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Timestamp: 2019-04-24 18:07:56+00:00

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California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b).This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
APPEAL from a judgment of the Superior Court of Los Angeles County.
Robert L. Hess, Judge. Affirmed.
Counselor & Advocate at Law, James S. Link; and Leta Schlosser for Cross-complainant and Appellant.
Barry L. Van Sickle for Cross-defendant and Appellant.
Cross-complainant Leta Schlosser (Schlosser) worked for a firm that represented Lawrence D. Wollersheim (Wollersheim) in his action against the Church of Scientology.Later, on an independent basis and pursuant to a contingency fee agreement, she advised his attorneys in appellate and collection matters. Wollersheim voided that contract because she failed to comply with Business and Professions Code section 6147. She thereafter tried a claim against Wollersheim to recover reasonable attorney fees based on quantum meruit. The jury found that the value of her services was $497,700 but that the amount should be reduced by $184,470 due to Schlosser’s unethical conduct. Schlosser applied for prejudgment interest on her net recovery, $313,230. Her application was denied.On appeal, Schlosser seeks either an additur or a remand for a new trial on damages, claiming that evidence of her unethical conduct was inadmissible and prejudiced her. Separately, she seeks a reversal of the denial of her application for prejudgment interest.After review, we conclude that Schlosser failed to demonstrate reversible error.
Wollersheim filed a cross-appeal to challenge the trial court’s denial of his motion for judgment notwithstanding the verdict.Based on the statute of limitations applicable to quantum meruit claims, he argues that Schlosser was barred from recovering for the services that she performed more than two years before she filed her cross-complaint seeking quantum meruit. Wollersheim’s cross-appeal lacks merit.Schlosser’s claim accrued in 2002, the same year she filed it.
We affirm in all respects.
Wollersheim hired Schlosser in 1990 to assist his attorneys in their ongoing litigation and collection efforts against the Church of Scientology.Due to her fear of the Church of Scientology, Schlosser’s work on the case was conditional on Wollersheim keeping her involvement a secret.
On May 9, 2002, the Church of Scientology interpleaded $8,674,843 in satisfaction of Wollersheim’s judgment.Schlosser requested payment for her services, but she was not paid.
Wollersheim’s answer provided a general denial and interposed 13 affirmative defenses.Among other affirmative defenses, Wollersheim alleged that Schlosser’s action was barred by the statute of limitations in Code of Civil Procedure section 339, and also the doctrine of unclean hands.He further alleged that Schlosser “is barred from recovery of fees as a result of her acts of impropriety inconsistent with the character of the legal profession as a result of her violations of the California Rules of Professional Conduct, including but not limited to violations of . . . Rule 3-300, Rule 3-700(d), 3-500, and 4-200.”Additionally, according to Wollersheim, Schlosser’s claim for attorney fees should be limited or barred because the claim was unconscionable, she damaged him by converting his papers, records and documents, and she interfered with his prospective economic advantage.Finally, he alleged that if Schlosser was awarded less by the jury than by the arbitrators in her mandatory fee arbitration, he was entitled to an offset for all costs and attorney fees he incurred following Schlosser’s rejection of the arbitration award.
Schlosser filed four motions in limine.In motion in limine No. 1, she requested exclusion of evidence that she committed an ethical violation by failing to comply with the requirements for written fee agreements.The second motion, motion in limine No. 2, argued that the trial court should exclude evidence that she committed various acts of impropriety, and that she damaged Wollersheim by converting his papers, records and documents.Motion in limine No. 3 urged the trial court to exclude evidence of any losses suffered by Wollersheim as a result of funds being interpleaded due to her fee claim.Finally, motion in limine No. 4 argued that evidence relating to the arbitration of the fee dispute before the Los Angeles County Bar Association would be improper.The trial court granted motion in limine No. 3 and denied the others.
Schlosser offered evidence of what she considered her reasonable fee for representing Wollersheim.Wollersheim put on evidence that Schlosser’s fee should be reduced because she engaged in unethical conduct, and she was more of a distraction than a help to Wollersheim’s legal team.
