Southern California Gas Co. v. Flannery

Filed 12/13/16 (unmodified opn. attached)
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
SOUTHERN CALIFORNIA GAS B268298
COMPANY,
(Los Angeles County
Plaintiff and Respondent, Super. Ct. Nos.
BC503027 and BC442504)
v.
ORDER MODIFYING
PATRICK FLANNERY, et al., OPINION
Defendants and Appellants; [NO CHANGE IN JUDGMENT]
SCOTT J. TEPPER, et al.,
Defendants and
Respondents.
THE COURT:
It is ordered that the opinion filed on November 14, 2016, is
modified as follows:
On page 16, the second sentence of the first full paragraph
reads: ―Judge Wiley noted his prior January 23, 2013 order in
the Sesnon Fire Case that the court in the Palimony Case ‗would
determine the ownership split between Murray and Flannery‘
and adopted the finding from the Palimony Case to award
Flannery $1,225,000.‖ The sentence should be replaced with:
―Judge Wiley noted his prior January 23, 2013 order in the
Sesnon Fire Case that the court in the Palimony Case ‗would
determine the ownership split between Murray and Flannery‘
and adopted the finding from the Palimony Case to award
Murray $1,225,000.‖
On page 29, the second sentence of the first full paragraph
reads: ―This argument is misguided because Flannery‘s answer
to the interpleader complaint was sufficient to place the
existence, value, and enforceability of his lien at issue as against
Flannery.‖ The sentence should be replaced with: ―This
argument is misguided because Tepper‘s answer to the
interpleader complaint was sufficient to place the existence,
value, and enforceability of his lien at issue as against Flannery.‖
The petition for rehearing is denied.
____________________________________________________________
KRIEGLER, Acting P.J. BAKER, J. KUMAR, J.

Judge of the Los Angeles Superior Court, assigned by
the Chief Justice pursuant to article VI, section 6 of the
California Constitution.
2
Filed 11/14/16 (unmodified version)
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
SOUTHERN CALIFORNIA GAS B268298
COMPANY,
(Los Angeles County
Plaintiff and Respondent, Super. Ct. Nos.
BC503027 and BC442504)
v.
PATRICK FLANNERY, et al.,
Defendants and Appellants;
SCOTT J. TEPPER, et al.,
Defendants and
Respondents.
APPEAL from a judgment of the Superior Court of Los
Angeles County, John Shepard Wiley, Judge. Affirmed.
Daneshrad Law Firm and Joseph Daneshrad for
Defendants and Appellants Patrick Flannery and Law Offices of
Joseph Daneshrad.
Sheppard Mullin Richter & Hampton, Steven O. Kramer,
John A. Yacovelle, Jonathan D. Moss, Marisa B. Miller; Sempra
Energy Office of General Counsel and Marlin E. Howes for
Plaintiff and Respondent.
Law Offices of John N. Tierney, John N. Tierney; Garfield
& Tepper and Scott J. Tepper for Defendants and Respondents
Scott J. Tepper and Garfield & Tepper.
Dennis Ardi for Defendant and Respondent Andrea L.
Murray.
_____________________
This case involves a judgment in an interpleader action
initiated by plaintiff and respondent Southern California Gas
Company (the Gas Co.) against: (1) defendant and appellant
Patrick J. Flannery; (2) defendant and appellant Law Offices of
Joseph Daneshrad (Daneshrad); (3) defendants and respondents
Scott Tepper and Tepper‘s law firm, Garfield & Tepper
(collectively, Tepper); and (4) defendant and respondent Andrea
L. Murray. In an earlier published opinion, this court affirmed
the lower court‘s denial of Flannery‘s special motion to strike
under Code of Civil Procedure section 425.161 (Anti-SLAPP
Motion). (Southern California Gas Co. v. Flannery (2014) 232
Cal. App. 4th 477.) After remand, the Gas Co., Murray, and
Tepper each filed a motion seeking payment from the
interpleader funds on different grounds, and the court ultimately
granted some portion of the funds sought by each party.
Flannery and Daneshrad appeal, and we affirm.
1 All further statutory references are to the Code of
Civil Procedure, unless otherwise stated.
2
FACTUAL AND PROCEDURAL BACKGROUND
We begin with an overview of the parties to this appeal and
their respective roles in three cases, of which the last is the
interpleader case on appeal.
Sesnon Fire Case
In 2009, Flannery and Murray sued the Gas Co. for
damages suffered as a consequence of the 2008 Sesnon wildfire
(Super. Ct. L.A. County, 2009, No. PC046735 [the Sesnon Fire
Case], consolidated under the lead case, No. BC442504). Judge
John Shepard Wiley presided over the case. Tepper represented
Flannery and Murray jointly2 pursuant to a contingency fee
agreement until the fall of 2010, when attorney Dennis Ardi
substituted in as Murray‘s counsel. Tepper continued to
represent Flannery until June 2012, when attorney Joseph
Daneshrad substituted in as Flannery‘s counsel.
On February 26, 2013, Flannery, Murray, and the Gas Co.
settled the Sesnon Fire Case. The parties‘ settlement was
approved by the court. Although the terms of the settlement
were confidential, it is clear that a specific amount (Settlement
Funds)3 was to be paid to Flannery and his counsel, while other
2Flannery and Murray never married, but have three
children together and lived together for two decades until
they separated in 2010.
3Ultimately, the parties refer to the amount of the
Settlement Funds as $2,450,000.
3
amounts were payable to other individuals, including Murray
and her counsel.
Palimony Case
While the Sesnon Fire Case was pending, Murray filed a
separate lawsuit against Flannery (Super. Ct. L.A. County, 2014,
No. BC438538 [the Palimony Case]) claiming among other things
50 percent ownership of the ranch that was damaged in the 2008
Sesnon fire. Judge Richard E. Rico conducted an eight-day jury
trial in the Palimony Case, as well as a separate court trial, and
in February 2014 the court entered judgment declaring Murray
50 percent owner of the property that was the subject of the fire
damage claims in the Sesnon Fire Case, and directing the court
in the Interpleader Case (described below) to disburse to Murray
$1,225,000 from the funds being held by the court, subject to any
attorney fees and costs to be determined as against her share of
the interpleaded funds.
