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Hood v. Gonzales

California Court of Appeals, Fourth District, First Division

December 9, 2019

Gregory S. HOOD, Plaintiff and Respondent,
v.
John-David GONZALES, Defendant and Appellant,

         [256 Cal.Rptr.3d 376] APPEAL from orders of the Superior Court of San Diego County, Eddie C. Sturgeon, Judge. Affirmed. (Super. Ct. No. 37-2017-00027246- CU-MC-CTL).

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         COUNSEL

         Daniel J. Lickel, for Defendant and Appellant.

         William Iagmin and Jon R. Williams, San Diego, for Plaintiff and Respondent.

          OPINION

         BENKE, J.

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          Defendant and appellant John-David Gonzales (Gonzales) appeals the orders of the trial court that led to the disbursement of settlement funds to respondents Michael Silvers, a law corporation (Silvers), Panish, Shea & Boyle (PSB), Michael W. Jacobs (Jacobs), Case Advance (CA),[1] Nexus Physical Therapy (Nexus), and Everence [256 Cal.Rptr.3d 377] Association, Inc. (Everence) (Silvers, PSB, Jacobs, CA, Nexus, and Everence are sometimes collectively referred to as lienholders).[2] Gonzales and lienholders (sometimes collectively defendants) were named as parties in the instant interpleader action filed by plaintiff, respondent, and stakeholder Gregory S. Hood (Hood).

          Hood filed this action to resolve the competing claims of defendants to funds from the settlement of Gonzales v. Sears Holding Corporation et al., San Diego Superior Court case No. 27-2014-00040057-CU-PL-CTL (sometimes, personal injury action), which litigation was filed by Silvers in November 2014 after Gonzales sustained personal injuries in a bicycle accident. Gonzales in July 2015 agreed in writing to have PSB associate in as counsel. Silvers/PSB settled a portion of the personal injury action for $100,000.

         After Silvers/PSB withdrew as counsel of record in the personal injury action, Gonzales retained Jacobs, who obtained an additional settlement of $299,999.99 pursuant to an offer to compromise under Code of Civil Procedure section 998 (section 998). Gonzales, however, refused to sign the settlement agreement and endorse the $299,999.99 check (sometimes, settlement check), terminated Jacobs as legal counsel, and retained Hood for the " ‘determination and distribution’ of the settlement funds."

          Despite his promise to do so, Gonzales again refused to endorse the settlement check. Within days after retaining Hood, Gonzales terminated him as legal counsel. Hood in response informed Gonzales that, if he did not promptly retain new counsel to allow for the transfer of the settlement check

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and other settlement funds in Hood’s possession, Hood would file an interpleader action, based on Hood’s concern there were multiple claimants to the settlement funds and the settlement check would "expire" and not be honored by a bank.

         Hood filed the instant action, and turned over the settlement funds and settlement check to the court clerk, after receiving no response from Gonzales. Hood subsequently moved for an appointment of an elisor[3] to endorse the check, and for dismissal from the action and an award of costs and fees of $7,772.50 pursuant to Code of Civil Procedure section 386.5, which relief the court granted on September 14, 2017 (sometimes, elisor order).

          In anticipation of an October 27, 2017 hearing, the lienholders stipulated to a proposed distribution of the settlement funds among defendants. At the October 27 hearing, Gonzales (through his fifth attorney of record) agreed with the amounts owed to Silvers, PSB, and CA under that stipulation. Gonzales, however, disputed the amount sought by Jacobs, Nexus, and Everence. He also disagreed with the court’s September 14 elisor order awarding costs and fees to Hood.

         Based on the proposed stipulation of the lienholders and Gonzales’s concession that Silvers, PSB, and CA were entitled to reimbursement of costs and loans they had advanced him, the court made a ruling from the bench, which resulted in its November 30, 2017 order (sometimes, distribution order). After reducing Jacobs’s [256 Cal.Rptr.3d 378] award under the proposed stipulation by $40,000 and increasing Gonzales’s award by that same amount, the court distributed the funds as follows: Silvers ($60,77.03); PSB ($50,884.58); Jacobs ($119,993); CA ($22,217.41); Nexus ($493.06); Everence ($500)[4] ; and Gonzales ($119,671.03.)[5]

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          Gonzales makes a series of arguments in requesting this court reverse the elisor and distribution orders, including arguing for the first time on appeal that the trial court prejudicially erred in allowing the interpleader action to proceed as the vehicle or means to distribute the settlement funds to defendants (including himself); and in appointing an elisor to endorse the settlement check, without first ordering him to do so. As we explain, we find these arguments and others raised by Gonzales unavailing and thus affirm the court’s orders.

