Filed 5/22/20 SL Environmental Law Group v. Robins Borghei, LLP CA1/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION TWO

SL ENVIRONMENTAL LAW GROUP, PC,

Plaintiff and Appellant,

v.

ROBINS BORGHEI, LLP,

Defendant and Respondent.

A155906

(San Francisco County

Super. Ct. No. CGC-18-565367)

Plaintiff SL Environmental Law Group, PC appeals after the trial court sustained without leave to amend the demurrer of defendant Robins Borghei, LLP to plaintiff’s complaint for damages. The complaint alleged six causes of action against defendant based on its claim that defendant unlawfully interfered with its attorney’s liens in seven cases that began while plaintiff was representing the clients and subsequently settled while defendant was the clients’ counsel. The court concluded that an attorney’s lien can only be established, valued, and enforced in an independent action against the client. On appeal, plaintiff contends this was error because an attorney’s lien can be established and enforced in an independent action against a third party for interference with the lien, without including the client in the action. We shall affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

Defendant’s complaint alleged the following pertinent facts. Plaintiff is “a litigation boutique dedicated to the pursuit of environmental justice and a pioneer in the field of environmental contaminant litigation” and, “[i]n particular, the firm has played an essential role in pioneering groundbreaking litigation over water contamination caused by 1, 2, 3, -Trichloropropane” (TCP), a chemical found in agricultural products sold and distributed by multinational corporations. TCP is toxic to humans.

In 2004, Sher Leff, LLP, the predecessor-in-interest to plaintiff, filed its first TCP lawsuit against Dow Chemical Company and Shell Oil Company on behalf of public entities to force those companies to pay for cleaning up TCP pollution. In the following years, Sher Leff filed dozens more TCP contamination suits on behalf of cities and water systems in rural California counties. Sher Leff also began bringing lawsuits for other types of water contamination. Sher Leff entered into contingency agreements with each of its clients. As part of their agreements with Sher Leff, “the clients also granted the law firm a lien on any and all claims or causes of action that were the subject of Sher Leff’s representation. The clients acknowledged that the lien would attach to any recovery it obtained in their water contamination lawsuits, in order to repay Sher Leff for the value of its work and to repay it for the costs it had agreed to incur on the client’s behalf.”

By 2013, Sher Leff had successfully resolved some of the first major TCP cases. That year, two of Sher Leff’s attorneys left to start their own firm, Robins Borghei (i.e., defendant), at which point a number of water contamination clients terminated Sher Leff as counsel and retained defendant to represent them instead. To protect its rights, Sher Leff filed a notice of an attorney’s lien in each of the departed client’s pending lawsuits.

At the time plaintiff filed its complaint, seven of the clients that were now represented by defendant had settled their lawsuits. Plaintiff alleged that, despite its outstanding liens on the recovery in each of those cases and “[i]nstead of fully compensating Sher Leff for the value of the legal representation it provided to the Settling Clients, or the costs it incurred in pursuing those clients’ lawsuits, [defendant] mailed Sher Leff checks in minimal amounts,” which Sher Leff believed was a “tiny fraction” of the amounts recovered by the clients and the amounts received by defendant in contingency fees.

On March 28, 2018, plaintiff filed its complaint for damages against defendant, alleging six causes of action for breach of fiduciary duty, conversion, unjust enrichment, intentional interference with contract, interference with prospective economic advantage, and unfair competition, based on the money allegedly owed to plaintiff under its contracts with the settling clients and defendant’s failure to satisfy its attorney’s liens on the settlement funds before disbursing those funds to the clients.

On June 29, 2018, defendant filed a demurrer to the complaint. On August 17, 2018, the trial court entered an order sustaining the demurrer without leave to amend after concluding, under California law, that the action against defendant was foreclosed by plaintiff’s failure to “ ‘establish the existence, amount, and enforceability of [its] attorney fees lien in an independent action against the clients.’ ” (Quoting Mojtahedi v. Vargas (2014) 228 Cal.App.4th 974, 976 (Mojtahedi).) The court explained that “Mojtahedi’s wisdom is illustrated by our case. As defendant points out, the seven clients may well have substantive and procedural defenses and arguments regarding plaintiff’s putative attorney fees lien. Among them: venue restrictions, Tort Claims Act, liens not permitted against public entities, unclean hands, breach of fiduciary duty, quantum meruit, amount and satisfaction of lien. Yet none of the clients is present in this case to assert those defenses or arguments.” The court also rejected plaintiff’s claim that another case, Brown v. Superior Court (2004) 116 Cal.App.4th 320, 333 (Brown), “ ‘squarely held that an attorney need not sue his former client,’ ” explaining that this was “not what the cited passage says. Rather, Brown held that an attorney was required to ‘bring a separate action’ against his client, though a declaratory relief action would suffice. [Citation.]”