Interpleader Case
On March 15, 2013, the Gas Co. deposited the Settlement
Funds with the court and filed a complaint in interpleader,
identifying Tepper, Daneshrad, and Flannery as defendants and
claimants. (Super Ct. L.A. County, 2013, No. BC503027 [the
Interpleader Case].) The case was assigned to Judge Wiley and
related to the Sesnon Fire Case. On March 21, 2013, the Gas Co.
filed an amendment adding Murray as a Doe defendant.4 Tepper
4On March 20, 2013, Murray‘s attorney had informed the
Gas Co. of a preliminary injunction entered in the Palimony Case
4
and Murray filed answers in the Interpleader Case on March 25
and March 27, 2013, respectively.
On May 17, 2013, Judge Wiley ordered the Gas Co.
discharged from the Interpleader Case. He also denied
Flannery‘s Anti-SLAPP Motion to strike the interpleader
complaint under section 425.16. Flannery appealed, and the
Interpleader Case was stayed at the trial court level until the
appeal was resolved, with this court affirming Judge Wiley‘s
order. The remittitur issued on April 30, 2015.
On May 27, 2015, the Gas Co. filed a motion for attorney
fees and costs, seeking payment for expenses incurred after May
8, 2013, in connection with opposing various motions and writ
petitions filed by Flannery, as well as the prior appeal. The
hearing on the Gas Co.‘s motion for attorney fees was scheduled
for September 10, 2015. On August 6, 2015, Murray filed a
motion seeking to collect the February 24, 2014 judgment
awarded to her in the Palimony Case. On August 12, 2015,
Tepper filed a motion seeking to collect attorney fees and costs
associated with his representation of Flannery in the Sesnon Fire
Case. Tepper‘s motion pointed out that despite the case having
been pending for over two years, and remittitur having issued on
April 30, 2015, after Flannery‘s unsuccessful anti-SLAPP appeal,
Flannery had not filed an answer and was therefore in default.
Tepper‘s motion also pointed out that Daneshrad had not re-
calendared a demurrer filed before the appeal. On August 28,
and requested the Gas Co. to add Murray as a Doe defendant in
the Interpleader Action.
5
2015, Flannery and Daneshrad filed answers in the Interpleader
Case. Flannery also filed oppositions to all three motions.5
On September 10, 2015, Judge Wiley held a hearing on the
motions filed by the Gas Co., Murray, and Tepper. He granted all
three motions, awarding $169,983.13 to the Gas Co., $1,225,000
to Murray, and $512,295 to Tepper. The final judgment entered
on September 23, 2015, also directs the balance of interpleaded
funds, including interest, to be paid to Flannery and Daneshrad.
Flannery and Daneshrad6 appealed the judgment on November
9, 2015.
DISCUSSION
Appellants raise a number of challenges to the court‘s
orders granting the motions filed by the Gas Co., Murray, and
Tepper. We first consider whether the appeal is subject to
dismissal based on the absence of a reporter‘s transcript or an
agreed or settled statement. Next, we review appellants‘ claim
that the court‘s orders deprived them of due process. We then
consider in turn each of the arguments raised by Flannery7 to the
5 Based on our review of appellants‘ appendix, it
appears that Daneshrad did not file an opposition to any of
the three motions.
6 We will refer to Flannery and Daneshrad together as
appellants, unless the context requires us to refer to them
individually.
7Because Daneshrad did not file any opposition to the
motions and no reporter‘s transcript was provided on appeal,
6
orders granting the motions filed by the Gas Co., Murray, and
Tepper.
Effect of Appellants’ Failure to Include a Reporter’s
Transcript or a Suitable Substitute
Appellants challenge orders made after a lengthy hearing
at which no court reporter was present. The record on appeal
does not include a settled statement or agreed statement as
authorized by California Rules of Court, rules 8.134 and 8.137.
―[I]t is appellant‘s burden to provide a reporter‘s transcript
if ‗an appellant intends to raise any issue that requires
consideration of the oral proceedings in the superior court . . .‘
(Cal. Rules of Court, rule 8.120(b)), and it is the appellant who in
the first instance may elect to proceed without a reporter‘s
transcript (Cal. Rules of Court, rule 8.130(a)(4)) . . . .‖ (Sanowicz
v. Bacal (2015) 234 Cal. App. 4th 1027, 1034, fn. 5.) A reporter‘s
transcript may not be necessary if the appeal involves legal
issues requiring de novo review. (See, e.g., Chodos v. Cole (2012)
210 Cal. App. 4th 692, 698–700 [transcript not necessary for de
novo review of order granting an anti-SLAPP motions].) In many
cases involving the substantial evidence or abuse of discretion
standard of review, however, a reporter‘s transcript or an agreed
or settled statement of the proceedings will be indispensible.
(See, e.g., Ballard v. Uribe (1986) 41 Cal. 3d 564, 574 [declining to
review the adequacy of an award of damages absent a transcript
we conclude Daneshrad has waived all arguments against
the motions. (See In re Marriage of Eben-King & King
(2000) 80 Cal. App. 4th 92, 117 [a party who fails to raise an
issue in the trial court waives the right to do so on appeal].)
7
or settled statement of the damages portion of a jury trial]; Vo v.
Las Virgenes Municipal Water Dist. (2000) 79 Cal. App. 4th 440,
447–448 [―The absence of a record concerning what actually
occurred at the trial precludes a determination that the trial
court abused its discretion‖] (Vo).)
We proceed to consider the issues raised on appeal,
cognizant of appellants‘ obligation to provide an adequate record
to demonstrate error as well as our obligation to presume that
the decision of the trial court is correct absent a showing of error
on the record. (Ketchum v. Moses (2001) 24 Cal. 4th 1122, 1140–
1141 (Ketchum).)
Appellants’ Due Process Claim
Appellants contend the trial court violated due process by
granting respondents‘ motions without a trial or a summary
judgment motion. Because appellants failed to put their own
claims at issue in compliance with the statutes governing
interpleader actions, they cannot now complain that they were
deprived of a right to a trial.
