Young v. Debtwave Credit Counseling CA4/3

Filed 2/24/15 Young v. Debtwave Credit Counseling CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

CHRIS YOUNG et al.,

Plaintiffs and Appellants, G049508

v. (Super. Ct. No. 30-2011-00479121)

DEBTWAVE CREDIT COUNSELING, OPINION
INC.,

Defendant and Respondent.

Appeal from a judgment of the Superior Court of Orange County,
Geoffrey T. Glass, Judge. Affirmed.
Law Offices of Scott E. Schutzman and Scott E. Schutzman for Plaintiffs
and Appellants.
Dinsmore & Sandelmann, Frank Sandelmann and Kirsten Stockton for
Defendant and Respondent.
* * *
 INTRODUCTION
Chris Young and Freedom Consulting Group, LLC (Freedom), sued
Debtwave Credit Counseling, Inc. (Debtwave), for quantum meruit. Debtwave filed a
motion for summary judgment, arguing it was undisputed that Debtwave had not
requested Young and Freedom to provide any services to it. The trial court granted the
motion; we affirm. Young and Freedom failed to raise a triable issue of material fact
countering Debtwave’s evidence that it did not request them to provide it with any
services.

STATEMENT OF FACTS AND PROCEDURAL HISTORY
The Johnson Law Group (Johnson) provided debt settlement and debt
management services to consumers. Debtwave provided back-office processing
assistance to Johnson. In October 2008, Young contacted Debtwave asking if he could
refer business to it. Debtwave referred Young to Johnson. Young entered into a
marketing agreement with Johnson, under the terms of which Young would provide
promotional and marketing services to Johnson and develop qualified leads for Johnson.
Johnson agreed to pay Young $1,400 for each qualified lead.
Young later formed Freedom, which entered into a separate marketing
agreement with Johnson. Freedom provided the same services to Johnson, and received
the same compensation from Johnson, as had Young. Debtwave was not a party to either
Young’s or Freedom’s marketing agreements with Johnson.
In April 2011, Young and Freedom stopped receiving any payments from
Johnson; apparently, Johnson ceased performing debt settlement and management
services when its sole partner was suspended from the practice of law. Debtwave
contacted Johnson’s clients to offer its own debt management services; Johnson’s former
clients retained Debtwave.

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 Young and Freedom sued Johnson for breach of written contract. Young
and Freedom later amended the complaint to add a claim for quantum meruit against
Debtwave. Debtwave filed a motion for summary judgment, which the trial court
granted. Judgment was entered in favor of Debtwave; Young and Freedom filed a timely
notice of appeal.

DISCUSSION
We review the trial court’s decision de novo, and we consider all the
evidence set forth in the moving and opposing papers, except that to which an objection
was made and sustained. (Lonicki v. Sutter Health Central (2008) 43 Cal.4th 201, 206.)
A motion for summary judgment is properly granted if the moving papers establish there
is no triable issue of material fact, and the moving party is entitled to judgment as a
matter of law. (Code Civ. Proc., § 437c, subd. (c); Aguilar v. Atlantic Richfield Co.
(2001) 25 Cal.4th 826, 843.) “To prevail on the motion, a defendant must demonstrate
the plaintiff’s cause of action has no merit. This requirement can be satisfied by showing
either one or more elements of the cause of action cannot be established or that a
complete defense exists. [Citations.] If the defendant meets this requirement, the burden
shifts to the plaintiff to demonstrate a triable issue of material fact exists. [Citations.]”
(We Do Graphics, Inc. v. Mercury Casualty Co. (2004) 124 Cal.App.4th 131, 135-136.)
In order to recover for quantum meruit, Young and Freedom were required
to establish (1) the services were requested by Debtwave, (2) the services were provided
by Young and Freedom, (3) Young and Freedom did not provide the services
gratuitously, and (4) there was a mutual expectation that Debtwave would compensate
Young and Freedom for providing the services. (Strong v. Beydoun (2008) 166
Cal.App.4th 1398, 1404; Ochs v. PacifiCare of California (2004) 115 Cal.App.4th 782,
794; CACI No. 371.)

