Torru v. Price CA1/3 ( 2020 )

Filed 12/14/20 Torru v. Price CA1/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION THREE
JOSCELYN JONES TORRU,
Plaintiff and Appellant, A158400
v.
PAMELA Y. PRICE, (Contra Costa County
Defendant and Respondent. Super. Ct. No. N19-1034)
Plaintiff Joscelyn Jones Torru filed a petition to confirm an attorney-
client fee award rendered pursuant to nonbinding arbitration under the
Mandatory Fee Arbitration Act (MFAA) (Bus. & Prof. Code, § 6200 et seq.).1
The trial court denied the petition, finding defendant Pamela Y. Price had
timely rejected the award by filing a complaint after sending a letter stating
her intent to reject the award. Jones Torru appeals. We will affirm.
FACTUAL AND PROCEDURAL BACKGROUND
A. Attorney-client Relationship
In October 2016, Price and Jones Torru executed an attorney-client
retainer agreement. The agreement stated that Jones Torru would provide
legal advice and representation to Price in a guardianship case filed in
Unless otherwise indicated, all further section references will be to
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the Business and Professions Code.
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Alameda County. It also provided that any controversy between Price and
Jones Torru “concerning fees or costs, or legal services rendered, that is, as to
whether any services were unnecessary, unauthorized, [or] improperly or
negligently rendered, shall be submitted to binding Arbitration and not by
lawsuit or resort to Court process except as State law provides for judicial
review of arbitration proceedings. Such Arbitration shall be pursuant to the
Rules of the American Arbitration Association.”
The attorney-client relationship between Jones Torru and Price
subsequently deteriorated, and the court granted Jones Torru’s motion to be
relieved as counsel in the guardianship case.
B. Nonbinding Arbitration Under the MFAA
As the attorney-client relationship deteriorated, a fee dispute arose
between the parties. Price then requested nonbinding arbitration of the
dispute under the MFAA. As explained in more detail below, the MFAA is a
distinct statutory scheme for the arbitration of attorney-client fee disputes
and allows a client to request nonbinding arbitration under its provisions,
despite a contractual agreement between the parties for binding arbitration.
(§ 6201, subd. (a); Schatz v. Allen Matkins Leck Gamble & Mallory LLP
(2009) 45 Cal. 4th 557, 565–566 (Schatz).) If nonbinding arbitration under
the MFAA is commenced by the client, it is mandatory for the attorney.
(§ 6200, subd. (c).)
The nonbinding arbitration under the MFAA was conducted on
March 19, 2019. On March 28, 2019, the arbitrator issued his findings and
award. The arbitrator described Price’s claims as “numerous,” including
“fraud and deceit in the contract’s formation, inflated and unreasonable
billings, improper post-termination billings, illegal fees charged, and breach
of fiduciary duty to charge only fair, reasonable, and conscionable fees.” In
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the arbitration, Price had demanded “that all fees charged by [Jones Torru]
be denied and that [Jones Torru] return all funds paid by [Price] and that any
and all outstanding charges be denied.” The arbitrator found that
Jones Torru had charged Price $33,171.70, factoring in discounts already
applied on Jones Torru’s billing. Price had previously paid Jones Torru
$6,250, leaving an outstanding balance of $26,921.70. The arbitrator found
that Jones Torru’s billing should be further reduced by $875 but that the
remaining fees were otherwise proper. The arbitrator awarded $26,046.70,
plus interest, to Jones Torru.
C. Price’s April 4, 2019 Letter
On April 4, 2019, Price sent a letter to Jones Torru’s attorney with a
“CONFIDENTIAL SETTLEMENT OFFER” heading. The letter indicated
that Price had received and reviewed the arbitrator’s award. It also stated:
“I am writing to confirm that my intent [sic] to reject his decision pursuant to
Business & Professions Code Section 6204. Prior to initiating the required
litigation, however, I wanted to give your client another opportunity to
resolve the matter by making an offer to resolve all claims between the
parties by payment of $5000 to her.” The letter concluded that the offer
would “remain open for a period of fourteen (14) days” and if “not accepted on
or before April 18, 2019, it will be deemed rejected.”
