Court Opinion

ID: 2802786
Source: CourtListenerOpinion
Date Created: 2015-05-21 21:08:57.416923+00
Date Added: 2024-06-11T11:29:45.876182
License: Public Domain

Filed 5/21/15 Villa v. Alessi & Koenig CA2/4
               NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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

                                   SECOND APPELLATE DISTRICT

                                                DIVISION FOUR

AURELIA ALEXANDRA VILLA,                                              B258022

         Plaintiff and Respondent,                                   (Los Angeles County
                                                                     Super. Ct. No. BC542923)
         v.

ALESSI & KOENIG, LLC, et al.,

         Defendants and Appellants.

         APPEAL from an order of the Superior Court of Los Angeles County,
Maureen Duffy-Lewis, Judge. Affirmed.
         Robert A. Koenig, in pro. per., and for Defendants and Appellants Alessi &
Koenig, LLC, Thomas J. Bayard and David A. Alessi.
         The Law Offices of Joel M. Pores, and Joel M. Pores for Plaintiff and
Appellant.
                                  ________________________________
                                 INTRODUCTION
      Appellants Alessi & Koenig, LLC, Thomas J. Bayard, David A. Alessi and
Robert A. Koenig appeal from an order denying their petition to compel
respondent Aurelia A. Villa to arbitrate her legal malpractice claim against them.
The trial court denied the petition because appellants failed to produce a fully
signed copy of the retainer agreement containing the arbitration clause. On appeal,
appellants contend they met their burden of showing the existence of an arbitration
agreement. Although we agree that appellants met their initial burden of proof on
that issue, we conclude the petition to compel arbitration was properly denied. The
entire retainer agreement was subject to rescission for failure to comply with
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Business and Professions Code section 6148, which required appellants to provide
respondent with a fully signed copy of the retainer agreement. Because the
evidence in the record showed appellants failed to do so, the entire agreement was
voidable, and respondent has elected to void the agreement. Accordingly, we
affirm the trial court’s order denying the petition to compel contractual arbitration.

          FACTUAL BACKGROUND & PROCEDURAL HISTORY
      On April 16, 2014, respondent filed a verified complaint for damages against
appellants, alleging that they had committed legal malpractice. The verified
complaint alleged that on September 9, 2010, respondent retained appellants to
help her keep her home by obtaining a loan modification, but that they failed to do
so. It was further alleged that the retainer agreement violated Civil Code sections
2944.6 and 2944.7, as appellants failed to make the required disclosures, were paid
in full in advance of the completion of their services, and failed to provide a “fully

1
      Undesignated statutory references are to the Business and Professions Code.

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executed copy of the [retainer] agreement to plaintiff.” The complaint also alleged
that appellants had violated section 6148 by “failing to have a contract for legal
services in writing,” thus making it voidable under subdivision (c) of section 6148.
Respondent elected to void any “oral agreements” with appellants for legal
services. A copy of the retainer agreement, unsigned by any party, was attached to
the complaint. In the agreement, respondent agreed to pay an initial retainer fee of
$3,000 and monthly payments of $1,000 in return for certain enumerated legal
services.
      On May 23, 2014, appellants filed a petition to compel contractual
arbitration and stay the civil proceedings. Appellants asserted the parties had
agreed to an attorney-client retainer agreement containing an arbitration clause. In
a supporting declaration, attorney Thomas J. Bayard stated: “Your Declarant
personally sent a copy of the [r]etainer agreement to the Plaintiff by E Mail several
days before she came into the office to execute it. A true and correct copy of said
[r]etainer is attached hereto marked Exhibit ‘1’ and incorporated herein by this
reference as though fully set forth at length.” Bayard never asserted that he or
anyone else at the law firm had signed the retainer agreement. An unsigned copy
of the agreement, identical to the document appended to respondent’s verified
complaint, was attached.
      Respondent opposed the petition to compel arbitration, arguing that
appellants had failed to meet their burden to show the existence of an agreement to
arbitrate. Respondent noted that the retainer agreement attached to the petition was
unsigned.
      In reply, appellants pointed to respondent’s testimony in a prior bankruptcy
proceeding, in which she admitted signing the retainer agreement. They lodged the

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reporter’s transcript of a June 13, 2013 hearing in which the following exchange
occurred:
      “BY MR. BAYARD:

      “Q. [Ms. Villa], you testified that the retainer agreement that you provided
      to the [bankruptcy] trustee is the same retainer agreement that you got from
      my office, correct?

