Waters v. Bourhis

• Decision Date: 05 December 1985
• Docket Number: S.F. 24611
• Citation: 40 Cal.3d 424,220 Cal.Rptr. 666,709 P.2d 469
• Court: California Supreme Court
• Parties: , 709 P.2d 469 Barbara WATERS, Plaintiff and Appellant, v. Ray BOURHIS et al., Defendants and Respondents.

Page 666

220 Cal.Rptr. 666

40 Cal.3d 424, 709 P.2d 469

Barbara WATERS, Plaintiff and Appellant, v. Ray BOURHIS et al., Defendants and Respondents.

S.F. 24611.

Supreme Court of California,

In Bank.

Dec. 5, 1985.

Rehearing Denied Jan. 23, 1986.

Robert Jay Katz, Katz & Lapides, San Jose, and Richard J. Kohlman, for plaintiff and appellant.

Musick, Peeler & Garrett, James E. Ludlam, Los Angeles, Hassard, Bonnington, Rogers & Huber, David E. Willett, San Francisco, Horvitz & Levy, Ellis J. Horvitz, S. Thomas Todd, Encino, for plaintiff and appellant.

Ray Bourhis, in pro. per., Bourhis, Lawless & Harvey, San Francisco, Victoria J. De Goff, De Goff & Sherman, Berkeley, Jerome B. Falk, Jr., Howard, Rice, Nemerovski, Canady, Robertson & Falk, San Francisco, B.K. Wines and Wines, Robinson & Wood, San Jose, for defendants and respondents.

David M. Harney, Los Angeles, as amici curiae on behalf of defendants and respondents.

KAUS, Justice. ^*

In March 1980, plaintiff Barbara Waters filed this action against defendant Ray Bourhis, an attorney who had represented her in an earlier suit against a psychiatrist, contending that the contingency fee which defendant had obtained after settlement of the earlier action exceeded the maximum fee permitted by Business and Professions Code section 6146, a provision of the Medical Injury Compensation Reform Act of 1975 (MICRA). ¹ Defendant moved for summary judgment, asserting that the earlier lawsuit was not an action for "professional negligence" within the meaning of section 6146 and, consequently, that the fee collected in that action was not subject to section 6146's limitations. Declarations were filed in support of and in opposition to the motion, and, after a hearing, the trial court granted summary judgment in defendant's favor. For the reasons discussed hereafter, we conclude that the judgment must be reversed.

I

In January 1977, plaintiff, who had a history of mental difficulties, began treatment with Dr. Jack Shonkwiler, a psychiatrist. According to the allegations of the complaint filed in the earlier action--allegations that were never admitted or proven--Shonkwiler started to engage in a variety of sexual activities with plaintiff a few months after treatment began. These activities allegedly "rang[ed] from directing her to observe [him] as he masturbated to compelling her to submit to sexual intercourse." The complaint alleged that at times Shonkwiler induced plaintiff to participate in sexual conduct by suggesting that it was part of the therapy designed to alleviate her sexual inhibitions, and at other times he coerced her to participate by threatening to have her institutionalized if she did not cooperate.

Plaintiff stopped seeing Shonkwiler in August 1977. The following spring, plaintiff cooperated with the police in a criminal investigation of Shonkwiler. In October 1978, she consulted defendant, who agreed to represent her in a civil action against Shonkwiler.

In a declaration filed in support of his summary judgment motion in the present proceeding, defendant stated that when plaintiff described to him the facts surrounding Shonkwiler's sexual activities with her, he "did not regard the allegations by [plaintiff] of the conduct of Shonkwiler as constituting medical negligence and so advised [plaintiff]." His declaration also stated that although he did not view the case as one of professional negligence, he advised plaintiff of the existence of section 6146 and told her that he would not represent her under the limitations of that statute. ^{2 2} Instead, defendant offered to take the case "either on an hourly basis ($50 or $65 per hour) or on the basis of our standard contingency fee agreement in personal injury cases," which provided for fees of (1) 33 1/3 percent if recovery was obtained before the filing of a lawsuit, and (2) 40 percent after such a suit was filed. Plaintiff told him that she wanted to be represented on a contingency basis and signed the contingency fee agreement that defendant had prepared. ³

In a counterdeclaration filed in opposition to the motion, plaintiff disputed defendant's account of their first interview in a number of respects, asserting that defendant never advised her that he did not regard Dr. Shonkwiler's conduct as medical negligence and did not inform her of the existence of section 6146 or of his unwillingness to represent her under its limitations.

