Written Fee Agreement Is Not Required For Ordinary Probate Work

Posted on September 18, 2012 by David J. McMahon

In Estate of Wong, 2012 DJDAR 8873 (2012), the California Court of Appeal for the First Appellate District decided an interesting attorney fee case dealing with the interplay of the Probate Code and Business and Professions (“B&P”) Code Section 6148. B&P Code Section 6148 requires a written fee agreement between the lawyer and the client where the services will likely exceed $1,000.

The client retained counsel to assist with a trust assignment and some probate work. The attorney did not provide the client with a written retainer agreement. Subsequently, the client terminated the lawyer’s employment and retained other counsel. After significant efforts by the prior and successor counsel, the client submitted a petition for settlement of the estate. The lawyers claimed entitlement to statutory compensation in the sum of $96,478. However, due to the lack of a written retainer agreement under the B&P Code, the client claimed the lawyers had waived their right to fees and should receive nothing.

The first lawyer (who had been discharged) petitioned for fees, dividing his work between the statutory probate work and for additional services. The probate court found that the lawyer was entitled to $72,358 in statutory fees. The client objected and filed an appeal.

The court of appeal affirmed the award of fees, noting that under Probate Code Section 10810, an attorney’s compensation for ordinary services is based on the value of the estate. The client argued that the lawyer was not entitled to statutory compensation under Section 10810 because no written agreement for services existed as required by B&P Code Section 6148. The court concluded, however, that because the fees for services rendered to a personal representative is paid out of the estate, rather than by the client, it is impossible that the “total expenses” charged to the client will exceed $1,000. For that reason, the court of appeal concluded that Business and Professions Code Section 6148 was not applicable.

No Attorney Fees Can Be Awarded for Non-Payment of Rest Breaks, California Supreme Court Rules

Posted on May 1, 2012 by Barger & Wolen LLP

by Michael A.S. Newman

In Kirby v. Immoos Fire Protection, Inc., the California Supreme Court held that neither California Labor Code section 1194 nor section 218.5 authorize the payment of attorney fees in an action seeking recovery for denial of required rest breaks under section 226.7.

Section 1194 authorizes recovery of attorney fees by a prevailing employee on a claim for unpaid minimum or overtime wages. It provides for one-way fee-shifting to plaintiffs.

Section 218.5, by contrast, provides for attorney fees to be paid to the prevailing party in any action brought for the nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions. It is thus a two-way fee-shifting statute. However, it is also limited, since it does not apply to any action for which attorney’s fees are recoverable under section 1194.

Section 226.7 imposes an obligation upon employers to provide mandated meal and rest breaks.

Plaintiffs, employees of Defendant (“IFP”), sued the employer for nonpayment of mandated rest breaks, but subsequently dismissed this claim. IFP sought roughly $50,000 of attorney fees for successfully defending this claim.

The first question the Supreme Court had to address was whether attorney fees would have been recoverable under 1194. The Supreme Court found that fees would not have been recoverable under 1194, since rest breaks do not constitute a type of “minimum wage,” as Plaintiffs had argued.

The second question was whether, in that case, attorney fees were recoverable under the two-way fee-shifting of section 218.5. Here, it was IFP that argued that non-payment of rest breaks constituted a “wage,” and therefore qualified under section 218.5. Again, the Supreme Court disagreed. Rest breaks do not constitute wages of any kind.

Thus, the Court held, attorney fees were not recoverable in actions seeking mandated rest breaks under section 226.7.

What makes this case interesting (and a little ironic) from a procedural standpoint is that it was the defendant employer seeking the attorney fees, and the employee plaintiffs who resisted. Thus, in losing their claim for attorney fees, the employer ended by establishing law generally advantageous to employers. And in winning this battle over the payment of roughly $50,000 in fees, the employees essentially nullified the ability of future plaintiffs to seek attorney fees in actions based on the denial of required rest breaks.

Originally posted on Barger & Wolen's Employment Law Observer blog.

Attorney Fee Award is Reversed Where It is Rendered Without Proper Statutory Authorization

Posted on June 2, 2011 by David J. McMahon

In Ilshin Investment Co. Ltd. v. Buena Vista Home Entertainment Inc., 2011 DJDAR 6917 (2011), the California Second District Court of Appeal reversed an award of attorney fees. The court ruled that the award was not proper where it lacked the requisite statutory support.

In 1993 an investment company (“Ilshin”) loaned money to a movie producer (“Patriot, Inc.”) to create a film. After completion of the project, Patriot was not able to repay the loan. Subsequently, Patriot entered into an exclusive agreement for the film’s home video distribution with Buena Vista Home Entertainment, Inc. (“Buena Vista”).

The agreement required Buena Vista to obtain Patriot’s consent before incurring distribution expenses over $900,000. The film’s sales exceeded the parties’ expectations. Distribution income reached almost $13.5 million. Buena Vista, however, failed to obtain Patriot’s consent to incur expenses over the $900,000 threshold.

Subsequently, Ilshin filed suit against Buena Vista as a judgment creditor for breach of contract. Ilshin alleged that Buena Vista incurred unauthorized distribution costs. The case went to trial and the trial court awarded Ilshin $1,439,203.08 in attorney fees pursuant to Code of Civil Procedure Section 701.020(c), as well as other damages which were proved at trial. Buena Vista appealed the judgment, including the fee award.

The Court of Appeal reversed the award of attorney fees. The court noted that attorney fees are not recoverable unless the award is expressly authorized by either statute or a valid contract.  The court noted that Ilshin brought suit under Section 701.280(b), which does not provide a basis for an attorney fee award. For these reasons, the court held that the trial court’s attorney fee award was erroneous.