Singh v. Molnar CA2/7 ( 2021 )

Filed 4/30/21 Singh v. Molnar CA2/7
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
JASBIR SINGH, B297036
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC519223)
v.
CHRISTIAN S. MOLNAR,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of
Los Angeles County, Teresa A. Beaudet, Judge. Affirmed.
Betty Agawa and Ronald W. Betty for Plaintiff and
Appellant.
Murphy Pearson Bradley & Feeney, Michael P. Bradley
and Jeff C. Hsu for Defendant and Respondent.
__________________________
Jasbir Singh, a restaurant owner and commercial landlord,
appeals from a judgment after a bench trial entered in favor of
his former attorney Christian S. Molnar. Molnar represented
Singh in a series of disputes with one of Singh’s tenants. As part
of a mediated settlement of those disputes, the tenant agreed to
deliver to Singh, via Molnar, a 10-year-old luxury sedan. Singh
filed this action for conversion and related claims after Molnar
took possession of the vehicle from the tenant, registered the
vehicle in his own name, and then credited Singh $12,827—the
estimated market value of the vehicle—against Molnar’s unpaid
attorneys’ fees invoices.
On appeal, Singh contends the trial court erred in finding
Singh and Molnar had agreed Singh would give the vehicle to
Molnar as payment toward Molnar’s fees and that payment with
a vehicle did not violate Molnar’s professional responsibilities to
Singh. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
A. The Pardal Settlement1
Singh, his wife Jaswinder Kaur, and their business entities
owned and operated restaurants in Los Angeles and leased space
to other restaurateurs.2 Beginning in 2007 and continuing until
1 The background facts are taken from the testimony and
exhibits admitted at trial and the trial court’s statement of
decision. We note where the facts are in dispute.
2 Singh, Kaur, and the Singhs’ business entities Bola
Properties, LLC, India’s Grill, Inc., Jasmine Enterprises, Inc.,
and 3B Hotel, LLC were plaintiffs in the underlying action. In
2
March 2013, Molnar represented Singh in a variety of legal
matters, including disputes with Singh’s tenant, Sumant Pardal,
concerning Pardal’s lease and operation of a restaurant in Singh’s
building. The disputes resulted in litigation in the Los Angeles
Superior Court. (Pardal v. Singh (Super. Ct. L.A. County, 2009,
No. BC411140).) In 2012 Pardal filed a petition for bankruptcy
under Chapter 7 of the United States Bankruptcy Code
(11 U.S.C. § 701 et seq.), and Singh filed an adversary action
against Pardal in the bankruptcy case. (In re Pardal (Bankr.
C.D. Cal. 2012, No. 2:12-bk-17634-RK).) Molnar’s representation
of Singh in connection with the two Pardal lawsuits was
governed by an “Agreement for Legal Services” executed on
October 18, 2012 (the legal services agreement).
The Pardal lawsuits were settled at a one-day mediation on
February 27, 2013. Molnar represented Singh at the mediation,
and Pardal was represented by attorney Kenderton Lynch. The
settlement was memorialized in a settlement agreement executed
by Singh and Kaur and Pardal and his wife, and it was approved
as to form by Molnar and Lynch (the Pardal settlement).
Paragraph 2.2 of the Pardal settlement required Pardal
and his wife to make four installment payments totaling
$100,000, as follows: “(a) $12,500.00 on or before March 4, 2013,
made payable to Christian S. Molnar IOLTA account;[3]
2018 the trial court granted summary judgment against India’s
Grill, Inc. and 3B Hotels, LLC. Only Singh appeals the judgment
after trial. For simplicity we refer to Singh and the related
parties collectively as Singh.
3 Business & Professions Code section 6211, subdivision (a),
provides for lawyers and law firms to maintain pooled client trust
3
[¶] (b) $21,250.00 on or before March 1, 2014, made payable to
Jaswinder Kaur; [¶] (c) $21,250.00 on or before March 1, 2015,
made payable to Jaswinder Kaur; [and] [¶] (d) $45,000.00 on or
before March 1, 2016, made payable to Jaswinder Kaur.” The
Pardal settlement also required Pardal and his wife “to deliver to
[Singh] their 2003 Mercedes Benz automobile, . . . along with the
title certificate properly endorsed transferring title to said
automobile and the initial payment specified in 2.2(a) . . . .”
Under the agreement, delivery was to take place at Lynch’s law
office on March 4, 2013, no later than 3:00 p.m. The agreement
further stated, “Both the automobile and its title as well as the
initial payment specified in 2.2 (a) above, shall remain in the
custody and control of counsel for [Singh] until the expiration of
fifteen (15) days from the date of the Chapter 7 Trustee . . .
executes a Notice of Abandonment of [Pardal’s] state court
claims . . . and the executed Notice of Abandonment is served and
provided that there are no objections thereto.”
