Opinion
No. 00-CV-70615-DT
June 29, 2001
OPINION AND ORDER
This action involves a lawyer and her disgruntled client. In essence, Plaintiff Jean Marie Hansen has sued Defendants Samir Chachoua and Adelaida Ortega, for unpaid legal fees, and Defendant Chachoua has filed a cross-complaint against Plaintiff for malpractice. This matter is currently before the Court on the following motions:
Defendants' Motion to Stay Action (March 30, 2001)
Defendant Chachoua's Motion for Summary Judgment (May 15, 2001)
Defendant Ortega's Motion for Summary Judgment (May 15, 2001)
Plaintiff's Motion for Protective Order and to Strike Defendants' Witness
Lists and Documents Filed in Violation of F.R. Civ. P. 5 (May 15, 2001)
Defendants' Motion for Sanctions (May 15, 2001)
Defendants' Motion to Compel Production of Documents and Request for Sanctions (May 23, 2001)
A hearing regarding the parties' motions was held on June 19, 2001. For the reasons stated below, Defendants' motion to stay action shall be denied, Defendant Chachoua's motion for summary judgment shall be denied, Defendant Ortega's motion for summary judgment shall be denied, Plaintiff's motion for protective order and to strike pleadings shall be granted, Defendants' motion for sanctions shall be denied, and Defendants' motion to compel production of documents and for sanctions shall be granted, in part, and denied, in part.
Background
This controversy stems from Plaintiff's representation of Chachoua as a plaintiff in a 1997 breach of contract and defamation action pending in the United States District Court for the Central District of California entitled Chachoua v. Cedars Sinai et al., Chachoua was originally represented by William Dailey in the California action. On September 23, 1999, Chachoua substituted Plaintiff Hansen as his attorney of record. Plaintiff served as Chachoua's attorney of record until January 18, 2000.
Chachoua's action against Cedars Sinai proceeded to trial in August of 2000. A jury ultimately returned a verdict in favor of Chachoua on his breach of contract claim and awarded him damages in the amount of $10,111,250. Cedars Sinai filed a motion for judgment as a matter of law or, in the alternative, a new trial. On November 21, 2000, the California district court issued an opinion and order granting Cedars Sinai's motion for new trial unless Chachoua accepted remitted damages in the amount of $11,250. Chachoua had thirty days to inform the Court of his choice. Chachoua decided not to accept the remittitur and accordingly, a new trial has been granted in the California action.
On February 1, 2000, Plaintiff filed a five-count complaint against Chachoua and Ortega alleging fraud based on false representations (Count I), fraud based on failure to disclose facts (silent fraud) (Count II), fraud based on bad faith promise (Count III), constructive trust (Count IV), and breach of contract/interference with contract (Count V). In general, Plaintiff's complaint alleges that Chachoua entrusted Ortega with the funds to pay for her representation, and that both Chachoua and Ortega failed to remit payment for such representation. Plaintiff's complaint further alleges that as of December 22, 1999, Chachoua owed Plaintiff in excess of $138,000 in legal fees and costs.
After various attempts by Chachoua to dismiss the complaint, and various attempts by Plaintiff to obtain a default judgment, on September 6, 2000, Chachoua filed a malpractice counter-claim against Hansen for professional negligence (First Counterclaim), negligent misrepresentation (Second Counterclaim), and intentional misrepresentation (Third Counterclaim).
Discussion
Although Defendants' motion for stay was filed with the Court before any of the other motions, the Court shall address Defendants' motions for summary judgment first as resolution of such motions may moot all other pending matters.
1. Defendant Chachoua's Motion for Summary Judgment
On May 15, 2001, Defendant Chachoua filed a motion for summary judgment with respect to Plaintiff's claims against him. Plaintiff filed a response to Chachoua's motion for summary judgment on June 12, 2001.
