Venegas v. Skaggs

• Decision Date: 04 April 1989
• Docket Number: 87-5684,Nos. 87-5662,s. 87-5662
• Parties: , 12 Fed.R.Serv.3d 1534, 14 Fed.R.Serv.3d 117 Juan Francisco VENEGAS, Plaintiff-Appellant, v. Ronnie J. SKAGGS; Carthel S. Roberson, Defendants-Appellees. Juan Francisco VENEGAS, Plaintiff-Appellee, v. Ronnie SKAGGS, et al., Defendants-Appellees. Michael R. Mitchell, Applicant-in-Intervention-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 527

867 F.2d 527

57 USLW 2522, 12 Fed.R.Serv.3d 1534,

14 Fed.R.Serv.3d 117

Juan Francisco VENEGAS, Plaintiff-Appellant, v. Ronnie J. SKAGGS; Carthel S. Roberson, Defendants-Appellees.

Juan Francisco VENEGAS, Plaintiff-Appellee, v. Ronnie SKAGGS, et al., Defendants-Appellees.

Michael R. Mitchell, Applicant-in-Intervention-Appellant.

Nos. 87-5662, 87-5684.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 2, 1988.

Decided Jan. 31, 1989.

As Amended on Denial of Rehearing and Rehearing En Banc April 4, 1989.

Michael S. Bromberg, Sag Harbor, N.Y., for plaintiff-appellant.

Robert Shannon, Long Beach, Cal., Johnnie Cochran, Los Angeles, Cal., for defendants-appellees.

Michael R. Mitchell, Los Angeles, Cal., pro per.

Harvey A. Schneider, Encino, Cal., for applicant-in-intervention-appellant.

Appeal from the United States District Court for the Central District of California.

Before HUG, FLETCHER and FARRIS, Circuit Judges.

FLETCHER, Circuit Judge:

Attorney Michael Mitchell ("Mitchell") appeals the district court's denial of his motion to intervene in his former client's Section 1983 action. Mitchell moved to intervene in order to confirm a $406,000 lien for attorney's fees on the judgment. Juan Francisco Venegas ("Venegas"), the former client, cross-appeals the district court's ruling that Mitchell's entitlement to attorney's fees is not limited to the 42 U.S.C. Sec. 1988 award of $75,000. We exercise jurisdiction pursuant to 28 U.S.C. Sec. 1291. We hold that the district court abused its discretion in denying Mitchell's intervention motion, and remand the case to the district court for a determination of the merits of Mitchell's motion to confirm a lien. We affirm the district court's ruling that Mitchell's entitlement to attorney's fees is not limited to the Sec. 1988 award and that a 40% contingent fee is reasonable in this case. ¹

I.

Mitchell successfully represented Venegas in his Section 1983 action against Long Beach police officers for false arrest and two and one-half years' imprisonment for a murder conviction obtained using perjured evidence. Venegas retained Mitchell in The contingent fee agreement Venegas and Mitchell entered into provided Mitchell with a $10,000 retainer and a contingent fee of 40% of the "gross amount recovered," less the retainer. The agreement also required Mitchell to apply for attorney's fees under 42 U.S.C. Sec. 1988 and to deduct any such recovery from his 40 percent entitlement. It forbade Venegas from waiving Mitchell's right to court-awarded attorney fees, and allowed Mitchell's intervention to protect his interest in the fees:

September 1985, three months prior to a scheduled trial date.

Client agrees that Attorney may, at Attorney's election, and at any time, intervene as a party in the action for the sole purpose of protecting Attorney's interest in and to any attorney fee award which may be made by the trial or any appellate court.

The agreement explicitly covered only Mitchell's handling of the trial:

This agreement covers one trial only. In the event there is a mistrial or an appeal, the parties may mutually agree upon terms and conditions of Attorney's employment, but are not obligated to do so.

On January 8, 1986, Venegas consented in writing to the association of another law firm, with the attorneys to share the contingent fee 50-50.

At a jury trial Mitchell obtained a $2.12 million verdict for Venegas. After post trial motions this award entitled Mitchell to $406,000 under the contingent fee agreement. Mitchell moved for attorney's fees under Section 1988, as required by the fee agreement. The district court awarded attorney's fees of $117,000 directly to Venegas, of which $75,000 was for Mitchell's participation. The court stayed enforcement of the attorney's fees judgment pending appeal. This court has since affirmed the jury verdict and the district court's attorney's fees award. Venegas v. Skaggs, 831 F.2d 1514 (9th Cir.1987).

Venegas refused Mitchell's offer to represent him on appeal for another 10 percent of the judgment, and substituted counsel on September 14, 1986. He maintains that he "fired" Mitchell, notwithstanding the agreement's coverage of "one trial only."

