Rosen & Associates, P.C. v. Meruelo CA2/7

California Court of Appeal·Decided March 13, 2023·No. B311652·Unpublished

Opinion

Filed 3/13/23 Rosen & Associates, P.C. v. Meruelo CA2/7 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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 SEVEN

ROSEN & ASSOCIATES, P.C., B311652

Plaintiff and Respondent, (Los Angeles County Super. Ct. v. Nos. 19STCP03171; 19STCP04198) RICHARD MERUELO et al.,

Defendants and Appellants.

APPEALS from a judgment and an order of the Superior Court of Los Angeles County, Holly J. Fujie, Judge. Affirmed. Peter D. Gordon & Associates and Peter D. Gordon for Defendants and Appellants. Rosen & Associates, Robert C. Rosen, John B. Wallace, and David Bleistein for Plaintiff and Respondent. __________________________ Richard Meruelo (Meruelo), individually and as trustee of the Richard Meruelo Living Trust (Meruelo Trust), appeals from a judgment confirming an arbitration award in favor of Rosen & Associates, P.C. (Rosen), arising from the parties’ legal fee disputes. Meruelo contends the trial court was required to vacate the award because Rosen and the arbitrator allowed Meruelo, a nonattorney trustee, to engage in the unauthorized practice of law by representing the Meruelo Trust during the arbitration. Meruelo argues the arbitrator therefore exceeded his powers and the arbitration award was procured by Rosen’s fraud. Meruelo also appeals from a postjudgment order awarding Rosen attorneys’ fees and costs. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

A. The Engagement Agreements On May 30, 2012, August 24, 2012, and August 28, 2013 Meruelo and Rosen (through attorney Robert Rosen) signed a total of four attorney-client engagement agreements containing identical arbitration provisions (and substantially the same attorneys’ fees provisions). Meruelo signed one of the May 30, 2012 arbitration agreements on behalf of himself and the Meruelo Trust; the other agreements were signed on behalf of Meruelo individually as the client. Under the agreements, the parties agreed to arbitrate all disputes involving Rosen’s provision of legal services, including disputes over attorneys’ fees, with Meruelo having the right to elect the fee arbitration procedures of the State Bar of California (Bus. & Prof. Code, § 6200 et seq.).

2 The 2012 engagement agreements also stated, “In the event that an arbitration or lawsuit arises with respect to your obligation to pay legal fees and/or costs under this Agreement, the prevailing party shall be entitled to collect reasonable attorneys’ fees and costs incurred in the course of such proceeding including filing fees and arbitration forum fees and other fees. Such attorneys’ fees and costs shall also include any and all fees and costs billed or incurred by attorneys of the Firm in representing the Firm or attorneys of the Firm. California Law may preclude the Firm from obtaining legal fees and costs in representing itself. With this knowledge and with our advising you to seek separate and independent counsel regarding this, you waive the opportunity to assert such preclusion.” The 2013 agreement contained a slightly modified attorneys’ fees provision.

B. The Arbitration and Arbitration Award In 2017 Rosen filed a demand for arbitration with the American Arbitration Association, served on Meruelo, claiming Meruelo and the Meruelo Trust owed it approximately $470,000 in unpaid legal fees, plus interest and attorneys’ fees and costs for the arbitration. During the arbitration Rosen updated its claim, ultimately seeking approximately $730,000. Meruelo and the Meruelo Trust asserted, among other defenses, Meruelo had filed for arbitration with the Los Angeles County Bar Association; the fee dispute had been settled in 2015 and Rosen was paid all the fees it was owed; Rosen’s bills had errors; Rosen charged a usurious interest rate; Rosen had a conflict of interest; and Rosen did not provide competent services. The parties arbitrated their legal fee disputes before arbitrator Peter K. Rundle over five days in November and

3 December 2018. During the evidentiary hearing, the arbitrator heard testimony from Meruelo, Rosen attorneys John Wallace and Robert Rosen, and two attorneys who had previously represented Meruelo and his affiliated businesses (Gregory Salvato and Aimee Dominguez). Neither side called any experts. Following post-hearing briefing and closing arguments, the arbitrator took the matter under submission. On June 26, 2019 the arbitrator issued a 39-page arbitration award in favor of Rosen. The award noted that in the arbitration Meruelo had represented his own interests and those of the Meruelo Trust “in pro per.” (Italics omitted.) The arbitrator found Meruelo was “a sophisticated and highly- successful real estate developer” who co-founded Meruelo- Maddux Properties, Inc. (MMPI). When that company went public, Meruelo obtained a bank loan to purchase stock in the new public company. The note was secured by a lien against Meruelo’s MMPI stock. Subsequently, 1248 Figueroa Street, LLC (Figueroa Street), an entity wholly owned by Meruelo’s mother (with Meruelo as its managing member), purchased the note from the bank. MMPI subsequently changed its name to EVOQ Properties, with Meruelo as chief executive officer. EVOQ later filed for bankruptcy. As part of the reorganization of the company, a group of new shareholders ousted Meruelo from his position as chief executive officer and proposed a reorganization plan that included a forced sale of some of Meruelo’s stock. EVOQ asserted claims in the bankruptcy proceeding against Meruelo for fraud and other wrongdoing. Salvato, and later, Dominguez, represented Figueroa Street in the bankruptcy proceeding. At some point, Rosen represented Meruelo and the Meruelo Trust in the bankruptcy proceeding.

4 The arbitrator found Rosen established the existence of contracts (the engagement agreements) between Rosen and Meruelo, individually and as trustee of the Meruelo Trust; Rosen performed services under the engagement agreements; Rosen established claims against Meruelo and the Meruelo Trust based on quantum meruit and account stated; and Meruelo and the Meruelo Trust’s defenses lacked merit. Rosen sought legal fees in connection with his (1) defense of Meruelo with respect to EVOQ’s claims for fraud and wrongdoing; (2) defense of Meruelo and the Meruelo Trust in connection with litigation over repayment of the bank loan; (3) litigation over the price of Meruelo’s MMPI shares he was forced to sell as part of the bankruptcy reorganization; (4) Meruelo’s claims against EVOQ for indemnity; and (5) other legal work for Meruelo. The arbitrator ordered Meruelo to pay Rosen a total of $667,414 for unpaid legal fees, interest, and attorneys’ fees and costs. The arbitrator also ordered Meruelo, individually and as trustee of the Meruelo Trust, jointly and severally, to pay Rosen $705,427 for unpaid legal fees, interest, and attorneys’ fees and costs. Further, the arbitrator ordered Meruelo, individually and as trustee of the Meruelo Trust, jointly and severally, to bear the costs of the American Arbitration Association’s administrative fees of $8,900 and $48,480 in arbitrator compensation.

C. The Competing Petitions On July 26, 2019 Rosen filed a petition to confirm the arbitration award. On September 27, 2019 Meruelo, individually and as trustee of the Meruelo Trust, and Merco Group-Roosevelt Building, LLC (Merco), an entity managed and partly owned by

5 Meruelo (collectively, the Meruelo defendants),1 filed a petition to vacate the arbitration award.

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