GAGGERO v. KNAPP No. B207567.
STEPHEN M. GAGGERO, Plaintiff and Appellant, v. KNAPP, PETERSEN & CLARKE et al., Defendants and Respondents.
Court of Appeals of California, Second Appellate District, Division Eight.
Filed May 6, 2010.
Bostwick & Jassy, Gary L. Bostwick and Jean-Paul Jassy; Westlake Law Group and Julian A. Simonis; and Benedon & Serlin and Gerald M. Serlin, for Plaintiff and Appellant.
Sedgwick, Detert, Moran & Arnold, Randall A. Miller, Lori S. Blitstien, Hall R. Marston and Matthew A. Reed for Defendants and Respondents.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
Stephen M. Gaggero brought a lawsuit in December 2002 against Knapp, Petersen & Clarke and three of its lawyers, Steven Ray Garcia, Stephen M. Harris, and Andre Jardini (collectively, the Knapp firm). The Knapp firm represented Gaggero from August 2000 until its withdrawal in January 2002, in connection with numerous lawsuits in which Gaggero was a plaintiff or defendant. Gaggero asserted claims against the Knapp firm for breach of contract, breach of fiduciary duty and professional negligence, among others, in connection with five matters handled by the firm. After Gaggero presented his evidence at a bench trial consuming almost three weeks in the summer of 2007, the trial court granted defense motions for judgment under Code of Civil Procedure section 631.8. Judgment was entered in February 2008, and the trial court later granted the Knapp firm attorney fees of over $1.2 million.
Gaggero appeals, asserting numerous errors by the trial court in (1) ruling that Gaggero failed to prove damages; (2) excluding evidence in connection with several defense motions in limine; and (3) sustaining objections to proffered evidence on the ground Gaggero had not produced it in discovery. He further asserts error in granting the Knapp firm's motions for judgment, contending he sustained his burden of proving breaches of fiduciary duty, breach of contract and professional negligence, and he claims the fee award was improper. We find no merit in any of Gaggero's contentions and affirm the judgment in its entirety.
FACTUAL AND PROCEDURAL BACKGROUND
We begin our recital of the facts in this case with a few observations from the trial court's statement of decision, all of them fully supported by the record, and none of them alluded to in Gaggero's recitation of the evidence.
1. The trial court's credibility determinations.
The trial court made adverse credibility determinations with respect to all three of the witnesses in Gaggero's case-in-chief: Gaggero himself; David Chatfield, a lawyer who appeared for Gaggero in various actions after the Knapp firm's withdrawal; and Gaggero's expert on legal ethics and malpractice issues, Attorney David Parker. As to Gaggero, who testified during all or part of 11 days, the court stated:
As to Chatfield, the court found him "extremely evasive," with a "remarkable lack of knowledge" of matters he should have known; Chatfield gave "confused and inconsistent testimony with respect to his handling of Mr. Gaggero's matters," and his testimony concerning his interactions with the Knapp firm attorneys was "less than fully credible."
As to expert Parker, the court found him "hostile and combative . . . to a degree which damaged his credibility." In addition, the court found that Parker's conduct in trying to secure a witness for Gaggero during the trial showed an abandonment of "the appearance of objectivity and neutrality for that of an advocate on behalf of Mr. Gaggero" and "compromised the integrity of Mr. Parker's testimony in the Court's eyes."
Bearing in mind the trial court's credibility determinations — with which we have no authority (or inclination) to disagree — we turn to the circumstances generating this lawsuit.
2. The underlying lawsuits.
Gaggero hired the Knapp firm to handle a number of matters, including matters relating to the five lawsuits that eventually generated this one. These were:
One other pertinent note: In 1999, Gaggero sold 90 percent of his net recovery in various of his lawsuits (including First Federal 1, First Federal 2, and Stacey) to I.D.C. Development, Ltd. (IDC), a factoring entity located in the country of Cyprus, for $200,000. Consequently, IDC had a lien claim on the proceeds of those cases.
3. The initiation of the lawyer-client relationship.
Gaggero hired the Knapp firm after his former counsel (Peter Bezek) withdrew because of disputes over payment of his bills. Gaggero and the Knapp firm executed several legal services agreements, including one for the Stacey case (as of August 28, 2000), one for First Federal 2 (as of August 30, 2000), and one for Slocumb (as of November 16, 2000). The agreements were substantially identical and followed extensive negotiation of their terms, with Gaggero making detailed revisions to the drafts. Among other things, the agreements contained a number of billing restrictions. For example, conferences among staff attorneys were to be billed only by the senior attorney; no attorney unfamiliar with the matter could bill time without Gaggero's consent; a single paralegal was to be assigned; the cost of a different attorney or paralegal learning the file if the assigned attorney left the firm's employ could not be billed to Gaggero; there were to be no charges for routine correspondence; and so on. Permissible billings for costs were specified, and documentation was required for costs over $100. Monthly statements were to "clearly explain attorneys' fees and costs incurred and their basis . . . ." Payment was to be considered timely "if it is made within 30 days of the date the statement is sent to [Gaggero]." In addition, any dispute under the agreement was to be submitted to mediation, with expenses shared equally, and if not resolved through mediation, the parties would "negotiate in good faith as to whether to submit the dispute to arbitration." The prevailing party in an arbitration or court action to enforce the terms of the agreement was entitled to reasonable fees and all costs.
