 2005 Markowitz retained Kurtz to represent Four Star in the Blue Water action. The parties dispute whether they executed an engagement agreement. It is undisputed, however, the parties agreed Kurtz would charge an hourly rate of

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$250, and at some point Kurtz began representing Markowitz in an individual capacity.

By the middle of 2006, Markowitz had fallen behind in paying Kurtz's invoices, and Markowitz was low on cash because Four Star's assets and income were tied up in the receivership. On September 1, 2006 Markowitz wrote in an e-mail to Kurtz, "When I saw you . . . 3 weeks ago 5K a month was acceptable to you and I wrote you a check. . . . I'm in a little bit of a bind right now and would ask I keep the same payment for now. . . . I will certainly pay all my outstanding balances in full if I have the means. [¶] . . . When the receivership is lifted I can pay you $15,000 a month probably in full as I will have an income . . . ." Kurtz responded, "[It's] not a big deal if [it's] a problem right now. [I] just don't like to see a bill grow to the point it seems very difficult to catch up."

Over the next two years Markowitz periodically paid monthly installments of $5,000 or $10,000, and the outstanding balance continued to grow as the Blue Water action proceeded. Kurtz accepted this arrangement because he was confident Markowitz would eventually be able to pay the balance of the legal bills because even if Markowitz lost the lawsuit, he would regain control of at least 50 percent of the assets in the receivership.

By November 2007 the balance on Kurtz's invoices exceeded $85,000, and Kurtz told Markowitz, "I need you to find some money and make a meaningful payment. [¶] . . . [¶] [T]hings are tight to the point that I cannot take my kids to [the] doctors . . . ." Markowitz responded, "[Y]eh you[']ve been pretty good about this. [¶] . . . [¶] [A]t any rate I will get you a substantial check this week ok?" A few weeks later Markowitz

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wrote, "[Y]ou have it coming and if the receiver gets lifted there[']s a chance I can square you before year[']s end . . . ." Markowitz made a $15,000 payment at that time and $10,000 payments sporadically in 2008.

Beginning in June 2008 Kurtz began to charge Markowitz an hourly rate of $300, which was reflecting in his July invoice, and in October 2008 Kurtz raised the hourly rate to $350. By September 2008 the outstanding balance on Kurtz's invoices had grown to nearly $100,000. On September 9, a few months before the date then set for trial, Kurtz texted Markowitz, "[F]rom now thru trial I am going to need you to up the monthly to 25K. I will need to spend considerably more time on the case and [will not] be able to look to other regularly paying matters . . . ." Markowitz stated he was unable to pay more than $10,000 per month, and following a series of heated communications, Markowitz terminated Kurtz around September 19. Markowitz picked up his client file from Kurtz's office on or around October 27. On October 29, 2008 Kurtz substituted out as counsel for Markowitz and Four Star in the Blue Water action.

However, the parties shortly reconciled, and on December 11, 2008 Kurtz substituted back in as counsel for Markowitz and Four Star in the Blue Water action. Kurtz's January 2009 invoice stated, "As discussed, there was a credit reduction in the amount of $13,168.97 to bring the past due down to $80,000. You have paid $60,000 towards that amount. The remaining $20,000 will remain due but not payable until (1) collection from the Four Star properties (2) collection from a judgment you have or (3) the end of this action, whichever comes first. Please keep current on new charges as discussed." The

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January 2009 invoice and subsequent invoices reflected an hourly rate of $350.

After several trial continuances, in late 2009 a 10-day bifurcated jury trial was held before Judge Rex Heeseman to determine whether Blue Water Sunset had made the initial capital contributions required under the LLC's operating agreements. Kurtz represented Markowitz at the trial. The jury delivered a verdict in favor of Blue Water Sunset; however, the verdict was subsequently vacated based on an affidavit of prejudice Blue Water Sunset had filed against Judge Heeseman at the beginning of the trial (but Judge Heeseman had not ruled on). Kurtz's December 2010 invoice, which included his trial work, reflected an outstanding balance exceeding $220,000.

Over the next two years Kurtz continued to represent Markowitz in the Blue Water action and other smaller matters, identified in his invoices as "Markowitz v. Noval," "Markowitz v. Peronne," "Markowitz v. NWA," "Markowitz v. RIT," and "Markowitz v. Four Star." Kurtz recorded his last billable work for Markowitz on October 29, 2012. By that time, the outstanding balance stated on Kurtz's invoices had grown to $329,833, and Kurtz began to bill Markowitz for interest at 10 percent per year. Over the course of the eight-year representation, Markowitz paid Kurtz $324,408.01.

On December 6, 2012 Markowitz substituted in Michael Buley to represent Markowitz and Four Star in the Blue Water action. A new trial on Blue Water Sunset's initial capital contributions was held as a bench trial in September 2014. At the conclusion of Blue Water Sunset's presentation of evidence, the trial court (Judge Michael Linfield) granted Markowitz's motion for entry of judgment pursuant to Code of Civil Procedure

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section 631.8,4 finding Blue Water Sunset failed to prove it made its initial capital contribution to any of the LLC's. Judgment was entered for Markowitz on December 12, 2014.

B. Kurtz's Complaint and Pretrial Proceedings

Kurtz filed this action on December 31, 2015. The operative first amended complaint asserted four causes of action against Markowitz: (1) breach of written contract, (2) breach of oral contract, (3) quantum meruit, and (4) common count for account stated. Kurtz prayed for at least $437,043 in damages plus statutory interest. The complaint attached and incorporated what it described as a "true and correct copy of the written fee agreement that was signed by both parties, which copy was on [Kurtz's] computer." The complaint further alleged, "The original, signed version, was returned to [Markowitz] with his entire file the first time [Kurtz] withdrew from representing [Markowitz] and was never returned."

The attached engagement agreement was addressed to Markowitz, but it was undated and unsigned. The agreement stated as to the scope of the representation, "This agreement applies to one representation, unless it is extended by a supplemental agreement in writing. You have asked us to represent your company Four Star . . . in pending action. This agreement...

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