A-Mark Foundation v. Advanced Media Networks CA2/3 ( 2021 )

Filed 12/28/21 A-Mark Foundation v. Advanced Media Networks CA2/3
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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 THREE
A-MARK FOUNDATION, et B295234
al.,
(Los Angeles County
Plaintiffs, Cross-defendants Super. Ct. No. SC118930)
and Appellants,
v. ORDER MODIFYING
OPINION
ADVANCED MEDIA [NO CHANGE IN
NETWORKS, LLC, JUDGMENT]
Defendant, Cross-complainant
and Appellant.
THE COURT:
It is ordered that the opinion filed herein on December 21,
2021, be modified as follows:
1. On page 1, the superior court number is corrected to
read SC118930.
[There is no change in the judgment.]
____________________________________________________________
KALRA, J.* EDMON, P.J. EGERTON, J.
* Judge of the Los Angeles County Superior Court, assigned
by the Chief Justice pursuant to article VI, section 6 of the
California Constitution.
2
Filed 12/21/21 A-Mark Foundation v. Advanced Media Networks CA2/3
(unmodified opinion
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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 THREE
A-MARK FOUNDATION, et B295234
al.,
(Los Angeles County
Plaintiffs, Cross-defendants Super. Ct. No. SC118390)
and Appellants,
v.
ADVANCED MEDIA
NETWORKS, LLC,
Defendant, Cross-complainant
and Appellant.
APPEALS from a judgment of the Superior Court of Los
Angeles County, Richard A. Stone and Mitchell L. Beckloff,
Judges.
Hawley Troxell Ennis & Hawley, Kurtz Law and John F.
Kurtz for Plaintiffs, Cross-defendants and Appellants.
Law Offices of Harold J. Light, Harold J. Light and Bruce
A. Gilbert for Defendant, Cross-complainant and Appellant.
Although this matter originated with patent infringement
litigation, these appeals have nothing to do with intellectual
property. Rather, we are primarily tasked with interpreting
1
Business and Professions Code section 6155, which regulates
lawyer referral services.
A-Mark Foundation (A-Mark) and AMAG, Inc. (AMAG)
filed a breach of contract action against Advanced Media
Networks, LLC (AMN) arising out of an underlying Patent
Litigation Agreement (PLA). AMN, in turn, filed a cross-
complaint against A-Mark, AMAG, and Steven C. Markoff
(Markoff) (sometimes collectively referred to as A-Mark),
alleging, inter alia, a cause of action under the Unfair
Competition Law (UCL) (§ 17200 et seq.), as well as a cause of
action for money had and received.
The trial court determined that the underlying contract,
the PLA, violated section 6155. It therefore declared the contract
unenforceable and granted summary judgment in favor of AMN
on A-Mark’s action for breach of contract. Thereafter, AMN
proceeded on its cross-complaint. At the bench trial on the UCL
claim, the trial court denied AMN’s request for restitution, while
granting AMN’s request for injunctive relief. Then, after A-Mark
unsuccessfully moved for summary adjudication on AMN’s cause
of action for money had and received, the jury awarded AMN
$1,197,951.45 in damages on that cause of action.
1
All further statutory references are to the Business and
Professions Code unless otherwise indicated.
2
A-Mark appealed the judgment insofar as the court granted
summary judgment in favor of AMN on A-Mark’s complaint, and
denied A-Mark’s motion for summary adjudication on AMN’s
cross-complaint for money had and received. AMN cross-
appealed, contending the award of prejudgment interest was
inadequate.
With respect to the grant of summary judgment in favor of
AMN on A-Mark’s complaint, A-Mark contends the trial court
erred (1) in its construction of section 6155 and in finding that A-
Mark operated as an unlawful attorney referral service; and (2)
in concluding that the unlawful attorney referral clause could not
be severed from the rest of the PLA.
With respect to the denial of A-Mark’s motion for summary
adjudication on AMN’s cross-complaint for money had and
received, A-Mark contends that ruling was erroneous because: (1)
the PLA is not void; (2) the trial court’s decision to deny
restitution at the UCL bench trial precluded the money had and
received claim from going to the jury; and (3) a claim for money
had and received requires a total failure of consideration, which
was not the case here.
On AMN’s cross-appeal, it contends the trial court
abused its discretion in failing to award prejudgment interest on
$288,330.28 of the damages award.
For the reasons discussed below, we conclude as follows:
First, the trial court properly granted AMN’s motion for
summary judgment on A-Mark’s complaint for breach of contract
because the PLA called for unlawful attorney referral services in
violation of section 6155 and therefore was unenforceable.
3
Second, the portion of the PLA that called for unlawful
attorney referral services cannot be severed from the balance of
the agreement, making the PLA void in its entirety.
Third, because the PLA was void due to illegality, AMN
was entitled to maintain a common count to recover the monies
that it had paid to A-Mark pursuant to the PLA, irrespective of
the trial court’s exercise of its discretion to deny restitution of
those monies under the UCL.
Fourth, with respect to the sole issue raised by AMN’s
cross-appeal, we conclude the trial court properly refused to
award AMN prejudgment interest on $288,330.28 of the damages
award.
Therefore, the judgment is affirmed in its entirety.
FACTUAL AND PROCEDURAL BACKGROUND
1. The PLA.
AMN owned certain patents which allegedly had been
infringed. On March 24, 2008, AMN, through its chief executive
officer, Richard Agostinelli, and an entity identified as Precious
Metals Finance, LLC (PMF), through Markoff, its sole manager,
2
entered into the PLA which is the subject of this dispute. The
PLA, a three-page document, stated that “AMN has requested
that PMF become involved in the financing and management of
the Patent Claims,” and that the parties agreed, inter alia:
2
Although PMF is named as the contracting party in the
PLA, this appears to have been a drafting error and that the
proper entity was PMFC, LLC. In the trial court, AMN argued
the PLA was unenforceable because PMF is a nonexistent entity.
We need not address this issue because it has not been raised on
appeal. For purposes of this opinion we refer to the contracting
entity as PMF, which is how it was identified in the PLA.
4
“1. PMF will use reasonable efforts to engage a law firm.
specializing in litigating patent infringement claims (‘PLLF’) to
represent AMN with regard to the Patent Claims (‘Patent
Litigation’) on a contingency fee basis agreeable to both PMF and
AMN. . . .
“2. PMF will use reasonable efforts to manage and
administrate the Patent Litigation.
“3. PMF shall meaningfully consult with the Chief
Executive Officer of AMN on a periodic basis regarding the status
of the Patent Litigation, including any settlement of the Patent
Litigation. . . .
“4. AMN shall at all times fully cooperate with PMF and
PLLF regarding the Patent Litigation.
“5. Any settlement of the Patent Litigation shall be agreed
upon by both AMN and PMF.
