Shtofman v. Kyle CA2/2 ( 2015 )

Filed 12/15/15 Shtofman v. Kyle CA2/2
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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 TWO
ROBERT SCOTT SHTOFMAN, B250087
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. BC462283)
v.
DAVID KYLE,
Defendant and Appellant.
APPEAL from a judgment of the Superior Court of Los Angeles County.
Frederick Carl Shaller, Judge. Affirmed.
Lewis Brisbois Bisgaard & Smith, Roy G. Weatherup, Bartley L. Becker and
Caroline E. Chan for Defendant and Appellant.
Robert Scott Shtofman, in pro. per.; and Law Office of Robert Scott Shtofman for
Plaintiff and Respondent.
_________________________
This case involves two attorneys, defendant and appellant David Kyle (Kyle) and
plaintiff and respondent Robert Scott Shtofman (Shtofman), who had joint venture
agreements to share attorney fees. After Kyle failed to pay Shtofman certain fees,
Shtofman sued him alleging several causes of action, including breach of contract and
fraud. A jury found in favor of Shtofman and imposed punitive damages against Kyle.
Kyle now appeals. He contends that certain retainer agreements he and Shtofman had
with their clients are unenforceable under Rule 2-200 of the California State Bar Rules of
Professional Conduct (rule 2-200) and that there is insufficient evidence to support the
jury’s verdicts. We affirm on substantive and procedural grounds.
FACTUAL AND PROCEDURAL BACKGROUND
The Agreements
Between 2002 and 2009, Kyle and Shtofman entered into a series of oral joint
venture agreements, in which they agreed to work together on various groups of legal
cases and to share equally attorney fees and costs. In 2007 and 2008, they entered into
attorney-client retainer agreements with four different clients (the retainer agreements) in
what the parties call the Lutheran clergy sexual abuse cases (the clergy abuse cases). The
retainer agreements were drafted and signed only by Kyle, but name both Kyle and
Shtofman as “attorney,” and provide that “attorney” would receive 40 percent of any
recovery.
In January 2009, Kyle and Shtofman entered into an agreement with attorney Paul
Kiesel (Kiesel) regarding the clergy abuse cases. Shtofman testified that the terms of the
agreement were that he and Kyle would receive 50 percent of attorney fees from the
clergy abuse cases.
At a lunch meeting at Philippe’s Restaurant on January 11, 2011, Shtofman asked
Kyle about the status of the clergy abuse cases. Kyle responded that it was “none of
[Shtofman’s] business.” In fact, Kyle knew that the cases had settled, and he admitted at
trial that he did not tell Shtofman about the settlement. The next day, Shtofman checked
the Web site for the Los Angeles Superior Court and learned that the cases had settled
and been dismissed on November 30, 2010. When Shtofman called Kyle about the
2
settlement, Kyle again said it was none of Shtofman’s business. After being pressed,
Kyle disclosed that the cases had settled for $1.8 million.
The Check
On March 24, 2011, Kiesel issued a check payable to “Law Offices of David Kyle
and Robert Shtofman Client Trust Fund” in the amount of $222,800. Kyle had
previously told Kiesel not to put Shtofman’s name on the check.
On March 29, 2011, Kyle and Shtofman went to a Bank of America branch to
deposit the check. They told the banker they needed an account that required both of
their signatures to make a deposit or withdrawal. The teller filled out forms, including a
“Sole Proprietorship Authorization—Opening and Maintaining Deposit Accounts and
Services,” on which Shtofman handwrote twice that two signatures were needed for all
deposits and withdrawals. He and Kyle added their initials to one of the interlineations.
On April 4, 2011, Kyle and Shtofman returned to the bank and received a copy of
the deposit receipt showing the check had been deposited. The bank manager testified
that later that same day, Kyle returned alone to the bank and she gave him the check
because “he wanted it back.”
On April 7, 2011, Kyle and Shtofman executed “The Limited Liability Partnership
Agreement of DKRS, LLP,” which indicated that the parties disputed ownership of the
check and that monies from the check could not be maintained in either of their
individual names. They took this agreement to the bank. Nevertheless, on April 12,
2011, Kyle deposited the check into his own Bank of America account. Kyle admitted at
trial that he did not tell Shtofman about doing so. On May 10, 2011, Kyle left a
voicemail for Shtofman telling him “The money is safe. Don’t worry about it.” This
message was played for the jury. By July 2011, there was no money left in the account.
