American Master Lease v. Robins, Kaplan CA2/4

CourtCalifornia Court of Appeal
DecidedMay 14, 2014
DocketB246654
StatusUnpublished

This text of American Master Lease v. Robins, Kaplan CA2/4 (American Master Lease v. Robins, Kaplan CA2/4) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Master Lease v. Robins, Kaplan CA2/4, (Cal. Ct. App. 2014).

Opinion

Filed 5/14/14 American Master Lease v. Robins, Kaplan et al. CA2/4 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

AMERICAN MASTER LEASE, LLC, B246654

Plaintiff and Appellant, (Los Angeles Country Super. Ct. No. SC114855) v.

ROBINS, KAPLAN, MILLER & CIRESI LLP

Defendant and Respondent.

APPEAL from an order of the Superior Court of Los Angeles Country, Cesar Sarmiento, Judge. Reversed. Graham & Martin, Anthony G. Graham and Michael J. Martin, for Plaintiff and Appellant. Robins, Kaplan, Miller & Ciresi, Roman M. Silberfeld and Michael A. Geibelson, for Defendant and Respondent. ______________________________ American Master Lease, LLC, appeals from an order of dismissal following the sustaining of a demurrer without leave to amend. Appellant sued its former counsel in a patent case, respondent Robins, Kaplan, Miller & Ciresi, for breach of contract, breach of the covenant of good faith and fair dealing, and negligence. The trial court concluded that the second amended complaint failed to state a cause of action because the contract to provide legal services was void for conflict of interest, and appellant was not damaged by respondent’s negligent conflict check. We disagree and reverse.

FACTS AND PROCEDURAL HISTORY As alleged in the second amended complaint, appellant obtained a business method patent in 2001. In 2007, appellant asked respondent to represent it in patent infringement cases, including one against Fort Properties Inc. (Fort). After conducting due diligence, respondent declined to do so at the time, but as we shall discuss, later, in 2011, it did represent appellant in a patent appeal. I. Idanta Case In 2007, appellant sued several defendants for aiding and abetting breach of fiduciary duty by inducing its employees and minority owners to set up Fort for the specific purpose of infringing on the patent. (See American Master Lease LLC v. Idanta Partners LTD (Feb. 25, 2014, No. B244689 [nonpub. opn.]) (hereafter Idanta case).) Fort was not a party to the Idanta case. At some point, the Idanta defendants were represented by an attorney in the New York office of Dreier Stein Kahan Browne Woods LLP (Dreier firm). At the time, Yakub Hazzard and Rori Starr Silver were attorneys in the Dreier firm’s Los Angeles office. After the firm’s collapse in January 2009, Hazzard and Silver joined the Entertainment and Media Department in respondent’s Los Angeles office. When the Idanta defendants retained respondent to represent them, appellant demanded that respondent withdraw because of its prior relationship with appellant. Respondent eventually complied. Appellant alleges “on information and belief” that Hazzard and Silver did not perform any substantive work for the Idanta defendants.

2 II. Fort Case Also in 2007, Fort sued appellant in federal district court, seeking to invalidate the patent (hereafter Fort case). The Dreier firm represented Fort until January 2009. Appellant alleges that “[n]either Mr. Haz[z]ard nor Ms. Silver were counsel for FORT and, on information and belief, neither at any time performed any legal work in the FORT matter.” The district court granted Fort summary judgment. (See Fort Properties Inc. v. American Master Lease, LLC (C.D.Cal. 2009) 609 F.Supp.2d 1052.) Appellant contacted several law firms specializing in patent law to represent it on appeal. Horwitz & Levy and Mayer Brown estimated that the appeal would cost more than $250,000. Graham & Martin, appellant’s trial counsel, quoted $60,000, exclusive of costs. Michael Geibelson from respondent’s Los Angeles office recommended David Swenson from the firm’s headquarters in Minneapolis, Minnesota, whose specialty was patent law. For an inclusive upfront fee of $100,000, respondent orally offered that counsel in the Minneapolis office would prepare and file an opening and reply brief and argue the appeal, prepare and file further briefs in connection with any petition for rehearing and other related proceedings, and provide 30 hours of consulting work on remand. During the negotiations in December 2010, appellant’s manager, Neil Roberts, told Geibelson he wanted to be sure conflict of interest would not be an issue. Giebelson assured Roberts that his initial investigation had uncovered no conflict and that before undertaking the representation respondent would conduct “a very thorough conflicts check.” On December 31, 2010, Roberts memorialized the parties’ oral agreement in a letter to Giebelson, which was accompanied by a check for $100,000. The check and letter are attached to the complaint and incorporated by reference. The memo portion of the check states: “AML v. FORT Appellate Work Retainer.” The first paragraph of the letter identifies the check as “payment in full for all work and related costs to be described more fully in an engagement letter to be executed between your firm and American Master Lease.” The next paragraph describes the agreed-upon work to be undertaken by Swenson in the Fort case. The last paragraph suggests that the parties