“6. Subject to the right of reimbursement described in this
Agreement, PMF shall be responsible for the payment of all
reasonable expenses owed to expert witnesses approved by PMF .
. . to support their efforts related to the prosecution of the Patent
Litigation. . . .
“7. The amount recovered from the Patent Litigation,
including any settlement thereof, shall be distributed as follows:
“a. First, unless otherwise expressly modified by any
attorney fee agreement entered into between AMN and PLLF,
PMF shall be reimbursed for all reasonable expenses paid by
PMF in relation to the Patent Litigation.
“b. Second, for the payment of any attorney fees, and
costs, if any, to PLLF or other expenses incurred in the Patent
Litigation and owed to any expert witness or other third party
5
retained by AMN and/or PLLF in accordance with Section 6
above to pursue the Patent Litigation.
“c. Third, the remaining balance of any recovery
from the Patent Litigation shall be shared with 60% of the
remaining balance being paid to AMN and 40% of the remaining
balance being paid to PMF.
“8. AMN acknowledges and agrees that this Agreement
shall constitute an assignment of 40% of the proceeds of any
recovery from the Patent Litigation to PMF . . . .”
Markoff contacted various law firms to discuss possible
representation of AMN in connection with the patent litigation.
Ultimately, the firm of Ostrow Kaufman & Frankl (Ostrow)
agreed to represent AMN in the patent litigation for a
contingency fee of between 25 and 45 percent, depending on the
stage in the litigation that the action was resolved.
Following an initial settlement of certain patent litigation
known as the Inmarsat lawsuit, the sum of $909,621 was
distributed to A-Mark in May 2012, representing 40 percent of
the net settlement proceeds as provided in the PLA. AMN
subsequently refused to split further settlement proceeds with A-
Mark.
2. Pleadings.
On November 1, 2012, A-Mark and AMAG initiated this
breach of contract action against AMN, seeking to recover 40
percent of any additional net proceeds received by AMN from
infringement claims on the patents identified in the PLA.
AMN, in turn, filed a cross-complaint against A-Mark,
AMAG and Markoff. AMN pled that the PLA was void pursuant
to section 6155 because A-Mark, AMAG and Markoff were not
registered with the California State Bar to provide attorney
6
3
referral services. The cross-complaint included causes of action
for declaratory relief as well as intentional fraud and negligent
misrepresentation. The cross-complaint also pled a cause of
action under the UCL that sought restitution of monies that
AMN had paid to A-Mark pursuant to the PLA, as well as
injunctive relief to preclude the cross-defendants from engaging
in any acts constituting the provision of attorney referral
services. AMN subsequently filed a first amended cross-
complaint that added a cause of action for money had and
received, to recover the $909,621 that it had paid to A-Mark
pursuant to the PLA.
3. AMN obtains summary judgment on A-Mark’s action for
breach of contract.
AMN moved for summary judgment on A-Mark’s
complaint. AMN contended the PLA called for PMF to provide
lawyer referral services, which can only be provided by persons or
entities registered with the State Bar pursuant to section 6155.
AMN asserted that because Markoff, A-Mark, PMF and any
other related entity were not registered with the State Bar of
3
Section 6155 states in relevant part: “(a) An individual,
partnership, corporation, association, or any other entity shall
not operate for the direct or indirect purpose, in whole or in part,
of referring potential clients to attorneys, and no attorney shall
accept a referral of such potential clients, unless all of the
following requirements are met: [¶] (1) The service is registered
with the State Bar of California . . . . [¶] (2) The combined
charges to the potential client by the referral service and the
attorney to whom the potential client is referred do not exceed
the total cost that the client would normally pay if no referral
service were involved.”
7
California to provide lawyer referral services, the PLA was void
and unenforceable.
Additionally, AMN argued that PMF’s fee under the PLA
violated section 6155, subdivision (a)(2), which requires that the
combined charges to the client by the referral service and the
attorney to whom the potential client is referred not exceed the
total cost that the client would pay if no referral service were
involved.
In opposition, A-Mark denied that it had operated a lawyer
referral service. It argued section 6155 “simply does not apply.
Indeed, the PLA is the first and only time that Markoff or any
entity in which he has a controlling interest has ever entered into
an agreement that contemplated assisting another party to
engage an attorney. Section 6155, which on its face proscribes
the operation of a business that refers clients to attorneys, does
not apply to a one-time agreement, particularly when 40% of the
proceeds from the Patent Litigation [were] originally assigned to
PMFC.”
After hearing the matter, the trial court (Judge Stone)
agreed with AMN’s interpretation of section 6155 and granted
AMN’s motion for summary judgment. The court determined
that the PLA “provides for unlawful lawyer referral services in
violation of section 6155, and that Plaintiffs ha[d] not raised a
triable issue of material fact as to that issue.” The court found
that “[t]he purposes of the PLA were for PMF, Plaintiff’s alleged
predecessor, to provide lawyer referral services to AMN and to
manage any subsequent Patent Litigation.” The court also noted
that the PLA provided for PMF to receive a single consideration
for its services, and that the PLA lacked a severability clause. In
sum, because A-Mark’s complaint for breach of contract was
8
predicated on the existence of the PLA, but the PLA was illegal
and unenforceable, AMN was entitled to summary judgment on
the complaint.
4. Proceedings relating to AMN’s cross-complaint to recoup
money that it had paid pursuant to the PLA.
a. Bench trial on UCL claim; trial court grants AMN
injunctive relief and denies its request for restitution.
In 2016, the trial court (Judge Beckloff) conducted a bench
4
trial on AMN’s UCL cause of action. AMN contended that
because the court already had determined that the PLA violated
section 6155, it followed that the PLA was an unlawful and
unfair business practice within the meaning of the UCL. (§
17200 [“unfair competition shall mean and include any unlawful,
unfair or fraudulent business act or practice”].) By way of relief
for the UCL violation, AMN requested an order enjoining A-Mark
from providing unlawful attorney referral services, as well as
restitution of monies it had paid to A-Mark pursuant to the PLA.
(§ 17203.)
The trial court granted injunctive relief while denying
AMN’s request for restitution. It found that “an injunction is
appropriate [to] ensure Cross-Defendants do not further engage
in providing lawyer referral services without compliance with
Section 6155.” It ruled, however, that “the court is not required
to order restitution upon a finding of unfair competition,” because
the remedy of restitution is within the court’s broad discretion,
and in considering whether, and to what extent, restitution is
appropriate, the court may be guided by equitable considerations.
4
Due to Judge Stone’s retirement, the action was reassigned
to Judge Beckloff, effective September 22, 2015.
