Opinion
B218021 c/w B218022 B218024 B220149 B220150 B220151
10-05-2011
WERTHEIM, LLC, et al., Plaintiffs and Appellants, v. OLIVER OMIDVAR et al., Defendants and Respondents.
Law Offices of Robert S. Besser, Robert S. Besser; Law Office of Anthony Kornarens and Anthony Kornarens for Plaintiffs and Appellants. Law Offices of Alan S. Gutman, Alan S. Gutman; Benedon & Serlin, Douglas G. Benedon and Gerald M. Serlin for Defendants and Respondents.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. BC364123)
APPEAL from an order of the Superior Court of Los Angeles County. Robert L. Hess, Judge. Reversed.
Law Offices of Robert S. Besser, Robert S. Besser; Law Office of Anthony Kornarens and Anthony Kornarens for Plaintiffs and Appellants.
Law Offices of Alan S. Gutman, Alan S. Gutman; Benedon & Serlin, Douglas G. Benedon and Gerald M. Serlin for Defendants and Respondents.
Assignment agreements expressly granted the assignee complete control of litigation not only of assigned claims but also of the grantors' nonassigned claims. When the assignee, in conjunction with the grantors, instituted litigation, the defendants moved to strike the assignee's claims on the ground that the agreements were invalid because they permitted the assignee to practice law without a license. The trial court found the agreements to be void on this basis and dismissed not only the assignee's claims, but also the grantors', without leave to amend. We hold that no ground existed to dismiss any claim. We accordingly reverse the judgments.
BACKGROUND
This is a consolidated appeal from three judgments and a post-judgment award of attorney fees and costs rendered in three related lawsuits: Wertheim and Dunbar v. Omidvar (Dunbar, BC364123); Wertheim and Meyers v. Omidvar (Meyers, BC366309); and Wertheim and Romero v. Omidvar (Romero, BC38121). We take the operative facts from the allegations of the pleadings, which we accept as true, and matters of which the trial court properly took judicial notice. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
A. Parties
A musical artist who owns the right to royalty payments may seek advances on those payments from a finance lender. The artist typically agrees to pay a fee to obtain the advance and interest on the amount advanced, and assigns to the lender the right to collect repayment from such royalty-gathering entities as the American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music Inc. (BMI).
Plaintiffs Ronald Dunbar, Dana Meyers and Robert Romero are accomplished songwriters or music producers who own artistic royalty rights. (For simplicity, we will refer to them collectively as "the songwriters.") Defendant Currency Corporation, which is owned and operated by defendants Oliver Omidvar, Aneal Omidvar and Parviz Omidvar (collectively "Currency"), is a finance lender. Currency gave the songwriters numerous advances on their royalty payments over a period of years, charging fees and interest and diverting royalty payments to itself. Disputes arose between the songwriters and Currency over the amount of interest charged, the fees assessed, and Currency's alleged practice of collecting more royalties from ASCAP and BMI than was necessary to cover advances it had made. Currency also allegedly gave the songwriters "advances" on royalties ASCAP and BMI had already paid to it, in effect charging the songwriters fees and interest on their own money.
David Pullman is the chairman and CEO of The Pullman Group, LLC and plaintiff Wertheim, LLC. Wertheim purchases and securitizes music and entertainment royalty rights. Dunbar and Meyers sold some of their royalty rights to the Pullman Group and they and Romero assigned some of their claims against Currency to Wertheim.
Wertheim and the songwriters initiated the three lawsuits against Currency that are the subject of this consolidated appeal.
B. Cleveland Litigation
In a similar situation, Alfred Cleveland, the son of a songwriter whose work earns royalties, took advances on those royalties from Currency and later sued, alleging causes of action for breach of contract, breach of fiduciary duty and violation of the Unfair Competition Law (UCL; Bus. & Prof. Code, § 17200 et seq.). During the pendency of the lawsuit Cleveland assigned his claims against Currency to Wertheim, which then joined the suit.
