Levinson Arshonsky & Kurtz LLP v. Kim

Filed 5/29/19
CERTIFIED FOR PARTIAL PUBLICATION*
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
LEVINSON ARSHONSKY & B289308
KURTZ LLP,
(Los Angeles County
Plaintiff and Respondent, Super. Ct. No. LC106289)
v.
DAVID KIM,
Defendant and Appellant.
APPEAL from a judgment of the Superior Court of Los
Angeles County, Rupert A. Byrdsong, Judge. Dismissed.
Law Office of Robert S. Myong and Robert S. Myong for
Defendant and Appellant.
Levinson, Arshonsky & Kurtz, Robert A. Levinson, and
David Krol for Plaintiff and Respondent.
_________________________
* Pursuant to California Rules of Court, rules 8.1100 and
8.1110, this opinion is certified for publication with the exception
of parts II.B and II.C.
David Kim appeals following the denial of his petition to
compel arbitration of a fee dispute with his former attorneys
pursuant to the Mandatory Fee Arbitration Act (MFAA),
Business and Professions Code section 6200, et seq. As described
more fully below, the MFAA permits a client 30 days in which to
request nonbinding arbitration by a local bar association of any
dispute involving attorneys’ fees or costs before a collection
related matter can proceed. The trial court found Kim waived his
right to arbitration under the MFAA by failing to request
arbitration within the required 30 days. Because the denial of a
petition to compel a MFAA arbitration is not an appealable order,
we lack jurisdiction to consider Kim’s appeal.
I. BACKGROUND
A. Framework of the MFAA
The MFAA establishes a system of arbitration before local
bar associations in attorney fee disputes to provide “an effective
inexpensive remedy to a client which does not necessitate the
hiring of a second attorney.” (Manatt, Phelps, Rothenberg &
Tunney v. Lawrence (1984) 151 Cal.App.3d 1165, 1174.) Under
the MFAA, arbitration is optional for the client, but mandatory
for attorneys if properly initiated by the client. (Aguilar v. Lerner
(2004) 32 Cal.4th 974, 984 (Aguilar).) Attorneys are required to
notify any client disputing legal fees or costs of the client’s right
to arbitration by sending a written notice prior to, or at, the time
the lawyer begins any collection related proceeding against the
client. (Bus. & Prof. Code, § 6201, subd. (a).) “[T]he client’s
failure to request arbitration within 30 days after receipt of
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notice from the attorney shall be deemed a waiver of the client’s
right to arbitration . . . .” (Ibid.)1
If the client timely petitions for arbitration with the local
bar association, any action filed by the attorney is automatically
stayed. (Bus. & Prof. Code, § 6201, subd. (c).) “The stay may be
vacated in whole or in part, after a hearing duly noticed by any
party or the court, if and to the extent the court finds that the
matter is not appropriate for arbitration under the provisions of
this article.” (Ibid.)
The arbitral decision in a MFAA proceeding is not binding.
(Bus. & Prof. Code, §§ 6203, subd. (b), 6204.) If, after the
arbitration, either party is not satisfied with the result, “the
MFAA has played its role, and the matter . . . continue[s] without
it.” (Aguilar, supra, 32 Cal.4th at p. 991 (conc. opn. of Chin, J.).)
A party has 30 days in which to seek a trial after arbitration, or
the arbitration award becomes final. (Bus. & Prof. Code, § 6203,
subd. (b).) “This trial after arbitration is conducted de novo,
essentially as if no arbitration had occurred.” (Maynard v.
Brandon (2005) 36 Cal.4th 364, 373 (Maynard).)
B. Factual Background
The law firm Levinson, Arshonsky & Kurtz LLP (LAK) and
Kim signed a written engagement letter in 2014. The letter
stated Kim retained LAK for employment law advice, and that if
he engaged the firm to perform additional services, the existing
agreement would govern payment for those additional services
1 There are other ways clients can waive their rights to
arbitration under the MFAA, but failure to petition for
arbitration within 30 days of notice is the only one at issue in this
appeal.