9
(See Zhang v. Superior Court (2013) 57 Cal.4th 364, 371
[equitable remedies of UCL are subject to broad discretion of trial
court and UCL does not require court to order restitution
whenever an unfair business practice has been shown].) The
court found that AMN’s arguments for restitution “at best . . .
only indirectly related to the attorney referral process. None of
[these] equitable considerations concern Attorney Ostrow’s skills,
qualifications or willingness to represent [AMN] and the referral
process. [Citation.] Attorney Ostrow was certainly economically
successful in his efforts on behalf of [AMN]. . . . Accordingly,
[AMN’s] request for restitution is denied.”
The court added, “To be clear, in exercising its discretion
with regard to remedies under the demonstrated UCL violation,
the court expresses no opinion concerning [AMN’s] tort and
contract claims and Cross-Defendants’ ultimate liability, if any,
on the cross-complaint. [AMN] will have the opportunity to
present its equitable considerations to the jury in the context of
its tort and contract claims and to argue how it has been
damaged.”
b. Denial of A-Mark’s motion for summary
adjudication on AMN’s cause of action for money had and
received.
After the bench trial on the UCL claim, AMN filed a first
amended complaint to add a count for money had and received.
The newly added cause of action pled that the PLA is a void
contract, AMN had paid A-Mark $909,621 out of the initial
settlement proceeds pursuant to the PLA, and AMN had
demanded return of those funds.
In 2017, A-Mark filed a motion for summary adjudication
on the cross-complaint with respect to AMN’s claim for money
10
had and received. A-Mark contended that Judge Beckloff’s ruling
in the bench trial that restitution was not warranted precluded
the cause of action for money had and received from going to the
jury. In addition, A-Mark argued that a claim for money had and
received requires a total failure of consideration, which did not
occur in this case.
The trial court denied A-Mark’s motion for summary
adjudication of the claim for money had and received. The court
explained that a common count for money had and received is
available where a plaintiff has paid money pursuant to a contract
that is void for illegality, and because AMN’s common count
claim sought to recover money paid pursuant to a void contract,
the claim was not precluded by the court’s earlier denial of
restitution on the UCL claim.
c. Jury trial on remaining claims; jury awarded
AMN damages on its cause of action for money had and received.
Thereafter, the remaining claims which were tried to a
jury, which returned a verdict in favor of AMN on its causes of
action for money had and received, intentional misrepresentation
and false promise. The jury awarded AMN $1,197,951.45 on its
money had and received claim, and nothing for fraud. The jury
further found that A-Mark was entitled to a set-off of $410,251.62
for the reasonable value of its services. Thus, the net jury award
for AMN was $787,699.83.
The jury also determined that AMN was entitled to interest
on its damages as of May 15, 2012.
d. Award of prejudgment interest.
AMN moved for prejudgment interest on the entire
$1,197,951.45 in damages that the jury awarded on AMN’s
claim for money had and received. The trial court, however,
11
determined that AMN was only entitled to prejudgment interest
on $499,369.55 of the damages that had been awarded. The
trial court reasoned as follows:
Pursuant to Civil Code section 3287, subdivision (a), only
the amount AMN paid to A-Mark under the PLA—
$909,621.17— was capable of being made certain by calculation
as of May 15, 2012. The additional amount of $288,330.28 (the
difference between the gross award of damages and the
$909,621.17) was incapable of being made certain as of a
particular date, so it declined to award prejudgment interest on
that portion of the jury award. Accordingly, after subtracting
A-Mark’s $410,251.62 offset from the $909,621.17, the trial
court concluded that AMN was entitled to prejudgment interest
on $499,369.55.
On October 31, 2018, the trial court entered judgment on
the verdict, awarding damages to AMN in the net amount of
$786,699.83, as well as $226,877.95 in prejudgment interest. A-
Mark and AMN filed timely notices of appeal from the
5
judgment.
CONTENTIONS
5
A-Mark’s notice of appeal, filed by Attorney John F. Kurtz,
Jr., was filed on behalf of Markoff, in addition to A-Mark and
AMAG. Further, the Civil Case Information Statements filed by
A-Mark and AMN named Markoff as a party to both the appeal
and the cross-appeal. Additionally, after the matter was fully
briefed, Kurtz filed a substitution of attorney form on behalf of A-
Mark, AMAG, and Markoff. Therefore, we deem the appellate
briefs filed by A-Mark’s counsel to have been filed on behalf of
Markoff, in addition to A-Mark and AMAG.
12
A-Mark contends the trial court erred in granting summary
judgment in favor of AMN on A-Mark’s complaint for breach of
contract because: PMF did not operate as an attorney referral
service in violation of section 6155; even if the PLA did violate
section 6155, the illegal portion of the agreement was severable;
6
and the PLA did not violate public policy. A-Mark also contends
the verdict awarding damages to AMN on its claim for money had
and received must be vacated because: the trial court’s denial of
AMN’s request for restitution in the bench trial on the UCL claim
entitled A-Mark to summary adjudication on AMN’s cause of
action for money had and received; and a claim for money had
and received requires a total failure of consideration, which did
not occur in this case.
On cross-appeal, AMN contends the trial court erred in
refusing to award prejudgment interest on $288,330.28 of the
damage award, which represents the difference between the
$1,197,951.45 that the jury awarded for money had and
received, and the $909,621.17 that AMN paid A-Mark pursuant
7
to the PLA.
6
While the trial court opined that the PLA was contrary to
public policy, the court also stated it did not need to reach the
public policy issue given its resolution of the section 6155 issue.
We likewise conclude the PLA violated section 6155, and
therefore we do not reach A-Mark’s contention that the PLA did
not contravene public policy.
7
AMN also contends the trial court abused its discretion in
the bench trial on the UCL claim when it denied AMN’s request
for restitution of the $909,621.17 that it paid to A-Mark pursuant
to the PLA. This contention is mooted by our affirmance of the
13
DISCUSSION
1. The trial court properly granted AMN’s motion for
summary judgment on A-Mark’s complaint for breach of
contract because the PLA called for unlawful attorney referral
services and therefore was unenforceable.
a. Standard of appellate review.
We independently review the trial court’s order granting
a motion for summary judgment in order to determine whether
triable issues of fact exist to reinstate the action. (Wiener v.
Southcoast Childcare Centers, Inc. (2004) 32 Cal.4th 1138,
1142.) We also review de novo questions of law, including the
trial court’s interpretations of statutes and whether a contract
is capable of severance. (Regents of University of California v.
Superior Court (1999) 20 Cal.4th 509, 531; United Educators of
San Francisco etc. v. California Unemployment Ins. Appeals Bd.
(2020) 8 Cal.5th 805, 812; Koenig v. Warner Unified School Dist.
(2019) 41 Cal.App.5th 43, 54.)
b. Principles of statutory interpretation.
The court’s “fundamental task in interpreting a statute is
to determine the Legislature’s intent so as to effectuate the law’s
purpose. We first examine the statutory language, giving it a
plain and commonsense meaning. We do not examine that
language in isolation, but in the context of the statutory
framework as a whole in order to determine its scope and purpose
and to harmonize the various parts of the enactment. If the
language is clear, courts must generally follow its plain meaning
unless a literal interpretation would result in absurd
judgment that was entered upon AMN’s favorable verdict on its
cause of action for money had and received.