On March 1, 2013 Lynch sent an email to Molnar
requesting modification of the Pardal settlement to extend
Pardal’s deadline to make the first payment by two weeks, from
March 4 to March 18. Lynch added, “With regard to the 2003
Mercedes Benz, it is also my understanding that there will be no
disruption with regard to the delivery of the Mercedes. However,
it is also my understanding that the Mercedes has a blue tooth
unit installed and a subsequent agreement has been reached that
Mr. Pardal will leave the blue tooth unit in the Mercedes, but
when you receive the Mercedes on Monday [March 4], you will
funds in an “IOLTA” account (Interest on Lawyer Trust Account),
the interest on which is used to fund indigent services.
(Carroll v. State Bar (1985) 166 Cal.App.3d 1193, 1198-1199.)
4
tender a check payable to Mr. Pardal or cash in the amount of
$250.00.” Molnar agreed to a two-week extension of Pardal’s first
installment payment provided the vehicle was delivered on
March 4. Molnar also wrote, “My understanding from speaking
with Jessie [Singh] is that the agreed price for the blue tooth is
$200.00 not $250.00.”
B. Transfer of the Vehicle to Molnar
On the afternoon of March 4, 2013 Molnar traveled to
Lynch’s offices in Century City to take delivery of the vehicle.
Pardal and Lynch were both present; Singh was not. Pardal and
Molnar executed a bill of sale, prepared by Lynch, which stated in
relevant part, “On March 4, 2013 Sumant Pardal transferred his
2003 Mercedes . . . to Jasbir Singh or Christian Molnar at a value
of $15,000.” Pardal also completed a Certificate of Title and a
Notice of Transfer and Release of Liability, which identified
Molnar as the transferee of the vehicle. Molnar wrote Pardal a
check for $200 to pay for the wireless equipment that had been
recently installed in the vehicle. Molnar then drove Pardal in the
2003 Mercedes to Pardal’s home in Santa Monica while Pardal
instructed Molnar on the features of the vehicle.
On March 5, 2013 Lynch emailed Molnar that the Pardal
bankruptcy trustee did not object to the exemption of the vehicle
from the estate and had filed a no-asset report, so Lynch was
“99.99 percent positive the trustee will not be making a claim for
the car, and you can submit paperwork to the DMV for the
transfer, but to whom the car is being transferred, you or [Singh].
I think you want to cut [Singh] out, but on the release of liability
with the DMV we have to report a transfer value.” On March 7
Molnar submitted the transfer of title along with a payment of
5
$984 for tax, title, and registration fees to the Department of
Motor Vehicles.
On March 18, 2013 Singh terminated Molnar as counsel
after accusing Molnar of forging Singh’s signature on the
modification of the Pardal settlement that extended the payment
schedule.4 Singh instructed Molnar in an email to deliver the
vehicle “to me immediately which you are holding as part of the
[P]ardal settlement.” On April 3, 2013 Singh sent a second email
to Molnar asking for the return “of my Mercedes Benz S430
which was part of my settlement with Pardal’s case.” Molnar
responded, “[Y]ou gave me the car as a partial payment for your
outstanding legal fees and invoices in the Pardal matter, in fact,
it was your idea; the car was only included in the Pardal
settlement after you proposed that I take it and I agreed to accept
it. Previously, according to you, . . . Mr. Pardal offered you the
4 On March 4, 2013 Lynch transmitted to Molnar a proposed
modification of the Pardal settlement extending the deadline for
the first settlement payment to March 18, 2013 and specifying
the payment “will be delivered to the Law Offices of Christian S.
Molnar.” Molnar testified he immediately forwarded this
modification to Singh, who had earlier instructed him in writing
to agree to the extension sought by Pardal. Molnar did not
receive a response from Singh by the time of Molnar’s March 4
meeting with Lynch and Pardal, so Molnar signed the
modification as “Jasbir Singh by Christian S. Molnar their
attorney and authorized agent.” Singh separately signed the
proposed modification with an interlineation that the first
payment must be delivered to Kaur rather than to Molnar. That
version was not countersigned by Pardal. Neither version
modified the provision in the Pardal settlement requiring the
first payment be made payable to Molnar’s client trust fund
account.
6
car in settlement, but, you rejected it because you had no use for
it. . . . What you are receiving is a credit for the [Kelley] Blue
Book private seller-value which is reflected in your March 31,
2013 invoice.” (Italics removed.) Singh responded, “I never
agreed to give you a car as a partial payment or a payment in
trade or any of the [Kelley] [B]lue [B]ook value. I was disputing
your . . . bills. [Pardal] traded that car as $40-50,000 in
settlement to me not to you. I am the one who determine[s] the
price of the car not anyone else . . . I wanted to have poss[ess]ion
of the car and money from day one but you tr[i]cked me into your
entire scam that you have to hold the car and money for 15 days
in your poss[ess]ion.”
On Molnar’s March 31, 2013 attorneys’ fees invoice to
Singh, Molnar credited $12,827 toward Singh’s outstanding
balance, reducing the balance to $49,640. Molnar indicated on
the invoice and later testified $12,827 was the price for a private
party sale of a 2003 Mercedes Benz S430 listed in “[g]ood
[c]ondition” as reported in the Kelley Blue Book automotive
pricing guide.
