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Leighton v. Forster
Citations: 8 Cal. App. 5th 467; 213 Cal. Rptr. 3d 899; 2017 WL 527320; 2017 Cal. App. LEXIS 100Docket: A145601
Court: California Court of Appeal; February 9, 2017; California; State Appellate Court
Original Court Document: View Document
Sheryl Leighton filed a lawsuit against Rochelle Forster for breach of an attorney fee contract and account stated, seeking over $114,000 in damages. The trial court granted summary judgment to Forster, determining that the engagement letter Leighton sent to Forster's husband was invalid due to lack of a signature, as mandated by Business and Professions Code section 6148. Additionally, the court ruled that Leighton’s claim for the reasonable value of her services was barred by the two-year statute of limitations under Code of Civil Procedure section 339, subdivision 1. Leighton argued that there were triable issues regarding Forster’s liability, claiming evidence of a fee arrangement negotiated with Forster’s husband that either complied with or was exempt from section 6148. The judgment was affirmed. The underlying dispute involved the Forsters’ joint purchase of a home with the Rheinheimers in 1984, which Rochelle initially opposed but agreed to due to perceived benefits. Over time, tensions arose over financial dealings, particularly after Bob discovered identity theft by Al Rheinheimer, which complicated their ability to buy out the Rheinheimers. By 2004, Rochelle was frustrated with Bob’s decisions that hindered their buyout efforts and focused on her own responsibilities, while Robert James, a neighbor and friend, began assisting the Forsters with their legal issues without charging them. Leighton, who was a contract attorney for James, had a separate employment agreement with him that had been signed prior to these events. In the 2002 Letter Agreement, the appellant committed to providing legal research and writing services to James at a rate of $75 per hour, along with the ability to charge for unspecified out-of-pocket expenses. Invoices were to be issued monthly, with payments due within 15 days, regardless of whether James’s clients paid him. The agreement specified that the appellant would not engage with James's clients directly and that her services did not include such interactions. From October 2004 to April 2005, the appellant billed James for work on the Forster v. Rheinheimer case, with monthly charges fluctuating between $238 and $1,455, all paid by Bob Forster. Invoices continued from November 2005 to March 2007, with James paying a September 2006 invoice for $3,459.50, while other payments were made by Bob Forster. By 2007, the appellant's invoicing increased significantly, with a final invoice for the Forster matter dated March 2, 2007, totaling $8,953.31, which included $3,045 for recent hourly services, $55.81 in out-of-pocket costs, and a $5,852.50 balance forward. On March 6, 2007, Bob informed the appellant of James's hospitalization. They corresponded about James's health, with the appellant visiting him and expressing concerns about the costs and stress of litigation. After learning of James’s deteriorating condition, Bob expressed his intention to proceed with the current litigation strategy but indicated he might seek the appellant's assistance in navigating the process. James died on March 13, 2007. Two days later, Bob issued a check for $5,852.50 to the appellant, which represented the balance on an invoice from March 2007. Starting in April 2007, the appellant began invoicing Bob directly. An April 2 invoice totaled $4,203.50 for current charges and included a $3,100.81 balance from the previous invoice. Bob paid the $3,100.81 on April 5, 2007, the same day he met the appellant for the first time. In a follow-up email, the appellant expressed her eagerness to work with Bob and optimism about achieving a settlement. On April 12, Bob requested the appellant represent him and his wife in a matter, outlining his aggressive negotiation strategy and suggesting a payment plan of $2,000 monthly for past and future fees. The appellant replied on April 13, indicating she could not carry accounts due to increasing work demands, but would propose solutions to make their arrangement work. Subsequent email exchanges revealed Bob's agreement to pay the invoices within 15 days of receipt, which the appellant acknowledged, stating she would draft an engagement letter. The appellant continued to invoice Bob, with an April 15 invoice totaling $5,958.60 and a May 1 invoice for $13,657.39. On May 2, 2007, the appellant emailed Bob with an attached letter outlining the terms of their agreement concerning her legal services, apologizing for the delay in sending it. She indicated that the document, which she asserts is a written attorney fee agreement relevant to her later litigation against Rochelle, was an unsigned letter titled 'Terms of Engagement.' The letter confirmed her commitment to assist Bob and Rochelle with their claims against the Rheinheimers and described the scope of her work, noting that they were representing themselves in ongoing litigation. Appellant indicated her intention to negotiate with opposing counsel in a manner beneficial to the client, stating she was authorized to dedicate necessary hours to develop an effective strategy and prepare for litigation. She emphasized the need for extensive research and preparatory work to ensure a strong negotiating position and mitigate future issues and costs. The May 2007 Engagement Letter revealed that appellant lacked