Gaggero and IDC also executed liens dated September 17 and September 29, 2000, giving the Knapp firm a claim to the proceeds of First Federal 2 and to funds in Attorney Bezek's trust account.
4. Payment of fees.
Fee payment issues, the trial court observed, "began to trouble the [Knapp firm]/Gaggero relationship" in the late spring of 2001. From early on, Gaggero insisted on face-to-face conferences on every bill before paying any fees. As the trial court found, "Gaggero demanded to review the bills,
5. The end of the lawyer-client relationship.
As larger amounts became past due, the Knapp firm became increasingly reluctant to devote extensive amounts of time to uncompensated review and revisions of bills. On August 22, 2001, the firm told Gaggero that he should seek new legal representation, and on August 24, 2001, the firm demanded a substantial immediate payment on past due amounts; Jardini stated, "I believe you righteously owe $79,239.93," which "should be paid before your departure [for Italy] on 9/7."
In late December 2001, Gaggero hired Chatfield, and later Gaggero's former attorney, Bezek, re-entered the fray, both representing Gaggero in the interpleader action after the Knapp firm's withdrawal on January 16, 2002. Before the end of January, the Knapp firm had substituted out of all of Gaggero's matters.
6. An overview of the claims in this case.
The principal claims in this case arise from the interrelated circumstances of (1) the efforts by the VNBC judgment creditors to collect from Gaggero on their judgment, (2) the Stacey case (in which Stacey was found liable for the malpractice causing the VNBC judgment), and (3) the existence of the $1.4 judgment Gaggero had obtained in the First Federal 2 case. In a nutshell, Gaggero did not want to pay the VNBC judgment creditors, taking the view that it should be paid by Stacey. But the Stacey judgment was on appeal, and Stacey's insurers would not pay. Meanwhile, the VNBC judgment creditors began making further efforts to collect from Gaggero, incurring additional attorney fees and costs as Gaggero continued to resist payment.
Meanwhile, Gaggero's $1.4 million judgment in First Federal 2 became final on August 13, 2001, and on August 28, 2001, First Federal Bank, aware that the VNBC judgment creditors and Gaggero's former attorney, Laura Slocumb, were asserting claims to those funds, filed an interpleader action and deposited $1.2 million of the judgment with the clerk of the court. The Knapp firm filed Gaggero's verified answer in the interpleader action on October 19, 2001, and also filed a cross-complaint on behalf of Gaggero, IDC and itself, seeking a declaration that the Knapp firm's interest in the funds (by virtue of its lien) had priority over all others, and that IDC's interest had priority over all others except the Knapp firm's interest. After its representation of Gaggero ended, the Knapp firm continued to assert its lien interests on its own behalf in the interpleader action. Eventually, in January 2003, the Knapp firm and Gaggero agreed that the Knapp firm would be paid the full amount of its fee claim ($125,883.71) from the interpleaded funds, and the remaining funds were released to Gaggero (other claims having earlier been resolved), but all parties reserved their rights against each other.
In this lawsuit, Gaggero asserts that the Knapp firm's work, principally in the Stacey and VNBC collection matters (and in allowing the interpleader action to be filed), fell below the standard of care; that he was over-billed in breach of the legal services agreements; and that the Knapp firm breached its fiduciary duties in connection with the liens he executed and in taking positions adverse to his interests after disputes arose between them. Described broadly, Gaggero claims:
7. The trial court's decision.
After hearing weeks of testimony from Gaggero, Chatfield, and Parker, none of whom were generally credible witnesses, and receiving voluminous exhibits in evidence, the trial court granted the Knapp firm's motions for judgment and issued a statement of decision. We note here several relevant findings (and will elaborate further on the court's rulings and the evidence as necessary in connection with Gaggero's arguments on appeal):
Judgment was entered on February 5, 2008, and the Knapp firm then filed a memorandum of costs and a motion for attorney fees, the latter seeking $1,202,994.50. The court awarded the full amount of attorney fees sought, and an amended judgment was entered on May 19, 2008. Gaggero's timely appeals from both judgments were consolidated.
We address and reject in turn Gaggero's claims of error in the trial court's rulings.
The trial court did not err in finding Gaggero failed to prove he suffered any damages as a result of the Knapp firm's conduct.
Gaggero's case foundered most plainly on his failure to prove damages: as the trial court observed at the hearing on the defense motions for judgment, it saw "problems with the damages in every aspect of this case." Gaggero's claimed damages fell into several categories, including (1) $498,000 in attorney fees and costs paid to other lawyers in the interpleader action after the Knapp firm was replaced; and (2) two groups of fees paid to the Knapp firm for which the amounts were disputed — one totaling about $80,000 (said to have been paid "under duress" in August 2001), and the other $125,000 (paid to the Knapp firm from interpleaded funds).
