Duke Gerstel Shearer, LLP v. Pursiano

DUKE GERSTEL SHEARER, LLP, Plaintiff and Appellant, v. DAVID T. PURSIANO et al., Defendants and Respondents.

D068633

COURT OF APPEAL, FOURTH APPELLATE DISTRICT DIVISION ONE STATE OF CALIFORNIA

Received for posting: December 16, 2016

December 13, 2016

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Super. Ct. No. 37-2010-00104285-CU-BT-CTL )

APPEAL from a judgment of the Superior Court of San Diego County, Judith F. Hayes, Judge. Affirmed.

Duke Gerstel Shearer, Andrew F. Lloyd and Katherine Dwyer for Plaintiff and Appellant.

Seltzer Caplan McMahon Vitek, Reginald A. Vitek and Andrea N. Myers for Defendants and Respondents.

Duke Gerstel Shearer, LLP (Duke) appeals a judgment in favor of David T. Pursiano and Laurel L. Barry (together Respondents) after the court granted Respondents' motion for summary judgment. Duke contends the superior court erred in finding that Duke had to first sue its former clients to establish the validity and amount of its attorney fee lien before it could maintain its causes of action for money had and received as well as conversion against Respondents, who replaced Duke as counsel.

The parties agree that although the instant matter is before us on an appeal of summary judgment, the issue presented is a pure question of law. Namely, we must determine if a discharged attorney is required to sue its former client to perfect its attorney fee lien before suing the successor attorneys for claims based on the validity and amount of that lien. On the specific facts before us, we answer that question in the affirmative. As such, we affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

Duke is a San Diego based law firm that maintained satellite offices in Las Vegas, Nevada and Phoenix, Arizona. Eric W. Sachrison, the managing partner of Duke's Arizona office, entered into a written contingency fee agreement with certain homeowners who were members of the class in a construction defect class action in a housing development known as Canyon Ridge. Sachrison filed the original complaint on behalf of these individuals (Canyon Ridge clients) in the Canyon Ridge class action in Arizona Superior Court and managed that case until his sudden death in May 2003.

In June 2003, Pursiano, then a partner in Duke's Nevada office and Barry, then an associate attorney in Duke's Nevada office, resigned from Duke.

Duke claimed that Sachrison's widow (Trinette Sachrison), Arizona attorney Michael N. Poli, Pursiano, and Barry conspired to convince the Canyon Ridge clients to terminate their representation by Duke. In July 2003, the Canyon Ridge clientsterminated their representation by Duke and retained Poli's law firm. Thereafter, Pursiano and Barry, and several other co-counsel appeared pro hac vice in the Canyon Ridge class action. Pursiano and Barry, together with co-counsel Poli, Trinette Sachrison, Stanley G. Feldman, and Joseph L. Oliva, litigated the Canyon Ridge class action for about five years until it was settled on September 23, 2008. Duke was not representing any of the Canyon Ridge clients at that time. On December 5, 2008, then current class counsel, consisting of attorneys Pursiano, Barry, Poli, Feldman, and Oliva, filed a motion seeking costs incurred by all current and former counsel, including Duke, and a 38 percent contingency fee for current class counsel.

The moving party class counsel, including Pursiano and Barry, attached Duke's retainer fee agreements to their motion for fees and costs apparently to show the requested 38 percent contingency fee was consistent with the original retainer agreements as well as the Canyon Ridge clients current retainer agreements. Following the reasonableness hearing, the Arizona Superior Court awarded the moving party class counsel their 38 percent contingency fee. In addition, the court awarded Duke its costs incurred. Although Duke requested that class counsel petition for recovery of Duke's costs from the common fund, there is no indication in the record that Duke requested recovery of its attorney fees directly from the Arizona court or through class counsel.

In November 2010, Duke filed its initial complaint against Respondents, alleging: (1) intentional interference with contractual relations; (2) intentional interference with prospective economic advantage; (3) breach of fiduciary duty; (4) trade secretmisappropriation; and (5) conversion. Duke amended its complaint to add a cause of action for quantum meruit.

Respondents demurred to Duke's first amended complaint, arguing the first five causes of action were barred by statutes of limitation, and the quantum meruit cause of action could not be alleged against them because they were not the clients who received the services. The superior court agreed and dismissed the case after sustaining Respondents' demurrer without leave to amend.