C. The Complaint and Phase One Trial
Singh filed this action on August 22, 2013 against Molnar
and Stephanie Ching-Yee Chan, an associate attorney at
Molnar’s law firm. Singh’s operative first amended complaint
alleged 12 causes of action: (1) accounting; (2) breach of oral
contract; (3) breach of written contract; (4) breach of fiduciary
duty; (5) constructive trust; (6) conversion; (7) declaratory relief;
(8) fraud & deceit; (9) equitable indemnification; (10) negligent
misrepresentation; (11) legal malpractice; and (12) civil extortion.
On August 29, 2014 Molnar filed a cross-complaint asserting
7
more than 20 causes of action, seeking payment for legal services,
to enforce a charging lien based on the attorney services
agreement, and for damages.5 On December 12, 2014 the trial
court sustained Molnar and Chan’s demurrer to the causes of
action for constructive trust and equitable indemnification.
On January 31, 2017 the trial court6 granted Singh and
Chan’s motion for summary judgment, or in the alternative, for
summary adjudication in part. The court granted summary
judgment in favor of Chan and summary adjudication of Singh’s
claims against Molnar, except for conversion and declaratory
relief, as well as breach of oral contract, breach of fiduciary duty,
and legal malpractice to the extent those claims were premised
on Molnar’s alleged conversion.
On June 30, 2017 the parties entered into a stipulation to
try all remaining causes of action asserted by both parties as a
bench trial and to bifurcate the trial into two phases. The first
phase of trial would address only whether the legal services
agreement governing the Pardal matters was valid; the second
phase would address all other claims by Singh and Molnar, with
Molnar presenting his case first. In a statement of decision filed
5 Molnar filed a separate action against Singh asserting
numerous claims for payment for legal fees and costs in other
smaller matters. (Molnar v. Singh (Super. Ct. L.A. County, 2014,
No. SC122329).) That action was consolidated with the present
action for trial.
6 The case was reassigned to Judge Teresa A. Beaudet on
September 15, 2015. Judge Beaudet ruled on the summary
judgment motion and presided over the trial.
8
on March 7, 2018 the trial court ruled that the legal services
agreement was valid and enforceable.7
D. The Disputed Evidence at the Phase Two Trial
The 11-day phase two bench trial was held from June 27 to
July 27, 2018. Singh, Kaur, Pardal, Lynch, Molnar, and Molnar’s
wife Neelamba Molnar (Neelamba) testified about the Pardal
settlement and the vehicle. In addition, attorney Robert Kehr
testified as an expert for Singh on legal malpractice and fiduciary
duty issues, and attorney Randall Miller testified as Molnar’s
expert on the same issues. The primary disputed issue at trial as
to Singh’s claims was whether Singh and Molnar agreed Molnar
would keep the 2003 Mercedes as payment for legal services and
credit Singh for the vehicle’s market value.
1. Molnar’s testimony
Molnar testified it was Singh who suggested Molnar take
the vehicle in connection with the Pardal settlement at the time
of the February 27, 2013 mediation: “We had a break during the
mediation . . . , and we were in [the mediator’s] building in
Riverside, and we went down in the elevator, and we were just
taking a walk. And it was kind of odd because Mr. Singh wanted
to walk [into] the garage, and we walked into the garage, and we
walked up next to a car, and he said, ‘Hey, that’s a pretty nice
car, isn’t it?’ And I said—I didn’t know what the purpose was, I
was, like, ‘Yeah. It looks pretty nice.’ And then he said, ‘Do you
want the car?’ and I said, ‘I’m not sure why you’re offering it to
7 Singh does not appeal the trial court’s ruling on Molnar’s
summary judgment motion or the trial court’s statement of
decision following phase one of the trial.
9
me.’ And he then told me that Mr. Pardal had come by his
restaurant the week before the mediation and tried to talk
settlement to him . . . . Mr. Pardal had offered him the car. And
Mr. Singh indicated to me that he told him he didn’t want the
car, he had a brand-new S600 Mercedes.”
Molnar testified that when he separated from Singh during
the break, he called Neelamba and told her, “‘[Singh] just offered
me Sumant Pardal’s car, and, you know, what do you think?’”
Molnar and Neelamba discussed that Singh owed Molnar a lot of
money. During a subsequent break or the lunch break, Molnar
responded to Singh: “‘Well, I think I will accept your offer of
giving me the car, . . . I will give you a credit towards the monies
you owe me for the value or reasonable value of the car, [which]
to me is the [Kelley] Blue Book value of the car.’” Molnar
believed he and Singh were in agreement the vehicle was
probably worth $10,000 because it was an older model, “wasn’t in
terrific condition,” and had been driven by a smoker, but Molnar
told Singh he would confirm the Kelley Blue Book value and
credit that amount to Singh. Singh responded, “That’s fine.”
