Judge: Colin Leis, Case: 20STCV19951, Date: 2024-10-15 Tentative Ruling

Case Number: 20STCV19951    Hearing Date: October 15, 2024    Dept: 74

Ruth Getachew v. Moscatel Enterprise LLC et al.

Plaintiff’s Motion for Determination of Contingency Fees, Attorney’s Fees, Costs and Revocation of Retainer Agreement

BACKGROUND 

            Plaintiff Ruth Getachew (Plaintiff) filed a complaint against defendant Moscatel Enterprise, LLC (Defendant).  Defendant and Plaintiff reached a settlement, but when Defendant failed to pay, Plaintiff filed a motion to enforce the settlement.  A judgement for $43,960 was entered on June 29, 2022, which included $3,900.00 in attorney’s fees and $60.00 in costs. 

Plaintiff’s Counsel attempted to enforce the judgement, but Defendants have made no payments.

On October 31, 2023, Plaintiff’s counsel’s (Counsel) motion to be relieved as counsel of record was granted. 

LEGAL STANDARD

¿¿            An attorney may enter into a contingency fee contract with a client so long as the contract contains: “(1) A statement of the contingency fee rate that the client and attorney have agreed upon; (2) A statement as to how disbursements and costs incurred in connection with prosecution or settlement of the claim will affect the contingency fee and the client’s recovery; (3) A statement as to what extent, if any, the client could be required to pay compensation to the attorney for related matters . . . not covered by their contingency fee contract”; and (4) “a statement that the fee is not set by law but is negotiable between attorney and client.”  (Bus. & Prof. § 6147(a).) If a contingency fee contract fails to comply with any of the legal requirements, the agreement is voidable, and the lawyer is entitled to collect a reasonable fee.  (Code Civ. Proc. § 6147(b).)

            “An unconscionable contract ordinarily involves both a procedural and a substantive element: (1) oppression or surprise due to unequal bargaining power, and (2) overly harsh or one-sided results.”  (Donovan v. Rrl Corp. (2001) 26 Cal.4th 261, 291.)  Unconscionability is determined at the time the contract was entered into.  (Morris v. Redwood Empire Bancorp (2005) 128 Cal.App.4th 1305, 1316.)

DISCUSSION 

            A retainer agreement was signed by both parties on March 3, 2024.  It includes (1) a statement of the contingency fee rate, (2) a statement how costs affect recovery, (3) no statement expanding compensation to related matters, and (4) a statement that the contingency fee is negotiable. Plaintiff alleges that the original contingency fee agreement was unconscionable and that Counsel’s motion to be relieved as counsel was a breach of contract, and therefore she does not owe the 44% contingency fee or costs.

1)      Unconscionability of the Contingency Fee Contract

The unconscionability of a contract is typically evaluated at the time the contract was formed. The retainer agreement complies with the Business and Professions Code § 6147.  Plaintiff argues that the 44% of the recovery and the $6,193.53 in costs is unreasonable and unconscionable given the amount of the stipulated judgement. The court finds no unconscionability.

2)      Breach of Contract and Withdrawal

Plaintiff argues that Counsel breached the Retainer Agreement when they were relieved as counsel.

Counsel filed a motion to be relieved as counsel after securing a settlement, followed by substantial expenditure attempting to enforce the judgement. The retainer agreement between the parties entitles Counsel to 44% of the gross recovery if a suit is filed and there is recovery.  Counsel performed their duties under the contract, and, therefore, they are entitled to attorney’s fees.  Counsel’s motion to be relieved as counsel was not a breach of contract because Counsel had already performed under the contract.

Additionally, the Contingency fee requires the client to reimburse Counsel for expenditures that Counsel advanced on behalf of the client.  Plaintiff includes the “Client Costs Advanced” billing document, which appropriately entitled Counsel to $6,195.53 in costs under the Contingency Fee contract.  This obligation to pay costs is not contingent upon payment of judgement and Plaintiff is obligated to reimburse Counsel for costs incurred during litigation.

CONCLUSION 

The court denies Plaintiff’s motion for determination of contingency fees, attorney fees, costs and revocation of retainer agreement.

Defendants shall give notice.