The trial court ruled that (1) there was no credible evidence that Gaggero personally suffered any damages (or that he had the authority to represent any other person or entity in asserting damage claims in this lawsuit), and (2) even if a theoretical argument for personal loss to Gaggero existed, Gaggero "failed to carry his burden to provide credible evidence to quantify and substantiate the amount of those losses." Even if there were any doubt as to the first ruling, there is none as to the second.
1. Fees paid to Gaggero's post-Knapp firm lawyers
The court found three flaws in Gaggero's claim for mitigation damages of $498,000 paid to his lawyers for their work in the interpleader action, each of which supports the trial court's conclusion.
Gaggero disputes the trial court's ruling, contending that he was improperly precluded from establishing that the funds used to pay attorney fees were his own. Specifically, he was precluded from answering the questions, "Why was it that Pacific Coast Management paid those [attorney fees to the Knapp firm]?" and "When Pacific Coast Management paid or wrote checks for fees and costs to [the Knapp firm], whose money was it?" Defense counsel objected on the ground that at his deposition, Gaggero refused to answer questions about Pacific Coast Management — such as "Why would Pacific Coast Management have paid on your behalf?" — on the ground the information was confidential. The trial court sustained the objection, observing that Gaggero could not refuse to answer at deposition based on a privacy objection and then "selectively waive the privacy objections later on when it appears to your advantage."
Gaggero contends (without acknowledging the standard) that the trial court's ruling was an abuse of discretion, and that the trial court could not exclude the testimony unless the Knapp firm had obtained a court order compelling Gaggero to answer at his deposition and Gaggero then refused to do so. The law is not so rigid. (See Vallbona v. Springer (1996) 43 Cal.App.4th 1525, 1545 ["under the circumstances here the court properly imposed the evidence sanction without a prior order to compel defendants' compliance with discovery"].) Moreover, as the Knapp firm points out, the issue is more properly characterized as whether a party may assert a privilege to block discovery and then waive that privilege and testify at trial. The answer is that he may not. (A & M Records, Inc. v. Heilman (1977) 75 Cal.App.3d 554, 566 [discovery statute was intended to take the "`game element'" out of trial preparation and do away with surprise at trial; to accomplish that purpose, court was compelled to prevent a litigant claiming privilege against self-incrimination in discovery and then waiving the privilege at trial; "[a] litigant cannot be permitted to blow hot and cold in this manner"].) In short, there was nothing "arbitrary, capricious, or whimsical" about the trial court's ruling (Vallbona, at p. 1545), and consequently no error in it.
Gaggero claims the trial court erred in concluding that his evidence of damages — the reasonable value of services provided by his attorneys calculated at $300 per hour — did not constitute evidence of actual expenditures for attorney fees. Gaggero relies on PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1088, 1094, where the court held that an entity represented by in-house counsel may recover attorney fees under Civil Code section 1717, and that the trial court has discretion under that section to fix an award in a reasonable amount based on the market value of the services (rather than the actual cost of the representation). But PLCM is entirely inapposite; it involved the trial court's discretion to determine the reasonable amount of an attorney fee award under Civil Code section 1717, and has nothing to do with proving the amount of damages (in the form of attorney fees) that have been caused by a defendant's malpractice or breach of fiduciary duty. Again, there was no error in the trial court's conclusion that there was "a complete failure" to present evidence of actual attorney fee expenditures.
In sum, as the trial court concluded, there was no factual or legal basis for this component of Gaggero's claimed damages.
2. Damages for disputed fees paid to the Knapp firm.
At trial, Gaggero sought damages for disputed fees paid to the Knapp firm. These disputed fees consisted of two components: the $80,000 (rounded) in fees paid in August 2001, after Jardini insisted on a substantial payment and indicated Gaggero should obtain new counsel; and the $125,000 in fees paid from the interpleaded funds. Gaggero disputed various entries on these bills, some of them on grounds they were contrary to the terms of the legal services agreement. The trial court found, as to the $80,000 payment, that "the evidence of any improper charges was so fragmentary and incomplete as to be essentially worthless"; Gaggero's objections that the work was not beneficial or was unnecessary or unsuccessful had no support in the legal services agreements; and "[f]undamentally, Mr. Gaggero did not present a clear statement from which a damage calculation could be made." As to the second component (the $125,000 paid out of interpleaded funds), Chatfield testified, offering an exhibit (which the trial court excluded because it was not produced in discovery and which Gaggero has not provided in the appellate record) showing his notations of entries on the Knapp firm bills which he thought were wrong. His oral testimony included no analysis of any of the actual entries on the bills, and the court found that Chatfield's presentation was "half-baked," "insufficient and fundamentally unpersuasive . . . ."