          FACTUAL AND PROCEDURAL SUMMARY

          As noted, Gonzales retained Silvers after Gonzales suffered injuries in a bicycle accident. During the course of representing Gonzales, Silvers advanced $60,744.03 in loans and costs. Once PSB associated into the personal injury action, it too advanced loans and costs to Gonzales in the amount of $50,844.58.

         In November 2016, Gonzales agreed to settle a portion of his personal injury action. At the time he was represented by Silvers/PSB. In late January 2017, counsel for settling party Cano Trading Corporation dba North Park Bikes (Cano) transmitted a $99,531.12 check to PSB, which it deposited in its client trust account.[6] Following the Cano settlement, Silvers/PSB withdrew their joint representation of Gonzales.

          As outlined in a September 15, 2017 letter addressed to the trial judge, which Gonzales attached to a September 20, 2017 declaration he filed with the court, Gonzales stated that he had not "fired" Silvers/PSB and that they withdrew as legal counsel in what he described as a "carefully calculated, and aggressive plan to sabotage [his] case," which he alleged they continued to do through their "illegal and unethical collusion ... with any [a]ttorney associated with [his] case." (Emphasis in original omitted.) Gonzales also accused Silvers/PSB of forcing him to "sign an illegal, unethical, improper, invalid ‘Affirmation Agreement on March 30, 2017— $100,000,’ " which affirmed his obligation to reimburse Silvers/PSB for loans and costs they had in the personal injury case.

          Gonzales agreed that $50,000 of the $100,000 Cano settlement funds (minus the [256 Cal.Rptr.3d 379] small lien amount) would go to Jacobs, his then "new attorney," who agreed to advance Gonzales $5,000 out of such funds, with the balance to be placed in Jacobs’s client trust account to "cover costs and expenses associated with the ... ongoing litigation." In addition to advancing $5,000

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to Gonzales, Jacobs expended $7,755.50 in costs, which amount he deducted from the funds, leaving a balance of $37,244.50. PSB kept the rest of the Cano settlement funds in its own client trust account "to cover in part the amounts currently owed" Silvers/PSB.

         Jacobs, with the consent of Gonzales, made a section 998 offer to compromise to Pacific Cycle, Inc. (PCI), the remaining defendant in the personal injury action. Gonzales later sought to rescind that offer after it had been accepted by PCI. In his September 20 declaration, Gonzales stated that there had been more than enough time for the offer to be rescinded; that Jacobs "ignored" his requests to do so; and that he also ended up terminating Jacobs as legal counsel.

          Gonzales explained his reasons for terminating Jacobs, and subsequently Hood, in his September 20 declaration, stating as follows: "Jacobs representation should be of the most concern to your Honor. [¶] a) As I mentioned on September 14, 2017, for over an hour JACOBS on May 3, 2017 ... berated me, called me a liar, spoke unmentionable phrases which then lead to his obsession with his Attorney Fees, and to get out of my case. [¶] b) JACOBS colluded with the Defendant #1 Legal team on many issues, and had the Defendant #1 Legal Reprsentative [sic ] issue the PCI check - $299,999.99 in JACOBS [sic ] name only. The check then had to be reissued, requiring JACOBS and Plaintiffs [sic ] signature.

          "c) JACOBS had the nerve to have an Expert contact me out of the blue, in order to justify JACOBS [sic ] 998 Offer. [¶] d) When called out, JACOBS agreed to reduce his Attorney Fees in writing to 12-25% of the PCI - $299,999.99 via a May 22, 2017, ‘Addendum to Retainer Agreement,’ which is not mentioned in HOODS [sic ] Interpleader action. [¶] e) JACOBS then colluded with HOOD to pursue Attorney Fees of $160,000.00, which is mentioned in HOODS [sic ], July 26, 2017, Interpleader action. Previously, HOOD in writing stated JACOBS was only entitled to ‘Quantum meruit.’

         "The FIRING of Attorney JACOBS and HOOD was solely due to their incompetence, and unwillingness to protect and secure my rights as a Litigant. What is most concerning, is even after both were FIRED, they continued to act in their best interest by filing various actions with the court."[7]

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          As noted, Hood was the fourth attorney Gonzales hired to represent him in the personal injury action. Gonzales retained Hood in June 2017 to facilitate the distribution of settlement funds from the personal [256 Cal.Rptr.3d 380] injury action in light of the competing claims to certain of those funds by Gonzales, his prior attorneys of record, and others, as noted. Jacobs transferred $37,244.50 to Hood, the amount left in Jacobs’s client trust account, and endorsed the settlement check over to Hood’s client trust account. Based on Gonzales’s representation that he would endorse the settlement check for deposit into Hood’s client trust account, and per their agreement on June 30, 2017 that Hood should "pay himself," Hood in early July 2017 transferred $4,500 from his client trust account to his business account. Despite his earlier agreement to do so, Gonzales again refused to endorse the settlement check from PCI.