D. Price’s Complaint
On April 25, 2019, Price filed a complaint in Contra Costa County. The
complaint alleged six causes of action: (1) breach of the implied covenant of
good faith; (2) breach of fiduciary duty; (3) breach of contract; (4) fraud;
(5) money had and received; and (6) declaratory and injunctive relief. It
alleged that Jones Torru had charged Price $33,171.70: $350 for initial
consultation; $5,250 for retainer; $1,000 for costs; $7,349.13 on the first
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invoice; $15,554.39 on the second invoice; and $3,668.18 on the third, final
invoice. It also alleged that Price had paid Jones Torru $6,250. The
complaint alleged that Jones Torru “has demanded that Price pay all three of
her invoices” but “Price has refused to pay an [sic] additional amounts to
Defendant JT. Price seeks a judicial determination of the reasonableness of
Defendant JT’s billing and conduct toward Price.” The prayer for relief
included compensatory and special damages, prejudgment interest, injunctive
relief to enjoin “any action to seek to collect any amounts allegedly owed to
[Jones Torru] from Price,” and declaratory relief that Jones Torru “is not
entitled to recover or receive any additional funds from Price for attorneys’
fees or costs under the Retainer Agreement . . . .”
On April 30, 2019, Price attempted to file a Rejection of Award and
Request for Trial After Attorney-client Fee Arbitration using Judicial Council
form ADR-104. The deputy clerk issued a correspondence memo that the
clerk could not “FILE/ISSUE” the form because it contained contradictory
information about whether there was a pending court case concerning the
dispute. Price successfully filed another ADR-104 form on May 1, 2019.
On May 7, 2019, Price filed a first amended complaint. The first
amended complaint contained the same six causes of action and prayer for
relief, but newly alleged: “On April 4, 2019, Price notified Defendant JT’s
counsel in writing that she intended to reject the arbitrator’s Findings and
Award pursuant to Business & Professions Code Section 6204. Price seeks a
trial de novo and judicial determination of the reasonableness of
Defendant JT’s billing and conduct toward Price.”
E. Jones Torru’s Petition to Confirm Arbitration Award
On June 12, 2019, Jones Torru initiated a new action in Contra Costa
County by a petition to confirm the March 28, 2019 arbitration award. The
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petition requested that the court enter a judgment against Price in the sum
of $26,046.70 with interest. Jones Torru argued that the award was binding
under the MFAA because Price had failed to timely reject the award and
selected the wrong forum for rejection of the award.
On August 29, 2019, the trial court denied the petition. The trial court
found that Price’s April 25, 2019 complaint was sufficient to constitute a
rejection of the arbitration award. The trial court also considered Price’s
April 4, 2019 letter, overruling Jones Torru’s objection that the letter was
inadmissible under Evidence Code section 1152. The trial court explained
that “[a]ll these facts taken together, convince the Court that [Price’s] action
met the requirements of section 6204(c).” It concluded: “Therefore, the Court
finds that Price’s rejection of the arbitration award was timely.”
The trial court also rejected Jones Torru’s argument that the retainer
agreement required Price to initiate binding arbitration if she wanted to
reject the arbitrator’s award. It explained that a party may file a lawsuit
even if there is a potentially applicable arbitration case, although the court
“may still order the parties to arbitration after a lawsuit has been filed.” The
trial court concluded that “Price may believe that the arbitration clause is
unenforceable or not covered by this dispute and thus, she is not required to
initiate an arbitration proceeding.”
This appeal followed.
DISCUSSION
Jones Torru makes two primary arguments on appeal.2 She argues
that the trial court abused its discretion in overruling her objection under
2We need not address Jones Torru’s third argument that failure to
timely reject an arbitration award under the MFAA cannot be excused by
Code of Civil Procedure section 473, as Price confirms that she does not make
any contrary argument.
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Evidence Code section 1152 and finding the April 4, 2009 letter admissible.
She also argues that the trial court erred in finding that Price had timely
rejected the arbitration award as required by the MFAA. We address each
argument in turn.
I. ADMISSIBILITY OF APRIL 4, 2009 LETTER
Jones Torru challenges the trial court’s ruling regarding the
admissibility of the April 4, 2019 letter. Price submitted the letter as an
exhibit to her declaration in opposition to Jones Torru’s petition. Jones Torru
objected to the exhibit, arguing that it was “evidence of a settlement offer and
negotiations” and thus inadmissible under Evidence Code section 1152. The
trial court overruled the objection, finding the letter admissible “to show that
Price notified Torru of her rejection of the arbitrator’s award on April 4,
2019.”
We review the trial court’s ruling on admissibility of evidence under
Evidence Code section 1152 for abuse of discretion. (Caira v. Offner (2005)
126 Cal. App. 4th 12, 32 (Caira).) Evidence Code section 1152, subdivision (a)
provides, in relevant part: “Evidence that a person has, in compromise . . . ,
furnished or offered or promised to furnish money or any other thing, act, or
service to another who has sustained . . . loss or damage, as well as any
conduct or statements made in negotiation thereof, is inadmissible to prove
his or her liability for the loss or damage or any part of it.”