Gaggero challenges the court's conclusions, pointing to two footnotes in the trial court's statement of decision, where the court observed that:
From these observations, Gaggero contends the trial court found that the Knapp firm breached the legal services agreements and, therefore, abused its discretion in failing to award damages for those breaches. We cannot agree.
The observations by the trial court, which were made in connection with the court's description of Gaggero's "cumbersome and protracted" process of "microscopic, line-by-line review of the bills," do not constitute a "finding . . . that [the Knapp firm] breached the contracts with [Gaggero]," as Gaggero asserts. On the contrary:
In short, contrary to Gaggero's claim, the trial court did not find a breach of contract, nor is there any basis for claiming it should have done so.
B. The trial court did not abuse its discretion in its rulings on motions in limine.
Gaggero contends the trial court erred in granting several motions in limine that excluded certain damages evidence and other evidence. We find no abuse of discretion in the trial court's rulings. (Zhou v. Unisource Worldwide (2007) 157 Cal.App.4th 1471, 1476 ["`a trial court's decision to admit or not admit evidence, whether made in limine or following a hearing pursuant to Evidence Code section 402, is reviewed only for abuse of discretion'"].)
1. The exclusion of evidence of damages in the form of VNBC's postjudgment collection costs paid by Gaggero allegedly as a result of malpractice by the Knapp firm.
The Knapp firm filed a motion in limine to exclude testimony or evidence of "the additional enforcement-of-judgment attorney's fees that [Gaggero] was ordered to pay in . . . [VNBC] . . . and statements bearing on that topic." This refers to the additional fees the VNBC creditors incurred in their efforts to collect their judgments from Gaggero after Gaggero obtained his favorable judgment in the Stacey case on November 9, 2000. (After the Stacey judgment, Gaggero continued to refuse to pay the VNBC creditors, and VNBC initiated collection efforts on March 8, 2001, by filing a lien against Gaggero in the Stacey action.) The Knapp firm argued that Gaggero's theory — that the Knapp firm should have anticipated that Gaggero would refuse to pay the VNBC judgment (thus precipitating further collection efforts and costs by VNBC), and should have sought those additional costs as future damages in the Stacey action ("or otherwise cause the trial court to retain jurisdiction to ascertain continuing damages in the future") — was not supported by California law, as (among other reasons) any such future damages were speculative and remote.
The trial court granted the motion in limine, observing that Gaggero's theory — "that [the Knapp firm] should bear the expense of Mr. Gaggero's decision not to pay that judgment in a timely fashion, but to force VNBC to incur additional fees post judgment in collection" — was "a non-starter," and evidence of "post[-Stacey] expenses incurred by VNBC to collect on its judgment are out." When Gaggero argued that the Knapp firm "did not make any effort . . . to seek . . . some remedy for any potential future fees that might . . . accrue because of VNBC's collection efforts after the [Stacey] verdict," the trial court asked Gaggero for the "legal authority for the proposition that you can get such a judgment," and Gaggero's counsel responded, "I cannot tell you that we have a case that says that that would be possible."
Gaggero contends the trial court erred in concluding, in effect, that it would not have been possible in the Stacey malpractice action either to obtain an award of future damages from the jury or to obtain a reservation of jurisdiction by the trial court for an award of future damages. Gaggero now cites United States Liab. Ins. Co. v. Haidinger-Hayes, Inc. (1970) 1 Cal.3d 586, 599 (Haidinger-Hayes), where the Supreme Court held that the trial court did not err in reserving jurisdiction to amend its judgment to include further damages. Haidinger-Hayes involved an insurer's negligence action against its agent for failing to investigate an insured's loss history and issuing a policy with a low premium rate that resulted in an exorbitant loss ratio. (Id. at pp. 590, 591.) Damages were found in a specified amount as of the date of conclusion of trial, plus an undetermined amount on open unsettled claims, and the trial court reserved continuing jurisdiction "to amend the judgment to insert the amount of the additional sums which [the insurer] became legally obligated to pay on these open claims, when the amounts were determined, as damages against" the agent. (Id. at p. 591.) The court of appeal found no error in the reservation of jurisdiction, because "[t]he claimants were known, the claims were in the process of settlement, and [the insurer's] liability therefor had been adjudicated" in a previous action against the insured. (Id. at p. 599.) The court observed that section 3283 of the Civil Code provides for an award of damages for detriment "certain to result in the future." While the trial court could have required the insurer to file another lawsuit to recover the further sums, or could have estimated the ultimate amount of further damages, "[r]eservation of jurisdiction over a cause or parties after a final judgment is exceptional but may be exercised in special situations." (Haidinger-Hayes, at p. 599.)
Haidinger-Hayes does not assist Gaggero. In the first place, its approval of a reservation of jurisdiction was premised on detriment to the insurer "certain to result in the future" (Civ. Code, § 3283) as a proximate result of the defendant agent's negligence. This essential predicate is entirely absent in the Stacey malpractice case. Perhaps more importantly, the trial court asked Gaggero, repeatedly, for any legal authority that might support his claim, and counsel offered none. Under these circumstances, the trial court can scarcely be said to have abused its discretion in excluding evidence of "post[-]Stacey expenses incurred by VNBC to collect on its judgment . . . ."
