Appellate Decision: Leta Schlosser v. Lawrence Wollersheim

Related Litigation

Filed 7/16/08 Schlosser v. Wollersheim CA2/2


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on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b).This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.




Cross-complainant and Appellant,
Cross-defendant and Appellant.

(Los Angeles County
Super. Ct. No. C332027)

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.[1]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.


Schlosser’s second amended cross-complaint

As alleged, Wollersheim filed an action against the Church of Scientology (underlying action).From 1981 to 1989, Schlosser represented Wollersheim as an associate of Greene, O’Reilly, Agnew & Broillet and its successors.She prepared and co-tried the underlying action and obtained a favorable verdict.To punish her for representing a former member, the Church of Scientology subjected Schlosser to a “steady stream of harassment, surveillance and dirty tricks, including, but not limited to, retaliatory lawsuits, physical assaults, wiretapping, breaking and entering, vandalism, and threats to her health, career and family.”

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

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’s motions in limine

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.

Trial; the special verdict

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.

Daniel Liepold (Liepold), another of Wollersheim’s attorneys in the litigation against the Church of Scientology, was asked:“Had [Schlosser] told you back in 1996 that she had the [trial] transcript, . . . what would you have done?”Answer:“I would have said, gee, that’s great [Schlosser].I will send somebody over to copy it, and get copies and we will then take those.And we will scan them, put them on a CD [ROM] and link them up with a search engine and we will be able to do a bang-up job, really officially on this case.”If she had given Liepold the trial transcript, then she “would not have been necessary at all.”

Sometimes Schlosser would call Liepold three or four times a day.He explained that “[s]he would call me to tell me she was faxing something.She would call me to ask me if I received the fax.[¶]She would call me an hour later to see if I reviewed the fax, and what I thought of the fax.And she was constantly . . . just—What’s going on?What’s this?What’s that?What about this?What about that?She was just all over the map on this.”When asked if he ever relied on Schlosser for legal advice, Liepold answered in the negative.Asked why, he stated:“Because . . . she’s not a very good lawyer.”

Robert Sall (Sall), an expert, opined about Schlosser’s conduct.In forming his opinion, he stated:“I assumed . . . that Mr. Greene was looking for a transcript and that [Liepold] did not have a [trial] transcript and that correspondence was exchanged between them which [Schlosser] received indicating, ‘We need a [trial] transcript.Where can we get one?’And eventually [Liepold’s] firm incurred approximately $25,000 in obtaining a trial transcript.”Stein went on to testify:“I think [Schlosser] had a duty to tell her co-counsel—to tell the attorneys that she was working with that she had the [trial] transcript, and to preclude them from incurring a substantial expense that was unnecessary.”

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.

Asked how her conduct should affect her fee, Sall stated:“It’s my opinion that she engaged in serious acts of impropriety that are inconsistent with what attorneys are supposed to do, and attempted to charge a client an unconscionable fee, in addition to an unreasonable fee.And on that basis, it’s my opinion that she would not be entitled to further compensation.”

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.

This timely appeal followed.

Wollersheim’s separate action against Schlosser [3]

Wollersheim sued Schlosser for fraud, conversion, and breach of fiduciary duty (Wollersheim action).He alleged that Schlosser committed fraud by falsely stating that she would charge $150 an hour for her services, and that she later claimed entitlement to as much as $2,000 an hour.He also alleged that she refused to turn over his client papers and property.In the punitive damages allegations, he alleged that Schlosser violated Rules of Professional Conduct, rules 3-300, 3-700(d), 3-500, and 4-200.Further, he alleged that she breached her fiduciary duties by seeking to extort an unconscionable fee and by “acts of impropriety inconsistent with the character of the legal profession.”

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.


Motion to Dismiss Schlosser’s Appeal

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.

A.The law.

