SECOND DIVISION
ANDREWS, P. J.,
MCFADDEN and RAY, JJ.
NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules/
March 25, 2015
In the Court of Appeals of Georgia
A14A1772. CORDELL & CORDELL, P.C. v. GAO.
MCFADDEN, Judge.
Shaojun Gao sued his former law firm, Cordell & Cordell, P.C. (hereinafter,
the firm) for breach of contract, breach of fiduciary duty, unjust enrichment, and
money had and received in connection with alleged overbilling. The case went to a
jury, which found in favor of Gao and awarded him $23,213.70, the same amount that
a panel of arbitrators previously had awarded Gao in nonbinding arbitration under the
State Bar of Georgia’s fee arbitration process.
The firm appeals from the judgment entered on that jury award. It argues that
the trial court erred in admitting into evidence the arbitration award and portions of
a recording of a telephone call between Gao and a former lawyer of the firm, and that
the trial court should have granted its motion for directed verdict on all of Gao’s
claims. The trial court, however, did not err in admitting the challenged evidence, the
evidence supported the denial of the directed verdict motion on the breach of contract
and breach of fiduciary duty claims, and the firm did not argue to the trial court the
specific ground upon which it now claims entitlement to a directed verdict on the
remaining claims. For these reasons, we affirm.
1. Facts and procedural history.
Gao hired the firm in September 2008 to represent him in an ongoing divorce
action that involved complicated custody issues. The parties entered into a written
contract setting forth the terms of the representation. Among other things, the contract
provided that Gao would pay the firm specific hourly rates for its work on his case,
that Gao acknowledged the total fees might be higher than any estimates given to him
by the firm, and that Gao would like the firm to “assign attorneys and other staff to
handle [the] matter in the most economical manner possible.”
The firm worked on Gao’s case for five and a half months and charged Gao
nearly $50,000 for that work. The work included a mediation and three court
appearances, at which some of the custody issues in the case were temporarily
resolved to Gao’s satisfaction. During this time, Gao told the firm he was concerned
about the mounting fees. Nevertheless, he paid all of the bills he received from the
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firm. In February 2009, Gao terminated the firm’s representation of him because he
could not afford further fees.
Soon after Gao ended the representation, the lawyer that had been assigned to
his case left the firm. Shortly thereafter, that lawyer and Gao had a telephone
conversation – a portion of which Gao recorded – that led Gao to believe the firm had
overcharged him. Gao unsuccessfully sought a refund of some of the fees he had paid,
then brought an arbitration proceeding against the firm under the State Bar of
Georgia’s fee arbitration program. The firm declined to participate in that proceeding.
Gao, however, presented evidence to a panel of arbitrators at a hearing, and on
January 29, 2010, the arbitrators issued an award in Gao’s favor. The award stated:
We find there was a written contract which provided for an hourly rate
and a billing history. The evidence and testimony suggested that client
billing emphasized the firm[‘]s financial needs rather than client[‘]s
interest in this case. The evidence shows a total bill of $49,289.63 which
was paid to [the firm] by [Gao] and we find from the evidence and
testimony of [Gao] and subpoenaed witness that [Gao] receive a refund
from [the firm] of $23,213.70.
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The firm declined to be bound by the award and, accordingly, did not participate in
the proceeding pursuant to the State Bar rules then in effect. See former State Bar R.
6-402.1
Gao then filed the instant action in superior court, and the action proceeded to
a jury trial, at which the trial court admitted the arbitration award into evidence over
the firm’s objection. The trial court also permitted Gao to use portions of the
recording of his telephone conversation with his former lawyer to impeach the lawyer
twice during his testimony. At the close of Gao’s case, the firm moved for a directed
verdict on all counts, which the trial court denied. The jury ultimately returned a
general verdict in Gao’s favor for $23,213.70.
2. Admissibility of State Bar arbitration award.
The firm challenges the trial court’s admission of the arbitration award into
evidence. Over the firm’s objection, the trial court admitted the award pursuant to the
State Bar rules governing arbitration of fee disputes, which establish a program
“designed to provide a convenient mechanism to resolve disputes between lawyers
and clients over fees[.]” Farley v. Bothwell, 306 Ga. App. 801 (703 SE2d 397) (2010)
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The arbitration proceeding in this case took place under a former version of
these rules, which were amended effective December 1, 2012. See State Bar Rules,
Part VI, Arbitration of Fee Disputes, Preamble.
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(citing former State Bar Rules, Part VI, Arbitration of Fee Disputes, Preamble). Those
rules “are grounded in [the Georgia Supreme] Court’s inherent and exclusive
authority to govern the practice of law in Georgia.” Nodvin v. State Bar of Ga., 273
Ga. 559 (1) (544 SE2d 142) (2001) (citations omitted). Our Supreme Court has
stressed that its “authority to regulate nearly every facet of the [legal] profession”
permits “both regulation of the fee arbitration process and restriction on subsequent
judicial review.” Id. at 559 (1) (citations omitted).
