Opinion
B186313
12-6-2006
LETA SCHLOSSER, Plaintiff and Appellant, v. LAWRENCE D. WOLLERSHEIM, Defendant and Respondent.
Counselor & Advocate At Law, James S. Link; Gwire Law Offices, William Gwire; and Leta Schlosser for Plaintiff and Appellant. HUB Law Offices, Ford Greene, Barry Van Sickle; Gelfand, Stein & Wasson and Craig J. Stein for Defendant and Respondent.
The Church of Scientology of California (Church) filed an interpleader, deposited $8,674,843 with the trial court in satisfaction of a judgment in favor of respondent Lawrence D. Wollersheim (Wollersheim), and named him and his creditors as parties. Leta Schlosser (Schlosser), one of Wollersheims attorneys in his action against the Church, filed a cross-complaint against Wollersheim to recover on an attorney fee lien (lien) and a claim for unpaid attorney fees. At this point, Schlosser and Wollersheim are the last two claimants to what remains of the interpleaded funds. On August 31, 2004, the trial court expunged the lien because it did not comply with rule 3-300 of the Rules of Professional Conduct. On September 30, 2005, the trial court ordered all remaining funds distributed to Wollersheim. Schlosser appeals, contending: (1) the trial court should not have expunged the lien because rule 3-300 of the Rules of Professional Conduct does not apply to Wollersheims fee agreement; (2) the trial court lacked jurisdiction to issue the September 30, 2005 order because it was based on a renewed motion that did not satisfy Code of Civil Procedure section 1008; (3) the August 31, 2004, and September 30, 2005 orders were procedurally improper because Wollersheim did not comply with the summary judgment statute; and (4) the September 30, 2005 order was erroneous because Schlosser still had a pending claim to the interpleaded funds due to her quantum meruit cross-complaint.
All further statutory references are to the Code of Civil Procedure unless otherwise indicated.
We affirm.
FACTS
Wollersheims judgment against the Church
After various appeals, Wollersheims judgment against the Church was reinstated on March 20, 1992, in the amount of $ 500,000 in compensatory damages and $2,000,000 in punitive damages.
Schlossers third party claim of security interest or lien
On February 20, 1997, Schlosser filed notice of a claim of security interest or lien in Wollersheims action against the Church. Her notice stated she "acquired her superior security interest or [lien] by virtue of having rendered legal services to [Wollersheim]. . . . The fee agreement for this representation included a provision granting [Schlosser] a lien on [Wollersheims judgment]." According to Schlosser, the total amount due was $ 117,774.29 plus interest.
The Churchs interpleader
In 2002, the Church filed a cross-complaint in interpleader. It alleged that Wollersheims judgment, plus interest, was $ 8,674,843 and that the funds were being deposited with the court because Wollersheim had a large number of creditors, including lienholders such as Schlosser, all of whom claimed an interest in the proceeds from the judgment.
Schlossers second amended cross-complaint
By way of cross-action, Schlosser sued Wollersheim for beach of oral contract, unjust enrichment, and recovery in quantum meruit. She alleged: In 1991, Wollersheim orally agreed to retain her to assist his appellate attorneys in connection with a petition for writ of certiori filed by the Church with the United States Supreme Court. In 1991, he signed a commitment letter promising to pay her $150 an hour. In addition, he orally promised to pay her a bonus of $150,000 upon collection of the judgment. She sought, in part, compensation for the time and money she expended in assisting Wollersheim.
The August 31, 2004 order
In June 2004, certain creditors had been paid by order of the trial court and the remaining funds were $2,183,446.80. Wollersheim requested that the lien be expunged because Schlosser did not comply with rule 3-300 of the Rules of Professional Conduct. On the theory that the lien was invalid, Wollersheim asked the trial court to distribute the remaining funds.
In her opposition, Schlosser argued that Wollersheims motion was procedurally defective because it was a speaking motion that did not comply with the summary judgment statute. Further, she averred that she was "not asserting her lien in this interpleader. . . . There are no competing lien creditors nor judgment creditors against whom lien priority is an issue."
