DocketNumber: No. B133171
Citation Numbers: 87 Cal. App. 4th 212
Judges: Johnson
Filed Date: 2/22/2001
Status: Precedential
Modified Date: 11/3/2024
Opinion
In the published portion of this case we hold a lawyer represented by other members of his law firm is entitled to recover reasonable attorney fees where the representation involved the lawyer’s personal interests and not those of the firm.
Facts and Proceedings Below
This case arises out of the landlord-tenant relationship between appellant Arthur Gilbert and respondent Master Washer & Stamping Co., Inc. However, this appeal focuses on postjudgment orders regarding attorney fees and costs, and does not concern the merits of the parties’ underlying claims against one another.
Gilbert filed a complaint against Master Washer, Los Angeles Superior Court case No. BC141326, on December 22, 1995, seeking damages for breach of lease, and attorney fees pursuant to the lease between the parties. Master Washer later filed a complaint in a separate action, Los Angeles Superior Court case No. BC142051, seeking damages for breach of contract and conversion of its property by Gilbert. Master Washer’s complaint also named Gilbert’s attorney, appellant David Gernsbacher, as a defendant based on his alleged role in preventing Master Washer from recovering its property from the leased premises. The cases were consolidated and assigned to Judge Ralph W. Dau.
Gemsbacher demurred to Master Washer’s first cause of action for breach of lease, and the trial court sustained the demurrer without leave to amend on April 4, 1996.
On February 10, 1998, Gilbert obtained summary adjudication in his favor on Master Washer’s breach of lease claim. This ruling also disposed of Master Washer’s defenses to Gilbert’s claim for breach of lease. The same
Trial of the consolidated actions commenced on January 7, 1999. On January 14, 1999, Gilbert and Master Washer entered into a stipulation for judgment (hereinafter the Stipulation) whereby Master Washer admitted liability in Gilbert’s breach of lease action.
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On February 24, 1999, Gilbert filed a proposed judgment pursuant to the Stipulation.
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On or about March 1, 1999, Gilbert and Gemsbacher filed a second proposed judgment providing in pertinent part as follows.
“On April 4, 1996, in Case No. BC 142051 (hereinafter the ‘Master Washer Action’) the Court sustained without leave to amend the demurrer of Defendant David Gemsbacher ... to the First Cause of Action for Breach of Lease of Plaintiff Master Washer & Stamping Co., Inc. . . . and, on February 10, 1998, the Court granted Defendant Gemsbacher’s Motion for Summary Judgment/Adjudication as to the remainder of Plaintiff Master Washer’s Complaint.
“On January 7, 1999, these consolidated causes came on regularly for trial before Judge Ralph W. Dau. . . .
“On January 14, 1999, in the Gilbert Action, Plaintiff Gilbert and Defendant Master Washer entered into a Stipulation under which Defendant Master Washer admitted liability on Plaintiff Gilbert’s complaint for breach of lease and, further, admitted that Plaintiff Gilbert’s damages for breach of lease total Eighty-Five Thousand Dollars ($85,000), stipulating that judgment be entered against Defendant Master Washer and in favor of Plaintiff Gilbert setting forth said $85,000 in damages.
“The Court has filed its Statement of Decision in the Master Washer Action.
“Accordingly,
*216 “It Is Ordered, Adjudged and Decreed as follows:
“1. That, in the Master Washer Action, Plaintiff Master Washer shall take nothing as against Defendant Gemsbacher, that the Master Washer Action against Defendant Gemsbacher be and hereby is dismissed, and that Defendant Gemsbacher shall recover from Plaintiff Master Washer his costs of suit in the amount of $_ and attorneys’ fees in the amount of $_
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On June 15, 1999, the trial court issued an order denying Gemsbacher’s motion to fix his attorney fees as costs, mling because Gemsbacher was represented by his own law firm, he was not entitled to an award of fees pursuant to Trope v. Katz
Gilbert and Gemsbacher both appeal from the trial court’s denial of their separate motions to fix attorney fees as
Discussion
I. Master Washer’s Motion to Amend the Judgment Did Not Conform with the Requirements of Code of Civil Procedure Section 663a, Therefore the Trial Court Erred in Amending the Judgment.
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II. An Attorney Who Is Represented by Other Members of His or Her Law Firm May Be Entitled to Recover Attorney Fees Under Civil Code Section 1717; Therefore the Trial Court Erred in Denying Gemsbacher’s Motion to Fix Attorney Fees As Costs.
California follows the so-called American rule, whereby each party to a lawsuit must ordinarily pay his or her own attorney fees.