14
consequences the Legislature did not intend. If the statutory
language permits more than one reasonable interpretation,
courts may consider other aids, such as the statute’s purpose,
legislative history, and public policy. [Citations.]” (Coalition of
Concerned Communities, Inc. v. City of Los Angeles (2004) 34
Cal.4th 733, 737.)
c. Section 6155.
Section 6155, the controlling statute, provides in relevant
part at subdivision (a): “An individual, partnership, corporation,
association, or any other entity shall not operate for the direct or
indirect purpose, in whole or in part, of referring potential clients
to attorneys, and no attorney shall accept a referral of such
potential clients, unless all of the following requirements are met:
[¶] (1) The service is registered with the State Bar of California
and (a) on July 1, 1988, is operated in conformity with minimum
standards for a lawyer referral service established by the State
Bar, or (b) upon approval by the Supreme Court of minimum
standards for a lawyer referral service, is operated in conformity
with those standards.”
The essential issue presented is the meaning of the phrase
“operate for the direct or indirect purpose, in whole or in part, of
referring potential clients to attorneys.” (§ 6155, subd. (a).) Does
it refer to how an individual or entity behaves on a discrete
occasion, as the trial court found—or does it refer to the purpose
of the enterprise’s existence, its raison d’être, as A-Mark argues?
Case law interpreting this section is instructive.
(d) Case law interpreting section 6155.
(1) The Hyon decision.
Selten v. Hyon (2007) 152 Cal.App.4th 463, 468 (Hyon)
appears to be the first case construing section 6155, and it is the
15
authority upon which the trial court primarily relied in granting
summary judgment for AMN.
Selten was president of National Legal Network (NLN),
which agreed to provide litigation support services, including
retaining counsel for Hyon and Colangelo, in certain litigation.
The agreement provided that if NLN succeeded in retaining new
counsel for Hyon and Colangelo and performed the other services
required by the contract, NLN would receive a 12 percent
contingency fee of any recovery. (Hyon, supra, 152 Cal.App.4th
at p. 465.) NLN did succeed in retaining counsel, and the
litigation ultimately resulted in a settlement. (Id. at pp. 465-
466.) Disagreements arose between the parties regarding, among
other issues, distribution of the settlement proceeds. Hyon filed
suit against Colangelo and Selten. Selten, as NLN’s assignee,
filed a cross-complaint against Hyon and Colangelo to recover
under their agreement. (Ibid.)
Hyon moved for summary judgment on Selten’s cross-
complaint, arguing that all of Selten’s claims were based on their
1997 contract, the contract called for Selten to engage in the
unauthorized practice of law and to provide attorney referral
services in violation of section 6155, pursuant to the 1997
contract Selten did in fact engage in the unauthorized practice of
law and did provide unlawful attorney referral services, and the
1997 contract was therefore illegal and unenforceable. (Hyon,
supra, 152 Cal.App.4th at p. 466.) In opposition, Selten argued,
inter alia, that his business, NLN, did not constitute an attorney
referral service within the meaning of section 6155, but Selten
did not dispute Hyon’s contention that neither Selten nor NLN
was registered with the State Bar as an attorney referral service.
(Hyon, at p. 467.)
16
The trial court granted Hyon’s motion for summary
judgment on the ground that the contract called for, and Selten
did in fact provide, unlawful attorney referral services. The trial
court further reasoned that the unlawful provisions of the
contract could not be severed because the contract provided for a
single consideration, namely, the contingent fee, in exchange for
all of Selten’s services, including attorney referrals. The trial
court therefore concluded that the entire contract was
unenforceable. The trial court further determined that because
all of Selten’s claims required proof of the unlawful contract and
the consideration purportedly due under it, Hyon was entitled to
judgment in his favor on Selten’s entire first amended cross-
complaint. The trial court did not reach the issue of the
unauthorized practice of law. (Hyon, supra, 152 Cal.App.4th at p.
467.)
The reviewing court affirmed in part, concluding that “[t]he
1997 contract is illegal insofar as it required NLN to provide
unlawful attorney referral services in order to earn the
contingent fee. The illegal portions of the contract cannot be
severed. We therefore agree with the trial court that the contract
is illegal and unenforceable in its entirety.” (Hyon, supra, 152
Cal.App.4th at p. 471.) However, Hyon also found that the
illegality of the contract did not bar Selten’s claim for the
reasonable value of lawful services rendered, and therefore
reversed the judgment in part to allow Selten to proceed on the
common count to recover for those services. (Ibid.)
On the main issue, Hyon held that “[b]ecause the contract
called for NLN to ‘operate for the direct or indirect purpose, in
whole or in part, of referring potential clients to attorneys,’ it
violated section 6155.” (Hyon, supra, 152 Cal.App.4th at p. 468.)
17
Hyon addressed and rejected Selten’s multiple arguments to the
contrary, stating as follows:
“First, he argues that the overall purpose of the 1997
contract was for NLN to provide litigation support services, not
merely to refer Hyon and Colangelo to attorneys, and that
attorney referrals were a ‘[r]elatively [m]inor’ part of the contract.
In a similar vein, Selten argues that his duties did not end, but
rather began, with the referral to counsel, that he was obligated
to continue to provide other services throughout the course of the
litigation, and that he would be paid nothing if the litigation were
not resolved in favor of Hyon and Colangelo. The argument fails
because it does not matter that the contract required NLN to
provide other services, that those other services were purportedly
the main purpose of the agreement, or that NLN’s compensation
was contingent upon a favorable outcome in the litigation. (Keene
v. Harling (1964) 61 Cal.2d 318, 319–320 [if part of the
consideration violates a statute, then the contract is partially
illegal].) Notwithstanding those provisions, the contract required
NLN to refer Hyon and Colangelo to attorneys for a fee, in
violation of section 6155. Therefore, the contract was at least
partially illegal.
“Second, Selten argues that under Evidence Code section
951, an ‘authorized representative’ can retain a lawyer on behalf
of a client, so NLN’s retention of counsel on behalf of Hyon and
Colangelo cannot have been unlawful. We disagree. Evidence
Code section 951 defines the term ‘client’ solely for purposes of
the attorney-client privilege. (Moeller v. Superior Court (1997) 16
Cal.4th 1124, 1129.) By including ‘authorized representative’ in
the definition of ‘client,’ the statute extends the privilege to cover
not only communications directly between the client and the
18
attorney but also communications between the client’s agents and
the attorney. (Ibid.) Nothing in the statute suggests, however,
that an unregistered individual or entity may charge a fee for
referring potential clients to attorneys without violating section
6155.
