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.
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.”
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
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