      “A. Correct, because it came in an attachment to an email that you sent me.

      “Q. Okay. And you signed it and returned this agreement?

      “A. I did. I don’t have the signed copy with me that’s why. It’s in storage.

      “Q. No, I -- I understand that. And -- but you did receive a signed copy of
      it?
                                        2
      “A. I believe it’s in storage.”

      On July 18, 2014, respondent filed a “Further Response To Petition To
Compel Arbitration And Motion For Stay,” arguing, inter alia, that appellants had
failed to provide any credible proof that the retainer agreement was fully signed.
She noted that her verified complaint specifically alleged that appellants had failed
to provide her with a fully signed copy of the retainer agreement as required by
law. Appellants filed a supplemental reply, but failed to address respondent’s
contention that she was never provided with a fully signed copy of the retainer
agreement.
2
       On the advice of appellant Bayard, respondent had filed for Chapter 13
bankruptcy in an effort to retain her home. However, the attempt was
unsuccessful. Later, the bankruptcy trustee sought disgorgement of some of the
attorney fees respondent had paid appellants. The June 13 hearing was on the
trustee’s motion for disgorgement of fees. Subsequently, appellants agreed to pay
$8,000 to settle the dispute.

                                            4
      At the hearing on appellants’ petition to compel arbitration, respondent’s
counsel reiterated her argument that the retainer agreement was voidable at the
option of the client because “Mr. Bayard and his firm never signed the agreement.”
Counsel further stated, “She [respondent] never got a copy countersigned by
them.” Counsel also represented that respondent no longer had a copy of the
retainer agreement with her signature, although at one time, respondent thought she
had it in storage. Finally, counsel argued that the retainer agreement was illegal
because it called for payment in advance of services. “So not only did they fail to
provide the client with a copy signed by the lawyer, which makes it voidable, they
also have an illegal contract, which makes it void.”
      Following the hearing, the trial court denied the petition to compel
contractual arbitration on the ground that the “moving party does not have a signed
completed agreement.” Appellants timely appealed.

                                   DISCUSSION
      Under Code of Civil Procedure section 1281.2, a party to an arbitration
agreement may petition the trial court to order the parties to the agreement to
arbitrate a dispute. “The petitioner bears the burden of proving the existence of a
valid arbitration agreement by [a] preponderance of the evidence, and a party
opposing the petition bears the burden of proving by a preponderance of the
evidence any fact necessary to its defense. [Citation.]” (Engalla v. Permanente
Medical Group, Inc. (1997) 15 Cal.4th 951, 972.) “We will uphold the trial court’s
resolution of disputed facts if supported by substantial evidence. [Citation.]
Where, however, there is no disputed extrinsic evidence considered by the trial
court, we will review its arbitrability decision de novo.” (Nyulassy v. Lockheed

