APPEAL from a judgment of the Superior Court of Los Angeles County, Alan S. Rosenfield, Judge. (Los Angeles County Super. Ct. No. BC402090)
The opinion of the court was delivered by: Mallano, P. J.
CERTIFIED FOR PUBLICATION
Reversed with directions.
Plaintiff, an attorney, represented a client, also an attorney, in a prior civil suit against the client's employer for discrimination, harassment, retaliation, wrongful termination, and other related claims. By motion, plaintiff withdrew from the case at the beginning of trial. The client could not find another attorney to represent her, and the trial court dismissed the suit.
In November 2008, plaintiff filed the present action, alleging that the client had breached the parties' retainer agreement. The complaint alleged that, under paragraph 5 of the agreement, plaintiff was entitled to a "combined hourly and contingency based rate," and under paragraph 7, he was entitled to costs. The complaint alleged that plaintiff "ha[d] been damaged in the sum of $44,082.22, plus interest."
On March 8, 2011, the case was called for trial by jury. On March 9, 10, and 11, 2011, plaintiff presented evidence and then rested. On March 11, he moved to amend the complaint to conform to proof, seeking $312,260 in attorney fees and $16,851.95 in costs, for a total of $329,111.95. The amendment was based on a new theory of liability: Under paragraph 9 of the retainer agreement--which was not mentioned in the complaint--plaintiff was entitled to recover for "all time spent" on the prior case because he had withdrawn for good cause. The client opposed the amendment. The trial court granted the motion to amend. The jury awarded plaintiff $140,056.95.
On appeal, the client contends that the trial court abused its discretion by permitting the amendment. We agree. The amendment was made on the fourth day of a five-day trial without any reason for the delay. If plaintiff had wanted to recover under paragraph 9 of the retainer agreement for all time spent on the case--800.65 hours according to his testimony--at $400 per hour, he could have easily included the appropriate allegations in the original complaint or moved to amend the complaint before trial. The client did not see a need to be represented by counsel or to retain an expert on attorney fee awards until the complaint was amended on the day before the case was submitted to the jury. By then, it was too late. Nor had the client attempted to determine through discovery whether plaintiff had actually spent 800.65 hours on the case or whether that was a reasonable amount of time. And the delay in making the amendment deprived the client of the ability to research adequately whether paragraph 9 was an unenforceable provision in the contingency fee agreement. We therefore reverse the judgment and remand for a new trial.
We begin with a description of the prior suit and administrative proceedings, and then discuss the history of the present case.
A. Prior Lawsuit and Administrative Proceedings
Ernestine Forrest, an attorney with the California Department of Corporations (Department), was suspended by the Department in early 2000 and then discharged during the period of suspension. She appealed the discharge to the State Personnel Board, which issued a decision in December 2002 ordering her reinstatement and awarding her three years of backpay. Forrest returned to work. Meanwhile, the Department filed a petition for a writ of administrative mandate, seeking to set aside the board's decision (Department of Corporations v. California State Personnel Board (Super. Ct. Sac. County, 2005, No. 04CS01424)). Ultimately, the superior court denied the petition.
On February 24, 2003, Forrest filed suit, in propria persona, against the Department, alleging wrongful termination, race and gender discrimination, harassment, retaliation, and breach of contract (Forrest v. State of California (Super. Ct. L.A. County, 2003, No. BC290873)). Before filing suit, Forrest had been declared a vexatious litigant.*fn1 The original complaint was never served.
After Forrest filed the complaint, she retained David J. Duchrow, Esq., to represent her. On May 14, 2003, Forrest executed an "Attorney-Client Fee Contract" with Duchrow concerning his representation of her in the suit against the Department. The contract stated in part:
"1. CONDITIONS. This Agreement will not take effect, and the Office will have no obligation to provide legal services, until you return a signed copy of this Agreement. . . .
"2. SCOPE OF SERVICES. You are hiring the Office to represent you in obtaining compensation and other relief for your damages, incurred in your employment with the State of California, Department of Corporations. This Agreement covers all legal representation through trial and post-trial motions, but does not cover appeals, nor judgment or settlement collection matters. [¶] . . . [¶]
"3. CLIENT'S DUTIES. You agree to be truthful with the Office, to cooperate, to keep us informed of developments, to abide by this Agreement, to pay our bills on time and to keep us advised of your address, telephone number and whereabouts. [¶] . . . [¶]
"5. BILLING RATES FOR ATTORNEYS FEES. Services will be rendered on a combined hourly and contingency basis. That is, you will be charged an hourly rate, as set forth below, plus an amount which is contingent upon, or depends upon, the monetary recovery from your case. Each part of the fee is described below.
"HOURLY RATE: You will be charged four hundred dollars ($400.00) per hour for time spent in representation of you on this action, including time spent on meetings, telephone calls, drafting and reviewing pleadings, motions and correspondence, travel time, and all other actions taken on your behalf. You will be billed in units of one tenth (.1) hour. Long distance calls (outside 213 or 310 area codes) will be billed a minimum of two tenths (.2) of an hour. Any appearance outside of Los Angeles County will be billed a minimum of one hour.