After taking the matter under submission, the trial court granted Wollersheims motion to expunge the lien on August 31, 2004. The trial court relied on Fletcher v. Davis (2004) 33 Cal.4th 61 (Fletcher), which establishes that an attorney lien is not valid unless the attorney complied with the writing and disclosure requirements set forth in rule 3-300 of the Rules of Professional Conduct. Because Schlosser was attempting to recover based on a series of oral modifications to the parties fee agreement, her lien was invalid.
The trial courts October 13, 2004 order on the second submitted matter stated: "Although [Schlossers] purported lien has been stricken, the existence of such a lien is not a prerequisite for resolution of an interpleader action. [T]he cross-complaint by [Schlosser] keeps that alive. The [trial court] is not persuaded that immediate release of the interpleaded funds is required by law, and declines to release all sums in the interpleader as a matter of discretion."
Schlossers abandoned appeal
On October 6, 2004, Schlosser filed a notice of appeal from the trial courts August 31, 2004 order. On November 4, 2004, Schlosser notified the Court of Appeal that she was abandoning her appeal.
She also appealed the trial courts October 6, 2004 order, denying her motion to vacate the August 31, 2004 order.
The September 30, 2005 order
In mid-2005, Wollersheim filed a motion for distribution of the proceeds on the grounds that the interpleader was moot. He pointed out that Schlosser admitted in her deposition that the Church did not owe her money, so she did not have a claim to the stake.
Schlosser argued that the motion was an improper renewed motion because it did not comply with section 1008, subdivision (a).
On September 30, 2005, the trial court granted the motion. It stated that section 1008 did not bar the motion because Wollersheim cited City of Morgan Hill v. Brown (1999) 71 Cal.App.4th 1114 (Morgan Hill) for the first time, and attached portions of Schlossers April 2005 deposition. The trial court noted that it had the inherent authority to reconsider its prior ruling and that it was persuaded that it "ought to reconsider its prior decision on its own motion." In its analysis, the trial court stated: "In this case, the obligation on which [Schlosser] bases her claim is the performance of legal services at the instance of [Wollersheim], based on quantum meruit. She has no valid written contract for the payment of the fees giving her a right to the proceeds from the judgment, either of a contingency or a non-contingency nature. She has no valid lien on any part of the proceeds of [Wollersheims] judgment. She does not have, and has never had, any claim directly against the [Church] for legal fees." The trial court recognized that Schlossers claim against Wollersheim was based on their relationship and implied agreement, and Wollersheims claim to the stake was based on his valid judgment against the Church. As a result, they were not asserting a right to payment for the same thing, debt or duty from the same obligor. Schlosser merely wanted to ensure that the interpleaded funds were not dissipated because she would have trouble collecting on her quantum meruit claim. "However," stated the trial court, citing to Morgan Hill, "the purpose of an interpleader action is not to ensure collectability of a judgment. Other provisional remedies are available for that purpose, if they are warranted by the claims and the evidence. `[A]llowing interpleader in these circumstances would constitute a form of prejudgment attachment without the protections generally afforded to those subject to that provisional remedy."
This appeal followed.
Final judgment and subsequent appeals
Trial on the cross-complaint commenced on November 1, 2005. Pursuant to a March 30, 2006, judgment entered on a special verdict, Schlosser was awarded $213,230 plus costs and disbursements.
On June 30, 2006, Schlosser filed a notice of appeal from the judgment and all appealable orders. On July 24, 2006, Wollersheim filed a notice of appeal from the judgment and all appealable orders.
We take judicial notice of the records on file with the Court of Appeal.
APPEALABILITY
Wollersheim argues that neither the August 31, 2004 order nor the September 30, 2005 order, are appealable. We conclude that the September 30, 2005 order is appealable and the August 31, 2004 order is reviewable because it impacts the propriety of the September 30, 2005 order.
An order is appealable under the collateral order exception when the order is collateral to the main issue, dispositive of the rights of the parties in relation to the collateral matter, and directs payment of money or performance of an act. (In re Marriage of Skelley (1976) 18 Cal.3d 365, 368.) The August 31, 2004 order, did not direct payment of money or the performance of an act, so it cannot be considered an appealable collateral order.
