Opinion
B192827
4-25-2007
LAW OFFICES OF ROGER C. HSU, Plaintiff and Appellant, v. MARK CHIAN et al., Defendants and Respondents.
Law Offices of Roger C. Hsu, Roger C. Hsu and Joseph M. Liu for Plaintiff and Appellant. Law Offices of Max C. Chiang and Max C. Chiang for Defendants and Respondents.
NOT TO BE PUBLISHED
A client signed a retainer agreement giving its lawyer both a flat fee and a contingency fee and a lien for the payment of the contingency fee against "any property or money obtained" in the collection action contemplated by the retainer agreement. The client prevailed in the collection action but filed a satisfaction of judgment before any money was recovered pursuant to the judgment, and the lawyer then sued both his former client and the defendants in the collection action. The lawyer obtained a default judgment against the former client (made worthless by the clients bankruptcy) but lost his claims against the other defendants. The lawyer appeals. We affirm.
FACTS
A.
In July 2003, King Case Industrial Co., Ltd., a Taiwanese corporation, retained Roger C. Hsu to represent it in a collection case, King Case Industrial Co., Ltd. v. Lemel International Corp., Mark Chian, and Diana Chian (Super. Ct. L.A. County, No. BC279956 (the collection case). Hsus retainer agreement obligated King to pay Hsu "a flat rate of $10,000.00 plus 45 [percent] of the amount of the net recovery" if King recovered all of the unpaid amounts it sought ($464,000, including interest), or the $10,000 flat fee plus 40 percent of the net recovery if he won less than the full amount. The retainer agreement gave Hsu a lien "for payment of fees, costs, and disbursements upon any property or money obtained in whole or in part paid unto [King] by reason of the services provided [by Hsu]."
The collection case was tried to the court in September 2003, with closing arguments on October 16. On October 30, the court ruled in favor of King, awarding it $464,000, and a judgment in that amount was entered on November 24. Shortly thereafter, Hsu learned that on October 17 (the day after closing arguments), two of the defendants (Mark and Diana Chian) transferred two parcels of real property to their family trust, and that the trust then transferred the properties to Agape Hedge LLC (which was owned by the trust, and both entities are included in our subsequent references to the Chians). In January 2004, the Chians appealed from the judgment in the collection case.
B.
In March 2004, King (still represented by Hsu) filed a second lawsuit against the Chians, alleging a fraudulent transfer to avoid the judgment in the collection case. (King Case Industrial Co., Ltd. v. Lemel International Corp., Super. Ct. L.A. County, No. KC043799 [the fraudulent transfer case].) Shortly before trial, the lawyer representing the Chians in both cases (Max C. Chiang) told Hsu that the parties had settled the fraudulent transfer case among themselves. Hsu, who had been working on the appeal in the collection case and getting ready for trial in the fraudulent transfer case, knew nothing about a settlement.
In February 2005, Hsu appeared for the final status conference in the fraudulent transfer case to find his client (Kings president, Peter Lu) present with a new lawyer. Hsu told the court he was unwilling to substitute out of the case because King owed him his fees and costs, and a continuance was granted so Hsu could brief the issue. On March 1, Hsu filed and served a "notice of lien" in both cases. Hsu appeared in court again on March 10 and substituted out of the case; that same day, King dismissed the fraudulent transfer case with prejudice. On April 21, Division Eight of our Court affirmed the judgment in the collection case. (King Case Industrial Co., Ltd. v. Lemel International Corp. (Apr. 21, 2005, B172525) [nonpub. opn.].) On April 25, King filed an acknowledgement of satisfaction of the judgment in the collection case.
The notice of lien stated that, "by virtue of a written fee agreement with [King, Hsu] has and claims a lien ahead of all others on [Kings] claims and causes of action asserted herein, and on any settlement or on any judgment rendered in favor of [King], to secure payment for legal services rendered and costs and expenses advanced on behalf of [King], all in accordance with the terms of the fee agreement aforesaid." Although a notice of lien is not essential to the creation of a lien (an attorneys lien is created at the time the fee agreement is executed), the notice assists "a discharged attorney who faces the risk that his former client may `settle around the lien." (Carroll v. Interstate Brands Corp. (2002) 99 Cal.App.4th 1168, 1172-1176.)
C.
Meanwhile, on March 2, 2005, Hsu sued King (for breach of contract, conspiracy, and declaratory relief) and the Chians (for intentional interference with a contractual relationship, conspiracy, fraudulent transfer, quiet title, declaratory relief, and abuse of process), seeking injunctive and other relief to enforce his lien. In his second amended complaint, Hsu alleged that the Chians had contacted King directly and induced it to breach its fee agreement with Hsu and to ignore Hsus lien by settling both cases without Hsus knowledge or involvement.
An independent action on an attorneys lien is required to establish its existence, determine its amount, and enforce the lien. (Law Offices of Stanley J. Bell v. Shine, Browne & Diamond (1995) 36 Cal.App.4th 1011, 1020.)
