Pech v. Morgan

CourtCalifornia Court of Appeal
DecidedMarch 11, 2021
DocketB300524
StatusPublished

This text of Pech v. Morgan (Pech v. Morgan) 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
Pech v. Morgan, (Cal. Ct. App. 2021).

Opinion

Filed 3/11/21 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION THREE

RICHARD PECH, B300524

Plaintiff and Respondent, Los Angeles County Super. Ct. No. 18STCV02178 v.

THOMAS E. MORGAN III et al.,

Defendants and Appellants.

APPEAL from orders of the Superior Court of Los Angeles County, Mary H. Strobel, Judge. Affirmed.

Joshua R. Furman Law Corp. and Joshua R. Furman for Defendants and Appellants.

Law Offices of Richard Pech and Richard Pech for Plaintiff and Respondent. _________________________ In 1993, the State Bar’s Committee on Mandatory Fee Arbitration published an advisory noting a curious gap in our statutory and case law concerning the recoverability of unpaid fees in an attorney’s breach of contract action against a client. Although Business and Professions Code section 6148 makes clear that, in the absence of a valid fee agreement, an attorney may recover only a “reasonable fee” for services rendered, the Committee found no similarly clear standard where the parties had entered into the requisite fee agreement.1 Almost three decades later, we also are unable to find a clear standard in our state law for determining what fees are recoverable in such a dispute. In this appeal we hold, when an attorney sues a client for breach of a valid and enforceable fee agreement, the amount of recoverable fees must be determined under the terms of the fee agreement, even if the agreed upon fee exceeds what otherwise would constitute a reasonable fee under the familiar lodestar analysis. To be enforceable, the fee agreement cannot be unconscionable. And, as with every contract, the attorney’s performance under the fee agreement must be consistent with the implied covenant of good faith and fair dealing. This requires a court adjudicating a fee dispute to determine, among other things, whether the attorney used reasonable care, skill, and diligence in performing his or her contractual obligations. This standard applies in determining the probable validity of an attorney’s claim for breach of an enforceable fee agreement under the attachment statutes. (See Code Civ. Proc., § 484.010 et seq.)

1 Statutory references are to the Business and Professions Code, unless otherwise designated.

2 Defendants, former clients of attorney Richard Pech, appeal attachment orders entered in favor of Pech on his claims for unpaid fees in breach of the parties’ fee agreements. The trial court found the fee agreements were valid and Pech had established the probable validity of his claims based on his billing statements, correspondence with defendants, and unrebutted evidence showing defendants disputed only a handful of the billing statements. This evidence was sufficient to support the attachment orders under the standard we articulate in this opinion. We affirm. FACTS AND PROCEDURAL BACKGROUND 1. Pech Sues Defendants for Breach of the Parties’ Fee Agreements Plaintiff Richard Pech is an attorney. Defendants Juanita Springs Associates LP (Juanita Springs) and Covina Hills MHC LP (Covina Hills) invest in commercial properties, including a mobile home park. Defendant Thomas Morgan III is a principal of Juanita Springs and Covina Hills. Pech filed this lawsuit to recover attorney fees allegedly incurred representing defendants in four legal matters related to defendants’ operation and ownership of a mobile home park. The operative complaint refers to these matters as the failure to maintain case, the insurance case, the mandamus case, and the takings case. The parties executed written retainer agreements for the failure to maintain and insurance cases. As for the mandamus and takings cases, the complaint alleges an implied-in-fact contract existed based upon Pech’s “long history” of providing legal services to defendants and the parties’ understanding that cases related to the mobile home park would be billed at the same rate.

3 As relevant to this appeal, the complaint asserts causes of action for breach of contract based on defendants’ alleged failure to pay Pech’s attorney fees as provided in the fee agreements. 2. Pech Applies for Attachment of Defendants’ Assets Pech filed applications for attachment orders against the assets of Juanita Springs and Covina Hills. In support of the applications, Pech offered a 92-page declaration and over 2,000 pages of exhibits, including the retainer agreements, billing records, and correspondence detailing his communications with Morgan and the services Pech’s office rendered on the four matters. Every billing statement included a notice instructing defendants to “PLEASE EMAIL/FAX US IF YOU DISPUTE ANY AMOUNT ON THIS BILL.” Pech’s evidence showed defendants objected to only four of the final statements. After accounting for defendants’ payments, Pech’s evidence showed unpaid fees and costs totaling over $821,000 and accrued interest in excess of $298,000. In opposition to the applications, defendants offered the declaration of André Jardini, an attorney and legal billings expert. Jardini opined that there were “serious issues regarding the compensability of certain fees and costs invoiced by Pech”; that Pech did not use “billing judgment and care” in the submission of his invoices, which were “ ‘wordy’ to the point of being difficult to understand”; and that Pech’s invoices were “overstated based on his use of a minimum billing increment for every email . . . and review of every piece of paper.” Jardini acknowledged, however, that he had not reviewed all the invoices for the failure to maintain action, which accounted for the bulk

4 of the unpaid fees.2 And he conceded he was “not able to specifically quantify [his] opinion as to the excessiveness of the fees and costs billed,” other than to opine the invoices were “overstated by at least 20 [percent].” 3. The Trial Court Grants the Attachment Orders The trial court granted the applications for attachment of defendants’ assets, concluding Pech had established the probable validity of his breach of contract claims. With respect to the failure to maintain and insurance cases, the court found the parties had entered into valid and enforceable fee agreements that complied with section 6148’s disclosure requirements.3 As for the mandamus and takings cases, the court found defendants had “impliedly agreed to the specified hourly rates [in Pech’s other fee agreements] based on previous work performed by [Pech].”4 The court rejected defendants’ contention that the agreements were unconscionable. Regarding the amount of the attachment, the court determined Pech had established the probable validity of his

2 The failure to maintain case accounted for over $1 million of the total $1.1 million in unpaid fees and interest that Pech claimed for the four matters. 3 Under section 6148, subdivision (a), a written fee contract must disclose the rates, fees, and charges applicable to the case; the general nature of the legal services to be provided to the client; and the attorney’s and client’s respective obligations under the contract. 4 Under section 6148, subdivision (d)(2), a written fee agreement is not required when the fee arrangement is implied by the fact that the attorney’s services are generally the same as previously rendered to and paid for by the client.

5 claims for all unpaid fees, but not for the related interest charges, which were not available under the terms of the fee agreements.5 After recounting the relevant evidence supporting the applications—including Pech’s “detailed account of his correspondence with Morgan,” Pech’s “various billing statements,” and unrebutted evidence that defendants objected to only a handful of invoices—the court rejected defendants’ contention that the fees were excessive or unreasonable.

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Bluebook (online)
Pech v. Morgan, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pech-v-morgan-calctapp-2021.