In contrast, the September 30, 2005 order, directed the payment of money. We conclude that it was an appealable collateral order.
Morgan Hill controls.
The City of Morgan Hill (City) interpleaded funds owed for attorney fees so that a law firm and one of its former shareholders, Seltzer, could litigate their entitlement to the fees. The firm obtained a summary judgment ruling that it was entitled to the interpleaded funds. (Morgan Hill, supra, 71 Cal.App.4th at p. 1118.) Seltzer appealed even though she had a pending cross-complaint against the firm for breach of contract, wrongful discharge, defamation and other causes of action. (Id. at p. 1119.) The court concluded: "The matter is appealable despite the fact that the cross-complaints remain to be litigated. . . . [T]here is an exception to the one final judgment rule when there is a final determination of some collateral matter distinct and severable from the general subject of the litigation. If this determination requires the aggrieved party immediately to pay money or perform some other act, then that party is entitled to appeal even though litigation of the main issues continues. `The determination is substantially the same as a final judgment in an independent proceeding. [Citation.] . . . Summary judgment as to the ownership of the [f]ees constituted a final determination as to the complaint in interpleader and is appealable since it directs the payment of the [f]ees to the [f]irm." (Id. at p. 1128.)
Pursuant to section 906, we may review any order "which involves the merits or necessarily affects the . . . order appealed from." Because the validity of the lien is relevant to the trial courts decision to distribute the proceeds, the August 31, 2004 order, is therefore reviewable.
DISCUSSION
1. The August 31, 2004 order expunging the lien.
Schlosser contends that because her fee agreement with Wollersheim was a contingent hourly fee agreement and Fletcher does not apply to liens based on contingency fee agreements, the trial court should not have expunged her lien. She adds that Fletcher does not apply to invalidate the lien due to another reason: the lien was prepared at Wollersheims request. Finally, she contends that Wollersheims motion to expunge the lien was procedurally improper because it did not comply with the summary judgment statute.
Because Schlosser presents questions of law, our review is de novo. (Pacific Bell v. City of San Diego (2000) 81 Cal.App.4th 596, 601.) After conducting a de novo review, we find no basis for reversal.
a. The contract that purported to create the lien.
Wollersheim gave Schlosser a signed handwritten note (contract) that stated: "I [Wollersheim] agree to pay [Schlosser] a bonus of $10,000 on her additional [illegible] work [and] her standard fee of $150/hr. [¶] This can be a lien against my judgment and will be paid in full on collection."
Wollersheim was not advised in writing to seek the advice of independent counsel.
b. The lien is not enforceable.
Rule 3-300 of the Rules of Professional Conduct provides: "A member shall not enter into a business transaction with a client; or knowingly acquire an ownership, possessory, security, or other pecuniary interest adverse to a client, unless each of the following requirements has been satisfied: [¶] (A) The transaction or acquisition and its terms are fair and reasonable to the client and are fully disclosed and transmitted in writing to the client in a manner which should reasonably have been understood by the client; and [¶] (B) The client is advised in writing that the client may seek the advice of an independent lawyer of the clients choice and is given a reasonable opportunity to seek that advice; and [¶] (C) The client thereafter consents in writing to the terms of the transaction or the terms of the acquisition."
Fletcher explained that "[a]n attorneys lien `upon the fund or judgment which he has recovered for his compensation as attorney in recovering the fund or judgment . . . is denominated a "charging lien." [Citation.] A charging lien may be used to secure either an hourly fee or a contingency fee. [Citation.]" (Fletcher, supra, 33 Cal.4th at p. 66.) In California, an attorneys lien is created only by contract. (Ibid.) A charging lien constitutes an adverse interest for purposes of rule 3-300 of the Rules of Professional Conduct. (Fletcher, supra, at p. 70) The court held that an attorney "who secures payment of hourly fees by acquiring a charging lien against a clients future judgment or recovery has acquired an interest that is adverse to the client, [and she] must comply with the requirements of [rule 3-300 of the Rules of Professional Conduct]." (Fletcher, supra, at p. 71.) But the Fletcher court limited its holding by indicating in a footnote that it was not deciding whether rule 3-300 of the Rules of Professional Conduct "applies to a contingency-fee arrangement coupled with a lien on the clients prospective recovery in the same proceeding." (Fletcher, supra, at p. 70, fn. 3.)
