Wednesday, December 29, 2010
C.A. Tosses Suit Alleging Scheme to Steal Attorney’s Client
By STEVEN M. ELLIS, Staff Writer
The Third District Court of Appeal yesterday published its decision tossing an attorney’s lawsuit accusing co-counsel he brought in on a personal injury case of scheming to steal the client and take his share of fees.
The court ruled Dec. 10 that Westlake Village attorney Christopher J. Olsen might be able to bring an unjust enrichment action against the client who fired him, but not against Sacramento attorney Joseph F. Harbison III, who agreed to a 60/40 percent split of fees with Olsen in the contingency case, and later succeeded him.
The justices said that the litigation privilege barred use of Harbison’s statements to support Olsen’s allegations that Harbison used fraud and deceit to induce Olsen to associate him into the case. They also held that the privilege barred an action for interference with contractual relations, and they concluded that Olsen could no longer sue Harbison for breaching the agreement once he had been discharged.
Olsen sued Harbison when the underlying case, involving an injury client Kathleen Klawitter suffered at a golf course, settled for $775,000. Klawitter, who retained Olsen in 1998, fired him and signed a new fee agreement with Harbison in 2002, just weeks after Olsen agreed to associate Harbison into the case.
The attorney said later that he would never have brought Harbison into the case had he been aware of what he said were Harbison’s true intentions.
Sacramento Superior Court Judge Judy Holzer Hersher sustained Harbison’s demurrer to a quantum meruit action, and she granted summary judgment against Olsen on claims for breach of contract, fraud and deceit and intentional interference with contractual relationship.
On Olsen’s appeal, the Third District affirmed in an opinion by Presiding Justice Vance W. Raye, who rejected Olsen’s claim for $310,000 for the value of work he performed. Noting that one attorney may be able to proceed against another in quantum meruit if the client never approved a fee-splitting agreement, the justice said that changed when a client agreed to the association and consented to the fee division, as Olsen and Harbison’s client had done.
Raye wrote that Olsen’s claim that Harbison committed fraud and deceit by inducing Olsen to hire him, when Harbison’s true intent was to persuade the client to fire Olsen and hire Harbison, was barred by the litigation privilege because the intent of the allegedly fraudulent communications was to secure the services of counsel.
“[D]efendant made his comments when discussing the possibility of becoming associated in on the Klawitter case,” he said. “This conversation was part of plaintiff’s efforts to bring in experienced counsel to assist on the case, take responsibility for the actual trial, and help Klawitter obtain a verdict or settlement. Had there been no litigation, these comments would never have been made.”
Raye reasoned that the litigation privilege barred Olsen’s claim against Harbison for interference with Olsen’s contract with the client, rejecting Olsen’s assertion that a plaintiff and a defendant had to be adverse parties at the time of the communication for the privilege to apply.
The justice also wrote that Olsen could not enforce the fee-sharing contract once the client terminated his services.
“When the Klawitter-plaintiff contract ceased to exist, the fee-sharing agreement between plaintiff and defendant, premised on that agreement, also ceased to exist,” he said. “There was no viable contract on which to base a breach of contract claim against defendant.”
Justices Harry Hull and Tani Cantil-Sakauye—who was ceremonially sworn in as California’s 28th chief justice Dec. 3, and is scheduled to take office next Monday—joined Raye in his opinion.
The case is Olsen v. Harbison, 10 S.O.S. 7162.
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