Wednesday, March 12, 2003
Failure to Register Law Corporation Not UCL Violation—C.A.
By KENNETH OFGANG, Staff Writer
An attorney’s failure to register his law corporation with the State Bar is not a violation of the unfair competition law, the Court of Appeal for this district ruled yesterday.
Div. Two affirmed the dismissal of the putative class action against mid-Wilshire sole practitioner Baruch C. Cohen, along with an award of more than $30,000 in legal fees against the ex-client who sued.
The plaintiff, David K. Olson, alleged that Cohen incorporated in August 1996 but did not register with the State Bar until April 2001. Olson asked for various forms of relief, including a disgorgement of monies paid to Cohen between the date of incorporation and the date of State Bar registration.
Olson is represented by Robert W. Hirsh, who had a publicized dispute with Cohen several years ago.
Hirsh sued for more than $10,000 that Cohen allegedly failed to pay for his contract work on a bankruptcy case. Cohen responded that his agreement with Hirsh required that the dispute be taken before a “bais din” or rabbinical tribunal—both men are Orthodox Jews, and Cohen is a rabbi—and a Beverly Hills Municipal Court judge agreed.
The bais din ruled for Cohen.
Olson’s suit was dismissed after Los Angeles Superior Court Judge Anthony More sustained a demurrer. Justice Michael Nott, writing yesterday for the Court of Appeal, said the ruling was correct because the plaintiff failed to show an inequity.
Nott acknowledged that Cohen may have engaged in an unlawful business practice by misrepresenting his practice as being conducted through a law corporation when that corporation was not registered with the State Bar. But Olson, he said, failed to show that anyone was harmed by the unlawful act, or that any harm that did occur would be remedied by granting Olson relief under the UCL.
There is no basis for injunctive relief, Nott explained, because the corporation was registered before the suit was filed. Nor is there any basis for restitution, the justice explained, because there was no allegation that any client relied upon the purported corporate status in retaining Cohen or was hurt by the delay in registration.
Besides, the jurist commented, to the extent that a violation of the registration statute might harm consumers, the remedies afforded by the State Bar Act—a cease-and-desist order or a suspension or revocation of registration—are adequate and UCL relief would be disproportionate.
Nott also rejected the contention that the trial judge abused his discretion by awarding excessive fees to Cohen’s attorney, Stuart L. Leviton of Levinson & Kaplan.
He cited Mohr’s finding that the suit was “a full-scale onslaught” in which the plaintiff sought to discover the identities of all of Cohen’s clients and their financial arrangements with the law office, and the defendant had to litigate class action issues.
Nott also noted that the trial judge disallowed about $20,000 of the more than $50,000 sought.
The case is Olson v. Cohen, B155518.
Copyright 2003, Metropolitan News Company