The parties dispute whether rule 3-300 of the Rules of Professional Conduct is applicable to a contingency fee for hourly rates. The question presented is whether the lien was adverse to Wollersheim.
When it is reasonably foreseeable that an attorneys interest in a clients property could become detrimental to the client, it constitutes an adverse interest for purposes of rule 3-300 of the Rules of Professional Conduct. (Fletcher, supra, 33 Cal.4th at p. 67.) A charging lien based on an hourly fee agreement "could significantly impair the clients interest by delaying payment of the recovery or settlement proceeds until any disputes over the lien can be resolved." (Id. at pp. 68-69.) If there is a dispute over the existence or amount of the lien, "the attorney can prevent the judgment debtor or the settling party from remitting the recovery to the client until the dispute is resolved. [Citations.]" (Id. at p. 69.) Also, "when the settlement draft is made jointly payable to the client and the attorney, the attorney may refuse to endorse the check until the dispute is resolved. [Citation.]" (Ibid, fn. omitted.) After the proceeds "have been deposited in the clients trust account, the attorney may withhold an amount equivalent to the disputed portion. [Citations.]" (Ibid.) Fletcher opined that in "each of these instances when the charging lien is disputed, the clients recovery will be `"tied up until everyone involved can agree on how the money should be divided . . . or until one or the other brings an independent action for declaratory relief." [Citation.]" (Ibid.)
After listing the foregoing observations, Fletcher concluded that "a charging lien grants the attorney considerable authority to detain all or part of the clients recovery whenever a dispute arises over the liens existence or its scope. That would unquestionably be detrimental to the client. [Citations.]" (Fletcher, supra, 33 Cal.4th at p. 69.) The conclusion of the Fletcher court has direct application to our analysis of Schlossers lien. It is irrelevant that her lien secured a contingent hourly fee agreement rather than a noncontingent hourly fee agreement. Once Wollersheim prevailed and the contingency for payment of fees occurred, he was in the same position as the plaintiff in Fletcher, i.e., they both faced a lien that secured hourly fees. As a consequence, it was foreseeable that Schlossers lien would become detrimental to Wollersheim for all the reasons enunciated in Fletcher. Schlossers lien created a potential that she could tie up the proceeds of Wollersheims action against the Church until everyone agreed how the proceeds should be divided.
In an attempt to distinguish Fletcher, Schlosser adverts to the declaration she submitted in opposition to Wollersheims motion to expunge her lien. She declared that Wollersheim prepared the lien after "consulting with other Los Angeles attorneys to represent him on the punitive damages remand from the U.S. Supreme Court. Ultimately, he hired Cummins & White. . . . [¶] For approximately one year before filing the February 1997 `notice of lien . . . , Wollersheim instructed [me] to file it for his own benefit. Despite my reluctance to file the `notice of lien for security reasons, Wollersheim insisted that it was imperative to effectuate a settlement with [the Church]."
In Schlossers view, her interest is not adverse to Wollersheim because she did not seek to secure payment of her fee. Instead, she informs us, Wollersheim created the lien for settlement purposes, and he had independent counsel. She concludes: "The reason for the ruling of the Supreme Court in Fletcher simply does not apply in this instance." We cannot accede.
Though Schlosser did not require the lien, she is seeking to enforce it without complying with the requirement that she properly advise Wollersheim. Rule 3-300 of the Rules of Professional Conduct establishes that an attorney shall not knowingly acquire a security interest adverse to a client without proper consent and advisement. It does not matter how the security interest is acquired, particularly after the attorney has tried to capitalize on it. If an attorney acquires a security interest, then the attorney must comply with her ethical obligations.