3
unless the firm asked Kim to sign a new engagement letter. LAK
alleges that in 2016, after several years of providing legal
services, LAK began representing several of Kim’s restaurant-
related entities in employment litigation matters. These entities
included Gen Alhambra, LLC, Gen Torrance, LLC, Golden Den
Corp., RD Restaurant Group, Inc., Den 103, LP, Den 105, LP, and
Den 107, LP.
Some months later, Kim and LAK had a disagreement over
LAK’s request to obtain new retainer agreements and fee
deposits for the litigation representations. Following Kim’s
refusal to sign new engagement agreements or pay the requested
retainers, LAK withdrew from representing Kim and his entities.
After its withdrawal, LAK claimed Kim owed the firm
$124,630.57 for work performed prior to the withdrawal. This
included $11,662.59 on the original employment law advice
engagement, and $112,967.98 in five different litigation matters
involving Kim, Gen Torrance LLC, Gen Alhambra LLC, and
Golden Den Corp.2 Kim asserted the services for which LAK was
seeking payment were unauthorized, and refused to pay.
On August 18, 2017, pursuant to the MFAA, LAK provided
notices for each of the disputed billing matters to Kim and
attorney Robert Myong (who was representing Kim), advising of
Kim’s right to arbitrate the fee disputes through a local bar
association. The notices stated, in underlined font, that Kim’s
2 LAK alleged it was owed $19,756.06 for Almedia et al. v.
Gen Torrance, LLC, $7,515.10 for Do v. Gen Alhambra et al.,
$11,935.12 for An et al. v. Gen Alhambra, LLC, et al., $65,164.72
for Nunez et al. v. Golden Den Corp., and $8,596.98 for Nunez et
al. v. Gen Alhambra, LLC.
4
failure to request arbitration within 30 days of receipt of the
notice would constitute a waiver of his right to arbitrate. Myong
and Kim received the notices on August 21 and 22, 2017,
respectively.
On September 19, 2017 (27 days after Kim received notice),
Myong filed a petition with the Los Angeles County Bar
Association (LACBA) for fee arbitration on behalf of “Gen
Restaurant Management Inc.” The petition itself is not in the
record. Instead, Kim provided a letter sent to Myong from
LACBA acknowledging receipt of the arbitration petition. This
letter lists “Gen Restaurant Management Inc.” as the only
petitioner—it does not mention Kim or any of the entities for
whom LAK allegedly performed litigation work.3 Nor does the
letter specify the particular disputed claim(s) for which
arbitration was sought.
C. Procedural Background
On September 28, 2017, LAK filed a complaint in Los
Angeles Superior Court for breach of written contract and
common counts (services rendered and account stated), naming
Kim as the sole defendant. LAK asserted it had not been served
with a request for arbitration on behalf of Kim, nor had it
received payment to satisfy Kim’s outstanding balance. The
complaint sought $124,630.57 in damages, plus prejudgment
interest.
3 The confirmation letter from LACBA is addressed to
“Robert Myong, Gen Restaurant Management LLC,” but lists the
party petitioning for arbitration as “Gen Restaurant
Management Inc.” Kim asserts the correct name is “Gen
Restaurant Management, LLC.”
5
On October 3, 2017, Myong asked LAK to dismiss the
complaint because Kim had filed a demand for arbitration with
LACBA which was still pending. LAK responded that “Gen
Restaurant Management LLC” had filed the petition for fee
arbitration, but the firm’s retainer agreement was with Kim
individually and LAK had never represented Gen Restaurant
Management LLC. LAK asserted that because Kim did not file a
petition for fee arbitration within the 30 days permitted by law,
he had waived his right to arbitrate and the firm intended to
proceed with the lawsuit. LAK indicated the firm would agree to
arbitration only if Kim agreed the arbitration would be binding.
Kim refused, and indicated he would move to compel arbitration.
On October 27, 2017, Kim (through his counsel) filed a
petition for arbitration with LACBA on behalf of Gen Alhambra,
LLC, Gen Torrance, LLC, Golden Den Corp., RD Restaurant
Group, Inc., Den 103, LP, Den 105, LP, Den 107, LP, and David
Kim. LAK objected to the October 27, 2017 petition as untimely
under Business and Professions Code section 6201, subdivision
(a) as well as the LACBA rules governing MFAA arbitrations.
