Professional Documents
Culture Documents
BOSTWICK & JASSY IIT GARY L. BOSTWICK, Cal. Bar No, 79000
JEAN-PAUL JASSY, Cal. Bar No. 205513 KEVIN L. VICK, Cal. Bar No. 220738 a J 12400 Wilshire Boulevard, Suite 400 Los Angeles, California 90025 4 Telephone: 310-979-6059 Facsimile: 3 1 0-3 l4-840 I
5
ii"!.t
i,
I
8
Case No,
8C476847
IO
COMPLAINT FOR:
T2
IJ
vs,
I6 I7
capacity as lnterim Chief Trial Counsel of the State Bar of the State of California, and DOES
l-100, inclusive,
Defendants.
i8
T9
VIOLATTON OF THE DUE PROCESS CLAUSE OF THE FOURTEENTH AMENDMENT OF THE LINITED STATES CONSTITUTION AND ARTICLE I, SECTION 7 OF THE CALIFORNIA CONSTITUTION;
DECLARATORY RELIEF:
20
21
22
23
aA
L-t
$ 52.1
25
26 27 28
-1-
as
follows:
2
3
1)
This lawsuit challenges the constitutionality of Senate Bill 94 ("SB 94"), codified in,
4
5
without limitation, California Civil Code $S 2944.6 and29tA.7 and California Business and
Professions Code $ 6106.3, as it is being applied and enforced by the State Bar of California
("State Bar") to prohibit attorneys from entering into phased or "unbundled" fee agteements when representing clients related to loan modification services. PlaintiffTaylor seeks to enjoin the enforcement of SB 94 in that regard arid prays; for declaratory judgment that these provisions
as
9 10
11
applied and interpreted by the State Bar violate the United States and California Constitutions.
PARTIES
tI
2)
I2
ta
State Bar of Califomia to practice law, is benehcially interested in this matter and has suffered
IJ
injury within one year of the filing of this action by virtue of the unconstitutional interpretation
and enforcement of SB 94 by the State
t4
15
Bar. I{e also brings this suit for declaratory relief on behalf
of all other persons damaged by the actions of the State Bar by its illegal application of SB 94, including on behalf of other members of the Sitate Bar and citizens of California seeking legal
16
t7 representation in dealing with financial institutions with respect to loan modifications during this
18 19 era ofsevere financial crisis.
20
3)
Defendant State Bar is a public corporation within the judicial branch of government,
2I
22
serving as an arm of the California Supleme Court. It maintains offices in Los Angeles County at I149 South Hill Street, Los Angeles,
24
25
4)
Defendant Jayne Kim is the lnterim Chief Trial Counsel of the State Bar and is a resident
of Los Angeles Counry, Defendant Kim is re,sponsible for the enforcement of some of the
provisions of SB 94 challenged by Plaintiffherein. She is sued both in her ofhcial and personal capacity.
26 27 28
-L-
,)
COMPLAINT
5)
their official and personal capacities and are presently unknown to Plaintiff, who therefore sues
such defendants by fictitious names,
J
4
5
Plaintiffwill
and identities of these defendants when they have been ascertained. Does l-100 are responsible
for the interpretation and/or the enforcement c,f some of the provisions of SB 94 challenged by
Plaintiff herein.
6)
Plaintiff is informed and believes, and thereon alleges, that each defendant herein was the
9 10
agont or employee of each of the other co-defendants and, in doing the things hereinafter alleged, was acting within the course and scope of such agency or employment and with the permission and consent of their co-defendants.
il
I2
13
7)
16
I7
18
8)
The State Bar publicly takes the position that an attomey who provides a bonower loan
modification or other forbearance services may not agree with the bonower that the services
requested
19
will
be broken down into component parts and that a fee for each component part may
20
2l
22
23
9)
The State Bar also publicly takes the position that if the services to be provided are in fact
loan modification services or other forbearanc,l services, or are an integral part of such services, but the services are not expressly designated as "loan modification" services in the fee agreoment,
24
25
SB 94 would apply even if the services are labeled as something other than loan modification
services.
26 27 28
-3-
COMPIAINT
10)
The State Bar has publicized to its mernbers that the positions stated in the prior two
2
3
paragraphs must govern the conduct of its mernbers and those positions
will
be relied upon in
disciplinary proceedings.