In general, it is inconsistent to accept the benefits of a judgment and prosecute an appeal from that judgment.Accepting the benefits of a judgment will waive an appeal unless an exception applies.(Lee v. Brown (1976) 18 Cal.3d 110, 114.)For example, “[a] waiver is not implied . . . in those cases in which appellant is concededly entitled to the accepted benefits, and his right to them is unaffected by the outcome of the case on appeal.[Citation.]”(Id. at p. 115.)This exception “is most amenable to application in circumstances involving different items of property [citations], or where portions of the judgment appealed from are conceptually severable from those portions accepted.[Citations.]”(Trollope v. Jeffries (1976) 55 Cal.App.3d 816, 825.)But “the exception is inapplicable where the portion of the judgment appealed from cannot be reversed without affecting the right of the appellant to retain the fruits received and where the issues in the judgment’s challenged portions are the same as, or interdependent with, matters not contested.[Citations.]”(Ibid.)Another exception occurs “where the appellant is simply attempting to augment the judgment and the relief sought would not jeopardize the amount already collected.”(Heacock v. Ivorette-Texas, Inc. (1993) 20 Cal.App.4th 1665, 1670.)

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.

To support his motion, Wollersheim offers a March 26, 2007, order from the trial court that instructs the clerk of the superior court to pay the interpleaded funds of $1,719,890.29 and accumulated interest to Wollersheim.The order contains a single footnote, which states that the amount awarded “represents the entire principal balance of $1,810,446.80, less the sum of $90,566.51 to account for the attorney’s claim of lien of Ford Greene.”

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.


Schlosser’s Appeal

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.

A.Res judicata.

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.

We disagree.

1.The law.

“The doctrine of res judicata precludes the relitigation of certain matters which have been resolved in a prior proceeding under certain circumstances.[Citation.]Its purpose is ‘to preserve the integrity of the judicial system, promote judicial economy, and protect litigants from harassment by vexatious litigation.’[Citations.][¶]The doctrine has two aspects.It applies to both a previously litigated cause of action, referred to as claim preclusion, and to an issue necessarily decided in a prior action, referred to as issue preclusion.[Citations.]”(Brinton v. Bankers Pension Services, Inc. (1999) 76 Cal.App.4th 550, 556.)To establish issue preclusion (also known as collateral estoppel):(1) the issue presented must be identical to one decided in the former proceeding; (2) the issue must have been actually litigated in the prior proceeding; (3) the issue must have been necessarily decided in the prior proceeding; (4) the decision in the prior proceeding must be final and on the merits; and (5) the person subject to preclusion must have been a party to the prior proceeding or in privity with a party.(People v. Garcia (2006) 39 Cal.4th 1070, 1077 (Garcia).)

Germane to this case, “[w]here two actions involving the same issue are pending at the same time, it is the first final judgment, even though it may be rendered in the second suit filed, that renders the issue res judicata in the other court [citation].In such case, the first final judgment may be brought to the attention of the court in which an appeal is still pending and relied upon as res judicata.[Citation.]”(Haines v. Pigott (1959) 174 Cal.App.2d 805, 807–808 (Haines).)

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.[4]The question arises whether claim preclusion or issue preclusion bars Wollersheim’s affirmative defenses.

a.Claim preclusion.

To establish that claim preclusion can bar affirmative defenses based on the dismissal of prior claims, Schlosser cites Torrey Pines Bank v. Superior Court (1989) 216 Cal.App.3d 813, 819–820 (Torrey Pines).But Torrey Pines applied issue preclusion, not claim preclusion.It stated:“‘Under traditional rules of res judicata, a party may be barred (“collaterally estopped”) from relitigating issues that were previously adjudicated in an earlier proceeding.’[Citation.]”(Id. at p. 821.)The court went on to hold that an earlier judgment “barred [respondent’s] present affirmative defenses on the issues determined by the judgment.”(Id. at p. 822.)

