Attorney Fees: Quantum Meruit Fees Allowed Despite Actual Undisclosed Conflict

  The California Supreme Court agrees with the Court of Appeals in Sheppard, Mullin, Richter & Hampton, LLP v. J-M Manufacturing Company, Inc. and holds that an actual undisclosed conflict of interest renders an attorney fee agreement, including the arbitration clause, unenforceable against public policy.

  Contrary to the Court of Appeals, however, it concludes that the ethical violation does not “categorically disentitle the law firm from recovering the value of the services it rendered to the manufacturer.” Principals of equity may entitle the law firm to “some measure of compensation” as determined by the trial court.

Memorandum of Costs: Not Required for Fee Award Under Civil Code 1717

  Must a party, seeking an award of contractual attorney fees pursuant to Civil Code section 1717, also file a timely memorandum of costs? No, writes the court in Kaufman v. Diskeeper Corporaton. The only requirement is that the party file a timely noticed motion. That motion must be served and filed within the time for filing a notice of appeal pursuant to California Rules of Court, Rule 3.1702(b)(1).

  The rule is different when attorney fees are fixed by formula without the necessity of court determination. Pursuant to subdivision (e) of Rule 3.1702: “If a party is entitled to statutory or contractual attorney’s fees that are fixed without the necessity of a court determination, the fees must be claimed in the memorandum of costs.”

Enforcement of Judgment: Attorney Fees as Costs, Privity Not Required

  Code of Civil Procedure section 685.040 authorizes the court to award a judgment creditor attorney fees incurred in enforcing a judgment if the underlying judgment included an award of fees as costs. Continue reading

Petitions to Compel Arbitration and Attorney Fees: The Rules

  Contracts frequently contain a prevailing party attorney fee provision and a provision requiring that any controversy arising under the contract be decided by binding arbitration. Where both parties agree to arbitration there is no tension between these two provisions. The prevailing party and the award of reasonable attorneys fees will be determined by arbitration.

  There can be tension, however, where the parties do not agree that the controversy between them is governed by the contract provision requiring arbitration. In that case a party may file a petition to enforce the arbitration agreement or the party may file a lawsuit. If a party files a lawsuit the defendant may respond with a petition to compel arbitration. If there is a pending action, a petition to compel arbitration must be filed in that action. Continue reading

Contingency Fee Recovery After Withdrawal or Discharge

  The rules on fee recovery by an attorney after withdrawal or discharge in a contingency case depend on two things: 1) who initiated the separation; and 2) why. When a client discharges an attorney the courts have adopted a bright line rule – the attorney is entitled to a reasonable fee against any recovery. In this circumstance whether the attorney was discharge for cause, or not, makes no difference; the attorney is entitled to recover the reasonable value of his services rendered to the time of discharge.

  The rules are more complex when an attorney withdraws without having been discharged by the client. In this circumstance, the attorney’s right to fees will depend on whether the attorney had “justifiable cause so as to permit a recovery of compensation.” If the attorney had just cause, the attorney may be entitled to reasonable fees to the date of discharge; otherwise, the attorney’s claim for fees will fail because an attorney who withdraws without justifiable cause may not recover any attorney’s fees under a contingency fee agreement. [This post concerns attorney’s fees only, not an attorney’s right to recover costs pursuant to a written fee agreement or valid attorney lien.] Continue reading

Law Firm Represented by Of Counsel Cannot Recover Attorney’s Fees As Prevailing Party

  It is well settled law in California that when a law firm is the prevailing party in a lawsuit and it is represented by one of its partners, members, or associates, it cannot recover attorney fees even though the litigation is based on a contract with a prevailing party attorney fee provision.

  Can a law firm, however, recover attorney fees under a prevailing party clause when the firm is a successful litigant represented by “of counsel”? The Second Appellate District says: “No.”

  In Sands & Associates v. Juknavorian the court held that because the relationship between a law firm and “of counsel” is close, personal, regular, and continuous, a law firm and “of counsel” constitute a single, de facto firm, and thus a law firm cannot recover attorney fees under a prevailing party clause when, as a successful litigant, it is represented by “of counsel.”

Consumer Protection Bureau Files First Lawsuit Against Law Firm

   My interest was perked by this article in the WSJ today: “Consumer Protection Agency’s First Lawsuit Targets Law Firm”. It warms my heart when scam artists, particularly those who happen to trade on their law license, get their due. One of the principals involved in the alleged scam is California attorney Chance Gordon who operated a loan modification mill under several DBAs. State Bar proceedings, and hopefully criminal charges, will follow. A receiver has been appointed. If you have been a victim, contact the State Bar and Kent Kawakami, local counsel for the Consumer Protection Bureau, whose contact information is listed on the face page of the complaint.

UPDATE: On February 22, 2016 the State Bar Court recommended disbarment of Chance Gordon. The decision is here.

New Trial Required Before Labor Code Section 98.2(c) Becomes Operative Against Employee

   An employee that has a wage claim against an employer may file a claim with the Labor Commissioner or may file a suit for breach of contract in Superior Court. Claims adjudicated by the commissioner do not provide for attorney fees. If either party is unsatisfied with the commissioner’s decision, an appeal may be taken to the Superior Court.

   However, Labor Code section 98.2, subdivision (c) provides that if a party files an appeal in the superior court seeking review of the Labor Commissioner’s decision and is unsuccessful, the court shall determine the reasonable attorney fees and costs incurred by the other parties to the appeal and assess that amount as a cost upon the party filing the appeal. The subsection specifically provides that an employee is successful on appeal if the court awards an amount greater than zero.

   What is the rule when an employee appeals and the appeal is dismissed on jurisdictional grounds because the appeal was not timely and the employee did not, therefore, achieve an award greater than zero in the Superior Court? Continue reading

Did Caterpillar’s Attorneys Commit Malpractice When They Served a 998 Offer?

  In Wohlgemuth v. Caterpillar, plaintiffs purchased a new motor home that had an engine manufactured and warranted by Caterpillar. Plaintiffs claimed the engine was defective and sued Caterpillar under the Song-Beverly Consumer Warranty Act, alleging Caterpillar failed to repair the defects after a reasonable number of attempts. Shortly before trial, Caterpillar served and filed the following Code of Civil Procedure section 998 offer:

“Pursuant and subject to the provisions of Code of Civil Procedure § 998, defendant Caterpillar Inc., without admitting liability, hereby offers to pay to plaintiffs . . . the total sum of Fifty Thousand Dollars ($50,000.00), in exchange for the dismissal with prejudice of the entire action and general release of all claims as to this defendant.”

  Plaintiffs filed an acceptance of the offer and a dismissal. Thereafter, plaintiffs moved for attorney fees under the Song-Beverly Act. The trial court found plaintiffs to be the prevailing parties and awarded attorney fees to plaintiffs in the amount of $117,625 and costs in the amount of $7,737.08. Affirmed. Continue reading

New California Homeowner Bill of Rights

   The legislature has passed two pieces of legislation which together are known as the Homeowner Bill of Rights. They are awaiting Governor Brown’s signature and will take effect, if signed, January 1, 2013. Continue reading