When an interpleader defendant elects to file an answer or
cross-complaint under subdivision (d) of section 386,8 the
8 The relevant text states: ―A defendant named in a
complaint to compel conflicting claimants to interplead and
litigate their claims . . . may, in lieu of or in addition to any
other pleading, file an answer to the complaint or cross-
complaint which shall be served upon all other parties to the
action and which shall contain allegations of fact as to his
ownership of or other interest in the amount or property and
any affirmative defenses and relief requested. The
8
pleading must ―contain allegations of fact as to either
[defendant‘s] ownership of or other interest in the amount or
property‖ interpleaded. Subdivision (e)9 of the same section
states that conflicting claims to funds ―shall be deemed issues
triable by the court,‖ and if the amounts claimed exceed the
amount on deposit, ―any issues of fact involved in determining
whether there is a deficiency . . . shall be tried by the court or a
jury . . . .‖
Appellants filed their answers belatedly.10 The answers
were insufficient to place their claims to the interpleaded funds
allegations in such answer shall be deemed denied by all
other parties to the action, unless otherwise admitted in the
pleadings.‖ (§ 386, subd. (d).)
9The relevant text states: ―Except in cases where by
the law a right to a jury trial is now given, conflicting claims
to funds or property or the value thereof so deposited or
delivered shall be deemed issues triable by the court, and
such issues may be first tried. In the event the amount
deposited shall be less than the amount claimed to be due by
one or more of the conflicting claimants thereto, . . . , any
issues of fact involved in determining whether there is a
deficiency in such deposit or delivery shall be tried by the
court or a jury . . . .‖ (§ 386, subd. (e).)
10To provide some context, the Gas Co. filed its
interpleader complaint on March 15, 2013, the trial court
denied Flannery‘s anti-SLAPP motion on May 17, 2013, and
remittitur issued following Flannery‘s first appeal on April
30, 2015. Appellants did not file their answers until August
28, 2015, three months after the Gas Co. filed its motion for
9
at issue before the court. First, both appellants‘ answers
contained a general denial of the allegations of the interpleader
complaint. The general denials in effect denied the Gas Co.‘s
allegations that appellants ―each claim an interest in some or all
of the same settlement proceeds to which [Tepper] claim[s] an
interest‖ and that ―other defendants claim an interest to all or
some of any settlement proceeds payable to Mr. Flannery under
the Confidential Settlement Agreement.‖ Next, appellants‘
answers are legally inadequate to state a conflicting claim to the
interpleader funds because they are devoid of any factual
specificity. (Interior Systems, Inc. v. Del E. Webb Corp. (1981)
121 Cal. App. 3d 312, 316 [―conclusionary [sic] allegations without
facts to support them are ambiguous and may be disregarded‖].)
Flannery‘s answer purports to state his claim in a single
sentence: ―Flannery claims that the entire amount of the
interpleader funds deposited with the court belongs to him as
provided for in the Settlement Agreement.‖ Similarly,
Daneshrad‘s purported claim states, ―Daneshrad claims the sum
of $1,960,000.00 up to date and continuing for legal services
rendered to [Flannery] pursuant to a contractual lien with
Flannery.‖
On this record, particularly where the sum total of the
court‘s awards to the Gas Co., Murray, and Tepper was less than
the amount of funds deposited with the court, appellants cannot
demonstrate that they were entitled to have their claims decided
by trial or summary judgment motion. With no reporter‘s
transcript in the record, we presume that Flannery had the
opportunity to present evidence at the hearing on September 10,
attorney fees, three weeks after Murray filed her motion,
and over two weeks after Tepper filed his motion.
10
2015, and waived any objection to the court proceeding on the
parties‘ declarations and exhibits alone. (Vo, supra, 79
Cal.App.4th at pp. 447–448 [affirming judgment in absence of
reporter‘s transcript on the grounds that the lower court‘s
judgment is presumed correct, and all intendments and
presumptions are indulged to support the judgment].)
Attorney Fee Award to the Gas Co.
Relevant Facts and Procedure
In May 2013, the trial court granted the Gas Co.‘s motion
for discharge and awarded $81,053.44 for costs and reasonable
attorney fees. In May 2015, after we remanded the Interpleader
Case following Flannery‘s first appeal, the Gas Co. filed a
renewed motion seeking additional attorney fees and costs
incurred after May 8, 2013. Flannery opposed the Gas Co.‘s
motion, arguing neither section 386.6 nor section 425.16
authorizes an award of attorney fees. On September 11, 2015,
the court granted the Gas Co.‘s motion, awarding $169,983.13 in
fees and costs incurred since May 8, 2013.
Analysis
Flannery contends section 386.6, subdivision (a), only
permits the court to award attorney fees incurred until the party
is discharged, and therefore the trial court erred in granting the
Gas Co.‘s motion for additional attorney fees and costs incurred
after May 8, 2013. We disagree.
11
A de novo standard of review applies to the question of
whether statutory language authorizes an award of attorney fees
and costs. (Conservatorship of Whitley (2010) 50 Cal. 4th 1206,
1213–1214.) If a statute permits a party to obtain attorney fees
and costs, the order granting or denying such an award is
reviewed for abuse of discretion. (Soni v. Wellmike Enterprise Co.
Ltd. (2014) 224 Cal. App. 4th 1477, 1481.)
Section 386.6, subdivision (a), gives the trial court
authority to award attorney fees to the Gas Co. for fees and costs
incurred not only to initiate the Interpleader Case and obtain
discharge, but also to defend against subsequent motions, writ
petitions, and appeals attacking the validity of the interpleader
complaint and discharge order. Flannery relies solely on the text
of section 386.6, subdivision (a), and excerpts from Canal Ins. Co.
v. Tackett (2004) 117 Cal. App. 4th 239 (Canal) to argue that the
statute only authorizes a court to award attorney fees to an
interpleading party when it orders discharge, not at any later
date. Section 386.6, subdivision (a),11 permits the party
initiating an interpleader action to request fees and costs
11The full text states: ―A party to an action who
follows the procedure set forth in Section 386 or 386.5 may
insert in his motion, petition, complaint, or cross complaint a
request for allowance of his costs and reasonable attorney
fees incurred in such action. In ordering the discharge of
such party, the court may, in its discretion, award such
party his costs and reasonable attorney fees from the
amount in dispute which has been deposited with the court.
