Opinion
NOT TO BE PUBLISHED
APPEALS from judgments of the Superior Court of Los Angeles County Ct. No. BC328672. David L. Minning, Judge.
Brian R. Shumake, in pro. per., for Plaintiff and Appellant.
Bernard R. Schwam, and Jeffrey J. Doberman for Defendants and Respondents Bernard R. Schwam and Jeffrey J. Doberman.
Cooksey, Toolen, Gage, Duffy & Woog, Brian R. Van Marter, Matthew R. Pahl for Defendants and Respondents Phil Woog; Cooksey, Toolen, Gage, Duffy & Woog; and St. Paul Reinsurance Company, Ltd.
BOREN, P.J.
An attorney sued his former client, his former client’s new attorneys, an insurance company, and the insurance company’s attorneys, claiming a right to settlement proceeds issued by the insurance company. Plaintiff lost his case on summary judgment. We affirm, because plaintiff’s case is predicated on the existence of an enforceable contingent fee and lien agreement, and the evidence shows that (1) an “exemplar” of the purported fee and lien agreement fails to satisfy legal requirements for enforceability, and (2) by his own admission, plaintiff agreed to work on an hourly basis, not for a contingent fee.
FACTS
The Underlying Lawsuit
Daniel Mirisola was the plaintiff in a construction defects lawsuit, Mirisola v. Mersola Construction, Inc., (the underlying lawsuit). Mirisola was originally represented by an attorney named Treadwell, who had a lien on any recovery Mirisola obtained in the underlying lawsuit. After a settlement was reached, Mirisola terminated the representation of Treadwell, who then served his notice of lien for $40,600 on all interested parties. After terminating Treadwell’s representation, Mirisola engaged appellant attorney Brian Shumake to represent him at an arbitration hearing. The purpose of the arbitration was to determine issues left unresolved by the settlement agreement negotiated by Treadwell.
The arbitration was conducted, and in August 2003, the arbitrator awarded Mirisola over $1 million for his damages and losses, plus attorney fees and costs. The arbitrator directed Shumake to submit a costs memorandum. Shumake presented his costs memorandum in September 2003. In an accompanying declaration, Shumake avers that Mirisola “agreed to pay my hourly rate” of $250.00 after “I agreed to substitute into this case on a ‘pay-me-as-you’re-able’ basis.” Shumake spent about 120 hours on the case, including 6.5 hours actually arbitrating the dispute. He requested fees of $40,125. In October 2003, the arbitrator awarded Mirisola attorney fees of $40,125. In March 2004, a judgment for $1,211,939.69 was entered in favor of Mirisola, based on the arbitration award.
Shumake incorrectly states that he received an hourly fee award from the arbitrator. The award was to Mirisola, not to Shumake.
A Dispute Arises Over Attorney Fees
Shumake claims that he and Mirisola entered into a contingent fee agreement; however, Shumake does not possess the original or a copy of a signed agreement. Shumake contends that Mirisola “stole the case file” containing the signed contingent fee agreement from Shumake’s office. Shumake offers into evidence instead an uncompleted, unsigned “exemplar” of a contingent fee agreement giving him 33 percent of all sums recovered before trial and 40 percent of all sums recovered at trial, and a lien on the recovery. Shumake testified during his deposition that he and Mirisola orally modified the fee agreement after judgment was rendered in the underlying lawsuit. In this oral modification, Shumake told Mirisola that “When the money comes in, I’ll cut you a check for a million bucks and whatever is leftover is mine.” Shumake’s pleading alleges that he agreed to reduce his contingent fee to facilitate payment of the settlement.
Mirisola denies that he ever entered into a contingent fee agreement with Shumake. According to Mirisola, Shumake orally agreed to handle the arbitration on an hourly basis, with fees capped at $5,000. As Shumake prepared for the arbitration hearing, Mirisola paid Shumake over $12,000 in legal fees and costs, as shown by negotiated checks written by Mirisola. According to Mirisola, Shumake “kept asking for more money or he wouldn’t do the case.” In 2003, Mirisola refinanced his home and paid Shumake an additional $10,460 out of escrow. Shumake issued a receipt giving Mirisola credit for the $10,460 and indicating that his legal fees were “paid in full except cost[s].”
