Fracasse v. Brent

• Decision Date: 10 March 1972
• Citation: 6 Cal.3d 784,100 Cal.Rptr. 385,494 P.2d 9
• Parties: , 494 P.2d 9 George FRACASSE, Plaintiff and Appellant, v. Ray Raka BRENT, Defendant and Respondent. L.A. 29876. In Bank
• Court: California Supreme Court

Page 385

100 Cal.Rptr. 385

6 Cal.3d 784, 494 P.2d 9

George FRACASSE, Plaintiff and Appellant, v. Ray Raka BRENT, Defendant and Respondent.

L.A. 29876.

Supreme Court of California,

In Bank.

March 10, 1972.

Rehearing Denied April 12, 1972.

Freeman & Freeman and Lee A. Freeman, Hollywood, for plaintiff and appellant.

Mour, Klein & Aronson, and Robert A. Klein, Sherman Oaks, amici curiae on behalf of plaintiff and appellant.

Richard T. Kayaian, Los Angeles, for defendant and respondent.

BURKE, Associate Justice.

In this case we are asked to reconsider the rule of damages which allows an attorney who has been discharged without cause by his client to recover as damages the full fee specified in the contract of employment, regardless of the reasonable value of his services or the extent of work performed under that contract. For the reasons hereinafter stated, we have concluded that this rule is inconsistent with the strong policy, expressed both judicially and legislatively, in favor of the client's absolute right to discharge his attorney at any time, and that the attorney should be limited to a quantum meruit recovery for the reasonable value of his services, upon the occurrence of any contingency contemplated by this contract.

Plaintiff, George Fracasse, is a duly licensed attorney at law, who was retained by defendant Ray Raka Brent to prosecute a claim for personal injuries in her behalf. On or about March 12, 1969, Fracasse and Brent entered into a written contingent fee agreement, under which Brent agreed that Fracasse's compensation would be 33 1/3 percent of any settlement made at least 30 days prior to the original trial date and 40 percent of any recovery obtained thereafter, whether by settlement or judgment.

Sometime thereafter, but before any recovery had been obtained in the personal injury suit, Brent informed Fracasse that she wished to discharge him and retain another attorney. She did so and, on January 16, 1970, Fracasse filed the instant action, entitled 'Complaint for Declaratory Relief.' Alleging that his discharge was without cause, and that Brent had breached her contract and had refused to give Fracasse the fee to which he would have been entitled thereunder, Fracasse prayed for a declaration that the contract was valid and that he had a one-third interest in any monies ultimately recovered in the personal injury action. Brent demurred generally and specially to the complaint. The trial court did not rule on the special demurrers, but held that the complaint did not state a cause of action and sustained the general demurrer without leave to amend on the authority of Brown v. Connolly, 2 Cal.App.3d 867, 83 Cal.Rptr. 158. This appeal followed.

In Brown v. Connolly, Supra, an attorney (Brown) was employed under a contingent fee contract which provided that he would be entitled to 25 percent of any recovery in certain litigation to be prosecuted by him. Brown filed a complaint on behalf of his client (Connolly) which prayed for $4,500,000 in damages. After his discharge by Connolly Brown filed an action against him for breach of contract, praying for $1,125,000 in damages--i.e., 25 percent of the recovery which Connolly had sought in the collateral litigation. Since Brown's complaint indicated, however, that Connolly had not yet recovered anything in that litigation, the trial court sustained a demurrer without leave to amend; the Court of Appeal affirmed on the basis that a wrongfully discharged attorney has no cause of action against his former client For compensation, based on a contingent fee contract, until the happening of the stated contingency.

As the Brown court noted, the rationale of such a rule is obvious. '(M)ore often than not the size of a party's claim bears little relation to its value. Such a rule . . . allowing judgment for attorney fees based upon a percentage of a wishful estimate (often by the attorney) of the client's claim before its liquidation or any recovery thereon, would often lead to grossly unfair consequences. A client, unfortunate enough to have misconceived a reason to discharge his attorney, without any recovery on his claim could find himself adjudged to pay many times its value--a disaster to the client and a windfall to the attorney.' (Brown v. Connolly, Supra, 2 Cal.App.3d 867, 870--871, 83 Cal.Rptr. 158, 160.) ¹