Craig Stein (Stein), an attorney who represented Wollersheim from 1994 to 2002, testified on Wollersheim’s behalf.Schlosser’s role in the case was to provide Stein and other attorneys with the historical background of the case, to explain what happened in the record, and to identify what the facts were.She constantly generated memos, none of which Stein requested.For the most part, Stein threw the memos away because they were irrelevant.She compulsively requested copies of everything.Though they were friendly, Schlosser was more of a distraction than a help.At one point he stopped taking her calls because “she was making me nuts.”Stein did not ask for Schlosser’s assistance until the Spring of 2002.The one assignment he gave her—putting together a witness list—was something that a paralegal could do.
According to Stein, Schlosser provided a “fair portion” of documents that were used in connection with several motions to amend the judgment.Included in those documents were portions of trial transcripts she claimed to have found at the trial court, federal court or appellate court.But when she sued Wollersheim for her attorney fees and responded to pretrial discovery, she produced a “100-plus volumes of the transcript.”After she sued, Stein asked her to return Wollersheim’s files and records.She refused.
According to Sall, Schlosser violated California Rules of Court, rule 3.500.It requires an attorney to communicate with the client about any significant developments that relate to the representation.She failed to tell Wollersheim that she lost her motion to obtain attorney fees from the Church of Scientology.She also failed to tell him what she intended to charge for her services, and that she was thinking of charging him a multiplier.Separately, she attempted to coerce an unconscionable fee by claiming entitlement to $4 or $5 million.Sall considered her representation of the potential fee “shocking” and “unconscionable.”In essence, she was trying to coerce Wollersheim into paying her a larger fee than she was entitled to receive.Further, she did not provide Wollersheim with information to substantiate her request.Sall classified Schlosser’s attempt to coerce a fee as a form of moral turpitude.
Sall opined about what hours Schlosser could recover for, and the value of her services given her usefulness to Stein and Leipold and her agreement with Wollersheim to charge $150 an hour.
The jury was given a special verdict form.Question No. 3 asked, “Do you find that [Schlosser] committed any violations of the Rules of Professional Conduct or other acts of impropriety inconsistent with the character of the profession which impacted those services sufficiently as to justify a reduction in the reasonable value of her services?”Question No. 4 asked how much Schlosser’s award should be reduced due to her improper conduct.The jury found that Schlosser’s reasonable fee was $497,700, and that the fee should be reduced by $184,470.
Schlosser moved for prejudgment interest and judgment notwithstanding the verdict or a new trial.Wollersheim also moved for judgment notwithstanding the verdict.The motions were denied.
Subsequently, the trial court dismissed Wollersheim’s action pursuant to an anti-SLAPP motion filed under Code of Civil Procedure section 425.16.In its written order, the trial court concluded that Wollersheim’s complaint related to the separate litigation between the parties over attorney fees.As a result, Wollersheim’s action was barred by the litigation privilege.
Wollersheim contends that this appeal should be dismissed because she is splitting her quantum meruit claim by prosecuting this appeal after she collected on the reduced judgment.This issue is parsed below.
B.There is no evidence that Schlosser collected the reduced judgment.
According to Wollersheim, Schlosser collected the judgment by levy of writ of execution.To prove this, he refers to footnote 1 of an order dated April 11, 2007, which he states notes the deduction of $267,479.16 from the amount distributed to Wollersheim in satisfaction of the judgment.
We have two responses.If, as represented, the trial court deducted $267,479.16 from the amount distributed to Wollersheim, this would not establish that Schlosser executed on her judgment.It would only establish that the trial court was preserving that portion of the interpleaded funds.But this analysis is moot.We have no evidence of the purported April 11, 2007, order.All we are provided with is a March 26, 2007, order that does not mention Schlosser.Regardless, Schlosser is only attempting to augment her judgment, so the motion lacks merit.
The motion to dismiss is denied.
On the tail end of Schlosser’s appeal, she argues that the trial court erred when it refused to award prejudgment interest.That ruling must not be disturbed on appeal unless we find that the trial court abused its discretion.(Moreno v. Jessup Buena Vista Dairy (1975) 50 Cal.App.3d 438, 448 (Moreno).)The bulk of Schlosser’s appeal presents a series of legal issues.In accord with settled appellate principles, we review those issues in the first instance.(Rayyis v. Superior Court (2005) 133 Cal.App.4th 138, 150.)According to Schlosser, the reduction in damages must be reversed because of the res judicata effect of the Wollersheim action, because her alleged misconduct was protected by the litigation privilege, and because Huskinson & Brown v. Wolf (2004) 32 Cal.4th 453 (Huskinson) only permits a reduction of a reasonable attorney fee based on egregious conduct not present here.
