If I remembered my case law correctly, I had another argument. Courts are reluctant to enforce non-compete agreements, especially against lawyers. To do so would impinges on a client's choice of counsel; something legal ethics cherish.
The hearing wasn't until tomorrow afternoon. The Hastings College of Law was near the courthouse. I'd use its library tomorrow morning. It shouldn't be difficult to find some cases to cite to the judge that would buttress my case.
*
That night when I told Keiko that L&P was suing me, she shook her head in disgust. "I never did respect Robert Beresford's judgment. But I didn't think penny-pinching Jack Fong would go along. I thought he'd jump at the opportunity to drop the non-compete if L&P could avoid paying you. As Jack is so fond of saying, it would be a win-win solution. Plus, a lawsuit invites more publicity concerning Hale and Morgado. Why would they take the chance?"
I thought for a moment. "Perhaps, Robert's not such an idiot. He may be afraid I'd sue L&P. So, L&P sues me first. That way they forestall my use of Brad's supposed kidnapping to gain sympathy. If they succeed, fine. If not, they at least obtain a court order that releases their payment obligation."
Keiko shook her head. "If it was that simple, why didn't Robert take you up on your offer to release them from payment when you talked to him?"
"Maybe he's had second thoughts," I replied.
"Why do I doubt it?" she asked rhetorically.
I shared her doubts. Was I missing something obvious
-9-
I'm not sure why, but at that moment I bolted up in bed wide awake. Had I overlooked the obvious?
I looked at my clock. It was two in the morning. The Hastings law library wouldn't open until eight. But I didn't need to go to a library to learn if I had overlooked the obvious.
I turned on the lights and bustled to my study. I yanked a pamphlet off a shelf and flipped through the pages. To my dread, I confirmed my apprehension. Both the California Rules of Professional Conduct and the American Bar Association rules prohibit non-compete agreements. Unfortunately, each contains a significant exemption. A non-compete agreement is valid if it requires payments upon retirement from the active practice of law.
The non-compete I signed did just that. L&P had a solid basis for enforcement. My only hope was to argue failure of consideration. L&P hadn't kept its part of the agreement. It hadn't paid me a cent. Such a failure generally voids an agreement.
Of course, L&P could easily counter by arguing that the payments were only slightly past due. It could ask for additional time to cure the default. The court probably would grant the additional time. In the interim, I'd be subject to a temporary restraining order.
I plodded back to the bedroom, turned off the lights, and brooded. How could I be so stupid? I always told clients, not to sign anything without reading it and understanding the implications. It sure would've been nice if I'd followed my own advice. Instead, I signed an agreement that I didn't read and then charged off half-cocked. As a result, after tomorrow I might not be able to practice law. I truly was an idiot.
Aren't you being a little hard on yourself?" Keiko asked.
I didn't realize that I'd dozed off. I was thankful I had. To spend the rest of the night tossing and turning wouldn't help.
"I deserve all the scorn I can heap on myself. My carelessness may cost me the case." I sighed. "But there's nothing I can do about it now. I'll just have to present the best case I can tomorrow afternoon. I wish the hearing notice had specified the presiding judge."
Keiko wrinkled her forehead. "Why's that important?
"If I know the judge, I can tailor my arguments to his tendencies. Some judges care most about legal precedent; others trying are concerned about doing what they think is fair. But I don't, so I'll just have to follow Quincy's advice. Concentrate on presenting my best arguments and let the chips fall where they may."
"I'm sure your arguments will convince any judge on the planet," she said.
I didn't have the same confidence. "I need to take my mind off the hearing. Let my thoughts percolate in the background."
-10-
Overnight I hadn't dreamed up any clever arguments. Unless something came to me soon, by the end of the day L&P might have a court order thwarting my plans.
After I dressed, I hopped in my BMW. When I merged into Highway 101, the sunlight angled through the windshield and created a glare that made it difficult to see the road ahead. I remembered the last time I'd driven to San Francisco in such glare. It had been the day I'd been forced out at L&P and signed the frigging agreement. Not an omen I liked.