Such restriction on subsequent judicial review includes the treatment of a fee
arbitration award in a later civil proceeding concerning the fee dispute. See generally
Nodvin, 273 Ga. at 561 (3) (describing State Bar rules’ burden-shifting presumption,
discussed below, as a limitation on attorney’s right of judicial review of fee
arbitration award). While a lawyer against whom an arbitration is brought may
decline to be bound by the decision, see former State Bar R. 6-402, there are
consequences to a refusal to be bound. The lawyer waives his right to participate in
the arbitration hearing, although he may attend it. Former State Bar R. 6-402.
Moreover,
the rules contemplate that a nonbinding award may be evidence in
subsequent civil litigation seeking a personal judgment against the
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lawyer for the amount of the award[.] . . . In such subsequent litigation,
the attorney fee dispute program gives the client the benefit of free legal
representation and a rule establishing the award as prima facie evidence
of its fairness.
Farley, 306 Ga. App. at 802 (citation and punctuation omitted); see former State Bar
R. 6-502. To that end, former State Bar R. 6-502 (a) provides that “the award
rendered will be considered as prima facie evidence of the fairness of the award and
the burden of proof shall shift to the lawyer to prove otherwise.”
Nevertheless, the firm challenges the trial court’s admission of the award into
evidence for two reasons: it argues that the arbitrators lacked authority to enter the
award and it argues that the State Bar rules permitting the use of the award as prima
facie evidence conflict with Georgia’s evidence code. As detailed below, we find no
ground for reversal.
(a) Arbitrators’ authority.
The firm argues that the arbitrators had no authority to enter the award because
it was contrary to the terms of the firm’s contract with Gao. Under former State Bar
R. 6-412, “[n]o arbitrator shall have authority to enter an award contrary to terms of
an executed written contract between the parties except on the grounds of fraud,
accident, mistake, or as being contrary to the laws of the state governing contracts.”
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The firm argues that the award in this case was contrary to the parties’ contract
because it refunded Gao a portion of fees for work that the firm performed and billed
in accordance with the contract’s terms. But the contract also included a term
providing for the firm to “assign attorneys and other staff to handle [the] matter in the
most economical manner possible.” Further, the contract created an attorney-client
relationship that imposed upon the firm a fiduciary duty of utmost good faith and
loyalty to Gao. Tante v. Herring, 264 Ga. 694, 695-696 (2) (453 SE2d 686) (1994);
see David C. Joel, Attorney at Law, P.C. v. Chastain, 254 Ga. App. 592, 595-596 (1)
(562 SE2d 746) (2002); Tunsil v. Jackson, 248 Ga. App. 496, 499 (2) (546 SE2d 875)
(2001). This duty required the firm “not to pursue any interest or take any act adverse
to [Gao’s] interests or incompatible with applying its best skill, zeal, and diligence
in representing [Gao].” David C. Joel, 254 Ga. App. at 596 (1) (citations omitted).
The arbitrators found, however, that the firm billed Gao’s case in a manner that put
its own interests ahead of Gao’s interests. That finding and the arbitrators’ refund of
some of Gao’s fees pursuant thereto were not inconsistent with the terms of the
contract. Accordingly, former State Bar R. 6-412 did not prohibit the award and the
trial court was under no obligation to exclude the award from evidence on that
ground.
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(b) Alleged conflict with Georgia’s evidence code.
The firm also argues that the trial court should not have admitted the award into
evidence because the State Bar rule permitting its admission, former State Bar R. 6-
502 (a), conflicts with various provisions of Georgia’s evidence code. In essence, the
firm challenges the procedure established by the State Bar to facilitate the resolution
of a fee dispute when the lawyer declines to be bound by arbitration, arguing that the
State Bar rules cannot “trump the statutory laws regarding evidence as passed by the
legislature[.]”
On its face, the firm’s argument appears to conflict with the principles
discussed by our Supreme Court in Nodvin v. State Bar of Ga., supra, 273 Ga. 559.
But we need not decide that issue because, as Gao points out, the firm did not make
this particular argument to the trial court. “A reason urged that evidence should not
have been admitted will not be considered on appeal unless the reason was urged
below.” Argonaut Ins. Co. v. Head, 149 Ga. App. 528, 531 (3) (254 SE2d 747) (1979)
(citation omitted).
3. Admissibility of recorded conversation between Gao and his former
attorney.
