Friday, May 27, 2011
C.A. Upholds Fee Award in Legal Malpractice Case
Sanctions Not ‘Relief’ That Must Be Pled in Specific Amount, Panel Says
By SHERRI M. OKAMOTO, Staff Writer
A Los Angeles attorney and his firm were entitled to recover the fees they paid to counsel representing them in a malpractice suit after a default judgment was entered in their favor as a terminating sanction, this district’s Court of Appeal ruled yesterday,
Div. One explained that attorney fees do not constitute the type of “relief” which Code of Civil Procedure Sec. 580 limits to the dollar amount demanded in a complaint in the event of a default. The panel concluded that David Chodos and Simke, Chodos, Silberfeld & Anteau—now Simke, Chodos & Sasaki—therefore could recoup the $427,466 it expended for another firm to defend them in a lawsuit filed by Jerry and George Athans.
The Athans brothers had been involved in earlier litigation with their mother, Eva Athans, who was represented by Goldsmith & Burns. After the dispute was settled in 1989, the Goldsmith firm sued Eva Athans, individually and as executor of her late-husband’s estate, and her children, for unpaid fees.
Once Athans retained Chodos and his firm to provide a defense, Chodos filed an answer to the complaint and filed a cross-complaint against the Goldsmith firm alleging legal malpractice.
A jury later found Eva Athans had breached the terms of a contingency agreement with Goldsmith and awarded the firm $520,225. It also returned a defense verdict on the malpractice claim. None of the Athans children were found liable.
In October 1992, the Athanses replaced Chodos with Ventura attorney Boyd Lemon. Lemon moved for a new trial in the Goldsmith matter, arguing that the firm’s entitlement to attorneys’ fees should have been determined in probate court under the Probate Code, not in a civil action based on the contingency fee agreement.
A trial court agreed and ordered that the case be retried in probate court. On appeal, Div. Four of this district’s Court of Appeal affirmed, and following remand, a probate court found the contingency fee agreement to be unenforceable and dismissed Goldsmith’s complaint.
Eva, Jerry and George Athans subsequently sued Chodos in the Los Angeles Superior Court for malpractice arising from his representation in the Goldsmith matter.
Chodos filed a cross-complaint, seeking to recover unpaid attorneys’ fees and costs and also filed a separate action against the Athans brothers, alleging that they owed the firm $285,246 for work performed on the Goldsmith case.
Both actions were consolidated, and Chodos was represented by Wasserman, Comden & Casselman—now Wasserman, Comden, Casselman & Esensten—in the consolidated cases.
When the Athans brothers failed to respond to discovery requests, Judge Fumiko Wasserman issued a minute order compelling responses and imposing $1,500 in sanctions. Chodos eventually filed a motion for terminating sanctions based upon the Athans brothers’ failure to comply with this order, and Judge Ralph Dau terminated the action.
Following Dau’s order, Judge Robert Letteau entered a default judgment against the brothers in the amount of $908,596.
Around 10 years later, in October 2009, Chodos renewed the judgment and served notice on the Athans brothers. The Athans brothers filed a motion to vacate the renewed judgment on the ground that Chodos’ cross-complaint and complaint in the separate action had not requested a specific amount of attorney fees.
Judge Gerald Rosenberg denied the motion, stating on the record that “it would be very difficult to plead ‘and we want to be awarded $427,000 in attorney fees’ without knowing what you’re in for in terms of the course and scope of litigation.”
Presiding Justice Robert M. Mallano expressed similar concerns in his opinion for the appellate court, emphasizing “the impossibility, not just the mere difficulty, of the task that would be imposed on plaintiffs at the time of filing a complaint if we interpreted ‘relief” in section 580 to include attorney fees awarded in a default judgment entered as a discovery sanction.”
He noted “the trial court awarded terminating sanctions approximately three and one-half years after the litigation commenced” and posited that “no attorney could have predicted with any accuracy whether or when terminating sanctions might be imposed or how much work might be done on the case” at the time the original complaint was filed.
The justice acknowledged “[t]here is no universal definition or plain meaning of ‘relief,’ ” but reasoned that “if a statement of damages, as mandated by sections 425.10 and 425.11 of the Code of Civil Procedure, and as referenced in section 580 of the same code, does not require a plaintiff to state an amount of attorney fees to recover them in a default judgment, then neither should a complaint in cases not for personal injury or wrongful death.”
In light of this, Mallano said, “the award of attorney fees of $427,466.29, incurred by Chodos in this litigation, did not constitute ‘relief’ ” under Sec. 580.
Justices Victoria Gerrard Chaney and Jeffrey W. Johnson joined the opinion.
Arthur Grebow of Gladstone Michel Weisberg Willner & Sloane, together with Marc J. Poster and Edward L. Xanders of Greines, Martin, Stein & Richland, represented the Athanses. Chodos represented himself and his firm on appeal.
The case is Simke, Chodos, Silberfeld & Anteau, Inc. v. Athans, 11 S.O.S. 2777.
Copyright 2011, Metropolitan News Company