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Martin Corp. (2004) 120 Cal.App.4th 1267, 1277; accord, Giuliano v. Inland
Empire Personnel, Inc. (2007) 149 Cal.App.4th 1276, 1284.)
      Here, appellants’ petition to compel arbitration alleged that the parties had
entered into a retainer agreement containing an arbitration clause. Appellants
produced an unsigned copy of the retainer agreement, along with prior testimony
from respondent that she had signed the agreement. Respondent contends that
appellants nonetheless failed to sustain their burden of showing the existence of a
written agreement to arbitrate because they failed to produce a fully signed copy of
the retainer agreement. On this point, we disagree.
      A petition to compel arbitration is essentially a suit in equity to compel
specific performance of a contract. (City of Hope v. Bryan Cave, L.L.P. (2002)
102 Cal.App.4th 1356, 1369.) Under Civil Code section 3388, “[a] party who has
signed a written contract may be compelled specifically to perform it, though the
other party has not signed it, if the latter has performed, or offers to perform it on
his part, and the case is otherwise proper for enforcing specific performance.” (See
also Performance Plastering v. Richmond American Homes of California, Inc.
(2007) 153 Cal.App.4th 659, 668 [“lack of a party’s signature does not make a
fully executed contract unenforceable”].) Thus, appellants may enforce the terms
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of the retainer agreement against respondent, absent other considerations. On this
record, appellants met their initial burden of showing the existence of a written
agreement to arbitrate.

3
       Respondent contends the individual lawyer defendants lacked standing to
enforce the contractual arbitration clause, but we disagree, as they were alleged to
be the general partners, agents or employees of the law firm. (See Bouton v. USAA
Casualty Ins. Co. (2008) 167 Cal.App.4th 412, 424 [nonsignatory persons who are
agents or alter egos of a signatory party or intended third party beneficiaries of an
arbitration agreement may enforce agreement].)

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      However, even where an agreement to arbitrate exists, a motion to compel
may properly be denied. And where the record demonstrates a basis for denying
arbitration, an appellate court may affirm the trial court’s ruling “on any basis
presented by the record whether or not relied upon by the trial court.” (Day v. Alta
Bates Medical Center (2002) 98 Cal.App.4th 243, 252, fn. 1.) As explained below,
on the record before the trial court, an alternative ground was demonstrated for
denying the petition to compel arbitration.
      Code of Civil Procedure section 1281 provides that “[a] written agreement to
submit to arbitration an existing controversy or a controversy thereafter arising is
valid, enforceable and irrevocable, save upon such grounds as exist for the
revocation of any contract.” (Italics added.) Likewise, Code of Civil Procedure
section 1281.2 provides that the court shall order arbitration pursuant to an
arbitration agreement, unless it determines “[g]rounds exist for the revocation of
the agreement.” (Code Civ. Proc., § 1281.2, subd. (b).) Respondent contends such
grounds exist. She argues, inter alia, that the retainer agreement is voidable
pursuant to section 6148, subdivision (a), and that she has elected to void the
agreement. We agree.
      Section 6148 provides that where the total expense to the client for legal
services would reasonably exceed $1,000, the legal services contract must be in
writing. Moreover, “[a]t the time the contract is entered into, the attorney shall
provide a duplicate copy of the contract signed by both the attorney and the client.”
Additionally, the contract must set forth certain terms, such as attorney
compensation and fees. (§ 6148, subd. (a).) “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).)

                                          7
      Here, it is undisputed that section 6148 applies, as the retainer agreement
was a legal services contract in which the client’s monetary obligation exceeded
$1,000. Respondent paid an initial retainer fee of $3,000, and agreed to make
monthly payments for $1,000 in return for the law firm’s services. Thus, the law
firm was required to provide respondent with a duplicate copy of the written
retainer agreement, signed by both the law firm and respondent. (See § 6148,
subd. (a).) In respondent’s verified complaint, she specifically alleged that she
never received a fully signed copy of the retainer agreement.
      Appellants contend that respondent admitted receiving a signed copy.
During the June 13, 2013 bankruptcy court hearing, Bayard had asked respondent
whether she received a “signed copy” of the retainer agreement, and she had
responded: “I believe it’s in storage.” When viewed in context, however,
respondent did not testify to having received a copy of the retainer agreement
already signed by the law firm. Rather, she reiterated that the email attachment she
received and signed was in storage. Notably, no evidence suggests that the law
firm habitually sent signed copies of its retainer agreement to the client for the
latter’s signature. Indeed, the evidence is to the contrary. In his declaration in
support of the petition to compel arbitration, Bayard stated: “Your Declarant
personally sent a copy of the [r]etainer agreement to the Plaintiff by E Mail several
days before she came into the office to execute it. A true and correct copy of said
[r]etainer is attached hereto marked Exhibit ‘1’ and incorporated herein by this
reference as though fully set forth at length.” The “true and correct copy of said
[r]etainer” attached to the petition is an unsigned copy of the retainer agreement.
Notably absent from the declaration is an averment that it was signed by Bayard or
any other representative of the law firm.