trial experience, having only assisted seasoned trial attorneys, and had no deposition experience. She advised that it would not be in the client's best interest for her to manage the cases if they proceeded to trial, offering instead to help find experienced trial counsel. Appellant proposed a billing rate of $105 per hour, with no charges for overhead expenses but actual costs billed along with occasional direct out-of-pocket expense requests. Invoices were to be issued monthly, with payment due within 15 days, clarifying that her services were not contingent on case outcomes, and she could not carry accounts for clients. Clients were encouraged to communicate any potential payment difficulties promptly to discuss alternative arrangements. The last paragraph of the May 2007 Engagement Letter required the client's signature for acceptance, but an accompanying email stated that a signature was unnecessary; only an email confirmation of agreement was needed. Bob's response included an acknowledgment of an invoice payment and a statement of his intent to review the engagement terms. Appellant's invoice for June totaled $12,128.85, with a balance remaining from a prior invoice. Bob later communicated his inability to pay the full amount in June, proposing a $5,000 monthly payment, which appellant accepted, resulting in his expressed relief. Appellant communicated with Bob via email, expressing understanding of the financial strain litigation can impose on families, especially in establishing a favorable settlement position. From July 2007 until Bob's death in May 2008, appellant billed for her services related to the 'Rheinheimer' matter, with invoices consistently addressed to Bob. The amount due escalated from $8,278.50 in July 2007 to $101,201.88 by May 2008, coinciding with Bob's terminal illness due to liver cancer, which he was diagnosed with in October 2007. Rochelle, Bob's partner, noted that Bob's health declined rapidly, rendering him unable to manage his affairs or comprehend the litigation status. During this time, Rochelle made two payments to appellant totaling $7,000 from her own account, acknowledging their arrangement for her to cover urgent bills from her funds if Bob was unable to pay. Rochelle signed two 'Notice of Limited Scope Representation' forms in November 2007, which allowed appellant to act on Bob's behalf to reduce his stress during his illness. These forms were filed with the court, but there is no evidence that Bob signed similar documents. After Bob's death, appellant reached out to Rochelle regarding unpaid legal fees, indicating that Bob had fallen behind on payments, previously agreeing to pay $5,000 monthly. Appellant mentioned the urgency of this financial situation, acknowledging Rochelle’s likely unawareness of the billing issues during their difficult time. Appellant expressed her financial difficulties, stating she could not cover her rent, work expenses, or fees for a process server needed for the Rheinheimer litigation, requesting at least $12,000 from Rochelle by Thursday to manage these costs. In an email dated June 5, 2008, Rochelle acknowledged her distress and the high costs but indicated she needed time to understand her situation following Bob's funeral. On June 6, appellant warned Rochelle about the necessity of funding legal fees to defend against the Rheinheimers and suggested finding a pro bono attorney. Appellant highlighted that she had been working without pay since October, incurring costs on Rochelle's behalf, and emphasized the importance of continuing to pursue the case aggressively to maintain momentum. She planned to deliver documents, including invoices, to clarify the costs and requested Rochelle to leave a check for her. Appellant also noted her inability to afford a process server and urged Rochelle to act promptly due to impending deadlines. After delivering the documents and collecting a $5,000 check, Rochelle expressed shock at the situation and acknowledged she was unaware of the documents and the extent of the financial issues. Rochelle disputed appellant's claim of non-payment since October, stating Bob had been paying appellant regularly and expressed her extreme distress over the circumstances. On June 14, 2008, the appellant received a $2,000 check from Rochelle to pay a process server for a fifth amended complaint in the Rheinheimer litigation. In a subsequent email on June 25, the appellant indicated she had not received a promised $2,500 payment from Rochelle and proposed a new payment schedule, warning that she would withdraw from the case if payments were not made. On June 30, the appellant filed an application to withdraw as the Forsters' attorney, stating her limited scope representation was intended for the early stages of litigation until trial counsel was retained. Rochelle acknowledged on July 1 that she intended to send the $2,500 but was unsure of the appellant's address due to a disconnected phone. On the same day, the appellant sent an invoice totaling $114,865.50, including $2,551.50 for services and $435.09 for costs incurred in June. The appellant communicated on July 6 that she could no longer provide services due to financial difficulties. Rochelle objected to the withdrawal on July 15, citing the need for assistance following Bob's death and upcoming deadlines. The appellant's application to withdraw was granted on August 19, 2008. Rochelle hired new counsel, Jeff Pollack, in September 2008, and litigation was subsequently stayed for mediation. Rochelle became the sole owner of a property in November 2009, and