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Severson & Werson v. Bolinger
Citations: 235 Cal. App. 3d 1569; 1 Cal. Rptr. 2d 531; 91 Cal. Daily Op. Serv. 9085; 91 Daily Journal DAR 14159; 1991 Cal. App. LEXIS 1309Docket: A048793
Court: California Court of Appeal; November 18, 1991; California; State Appellate Court
In Severson v. Bolinger, the Court of Appeals of California addressed the obligations of law firms regarding fee agreements. The court determined that if a law firm quotes specific hourly rates to a client who subsequently agrees in writing to pay those rates, the firm must notify the client before increasing those rates. The Bolingers, defendants, appealed a judgment favoring Severson, the plaintiff, which awarded Severson $138,584.97 for unpaid fees after representing the Bolingers in litigation against Sperry Corporation from 1980 to 1984. Initially, the Bolingers had requested nonbinding arbitration, which resulted in an award to Severson that they rejected in favor of a trial. During the trial, the court found that Severson had increased its hourly rates without informing the Bolingers, who were initially quoted $110 and $90 per hour for two attorneys. The court's findings were backed by substantial evidence. Following the trial court's tentative decision and subsequent judgment, the Bolingers filed several motions to challenge the rulings, including requests to vacate the judgment and modify the statement of decision. Notably, the Bolingers also filed for bankruptcy, which led to an automatic stay of proceedings against them. The court ultimately upheld the findings and the judgment, emphasizing the importance of transparency in billing practices between attorneys and clients. The court determined it lacked jurisdiction to consider further motions while a bankruptcy court stay was active. After Bolinger filed an appeal, the bankruptcy court retroactively granted Severson relief from the automatic stay, tolling all state court time periods from December 11, 1989, until March 18, 1990. Bolinger contended that Severson could not unilaterally alter the hourly rates for attorneys Ryland and Wood, and the court agreed. The dispute centered on differing interpretations of the fee agreement. Severson interpreted "our regular hourly rates" to allow for undisclosed rate changes, while Bolinger believed the quoted rates were fixed. Attorney fee agreements must be evaluated at the time of their creation, ensuring they are fair, reasonable, and clearly understood by clients, with any ambiguities construed against the attorney. The Legislature's statutes require specific disclosures in attorney fee agreements, emphasizing that clients must understand billing procedures. The agreement in this case did not clarify what constituted "regular hourly rates" or indicate any permissible rate changes, leading to a conclusion that the fee provisions should favor Bolinger. Additionally, Bolinger contested Severson's claims for prejudgment interest, costs, and attorney fees, which should be resolved by the trial court on remand. The judgment was reversed and remanded for a hearing on damages, prejudgment interest, costs, and fees, while all other aspects of the judgment were affirmed. A rehearing was denied, and a petition for Supreme Court review was also denied.