Court Opinion

ID: 9914182
Source: CourtListenerOpinion
Date Created: 2023-12-29 19:02:21.94822+00
Date Added: 2024-06-11T13:10:28.323598
License: Public Domain

Filed 12/29/23 LexAnalytica v. Mahamedi CA1/4
        NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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 This opinion has not
been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                            FIRST APPELLATE DISTRICT

                                        DIVISION FOUR

 LEXANALYTICA, P.C. and
 PERRY NARANCIC,
      Plaintiffs, Cross-                                      A166170
 Defendants and Respondents,
                                                              (San Mateo County
 v.                                                           Super. Ct. No.
 ZURVAN MAHAMEDI,                                             22CIV00730)
     Defendant, Cross-
 Complainant and Appellant.

          Zurvan Mahamedi appeals from a judgment confirming an
arbitration award in favor of his prior counsel, Perry Narancic,
and Narancic’s law firm, LexAnalytica, P.C. (collectively,
LexAnalytica). The arbitrator found that Mahamedi was liable
under the parties’ contract for attorney’s fees charged at hourly
rates that the arbitrator found the parties had orally agreed
upon.
          Mahamedi contends that the arbitrator exceeded his
powers (Code Civ. Proc., § 1286.2, subd. (a)(4)) because the orally
agreed-upon attorney’s fees violate Business and Professions

                                                      1
Code1 section 6148, and, as such, they are void and
unenforceable.2 We affirm the judgment.
                         BACKGROUND
      Mahamedi, an attorney specializing in intellectual
property, retained LexAnalytica to represent him in litigation
against officers and directors of a company called Shocking
Technologies, Inc. (the Shocking litigation) through a written
engagement agreement in 2013. The 2013 engagement
agreement set forth a $325 hourly rate for this work.
      In addition to the Shocking litigation, LexAnalytica worked
for Mahamedi on a litigation between Mahamedi and his former
law partner, William Paradice (the Paradice litigation), and on a
matter described as the Chavez litigation. The 2013 engagement
agreement is the only written contract between Mahamedi and
LexAnalytica, and, as noted above, on its face, the 2013
engagement agreement governs only the Shocking litigation. The
parties agreed, however, that LexAnalytica’s representation of
Mahamedi in the Chavez and Paradice litigations would be
pursuant to the terms of the 2013 engagement agreement.
      On February 6, 2019, Mahamedi initiated an arbitration
against LexAnalytica and Narancic under the arbitration
provision of the 2013 engagement agreement. He asserted claims

      1 All further statutory references are to the Business and

Professions Code unless otherwise stated.
      2 Mahamedi also claims that enforcement of the orally

agreed-upon attorney’s fees violates the Rules of Professional
Conduct, but he concedes that his assertion of error with respect
to the alleged violation of the Rules of Professional Conduct is not
judicially reviewable.

                                 2
for breach of written contract, assault, battery, professional
negligence, breach of fiduciary duty, and intentional infliction of
emotional distress. LexAnalytica counterclaimed for, among
other things, attorney’s fees pursuant to the parties’ contract or
quantum meruit recovery. The arbitration award recounts that
the arbitration arose from the parties’ dealings in the Paradice
litigation, but the award also shows that the arbitration included
a dispute as to attorney’s fees in the Shocking, Paradice, and
Chavez litigations.
      After many days of hearings, the arbitrator issued a final
arbitration award rejecting Mahamedi’s claims and granting
attorney’s fees and costs to LexAnalytica under the parties’
contract for the Shocking, Paradice, and Chavez litigations.
LexAnalytica petitioned to confirm the arbitration award, and
Mahamedi cross-petitioned to vacate the arbitration award.
      The trial court conducted a hearing on the petitions and
issued the following minute order: “The court finds/orders: The
fee issue was appropriately dealt with by the Arbitrator. The
validity of the agreement is not an issue for this court. Therefore,
the Motion to Vacate the Arbitration Award is denied; the
Petition to Confirm the Arbitration Award is granted.” The court
subsequently entered a final judgment confirming the arbitration
award.
      Mahamedi timely appealed.
                          DISCUSSION
      In this appeal, Mahamedi contends that the $375 and $395
hourly rates charged by LexAnalytica were illegal and void under

