Fee Clause Was Broad Enough To Allow For Recovery Of Fees, With Destruction Of Signed Fee Agreement By Terminated Attorney Not Precluding Recovery.
Stolz v. Fleischner, Case No. E062781 (4th Dist., Div. 2 Jan. 6, 2016) (unpublished) is a situation where a terminated attorney won a fee recovery of $27,120 (out of a requested $ 42,600) under Civil Code section 1717—based on a client retainer fees clause—after clients’ legal malpractice/breach of fiduciary duty tort claims were dismissed with prejudice after failure to appear at a case management conference (grounded on an OSC hearing after the CMC failure to appear). In an interesting twist, the attorney conceded not having an original fee agreement because it had been purged after the malpractice statute of limitations had expired. However, attorney did say that he adopted a California State Bar template which had a fees clause allowing recovery to the prevailing party in any action or proceeding “arising out of or to enforce any provision” in the retainer agreement.
Clients’ appeal of the fee recovery was unsuccessful on appeal.
The absence of a signed fee agreement was not dispositive given the other circumstances of what was reached between attorneys and clients, with clients citing “no authority for the proposition that a terminated attorney’s destruction of a signed fee agreement with a client precludes the attorney from claiming the agreement existed, and from recovering fees and costs for the client pursuant to the terms of the agreement.” (Slip Op., p. 11.) With respect to fee recovery for the dismissed tort claims, the appellate court found that the retainer fees clause was broad enough to encompass legal malpractice and fiduciary breach claims, all the more so given the “arising out of” language—distinguishing this from more severe “on the contract” language cases.