After the mediation, Singh also raised with Molnar that Pardal
had paid $500 for wireless equipment to speak handsfree on the
phone, and Singh inquired whether Molnar wanted it. Molnar
asked Singh what Pardal wanted for the equipment, and Singh
responded Pardal wanted $250 or $300, but Singh could talk
Pardal down in price. Singh was able to negotiate a $200 price.
After Molnar took possession of the vehicle, Singh called him to
ask how he liked it, and Molnar responded, “It’s pretty nice.”
10
2. Singh’s testimony
Singh testified he did not talk to Molnar during a break at
the Pardal mediation, there was no lunch break at the mediation,
and he did not offer Molnar the vehicle in exchange for a credit
towards Molnar’s legal invoices. They never discussed Molnar
crediting him for the Kelley Blue Book value of the car, and the
two never agreed Molnar would receive the car permanently.
Singh’s understanding of the Pardal settlement was that
Molnar would only take possession of the vehicle for the first
15 days, until the vehicle was abandoned in the Pardal
bankruptcy proceeding. Singh had asked Molnar, “‘Chris, when
you pick up the car from Pardal, can you garage it [in] my
home?’” Molnar responded, “‘Due to the bankruptcy proceeding,
it has to be held by a third party, in [a] third party’s possession.’”
With respect to the wireless equipment, Singh told Molnar, “‘Hey,
you’re going to go pick up the car, write a check to Mr. Pardal for
[the $200] I negotiated.’”8 Singh first learned Molnar had
assigned a value of $12,827 to the vehicle when he received
Molnar’s March invoice in April 2013, after he had terminated
Molnar. Singh believed the vehicle was worth $50,000 at the
time of the Pardal settlement.
On cross-examination, Singh admitted he made
arrangements with other attorneys to pay significant portions of
their attorneys’ fees with meals at his restaurant in lieu of
monetary payments.
8 On cross-examination, Singh stated he told Molnar he
would reimburse Molnar $200 for the wireless equipment, but he
never did.
11
3. Neelamba’s testimony
Neelamba, who is an attorney at Molnar’s firm, testified
she received a call from Molnar on the day of the mediation and
learned that Singh wanted to offer Molnar a vehicle as payment
toward outstanding bills. Neelamba was very skeptical of the
arrangement, but she reluctantly agreed Molnar could accept the
vehicle in lieu of fees. Molnar texted Neelamba a picture of the
vehicle, and she was not impressed. When Molnar brought the
vehicle home she learned there was a tear in the front seat and
the vehicle smelled. She explained, “It wasn’t an exciting car. . . .
It was just a car that came home and a little chunk of money
taken off the bills.”
4. Expert witness testimony
Kehr provided expert testimony on behalf of Singh as to
whether Molnar’s conduct in taking possession of the vehicle
comported with a lawyer’s ethical and fiduciary duties. Kehr was
asked to assume as a hypothetical that pursuant to the Pardal
settlement, Pardal’s vehicle was to be transferred to Singh after
being held by Molnar for 15 days, and Molnar instead transferred
the vehicle to himself and unilaterally applied payment against
Singh’s outstanding invoices without consulting Singh as to the
amount of that credit. Kehr opined Molnar’s conduct would not
meet the requirements of rule 3-300 of the State Bar Rules of
Professional Conduct (rule 3-300), which restricts the
circumstances in which an attorney may enter into a business
transaction with a client or knowingly acquire a possessory
12
interest adverse to a client.9 Such a transaction must be fully in
writing; the client must be given written notice of the right to
obtain legal counsel regarding the transaction; and the terms of
the transaction must be fair and reasonable to the client.
Molnar’s failure to ensure the transaction complied with
rule 3-300 would constitute a breach of his duty of loyalty to
Singh. In response to a revised hypothetical, Kehr testified that
even if Singh had instructed Molnar to take possession of the
vehicle as payment for fees, the transaction still would not
comport with the requirements of rule 3-300 and Molnar’s
fiduciary duties. On cross-examination, Kehr admitted his
opinion assumed the vehicle belonged to Singh under the Pardal
settlement and there were no conditions precedent to Singh
taking ownership of the vehicle. Further, the rule 3-300 analysis
did not apply if Singh did not have a right to possess the vehicle.
On redirect examination, Kehr opined Molnar would still be in
breach of rule 3-300 even if Molnar had a claim to fees written
into a fee agreement because Molnar was not entitled to
determine the value of a particular asset unilaterally or to take
possession of an asset unilaterally.
Miller opined on behalf of Molnar that an oral agreement
between Singh and Molnar to transfer Pardal’s vehicle to Molnar
as payment of Molnar’s legal fees would not constitute a business
transaction with a client subject to rule 3-300. Miller explained
9 The State Bar Rules of Professional Conduct in effect at the
time of the events of this case were superseded by the current
rules effective November 1, 2018. Current rule 1.8.1 is
substantially similar to former rule 3-300. All further
undesignated references to rules are to the State Bar Rules of
Professional Conduct operative from September 14, 1992 to
November 1, 2018.