3
The Trial Court Proceedings
Shtofman filed a second amended complaint (SAC) against Kyle, alleging causes
of action for conversion, breach of fiduciary duty, fraud, breach of contract, and quantum
meruit.1 Kyle filed an answer to the SAC.
The case proceeded to a three-week jury trial. The jury returned special verdicts
in favor of Shtofman, awarding him the following damages: $111,400 on his breach of
contract claim; $180,000 on his fraud claim; $111,400 on his quantum meruit claim;
$111,400 plus future economic damages of $6,000 on his breach of fiduciary duty claim;
$111,400 plus noneconomic damages of $6,000 on his conversion claim, and $14,300 in
punitive damages.
Kyle filed motions for a new trial and for judgment notwithstanding the verdict,
which the trial court denied in an 18-page written ruling. Kyle filed this appeal.
DISCUSSION
I. Kyle is Equitably Estopped from Challenging Fee-Splitting Agreements
Kyle begins his legal argument by stating: “It [is] undisputed that Mr. Shtofman
failed to present any evidence that any retainer agreements provided full written
disclosure of the division of fees and of the terms of the division. He cannot enforce a
fee splitting agreement with Mr. Kyle.”
Kyle relies on rule 2-200, which provides: “(A) A member shall not divide a fee
for legal services with a lawyer who is not a partner of, associate of, or shareholder with
the member unless: [¶] (1) The client has consented in writing thereto after a full
disclosure has been made in writing that a division of fees will be made and the terms of
such division; and [¶] (2) The total fee charged by all lawyers is not increased solely by
reason of the provision for division of fees and is not unconscionable as that term is
defined in rule 4-200.”
Kyle argues the retainer agreements do not comply with rule 2-200 because they
fail to disclose in writing how the attorney fees will be divided between him and
1
Shtofman also sued Bank of America, N.A., which is not a party to this appeal.
Shtofman’s coplaintiff, Richard M. Chaskin, is also not a party on appeal.
4
Shtofman, and thus are unenforceable. Because the retainer agreements are
unenforceable, he continues, Shtofman is not entitled to any attorney fees under the
parties’ joint venture agreements to split fees. We agree with Shtofman that Kyle is
equitably estopped from raising this issue.
First, Kyle himself drafted the retainer agreements he now claims are
unenforceable and pursuant to which he tried to keep the entirety of attorney fees to be
split with Shtofman. “[T]he offending attorney is equitably estopped from wielding
rule 2-200 as a sword to obtain unjust enrichment.” (Barnes, Crosby, Fitzgerald &
Zeman, LLP v. Ringler (2012) 212 Cal. App. 4th 172, 186.)
Second, Kyle raised this defense for the first time in his posttrial motions. While
he asserts in his opening brief that the issue is “a straightforward question of law,” he is
wrong. Had Kyle timely raised the issue before or during trial, Shtofman would have
been able to present more developed evidence of the circumstances surrounding the
retainer agreements. For example, why did only Kyle sign the retainer agreements?
What did Kyle tell Shtofman about the retainer agreements? Did Shtofman even know
what the retainer agreements said? Did Shtofman ever see or ask to see the retainer
agreements before the clients signed them? If not, why not?
Third, along the same vein, the evidence is unclear regarding the agreement
between Kiesel, Kyle and Shtofman as to attorney fees. Kyle suggests this agreement is
irrelevant, but it was pursuant to this agreement that the amount of attorney fees was
calculated and paid. As the trial court noted in its 18-page ruling denying Kyle’s posttrial
motions, Kiesel never testified, and the evidence was unclear “as to whether Kiesel paid
the money for services rendered pursuant to a fee split agreement, joint venture
agreement, quantum meruit, or another basis or agreement. There is no evidence as to
whether Kiesel obtained or failed to obtain authorization from his clients as to the
payment to Shtofman and Kyle. The court lacks sufficient evidence from which the court
could deduce that whatever agreement existed as between Kiesel on one hand and
Shtofman and Kyle on the other complied or did not comply with Rule 2-200.”
5
Accordingly, under the circumstances here, Kyle is equitably estopped from
raising the issue that the retainer agreements are unenforceable under rule 2-200.
II. Kyle Has Forfeited His Substantial Evidence Challenge
Kyle next argues that the evidence is insufficient to support the jury’s verdicts in
favor of Shtofman on his causes of action for quantum meruit, breach of contract, fraud,
breach of fiduciary duty and conversion.
