iLaw Dictionary			USAConstitution Law
						California			BankruptcyCode.US
						Law Dictionary			iBusiness Center.US
						Standard of Review			United States Law.US

A Legal and Business Portal-Home

Law Dictionary: California: Law Dictionary: Table of Contents

iLaw Dictionary
California
Law Dictionary
Standard of Review-Demurrer Without Leave to Amend
(Liska v. Arns Law Firm)

Standard of Review-Demurrer Without Leave to Amend
(Liska v. Arns Law Firm)

May a client who loses a binding fee arbitration conducted pursuant to the mandatory fee arbitration statute (MFA), Business and Professions Code section 6200 et seq.,[1]  file a subsequent action against the attorney predicated on the same allegations of misconduct or breach of contract that formed the basis of the fee dispute?  We hold that the client  may do so, but that the client may not seek to recover as damages any portion of the fee that the arbitrators awarded the attorney.

            Plaintiff George Liska hired the defendant law firm to represent him in a personal injury products liability action.  The matter was settled after a trial date had been set but before trial began, which under the retainer agreement entitled the firm to a higher percentage of the settlement than if the matter had been settled before there was a trial date.  Liska disputed the fees and demanded arbitration.  The arbitrator found in favor of the firm.  After the arbitrators’ award became final, Liska filed suit against the law firm and several of its individual attorneys (collectively the firm), alleging causes of action for breach of contract and fraud.  The firm demurred on the grounds that the suit was barred by the statute of limitations and by the doctrines of res judicata and collateral estoppel.  The firm simultaneously petitioned the court to confirm the arbitrators’ award.  The trial court granted the petition to confirm the award, sustained the demurrer without leave to amend, and entered judgment accordingly.  Liska appealed.  We reverse the judgment insofar as it sustained the demurrer without leave to amend.

Background

            According to the complaint, Liska hired The Arns Law Firm on December 11, 2000, to represent him in a product liability action arising out of an injury he suffered at work.  Liska alleged that attorneys Robert Arns, Morgan Smith, and Bryan Lamb told him that he could expect a recovery of approximately $1,600,000 and that “Arns and Smith would participate fully in plaintiff’s case . . . .”  The representation agreement provided that the firm would receive 33⅓ percent of the recovered sum after costs were deducted if the matter settled before it was set for trial, and that the fee would rise to 40 percent if the matter settled after there was a trial date.

            In December 2001, the court set the case for trial for the following November.  In May 2002, the case went to mediation and settled for $600,000, which included the release of a $75,000 workers’ compensation lien for $35,000 paid out of the settlement proceeds.  After the settlement had been entered, Liska filed a “Client’s Request for Resolution of a Fee Dispute” with the Bar Association of San Francisco.  In his petition, Liska complained that Arns did not give the case the attention that Liska expected and the case demanded.  He alleged that the firm was guilty of malpractice because the attorneys were unprepared for the mediation and strategized poorly.  He estimated that if the case had been handled properly he would have recovered between $150,000 and $400,000 more than he did. 

            The arbitration panel found that there was “no evidence that the contingency fee agreement was unconscionable or otherwise reflected an inappropriate or unreasonable means of determining the fees for respondents’ services,” that Liska “acknowledged that he had entered into the [settlement] agreement without qualification or condition,” and that Liska “did not dispute the testimony of respondent to the effect that he had been satisfied and pleased at the outcome of the mediation.”  The panel stated  that Liska “failed to introduce evidence that the amount of the settlement of the underlying action was unreasonable, or to rebut evidence presented by respondents which tended to support the reasonableness of the $600,000.00 settlement (including the settlement of a $75,000.00 worker’s compensation lien for $35,000.00.)”  The panel concluded that the amount of the settlement was “well within the reasonable range of settlement value for comparable cases in the Bay Area, particularly those involving capable and aggressive defense attorneys representing corporate defendants with strong motivation to vigorously defend the integrity of their products.”  The panel also concluded that there was no evidence that the settlement “had been improperly or unreasonably obtained,” that Liska “had been fully informed of all relevant matters regarding his case, the mediation process and the potential verdict value of the matter prior to agreeing to compromise the underlying claims,” and that the fee was fair and reasonable considering “the difficulty of the legal and factual issues involved in the underlying action, the result achieved and petitioner’s informed consent to the fee agreement.”

