Majority Remands So That Quantum Meruit Recovery Can Be Considered; Dissent Believes Neither Contractual Nor Quantum Meruit Recovery Should Be Awarded.
Dear Readers, as we approach the three-day Labor Day Weekend, which I hope each of you will enjoy, I would like to spare your having to read a California Supreme Court majority slip opinion that is 43 pages long, followed by a dissent that is 30 pages long. However, if you want to read the majority opinion and the dissent too, just click here. Sheppard, Mullin, Richter & Hampton v. J-M Manufacturing Company, Inc., S232946 (Sup. Ct. 8/30/18) (maj: Kruger, Corrigan, Liu, Cuellar, Nares) (dsst: Chin, Cantil Sakauye, C.J.).
The law firm represented J-M Manufacturing Company, Inc. in the defense of a federal qui tam action. It also represented South Tahoe Public Utility District, one of the parties suing J-M. The law firm also obtained conflict waivers from the parties, without, however, disclosing to the parties that it represented their opponents in other matters. A fee dispute arose between J-M and the law firm. The fee dispute was sent to arbitration, and the arbitrator awarded fees on the contract to the law firm. The superior court confirmed the award. However, the Court of Appeal reversed, holding that the law firm was precluded from obtaining contractual fee recovery because of its failure to disclose the existing conflict. I blogged about the Court of Appeal opinion on January 31, 2016.
The Supreme Court majority, as well as the two dissenters, agreed that the Court of Appeal was correct to deny contractual fee recovery based on the undisclosed conflict. However, the majority remanded for consideration of the possibility of equitable recovery in quantum meruit, whereas the dissenters would have held that the disqualification from fee recovery should be total.
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