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Court of Appeal:
Proviso Vesting Attorney With Power to Settle Is Invalid
By a MetNews Staff Writer
A client’s express contractual entrustment to her attorneys of the decision whether to accept a proposed settlement offer if they believed it would be advantageous to her was unenforceable, Div. Three of the Fourth District Court of Appeal has ruled, reversing a judgment in a personal injury case to which the plaintiff’s attorneys agreed over the client’s protest.
The panel referred the matter to the State Bar for possible disciplinary action against the attorneys.
Justice David A. Thompson wrote the opinion, filed Monday. The issue was apparently one of first impression—although the plaintiff’s attorney disputes that—given that Thompson pointed to no binding precedent proclaiming the invalidity of a clause in a retainer agreement relegating to the law firm the power to settle, and he relies on a nonbinding State Bar Court decision.
However, attorney Peter diDonato of Valencia, who represented plaintiff Sayedeh Sahba Amjadi in the Orange Superior Court and on appeal—said yesterday of the opinion:
“I believe that it only re-affirms long-standing case law and ethical rules that the attorney works for the client as a fiduciary and that refusal of the attorney to abide by the client’s ultimate right to determine finality of a personal injury claim impedes and violates that fiduciary relationship.”
Wording of Provision
The clause in the retainer agreement between Amjadi and the Mission Viejo firm of Jolly Berry Law reads:
“CLIENT agrees that if a settlement offer is tendered in the case by any defendants and the ATTORNEY believes in good faith that the settlement offer is reasonable, and that acceptance of the offer is in the CLIENT’S best interest, and should be accepted, CLIENT authorizes ATTORNEY to accept said offer on CLIENT’S behalf, at ATTORNEY’S sole discretion.”
Thompson Declared
That clause, Thompson declared, runs afoul of a provision of the State Bar Rules of Professional Conduct.
He wrote:
“Rule 1.2(a) provides, in relevant part, ‘A lawyer shall abide by a client’s decision whether to settle a matter.’ On its face, this rule appears to prohibit the disputed provision of the Jolly Berry firm’s retainer agreement.”
Thompson cited a 2014 opinion of the State Bar Court’s review Department in In re Guzman that says: “Attempts by an attorney to restrict a client’s right to control his or her case are invalid and evidence of overreaching.”
The jurist went on to declare that in light of that provision, the settlement by Amjadi’s lawyers of her action for $150,000 “is void to the extent it purports to grant an attorney the right to accept a settlement over the client’s objection,” adding:
“Accordingly, we hold the settlement to be void and reverse the resulting judgment.”
That judgment resulted from Hunt dismissing the action pursuant to the settlement. While Amjadi also appealed from Hunt’s order denying her motion to vacate the judgment, Thompson saw no need, in light of the reversal of the judgment, to discuss the order.
Waiver of Right
Thompson did not set forth why the right conferred by Rule 1.2(a) cannot be knowingly and intelligently waived.
DiDonato addressed that, saying yesterday:
“Rule 1.2(a) and its comments make it clear that an attorney must abide by the client’s instructions. In a personal injury claim there are so many unknown variables (liability, damages, insurance coverage) that a pre-authorization for settlement without specific value identified renders such a ‘waiver’ illusory and unenforceable.”
He said that a “concept of ‘waiver’ embodies an assumption that the attorney and client have equal bargaining power to enter into such an agreement.”
DiDonato recounted that Jolly “clearly did not want to proceed to trial” and sought permission from Orange Superior Court Judge Derek W. Hunt for permission to withdraw, “which was denied.” He said Jolly then decided to settle Amjadi’s claim for $150,000.00, the amount specified six months earlier in a Code of Civil Procedure §998 offer to compromise, “knowing that Ms. Amjadi did not accept that offer.” The lawyer added that Jolly seized upon “the vague language in the retainer of his so-called exclusive authority to settle the case against Amjadi’s explicit instructions in court, which he ignored with the support of Judge Hunt and defense counsel Richard Gower.” He explained:
“Therefore, the non-specific so-called ‘waiver’ of rights was subject to abuse by the Jolly Lawfirm, which is why the Court of Appeal declared such a provision in the retainer agreement as void against public policy.”
The first amended complaint in the action sets forth that the actual value of Amjadi’s claim against Jerrod West Brown based on her injuries incurred in an automobile accident was $2.3 million.
Notifying State Bar
Thompson announced that the court is referring “plaintiff’s former attorneys to the State Bar for potential discipline, as required by law and by Canon 3D(2) of the Code of Judicial Ethics.”
That canon says:
“Whenever a judge has personal knowledge, or concludes in a judicial decision, that a lawyer has committed misconduct or has violated any provision of the Rules of Professional Conduct, the judge shall take appropriate corrective action, which may include reporting the violation to the appropriate authority.”
Thompson also cited Business & Professions Code §6086.7(a) which requires a court to alert the State Bar “(2) Whenever a modification or reversal of a judgment in a judicial proceeding is based in whole or in part on the misconduct, incompetent representation, or willful misrepresentation of an attorney.”
He said: “Because we based our reversal in this matter on the Jolly Berry firm’s violation of rule 1.2 of the Rules of Professional Conduct, we refer plaintiffs former attorneys Kevin Jolly, Leah Berry, and Joseph Nazarian to the State Bar for potential discipline.” Jolly and Berry are partners in Jolly Berry. Nazarian, who also represented Amjadi in the trial court, is a Newport Beach attorney who is not a member of the Jolly Berry firm and was not a signatory to its retainer agreement.
Thompson did not explain why Nazarian was being referred to the State Bar.
However, diDonato said that Nazarian “was associated as counsel with the Jolly Lawfirm and present in Court when all these events occurred.”
Berry Comments
Berry provided this comment:
“Jolly Berry Law is disappointed with the Court of Appeal’s ruling and disagrees with its analysis. Jolly Berry Law was not a party to the underlying appeal and did not have the opportunity to provide the Court of Appeal a full factual and evidentiary record. As such, Jolly Berry Law is confident that when given the opportunity to present a full factual record, a trier of fact will agree that Jolly Berry Law fulfilled its ethical obligations to Ms. Amjadi.
“Jolly Berry Law is well respected for obtaining excellent results in challenging cases and believes it did just that in the underlying matter for Ms. Amjadi. The firm recognizes that settlement decisions are emotional and complicated. Unfortunately, because there are underlying matters still ongoing, the firm is unable to provide a more detailed response at this time. It looks forward to taking advantage of the opportunity to clear its name in the ongoing proceedings.”
The case is Amjadi v. Brown, 2021 S.O.S. 4898.
Jewels J. Jin of the diDonato Law Center also represented Amjadi on appeal.
Richard S. Gower and Christian X. Przybylowski of the downtown Los Angeles firm of MacDonald & Cody acted for Brown.
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