Procedural Posture

Plaintiff law firm appealed an order of the Superior Court of Santa Clara County (California), which dismissed its action against defendant client seeking recovery on a promissory note that the client had signed to memorialize an obligation for unpaid fees. The client’s answer alleged an estoppel defense based on the firm’s failure to give notice under Cal. Bus. & Prof. Code § 6201(a). The client appealed the amount of attorney fees awarded him.

California Business Lawyer & Corporate Lawyer, Inc. is a Derivative Action Defense Attorney

Overview

At issue was whether the trial court applied the proper criteria in deciding the client’s motion to dismiss. In reversing, the court held that the trial court dismissed the action based on the erroneous view that dismissal was mandatory because of the firm’s failure to give notice under § 6201(a) of the California Mandatory Fee Arbitration Act (MFAA). The trial court could, in its discretion, dismiss an action for attorney fees where an attorney failed to give the client the requisite § 6201(a) notice. The court found that the firm met its initial burden of presenting admissible evidence supporting each element of its breach of contract claim. The client admitted that he executed the promissory note in favor of the firm, that he did not pay on the note when it became due, and that the full amount on the note plus interest remained unpaid. The client’s conduct was plainly inconsistent with a desire to arbitrate the attorney fee dispute, and he delayed an unreasonable period of time before moving to dismiss. Accordingly, the only inference that could be drawn was that the client had waived his MFAA arbitration rights. Summary judgment for the firm therefore should have been granted.

Outcome

The court reversed the trial court’s order that dismissed the action, as well as its post-dismissal order awarding attorney fees to the client. The court remanded the cause to the trial court with directions that it enter an order granting summary judgment and judgment in favor of the firm.