Filed 4/6/20 Medfin Manager, LLC v. Carrazco CA2/3

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

SECOND APPELLATE DISTRICT

DIVISION THREE

MEDFIN MANAGER, LLC,

Plaintiff and Appellant,

v.

ANGEL CARRAZCO,

Defendant and Respondent.

B292644

(Los Angeles County

Super. Ct. No. BC684123)

APPEAL from an order of the Superior Court of Los Angeles County, Richard E. Rico, Judge. Affirmed.

Law Offices of Alan M. Laskin and Alan M. Laskin for Plaintiff and Appellant.

Carrazco Law and Christopher L. Holm for Defendant and Respondent.

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Medfin Manager, LLC (Medfin) appeals from the order dismissing its action against Angel Carrazco (Carrazco) after granting Carrazco’s motion for sanctions under Code of Civil Procedure section 128.7. We discern no abuse of discretion and affirm the order.

BACKGROUND

Luis Vasquez-Estrada suffered personal injuries in an accident. Temple Community Hospital (the hospital) provided some of his medical care. Vasquez-Estrada signed two contractual liens, giving the hospital a lien against any settlement or judgment that he might recover in litigation for his injuries. The lien states in relevant part, “I hereby authorize and direct my attorney to i) withhold such sums from any settlement, judgment or verdict, no matter the source of such sums . . . ii) pay directly and fully to said Provider such sums as may be due and owing the Provider for medical and professional services rendered to me . . . . I irrevocably authorize and direct any payor, including the defendant and/or its insurance company, making payment of such sums to make such payment directly and fully to said Provider. [¶] . . . [¶] . . . This contract/lien is expected to continue in force, and be binding if I should decide to change attorneys in the future. I agree to provide any such attorney with notice of this contract/lien. . . . [¶] I fully understand that I am DIRECTLY, PERSONALLY, AND FULLY responsible to make payment in full to said Provider for all professional bills submitted by it for services rendered to me.” (Italics omitted.)

In connection with the medical lien, Steven Lerman, Vasquez-Estrada’s attorney in his personal injury action, signed two identical documents entitled “attorney’s consent to contract for payment/medical lien” (consents). (Capitalization omitted.) These consents stated that “[t]he undersigned being attorney of record for the above patient hereby agrees to observe all the terms of the above,” and verified that Vasquez-Estrada had made his personal and irrevocable obligation to full payment for the hospital’s care.

The hospital assigned the lien documents to Medfin.

Lerman referred Vasquez-Estrada’s personal injury case to attorney Carrazco who settled the action. Carrazco then negotiated with most of the medical providers to reduce their liens, but Medfin was unwilling to accept a reduction. In October 2017, Vasquez-Estrada instructed Carrazco’s law firm not to pay Medfin. Vasquez-Estrada acknowledged he was fully responsible for the unpaid medical bills.

Medfin brought this lawsuit for breach of contract and fraud against Vasquez-Estrada, Lerman, and Carrazco. The contract cause of action alleges that all three defendants breached the lien documents by failing to pay Medfin for medical services rendered to Vasquez-Estrada within 30 days of receipt of the personal injury settlement funds. In the fraud cause of action, the complaint alleges that Vasquez-Estrada represented that he would be responsible for paying the full amount to Medfin’s assignor, but never intended to pay. “He only signed the papers so that he could get the surgery he needed without having to pay the full amount for it.” (Capitalization omitted.)

Carrazco filed his section 128.7 motion seeking sanctions against Medfin and its attorneys of record, Alan M. Laskin, Jeffrey C. Arnold, and Law Offices of Alan M. Laskin. The motion argued that Carrazco was not contractually bound to Medfin because he never signed the lien and the fraud cause of action alleged no facts that Carrazco was part of the purported fraud.

Medfin responded that Lerman executed the consents as “attorney of record,” and once Carrazco substituted in as Vasquez-Estrada’s attorney of record in the personal injury matter and was aware of the consents, Carrazco became a party to the contract. Alternatively, Medfin argued that these facts established that Carrazco manifested assent to the lien documents which gave rise to an implied contract to which Carrazco was bound.

As for the fraud cause of action, Medfin attached attorney Alan Laskin’s letter to Carrazco stating that “[a]t the outset, I agree with your position that there is no cause of action for fraud against you. Accordingly, I will prepare a dismissal . . . of the fraud cause of action only.” (Italics added.) Medfin did not dismiss the cause of action before the court ruled on Carrazco’s sanctions motion.

The trial court granted Carrazco’s motion for sanctions against Medfin only. The court found unpersuasive and unsupported Medfin’s argument that by becoming attorney of record, Carrazco was bound by the consents. Citing Gilman v. Dalby (2009) 176 Cal.App.4th 606 (Gilman), the court ruled that Carrazco was not obligated by a lien that he did not sign. His mere awareness of the lien was not the equivalent of contractual assent. The court ordered the parties to discuss the amount of the sanctions award. The court awarded Carrazo’s sanctions in the amount of $5,185 and dismissed all the causes of action against Carrazco. Medfin timely appealed.

DISCUSSION

“Under section 128.7, a court may impose sanctions if it concludes a pleading was filed for an improper purpose or was indisputably without merit, either legally or factually.” (Bucur v. Ahmad (2016) 244 Cal.App.4th 175, 189.) The trial court here granted Carrazco’s sanctions motion based on its finding that Medfin’s claims were legally frivolous.

