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Court of Appeal:
Firm Did Not Convert Funds by Paying Them To Party Rather Than Attorney With Lien
By a MetNews Staff Writer
A law firm representing the wife in a divorce proceeding that knew the husband’s previous lawyer had a lien against any recovery in the case, and that he claimed entitlement to $11,698.36 in unpaid fees, did not convert funds belonging to that attorney when it routed to the husband a $10,000 pre-judgment payment pursuant to a stipulation of the parties, Div. Seven of the Court of Appeal for this district has held.
The panel rebuffed the contention that a 1963 precedent points to a contrary conclusion and should be followed.
Alameda Superior Court Judge Noël Wise, sitting on assignment, authored Thursday’s opinion which was not certified for publication.
The opinion affirms a Nov. 24, 2020 order by Los Angeles Superior Court Judge Robert S. Draper granting a special motion to strike the complaint filed by attorney Devin Weisberg against the Jaurigue Law Group and firm members Michael Jaurigue and Ryan Stubbs.
Second Prong
While it was not in doubt that the action came under the first prong of the anti-SLAPP statute, Code of Civil Procedure §425.16—protected conduct—what was in dispute was whether Weisberg could show a probability that he could prevail on the merits, his burden under the second prong. Draper ruled that he could not.
Weisberg, a downtown Los Angeles practitioner, had represented Joseph Esquivel from July 15, 2013 to Dec. 3, 2014 in dissolution of marriage proceedings. Their retainer agreement created a lien based on charges for services, known as a “charging lien”; after he was fired, Weisberg provided a notice to the wife’s lawyers, at the Jaurigue firm in Glendale, of that lien; on June 28, 2017, Esquivel and his wife agreed that $10,000 of funds held in the Jaurigue firm’s client trust account would be released to him; they were. Weisberg protested that his lien had been ignored.
Seeking a declaration as to the validity of the lien, the lawyer obtained a June 16, 2018 default judgment setting the amount owed him at $16,273.79 which included prejudgment interest and costs.
Draper’s Ruling
In granting the anti-SLAPP motion, Draper observed:
“It is noteworthy that the disbursement of $10,000 was made almost a year before Weisberg established the enforceability and amount of his contractual lien.”
He cited the Aug 8, 2014 Court of Appeal opinion by this district’s Div. Three in Mojtahedi v. Vargas for the proposition that “an attorney lienholder must bring an independent action against the client to establish the existence, amount, and enforceability of the lien before the lien can be enforced against settling parties (or their attorneys) involved in making payments to the attorney’s former client.”
The judge noted that there were funds in the client trust account exceeding what was owed Weisberg, adding:
“Weisberg still has not established for the Court why, if the family law court in the dissolution matter has not fully resolved, Weisberg would have been entitled to his portion of fees out of a specific share of the disputed community property (the $10,000) at such a specific point in time before the resolution of the case.”
Wise’s Opinion
Wise’s opinion largely tracks Draper’s reasoning. Additionally, she dealt with Weisberg’s contention that the 1963 holding by Div. Two of this district’s Court of Appeal in Miller v. Rau should be applied, and if it were, that the judgment of dismissal would necessarily be reversed.
In that case, Beverly Hills attorney Jack L. Rau (now deceased) was sued for diverting to his client funds that were being claimed in a pending action brought by one Victor R. Miller to be his property, where Rau had notice of that claim. The appeals court declared in 1983:
“Although the express question of Rau’s duty upon receipt of notice of Miller’s claim has apparently not arisen in California on facts similar to those in the instant case, courts in other jurisdictions have generally recognized the principle that where one receives money as an agent, to which his principal has no right, and where he receives notice not to pay to his principal prior to disbursement of the funds, an action for money had and received lies against such party.”
Distinction Declared
Wise scoffed:
“The facts and equitable considerations in Miller bear little resemblance to those in Weisberg’s case.”
She added:
While Miller and its progeny stand for the proposition that an equitable lien may be imposed in certain cases where an attorney is on notice of a third party’s contractual right to funds received by that counsel on behalf of their client, the holding in Miller is driven by equitable considerations and does not provide a clear and unqualified rule….Until a valid attorney’s lien is established through a separate action, there is no requirement for counsel or the court to honor it.”
The jurist remarked:
Under Weisberg’s approach, Jaurigue should have refused to distribute the settlement funds to Esquivel in anticipation of Weisberg perfecting his lien and making a claim for those same funds. The law does not impose such foresight on a payor prior to the perfection of a lien. While Weisberg now has a right to satisfy his attorney lien from Esquivel, he had no such right when Jaurigue paid the $10,000 settlement payment to Esquivel in 2017.”
The case is Weisberg v. Jaurigue Law Group, B309754.
Weisberg represented himself on appeal, joined by mid-Wilshire attorney Howard A. Kapp. Zareh A. Jaltorossian of the Pasadena firm of KP Law acted for the Jaurigue Law Group and for Jaurigue and Stubbs.
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