On May 23, 2001, Chachoua filed a second motion for summary judgment against Plaintiff, raising the same arguments as in his May 15 motion. The Court is at a loss as to why Chachoua filed such motion. Furthermore, motion cut-off in this case was May 15, 2001. Chachoua has failed to articulate any basis for filing such motion after the motion cut-off date. Accordingly, any arguments contained in such motion shall not be considered by this Court in addressing Chachoua's motion for summary judgment filed May 15, 2001.
Summary judgment is proper only if there is no genuine issue as to any material fact, thereby entitling the moving party to judgment as a matter of law. Hunter v. Caliber Sys., Inc., 220 F.3d 702, 709 (6th Cir. 2000); see also FED. R. Civ. P. 56(c). On a motion for summary judgment, the moving party bears the initial responsibility of informing the Court of the basis for its motion and identifying those portions of the record that establish the absence of a material issue of fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving party has met its burden, the nonmoving party must go beyond the pleadings and come forward with specific facts to show that there is a genuine issue for trial. FED. R. Civ. P. 56(e); Celotex, 477 U.S. at 322-24, 106 S.Ct. at 2552-53. If, after adequate time for discovery, the party bearing the burden of proof fails to make a showing sufficient to establish an essential element of his claim, summary judgment is appropriate. Celotex, 477 U.S. at 322-24, 106 S.Ct. at 2552-53.
Chachoua asserts that he is entitled to summary judgment against Plaintiff because he never signed a written retainer agreement. Chachoua does not deny that Plaintiff represented him in connection with the California case. Chachoua also admits that he paid Plaintiff for legal services in connection with the California case, although he contends that he paid her too much based upon her "shoddy" work.
In response, Plaintiff asserts that there was a written fee agreement, but that such agreement has been misplaced. As evidence of a written agreement, Plaintiff cites a letter dated February 17, 2000, from counsel for Chachoua to Plaintiff in which counsel for Chachoua states that "the agreement between you and Dr. Chachoua was executed in California." (Pl.'s Resp., Ex. 5).
In his written motion, Chachoua asserts that under Michigan law, an attorney must have a retainer agreement with a client in order to recover legal fees. Chachoua cites only one case in support of his assertion, Nahan v. Pieprzak, 40 Mich. App. 223 (1972). Nahan, however, does not support Chachoua's assertion. In Nahan, the plaintiff sought to recover a commission on a sale of an interest in land pursuant to a "retainer agreement" signed by the defendant's father. The court determined that because the alleged agreement involved an interest in land, the statute of frauds required a signed written agreement. Id. at 226. Because the defendant never signed the agreement, the statute of frauds barred recovery. Id. at 226.
Unlike Nahan, this case does not involve an interest in land and therefore, the statute of frauds is not applicable. Generally, under Michigan law, "in the absence of express contractual terms for legal compensation, the Michigan courts have followed the rule of implying a contract for legal services for the reasonable value of the service rendered." Begovich v. Murphy, 359 Mich. 156, 159 (1960) (citing Eggleston v. Boardman, 37 Mich. 14 (1877); In re Freshour's Estate, 174 Mich. 114 (1913); Crary v. Goldsmith, 322 Mich. 418 (1948)).
At oral argument, counsel for Chachoua argued that California law applies to this case and that under a California statute, a retainer for over $1000 must be in writing. Chachoua cites no California law in his motion for summary judgment; nor was counsel for Chachoua able to cite the California statute to the Court. In any event, even if this case were governed by California law, which the Court is not stating that it is, Chachoua's argument would fail.
Under California law, in any case in which it is reasonably foreseeable that the total expense to a client will exceed $1,000, the contract for services must be in writing. CAL. Bus. PROF. CODE § 6148(a). A failure to comply with such requirement "renders the agreement voidable at the option of the client, and the attorney shall, upon the agreement being voided, be entitled to collect a reasonable fee." Id. § 6148(c). Therefore, just as with Michigan law, California law provides for a reasonable attorney fee in the absence of a written agreement.
Genuine issues of material fact exist as to whether or not either Defendant is obligated to Plaintiff with respect to payment of attorney fees. These issues include, but are not necessarily limited to, whether or not, in fact, a written agreement existed, what amount of attorney fees have already been paid by Chachoua, the extent of the services rendered by Plaintiff, and what constitutes a reasonable attorney fee in this case. Accordingly, Defendant Chachoua's motion for summary judgment shall be denied.