At the time of final judgment in the action the court may
make such further provision for assumption of such costs
and attorney fees by one or more of the adverse claimants as
may appear proper.‖ (§ 386.6, subd. (a).)
12
incurred ―in such action.‖ The statutory text continues: ―In
ordering the discharge of such party, the court may, in its
discretion, award such party his costs and reasonable attorney
fees from the amount in dispute which has been deposited with
the court.‖ (§ 386.6, subd. (a).) Canal involved an interpleading
plaintiff who sought an award of attorney fees three months after
the court had discharged plaintiff and allocated the interpleader
funds among 14 claimants. The appellate court held section
386.6 did not authorize a court to award fees to a party that had
earlier opted to settle the case and forgo its request for fees, and
then belatedly sought fees three months after the interpleaded
funds had been allocated among the claimants. (Canal, supra, at
p. 244.) The facts of Canal are fully distinguishable from the
facts and procedural posture of the case before us. Here, the
lower court awarded the Gas Co. fees and costs incurred prior to
discharge, but the Gas Co. subsequently incurred additional fees
and costs in the interpleader action based on Flannery‘s decision
to continue to challenge the validity of the action itself. Case law
recognizes that attorney fees, whether recoverable by contract or
statute, ―are available for services at trial and on appeal.
[Citation.]‖ (Serrano v. Unruh (1982) 32 Cal. 3d 621, 637, italics
added [rejecting argument that no fees are recoverable for
defending a fee award on appeal because the appeal did not
independently meet the statutory requirements for a fee award];
see also Ketchum, supra, 24 Cal.4th at p. 1141 [the party
litigating a matter tenaciously cannot complain about the time
necessarily spent by the other party in response].) We do not
read the language of section 386.6 or the reasoning of Canal as
mandating a departure from the usual rule that a party entitled
13
to attorney fees and costs by statute is also entitled to fees and
costs incurred on appeal.
We therefore conclude section 386.6, subdivision (a), gives
the court statutory authority to award the Gas Co. attorney fees
and costs until the Gas Co. was fully and finally discharged from
the proceeding, which includes defending the interpleader
complaint and discharge order against subsequent motions, writ
petitions, and appeals. (See Lincoln Nat. Life Ins. Co. v. Mitchell
(1974) 41 Cal. App. 3d 16, 20.) Because the court had authority to
award fees under section 386.6, we need not consider whether
section 425.16 provides an alternate basis for the award. To the
extent Flannery challenges the amount of the award to the Gas
Co., without a reporter‘s transcript, Flannery cannot demonstrate
the trial court‘s award constituted an abuse of discretion.
Monetary Award to Murray
Relevant Facts and Procedure
Judge Wiley ruled on motions in limine filed by Murray
and Flannery in the Sesnon Fire Case on January 23, 2013,
ordering that: ―Murray and Flannery are parties to [the
Palimony Case] in which Murray seeks a declaration of her
ownership interest in the real property Murray and Flannery
claim the Sesnon fire damaged. The respective ownership
interests of Murray and Flannery in the subject property are not
directly relevant to their claims of negligence against the Gas
[Co.] Litigating the issue of the ownership interests of [Murray
and Flannery] in this case is unnecessary, as [the Palimony Case]
will resolve that dispute.‖
14
Murray, Flannery, and the Gas Co. later settled the Sesnon
Fire Case. The settlement terms specified, ―As between Ms.
Murray and Mr. Flannery, the parties are not releasing each
other of and from any and all claims that may exist between
them, whether or not included in the pending lawsuits. And this
settlement is without prejudice to either of their rights in those
other lawsuits.‖ Murray‘s attorney in the Palimony Case advised
the Sesnon Fire Case settlement judge that he planned ―on going
to court in the [Palimony Case] and advising the court of this
settlement because we intend to seek an injunction -- restraining
order.‖
On February 28, 2013, Judge Rico issued an order in the
Palimony Case requiring certain settlement proceeds from the
Sesnon Fire Case be deposited in a trust account for the benefit of
Murray and Flannery.
On February 24, 2014, Murray obtained a judgment in the
Palimony Case awarding her $1,225,000, subject to attorney fees
and costs (Palimony Judgment). The pertinent part of the
Palimony Judgment declares Murray a 50 percent owner of the
ranch property damaged in the fire at issue in the Sesnon Fire
Case and recognizes that Murray and Flannery‘s property
damage claims in the Sesnon Fire Case were settled in the
amount of $2,450,000. The Palimony Judgment continues: ―This
settlement of $2,450,000 was deposited by [the Gas Co.] with the
court in [the Interpleader Case]. [¶] As and for her share of the
property damages claim in the [Sesnon Fire Case], [Flannery]
shall pay to [Murray] the sum of $1,225,000, which amount is
subject to any attorney fees and costs that may be assessed
against this money as to be determined in the Interpleader
[Case]. The court in the Interpleader [Case], shall release and
15
disburse from the funds being held in that action, the sum of
$1,225,000 to [Murray] subject to attorney‘s fees and costs, if any
to be determined as against [Murray‘s] share.‖ On April 25,
2014, Flannery appealed the Palimony Judgment.12
While Flannery‘s appeal of the Palimony Judgment
remained pending, Murray filed a motion in the Interpleader
Case to collect the Palimony Judgment, seeking disbursement of
$1,225,000 plus interest from the funds deposited by the Gas Co.