On November 3, 2017, Kim filed a petition in the Superior
Court to compel arbitration, which asked the court to dismiss
and/or stay LAK’s lawsuit pending arbitration before LACBA.
LAK opposed the petition, and filed its own motion to vacate the
automatic stay under Business and Professions Code section
6201, subdivision (c), so its lawsuit could proceed.
In arguing his petition for arbitration was timely, Kim
claimed both he and the pertinent entities filed a demand for
arbitration with LACBA on September 19, 2017. At the March 7,
2018 hearing before the trial court on the petition to compel
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arbitration, Kim’s counsel stated the online LACBA form only
provided space to list two client parties, but that Kim and all the
entities LAK represented were identified in documentation
submitted to LACBA along with the first petition. Kim’s counsel
claimed that after the first petition was filed, LACBA requested a
paper copy and the paper copy submitted by Kim in response to
that request was the October 27, 2017 petition. In addition to
failing to provide a copy of the original petition for arbitration
and any documents provided to LACBA along with it, Kim did
not provide the trial court any documentation regarding the
purported request from LACBA to submit a paper copy. The
responses from LACBA to the first and second petitions, which
are in the record, do not suggest that anyone other than Gen
Restaurant Management LLC was included in the original
arbitration request.
The trial court denied Kim’s petition to compel arbitration
and granted LAK’s motion to vacate the stay. The court rejected
Kim’s suggestion that he was listed on the initial arbitration
request, saying it “appears to be clear . . . the defendant, Kim, did
not timely submit the petition for arbitration based on the 30-day
deadline that was built into the [statute] and, therefore,
arbitration has been waived.” The court went on to say that
“defendant Kim tried to do a relation-back attempt and filed it
well beyond the 30-day deadline when the petition to arbitrate
was [due]—defendant Kim’s name was added in October when
the claim should have been made in September.”
Kim filed a timely notice of appeal from the order denying
his petition to compel arbitration. He did not seek review of the
order granting LAK’s motion to vacate the stay.
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II. DISCUSSION
A. This Court Lacks Jurisdiction to Consider
Kim’s Appeal
1. Code of Civil Procedure Section 1294(a)
“Appellate courts have jurisdiction over a direct appeal, like
the present one, only where there is an appealable order or
judgment.” (In re Marriage of Garcia (2017) 13 Cal.App.5th 1334,
1342.) Whether an order or judgment is appealable “is wholly
statutory.” (Dana Point Safe Harbor Collective v. Superior Court
(2010) 51 Cal.4th 1, 5.) Unless an order is expressly made
appealable by a statute, this court has no jurisdiction to consider
it. (Steen v. Fremont Cemetery Corp. (1992) 9 Cal.App.4th 1221,
1226.)
“The general list of appealable civil judgments and orders is
codified in [Code of Civil Procedure] section 904.1.” (Gastelum v.
Remax Internat., Inc. (2016) 244 Cal.App.4th 1016, 1021.)
Additional arbitration-related appealable orders are codified in
the California Arbitration Act (CAA), a “ ‘comprehensive
statutory scheme regarding private arbitration in this state.’ ”
(Aguilar, supra, 32 Cal.4th at p. 983.) Among other things, the
CAA provides that an aggrieved party may appeal from “[a]n
order dismissing or denying a petition to compel arbitration.”
(Code Civ. Proc., § 1294, subd. (a).) Kim argues we should read
this provision in the CAA to authorize his appeal under the
MFAA.
As we shall explain, the CAA and MFAA are located in
distinct parts of the California code. Each provides a different
arbitration framework governed by discrete procedural rules.
The CAA provision permitting appeal of a denial of a petition to
8
compel contractual arbitration (Code Civ. Proc., § 1294, subd.
(a)), does not apply to mandatory fee arbitration under the
Business and Professions Code, and does not authorize Kim’s
appeal.
2. The CAA and MFAA Are Separate
Statutory Regimes
The California Code contains several distinct statutory
schemes providing for arbitration, each with its own procedural
nuances. To mention just three, California law provides for
judicial arbitration of civil cases with limited amounts in
controversy (Code Civ. Proc., § 1141.10, et seq.), private
contractual arbitration under the CAA (Code Civ. Proc., § 1280,
et seq.), and arbitration of disputes concerning payment of
attorneys’ fees and costs under the MFAA (Bus. & Prof. Code,
§ 6200, et seq.).
