Joseph E. Di Loreto, Inc. v. O'Neill

• Court: California Court of Appeals
• Writing for the Court: LILLIE
• Citation: Joseph E. Di Loreto, Inc. v. O'Neill, 1 Cal.Rptr.2d 636, 1 Cal.App.4th 149 (Cal. App. 1991)
• Decision Date: 21 November 1991
• Docket Number: No. B050445,B050445
• Parties: JOSEPH E. DI LORETO, INC., etc., et al., Plaintiffs and Respondents, v. Ann M. O'NEILL, Defendant and Appellant.

Page 636

1 Cal.Rptr.2d 636

1 Cal.App.4th 149

JOSEPH E. DI LORETO, INC., etc., et al., Plaintiffs and Respondents, v. Ann M. O'NEILL, Defendant and Appellant.

No. B050445.

Court of Appeal, Second District, Division 7, California.

Nov. 21, 1991.

[1 Cal.App.4th 152] Brian R. Shumake, for defendant and appellant.

Law Offices of Beckman & Cohen, and Joel Beckman, for plaintiffs and respondents.

LILLIE, Presiding Judge.

Defendant O'Neill appeals from summary judgment in favor of plaintiffs Joseph E. Di Loreto, Inc., a Professional Law Corporation, and Joseph E. Di Loreto (Di Loreto) for the amount of $313,666.73 plus costs on Di Loreto's claim against O'Neill for breach of a written employment agreement.

FACTUAL AND PROCEDURAL BACKGROUND

We set out only the allegations of the first amended complaint for breach of contract (second cause of action), Di Loreto's remaining causes of action against O'Neill having been dismissed prior to entry of the summary judgment on the second cause of action. Di Loreto alleged that in March 1982, O'Neill and he entered into a written employment agreement; Di Loreto was required to render legal services to O'Neill in an action for personal injuries she sustained as a result of the negligence of Commuter Bus Lines; the agreement provided for attorney's fees of thirty-three and one-third percent of the gross recovery if the matter was concluded before trial and forty percent of the gross recovery if the matter proceeded further; Di Loreto represented O'Neill in her action against Commuter Bus Lines through successful completion of a jury trial in July 1986, when a jury verdict was rendered in favor of O'Neill for a total sum, including prejudgment interest and costs, of $575,321.50; judgment in that amount was entered on July 7, 1986; in August 1986, Di Loreto advised O'Neill that pursuant to the employment agreement, a new employment contract would have to be negotiated for continued representation on appeal; O'Neill demanded that Di Loreto turn her file over to her and asserted her intent to retain a new attorney; on August 29, 1986, Di Loreto delivered O'Neill's entire file to her and in September 1986, O'Neill substituted another attorney, Brian Shumake, as attorney of record on any appeal; on September 5, 1986, Commuter Bus Lines filed a notice of appeal; on September 19, 1986, Di Loreto filed a Notice of Attorney's Lien in the underlying action; in December 1987, O'Neill, through attorney Shumake, accepted $558,000 in full payment of the judgment; ¹ Di Loreto had performed all conditions, covenants and promises required to be performed in accordance with the terms and conditions of the employment agreement; O'Neill breached her contract with plaintiffs by failing and refusing to pay Di Loreto forty percent of the recovery plus costs advanced, pursuant to the agreement.

O'Neill answered the complaint, asserting as affirmative defenses that Di Loreto had no contractual rights as he had willfully terminated all contracts; that Di Loreto was owed no duty of performance; and Di Loreto had acted with malicious intent, thereby barring his claims by the equitable defenses of unclean hands and laches.

Thereafter, Di Loreto filed motion for summary adjudication of issues, which was opposed by O'Neill. In support of the motion, Di Loreto declared, inter alia, that although Commuter Bus Lines filed a notice of appeal in O'Neill's underlying personal injury action, counsel for Commuter Bus Lines wrote him a letter stating that the notice of appeal was merely to preserve his client's rights and that he had no intention of pursuing an appeal. ²

After hearing thereon, the court granted the motion; an October 26, 1989 order granting plaintiffs' motion for summary adjudication of issues established the following issues to be without substantial controversy: Di Loreto and defendant O'Neill entered into a valid, fully executed employment contract; Di Loreto fully performed all his obligations under the valid employment contract; Di Loreto, by fully performing all his obligations under the employment contract, is entitled to the negotiated fees as specified in the contract; and Di Loreto filed and served a valid attorney's lien to protect his interest in the judgment proceeds.