Flannery‘s opposition argued that (1) the Palimony Judgment
was stayed pending appeal, (2) Judge Wiley lacked jurisdiction to
modify the settlement agreement reached in the Sesnon Fire
Case, and (3) the Palimony Judgment was subject to an offset for
attorney fees claimed by Tepper and Daneshrad. Murray‘s reply
brief argued that (1) the Palimony Judgment was not stayed
pending appeal because Flannery had not posted a bond or
undertaking as required by section 917.2, (2) Judge Wiley had
expressly granted Judge Rico, the judge presiding over the
Palimony Case, authority to determine the division of any
judgment or settlement in the Sesnon Fire Case as between
Flannery and Murray, and (3) any claim for attorney fees
regarding Murray‘s Palimony Judgment had been resolved.
After a hearing on September 10, 2015, Judge Wiley issued
an order dated September 11, 2015, awarding Murray $1,225,000
from the interpleader funds, but denying her request for interest.
Judge Wiley noted his prior January 23, 2013 order in the Sesnon
Fire Case that the court in the Palimony Case ―would determine
the ownership split between Murray and Flannery‖ and adopted
12Appellants filed a request for judicial notice of the
disposition of the Palimony Judgment on appeal. The
request was denied on May 26, 2016.
16
the finding from the Palimony Case to award Flannery
$1,225,000. The September 11, 2015 order also addressed the
provision in the Palimony Judgment making Murray‘s award
subject to any attorney fees charged against Murray‘s share of
the interpleaded funds. Relying on Murray‘s declaration that she
would resolve any fee obligations to her attorneys out of the
award amount, the court extinguished any claims by Murray‘s
attorneys, Tepper and Ardi, to the remaining funds on deposit
with the court. The trial court denied Murray‘s request for
postjudgment interest, noting that the Palimony Judgment is
―most fairly interpreted as a judgment for the personal property
that is within this court‘s interpleader jurisdiction.‖ Finally, the
court ruled that Murray is entitled to the funds immediately,
rejecting Flannery‘s argument that the Palimony Judgment is
stayed pending appeal.
Analysis
Flannery raises multiple contentions of error against the
order awarding $1,225,000 of the interpleader funds to Murray,
but none are persuasive. First, the court correctly concluded the
Palimony Judgment was not stayed pending appeal. Second,
Flannery cannot show the court that entered the Palimony
Judgment lacked jurisdiction. Third, Flannery fails to
demonstrate the trial court abused its discretion in deferring to
Murray‘s assurance that her attorneys will be paid from the
award amount. Fourth, there is no evidence—or even adequate
factual allegations—to support Flannery‘s claim that
Daneshrad‘s firm had a $1,960,000 lien that took priority over
any distribution to Murray.
17
A. Stay of Palimony Judgment Pending Appeal
Flannery contends the interpleader court lacked authority
to grant Murray‘s motion because the Palimony Judgment was
stayed pending appeal under section 916, subdivision (a).13
Alternatively, Flannery argues that because the Palimony
Judgment is a mandatory injunction, it was subject to an
automatic stay on appeal. Murray responds that the Palimony
Judgment was enforceable because Flannery did not post an
undertaking as required under section 917.2. Murray is correct.
Under subdivision (a)(1) of section 917.1,14 enforcement of a
judgment for ―[m]oney or the payment of money‖ is not stayed on
appeal ―[u]nless an undertaking is given.‖ Under section 917.2,15
13 The relevant text states: ―Except as provided in
Sections 917.1 to 917.9, inclusive, . . . the perfecting of an
appeal stays proceedings in the trial court upon the
judgment or order appealed from or upon the matters
embraced therein or affected thereby, including enforcement
of the judgment or order . . . .‖ (§ 916, subd. (a).)
14 The full text states: ―(a) Unless an undertaking is
given, the perfecting of an appeal shall not stay enforcement
of the judgment or order in the trial court if the judgment or
order is for any of the following: [¶] (1) Money or the
payment of money, whether consisting of a special fund or
not, and whether payable by the appellant or another party
to the action.‖ (§ 917.1, subd. (a)(1).)
15The full text states: ―The perfecting of an appeal
shall not stay enforcement of the judgment or order of the
18
an appeal of a judgment for delivery of personal property does not
stay enforcement of judgment ―unless an undertaking in a sum
and upon conditions fixed by the trial court, is given . . . .‖
Flannery and Murray disagree about the impact of
McCallion v. Hibernia etc. Society (1893) 98 Cal. 442 (McCallion)
on the question of whether Flannery needed to post an
undertaking to stay the Palimony Judgment on appeal. In
McCallion, the court concluded that money held by the court in a
trial court if the judgment or order appealed from directs the
assignment or delivery of personal property, including
documents, whether by the appellant or another party to the
action, or the sale of personal property upon the foreclosure
of a mortgage, or other lien thereon, unless an undertaking
in a sum and upon conditions fixed by the trial court, is
given that the appellant or party ordered to assign or deliver
the property will obey and satisfy the order of the reviewing
court, and will not commit or suffer to be committed any
damage to the property, and that if the judgment or order
appealed from is affirmed, or the appeal is withdrawn or
dismissed, the appellant shall pay the damage suffered to
such property and the value of the use of such property for
the period of the delay caused by the appeal. The appellant
may cause the property to be placed in the custody of an
officer designated by the court to abide the order of the
reviewing court, and such fact shall be considered by the
court in fixing the amount of the undertaking. If the
judgment or order appealed from directs the sale of
perishable property the trial court may order such property
to be sold and the proceeds thereof to be deposited with the
clerk of the trial court to abide the order of the reviewing
court; such fact shall be considered by the court in fixing the
amount of the undertaking.‖ (§ 917.2.)
19
proceeding akin to an interpleader action constituted personal
property within the meaning of former section 943, the
predecessor to section 917.2. (Id. at p. 445.) Murray and the
lower court relied on the McCallion court‘s reasoning that ―when
the money came into the possession of the court the litigation
resolved itself essentially into an action to try the title to
personal property‖ subject to the stay provisions applicable to
judgments for delivery of personal property. (Ibid.) Flannery, on
the other hand, focuses on the McCallion court‘s reliance on the
former statutory language to conclude that no stay bond was
required because ―the fund was in the possession of the court,
and such fact by the terms of the section itself does away with the
requirement.‖ (Ibid.)