                                            8
      Additionally, appellants have never produced or averred that they possess --
or ever possessed -- a fully signed copy of the retainer agreement. Nor have they
produced a declaration from any partner, agent, or employee of the law firm stating
that “a duplicate copy of the [retainer agreement] signed by both the attorney and
the client” was provided to respondent, as required by section 6148, subdivision
(a). In his declaration, Bayard merely stated that he personally sent a copy of the
retainer agreement to respondent “several days before she came into the office to
execute it.” Bayard never stated that after respondent signed the retainer
agreement, it was countersigned and a copy of the fully signed contract provided to
respondent. Finally, despite this issue being raised in the verified complaint and at
the hearing on the petition to compel arbitration, appellants have never addressed
respondent’s allegation that they failed to provide her with a fully signed copy of
the retainer agreement. Nor do they address it on appeal, despite the issue being
raised again in respondent’s brief. On this record, appellants have failed to rebut
respondent’s claim that she never received a fully signed copy of the retainer
agreement. Thus, respondent is entitled to rescind the retainer agreement pursuant
to section 6148, subdivision (c).
      At the hearing on their motion to compel, appellants argued that the trial
court was not authorized to examine whether the retainer agreement was voidable
or whether it’s an “illegal contract.” This argument is an apparent reference to the
holding in Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1 (Moncharsh). There,
the California Supreme Court held that “[i]f a contract includes an arbitration
agreement, and grounds exist to revoke the entire contract, such grounds would
also vitiate the arbitration agreement. Thus, if an otherwise enforceable arbitration
agreement is contained in an illegal contract, a party may avoid arbitration
altogether. [Citations.]” (Id. at pp. 29-30.) However, where “the alleged illegality

                                          9
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. [Citations.]” (Id. at p. 30.) Because the plaintiff in Moncharsh did not
contend that the alleged illegality constituted grounds to revoke the entire
employment contract or that the alleged illegality voided the arbitration clause of
that contract, the entire controversy remained arbitrable. (Id. at pp. 29-30.) In
contrast, here, respondent contended that she was entitled to void the entire
contract pursuant to section 6148, subdivision (c), because appellants failed to
provide her a fully signed copy as required in section 6148, subdivision (a). (See
§ 6148, subd. (c) [“Failure to comply with any provision of this section renders the
agreement voidable at the option of the client . . . .”]; see also Civ. Code, § 1689,
subd. (b) [“A party to a contract may rescind the contract in the following cases:
[¶] . . . [¶] (5) If the contract is unlawful for causes which do not appear in its
terms or conditions, and the parties are not equally at fault”].) Because “grounds
must exist to revoke the entire contract,” those grounds also vitiate the arbitration
clause in the contract. (Moncharsh, supra, at p. 29.) Accordingly, there was no
error in the denial of appellants’ petition to compel contractual arbitration. (See
                                     4
Code Civ. Proc., §§ 1281, 1281.2.)

4
      Because we conclude that the entire agreement was voidable pursuant to
section 6148, we need not address respondent’s alternate argument that the entire
agreement was void and illegal under Civil Code sections 2944.6 and 2944.7.

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                               DISPOSITION
     The order is affirmed. Respondent is awarded her costs on appeal.

     NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

                                                MANELLA, J.

We concur:

WILLHITE, Acting P. J.

COLLINS, J.

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