The minute order which contains the court's ruling on the motion for summary adjudication of issues stated in part: "The Court has reviewed the [August 1989] deposition of Ann O'Neill and notes that she does not deny executing the retainer agreement. Further, no declarations, affidavits or other competent evidence was submitted in opposition to the motion to the effect that the plaintiff had not performed under the terms of the agreement...." ³

Di Loreto thereafter moved for summary judgment on the ground that there was no defense to the action and that he was entitled to forty percent of the total judgment received by O'Neill in the underlying action, including interest from the disbursement dates (see ante, fn. 1), which amounted to a total of $313,666.73.

In opposition to the motion for summary judgment, O'Neill submitted her declaration dated January 9, 1990, in which, for the first time, and contrary to her deposition testimony, she stated that she did have an oral agreement with Di Loreto which provided that he "would handle everything and would get paid if he got me money. Before trial his fee was 33 percent, after trial, with a recovery, his fee was 40 percent. He always told me that I owed him nothing if he didn't get me my money! He never told me I owed him his fee if he just got me a judgment, nor did he ever state that he would not represent me on an appeal...." O'Neill also declared that she never knowingly signed the employment contract; there was never any explanation or discussion of it, and without "that ceremony to stand out in my mind, I can only speculate as to whether that is or is not my signature" on the contract.

After hearing, the court granted summary judgment. O'Neill filed timely notice of appeal from the judgment. Her appellate contentions are that summary judgment was improperly granted because triable factual issues exist with respect to whether she entered into the written employment agreement, whether Di Loreto entered into the agreement, and whether the terms of the written agreement are sufficiently unambiguous or certain as to make its interpretation a proper basis for summary judgment.

I SUMMARY JUDGMENT PRINCIPLES

Since a summary judgment motion raises only questions of law regarding the construction and effect of the supporting and opposing papers, we independently review them on appeal, applying the same three-step process required of the trial court: First, we identify the issues raised by the pleadings, since it is these allegations to which the motion must respond; secondly, we determine whether the moving party's showing has established facts which negate the opponent's claims and justify a judgment in movant's favor; when a summary judgment motion prima facie justifies a judgment, the third and final step is to determine whether the opposition demonstrates the existence of a triable, material factual issue. (City of El Segundo v. Bright (1990) 219 Cal.App.3d 1372, 1375-1376, 269 Cal.Rptr. 1; McAlexander v. Siskiyou Joint Community College (1990) 222 Cal.App.3d 768, 773, 272 Cal.Rptr. 70.)

The moving party's burden on a motion for summary judgment is only to negate the existence of triable issues of fact in a fashion that entitles him to judgment on the issues raised by the pleadings; he is not required to refute liability on some theoretical possibility not included in the pleadings. (American Continental Ins. Co. v. C & Z Timber Co. (1987) 195 Cal.App.3d 1271, 1281, 241 Cal.Rptr. 466.)

What issues are material is determined mainly by the pleadings, the rules of pleading, and the substantive law relating to the particular kind of case. (Pultz v. Holgerson (1986) 184 Cal.App.3d 1110, 1114, 229 Cal.Rptr. 531.)

In light of the foregoing principles, we set out the substantive law with respect to the rights of discharged and withdrawing attorneys to compensation.

II COMPENSATION OF ATTORNEYS

"In California it is clear that a client has an absolute right at any time to discharge an attorney, with or without cause. (Fracasse v. Brent (1972) 6 Cal.3d 784, 792 [100 Cal.Rptr. 385, 494 P.2d 9]....)" (Kroff v. Larson (1985) 167 Cal.App.3d 857, 860, 213 Cal.Rptr. 526.) "In Fracasse, the court held that an attorney employed under a contingent fee contract and discharged prior to the occurrence of the contingency is limited to quantum meruit recovery for the reasonable value of services rendered up to the time of discharge, rather than the full amount of the agreed contingent fee. [Citations.] The rule is based upon the premise that a client should not be forced to pay a discharged attorney the compensation called for in the contract, since that amount may reflect neither value received nor services performed and could result in double payment of fees first to the discharged and then to a new attorney.... [p] ... [Where] the contingent fee is insufficient to meet the quantum meruit claims of both discharged and existing counsel, the proper application of the Fracasse rule is to use an appropriate pro rata formula which distributes the contingent fee among all discharged and existing attorneys in proportion to the time spent on the case by each. Such a formula insures that each attorney is compensated in accordance with work performed, as contemplated by Fracasse, while assuring that the client will not be forced to make a double payment of fees." (Spires v. American Bus Lines (1984) 158 Cal.App.3d 211, 215-216, 204 Cal.Rptr. 531.)

"To the extent that such a discharge occurs 'on the courthouse steps,' where the client executes a settlement obtained after much work by the attorney, the factors involved in a determination of reasonableness would certainly justify a...