Duke appealed the judgment of dismissal, and this court affirmed in part and reversed in part the judgment. (Duke Gerstel Shearer, LLP v. Pursiano (Oct. 4, 2012, D060374) [nonpub. opn.] (Duke I).) Relevant here, we determined that Duke should be given the opportunity to allege causes action for conversion and money had and received because the statute of limitations did not bar either claim. Underlying our rationale for providing Duke with another opportunity to plead a valid cause of action was Duke's representation that it could allege a valid attorney lien giving it a right to a share of the contingency fee received by Respondents as well as a specific dollar amount of the fees to which Duke was entitled.

Consistent with our opinion in Duke I, Duke filed a second amended complaint with causes of action for money had and received and conversion. Specifically, Duke alleged it had represented the Canyon Ridge clients in the underlying class action under multiple contingency fee agreements that entitled it to a lien on any recovery for attorney fees and costs. Moreover, Duke averred Respondents received attorney fees in theamount of $1.3 million and paid $100,000 to a creditor of Duke, leaving Respondents with $1.2 million. Duke alleged that it was entitled to those remaining fees.

Respondents successfully demurred to the second amended complaint, but the superior court gave Duke leave to amend to allege a specific dollar amount to which Duke was entitled.

Duke filed a third amended complaint, again alleging causes of action for money had and received as well as conversion. In that complaint, Duke alleged that it was entitled to $1.1 million of the $1.2 million received by Respondents.

Respondents subsequently moved for summary judgment. In doing so, they predominately argued that Duke's claims fail because Duke did not establish the enforceability and amount of the lien on which it based both its causes of action. In its opposition, Duke asserted that it had a contingency fee agreement with its former clients that gave it a lien sufficient to maintain its two causes of action.

The superior court found that Duke could not demonstrate the amount and enforceability of any attorney fees lien with any admissible evidence. As such, the court granted Respondents' motion for summary judgment and subsequently entered judgment in favor of Respondents.

Duke timely appealed.

DISCUSSION

We review summary judgment de novo. (Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 767.) In performing our independent review, we typically apply the same three-step process as the superior court. (Baptist v. Robinson (2006) 143 Cal.App.4th151, 159.) Here, however, the parties agree that there are no material facts in dispute, and instead, we are faced with only questions of law. We thus proceed accordingly.

Duke alleged two causes of action: (1) money had and received and (2) conversion. A cause of action for money had and received arises when one person receives money belonging to another and " 'in equity and good conscience' " should return it. (Mains v. City Title Insurance Co. (1949) 34 Cal.2d 580, 586.) The elements of this cause of action require Duke to show that Respondents received a certain sum that should have been paid to Duke. (See Gutierrez v. Girardi (2011) 194 Cal.App.4th 925, 937.) Similarly, a cause of action for conversion requires: (1) plaintiff's ownership or right to personal property, (2) defendant's wrongful act toward or disposition of that property; and (3) resulting damages to plaintiff. (Baldwin v. Marina City Properties, Inc. (1978) 79 Cal.App.3d 393, 410.) Money can be the property subject to an alleged conversion, but the claim must involve a specific, identifiable sum. (Vu v. California Commerce Club, Inc. (1997) 58 Cal.App.4th 229, 235.)

To support both of its causes of action, Duke alleged that it had an attorney fees lien as set forth in its contingency agreements with certain class representatives in the Canyon Ridge class action, whom Duke represented from sometime in 2000 or 2001 until August 2003. As part of the settlement of the Canyon Ridge class action, which occurred in September 2008, Respondents received $1.3 million for their attorney fees. After paying a creditor of Duke $100,000, Respondents were left with $1.2 million, none of which they paid Duke. Duke alleged it was entitled to $1.1 million "based on factors including, but not limited to, the quality and quantity of the work done for the benefit ofthe [clients] and the development of the case as compared to the quantity and quality of work done for the benefit of the [clients] and the development of the case by [Respondents]." In short, Duke's causes of action are contingent on possessing a valid lien that entitles it to $1.1 million of the $1.2 million received by Respondents.

"[A]n attorney's lien is not...