                                 3
section 6148 because the parties did not agree to those rates in a
written contract. He further contends that, by enforcing those
allegedly illegal contract provisions, the arbitrator committed
legal error and exceeded the scope of his powers, requiring
judicial vacatur of the arbitration award under Code of Civil
Procedure section 1286.2, subdivision (a)(4). After a brief
discussion of the relevant law, we affirm the judgment because
we agree with LexAnalytica that Mahamedi has not established
that he raised with the arbitrator the issue he seeks to pursue on
appeal. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 30–31
(Moncharsh).)
 I.    Standards Governing Our Review
      “[I]t is the general rule that, ‘The merits of the controversy
between the parties [to a private arbitration agreement] are not
subject to judicial review.’ [Citations.] More specifically, courts
will not review the validity of the arbitrator’s reasoning.
[Citations.] Further, a court may not review the sufficiency of the
evidence supporting an arbitrator’s award. [Citations.] [¶] Thus,
it is the general rule that, with narrow exceptions, an arbitrator’s
decision cannot be reviewed for errors of fact or law.”
(Moncharsh, supra, 3 Cal.4th at p. 11.)
      Code of Civil Procedure section 1286.2, subdivision (a), sets
forth the exclusive grounds for vacating an arbitration award.
Pertinent here, the court “shall vacate the award” if it determines
that “[t]he arbitrators exceeded their powers and the award
cannot be corrected without affecting the merits of the decision
upon the controversy submitted.” (Code Civ. Proc., § 1286.2,

                                  4
subd. (a)(4).) “Arbitrators may exceed their powers by issuing an
award that violates a party’s unwaivable statutory rights or that
contravenes an explicit legislative expression of public policy.”
(Richey v. AutoNation, Inc. (2015) 60 Cal.4th 909, 916.) At the
same time, however, an arbitrator does not exceed his or her
powers “merely by rendering an erroneous decision on a legal or
factual issue, so long as the issue was within the scope of the
controversy submitted to the arbitrators.” (Moshonov v. Walsh
(2000) 22 Cal.4th 771, 775.)
      In Moncharsh, the high court discussed situations where,
as here, a party seeks judicial review of an arbitration award and
claims that a provision of a contract enforced by the arbitrator is
illegal. (Moncharsh, supra, 3 Cal.4th at pp. 29–30.) The high
court rejected the notion that “judicial review of an arbitrator’s
decision is routinely available where one party claims merely
that a portion of a contract is illegal.” (Id. at p. 32, fn. 14.)
However, “[T]here may be some limited and exceptional
circumstances justifying judicial review of an arbitrator’s decision
when a party claims illegality affects only a portion of the
underlying contract. Such cases would include those in which
granting finality to an arbitrator’s decision would be inconsistent
with the protection of a party’s statutory rights.” (Id. at p. 32.)
“Without an explicit legislative expression of public policy,
however, courts should be reluctant to invalidate an arbitrator’s
award on this ground. The reason is clear: the Legislature has
already expressed its strong support for private arbitration and
the finality of arbitral awards . . . . [Citation.] Absent a clear