In order to explain why current statutory language
requires a bond to stay a judgment for identified funds already in
the court‘s possession, we briefly review some relevant legislative
history. When McCallion was decided in 1893, former section
943 provided that the execution of a judgment or order for
assignment or delivery of personal property ―cannot be stayed by
appeal, unless the things required to be assigned or delivered be
placed in the custody of such officer or receiver as the court may
appoint, or unless an undertaking be entered into . . . .‖ (Former
§ 943, Code Amends. 1880, ch. 18, § 1, p. 6 [Code Civ. Proc.],
italics added.) In 1968, the Legislature recodified the statutory
provisions for stays pending appeal, replacing former section 943
with section 917.2, but retaining language exempting from the
bond requirement property placed in the court‘s custody.16
16The relevant text of former section 917.2 stated:
―The perfecting of an appeal shall not stay enforcement of
the judgment or order of the trial court if the judgment or
20
(Stats. 1968, ch. 385, §§ 1–2, pp. 816–820.) In 1972, the
Legislature eliminated the exception relied upon by the
McCallion court, so section 917.2 currently states in relevant
part: ―The perfecting of an appeal shall not stay enforcement of
the judgment or order of the trial court if the judgment or order
appealed from directs the assignment or delivery of personal
property . . . unless an undertaking in a sum and upon conditions
fixed by the trial court, is given . . . .‖ The reference to funds
deposited with the court, historically part of section 917.2, now
appears in section 917.1, subdivision (b),17 and provides that in
order appealed from directs the assignment or delivery of
personal property . . . unless the property is placed in the
custody of an officer designated by the trial court to abide the
order of the reviewing court or an undertaking in a sum and
upon conditions fixed by the trial court, is given . . . .‖ (Stats.
1968, ch. 385, § 2, p. 817, italics added.)
17 The full text states: ―The undertaking shall be on
condition that if the judgment or order or any part of it is
affirmed or the appeal is withdrawn or dismissed, the party
ordered to pay shall pay the amount of the judgment or
order, or the part of it as to which the judgment or order is
affirmed, as entered after the receipt of the remittitur,
together with any interest which may have accrued pending
the appeal and entry of the remittitur, and costs which may
be awarded against the appellant on appeal. This section
shall not apply in cases where the money to be paid is in the
actual or constructive custody of the court; and such cases
shall be governed, instead, by the provisions of Section
917.2. The undertaking shall be for double the amount of
the judgment or order unless given by an admitted surety
insurer in which event it shall be for one and one-half times
the amount of the judgment or order. The liability on the
21
―cases where the money to be paid is in the actual or constructive
custody of the court; . . . such cases shall be governed, instead, by
the provisions of Section 917.2.‖
Based on the amendments to statutory language since the
time McCallion was decided, we conclude that the Palimony
Judgment was a judgment for delivery of personal property
governed by section 917.2.18 Because Flannery did not seek an
order from Judge Rico fixing the amount for an undertaking,
Flannery‘s appeal did not stay enforcement of the Palimony
Judgment.
B. Jurisdiction to Determine Division of Ownership of
Property at Issue in the Sesnon Fire Case
Flannery contends the Palimony Judgment is void because
the Palimony Case court (Judge Rico) lacked jurisdiction to
declare the rights of parties in the Sesnon Fire Case. His
argument rests on the fact that the settlement judge dismissed
the Sesnon Fire Case under section 664.6, retaining jurisdiction
only to enforce the terms of the settlement. However, the
settlement and dismissal of the Sesnon Fire Case did not resolve
the ongoing dispute between Murray and Flannery regarding
undertaking may be enforced if the party ordered to pay does
not make the payment within 30 days after the filing of the
remittitur from the reviewing court.‖ (§ 917.1, subd. (b).)
18 Having determined that the Palimony Judgment is a
judgment directing the delivery of personal property, which
is governed by section 917.2, we reject Flannery‘s argument
that the Palimony Judgment is a mandatory injunction
subject to an automatic stay on appeal.
22
their respective ownership interests in the fire-damaged
property, and therefore their respective claims to the Settlement
Funds. The parties to the Sesnon Fire Case were well aware that
there was ongoing litigation between Murray and Flannery and
that Judge Wiley had deferred those questions to Judge Rico
when he ruled on Murray and Flannery‘s motions in limine on
January 23, 2013. The Settlement Agreement expressly reserved
those claims by stating, ―As between Ms. Murray and Mr.
Flannery, the parties are not releasing each other of and from
any and all claims that may exist between them, whether or not
included in the pending lawsuits. And this settlement is without
prejudice to either of their rights in those other lawsuits.‖
Having entered into a settlement agreement that expressly
reserved Murray‘s claims against him, Flannery cannot now
claim that the court tasked with resolving those claims somehow
lacked jurisdiction to do so.
C. Offset of Attorney Fees
Flannery also contends the trial court erroneously failed to
offset attorney fees against the $1,225,000 disbursement as
contemplated by the Palimony Judgment. Flannery does not
provide any legal authority to support his argument, nor does he
specify what standard of review should apply. Nevertheless, we
glean from appellants‘ opening brief that Flannery is unhappy
that the court ordered the full $1,225,000 to Murray without
deducting fees owed to Tepper or to Daneshrad. One problem
with the argument is that Tepper is apparently satisfied with the
judgment, as he has not appealed, and Flannery has no standing
to make an argument for him. A greater folly in this argument is
23
that the court‘s decision on whether or not to award fees to
Tepper or Daneshrad is subject to an abuse of discretion standard
of review. ―A request for an award of attorney fees is entrusted to
the trial court‘s discretion and will not be overturned in the
absence of a manifest abuse of discretion, a prejudicial error of
law, or necessary findings not supported by substantial
evidence.‖ (Yield Dynamics, Inc. v. TEA Systems Corp. (2007)
154 Cal. App. 4th 547, 577.) Because Flannery cannot show the
court abused its discretion in extinguishing Tepper‘s claim to
additional fees based on his representation of Murray and in
impliedly denying Daneshrad‘s claim for fees, we find no error.