“Third, Selten argues that the contract did not actually
require NLN to refer Hyon and Colangelo to attorneys, because
nothing in the contract prohibited Hyon and Colangelo from
finding attorneys on their own. The argument fails because the
contract expressly denied NLN any right to compensation ‘[i]n
the event NLN is unsuccessful in arranging [a]ttorney(s) to come
into this [l]awsuit in [c]lients’ behalf[.]’ Thus, by its terms, the
contract required NLN to find attorneys for Hyon and Colangelo.
“Fourth, Selten argues that he did not refer Hyon and
Colangelo to Shopoff, the lawyer who ultimately settled the
Decker Island litigation. Rather, Disner referred Hyon and
Colangelo to Bien, who referred them to Shopoff. Thus, according
to Selten, ‘[t]here was no nexus between any claimed referral and
the ultimate successful outcome of [the underlying litigation].’
The argument fails, because the presence or absence of any such
‘nexus’ is irrelevant. Selten does not dispute that NLN referred
Hyon and Colangelo to Disner and arranged for Disner to
represent them in the [underlying] litigation. Had NLN not done
so, NLN would not be entitled to any compensation under the
1997 contract. NLN thus referred Hyon and Colangelo to Disner
for a fee, in violation of section 6155. It does not matter that
Disner withdrew before the litigation concluded, or that the final
settlement of the litigation was negotiated by Shopoff. The
statute provides that no individual or entity may ‘operate for the
direct or indirect purpose, in whole or in part, of referring
19
potential clients to attorneys.’ (§ 6155.) The statute thus
prohibits referral to any attorney, not just referral to an attorney
who goes on to win the case.
“Fifth, Selten argues that the principal evil that motivated
enactment of section 6155 was the existence of sham referral
services, consisting of attorneys who would refer clients to each
other (or sometimes a single attorney who would ‘refer’ all clients
to himself or herself), and the record contains no evidence that
Selten’s business ever fit that model. In support of this
argument, Selten relies upon certain materials from the
legislative history of section 6155. The argument fails because
the cited materials relate only to the 1987 enactment of the
original version of section 6155. The Legislature amended the
statute in 1992 to include the language we quoted ante, to the
effect that no individual or entity shall ‘operate for the direct or
indirect purpose, in whole or in part, of referring potential clients
to attorneys’ without meeting the requirements of the statute.
Thus, even if we found the statutory language sufficiently
ambiguous to require resort to legislative history—which we do
not—the materials cited by Selten would have no effect on our
decision, because they relate to a version of the statute that did
not include the language on which we rely. (Regency Outdoor
Advertising, Inc. v. City of Los Angeles (2006) 39 Cal.4th 507, 524
[resort to legislative history is unnecessary if statutory language
is unambiguous].)
“Sixth, Selten argues that he exercised due diligence in
investigating whether his business constituted an unlawful
attorney referral service, and that he reasonably concluded, on
the basis of advice from both the State Bar and privately retained
counsel, that his business did not violate section 6155. Selten’s
20
good faith and diligence cannot alter the fact that the 1997
contract did require NLN to provide attorney referral services.
Moreover, the State Bar and private counsel opinions predate,
and do not specifically relate to, the 1997 contract; one of them
actually predates the 1992 amendment of section 6155. Selten
cites no evidence that anyone ever advised him that the 1997
contract did not require NLN to provide attorney referral services
in violation of section 6155.
“Seventh, Selten argues that any interpretation of section
6155 that would render the 1997 contract illegal would also
render the statute itself unconstitutionally vague, because it
would make unlawful ‘virtually every relationship in a
commercial setting where a third party has involvement with
another’s attorney-client relationship.’ Selten notes, for example,
that ‘[a] large and disparate variety of professionals such as
attorneys, accountants, personal and business managers, brokers
and others, regularly help their clients find attorneys (or other
professionals), often while they continue providing service to the
same client for a fee.’ The argument fails because NLN (and
Selten, by assignment) earned its fee, in part, by referring Hyon
and Colangelo to Disner. Section 6155 prohibits such conduct by
an unregistered individual or entity. Our interpretation of the
statute does not render it unconstitutionally vague or make
illegal the commonplace uncompensated attorney referrals that
Selten describes.
“Finally, Selten argues that even if the contract is partially
illegal because it required NLN to provide unlawful attorney
referral services, the illegal portion of the contract should be
severed. But Selten never addresses the trial court’s reasoning,
based on Civil Code section 1608, that severance here is
21
impossible because the contract provides for a single
consideration in exchange for all of Selten’s services, including
attorney referral. Section 1608 provides that ‘[i]f any part of
single consideration for one or more objects, or of several
considerations for a single object, is unlawful, the entire contract
is void.’ Attorney referrals were among the several
considerations that Selten provided for a single object, namely,
his contingent fee. By statute, the contract is therefore void in its
entirety.” (Hyon, supra, 152 Cal.App.4th at pp. 468-471, italics
omitted.)
(2) The decision in Jackson v. LegalMatch.com
explaining referral activity within the meaning of section 6155.
After this matter was ruled on below, section 6155 was
construed in another decision, Jackson v. LegalMatch.com (2019)
42 Cal.App.5th 760 (Jackson).
LegalMatch.com was an online service company that
connected individuals seeking legal assistance to lawyers who
had purchased a LegalMatch subscription. LegalMatch sued
Jackson, a subscribing attorney, when he allegedly failed to pay
for his subscription. Jackson cross-claimed on the basis that
LegalMatch was operating an uncertified lawyer referral service
in violation of section 6155, rendering the subscription contract
illegal and unenforceable. The lower court rejected Jackson’s
argument, finding that LegalMatch was not engaged in referral
activity within the meaning of section 6155. The reviewing court
reversed, concluding that Legal Match did engage in referral
activity. (Jackson, supra, 42 Cal.App.5th at p. 764.)
Jackson explained, “a referral occurs when an entity
engages in the act of directing or sending a potential client to an
attorney. The act of referring is complete when LegalMatch
22
routes a potential client to attorneys who match the geographic
location and area of practice—regardless of whether LegalMatch
exercises legal judgment on an individual’s issue before
communicating that information to lawyers on its panel.”
(Jackson, supra, 42 Cal.App.5th at p. 777, fn. omitted.)
Accordingly, when “LegalMatch gathers potential clients’
geographic and case-type information and sends those potential
clients to attorneys who (a) match the location and (b) have been
permitted to join LegalMatch within a relevant practice area, the
act of referral is complete. Section 6155 requires no more for a
service to fall within its ambit.” (Jackson, at p. 778.)
e. The trial court properly granted AMN’s motion for
summary judgment because the PLA violated section 6155; A-
Mark’s attempts to distinguish the Hyon decision are unavailing.
