No Lock On Trope Waiver, But Court Finds Fees For Other Attorneys May Not Be Barred By Trope; Nonsignatory Entitled to Fees Based on Alter Ego Theory.
Here is an interesting unpublished decision from the Second District, Division 6–interesting because it parts company with the holding in Lockton v. O’Rourke, 184 Cal.App.4th 1051 (2010), which validated a retainer agreement that allowed compensation of attorney litigating a fee dispute (a Trope waiver clause).
Biggins v. Madison, Case No. B220202 (2d Dist., Div. 6 Nov. 22, 2011) (unpublished) involved a situation where plaintiff attorney was denied fees under an attorney-client retainer agreement even though he won damages in a dispute he litigated (along with other attorneys representing his interests) over the proper division of attorney’s fees between client and various attorneys after a settlement of a matter governed by a contingency agreement. Plaintiff was denied attorney’s fees for winning damages based on Trope–he represented himself. Plaintiff said “no way,” because my client retainer agreement had a Trope waiver clause (allowing compensation to the attorney representing himself in a fee dispute)–a waiver validated in Lockton. The Second District, Division 6 disagreed: “We decline to follow Lockton. As we have stated, section 1717 prohibits such one-sided attorney fee agreements.” However, the matter was remanded, because the lower court did not consider whether other attorneys representing winning attorney were worthy of compensation (falling outside the Trope preclusion).
A nonsignatory party was awarded $66,875.45 in fees under Civil Code section 1717. This fee award was affirmed because plaintiff alleged a signatory defendant was the alter ego of the nonsignatory party and, had plaintiff prevailed on this theory, the nonsignatory would have been liable for fees under Reynolds Metals (one of our Leading Cases).