Second District, Division Three Panel Rejects Judicial Estoppel, Self-Representation, and Third-Party Beneficiary Arguments Raised By Losing Client.
An attorney’s fees clause in a retainer agreement is a great equalizer in any litigation over the proper fee charged for services by former counsel. An in pro per Client sued his Former Attorneys, raising judicial estoppel, self-representation, and third-party beneficiary obstacles to fee recovery. These arguments did not prevail.
In Fink v. Moreno, Becerra & Guerrero, Inc., Case No. B201957 (2d Dist., Div. 3 June 26, 2008) (unpublished), Client’s third amended complaint was demurred out by Former Attorneys, which then sought costs and fees based on an attorney’s fees clause in the retainer agreement. Former Attorneys were represented in the litigation by retained outside counsel. The trial judge ultimately awarded $101,024.72 as costs and fees (with $95,165 being the fee component). Client appealed, raising some interesting arguments for review. They were not successful, the Second District, Division Three panel decided in an unpublished opinion authored by Acting Presiding Justice Croskey.
Client first argued that Former Attorneys should be judicially estopped from fee recovery because they filed three motions to strike Client’s prayer for attorney’s fees in earlier proceedings attacking the complaints. Unfortunately for Client, the trial court never ruled on the motions, suggesting to Client that he should leave some things out. Judicial estoppel was found inapplicable because there was a missing crucial element—the trial judge never adopted the “inconsistent position” such that Former Attorneys were not successful in obtaining an adjudication based on the position. The appellate court has a good discussion on how our state supreme court’s decision in Aguilar v. Lerner, 32 Cal.4th 974, 986-987 (2004) required the “successful” element as part of the judicial estoppel test, scaling back on broader language contained in an earlier Second District opinion (Jackson v. County of Los Angeles, 60 Cal.App.4th 171, 183-184 n. 8 (1997).
Client next contended that Civil Code section 1717 did not apply because he represented himself in the litigation. “Wrong,” said Justice Croskey on behalf of the Second District panel. The anchor of Client’s argument was Trope v. Katz, 11 Cal.4th 274 (1995), which denied section 1717 fee recovery to attorneys representing themselves in controversies with a fees clause as a fee-shifting mechanism. Trope was found distinguishable because (1) Former Attorneys retained different counsel to defend them in the case; and (2) Client, if he had been represented by outside counsel and had he prevailed, would have been entitled to fees under section 1717, meaning under the mutuality principle that Former Attorneys are similarly entitled to recoup fees.
Client last argued that he was only a third-party beneficiary not entitled to seek fees, based on a slanted reading of Sessions Payroll Mgt., Inc. v. Noble Construction Co., 84 Cal.App.4th 671 (2000). The Court of Appeal found that Sessions was inapt because one of the parties was a nonsignatory third-party beneficiary not entitled to fees (which meant section 1717 reciprocity never kicked in). It also chided Client for falsely describing the holding in Sessions, dropping out the critical word “nonsignatory”—an appellate “no no” and big credibility deflater.
Although raising some novel arguments, in pro per Client—after losing the judicial estoppel contention and trying to unsuccessfully surmount the venerable section 1717 mutuality policy—ended up owing over $101,000, plus more (because the appellate court awarded Former Attorneys costs on appeal as the winning parties).