Skelly v. Richman

• Decision Date: 26 August 1970
• Citation: 10 Cal.App.3d 844,89 Cal.Rptr. 556
• Court: California Court of Appeals Court of Appeals
• Parties: Edward J. SKELLY, Plaintiff and Respondent, v. Matthew M. RICHMAN and Edward M. Granz, Defendants and Appellants. Civ. 33780.

Page 556

89 Cal.Rptr. 556

10 Cal.App.3d 844

Edward J. SKELLY, Plaintiff and Respondent, v. Matthew M. RICHMAN and Edward M. Granz, Defendants and Appellants.

Civ. 33780.

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

Aug. 26, 1970.

Rehearing Denied Sept. 17, 1970.

[10 Cal.App.3d 849] Joseph W. Fairfield, Ethelyn F. Black and Alfred W. Omansky, Beverly Hills, for Edward M. Granz.

Margolis, McTernan, Smith, Scope & Herring, and Ben Margolis, Los Angeles, for Matthew Richman.

Raymond, Noriega & Robinson and Mark P. Robinson, Bakersfield, for plaintiff and respondent.

UNDERLYING CIRCUMSTANCES

REPPY, Associate Justice.

The following facts emerge from a lengthy transcript construed favorably to the successful plaintiff with some emphasis on conflicting aspects which are significant to contentions made by defendants and with one or two concessions by plaintiff somewhat adverse to his position.

Robert J. Schmorleitz (Schmorleitz) and Edward J. Skelly (Skelly), both attorneys, had offices in the same building. They were not partners or regular associates but occasionally referred business back and forth.

A. V. Bamford (Bamford) was a sometime client of Schmorleitz. Bamford had a cause of action against Edward M. Granz (Granz) for substantial monies (disputed as to specific amount) which had been withheld by Granz from Bamford in connection with a joint venture the two had carried out. It eventuated that the dispute had to be tried in court. Schmorleitz had Bamford take the case to Skelly because the latter was a trial attorney. An independent attorney-client relationship was created between Skelly and Bamford. They orally agreed to a fee arrangement whereby Skelly's fee would be contingent upon recovery of monies from Granz and payable therefrom, and whereby the amount of the fee would be 25 percent of the monies recovered. ¹ Skelly was to be solely and completely in charge. However, Schmorleitz' name appeared on the complaint. Skelly had agreed to give Schmorleitz, as a referral fee, one-third of whatever his contingent fee amounted to.

Before the trial Skelly proposed that the fee percentage be raised to 40 percent. Bamford did not accede to the suggestion, and the original oral agreement was confirmed by an exchange of telegrams.

Some degree of mutual dissatisfaction developed between Bamford and Skelly having to do with advancement of funds for costs and delay in getting to trial; but there was no actual disruption of the attorney-client relationship.

The court trial eventually commenced. Granz was represented by an attorney named William Israel (Israel). During the course of the trial, Granz came up with more offsets against Bamford's claims than was expected. On the basis that the lesser amount which now appeared to be recoverable made if equitable, Skelly again proposed to Bamford that the fee percentage be increased to between 33 1/3 and 40 percent. Bamford agreed in principle, but the exact figure was left open to future negotiation.

While the trial was in progress, a person by the name of Hovious, who had a judgment against Bamford in about the sum of $5,000, perfected a lien therefor against any recovery Bamford might secure from Granz. ²

Eventually judgment was rendered in favor of Bamford and against Granz in the sum of $9,559.03 (principal plus interest to date of judgment) with $122.25 costs.

After the trial Granz substituted Matthew M. Richman (Richman) as his attorney instead of Israel. Richman made a motion for new trial on behalf of Granz which was denied. At the courthouse, after the denial, Richman, with Granz present, asked Skelly entered into correspondence with Bamford about the financial exigencies (including additional attorney's fees for appellate work, either straight retainer or increased percentage of recovery) ⁵ of the pending appeal and the advisability of settlement at the suggested reduced figure. Bamford did not desire to settle; he wanted to collect the full amount of the judgment. ⁶ Skelly advised Richman of Bamford's disinclination, and, upon inquiry by Richman, authorized Richman to contact Bamford directly and personally to see if he (Richman) could persuade him (Bamford) to settle. Skelly reminded Richman of his contingent-fee status, and Richman told Skelly that he would protect him with respect to his fees. ⁷