The Insurer And Its Attorneys
Respondent St. Paul Reinsurance Company, Ltd. (St. Paul) is the insurer of Mersola Construction Company, the defendant in the underlying lawsuit. Respondent Cooksey, Toolen, Gage, Duffy & Woog (CTGDW) is a law firm that represented St. Paul in the underlying lawsuit. Respondent Woog is a partner in CTGDW. CTGDW was retained by St. Paul after judgment was rendered in the underlying lawsuit.
In April 2004, Shumake contacted St. Paul regarding paying of the judgment in the underlying lawsuit. During his conversation with St. Paul’s claims representative, Shumake acknowledged Treadwell’s lien, remarking that “He’ll get paid before I get paid.” There is no indication that Shumake claimed a lien on the recovery for himself during his conversation with the claims representative. Shumake shredded the notes he made of his conversations with St. Paul and its attorneys.
The Settlement Drafts
St. Paul issued two settlement drafts totaling $1,233,853.67 and sent them to Shumake. The checks were made payable to the “Brian Shumake Client Trust Account for Daniel Mersola [sic].” The transmittal letter instructed Shumake that the checks could not be disbursed until Mirisola signed a settlement agreement and release. Further, the letter acknowledged that “prior counsel [Treadwell] has a lien on this file . . . .” In April 2004, at the same time that St. Paul sent Shumake the settlement checks, Mirisola hired new counsel, respondent attorneys Bernard Schwam and Jeffrey Doberman, because of his dissatisfaction with Shumake’s demands for more money and because Shumake had not taken steps to promptly enforce the arbitration award.
On April 12, 2004, Shumake advised Mirisola that the settlement checks had arrived, and that he intended to deposit the checks at his bank. Mirisola intercepted Shumake at the bank, and took the two checks from the bank manager’s desk, telling Shumake that he was fired. Mirisola gave the checks to Attorney Schwam to return to St. Paul, so that the settlement funds could be reissued in Mirisola’s name alone. St. Paul reissued the checks to Mirisola on April 14, 2004, and honored Treadwell’s lien directly.
After the contentious encounter at the bank, Shumake served a formal notice of lien for $233,853.67, claiming an interest in the proceeds of the settlement fund. This occurred on April 20, 2004, after St. Paul reissued the checks to Mirisola.
Shumake Files His Lawsuit
Shumake brought suit against respondents and Mirisola. In his second amended complaint, Shumake makes the following claims against respondents Schwam and Doberman: constructive trust (for wrongfully obtaining the settlement funds in the underlying lawsuit); breach of trust (for causing the settlement checks to be reissued solely to Mirisola); conversion (for taking the settlement checks away from Shumake’s bank); money had and received; negligent misrepresentation (for misleading Shumake into believing that they would deposit the contingent fee he wanted into his trust account); interference with contract (for violating the contractual relationship between Shumake and Mirisola); and interference with economic advantage (for redirecting the settlement funds away from Shumake’s trust account).
Mirisola is not a party to this appeal. There is no final judgment as to Mirisola because the trial court allowed Shumake to go forward on his claim against Mirisola for quantum meruit.
Against St. Paul and its attorneys, Shumake makes the following claims: money had and received; conversion of settlement funds; intentional interference with contract; and intentional interference with economic advantage. Shumake alleges that respondents owe him $493,533.47 in attorney fees.
There is a sizable gap between the amount of Shumake’s lien notice ($233,853) and the contingent fee he now claims ($493,533).
Respondents’ Motions For Summary Judgment
Respondents filed motions for summary judgment. They argued that Shumake’s claims are based on an unenforceable contingency fee agreement and lien; Shumake has no valid interest in the settlement funds; and Shumake failed to prove any independently wrongful conduct on the part of respondents. These arguments will be analyzed in the Discussion section of this opinion.