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 Debtwave offered admissible evidence that it did not request Young or
Freedom to, nor did Young or Freedom, deliver any goods to Debtwave, refer any leads
to Debtwave, or provide any services to Debtwave. This evidence successfully shifted
the burden to Young and Freedom to produce admissible evidence establishing the
existence of a triable issue of material fact.
Young and Freedom offered the following admissible evidence in
opposition to the motion for summary judgment:
(1) Young contacted Debtwave to find out if he could refer business to
Debtwave. Debtwave’s director of operations provided Young with information on how
to refer leads to Johnson. Young “understood that although I was initially contracting
with the Johnson Law Group, Debtwave was facilitating the arrangement and would be
paid in some way on the leads that I will provide to the Johnson Law Group.”
(2) Young and Freedom were owed $177,727 for 310 qualified leads
provided to Johnson when Johnson stopped making payments to Young and Freedom in
April 2011.
(3) Debtwave did not pay Freedom any service fees for clients referred to
Johnson because Debtwave did not have an agreement with Freedom.
(4) A document attached to the declaration of Young and Freedom’s trial
counsel, which he declared was “a true and correct copy of a commission summary
produced by Debtwave, namely Documents DW2000470-DW2000526, which purport to
be a commission summary listing commissions paid to Chris Young based upon the
verified leads which he provided to Johnson Law Group.”
(5) A copy of the marketing agreement between Johnson and Freedom,
which does not contain any mention of or reference to Debtwave.
(6) Debtwave began providing debt management and settlement services to
Johnson’s clients, including those clients Young and Freedom referred to Johnson, and
began collecting fees from Young and Freedom’s former clients.

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 None of this evidence was sufficient to create a triable issue of material fact
as to whether Debtwave requested that Young or Freedom provide any services to it.
Debtwave was not obligated to assume Johnson’s contract with Young or Freedom when
it took over the servicing of Johnson’s clients. Debtwave did not request, directly or
impliedly, that Young and Freedom provide it with qualified leads, and there was no
mutual expectation between Debtwave and Young and Freedom that Debtwave would
compensate Young and Freedom for leads provided to Johnson.
At most, the evidence showed Young and Freedom provided services
which afforded a benefit to Debtwave, those services were not provided gratuitously, and
Young and Freedom expected to be compensated for those services. The elements
missing from the evidence are that Debtwave requested Young and Freedom to provide
the services, and that Debtwave expected to continue to compensate Young and Freedom
once it took over the business from Johnson. Indeed, Debtwave’s referral of Young
directly to Johnson when Young asked Debtwave if he could refer business to Debtwave
contradicts any claim that Debtwave requested the services be provided. And there is no
evidence in the record supporting an inference that Debtwave was aware, at the time
Young first contracted with Johnson, that Johnson’s sole partner would lose his law
license, and Debtwave would be in a position to take over the business; Debtwave could
not have had any expectation that it would compensate Young and Freedom. There is
simply no objective evidence of the satisfaction of all the requirements for recovery
under quantum meruit.
Earhart v. William Low Co. (1979) 25 Cal.3d 503, on which Young and
Freedom rely, does not change our analysis or conclusion. In Earhart, our Supreme
Court held that “a party who expends funds and performs services at the request of
another, under the reasonable belief that the requesting party will compensate him for
such services, may recover in quantum meruit although the expenditures and services do
not directly benefit property owned by the requesting party.” (Id. at p. 505.) That case,

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however, was vastly different factually. The defendant requested that the plaintiff
perform construction work on the defendant’s property and on an adjacent parcel of
property. (Id. at pp. 506-507.) The defendant then refused to pay the plaintiff for any of
the work performed. (Id. at p. 507.) The trial court found that the defendant owed the
plaintiff in quantum meruit for the work performed on the defendant’s property, but not
on the adjoining property because the work on the adjoining property did not benefit the
defendant directly. (Id. at pp. 507-508.) The Supreme Court, however, reversed that
portion of the trial court’s ruling. (Id. at p. 516.)
Under the rule of Earhart v. William Low Co., Debtwave might be liable in
quantum meruit to pay Young and Freedom for work they performed at Debtwave’s
request but for which Debtwave did not directly benefit. However, the undisputed
evidence in the appellate record establishes that Debtwave did not request Young and
Freedom to perform any work or services for it or for any third party.

DISPOSITION
The judgment is affirmed. Respondent to recover costs on appeal.

FYBEL, J.

WE CONCUR:

O’LEARY, P. J.

IKOLA, J.

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