Wednesday, July 17, 2002
Santa Ana Lawyer Sanctioned $6,000 for Frivolous Appeal in Fee Case
By ROBERT GREENE, Staff Writer
The Fourth District Court of Appeal yesterday imposed a $6,000 sanction on a Santa Ana lawyer on its own motion for what it labeled as the attorney’s mishandling of client trust funds in an attempt to avoid turning them over after a fee dispute was resolved.
John M. Heurlin “followed a path of artifice and deceit with single-minded determination,” Justice Richard D. Fybel wrote for Div. Three.
Heurlin ultimately obtained control of his ex-client’s settlement funds by telling him—and the trial court—that the money would be maintained in a trust account pending resolution of a fee dispute. But he transferred much of the money to his own office account, and when the trial court ordered him to return the money on resolution of the fee dispute, he told the client there was no money left.
Fybel quoted from Abraham Lincoln’s advice to would-be lawyers that “if, in your own judgment, you cannot be an honest lawyer, resolve to be honest without being a lawyer.”
“Heurlin’s failure to abide by this wisdom has harmed not only the parties to this case, but also those litigants waiting in line with nonfrivolous appeals and the taxpayers of California,” Fybel said.
The justice said the opinion was published “because the issue of integrity of lawyers is important to the bench, the bar, and the general public.”
The case arose from a fee dispute Heurlin had with former client Michael DeRose.
DeRose discharged Heurlin and got new lawyers to handle a dental malpractice claim, but the new lawyers had a difficult time getting Heurlin to turn over his files. Among the correspondence Heurlin sent to new lawyer Christopher Day was advice to “educate yourself” about attorney liens and the work product privilege.
Day’s firm obtained a settlement in the dental matter. Heurlin, meanwhile, demanded that the defendant’s insurance company issue two checks, including one to him for the full amount of his fee claim—$12,590.70. He told Day, “[A]ll matters regarding our fee will be settled before Mr. DeRose sees a dime.”
The insurance company issued a $75,000 check, and Day asked Heurlin to come to his office to endorse it so that DeRose’s portion could be distributed to him while the lawyers continued to work out their issues over their portion, which Day offered to hold in trust.
Heurlin declined, writing:
“[M]y signature is not going on the check until we resolve the lien issue. You better get use [sic] to the idea that, if everyone wants to get paid, my lien will need to be paid.”
The Orange Superior Court entered a judgment in Heurlin’s favor for the face amount of a compromise offer made under Code of Civil Procedure Sec. 998, the settlement statute that includes cost-shifting measures to encourage parties to come to agreement.
But based on Heurlin’s assertion in court that that he was still holding his ex-client’s funds in trust, the court permitted him to retain the amount of the Sec. 998 offer if he returned the remainder of the trust moneys he held.
When Heurlin was served with notice of the judgment directing him to return the funds he sent DeRose’s lawyers what Fybel called a “gotcha” letter, saying there were no funds in the account and that he was free to execute on the judgment immediately.
“Heurlin’s position was that he would take the money offered in settlement and keep all of the client trust funds to boot,” Fybel said.
The trial court then vacated the judgment and told the parties to try again at settlement. Heurlin appealed, seeking to compel entry of a judgment that would allow him to keep the client trust funds and require the client to pay him the amount of the Sec. 998 agreement.
At oral argument before Fybel, Presiding Justice David Sills and Justice William Rylaarsdam, the court grilled Heurlin on just how much money he had in trust, and when.
“We conclude Heurlin filed and prosecuted a frivolous appeal…,” Fybel said.
The justice also called the sanctions amount “conservative.”
The case is DeRose v. Heurlin, G028450.
Copyright 2002, Metropolitan News Company