Liens For Attorney’s Fees, Settlement: Judgment Creditor’s Settlement And Release Of Judgment Debtor Did Not Release Interference Claims Against Judgment Creditor’s Attorney Obtaining Judgment Against Judgment Debtor

Interference Claim Was Righteous And Not Released By Judgment Debtor’s Unilateral Settlement With Judgment Creditor.

            Mancini & Associates v. Schwetz, Case No. B290498 (2d Dist., Div. 6 Sept. 4, 2019) (published) goes to show you that a client/judgment creditor has no ability to unilaterally release claims that client’s attorney has against a third-party judgment debtor. 

            Attorney obtained a substantial jury verdict for his client/judgment creditor against defendant/judgment debtor, with the attorney’s retainer agreement indicating that the attorney would receive a percentage of recovery and costs as well as an attorney’s lien against any recovery.  Without attorney’s knowledge or consent, client/judgment creditor entered into a settlement agreement with judgment debtor, releasing that party.  Judgment creditor’s attorney then sued judgment debtor for interference with his retention agreement and attorney’s lien rights, obtaining a $409,351 judgment against judgment debtor.

            On appeal, judgment debtor principally relied on the release in the settlement agreement with judgment creditor.  However, that agreement did not bind judgment creditor’s attorney who was not a party to the settlement, given that interference by a third party with attorney’s lien rights is a cognizable claim in California.  (Little v. Amber Hotel Co., 202 Cal.App.4^th 280, 291 (2011).)  As observed at the start of the opinion, “Does this release preclude the attorney from pursuing his costs and fees from the defendant [judgment debtor]?  Of course not.”