Furthermore, Chachoua shall be sanctioned for attaching a copy of his grievance against Plaintiff filed with the Attorney Grievance Commission as an exhibit to his motion. Chachoua attached the same grievance to a previous motion to dismiss. On July 24, 2000, the Court issued an Opinion and Order striking the grievance from the record. As the Court explained in its July 24, 2000 Opinion, "under Michigan law, requests for investigations are confidential records that may only be disclosed once a formal complaint has been filed." (7/24/00 Op. at 4). There is no evidence that a formal complaint has been filed by the Attorney Grievance Commission. Accordingly, this exhibit shall again be stricken from the record and Chachoua shall be sanctioned $100 for attempting to submit material that this Court has already determined is not proper and causing Plaintiff to respond to such for a second time.
2. Defendant Orte a's Motion for Summary Judgment
Defendant Ortega filed a motion for summary judgment on May 15, 2001, raising essentially the same arguments as Defendant Chachoua. Plaintiff filed a response to Ortega's motion for summary judgment on June 12, 2001. In her response, Plaintiff asserts that the motion filed upon her was "so defective that it ought to be stricken" and that Ortega's arguments are without merit.
Although Defendant Ortega's May 15 motion states that it is a motion for summary judgment and contains a number of exhibits, counsel for Ortega stated at the hearing on June 19 that it is really a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief can be granted. According to counsel for Ortega, there are no claims alleged against Ortega in Plaintiff's complaint.
Rule 12(b)(6) is designed to test whether, as a matter of law, a plaintiff is entitled to legal relief See Nishiyama v. Dickson County, 814 F.2d 277, 279 (6th Cir. 1987). "[A] complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957). When reviewing a 12(b)(6) motion, the Court must accept all factual allegations in the complaint as true. Kerasetes Mich. Theatres, Inc. v. National Amusements, 854 F.2d 135, 136 (6th Cir. 1988), cert. dismissed, 490 U.S. 1087, 109 S.Ct. 2461, 104 L.Ed. 982 (1989).
Plaintiff asserts five claims in her complaint. Four of these claims (Claims I, II, III, and V) are against "Defendant Chachoua, acting alone and/or together in active concert with Ortega." It appears from the allegations in these counts that such claims are asserted only against Chachoua. In Count IV, however, Plaintiff alleges a claim of "constructive trust" against "Defendants Ortega and Chachoua, acting alone and/or together in active concert with each other." According to the complaint, Chachoua represented to Plaintiff that he had transferred $15,000 to Ortega for the benefit of Plaintiff (Compl. ¶ 24), with the understanding that such funds would be remitted to Plaintiff immediately ( Id. ¶ 25). Count IV alleges that neither Chachoua nor Ortega have remitted the $15,000. Plaintiff seeks a constructive trust on such funds.
Under Michigan law, a plaintiff has a right to reimbursement if a person has possession of money "which in equity and good conscience belongs to the plaintiff" Michigan Educ. Employees Mut Ins Co. v Morris, 460 Mich. 180, 198 (1999). A constructive trust may be imposed "where such trust is necessary to do equity or to prevent unjust enrichment." Ooley v. Collins, 344 Mich. 148, 158 (1955). To prove a claim of unjust enrichment, Plaintiff must show that (1) the defendant received a benefit and (2) defendant's retention of the benefit would result in an inequity to the plaintiff. Dumas v. Auto Club Ins Ass'n, 437 Mich. 521, 546 (1991). A court may also impose a constructive trust when property "`has been obtained through fraud, misrepresentation, concealment, undue influence, duress, taking advantage of one's weakness, or necessities, or any other similar circumstances which render it unconscionable for the holder of the legal title to retain and enjoy the property.'" Potter v. Lindsay, 337 Mich. 404, 411 (1953) (quoting Racho v. Beach, 254 Mich. 600, 606-07 (1931)).