On August 31, 2018, the court entered its judgment of dismissal and on September 10, 2018, a notice of entry of judgment was filed.

On November 7, 2018, plaintiff filed an amended notice of appeal.

DISCUSSION

Plaintiff contends the court erred in sustaining the demurrer, arguing that it was not required to file an action against each former client to establish and enforce its attorney’s liens.

On appeal from the trial court’s order sustaining a demurrer without leave to amend, “we examine the complaint de novo to determine whether it alleges facts sufficient to state a cause of action under any legal theory, such facts being assumed true for this purpose. [Citations.]” (McCall v. PacifiCare of California, Inc. (2001) 25 Cal.4th 412, 415.) “ ‘We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] . . . Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.]” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)

I. California Law on Enforcement of Attorney’s Liens

“Unlike other liens, ‘an attorney’s lien is not created by the mere fact that an attorney has performed services in a case.’ [Citation.] An attorney’s lien is created only by an attorney fee contract with an express provision regarding the lien or by implication in a retainer agreement that provides the attorney will be paid for services rendered from the judgment itself. [Citation.]” (Mojtahedi, supra, 228 Cal.App.4th at p. 977.) “If a lien is created by contract, the lien survives the discharge of the attorney, and the attorney, although no longer entitled to the fees contracted for, remains entitled to recover from the judgment the reasonable value of services actually performed. [Citation.]” (Carroll v. Interstate Brands Corp. (2002) 99 Cal.App.4th 1168, 1172, fn. 3 (Carroll).)

“ ‘Appellate courts have consistently held that the trial court in the underlying action has no jurisdiction to determine the existence or validity of an attorney lien on the judgment. [Citations.] The trial court does have fundamental jurisdiction over the subject matter and the parties. Nevertheless, because the attorney is not a party to the underlying action and has no right to intervene, the trial court acts in excess of its jurisdiction when it purports to determine whether the attorney is entitled to foreclose a lien on the judgment. [Citations.] Nor can the court entertain a motion to terminate the lien. [Citation.] After the client obtains a judgment, the attorney 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. [Citations.] An order within the underlying action purporting to affect an attorney’s lien is void.’ [Citation.]” (Brown, supra, 116 Cal.App.4th at p. 328, quoting Carroll, supra, 99 Cal.App.4th at p. 1173; accord, Valenta v. Regents of University of California (1991) 231 Cal.App.3d 1465, 1470 [“while a previously discharged attorney may file a notice of lien in a pending action, an independent action is required to establish the existence and amount of the lien and to enforce it”]; Hansen v Jacobsen (1986) 186 Cal.App.3d 350, 356 [“even though a contractual lien continues to be viable after discharge [of counsel], a subsequent, independent action is required to establish the amount of the lien and to enforce it”]; Bandy v. Mt. Diablo Unified Sch. Dist. (1976) 56 Cal.App.3d 230, 234 [an attorney’s lien must be enforced “in an independent action by the attorney against the client”]; Hendricks v. Superior Court (1961) 197 Cal.App.2d 586, 588-589 [because former attorney was not a party in original action, “the enforcement of his contractual lien necessarily requires that he obtain his relief through an independent action in which [his former client] may set up any defenses she may have”]; see also Cal-Western Reconveyance Corp. v. Reed (2007) 152 Cal.App.4th 1308, 1322 [relying on Brown, Carroll, Bandy, and Hendricks for rule, which “has been stated many times,” that court in underlying action has no authority to determine existence or validity of attorney’s lien and a former attorney must bring a separate action against client to establish and enforce lien].)

In the present case, plaintiff argues that the trial court erroneously relied on Mojtahedi, supra, 228 Cal.App.4th 974, and misconstrued Brown, supra, 116 Cal.App.4th 320 in concluding plaintiff cannot forego an action against its former clients and sue only defendant to enforce its attorney’s liens, as it attempted to do here. According to plaintiff, Mojtahedi was wrongly decided and Brown in fact held that an attorney could sue a third party without first suing his former client. As we shall explain, both Brown and Mojtahedi are consistent with settled California law that requires a former attorney to sue his or her former client in a separate action in order to establish the validity and value of an attorney’s lien.