both Rheinheimer cases were dismissed the following month. On June 21, 2012, the appellant filed a complaint against Rochelle for breach of contract regarding unpaid attorney fees, seeking $114,865.50 plus an additional amount to cover a judgment against her related to a $772.99 debt incurred on Rochelle's behalf. Appellant provided legal services to Rochelle from September 1, 2004, to August 19, 2008, during which she incurred costs on Rochelle's behalf and used her own funds to cover Rochelle's account. Appellant’s services were documented in invoices, and her limited-scope representation ended by court order on August 19, 2008. For her breach of contract claim, appellant asserted that a May 2007 Engagement Letter constituted a written contract, which Rochelle acknowledged via email. Appellant also claimed that Rochelle breached this contract in July 2008 by ceasing payments and later by refusing to pay a specific bill of $722.99. In her second cause of action for an account stated, appellant claimed an unpaid balance of $114,865.50 from the July 2008 Invoice, asserting that Rochelle repeatedly promised payment and requested further services, but no payments were made. Rochelle moved for summary judgment, arguing that the Engagement Letter and invoice were unenforceable under section 6148, that she had not consented to the services, and that any quantum meruit claim was barred by a two-year statute of limitations. Appellant contended there were triable facts regarding the existence of a written contract, which would fall under a four-year statute of limitations. The trial court granted Rochelle’s motion, concluding that the May 2007 Engagement Letter was not enforceable due to lack of signatures, and thus appellant could only pursue a quantum meruit claim, which was barred by the statute of limitations as her complaint was filed over three years after her services ended. The court also ruled that appellant's second cause of action for an account stated failed because it relied on an unenforceable contract. Summary: The standard of review for summary judgment is de novo, focusing on whether there are triable issues of material fact and if the moving party is entitled to judgment as a matter of law. Material facts are defined as those relevant to the issues framed by the pleadings, and a genuine issue exists only if evidence allows a reasonable trier of fact to favor the opposing party according to the applicable standard of proof. In this case, summary judgment was granted based on evidence that the appellant's services lacked a written fee agreement, with any claims not based on a writing barred by the statute of limitations. The analysis is divided into two parts: (1) whether a written fee agreement exists for the appellant's fees and (2) whether the appellant can hold Rochelle liable for fees without a written agreement. Section 6148, part of a trio of statutes regulating attorney-client fee contracts, aims to protect clients and ensure clarity in fee agreements. It mandates written contracts for cases where expenses exceed $1,000, detailing compensation methods, the nature of services, and responsibilities of both parties. Noncompliance renders the agreement voidable at the client's option, although the attorney may collect a reasonable fee thereafter. Additionally, section 6148 outlines exceptions to its application, including scenarios where fees are implied from prior services or if the client, after full disclosure, states in writing that a written agreement is unnecessary. The May 2007 Engagement Letter does not comply with the mandatory requirements of Section 6148(a) due to several admissions made by the appellant during summary judgment proceedings. Key admissions include the foreseeability of attorney fees exceeding $1,000, the absence of signatures from all parties (Bob, Rochelle, and the appellant), and the appellant's failure to request Rochelle's signature or inform Bob that signing was necessary. The appellant's characterization of these failures as a mere 'technicality' is rejected, as the lack of signatures represents a significant noncompliance with statutory requirements intended to protect clients and ensure their understanding of fee agreements. Moreover, the argument that electronic acceptance could substitute for physical signatures is undermined by the undisputed evidence that Rochelle never accepted the Engagement Letter in any form, as she only became aware of it in June 2008 after receiving a packet from the appellant. The appellant's reliance on Bob as Rochelle's representative under Section 6148(a) is not addressed, as it is based on the erroneous assumption that Bob's email constituted acceptance of the contract. The email merely indicated that they would review the document, lacking any confirmation of acceptance. Thus, the evidence clearly indicates a material failure to comply with the statutory requirements of Section 6148(a). Evidence indicates that aside from a May 2, 2007 email exchange between Bob and the appellant, there was no discussion regarding the appellant’s May 2007 Engagement Letter until after the lawsuit was filed. The appellant's June 6, 2008 email to Rochelle referenced attorney fee contracts generally, but there is no proof or allegation of any direct discussion about the May 2007 Engagement Letter. Consequently, it is unnecessary to determine if an email or other evidence could satisfy the requirements of section 6148(a). The summary judgment evidence shows that the May 2007 Engagement Letter does not substantially comply with section 6148(a), making