GLENN SPEARS VS SMART AND FINAL STORES LLC ET AL

Tentative Rulings

Case Number: ****1857    Hearing Date: June 05, 2020    Dept: 1

On June 4, 2020, the court denied Prospective Intervenor’s first ex parte due to insufficient notice.

The court has read and considered Prospective Intervenors Sara B. Poster, Kyle Todd, and Steven L. Rodriguez’s second ex parte application to intervene, Defendants’ opposition, and Robert Whitmore’s response thereto. Prospective Intervenors are Plaintiff’s counsel. The request for judicial notice of various court documents is GRANTED. (Evid. Code ; 452.)

Pursuant to CCP ; 387(c), “[a] nonparty shall petition the court for leave to intervene by noticed motion or ex parte application.”

On February 24, 2017, Plaintiff Glenn Spears filed a complaint for: (1) harassment based on race/color and ancestry (Gov. Code ; 12940(j), (k)); (2) failure to investigate, stop, and prevent harassment (Gov. Code ; 12940(j), (k)); (3) negligent retention and supervision; (4) intentional infliction of emotional distress; and (5) negligent infliction of emotional distress. On March 16, 2020, Defendants filed a Notice of Settlement of Entire Case. On May 29, 2020, Robert Whitmore, Chapter 7 Trustee of the bankruptcy estate of Glenn Spears filed a Notice of Approval of Settlement by Bankruptcy Court and a Request for Dismissal with Prejudice.

The settlement agreement between Whitmore, as Chapter 7 Trustee, and Defendants provides, in relevant part: “The Released Claims including, without limitation, Spears’ claims under the California Fair Employment and Housing Act, . . . and all claims for attorneys’ fees, costs and expenses, (RJN Ex. 2, Ex. 1 at 24 ¶ 4), “[t]he parties to this Agreement shall bear all of their own attorneys’ fees and litigation costs relating to the Litigation and Settlement.” (RJN Ex. 2, Ex. 1 at 27 ¶ 9.)

Prospective Intervenors were served with the Motion for Order Approving Compromise on April 9, 2020. (RJN Ex. 2.) The Order Approving Compromise of Controversies entered by the Bankruptcy Court attached to the May 29, 2020 Notice of Approval of Settlement by Bankruptcy Court indicates Prospective Intervenor Sara Poster appeared at the May 5, 2020 hearing approving the compromise.

Prospective Intervenors contend, as Plaintiff’s counsel, they have a direct and immediate interest in statutory attorneys’ fees and costs in this FEHA action, and have a right to intervene. Prospective Intervenors argue the upcoming deadlines to file a memorandum of costs and motion for attorneys’ fees warrant ex parte relief.

Under the procedural circumstances outlined above, the court does not find intervention into this case appropriate. None of the cases cited by Prospective Intervenors support intervention herein. In Flannery v. Prentice (2001) 26 Cal.4th 572, 576 the jury awarded plaintiff in a FEHA case $250,000.00 in damages and the court ultimately awarded attorneys’ fees in the amount of $971,684.00. Plaintiff sued her counsel to recover the fee amount. The Court held once fees were awarded, they were the property of counsel. (Id. at 577 (“We conclude that any proceeds of a section 12965 fee award exceeding fees the client already has paid belong, absent a contractual agreement validly disposing of them, to the attorneys for whose work they are awarded.”).) Here, no such fee award has been made and the case did not proceed to judgment. Rather, Prospective Intervenors seek to obtain a post-settlement fee award where the real party in interest expressly waived the right to seek attorneys’ fees in this action. The Court in Flannery suggested that the client retains such a right:

in recognizing that counsel should, absent contract, receive the proceeds of any section 12965 award exceeding fee payments made, we would confer no “exclusive possession of the right to collect attorney's fees” (State Bar Advisory Opn., supra, at p. 2) such as might compromise public policy favoring client control over settlement of FEHA cases. . . . Obviously, it is not necessary that we deprive attorneys of FEHA fees in cases where they have in fact been sought and awarded in order to vindicate the principle that a civil rights plaintiff may, in order to effect settlement, agree to waive the right to seek fees.

(Flannery, supra at 587.) Prospective Intervenors are attempting to impose “exclusive possession of the right to collect attorney’s fees” that the Court in Flannery sought to avoid.

Similarly, in Lindelli v. Town of San Anselmo (2006) 139 Cal.App.4th 1499, 1504-1517 the court allowed attorneys to intervene to obtain attorneys’ fees pursuant to CCP ; 1021.5 after petitioners obtained a declaration that a contract violated the stay provisions of Election Code ; 9241. However, the court in Lindelli expressly noted:

It may be that a trial court would be justified in denying intervention to an attorney seeking to move for fees when intervention would interfere with settlement on the merits. (See also, Evans, supra, 475 U.S. at p. 728 & fn. 14, 106 S.Ct. 1531.)

(Lindelli, supra at 1513 n.10.) Unlike Lindelli, this case did not proceed to judgment and was dismissed after settlement. Prospective Intervenors seek to interfere with the settlement agreement approved by the Bankruptcy Court.

In Henry M. Lee Law Corp. v. Superior Court (2012) 204 Cal.App.4th 1375, the court permitted counsel to intervene to amend an attorney fee order to state the fee award “should be made payable directly to the attorney,” extending Flannery to apply to Labor Code Sections 1194 and 226. (Henry, supra at 1388.) Here, no such award has been made and Henry is inapplicable. In Mancini & Associates v. Schwetz (2019) 39 Cal.App.5th 656 Plaintiff’s attorneys sued the defendant for interference with contract and economic advantage after the defendant obtained a settlement from plaintiff, without the attorney’s knowledge, releasing the attorneys’ fees and costs due to the Mancini firm pursuant to its agreement with the plaintiff. Thus, Mancini is inapplicable to Prospective Intervenors’ request to intervene.

Generally, the client has the right to settle an action without the attorneys’ consent. (See e.g. Calvert v. Stoner (1948) 33 Cal.2d 97, 103 (“a contingent fee contract providing that the client may not compromise the suit without the consent of his attorney is against public policy and void.”).) In bankruptcy, the bankruptcy trustee has the sole power to pursue and settle legal claims. (See generally 11 U.S.C. ; 323; Jones v. Harrell (11th Cir. 1988) 858 F.2d 667, 669.)

The court finds the settlement and the Bankruptcy Court’s order approving thereof, with notice to Prospective Intervenors, waiving the right to recover attorneys’ fees and costs in this litigation weighs against their intervention to file requests for attorneys’ fees and costs in this case. Prospective Intervenors have not demonstrated a sufficient interest to intervene.

Accordingly, Prospective Intervenors’ Ex Parte Application to Intervene is DENIED in its entirety.