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Court of Appeal to Santa Monica: Your Litigation Waived Your Right to Arbitration in Lawsuit

The case of City of Santa Monica v. Baron & Budd, B187425, simply stated, is a case about legal fees and retainer agreements. The City of Santa Monica hired attorneys, discharged attorneys and hired more attorneys. The retainer agreement in dispute included contingent fee provisions. It also had a clause stating that the attorneys were entitled to a reasonable fee if the contingent fee provisions could not be enforced. Further it stated that the amount of the fee was subject to arbitration before JAMS (Judicial Arbitration and Mediation Services).

The next 5 to 10 paragraphs could be spent describing the legal wrangling of a city government and 3 law firms. Instead I will just give the highlights.

425184_grant%20%2450.jpg Around the time the City of Santa Monica was resolving/settling the legal matter which caused it to hire outside counsel, the attorneys and the city realized there were disagreements about calculations and fees to be paid to outside counsel.

With no resolution at hand the city sued for declaratory relief in May 2004. It later amended the complaint to allege breach of fiduciary duties. Coming as no surprise, the lawyers cross-complained for their fees.

In May 2005, Los Angeles Superior Court Judge David Minning denied the city’s motion for summary adjudication. Five months later, the city moved to compel arbitration. Judge Minning denied the motion.

Court of Appeal Justice Robert Mallano said the trial judge was correct.

He cited the 17-month delay between the filing of the suit and the demand for arbitration, that the parties had extensively litigated the issues that would be the subject of the arbitration, and the prejudice the law firms would have suffered as a result of having to provide the city with more discovery than would have been required had the case been assigned to arbitration at the outset.

Los Angeles Superior Court Judge Frank Jackson, sitting on assignment, concurred in the opinion, while Justice Frances Rothschild concurred separately.

A retainer agreement is a contract. Any business executive knows you just can’t change the terms of a contract because it suits you. If you are having trouble with compliance to the terms of a contract, seek qualified legal help immediately.

If you have been sued for breach of contract, time is of the essence, contact the trial attorneys at Sylvester, Oppenheim & Linde today. Our initial consultation is available to you at no charge. Know where you stand. Know your options. 818-461-8500