Maldonado v. Giblin

Decision Date27 December 2017
Docket NumberH041417
CourtCalifornia Court of Appeals
PartiesRICHARD MALDONADO et al. Plaintiffs and Respondents, v. HAYLEY GIBLIN et al. Defendants; DUNNION LAW FIRM, Claimant and Appellant.

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Santa Clara County Super. Ct. No. 1-13-CV247114)

I. INTRODUCTION

The issue presented by this appeal is whether a wife needs evidence of agency in order to retain an attorney on behalf of her husband after he has been incapacitated in an accident, thereby giving the attorney a lien against anticipated damages for the husband's personal injuries.

Here a wife signed a legal services agreement on behalf of her husband, who had been seriously injured in a motor vehicle accident. After the wife discharged the attorney, she successfully resisted the attorney's assertion of a lien on the ground that she lacked authority to enter into the agreement. Relying on recent case law grounded on decisions dating back to a time when husbands had exclusive management and control of community property, the trial court found that, because there was no evidence of agency, the wife was not authorized to sign the agreement on her husband's behalf. Because the principle on which that case law is based has been outdated since 1975, when wives gained equal management and control of community property, we hold that the wife had the statutory authority to enter into the agreement for her husband. Accordingly, we will reverse the order denying the attorney's lien.

II. OVERVIEW

On January 4, 2013, a car driven by defendant Hayley Giblin and owned by her father, defendant James Giblin, struck plaintiff Richard Michael Maldonado, then age 44, as he was riding his bicycle.1 Richard suffered serious injuries, including a traumatic brain injury which resulted in an inability to speak. Later that month, on Richard's behalf, his wife, Annette, entered into an agreement for legal services with the Dunnion Law Firm APC (Dunnion). In March 2013, Annette agreed to retain Larry Rothstein to represent her and Richard and, through Rothstein, she discharged Dunnion.

Rothstein filed this action in May 2013 on behalf of Richard and Annette, seeking damages for Richard's personal injuries and Annette's loss of consortium. Dunnion filed a notice of lien in the action for reasonable attorney fees and costs based on the agreement for legal services that Annette had signed on Richard's behalf.

Rothstein settled the claims of Richard and Annette against the Giblins for $1 million, the limits of two applicable insurance policies issued by the California State Automobile Association (CSAA). In February 2014, he sought judicial approval of the settlement.

Relying on Flores v. Evergreen At San Diego, LLC (2007) 148 Cal.App.4th 581 (Flores) and related cases, the trial court denied Dunnion's claims for a lien and for recovery in quantum meruit, concluding that there was no evidence of agency that would have authorized Annette to sign the agreement for Dunnion's legal services on Richard's behalf. Dunnion therefore had no reasonable expectation of compensation. The trial court awarded Rothstein fees of $169,835.81 and costs of $20,042.37 out of Richard's recovery of $700,000.00.

As we will explain, the trial court understandably relied on recent appellate opinions holding that the marital relationship does not automatically establish agency. Those opinions followed precedent developed when husbands had exclusive management and control of community property. However, those opinions did not consider the significance of major statutory changes in 1975 which conferred the management and control of community property equally on husbands and wives.

Because we hold here that each spouse is a statutory agent of the other spouse for the purpose of entering a contract for legal services to recover for a spouse's personal injuries during the marriage, we will reverse the order denying Dunnion's lien. We will also determine that a trial court cannot, over objection, decide a contested claim for attorney fees in a probate proceeding based only on affidavits and declarations.

III. THE FACTS

Because the trial court's denial of Dunnion's lien rested on its determination that there was no valid contract between Dunnion and the plaintiffs, our summary of the procedural history will focus more on the evidence of contract formation than on the evidence of the legal services that Dunnion and Rothstein claim to have provided.

A. RETENTION OF THE DUNNION FIRM AND INITIAL SERVICES RENDERED

According to a declaration by Annette, after Richard was injured on January 4, 2013, her brother-in-law told her he had found a lawyer and put her in contactwith an investigator from The Dunnion Law Firm. Annette met with the investigator at the Santa Clara Valley Medical Center on January 17, 2013. At the investigator's invitation, she signed a written agreement for legal services "arising out of" the January 4, 2013 incident. The agreement identified the client as "Annette Maldonado on Behalf of Richard Maldonado." Annette also signed an authorization on Richard's behalf to release medical records to Dunnion.