There was a dissent in Torrey Pines, which was authored by Justice Huffman.The justice stated that because the respondent dismissed his lawsuit with prejudice, “the majority opinion applies retraxit to produce issue preclusion in a separate case, thereby preventing [the respondent] from raising any affirmative defenses therein.However, no reported case found by either party or by the court has gone so far, and there is good reason for such dearth of authority.In examining the theoretical underpinnings of collateral estoppel, one can find no justification for issue preclusion where the issues were never ‘actually litigated’ by the parties.”(Torrey Pines, supra, 216 Cal.App.3d at p. 825.)The dissent went on to state:“I believe the majority, in making its analysis of this problem, incorrectly applies well-established rules from the field of res judicata, restricting the ability of a party who previously dismissed an action to pursue a second such action, to the quite different situation of deciding whether a defense in a civil case stemming from the same set of facts must be barred.Because collateral estoppel is a ‘distinct aspect of the doctrine of res judicata’ [citation], and because retraxit is likewise an aspect of res judicata which becomes applicable where two successive actions are involved, collateral estoppel principles are applicable and must be considered here.However, the majority approach fails to take into consideration an important factor in collateral estoppel analysis, whether the party who dismissed the action ever had a day in court to actually litigate the claims asserted.”(Id. at pp. 825–826.)

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.

b.Issue preclusion.

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.

Schlosser adverts to issues in affirmative defense Nos. 7, 9 and 10.Affirmative defense No. 7 alleges that Schlosser’s claims are barred by unclean hands.The next one, affirmative defense No. 9, alleges that Schlosser’s “claim for attorney’s fees are unconscionable and therefore [Schlosser] should be limited or barred from recovering any sum whatsoever from [Wollersheim].”Last, affirmative defense No. 10, alleges 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.”

Regardless of whether these issues are identical to issues in the Wollersheim action, there is a question as to whether those issues were actually litigated and necessarily decided in the Wollersheim action.But Schlosser ignores these issues in her opening brief, and in her reply brief all she states is that “each such issue was fully litigated in [the Wollersheim action].”The issue has been waived (Tan v. California Fed. Sav. & Loan Assn. (1983) 140 Cal.App.3d 800, 811) because “[i]t is not our responsibility to develop an appellant’s argument.”(Alvarez v. Jacmar Pacific Pizza Corp. (2002) 100 Cal.App.4th 1190, 1206, fn. 11.)And fairness militates against our consideration of reply arguments raised for the first time.(See Varjabedian v. City of Madera (1977) 20 Cal.3d 285, 295, fn. 11.)

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.

Our Supreme Court explained that Government Code “[s]ection 68081 does not require that a party actually have briefed an issue; it requires only that the party had the opportunity to do so.By requiring the parties to file opening and responding briefs, the California Rules of Court automatically give the parties the opportunity to brief every issue that is raised in the appeal.(Cal. Rules of Court, rule 8.200(a)(1).)Further, we hold that this also gives the parties the opportunity to brief any issues that are fairly included within the issues actually raised.Our court rules adopt this approach—that the opportunity to brief an issue includes the opportunity to brief any issues that are fairly included within that issue—in addressing the related question of when this court is required to permit the parties before it to submit supplemental briefs.”(People v. Alice (2007) 41 Cal.4th 668, 677.)“We do not suggest, of course, that the parties have a right under [Government Code] section 68081 to submit supplemental briefs or be granted a rehearing each time an appellate court relies upon authority or employs a mode of analysis that was not briefed by the parties.The parties need only have been given an opportunity to brief the issue decided by the court and the fact that a party does not address an issue, mode of analysis, or authority that is raised or fairly included within the issues raised does not implicate the protections of [Government Code] section 68081.”(People v. Alice, supra, at p. 679.)

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.

B.The litigation privilege.

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.[5]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,[6] 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.[7]

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.

D.Prejudgment interest.

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.

1.The law.

“Every person who is entitled under any judgment to receive damages based upon a cause of action in contract where the claim was unliquidated, may also recover interest thereon from a date prior to the entry of judgment as the court may, in its discretion, fix, but in no event earlier than the date the action was filed.”(Civ. Code, § 3287, subd. (b).)A quantum meruit action is deemed a contract action for purposes of prejudgment interest because the theory of recovery is quasi-contract.(George v. Double-D Foods Inc. (1984) 155 Cal.App.3d 36, 46–47 (George).)

2.The trial court exercised its discretion.