In the midst of litigation Cleveland settled with Currency and dismissed his claims. Currency then moved for judgment on the pleadings against Wertheim, arguing Cleveland's exit from the lawsuit left Wertheim without standing to proceed. The trial court found that Wertheim, as Cleveland's assignee, retained standing to pursue the breach of contract cause of action but not the causes of action for breach of fiduciary duty or violation of the UCL, which were unassignable. Wertheim appealed the ruling and filed a second lawsuit against Currency in which it alleged that by settling with Cleveland, Currency intentionally interfered with Wertheim's agreements with him.
C. The Instant Litigation
Dunbar and Meyers filed their complaints first, followed by Romero. After two demurrers, Dunbar's and Meyers's second amended complaints, and Romero's original complaint, were operative. The songwriters asserted causes of action for fraud, conversion, breach of fiduciary duty, money had and received, open book account, violation of the UCL, and declaratory relief. They alleged that Currency charged a usurious interest rate, illegally compounded interest, charged illegal administrative fees, failed to make required disclosures, refused to provide accountings, misappropriated the songwriters' royalty income, and made misrepresentations concerning the songwriters' repayment obligations.
The only cause of action asserted by Wertheim in the Dunbar and Meyers litigation was for breach of contract. Wertheim's only cause of action in the Romero lawsuit was for declaratory relief. Wertheim alleged that assignments from the songwriters, copies of which were attached to the complaints, gave it standing to be a plaintiff.
D. The Assignments
In May 2004, Dunbar sold his right "to receive the writer's share of royalty income from Broadcast Music, Inc. (the 'BMI Rights')," along with options on other royalties, to the Pullman Group for $108,333.33, less costs related to securing the rights. The BMI Rights comprised Dunbar's "entire right, title and interest to income or payments of any kind from BMI including special bonuses, or other one time payments, resulting from or related to the exploitation of the Works in perpetuity (the 'BMI Income'). . . . The BMI Rights also include[d] any and all Interests and rights of reversion in the copyrights to the Works or the Income streams therefrom. [Dunbar] . . . grant[ed] Pullman full rights of publicity and full name and likeness rights in connection with this transaction . . . ."
In a December 29, 2005 letter agreement, Dunbar purported to expand the definition of "Rights" sold to Pullman to include any causes of action he might have arising from the Currency loans. The causes of action were designated the "Assigned Claims."
A month later, on July 13, 2006, Dunbar, for unspecified "good and valuable consideration" affirmatively assigned to Wertheim and its nominees all of his "claims, causes of action and right to seek damages, past, present or future . . . against [Currency and related entities], arising from or relating to loans or other financial transactions by or between Dunbar and one or more of the Currency Corp Parties." The claims and causes of action were again designated the "Assigned Claims."
Wertheim made materially similar arrangements with Meyers and Romero.
After Cleveland, over Wertheim's objection, settled his claims against Currency, Pullman induced Dunbar, Meyers and Romero to execute assignment agreements that prohibited similar settlements. The Dunbar and Meyers agreement were entitled "First Amended and Restated Assignment"; the Romero agreement was entitled "Assignment Agreement." (We will refer to these as "amended" agreements to distinguish them from Dunbar's and Meyers's prior assignment agreements, even though the Romero assignment did not amend a prior agreement.)
The amended assignments granted Wertheim and its nominees the right to pursue all causes of action that the grantors had or may have against Currency, the "Assigned Claims." "Wertheim" was defined as "Wertheim, LLC and its nominees and assigns." The amended assignments defined "Non-Assigned Claims" to be any claims "not assignable by law." ("Assigned Proceeds" were defined as half of all proceeds realized from pursuit of Non-Assigned Claims plus costs incurred in the prosecution of all claims, assigned and nonassigned.)