3 considered pursuing other infringers in the future on mutually agreeable financial terms to be determined later. On January 19, 2011, Giebelson sent Roberts an email entitled “Conflict Check run,” which read, “No conflicts.” The parties did not sign a formal retainer agreement, but respondent cashed the check and Swenson began work on the opening brief, which was due on February 18. Respondent sent the draft brief to appellant on February 2, and filed its notice of association as appellant’s counsel two days later. On February 7, Fort’s counsel demanded that respondent withdraw because Hazzard, a partner at respondent’s Los Angeles office, had been with the Dreier firm when that firm represented Fort in the case. Respondent withdrew the next day. Because respondent did not dispute the alleged conflict, Anthony Graham of Graham & Martin, who was appellant’s trial counsel and liaison with respondent, also withdrew from the appeal. Before withdrawing, Graham obtained a 30-day extension of the deadline for filing an opening brief. Pressed for time to find new counsel, appellant retained Mayer Brown, which again estimated that the appeal would cost at least $250,000. The United States Court of Appeals for the Federal Circuit eventually affirmed the district court’s decision invalidating the patent. (See Fort Properties, Inc. v. American Master Lease LLC (Fed.Cir. 2012) 671 F.3d 1317.) Mayer Brown billed appellant for $306,904.67. Respondent initially claimed it was entitled to $20,000 for Swenson’s work on the appeal but eventually refunded the full $100,000 retainer. But it refused to mediate or arbitrate appellant’s claim for damages in the amount of $206,904.67, which represented the difference between respondent’s retainer and the amount billed by Mayer Brown. III. Present Case In 2011, appellant sued respondent for breach of contract, breach of the implied covenant of good faith and fair dealing, negligence, and violation of the Unfair Competition Law, Business and Professions Code section 17200 et seq. In the original complaint, appellant alleged that, “[e]vidently, unknown to [appellant],” Hazzard and Silver worked on the Idanta case, and Hazzard worked on the Fort case while with the Dreier firm. The complaint also alleged that counsel for Fort demanded respondent’s

4 withdrawal because Hazzard had represented Fort.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Fort Properties, Inc. v. American Master Lease LLC
671 F.3d 1317 (Federal Circuit, 2012)
Johnson v. Atkins
127 P.2d 1027 (California Court of Appeal, 1942)
Blank v. Kirwan
703 P.2d 58 (California Supreme Court, 1985)
Hendy v. Losse
819 P.2d 1 (California Supreme Court, 1991)
Fort Properties, Inc. v. American Master Lease, LLC
609 F. Supp. 2d 1052 (C.D. California, 2009)
Mohlmann v. City of Burbank
179 Cal. App. 3d 1037 (California Court of Appeal, 1986)
Rader Co. v. Stone
178 Cal. App. 3d 10 (California Court of Appeal, 1986)
White Dragon Productions, Inc. v. Performance Guarantees, Inc.
196 Cal. App. 3d 163 (California Court of Appeal, 1987)
Copeland v. Baskin Robbins U.S.A.
117 Cal. Rptr. 2d 875 (California Court of Appeal, 2002)
Fergus v. Songer
59 Cal. Rptr. 3d 273 (California Court of Appeal, 2007)
Barnett v. Fireman's Fund Insurance
108 Cal. Rptr. 2d 657 (California Court of Appeal, 2001)
McIntosh v. Mills
17 Cal. Rptr. 3d 66 (California Court of Appeal, 2004)
Berg & Berg Enterprises, LLC v. Boyle
178 Cal. App. 4th 1020 (California Court of Appeal, 2009)
Jessen v. Hartford Cas. Ins. Co.
3 Cal. Rptr. 3d 877 (California Court of Appeal, 2003)
Kirk v. First American Title Insurance
183 Cal. App. 4th 776 (California Court of Appeal, 2010)
People v. Bishop
11 Cal. App. 4th 1125 (California Court of Appeal, 1992)
Adams v. Aerojet-General Corp.
104 Cal. Rptr. 2d 116 (California Court of Appeal, 2001)
Marathon Entertainment, Inc. v. Blasi
174 P.3d 741 (California Supreme Court, 2008)
Zelig v. County of Los Angeles
45 P.3d 1171 (California Supreme Court, 2002)

Cite This Page — Counsel Stack

Bluebook (online)
American Master Lease v. Robins, Kaplan CA2/4, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-master-lease-v-robins-kaplan-ca24-calctapp-2014.