“A claim is . . . legally frivolous if it is ‘not warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law.’ ” (Bucur v. Ahmad, supra, 244 Cal.App.4th at p. 189.) To obtain sanctions, the moving party has the burden to show that the party’s conduct in asserting the claim “was objectively unreasonable.” (Ibid.) “A claim is objectively unreasonable if ‘any reasonable attorney would agree that [it] is totally and completely without merit.’ ” (Ibid.)

As it did below, Medfin contends that Carrazco impliedly accepted the lien when he became attorney of record and was aware of the Lerman’s consents and of his own professional obligations. According to Medfin, Carrazco’s conduct created a mutual agreement and intent to honor Medfin’s rights to the settlement agreement.

“A contract is either express or implied. [Citation.] The terms of an express contract are stated in words. [Citation.] The existence and terms of an implied contract are manifested by conduct. [Citation.] The distinction reflects no difference in legal effect but merely in the mode of manifesting assent. [Citation.] Accordingly, a contract implied in fact ‘consists of obligations arising from a mutual agreement and intent to promise where the agreement and promise have not been expressed in words.’ [Citation.] [¶] Even when a written contract exists, ‘ “ ‘[e]vidence derived from experience and practice can now trigger the incorporation of additional, implied terms.’ ” ’ ” (Retired Employees Assn. of Orange County, Inc. v. County of Orange (2011) 52 Cal.4th 1171, 1178–1179.)

Medfin also relies on Crooks v. State Bar (1970) 3 Cal.3d 346 to argue that “[a]n attorney holding funds for a person who is not the attorney’s client must comply with the same fiduciary duties in dealing with such funds as if an attorney-client relationship existed.” Medfin asserts that Carrazco was bound by these authorities at the time he allegedly breached the lien.

Crooks v. State Bar, supra, 3 Cal.3d 346 is inapt. It involved an attorney who was disciplined for violating the duties that he had agreed to undertake as escrow holder in the purchase and sale of a business. Carrazco did not sign the lien.

In contrast, the facts of Gilman, supra, 176 Cal.App.4th 606 are nearly identical to this case. There, the patient and his original counsel signed the medical lien, but the successor attorneys did not, though they were aware of it. (Id. at p. 611.) Gilman, the medical provider’s assignee, sued the successor attorneys for, among other things, breach of fiduciary duty. (Id. at p. 612.) The complaint alleged that the successor attorneys received funds applicable to the assignee’s lien and that, on receipt of those funds, the successor attorneys “ ‘owed [Gilman] a fiduciary duty and obligation not to act in any manner that would compromise his claim of lien.’ ” (Id. at p. 613.) The Third Appellate District concluded that the complaint failed to state that cause of action for breach of fiduciary duty. It explained that the lien created nothing more than a contractual duty to withhold money for the medical provider in the event the litigation was successful. (Id. at p. 614.) However, because the medical provider was not the successor attorneys’ client and because the successor attorneys had not signed the lien, “they did not have any contractual duty” to the medical provider’s assignee. (Ibid.) The Third Appellate District also rejected Gilman’s reliance on Crooks v. State Bar, supra, 3 Cal.3d at pages 348 to 349, because the attorney in Crooks had agreed to serve as escrow holder. (Gilman, at p. 615.) Gilman explained that the successor attorneys did not have an agreement with the medical provider to act as its fiduciary, and their “mere awareness of the lien . . . is not the equivalent of [the successor attorneys’] agreeing to act as trustees for [the medical provider’s assignee]; and it does not make [the successor attorneys] escrow agents with respect to the litigation proceeds” where the successor attorneys did not sign the lien. (Ibid., italics added.)

Gilman, being on point, is controlling. It is undisputed that only Lerman signed the consents. Medfin presented no evidence that Carrazco orally agreed to pay the lien. Medfin’s argument that Carrazco impliedly agreed to be bound by the lien documents by becoming successor attorney of record and knowing about the lien, is contrary to Gilman. Medfin has no authority for its assertion that Carrazco breached a contract as successor to the lien documents under these circumstances. Indeed, on appeal, Medfin does not cite or attempt to distinguish Gilman at all.

Turning to the fraud cause of action, the trial court did not address Carrazco’s contention that it was legally frivolous. We note only that Medfin’s attorney acknowledged that it was groundless but did not promptly dismiss it as he had promised.

Medfin insists it should not be sanctioned for what it terms zealous representation by its counsel. We are mindful that section 128.7 must not be construed so as to conflict with the primary duty of an attorney to represent his or her client zealously. Forceful representation often requires that an attorney attempt to read a case or an agreement in an innovative though sensible way. Our law is constantly evolving, and effective representation sometimes compels attorneys to take the lead in that evolution.” ’ ” (Ponce v. Wells Fargo Bank (2018) 21 Cal.App.5th 253, 261.) However, where Medfin does not address or attempt to distinguish the most applicable authority relied on by the trial court, and where it cites cases that are inapt and that are distinguished by Gilman, we cannot say that its contentions are innovative or constitute a good faith extension or modification of existing law.

For the reasons given, we conclude that the two causes of action alleged against Carrazco were objectively unreasonable and legally frivolous. The award of sanctions was not an abuse of trial court discretion.

DISPOSITION

The order is affirmed. Angel Carrazco is awarded his costs on appeal.

NOT TO BE PUBLISHED.

DHANIDINA, J.

We concur:

EDMON, P. J. LAVIN, J.