Severson & Werson v. Bolinger, A048793

• Decision Date: 18 November 1991
• Docket Number: No. A048793,A048793
• Citation: 1 Cal.Rptr.2d 531,235 Cal.App.3d 1569
• Court: California Court of Appeals Court of Appeals
• Parties: , 60 USLW 2435 SEVERSON & WERSON, Plaintiff and Respondent, v. Kenneth W. BOLINGER, et al., Defendants and Appellants.

Page 531

1 Cal.Rptr.2d 531

235 Cal.App.3d 1569, 60 USLW 2435

SEVERSON & WERSON, Plaintiff and Respondent, v. Kenneth W. BOLINGER, et al., Defendants and Appellants.

No. A048793.

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

Nov. 18, 1991.

As Modified Dec. 18, 1991.

Review Denied Feb. 13, 1992.

Richard M. Bryan, Bryan Law Corp., Jan T. Chilton, Severson & Werson, San Francisco, for plaintiff and respondent.

Kathleen Courts, White, Courts & Mitchell, Oakland, for defendants and appellants.

KING, Associate Justice.

In this case we hold that when a law firm quotes specific hourly rates for the services of named attorneys to a prospective client who then agrees in writing to pay the firm's "regular hourly rates," the law firm cannot raise the rates charged by the named attorneys without first notifying the client.

Kenneth W. and Myra Sue Bolinger appeal from a judgment in favor of Severson & Werson (Severson), challenging both the amount of the judgment and the award of prejudgment interest, costs and attorney fees.

Between 1980 and 1984, Severson represented the Bolingers, their partners Robert and Darleen Smith, and Collection Computers, Inc., in litigation against Sperry Corporation under the terms of an August 28, 1980, fee agreement letter. ¹ In January 1985, Severson sued its former clients for $138,584.97 in unpaid fees. The defendants requested nonbinding arbitration (Bus. & Prof.Code, §§ 6200 et seq.) which resulted in an award to Severson in the requested amount. The defendants rejected the award and requested a trial after arbitration (Bus. & Prof.Code, § 6204, subd. (b)).

Before the trial began, the Smiths settled with Severson for $50,000. On November 6, 1989, after a bench trial, the court filed a tentative decision dated October 20 (Code Civ.Proc., § 632) awarding Severson "$138,584.97 as prayed (subject to stipulated reduction, credit or offset), together with interest and attorneys' fees," and ordering Severson's counsel "to prepare, serve and submit to court a proposed statement of decision and judgment (Rule 232)."

On November 9, Collection Computers filed a notice of pending bankruptcy resulting in an automatic stay of proceedings against it (11 U.S.C. § 362, subd. (a)(1)) as of September 12. On November 21, the Bolingers and Collection Computers filed a detailed request for statement of decision (Code Civ.Proc., § 632). On December 1, Severson served its proposed statement of decision and judgment, and a memorandum of costs. The trial court signed the statement of decision and judgment on December 9. On December 14, the Bolingers filed a notice of pending bankruptcy resulting in an automatic stay of proceedings against them as of December 11. On December 18, the trial court filed its statement of decision and judgment. ²

Among other things, the trial court found that when Severson began representing Bolinger he was told Ryland's billing rate was $110 per hour and that of attorney Tom Wood was $90 per hour. The court also found, "Throughout the course of its representation Severson increased the hourly billing rates for [its] services without notifying [Bolinger] of the changes.... The bills which were sent by Severson did not set forth the hourly rates of the attorneys or contain information from which, on their face, changes in the hourly rates could be determined." These findings are supported by substantial evidence.

On December 21, Bolinger filed a motion to strike Severson's memorandum of costs and to tax costs, and detailed objections to the proposed statement of decision. On January 3, 1990, Bolinger filed a motion to vacate and set aside the statement of decision and judgment and for a new trial or, in the alternative, for an order modifying the statement of decision and judgment, vacating and setting aside the statement of decision and/or reopening the case for further proceedings (Code Civ.Proc., §§ 659, 662), and a separate motion to vacate and set aside the statement of decision and judgment under Code of Civil Procedure section 473 and California Rules of Court, rule 520. After a hearing on January 31, the court ruled it had no jurisdiction to hear further motions while the bankruptcy court stay was in effect. On March 22, 1990, after Bolinger had filed its notice of appeal, the bankruptcy court granted Severson's motion for relief from the automatic stay retroactive to December 11, 1989, and ordered the running of all state court time periods tolled from that date "or the date from which time commenced to run, whichever is later" until March 18, 1990.

Bolinger's primary contention is that as a matter of law Severson could not unilaterally change the hourly rates of attorneys Ryland and Wood. We agree.

In essence we are presented with conflicting interpretations of the terms of a contract. Severson apparently construed the phrase "our regular hourly rates" as used in the fee agreement letter to include its "standard practice" of changing, i.e., raising, its hourly rates "from time to time" without notifying clients. Bolinger assumed the regular hourly rates for the professional services of Ryland and Wood were those quoted to him.

"Attorney fee agreements are evaluated at the time of their making and must be fair, reasonable and fully explained to the client. Such contracts are strictly construed against the attorney." (Alderman v. Hamilton (1988) 205 Cal.App.3d 1033, 1037, 252 Cal.Rptr. 845, citations...