            Subsequent to the issuance of the award, Liska filed a complaint against the firm and the individual attorneys who had worked on his case, alleging four causes of action.  The first cause of action, for breach of contract, alleged that in addition to the written fee agreement, Arns and Smith agreed orally that they “would participate fully in plaintiff’s case and represented to plaintiff that with the participation of Arns and Smith, plaintiff could expect a gross recovery in the range of $1,600,000.”  Liska alleged that the oral agreement was further amended on the day of the mediation of the underlying claim when Lamb promised Liska that if he would accept $600,000 in settlement, Liska would net $400,000, because the firm would take only one-third of the recovery and would not require reimbursement of its costs.  He alleged that he signed the settlement agreement in reliance on this representation by Lamb.  In his second, third and fourth causes of action, Liska alleged fraud in the forms of intentional and negligent misrepresentation, concealment, and making a promise without intent to perform.  All of these causes of action alleged essentially the same facts:  1) that the firm promised to provide Liska with representation; 2) that Arns and Smith promised to fully participate in the representation; 3) that Arns and Smith would attempt to recover $1,600,000 on Liska’s behalf; and 4) that Liska was promised a net recovery of $400,000 if he accepted the $600,000 settlement.  Liska attached to the complaint a portion of the fee agreement with the firm and the settlement agreement in the underlying action.

            Defendants demurred, arguing that the complaint was an attempt to vacate the arbitration award beyond the time allowed for such a motion, and that the complaint was barred by res judicata and collateral estoppel because it addressed the same issues that were decided in the arbitration of the fee dispute.  At the same time, the firm filed a petition to confirm the arbitration award.  The firm also moved for sanctions against Liska under Code of Civil Procedure section 128.7.  Liska opposed all three motions.

            The trial court sustained the demurrer without leave to amend, and granted the petition to confirm the arbitration award.  The order sustaining the demurrer stated only that the court had separately granted the petition to confirm the arbitration award and that the demurrer was sustained without leave to amend “[o]n the basis of this petition, the moving papers, the confirmation of this arbitration award, and good cause appearing.”  The court awarded the firm its costs, but denied the request for sanctions.  The court then entered judgment on the arbitration award and provided that Liska take nothing on his complaint.  

Discussion

            We review a trial court’s ruling on a demurrer independently.  (Ramirez v. Long Beach Unified School Dist. (2002) 105 Cal.App.4th 182, 187.)  “ ‘Our only task in reviewing a ruling on a demurrer is to determine whether the complaint states a cause of action.  Accordingly we assume that the complaint’s properly pleaded material allegations are true and give the complaint a reasonable interpretation by reading it as a whole and all its parts in their context.’ ”  (People ex rel. Lungren v. Superior Court (1996) 14 Cal.4th 294, 300.)

Liska v. Arns Law Firm March 30, 2004-CA1/3-A102926
 

California: Authoritative-Law Dictionary: Table of Contents

Thomas - Legislative Information on the Internet |Check Your Credit Score
Directory of Medical Dictionaries: Table of Contents | California Injury (Torts) Law
USA Entertainment.US | FederalCriminalProcedure.Com | United Statea News
FederalCriminalProcedure.Com | iLaw Dictionary.Com |  Library of Congress
United States Law Consumer Law TITLE PAGE | USA Entertainment.US |United States News
iBusiness Center.US | United States Law: Constitutional Law: Constitutions of  The World: TITLE PAGE
California Contracts Law.Com | California Injury (Torts) Law  | Advanced Trial Handbook
Phone Directories From Around the World New | California Law Revision Commissionmm  
California Civil Procedure.Com | Federal Civil Procedure.Com