4
5
l)
Plaintiff'has entered into engagement argreements with clients that speciff that he will
perform services described, among other thing;s, as: (a) Perform Financial Analysis of Client's Case; (b) Formulate Theory of Client's Case for Loan Modification; (c) Prepare Loan
Modification Package on Behalf of Client (Budget, Profit & Loss, Etc.); (d) Prepare a Demand
Letter Directed to Lender. This rype of agreernent is sometimes referred to as phased or
9 10
"unbundled" fee agreements in representing clients related to loan modification services. Plaintiff
and clients have entered into engagement agreements containing the above terms.
il
I2
la
IJ
lZ)
Plaintiff has on some occasions in the past and prior to the enactment of SB 94 charged
t4
15
and collected fees for each service listed in the paragraph above after his firm
specific service his firm contracted to perform and represented that it would perform.
l6
T7
l3)
Plaintiff is informed and believes and on that basis alleges that many other members of the
18 19
State Bar have structured engagement letters and have collected fees in the same manner as
20
2I
22
23
l4)
A violation of Civil Code $ 2944.7 sutrjects a person to substantial fines and penalties,
24
25
26 27 28
-4-
COMPLAINT
2 J
4
5
(3) Take any power of attorney from ttre borrower for any purpose. (b) A violation of this section by a natual person is a public offense punishable thousand dollars ($10,000), by ;rm not to exceed one year, or by both that by a business entity, the violation is punishable by a fine not exceeding fifty thousand dollars ($50,000). These penalties are cumulative to any other r,emedies or penalties provided by law,
by imprisonment
fine
6 7
8
exceeding ten thousand dollars ($ 10,000), by iimprisonment in the county exceed one year, or by both that fine and imprisonment,
t0
11
l5)
Defendants have initiated proceedings in the State Bar Court against Plaintifffor, among
I2
13
1A
other things, the practice of phased engagement agreements and subsequent collection of f'ees pursuant to phased engagement agreements.
l.t
15
l6)
The State Bar has provided Plaintiff and many other citizens contradictory and vague
16 17 18
directives and instructions about the interpretation and enforcement of SB 94. Shortly after SB 94
was enacted, the State Bar and its agents mader statements that were communicated to Plaintiffand others that phased or unbundled engagement agreements did not violate SB 94's provisions.
t9
20
17)
Plaintiff has been forced to alter his m<lde of entering into engagements with clients
so that
2l
22
23
in spite of the fact that in some given situations his duty to represent the best interests of a client would reasonably call for performing fewer than all of the phases of loan modification services
and charging only for those services of value he had completed, he and his firm must, in spite
of
24 25 26
contrary indications, perform all of the phased services in order to get paid. Thus, Plaintiffis foreclosed from aiding clients who need help in understanding and dealing with large financial
institutions and their agents in a manner tailored to each client's situation and as agreed to by the
zl
28
client. Plaintiff is informed and believes and on that basis alleges that many other members of the
State Bar are now forced to conduct themselves in a similar fashion.
-5-
COMPLAINT
I
2
l8)
The illegal application of SB 94 has caused monetary and other damages to Plaintiff by
limiting the manner in which he may enter freely into agreements with clients to aid them as he
has done for many clients in the past and for which he has been
justly compensated,
4
5
19)
20)
The State Bar takes the position in the application of SB 94 to its members that it does not
9 10
11
apply to contracts or fee agreements entered imto prior to October I l, 2009, but qualifies that
position in its public pronouncements by stating only that "advanced fees paid to an attorney prior to October I l, 2009 are not affected by SB 94," This statement thus leaves open the possibility of
State Bar as to contracts formed by its members before October l
t2 enforcement of SB 94 by the
13 T4 15
l,
2009 that result in services rendered and payments made after October 11, 2009.
16 T7 18 19
AJl5ffidants of Anicle I, Sectionl0 of the United Constitution and Article l, Seotion 9 of ttre California Constitution)
2,0 above as
States
21) 22)
zu;
20
infringe upon the rights of Plaintiff, other members of the State Bar and citizens of Califomia
seeking legal representation under Article
2l
22
23
states that no State shall pass any law "impairing the Obligation
of Contracts."
24
25
23)
Plaintiff, other members of'the State Bar and citizens of California seeking
26 21 28
l,
-6-
COMPLAINT
24)
By acting and threatening to act under the color of law to deprive plaintiff and other State
2
3
Bar members of rights guaranteed by the united States and california Constitution, defendants
have caused and threaten grave and ineparable damage to
plaintiffand others.
4
5
25)
As a direct and legal result of the acts imd omissions of these defendants, and each of them.
6
1
8
(For
9
10
11
ViolatioE
the California Constitution)
ffi &i"ffi
section 7 of
26)
I2
13 T4
27)
By acting and threatening to act in the rnanner alleged above, defendants have violated the
Due Process Clause of the Fourteenth Amendment of the United States Constitution.
i)
16
28)
By acting and threatening to act in the rnanner alleged above, defendants have violated the
19
29)
The challenged application of sB 94 by the State Bar violates the Due Process Clauses
of
20
l,
Section 7 of the
2l
22 ZJ
a)
By causing agents of the State Bar and prosecutors of the State Bar,s Office of
as
,ti
25
they choose
rather than as the language of SB 94 states, and subjecting Plaintiff and others to penalties and potential penalties under provisions of SB 94 that were not intended to apply to them under circumstances as they are being applied, thus depriving Plaintiff of property and
26 27
28
COMPI-A]NT
b)
2
3
penalties, for failing to comply with provisions of SB 94 as applied which lack standards that give Plaintiffand others adequate notice of their obligations, thus depriving plaintiff
4
5 6
30)
As a direct and legal result of the acts and omissions of these defendants, and each of them,
(For Declaratory
10
1l
T2 13
31) 32)
as though set
I4 i5
16
Plaintifl
as set forth
above. Defendants maintain that allof defendlants'enforcement efforts and planned enforcement
are constitutional and lawful.