While we agree that Price was negotiating a compromise of the fee
dispute in her April 4, 2019 letter, we also agree with the trial court that the
letter does not fall within the purview of Evidence Code section 1152. The
statements in the letter were not admitted to demonstrate liability of either
Price or Jones Torru but to establish that Jones Torru had received notice
that Price was rejecting the arbitration award.
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Jones Torru’s argument that the facts here should be analogized to the
facts of Caira is not persuasive. In Caira, the appellate court concluded there
was no abuse of discretion in excluding an email sent during settlement
negotiations where one party “sought admission of the e-mail to prove a claim
that was specifically discussed in the e-mail.” (Caira, supra, 126 Cal.App.4th
at p. 36.) Unlike Caira, Price did not offer her April 4, 2019 letter to prove
any of her claims against Jones Torru, but instead to show that Price
provided notice of her intent to reject the award. Accordingly, we conclude
that the trial court did not abuse its discretion in finding the April 4, 2019
letter admissible.
II. TIMELY REJECTION OF ARBITRATION AWARD
Jones Torru also argues that the trial court erred in finding that Price
had timely rejected the arbitration award. Even considering the April 25,
2019 complaint with the April 4, 2019 letter, Jones Torru contends that Price
failed to meet the requirements of the MFAA. In ascertaining whether the
trial court’s finding was in error, we begin with a brief overview of the MFAA.
A. Overview of the MFAA
The MFAA is a statutory scheme that provides for the arbitration of
attorney-client disputes over legal fees, costs, or both. (Schatz, supra, 45
Cal.4th at pp. 564–565.) Enacted in 1978, the MFAA was established “to
protect clients as consumers of legal services in general.” (Alternative
Systems, Inc. v. Carey (1998) 67 Cal. App. 4th 1034, 1044; see Schatz, at pp.
564–565 [explaining that the MFAA recognizes “ ‘the “disparity in bargaining
power in attorney fee matters which favors the attorney in dealings with
infrequent consumers of legal services” ’ ”].)
The MFAA has its own rules and limitations, distinct from those that
govern private arbitration under the California Arbitration Act. (Schatz,
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supra, 45 Cal.4th at p. 565.) Arbitration under the MFAA is “ ‘based on a
statutory directive and not the parties’ agreement.’ ” (Ibid.) Accordingly, a
client may request nonbinding arbitration under the MFAA despite having a
contractual agreement with his or her lawyer for binding arbitration.
(§ 6201, subd. (a); Schatz, at pp. 565–566.) If a client commences nonbinding
arbitration under the MFAA, it is mandatory for the attorney. (§ 6200,
subd. (c).)
An award rendered pursuant to an arbitration under the MFAA is not
binding, absent a written agreement by the parties to make it binding.
(§ 6204, subd. (a).) But “[e]ven if the parties to the arbitration have not
agreed in writing to be bound, the arbitration award shall become binding
upon the passage of 30 days after service of notice of the award, unless a
party has, within the 30 days, sought a trial after arbitration pursuant to
Section 6204.” (§ 6203, subd. (b).)
The specific procedure for seeking a trial after arbitration depends on
whether there is a court action concerning the fee dispute that is already
pending. (§ 6204, subd. (b) (section 6204(b).) If there is a pending action, the
party must file “a rejection of arbitration award and request for trial after
arbitration in that action within 30 days after service of notice of the award.”
(Ibid.) If no action is pending, the party must commence “an action in the
court having jurisdiction over the amount of money in controversy within 30
days after service of notice of the award.” (Id., subd. (c) (section 6204(c).) The
trial after arbitration is then “conducted de novo, essentially as if no
arbitration had occurred.” (Maynard v. Brandon (2005) 36 Cal. 4th 364, 373.)
B. Standard of Review
The parties dispute the appropriate standard of review on this issue:
Jones Torru argues that the de novo standard applies, while Price argues
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that the trial court’s ruling should be reviewed for abuse of discretion. We
find Giorgianni v. Crowley (2011) 197 Cal. App. 4th 1462 (Giorgianni) on point
here. In Giorgianni, the defendant attorney filed a small claims action after
an arbitration award was rendered to his former client. (Id. at p. 1469.) The
appellate court explained that it “must decide here whether Crowley’s filing
of the small claims action constituted an effective rejection of the Award
under the MFAA. Since that decision is based upon an interpretation of the
relevant MFAA statutes and an application of that interpretation to the
undisputed facts presented here, these questions of law are subject to
independent review.” (Id. at pp. 1471–1472; see Loeb v. Record (2008) 162
Cal. App. 4th 431, 441 [“Issues of statutory interpretation and the application
of that interpretation to a set of undisputed facts are questions of law subject
to independent review by this court”].)3
So too in this appeal, we must decide whether Price satisfied the
provisions of the MFAA that required her to seek and commence a trial after
arbitration. That decision is based on statutory interpretation and
application of that interpretation to undisputed facts: namely, Price’s
April 4, 2019 letter and April 25, 2019 complaint. Accordingly, we review the
trial court’s ruling de novo.
