Gilbert v. Master Washer & Stamping Co.

• Decision Date: 22 February 2001
• Docket Number: No. B133171.,B133171.
• Citation: 104 Cal.Rptr.2d 461,87 Cal.App.4th 212
• Court: California Court of Appeals Court of Appeals
• Parties: Arthur GILBERT, Plaintiff and Appellant, v. MASTER WASHER & STAMPING CO., INC., Defendant and Respondent. Master Washer & Stamping Co., Inc., Plaintiff and Respondent, v. Arthur Gilbert et al., Defendants and Appellants.

104 Cal.Rptr.2d 461

87 Cal.App.4th 212

Arthur GILBERT, Plaintiff and Appellant, v. MASTER WASHER & STAMPING CO., INC., Defendant and Respondent. Master Washer & Stamping Co., Inc., Plaintiff and Respondent, v. Arthur Gilbert et al., Defendants and Appellants.

No. B133171.

Court of Appeal, Second District, Division 7.

February 22, 2001.

Certified for Partial Publication.^*

As Modified March 13, 2001.

Gernsbacher & Associates, Eric Brown; Gernsbacher & McGarrigle and Paul B. Beach for Plaintiff and Appellant and for Defendants and Appellants.

Law Offices of Jay F. Stocker and Jay F. Stocker, Newport Beach, for Plaintiff and Respondent and for Defendant and Respondent.

JOHNSON, J.

In the published portion of this case we hold a lawyer represented by other members of his law firm is entitled to recover reasonable attorney fees where the representation involved the lawyer's personal interests and not those of the firm.

FACTS AND PROCEEDINGS BELOW

This case arises out of the landlordtenant relationship between appellant Arthur Gilbert and respondent Master Washer & Stamping Co, Inc. However this appeal focuses on post-judgment orders regarding attorney fees and costs, and does not concern the merits of the parties' underlying claims against one another.

Gilbert filed a complaint against Master Washer, Los Angeles Superior Court case No. BC 141326, on December 22, 1995, seeking damages for breach of lease, and attorney fees pursuant to the lease between the parties. Master Washer later filed a complaint in a separate action, Los Angeles Superior Court case No. 142051, seeking damages for breach of contract and conversion of its property by Gilbert. Master Washer's complaint also named Gilbert's attorney, appellant David Gernsbacher, as a defendant based on his alleged role in preventing Master Washer from recovering its property from the leased premises. The cases were consolidated and assigned to Judge Ralph W. Dau.

Gernsbacher demurred to Master Washer's first cause of action for breach of lease, and the trial court sustained the demurrer without leave to amend on April 4, 1996.

On February 10, 1998, Gilbert obtained summary adjudication in his favor on Master Washer's breach of lease claim. This ruling also disposed of Master Washer's defenses to Gilbert's claim for breach of lease. The same day, Gernsbacher obtained summary judgment as to all remaining causes of action in Master Washer's complaint.

Trial of the consolidated actions commenced on January 7, 1999. On January 14, 1999, Gilbert and Master Washer entered into a stipulation for judgment (hereinafter the "Stipulation") whereby Master Washer admitted liability in Gilbert's breach of lease action. [[]]^**

On February 24, 1999, Gilbert filed a proposed judgment pursuant to the Stipulation.¹ [[]]^**

On or about March 1, 1999, Gilbert and Gernsbacher filed a second proposed judgment providing in pertinent part as follows.

"On April 4, 1996, in Case No. BC 142051 (hereinafter the `Master Washer Action') the Court sustained without leave to amend the demurrer of Defendant David Gernsbacher ... to the First Cause of Action for Breach of Lease of Plaintiff Master Washer & Stamping Co., Inc .... and, on February 10, 1998, the Court granted Defendant Gernsbacher's Motion for Summary Judgment/Adjudication as to the remainder of Plaintiff Master Washer's Complaint.

"On January 7, 1999, these consolidated causes came on regularly for trial before Judge Ralph W. Dau....

"On January 14, 1999, in the Gilbert Action, Plaintiff Gilbert and Defendant Master Washer entered into a Stipulation under which Defendant Master Washer admitted liability on Plaintiff Gilbert's complaint for breach of lease and, further, admitted that Plaintiff Gilbert's damages for breach of lease total Eighty Five Thousand Dollars ($85,000), stipulating that judgment be entered against Defendant Master Washer and in favor of Plaintiff Gilbert setting forth said $85,000 in damages.

"The Court has filed its Statement of Decision in the Master Washer Action.