I stopped long enough at the Hastings library to find some failure-of-consideration cases I could cite. When I reached the courthouse steps, a line of attorneys and clients waited patiently to pass through building security. When I stepped into the building, the orderly line outside the courtroom transformed into bedlam. Lawyers, clients, and jurors raced across the rotunda, sprinted up the staircase two steps at a time, or milled around the elevator doors.
You can always spot the big-firm lawyers. The senior partner and the junior partner gravely whisper in each other's ear while in their wake flutter a horde of young associates carrying black litigation briefcases. The youngest associate always races ahead to pound the elevator button so that senior partner won't have to wait. No wonder clients complain about exorbitant litigation costs. The push of the elevator button alone probably costs over $100. I knew the scam because until four weeks ago I'd been a big-firm lawyer.
I spotted a bulletin board where the day's docket was posted. I searched for Lott & Pembroke v. Hobart L. Burrows, III. When I found it, I didn't know whether to be happy or sad. Because of the court's heavy caseload, L&P motion would be heard by Judge Martin Rykoff. Quincy had said that in Judge Rykoff's prime, Rykoff had been the finest trial judge in the city, if not the state. But had to be at least 80 years old. I'd heard that even though at times he remained brilliant, he was going senile. In the middle of an argument he frequently lapsed into never-never land.
To make it worse, Judge Rykoff's calendar was jammed. L&P v. Burrows was the last of fifteen motions the judge would hear. There would be hours of tedious waiting while those motions were argued. Even if Judge Rykoff wasn't senile, at his age he'd be exhausted long before L&P v. Burrows could be heard. He'd want to get the last case over with as quickly as possible. As quickly as possible meant granting the temporary restraining order and passing to another the judge the responsibility for a permanent injunction hearing.
The assigned courtroom was on the third floor. A crowd of briefcase carrying lawyers waited at the elevators, including Robert Beresford and Jack Fong. I had no desire to talk to them, so I headed for the stairs. I didn't look where I turned and bumped into someone.
"Sorry," I said without looking up.
"Hobie, stop," a familiar voice said. "You have one hell of a lot of explaining to do.
I looked up. A face red with rage glared at me. "Hello, Georgia." I hoped there wouldn't be a public scene.
"Why didn't you tell me?" she said in a whisper that cut through me more than if she'd yelled. "Do you think I enjoy showing office space to someone who's violating a non-compete? This could ruin my reputation. People will think I knew and didn't care. That all I was interested in was a commission."
"I'm sorry. Since they never paid me, I didn't think they'd carry it this far."
Her arm twitched and thought she was going hit me with her Gucci handbag. "Well, you were wrong and my reputation will suffer because of it."
"We'll find out in court who was wrong," I said a little more bitter than I should have. "There's two sides to this case, and mine hasn't been heard."
She stomped off. Even though I didn't think I'd done anything wrong, she had every right to be mad. I should have told her of the non-compete so she could decide if she wanted to represent me. I could understand
how she thought I'd acted like a self-centered jerk who didn't care if my actions hurt others.
I trudged up the stairs. When I reached the courtroom the three rows of benches behind the counsel tables were packed with attorneys waiting for their motions to be called. I had to stand against the back wall. Robert and Jack were in the front row with Georgia and a man I didn't know sitting next to them. He could be the person who'd been following me and would testify about my driving to Eloise's.
The clerk called the room to order and the Judge entered. Judge Rykoff hadn't changed much physically in the twenty years since I'd last appeared before him. He still reminded me of a tall scarecrow. The only noticeable change was that his shock of brown hair had turned silver. He also continued his habit of sitting straight backed in his chair so that he towered over everyone in the courtroom.
Rykoff's mental capacities also remained intact, most of the time. He listened to the arguments, asked a few insightful questions, and then ruled decisively, and in my opinion, correctly. All of which bode well for my arguments. A few times, though, he stopped in mid-sentence as though he forgot what he was going to say and then asked a question unrelated to the question he'd started to ask. I couldn't decide, though, if that was his technique to ask unexpected questions or if he was in fact senile.