The amended agreements granted Wertheim and its nominees "the right and authority in its sole discretion to pursue all legal remedies and actions with respect to any Non-Assigned Claims, . . . in it[s] own name or [client's] name, or both, and the right in WERTHEIM's sole discretion to control any litigation, settlement or compromise of any Non-Assigned Claims . . . ." The amended agreements vested sole discretion in Wertheim and its nominees to select and retain counsel to represent the songwriters in pursuit of their nonassigned claims and waived in advance any conflict of interest arising between the songwriters and any attorney chosen by Wertheim or its nominee, not only in litigation against Currency but also in any litigation between Wertheim and the songwriters. Finally, the amended agreements provided: "[Grantor] does not have the right or authority to settle or in any way compromise the Non-Assigned Claims (including the Assigned Proceeds relating thereto) without the prior written consent and authority of WERTHEIM . . . ."
E. Motions to Strike
Currency moved in all three lawsuits to strike Wertheim as a party plaintiff. It argued that by ceding complete control over the litigation of nonassigned claims, the amended assignments authorized Wertheim and Pullman to engage in the unlicensed practice of law, which rendered the assignment agreements illegal and void. Because Wertheim enjoyed standing in the lawsuits only by virtue of the amended assignments, Currency argued, it must be dismissed as a party plaintiff. Currency stated the illegality of the amended assignments was the sole issue on appeal, but also argued that Wertheim and Pullman were actually "engaged in the unlicensed practice of law," and "Pullman took control of the lawsuits and has deprived the true real parties in interest of any say in them . . . ." It offered no evidence supporting these arguments.
Wertheim opposed the motion, arguing Currency lacked standing to challenge the amended assignment agreements, which at any rate were not void. It argued any unlawful provision of the amended agreements could be severed (Civ. Code, § 1599), and determination of severability required factual analysis of the parties' agreement and relationship. Wertheim complained that although the motion to strike was ostensibly based on the viability of the complaints, it improperly referenced and depended on extrinsic matters.
In reply, Currency affirmed that the motion was "based entirely on the allegations of the complaints and the [amended] assignments attached as exhibits thereto" and denied that it depended on "any extrinsic evidence." Currency argued any attempt to sever or reform the amended agreements "would be hopelessly impracticable, as there is no way to effectively resolve the question of who would take charge of the litigation."
The trial court directed the parties to give further briefing on whether the provisions in the amended assignments giving Wertheim control over the songwriters' nonassignable claims could be severed from provisions regarding the assignable claims.
After considering the supplemental briefs the trial court issued a written order. It found that although the grantors "retain[ed] a fractional interest in any recovery on the non-assigned claims, Wertheim ha[d] complete and absolute control over whether and how those claims are prosecuted or settled, to the practical exclusion of the assignor[s]." Although the court had no doubt that the songwriters "could assign claims to Wertheim, which could then prosecute them it its own name," "Wertheim's control over non-assigned claims" was problematic. "The [amended] assignments in Dunbar, Meyers and Romero are explicit in precluding those individuals from having any control over the non-assigned claims. Wertheim is purportedly empowered [to] select and retain counsel with respect to the non-assigned claims, to incur legal fees and costs 'in its sole discretion' for which the assignors will be responsible, at its sole discretion to pursue, not pursue, or settle the non-assigned claims, and to grant releases, 'in the sole discretion of Wertheim without the knowledge or consent of [the assignor].'" The court noted that "[a]mong the other provisions are such items as advance waivers of any conflicts attorneys hired by Wertheim may have, an irrevocable power of attorney, arbitration of disputes between the artists and Wertheim without any opportunity for discovery, and one-way indemnification of Wertheim and related persons and entities by the assignor from anything relating to the assignment and any breach of its terms." "Indeed," the court observed, "there can be no question that Wertheim claims 'the right in Wertheim's sole discretion to control any litigation, settlement or compromise of any Non-Assigned Claims.'"
The court found that in the amended assignments "Wertheim undertakes to obtain counsel and to prosecute the non-assigned claims, which constitutes the illegal practice of law within the meaning of Business & Professions Code § 6125." It held the amended assignments thus violated public policy under the authority of Estate of Molino (2008) 165 Cal.App.4th 913 and were therefore void and of no effect.