2. The exclusion of evidence of damages characterized as "disgorgement."
In his second amended complaint, Gaggero sought compensatory damages on all of his causes of action and, as to his cause of action for breach of fiduciary duty, sought "disgorgement of all fees paid to [the Knapp firm] . . . or, in the alternative, exemplary and punitive damages . . . ." The Knapp firm moved to strike the allegations and prayer relating to disgorgement and punitive damages. On October 16, 2003, the trial court granted the motion to strike as to disgorgement (but not as to punitive damages).
Prior to trial, the Knapp firm filed a motion in limine to exclude testimony or evidence of "fees subject to this Court's ruling on the stricken disgorgement claim." The Knapp firm described these as "attorney fees [Gaggero] previously paid to [the Knapp firm] including for handling the [Stacey], [VNBC], [Slocumb] and [First Federal 1 and 2] appeal matters, in the amount of at least $114,086.41 . . . ." Gaggero opposed the motion, contending that all amounts paid to the Knapp firm after the liens were executed in September or December 2000, amounting to "over $200,000 . . . were legally unearned," because of an "unresolved conflict of interest" between Gaggero and the Knapp firm, and these were claims for "reimbursement of legal fees paid that were unearned" and were not "disgorgement." At the hearing on the motion in limine, Gaggero explained that "the fees were not owed in the two major instances where there was a payment of $80,000 by Mr. Gaggero, and then the payment of 125 [thousand dollars] out of the interpleader." After a further exchange, the court ruled:
Gaggero now argues that this ruling was reversible error. He asserts that the damages he sought at trial were not "disgorgement" damages but constituted normal compensatory damages for legal fees paid but unearned, and asserts that the court "barred
3. The exclusion of evidence of allegedly improper fees billed in the Yura matter.
There is a separate lawsuit between Gaggero and the Knapp firm concerning the firm's actions in a lawsuit (Yura) that is not at issue in this litigation. Early on, the defense moved in limine to exclude evidence of unrelated litigation (including Yura), and in the argument on that motion, the trial court specifically asked Gaggero's counsel whether he was going to contest any charges incurred or billed in the Yura case. Counsel said he was not contesting "any of that." Counsel did not then claim that fees billed in Yura were properly attributable to matters at issue in this case, and the trial court ruled that the Yura matter was off-limits in this trial, stating, "We are not having any contest as to whether any of the charges in Yura were . . . appropriate or inappropriate." Then, a week later during Gaggero's trial testimony, his counsel asserted that some of the fees charged in the Yura matter were at issue in this case because they were actually improper charges for work performed on the VNBC matter (for the Knapp firm's allegedly negligent handling of the VNBC collection matter) but billed in the Yura matter. Defense counsel objected, and the court observed:
After argument, the court ruled that "[t]he propriety of the individual charges . . . assessed in Yura . . . is out, out," and "[t]he only thing that is in is . . . whether they were recoverable in interpleader, that is the only thing that we left open . . . ." After continued argument,
Gaggero challenges the trial court's ruling, claiming it was "prejudicial in that it excluded all evidence of damages caused by [the Knapp firm's] misconduct" and "insulated [the Knapp firm] from the obviously incorrect entries because of its own sloppy accounting." Under the circumstances described, we can discern no abuse of the trial court's discretion (nor any merit in the hyperbolic assertion that the ruling excluded "all evidence of damages caused by [the Knapp firm's] misconduct").
4. The exclusion of evidence of the Slocumb matter.
One of the matters for which Gaggero engaged the Knapp firm was the Slocumb suit, in which one of Gaggero's former lawyers sought payment of fees for her work in First Federal 2. Gaggero claimed in the case at bar that the Knapp firm was negligent in failing to seek a stay of the Slocumb suit after Slocumb filed a claim in the interpleader action, causing Gaggero's legal expenses in that action to continue. The trial court granted defense counsel's motion to exclude evidence concerning the Slocumb case, based on Gaggero's refusal to answer questions about the Slocumb case at his deposition (parts of which occurred less than 30 days before trial and just before the in limine motions were to be filed).
At the hearing on the motion to exclude Slocumb evidence, Gaggero claimed the refusal to answer deposition questions was justified because the questions were not relevant, as the questions related to the "substantive merits" of Slocumb and Gaggero's claim against the Knapp firm involved a procedural error rather than the substantive merits of the Slocumb case. The trial court disagreed, observing:
The trial court stated that Gaggero's objections and the instructions not to answer were based on a "very narrow view" of relevance in discovery and amounted to a "systematic obstruction of that deposition at least as to the Slocumb matter." The court found the instructions not to answer questions prejudiced defense trial preparation, requiring "that the remedial step of foreclosing the subject from [Gaggero's] presentation be imposed. [¶] The Slocumb matter is now out."