13
that rule 3-300 “carves out or accepts as part of its language any
transaction between an attorney and a client where the attorney
is retained,” and therefore a lawyer and client are free to change
the manner of the lawyer’s compensation under a fee agreement
at any time without regard to rule 3-300.
Miller explained, “The fact that an attorney and client here
discuss later on exactly how those services are going to be paid
for would be something that’s well within the purview of the
original agreement. If that’s the case, then [rule] 3-300, at least
the discussion or comment aspect of 3-300, makes it very, very
clear that that’s not subject to the regulation of 3-300.” Miller
testified further that even if rule 3-300 applied, a transaction
which Molnar credited Singh for the fair market value of the car
was fair and reasonable. Asked on cross-examination whether an
attorney must discuss the price of the vehicle before crediting
that amount to a fees invoice, Miller admitted it would be
“prudent” to do so, but he opined that as long as the attorney
“uses some objectively verifiable industry standard in
determining the value of the asset—here, a car—[he] would find
no problem with that.”
E. Statement of Decision
The parties filed closing briefs following the phase two
trial, and on November 5, 2018 the trial court issued a proposed
statement of decision. After considering the parties’ written
objections, on January 22, 2019 the court issued an 11-page
14
statement of decision addressing Singh’s conversion-related
claims.10
The trial court found Molnar did not convert the vehicle
when he took possession and transferred it to his own name. The
court reasoned, “The only truly disputed material fact during the
trial regarding the [v]ehicle was whether [Singh] had agreed at
the [m]ediation, to give Molnar the [v]ehicle as a payment
towards the attorney fees that [Singh] owed Molnar. Molnar
testified that this was the case, and Singh testified that it was
not.” The court found “the testimony of Molnar was credible and
consistent with the terms of the Pardal [s]ettlement and the
conduct of Pardal and Pardal’s counsel.” Further, Singh offered
no explanation why the Pardal settlement expressly stated the
vehicle and its title, along with the initial settlement payment,
would remain in the custody and control of Molnar until the
expiration of the 15-day bankruptcy abandonment period if the
parties did not contemplate the vehicle would go to Molnar. The
court explained, “The 15-day waiting period . . . could have
passed while the [v]ehicle was in the possession of [Singh] rather
than in Molnar’s possession if the [v]ehicle was going to be kept
by [Singh].” Moreover, neither Pardal nor Lynch expressed
surprise the vehicle was transferred to Molnar, in that Lynch
emailed Molnar about Molnar writing a check for the wireless
equipment, and Pardal showed Molnar the features of the vehicle
when the two drove to Pardal’s home on March 4, 2013. The
court found Neelamba’s testimony regarding her conversation
with Molnar about Singh’s offer on the day of the Pardal
10 On March 22, 2019 the trial court issued a separate
statement of decision addressing Molnar’s claims for attorneys’
fees.
15
mediation “seemed to be forthright,” and although Neelamba had
a bias as Molnar’s wife, as an attorney she was an officer of the
court. The court found it relevant Singh had on other occasions
paid legal fees with something other than money. The court
concluded that because Singh and Molnar had an oral agreement
to transfer the vehicle from Pardal to Molnar, Molnar did not
convert the vehicle. Therefore, Singh did not prevail on his
causes of action for conversion and breach of oral contract.
The trial court held further Singh did not prevail on his
causes of action for breach of fiduciary duty and legal malpractice
based on Molnar’s alleged violation of rule 3-300. The court
observed Kehr based his opinion on the assumption Singh had a
right to possess the vehicle, and Kehr did not opine as to whether
rule 3-300 applied to nonmonetary payments for legal fees. By
contrast, Miller opined rule 3-300 “does not govern a client’s
nonmonetary payment for attorneys fees.” The court found that
Miller’s testimony “more properly applied to the facts of this
case.”11
11 The court found Singh was not entitled to declaratory relief
because the first amended complaint did not “identify any
controversy regarding the [v]ehicle nor does it contain any
request to have the Court make any declaration regarding the
[v]ehicle.” Singh does not on appeal address the trial court’s
judgment with respect to his declaratory judgment cause of
action.
16
On May 7, 2019 the trial court entered judgment in favor of
Molnar.12 We consider Singh’s premature notice of appeal filed
on April 15, 2019 a valid “notice of appeal filed after judgment is
rendered but before it is entered” and treat the notice as filed
immediately after entry of judgment. (Cal. Rules of Court,
rule 8.104(d)(1); see Valdez v. Seidner-Miller, Inc. (2019)