"Accordingly,

"IT IS ORDERED, ADJUDGED AND DECREED as follows:

"1. That, in the Master Washer Action, Plaintiff Master Washer shall take nothing as against Defendant Gernsbacher, that the Master Washer Action against Defendant Gernsbacher be and hereby is dismissed, and that Defendant Gernsbacher shall recover from Plaintiff Master Washer his costs of suit in the amount of $_____ and attorneys' fees in the amount of $_____; [[ ]].^***

On June 15, 1999, the trial court issued an order denying Gernsbacher's motion to fix his attorney fees as costs, ruling because Gernsbacher was represented by his own law firm, he was not entitled to an award of fees pursuant to Trope v. Katz,³ in which the California Supreme Court held an attorney who litigates in propria persona may not recover attorney fees pursuant to Civil Code section 1717.

Gilbert and Gernsbacher both appeal from the trial court's denial of their separate motions to fix attorney fees as costs.⁴

DISCUSSION

I. MASTER WASHER'S MOTION TO AMEND THE JUDGMENT DID NOT CONFORM WITH THE REQUIREMENTS OF CODE OF CIVIL PROCEDURE SECTION 663a, THEREFORE THE TRIAL COURT ERRED IN AMENDING THE JUDGMENT

[[ ]]^†

II. AN ATTORNEY WHO IS REPRESENTED BY OTHER MEMBERS OF HIS OR HER LAW FIRM MAY BE ENTITLED TO RECOVER ATTORNEY FEES UNDER CIVIL CODE SECTION 1717; THEREFORE THE TRIAL COURT ERRED IN DENYING GERNSBACHER'S MOTION TO FIX ATTORNEY FEES AS COSTS.

California follows the so-called American rule, whereby each party to a lawsuit must ordinarily pay his or her own attorney fees.¹¹ However, this rule does not apply where, as in this case, the parties have agreed to allocate attorney fees by contract.¹² Such agreements are governed by Civil Code section 1717, which provides in pertinent part "(a) In any action on a contract, where the contract specifically provides that attorneys' fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney's fees in addition to other costs.... Reasonable attorney's fees shall be fixed by the court, and shall be an element of the costs of suit."

The trial court found Gernsbacher was not entitled to attorney fees because he was represented by his own law firm, Gernsbacher & McGarrigle, APC, and did not present evidence he was "obligated to pay" the legal fees incurred on his behalf by the attorneys representing him in this matter. Gernsbacher argues he is entitled to his attorney fees because he was sued personally and was represented by other counsel within the law firm of which he is a member. Thus he did not represent himself in propria persona. We agree with Gernsbacher and therefore we reverse the trial court's order denying his motion to fix attorney fees as costs and remand for further proceedings.

A. An Attorney Representing Himself or Herself In Propria Persona May Not Recover Contractual Attorney Fees Pursuant to Civil Code Section 1717. However a Corporation May Recover Fees Incurred by its In-House Counsel.

In Trope v. Katz,¹³ the law firm Trope & Trope, representing itself in propria persona, sued a former client for fees.¹⁴ The former client filed a cross-complaint for malpractice, and a trial of the entire matter resulted in a net verdict in favor of Trope and Trope.¹⁵ Trope and Trope moved for an award of attorney fees under the attorney fee provision in the parties' retainer agreement.¹⁶ The trial court found "although Trope & Trope would have been entitled to attorney fees under the 1985 agreement if it had retained an attorney, it was barred from recovering such fees because it had represented itself."¹⁷

The California Supreme Court affirmed the trial court's action, holding "an attorney who chooses to litigate in propria persona rather than retain another attorney to represent him in an action to enforce a contract ... cannot recover [attorney] fees under [Civil Code] section 1717."¹⁸ The high court explained Civil Code section 1717 authorizes an award of "attorney's fees," and the plain meaning of the term "both in legal and in general usage, is the consideration that a litigant actually pays or becomes liable to pay in exchange for legal representation. An attorney litigating in propria persona pays no such compensation."¹⁹

Trope rejected Trope and Trope's argument they were entitled to an award of attorney fees "simply because the time [an attorney] devotes to litigating a matter on his own behalf has value."²⁰ Noting the time of any litigant is valuable, the Supreme Court concluded "the issue is whether in enacting section 1717 the Legislature intended to allow attorneys who represent themselves to recover `reasonable attorney's fees' for the time and effort they have expended and the professional opportunities they have lost as a result of their decision to litigate a contract dispute in propria persona, even though they have not actually paid or become liable to pay any consideration in exchange for legal representation.... [W]e believe the Legislature did not so intend."²¹

The Supreme Court in Trope also rejected Trope and Trope's suggestion the Legislature may have wished to encourage attorneys to represent themselves in litigation. Citing to the United States Supreme Court's decision in Kay v. Ehrler,²² the court observed "a lawmaking body may instead prefer to discourage attorneys from electing to appear in propria persona because such self-representation may often conflict with the general public and legislative policy favoring the effective and successful prosecution of meritorious claims"²³ Thus Trope stands for the proposition an attorney who represents him or herself in propria persona may not recover the value of his or her time as attorney fees pursuant to Civil...