As the motions were heard and decided, the courtroom became less and less crowded. Finally, only the last case remained.
"Next case," Judge Rykoff said in his smooth baritone.
My heart beat faster. "Lott & Pembroke versus Hobart L. Burrows, III," the clerk stated crisply.
I stepped to the defendant's counsel table and faced the Judge. Robert and the stranger walked to the other counsel table.
"And who represents whom in this case?" the Judge asked.
The stranger rose. "George Bresh of Cannady & Bresh, LLP, representing Lott & Pembroke."
I took a shallow breath. Cannady & Bresh were the pit bulls of the litigation bar, and the crew-cut and squat George Bresh resembled a pit bull.
"Hobart Burrows for himself," I said in voice that sounded shaky even to me.
Judge Rykoff peered down at the file. "I see that you were only served yesterday, Mr. Burrows. Would you like a two-day continuance until you can find counsel to represent you?"
"I object, your Honor," Bresh said. "Mr. Burrows is a long-time member of the San Francisco bar. He could easily have contacted any of dozens of lawyers that he knows to represent him. He chose not to and my clients shouldn't suffer any delay because of such an obvious ploy by Mr. Burrows."
I hadn't even thought of hiring someone to represent me or of using the lack of representation to ask for a delay. If L&P had counsel, should I do the same since I apparently had missed something obvious? I took a deep breath. I couldn't become rattled. "No, your honor. I can do so later if this matter moves to a hearing for a permanent injunction."
Judge Rykoff lowered his head and peered down his nose at me. "Surely you're aware, Mr. Burrows, of the legal standard regarding the issuance of a temporary restraining order. A temporary restraining order can be issued only if I find at this hearing that a permanent injunction will likely be issued."
"Yes, your Honor. I'm aware of that."
The corner of Judge Rykoff's mouth twitched. "And you still wish to proceed."
"Yes, your honor."
The judge nodded. "Mr. Bresh, you may present your case."
"I call Mr. Robert Beresford to the stand."
After the clerk swore in Robert, Bresh handed Robert some sheets of paper. "Is this a copy of the complaint filed in this case?"
Robert made a show of flipping through the papers. "Yes."
"Please refer to Exhibit 1 of the complaint and tell me if you are familiar with it."
Robert folded back several pages. "Yes."
"Can you tell me what Exhibit 1 is?"
"It is an agreement between my firm, Lott & Pembroke, and Mr. Burrows pursuant to which he retired from the firm."
"Would you please review Section 3(a) of this agreement?"
Robert turned over a page. His eyes moved back and forth as he read. I wanted to object and yell that he didn't need to read the section, he wrote it himself.
"Mr. Beresford, please tell the court what this section provides."
"Section 3(a) provides that Hobie, I mean, Mr. Burrows, will not engage in the practice of law in San Francisco County or any contiguous county subsequent to his retirement from Lott & Pembroke."
Bresh nodded. "Now, please review Section 3(b) and tell me what it provides."
Robert went through the same charade of reading the section. "Section 3(b) states that in exchange for Mr. Burrows promise not to practice law, the firm would pay him a lump sum equal to his draw for the prior year and -"
"If I may interrupt, Mr. Beresford, what does the term draw mean?" Bresh asked.
I rolled my eyes. Like every other lawyer on the planet, Judge Rykoff knew what "draw" meant.
"Oh yes, I should have mentioned that. Under the Lott & Pembroke partnership agreement, a partner's draw is the partner's percentage interest in the partnership's profits."
"Thank you, Mr. Beresford. Please continue."
"Section 3(b) also provides that Mr. Burrows would be paid an unreduced lifetime pension from the firm's retirement plan."
"Do all partners who leave Lott & Pembroke sign a non-compete agreement?"
Robert shook his head. "No. In accordance with legal ethics, only those who retire from the practice of law can be bound by a non-compete."