Accepting all of the factual allegations in the complaint as true, the Court is satisfied that Plaintiff has stated a claim against Ortega. Accordingly, Defendant Ortega's motion for summary judgment/motion to dismiss shall be denied.
For the same reasons stated above, Ortega shall also be sanctioned $100 for attaching a copy of Chachoua's grievance against Plaintiff with the Attorney Grievance Commission as an exhibit to her motion for summary judgment, and such exhibit shall be stricken from the record.
3. Defendants' Motion to Stay Action
On March 30, 2001, Defendants filed a motion to stay this action until a new trial is completed in the California action. On April 16, 2001, Plaintiff filed a response to Defendants' motion. On April 25, 2001, Defendants filed a twenty-four page "Addendum" to their motion. On May 15, 2001, Plaintiff filed an "Update" to her response requesting that the Court strike Defendants' "Addendum" as the Local Rules do not provide for such a pleading, and because such pleading does not comply with the Local Rules regarding reply briefs. On June 1, 2001, Defendants filed a response to Plaintiff's "Update" in which they contend, without any authority, that their "Addendum" is permissible under the Local Rules. On June 14, 2001, Plaintiff filed a "Brief in Reply to Defendant's Response to Update to Stay Motion and Deliberate Misrepresentations," in which she requests that the Court enter a default judgment against Defendants based upon their conduct in this case.
Defendants assert that this action should be stayed because the outcome of the new trial in the California action will necessarily affect whether Plaintiff is entitled to recover in her action for legal fees, as well as Chachoua's counter-claim for malpractice. Chachoua alleges that the new trial in the California case was caused by Plaintiff's malpractice. Specifically, Defendant alleges that Plaintiff "failed to properly represent him in the [California] case, missed time deadlines, misfiled court documents, and did not timely designate an expert witness who was precluded from presenting expert testimony." (Def.'s Br. Supp. Stay at 5). Defendants have provided no evidentiary support for such assertions.
Plaintiff asserts that the new trial was not a result of her representation, but a result of Chachoua's failure to conduct discovery during the two years preceding her substitution on September 23, 1999. In support of her assertions, Plaintiff has presented the Court with portions of the California district court's opinion granting a new trial in the California action. (Pl.'s Resp., Ex. 3).
"`[T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes in its docket with economy of time and effort for itself, for counsel and for litigants.'" Ohio Envtl. Council v. United States Dist. Ct., S.D. Ohio, 565 F.2d 393, 396 (6th Cir. 1977) (quoting Landis v. North Am. Co., 299 U.S. 248, 254-55, 57 S.Ct. 163, 166, 81 L.Ed. 153 (1936)). Entry of a stay "ordinarily rests with the sound discretion of the District Court." Id. The party seeking the stay bears the burden of showing "that there is pressing need for delay, and that neither the other party nor the public will suffer harm from entry of the order." Id.
Defendants have failed to sustain their burden of showing that a stay is needed in this case. Defendants merely assert, with no evidentiary support, that the new trial in the California action was a result of Plaintiff's deficient representation in failing to timely file certain pleadings. A review of those portions of the California district court's opinion granting a new trial indicates that the new trial was a result of trial counsel's failure to provide sufficient evidence to support the jury's award. There is absolutely no evidence to support Defendants' assertion that Plaintiff failed to timely designate an expert witness in the California case. The Court must also question why, if a stay is so desperately needed in this case, Defendants waited until March 30, 2001, a month before discovery was set to close, to file their motion. Accordingly, the Court shall deny Defendants' motion to stay this action.
4. Plaintiff's Motion for Protective Order and to Strike Defendants' Witness Lists and Documents File in Violation of F.R. Civ. P. 5/ Defendants' Motion for Sanctions
On May 15, 2001, Plaintiff filed a motion for a protective order and to strike various documents filed by Defendants. In particular, Plaintiff seeks an order requiring that Chachoua's and Ortega's depositions be taken in this Court, instead of Tijuana, Mexico, as ordered by Magistrate Judge Scheer, as well as an order striking Defendants' "Witness List Continued" filed on April 3 and 11, 2001.