                                    5
expression of illegality or public policy undermining this strong
presumption in favor of private arbitration, an arbitral award
should ordinarily stand immune from judicial scrutiny.” (Ibid.)
      Moncharsh also discussed forfeiture principles applicable to
claims such as the one Mahamedi presents. “[W]hen . . . the
alleged illegality goes to only a portion of the contract (that does
not include the arbitration agreement), the entire controversy,
including the issue of illegality, remains arbitrable.”
(Moncharsh, supra, 3 Cal.4th at p. 30.) A party thus must raise
the issue of a contract’s partial illegality before the arbitrator or
forfeit the right to challenge the arbitration award on that basis
in court. (Ibid.) The high court gave two reasons for this rule.
First, “[a]ny other conclusion is inconsistent with the basic
purpose of private arbitration, which is to finally decide a dispute
between the parties.” (Ibid.) Second, “we cannot permit a party
to sit on his rights, content in the knowledge that should he
suffer an adverse decision, he could then raise the illegality issue
in a motion to vacate the arbitrator’s award. A contrary rule
would condone a level of ‘procedural gamesmanship’ that we have
condemned as ‘undermining the advantages of arbitration.’
[Citations.] Such a waste of arbitral and judicial time and
resources should not be permitted.” (Ibid.)
      Our high court recently confirmed that Moncharsh’s
forfeiture rule remains valid. (Law Finance Group, LLC v. Key
(2023) 14 Cal.5th 932, 958–959 (Law Finance Group, LLC).) “In
Moncharsh, the plaintiff sought to vacate an arbitral award,
claiming that the arbitrators had enforced an illegal noncompete

                                  6
provision of his employment contract. [Citation.] We held that
the claim of illegality was not the kind that would require a court
to intervene on public policy grounds. [Citation.] Critically,
however, we did so only after considering whether the claim had
been forfeited through failure to raise it in accordance with
prescribed procedure. [Citation.] We explained that both
challenges asserting that ‘grounds exist to revoke the entire
contract’ and challenges going ‘to only a portion of the contract’
can be forfeited if they are not timely raised.” (Id. at p. 958, italics
added.)
      Thus, when faced with the claim that an arbitration award
such as the one at issue here should be vacated under Code of
Civil Procedure section 1286.2, subdivision (a)(4) because the
arbitrator allegedly enforced an illegal contract provision, we ask
two questions. First, did the party seeking to vacate the
arbitration award raise the illegality argument before the
arbitrator? (Moncharsh, supra, 3 Cal.4th at pp. 30–31.) Second,
is the arbitrator’s award subject to judicial review? (Id. at
pp. 31–32.)
      In resolving this appeal, we are mindful of the fundamental
rule of appellate review: An appealed judgment or order is
presumed to be correct. “ ‘All intendments and presumptions are
indulged to support it on matters as to which the record is silent,
and error must be affirmatively shown.’ ” (Denham v. Superior
Court (1970) 2 Cal.3d 557, 564.)
      “Our review of an arbitration award [similarly] requires us
to extend to it every intendment of validity and the party

                                   7
claiming error has the burden of supporting his contention.”
(Ikerd v. Warren T. Merrill & Sons (1992) 9 Cal.App.4th 1833,
1841.) “There is a presumption favoring the validity of the
award, and appellant bears the burden of establishing her claim
of invalidity.” (Betz v. Pankow (1993) 16 Cal.App.4th 919, 923.)
A court will not presume error, and the party seeking to vacate
the award must show error. (Ikerd, at p. 1841; see also Taranow
v. Brokstein (1982) 135 Cal.App.3d 662, 666–667 [where no record
is presented or available on appeal, every reasonable intendment
will be indulged to give effect to arbitration proceedings and
burden is on party attacking award to affirmatively establish
existence of error by a proper record].)
      With these principles in mind, we turn to the first question:
Whether Mahamedi, as the party seeking to vacate the
arbitration award, raised before the arbitrator his argument that
the $375 and $395 hourly rates charged by LexAnalytica were
illegal and void under section 6148? (Moncharsh, supra,
3 Cal.4th at pp. 30–31.)
II.    Section 6148 — Overview
      Section 6148 provides: “In any case not coming within
Section 6147 [governing contingency fee agreements] in which it
is reasonably foreseeable that total expense to a client, including
attorney fees, will exceed one thousand dollars ($1,000), the
contract for services in the case shall be in writing . . . [and] shall
contain all of the following: [¶] (1) Any basis of compensation
including, but not limited to, hourly rates, statutory fees or flat
fees, and other standard rates, fees, and charges applicable to the

