Sanctions: $5,185.00 Section 128.7 Sanctions Award Against Plaintiff For Legally Frivolous Lawsuit Against Successor Attorney Defendant Who Did Not Pay Plaintiff’s Medical Lien When His Client’s Case Resolved Affirmed On Appeal

Second District Finds Gilman Precisely On Point.

            In Medfin Manager, LLC v. Carrazco, Case No. B292644 (2d Dist., Div. 3 April 6, 2020) (unpublished), a personal injury patient signed contractual liens giving the hospital that provided some of his medical care a lien against any settlement or judgment he might recover in litigation for his injuries.  Patient’s original attorney in the personal injury case signed consents for payment of the medical lien.

            The hospital assigned its lien documents to Plaintiff, and the original attorney referred the personal injury case to Defendant/successor attorney.  When successor attorney settled the case, he successfully negotiated with patient’s medical providers for a reduction of their liens, but Plaintiff would not agree to a reduction of its lien.  Patient then instructed successor attorney not to pay Plaintiff, and acknowledged that the unpaid medical bills were his responsibility.

            Plaintiff sued successor attorney, patient, and original attorney for breach of contract and fraud, and successor attorney filed a section 128.7 motion for sanctions against Plaintiff and its attorneys.  Successor attorney argued that he was not contractually bound to Plaintiff because he never signed the lien, and that the fraud cause of action alleged no facts as to his involvement.  Additionally, Plaintiff’s attorney agreed in a letter to successor attorney that there was no cause of action for fraud against him, but failed to prepare a dismissal of the fraud cause of action as promised.

            As to the breach of contract claims, Plaintiff argued that successor attorney was bound by the medical liens/consents by becoming attorney of record.  The trial court was not persuaded – finding successor attorney under no obligation to a lien he did not sign pursuant to Gilman v. Dalby (2009) 176 Cal.App.4^th 606 [discussed in our August 13, 2009 post].

            In Gilman, a patient and his original counsel signed a medical lien, but the successor attorneys did not.  The successor attorneys were merely aware of the liens, but mere awareness of the liens did not create a contractual obligation on the successor attorneys’ part. 

            Plaintiff appealed the trial court’s granting of successor attorney’s 128.7 motion and the $5,185 in sanctions awarded against it, but the 2/3 DCA affirmed – finding Gilman precisely on point, and Plaintiff’s two causes of action against successor attorney objectively unreasonable and legally frivolous.