Monday, October 16, 2006
Court of Appeal: Divorce Attorneys May Collect Interest on Fee Award, Even if Client Objects
By TINA BAY, Staff Writer
Family law attorneys whose collection of fees from the opposing party was delayed by an objection from their ex-client are entitled to interest on the award, the Court of Appeal for this district ruled Friday.
Div. Three reversed Los Angeles Superior Court Judge Richard E. Denner’s order quashing a writ of execution in favor of Freid & Goldsman, in which the Century City firm sought to recover post-judgment interest on attorney fees awarded against their former client’s ex-spouse.
The firm had represented Jude Green in dissolution proceedings beginning in 2000. In October 2003, after the court entered a status judgment of dissolution and Green’s ex-husband subsequently died, Green and the trustee of her late ex-husband’s living trust signed a marital settlement agreement.
The agreement required the trust to pay, as the trustor’s contributive share of Green’s attorney fees, $850,000 to Freid & Goldsman.
In December 2003, Green replaced the firm with Westwood attorney Martin S. Friedlander as her attorney of record and then sought to set aside the settlement agreement as unenforceable. Granting the trustee’s motion, however, Denner on June 4, 2004 entered a judgment incorporating and ordering compliance with the settlement agreement.
That same day the trustee notified Green he would pay $860,000 to Freid & Goldsman—which demanded immediate payment—pursuant to the judgment, unless she objected. Friedlander responded by instructing him not to disburse the funds or take any other action to enforce the “void judgment,” and warning him that any attempt to disburse the funds would be an act of bad faith.
The trustee then notified both Green and her former counsel that he was prepared to enforce the judgment and reserved the right to interplead the funds due to their conflicting claims.
Freid & Goldsman thereafter served a notice of application to enforce the attorney fee provision in the judgment pursuant to Family Code Sec. 272(c), which allows attorneys to enforce such awards in their own behalf. Advising the trustee of the notice, the firm said it expected interest calculated from June 4 to be added to the principal.
Green subsequently filed a notice of appeal, which was dismissed. She then filed a motion for reallocation of fees between Freid & Goldsman and Friedlander on the basis that her former counsel’s legal services had little or no value. Denner denied her motion.
In January 24, 2005, the trustee’s counsel delivered a $860,000 check to the firm but said it would not pay interest on the amount due to Green’s and Friedlander’s conduct.
The firm obtained a writ of execution for $54,493.92 in post-judgment interest, which the trustee then moved to quash.
Denner granted the trustee’s motion, stating in his order that Freid & Goldsman’s right to enforcement in a dissolution proceeding was derivative of their former client’s right—and since Green had no right to recover post-judgment interest while her appeal was pending, the firm also had no right to recover post-judgment interest.
Writing for the court, Justice Patti S. Kitching said that once judgment was entered in Green’s case, her former attorneys were entitled to enforce their fee award pursuant to Family Code Sec. 272(a) notwithstanding Green’s objections.
Prior to judgment, Sec. 272(a) requires a client to expressly or impliedly authorize discharged attorneys to move for payment of fees, the justice explained.
“This rule, however, applies only to attorney fee applications made before judgment,” she wrote. “Entry of a judgment pursuant to Family Code section 272, subdivision (a), making attorney fees payable directly to a spouse’s attorney alters this situation by making the attorney a judgment creditor. Section 272, subdivision (b), gives that attorney an independent, non-derivative, statutory right to enforce the award in the judgment.”
Because Green did not have the power to prevent the trustee from paying her former attorneys, her actions did not stop the accrual of post-judgment interest under Code of Civil Procedure 685.030, Kitching said, explaining:
“Under Code of Civil Procedure section 685.030, it was Trustee’s burden to determine whether to terminate accrual of post-judgment interest under subdivision (d)91) or (2) either by paying the judgment amount to Freid and Goldsman or by depositing the funds into the court. Pursuant to section 685.030, subdivision (b), either of these steps would have terminated the accrual of post-judgment interest. Trustee did not take either step.”
Therefore, the justice concluded, post-judgment interest continued to accrue from June 4, 2004 until the Trustee paid the judgment amount to Freid & Goldsman on January 24, 2005.
Presiding Justice Joan D. Klein and Justice H. Walter Croskey concurred in the opinion.
Freid and Goldsman’s appellate attorney Gary J. Cohen, who practices in Century City, told the MetNews:
“I think what the decision does is vindicates the rights of attorneys who are judgment creditors to enforce the fee orders in their favor in family law matters.”
Beverly Hills attorney Charles K. Wake, who represented the trustee on appeal, could not be reached for comment.
The case is In Re Marriage of Green, B186507.
Copyright 2006, Metropolitan News Company