Brown v. Grimes

192 Cal. App. 4th 265, 120 Cal. Rptr. 3d 893, 2011 Cal. App. LEXIS 98
CourtCalifornia Court of Appeal
DecidedJanuary 27, 2011
DocketNo. B216650
StatusPublished
Cited by105 cases

This text of 192 Cal. App. 4th 265 (Brown v. Grimes) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Brown v. Grimes, 192 Cal. App. 4th 265, 120 Cal. Rptr. 3d 893, 2011 Cal. App. LEXIS 98 (Cal. Ct. App. 2011).

Opinions

Opinion

MOSK, J.

INTRODUCTION

For the following three reasons, the trial court refused to enforce a fee-sharing agreement between lawyers—plaintiff James L. Brown and [269]*269defendant Milton C. Grimes—arising out of cases they handled in Texas: Brown had not performed his contractual responsibility to pay Paul Ross, a third party; Brown had unclean hands because he had unethically agreed to share his fees with Ross, a former lawyer who had resigned from the bar; and the fee-sharing agreement violated applicable Texas law because the clients did not consent to the arrangement at the outset of the litigation. The trial court also ordered Brown to return fees he had already received from Grimes under the fee-sharing agreement less an amount for the reasonable value of Brown’s services. Brown does not challenge the sufficiency of the evidence supporting the trial court’s factual conclusions.

We hold as follows: the trial court did not commit legal error in excusing Grimes from any further obligation to Brown under a fee-sharing agreement because of Brown’s failure to perform one of his contractual obligations; the trial court erred in requiring Brown to repay monies already paid to him because there was not a total failure of consideration; the trial court erred in denying enforcement of the fee-sharing agreement under the unclean hands doctrine because Brown’s offending conduct did not affect the fee-sharing agreement, was not inequitable as to Grimes, and did not prejudice Grimes; even if unclean hands applied, Grimes was not entitled to any affirmative relief; and a violation of the laws of either California or Texas governing fee-sharing agreements did not require Brown to repay money received from Grimes under the fee-sharing agreement.

BACKGROUND

Ross, a former California attorney (who resigned as a result of State Bar proceedings against him), had been doing investigative work for a California attorney, Brown. Ross referred Brown cases of individuals injured by the 2005 British Petroleum (BP) refinery explosion in Texas City, Texas. As a result, Brown obtained signed retainer agreements with some of those individuals. But Brown told Ross that he, Brown, could not handle those cases as lead counsel because of other responsibilities.

Ross and Brown ultimately contacted Grimes, a California attorney, who agreed to act as lead counsel on the cases referred by Ross arising out of the BP explosion. Brown and Grimes entered into a written fee-sharing agreement, which provided as follows: “THIS CONSTITUTES THE AGREEMENT OF THE UNDERSIGNED REGARDING ASSOCIATION OF ATTORNEYS AND DIVISION OF ATTORNEYS’ FEES pertaining to the British Petroleum (‘BP’) explosion cases, arising from the March 23, 2005 explosion at the BP facilities at or near Texas City, Texas. [Grimes], the lead litigation Attorney will receive fifty percent (50%) of all net attorneys’ fees, and [Brown], the referring and associate attorney, will receive fifty percent [270]*270(50%) of all net attorneys’ fees. This fee division will not in any way increase the total fees agreed upon by Clients in the Retainer Agreement and full disclosure of the attorney fee division has been made to Clients.” There were spaces in the agreement for the clients to sign their consents, but no indication that they acknowledged or signed the agreement.

Brown referred a group of nine clients to Grimes. Ross referred the other clients directly to Grimes. Grimes ended up with a total of 53 BP explosion clients.

Brown testified at one point he was being compensated for his referrals and did not have.to perform any legal services, but later added he was also to perform legal services. After first testifying that he was to be compensated for all the cases as the referring attorney, Brown later claimed he was the referring attorney on the first nine cases and was an associated attorney on the rest of them. Grimes testified he agreed to the 50/50 split with Brown of the contingent fee instead of agreeing to the customary 25 or 30 percent referral fee, because as part of the fee-sharing agreement, Brown orally agreed to pay Ross, the “project coordinator,” out of Brown’s 50 percent of the fees. Brown denied Grimes’s account.

Grimes and Brown both were admitted to practice law in Texas pro hac vice as to the BP cases. Grimes promptly began working on the cases, and filed actions in Texas prior to obtaining from the clients signed consents to the fee-sharing agreement. Grimes had the clients sign a contingent fee agreement providing that he was to be paid a percentage of the recovery. Thereafter, clients signed an addendum acknowledging that Grimes was the lead attorney and that there would be a fee division with Brown, but the percentages of the division were not specified. Grimes said he did not consider the application of Texas requirements in connection with the fee-sharing agreement.

Grimes, with Brown’s consent, brought in a Texas law firm, The Ammons Law Firm (Ammons firm), to act as local counsel in the cases. Grimes and Brown then agreed to modify the fee-sharing agreement to provide that Brown and Grimes would each be entitled to 40 percent of the fees and that the Ammons firm would be entitled to 20 percent of the fees. This modification did not purport to affect Brown’s obligation to pay Ross. Grimes advised the clients of the involvement of the Ammons firm, and at some point, the clients signed documents reflecting that association and that the Ammons firm would receive 20 percent of the fee. Again, there was no breakdown as to the percentages of the contingency fee between Brown and Grimes. Brown did not participate in obtaining these consents.

[271]*271As the arrangement developed, it was contemplated that Grimes would have the primary responsibility in dealing with the clients and trying the cases and would be paid the fees. Grimes would then pay certain expenses and have the contractual obligation to send Brown and the Ammons firm the amounts owed them. Brown was to compensate Ross out of the amount Brown received from Grimes. Brown’s compensation was in large part for his referral of the clients, but also, in part, for whatever legal services he performed.

The relationship between Grimes and Ross deteriorated, precipitated in part by the association of the Ammons firm. In addition, according to Grimes, Ross was holding himself out as a lawyer. As a result, Grimes would no longer communicate with Ross. Grimes performed most of the legal services and considered Brown as essentially a referrer of clients.

Brown did perform what was described as some, but few, legal services and did not keep time records. According to Grimes, Ross acted as the “project coordinator,” who performed “a lot of hours in these cases” in-obtaining treating doctors for the clients, interviewing witnesses, and retaining experts.

Ross believed at the outset that Brown was to act for him in collecting Ross’s share of the fees from Grimes, but Brown denied this assertion. Ross ultimately alleged that both Brown and Grimes agreed to pay Ross’s compensation.

The BP cases began to settle. The first 13 settlements were funded, and Grimes, without Brown, met in Texas with each client whose case had settled to have the client sign papers reflecting the distributions to each of the attorneys and the client, and to give the settlement check to the client.

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Cite This Page — Counsel Stack

Bluebook (online)
192 Cal. App. 4th 265, 120 Cal. Rptr. 3d 893, 2011 Cal. App. LEXIS 98, Counsel Stack Legal Research, https://law.counselstack.com/opinion/brown-v-grimes-calctapp-2011.