The trial court found Gemsbacher was not entitled to attorney fees because he was represented by his own law firm, Gemsbacher & McGarrigle, ARC, and did not present evidence he was “obligated to pay” the legal fees incurred on his behalf by the attorneys representing him in this matter. Gemsbacher argues he is entitled to his attorney fees because he was sued personally and was represented by other counsel within the law firm of which he is a member. Thus he did not represent himself in propria persona. We agree with Gemsbacher and therefore we reverse the trial court’s order denying his motion to fix attorney fees as costs and remand for further proceedings.
A. An Attorney Representing Himself or Herself In Propria Persona May Not Recover Contractual Attorney Fees Pursuant to Civil Code Section 1717. However, a Corporation May Recover Fees Incurred by Its In-house Counsel.
In Trope v. Katz,
The California Supreme Court affirmed the trial.court’s action, holding “an attorney who chooses to litigate in propria persona rather than retain another attorney to represent him in an action to enforce a contract . . . cannot recover [attorney] fees under [Civil Code] section 1717.”
Trope rejected Trope and Trope’s argument they were entitled to an award of attorney fees “simply because the time [an attorney] devotes to litigating a matter on his own behalf has value.”
The Supreme Court in Trope also rejected Trope and Trope’s suggestion the Legislature may have wished to encourage attorneys to represent themselves in litigation. Citing to the United States Supreme Court’s decision in Kay v. Ehrler,
More recently, in PLCM Group, Inc. v. Drexler,
PLCM Group emphasized none of the problems relating to the pro se attorney litigants in Trope applied in the case of in-house counsel: “There is no problem of disparate treatment; in-house attorneys, like private counsel but unlike pro se litigants, do not represent their own personal interests and are not seeking remuneration simply for lost opportunity costs that could not be recouped by a nonlawyer. A corporation represented by in-house counsel is in an agency relationship, i.e., it has hired an attorney to provide professional legal services on its behalf. Nor is there any impediment to the effective and successful prosecution of meritorious claims because of possible ethical conflict or emotional investment in the outcome. The fact that [the corporation employs in-house counsel] does not alter the fact of representation by an independent third party. Instead, the payment of a salary to in-house attorneys is analogous to hiring a private firm on a retainer.”
B. The Policy Considerations in Trope v. Katz Do Not Preclude Gemsbacher’s Recovery of Attorney Fees Because He Is Not a Litigant In Propria Persona.
Having examined the policy considerations leading to the Trope and PLCM Group decisions, we apply those considerations to the case before us. We hold Gemsbacher, as an attorney litigant represented by other attorneys in his firm, is not a litigant in propria persona and thus Trope does not bar his recovery of reasonable attorney fees under Civil Code section 1717.
1. An Attorney Represented by Members of His or Her Own Law Firm “Incurs” Attorney Fees.
While Trope defines “incurring” an attorney fee as “becoming obligated to pay for it,”
Moreover, under PLCM Group, the trial court has wide discretion to fix a reasonable amount of attorney fees, and is not limited to the amount actually
Thus, a member of a law firm who is represented by other attorneys in the firm “incurs” fees within the meaning of Civil Code section 1717. Either the represented attorney will experience a reduced draw from the partnership (or a reduced salary from the professional corporation) to account for the amount of time his or her partners or colleagues have specifically devoted to his or her representation, or absorb a share of the reduction in other income the firm experiences because of the time spent on the case. This is different from the “opportunity costs” the attorney loses while he or she is personally involved in the same case, because the economic detriment is caused not by the expenditure of his or her own time, but by other attorneys working on his or her behalf.
Nevertheless, in this case the trial court denied Gemsbacher’s motion to fix attorney fees as costs in part because it believed the declaration of McGarrigle, Gemsbacher’s attorney, did not adequately establish Gernsbacher had “incurred” attorney fees. Although the trial court stated “nowhere does the declaration state that attorney Gernsbacher is obligated to pay this or any other amount to his firm for his representation in this matter,” this conclusion is factually inaccurate. Mr. McGarrigle’s declaration does indeed state “the total amount of costs and attorneys’ fees incurred by Defendant [Gernsbacher].” Master Washer did not present any evidence to rebut this statement, and in the absence of any reason to think otherwise, the word
2. An Attorney Represented by Members of His or Her Own Law Firm Is Party to an Attorney-client Relationship.
Trope v. Katz,
There can be no question an attorney-client relationship is also present where an attorney litigant is represented by other attorneys in his or her own firm. In this case, Messrs. Beach and McGarrigle of Gemsbacher & McGarrigle, like the in-house counsel in PLCM Group but unlike Messrs. Trope and Trope in Trope, represented not their personal interests or even those of their law firm, but the separate and distinct interests of Gemsbacher himself.