33 Cal.App.5th 600, 607.)
DISCUSSION
A. Standard of Review
“In reviewing a judgment based upon a statement of
decision following a bench trial, we review questions of law de
novo.” (Thompson v. Asimos (2016) 6 Cal.App.5th 970, 981;
accord, Aljabban v. Fontana Indoor Swap Meet, Inc. (2020)
54 Cal.App.5th 482, 496.) We generally review the trial court’s
findings of fact for substantial evidence. (Aljabban, at p. 496;
Thompson, at p. 981.) However, “‘this test is typically implicated
when a defendant contends that the plaintiff succeeded at trial in
spite of insufficient evidence. In the case where the trier of fact
has expressly or implicitly concluded that the party with the
burden of proof did not carry the burden and that party appeals,
12 In its March 22, 2019 statement of decision regarding
Molnar’s claims for attorneys’ fees, the trial court reduced
Molnar’s recovery by $2,173, finding Molnar should have credited
Singh $15,000, the amount on the bill of sale prepared by Lynch
for the vehicle, and not the $12,827 Kelley Blue Book value. The
court held, “There was no testimony that Singh had agreed to the
Kell[e]y Blue Book valuation used by Molnar, and there was no
explanation as to why the [b]ill of [s]ale signed by Molnar did not
reflect the proper amount for the value of the [v]ehicle.”
17
it is misleading to characterize the failure-of-proof issue as
whether substantial evidence supports the judgment.’” (Sonic
Manufacturing Technologies, Inc. v. AAE Systems, Inc. (2011)
196 Cal.App.4th 456, 465 (Sonic); accord, Dreyer’s Grand Ice
Cream, Inc. v. County of Kern (2013) 218 Cal.App.4th 828, 838.)
“‘Thus, where the issue on appeal turns on a failure of proof at
trial, the question for a reviewing court becomes whether the
evidence compels a finding in favor of the appellant as a matter of
law. [Citations.] Specifically, the question becomes whether the
appellant’s evidence was (1) “uncontradicted and unimpeached”
and (2) “of such a character and weight as to leave no room for a
judicial determination that it was insufficient to support a
finding.”’” (Sonic, at p. 466; accord, Dreyer’s Grand Ice Cream, at
p. 838.)
Singh contends we should review the trial court’s decision
on his conversion claim de novo because the appeal raises the
application of law to undisputed facts. It does not. Whether
Singh and Molnar orally agreed Molnar would receive the vehicle
from the Pardal settlement as payment for attorneys’ fees was a
disputed fact at trial, and the court’s finding there was an
agreement was dispositive of Singh’s conversion-related claims.
However, we independently review whether an oral agreement
for Singh to transfer the vehicle to Molnar violated Molnar’s
fiduciary duties to Singh. (See Feresi v. The Livery, LLC (2014)
232 Cal.App.4th 419, 425 [questions concerning the scope of
fiduciary duties are a legal issue subject to de novo review].)
18
B. Singh Failed To Present Evidence Compelling a Finding
Molnar Converted the Vehicle
To prove the tort of conversion, a plaintiff must prove three
elements: “‘(a) [P]laintiff’s ownership or right to possession of
personal property, (b) defendant’s disposition of property in a
manner inconsistent with plaintiff’s property rights, and
(c) resulting damages.’” (Voris v. Lampert (2019) 7 Cal.5th 1141,
1150; accord, Hodges v. County of Placer (2019) 41 Cal.App.5th
537, 551.) Singh contends the trial court erred because the
Pardal settlement did not specify that the 2003 Mercedes was to
be transferred to Molnar permanently, instead providing only
that Molnar would retain custody and control over the vehicle for
15 days from abandonment of the claim for the vehicle in the
bankruptcy proceeding. Thus, Singh had ownership and the
right to possess the vehicle. Singh argues further that even if
there was some general agreement for Molnar to take the vehicle,
there was no meeting of the minds because Molnar unilaterally
assigned a value to the vehicle.
Singh ignores the evidence presented by Molnar showing
that Singh and Molnar agreed the vehicle would be transferred
from Pardal to Molnar. Molnar testified Singh showed him the
vehicle during a break at the February 27, 2013 mediation and
proposed Molnar should take it because Singh had no use for it.
Molnar explained he and Singh discussed that Singh would be
credited the Kelley Blue Book price, and Singh responded, “That’s
fine.”13 Singh’s conduct after their agreement—including helping
13 As discussed, the trial court found there was no testimony
that Singh had agreed to the valuation used by Molnar, but this
finding is not inconsistent with Molnar’s testimony that he and
19
to broker Molnar’s purchase of the wireless equipment from
Pardal and asking how Molnar enjoyed the car—showed that
Singh understood the car belonged to Molnar. Neelamba also
testified Molnar contacted her during the mediation to obtain her
approval to accept Singh’s offer of the car in lieu of monetary
payment for outstanding attorneys’ fees. As the trial court
observed, Pardal and Lynch likewise behaved consistently with
an understanding the Pardal settlement transferred the vehicle
to Molnar, expressing no surprise that the vehicle was being
transferred to him, arranging for payment for the wireless
equipment, and explaining to Molnar how the vehicle worked.