3 We note that the issue in Giorgianni was whether the small claims
court satisfied the definition of “the court having jurisdiction over the amount
of money in controversy” in section 6204(c). (Giorgianni, supra, Cal.App.4th
at p. 1473.) As discussed post, the issue presented here is whether Price’s
April 25, 2019 complaint satisfied the definition of “commencement of an
action” in section 6204(c) and sufficiently informed Jones Torru that Price
was rejecting the arbitration award. (Shiver, McGrane & Martin v. Littell
(1990) 217 Cal. App. 3d 1041, 1045 (Shiver).)
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C. Analysis
As this is a matter of statutory interpretation subject to our de novo
review, we begin with the terms of the relevant MFAA provisions, affording
the words their “ ‘usual and ordinary meaning’ ” and viewing them in their
statutory context “in order to effectuate the law’s purpose.” (Imperial
Merchant Services, Inc. v. Hunt (2009) 47 Cal. 4th 381, 387.) Section 6203,
subdivision (b) provides that an arbitration award shall become binding
unless a party seeks a “trial after arbitration pursuant to Section 6204”
within 30 days. Accordingly, we look to the procedures described in section
6204 to determine whether Price met this requirement to seek a trial after
arbitration.
As described above, subdivisions (b) and (c) of section 6204 set forth the
specific procedure for seeking a trial after arbitration, depending on whether
there is a court action already pending. The parties agree that the procedure
applicable here is section 6204(c), as there was no court action pending when
Price filed her April 25, 2019 complaint. Section 6204(c) states, in
straightforward terms, that “the trial after arbitration shall be initiated by
the commencement of an action in the court having jurisdiction over the
amount of money in controversy within 30 days after service of notice of the
award.” Based on the plain language of the statute, we conclude that Price’s
filing of her April 25, 2019 complaint constituted the commencement of an
action 28 days after the March 28, 2019 arbitration award, and thus satisfied
the requirement of section 6204(c).
Jones Torru makes three arguments to the contrary. First, she argues
that the April 25, 2019 complaint is insufficient because it does not mention
the arbitration or specifically allege that Price was rejecting the award.
Second, she challenges Price’s first attempt and subsequent filing of the
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ADR-104 form, arguing that they were untimely and show that Price knew
the April 25, 2019 complaint was insufficient. Third, she argues that Price’s
dispute was filed in the wrong forum, as the retainer agreement required
Price to submit her dispute to binding arbitration instead of filing the
April 25, 2019 complaint in court. As detailed below, we do not find the
arguments persuasive.
1. Sufficiency of April 25, 2019 Complaint
Jones Torru argues that the April 25, 2019 complaint is insufficient
because it does not specifically allege that the arbitration occurred or that
Price was rejecting the award, instead making “general allegations” and
asserting claims that were not made in the arbitration. Jones Torru relies on
Shiver to support her position.
We agree with the trial court that Shiver is distinguishable from the
facts here. In Shiver, a law firm demanded payment of outstanding fees after
its relationship ended with clients Robert and Joyce Littell. (Shiver, supra,
217 Cal.App.3d at pp. 1043–1044.) The Littells exercised their right to
nonbinding arbitration under the MFAA, and the arbitrator subsequently
awarded fees to the firm. (Id. at p. 1044.) A month later, Mr. Littell filed a
“ ‘Complaint for damages for Legal Malpractice’ ” against only one of the
attorneys at the law firm, alleging that the attorney’s negligent performance
of legal services had damaged him in an unspecified sum. (Ibid.) Shiver
concluded that Mr. Littell’s malpractice complaint did not satisfy the
requirements of section 6204(c) for three reasons. (Id. at p. 1045.) First, the
arbitration was between the law firm and both Littells, whereas the
malpractice action was instituted by Mr. Littell alone against one of the
attorneys in the firm as an individual. (Ibid.) Second, the arbitration was
“not mentioned in the complaint and there is no indication that the fees
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challenged in the malpractice action are the same fees awarded to respondent
by the arbitrator.” (Ibid.) Third, “the filing of the malpractice action would
not necessarily inform respondent that appellants intended to challenge the
award.” (Ibid.)
These three reasons do not apply with equal force to the facts here.