At this point, we take heed of Justice Baxters words in Fletcher. The court held that the plaintiffs lien could not be enforced because he did not comply with his ethical duties. "Were we to hold otherwise," wrote Justice Baxter, "`we would, in effect, be both countenancing and contributing to a violation of a rule we formally approved in order "to protect the public and to promote respect and confidence in the legal profession." [Citation.] Such a result would be untenable as well as inconsistent with the policy considerations that animated the adoption of [rule 3-300 of the Rules of Professional Conduct.]" (Fletcher, supra, 33 Cal.4th at p. 72.) Justice Baxters words are true for Schlossers appeal. We cannot permit Schlosser to enforce her lien, even if it is possible that Wollersheim received advice from independent counsel. She did not acquire a lien in the appropriate manner, and rule 3-300 of the Rules of Professional Conduct requires strict adherence.
c. The motion to expunge the lien can be construed as a motion for judgment on the pleadings and affirmed.
Schlosser contends that Wollersheims motion was defective because it did not comply with the procedural requirements for summary judgment.
We disagree.
In general, the procedure to dismiss an action based on extrinsic evidence is a motion for summary judgment. (Saltarelli & Steponovich v. Douglas (1995) 40 Cal.App.4th 1, 5. If a motion to dismiss does not comply with the requirements for summary judgment, but no extrinsic evidence is required, "the motion may be treated as a nonstatutory motion for judgment on the pleadings. Such a motion may be granted when the complaint fails to state facts sufficient to constitute a cause of action. In considering this motion, the court may consider matters properly subject to judicial notice. [Citation.]" (Ibid.)
For our purposes, Morgan Hill is instructive. It demonstrates that the ownership of interpleaded funds can be decided by motion even though parties claiming an interest in the stake have a pending cross-complaint. It does not matter that Morgan Hill involved summary judgment and the case at bar involves judgment on the pleadings. The type of motion is irrelevant.
Wollersheims motion to expunge the lien was, in essence, a motion for judgment on the pleadings directed at Schlossers claim to ownership of a portion of the interpleaded funds. The contract purporting to create the lien is attached to Schlossers amended cross-complaint, the significance of which is that the contract was properly subject to judicial notice.
A motion for judgment on the pleadings "is equivalent to a demurrer and is governed by the same standard of review. All material facts that were properly pleaded are deemed true, but not contentions, deductions, or conclusions of fact or law. If leave to amend was not granted, we determine whether the complaint states a cause of action and whether the defect can reasonably be cured by amendment." (Pang v. Beverly Hospital, Inc. (2000) 79 Cal.App.4th 986, 989.) Because the "defect of substance is not waived by failure to demur and may be raised at any time on trial or appeal . . . , the motion may be made without previously demurring, and an order overruling a general demurrer does not preclude granting the motion at trial." (5 Witkin, Cal. Procedure (4th ed. 1997) Pleading, § 954, p. 411.)
On its face, the contract does not comply with rule 3-300 of the Rules of Professional Conduct. The contract did not advise Wollersheim in writing that he could seek the advice of counsel. No other facts were relevant. Because the motion to expunge can be viewed as a motion for judgment on the pleadings, and because it is impossible for Schlosser to plead around the defective lien behind her third party claim, we perceive no error in the trial courts ruling.
In her reply brief, Schlosser contends that Wollersheims motion cannot be considered a motion for judgment on the pleadings because the trial court did not rule that a cause of action was inadequate. While that is true, it is beside the point. The trial court properly ruled that judgment could be rendered on the Churchs cross-complaint in interpleader based on the pleadings.
In Morgan Hill, Seltzer argued that the trial court should not have granted summary judgment because it did not resolve all pending issues. The court stated: "We conclude that there was nothing improper in the procedure followed. As already noted, neither Seltzer nor the Firm objected to permitting the City to deposit the money with the court and then be discharged. When [the] Firm then sought summary judgment as to the ownership of the Fees, there is no reason why the trial court should have been prohibited from ruling that the City `owned the Fees given the undisputed facts. . . . Because the undisputed facts demonstrated that Firm had the right to that property, summary judgment was proper. . . . Interpleader confers rights only concerning discharge of the stakeholder and then leaves the conflicting claims to the fund for proper later resolution. If it turns out, as here, that a claimant has no viable claim to the fund, then distribution of the fund to the remaining claimant is entirely appropriate." (Morgan Hill, supra, 71 Cal.App.4th at pp. 1127-1128.)
