## United States Court of Appeals FOR THE EIGHTH CIRCUIT

_____________ No. 97-1904

_____________ Hillside Enterprises, Inc., a Missouri * general business corporation, doing * business as Hillside Vineyards, * * Plaintiff, * * v. * * Appeals from the United States Continental Carlisle, Incorporated, * District Court for the * Eastern District of Missouri. Defendant - Appellee, * *

------------------------------ * * John A. Walsh, * * Movant - Appellant. *

_____________ No. 97-1907 No. 97-1908

_____________ Hillside Enterprises, doing business * as Hillside Vineyards, Inc., a Missouri * general business corporation, * * Plaintiff - Appellee, * * v. *-2- *The Ho norable Pasco M. Bowman became Chief Judge of the United State s 1 Court of Appeals for the Eighth Circuit on April 18, 1998. -3- Continental Carlisle, Incorporated, * * Defendant - Appellant. * *

------------------------------- * * John A. Walsh, * * Movant - Appellee. *

_____________ Submitted: April 16, 1998 Filed: June 23, 1998

_____________ Before McMILLIAN, BOWMAN, and MURPHY, Circuit Judges. 1

_____________ BOWMAN, Circuit Judge. Hillside Enterprises and Co ntinental Carlisle entered into a purchase agreement whereby Continental was to develop and manufacture, and Hillside was to purchase, a semi-disposable wine glass product. Hillside later sue d Continental alleging a breach of the purchase agreement and misrepresentation. Continental counterclaimed, seeking to recover for shipments of the product already delivered to Hillside. On March 28 , 1994, after a jury trial, the District Court entered a judgment for Hillside in the amount of $ 465,000.00 on its claims and a judgment for Continental in the amount o f $164, 948.17 on its counterclaim. We affirmed the judgments and ruled that Con tinental was entitled to prejudgment interest on its counterclaim. See Hillsid e Enter. v. Carlisle Corp. , 69 F.3d 1410, 1416 (8th Cir. 1995).Walsh has never produced a copy of the original written retainer agreement. 2 -4- On Apr il 5, 1994, seven days after the District Court entered the origina l judgmen ts, Hillside and its counsel, John Walsh, executed an amendment to thei r original retainer agreement. The amendment changed Walsh's compensatio n from one- 2 third, which was purportedly the amount provided for in the original agreement, to onehal f of all sums recovered. On February 23, 1996, nearly two years after the trial , Wa lshinformed Continental for the first time that he was asserting an attorney's lie n against Hillside's judgment pursuant to Missouri law. See Mo. Rev. Stat. § 484.14 0 (1987). On March 8, 1996, Walsh moved to impress his lien upon Hillside's judgment
an d claimed that his lien had priority over Continental's right to offset its judgmen t ag ainst Hillside's judgment. The District Court held that Walsh's attorney's lien ha d pri ority, but that the lien was limited to one-third pursuant to the purported origina l retainer agreement. The court further held that Continental was entitled to prejudgment interest only from the date on which Continental filed its counterclaim. Walsh the n moved forreconsideration, requesting a ruling that his attorney's lien also include d expenses he had inc urred. The court denied Walsh's motion and held that the lien did not include such expenses. In this appeal, Walsh argues that he is entitled to a contingent f ee of one-half and that his expenses should be included in the lien. Continental cross-appeals, claiming that i t is entitled to prejudgment interest beginning thirty days after the date of eac h unpaid invoice, that Walsh has no valid attorney's lien, and that, if the lien is valid , Continental's right to set-off has priority.

II.

We must first determine the date from which Continental is entitled t o prejudgment interest. In our earlier opinion, we applied Oklahoma law and determined that Continental was entitled to prejudgment interest at the one and one-half percent-5-

rate set forth in the purchase agreement. See Hillside , 69 F.3d at 1416. On remand, the D istrict Court awarded prejudgment interest starting from the date on whic h Continental filed its counterclaim. We review this award for abuse of discretion. See United States v. Feterl , 849 F.2d 354, 358 (8th Cir. 1988).

Under O klahoma law, "'it is a rule of general recognition by the courts an d obt ains in [that] jurisdiction that where there is a contract to pay money on a da y certai n, . . . interest will be allowed from such date.'" Loffland Bros. Co. v. C.A

. Overstreet , 758 P.2d 813, 822 (Okla. 1988) (quoting Fidelity-Phenix Fire Ins. Co. of New York v. Board of Educ. of Rosedale , 204 P.2d 982, 987 (Okla. 1949)). In thi s case, the purchase agreement stated, "Terms of sale shall be Net 30 Days from date of invoice. Past due invoices may be subject to a one and one half (1 1⁄2%) percent service charge per month." Appellee's Supplemental App. at 82.

Walsh argues that the one and one-half percent was a service charge an d therefore not interest. We rejected this argument the fir st time this case was before our Court. See Hillside , 69 F.3d at 1416 ("Although the contract uses the term 'servic e charge ,' a sensible reading of the provision indicates it is an interest rate.") Wals h further argues that, because the language in the purchas e agreement states that invoices "may be" subject to a service charge, Continental merely had the option of imposing such a charge and never exercised that option before filing its counterclaim. Wals h thus contends that the District Court was correct in awarding p rejudgment interest from the f iling of the counterclaim. We disagree. We read the purchase agreement as a contract to pay money on a day certain--thirty days from the date of the invoice. Under Oklah oma