Schlosser contends that the verdict reduction was based on affirmative defenses that are barred by the res judicata effect of the Wollersheim action.As a result, she argues that the reduction must be reversed.
2.Impact of the Wollersheim action.
While Schlosser’s action was pending, Wollersheim initiated the Wollersheim action.After judgment was entered in Schlosser’s action and she noticed her appeal, the Wollersheim action was dismissed pursuant to an anti-SLAPP motion, and the judgment became final.The question arises whether claim preclusion or issue preclusion bars Wollersheim’s affirmative defenses.
Schlosser also cites Alpha Mechanical, Heating & Air Conditioning v. Travelers Casualty & Surety Co. of America (2005) 133 Cal.App.4th 1319, 1330 (Alpha Mechanical) and Walsh v. West Valley Mission Community College Dist. (1998) 66 Cal.App.4th 1532, 1545 (Walsh) to support her argument.But for the argument at hand, these cases are empty vessels.Alpha Mechanical involved claims in a cross-complaint; it did not involve affirmative defenses.Walsh refused to apply claim preclusion or issue preclusion to bar a party from litigating an answer that contained a general denial but did not contain affirmative defenses.
None of these cases apply claim preclusion to affirmative defenses.This is with good reason.Affirmative defenses are not claims for money, nor are they requests for equitable relief in the nature of quiet title or accounting.They are designed for one thing:to defeat or reduce liability.
The question is whether the issues raised by the affirmative defenses were litigated in the Wollersheim action.
Before delving into our analysis, we must address Torrey Pines.While we find that Torrey Pines establishes that the dismissal of an action could preclude the second time around litigation of issues in connection with affirmative defenses in a subsequent action, we conclude, as did the dissent in Torrey Pines, that the traditional rules of collateral estoppel must be applied.Torrey Pines provided no rationale for its departure from that body of law.And, regardless, we are bound by our Supreme Court’s decision in Garcia regarding the elements.
Now we turn to Schlosser’s arguments.
Our waiver analysis requires an additional point of law.Neither party analyzed the elements of collateral estoppel, but this does not require us to give them the opportunity to file further briefs.Schlosser raised res judicata in her opening brief, and she recognized that collateral estoppel was an issue.As a result, she had every opportunity to brief the matter.
The same analysis applies to other issues that Schlosser contends should be barred by the dismissal of the Wollersheim action.
We reserve our final word for Schlosser’s contention that a retraxit is sufficient to collaterally estop affirmative defenses.A retraxit is simply an antiquated name for a dismissal with prejudice.(Torrey Pines, supra, 216 Cal.App.3d at p. 820.)The Torrey Pines court did not hold that a retraxit, absent principles of claim preclusion or issue preclusion, bars relitigation of issues.Indeed, “a court will apply principles of res judicata to resolve precisely what causes of action or issues are barred as a result of retraxit.”(Alpha Mechanical, supra, 133 Cal.App.4th at p. 1331.)Thus, retraxit law does not aid Schlosser’s cause.
Schlosser contends that her failure to communicate with Wollersheim, her failure to share the trial transcript, her attempt to coerce an unconscionable fee and other alleged acts of misconduct are protected by the litigation privilege set forth in Civil Code section 47, subdivision (b).
To raise this argument, Schlosser had to argue it below.She does not contend that she did so, nor does she contend that the trial court failed to apply the litigation privilege. The litigation privilege was not asserted in her motions in limine Nos. 1, 2 and 4.She tells us, on page 7 of her opening brief, that she objected that the ethics violations were inadmissible.Other than the motions in limine, she cites to the entirety of the augmented record, which is 38 pages, and pages 3044 to 3096 of the reporter’s transcript, all without pinpoint cites. We reviewed those pages of the record.They do not contain a discussion of the litigation privilege. To permit a party to raise a new issue that was not raised in the trial court would not only be unfair to the trial court, but manifestly unjust to the opposing party.(North Coast Business Park v. Nielsen Construction Co. (1993) 17 Cal.App.4th 22, 29.)As a result, we need not consider whether Schlosser’s conduct was protected by the litigation privilege.