"MAXIMUM HOURLY FEE: The total amount of attorney fees billed on an hourly basis will be eight thousand dollars ($8,000.00).
"In calculating the maximum hourly fee, hours billed but not charged will not be included. For example, if [y]ou are billed for a telephone call (i.e., it appears on your billing statement), but you are not charged a fee for the call, the time spent on that call will not count toward the maximum hourly fee, since no fee was charged for the time.
"CONTINGENCY RATE: In addition to the hourly rate in the preceding paragraph, you will be charged an amount which depends upon (i.e., is contingent upon) a monetary recovery. Any contingency fee is negotiable and is not set by law (except that in any claims against a health care provider for professional negligence, the contingency fee may not exceed limits provided in California Business & Professions Code Section 6146).
"Bearing such advice in mind, you agree to pay a contingency fee equal to forty percent (40%) of the gross recovery. [¶] . . . [¶]
"Costs and disbursements incurred and advanced in connection with the prosecution or settlement of your claim shall be reimbursed after the contingency fee is computed. . . . [¶] . . . [¶]
"7. COSTS AND OTHER CHARGES. Various costs and expenses will be incurred in performing legal services under this Agreement. You agree to pay for those costs and expenses in addition to the fees. It is the policy of the Office not to advance costs, and it remains your responsibility to pay the costs as they are incurred. If the Office does advance a cost, the Office does not thereby waive its right to seek reimbursement for costs prior to recovery of a settlement of [sic] judgment.
"Common costs include costs imposed by administrative agencies, court filing fees, facsimile transmission (FAX) costs, to be billed at one dollar ($1.00) per page; photocopying, to be billed at fifteen cents ($0.15) per page; mileage, to be billed at thirty-five cents ($0.35) per mile; jury fees; witness fees, including expert witness fees; substantial long distance telephone calls; messenger and delivery fees; court reporter and transcript costs; postage including certified mail costs; parking and other local travel expenses; and other costs. [¶] . . . [¶]
"8. BILLING STATEMENTS. You may be sent periodic statements for fees and costs incurred. Each statement will be due within ten calendar days of its date. You may request a statement at intervals of no less than thirty (30) days. If you do, the Office will provide a statement within ten (10) days. If your account becomes 'past due' for four months, you may be charged interest at the annual percentage rate of 12% simple interest, calculated monthly, plus any amounts incurred as costs or attorney's fees, in collecting past due amounts.
"If the Office represents itself in collecting past due fees or costs from you, you acknowledge that the Office will be entitled to an attorney fee equal to four hundred dollars ($400.00) per hour for such efforts.
"9. DISCHARGE AND WITHDRAWAL. You may discharge the Office at any time. The Office may withdraw with your consent or for good cause. Good cause includes your material breach of this Agreement, your refusal to cooperate with us or to follow our advice on a material matter, such as unreasonable refusal to accept a settlement, or any fact or circumstance that would render continuing representation unlawful or unethical.
"If you do discharge the office, prior to a settlement or judgment being obtained, or if there is good cause, as described above, for this Office to withdraw, the Office reserves the right to bill for all time spent in the prosecution of your matter." (Italics & last boldface added, underscoring in original.)
The parties refer to this retainer agreement as "Contract 1"; we refer to it as the "Litigation Agreement." As we discuss below, the lawsuit governed by the Litigation Agreement was dismissed involuntarily after Duchrow filed a successful motion to withdraw from the case and Forrest could not find another attorney.
On December 6, 2003, Forrest and Duchrow executed another "Attorney-Client Fee Contract." This second contract related to Duchrow's representation of Forrest in the administrative proceedings before the State Personnel Board. The contract provided that Forrest would pay Duchrow $275 for each hour he spent on the matter and also pay for costs. The contract recited that Forrest would be sent periodic billing statements for attorney fees and costs; payment was due within 10 days. If the bill was not paid within 30 calendar days of the date of the statement, Duchrow reserved the right to charge "interest at the annual percentage rate of twelve percent, or one percent per month." The parties refer to the second retainer agreement as "Contract 2"; we refer to it as the "Administrative Agreement."
Duchrow revised the original complaint, alleging claims under the California Fair Employment and Housing Act (FEHA) (Gov. Code, §§ 12900-12996) for discrimination (id., § 12940, subd. (a)), harassment (id., subd. (j)), retaliation (id., subd. (h)), and failure to remedy discrimination and retaliation (id., subd. (k)). The amended complaint also alleged common law claims for wrongful termination in violation of public policy and intentional infliction of emotional distress. It was filed and served on June 27, 2003. While the suit was pending, the Department discharged Forrest a second time.
The case was assigned to Judge Thomas L. Willhite, Jr. "[It] was set for trial in August 2004, and then continued to December 7, 2004. Prior to the December 7 trial date, Duchrow informed Forrest by facsimile that he would be withdrawing as counsel, but he did not in fact withdraw at that time. The December trial date was continued to January 18, 2005, then January 31, and then February 7. On February 4, 2005, Duchrow informed ...