Appellant partnership sought relief from orders of the Superior Court of Los Angeles County (California). The lower court granted respondents a partial summary judgment, a motion for nonsuit, and a motion for judgment on the pleading in appellant’s suit for breach of fiduciary duty, interference with contractual relations, and conspiracy to interfere with contractual relations. Appellants sought counsel from a small business attorney.
Overview
Appellant partnership was a dissolved at-will law partnership. Respondent partners dissolved the at-will partnership. While the partnership was in existence, it entered into an agreement to represent a corporate client in litigation on a contingent fee basis. Although respondents were responsible for the litigation, the other partners expected to share in the fee from the client’s action. Respondents eventually withdrew from the firm, formed their own law firm, and were retained by the client to handle the litigation. After the client’s litigation was settled, appellant brought suit alleging breach of fiduciary duty, interference with contractual relations, and conspiracy to interfere with contractual relations. In reversing the trial judge, the court ruled that the lower court erred in holding that a partner had an absolute right to dissolve a partnership, even in bad faith. The court also found that respondents breached their fiduciary duties by failing to complete the client’s case for the dissolved partnership.
Outcome
The court reversed the partial summary judgment granted to respondent former partners based on the trial court’s erroneous ruling that a former partner had an absolute right to dissolve a partnership even in bad faith. The court also reversed the dismissal of appellant partnership’s cause of action for breach of fiduciary duty and the nonsuit order limiting appellant’s presentation of its claim for interference with contract.
Procedural Posture
Plaintiff attorney appealed a judgment from the Superior Court of the County of Los Angeles (California), which refused to enforce a fee-sharing agreement between the parties. On a cross-complaint, the trial court ordered the return of fees already paid by defendant attorney under the fee-sharing agreement, less an amount for the reasonable value of the services provided.
Overview
The attorney who sought to enforce the agreement had failed to pay a third party, who was not a lawyer, for referrals. The trial court found that the failure to pay the third party materially breached the fee-sharing agreement, thereby excusing the other attorney’s performance. The court held that although the material breach precluded the enforcement of the fee-sharing agreement, it did not give rise to an obligation to repay money already received. Consideration had been given, in the form of valuable referrals, and the fee-sharing agreement had not been rescinded under Civ. Code, § 1691, subd. (b). Absent proof of damages, repayment could not be ordered on a claim for money had and received. Any violations of Rules Prof. Conduct, rule 1-320A, or Bus. & Prof. Code, § 6152, as to the third party did not relate closely to the parties’ agreement, and the unclean hands doctrine could not be used affirmatively to recover on a cross-complaint. Regardless of whether the parties’ agreement was permissible under Rules Prof. Conduct, rule 2-200, any illegality would not, pursuant to Rules Prof. Conduct, rule 1-100(A), give rise to a cause of action for recovery of amounts already paid.
Outcome
The court reversed the judgment with respect to the cross-complaint and otherwise affirmed.