We note that Schlosser did not argue that the failure to share the trial transcript with Wollersheim or his other attorneys was a protected act.Nor did she cite any cases for the specific proposition that the litigation privilege insulates an attorney from liability for breaching her fiduciary duties to a client.We doubt there are any, for otherwise no client could sue an attorney for litigation malpractice.This would not comport with equity, policy or common sense.
In Huskinson, our Supreme Court held that a violation of California Rules of Court, rule 2.200—which requires client consent for a fee splitting agreement—does not bar an attorney from recovering a reasonable fee.(Huskinson, supra, 32 Cal.4th at p. 461.)According to Schlosser, Huskinson prohibits the reduction of her reasonable fee based on her unethical conduct.
As with the litigation privilege, there is no indication from Schlosser that she raised Huskinson below.
Our analysis could stop here.
According to Schlosser, Huskinson restated the law “that violations of the Rules of Professional Conduct may reduce awards of attorney fees in quantum meruit only where the attorney has effectively defrauded the client or committed the most egregious acts of representing conflicting or adverse interests.” But, as we read it, Huskinson did not pronounce any such rule. It merely noted that cases “in which courts have disallowed quantum meruit recovery to attorneys who violated one of the Rules of Professional Conduct . . . involved violations of a rule that proscribed the very conduct for which compensation was sought, i.e., the rule prohibiting attorneys from engaging in conflicting representation or accepting professional employment adverse to the interest of a client or former client without the written consent of both parties.[Citations.]”(Huskinson, supra, 32 Cal.4th at p. 463.)Huskinson does not say that it is impermissible to reduce a quantum meruit award if an attorney failed to communicate material facts (such as Schlosser’s possession of the trial transcript) which, if known, may have made the representation moot.Nor does it state that other ethics violations cannot be used as reducers.
Schlosser also cites Fergus v. Songer (2007) 150 Cal.App.4th 552 (Fergus), which held that whether a contingency fee agreement and modification violated ethical codes and rules of practice was irrelevant in determining the reasonable value of an attorney’s services.(Id. at p. 577.)This holding, however, has no bearing on whether other types of ethical violations were relevant factors.
Even if we accepted Schlosser’s version of the law, she concedes that fraudulent conduct can be used to reduce a quantum meruit award.Her failure to disclose her possession of the trial transcript constitutes a fraud that, according to testimony, made her seem necessary when she was not.Schlosser does not explain why this one fact cannot support the reduction of her award.While silence may be golden at a solemn event, it is the exact opposite in an appellate brief.
We find it telling that Schlosser focuses on peccadilloes rather than serious conduct.For example, while ignoring the trial transcript issue, she attempts to curry a reversal by focusing on her fee agreement’s lack of compliance with Business and Professions Code section 6147, and on her failure to deliver a contingency bill to Wollersheim within 10 days.From this we conclude that Schlosser cannot cogently argue that her failure to share the trial transcript was not a fraud that warranted a reduction in her quantum meruit recovery.
Schlosser argues that she was entitled to prejudgment interest pursuant to Civil Code section 3287, subdivision (b).She claims that the trial court failed to exercise its discretion under the statute, and that even if it did, that discretion was abused.For reasons discussed below, we disagree.
2.The trial court exercised its discretion.
The trial court assumed it could award prejudgment interest but declined to do so.Under any definition, this was an exercise of discretion.
3.The trial court did not abuse its discretion.
The problem with Schlosser’s argument is that she did not support it with case law discussing when a trial court is required to award, or is permitted to deny, discretionary prejudgment interest.
In any event, there was no abuse of discretion.