Singh testified he and Molnar never discussed the vehicle
on the day of the Pardal mediation, and at no time did Singh offer
the car to Molnar, let alone agree Molnar would keep the car and
give Singh a credit for the value of the car. But Singh’s
testimony was directly contradicted by Molnar’s testimony, and
the trial court found Molnar’s (and Neelamba’s) testimony
“credible and consistent with the terms of the Pardal [s]ettlement
and the conduct of Pardal and Pardal’s counsel.” The Court also
found Singh was unable to explain why the Pardal settlement
was structured to give initial possession of the car to Molnar
during the 15-day waiting period instead of Singh. Singh
testified Molnar told him the vehicle had to be held by a third
party because of the bankruptcy proceeding, but Singh did not
Singh agreed Molnar would credit Singh for the Kelley Blue Book
value. Rather, the trial court found there was no support for the
specific $12,827 credit applied by Molnar, especially in light of
the $15,000 bill of sale Molnar signed.
20
provide any legal support for this proposition.14 Further,
although Singh testified he intended to reimburse Molnar for the
$200 Molnar paid Pardal for the wireless equipment, Singh’s
failure to reimburse Molnar is consistent with Molnar’s
testimony Singh knew the car belonged to Molnar.
Singh has therefore failed to present “‘uncontradicted and
unimpeached’” evidence that is “‘of such a character and weight
as to leave no room for a judicial determination’” that Singh
agreed to transfer the vehicle to Molnar in partial payment for
attorneys’ fees. (Sonic, supra, 196 Cal.App.4th at p. 466; Dreyer’s
Grand Ice Cream, Inc. v. County of Kern, supra, 218 Cal.App.4th
at p. 838.)
Accordingly, because Singh did not present evidence
compelling a finding Molnar converted the vehicle, there are no
grounds to reverse the trial court’s judgment as to the sixth cause
of action for conversion. Likewise, there are no grounds to
reverse the judgment as to the second cause of action for breach
of oral contract, because that claim was limited at summary
14 The Pardal settlement is more ambiguous as to the transfer
of the vehicle than the trial court acknowledged because it states
the Pardals would “deliver to Plaintiffs their 2003 Mercedes Benz
automobile, . . . along with the title certificate properly endorsed
transferring title to said automobile . . . [at] the law offices of
[Lynch].” (Italics added.) “Plaintiffs” was defined as Singh,
Kaur, and their companies, not Molnar. And the bill of sale
drafted by Lynch stated the vehicle had been transferred “to
Jasbir Singh or Christian Molnar.” But despite any ambiguity,
the Pardal settlement and conduct of Pardal and Lynch show the
parties at least contemplated Molnar might be the ultimate
transferee, which is inconsistent with Singh’s testimony that he
and Molnar never discussed Molnar receiving the vehicle.
21
adjudication to the allegation Molnar breached an implied term
in the agreement governing Singh’s representation to refrain
from self-dealing when he converted the vehicle.
C. The Parties’ Agreement for Singh To Give Molnar the
Vehicle as Payment for Legal Services Did Not Violate
Rule 3-300
Singh contends that if there was an oral agreement to
transfer the vehicle to Molnar, Molnar breached his fiduciary
duty to Singh by entering into a transaction to acquire property
adverse to his client in violation of rule 3-300.15 (See BGJ
Associates v. Wilson (2003) 113 Cal.App.4th 1217, 1227 [although
a violation of the rules of professional conduct “does not in itself
provide a basis for civil liability[,] [citation] . . . the rules,
‘together with statutes and general principles relating to other
fiduciary relationships, all help define the duty component of the
fiduciary duty which the attorney owes to his or her client’”].)
Singh’s contention lacks merit because rule 3-300 does not apply
to Singh’s agreement with Molnar.16
15 The rules were adopted by the Board of Governors of the
California State Bar and approved by the Supreme Court.
(Rule 1-100(A).)
16 Because we affirm the judgment in favor of Molnar on
Singh’s conversion claim, his claims for legal malpractice and
breach of fiduciary duty would likewise appear to fail because the
trial court granted summary adjudication in favor of Molnar “to
the extent that these claims are premised on anything other than
Molnar’s alleged conversion of the vehicle.” However, for reasons
that are not evident, the parties’ experts opined at trial on
whether Molnar violated rule 3-300, and the trial court addressed
22
Rule 3-300 provides, “A member [of the State Bar] shall not
enter into a business transaction with a client; or knowingly
acquire an ownership, possessory, security, or other pecuniary
interest adverse to a client, unless each of the following
requirements has been satisfied: [¶] (A) The transaction or
acquisition and its terms are fair and reasonable to the client and
are fully disclosed and transmitted in writing to the client in a
manner which should reasonably have been understood by the
client; and [¶] (B) The client is advised in writing that the client
may seek the advice of an independent lawyer of the client’s
choice and is given a reasonable opportunity to seek that advice;
and [¶] (C) The client thereafter consents in writing to the terms
of the transaction or the terms of the acquisition.”
The accompanying discussion note17 clarifies, “Rule 3-300 is
not intended to apply to the agreement by which the member [of
the State Bar] is retained by the client, unless the agreement
confers on the member an ownership, possessory, security, or
other pecuniary interest adverse to the client. Such an
this question in its statement of decision. We therefore consider
whether the trial court erred in concluding rule 3-300 did not
apply to support a claim for breach of fiduciary duty. Singh does
not argue on appeal that Molnar’s violation of rule 3-300 supports
his legal malpractice claim.
