Fergus v. Songer

59 Cal. Rptr. 3d 273, 150 Cal. App. 4th 552
CourtCalifornia Court of Appeal
DecidedJune 1, 2007
DocketB182525
StatusPublished
Cited by40 cases

This text of 59 Cal. Rptr. 3d 273 (Fergus v. Songer) 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
Fergus v. Songer, 59 Cal. Rptr. 3d 273, 150 Cal. App. 4th 552 (Cal. Ct. App. 2007).

Opinion

Opinion

YEGAN, J.

It all started over a quarter of a century ago with a chunk of concrete hurled at Joseph A. Songer (respondent) by Lawrence Bordan, owner of the Pismo Beach Hotel. As a result of this assault, Songer obtained a money judgment against Bordan. Collection was another matter. If there were a gold medal for “judgment avoidance,” it would go to Bordan. He delayed collection for over 20 years. Through the extraordinary efforts of his attorney, Clark Fergus (Fergus), respondent eventually became the owner of the hotel and reaped millions of dollars of profits. However, he refused to pay Fergus and he refused to honor an agreement with Fergus’s wife (wife). She had agreed to borrow money against her house to refurbish and run the hotel. Given Bordan’s penchant for litigation, this was an extremely risky decision.

Now we are presented with issues relating to attorney’s fees and breach of a partnership agreement. Unfortunately, we infuse new life into this legal saga. We have no choice unless we are to hold that a nonattomey spouse is bound by the Business and Professions Code and the Rules of Professional Conduct for attorneys. Nonattomey wives and husbands of attorneys retain their individual rights to enter into enforceable contracts after marriage.

Fergus and his wife brought the present action against respondent. They claimed that respondent had refused to pay the amount due under a contin *557 gency fee agreement, a modification of that agreement, and a partnership agreement involving wife whereby Fergus and wife would own a 50 percent interest in the hotel. Respondent filed a cross-complaint alleging that Fergus had committed legal malpractice. In a special verdict, the jury found that Fergus had not committed legal malpractice and that he was entitled, as damages, to a reasonable attorney’s fee of $1.2 million. It also found that appellants had loaned respondent $133,494, and that he was required to repay these loans. Judgment was entered on the special verdict.

The trial court granted respondent’s motion for a new trial on the issue of damages. It denied respondent’s motion for a new trial on the malpractice issue.

Fergus and wife appeal from the trial court’s order granting a new trial on the issue of damages. They also appeal from the original judgment on the jury verdict. Respondent has filed a cross-appeal from the judgment.

We reverse the order granting a new trial and reinstate the $1.2 million judgment. We reject appellants’ other contentions with one exception: We conclude that the trial court erroneously granted the motion in limine excluding evidence of the oral partnership agreement involving wife. This ruling was the functional equivalent of the granting of a nonsuit as to wife’s causes of action based on the partnership agreement. We reverse the original judgment to the extent that it, in effect, granted a nonsuit as to these causes of action. We reject respondent’s claims on the cross-appeal.

Factual and Procedural Background

In July 1981 judgment was entered on a personal injury jury verdict awarding respondent damages of $308,000 against Lawrence Bordan, owner of the Pisnio Beach Hotel. An abstract of judgment was recorded in San Luis Obispó County. As a result of this recording, a judgment lien attached on the hotel.

Almost immediately after the judgment was entered, Bordan filed for bankruptcy. For almost 20 years, the bankruptcy filing and other Bordan maneuvers obstructed the enforcemdnt of the judgment. In July 1991 respondent renewed the judgment. With interest, the amount of the renewed judgment had increased to $597,959.93.

*558 . In.late 1995 respondent met with Fergus to discuss the enforcement of the judgment against Bordan. Fergus specialized in commercial collections. Fergus and respondent signed a contingency fee agreement. Fergus agreed to represent respondent in a number of matters, including the enforcement of the judgment against Bordan. Respondent agreed to pay Fergus 45 percent “of all recoveries made.”

The contingency fee agreement did not comply with Business and Professions Code section 6147, subdivision (a)(4), which required the agreement to" include “a statement that the fee is not set by law but is negotiable between attorney and client.” 1

In June 2001 Fergus filed an application to renew the judgment against Bordan. With interest, the amount of the renewed judgment had increased to $1,189,558.01.

Respondent’s judgment lien against the Pismo Beach Hotel was junior to a deed-of trust in favor of Mary Siler. The deed of trust secured a debt of approximately $550,000. In August 2001 Fergus filed an action seeking the cancellation of the Siler deed of trust.

Respondent planned to acquire the Pismo Beach Hotel at a sheriff’s sale of the property. But he did not have the funds necessary to refurbish and operate the hotel. His total assets consisted of only $15,000 in the bank. Respondent estimated that the hotel would require improvements costing at least $300,000.

In September 2001 Fergus wrote a letter to respondent setting forth the terms of what he characterized as “a novation to our original [contingency fee] agreement.” The contingency fee would be raised from 45 to 50 percent, and Fergus agreed to “advance for a short period of time limited but substantial funds towards getting the hotel operational if the hotel is acquired through sheriff’s sale and there is a need.” Fergus wrote that he and respondent would “in effect [be] 50%-50% partners.”

*559 At the end of the letter, there is a space for respondent’s signature indicating his approval of the new contingency fee agreement. This space is blank. Fergus did not have a copy of the letter signed by respondent, and he could not remember whether respondent had signed the letter and returned it to him.

Appellants and respondent met in November 2001 to discuss respondent’s acquisition of the Pismo Beach Hotel. Wife orally agreed to provide community property funds to respondent for the purpose of refurbishing and operating .the hotel until it was sold. The funds would be derived from a home equity loan. Respondent needed the funds because he “was broke.” Wife understood that appellants “would be 50-50 partners [with respondent] in a venture” and “would be 50 percent owners of the hotel.” Wife “felt that [she] had no alternative to advancing the money because of all the time and energy that Mr. Fergus had put into the lawsuit and the hotel had to be fixed up before it could be sold . . . .” The sale would provide the funds needed to pay Fergus for his legal services. Wife requested that respondent provide documentation of their agreement. Respondent replied, “I will sign anything you want.”

On November 29, 2001, after the meeting between appellants and respondent, respondent purchased the hotel for $910,000 at a sheriff’s sale. Thereafter, appellants advanced funds to respondent “to be used towards hotel costs.” In a letter to respondent dated February 13, 2002, Fergus stated: “As I understand our agreement, we each own 50% of what we get from the Bordan properties. You hold title to any properties in trust one-half for yourself and one-half for me.

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Cite This Page — Counsel Stack

Bluebook (online)
59 Cal. Rptr. 3d 273, 150 Cal. App. 4th 552, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fergus-v-songer-calctapp-2007.