The retainer agreement contained the following relevant provisions. In paragraph 3, "Client" agreed, as compensation for Dunnion's services, to pay 39 percent "of any and all total amounts received by compromise, if the case is settled without mediation or the filing of a lawsuit" or 45 percent of "all total amounts received after the filing of a lawsuit or demand for arbitration or mediation. [¶] 4. In the event that the services of [Dunnion] herein are terminated prior to the settlement, arbitration, or adjudication of this matter, [Dunnion] shall be compensated for attorney services at the rate of $485.00 per hour, plus all costs incurred, with case analyst time billable at the rate of $150.00 per hour plus all costs incurred, both hourly rates having a minimum billable time increments of .33 hours per activity. Client agrees that the 'quantum meruit' or the reasonable value of services of attorneys shall be calculated at time of settlement or judgment of this claim at either: (a) the hourly rates as stated above; or (b) a reasonable percentage of the total ATTORNEY'S fees, plus costs, upon settlement, if no settlement offer has been tendered to attorney; or (c) the percentage, the percentage as agreed to in paragraph 3 above, of the last offer of settlement to client; or the greater of either (a), (b), or (c) at the option of [Dunnion]. . . . [¶] . . . [¶] 8. [Dunnion is] hereby given a first priority lien upon the proceeds of any recovery, whether by settlement or judgment, for professional fees stated in Paragraph 4 together with all costs incurred or paid out in connection with the prosecution of Client's claim. . . . [¶] . . . [¶] 22. In the event Client is married, Client's spouse may have a claim for damages resulting from the spouse's loss of marital rights such as the care, comfort, society and affection of client as a resultof client's personal injury. The lawyer refers to this type of claim as one for 'loss of consortium.' . . . [Dunnion] will accept the representation of said spouse and/or loved ones relative to such claim(s) only upon consultation with said spouse and/or loved ones and upon the signing of a separate written 'Agreement for Legal Services' by both said spouse and/or loved ones and [Dunnion]. Absent such an agreement, [Dunnion] shall have no responsibility for prosecuting such claim(s) and Client agrees to indemnify and hold [Dunnion] harmless for failing to make such claim(s)."

Annette declared that Dunnion did not mention to her the availability of a loss of consortium claim. Annette did not believe she had authorized Dunnion to negotiate to settle Richard's claims.

According to a declaration by Sargis G. Atanous, he was the attorney at Dunnion who represented Richard after receiving the agreement signed by Annette. He obtained and reviewed the traffic collision report and nearly 1000 pages of Richard's medical bills and records, conducted DMV searches on the car's driver and owner, and contacted the Giblins' insurer, CSAA. Atanous discovered that a second CSAA excess policy was also applicable.

On February 22, 2013, Atanous sent a letter to a senior CSAA adjuster he knew, Robert Pereira, identifying himself as Richard's attorney, listing two claim numbers as the subject, and stating in part: "I value the case at $10,000,000.00. Please review the enclosed documents and make me an offer to resolve the matter within seven (7) days." CSAA did not respond within the seven days, and Atanous extended the deadline to March 6. On March 5, 2013, CSAA offered its policy limits, which it mistakenly believed were $600,000. By that time, however, Annette was represented by her current attorney, Larry Rothstein.

B. RETENTION OF ROTHSTEIN, DISCHARGE OF DUNNION, AND FURTHER SERVICES

According to Annette's declaration, in her last telephone conversation with Atanous he told her he was trying to ascertain the insurance policy limits. She decided to discharge Dunnion primarily due to a concern about its high fees, so she met with Larry Rothstein on Saturday, March 2, 2013.

On March 3, Annette entered into a contingency fee agreement with Rothstein that listed "Richard + Annette Maldonado" as the client. She signed her own name as a client and also signed for Richard as a client "by Annette Maldonado." Under Rothstein's retainer agreement, client agreed to pay Rothstein one-third of any gross recovery for client's injuries on January 4, 2013 before the filing of either court papers or a demand for arbitration and 40 percent...

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