The Trial Court’s Ruling
The court granted summary judgment in favor of respondents Schwam and Doberman. The court found that Shumake “does not have an enforceable written contract for a contingency fee” because he produced no evidence to show the existence of a fee agreement that complies with state law. As a result, Mirisola was entitled to void the contingency fee agreement “if one ever existed,” and Shumake is only entitled to collect a reasonable fee. Shumake lacks an enforceable attorney charging lien against Schwam and Doberman. If the contingency fee agreement fails, so does the lien. Respondents did not convert the settlement funds: the attorney fees in the underlying lawsuit were awarded to Mirisola, not Shumake. At most, Shumake has a claim against Mirisola for quantum meruit. For these reasons, Shumake’s causes of action for breach of trust, for money had and received, for negligent misrepresentation, and for interference with contract all fail. Finally, Shumake’s claim for interference with prospective economic advantage fails because he failed to provide admissible evidence of an independent wrongful act in violation of the law.
The court granted summary judgment in favor of respondents St. Paul, CTGDW and Woog. As with the corresponding motion from Schwam and Doberman, the court found that (1) there is no contingency fee agreement; (2) Mirisola voided the agreement; and (3) the lien was voided as well. The court rejected all of Shumake’s claims against St. Paul and its attorneys.
On March 14, 2007, the court entered judgment in favor of Schwam and Doberman. Notice of entry of judgment was served on April 2, 2007. Shumake filed his appeal from the Schwam/Doberman judgment on May 22, 2007. On May 3, 2007, the court entered judgment in favor of St. Paul, CTGDW and Woog. Notice of entry of judgment was served on May 17, 2007. Shumake filed his notice of appeal from the St. Paul/CTGDW/Woog judgment on July 16, 2007.
DISCUSSION
1. Appealability
The judgments for respondents are final and appealable. (Code Civ. Proc., § 437c, subd. (m)(1).) A motion for summary judgment “shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (Id., subd. (c).) Review is de novo. (Kahn v. East Side Union High School Dist. (2003) 31 Cal.4th 990, 1003.)
2. There Is No Enforceable Contingent Fee Or Lien Agreement
a. Contingent Fee Agreement
Shumake’s claims are predicated on a single premise. The premise is that Shumake had an enforceable contingent fee/lien agreement with Mirisola, and that respondents thwarted Shumake’s ability to collect on that agreement. As we shall see, the “exemplar” of Shumake’s contingent fee/lien agreement does not contain the terms needed to make it enforceable. Moreover, Shumake’s claims collapse in the face of his admission that the agreement he had with Mirisola was for compensation on an hourly basis, leading the arbitrator to award Mirisola $40,000 for attorney fees.
The requirements for a contingent fee agreement are established by law. The agreement must: be in writing; set forth the agreed upon contingent rate; state how disbursements and costs incurred in the litigation will affect the fee and the client’s recovery; and specify how matters not encompassed by the contingent fee (such as collecting on a judgment) will be paid for by the client. (Bus. & Prof. Code, § 6147, subd. (a).) Failure to comply with any of these requirements renders the fee agreement voidable at the client’s option, whereupon the attorney shall “be entitled to collect a reasonable fee.” (Id., subd. (b).) Fee agreements are strictly construed against the attorney. (Alderman v. Hamilton (1988) 205 Cal.App.3d 1033, 1037.)
Shumake was unable to produce in court a completed and executed contingent fee agreement to support his claims. Thus, the initial legal requirement that “the contract shall be in writing” is not met. Shumake maintains that an executed contingent fee agreement cannot be presented into evidence because Mirisola “stole the case file” containing the agreement from Shumake’s office. To address the problem presented by the purportedly purloined pact, Shumake offers instead an “exemplar” of the fee agreement. Shumake testified that the exemplar is “an identical copy” of the missing original, signed contingent fee agreement, except that the original contained Mirisola’s name.
