First District, Division Three Affirms a Lower Court’s Allocation of Fees Between Recipient Heirs From a Common Fund.
Settlement of wrongful death actions generally results in the creation of a common fund of proceeds to be divided up among the various heirs. The trial court determines how to allocate the settlement fund as well as award attorney’s fees to various attorneys from the heirs’ respective stakes. This next case illustrates how the process works in practice.
Gas Pipeline Explosion Cases, Case No. A117475 (1st Dis., Div. 3 Aug. 22, 2008) (unpublished) concerned two things: (1) the allocation of an $8 million wrongful death settlement fund between decedent’s two minor daughters in the States and decedent’s eldest daughter from a prior relationship living in Mexico; and (2) the trial court’s order directing the eldest daughter to pay counsel for the other daughters $27,500 in attorney’s fees. Because eldest daughter only was awarded $180,000 out of the settlement fund and did not like having to pay fees to other counsel (she had her own separate attorney), eldest daughter appealed.
The First District, Division Three affirmed both determinations.
Even though eldest daughter had been joined late in the game with a tentative settlement already negotiated on behalf of the other daughters, eldest daughter never asked for a trial continuance. Instead, her separate counsel came to believe she should join the settlement. The Court of Appeal found no abuse of discretion with the trial court’s allocation principally because the trial court found a qualitative difference: decedent was the primary breadwinner for his daughters in the State (who were very young), whereas he only had occasional interaction with eldest daughter (who was living in Mexico and was much older in age).
That brings us to the fee award. Attorneys for the other daughters—who produced the settlement—were entitled to fees based on creation of a common fund. (See Serrano v. Unruh, 32 Cal.3d 621, 632 (1982) [one of our Leading Cases]; Estate of Reade, 31 Cal.2d 669, 671-672 (1948).) Eldest daughter only argued that the attorneys should be awarded 15% rather than 25% from her share (given that 25% was the contingency fee agreement with the other daughters). The Court of Appeal found no discretion in the trial court’s award of 25% of her recovery as fees, because the lower court did offset by the amount that it found to be a reasonable fee eldest daughter expended in paying her independent attorneys. The appellate court quoted the trial court’s opinion in which it found the 25% contingency fee reasonable when compared to the normal 33 1/3% cut taken in a case that was complex and risky. Coupled with the other adjustment by the lower court, the award to the common fund attorneys was fair.