Judge: Jon R. Takasugi, Case: 23STCV23143, Date: 2024-01-29 Tentative Ruling

Case Number: 23STCV23143    Hearing Date: January 29, 2024    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENATIVE RULING

Defendant’s demurrer is GRANTED, WITHOUT LEAVE TO AMEND. Dismissal is to be without prejudice.

As such, the request to strike the Complaint is duplicative and moot.  

            On 9/25/2023, Plaintiff M&Y Personal Injury Lawyers (Plaintiff) filed suit against stone Dean, LLP, Gregory E. Stone, Lesllie A Blozan, Kristi W. Dean (collectively, Defendants), alleging: (1) intentional interference with contract; (2) breach of fiduciary duty; (3) fraud; and (4) conversion.

            Now, Defendants demur to Plaintiff’s Complaint.

Factual Background

On 2/26/2018, Steven Mazur was injured in a car vs. bicycle accident. He retained Plaintiff, who filed suit on his behalf on March 19, 2018, and tentatively settled the case for the defendant’s policy limits on or about March 20, 2018. His retainer agreement with M&Y specified recovery of a certain percentage of the settlement, whether or not M&Y still represented Mazur.

Mazur did not wish to settle the case so quickly or for the policy limit amount, so sought new counsel. In April, 2018, he substituted Defendant Stone Dean for M&Y, to pursue the action further. The Mazur action was eventually settled for policy limits, the amount M&Y originally obtained. However, Mazur’s wife, Eva Altobelli, also asserted a loss of consortium claim not pled by M&Y, allowing an additional recovery beyond the previous offer.

At the conclusion of the case, Stone Dean disbursed the settlement funds, retaining the amount specified in the M&Y retainer in trust to resolve the fee dispute with M&Y. The dispute has not been resolved, as M&Y will not negotiate to accept anything less than their contracted amount.

Discussion

            Defendant argues that Plaintiff’s action is premature because it is premised on the existence and enforceability of a lien that has not been confirmed by a court determination. More specifically, Defendant contends that Plaintiff has not obtained a determination that he is entitled a recovery of fees from his client. Such a dispute would be subject to mandatory arbitration pursuant to Business and Professions Code section 6200. Only then, once the enforceability of the lien and amount owed has been determined, can Plaintiff maintain a claim against Defendants here for alleged actions regarding non-payment of the claimed lien.  

            In support, Defendant cites Mojtahedi v. Vargas (2014) 228 Cal.App.4th 974. There, a plaintiff’s attorney attempted to enforce an attorney fee lien against the former client’s second attorney. The first attorney demanded payment of fees under the original retainer agreement, and refused to negotiate the amount of the fees with the attorney who settled the case. Plaintiff Mojtahedi sued Vargas, the second attorney, as well as the claims adjuster who issued the settlement check and the two banks that issued and deposited the settlement check. Causes of action included fraud and tortious interference with prospective advantage. Plaintiff never sued the former client to confirm enforceability of the lien or establish the amount the client owed under the lien.

The trial court sustained defendant Vargas’ demurrer to the second amended complaint and Mojtahedi appealed. The Court of Appeal framed the issue under review: “…[W]hether plaintiff can enforce an attorney lien solely via an action against defendant, who holds the settlement funds in his client trust account.” The court concluded; “Without an enforceable lien, plaintiff cannot prove that he has a right to a portion of the settlement money.” (Mojtahedi, supra, at 977).

In explaining the ruling, the court noted “[u]nlike other liens, ‘an attorney’s lien is not created by the mere fact that an attorney has performed services in a case.’ (Carroll v. Interstate Brands Corp. (2002) 99 Cal.App.4th 1168, 1172.) The court explained that an attorney claiming a lien “…must bring a separate, independent action against the client to establish the existence of the lien, to determine the amount of the lien, and to enforce it.” (Id, citing Brown v. Superior Court (2004) 116 Cal.App.4th 320, 328, quoting Carroll, supra, 99 Cal.App.4th at p. 1173…” (Id.)

Mojtahedi’s complaint alleged a contract that created a lien, but “failed to allege facts establishing that he adjudicated the existence, value or enforceability of his lien.” (Id.) The court also observed that Mojtahedi provided services to his client, not defendant attorney, with any enforceable lien proceeds being paid from the client’s settlement. It is therefore a requirement that [p]laintiff must litigate with the clients to determine the reasonable cost of the services he provided to them. Plaintiff has omitted this essential step of establishing his entitlement to a particular portion of the settlement proceeds.” (Id, at pg. 788.) Mojtahedi was required to bring a separate, declaratory relief action to determine the reasonable value of his services. Mojtahedi did not file that action, and therefore “failed to establish the existence, amount and enforceability of his lien on the settlement money.” (Id, at pg. 979.) Judgment for defendant Vargas was affirmed.

After review, the Court finds the facts here to be analogous to those in Motjahedi. Here, Plaintiff’s action is based on an unconfirmed lien and unknown lien amount.  While Plaintiff disputes this in opposition, the very premise of Plaintiff’s claims, i.e., that Defendant here has engaged in tortious and fraudulent conduct, turns on the fact that Defendant is in control of funds Plaintiff claims it is owed in an ongoing contract fee dispute. In opposition, Plaintiff noted that the contractual fee dispute between Plaintiff and Steven Mazur has an arbitration hearing set for January 23, 2024. Plaintiff should update the Court at oral argument whether the arbitrator there ruled there is an enforceable attorney lien.

A contingent fee agreement “does not operate to transfer part of the cause of action to the attorney but only gives him a lien on his client’s recovery…Compensation must be sought in an independent action by the attorney against the client…” (Hendricks v. Superior Court (1961) 197 Cal.App.2d 586, 589.) An attorney seeking recovery of fees owed under a lien must first file a quantum meruit action against the client. (Ibid.) As such, the Court agrees that case law requires that Plaintiff participate in mandatory fee arbitration to determine the quantum meruit value of fees; and if necessary, seek a judicial determination regarding the enforceability of the claimed lien amount and the reasonable value of the services rendered by plaintiff to Mazur.  

Based on the foregoing, Defendant’s demurrer is granted, without leave to amend. Dismissal is to be without prejudice. As such, the request to strike the Complaint is duplicative and moot.  

It is so ordered.

Dated:  January    , 2024

   Hon. Jon R. Takasugi
   Judge of the Superior Court

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