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The firm argues that the trial court erred in denying its motion in limine to
exclude the recorded conversation between Gao and his former attorney. In arguing
that motion, however, the firm agreed that the recording could be allowed to impeach
the lawyer, and the trial court limited the recording to that use. Consequently, the firm
waived this claim of error. See Perry v. Gilotra-Mallik, 314 Ga. App. 764, 765 (1)
(726 SE2d 81) (2012) (party cannot acquiesce in trial court’s ruling below and then
complain about that ruling on appeal).
4. Directed verdict.
The firm argues that the trial court erred in denying its motion for directed
verdict on all of Gao’s claims. “A motion for a directed verdict shall state the specific
grounds therefor.” OCGA § 9-11-50 (a). A directed verdict shall be granted “[i]f there
is no conflict in the evidence as to any material issue and the evidence introduced,
with all reasonable deductions therefrom, shall demand a particular verdict[.]” Id. On
appeal from the denial of a motion for directed verdict, “we construe the evidence in
the light most favorable to the party opposing the motion, and the standard of review
is whether there is any evidence to support the jury’s verdict.” Parris Properties v.
Nichols, 305 Ga. App. 734, 735 (1) (700 SE2d 848) (2010) (citation omitted).
Considering these principles, we find no ground for reversal. As detailed below, there
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is evidence to support the jury’s verdict on the claims for breach of contract and
breach of fiduciary duty, and the firm did not state the specific grounds for directed
verdict on the remaining claims that it now argues on appeal.
(a) Claims for breach of contract and breach of fiduciary duty.
The elements of a breach of contract claim are breach and resultant damages
to a party with the right to complain about the breach. Inland Atlantic Old Nat. Phase
I v. 6425 Old Nat., 329 Ga. App. 671, 677 (3) (766 SE2d 86) (2014). “A breach
occurs if a contracting party repudiates or renounces liability under the contract; fails
to perform the engagement as specified in the contract; or does some act that renders
performance impossible.” Id. (citation and emphasis omitted). As discussed above,
the contract in this case included a term providing for the firm to “assign attorneys
and other staff to handle [the] matter in the most economical manner possible.”
The elements of a claim for breach of fiduciary duty are the existence of a
fiduciary duty, the breach of that duty, and damage proximately caused by that
breach. Inland Atlantic, 329 Ga. App. at 674 (1). An attorney-client relationship
imposes upon the attorney a fiduciary duty of utmost good faith and loyalty, which
includes the responsibility not to pursue interests or take acts adverse to the client’s
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interest. See Tante, 264 Ga. at 695-696 (2); David C. Joel, 254 Ga. App. at 595-596
(1); Tunsil, 248 Ga. App. 499 (2).
There was some evidence presented at trial to support a finding that the firm
performed work on Gao’s case and billed for that work in a manner that placed the
firm’s financial interests above the interests of Gao, in violation of both the terms of
the parties’ contract and the firm’s fiduciary duties as Gao’s attorney. That evidence
included expert opinion testimony that the firm overcharged Gao; in reaching this
opinion, the expert witness questioned both the need for certain work that the firm
performed on the case and the amount of time spent on other work. That evidence
also included the testimony of Gao’s former lawyer that the firm had instructed him
to “think more creatively” about his cases to meet billable hour requirements, a
practice that bothered the lawyer and that he thought did a disservice to the client.
And that evidence included the arbitration award in which the arbitrators found that
the firm had billed Gao in a manner that served the firm’s interests over those of Gao.
In light of that evidence, the trial court did not err in denying the motion for directed
verdict on the breach of contract and breach of fiduciary duty claims. See Parris
Properties, 305 Ga. App. at 735 (1).
(c) Claims for unjust enrichment and money had and received.
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The firm argues that the existence of the contract precluded Gao’s claims for
unjust enrichment and money had and received, and consequently the firm was
entitled to a directed verdict on those claims. See Tuvim v. United Jewish
Communities, 285 Ga. 632, 635 (2) (680 SE2d 827) (2009) (“Unjust enrichment
applies when as a matter of fact there is no legal contract[.]”) (citation and
punctuation omitted); Fernandez v. WebSingularity, 299 Ga. App. 11, 13-14 (2) (681
SE2d 717) (2009) (claim for money had and received “exists only where there is no
actual legal contract governing the issue”) (citation and punctuation omitted). The
firm, however, did not make this argument to the trial court in support of its motion.
The firm only argued generally that “[t]here’s no evidence of any unjust enrichment”
and that it did not “think that there’s been proper evidence presented” to show money
had and received. Because the firm’s motion did not state the specific ground upon
which the firm now argues the motion should have been granted as to the claims of
unjust enrichment and money had and received, we will not consider that ground on
appeal. Phillips v. Blakenship, 251 Ga. App. 235, 237 (3) (554 SE2d 231) (2001); see
OCGA § 9-11-50 (a).
Judgment affirmed. Andrews, P. J., and Ray, J., concur.
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