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Karton v. Dougherty

California Court of Appeals, Second District, First Division

November 14, 2014

DAVID S. KARTON, A LAW CORPORATION, Plaintiff and Appellant,
v.
WILLIAM RUSSELL DOUGHERTY, Defendant and Appellant.

[As modified Dec. 12, 2014.]

APPEALS from a judgment and orders of the Superior Court of Los Angeles County. No. BC206243 Ralph W. Dau, Judge.

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[Copyrighted Material Omitted]

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COUNSEL

The David Firm, Henry S. David, Dana J. Emmer; Greines Martin Stein & Richland, Robert A. Olson, and Edward L. Xanders for Plaintiff and Appellant.

Law Offices of James T. Duff, James T. Duff; Musick, Peeler & Garrett, and Cheryl A. Orr for Defendant and Appellant.

OPINION

ROTHSCHILD, P. J.

David S. Karton, A Law Corporation (Karton) sued its former client, William Russell Dougherty, for unpaid fees and costs. In 1999, Karton obtained a default judgment against Dougherty in the amount of $86,676.88, including an award of attorney fees pursuant to the parties’ retainer agreement. Karton thereafter pursued enforcement of the judgment and obtained awards of the attorney fees incurred in those enforcement efforts.

On appeal from the denial of Dougherty’s motion to vacate a 2007 attorney fees award, we directed the superior court to vacate that award and held that the 1999 default judgment was void on the face of the record because it granted relief that exceeded what was demanded in Karton’s complaint. (David S. Karton, A Law Corp. v. Dougherty (2009) 171 Cal.App.4th 133, 136 [89 Cal.Rptr.3d 506] (Karton).) We directed the superior court to vacate the judgment nunc pro tunc, and we remanded for further proceedings.

On remand, after vacating the default judgment as directed, the court granted Dougherty’s motion to vacate the default. The matter proceeded to arbitration pursuant to Business and Professions Code section 6201, and the arbitrators determined that Dougherty had already repaid his entire contractual debt to Karton, including interest, before the arbitration took place. Karton sought and obtained trial de novo, and the superior court reached the same conclusion as the arbitrators: The debt was paid in full, including interest, no later than March 2008. The court accordingly entered judgment awarding Karton no relief on any of its claims.

On the parties’ cross-motions to be determined the prevailing party, however, the court ruled that Karton was the prevailing party for purposes of

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both costs and contractual attorney fees. The court awarded Karton more than $1 million in attorney fees on that basis.

Dougherty timely appealed, and we reverse. As a matter of law, Dougherty is the prevailing party for purposes of both costs and contractual attorney fees.

BACKGROUND

The history of this long-running dispute is set forth in detail in our opinion in Karton. In very brief summary: In 1996, Dougherty retained Karton to represent him in a marital dissolution action. The retainer agreement contained the following attorney fees provision: “In the event legal services are commenced in connection with the enforcement of this agreement or the collection of the fees and/or the costs, whether in the form of a demand, a court action, or an arbitration proceeding, the prevailing party (to the extent permitted by law) shall be entitled to legal fees for services, as well as court and/or arbitration costs.” (Karton, supra, 171 Cal.App.4th at p. 136.)

In 1999, Karton filed suit against Dougherty, seeking to recover $65, 246.63 in unpaid fees and costs, plus interest. On August 11, 1999, the trial court entered a default judgment against Dougherty for a total of $86, 676.88, including accrued prejudgment interest, attorney fees, and costs. (Karton, supra, 171 Cal.App.4th at pp. 138-139.)

By October 4, 1999, Karton had collected approximately $56, 000 in partial satisfaction of the judgment. (Karton, supra, 171 Cal.App.4th at p. 139.) Thereafter, Karton pursued further collection efforts against Dougherty in California, Pennsylvania, and Tennessee, and Dougherty resisted those efforts. In addition, Karton twice returned to the superior court to request awards of the attorney fees incurred in enforcing the judgment. Both times, Karton failed to give Dougherty notice that it was seeking such relief, and both times the requests were granted in their entirety. The second such award, entered in February 2007, increased the principal amount of the judgment to more than $1.1 million. (Id. at pp. 135-136, 141-144.) After learning of the order granting the February 2007 fee award, Dougherty filed a motion for relief from that order and then, after the motion was denied, appealed from the denial of his motion.

In a published opinion filed on February 17, 2009, we reversed. We concluded that the trial court had abused its discretion by denying Dougherty’s motion for relief from the order granting the February 2007 fee award, because Dougherty was entitled to notice of Karton’s application for that award. (Karton, supra, 171 Cal.App.4th at p. 149; see generally id. at

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pp. 145-149.) We further concluded that the original default judgment was void on the face of the record because it awarded relief that exceeded the demand in Karton’s then-operative first amended complaint.[1] (171 Cal.App.4th at pp. 149-151.) We accordingly directed the trial court “to enter an order vacating and setting aside, nunc pro tunc, the default judgment entered on August 11, 1999.” (Id. at p. 152.) We also noted that Dougherty had argued that “the default itself, and not merely the default judgment, is void because [Dougherty] timely requested arbitration before the default was entered.” (Id. at p. 151, fn. 17.) We expressed no opinion on ...


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