The Chians answered but King did not and its default was entered in May. On July 8, the court entered a default judgment (drafted by Hsu) against King and in favor of Hsu, declaring that Hsu "be assigned [a] 45% ownership interest in the [j]udgment entered in the [collection case]" and "be allowed to immediately enforce [his] 45% ownership interest independent of King[s] 55% interest[] in the [j]udgment entered in the [collection case]." By this time, King was in bankruptcy and "no longer exist[ed]," and Hsu was unable to find Lu (Kings principal). As a result, Hsu never sought or obtained monetary relief from King.
D.
Hsus case against the Chians was tried to the court in May 2006, at which time Hsu presented evidence of his retainer agreement with King, the judgment in the collection case, the Chians property transfers (and the absence of consideration for those transfers), the amounts due to Hsu for his fees and costs, and the notices of Hsus lien. In addition, Hsu testified that when he saw Lu at the final status conference in the fraudulent transfer case, Lu told him he was "sick and tired of this case [and did not] want to pursue it anymore."
For their part, the Chians testified they had not made or authorized anyone else to make any deal with King or Lu, and they insisted they had not given anything of value to King or Lu (or received anything from them) during 2003, 2004 or 2005. They claimed the collection case was Kings effort to collect the purchase price for goods it sold and shipped to Paraguay which had been seized by the Paraguay government — but the goods were released and returned to King in late 2004, at which point King was satisfied and decided to end all legal proceedings (and gave the Chians the satisfaction of judgment).
The trial court gave judgment to the Chians, noting there was "no evidence of the recovery of the full [or any] amount of all of the unpaid invoices" as required by the retainer agreement and the attorney lien. Indeed, "no money [had] change[d] hands" between King and the Chians, and the satisfaction of judgment "reflect[ed] [Kings] acceptance of payment or performance other than that specified in the [collection] judgment." The court also found there was no conspiracy, and no interference by the Chians with Hsus contract with King. And although the court believed the Chians property transfers were fraudulently made to avoid the judgment in the collection case, the court found that Hsu had no standing to complain because the judgment was satisfied without the payment of money. Hsu appeals from the judgment thereafter entered (and from the order denying his subsequent motion to vacate the judgment).
The court commented: "I empathize and I feel that . . . Mr. Hsu has been abused in this case. He has done a lot of work for his client, King . . . . He recovered a very, very large judgment on [its] behalf and [is] kind of left holding the bag, but I dont believe I have any choice other than to find for [the Chians]." The court also noted that Hsus claim was "based upon an allegation that he somehow has 45 percent of [the collection] judgment even though the judgment was satisfied. [¶] Theres a couple of problems with that, unfortunately, the judgment was satisfied; 45 percent of a satisfied judgment is 45 percent of nothing. To the extent that the default judgment that [Hsu] recovered in this case will indicate that [Hsu] has a 45 percent interest in the unsatisfied judgment, I have two observations. [¶] One, the judgment that was obtained in this case was a default judgment. It was based upon a judgment that was submitted by [Hsu]. Im not so sure whether or not that judgment is subject to being challenged as void, but in any event, its nothing more than a 45 percent interest in nothing . . . ."
DISCUSSION
In a series of related arguments, Hsu contends that, at the time the satisfaction of the collection judgment was filed, King "did not own 100 [percent] of that judgment" — and the satisfaction of judgment was thus "null and void." It follows, according to Hsu, that the trial court was wrong when it found that the satisfaction of judgment left nothing to which his lien could attach. He insists he is entitled to recover 45 percent of $464,000 from the Chians. We disagree.
The flaw in Hsus argument, as noted by the Chians, is that Hsu presumes he had a lien on the collection judgment itself — when all he had was a lien on any recovery under that judgment. As the retainer agreement itself provided and case law confirms, Hsu had a lien on 45 percent of the amount of the net recovery in the collection case. (Epstein v. Abrams (1997) 57 Cal.App.4th 1159, 1169 [an attorneys lien against a clients prospective recovery vests in the attorney an equitable interest in the clients recovery]; Siciliano v. Firemans Fund Ins. Co. (1976) 62 Cal.App.3d 745, 752; Bandy v. Mt. Diablo United Sch. Dist. (1976) 56 Cal.App.3d 230, 235.) Substantial evidence supports the trial courts finding that King did not recover anything on the unpaid invoices or the collection judgment.
Because this matter is before us on Hsus appeal from the judgment in favor of the Chians, we do not address the propriety of Kings actions vis-à-vis Hsu or discuss any remedies Hsu has, or might have had, against King. (But see Epstein v. Abrams, supra, 57 Cal.App.4th at pp. 1169-1170 .)
Because no money changed hands between King and the Chians, there was no recovery to which Hsus lien could have attached, and there is no evidence of any sort of wrongful conduct by the Chians and thus no evidence to support Hsus conspiracy claim (Hsus insistence that King and the Chians had an undisclosed secret settlement finds no evidentiary support in the record). Similarly, there is no evidence of fraud in the inducement, execution or filing of the satisfaction of judgment.
DISPOSITION
The judgment and post-judgment order are affirmed. Respondents are entitled to their costs of appeal.
We concur:
MALLANO, Acting P.J.
ROTHSCHILD, J.