Gleason v. Klamer

• Decision Date: 25 March 1980
• Citation: 103 Cal.App.3d 782,163 Cal.Rptr. 483
• Court: California Court of Appeals Court of Appeals
• Parties: Gwen GLEASON, Plaintiff and Respondent, v. Reuben KLAMER, Defendant and Appellant. Civ. 56229.

Page 483

163 Cal.Rptr. 483

103 Cal.App.3d 782

Gwen GLEASON, Plaintiff and Respondent, v. Reuben KLAMER, Defendant and Appellant.

Civ. 56229.

Court of Appeal, Second District, Division 5, California.

March 25, 1980.

Swartz & Swartz and Jacob Swartz, Los Angeles, for defendant and appellant

Irmas, Simke & Chodos, Inc., and Richard A. Fond, Los Angeles, for plaintiff and respondent.

ASHBY, Associate Justice.

This is an action by a law firm against a former client for fees for services rendered. ¹ The complaint alleges three causes of action: (1) a common count for "the agreed and reasonable value" of services rendered to defendant Klamer at his special instance and request; (2) an open book account; and (3) an account stated. The trial court entered summary judgment in favor of plaintiff on the ground plaintiff had proved an account stated. Defendant appeals.

In March 1976 defendant retained the law firm to represent him in his marriage dissolution and agreed to pay the firm a reasonable fee of not less than $100 per hour for members and $75 per hour for associates.

Prior to the termination of the dissolution proceedings, the firm ceased representing defendant on January 13, 1977. The basis for the asserted account stated was the bill which the firm sent to defendant on March 14, 1977, and defendant's reply thereto on March 25, 1977.

The bill was set up as follows:

                For professional services rendered and
                costs incurred in December 1976 and
                January and February 1977               $3,118.65
                Balance from prior statement             9,918.00
                    Less payments received              -4,000.00
                                                        ---------
                        Balance due                     $9,036.65
                

Attached to the statement was a brief summary of the services rendered in December, January, and February. ²

Attorney Simke wrote a letter accompanying the statement, stating: "Enclosed please find itemized statements for the months of December, 1976 and January and February, 1977. (P) . . . . (P) Now that you have all of this information, I want an immediate acknowledgment of our bill and a plan for the payment thereof."

On March 25 defendant replied:

"Your itemized statements for the months of December, 1976, January, 1977, and February, 1977, have been received and reviewed by me. (P) They are in order, and I hereby acknowledge for payment by me as billed. (P) I am sending Jim Bay a copy of this letter in order to arrange for a plan of payment of the unpaid balance such plan to be acceptable to you."

Defendant opposed the motion for summary judgment on the grounds that the attorney's fees of over $13,000 were excessive and unreasonable because the attorneys did a bad job amounting to malpractice, charged defendant for unnecessary services, made only one court appearance, and abandoned defendant by resigning. Defendant contended that his March 25 letter was written at a time when he was under great physical, mental, and emotional strain. Plaintiff replied that the reasonable value of the services was irrelevant to the cause of action for account stated, and that defendant had shown insufficient grounds for relief from liability on the account stated.

The trial court granted summary judgment against defendant in the amount of $8,036.65, plus interest, which is the full balance due listed on the March 14 statement, less $1,000 which defendant had subsequently paid.

We hold that the judgment must be reversed. Although the declarations submitted in support of and in opposition to the motion establish the elements of an account stated, there remains a triable issue of fact as to whether defendant's letter conceded the entire amount due, or only the $3,118.65 for December, January, and February.

DISCUSSION

An account stated is an agreement, based on the prior transactions between the parties, that the items of the account are true and that the balance struck is due and owing from one party to another. (Trafton v. Youngblood, 69 Cal.2d 17, 25, 69 Cal.Rptr. 568, 442 P.2d 648; Gardner v. Watson, 170 Cal. 570, 574, 150 P. 994, 995.) When the account is assented to, " 'it becomes a new contract. An action on it is not founded upon the original items, but upon the balance agreed to by the parties. . . .' Inquiry may not be had into those matters at all. It is upon the new contract by and under which the parties have adjusted their differences and reached an agreement." (Gardner v. Watson, supra.)

The account stated may be attacked only by proof of "fraud, duress, mistake, or other grounds cognizable in equity for the avoidance of an instrument." (Gardner v. Watson, supra, 170 Cal. at p. 576, 150 P. at p. 996; Wenban Estate, Inc. v. Hewlett, 193 Cal. 675, 702, 227 P. 723; Downing v. Murray, 113 Cal. 455, 462, 45 P. 869.) The defendant "will not be heard to answer when action is brought upon the account stated that the claim or demand was unjust, or invalid." (Gardner v. Watson, supra, 170 Cal. at pp. 575, 577, 150 P. at p. 995.)

Viewed as a new contract which ordinarily forecloses further dispute as to the items of which it is composed, an account stated is subject to a presumption of undue influence when entered between an attorney and client during their fiduciary relationship. The burden is on the attorney to show that the transaction was fair and regular and entered voluntarily by the client with full knowledge of the facts. (Trafton v. Youngblood, supra, 69 Cal.2d 17, 25, 27, 28, 69 Cal.Rptr. 568, 442 P.2d 648; Annot. 13 A.L.R.3d 701, 710-798.)

In the particular circumstances of this case, however, we hold the presumption of undue influence was inapplicable, because the record establishes that at the time of the account stated, the fiduciary relationship had terminated. Attorney Simke wrote to defendant on February 24, 1977, stating:

"We ceased being your counsel on January 13, 1977. As yet, you have not acknowledged your indebtedness to our firm nor made any arrangements for the payment thereof. At the suggestion of your present counsel, Howard Miller, I wrote to your new accountant advising him of the bill, asking for an acknowledgment of the indebtedness and requesting an arrangement for the payment thereof. I have not heard from anyone regarding the letter or its contents.

"In view of the broken promises regarding payment and your failure to even acknowledge the indebtedness, I am compelled to take action to secure payment of my bill.

"Unless satisfactory arrangements are made for the payment of our bill within five days from the date of this letter, I will forthwith file suit and seek judicial relief." (Emphasis added.)

The attorney later sent a copy of the bill with the March 14 letter demanding acknowledgment.

The fact that the attorney had completed his services would not by itself necessarily dispel the influence of the fiduciary relationship. (Annot., supra, 13 A.L.R.3d 718-722.) But in this case there are additional circumstances. Defendant had a new attorney representing him in the same matter. Furthermore, defendant's own declaration in opposition to the motion for summary judgment states that he discussed his predicament with his accountant, James Bay, who was paying all of defendant's bills under a trust arrangement, and Mr. Bay advised defendant to send the March 25 letter to avoid being sued. Thus the record clearly indicates that at the time of the account stated the attorney-client relationship between defendant and the firm no longer existed, defendant had a new attorney, and defendant received the independent advice of his accountant before sending the March 25 letter acknowledging the debt. The presumption of...