We again discern no abuse of discretion in the trial court's ruling. Counsel's instruction not to answer was improper (see Stewart v. Colonial Western Agency, Inc. (2001) 87 Cal.App.4th 1006, 1014 [even if deposition questions were designed to elicit irrelevant evidence, "irrelevance alone is an insufficient ground to justify preventing a witness from answering a question posed at a deposition"]), and this court will not second-guess the trial court's conclusion that the obstruction of Gaggero's deposition prejudiced the Knapp firm in trial preparation and justified the exclusion of the Slocumb evidence. Gaggero contends the trial court had no authority to exclude the evidence, again contending that the trial court cannot do so unless defense counsel has first brought a motion to compel the testimony and the court has ordered the witness to answer. We have already rejected this as an absolute proposition (see Vallbona v. Springer, supra, 43 Cal.App.4th at p. 1545 [evidence sanction was properly imposed without a prior order compelling compliance with discovery]), and the claim is particularly inappropriate in this case, where the deposition session in question took place less than a month before trial, leaving recourse to statutory methods difficult. (The trial court observed Gaggero was in effect arguing that the instructions not to answer "may not have been right but [because it was so late] you have got no remedy.") Under these circumstances, the trial court's exclusion of the Slocumb evidence was well within its inherent power to control the litigation and ensure a fair process. (Cf. Castaline v. City of Los Angeles (1975) 47 Cal.App.3d 580, 591-592 [exclusion of testimony of doctor who examined plaintiff three days before trial was within trial court's "basic power to insure that all parties receive a fair trial"].)
C. The trial court did not abuse its discretion in sustaining objections to exhibits 520-526.
Gaggero contends the trial court abused its discretion in refusing to admit several exhibits into evidence, which Gaggero claims show the extent of his understanding (or lack thereof) of the interpleader action and that the Knapp firm explained very little to him. The exhibits (proposed exhibits 520 through 526) were not on the exhibit list, and Gaggero's counsel sought to introduce them in connection with Gaggero's redirect examination, to "rehabilitate him" after cross-examination about his understanding of the interpleader action. Defense counsel pointed out that Gaggero's understanding of an interpleader action was at the core of the case and was not a new issue, and when the court asked, "Where is the prejudice?" defense counsel replied that the documents were not produced in discovery. When the court asked Gaggero's counsel, "You got a Bates number for the production of this, I assume?" counsel responded in the negative. When asked whether the documents were produced, Gaggero's counsel said they were "made available to prior counsel" in a process in which prior defense counsel could inspect and copy documents at plaintiff's counsel's office. Gaggero's counsel stated that "the entire universe was provided to them." The court asked, "How do we know that?" and "[T]here is no way to verify that," and then asked defense counsel to "show me it wasn't produced." Defense counsel stated, "It wasn't produced because there are no Bates numbers on it. Prior counsel copied every single e-mail that was available. There would be no reason to exclude or make distinctions among e-mails. Everything that was copied was Bates labeled. . . . There are no Bates labels on any of these documents . . . ." Gaggero's counsel told the court, "[T]here is no way for you, I admit, to know that those without Bates numbers were produced."
After an extended discussion, the court asked to see the declarations that Gaggero's counsel said he had brought to establish "how the discovery was handled in that instance." Defense counsel observed that he had had no opportunity to speak with prior defense counsel "to make a counter declaration . . . ." The court looked at the declarations and stated that none of them were made by anyone with any personal knowledge of what documents were produced, and Gaggero's counsel said, "That is absolutely right . . . ." After reviewing the discovery requests and attachments enumerating what was produced relating to the First Federal case, the court said, "I don't see anything in Attachment B that suggests where these were produced," and counsel for Gaggero also stated, "I don't see anything in Attachment B where it specifically talks about e-mails being produced in the First Federal matter." The court concluded, "So it seems to me that . . . the production at that time appears to have been incomplete at best," and Gaggero's counsel stated, "[W]e have given you everything that we can to try to enlighten you." The trial court thereupon ruled, "Everybody agrees it was requested . . . and I am not persuaded it was produced, so we will exclude that from any use."
Gaggero claims the court's ruling was an abuse of discretion, because the declarations he presented to the trial court "demonstrat[ed] that all emails had been produced in discovery," and defense counsel produced nothing but the unsubstantiated statements of defense counsel to the contrary, based only on the absence of Bates numbers. On the contrary, the trial court clearly concluded that the declarations Gaggero provided — which Gaggero has not included in the appellate record — did not show the emails had been produced, and indeed the court carefully examined Gaggero's verified discovery responses, describing what had been produced, before determining that the emails had not been produced and should be excluded.
D. The trial court did not err in granting the Knapp firm's motions for judgment.
Under Code of Civil Procedure section 631.8, the trial court, after weighing the evidence at the close of the plaintiff's case, may dispense with defense evidence if the court is persuaded that the plaintiff has failed to sustain his burden of proof. "In weighing the evidence, the trial judge may exercise the prerogatives of a fact trier by refusing to believe witnesses and by drawing conclusions at odds with expert opinion." If the motion is granted, the trial court's findings "are entitled to the same respect on appeal as any other findings and are not reversible if supported by substantial evidence." (Heap v. General Motors Corp. (1977) 66 Cal.App.3d 824, 829-830.)