law, Continental is entitled to interest from that date. The District Court ab used its discretion in finding otherwise. This result further accords with the policy under Oklahoma law behind awarding prejudgment interes t from the time an obligation becomes du e and payable: "to compensate another for the use of his money. " Rendezvous Trails of Am. v. R.T. Ayers , 612 P.2d 1384, 1385 (Okla. Ct. App. 1980) (footnote omitted). Finally, awarding prejudgment interest from the time at which theHillside and Continental stipulated to this figure. 3 T he District Court concluded that, by relying upon Hinde , "the Missour i 4 Supreme Court [in Benton ] may have made an error in judgment" in its holding because at the time Hinde was decided, the statute in effect made set-off mandatory. Hillside -6- payments became overdue is consistent with the result in our previous decision in this case. It would be anomalous to hold that Continental is entitled to prejudgment interest according to the contract rate, see Hillside , 69 F.3d at 1416, and then disregard for no apparent reason the terms of the contract that state the time at which the interest is to accrue. We therefore hold that Continental is entitled to prejudgment interest from the time each invoice became overdue, which amounts to $248,5 41.94 for a total judgment 3 of $4 13,489.51 plus postjudgment interest at the rate of 4.22 percent per year fro m March 28, 1994.

We next address whether the District Court erred in holding that Walsh' s attorn ey's lien has priority over Continental's right to offset its judgment agains t Hillside's judgment. As the District Court determined, we apply Missouri law to this issu e because Missouri law governs Walsh's relationship with his client and, indeed , Walsh asserts his lien pursuant to Missouri law. See Mo. Rev. Stat. §§ 484.130 an d 484.140 (1987).

The District Court ordered that Wal sh's lien should take priority over any set-off of Continental's judgment against Hillside. We conclude that this result is contrary to Missou ri law. In Benton v. Alcazar Hotel Co. , 194 S.W.2d 20, 25 (Mo. 1946), th e Missouri Supreme Court h eld that an attorney's lien is "subsequent and subservient" to the right of an opponent to set off its award where the claims "arose in the course o f [the] very action and in

hered in and arose out of the same transaction." Bentonin turn relied up on State ex rel. Hinde v. United States Fidelity & Guar. Co. , 115 S.W. 1081, 108 3 (Mo. Ct. App. 1909), wherein the court held that a defendant's right to set-off is superior to an attorney's lien. "[W]here the cause and the set-off are related to the 4Enter., Inc. v. Carisle Corp. , 944 F. Supp. 793, 801 (E.D. Mo. 1996). It is not th e

place of the federal courts, however, to reexamine state court determinations of state law quest ions. "We are . . . bound to accept the interpretation of [state] law by th e highestc ourt of the State." Hortonville Joint Sch. Dist. No. 1 v. Hortonville Educ

. Ass'n , 426 U.S. 482, 488 (1976). To do otherwise "exceed[s] the bounds of federa l court authority." Re eves v. Hopkins , 76 F.3d 1424, 1427 (8th Cir.), cert. denied , 117 S. Ct. 307 (1996). Moreover, n otwithstanding that Hinde was decided at a time when set-off was mandatory, we believe that the rationale upon which Hinde relied equally applies in the present case. The amended retainer agreement states that Walsh's compensation "shall be one- 5 half of all gross sums recovered, before counterclaims, set-offs and expenses ar e deducted therefrom." Appellant's Addendum at 18. While it is the prerogative o f Walsh and Hillside to establish the figure from w hich Walsh's fee should be computed, here the total amount before counterclaims and set-offs, w e decline to give effect to the agreement insofar as it would unfairly prejudice Continental. -7- same matter, the lien attaches only to the surplus that may be adjudged the plaintiff after
a balan ce is struck." Id. Further, this Court has applied Benton , holding that "[th e plaintiff's] cou nsel's attorney lien against [the plaintiff's] $450,000 judgment is inferior to [the defendant's] right to obtain a final judgment for the net a mount." James E. Brady & Co. v. Eno , 992 F.2d 864, 870 (8th Cir. 1993). We are, of course, bound by thi s decision. See United States v. Mason , 74 F.3d 890, 891 (8th Cir.) (per curiam), cert. denied , 517 U.S. 1239 (1996).
In this case, the judgments Hillside and Continental obtained against each other arose out of same t

ransaction pursuant to the same purchase agreement. We therefore hold that under Mi ssouri law Walsh's attorney's lien is inferior to Continental's right to set off its judgment. This result also comports with Missouri's policy "that an attorney is entit led to a percentage of the amount of the verdict after it is reduced by an y counterclaim or offset." Kramer v. Fallert , 628 S.W. 2d 671, 674 (Mo. Ct. App. 1981). 5-8-

In furtherkeeping with Missouri law, one final judgment representing the ne t difference in awards should be entered. See Buss v. Horine , 819 S.W. 2d 762, 770 (Mo. Ct. App. 1991). Accordingly, Continental should first offset its judgment o f $41 3,489.51 plus postjudgment interest from Hillside's judgment of $465,000.00 plus postjudgment interest. A final judgment should be entered in favor of Hillside for the difference. Only then may Walsh assert his attorney's lien over the net sum due t o Hillside.

Becau se we conclude today that Walsh's attorney's lien does not take priorit y over Cont inental's judgment, we need not decide the percentage of Hillside's recovery Walsh is entitled to have under his contingent fee arrangement with Hillside, whether Wa lsh's expenses should be included, and whether the attorney's lien is even valid. It is for Walsh and Hillside to determine the portion of Hi llside's recovery to which Walsh is entitled; the amount of his attorney fee is now irrelevant to this proceeding.

III. We hold that Continental is entitled to prejudgment interest beginning thirty days after the date of each invoice and that Continental's right to set-off has priority ove r Walsh's attorney's lien. We therefore remand to the District Court to enter one fina l judgm ent in favor of Hillside for the net difference between $465,000.00 plu s postjudgment interest and $413,489.51 plus postjudgment interest.

A true copy.

Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.