As Morgan Hill demonstrates, a trial court can resolve ownership of a stake even if other issues remain to be tried.
2. Reconsideration of the September 30, 2005 distribution order.
Schlosser contends that the trial court had no authority to reconsider its interim order denying distribution of the proceeds because Wollersheims renewed motion did not comply with section 1008. Wollersheim posits that the trial court acted on its own motion, and that it had authority to do so.
Wollersheim is correct.
In Le Francois v. Goel (2005) 35 Cal.4th 1094, 1096-1097 (Le Francois ), the Supreme Court held that a trial court may always, on its own motion, correct mistakes in prior interim orders as long as it gives notice to the parties of its intention and provides a reasonable opportunity to litigate the question. (Id. at p. 1096.) The effect of section 1008 is merely to limit a partys ability to file repetitive motions. (Id. at p. 1107.) There is a distinction between a court acting sua sponte as opposed to ruling on a litigants motion. (Id. at pp. 1107-1108.)
The Le Francois court explained the import of its ruling. "We cannot prevent a party from communicating the view to a court that it should reconsider a prior ruling (although any such communication should never be ex parte). We agree that it should not matter whether the `judge has an unprovoked flash of understanding in the middle of the night [citation] or acts in response to a partys suggestion. If a court believes one of its prior interim orders was erroneous, it should be able to correct that error no matter how it came to acquire that belief. For example, nothing would prevent the losing party from asking the court at a status conference to reconsider a ruling. [Citation.] But a party may not file a written motion to reconsider that has procedural significance if it does not satisfy the requirements of section 437c, subdivision (f)(2), or 1008. The court need not rule on any suggestion that it should reconsider a previous ruling and, without more, another party would not be expected to respond to such a suggestion." (Le Francois, supra, 35 Cal.4th at p. 1108.)
Le Francois was applied in New York Times Co. v. Superior Court (2005) 135 Cal.App.4th 206 (New York Times). A party moved for reconsideration of an order granting summary judgment without new or different law or facts, and the trial court granted the motion. On appeal, the respondent argued that the trial court acted sua sponte to reconsider its prior order. According to the court: "Under Le Francois, the trial court has the authority to reconsider a previous interim order on its own motion, if it gives notice to the parties that it may do so and provides a reasonable opportunity to litigate the question. [Citation.] Here, however, the court acted in response to a written motion for reconsideration brought under section 1008. The court stated that it was ruling on [the] motions," including the motion for reconsideration. (New York Times, supra, 135 Cal.App.4th at p. 215.) As a result, the court held the "the trial court abused its discretion in granting the motion for reconsideration." (Ibid.)
The trial courts decision to reconsider its interim order on its own motion was permissible under Le Francois. Whether the trial courts epiphany was triggered by Wollersheims motion is irrelevant.
We note that at the end of the trial courts order, the trial court purported to grant Wollersheims motion. But that does not mean the trial court intended to reconsider its prior decision based on Wollersheims motion as opposed to its own motion. In other words, this case is distinguishable from New York Times. When the trial court stated that it had the inherent authority to reconsider its own rulings, and that it should reconsider its prior decision on its own motion, the trial court signaled that it was aware of the constraints that section 1008, subdivision (b) placed on Wollersheims motion. We conclude that the trial court sufficiently communicated its understanding of the law, and that it realized it could not distribute the proceeds except on its own motion. Because the trial courts intent was manifest, we construe the order as one prompted by the trial courts own motion.
At the hearing, the trial court told the parties it was "thinking through afresh these issues." The parties filed papers in connection with Wollersheims motion, and they argued the issues. In our view, the parties had notice of the trial courts intent to reconsider the prior order on its own motion, and they had a reasonable opportunity to brief and argue the merits.
3. The merits of the trial courts September 30, 2005 order.
Schlosser argues that the trial court erred when it issued the September 30, 2005 order because: (1) the motion to distribute the proceeds failed to comply with the summary judgment statute; and (2) even if the lien was invalid, she still has a claim to the stake. We turn to these issues.
a. The motion for distribution of the proceeds did not have to comply with the summary judgment statute.