In Hyon, as indicated, the contract called for NLN to retain
counsel to represent Hyon and Colangelo, and provided that NLN
would be entitled to compensation if it were to recruit counsel for
Hyon and Colangelo and to perform the other services called for
under the contract. (Hyon, supra, 152 Cal.App.4th at p. 468.)
The Hyon court concluded it “follow[ed] as a matter of law that,
under the contract, Hyon and Colangelo were paying NLN, in
part, to refer them to an attorney.” (Ibid.) Because the contract
“called for NLN to ‘operate for the direct or indirect purpose, in
whole or in part, of referring potential clients to attorneys,’ it
violated section 6155.” (Ibid.) Thus, Hyon scrutinized the
contract’s objective in finding a violation of section 6155.
Similarly, in the instant case, the PLA called for PMF to
engage a law firm to represent AMN in the patent litigation, as
well as to finance, manage, and administer the patent litigation,
and that if successful, PMF would recover 40 percent of the
23
proceeds of any recovery from the patent litigation, after payment
of PMF’s reasonable expenses as well as attorney fees and costs.
Thus, under the PLA, AMN would be paying PMF, “in part, to
refer [AMN] to an attorney. (Hyon, supra, 152 Cal.App.4th at p.
468.) Because the PLA “called for [PMF] to ‘operate for the direct
or indirect purpose, in whole or in part, of referring potential
clients to attorneys,’ it violated section 6155.” (Ibid.)
A-Mark’s various arguments to the contrary are
unpersuasive.
A-Mark contends section 6155 does not apply because the
PLA was PMF’s “only foray into lawyer finding,” and that in
enacting section 6155, the Legislature only intended the statute
“to apply to entities that connect lawyers to clients on a repeated
basis, and [where] the enterprise’s principal income comes from
brokering such connections.” (Italics added.) Stated another
way, A-Mark would construe the statute as applying solely to an
individual or entity that operates “for the primary direct or
indirect purpose, in whole or in part, of referring potential clients
to attorneys on a repeated basis and whose principal income
comes from brokering such connections.” However, these implied
8
limitations lack support in the plain text of section 6155. To the
contrary, the statute is written expansively to prohibit any
individual or entity from “operat[ing] for the direct or indirect
8
Moreover, the construction proposed by A-Mark would lead
to a rule that is nebulous and unworkable. How many referrals
must occur before an entity’s primary purpose is to operate as a
lawyer referral service? Two, ten, one hundred? Similarly, what
percentage of the enterprise’s income must be based upon lawyer
referrals to constitute a principal source of the enterprise’s
income?
24
purpose, in whole or in part, of referring potential clients to
attorneys,” unless the statutory requirements are satisfied. (§
6155, subd. (a), italics added.) Further, in Hyon, the contract was
held illegal in part and unenforceable, although there was no
indication in that opinion that NLN, the entity that provided the
attorney referral service, had connected lawyers to clients on a
9
repeated basis. (Hyon, supra, 152 Cal.App.4th at pp. 465-467.)
A-Mark also contends that finding a lawyer was only a
“collateral purpose, one among many” obligations of the PLA.
Again, Hyon is dispositive. In rejecting this argument, Hyon
stated “it does not matter that the contract required NLN to
provide other services [or] that those other services were
purportedly the main purpose of the agreement.” (Hyon,
supra,152 Cal.App.4th at p. 469.) Therefore, A-Mark’s attempt to
characterize PMF’s obligation under the PLA to engage counsel
for AMN as a collateral purpose of the PLA does not advance A-
Mark’s argument.
A-Mark also argues that section 6155 does not apply
because PMF was not even obligated by the PLA to find a lawyer
for AMN; rather, the PLA merely required FM to “use reasonable
9
We note that A-Mark’s opening brief improperly cited the
lower court’s unpublished order in Hyon for the proposition that
during the time NLN was in business, it had over a thousand
clients and had obtained hundreds of attorneys for its clients.
However, there is no mention in the published appellate decision
in Hyon of a history of attorney referrals by NLN. Thus, Hyon’s
holding that the contract violated section 6155 was not based on
the fact that NLN repeatedly referred clients to attorneys.
Therefore, we do not read Hyon as applying only when an entity
repeatedly refers clients to attorneys.
25
efforts to engage a law firm.” The argument is unpersuasive
because, similarly to Hyon, the PLA called for PMF to obtain
counsel for AMN in order to earn its 40 percent contingent fee.
(Hyon, supra, 152 Cal.App.4th at p. 471.) Had patent litigation
counsel not been secured, there would have been no patent
infringement litigation, no recovery by AMN, and no contingent
fee would have been payable under the PLA. Therefore, the
PLA’s provision that PMF use “reasonable efforts” to secure
10
counsel did not take the PLA outside the ambit of section 6155.
A-Mark further contends that rather than a “referral,”
what occurred here “was actually a ‘self-referral’ or, more
accurately, no referral at all.” A-Mark argues that in reality,
Markoff simply agreed to help find a lawyer for a joint venture
between AMN and PMF to monetize the patents, and because
Markoff merely was finding a lawyer for his own benefit, there
was no referral and section 6155 is not implicated. A-Mark cites
no authority for this novel “self-referral” theory. Moreover, this
attempt to recharacterize the relationship between the parties as
a joint venture is belied by the language of the PLA, to which
AMN and PMF were parties, and which assigned to PMF the role
of securing counsel as well as managing and financing the patent
litigation.
10
A-Mark also denies that Markoff made a referral because
Ostrow, the counsel that was ultimately retained, had been
initially identified by Agostinelli. This argument lacks merit.
The fact remains that the PLA called for PMF to find a lawyer for
patent litigation, and Markoff was actively involved in Ostrow’s
retention, including negotiating the terms of the retention.
26
In sum, we conclude the PLA is illegal insofar as it required
PMF to provide attorney referral services to AMN in violation of
section 6155.
f. The illegal portion of the contract cannot be
severed.
A-Mark contends that even if the PLA violates section
6155, the portion requiring PMF to provide attorney referral
services should be severed, leaving the balance of the PLA
enforceable.
Hyon is on point. It concluded the illegal portion of the
contract requiring NLN to provide unlawful attorney referral
services could not be severed, and therefore the contract was
unenforceable in its entirety. (Hyon, supra, 152 Cal.App.4th at p.
471.) Hyon explained: “Selten argues that even if the contract is
partially illegal because it required NLN to provide unlawful
attorney referral services, the illegal portion of the contract
should be severed. But Selten never addresses the trial court's
reasoning, based on Civil Code section 1608, that severance here
is impossible because the contract provides for a single
consideration in exchange for all of Selten’s services, including
attorney referral. [Civil Code] [s]ection 1608 provides that ‘[i]f
any part of single consideration for one or more objects, or of
several considerations for a single object, is unlawful, the entire
contract is void.’ Attorney referrals were among the several
considerations that Selten provided for a single object, namely,
his contingent fee. By statute, the contract is therefore void in its
entirety. . . . [W]e conclude that the illegal portions of the
contract cannot be severed—the entire contract is void.” (Hyon,
supra, 152 Cal.App.4th at p. 471.)