"Despite the presence of a severability provision" in the amended assignments, the court concluded that the provisions with respect to non-assigned claims were not severable, because the provisions regarding assigned and nonassigned claims [were] so intertwined" that "[e]xcision of those provisions would require substantially rewriting the assignments . . . ." The court also found the provisions regarding non-assigned claims were unseverable because the unspecified "good and valuable consideration" the grantors acknowledged receiving was "both undefined and unitary," citing Civil Code section 1608, Keene v. Harling (1964) 61 Cal.2d 318, 321, and Selton v. Hyon (2007) 152 Cal.App.4th 463, 471.
"The problems pervade the entire assignment," the court held, "and they cannot be saved."
The court dismissed all three complaints in their entirety without leave to amend. It dismissed the songwriters' claims (in addition to Wertheim's) because "Wertheim has been and is the only party controlling the litigation, there is no claim actually presented by Messers Dunbar, Meyers or Romero (as opposed to by Wertheim for them) to preserve."
The court denied Wertheim's motion for reconsideration, entered judgment in favor of Currency, and awarded it $50,125 in attorney fees.
Wertheim and the songwriters appeal from the judgments.
DISCUSSION
Plaintiffs contend (1) Currency lacked standing to challenge the enforceability of the amended assignment agreements; (2) the agreements did not violate public policy; (3) any offending provisions should have been severed; (4) even if the assignments violated public policy and offending portions could not be severed, the trial court should not have stricken the songwriters' claims; and (5) no basis exists for an award of attorney fees.
A. Assigned Claims
Defendants do not contest the songwriters' ability to assign their contract rights or causes of action for breach of contract. Nor could they. "A thing in action is a right to recover money or other personal property by a judicial proceeding." (Civ. Code, § 953.) "A thing in action, arising out of the violation of . . . an obligation, may be transferred by the owner." (Civ. Code, § 954.) A contract right may also be transferred. (Civ. Code, § 1458; Farmland Irrigation Co. v. Dopplmaier (1957) 48 Cal.2d 208, 222 ["The statutes in this state clearly manifest a policy in favor of the free transferability of all types of property, including rights under contracts"].)
"Under the early English common law the doctrines of champerty and maintenance prohibited an assignment of a chose in action. [Citation.] In California this common law doctrine has been superceded by statute. [Civ. Code, §§ 953, 954]." (Bush v. Superior Court (1992) 10 Cal.App.4th 1374, 1380.) '"[A]ssignability of things [in action] is now the rule; nonassignability, the exception; and this exception is confined to wrongs done to the person, the reputation, or the feelings of the injured party. . . .' [Citations.]" (Webb v. Pillsbury (1943) 23 Cal.2d 324, 327.)
A cause of action for breach of contract is also assignable. (Baum v. Duckor, Spradling & Metzger (1999) 72 Cal.App.4th 54, 64-65.) And because rights under a contract are assignable, the assignee may seek a judicial declaration of those rights.
Here, Wertheim's only claims were for breach of contract and declaratory relief. There is no dispute that Wertheim may bring these claims as an assignee. Instead, defendants contend, and the trial court found, that the amended assignments were void due to illegality attending nonassigned claims.
B. Currency's Standing to Challenge Provisions Relating to Nonassigned Claims
Preliminarily, Wertheim argues Currency has no standing to challenge enforceability of the amended assignment agreements because it was not party to them. The argument is without merit. Because Wertheim's standing as a plaintiff was based solely on the amended assignments, the terms of which it was required to plead and ultimately prove (Cockerell v. Title Ins. & Trust Co. (1954) 42 Cal.2d 284, 292-293), Currency was entitled to challenge their validity. (Bush v. Superior Court, supra, 10 Cal.App.4th at p. 1381 [it is the burden of the party challenging an assignment to show an exception to the rule of assignability exists].) The issue is not whether it has standing to argue that illegal provisions concerning nonassigned claims invalidate provisions concerning assigned claims, but whether the former provisions, if void, invalidate the latter provisions.