D. Daneshrad’s Fee Lien
Finally, Flannery contends the court erred when it
disregarded the priority of Daneshrad‘s attorney fee lien and
instead disbursed half of the funds on deposit to Murray. As
discussed earlier in this opinion, the record does not establish
that Daneshrad ever made a claim on the interpleaded funds,
and so Flannery‘s contentions are unwarranted. ―A lien in favor
of an attorney upon the proceeds of a prospective judgment in
favor of his client for legal services rendered . . . may be created
either by express contract . . . [citations] or it may be implied if
the retainer agreement between the lawyer and client indicates
that the former is to look to the judgment for payment of his fee
[citations].‖ (Cetenko v. United California Bank (1982) 30 Cal. 3d
528, 531, italics added (Cetenko).) Even if Daneshrad had filed a
sufficient answer, there is no evidence in the record on appeal
demonstrating a contractual relationship between Murray and
Daneshrad. Accordingly, Daneshrad‘s lien would only apply to
24
any amount awarded to Flannery, and the court‘s judgment
reflects that fact.
Monetary Award to Tepper
Relevant Facts and Procedure
Tepper represented Flannery and Murray jointly in the
Sesnon Fire Case until the fall of 2010, when Ardi substituted in
as Murray‘s counsel. In June 2012, Tepper sought to withdraw
from his role as Flannery‘s attorney, based on Tepper‘s recent
diagnosis with advanced prostate cancer, ethical conflicts relating
to Flannery‘s insistence on untruthful testimony, and Flannery‘s
refusal to advance expert witness fees. Ultimately, Daneshrad
substituted in as Flannery‘s new counsel on June 13, 2012.
On August 12, 2015, Tepper filed a motion for attorney fees
and costs seeking a disbursement of $793,785.06 from the
interpleaded funds. Flannery‘s opposition argued (1) Tepper
could not recover on his fee lien without first filing a separate
lawsuit against Flannery, (2) Tepper is not entitled to any fees
because he voluntarily withdrew from the case, and (3) Tepper
inflated his fees and was double billing by seeking compensation
from both Flannery and Murray.
After the September 10, 2015 hearing, the court awarded
Tepper $512,295. The court deducted (1) any time claimed but
not reflected in Tepper‘s billing records and (2) half the time
claimed for the period when Tepper was representing both
Murray and Flannery. The court also used an hourly rate of
$500, rather than the $650 hourly rate claimed by Tepper. Using
the new hourly rate and the reduced time, the court applied a
25
multiplier of 1.5 based on the contingent nature of the fee
agreement, which reflects a risk of non-recovery and a delay in
payment.
Analysis
A. Interpleader Case Satisfies the “Separate,
Independent Action” Requirement for Enforcement of
an Attorney Fee Lien
Flannery contends the court erred in awarding attorney
fees and costs to Tepper because Tepper did not establish the
existence and amount of his lien in an independent action. We
reject this contention because the Interpleader Case satisfies the
requirement that an attorney must file a separate, independent
action in order to enforce a fee lien.
―A lien in favor of an attorney upon the proceeds of a
prospective judgment in favor of his client for legal services
rendered has been recognized in numerous cases.‖ (Cetenko,
supra, 30 Cal.3d at p. 531.) ―In California, an attorney‘s lien is
created only by contract—either by an express provision in the
attorney fee contract [citations] or by implication where the
retainer agreement provides that the attorney is to look to the
judgment for payment for legal services rendered [citations].‖
(Carroll v. Interstate Brands Corp. (2002) 99 Cal. App. 4th 1168,
1172, fn. omitted (Carroll).) For liens created in a contingency
fee contract, a cause of action to enforce the lien ―does not accrue
until the occurrence of the stated contingency.‖ (Fracasse v.
Brent (1972) 6 Cal. 3d 784, 792.) The attorney‘s lien survives even
after discharge, although the attorney‘s recovery is limited to the
26
reasonable value of services actually performed (i.e., quantum
meruit), rather than the full percentage specified in the contract.
(Id. at p. 786; Weiss v. Marcus (1975) 51 Cal. App. 3d 590, 598
[―where an attorney has been discharged (with or without cause)
by a client with whom the attorney had a contingent fee
agreement, upon occurrence of the contingency specified in the
agreement, the attorney is limited to a quantum meruit recovery
for the reasonable value of his services rendered to the time of
discharge‖].)
―Unlike a judgment creditor‘s lien, which is created when
the notice of lien is filed [citation], an attorney‘s lien is a ‗secret‘
lien; it is created and the attorney‘s security interest is protected
even without a notice of lien. [Citations.]‖ (Carroll, supra, 99
Cal.App.4th at p. 1172.) Still, it is ―permissible, and even
advisable,‖ for an attorney to file a notice of lien in the
underlying action, meaning the action where the attorney is the
client‘s attorney of record or—in the case of an attorney who has
been discharged—where the attorney previously represented the
client. (Valenta v. Regents of University of California (1991) 231
Cal. App. 3d 1465, 1470 (Valenta) [discharged attorney filed a
notice of lien in the underlying action, an action by plaintiff
Valenta against defendant university for wrongful termination;
court lacked jurisdiction to either affirm or terminate the lien].)