As our Supreme Court recognized in PLCM Group, the introduction of an objective third party as counsel for an attorney litigant promotes “the general
3. Permitting an Attorney Represented by Members of His or Her Own Law Firm to Recover Fees Under Civil Code Section 1717 Does Not Lead to Inequitable Application of the Statute.
In Trope v. Katz,
As we have seen, this consideration is absent where an attorney litigant is represented by members of his or her firm, because like a corporation represented by in-house counsel, the represented attorney seeks to recover fees for work done by others on his behalf. Indeed, it would be inequitable in the extreme to permit Gemsbacher to recover fees incurred by outside counsel, but deny him such recovery merely because his counsel are members of the same law firm as he.
*224 C. The Matter Must Be Remanded for Ruling on the Remaining Issues Presented in Gemsbacher’s Motion to Fix Attorney Fees.
Because the trial court erroneously ruled Trope v. Katz
Disposition
The trial court’s June 15, 1999 order denying Gemsbacher’s motion to fix attorney fees as costs is reversed and the matter is remanded to the trial court with directions to make a new ruling on Gemsbacher’s motion to fix attorney fees as costs, including whether Gemsbacher is a prevailing party entitled to contractual attorney fees, and the amount, if any, of reasonable attorney fees to which he is entitled. The parties shall bear their own costs on appeal.
Lillie, P. J., and Woods, J., concurred.
On March 13, 2001, the opinion was modified to read as printed above.
See footnote, ante, page 212.
This judgment was never signed or entered by the trial court.
See footnote, ante, page 212. .
Trope v. Katz (1995) 11 Cal.4th 274, 292 [45 Cal.Rptr.2d 241, 902 P.2d 259],
The lease underlying the litigation includes a provision for attorney fees to the successful party “by reason of any action to which Lessor shall be made party because of this lease.”
Gray v. Don Miller & Associates, Inc. (1984) 35 Cal.3d 498, 504 [198 Cal.Rptr. 551, 674 P.2d 253, 44 A.L.R.4th 763],
International Billing Services, Inc. v. Emigh (2000) 84 Cal.App.4th 1175, 1182 [101 Cal.Rptr.2d 532] (“Parties may agree by contract for the payment of attorney fees in actions relating to the contract”). See also Code of Civil Procedure section 1021 (“Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties . . . .”).
Trope v. Katz, supra, 11 Cal.4th 274.
The party litigants in Trope were actually the individual lawyers, Sorrell Trope and Eugene L. Trope, who were, according to the Court of Appeal opinion in Trope v. Katz, No. B073244, “engaged in the practice of law as the firm of Trope and Trope." The law firm Trope and Trope was not a party to the action and there is no indication it had any independent legal existence. Indeed, the Supreme Court treated the firm and the attorneys as interchangeable, framing the issue in the case as “whether an attorney who successfully represents himself in litigation may recover attorney fees when such fees are provided for by contract or statute.” (Trope v. Katz, supra, 11 Cal.4th 274, 278.) Therefore the Supreme Court’s references to “Trope & Trope" or “the firm” are best understood as shorthand references to party litigants Sorrell Trope and Eugene L. Trope, the two attorneys who
Trope v. Katz, supra, 11 Cal.4th at page 283.
Trope v. Katz, supra, 11 Cal.4th at page 283.
Trope v. Katz, supra, 11 Cal.4th at page 278.
Trope v. Katz, supra, 11 Cal.4th 274, 277.
Trope v. Katz, supra, 11 Cal.4th at page 280.
Trope v. Katz, supra, 11 Cal.4th 274, 285.
Trope v. Katz, supra, 11 Cal.4th at page 283, italics omitted.
Kay v. Ehrler (1991) 499 U.S. 432 [111 S.Ct. 1435, 113 L.Ed.2d 486].
Trope v. Katz, supra, 11 Cal.4th 274, 292, citing Kay v. Ehrler, supra, 499 U.S. 432.
PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084 [95 Cal.Rptr.2d 198, 997 P.2d 511].
PLCM Group, Inc. v. Drexler, supra, 22 Cal.4th at page 1092.
Trope v. Katz, supra, 11 Cal.4th 274.
PLCM Group, Inc. v. Drexler, supra, 22 Cal.4th 1084, 1092.
