Newsletter – September 2019

“Of course, on occasion, a client may not fully appreciate the excellent result achieved by her or his attorney.” These words begin the California Court of Appeal’s opinion in Mancini & Associates v. Jason Schwetz, No. B290498 (Ct. App. September 4, 2019) that explains why a client who won a substantial jury verdict could not simply sign away hundreds of thousands of dollars due to her attorneys for their good work. Nor could the defendant in the case lawfully persuade the client to sign away the firm’s right to that money.

Facts of the Case

Law firm Mancini & Associates agreed to represent Gina Rodriguez in a lawsuit against her former employer and its principal Jason Schwetz. The agreement that Gina signed said that Mancini would receive fifty percent of any recovery plus all attorneys’ fees awarded by the court. Costs of the case would be paid to Mancini out of the recovery, and Mancini would have a lien for the fees and costs.

Gina’s case went to a jury trial, and she won money damages against Schwetz as well as attorneys’ fees. Mancini tried to collect on the judgment but was unsuccessful. Years later, Gina reached out to Schwetz and they became friends again. Mancini then hired another lawyer to try to collect on the judgment. When Schwetz learned of the new collections attempt, he asked Gina if she had hired the lawyer. Gina said she didn’t know who he was. Gina and Schwetz then signed a “Memorandum of Settlement and Mutual Release” that purported to release both of them and their attorneys from the judgment and from any fees or costs arising from the lawsuit.

When Mancini learned of the memorandum, it sued Schwetz for interference with its contract with Gina, interference with economic relations, and to enforce its attorney lien. Schwetz admitted that he knew about the collection attempts when he signed the memorandum and did not pay anything to Gina for the release of attorneys’ fees. The trial court found in Mancini’s favor. When it awarded a judgment of $409,351.81 against Schwetz, he promptly appealed.

Why Could the Law Firm Pursue Schwetz for Payment of the Attorneys’ Fees and Costs?

The Court of Appeal affirmed the judgment in favor of Mancini. The Court of Appeal emphasized  that Schwetz knew Mancini was trying to collect on Gina’s judgment. He even spoke to the new lawyer who tried to collect a second time, and he learned that Gina’s judgment was the reason for the second attempt. As a result, by signing the memorandum, Schwetz attempted to prevent Mancini from getting its attorneys’ fees.

Schwetz tried to argue that he did not know about Mancini’s lien or the substance of its agreement with Gina. But the opinion notes that Schwetz attended the trial, knew that Mancini represented Gina in the trial, received the judgment, and knew that the court awarded attorneys’ fees to Mancini. Due to this evidence, Schwetz’s argument that he did not interfere with Mancini’s collection attempts must fail.

The Takeaway

Even if a client tries to sign away her right to collect on a judgment that includes attorneys’ fees and costs, the lawyers who represented her at trial may still have the right to pursue collections against the losing defendant. At that point, the lawyers’ attorneys fees had vested.

GOODMAN LAW EVENTS:

Goodman Law team members have been very busy in what has become a very short summer.

First, on August 26, 2019, an Alameda County jury ruled in favor of Karen Goodman’s client in defense of a lawsuit filed by an attorney (Mary Margaret Bush) for breach of contract, interference with contract, interference with economic advantage and conversion.  The case was tried in the Hayward courthouse over a 3 week time period.   Ms. Goodman represented a retired attorney (Martha Caron) who had brought Ms. Bush into an ongoing enforcement of judgment case to complete the collection activities after trial.  Ms. Bush decided to quit the case instead of pursuing collections. After Ms. Caron (and the team of lawyers she put together) negotiated settlements years later with the defendants, Ms. Bush returned and demanded her share of the settlement.  The jury found in favor of Ms. Goodman’s client on every cause of action.  Judge Hayashi was the trial judge.  It is unknown if plaintiff is going to file an appeal.

Second, literally as soon as Ms. Goodman returned from Hayward, she spoke with her former Weintraub colleague Bret Rossi (now at Kronick Moskovitz) before the Sacramento County Bar Association’s Small Firm and Solo Division on the subject of collecting attorneys fees.  It was a well attended event with great audience participation.

Upcoming scheduled events for Ms. Goodman include participating as a panelist on the ABA GP/Solo sponsored webinar on the Use of Expert witnesses on October 8, 2019.  Ms. Goodman will also participate as a panelist on 2  ethics programs during the California Lawyer Association annual meeting in Monterey on October 10th and October 11th.