I7 efforts
18
T9
33)
such
20
a declaration,
Plaintiff will be uncertain about his rights and responsibilities under the challenged
2l
22
./.)
provisions and may face substantialpenalties and fines if he does not comply with the provisions
as
wrongfully interpreted by the State Bar. Without such a declaration, Plaintiff will be required
to forego rights guaranteed under the United Sitates and California Constitutions to avoid risking
such penalties.
24
25
26
.l'l
dants)
28
34)
as though set
2
3
35)
are acting
4
5
suffering and will continue to suffer irreparable injury as a result of the enforcement and
threatened enforcement of the challenged provisions of SB 94 by the State Bar as set forth above.
36)
8
an unconstitutional scheme
of
enforcement by the State Bar or risking substamtial penalties if he does not comply with the
challenged provisions
9 10
11 T2
la
ofSB
94.
37)
IJ
T4 15
(ForViolationsof42u.imandDefendantSDoesl-l00
in their official capacities)
l6
I7
18
38) 39)
as though set
The actions of Defendant Kim and Does 1-100 described above deprived the
Plaintiffof
procedural and substantive Due Process rights conferred upon him by the Due Process Clause
I9
the Fourteenth Amendment to the United States Constitution. 20
of
2I
22
40)
The actions of the State Bar, as describ,ed above, were arbitrary and capricious and
therefore violated the substantive Due Process rights of Plaintiff. In addition, Plaintiffs
23
.A L-t
procedural Due Process rights were violated because there was no "procoss" by which Plaintiff could challenge the unconstitutional interpretation and enforcement of SB 94 in the State Bar
25
Court. He has been forced to bring this action to protect his Due Process Rights. The deprivations
26 of the procedural and substantive Due Process rights of Plaintiffwere a proximate result of the 27 policies, procedures, practices, and/or customs;maintained by Defendants, and each of them. 28
-9-
COMPLAINT
2 J
a
4l)
Defendants Kim and Does 1-100, and each of them, acted with deliberate indifference to
the rights of
Plaintiff. As a direct and legal result of the acts and omissions of these defendants,
4
5
tial.
6 n
8
42)
The aforementioned acts of defendants;Kim and Does l-100, and each of them, were
willful, wanton, malicious and oppressive thereby justiffing the awarding of exemplary and
punitive damages against those defendants,
9 10
(For Violations
1i t2 43)
13
oFtEiltl@
I4
15 16
1,7
44)
The aforementioned acts of defendants, and each of them, interfered with the exercise
and/or enjoyment of rights sesured by the Constitution and laws of the United States and the Constitution and laws of Californi4 including, but not limited to, procedural and substantive Due
Process rights. Said interference was accomplished by the inaccurate and illegal interpretation and
18
enforcement of SB 94,
I9
20
45)
As a direct and legal result of the acts end omissions of these defendants, and each of them.
suffered damages in an amount to proven at trial.
2l Plaintiffhas
22
23
46)
24
25
26 27 28
47)
-10-
COMPLAINT
48)
Plaintiff also seeks to recover the costs of this suit and, pusuant to Califomia Civil Code $
2
3
4
5
49)
This Court has the power under Code of Civil Procedure $1021.5, the',private Attomey
6
7
8
General Doctrine," to award attorneys' fees to Plaintiffwhere (a) a significant benel4 whether pecuniary or nonpecuniary, has been conferrecl on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement are such as to make the award appropriate, and (c) payment of such fees is more appropriately made by defendants rather than from the recovery of funds at issue in this action.
9 10
ll
T2 13 ),4 15
50)
This Court has the power under Govemment Code $800 to award attomeys' fees to
Plaintiffwhere the actions of a public entily or official are found to be wholly arbitnry or
capricious.
t6 t7
18
51)
This Court also has the power to award attomey fees and costs pursuantto 42 U.S.C.
S 1988 to a
I9
20
52)
This Court also has the power to award attorney fees and costs pursuant to Cal. Civ. Code
52.1(h).
2l
22 WF{EREFORE, Plaintiffprays for judgment against defendants, and each of them,
as
follows:
24
25
l) Z) 3)
enforced by the defendants violate the United States and California Constitutions;
26 27 28
A preliminary and permanent injunction prohibiting the defendants from enforcing the
4)
An award of attorneys' fees pursuantts 42 U.S.C. 1988, California Civil Codeg 52.1O), $
Cal' Code Civ. Proc. $ 800 and California Code of Civil Procedure$ 1021.5 against all defendants.
5) 6)
np
9 10
11
By
l2
13
t4
15
16
t7 l8
19
20
2I
22 23
24
25
26 't1 at
28
-12-
COMPI-AINT