The motion for distribution of the proceeds was coupled with the motion to expunge the lien. Though the latter motion tacitly sought to adjudicate the Churchs cross-complaint in interpleader, the motion to distribute the proceeds did not. It simply requested that the trial court distribute the proceeds to Wollersheim if it concluded that there were no more competing claims. Schlosser cites no authority establishing that summary judgment procedure applies to a motion to distribute interpleaded funds to a lone claimant. We need not give this matter further consideration because it "is not our responsibility to develop an appellants argument." (Alvarez v. Jacmar Pacific Pizza Corp. (2002) 100 Cal.App.4th 1190, 1206, fn. 11.)
b. Schlosser does not have a claim to the stake.
According to Schlosser, her quantum meruit claim is a claim to the stake even in the absence of a lien, and Wollersheim waived any objection to her claim by waiting over two years to file his motion to expunge the lien. She also contends that once the lien attached, her claim was irrevocable.
(i) Existence of a claim to the stake.
To prove that she still has a claim to the stake, Schlosser cites Miller v. Rau (1963) 216 Cal.App.2d 68 (Miller).
In Miller, the facts were these. Aviation Export Company, Ltd. (Aviation) and Miller entered into an oral joint venture agreement for Miller to purchase AT-6 aircraft from the British Air Ministry and sell them in the United States. To obtain the funds for the venture, Aviation entered into a limited partnership with Cohen (Cohen agreement), who was acting for both himself and a silent partner named Bright. Cohen was obligated to contribute $50,000 to the venture. Miller objected to the Cohen agreement and claimed that he was not bound by it. He sued Aviation for declaratory relief and gave notice to Cohen and Brights attorney, Rau. Rau was told not to disburse any funds from the proceeds of the sale without Millers approval. During the pendency of Millers action, the AT-6 aircraft inventory was sold for $199,000. The buyer made payments to Bright, and then to Rau and Aviation. The payments to Rau and Aviation were endorsed by Aviation and delivered to Rau. Instead of notifying Miller, Rau distributed checks in varying amounts to Aviation, which endorsed those checks over to third party creditors. The trial court rendered judgment in favor of Miller and against Rau for $30,264,98 as damages for converting Millers interest in the proceeds. (Miller, supra, 216 Cal.App.2d at pp. 72-75.)
The Court of Appeal affirmed the judgment, concluding that Rau was obligated to hold the proceeds that represented Millers known interest. (Miller, supra, 216 Cal.App.2d at p. 76.) After receiving notice of Millers claim, Rau had the option of filing an interpleader. (Ibid.)
In essence, Schlosser argues that she has a claim because she would have had a claim against the Church if it paid the proceeds to Wollersheim instead of interpleading them with the trial court. She points out that section 386, subdivision (b) permits an entity "against whom double or multiple claims are made, or may be made, by two or more persons which are such that they may give rise to double or multiple liability, may bring an action against the claimants to compel them to interplead and litigate their several claims." In her brief, she argues: "It was patently absurd for Wollersheim to argue and the trial court to apparently accept that the absence of an obligation between Schlosser and [the Church] rendered the interpleader moot. As shown in [Miller] and section 386, a party with money owed to another may interplead that money when there are known obligations due by the payee."
There are problems with Schlossers argument. In Miller, part of the money held by Rau belonged to Miller by virtue of his joint venture agreement with Aviation. Aviation and Bright did not owe Miller payment for services rendered. Rather, Miller had a immediate ownership interest in the specific funds at issue, i.e., the cash from the sale of the inventory of AT-6 aircraft. While Schlosser may have a right to be paid for her services based on quantum meruit, that does not give her an ownership interest in the specific money deposited by the Church.
As explained by Morgan Hill, "`[t]he right to the remedy by interpleader is founded . . . not on the consideration that a [person] may be subjected to double liability, but on the fact that he is threatened with double vexation in respect to one liability. [Citation.]" (Morgan Hill, supra, 71 Cal.App.4th at p. 1122.) It is required "that the claimants seek the same thing, debt, or duty." (Id. at p. 1123.) Simply put, Wollersheim and Schlosser do not seek the same thing. Wollersheim seeks the specific funds deposited by the Church with the trial court. Schlosser seeks payment from Wollersheim for her services. The source of the funds, as long as Schlosser is paid, is irrelevant to whether her claim is satisfied.