Skelly if the judgment could be paid off at a reduced figure, indicating that he was going to appeal ³ and stating his feeling that he had a particularly good basis for establishing trial court error in the disallowance to Granz of an additional claimed offset of about $2,000. Bamford was in Texas at this time, and Skelly advised Richman that he [10 Cal.App.3d 851] would communicate with him and recommend such a settlement to him. Skelly then pointed out to Richman and Granz that he had a percentage fee contingent upon and payable from recovery and said that he would be willing to cut it some to make settlement attractive to Bamford. ⁴

As a courtesy to Richman, still figuring it would be beneficial to his client to settle, obviously hoping that he could get him to come over to this viewpoint, and reasoning that there would be a better chance to settle if Granz did not have to pay out funds for transcripts and briefs on appeal, Skelly executed and delivered to Richman a 60-day extension ⁸ of time within which to designate and make deposits for the record on appeal. Richman kept the stipulation in his office; did not file it with the clerk. Skelly advised Bamford that he had taken this action. Bamford was provoked and wrote Skelly that he had wired the clerk to 'dismiss it.' ⁹ Skelly ignored this communication, appraising it as a grandstand threat which would not be carried out. However, Bamford had so telegraphed the clerk of the Court of Appeal. The clerk replied by letter to the effect that Bamford would have to notice a motion and support it with a certificate from the clerk of the superior court showing that Granz was in default of perfection of the record. On November 20, 1962, without telling Skelly or sending him copies of the papers, Bamford did secure the necessary default certificate from the clerk of the superior court (which could be issued because Richman had not filed the extension stipulation) and submitted a written motion to dismiss the appeal to the Court of Appeal supported by said certificate About this same time Richman told Granz that Skelly had authorized either of them (Granz or Richman) to contact Bamford directly to see if the judgment could be compromised, although, as indicated above, Skelly had authorized only Richman to make such a contact. Granz, at first, made long distance overtures to Bamford, which apparently were sufficiently promising to prompt Granz to go to Texas. Before doing so, Granz bought up, or contracted to buy up, the Hovious judgment at a discount and thus put himself in a position to give to, or get for, Bamford a release and satisfaction of the Hovious judgment.

with copies of the papers going to Richman. Accompanying the motion Bamford sent a letter stating that his attorney would not appear because he and his attorney had differences with some aspects of he case and requesting that the motion be granted on the papers submitted.

Granz went to Texas in the middle of December 1962 and secured the services of an attorney, Arthur Gochman (Gochman), to assist him in processing any settlement he might make with Bamford. Granz contacted Bamford, and they agreed that Granz would pay Bamford $4,930 and would furnish Bamford within 15 days a release of the Hovious judgment, or, in lieu thereof, would pay him an additional $5,037. Gochman told Bamford that Granz had acquired the Hovious judgment.

Granz had Bamford come with him to Gochman's office so that the pay-off of the Bamford judgment against Granz could be documented and consummated. Gochman asked about Bamford's attorney and his fee status. He evidently was told that Bamford had displaced him. Gochman became concerned and called Richman for information and instructions. Richman told Gochman that Bamford's attorney had been paid and was out of the picture, and he instructed Gochman as to the nature and contents of the documents to be prepared. Accordingly, Gochman made up a document reciting the agreement, a substitution of attorneys whereby Bamford substituted himself (pro se) for Skelly which did not call for the signature of Skelly, and, on a California printed form, a satisfaction of judgment with provision for the signature of Bamford where normally the signature of the attorney would be placed. He had Granz provide a check for $4,930, payable to Bamford only. Although there was some skirmishing by Granz to get away with the satisfaction of judgment without Bamford having in hand a signed copy of the agreement to release the Hovious judgment, the papers and check eventually were exchanged.

Granz came back to Los Angeles where he tried to file the satisfaction of judgment in the superior court. It was not accepted because it was not signed by Skelly, who was still the attorney of record and because Gochman's notarial signature was not exemplified by the Texas clerk. Apparently the unilateral substitution of attorneys was also unacceptable. Thereupon, Granz sent the papers back to Gochman for revision, who, in turn, sent them on to Richman.

Meanwhile, the appellate court dismissed the appeal, and Richman called Skelly and told him of this and of how Bamford and Granz had settled out the judgment, claiming, when Skelly angrily accused him of failing to protect him on his fees, that he had not known that Skelly was on a contingent fee, but thought he had been fully paid. Skelly told Richman that he was going to sue him and Granz.

Skelly talked to Bamford on the telephone from Los Angeles to Texas, and Bamford said that he had no intention of paying Skelly a fee and told him to go ahead and sue him. Richman wrote Gochman saying, in...