In Brown, an attorney, Brown, filed a motion in his current client’s underlying action for the purpose of asserting the priority of his contractual lien against the client’s judgment and a contesting creditor’s judgment lien. (Brown, supra, 116 Cal.App.4th at pp. 324–325.) The trial court denied Brown’s motion to appear in the underlying action to determine lien priority, concluding he was required to bring a separate independent action against his client to enforce the lien. (Id. at p. 326.) On appeal, Brown attempted “to avoid the effect of Carroll and its predecessors by arguing that each of those cases ‘concerned either a dispute between a discharged attorney and the client regarding attorney’s fees, or a dispute between the client and current counsel and discharged counsel regarding attorney’s fees.’ ” The attorney asserted that, unlike in those cases, “the court does have jurisdiction over an attorney’s lien claim when there is no dispute between the attorney and the client, but only between the attorney and another creditor of the client.” (Brown, at p. 329.)

The appellate court disagreed: “While it may be true that Carroll and its predecessors involved attorney-client disputes, the rationale of those cases is not limited to such disputes. The rule that the trial court in the underlying action lacks jurisdiction to affect an attorney lien is founded on the fundamental principle ‘that one who is not a party to a proceeding may not make a motion therein.’ [Citation.]” (Brown, supra, 116 Cal.App.4th at p. 329.) Hence, if Brown wanted to establish and enforce his lien on the proceeds of the judgment in the underlying action, the court explained, “he must bring a separate action to do so.” (Id. at p. 333.)

The court rejected Brown’s argument that requiring him to bring a separate action against his client to enforce the lien when there was no dispute between them regarding the amount of fees and costs would result in Brown violating various rules and committing a tort “because such an action would be ‘without just cause.’ ” (Brown, supra, 116 Cal.App.4th. at p. 333.) The court explained: “By requiring Brown to bring a separate action to enforce his lien, we do not mean to suggest that he must sue [his client] for breach of contract. Given the apparent lack of any controversy between Brown and [his client], but the clear existence of an actual controversy between Brown and [the judgment creditor] over whose lien on the proceeds of the [underlying] judgment is entitled to first priority, a declaratory relief action under [Code of Civil Procedure] section 1060 . . . would be appropriate. Even if Brown were to name [his client] as a defendant in such a declaratory relief action, [the client] would not have to appear in the action if it did not claim any remaining interest in the judgment.

“By requiring Brown to bring a separate action to establish and enforce his lien, we also do not mean to suggest that Brown must obtain a money judgment against [his client], then obtain a judgment lien . . . before he can enforce his lien against the proceeds of the [underlying] judgment. If Brown files a declaratory relief action naming [the judgment creditor] as a defendant, Brown and [the judgment creditor] can litigate the validity, amount, and priority of Brown’s lien in that action.” (Brown, supra, 116 Cal.App.4th at pp. 333–334, italics added, fn. omitted.)

First, considering the Brown court’s entire analysis, we agree with the trial court’s interpretation of Brown. The Brown court did not hold, as plaintiff insists, that an attorney can sue a third party judgment creditor, without first bringing an action against his former client. Rather, to the extent the language relied on by plaintiff to make this argument—italicized above—is ambiguous or could be read to support such an argument, when considered together with the entire discussion surrounding it, it is apparent that the court found that Brown was required to file an action against his client to establish and enforce his attorney’s lien, although he could do so in a declaratory relief action, and could also name the judgment creditor as a defendant in such an action. (Brown, supra, 116 Cal.App.4th at pp. 333–334.) Thus, Brown did not purport to change the longstanding rule that, “ ‘[a]fter the client obtains a judgment, the attorney 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. [Citations.]’ ” (Brown, at p. 328, quoting Carroll, supra, 99 Cal.App.4th at p. 1173.)

Second, we observe that Brown is not directly applicable to the circumstances of this case: the issue in Brown was whether a party’s current attorney could appear in the underlying action to establish the priority of his attorney’s lien over the lien of a judgment creditor, where no dispute existed between him and his clients as to the amount of fees and costs owed. Instead, the more recent case of Mojtahedi is directly on point and is therefore extremely relevant to our analysis.