Our Supreme Court has highlighted the need to consider
each statutory regime individually. For example, when
comparing judicial and contractual arbitration, it noted that “in
light of their mutual exclusiveness and independence, the judicial
arbitration law and the contractual arbitration law . . . differ the
one from the other in various features. [¶] [A]s to
commencement, contractual arbitration arises solely out of an
arbitration agreement, specifically, a written arbitration
agreement . . . whereas judicial arbitration may be imposed on
the parties . . . , whether or not they agree in writing or
otherwise.” (Mercury Ins. Group v. Superior Court (1998) 19
Cal.4th 332, 344.) Further differences include the mechanism for
selecting the arbitrator, the scope of the arbitrator’s powers, the
scope of discovery, the applicability of the rules of evidence, and
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whether the arbitrator’s decision is binding. (Id. at pp. 344―345.)
The Supreme Court has similarly highlighted the procedural and
policy differences between judicial arbitration and the MFAA,
holding relief under Code of Civil Procedure 473, subdivision (b)
is available in some circumstances for deadlines applicable to
judicial arbitration awards but not similar deadlines applicable to
MFAA awards. (Maynard, supra, 36 Cal.4th at pp. 378―382.)
The CAA and MFAA are likewise distinct. The procedures
for one cannot be substituted for, or added on to, the procedures
for the other absent legislative direction to do so. (E.g., Schatz v.
Allen Matkins Leck Gamble & Mallory LLP (2009) 45 Cal.4th
557, 562 [right to trial de novo in MFAA did not override
contractual agreement for binding arbitration pursuant to CAA]
(Schatz); Benjamin, Weill & Mazer v. Kors (2011) 195
Cal.App.4th 40, 46―47 [error to apply MFAA procedures to
arbitration subject to CAA].)
As is evident from their respective statutory text, the
MFAA and CAA “do not even govern the same subject. The
MFAA concerns nonbinding arbitration that the parties did not
agree to in advance, while the CAA concerns binding arbitration
agreed to in advance.” (Schatz, supra, 45 Cal.4th at 574; accord,
Rosenson v. Greenberg Glusker Fields Claman & Machtinger LLP
(2012) 203 Cal.App.4th 688, 693 [“The Legislature created the
MFAA as a separate and distinct arbitration scheme applicable to
disputes between clients and attorneys over legal fees, costs, or
both.”].) “ ‘The statutes [codifying the CAA] set forth procedures
for the enforcement of agreements to arbitrate ([Code Civ. Proc.,]
§§ 1281.2―1281.95), establish rules for the conduct of arbitration
proceedings except as the parties otherwise agree (id.,
§§1282―1284.2), describe the circumstances in which arbitrators’
10
awards may be judicially vacated, corrected, confirmed, and
enforced (id., §§ 1285―1288.8), and specify where, when, and how
court proceedings relating to arbitration matters shall occur (id.,
§§ 1290―1294.2).’ [Citation.] . . . [¶] By contrast, the MFAA
constitutes a separate and distinct arbitration scheme. . . . [¶] In
contrast to the CAA, which is governed by the Code of Civil
Procedure, the MFAA has its own rules and limitations, as set
forth in the Business and Professions Code. . . . [T]he MFAA ‘is a
closed system and the binding arbitration agreed to . . . is the
arbitration conducted by [a] local bar association under the
MFAA, not some other private alternative dispute resolution
provided by another forum.’ ” (Aguilar, supra, 32 Cal.4th at
pp. 983―984.)
To illustrate some pertinent differences between the CAA
and the MFAA, the right to contractual arbitration under the
CAA is not self-executing. A party to an agreement to arbitrate
may initially resort to an action at law. (Sargon Enterprises, Inc.
v. Browne George Ross LLP (2017) 15 Cal.App.5th 749, 767―768.)