Gaggero contends the trial court erred in granting defense motions for judgment on his claims of breach of fiduciary duty, breach of contract and professional negligence. We find no error.
1. Breach of fiduciary duty.
Gaggero contends that the Knapp firm breached its fiduciary duty to him (1) by its conduct when its liens were created; (2) by its conduct and use of the liens in the interpleader action, including advising Gaggero that a cross-complaint in the interpleader would benefit him (and failing to advise him that in filing the cross-complaint, he would be admitting that the Knapp firm's rights were superior to his); and (3) by threatening to withdraw as counsel if Gaggero did not pay the $80,000 due in August 2001.
a. The origination of the Knapp firm liens.
Gaggero claims the Knapp firm breached its fiduciary duty at the time Gaggero gave the liens because the liens were "false on their face," contained exculpatory provisions, were "not substantively fair," and did not define the terms "default" and "seize" (in the provision stating that if Gaggero ever defaulted on any of his obligations to the Knapp firm, the firm was legally entitled to seize the funds and use them to satisfy those obligations). The trial court concluded otherwise, finding:
In support of his contention that the evidence showed a breach of fiduciary duty, in that the liens were "false on [their] face," contained "exculpatory provisions," and so on, Gaggero cites nothing but the opinion testimony of his expert, David Parker. But the trial court expressly found that Parker's hostility and combativeness on cross-examination damaged his credibility, and further that "the integrity of Mr. Parker's testimony" was compromised by his conduct during trial, seeking to secure the attendance of a witness "so he could testify a particular way on a particular subject." In addition, the court found that "much of the material which Mr. Parker did not consider [in forming his opinions] was or should have been highly pertinent to his opinions."
b. Use of the liens in the interpleader action.
Gaggero claims the Knapp firm breached its fiduciary duty to him by telling him that filing a cross-complaint in the interpleader — which, like his verified answer, stated that the Knapp firm's lien rights were superior to all others including his own would be of benefit to him, and then later using its lien to claim its fees from the interpleaded funds.
On this record, there is no basis — and Gaggero offers none — for a conclusion that the court's findings were not supported by substantial evidence.
c. The alleged "abandonment" threat.
Gaggero argues that the Knapp firm breached its fiduciary duty by insisting on payment of $80,000, absent which the Knapp firm "would stop work and withdraw as counsel on all of Gaggero's matters while Gaggero was away." This claim, like the others, has no merit. The evidence Gaggero cites to support the claim does not do so. Certainly the Knapp firm demanded payment and indicated Gaggero should get new counsel, but it did not threaten "abandonment." Indeed, Jardini stated, "We will do the things on calendar and the things necessary to avoid default or dismissal." The claim that this was "tantamount to threatening abandonment" and constituted a breach of fiduciary duty is supported only by Parker's testimony, which the trial court was free to reject.
In sum, we are left in no doubt that substantial evidence supported the trial court's grant of the Knapp firm's motion for judgment on Gaggero's claim for breach of fiduciary duty.
2. Breach of contract.
Gaggero contends the trial court erred in granting the Knapp firm's motion for judgment on Gaggero's breach of contract claim, claiming the Knapp firm "did breach the contracts in billing for tasks not permitted by the [legal services agreements] and in the manner of billing." Gaggero claims that the Knapp firm (1) breached the contracts by demanding payments without submitting the billing disputes to mediation, and without following the practice the parties had established of "conferring together to clarify bills" (which Gaggero alleged became a term of the contract); (2) breached the provision of the agreements that required the firm to keep Gaggero informed of progress and developments (by not telling Gaggero that First Federal had interpleaded the funds on August 28, 2001) and by failing to inform Gaggero of the date of a hearing on VNBC's motion for fees "until it was too late for [Gaggero] to do anything by way of settlement with VNBC"; and (3) "failed to give notice under the mandatory fee arbitration act . . . that [Gaggero] could choose arbitration regarding the fee dispute" before "filing a Cross-Complaint on their own behalf in the First Federal Interpleader Action."
None of Gaggero's contentions has merit.
As to the claim the Knapp firm breached the contract by demanding payment of bills without submitting the billing disputes to mediation, nothing in the agreements required the Knapp firm to initiate mediation before demanding payment of a bill, and Gaggero could have sought mediation if he wished, but he did not. And the claim that the "practice of conferring with Gaggero about bills became a term of the contract between the parties" was expressly rejected by the trial court, which stated: "The credible evidence is insufficient to persuade me that there was indeed a modification of the contract such as, by conduct, such as would require either side to have telephonic or letter or in-person discussions with regard to the bills as a pre-condition for payment or as a pre-condition for any other steps."