The proffered exemplar notably omits most of the required elements for an enforceable contingent fee agreement. First, it does not set forth the agreed upon contingent rate. Shumake testified that the rate listed in the exemplar was orally modified to give Mirisola one million dollars, and to give Shumake everything over a million. This violates the requirement of a written “statement of the contingency fee rate that the client and attorney have agreed upon.” (Bus. & Prof. Code, § 6147, subd (a)(1).) Any modification of a contingent fee rate must be in writing and signed by the parties. (Fergus v. Songer (2007) 150 Cal.App.4th 552, 560, 570.) Second, the exemplar does not state how costs and disbursements will affect client recovery. (Bus. & Prof. Code, § 6147, subd. (a)(2).) Third, it does not specify how the attorney will be compensated for time spent collecting the judgment. (Id., subd. (a)(3).)
Shumake does not address in his briefs the requirements of Business and Professions Code section 6147, or the exemplar’s compliance with those requirements, effectively conceding the exemplar’s inadequacy.
Because of the omissions that we have just detailed, Mirisola “had an absolute right to void the contract before or after services were performed.” (Alderman v. Hamilton, supra, 205 Cal.App.3d at p. 1038; Bus. & Prof. Code, § 6147, subd. (b).) A client exercises this right by denying the existence of an enforceable contingent fee contract and refusing to pay any money to the attorney. (Alderman v. Hamilton, supra. 205 Cal.App.3d at p. 1038.) In this case, Mirisola denied the existence of a contingent fee agreement and refused to pay any money to Shumake, thereby voiding the agreement. Mirisola is not estopped from voiding the legally inadequate fee agreement merely because he picked up—then promptly returned—a disbursement check from Shumake. Mirisola did not cash the check, which arguably would show his willingness to accept the terms of the voidable contingent fee agreement.
Shumake cites the ambiguous declaration of his client Ed Lum as proof that Mirisola “admitted” a debt of $230,000 to Shumake. The Lum declaration is all but useless. Purportedly, Mirisola said, “He’s getting some $230,000 to pay off credit cards that his wife doesn’t know about.” There is no clue about the provenance of the $230,000—it could have been from another client, or an inheritance, or a real estate sale. There is no indication that this represents a fee for representation in Mirisola’s case. In any event, Mirisola’s vague statement does not bar him from voiding the fee agreement.
b. Lien Agreement
Just as Shumake’s contingent fee agreement fails to meet the controlling legal requirements, so, too, does the lien that he seeks to enforce. In California, “‘an attorney’s lien is created only by contract . . . [it] is not created by the mere fact that an attorney has performed services in a case.’” (Fletcher v. Davis (2004) 33 Cal.4th 61, 66.) An attorney’s lien creates a “security interest.” (Id. at p. 67.) Because it gives the attorney authority to detain all or part of the client’s recovery, it is an “adverse interest” that must comply with rule 3-300 of the Rules of Professional Conduct. (Id. at pp. 69-71.) Rule 3-300 requires that an attorney seeking an adverse interest: fully disclose in writing terms that “are fair and reasonable to the client”; notify the client in writing that the client may seek the advice of an independent lawyer; and obtain the client’s written consent to the terms of the transaction.
Once again, there is no executed lien agreement due to the “stolen case file.” Even if we credit Shumake’s claim that the “exemplar” comprises the relevant terms of the lien agreement, it is apparent that the agreement fails to meet the requirements of rule 3-300: it does not advise the client that he may seek the advice of an independent lawyer. Because the terms of the lien agreement (as shown in the exemplar) do not meet the requirements of rule 3-300, the lien cannot be enforced. (Fletcher v. Davis, supra, 33 Cal.4th at pp. 71-72.)
