Engel & Engel v. Shuck CA2/2

FACTS AND PROCEDURAL BACKGROUND

I. Underlying Transactions

Over a decade ago, two persons solicited investments in a surgical building in Newport Beach from Wells Fargo Equipment Finance, Inc. (Wells Fargo), from John and Judith DeLong (the DeLongs), and from Leona Horowitz (Horowitz). When the investments failed, Wells Fargo, the DeLongs, and Horowitz sued the solicitors in separate lawsuits for misuse of their funds. In the spring of 2014, Engel & Engel, LLP (plaintiff) was retained to do the forensic accounting in support of one or more of these pending lawsuits. Although Wells Fargo, the DeLongs, and Horowitz discussed a pooling arrangement under which the three would split the costs of plaintiff’s services, only the DeLongs and Horowitz signed retainer agreements with plaintiff. Plaintiff

2 ended up billing over $110,000 in fees on the pending lawsuits in May, June, and July 2014. Although plaintiff allocated its bills between Wells Fargo, the DeLongs, and Horowitz, only Horowitz paid those bills. In 2014, plaintiff sued the DeLongs for its unpaid fees. During the ensuing arbitration, plaintiff took the positions that the DeLongs were solely responsible for all of the…