Bresh nodded. "How does a partner become eligible for an unreduced pension?"
"Normally, someone must have been a partner for at least 20 years and be at least age 65."
"How old was Mr. Burrows when he retired?
"Fifty-five."
Bresh rubbed his chin. "If Mr. Burrows was only 55, why did his retirement agreement provide for an unreduced pension?"
"Hobie had-" Robert took a deep breath. His Adam's apple bobbed. "Hobie had alienated the firm's most important client. The client threatened to take his business to another firm if Hobie remained with the firm. To induce Hobie to leave without creating an ugly scene, the firm's management committee decided to give him the year's draw and an unreduced pension if he'd agree to retire."
Bresh puckered his lips. "Who was the client that Mr. Burrows alienated?"
"Jack Morgado."
Bresh stepped closer to Robert. "Since Mr. Burrows has retired, has Mr. Morgado retained his relationship with Lott & Pembroke?"
Robert lowered his head for a moment before answering. "Mr. Morgado died in a plane crash the week after Hobie retired. Brad Hale, the chairman of the firm's management committee, also died in that crash. Their deaths and the circumstances thereof have devastated the firm."
I thought Bresh might ask about Keiko and try to sling some mud at her and imply that she was having an affair with the good-looking Brad Hale. Instead, he merely nodded. "I'm sorry to hear that. I know this isn't easy, but I'm afraid I have to ask a few more questions."
"Okay," Robert replied softly.
"My understanding is that ERISA, the Employee Retirement Income Security Act of 1974, prohibits what are commonly referred to as bad-boy clauses in retirement plans. One such bad-boy clause is a non-compete requirement. Does the non-compete requirement in Mr. Burrows retirement agreement violate ERISA?"
I hadn't even considered ERISA, and Bresh wouldn't bring it up if it would hurt his case. I had no doubt that Robert's response would validate the non-compete.
"No. ERISA's bad-boy prohibition does not apply to the L&P partners' pension plan."
"Why is that?"
"ERISA exempts a plan that covers only partners provided plan benefits are paid from the firm's general assets rather than a trust fund."
Bresh paused. The man was a pro. He'd brought out legal ethics and then covered the highly technical area of pension la
w. He'd forgotten one point though. I hadn't been paid a cent.
Bresh stepped back. "If I may summarize then, in accordance with legal ethics and ERISA, Lott & Pembroke and Mr. Burrows entered into an agreement under which Mr. Burrows would receive generous retirement payments in exchange for his retirement from the practice of law."
Robert nodded.
"When were these generous payments to be made?"
I thought about objecting to Bresh's use of the word "generous," but didn't. Even I had to admit the payments were generous.
"The lump sum amount was to be paid within ten days of the date of the agreement and the pension was to commence as of the first day of the month following the date of the agreement."
"Have these payments been made."
What was Bresh up to? This was the one thing I'd counted on bring out in cross-examination. My breath became light because I knew Bresh had something planned that would devastate the basis I hoped to use to void the agreement.
Robert swallowed and his Adam's apple bobbed. "No."
Bresh gave Robert a stern look as though he was surprised by the answer. "Why not?"
"Mr. Burrows traveled to France the day after he signed the agreement. I was unable to contact him to ask where to deposit his checks before the ten days passed. While Hobie was in France, the plane crash occurred." Robert closed his eyes.
Bresh stepped closer to the witness stand. "I know this is difficult, Mr. Beresford. Would you like to take a break?"
Robert blinked his eyes. "No. I'll be okay."
Grudgingly, I had to admire Bresh's tactics. He coached Robert on how to come up with an excuse and to gain sympathy at the same time. Thankfully, Judge Rykoff had been around long enough to see through a well-coached witness. I hoped.
"Please continue, Mr. Beresford."
"In addition to Brad Hale and Jack Morgado, Hobie's fiancée died in the plane crash. So, quite frankly, I had more important things to worry about, and I assumed Hobie did too."