First, unlike Shiver, Price’s April 25, 2019 complaint involved the same two
parties as the arbitration: Price and Jones Torru. Second, while the
complaint did not specifically allege that the arbitration had occurred, it
explicitly challenged the same fees that were awarded to Jones Torru in
arbitration. It alleged that Jones Torru had charged Price $33,171.70 and
that Price had paid Jones Torru $6,250, thus reflecting the same outstanding
balance of $26,921.70.
Third, the April 25, 2019 complaint informed Jones Torru that Price
was intending to challenge the arbitration award. The complaint specifically
requested declaratory relief that Jones Torru “is not entitled to recover or
receive any additional funds from Price for attorneys’ fees or costs under the
Retainer Agreement . . . .” Such a request was equivalent to the rejection of
the arbitration award. Moreover, the causes of action were consistent with
the other claims Price made in the arbitration, including “fraud and deceit in
the contract’s formation” and “breach of fiduciary duty.”
Finally, while the April 4, 2019 letter alone did not satisfy the
requirements of section 6204(c), we agree with the trial court that it further
demonstrates that Jones Torru had notice that Price was rejecting the award.
In the letter, Price stated her intent to reject the award and made a
settlement offer open for 14 days “[p]rior to initiating the required
litigation . . . .” Price filed her complaint 21 days later. On this record, we
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conclude that Price satisfied the requirement of section 6204(c) to initiate a
trial after arbitration.4
2. Rejection of Award
Jones Torru argues next that Price did not file a timely rejection of the
award because both her first attempt and her subsequent filing of the ADR-
104 form were made after the 30-day deadline and show that Price knew her
April 25, 2019 complaint was insufficient. We disagree.
As a preliminary matter, the ADR-104 form itself indicates it is a
“Form Approved for Optional Use.” Moreover, section 6204(c) does not
require a party to file a specific rejection, using this form or otherwise. In
contrast, section 6204(b) requires the “filing [of] a rejection of arbitration
award and request for trial after arbitration in that action” to initiate a trial
after arbitration if there is a court action already pending. But section
6204(b) is inapplicable because, as explained above, there was no pending
action when Price filed her April 25, 2019 complaint. The fact that Price
attempted to file (and then later filed) the ADR-104 form, even though she
was not required to do so and the 30-day deadline had passed, does not
negate our conclusion that Price had already satisfied the requirement of
section 6204(c).
3. Forum
Finally, Jones Torru argues that Price did not satisfy section 6204(c)
because she filed her April 25, 2019 complaint in the wrong forum.
Jones Torru does not challenge Price’s election to pursue nonbinding
arbitration under the MFAA. Nor does she contend that the April 25, 2019
4Given this conclusion, we need not address Price’s alternative
argument that her first amended complaint relates back to the filing of her
original complaint and thus satisfies section 6204(c).
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complaint should have been filed in some other court. Instead, she relies on
Schatz to argue that instead of initiating a court action by her April 25, 2019
complaint, Price should have submitted her dispute to binding arbitration as
required by the arbitration provision in the retainer agreement.
We again agree with the trial court that Price was not required to
initiate an arbitration proceeding pursuant to the retainer agreement. As
explained in Sargon Enterprises, Inc. v. Browne George Ross LLP (2017) 15
Cal. App. 5th 749, 769, a party to an arbitration agreement may file a lawsuit
in court and then argue that the agreement is not binding, unenforceable, or
inapplicable to the dispute. The opposing party may respond by filing a
petition to compel arbitration of the dispute. (Id. at p. 767.) Schatz is
consistent with this framework, concluding that the right to a trial under
section 6204 “would appear to be subject to a demurrer or summary judgment
motion designed to compel contractual arbitration.” (Schatz, supra, 45
Cal.4th at p. 573.) Here, Jones Torru could have asserted her contractual
right to arbitrate by petitioning to compel arbitration after Price filed her
April 25, 2019 complaint. Regardless of how Jones Torru responded to the
complaint, Price satisfied the requirement of section 6204(c) by filing her
April 25, 2019 complaint “in the court having jurisdiction over the amount of
money in controversy within 30 days after service of notice of the award.”
In sum, we conclude that the trial court did not err in denying
Jones Torru’s petition to confirm the arbitration award. Accordingly, we also
reject Jones Torru’s request for fees and costs incurred on appeal.
DISPOSITION
The judgment is affirmed. Price is entitled to her costs on appeal. (Cal.
Rules of Court, rule 8.278(a)(1), (2).)
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_________________________
Jackson, J.
WE CONCUR:
_________________________
Fujisaki, Acting P. J.
_________________________
Petrou, J.
A158400/Jones Torru v. Price
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