                                   8
case. [¶] (2) The general nature of the legal services to be
provided to the client. [¶] (3) The respective responsibilities of the
attorney and the client as to the performance of the contract.”
(§ 6148, subd. (a).) The statute also sets requirements for
attorney billing.3 (§ 6148, subd. (b).)
      Section 6148 provides that any agreement that does not
comply with its provisions is voidable at the client’s option.
“Failure to comply with any provision of this section renders the
agreement voidable at the option of the client, and the attorney
shall, upon the agreement being voided, be entitled to collect a
reasonable fee.” (§ 6148, subd. (c).)4

      3 There are various exceptions to the statute’s writing

requirements. “This section shall not apply to any of the
following: [¶] (1) Services rendered in an emergency to avoid
foreseeable prejudice to the rights or interests of the client or
where a writing is otherwise impractical. [¶] (2) An arrangement
as to the fee implied by the fact that the attorney’s services are of
the same general kind as previously rendered to and paid for by
the client. [¶] (3) If the client knowingly states in writing, after
full disclosure of this section, that a writing concerning fees is not
required. [¶] (4) If the client is a corporation.” (§ 6148,
subd. (d)(1)–(4).)
      4 Voidable is distinct from void.   “A void contract is no
contract at all; it binds no one and is a mere nullity. [Citation.]
Consequently, such a contract cannot be enforced.” (Guthman v.
Moss (1984) 150 Cal.App.3d 501, 507.) The doctrine of contract
illegality “considers whether the object of the contract is illegal”
(McIntosh v. Mills (2004) 121 Cal.App.4th 333, 346), and an
illegal contract is void, not voidable (1 Witkin, Summary of
Cal. Law (11th ed. 2023) Contracts, § 433).) On the other hand, a
voidable contract may be “rendered null at the option of one of
the parties, but is not void until so rendered.” (Depner v. Joseph
Zukin Blouses (1936) 13 Cal.App.2d 124, 127–128.)

                                  9
III.   Analysis
       We agree with LexAnalytica that Mahamedi forfeited his
claim by failing to show that he raised it in the arbitration.
Under the settled standards of review discussed, ante, Mahamedi
has the burden of establishing the merits of any claim of error
and that he adequately preserved his claim. (Cf. Crummer v.
Zalk (1967) 248 Cal.App.2d 794, 796–797 [court will not presume
error or preservation of claim by assuming objection to evidence
challenged on appeal was made and overruled in trial court
where appeal was on clerk’s transcript alone]; Dietz v.
Meisenheimer & Herron (2009) 177 Cal.App.4th 771, 799 [noting
appellant has burden on appeal to demonstrate proper
preservation of claims in trial court through timely assertion].)
       Here, Mahamedi does not show that he argued to the
arbitrator that the $375 and $395 hourly rates were
unenforceable because a violation of section 6148 rendered those
contract provisions void or they were voided. (Moncharsh, supra,
3 Cal.4th at pp. 30–31.) The limited record does not contain full
transcripts of the arbitration, or, with the exception of
Mahamedi’s motion for reconsideration, the parties’ written
arbitration submissions. In response to LexAnalytica’s forfeiture
argument, Mahamedi nonetheless contends that the arbitration
award, which is part of the record, is sufficient to show that he
raised his claim in arbitration.5 Looking at that award, and in

       5 Mahamedi also argues that whether or not he raised this

issue in arbitration “is of no moment,” but, as we have explained,
our high court, even if only in persuasive dicta, has stated

                                 10
particular the resolution of Mahamedi’s breach of contract and
fiduciary duty claims to which Mahamedi points us in his
briefing, we disagree.
      The arbitration award recites that Mahamedi brought a
claim alleging that LexAnalytica breached the parties’ contract
by failing to provide monthly invoices, failing to bill at a $325
hourly rate, and failing to obtain Mahamedi’s prior approval for
expenses exceeding $500. The record also shows that the parties
disputed the existence of a “handshake” agreement to $375 and
$395 hourly rates, with Mahamedi arguing that there had been
no “handshake” agreement with respect to these raised rates.
The arbitrator concluded otherwise, finding in relevant part that
LexAnalytica had not breached the parties’ contract because the
parties entered into a handshake agreement modifying the $325
hourly rate to $375 and $395.
      From this summary and resolution of Mahamedi’s breach of
contract claim, we can deduce that Mahamedi’s contention in
arbitration was that he had never entered into a “handshake”
agreement approving of LexAnalytica’s $375 and $395 hourly
rates. However, we cannot conclude from the face of the award
that Mahamedi also argued that, regardless of the validity of any
oral agreement for the $375 and $395 hourly rates as a matter of
contract law, the $375 and $395 hourly rates were unenforceable
because they were void or voided for failure to comply with
section 6148.