C. Provisions Concerning Nonassigned Claims Are Void
The amended assignment agreements gave Wertheim and its nominees sole discretion to control litigation, settlement and compromise of the songwriters' nonassigned claims. (When we refer to Wertheim in the context of the assignments we include, as did the parties, its nominees and assigns.) These provisions are void for four reasons: They (1) authorize Wertheim to practice law without a license; (2) commercialize the practice of law; (3) grant Wertheim the power to veto settlement; and (4) effect an assignment of nonassignable claims.
1. Authorization of the Practice of Law Without a License
"No person shall practice law in California unless that person is an active member of the State Bar." (Bus. & Prof. Code, § 6125.) Here, the amended assignments granted Wertheim the power unilaterally to "pursue all legal remedies and actions with respect to" the songwriters' claims and "control any litigation, settlement or compromise" of the claims.
The term "practice of law," though not defined by Business and Professions Code section 6125, has long been defined by our Supreme Court as including, among other acts, the giving of "'legal advice and counsel and the preparation of legal instruments and contracts by which legal rights are secured although such matter may or may not be depending in a court.'" (People v. Merchants Protective Corp. (1922) 189 Cal. 531, 535; Birbrower, Montalbano, Condon & Frank v. Superior Court (1998) 17 Cal.4th 119, 128.) To give "legal advice and counsel" regarding a loan means, at minimum, to gather facts surrounding the loan (for example, its terms, any disclosures or representations made by the lender, and the lender's post-disbursement servicing practices), evaluate the legal import of those facts in light of pertinent contract and finance law, recommend a course of action to the borrower (litigation, for example), and periodically reevaluate the action through its various stages. There can be no question that in ceding to Wertheim the authority unilaterally to pursue (or not pursue) all legal remedies concerning their claims and to control completely not only any litigation but also any settlement, the songwriters granted it the authority to give them legal advice and counsel. It makes no difference that Wertheim hired an attorney to prepare legal instruments or conduct any actual litigation—Wertheim retained the power to control the attorney's conduct of the litigation.
Pursuit and control of litigation constitutes the practice of law. To the extent that the amended assignments granted Wertheim the authority to control litigation of the songwriters' nonassignable claims, they are illegal and void. (Estate of Butler (1947) 29 Cal.2d 644, 651.)
Plaintiffs argue a debt collector will regularly take an assignment of a claim, sue to enforce it in the grantor's name, and later account to the grantor for any recovery obtained. (E.g., Le Doux v. Credit Research Corp. (1975) 52 Cal.App.3d 451, 454.) The point is not in dispute. As the trial court stated, "[t]here is no[] doubt that Messrs. Dunbar, Meyers [and] Romero . . . could assign claims to Wertheim, which could then prosecute them in its own name." But here Wertheim was authorized to control litigation not only of assigned claims belonging to it, but also expressly of the songwriters' nonassigned and nonassignable claims.
Plaintiffs also argue Wertheim's control over the songwriters' nonassigned claims is no more the unauthorized practice of law than when an insurer hires counsel for its insured and directs the litigation. The argument is without merit. True, when an insurer owes a duty to defend it may retain counsel and control the defense and settlement of underlying litigation so long as no conflict of interest exists between it and the insured. Because "[b]oth the insured and the carrier have a common interest in defeating or settling the third party's claim," the parties "may be viewed as a loose partnership, coalition or alliance directed toward a common goal, sharing a common purpose . . . ." (American Mut. Liab. Ins. Co. v. Superior Court (1974) 38 Cal.App.3d 579, 592.) But when a conflict of interest arises between an insurer and insured, the insured has the "right to retain independent counsel at the insurer's expense. (Civ. Code, § 2860, subd. (b).)" (Gafcon, Inc. v. Ponsor & Associates (2002) 98 Cal.App.4th 1388, 1407.) When that occurs, it is the insured, not the insurer, who thereafter controls the defense. (Long v. Century Indemnity Co. (2008) 163 Cal.App.4th 1460, 1469-1470.)