The CAA accordingly provides for a litigant to petition to compel
arbitration (Code Civ. Proc., §§ 1281.2―1281.95) and for appeal of
the denial of such a petition (id., § 1294, subd. (a)). “The party
seeking resolution via contractual arbitration must also file a
motion in the action at law to stay it (§§ 1281.4, 1292.8); it will
not be stayed automatically.” (Brock v. Kaiser Foundation
Hospitals (1992) 10 Cal.App.4th 1790, 1796.) If such a stay
request is made, the court “shall . . . stay the action or proceeding
until an arbitration is had in accordance with the order to
arbitrate or until such earlier time as the court specifies.” (Code
Civ. Proc., § 1281.4)
11
In contrast, the MFAA does not provide procedures for a
petition to compel arbitration or to appeal the denial of any such
petition. Instead, the client has a unilateral right to compel
MFAA arbitration within 30 days of receiving notice of a
proceeding to recover fees and/or costs. Failure to give such
notice by the lawyer seeking fees is grounds to dismiss any court
complaint. (Bus. & Prof. Code, § 6201, subd. (a); see also Law
Offices of Dixon R. Howell v. Valley (2005) 129 Cal.App.4th 1076,
1090 [court has discretion to dismiss suit for payment of fees
where law firm fails to comply with Bus. & Prof. Code, § 6201,
subd. (a)].) To further enforce the client’s right to fee arbitration,
the MFAA provides any court or other action is automatically
stayed upon the filing of an appropriate request for arbitration,
with the stay to remain in force until the arbitration terminates.
(Id., subd. (c).) The stay cannot be vacated in whole or in part
until after a noticed hearing. (Ibid.) In other words, whereas a
party in a CAA proceeding must move to stay the parallel non-
arbitration proceeding, the MFAA adopts the reverse approach—
the parallel nonarbitration matter is automatically stayed, and
the party seeking to proceed outside arbitration must move to lift
the stay.
The CAA and MFAA do cross-reference one another
procedurally with regard to the confirmation, correction, or
vacatur of a MFAA arbitral award. The MFAA borrows the
CAA’s provisions for the confirmation of contractual arbitration
awards, stating a MFAA arbitral award concerning fees and costs
may be confirmed, corrected, or vacated “in the same manner as
provided in Chapter 4 (commencing with Section 1285) of Title 9
of Part 3 of the Code of Civil Procedure.” (Bus. & Prof. Code,
§ 6203, subd. (b).)
12
In light of this statutory cross-reference, it is unsurprising
the cases on which Kim relies to support his contention that the
CAA authorizes his appeal all concern petitions to confirm,
correct, or vacate a MFAA arbitration award, or cases involving
the CAA alone. (Fleur du Lac Estates Assn. v. Mansouri (2012)
205 Cal.App.4th 249 [dismissing appeal of order denying
reconsideration of fee and cost motion in CAA proceeding]; Law
Offices of David S. Karton v. Segreto (2009) 176 Cal.App.4th 1, 9
[petition to correct a MFAA award]; Perez v. Grajales (2008) 169
Cal.App.4th 580, 588 [petition to confirm a MFAA award]; Otay
River Constructors v. San Diego Expressway (2008) 158
Cal.App.4th 796 [discussing appealability of fees and costs in
connection with petition to compel contractual arbitration under
CAA]; Mid-Wilshire Associates v. O’Leary (1992) 7 Cal.App.4th
1450, 1453―1454 [motion to vacate a MFAA award]).) None
involves the type of order at issue here, or applies a provision of
the CAA absent the MFAA’s express reference to, or
incorporation of, that provision.
Given the distinct statutory regimes and purposes of the
CAA and the MFAA, the lack of authorization for this appeal in
the MFAA or any of the cases relied upon by Kim, and the
Supreme Court’s repeated admonition that we should refrain
from reading a provision from one statutory arbitration regime
into another, we hold that Code of Civil Procedure section 1294,
subsection (a) does not authorize the instant appeal. We
therefore lack jurisdiction to hear it.
13
B. We Decline to Treat the Appeal as a Writ
Petition
Kim requests that, should we determine the CAA does not
authorize his appeal, we exercise our discretion to characterize
the appeal as a petition for a writ of mandamus to compel the
trial court to order statutory arbitration pursuant to the MFAA.