27
Notwithstanding this clear holding in Hyon, A-Mark
contends severance is mandated by the Supreme Court’s decision
in Marathon Entertainment, Inc. v. Blasi (2008) 42 Cal.4th 974(Marathon).) A-Mark’s reliance on Marathon is misplaced.
Marathon addressed the legal consequences that arise
when a personal manager solicits or procures employment for a
client without a talent agency license. (Marathon, supra, 42
Cal.4th at p. 980.) Marathon held that the strictures of the
Talent Agencies Act (Lab. Code, § 1700 et seq.) apply to personal
managers as well as agents, and while the Labor Commissioner
has the authority to void manager-talent contracts ab initio for
unlawful procurement, she also has discretion to apply the
doctrine of severability to partially enforce these contracts.
(Marathon, at pp. 980-981.)
With respect to severability, Marathon explained “a
personal manager provides an undifferentiated range of services;
in exchange, he receives an undifferentiated right to a certain
percentage of the client’s income stream. [¶] This compensation
scheme is essentially analogous to a contingency fee
arrangement, in which an attorney provides an undifferentiated
set of services and is compensated not for each service but as a
percentage of the ultimate recovery her efforts yield for her
11
client. In Birbrower,[ ] we dealt with both fixed fee and
11
In Birbrower, Montalbano, Condon & Frank v. Superior
Court (1998) 17 Cal.4th 119, “a law firm licensed in New York,
but not California, provided legal services in both states. The
trial court and Court of Appeal invalidated the entire attorney fee
agreement, but [the Supreme Court] reversed in part, explaining
that under the doctrine of severability the firm might be able to
28
contingency fee arrangements, and nothing in the nature of the
latter stood as an obstacle to application of severability. We
directed the trial court to determine on remand, if it determined
a partially valid agreement existed, what value should be
attributed to legally provided services and what to illegally
provided services. (Birbrower, supra, 17 Cal.4th at pp. 139–140.)
While an undifferentiated compensation scheme may in some
instances preclude severance (see Civ. Code, § 1608; Selten v.
Hyon (2007) 152 Cal.App.4th 463, 471), Birbrower demonstrates
that it does not represent a categorical obstacle to application of
the doctrine.” (Marathon, supra, 42 Cal.4th at p. 997, italics
added.)
Thus, while Marathon allowed for severability of contracts
that violate the Talent Agencies Act (Lab. Code, § 1700 et seq.),
and also held that an undifferentiated compensation scheme does
not necessarily preclude severance, it simultaneously cited with
approval the Hyon decision, which held that a lawyer referral
agreement that violated section 6155 and that provided for
undifferentiated compensation was not severable.
Thus, consistent with Hyon, we conclude the portion of the
PLA that called for PMF to provide unlawful attorney referral
services cannot be severed from the balance of the agreement,
making the PLA void in its entirety. (Hyon, supra, 152
Cal.App.4th at p. 471.)
recover the fees it had lawfully earned by providing services in
New York, notwithstanding its unlicensed provision of services in
California. (Id. at pp. 138–139.)” (Marathon, supra, 42 Cal.4th
at p. 993.)
29
Accordingly, the trial court properly granted summary
judgment in favor of AMN on A-Mark’s complaint for breach of
contract.
2. The trial court did not err in denying A-Mark’s motion
for summary adjudication on AMN’s cause of action for money
had and received.
a. Overview.
As indicated, in the UCL bench trial, the trial court
granted AMN’s request for injunctive relief but denied its
request for restitution of the $909,621.17 that AMN had paid to
A-Mark pursuant to the PLA. The trial court noted that it is
not required to order restitution upon a finding of unfair
competition, its decision is guided by equitable considerations
(Zhang v. Superior Court, supra, 57 Cal.4th at p. 371), and after
considering the matter, the court determined that “restitution is
not warranted in this case.”
AMN subsequently filed a first amended cross-complaint
that added a new cause of action for money had and received.
The amended pleading alleged that A-Mark was indebted to
AMN for the $909,621.17 that AMN had paid to A-Mark
pursuant to the PLA.
A-Mark moved for summary adjudication on the cause of
action for money had and received on the ground that Judge
Beckloff’s equitable ruling in the bench trial that restitution
was not warranted precluded the jury from awarding
restitution of the $909,621.17 by way of a cause of action for
money had and received. In addition, A-Mark argued that a
claim for money had and received requires a total failure of
consideration, which did not occur in this case.
30
The trial court denied A-Mark’s motion for summary
adjudication of the claim for money had and received. The court
explained that a common count for money had and received is
available where a plaintiff has paid money pursuant to a
contract that is void for illegality, and because AMN’s common
count claim sought to recover money paid pursuant to a void
contract, the claim was not precluded by the court’s earlier
denial of restitution on the UCL claim.
12
On appeal, A-Mark contends the trial court erred in
denying its motion for summary adjudication of the claim for
money had and received, and that the verdict awarding
damages to AMN for money had and received must be vacated
13
because (1) the PLA is not void, (2) the decision in the UCL
bench trial denying restitution precluded the claim for money
had and received from going to the jury, and (3) a claim for
money had and received requires a total failure of
consideration, which did not occur here. As explained, we find
no error.
12
An order denying a motion for summary adjudication is a
nonappealable order that may be reviewed on direct appeal from
a final judgment entered after a trial. (Federal Deposit Ins. Corp.
v. Dintino (2008) 167 Cal.App.4th 333, 343.) In reviewing that
order, we apply the same standards as we would in reviewing a
trial court’s order granting or denying a motion for summary
judgment. (Id. at p. 344.)
13
We have already determined the PLA was void in its
entirety, so this argument necessarily fails.
31
b. Trial court properly denied A-Mark’s motion for
summary adjudication of AMN’s cause of action for money had
and received; denial of claim for restitution under the UCL did
not preclude AMN from pursuing a common count for money
had and received.
A-Mark’s theory is that because the trial court in the UCL
bench trial determined that A-Mark did not owe restitution of
the money it received from AMN pursuant to the PLA, the
contrary jury finding in favor of AMN on its common count for
money had and received cannot be reconciled, and the claim for
money had and received should have been eliminated on
summary adjudication.
The argument is meritless because the elements of a
claim for restitution under the UCL, and a common count for
money had and received, are different.