otherwise. (Moncharsh, supra, 3 Cal.4th at pp. 30–31; Law
Finance Group, LLC, supra, 14 Cal.5th at p. 958.)

                                 11
      Next, Mahamedi claimed that Narancic breached fiduciary
duties owed to Mahamedi in many ways. One such allegation
was that Narancic breached his fiduciary duty by “[f]ailing to
comply with Bus. & Prof. Code [section] 6148 and with California
ethical rules by failing to provide an engagement letter to
Mahamedi.” Here, the arbitrator ruled, “Respondent Narancic
represented Claimant Mahamedi in the Shocking, Chavez and
Paradice matters pursuant to the Engagement Letter dated
December 4, 2013. . . . The December 4, 2013, Engagement Letter
was entered into by the parties for the Shocking matter. The
parties agree that the December 4, 2013, Shocking Engagement
Letter represents the only written retainer agreement and that it
applied to the Chavez and Paradice matters. As discussed in the
Breach of Contract section above, the evidence supports a finding
that the December 4, 2013, agreement was orally modified by a
‘handshake.’ Civil Code [section] 1698 (b) provides for the oral
modification of a contract in writing. Failing to enter into
separate written agreements for the Chavez and Paradice
matters did not violate [section] 6148 in light of the December 4,
2013, executed Engagement Letter and the parties[’]
understanding that it applied to the Chavez and Paradice
matters.”
      From the arbitrator’s discussion, we can deduce that
Mahamedi argued in arbitration that Narancic and LexAnalytica
had to provide written engagement letters for both the Chavez
and Paradice litigations under section 6148, and Narancic
breached his fiduciary duty by failing to provide any written

                                12
engagement letter for those matters. However, the arbitration
award does not mention any argument from Mahamedi that the
parties’ oral agreements were void or had been voided as a result
of a violation of section 6148. Thus, without engaging in
speculation, we cannot extrapolate from the arbitrator’s
resolution of the breach of fiduciary duty claim that Mahamedi
also argued that the oral agreements for the Paradice and
Chavez matters, or the orally agreed-upon $375 and $395 hourly
rates alone, were unenforceable because a violation of section
6148 rendered such provisions void or Mahamedi had voided
them.6
      Similarly, in the arbitrator’s resolution of LexAnalytica’s
claim for breach of contract, there is no mention of an argument
that the parties’ agreement for the Paradice and Chavez matters,
or the orally agreed-upon $375 and $395 hourly rates, were
unenforceable because section 6148 rendered such provisions void
or Mahamedi had voided them.
      In sum, because Mahamedi does not provide a record
showing that he raised the issue of the allegedly illegal
enforcement of void or voided oral contract provisions before the
arbitrator, he cannot raise the claim on appeal as a basis to

      6 As LexAnalytica observes, the record refutes any

conclusion that Mahamedi argued that the entire oral
agreements for the Chavez and Paradice matters were void.
Indeed, Mahamedi brought a breach of contract claim arguing for
the enforcement of what he contended were the parties’
agreements with respect to these matters despite the lack of
written engagement letters.

                                13
vacate the arbitration award. (Moncharsh, supra, 3 Cal.4th at
pp. 30–31.)
                            DISPOSITION
      The judgment is affirmed.

                                          BROWN, P. J.

WE CONCUR:

STREETER, J.
HIRAMOTO, J.

LexAnalytica v. Mahamedi (A166170)

      
        Judge of the Superior Court of California, County of
Contra Costa, assigned by the Chief Justice pursuant to article
VI, section 6 of the California Constitution.

                                     14