It is well recognized that, regardless of whether an attorney
files a notice of lien, the court deciding the underlying action
lacks jurisdiction to decide the existence or validity of the
attorney‘s lien claim on the underlying judgment. (See, e.g.,
Brown v. Superior Court (2004) 116 Cal. App. 4th 320, 328–329
(Brown) [―the trial court in the [underlying] action had no
authority to determine the existence or validity of [the attorney‘s]
27
claimed lien on the proceeds of the [underlying] judgment‖];
Carroll, supra, 99 Cal.App.4th at p. 1172 [―[a]ppellate courts
have consistently held that the trial court in the underlying
action has no jurisdiction to determine the existence or validity of
an attorney‘s lien on the judgment‖]; Valenta, supra, 231
Cal.App.3d at p. 1470.) The court in Brown explained the
limitation ―is founded on the fundamental principle ‗that one who
is not a party to a proceeding may not make a motion therein.‘
[Citation.]‖ (Brown, supra, at p. 329.) Because an attorney is
very unlikely to meet the criteria to intervene and become a party
to the underlying action, ―the fundamental rule is that the
attorney is not a party to the client‘s action and cannot appear on
his or her own behalf to seek any relief in that action, including
enforcement of a contractual lien against the proceeds of the
judgment. (See Hansen v. Jacobsen (1986) 186 Cal. App. 3d 350,
356 [‗Because the discharged attorney is not a party to the
pending action and may not intervene, the trial court has no
jurisdiction to award fees to that attorney‘].)‖ (Brown, supra, at
p. 330.) Because the attorney cannot intervene in the underlying
action, ―[a]fter the client obtains a judgment, the attorney must
bring a separate, independent action against the client to
establish the existence of the lien, to determine the amount of the
lien, and to enforce it.‖ (Carroll, supra, at p. 1173, italics added.)
The court in Mojtahedi v. Vargas (2014) 228 Cal. App. 4th
974, 976 (Mojtahedi) took this principle one step further by
requiring that the former client must be named as a party to the
separate, independent action to establish the existence and
validity of an attorney fee lien. In Mojtahedi, the plaintiff was
the clients‘ former attorney in a personal injury matter. Their fee
agreement included a lien provision. The plaintiff represented
28
the clients for about eight months before the defendant
substituted in as the clients‘ new attorney. The plaintiff
informed the claims adjuster of his lien, and when the underlying
action settled for $14,500, the check identified three payees: the
clients, the plaintiff‘s law office, and the defendant‘s law office.
The plaintiff sent the defendant a log of his time and demanded
$4,407 in attorney fees. When the defendant offered the plaintiff
a lower amount, the plaintiff filed suit against the defendant,
among others, but not his former clients. (Ibid.) The Mojtahedi
court concluded that without bringing a separate action against
the clients, a former attorney cannot establish ―the existence,
amount, and enforceability of his lien‖ on settlement funds. (Id.
at p. 979.) The court‘s reasoning focused on the significance of
the plaintiff‘s choice not to name his former clients as a party.
The court noted that the plaintiff‘s time log would be ―useful to
adjudicate the reasonable value of plaintiff‘s services in a
separate action against the clients,‖ but it was insufficient to
state a claim against the successor attorney. (Id. at p. 978, italics
added.) It went on to emphasize ―the attorney‘s lien is only
enforceable after the attorney adjudicates the value and validity
of the lien in a separate action against his client.‖ (Ibid.)
Flannery argues the lower court lacked authority to grant
Tepper‘s motion for attorney fees because Tepper never filed an
independent action against Flannery adjudicating the existence,
value, and enforceability of his lien. This argument is misguided
because Flannery‘s answer to the interpleader complaint was
sufficient to place the existence, value, and enforceability of his
lien at issue as against Flannery. The ―underlying action‖ was
the Sesnon Fire Case, and the Interpleader Case is not only the
separate, independent action referred to in case law governing
29
attorney liens, it is the correct proceeding in which to determine
the existence, value, and enforceability of Tepper‘s lien as against
Flannery.
Flannery attempts to compare Tepper‘s motion to plaintiff‘s
lawsuit in Mojtahedi: ―Just like Mojtahedi who had filed a claim
against the settlement proceeds held by successor attorney, the
Tepper Firm has filed a claim against the settlement proceeds
held by the court.‖ This argument ignores the crucial fact that
Flannery is a party to the interpleader case, while the clients in
Mojtahedi were not. Tepper‘s March 25, 2013 answer alleged
facts to support his claim for payment as against the other named
defendants in the interpleader action, including Flannery. Taken
together, Tepper‘s answer and motion for attorney fees and costs
are the equivalent of a complaint seeking a determination of the
value and enforceability of Tepper‘s lien for attorney fees and
costs advanced to Flannery in the Sesnon Fire Case, as well as
payment of the lien amount.
B. Factual Findings Did Not Violate Due Process
Flannery further contends the court‘s factual finding that
Tepper withdrew involuntarily and for good cause violated due
process because it deprived Flannery of the opportunity to
conduct discovery and present evidence to refute Tepper‘s
declaration. Because this argument appears to be distinct from
the overall due process argument discussed earlier in this
opinion, we address it separately.
An attorney who withdraws from representing a client for
good cause, including adherence to ethical rules, is entitled to a
quantum meruit recovery of fees. (Estate of Falco (1987) 188
30
Cal. App. 3d 1004, 1015.) Tepper‘s motion was supported by a
declaration and exhibits demonstrating that he was ethically
required to withdraw from representing Flannery for three
reasons: (1) Tepper had been diagnosed with advanced prostate
cancer and was scheduled to undergo surgery and radiation; (2)
Tepper was ethically prohibited from following Flannery‘s
instruction to use testimony Tepper knew to be untruthful; and
(3) Flannery had breached the retainer agreement by refusing to
advance anticipated expert witness fees.
Flannery opposed the motion, claiming Tepper could not
show justifiable cause for voluntarily withdrawing as Flannery‘s
attorney. Without a reporter‘s transcript, however, we accept the
representations in the court‘s September 11, 2015 order that
―Flannery does not rebut or contest‖ evidence that ―Tepper
ethically could not present a case founded on lies, as his client
was demanding. Flannery also refused to advance the cost of
expert witness fees in violation of Flannery‘s retention agreement
with Tepper.‖ The court also noted evidence of Tepper‘s
―debilitating cancer treatment‖ was likewise uncontested. Absent
any evidence in the record that the court abused its discretion in
making its factual findings, Flannery‘s due process claim must
fail.
DISPOSITION
The judgment is affirmed. Costs on appeal are awarded to
Southern California Gas Company, Scott Tepper, Garfield &
Tepper, and Andrea L. Murray.
31
KRIEGLER, Acting P.J.
We concur:
BAKER, J. KUMAR, J.

Judge of the Los Angeles Superior Court, assigned by
the Chief Justice pursuant to article VI, section 6 of the
California Constitution.
32