Respondents did not draft the unenforceable contingent fee/lien agreement. Shumake alone is responsible for its deficiencies. Nothing respondents did—for example, by writing a legal memorandum about attorneys’ liens—could render enforceable the inadequate and voidable agreement drafted by Shumake.
c. Shumake Admits That He Worked On An Hourly Basis
Quite apart from the legal inadequacy of the contingent fee/lien agreement, Shumake’s case implodes in light of a sworn declaration he submitted in the underlying lawsuit. Shumake avers that Mirisola paid an “hourly rate” for his representation. Shumake “agreed to substitute into this case on a ‘pay-me-as-you’re-able basis.” Shumake declared that his fees for the arbitration totaled $39,375. Mirisola’s cancelled checks payable to Shumake for legal fees bear out Shumake’s declaration that he worked for Mirisola on an hourly basis in the underlying lawsuit. Upon receipt of an escrow check from Mirisola for $10,460, Shumake gave Mirisola notice that his legal fees were “paid in full except cost[s].” When a plaintiff makes “‘a clear and unequivocal admission’” that contradicts a later declaration in support of summary judgment, the admission is given deference. (D’Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 21-22.)
Shumake’s admission that he worked for an hourly rate is entirely at odds with his current claim that he represented Mirisola on a contingent fee basis. Clients enter contingent fee agreements to shift the burden of legal fees—and the risk of no recovery—onto the lawyer. “A contingent fee contract, since it involves a gamble on the result, may properly provide for a larger compensation tha[n] would otherwise be reasonable.” (Estate of Raphael (1951) 103 Cal.App.2d 792, 796; Rader v. Thrasher (1962) 57 Cal.2d 244, 253; Cazares v. Saenz (1989) 208 Cal.App.3d 279, 288 [“The lawyer on a contingent fee contract receives nothing unless the plaintiff obtains a recovery”].) There is no earthly reason why a client like Mirisola would pay thousands of dollars in fees to a lawyer as the litigation progresses and at the same time agree to fork over 40 percent of his ultimate recovery to the lawyer. If the client personally funds the litigation, the lawyer does not “gamble on the result”; i.e., his fee is not “contingent” upon securing a successful result. With his words (his declaration averring that he worked on an hourly basis) and his actions (his acceptance of regular payments from Mirisola to fund the litigation), Shumake has negated the notion that he is entitled to a contingent fee.
3. Respondents Were Not Required To Give The Settlement Checks to Shumake
Shumake argues that respondents were required to give the settlement checks to him, because he was attorney of record at the time the checks were issued. He cites Code of Civil Procedure section 283, which gives an attorney authority to bind his client in court, and to receive money claimed by his client unless that authority is revoked. Shumake did not raise this argument in the trial court. Arguments not presented in opposition to summary judgment are waived. (Waisbren v. Peppercorn Productions, Inc. (1995) 41 Cal.App.4th 246, 263.)
In any event, section 283 “is not a command to the judgment debtor to pay the attorney. What section 283 does is simply to make it proper for the judgment debtor to pay the attorney only (instead of the party or party and attorney) . . . .” (Skelly v. Richman (1970) 10 Cal.App.3d 844, 863.) Section 283 does not give Shumake any right to the settlement checks. On the contrary, “the authorities support the proposition that the judgment creditor can pay the plaintiff directly and that the latter can give a satisfaction of judgment.” (Skelly v. Richman, at p. 863, italics added.) Because the client can discharge his attorney at will, he also can settle at will without the attorney. (Ibid.) After Mirisola discharged Shumake, respondents were within their rights to have the checks reissued to Mirisola alone, at Mirisola’s request. The judgment in the underlying lawsuit was in favor of Mirisola, not Shumake, and Shumake had no lien or any right to detain the proceeds of the judgment. Any requirement regarding formal notice to an adverse party of a change of attorney is irrelevant here, given Mirisola’s exercise of his right to demand that respondents pay the settlement directly to him.
4. Absent An Enforceable Agreement, Shumake’s Claims Fail
Shumake cannot establish his claims for breach of trust and for a constructive trust because respondents did not “wrongfully detain” the settlement proceeds. (Civ. Code, § 2223.) Shumake had no right to or lien on the settlement proceeds: the money was awarded to and belonged to Mirisola, and respondents properly re-issued the settlement checks to him. By the same token, Shumake cannot prove that respondents gained control of the settlement money “by fraud, accident, mistake, undue influence, the violation of a trust, or other wrongful act.” (Civ. Code, § 2224.) Mirisola did not “steal” the first set of settlement checks from Shumake. The money represented in those checks belonged to Mirisola alone. When Mirisola took possession of the checks and gave them to respondents, no wrongful act occurred.