On June 1, 2001, Defendants filed a response to Plaintiff's motion as well as "Evidentiary Objections of Defendants to Affidavit of Ellen Bartman Jannette" filed in support of Plaintiff's motion. On June 11, 2001, Defendants' filed "Evidentiary Objections of Defendants to Declaration of Alfonso Rocha-Albertsen."
On June 14, 2001, Plaintiff filed a reply. On June 18, 2001, Plaintiff filed her own affidavit "in update and support of Hansen PC's motion pleadings," and on June 19, 2001, the date of the hearing in this case, Plaintiff filed another affidavit, accompanied by a translation of the Mexican warrant and other exhibits.
Protective Order
Chachoua allegedly resides in Gaudalajara, Mexico part of the year, and Melbourne, Australia the other part of the year. Ortega allegedly resides in Guadalajara, Mexico. Plaintiff initially noticed Chachoua's deposition for December 11, 2000 in Detroit, Michigan. Three days before the deposition was to take place, Chachoua filed a motion for a protective order seeking to change the location of his deposition. On December 11, 2000, this Court sent counsel for all parties a letter indicating that it did not receive Chachoua's motion until December 11, and that it was denying the motion as moot as it was impossible for the Court to rule on the motion before the scheduled date for the deposition. In light of his pending motion, Chachoua did not appear for the scheduled deposition on December 11, 2000.
Anticipating that Plaintiff would reschedule Chachoua's deposition in Detroit, Michigan, on December 27, 2000, Chachoua filed another motion for a protective order to change the location of his deposition to either Guadalajara or Melbourne. Chachoua also indicated in his motion that he would be willing to have his deposition conducted at his attorney's office in Los Angeles, California. Chachoua's motion was referred to Magistrate Judge Scheer for hearing and determination. Magistrate Judge Scheer held a hearing regarding Chachoua's motion on February 1, 2001. On February 27, 2001, Magistrate Judge Scheer issued a Protective Order mandating that Chachoua's deposition be taken in Tijuana, Mexico and be scheduled within sixty days of the date of the Protective Order.
Defendants assert that they appeared for their scheduled depositions, but that Plaintiff "never showed, never called, and never canceled the depositions." (Def.'s Mot. Sanctions at 2). Plaintiff, however, contends that she did not schedule Defendants' depositions for the end of April. Rather, on Monday, April 23, 2001, counsel for Defendants notified Plaintiff and Attorney Barrett, Plaintiff's attorney on the counter-claim, that Defendants would appear in Tijuana, Mexico for their depositions on Thursday and Friday, April 26 and 27. Attorney Barrett responded that he "was not in the position to drop everything and fly to Mexico" and that counsel's offer to make Defendants available for deposition on April 26 and 27 was "nothing short of ludicrous."
Around the same time, Plaintiff learned that someone had filed criminal charges of extortion and attempted murder in Guadalajara against Plaintiff, Plaintiff's former attorney, Larry Bennett, and the process server Plaintiff used to serve Ortega, Oscar DePineres. ( Id., Ex. C; Jannette Aff. ¶ 4; Cummings Aff. ¶¶ 4-6). Because of the pending Mexican criminal action, Plaintiff seeks to change the location of the depositions.
For the reasons stated above, and for the reasons stated at the hearing on June 19, 2001, Plaintiff's motion for a protective order shall be granted. Both Defendant Chachoua and Defendant Ortega's depositions shall be taken in Los Angeles. Defendant's motion for sanctions shall be denied.
Motion to Strike Documents
Plaintiff has also moved to strike Defendants' "Witness List Continued" filed on April 3 and 11, 2001. The cut-off date for witness lists in this action was set for March 31, 2001. Because March 31 fell on a Saturday, pursuant to federal and local court rules, the parties' witness lists were due on April 2, 2001. On April 2, 2001, Defendants filed a witness list. On April 3, 2001, Defendants filed a "Witness List Continued," in which they named approximately fifty-six new witnesses. Defendants did not seek, nor did this Court ever grant, permission to file a "continued" witness list after the April 2, 2001, witness list cut-off date.