the alleged agreement voidable at the client's option. The appellant asserts that the Engagement Letter, although initially voidable, was not so at the time of issuing the July 2008 invoice because all related fees were incurred after compliance with section 6148(a). The appellant argues that the Engagement Letter met all requirements except for physical signatures, and notes that both parties signed the November 2007 Notices of Limited Scope Representation, which confirmed their agreement. However, this argument fails to recognize the fundamental difference between retaining an attorney and agreeing on payment terms. The Notices do not validate the May 2007 Engagement Letter as a fee contract. Furthermore, undisputed evidence indicates that Rochelle was led to sign the Notices under the pretense that they were solely to relieve stress for Bob. Additionally, section 6148(a) mandates that a signed duplicate of the contract be provided at the time of agreement, preventing the appellant from using a document signed over a year later as proof of the initial agreement. The evidence shows that Rochelle was unaware of the May 2007 Engagement Letter until June 6, 2008, when the appellant delivered an unsigned copy. Less than a month later, the appellant issued the July 2008 Invoice without prior discussion of the contract, which demanded $114,865.50 for fees allegedly authorized by the May 2007 Engagement Letter. Rochelle did not sign or accept the Engagement Letter or pay the invoice, leading to the conclusion that she repudiated both documents and exercised her option to void the alleged attorney fee contract under section 6148(c). Rochelle's acceptance of the appellant's services over several years does not constitute a waiver of her right to contest the validity of the May 2007 Engagement Letter as a written fee contract under section 6148. The appellant's argument misidentifies the issue, which is not about an implied agreement or obligation to pay, but rather the legitimacy of the written contract itself. Furthermore, section 6148(d)(3) clearly states that a client waives rights under this section only if they knowingly indicate in writing that a fee agreement is not required after full disclosure, which did not occur in this case. The appellant also claims that Rochelle's notice of rescission was untimely, asserting that she did not act until January 2, 2013. However, no legal authority supports imposing rescission requirements onto section 6148, and Rochelle's attorney argued her right to void the agreement under section 6148(c). The appellant's assumption that a client must expressly declare their intention to void an agreement is unfounded. Precedent, such as Fergus v. Songer, indicates that a lack of signature can implicitly void an agreement. In this instance, Rochelle implicitly voided the May 2007 Engagement Letter by refusing to pay the July 2008 Invoice. Lastly, the appellant's claim that her fee arrangement with the Forsters fell under section 6148(d)(2) is challenged by the fact that prior to Robert James's death, her work was governed by the valid 2002 Letter Agreement, which limited her services. Appellant had no direct contact with James's clients and her contract work was limited to assignments from James, who agreed to pay her for work on the Forsters' case. The services outlined in the May 2007 Engagement Letter differed materially from her prior role as James's contract attorney. During her employment with James, the Forsters were his clients, but in the May 2007 letter, appellant sought to make them her clients, offering to take over James's role and assume full responsibility for their legal matters. Despite lacking relevant experience, she claimed the authority to determine necessary hours for effective legal strategy and intended to charge a significant hourly rate, unlike James, who did not charge the Forsters. Appellant asserts that she can demonstrate to a jury that she provided similar services before and after James's death through three types of evidence. First, her time records show she performed legal research and drafted documents during both periods; however, this does not create a genuine issue regarding the distinct nature of her assignments. Second, she references email exchanges with Bob indicating a mutual intent to continue her prior services, but the May 2007 Engagement Letter established a new legal relationship and authorized different services. Lastly, appellant claims that payments made by Rochelle for her fees before and after James's death imply she performed the same services, although Rochelle did not directly pay her invoices before James died. This argument is considered strained, as any payments made do not negate the clear evidence that appellant’s work changed post-James's death. Additionally, absent a written agreement, Rochelle is not liable to appellant, and appellant's quantum meruit claim is barred by the statute of limitations, particularly since the agreement was voided under section 6148(c). An attorney is entitled to collect a reasonable fee if an agreement is voided, as established in section 6148. This section supports the principle that attorneys can recover the reasonable value of services rendered under a common count for quantum meruit when no valid written fee agreement exists. The California Supreme Court in Huskinson clarified that the Legislature intended for law firms to receive reasonable compensation even in the absence of a written agreement. Claims for quantum meruit are subject to a two-year statute of limitations under