Trembath v. Digardi

Opinion

This is an action by an attorney against other attorneys for damages allegedly caused by the latter’s wrongfully inducing breach, by the first attorney’s client, of his contingent fee contract. Defendants-respondents demurred to the complaint upon the ground that the statute

The complaint alleges that: James Gordon died April 10, 1970, in an accident in which he was electrocuted; he left his widow and three minor children; on the day of his death, Mrs. Gordon and plaintiff entered into a written agreement by which she employed him to prosecute her claim for damages for the wrongful death of her husband, and agreed to pay, from any sum received, his costs and one-third of the recovery if settlement was made before a trial date was set, or 40 percent of any recovery after that date; plaintiff did perform services and advanced expenses in the amount of $143.65. It is also alleged that beginning April 14, 1970, defendants, knowing of the contract with plaintiff, made false representations to Mrs. Gordon about plaintiff’s ability, in order to persuade her to employ them in place of plaintiff. Allegedly, these activities culminated in the client’s discharging plaintiff as her attorney on April 28, 1970; defendants thereupon prosecuted her case against a number of defendants, and “between July 24, 1972 and October 21, 1972,” received $400,000 and costs in settlements and judgments. The complaint now before us was filed January 4, 1973.

it is undisputed that an action in tort lies for wrongful inducement of breach of contract. This rule is fully applicable to induced breach of contract to pay a contingent fee (Herron v. State Farm Mutual Ins. Co., 56 Cal.2d 202 [ 14 Cal.Rptr. 294 , 363 P.2d 310 ]). Nor is there dispute that the applicable limitation period is two years, as fixed by Code of Civil Procedure section 339, subdivision 1 (Kenworthy v. Brown, 248 Cal.App.2d 298 , 301 [ 56 Cal.Rptr. 461 ]).

The issue here turns upon the date on which the cause of action accrued. In general, a cause of action for wrongfully induced breach occurs at the date of the wrongful act (Kenworthy v. Brown, supra, 248 Cal.App.2d 298 , 301; Kiang v. Strycula, 231 Cal.App.2d 809 , 812 [ 42 Cal.Rptr. 338 ]). Clearly, the accrual date could not be later than the actual breach of the contract by the party who was wrongfully induced to breach. Here, Mrs. Gordon discharged plaintiff April 28, 1970, some eight months more than two years before this action was filed.

Plaintiff, however, argues that the general rule on accrual cannot be applied to an attorney’s contract for a contingent fee. He points to the established rule that he can have no cause of action against his client until the contingency of some recovery by her had occurred. (Brown v. Connolly,

The rules ameliorating the liability of the client in contingent fee contracts are specifically based upon the established right of the client to terminate his representation by an attorney in whom he has lost confidence, and a desire to protect the client from the risk of excessive or double payment for a single result if his lay judgment as to the existence of good cause for discharge is erroneous (see Fracasse, supra, 6 Cal.3d at p. 790) to prevent “a disaster to the client and a windfall to the attorney” (Brown v. Connolly, supra, 2 Cal.App.3d at p. 871). No such consideration favors a third party (particularly if he also be an attorney) who tortiously induces a client to breach a contingent fee contract. The distinction between the attorney’s right against his client and that against the third party who induces breach is implied in Herron, which holds that despite the client’s right to terminate the employment, “[a]n attorney’s interest in his contingent fee agreement is greater than that of a party to a contract terminable at will,” and thus supports his action against one who intentionally and unjustifiably interferes with his contract right (56 Cal.2d at p. 206). The distinction between the two causes of action has been recognized elsewhere (State Farm Mutual Ins. Co. v. St. Joseph’s Hospital, 107 Ariz. 498 , 502-503 [ 489 P.2d 837 , 839-840]). A New York decision (Lurie v. New Amsterdam Casualty Co., 270 N.Y. 379 [ 1 N.E.2d 472 ]) equated the rights of an attorney against his client with those against the breach inducer, but did so without discussion. We hold that the tort action against the third party is distinct from the contract right against the client, and that the attorney’s cause of action upon the former right accrues, as would any other tort action for inducement of breach of contract, no later than the date of the breach which has been tortiously induced. Thus the demurrer was properly sustained.

In light of our holding that the attorney’s right against a third party tort