We decline to do so.
We recognize that we have the power in appropriate cases
to treat an appeal as a petition for an extraordinary writ. (Olson
v. Cory (1983) 35 Cal.3d 390, 400―401.) This power is reserved,
however, for unusual and exigent circumstances. (Ibid.; Estate of
Weber (1991) 229 Cal.App.3d 22, 25.) No such unusual or exigent
circumstances exist here. The trial court’s denial of the petition
to compel fee arbitration is over 14 months old. (See In Re
Twighla T. (1992) 4 Cal.App.4th 799, 803 [16 months after order
being challenged “not a reasonable time for seeking extraordinary
relief”].) Nor did Kim request the trial court stay the litigation,
which has now been pending for approximately 21 months.
Moreover, a petition to treat a nonappealable order as a
writ should only be granted when the circumstances are
“ ‘ “ ‘compelling enough to indicate the propriety of a petition for
writ . . . in the first instance.’ ” ’ ” (Wells Properties v. Popkin
(1992) 9 Cal.App.4th 1053, 1055.) Putting aside the lack of
unusual or exigent circumstances, Kim has not established the
facts before the trial court compelled a grant of his petition to
compel arbitration, as substantial evidence supports the trial
court’s finding that Kim did not timely seek arbitration pursuant
to the MFAA, and therefore waived his rights to arbitration
pursuant to that statute.
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C. Sanctions Are Not Warranted, Nor Can LAK Be
Awarded Attorney Fees for Representing Itself
LAK argues Kim’s appeal was frivolous, and sanctions
should be imposed equivalent to the attorney fees incurred by
LAK in responding to the appeal. “[A]n appeal should be held to
be frivolous only when it is prosecuted for an improper motive—
to harass the respondent or delay the effect of an adverse
judgment—or when it indisputably has no merit—when any
reasonable attorney would agree that the appeal is totally and
completely without merit.” (In re Marriage of Flaherty (1982) 31
Cal.3d 637, 650.) This appeal does not indisputably lack merit.
Although we find a lack of jurisdiction to review the underlying
arguments, the issue appears to be one of first impression and
litigated in good faith. Nor did this appeal harass LAK or delay
the effect of an adverse judgment, because no such judgment yet
exists.
Equally important, LAK’s request for sanctions equivalent
to its fees violates the well-established principle that absent
specific circumstances not present here a law firm representing
itself is not entitled to attorney fees. (Trope v. Katz (1995) 11
Cal.4th 274, 292.) Nor can a law firm litigating in propria
persona “recover sanctions . . . in the form of an award of
attorney fees,” even if sanctions are warranted. (Musaelian v.
Adams (2009) 45 Cal.4th 512, 520.) These principles apply when
an attorney at the law firm is representing the firm in the
circumstances presently before us. (Witte v. Kaufman (2006) 141
Cal.App.4th 1201, 1211 [law firm suing in its own right and
appearing through one of its members comparable to sole
practitioner representing himself or herself].)
15
Self-represented attorneys are not entitled to such fees
because awarding fees to self-represented attorneys but not to
other self-represented litigants would suggest “ ‘the time and
opportunity an attorney gives up when he or she chooses to
litigate a case in propria persona are somehow [more] important
and worthy of compensation than those of other pro se litigants.’ ”
(Musaelian v. Adams, supra, 45 Cal.4th at p. 519.) “Such
disparate treatment between attorney and nonattorney litigants
would be viewed by the public as unfair, allowing only lawyer
litigants to qualify for fee awards.” (Ibid.) “ ‘ “The public
perception of fairness in the legal system” ’” therefore outweighs
a self-represented “ ‘ “lawyer litigant’s claim to an attorney fee
award.” ’” (Id. at pp. 519―520.)
III. DISPOSITION
The appeal is dismissed. The parties shall bear their own
costs on appeal.
CERTIFIED FOR PARTIAL PUBLICATION
WEINGART, J.*
We concur:
JOHNSON, Acting P. J. BENDIX, J.
*Judge of the Los Angeles Superior Court, assigned by the
Chief Justice pursuant to article VI, section 6 of the California
Constitution.
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