Code of Civil Procedure section 339, starting from the last payment made or the last service performed. In this case, the appellant's complaint was filed over three years after the termination of representation, rendering the claim time-barred. Consequently, Rochelle is entitled to summary judgment due to the lack of a written fee agreement. Additionally, the appellant's claim for an account stated fails as a matter of law. An account stated requires prior transactions establishing a debtor-creditor relationship, an agreement on the amount due, and a promise to pay. The appellant argues there are triable issues of material fact regarding this claim, but the essential elements needed to establish an account stated have not been satisfied. Appellant argues that a jury could reasonably conclude that Rochelle consented to pay the July 2008 Invoice based on her actions following its receipt. Specifically, Rochelle filed an objection to appellant’s application to withdraw her limited scope representation and sent an email on July 16, 2008, indicating her willingness to pay for future services contingent on her understanding of those services. Appellant’s application to withdraw, submitted in June 2008, did not cite any payment issues or reference a fee agreement, and Rochelle’s objection was unrelated to fees. The email from Rochelle clearly states her intention to pay for upcoming services only after receiving further information, suggesting she did not agree to the July 2008 Invoice amount of $114,865.50. Appellant's assertion that Rochelle's failure to object to the invoice signifies consent is challenged, as Rochelle had no obligation to affirmatively notify appellant about her payment intentions. Appellant references a precedent case, California B. G. Assn. v. Williams, to support her position, but this case involved a different context where the defendant had a pre-existing indebtedness acknowledged by both parties, which does not apply here. The key takeaway is that Rochelle's communication and actions indicate she did not consent to pay the invoice as claimed by appellant. Both parties in the referenced case established the existence of an underlying loan. The association's statement of the defendant’s account became an account stated when the defendant failed to object in a reasonable timeframe. The case of Williams is noted, where it was undisputed that the plaintiff had loaned money under a written contract, establishing that a debtor must object to an accounting of acknowledged debt promptly. In the current case, the appellant did not provide evidence of an enforceable contract to recover legal fees from Rochelle, who the appellant claimed was her debtor. The burden cannot be shifted to Rochelle to dispute the July 2008 Invoice's accuracy; her non-payment indicated disagreement with the debt. Even if evidence of Rochelle's consent to the invoice existed, summary judgment would still be justified. The appellant argues that her account stated claim is subject to a four-year limitations period under Code of Civil Procedure section 337, subdivision 2, which applies to written accounts. However, the lack of a written attorney fee agreement prevents the appellant from proving an account stated based on a written account. Therefore, to establish an account stated, the appellant must demonstrate Rochelle's indebtedness through an oral promise or implied agreement, which is limited by a two-year statute of limitations for claims not founded on a writing. The appellant cites Richey v. Pedersen, where the court determined that an attorney could claim an account stated based on a written bill for services. In Richey, the court found no express agreement on attorney fees but recognized an implied agreement from the attorney's employment, leading to the conclusion that an account was stated through billing and partial payments. Appellant's reliance on Richey is deemed inappropriate as the case involved an implied agreement for attorney fees due to an established attorney-client relationship, which is not applicable here. The complaint relies on a written contract to substantiate a creditor-debtor relationship; however, this cannot be proven as previously detailed. Additionally, any claim of an account stated based on an implied agreement is barred by the two-year statute of limitations. Appellant appears to argue that the July 2008 Invoice serves both as a standalone attorney fee agreement and a statement of account, but it fails to meet the requirements of section 6148. Appellant acknowledges that the July 2008 Invoice is not a contract for services but a regular billing for previously rendered services under a May 2, 2007 agreement, which undermines her attempt to treat the second cause of action as an independent claim. The incidental maintenance of accounts under a prior contract cannot extend the statute of limitations. Courts consistently hold that a plaintiff cannot circumvent the statute of limitations by recharacterizing a claim based on the same facts as a barred contract claim as a common count. Appellant's claims hinge on evidence identical to that supporting her breach of written attorney fee agreement claim, yet there is insufficient evidence for a written agreement between appellant and Rochelle. As such, any claim for unpaid fees arises from a non-written obligation, subject to a two-year statute of limitations. Since appellant filed the complaint beyond this period, summary judgment was correctly granted in favor of the respondent. The judgment is affirmed, with Rochelle awarded costs on appeal.