On April 11, 2001, Defendants filed a second "Witness List Continued." Defendants' second "Witness List Continued" did not name any new witnesses. Rather, Defendants' second "Witness List Continued" contains what purport to be preliminary reports from Defendants' experts, Boyd S. Lemon and retired Judge James Del Rio. Mr. Lemon was named on Defendants' original witness list filed on April 2, 2001, and Mr. Del Rio was named on Defendants' "Witness List Continued" filed on April 3, 2001.
For the reasons stated at the hearing on June 19, 2001, Plaintiff's motion to strike shall be granted. Plaintiff's "Witness List Continued" filed on April 3, 2001, and "Witness List Continued" filed on April 11, 2001, shall be stricken from the record. Any additional witnesses shall be allowed only be leave of this Court.
5. Defendants' Motion to Compel Production of Documents and Request for Sanctions
On May 23, 2001, Defendants filed a motion to compel production of documents and for sanctions against Plaintiff, asserting that Plaintiff has refused to turn over requested documents. On June 6, 2001, Plaintiff filed a response to Defendants' motion. Counsel for Counter-Defendant Hansen states that the documents requested by Defendants/Counter-Plaintiffs are available for inspection by their counsel either at Hansen's office or at Attorney Barrett's office. Counsel for Counter-Defendant Hansen also indicated that he has yet to receive his requested documents from Defendants/Counter-Plaintiffs.
For the reasons stated at the hearing on June 19, 2001, counsel for Defendants shall provide the requested documents to counsel for Counter-Defendant Hansen. After he receives the requested documents, Chachoua's deposition shall be taken in Los Angeles. After Chachoua's deposition has been completed, counsel for Counter-Defendant Hansen shall provide counsel for Defendants with their requested documents. Defendants' motion for sanctions shall be denied.
Conclusion
Defendants have repeatedly filed motions that are not in conformance with the Local Rules, referenced exhibits that do not exist, erroneously referenced other exhibits, included judge's copies that were not identical to the originals, were untimely, contained material that this Court has already determined should not be part of the record, and have not been served upon counsel for Plaintiff. Counsel for all parties are hereby on notice that all Local Rules, Orders by this Court, and schedules in this case will be strictly enforced. Failure to comply with any of the preceding will result in additional sanctions against the parties, up to and including dismissal of their claims.
For the reasons stated above:
IT IS ORDERED that Defendant Chachoua's motion for summary judgment is DENIED, Exhibit 5 of Defendant Chachoua's May 15, 2001 motion for summary judgment shall be STRICKEN from the record, and Defendant Chachoua shall pay $100 in sanctions to Plaintiff Hansen on or before July 15, 2001, for attempting to submit such material;
IT IS FURTHER ORDERED that Defendant Ortega's motion for summary judgment is DENIED, Exhibit S of Defendant Ortega's motion for summary judgment shall be STRICKEN from the record, and Defendant Ortega shall pay $100 in sanctions to Plaintiff Hansen on or before July 15, 2001, for attempting to submit such material;
IT IS FURTHER ORDERED that Defendants' motion to stay action is DENIED;
IT IS FURTHER ORDERED that Plaintiff's motion for a protective order is GRANTED. Defendant Chachoua and Defendant Ortega's depositions shall be conducted in Los Angeles, California;
IT IS FURTHER ORDERED that Plaintiff's motion to strike Defendants' witness lists filed April 3 and April 11, 2001 is GRANTED;
IT IS FURTHER ORDERED that Defendants' motion for sanctions is DENIED, and
IT IS FURTHER ORDERED that Defendants' motion to compel production of documents and sanctions shall be GRANTED IN PART AND DENIED IN PART. Counsel for Defendants shall provide counsel for Counter-Defendant Hansen with the requested documents, after which Chachoua's deposition shall be taken. After Chachoua' s deposition is taken, counsel for Counter-Defendant Hansen shall provide counsel for Defendants with their requested documents.