Kyle does not set forth our standard of review, which is: “‘When a finding of fact
is attacked on the ground that there is not any substantial evidence to sustain it, the power
of an appellate court begins and ends with the determination as to whether there is any
substantial evidence contradicted or uncontradicted which will support the finding of
fact.’” (Foreman & Clark Corp. v. Fallon (1971) 3 Cal. 3d 875, 881.) “If this
‘substantial’ evidence is present, no matter how slight it may appear in comparison with
the contradictory evidence, the judgment must be upheld. As a general rule, therefore,
we will look only at the evidence and reasonable inferences supporting the successful
party, and disregard the contrary showing.” (Howard v. Owens Corning (1999) 72
Cal. App. 4th 621, 631.)
When an appellant challenges the sufficiency of the evidence, the opening brief
must set forth “all the material evidence on the point” and not merely state facts favorable
to the appellant. (Stewart v. Union Carbide Corp. (2010) 190 Cal. App. 4th 23, 34.) An
appellant fails to meet this requirement when it “cites the evidence in its favor, points out
the ways in which (it contends) it controverted or impeached [the other party’s] evidence,
and interprets the evidence in the light most favorable to itself.” (Id. at p. 34.) An
appellant must present a “fair summary” of all the evidence and “‘cannot shift this burden
onto respondent,’” nor can it require the reviewing court to “‘undertake an independent
examination of the record.’” (Huong Que, Inc. v. Luu (2007) 150 Cal. App. 4th 400, 409–
410.) When an appellant fails to set forth all of the material evidence, the claim of
insufficient evidence is waived or forfeited. (Mendoza v. City of West Covina (2012) 206
Cal. App. 4th 702, 713–714; Arechiga v. Dolores Press, Inc. (2011) 192 Cal. App. 4th 567,
571–572; Clark v. Superior Court (2011) 196 Cal. App. 4th 37, 52–53.)
6
We find that Kyle has forfeited his substantial evidence challenge because he did
not present a fair summary of all of the material evidence. The statement of facts we set
forth above is largely taken from Shtofman’s respondent’s brief and our own review of
the record, rather than from Kyle’s opening brief. While Kyle does cite to some evidence
favorable to Shtofman, his opening brief largely presents an incomplete, one-sided, and
confusing statement of the evidence. Kyle inexplicably spends more than seven pages of
his factual background citing to the allegations of the SAC. In his discussion of the trial,
Kyle cites only to his and Shtofman’s testimony, and presents the testimony most
favorable to himself. Kyle’s opening brief omits key pieces of evidence, including
testimony from the bank manager, the voicemail he left for Shtofman stating the money
was safe, the meeting at Philippe’s Restaurant in which he failed to disclose the
settlement of the clergy abuse cases, and that he told Kiesel not to put Shtofman’s name
on the check. Kyle’s factual background essentially supports his theory of the case—that
Shtofman failed to perform legal work as required by the parties’ joint venture
agreements.
We find that Kyle also forfeited his substantial evidence challenge because in his
legal discussion of why each cause of action is not supported by substantial evidence, his
assertions are merely conclusory,2 he does not cite to the record, and he repeatedly states
that Shtofman did not present substantial evidence of the causes of action, thereby
improperly shifting his appellate burden to Shtofman and ignoring the evidence Shtofman
did present. It is well established that an appellant bears an affirmative burden of
demonstrating error in the trial court. (Denham v. Superior Court (1970) 2 Cal. 3d 557,
564.) Kyle has failed to do so.
2
For example: “Mr. Shtofman’s work cannot be worth the amount awarded by the
jury”; “Apparently the jury did not find there was substantial evidence to support any
other basis for the breach of contract claim”; “Mr. Shtofman’s fraud claim [is] based
upon Mr. Kiesel’s representation as to the terms of the division of fees between his firm
and the others, not Mr. Kyle’s representation”; “Mr. Kyle breached no fiduciary duties
owed to Mr. Shtofman”; “Regardless of Mr. Kyle’s actions, he did not cause
Mr. Shtofman to incur any damages for conversion.”
7
DISPOSITION
The judgment is affirmed. Shtofman is entitled to his costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
__________________________, J.
ASHMANN-GERST
We concur:
_____________________________, P. J.
BOREN
____________________________, J.
HOFFSTADT
8