In Mojtahedi, an attorney who had previously represented two clients filed a complaint against the clients’ successor attorney, seeking to recover a portion of a settlement payment the successor attorney had obtained for the clients. (Mojtahedi, supra, 228 Cal.App.4th at p. 976.) The trial court sustained without leave to amend the defendant’s demurrer to the complaint because the plaintiff had failed to establish the amount or enforceability of his attorney’s lien in an independent action against the clients. (Id. at pp. 976–977.)

On appeal, the appellate court first reiterated the “well established” rule that “ ‘ “[a]fter the client obtains a judgment, the attorney must bring a separate, independent action against the client to establish the existence of [an attorney’s] lien, to determine the amount of the lien, and to enforce it.” ’ [Citations.]” (Mojtahedi, supra, 228 Cal.App.4th at pp. 977–978, quoting Brown, supra, 116 Cal.App.4th at p. 328.) Although the plaintiff had alleged that he had a contract with his former clients and that he had a detailed log stating a lien in a specific amount based on his time and costs expended, he had “failed to allege facts establishing that he adjudicated the existence, value, or enforceability of his lien. . . . A log of plaintiff’s time, although useful to adjudicate the reasonable value of plaintiff’s services in a separate action against the clients, is insufficient to establish that plaintiff is entitled to a particular amount of settlement money in his suit against defendant. Plaintiff admits that he never brought a separate action against his clients to litigate those issues. Therefore, he has yet to establish the value or validity of his purported lien.” (Mojtahedi, at p. 978.)

In response to the plaintiff’s attempt to distinguish his situation from that of prior similar cases on the ground that there was no actual dispute between him and his clients regarding the amount owed to him, the court concluded “that even if this is true, it is irrelevant,” noting that the appellate court in Brown had “addressed this identical issue,” and “held that the attorney had to bring an independent action against his client to establish the enforceability and amount of his contractual lien,” regardless of whether there was a conflict between the attorney and his clients. (Mojtahedi, supra, 228 Cal.App.4th at pp. 978–979.) “Without first establishing a right to any portion of his clients’ settlement proceeds, plaintiff in this case lacks any basis to assert that defendant fraudulently withheld any money from him.” (Id. at p. 979.) The court stated, as did the court in Brown, that “by seeking a declaration regarding the reasonable value of his services rendered, plaintiff will address the issue without subjecting his former clients to damages. Importantly, this procedure also gives the court an opportunity to evaluate the value and quantity of plaintiff’s services with the relevant parties: plaintiff and his former clients.” (Mojtahedi, at p. 979.)

The court found that, having failed to bring a separate declaratory relief action against his former clients, the plaintiff had not “establish[ed] the existence, amount, and enforceability of his lien on the settlement money,” and the trial court had therefore properly sustained the demurrer without leave to amend. (Mojtahedi, supra, 228 Cal.App.4th at pp. 979–980; see Southern California Gas Co. v. Flannery (2016) 5 Cal.App.5th 476, 495–496 (Southern California Gas Co.) [finding that former attorney satisfied requirement of a separate action against client where validity of attorney’s lien could be established in interpleader case in which both former attorney and client were parties].)

Here, the causes of action in plaintiff’s complaint are based on defendant’s alleged failure to fully satisfy Sher Leff’s attorney’s liens on the settlement funds before disbursing those funds to the clients and assert plaintiff’s entitlement to recover the amount due under its contracts with the settling clients. The facts of this case are thus almost identical to those in Mojtahedi, and like the appellate court in that case, we conclude that because plaintiff did not file declaratory relief actions against his former clients, he “has failed to establish the existence, amount, and enforceability of his lien on the settlement money.” (Mojtahedi, supra, 228 Cal.App.4th at p. 979.) “Without first establishing a right to any portion of [its] clients’ settlement proceeds, plaintiff in this case lacks any basis to assert that defendant fraudulently withheld any money from [it].” (Ibid.)

For the reasons discussed herein, we conclude the trial court properly sustained defendant’s demurrer to the complaint without leave to amend. (McCall v. PacifiCare of California, Inc., supra, 25 Cal.4th at p. 415; Mojtahedi, supra, 228 Cal.App.4th at p. 980.)

DISPOSITION

The judgment is affirmed. Costs on appeal are awarded to defendant Robins Borghei, LLP.

_________________________

Kline, P.J.

We concur:

_________________________

Stewart, J.

_________________________

Miller, J.

SL Environmental Law Group, PC v. Robins Borghei, LLP (A155906)