Third District Finds No Basis to Make Attorney Liable for Judgment Against Client.
In Monier-Kilgore v. Flores, Case No. C054502 (3d Dist. June 30, 2009) (unpublished), an attorney was paid about $532,000 in fees after helping his clients collect insurance proceeds from two recalcitrant insurers (receiving his contingency portion) and defending clients against plaintiffs’ action (on an hourly basis). Attorney was paid by July 2006, and plaintiffs later obtained entry of a damages/constructive trust judgment against attorney’s clients. Plaintiffs then attempted to enforce the judgment against attorney, a request denied by both the trial and appellate courts.
The Third District saw nothing wrong in the lower court’s denial of the judgment extension request vis-à-vis attorney. It did so in this language: “[Plaintiffs} cite to no authority demonstrating that (1) where a defendant, who has wrongfully acquired money upon which a constructive trust is imposed, uses the money to pay an attorney, or a landlord, an employee, or a creditor for services rendered or a debt owed, (2) the services were performed in good faith and the debt was legitimate, rather than a ruse to prevent the beneficiary of a trust from obtaining the money, (3) the debt was paid prior to the entry of judgment imposing a constructive trust against the defendant, then (4) the beneficiary is entitled to recover the money from the attorney, landlord, employee, or creditor because it is traceable to the defendant’s wrongfully acquired money.” (Slip Opn., at p. 54.) Because no evidence of wrongdoing was demonstrated on the part of the attorney, the decision of the lower court on this point was affirmed.
BLOG UNDERVIEW—Some time down the line, we will explore how retainer agreements can be structured so that fees cannot be recaptured where a client is later accused of investor fraud or where a bankruptcy is filed while services are being performed for the client.