Southern California Gas Co. v. Flannery
5 Cal. App. 5th 476
| Cal. Ct. App. | 2016Background
- Southern California Gas Co. deposited $2,450,000 settlement proceeds with the court and filed an interpleader naming claimants including Patrick Flannery, his counsel Joseph Daneshrad, former joint counsel Scott Tepper (and his firm), and Andrea Murray.
- Murray and Flannery had parallel litigation (the Palimony Case) in which Murray obtained a judgment declaring her 50% ownership of the property and directing $1,225,000 be disbursed to her from the interpleaded funds.
- After this court previously affirmed denial of Flannery’s anti‑SLAPP motion, the interpleader proceedings resumed; the Gas Co. sought fees, Murray sought enforcement of the Palimony judgment, and Tepper sought payment of his attorney fees from the fund.
- Judge Wiley awarded the Gas Co. $169,983.13 in additional fees and costs, Murray $1,225,000 (no postjudgment interest), and Tepper $512,295; remaining balance was directed to Flannery and Daneshrad.
- Flannery and Daneshrad appealed; Daneshrad did not oppose the motions below and failed to provide a reporter’s transcript on appeal.
- The Court of Appeal affirmed, rejecting appellants’ procedural and substantive challenges (due process, stay on appeal, fee lien priority, and statutory limits on interpleader fee awards).
Issues
| Issue | Plaintiff's Argument (Gas Co./Murray/Tepper) | Defendant's Argument (Flannery) | Held |
|---|---|---|---|
| Whether appeal record is inadequate without reporter’s transcript/settled statement | Respondents relied on trial court record and presume correctness absent transcript | Appellants argued errors occurred at hearing and needed transcript to review | Court: Appellants bore burden to provide transcript; without it, many challenges fail and trial court’s factual findings are presumed correct |
| Whether due process required a trial or summary judgment to adjudicate claimants’ rights in interpleader | Respondents: appellants’ belated, conclusory answers did not timely or sufficiently put claims at issue; hearing was proper | Flannery: he was deprived of trial and discovery on competing claims | Court: appellants’ answers were inadequate; interpleader court properly resolved competing claims; due process claim fails |
| Whether section 386.6 permitted award of post‑discharge attorney fees to interpleader plaintiff | Gas Co.: statute authorizes fees for costs incurred in the action, including defending motions/writs/appeals until fully discharged | Flannery: section authorizes fees only at time of discharge; later fees not recoverable | Court: statutory language and precedent permit fees through final discharge (including defending appeals); award affirmed |
| Whether Palimony judgment was stayed on appeal so funds could not be disbursed | Murray: enforcement not stayed because appellant did not post undertaking required by sections governing stays; funds are delivery of personal property under §917.2 | Flannery: the Palimony judgment was stayed on appeal or otherwise judge lacked jurisdiction | Court: Palimony judgment directed delivery of personal property; because no undertaking was posted, enforcement was not stayed; court could disburse funds to Murray |
| Whether interpleader court lacked jurisdiction to enforce Palimony judgment or should have offset attorneys’ liens/fees | Murray: settlement reserved intra‑parties’ claims to Palimony court; interpleader court may enforce that judgment and assess fee claims | Flannery: settlement judge retained exclusive control; fees/liens should offset Murray’s award | Court: settlement expressly reserved claims; Palimony court had authority; interpleader court acted within discretion in awarding Murray funds and extinguishing competing claims (Tepper did not appeal) |
| Whether Tepper could enforce an attorney fee lien in the interpleader proceeding without a separate suit | Tepper: interpleader is a separate, independent action and Flannery was a party, so enforcing the lien there was proper | Flannery: Mojtahedi and related cases require a separate action against the client to adjudicate an attorney’s lien | Court: Interpleader case satisfied the separate‑action requirement because it was distinct from the underlying suit and directly involved Flannery; Tepper’s lien enforcement there was proper; court’s fee determination was discretionary and supported |
Key Cases Cited
- Sanowicz v. Bacal, 234 Cal.App.4th 1027 (discusses appellant’s burden to provide reporter’s transcript)
- Chodos v. Cole, 210 Cal.App.4th 692 (transcript not required for de novo review of legal matters)
- Ballard v. Uribe, 41 Cal.3d 564 (need for record to review discretionary factual rulings)
- Ketchum v. Moses, 24 Cal.4th 1122 (presumption of trial court correctness; fee‑litigation principles)
- Canal Ins. Co. v. Tackett, 117 Cal.App.4th 239 (limits on late fee requests in interpleader distinguishable on facts)
- Serrano v. Unruh, 32 Cal.3d 621 (fees available for trial and appeal)
- Fracasse v. Brent, 6 Cal.3d 784 (attorney lien and quantum meruit after discharge)
- Cetenko v. United California Bank, 30 Cal.3d 528 (creation of attorney lien by contract or implication)
- Brown v. Superior Court, 116 Cal.App.4th 320 (trial court in underlying action generally lacks jurisdiction to adjudicate attorney’s lien)
- Mojtahedi v. Vargas, 228 Cal.App.4th 974 (attorney must bring separate action against former client to enforce lien; naming client is required)