As stated in Zhang, “the equitable remedies of the UCL are
subject to the broad discretion of the trial court. [Citation.] The
UCL does not require ‘restitutionary or injunctive relief when an
unfair business practice has been shown. Rather, it provides that
the court “may make such orders or judgments . . . as may be
necessary to prevent the use or employment . . . of any practice
which constitutes unfair competition . . . or as may be necessary
to restore . . . money or property.” ’ [Citation.] ‘[I]n addition to
those defenses which might be asserted to a charge of violation of
the statute that underlies a UCL action, a UCL defendant may
assert equitable considerations. In deciding whether to grant the
remedy or remedies sought by a UCL plaintiff . . . consideration
of the equities between the parties is necessary to ensure an
equitable result.’ [Citation.]” (Zhang v. Superior Court, supra,57 Cal.4th at p. 371, original italics.)
32
On the other hand, a cause of action is stated “for money
had and received if the defendant is indebted to the plaintiff in a
certain sum ‘for money had and received by the defendant for the
use of the plaintiff.’ [Citations.] The cause of action is available
where . . . the plaintiff has paid money to the defendant pursuant
to a contract which is void for illegality. [Citation.]” (Schultz v.
Harney (1994) 27 Cal.App.4th 1611, 1623, italics added.)
Because the PLA was void due to illegality, AMN was
entitled to maintain a common count to recover the $909,621.17
that it had paid to A-Mark pursuant to the PLA, irrespective of
the trial court’s exercise of its discretion to deny restitution of
those monies under the UCL.
b. A common count for money had and received does
not require a total failure of consideration.
A-Mark contends that a claim for money had and received
requires a total failure of consideration, which did not occur here.
The argument is meritless.
Brown v. Grimes (2011) 192 Cal.App.4th 265 (Brown), on
which A-Mark primarily relies, actually states: “A party is
entitled to restitution when the contract has failed, such as when
it is void, or has been rescinded or ‘the consideration has wholly
failed.’ (1 Witkin, Summary of Cal. Law, supra, Contracts, §
1042, pp. 1132–1133.)” (Brown, supra, 192 Cal.App.4th at p. 281,
first italics added.) Because the PLA was void, AMN was entitled
to seek recovery of the monies it paid pursuant to the PLA,
irrespective of whether there was a total failure of consideration.
In sum, A-Mark has not shown any error in the trial court’s
refusal to grant summary adjudication on AMN’s common count
for money had and received.
33
3. AMN’s cross-appeal; no showing of error in the trial
court’s refusal to award prejudgment interest on $288,330.28 of
the award.
a. Overview.
The jury awarded AMN damages of $1,197,951.45 on its
14
claim for money had and received. The jury further found that
AMN was entitled to interest on its damages from and after May
15, 2012, the day AMN paid A-Mark $909,621.17 in settlement
proceeds pursuant to the PLA. The jury also determined that
AMN owed $410,251.62 to AMAG for the reasonable value of
services rendered.
In its post-trial motion, AMN asked the trial court to award
prejudgment interest on the entire $1,197,951.45 pursuant to
15
Civil Code section 3287, subdivision (a). AMN argued that
“[b]eyond any doubt, [its] money had and received cause of action
constituted a liquidated claim” based in contract. As a fallback
14
Apart from restoring to AMN the $909,621.17 that AMN
had paid to A-Mark on May 15, 2012, pursuant to the PLA, the
jury awarded AMN an additional $288,330.28 on its claim for
money had and received. According to AMN, $215,134.83 of that
sum was based on trial testimony that Markoff had increased
Ostrow’s contingency fee interest to avoid PMF’s obligation to
advance costs. AMN conceded it was unclear “how the jury came
up with the remaining $73,195.45 out of the $1,197,951.45 in
damages.”
15
Civil Code section 3287 states in relevant part at
subdivision (a): “A person who is entitled to recover damages
certain, or capable of being made certain by calculation, and the
right to recover which is vested in the person upon a particular
day, is entitled also to recover interest thereon from that day[.]”
34
position, AMN asserted that if the trial court found that any
portion of the amount over $909,621.17 was not certain or
capable of being made certain by calculation, it should award
AMN prejudgment interest either pursuant to Civil Code section
16 17
3287, subdivision (b), or Civil Code section 3288.
The trial court, relying on Civil Code section 3287,
subdivision (a), reasoned that only the amount AMN paid to A-
Mark under the PLA—$909,621.17— was capable of being made
certain by calculation as of May 15, 2012. The trial court ruled
the remaining amount of $288,330.28 was incapable of being
made certain as of a specific date, so it declined to award any
prejudgment interest on that segment of the jury’s award.
Accordingly, after subtracting A-Mark’s $410,251.62 offset that
was awarded by the jury, the trial court concluded that AMN was
entitled to prejudgment interest on $499,369.55. The trial court
calculated the amount of prejudgment interest at $226,877.95,
which it added to the judgment.
b. No merit to AMN’s argument that it was entitled to
prejudgment interest on an additional $288,330.28 of the award
pursuant to Civil Code section 3288.
16
Civil Code section 3287 states at subdivision (b): “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.”
17
Civil Code section 3288 states: “In an action for the breach
of an obligation not arising from contract, and in every case of
oppression, fraud, or malice, interest may be given, in the
discretion of the jury.”
35
AMN’s sole argument on cross-appeal is that the trial court
erred in denying prejudgment interest on $288,330.28 of the
damage award, which represents the difference between the total
damage award and the portion of the award attributable to the
amount that AMN had paid to A-Mark pursuant to the PLA.
AMN contends that Civil Code section 3288 is controlling, and
therefore the judgment must be modified to increase the amount
of prejudgment interest.
The contention is meritless because Civil Code section 3288
is inapplicable. In Greater Westchester Homeowners Assn. v. City
of Los Angeles (1979) 26 Cal.3d 86, at page 102, the Supreme
Court explained: “Section 3288 recites, ‘In an action for the
breach of an obligation not arising from contract, and in every
case of oppression, fraud, or malice, interest may be given, in the
discretion of the jury.’ We have recently affirmed that, unlike
Civil Code section 3287, which relates to liquidated and
contractual claims, section 3288 permits discretionary
prejudgment interest for unliquidated tort claims. (Bullis v.
Security Pac. Nat. Bank (1978) 21 Cal.3d 801, 814-815.)” (Italics
added.)
Here, the jury did not award any damages to AMN on its
tort claims. The entire $1,197,951.45 in damages was awarded in
connection with AMN’s claim for money had and received. “[A]n
action for money had and received is ex contractu in nature, being
founded upon a promise implied in law.” (Haigler v. Donnelly
(1941) 18 Cal.2d 674, 680.) Thus, because a claim for money had
and received does not sound in tort, Civil Code section 3288 is
inapplicable.
36
DISPOSITION
The judgment is affirmed. The parties shall bear their
respective costs on appeal.
NOT TO BE PUBLISHED
*
KALRA, J.
We concur:
EDMON, P. J.
EGERTON, J.
*
Judge of the Los Angeles County Superior Court, assigned
by the Chief Justice pursuant to article VI, section 6 of the
California Constitution.
37