As for the claims that the Knapp firm breached the contract by not telling Gaggero that First Federal had interpleaded the funds and by failing to inform Gaggero of the date of a hearing on VNBC's motion for fees, there was no credible evidence that this conduct, if it occurred, caused any injury to Gaggero. As to the first item, the evidence shows Gaggero and the Knapp firm discussing the interpleader in early September. As to the second, the trial court rejected Gaggero's claim that he would have settled with VNBC and avoided First Federal's interpleading the funds if only he had been informed of the date of the hearing on VNBC's motion for further fees. (Gaggero claimed that he had decided to authorize Bezek to offer $170,000 (the offer to be made after briefing but before the hearing on VNBC's motion for additional fees). But the court found Gaggero never actually instructed Bezek to make this offer, and the court "[did] not accept [Gaggero's] explanation" that this was because of the Knapp firm's failure to keep him informed and otherwise follow his instructions. The court said: "[B]ecause Mr. Gaggero had not abandoned his quest to compel VNBC to accept less than the full amount [of] its judgment plus interest, the Court does not believe Mr. Gaggero actually had any intention at this time of offering to pay the full amount of the judgment to VNBC. Specifically, the Court does not believe Mr. Gaggero's testimony on cross-examination that he planned to send Mr. Bezek to Oakland with a `blank check' to settle the [VNBC] claim." Thus, these claims of contract breaches fail for lack of evidence of causation (in addition to, as we have concluded ante, lack of any principled basis upon which to award damages). The trial court was entirely justified in concluding that "the evidence of damages on the contract claim is not sufficient to either demonstrate causation or, and perhaps more significantly, to allow anything in the way of a quantification of the damages that is not pure speculation."
Finally, Gaggero claims the Knapp firm failed to give notice under the Mandatory Fee Arbitration Act (Bus. & Prof. Code, §§ 6200 et seq.) of Gaggero's right to arbitration under the Act. (Id., § 6201, subd. (a).) This claim is subject to the same defects as to causation and damages as Gaggero's other claims (to the extent it could be considered a breach of contract claim).
3. Professional negligence.
Gaggero contends (1) the damages in the VNBC collection matter "could and would have been avoided if [the Knapp firm] had acted competently," and (2) the Knapp firm's conduct in erroneously advising Gaggero that he could not recover attorney fees on appeal in the First Federal 2 case was malpractice.
Gaggero's claim that the Knapp firm's negligence resulted in his payment of more than would have been necessary to settle the VNBC collection matter is entirely without merit. The trial court expressly concluded otherwise, finding, for example:
Substantial evidence supports the trial court's conclusions, and accordingly, there is no basis upon which an appellate court may reach a contrary conclusion.
As for the second claim of erroneous advice on the availability of attorney fees for the appeal of First Federal 2, Gaggero gives no record citations to the evidence for his claims (that is, that the Knapp firm advised him erroneously, he paid for a second opinion from other counsel, the Knapp firm then filed a motion for attorney fees, and fees were awarded). (Gaggero claims he presented evidence he had paid $1,580 to the Knapp firm for the "admittedly incorrect" advice and the Knapp firm never refunded that amount. The only evidence he cites for this is his own testimony, to which the trial court generally gave little credence: "[O]utside the subjects which are corroborated by contemporaneous writings, there is little [the court] can believe unreservedly.")
E. The trial court did not err in the award of attorney fees.
The legal services agreements between the Knapp firm and Gaggero provided that the prevailing party "in any action or arbitration to enforce the terms of this agreement shall be entitled to recover reasonable attorneys fees and all costs in any such action or arbitration." The trial court awarded $1,202,994.50 in fees, the full amount requested. Gaggero contends this was error because the parties' agreement allowed fees only for "that fraction . . . devoted to defending [Gaggero's] breach of contract claims."
Gaggero correctly states the general principle that, when a contract action is joined with other causes of action beyond the contract, the prevailing party may recover attorney fees under Civil Code section 1717 "only as they relate to the contract action." (Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 129 ["[a]ccordingly, attorney's fees incurred solely for . . . defending against the tort causes of action are not recoverable"].) But Gaggero fails to describe the basis for the trial court's award of attorney fees, and fails to acknowledge the authorities that supported the court's decision to award the full amount of the Knapp firm's fees. As Reynolds Metals also states, "Attorney's fees need not be apportioned when incurred for representation on an issue common to both a cause of action in which fees are proper and one in which they are not allowed." (Id. at pp. 129-130; Abdallah v. United Savings Bank (1996) 43 Cal.App.4th 1101, 1111 ["[a]pportionment of a fee award between fees incurred on a contract cause of action and those incurred on other causes of action is within the trial court's discretion"; trial court could reasonably find that appellant's claims were inextricably intertwined, "making it `impracticable, if not impossible, to separate the multitude of conjoined activities into compensable or noncompensable time units'"].)
In this case, the trial court expressly found that Gaggero's claims were "inextricably intertwined":
We can detect no basis (and Gaggero offers none) for concluding that the trial court abused its discretion in so ruling.
The judgment is affirmed. The respondents are to recover their costs on appeal.
BIGELOW, P. J.
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