The courts analysis of the facts in Morgan Hill sheds light on the issues. It stated: "Seltzer and the Firm assert the right to different things, debts or duties owed from different obligors. The debt claimed by the Firm is the Fees; the obligor is the City. The debt claimed by Seltzer is compensation under the Firms internal agreements; the obligor is the Firm. The fact that the amount of money due Seltzer under the shareholders agreement and other agreements with the Firm may be partly based upon the amount of the Fees from the City does not alter the fact that the debt owed Seltzer is due from the Firm under her agreements with the Firm. Indeed, Seltzer admits that she is owed money pursuant to the Firms internal agreements, concedes trying to collect the Fees from the City only as an agent of the Firm and does not dispute that the Firms internal agreements must be used to calculate the specific sum owed. Given that Seltzer concedes that the City does not owe the Fees to her, Seltzer is unable to demonstrate that Seltzer and Firm assert the right to the same thing, debt, or duty owed by City." (Morgan Hill, supra, 71 Cal.App.4th at pp. 1123-1124.)
In Morgan Hill, attorney Seltzer admitted that the City did not owe her. Schlosser admitted the same thing as to the Church. In our view, Schlosser and the attorney in Morgan Hill stand in the same position. They seek recovery from funds owed to an obligor who is not the stakeholder. The court in Morgan Hill noted that "Seltzer does not assert that the City has a duty to pay the Fees to her. Seltzer asserts that Firm has a duty to pay her a portion of the Fees Firm receives from the City." (Morgan Hill, supra, 71 Cal.App.4th at p. 1124.) These facts illustrate the flaw in Seltzers claim, which is the flaw in Schlossers claim. The firm in Morgan Hill did not assign the fees to Seltzer, "nor was there any basis for Seltzer to assert a claim or lien rights to the Fees." (Id. at p. 1126.) Because Schlossers lien was invalid and unenforceable, there is no basis for her to make a claim to the stake.
(ii) Waiver.
Citing Woodmen of the World v. Rutledge (1901) 133 Cal. 640 (Woodmen), Schlosser argues that Wollersheim cannot attack the propriety of the interpleader procedure because he already received disbursements from the stake. In Woodmen, an interpleader action went to final judgment. Rutledge appealed, contending that the interpleader was procedurally improper. The court held that the procedure below was appropriate, and that because Rutledge litigated her claim but did not demur or object below, she could not be heard to complain. (Id. at p. 643.)
Woodmen is inapposite.
Wollersheim has no objection to the interpleader. He filed a motion to expunge the lien, which we take as a motion for judgment on the pleadings, and thereby litigated the Churchs cross-complaint. He did not wait until after the interpleader was resolved to complain about the validity of the lien.
Because a waiver under Woodmen does not appear, we decline Schlossers invitation to use that case to reverse the September 30, 2005 order.
(iii) Attachment of the lien.
Schlosser informs us that pursuant to Texaco, Inc. v. Ponsoldt (9th Cir. 1997) 118 F.3d 1367, an interpleader action focuses on the claimants rights at the time the action was filed. This leads her to state: "[T]he trial judge improperly invalidated the lien on August 31, 2004 . . . , over two years after the filing of the interpleader action. That subsequent event could not destroy Schlossers right to pursue her claim to the stake." She goes on to add: "While the lien was ordered expunged, the claim to the stake remained."
Even if Schlossers recitation of the law is correct, it is of no moment. Her lien was invalid at the time the interpleader was filed because the contract that purported to create the lien did not comply with rule 3-300 of the Rules of Professional Conduct. Because she had no rights to the stake when the interpleader was filed, this last argument by Schlosser must fail.
DISPOSITION
The August 31, 2004, and September 30, 2005 orders, are affirmed. Wollersheim shall recover his costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
We concur:
BOREN, P. J.
CHAVEZ, J.