On October 20, 1986 Mitchell filed his motion to intervene for the purpose of confirming a lien on the judgment for attorney's fees under the contingent fee agreement. Mitchell sought intervention as of right under Fed.R.Civ.P. 24(a)(2), and, alternatively, permissive intervention under Fed.R.Civ.P. 24(b)(2). Venegas did not oppose intervention, but claimed Mitchell's fee entitlement is limited to the court-awarded fees.

The district court denied Mitchell's motion to intervene but declined to invalidate the contingent fee agreement, leaving any dispute over the contract terms to a state court action. The court did, however, decide that the difference between the contingent fee and court-award fees is not a "windfall" to which Mitchell is not entitled.

II.

Since we conclude that the district court erred in denying Mitchell permissive intervention, we need not decide whether Mitchell is entitled to intervention as of right. We review the denial of permissive intervention for an abuse of discretion. Willard v. City of Los Angeles, 803 F.2d 526, 527 (9th Cir.1986).

A court may grant permissive intervention under Rule 24(b) only if three conditions are met: (1) the movant must show an independent ground for jurisdiction; (2) the motion must be timely; and (3) the movant's claim or defense and the main action must have a question of law and fact in common. See Cook v. Pan American World Airways, Inc., 636 F.Supp. 693, 698 (S.D.N.Y.1986) (outlining these requirements). The district court in the case before us found that it had "jurisdiction to determine the rights of the parties under the contingent retainer agreement as ancillary to its conduct of the principal litigation." The court also did not question the timeliness of Mitchell's motion. However, the court found that the "common question of law or fact" requirement had not been If the court had limited its rulings in Venegas's action to the merits of his Section 1983 claims, then its finding of no "common question of law or fact" might have been justified. In fact, the court chose to decide a question that was common with, and indeed central to, Mitchell's motion. In the course of hearing Venegas's action, the court decided that Mitchell's entitlement to attorney's fees is not limited under federal law to the Section 1988 award, and that a 40% contingent fee is reasonable in this case. In his motion, Mitchell in effect asked the court to answer two questions: (1) what amount of fees (if any) were due him; and (2) whether he had a right to a lien for that amount. The district court's ruling that the statutory award does not place a ceiling on Mitchell's claim to a contingent fee and that the 40% contingent fee is "reasonable" went a long way toward answering the first question posed by Mitchell's motion.

met, since it was "unable to discern any relationship between plaintiff's civil rights claims and Mitchell's claim that, under California law, he is entitled to a lien for attorney's fees under a contingent fee contract." ²

The existence of a common question of law or fact does not automatically entitle an applicant to intervene. Rather, Rule 24(b) necessarily vests "discretion in the district court to determine the fairest and most efficient method of handling a case...." SEC v. Everest Management Corp., 475 F.2d 1236, 1240 (2d Cir.1972). In this case, however, all of the considerations which guide the exercise of judicial discretion clearly weighed in favor of permissive intervention.

In exercising its discretion to grant or deny permissive intervention, a court must consider whether the intervention will "unduly delay or prejudice the adjudication of the rights of the original parties." Rule 24(b). Neither of the original parties in this case alleged that Mitchell's intervention would cause delay or prejudice to the adjudication of their rights. Compare California Ex Rel. State Lands Commission v. United States, 805 F.2d 857, 865-66 (9th Cir.1986) (permissive intervention proper where plaintiff has not alleged that prejudice will result from the intervention). Indeed, neither of the original parties offered any opposition at all to Mitchell's intervention motion. See Crumble v. Blumthal, 549 F.2d 462, 468-69 (7th Cir.1977) (district court abused its discretion in denying permissive intervention where the requirements for permissive intervention had been met and there was "no evidence" that intervention would prejudice the original parties).

In addition to the interests of the original parties, a court in deciding whether to permit intervention should evaluate whether the movant's "interests are adequately represented by existing parties." State of California v. Tahoe Regional Planning Agency, 792 F.2d 775, 779 (9th Cir.1986). In the case of a former attorney seeking intervention in order to secure rights under a contingent fee agreement, "[n]either of the existing parties is concerned with protecting the [attorney's] interest." Gaines v. Dixie Carriers, Inc., 434 F.2d 52, 54 (5th Cir.1970) (holding that under such circumstances, former attorney may intervene as of right). Venegas, in fact, strenuously opposes Mitchell's claim to attorney's fees. In Venegas's view, Mitchell is entitled to at most about a sixth of the fees he demands. Since the district court chose to rule on issues central to Mitchell's claim, it should have allowed Mitchell to intervene so that he could defend his position.

Finally, judicial economy is a relevant consideration in deciding a motion for permissive intervention. See, e.g., Austell v. Smith, 634 F.Supp. 326, 335 (W.D.N.C.1986); Gordon v. Forsyth County Hosp. Authority, Inc., 409 F.Supp. 708, 718-19 (M.D.N.C.1976), aff'd in part, vacated in part, 544 F.2d 748 ...