No claim for conversion can be maintained. Shumake had no ownership interest in the settlement checks, as his contingent fee/lien agreement was legally inadequate and was voided by Mirisola. (Compare Weiss v. Marcus (1975) 51 Cal.App.3d 590, 599 [where a valid attorney lien was created, a conversion claim may be stated as to sums rightfully belonging to the attorney].) Shumake has, at most, the right “to collect a reasonable fee” from Mirisola. (Bus. & Prof. Code, § 6147, subd. (b).) The amount of the reasonable fee will be determined by the trial court. A cause of action for money had and received applies when a party receives money that belongs to another. (Ibid.) The settlement money here did not belong to Shumake, who had no valid lien upon it.
Shumake cannot prove his claim for wrongful interference with a contingent fee contract. The exemplar shows a contract that falls short under Business and Professions Code section 6147, and Mirisola exercised his right to void the deficient fee agreement. Without an enforceable contract, there can be no claim for interference with that contract. (Bed, Bath & Beyond of La Jolla, Inc. v. La Jolla Village Square Venture Partners (1997) 52 Cal.App.4th 867, 878-879.)
Shumake concedes that his claim for intentional interference with economic advantage is identical to his preceding claim for wrongful interference with contract, except that it requires that the interference be “independently wrongful.” Making arguments that he did not present in the trial court, Shumake contends that the independently wrongful act was (a) that respondents failed to give notice that Mirisola changed attorneys, but as previously discussed, the notice requirement is irrelevant; (b) a violation of his lien, but as previously discussed, he had no enforceable lien; (c) that respondents breached their trust by failing to hold onto the settlement money as trustee for his benefit, but this would only be true if Shumake had a valid lien, and he does not; and (d) that respondents committed acts of spoliation of Shumake’s contingent fee/lien agreement. There is no evidence suggesting that respondents had anything to do with Mirisola’s taking of a file from Shumake’s office, and even if we assume that there was collusion, it does not matter: the contingent fee/lien agreement is demonstrably unenforceable regardless of whether respondents tore up the signed original.
Respondents did not profit or benefit from Mirisola’s theft of his own case file, assuming that a theft occurred. St. Paul was obliged to remit the settlement, regardless of whether the money went to Mirisola or Shumake. Doberman and Schwam had no monetary interest in the settlement funds.
The facts do not show that Shumake was damaged by any negligent misrepresentation. According to Shumake, Mirisola agreed on April 12, 2004, to accept a distribution check for $960,000 from Shumake, in full settlement with Shumake. Mirisola picked up the check from Shumake on April 14. On April 19, Schwam returned the checked to Shumake, uncashed. In the interim, St. Paul reissued the settlement checks, payable to Mirisola. During the seven days between the time that Mirisola agreed to accept $960,000 from Shumake and the time that the check was returned uncashed, Shumake believed that he was going to receive a contingent fee from Mirisola. Schwam and Doberman took possession of Shumake’s check without telling him that they had asked St. Paul to reissue the checks payable to Mirisola.
Shumake cannot show that he suffered any harm from respondents’ conduct. Shumake claims that he was induced “into not taking steps that would have ensured his payment from MIRISOLA’S settlement proceeds with the ST. PAUL respondents.” Shumake could not “have ensured” the payment of a contingent fee. Mirisola had the right to discharge Shumake at any time, and to have the judgment debtor pay him the settlement proceeds directly. Shumake lacked an enforceable contingent fee or lien agreement, so he had no right to detain payment of the settlement. Even if Shumake’s hopes were dashed, he cannot show any loss or damage.
DISPOSITION
The judgments are affirmed.
We concur: DOI TODD, J., ASHMANN-GERST, J.