Here, the assignments authorized Wertheim not only to choose and retain counsel for the songwriters and pursue and control litigation and settlement, they authorized it to do so whether or not a conflict of interest arose. In fact, the assignments required that the songwriters waive in advance any such conflict not only as to any litigation against Currency, but also as to any later litigation between Wertheim and the songwriters. The assignments granted Wertheim and Pullman far more power than would be enjoyed by any licensed attorney in or out of the insurance context: They could pursue or settle the songwriters' claims in their sole discretion and prevent the songwriters from settling them independently.
2. Commercialization of the Practice of Law
In a similar vein, the provisions granting Wertheim control of nonassigned claims are void because they commercialize the practice of law. A nonlawyer may not intervene for profit in the conduct of legal proceedings. (Estate of Butler, supra, 29 Cal.2d at p. 647.) Any agreement that on its face or in effect authorizes him or her to do so is contrary to public policy and void ab initio and in its entirety. (Id. at pp. 647-648; Estate of Molino, supra, 165 Cal.App.4th at p. 922.)
The provisions relating to nonassigned claims authorized Wertheim and Pullman to intervene for profit in litigation to which they were otherwise strangers. Though Wertheim presented its own claims in the same litigation, the songwriters' nonassigned claims were theirs alone, as was any litigation on them. Though they could and did assign to Wertheim half of the proceeds from those claims, such an assignment gave Wertheim only a charge upon the claims, not the claims themselves.
3. The Power to Prevent Settlement
Even had the songwriters not ceded to Wertheim control of the litigation of nonassigned claims, the prohibition against settlement of those claims without Wertheim's permission was void. "An open-ended veto provision conflicts with the public policy which favors the full settlement of litigation and may frequently result in unnecessary trials." (Abbott Ford, Inc. v. Superior Court (1987) 43 Cal.3d 858, 883; see Hall v. Orloff (1920) 49 Cal.App. 745, 748 ["'a clause prohibiting the client from making a settlement of his litigation without the consent of his attorney is void as against public policy. [Citations]'".) A client's "'lawsuit is his own. He may drop it when he will. Even an express agreement to pay damages for dropping it without his lawyer's consent would be against public policy and void. [Citations.]" (Hall v. Orloff, at p. 749.)
Plaintiffs admit in their opening brief on appeal that the provision granting Wertheim and its nominees power to veto any settlement between Currency and the songwriters was generated "[w]ith the Cleveland experience in mind" and designed "to protect Wertheim against interference with its right to the proceeds of claims for which it had paid substantial sums of money." The admitted purpose, in other words, was to obstruct the quieting of the songwriters' disputes and settlement of their litigation. This was improper. A settlement occurs only when two interested parties agree on the amount which ought to be realized from litigation. It would be an abrogation of their right to control their own property, and a misuse of the legal process, to prolong litigation for the sole purpose of permitting a stranger to dictate how much a defendant should pay to obtain peace. For this reason, the provision prohibiting settlement without Wertheim's permission is void.
4. Assignment of Nonassignable Claims
Even if the provisions in the amended assignments relating to nonassignable claims did not grant Wertheim the authority to practice law, did not result in the commercialization of litigation, and did not grant impermissible veto power, they would still be illegal and void for the simple reason that they purport to make an assignment of claims that are by definition nonassignable.
As discussed, a chose in action is a right to recover money by judicial proceeding. Many such rights may be transferred, but some may not, including some statutory rights and the right to recover money for wrongs done to the person of the injured party. (Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court (2009) 46 Cal.4th 993, 1002 [an unfair competition claim is nonassignable]; Essex Ins. Co. v. Five Star Dye House, Inc. (2006) 38 Cal.4th 1252, 1260 [causes of action founded upon wrongs of a purely personal nature are nonassignable].)
Here, the provisions relating to nonassignable claims granted Wertheim the authority to pursue or not pursue the claims, settle or not settle them, elect and retain counsel with respect to them, control any litigation, incur legal fees and costs in its sole discretion, grant releases, and retain half of the proceeds. The provisions in effect assigned to Wertheim nonassignable claims. Such an assignment is void on its face.