PLCM Group, Inc. v. Drexler, supra, 22 Cal.4th at page 1093.
PLCM Group, Inc. v. Drexler, supra, 22 Cal.4th 1084, 1092-1093.
PLCM Group, Inc. v. Drexler, supra, 22 Cal.4th at page 1094.
Trope v. Katz, supra, 11 Cal.4th 274, 280.
International Billing Services, Inc. v. Emigh (2000) 84 Cal.App.4th 1175 [101 Cal.Rptr.2d 532],
International Billing Services, Inc. v. Emigh, supra, 84 Cal.App.4th at page 1193 (“[i]t is difficult to see how [plaintiff] is aggrieved by the serendipity of the [defendants], who discovered how to defend the lawsuit without having to pay out of their pockets”).
International Billing Services, Inc. v. Emigh, supra, 84 Cal.app.4th at page 1192, italics omitted.
Staples v. Hoefke (1987) 189 Cal.App.3d 1397 [235 Cal.Rptr. 165]
Staples v. Hoefke, supra, 189 Cal.App.3d at page 1410 (“we can perceive of no reason why plaintiffs should profit from defendant Hoefke’s foresight in obtaining insurance coverage”).
PLCM Group, Inc. v. Drexler, supra, 22 Cal.4th 1084, 1096 (“ ‘the determination of what constitutes reasonable attorney fees is committed to the discretion of the trial court’ ”). See also Beverly Hills Properties v. Marcolino (1990) 221 Cal.App.3d Supp. 7 [270 Cal.Rptr. 605] (party who receives free legal services from pro bono attorney, and thus incurs no attorney fees at all, is nonetheless entitled to recover attorney fees under Civ. Code, § 1717); Vella v. Hudgins (1984) 151 Cal.App.3d 515, 520 [198 Cal.Rptr. 725] (while terms of the contract between attorney and client may be considered by trial court, such terms “do not compel any particular award”); All-West Design, Inc. v. Boozer (183 Cal.App.3d 1212, 1227 [228 Cal.Rptr. 736] (trial court not bound by terms of contingency fee agreement in determining amount of reasonable fees under Civ. Code, § 1717).
PLCM Group, Inc. v. Drexler, supra, 22 Cal.4th at page 1096. See also Balkind v. Telluride Mountain Title Co. (Colo.Ct.App. 2000) 8 P.3d 581, 588 (“The market-rate approach also has the virtue of being predictable for the parties and easy to administer, whereas the cost-plus approach is cumbersome, intrusive, costly to apply, and may distort the incentives for settlement and reward inefficiency.”).
See International Billing Services, Inc. v. Emigh supra, 84 Cal.App.4th 1175, 1192 (for purposes of Civ. Code, § 1717, “To ‘incur’ means ‘To run or fall into (some consequence, usually undesirable or injurious); to become through one’s own action liable or subject to; to bring upon oneself.’ (5 Oxford English Diet. (2d ed. 1933) p. 188, col. b.; see Black’s Law Diet. (7th ed. 1999) p. 771, col. b. [‘To suffer or bring on oneself (a liability or expense)’]; 1 Abbott’s Law Diet. (1879) p. 595, col. b [liability ‘cast upon them by act or operation of law’].) The California Supreme Court has construed the term as used in section 1717 to mean generally ‘ “become liable” for’ a fee, ‘i.e., to become obligated to pay for it.’ [Citation.].” [italics omitted]).
Trope v. Katz, supra, 11 Cal.4th 274.
Trope v. Katz, supra, 11 Cal.4th at page 280.
PLCM Group, Inc. v. Drexler, supra, 22 Cal.4th 1084, 1094.
Unlike the law firm Trope and Trope, Gemsbacher & McGarrigle has an independent existence as a professional corporation. Furthermore, Gemsbacher was being sued personally; the professional corporation was not a party to the lawsuit.
Indeed, while Gemsbacher’s situation is somewhat similar to that of the corporation in PLCM, it is even more analogous to that of any litigant who retains private counsel to represent him or her in a lawsuit.
PLCM Group, Inc. v. Drexler, supra, 22 Cal.4th 1084, 1092.
PLCM Group, Inc. v. Drexler, supra, 22 Cal.4th at pages 1092-1093.
Trope v. Katz, supra, 11 Cal.4th 274.
Trope v. Katz, supra, 11 Cal.4th at page 285.
Trope v. Katz, supra, 11 Cal.4th at pages 285-286, italics omitted.
Trope v. Katz, supra, 11 Cal.4th 274.
See footnote, ante, page 212.