Initially, at the oral proceeding, the trial court cited Swafford v. Goodman (1952) 115 Cal.App.2d 105 (Swafford) for the proposition that because a quantum meruit claim is unliquidated, it does not support a claim for prejudgment interest.It is true, as Schlosser points out, that any reliance on Swafford was error because it predated the addition of subdivision (b) of Civil Code section 3287 in 1967.But did the trial court rely on Swafford and refuse to exercise its discretion?No.Schlosser’s counsel asked the trial court to consider George, whereupon the trial court stated, “Okay, let’s assume that I can [award prejudgment interest].. . . [¶]Those few cases which seem to say that there is a possibility to award prejudgment interest in a situation where the claim is unliquidated do so in a context . . . where there is a principal basis for, roughly, at least fixing the amount.And I don’t see on the facts of this case that there was.”Finally, and only after hearing argument, the trial court stated:“In the exercise of the [trial court’s] discretion, the motion is denied.”

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.

Regarding her abuse of discretion argument, Schlosser states:“Should this panel conclude that the trial court did exercise discretion, reversal is still mandated because the prejudice to Schlosser was manifest from the trial court’s abuse of that discretion in light of the ameliorative purposes behind that statute, the jury’s award and the fact that [Schlosser] has had to wait over five years for payment that was perfected on May 9, 2002.[¶]The discretion of the trial court is not ‘uncontrolled power, but a legal discretion, which is subject to the limitations of legal principles governing the subject of its action, and to reversal on appeal where no reasonable basis for the action is shown.’[Citation.]The subject statute provides for the recovery of prejudgment interest with the present case a prime example of the reason for the amendment to add that new recovery of interest.”

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]).

The record favors Wollersheim.

In connection with an order distributing the interpleaded funds, the trial court noted “that it has been extraordinarily difficult to pin [Schlosser] down as to what amount she claims she is owed for legal services, since she has at various times claimed to be entitled to sums ranging from approximately $617,000 to over $2.5 million.These have included claims based on different hourly rates for different periods (with no indication that the changes in rates were communicated in advance to [Wollersheim]) . . . , and based upon entitlement to a ‘multiplier’ of an hourly based fee.It is not an exaggeration to compare attempts to have her state a sum certain to the experience of trying to nail a piece of Jello to a board.”

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’s cross-Appeal

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.

Schlosser is correct.

A.The law.

Bernard Witkin explains that “[w]hen services are performed at the request of another without a contract, the duty implied by law to pay for them arises immediately on performance.Hence the statute begins to run, and the plaintiff may recover only for the value of services rendered within 2 years before the suit is filed.This rule is applicable whenever there is no indication of a time of payment, whether the obligation is viewed as strictly quasi-contractual or as implied in fact.[Citations.]”(3 Witkin, Cal. Procedure (4th ed. 1996) Actions, § 508, p. 640.)

According to our Supreme Court, it has been held “[a] claim based upon unlawful discharge of an attorney retained under a contingent fee contract did not accrue until the happening of the contingency.[Citation.]The basis for the rule was, of course, the fact that until the happening of the contingency, the amount of damages suffered by the attorney could not be ascertained.”(Fracasse v. Brent (1972) 6 Cal.3d 784, 791–792; Kroff v. Larson (1985) 167 Cal.App.3d 857, 860.)

The date a cause of action accrues is a question of fact.(Krusi v. S.J. Amoroso Construction Co. (2000) 81 Cal.App.4th 995, 1006.)

B.Schlosser’s award must stand.

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 judgment is affirmed.

The parties shall bear their costs on appeal.


______________________________, J.


We concur:

_______________________________, P. J.


_______________________________, J.


[1]Wollersheim filed a motion to dismiss Schlosser’s appeal.As we discuss in the body of our opinion, that motion is denied.

[2]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.

[3]Schlosser requested that we take judicial notice of Wollersheim’s separate action. We hereby grant that request.

[4]According to Schlosser, Wollersheim filed and then abandoned an appeal of the Wollersheim action.Remittitur was issued on November 16, 2006.

[5]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.

[6]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.

[7]Our review of the record indicates that Schlosser argued Huskinson in connection with a motion to exclude portions of expert testimony.