Finds Attorney’s Lien Dispute Can Be Resolved in Minor Compromise Case and Analyzes Permissive Withdrawal Circumstances That Will or Will Not Give Rise to Quantum Meruit Recovery.
Here is an unpublished decision that faced some gnarly issues regarding jurisdictional and quantum meruit recovery issues in an attorney’s lien situation where an attorney obtained a mandatory withdrawal in a contingency case. Interestingly enough, the appellate court disagreed with the trial court’s assessment, finding the withdrawal was permissive and was not of a species that should allow for quantum meruit recovery—reversing a lower court’s order requiring satisfaction of the lien out of settlement proceeds.
In Noskevich v. Eden Medical Center, Case No. A125152 (1st Dist., Div. 1 Mar. 3, 2010) (unpublished), the lower court granted a lien to plaintiff minor’s (represented by her mother/guardian ad litem’s) former attorneys in the amount of $23,061.77, payable out of the minor compromise settlement proceeds. The Court of Appeal reversed the orders enforcing payment of the lien.
The former attorneys requested plaintiff to consult new counsel and indicated a withdrawal motion would be made if she failed to find new counsel. After some trial continuances, former attorneys finally did file to withdraw, alleging a “serious breakdown” in the attorney-client relationship with plaintiff. Former attorneys dropped the motion to withdraw, with settlement discussions continuing. A second motion to withdraw occurred, based on a sealed declaration—later submitted by plaintiff in unsealed fashion—that indicated plaintiff and former attorneys disagreed on the value of the case for purposes of settlement discussions (although also indicating a lack of trust based on “her repeated lies, threats, and [other] statements”). Because the second motion to withdraw was made too close to trial, it was denied although the trial was continued. A bitter fight then ensued over whether plaintiff accepted a $75,000 settlement offer after tussles between plaintiff and her former attorneys, with the lower court eventually denying a defense motion to enforce the alleged settlement on the basis that the parties were first required to obtain an order approving minor’s compromise. Yet a third motion to withdraw was filed, and it was bitterly contested by plaintiff. The lower court granted this motion to withdraw, finding that the attorney and client were in an adversarial relationship and that plaintiff took inconsistent positions during the case so that representation was difficult. New counsel was obtained, reaching a settlement of $180,000 (as compared to the prior $75,000 compromise that blew up).
Prior to the actual settlement, former attorneys filed a notice of lien, and plaintiff requested the lower court to strike it. Former attorneys were granted a lien on the settlement proceeds based on a quantum meruit fee of $9,375 (12.5% of the first $75,000 recovered) plus costs of $13,686.77. Plaintiff appealed.
Plaintiff first challenged the jurisdiction of the lower court to grant the attorney’s lien. This issue involved conflicting intermediate appellate decisions: pitting Law Offices of Stanley J. Bell v. Shine, Browne & Diamond, 36 Cal.App.4th 1011, 1020-1021 (1995) and older cases cited therein, holding that the attorney may only enforce a lien against the minor’s settlement in a separate action, against Padilla v. McClellan, 93 Cal.App.4th 1100, 1103-1106 (2001) and Curtis v. Estate of Fagan, 82 Cal.App.4th 270, 276-280 (2000), holding that no separate action was required because Probate Code section 3601(a) allows the same court to determine the validity/amount of a former attorney’s lien as part of the minor’s compromise proceeding. The Court of Appeal in Noskevich found Padilla and Curtis persuasive. However, it also found that plaintiff was estopped from raising the issue on appeal because she freely (and without objection) allowed the lien issue to be litigated in the minor’s compromise proceeding. (Harnedy v. Whitty, 110 Cal.App.4th 1333, 1345 (2003).)
That took the appellate court to the merits of the trial court’s ruling in which the lien was granted. Remember, the lower court ruled that former attorneys’ withdrawal from the case was mandatory rather than just permissive. The Court of Appeal disagreed with the mandatory withdrawal rationale.
As a general rule, an attorney working on a contingency fee basis who withdraws from representation is not entitled to quantum meruit recovery for the value of his services unless the withdrawal was mandated by ethical rules, with a contrary rule improperly shifting the risks from the contingency attorney to the client. (Estate of Falco, 188 Cal.App.3d 1004, 1016 (1987); Rus, Miliband & Smith v. Conkle & Olesten, 113 Cal.App.4th 656, 674-678 (2003).) However, Falco left open the possibility that quantum meruit fees could be awarded in permissive withdrawal cases, subject to a very heightened level of scrutiny—although failure to cooperate in settlement discussions, mutual animosity, or a complete breakdown in the relationship were situations that did not fall within this exception. (Rus, supra, 113 Cal.App.4th at 674, citing Falco, supra, 188 Cal.App.3d at 1010-1011.)
Here, the evidence did not bear out that former attorneys were under a mandatory, ethical duty to withdraw. Rather, the withdrawal was permissive given that the attorneys and client were basically bickering about differences in the settlement value in the case—hardly the type of conduct falling within the “heightened scrutiny” exception. The lien grant was reversed accordingly.