As was emphasized above, the Brown court was dealing with a situation in which the attorney was suing for compensation prior to the happening of the contingency, i.e., prior to any recovery by the client. Plaintiff would distinguish Brown on the basis that he is merely seeking a declaration of his rights in any recovery which his former client ultimately might receive. Defendant on the other hand contends that because plaintiff would be entitled to no compensation whatever unless and until defendant recovered something by way of judgment or settlement, the action is premature. More importantly, defendant argues that it is grossly unfair to allow a discharged attorney to put a former client to the expense of defending a suit, the result of which can put the attorney in no better position than he was initially and the purpose of which is likely to be to force an unfair settlement. Without attempting to judge the motives underlying the bringing of the instant action, and while recognizing the factual distinction between Brown and the instant situation, we shall point out that in light of our holding regarding the applicable measure of damages, the action is premature and, on that basis, the judgment must be affirmed.

Turning then to the question of damages we note that the rule respecting the measure of damages to be awarded a wrongfully discharged attorney derives from the 1894 case of Baldwin v. Bennett, 4 Cal. 392. In that case, an attorney was retained to litigate a matter and, by contract, the client had agreed to a $5,000 fee. The client settled the matter himself and the attorney sued for his fee. In support of its holding that the attorney was entitled to the full amount of the fee, the court set forth the following rationale: 'The general rule as to measure of damages . . . 'is not the whole price agreed to be paid, but the actual loss sustained, which will consist of the value of the services rendered and the damage sustained by the refusal to allow performance of the rest of the contract.' (Par.) To this rule there are, however, some exceptions. Where, from the nature of the contract, as in this case, no possible mode is left of ascertaining the damage, we will have presented the anomalous case of a wrong without a remedy, unless we adopt the only measure of damages which remains, and that is, the price agreed to be paid. . . .' (Baldwin v. Bennett, Supra, at p. 393.)

Despite the court's faulty premise--there being no convincing reason why recovery on a quantum meruit theory would not fairly and adequately compensate the attorney for his services--Baldwin v. Bennett, Supra, was cited as controlling in Webb v. Trescony, 76 Cal. 621, 18 P. 796 another contractual fee case--with no discussion of alternative theories of recovery. Bartlett v. Odd Fellows' Savings Bank, 79 Cal. 218, 21 P. 743, appears to be the first case to apply the contract-price measure of recovery to a contingent fee contract. The court also held that a cause for action for wrongful discharge under a contingent fee contract accrues at the time of the happening of the contingency, not at the time of the discharge. The court affirmed the award of the stipulated fee without discussion of the basis for the rule, or citation of authority. The rule was reaffirmed in Zurich General etc. Ins. Co. v. Kinsler, 12 Cal.2d 98, 100--101, 81 P.2d 913, 915, in which the court held that 'where, with respect to compensation for services thereafter to be performed, an attorney who was employed under a contingent contract . . . was discharged 'without cause' . . . he (is) entitled to recover a judgment for the full amount that was provided by the terms of such contract.' (See also Denio v. City of Huntington Beach, 22 Cal.2d 580, 591, 140 P.2d 392; Jones v. Martin, 41 Cal.2d 23, 27, 256 P.2d 905.) ²

The rule was given substantial consideration in the case of Salopek v. Schoemann, 20 Cal.2d 150, 124 P.2d 21, an action to foreclose an attorney's lien on the proceeds of a judgment. The trial court allowed the lien to the extent of the reasonable value of the services, and this court affirmed, holding that the attorney was discharged For cause and, therefore, was entitled only to a quantum meruit recovery. Chief Justice Gibson and Justice Traynor concurred, but contended that the line of cases following Baldwin v. Bennett, Supra, 4 Cal. 392, should be overruled and that whether the discharge was with or without cause, the measure of damages should be the reasonable value of the attorney's services. The concurring justices reasoned that 'It is recognized as a part of the ethical rules governing the legal profession that an attorney will not sue a client for a fee except to prevent injustice, imposition or fraud. See American Bar Association, Canons of Professional Ethics, Canon 14. (Par.) The relation of attorney and client is one of special confidence and trust and the dignity and integrity of the legal profession demand that the interests of the client be fully protected. (Citation.) Without public confidence in the members of the legal profession which is dependent upon absolute fairness in the dealings between attorney and client, courts cannot function in the proper administration of justice. And inherent in the relationship between attorney and client is the fact that the client must rely almost entirely upon the good faith of the attorney who alone can make an informed estimate of the value of the client's legal right and of the expense and effort necessary to enforce it. These considerations have given rise to the generally accepted rule that a client may...