D. Severability
Plaintiffs contend that if the control provisions are void, the trial court "should have severed the non-assigned claims from the other claims that Wertheim and the songwriters were making." Although, as the trial court observed, plaintiffs do not "attempt[] to define which claims fall into what category," we nevertheless agree that under the circumstances of this case, the void control provisions are severable.
"In deciding whether severance is available, . . . '[t]he overarching inquiry is whether " 'the interests of justice . . . would be furthered'" by severance.' [Citation.] 'Courts are to look to the various purposes of the contract. If the central purpose of the contract is tainted with illegality, then the contract as a whole cannot be enforced. If the illegality is collateral to the main purpose of the contract, and the illegal provision can be extirpated from the contract by means of severance or restriction, then such severance and restriction are appropriate.' [Citations.]" (Marathon Entertainment, Inc. v. Blasi (2008) 42 Cal.4th 974, 996.) "If the court is unable to distinguish between the lawful and unlawful parts of the agreement, 'the illegality taints the entire contract, and the entire transaction is illegal and unenforceable.' [Citation.]" (Birbrower, Montalbano, Condon & Frank v. Superior Court, supra, 17 Cal.4th at p. 138.)
Here, the central purpose of the assignments was to transfer the songwriters' claims against Currency to Wertheim. Although the admitted objective of the control provisions—to prevent the songwriters from settling their claims with Currency—is improper, that objective was collateral.
Currency argues the impropriety attending the control of nonassignable claims taints the entire contract because plaintiffs refuse to distinguish between assignable and nonassignable claims or explain how the former can be severed from the latter. We agree that the agreements are vague in that respect: They give Wertheim control over claims "[t]o the extent" they "are not assignable by law" but make no present distinction between any claims. They do not equate the term "claim" with "cause of action" at all, asserting instead only a contingent distinction apparently dependent on some future ruling in an undesignated legal proceeding. (Plaintiffs reveal in their briefs on appeal that such proceedings are in progress.)
But the taint of Wertheim's purported control of nonassignable claims does not spread far for present purposes, because Wertheim does not purport to exercise control over any nonassignable claims here. Wertheim sued Currency only for breach of contract and declaratory relief, causes of action Currency admits may be assigned and Wertheim may control.
Neither is there any evidence that Wertheim has engaged in the unlawful practice of law, though the amended assignments purported to give it authority to do so. (We note the trial court's observation that Wertheim practiced law and controlled the litigation was unsupported by the record. Currency admitted its challenge was based on the pleadings alone, and they said nothing about how the litigation was actually conducted.)
Pursuant to the above discussion, we hereby sever the control provisions in the Dunbar, Meyers and Romero assignments.
E. The Songwriters' Causes of Action
Currency moved only to strike Wertheim as a party plaintiff, not to strike the complaints en toto. The trial court nevertheless struck the complaints on the ground that "Wertheim has been and is the only party controlling the litigation, [and] there is no claim actually presented by Messers Dunbar, Meyers or Romero (as opposed to by Wertheim for them) to preserve." This was error.
As stated parenthetically above, nothing in the record established that Wertheim exercised the control available to it under the assignments. At any rate, the remedy for unlawful practice of law is to remove the ersatz lawyer where possible, not to strike the represented party's complaint. On this independent ground, the songwriters' complaints must be reinstated.
F. Attorney Fees
The order awarding attorney fees to Currency must be vacated in light of our holding that Wertheim's and the songwriters' complaints were improperly dismissed.
DISPOSITION
The trial court order granting Currency's motions to strike is reversed. The case is remanded to the superior court with directions to deny the motions. The order granting Currency's motion for attorney fees is reversed. Appellants are to receive their costs on appeal.
NOT TO BE PUBLISHED.
CHANEY, J. We concur:
MALLANO, P. J.
JOHNSON, J.