Case Number: BS173756 Hearing Date: August 08, 2018 Dept: 74

BS173756 Jeffer Mangels Butler & Mitchell, LLP v. Ultimate Brand Management, LLC, et al.

Petition to Compel Binding Arbitration

TENTATIVE RULING: The petition is granted as to respondents Ultimate Brand Management, LLC.,and 4 What It’s Worth, Inc. only.

Respondents’ Contentions

The entire agreement is the retainer agreement, not just the arbitration provision. Respondents argue that the retainer agreements with Ultimate Brand and Halpern are voidable because of failure to comply with the requirements of Business & Professions Code section 6148. They point to two violations of the statute; the failure to provide a written copy of the signed agreement to them at the time the agreement was signed and the waiver of subdivision (b) without citing verbatim the full code section. Failure to comply makes the agreement voidable, and respondents have chosen to void the agreements. Therefore, the arbitration provision is unenforceable.

Ultimate Brand Management, LLC

Ultimate Brand is a corporation, an LLC. Laws applicable to corporations are applicable to LLCs. (PacLink Communications Intern., Inc. v. Superior Court (2001) 90 Cal. App. 4th 958, 963.) Section 6148 does not apply.

Ultimate Brand argues that it should not be ordered to arbitration as it has filed a case against Michael Belch, the expert witness retained by petitioner in Ultimate’s lawsuit, and that proceeding with the arbitration may result in inconsistent determinations. Ultimate Brands has also asserted claims other attorneys in the litigation, who are not signatories to the arbitration agreement.

These arguments are not persuasive. The actions of an expert witness in litigation are separate from the actions of the attorneys in that litigation. Ultimate Brands has not identified the factual or legal issues could have inconsistent results. As to the attorney defendants, the proposed complaint submitted by Ultimate in support of the motion does not differentiate between the individual attorney defendants and respondent as a defendant. If they worked for respondent at the time of the litigation, they would be covered by the arbitration agreement as well.

The petition is granted as to Ultimate Brands.

4 What It’s Worth, Inc.

This is also a corporation, and section 6148 does not apply. 4 What It’s Worth made no argument that that any other action was pending which would prevent arbitration.

The motion is granted.

Alden J. Halpern

Halpern is an individual, and section 6148 does apply.

Halpern relies on Duffens v. Valenti (2008) 161 Cal.App.4th 434 for his argument that the agreement is voidable, he chose to void it, and the arbitration provision is unenforceable. In Duffens, plaintiffs sued over dating service contracts they had entered into with defendant. They opposed defendant’s motion to compel arbitration on the grounds that the contracts were void as not including language required by the statutes, and the arbitration provision in a void contract could not be enforced. There was a statutory scheme covering dating service contracts, and to be valid a dating service contract had to comply with the requirements of the statutes.

There are similarities to Duffens. There is a statutory scheme which governs attorney retainer agreements, and failure to comply renders the agreement voidable. However, in Duffens there was language which was required to appear in the contract which did not appear, and the language which was in the contract was directly contradictory to the required language.

The waiver of section 6148, subdivision (b) is in violation of the statute, given a common sense interpretation:

All bills rendered by an attorney to a client shall clearly state the basis thereof. Bills for the fee portion of the bill shall include the amount, rate, basis for calculation, or other method of determination of the attorney’s fees and costs. Bills for the cost and expense portion of the bill shall clearly identify the costs and expenses incurred and the amount of the costs and expenses. Upon request by the client, the attorney shall provide a bill to the client no later than 10 days following the request unless the attorney has provided a bill to the client within 31 days prior to the request, in which case the attorney may provide a bill to the client no later than 31 days following the date the most recent bill was provided. The client is entitled to make similar requests at intervals of no less than 30 days following the initial request. In providing responses to client requests for billing information, the attorney may use billing data that is currently effective on the date of the request, or, if any fees or costs to that date cannot be accurately determined, they shall be described and estimated.

The agreement provides only the first three sentences of the subdivision. The portion which identifies the client’s right to request bills and the attorney’s response are not included in the agreement, although they are also waived under the language of the agreement. It is a violation of the statute to have the client waive a part of the code section which is not reprinted in the agreement.

Petitioner also failed to establish that a copy of the retainer agreement, signed by petitioner and Halpern, was provided to Halpern at the time the agreement was signed. Morgan provides his declaration that he an employee of petitioner, and that at the time the agreement was signed it is routed to his department, which prepares a letter which he signs. The letter is sent to the client with a copy of the executed agreement, and a copy of the letter is filed. The copy may be filed before or after Morgan signed it. There was an unsigned copy of the cover letter for Halpern.

Soladay submits his declaration that he is CFO of Ultimate Brand and 4 What It’s Worth and handles Halpern’s personal financial dealings. He handled communications with petitioner. The letter in Morgan’s file was address to Soladay. He does not recall receiving the letter. It would have been put in Halpern’s files. The file did not contain either the cover letter or the retainer agreement.

If the letter was put into petitioner’s files before it was signed, it was necessarily put into the file before it was mailed. Petitioner has no evidence other than normal practice that the letter and retainer agreement were actually mailed. The absence of the letter from Halpern’s files shows that it was not received. The unsigned file copy and absence from Halpern’s files leads to an interference that it was not mailed.

The petition is denied as to Halpern.

Conclusion

Ultimate Brands and 4 What It’s Worth are ordered to arbitration. The arbitration provision does not state what arbitration service is to be used. The parties are ordered to meet and confer regarding the choice of arbitrator. Should the parties be unable to agree on an arbitrator, they shall submit a joint list of proposed arbitrators by August 22, 2018 and the court will select an arbitrator as stated in Code of Civil Procedure section 1281.6.