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Leonard Carder, LLP v. Patten

October 12, 2010

LEONARD CARDER, LLP, PLAINTIFF AND APPELLANT,
v.
PATTEN, FAITH & SANDFORD, DEFENDANT AND RESPONDENT.



APPEAL from a judgment of the Superior Court of Los Angeles County, Randolph Rhodes, Judge. Reversed. (Los Angeles County Super. Ct. No. PC044959).

The opinion of the court was delivered by: Kriegler, J.

CERTIFIED FOR PUBLICATION

Plaintiff and appellant Leonard Carder, LLP filed a declaratory relief action against Patten, Faith & Sandford (Patten)*fn1 regarding distribution of attorney fees awarded in a stipulated judgment in a class action lawsuit. The trial court entered a judgment denying all relief to Leonard Carder on the basis the complaint did not present a case or controversy and that jurisdiction had been reserved with the judge who approved the class action settlement. Leonard Carder challenges both aspects of the trial court's ruling. We reverse, holding that the complaint did articulate a justiciable case or controversy, the class action court specifically declined to retain exclusive jurisdiction over the distribution of attorney fees, and entry of judgment against Leonard Carder without transfer to the class action court was an abuse of discretion.

BACKGROUND AND PROCEDURAL HISTORY

Leonard Carder and Patten were appointed class counsel in an action tried in 2004 before the Honorable Howard J. Schwab, with the bulk of the work on behalf of the plaintiff class performed by Leonard Carder. A judgment including attorney fees was reversed in part on appeal, and the action was remanded for determination of damages and attorney fees.

Judge Schwab was disqualified after the cause was remanded to the trial court. After further proceedings, the plaintiff class was determined to be entitled to an award of approximately $14.4 million.

A tentative agreement as to an award to class members and attorney fees was reached. Class members received a total of $14,377,881.10 in damages. Leonard Carder filed a motion for court approval of an award of attorney fees. A loadstar chart in support of the motion set forth the number of hours worked by the two law firms on the class action--11,414 by Leonard Carder and 673 by Patten, plus law clerk and paralegal charges for each firm--and based upon those figures, the loadstar chart justified total fees of $10,879,272 for Leonard Carder and $373,040 for Patten. Patten was provided copies of the moving papers one day before they were filed with the court.

Patten did not file a written objection to Leonard Carder's attorney fees motion, which was heard before the Honorable William Highberger on December 23, 2008. An attorney from Patten appeared at the hearing and indicated a preference that the total attorney fee award be paid to both law firms and the firms could resolve the issue of distribution. Patten made reference to an agreement it had with Leonard Carder for payment of an amount "that is far greater than the loadstar." After the parties disputed disposition of the attorney fees award, the court took a recess. When the case was recalled, the attorneys indicated there was an agreement that the funds would be payable to Leonard Carder as trustees for all counsel. Judge Highberger signed the parties' stipulation to reasonable attorney fees and costs in the total amount of $12,475,000 to be paid within 45 days to Leonard Carder "as trustees for distribution to all counsel in accordance with the approved stipulation."

The final provision in the stipulated judgment was that "[t]his court shall retain jurisdiction over the parties to enforce the terms of this Stipulated Judgment." Judge Highberger orally stated that if there were unresolved issues regarding distribution of the fees, "you'll find some other forum to resolve them. They don't automatically come to me as a matter of exclusive jurisdiction." All counsel expressed agreement with the court's statement regarding exclusive jurisdiction.

Leonard Carder filed the instant complaint for declaratory relief on March 19, 2009. The complaint alleged the existence of a "current controversy" and dispute over distribution of the attorney fees. Patten had received the full $373,040 it was entitled to as attorney fees in the class action, there was no agreement for fee sharing, the stipulated judgment is res judicata as to any claim by Patten to additional fees, and by cashing the check denoted as the "Final Settlement" Patten entered into an accord and satisfaction over the attorney fees dispute between Leonard Carder and Patten. Leonard Carder sought a declaration of its right to fees of $10,879,292 under the stipulated judgment.

In the factual allegations of the complaint, Leonard Carder alleged Patten did not object to the attorney fee award in the class action, but it claimed the right to 40 percent of the award. Leonard Carder denied there was an agreement in 1999, near the commencement of litigation, that Patten would receive 40 percent of the attorney fees. Leonard Carder delivered a check to Patten in the amount of $373,040 with an indication in the memo line that the check was payment for the final settlement of the class action litigation. Patten cashed the check by adding on the memo line that the check was credit toward the settlement.

Patten failed to respond to the complaint, and on July 28, 2009, the clerk entered Patten's default.*fn2 Leonard Carder filed an application for entry of a default judgment declaring its right to attorney fees by virtue of the December 23, 2008 stipulated judgment. No opposition was filed to the application for default judgment.

On October 20, 2009, the Honorable Randy Rhodes entered a five-page ruling on Leonard Carder's proposed default judgment. Judge Rhodes ruled there was no actual controversy between the parties, only an informal claim and apparent contention that Patten had the right to additional fees. As a separate ground, Judge Rhodes also ruled that Judge Highberger expressly retained jurisdiction for enforcement of the terms of the settlement, which included the attorney fees. If clarification of the award is needed, Leonard Carder ...


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