17 Rule 1-100(C) provided as to the “Discussion” notes
following each rule, “Because it is a practical impossibility to
convey in black letter form all of the nuances of these disciplinary
rules, the comments contained in the Discussions of the rules,
while they do not add independent basis for imposing discipline,
are intended to provide guidance for interpreting the rules and
practicing in compliance with them.”
23
agreement is governed, in part, by rule 4-200.[18] [¶] . . . [¶]
Rule 3-300 is intended to apply where the member wishes to
obtain an interest in [a] client’s property in order to secure the
amount of the member’s past due or future fees.”19 (Rule 3-300,
Discussion; see Fletcher v. Davis (2004) 33 Cal.4th 61, 71-72
(Fletcher) [applying rule 3-300 to charging lien to secure hourly-
rate attorneys’ fees]; but see Plummer v. Day/Eisenberg, LLP
(2010) 184 Cal.App.4th 38, 49 [charging lien in contingency fee
agreement not subject to rule 3-300].)
The Supreme Court in Fletcher held an attorney’s oral
agreement to secure payment of his hourly fees by taking a
charging lien against the client’s future recovery was an adverse
interest within the meaning of rule 3-300. (Fletcher, supra,
33 Cal.4th at p. 71.) The court explained, “[A] charging lien
18 Rule 4-200 prohibits an attorney from entering into an
agreement for, charging, or collecting an unconscionable fee.
(Rule 4-200(A).) The rule sets forth factors relevant to a
determination of unconscionability, including the proportionality
of the fee to the value of the services performed.
(Rule 4-200(B)(1).)
19 Singh does not argue on appeal that the agreement for him
to give Molnar the vehicle as payment for attorneys’ fees
constituted a business transaction under rule 3-300, and there is
no evidence the exchange involved any economic expectancy other
than a reduction in fees. (See, e.g., Chan v. Lund (2010)
188 Cal.App.4th 1159, 1177 [attorney’s agreement to discount
fees in exchange for client’s agreement to settle litigation was not
a business transaction subject to rule 3-300]; compare BGJ
Associates v. Wilson, supra, 113 Cal.App.4th at p. 1227
[agreement with client to jointly acquire property adjacent to
parcel for which attorney was retained in litigation was a
business transaction subject to rule 3-300].)
24
grants the attorney considerable authority to detain all or part of
the client’s recovery whenever a dispute arises over the lien’s
existence or its scope. That would unquestionably be detrimental
to the client.” (Id. at p. 69) Thus, “an adverse interest exists
where the fee arrangement ‘gives the attorney an ownership
interest in client property that has a value greater than the
amount absolutely agreed upon in fees.’” (Ibid.) The Fletcher
court contrasted the charging lien to a client’s payment of
attorneys’ fees with an unsecured promissory note, which does
not fall within rule 3-300. (Fletcher, at p. 68.)
Here, Molnar has not obtained a charging lien or other
security interest in property owned by Singh to secure the
recovery of Molnar’s fees. Instead, at the time Singh negotiated
the Pardal settlement, he also agreed to pay a specific portion of
the settlement proceeds to Molnar as payment for attorneys’ fees.
It is a common and acceptable practice for a settlement
agreement to provide for a portion of the settlement payment to
go to the attorney as compensation for attorneys’ fees. The fact
the payment was in the form of a vehicle included in the
settlement, albeit unusual, does not transform the payment into
a secured lien on future proceeds. And, unlike charging liens,
Molnar has no ownership interest in Singh’s property greater
than the value of the attorneys’ fees owed. Rather, Singh was
credited for the value of the vehicle.
Singh cites to no authority for his contention rule 3-300
applies to an agreement to accept a nonmonetary payment for
attorneys’ fees, nor is there. Rather, the payment would be
governed by rule 4-200, which prohibits an attorney from
charging an unconscionable fee. Singh did not present evidence
showing that either the $12,827 valuation of the vehicle applied
25
by Molnar on his invoices or the $15,000 valuation the trial court
included as an offset to Molnar’s fees constituted an
unconscionable fee in violation of rule 4-200. Because rule 3-300
did not apply to the parties’ oral agreement for the transfer of the
vehicle, the trial court did not err in finding against Singh on his
claim for breach of fiduciary duty.20
DISPOSITION
The judgment is affirmed. Molnar is to recover his costs on
appeal.
FEUER, J.
We concur:
PERLUSS, P. J.
MCCORMICK, J.*
20 Because we find rule 3-300 did not apply to the parties’ oral
agreement, we do not reach Molnar’s arguments that the
agreement complied with rule 3-300, nor do we reach the
relevance of the experts’ testimony at trial.
* Judge of the Orange County Superior Court, assigned by
the Chief Justice pursuant to article VI, section 6 of the
California Constitution.
26