Prejudgment interest is normally denied “based upon the rationale that it is unreasonable to expect a defendant to pay a debt before he or she becomes aware of it or is able to compute its amount.[Citations.]”(Lewis C. Nelson & Sons, Inc. v. Clovis Unified School Dist. (2007) 90 Cal.App.4th 64, 69.)Civil Code section 3287, subdivision (b) allows prejudgment interest in order to balance “concern for fairness to the debtor against the concern for full compensation to the wronged party.[Citations.]”(Lewis C. Nelson & Sons, Inc. v. Clovis Unified School Dist., supra, at p. 69.)In trying to strike the right balance, courts have considered delay in bringing a case to trial and the nature of the litigation (Moreno, supra, 50 Cal.App.3d at p. 448 [prejudgment interest properly denied because delay was not excessive and the bona fide dispute was complicated]) and whether the plaintiff turned down a settlement offer that was larger than the verdict (Elliano v. Assurance Co. of America (1975) 45 Cal.App.3d 170, 183 [denial affirmed]).
In opposition to the motion for prejudgment interest, Wollersheim’s attorney declared in May or June of 2002, when Schlosser was unable to present invoices for her services, Wollersheim offered $225,000.Before the mandatory fee arbitration on June 23 and June 25, 2003, Wollersheim offered $425,000.When the arbitrator awarded Schlosser $281,566, Wollersheim offered to pay that amount, less $100,000 that was awarded by the trial court.Schlosser rejected each of the offers.She then proceeded to get an award of only $313,230, which was more than $100,000 less than one of the offers.
The record suggests that Wollersheim did not know the extent of his debt, if any, because Schlosser kept changing her demand.This is a strong factor cutting against prejudgment interest.There is no indication that Wollersheim caused excessive delay, or that the dispute was not bona fide and complicated.The jury found that Schlosser violated the Rules of Professional Conduct or committed other acts of impropriety inconsistent with the character of the legal profession and that those violations or acts justified a reduction in the reasonable value of her services.By inference, this included an implied finding that Schlosser concealed her possession of the trial transcript, and that if she had turned it over to Wollersheim’s other attorneys, then Wollersheim would not have needed her services.These additional factors, in our view, amply support the trial court’s decision.
Schlosser does not address any of these issues, which were all fair game for the trial court to consider.On this record, we cannot conclude that the trial court abused its discretion in denying prejudgment interest.
Wollersheim contends that the two-year statute of limitations in Code of Civil Procedure section 339 barred Schlosser’s claim for quantum meruit.Schlosser, on the other hand, contends that her claim did not accrue until the Church of Scientology paid the judgment in May 2002.
The parties agree that they had a contract, but that it was voided under Business and Professions Code section 6147.Wollersheim testified that he entered into a contingent agreement with Schlosser, and that she was supposed to be paid only if the Church of Scientology paid.The parties contemplated a time of payment—upon collection of the judgment.
In our view, Wollersheim’s testimony supported a finding that Schlosser’s claim did not accrue until the judgment was paid in May 2002.Only then was she entitled to compensation.To defeat this analysis, Wollersheim cites Fergus, supra, 150 Cal.App.4th at p. 573.There, the court held that if a contingency fee contract is nullified, the trier of fact is not permitted to consider the contingent nature of the contract in determining a reasonable fee.This prevents the attorney from obtaining the benefit of the voided contract.Fergus does not change our analysis.The contemplated time for payment is dispositive of the accrual issue.
The parties shall bear their costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
Wollersheim filed a motion to dismiss Schlosser’s appeal.As we discuss in the body of our opinion, that motion is denied.
Our statement of facts is limited because Schlosser’s appeal involves a trial and she rarely cited to the reporter’s transcript in her statement of facts.At times we have utilized citations to the reporter’s transcript provided by Wollersheim.As a result, the trial evidence referred to is his.
Schlosser requested that we take judicial notice of Wollersheim’s separate action. We hereby grant that request.
According to Schlosser, Wollersheim filed and then abandoned an appeal of the Wollersheim action.Remittitur was issued on November 16, 2006.
The litigation privilege was asserted in connection with motion in limine No. 3, which was granted.That motion only pertained to evidence regarding the arbitration of the parties’ fee dispute. Moreover, the litigation privilege was not argued in Schlosser’s motion for judgment notwithstanding the verdict or new trial.
We hereby grant Schlosser’s motion to augment the record to include the reporter’s transcript from the proceedings on December 12, 2005, and February 10, 2005.
Our review of the record indicates that Schlosser argued Huskinson in connection with a motion to exclude portions of expert testimony.

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