Lawyer didn’t meet requirements to enforce fee sharing agreement, panel says

Finding a lawyer did not meet the requirements to enforce a fee agreement with another, the 3rd District Court of Appeal has reversed a San Joaquin County jury.

The jury found Stockton attorney Kenneth N. Meleyco owed fees and interest to attorney Robert K. Reeve of Valley Springs. But a unanimous three-judge panel found that even though the client understood the fee arrangement, he did not sign the necessary documents needed in order to enforce the referral fee. Reeve v. Meleyco, 2020 DJDAR 2627.

The original case involved a lawsuit brought by a man whose wife was killed in a car accident while his daughter was seriously injured. Reeve did some early work in the case but referred the matter to Meleyco. After the client began to complain he was worried his ultimate payout would be reduced due to the involvement of two attorneys, Meleyco sent Reeve a letter stating he would pay him 25% of his own fee.

The client signed a letter stating Reeve's fee would come out of Meleyco's fee, not from the plaintiff. Meleyco reached a nearly $3.4 million settlement with Penske Truck Leasing in 2007. He paid Reeve $20,000 out of attorney fees of $177,187.50. In 2011, Meleyco obtained a $900,000 settlement with the State of California, receiving $180,000 in attorney fees but paying Reeve nothing.

Reeve sued in 2014. A jury determined the statute of limitations ran out for the 2007 settlement but awarded Reeve $78,500 and nearly $50,000 in interest from the latter settlement.

Citing Chambers v. Kay, 29 Cal. 4th 142, 147-61 (2002), Justice Louis R. Mauro found that under State Bar rules at the time, the client's signature on a document informing him of the fee arrangement was not sufficient to show his consent.

"Written consent requires written words expressing agreement or acquiescence, not just words expressing receipt or understanding," Mauro wrote for the panel in the opinion published Tuesday.

-- Malcolm Maclachlan