Fair v. Bakhtiari
195 Cal. App. 4th 1135
| Cal. Ct. App. | 2011Background
- Fair, an experienced business attorney, formed Stonesfair entities with Bakhtiari and provided extensive legal and business services through 1990–2000.
- Fair acted while representing Bakhtiari and the Stonesfair entities, creating an alleged conflict of interest and failing to disclose terms or obtain written consent under rule 3-300.
- The trial court found Fair violated rule 3-300 and breached Probate Code section 16004, creating a presumption of undue influence and voiding the agreements.
- Cross-complainants sought declaratory relief, rescission, and accounting, while Fair sought leave to amend for quantum meruit for reasonable value of services.
- The court denied Fair’s motion to amend, concluding that quantum meruit was unavailable because the entire business relationship and services were inseparable from voided, unenforceable transactions.
- On appeal, the judgment in favor of Bakhtiari and the Stonesfair entities was affirmed, confirming voiding of the agreements and denial of quantum meruit.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether denial of quantum meruit was proper | Fair argues damages not required and that some lawful services may be recovered. | Bakhtiari/Stonesfair contend rule 3-300 and 16004 breach tainted all services and voided the agreements. | Denial affirmed; breach voided all services and quantum meruit not recoverable. |
| Severability of the unlawful terms from lawful services | Some services could be severed and compensated under quantum meruit. | All services were integral to unenforceable transactions and not severable. | No severance; contracts and services inseparable from voided transactions. |
| Application of Huskinson and 16004 undue influence standard | Rule 3-300 violation could allow quantum meruit for lawful services. | Serious fiduciary breach precludes quantum meruit recovery; undue influence proven. | Court did not err; serious breach and absence of full disclosures foreclose quantum meruit. |
Key Cases Cited
- BGJ Associates v. Wilson, 113 Cal.App.4th 1217 (2003) (statutory complement of section 16004; presumption of breach when transaction adverse to client)
- Huskinson & Brown v. Wolf, 32 Cal.4th 453 (2004) (quantum meruit when fee arrangements unenforceable; distinction between rule violations and statutory prohibitions)
- Shopoff & Cavallo LLP v. Hyon, 167 Cal.App.4th 1489 (2008) (limits on quantum meruit where underlying unlawful conduct; severance principles applied to related contexts)
- Fletcher v. Davis, 33 Cal.4th 61 (2004) (contingent lien and rule 3-300 implications; client consent requirements)
- Goldstein v. Lees, 46 Cal.App.3d 614 (1975) (no recovery where representation conflicting with fiduciary duties; ethics as a bar to fees)
- Cal Pak Delivery, Inc. v. United Parcel Service, Inc., 52 Cal.App.4th 1 (1997) (fees may be denied when ethical rules conflict with professional responsibility)
- Pringle v. La Chapelle, 73 Cal.App.4th 1000 (1999) (discipline and ethical rules can bar fee recovery; respect for professional duties)