A few days after their first meeting, defendant filed a complaint for damages against Shonkwiler on plaintiff's behalf. The complaint--entitled "Complaint for Damages--Malpractice-Medical"--sought recovery on a variety of legal theories: (1) negligence, (2) breach of duty of good faith, and (3) intentional or reckless infliction of emotional distress. ⁴ Both compensatory and punitive damages were requested.

In the course of discovery, defendant learned that Shonkwiler was insured under a "Psychiatrist's Professional Liability" policy which had a limit of $200,000 and which provided coverage for "damages ... awarded against [the psychiatrist] in respect to services rendered by him in his practice of psychiatry" in any action based, inter alia, on "malpractice, ... negligence, ... personal restraint, assault, ... [and] undue familiarity...." After preliminary negotiations between defendant and Shonkwiler's insurer, in August 1979 the insurer initiated a declaratory judgment action against Shonkwiler, alleging that its policy did not provide coverage for Water's suit because Shonkwiler's acts did not arise out of professional services but amounted to criminal acts. Two months later, after continued negotiations by defendant on plaintiff's behalf, the insurer dismissed its own declaratory judgment action against Shonkwiler and, without admitting liability either on its own behalf or on behalf of its insured, agreed to settle plaintiff's action against Shonkwiler for $200,000, the policy limit.

In his declaration, defendant states that on October 31, 1979, at the meeting at which he presented the settlement agreement to plaintiff for her approval and signature, he provided her with a letter which explained how the $200,000 would be disbursed: he would retain 40 percent of the recovery ($80,000) plus an amount equal to his out-of-pocket expenses ($1,797.30) in accordance with the written fee agreement, and the balance ($118,202.70) would be plaintiff's net recovery. The letter also drew plaintiff's attention to section 6146, explained why defendant believed that the provision did not apply to her case, ⁵ and advised her to consult a lawyer who had no financial interest in the matter if she had any questions. In her counterdeclaration, plaintiff states that although the explanatory letter is dated October 31, she recalls receiving it on November 7--when she met defendant at a bank to endorse the settlement check--rather than at the October 31 meeting at which she signed the settlement agreement.

Shortly after obtaining the recovery, plaintiff did seek other legal advice and then brought the present action, alleging that defendant had obtained fees in excess of $18,000 greater than the fees to which he was entitled under section 6146. In his answer, defendant denied liability both on the ground that section 6146 was unconstitutional and on the ground that the underlying lawsuit was not based on "professional negligence" as that term is defined in section 6146. Defendant then moved for summary judgment on the latter ground, relying on his own declaration setting out the facts described above and on a number of documents relating to the earlier lawsuit. As already noted, plaintiff filed a counterdeclaration, expressly disputing a number of facts contained in defendant's declaration.

At the conclusion of the hearing on the summary judgment motion, the trial court stated: "I'm going to find that most of the damage was outside the scope of professional negligence under which the attorney's fees is limited. So no limit on the fees in the case Mr. Bourhis handled and I'm going to grant summary judgment for the defendant." Plaintiff appeals from the judgment.

II

In our recent decision in Roa v. Lodi Medical Group, Inc. (1985) 37 Cal.App.3d 920, 211 Cal.Rptr. 77, 695 P.2d 164, we concluded that the statutory limits on attorney fees imposed by section 6146 are not unconstitutional on their face. Here, however, we are not faced with broad questions of the validity of the legislative provision, but with the much narrower problem of determining the proper application of section 6146 in a rather unusual "medical malpractice" setting.

The issue arises because section 6146's limitations on attorney fees do not apply to all types of actions against doctors or other "health care providers," but--like other provisions of MICRA ⁶--only to actions which are "based upon [the provider's] alleged professional negligence." ... ⁷ Section 6146, subdivision (c)(3)--again like the other sections of MICRA (see fn. 6, ante )--defines "professional negligence" for these purposes as "a negligent act or omission to act by a health care provider in the rendering of professional services, which act or omission is the proximate cause of a personal injury or wrongful death, provided that the services are within the scope of services for which the provider is licensed and which are not within any restriction imposed by the licensing agency or licensed hospital."

We addressed a different question relating to the proper scope or reach of this "professional negligence" language of MICRA in Hedlund v. Superior Court (1983) 34 Cal.3d 695, 194 Cal.Rptr. 805, 669 P.2d 41. In Hedlund, the question presented was whether MICRA's statute of limitations--Code of Civil Procedure section 340.5--was applicable to an action against a psychiatrist which rested on the psychiatrist's alleged failure to warn a potential victim of the dangerous proclivities of the psychiatrist's patient, i.e., an action deriving...