Metropolitan News-Enterprise


Monday, July 16, 2007


Page 1


Partial Publication of Opinion in Fee Dispute Ordered


By a MetNews Staff Writer


A law firm’s failure to keep time records for work done on a contingency-fee case did not bar it from offering testimony in a fee dispute six years later as to the estimated number of hours it had spent, the Court of Appeal for this district has ruled.

In an opinion filed June 18 and ordered partially published on Friday, Div. Seven upheld a fee award to the local firm of Mardirossian & Associates in connection with its representation of entertainment manager Seth Ersoff.

The firm sued Ersoff in 2002 seeking reasonable compensation for work it performed on a 1998 matter involving his rights to Tae Bo infomercial profits.

Ersoff, a law school graduate, previously managed the careers of physical trainer Billy Blanks, who created the Tae Bo exercise program, and former boxing world champion Sugar Ray Leonard.

In March 1998, Ersoff entered into an agreement with Universal Management Services, Inc. and its president, Paul Monea, to create an infomercial marketing the Tae Bo videotape program.  The contract entitled him to five percent of adjusted gross revenue from the infomercial.

As part of his plan, Ersoff obtained a videotaped testimonial from Leonard endorsing the Tae Bo tapes.  He signed Leonard’s name, purportedly on his behalf, to a release authorizing UMSI’s use of the testimonial for the infomercial under certain conditions.

A few days after Ersoff signed the release, Leonard notified UMSI that he did not want his name or the taped testimonial to be used in connection with the infomercial.  As a result, Ersoff became concerned that UMSI intended not to honor its agreement to pay him a portion of the infomercial profits.

The manager retained Mardirossian & Associates, and partner Garo Mardirossian specifically, to represent him in a lawsuit against UMSI for breach of contract, fraud and other claims.

The firm simultaneously took on the representation of Leonard in a suit alleging the unauthorized use of his name and likeness, and seeking to enjoin the infomercial’s broadcast. Leonard had told the firm he wanted to participate in the action primarily to help Ersoff, who suggested the boxer’s celebrity status would generate publicity that would help forge a quick settlement, according to testimony.

Ersoff’s November 1998 retainer agreement with the Mardirossian firm provided the firm would represent him on a contingency-fee basis, for 50 percent of all recovery he would receive in the future. In the event that Ersoff discharged the firm and replaced it with other counsel, he agreed to pay the firm upon settlement or verdict the reasonable value of services it performed.

Pursuant to the signed retainer, the Mardirossian firm worked on Ersoff’s case, filing a complaint on his behalf and performing other work such as preparing for Blanks’ deposition, set for April 13, 1999, and a mediation scheduled for April 21, 1999.

The day before the Blanks deposition, Ersoff fired the firm and replaced it with the law firm of Wood, Smith Henning & Berman, where his wife, Victoria Lynn Ersoff, is a partner. His case settled in mediation, with UMSI and Monea agreeing to pay him $3.7 million.

On Nov. 7, 2002, the Mardirossian firm sued Ersoff seeking at least 50 percent of the settlement amount.

Ersoff unsuccessfully moved to dismiss the complaint on the ground that the firm was not a corporation at the time it filed suit and thus lacked standing to prosecute the action. In denying the dismissal motion in January 2004, Los Angeles Superior Court Judge Kenneth R. Freeman, also granted the firm’s request for sanctions on the basis that the motion had been frivolous.

Ersoff then moved to exclude testimony by the Mardirossian firm’s attorneys as to the number of hours they had each worked on his case. 

The motion highlighted Mardirossian’s deposition testimony that neither he nor his associates kept records of the time spent on his case because they worked on a contingency-fee basis. Without such records, Ersoff argued, the attorneys’ proposed testimony was “incompetent and insufficient” and their estimates false and absurd.

Freeman denied the motion.

In a second motion in limine, Ersoff sought to exclude expert testimony by the firm’s expert witness, contingency fee Dana Hobart. He contended the firm’s time estimates were too speculative to give Hobart a basis on which to opine whether the estimates were reasonable.

That motion, too, was denied.

At trial, Mardirossian and associates Joseph Barrett, Donald Conway and Kathy Mardirossian testified as to the work they each specifically performed on Ersoff’s case. In total, they claimed they worked an estimated 3,700 hours on the matter.

Hobart testified that the figure was not unreasonable, while Ersoff’s expert, attorney Alan Jay Weil—who does not take cases on a contingency-fee basis—opined that the 3,700-hour estimate was “preposterous.” Weil testified that a reasonable attorney would have spent at most no more than 200 hours to accomplish the work the firm had done.

Ultimately, the jury found that the firm reasonably spent 2,392 hours on Ersoff’s case, and was entitled to $635,440 in reasonable compensation.

Ersoff’s contentions on appeal included challenges to Freeman’s motion in limine rulings.

The appellate panel said the trial judge had not erred.

Presiding Justice Dennis M. Perluss wrote for Div. Seven:

“Although Mardirossian did testify he could not recreate time sheets six years after the fact with any precision, he also testified later in his deposition that he and his associates could review the file and use their own personal knowledge of the time worked to provide fair estimates of the hours spent on the case. His deposition testimony is not inconsistent with his trial testimony on that point; but, even if it were, the trial court properly concluded such inconsistency was to be evaluated by the trier of fact.”

There is no legal requirement that billing statements be supplied to support a claim for attorney fees, he noted.

The justice rejected Ersoff’s attacks on Hobart’s testimony, saying his opinion was relevant to the issue of reasonableness and that it was up to the jury to decide how much weight to give it.

In a portion of the opinion that remains unpublished, the presiding justice said there was sufficient cause for Freeman to impose sanctions against Ersoff and attorney Philip A. Levy for filing a frivolous motion to dismiss and a dilatory request for a continuance.

Perluss noted that Levy substituted into the case immediately after the continuance was granted, even though the motion to continue was based on the unavailability of prior counsel to appear on the originally scheduled date, and that the trial judge had found that Ersoff was actively involved in a plan to prolong the litigation by asking for repeated continuances.

Attorneys on appeal were Levy for Ersoff and Charles B. O’Reilly, Garo Mardirossian and Jill McDonell for Mardirossian & Associates.

The case is Mardirossian & Associates, Inc. v. Ersoff, B182966.


Copyright 2007, Metropolitan News Company