Friday, May 6, 2011
C.A. Declines to Revive Glendale Attorney’s Suit Against Client
By a MetNews Staff Writer
This district’s Court of Appeal yesterday ruled that a Glendale attorney could not sue his former client for walking away from a lawsuit which he had retained the lawyer for on a contingency basis.
Div. Eight said public policy articulated in well-established California Supreme Court authority barred Don S. Lemmer from seeking damages from Jeffrey Charney.
Charney had hired Lemmer to represent him in a lawsuit against his former employer, Teleflora LLC. They entered into a fee agreement providing for an hourly rate for legal services rendered in this litigation.
The attorney then filed suit on behalf of Charney against Teleflora, its owners, and an affiliate for breach of contract, fraud and violations of the Labor Code. Teleflora cross-complained breach of Charney’s employment contract, fraud and other causes of action.
Several months later, Charney allegedly asked Lemmer to continue his representation on a contingency fee basis, and he promised he would take his claims against Teleflora to trial or to settlement to ensure Lemmer would be paid for his work.
Lemmer claimed Charney never intended to keep this promise because he knew Teleflora’s owner was extremely litigious and vindictive and would drag out the litigation to exhaust Charney’s resources.
Likelihood of Prevailing
The attorney said he believed Charney had a strong likelihood of prevailing against Teleflora and that he expected to recover contractual and statutory attorney fees in addition to the contingency fee. Had he known Charney would not go to trial, he insisted he could not have agreed to the contingency fee arrangement.
Less than a month before trial was scheduled to begin, Lemmer said Charney called him and asked him to settle the case. When Lemmer objected, he said Charney’s wife told him:
“You are our attorney, and you will do what we tell you to do.”
Lemmer then initiated settlement discussions with Teleflora, who offered a “walk away” settlement wherein each side would receive nothing and bear their own fees and costs. Charney accepted this offer, and never paid Lemmer for his services.
The attorney later filed suit against Charney and his wife for conspiracy to defraud by falsely promising to go to trial against the Teleflora defendants to induce Lemmer to enter into the contingency fee agreement.
He also sued Charney’s wife, claiming she induced Charney to end the Teleflora lawsuit and thereby interfered with Lemmer’s prospective economic advantage from the attorney-client relationship.
The Charneys demurrerd, and Justice Elizabeth A. Grimes, writing for the appellate court, said Los Angeles Superior Court Judge Laura A. Matz properly sustained the demurrer.
Grimes explained that it was well-settled law that “a clause in a retainer agreement between an attorney and his client prohibiting the client from settling his lawsuit without the consent of his attorney is void as against public policy.”
She reasoned “there is no real difference between a promise not to settle without the attorney’s consent and a promise, as alleged here, ‘to proceed with the case to either settlement or trial,’ ” except that “the former is stated in the negative, and the latter in the affirmative.”
The justice posited that the “practical effect of permitting plaintiff to sue his client for fraudulently inducing plaintiff to enter a contingency fee agreement with a false promise to take the case to trial or settlement is no different than permitting plaintiff to enforce an agreement not to abandon the lawsuit without the lawyer’s consent.”
Grimes concluded that the law should not recognize a tort cause of action for damages for the client’s decision to abandon litigation “because that would equally constrain defendant to keep his lawsuit alive just for his attorney’s profit, despite his own fears and desire to abandon the case” as if he had agreed at the outset not to settle without the attorney’s consent.
Since Charney was free to abandon the Teleflora suit, or settle it for a waiver of fees and costs, Grimes said “he committed no wrong” and his wife could not be liable for encouraging her husband’s lawful acts.
Presiding Justice Tricia A. Bigelow and Justice Madeleine Flier joined Grimes in her decision.
Lemmer appeared pro per on appeal, while Charney was represented by Frederick E. Turner and Keith Van Dyke of Turner, Reynolds, Greco & O’Hara.
The case is Lemmer v. Charney, 11 S.O.S. 2309.
Copyright 2011, Metropolitan News Company