69 Cal.App.5th 630
Cal. Ct. App.2021Background
- Missakian, an experienced attorney, accepted an oral employment offer from Amusement (through founder Alevy) to serve as in‑house general counsel; compensation included a $325,000 salary, a monthly litigation bonus, and a 10% contingent bonus on recovery in pending Stern litigation.
- The parties exchanged draft written agreements but never signed one; disputes over language (notably whether the 10% applied to gross recovery or recovery net of losses/expenses) arose during employment.
- Missakian worked from December 2010 to August 2014, then left; Stern litigation later settled for $26 million and Missakian received no contingent or monthly bonuses.
- Missakian sued Amusement and Alevy for breach of oral contract and promissory fraud; a jury found breach against Amusement (awarding ~$2.525M) and—after corrected special verdict forms—found promissory fraud against Amusement (but not Alevy), awarding compensatory and punitive damages.
- The trial court granted JNOV for Amusement on promissory fraud (crediting the jury’s finding that Alevy did not make a false promise) but denied other post‑trial relief; appeals followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does B&P Code §6147 (writing requirement for contingency fee agreements) apply to an in‑house attorney’s contingent compensation? | Missakian: in‑house counsel receive wages, not “fees,” so §6147 does not apply. | Amusement: the 10% bonus is a contingency fee and §6147 governs; oral contingency agreements are voidable. | Court: §6147 applies to an attorney who contracts to represent a client on a contingency basis, including in‑house counsel acting as litigators; the oral contingency agreement is voidable. |
| Can Missakian enforce the Oral Contract’s contingent bonus? | Missakian: contract enforceable despite being oral. | Amusement: oral contingency term violates §6147 and is unenforceable. | Court: the contingent bonus falls within §6147; the oral contingency term is unenforceable and the breach‑of‑oral‑contract judgment must be reversed. |
| Was JNOV proper on the promissory‑fraud verdict given the jury’s special verdicts? | Missakian: JNOV was improper because the jury rendered inconsistent special verdicts; inconsistent findings require a new trial. | Amusement (and trial court): JNOV proper because jury found Alevy (the sole promisor) did not intend to deceive, so no fraud liability for the company. | Court: jury’s special verdicts are materially inconsistent (Amusement liable for fraud but Alevy not); court cannot pick between them—JNOV was erroneous; remand for a new trial on fraud against all parties. |
| Is Alevy entitled to contractual attorney fees under Civ. Code §1717? | — | Alevy: prevailing party on the only claim against him, so entitled to fees; trial court denied fees. | Court: appeal of fee denial is moot because judgment reversed and case remanded; fee issue not decided on merits. |
Key Cases Cited
- PLCM Group, Inc. v. Drexler, 22 Cal.4th 1084 (2000) (in‑house counsel performing legal representation are equivalent to retained counsel for many purposes)
- Fracasse v. Brent, 6 Cal.3d 784 (1972) (discharge of attorney with contingency contract gives quantum meruit, not contractual recovery)
- Chodos v. Borman, 227 Cal.App.4th 76 (2014) (§6147 and related statutes protect clients by requiring signed written fee agreements)
- Arnall v. Superior Court, 190 Cal.App.4th 360 (2010) (definition and scope of contingency fee arrangements)
- Ketchum v. Moses, 24 Cal.4th 1122 (2001) (role of contingent risk in evaluating fee awards)
- Huskinson & Brown v. Wolf, 32 Cal.4th 453 (2004) (attorney entitled to reasonable fee when statutory formalities void a contingency agreement)
- Lazar v. Superior Court, 12 Cal.4th 631 (1996) (elements of promissory fraud)
- Riverisland Cold Storage, Inc. v. Fresno‑Madera Production Credit Assn., 55 Cal.4th 1169 (2013) (promissory‑fraud intent requires proof that promisor lacked intent to perform when promise made)
- General Dynamics Corp. v. Superior Court, 7 Cal.4th 1164 (1994) (discussion of in‑house counsel’s role and limits on suits that might harm attorney‑client relationship)
- Gutierrez v. G & M Oil Co., Inc., 184 Cal.App.4th 551 (2010) (in‑house counsel perform quintessential legal services; statutes applying to attorneys may cover in‑house counsel)