          In mid-July 2017, Gonzales terminated Hood. In response, Hood informed Gonzales that he either would agree to transfer to a new attorney retained by Gonzales the money remaining in Hood’s client trust account, $32,744.50, and the settlement check, or file an action in interpleader. When Gonzales did not reply, Hood in late July filed the instant interpleader action, and deposited the balance of the Cano settlement funds from his trust account with, and delivered the unendorsed settlement check to, the court clerk. As noted ante, Hood named Gonzales, and the lienholders as defendants in the instant action.

         On or about August 10, 2017, Hood moved for the appointment of an elisor. (See Super. Ct. San Diego County, Local Rules, rule 2.5.11 (rule 2.5.11), discussed post. ) At the same time, as stakeholder Hood requested he be awarded attorney fees and discharged from the action pursuant to Code of Civil Procedure sections 386.5 and 386.6, discussed post. Hood on August 18, 2017 served defendants by e-mail with all moving papers, including the "date, time, department and nature of said hearing," which was scheduled for September 14, 2017.

          Gonzales appeared at the unreported September 14 hearing in propria persona. The court in its elisor order dated that same day granted Hood’s request for appointment of an elisor; directed the clerk of the court to endorse the settlement check and deposit the money into a trust account; awarded Hood attorney fees and costs of $7,772.50, which number was derived from the declaration of Hood in support of his application (19.3 hours x $375 per

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hour + $435 filing fee + $100 in service of process fees/anticipated additional work); and discharged Hood from the action. The court set a status conference for October 6, 2017.

          As noted ante, shortly thereafter Gonzales filed his September 20 declaration, but did not otherwise respond to the interpleader complaint, unlike Silver, PSB, and Jacobs. The court at the unreported October 6 status conference reset the matter for October 27, 2017 as an "OSC re: Disbursement of Funds" and directed counsel to ensure a court reporter would be present for that hearing. The minute order of the October 6 hearing shows Gonzales again attended in propria persona. On or about October 20, PSB deposited with the court $49,531.12 from its client trust account, which represented the balance of the Cano settlement funds in its possession.

         Because Gonzales had still not answered the complaint, Hood on October 23 requested entry of default and court judgment against Gonzales, which request was subsequently denied.[8] Gonzales filed an answer [256 Cal.Rptr.3d 381] to the interpleader complaint on October 27, the same day as the hearing. As noted ante, the lienholders (i.e., Silvers, PSB, Jacobs, CA, Nexus, and Everence) submitted a proposed stipulation regarding the distribution of the settlement funds.

          Attorney Daniel Lickel represented Gonzales at the October 27 hearing, after substituting into the case that same day. Although Gonzales claimed his September 20 declaration was an "answer" to the complaint, he nonetheless filed a formal answer out of an abundance of caution. In his answer, Gonzales admitted that it was "now the Court’s job to determine whether there are valid liens held by the other claimants and in what amount if any." Gonzales also asserted various affirmative defenses against his four prior attorneys of record.

          At the hearing, Gonzales asked to be heard first in order to "short circuit this a little bit." Gonzales (through counsel) stated: "So we did review the stipulation; my client and I reviewed the stipulation. First of all, we don’t have any dispute with the amount that Case Advance wants. That’s $22,217.41. We don’t have any dispute with respect to what Mr. Silvers wants, which I understand to be $60,744.03. We don’t have any dispute as to what [PSB] wants.... [¶] In any event, we’re okay with the [$]50,884.58 that they want. So that— and based on the stipulation, it’s our understanding that the parties do not dispute $79,671.03 going to my client. So my client would be willing to stipulate to the release of those funds to the Court."

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Gonzales, however, did dispute the amount claimed to be owed to Jacobs, Nexus, and Everence in the proposed stipulation, and the amount previously paid to Hood.

         With respect to Jacobs, Gonzales argued his request for $160,000 was excessive because Jacobs began representing Gonzales after the Cano settlement of $100,000 had been completed. Gonzales also argued that Jacobs "convinced" him to make the section 998 offer in an amount Gonzales "was not entirely comfortable with"; that on May 15 Gonzales e-mailed Jacobs requesting that offer be withdrawn because it was too low; that on the following day, PCI accepted the offer; that Jacobs had suggested to Gonzales in connection with the offer that, if Gonzales went forward with it, Jacobs would take significantly less in fees than the amount stated in the retainer agreement, which lesser amount was not reflected in the lienholders’ proposed stipulation; and that Jacobs, to be paid anything, needed to file a cross-complaint ...


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