IN THE COURT OF APPEALS OF TENNESSEE

AT JACKSON

JANUARY 24, 2013 Session

HOLLY CASTLE, INDIVIDUALLY, AND AS NEXT FRIEND OF EMILY CASTLE, A

MINOR CHILD; AND JANA CLARK v. 

DAVID DORRIS LOGGING, INC., ET AL.

Direct Appeal from the Circuit Court for Shelby County

No. CT-001806-07, Div. IV Gina C. Higgins, Judge

No. W2012-00917-COA-R3-CV - Filed February 11, 2013

This case involves a post-trial dispute between one party to a personal injury case and their

former counsel. After a jury verdict was entered in favor of Appellants, their former law firm

filed an attorney lien and a motion to recover its attorney fees in the trial court. Appellants

asserted that the trial court lacked jurisdiction to consider the former firm’s motion. The trial

court disagreed and awarded the former firm its full requested fee. Appellants appeal both

the award of attorney fees to its former law firm, and also the trial court’s denial of

Appellants’ request to release funds held by the clerk. We conclude that the trial court lacked

jurisdiction to consider the post-trial dispute and reverse the award of attorneys fees in this

case. However, we affirm the trial court’s denial of the motion to release funds. Reversed in

part, affirmed in part, and remanded.

Tenn. R. App. P. 3. Appeal as of Right; Judgment of the Circuit Court Reversed in

Part, Affirmed in Part and Remanded

J. STEVEN STAFFORD, J., delivered the opinion of the Court, in which ALAN E. HIGHERS,

P.J.,W.S., and DAVID R. FARMER, J., joined.

R. Sadler Bailey, Memphis, Tennessee, for the appellants, Holly Castle and Jana Clark.

Martin Zummach, Southhaven, Mississippi, for the appellee, Horne & Wells, PLLC.

OPINION

I. Background
Plaintiffs/Appellants Holly Castle, Emily Castle, and Jana Clark (collectively,

“Appellants”) were involved in a car accident with Defendants David Dorris Logging, Inc.,

and David Dorris, (collectively, “Defendants”) on May 9, 2006. The Defendants stipulated

to liability and a jury returned a verdict for the Appellants in the total amount of $350,000.00.

Shortly after the jury verdict, Appellants fired their law firm, Appellee Horne and Wells,

PLLC (“Horne and Wells”). The jury verdict was reduced to judgment on October 25, 2011.

On October, 26, 2011, Appellants’ new attorney entered a notice of appearance in the case.

On the same day, Horne and Wells filed a notice of attorney lien on the jury verdict. Before

hiring Horne and Wells, Appellants had previously fired attorney Ronald Krelstein in 2008.

Mr. Krelstein also filed a notice of attorney lien in this case. Mr. Krelstein later filed a

separate action to recover his attorney fees with regard to this litigation.

1

On November 18, 2011, new counsel for the Appellants filed a Motion for New Trial,

or, in the alternative, for Additur, arguing that the jury’s verdict was against the weight of

the evidence introduced at trial. On November 22, 2011, Defendants entered into a consent

order, awarding Appellants their discretionary costs. On December 12, 2011, Defendants

filed a response to Appellants’ Motion for New Trial, denying that the jury’s verdict was

against the weight of the evidence. On December 30, 2011, counsel for Horne and Wells

notified the Appellants’ newly retained counsel that it intended to file a motion to recover

attorney fees and costs. According to the briefs, the matter was set for hearing, but was later

removed from the docket when Appellants’ counsel informed Horne and Wells that he

believed seeking attorney fees in such a manner was improper pursuant to Starks v.

Browning, 20 S.W.3d 645 (Tenn. Ct. App. 1999), discussed in detail below.

On January 3, 2012, the trial court denied Appellants’ Motion for New Trial, or, in

the alternative, for Additur. On the same day, the trial court entered a Consent Order, under

which the full amount of damages awarded to the Appellants would be paid to the Shelby

County Circuit Court Clerk pending resolution of all claims for damages, whether claimed

by the Appellants’ former counsel or others. The order notes that both Horne and Wells and

Mr. Krelstein had filed attorney liensregarding the funds paid into the Court Clerk. The order

also refers to other claims on the funds, concerning loans entered into by Appellants, which

are not the subject of this appeal. The order states:

2

Mr. Krelstein filed a brief in this matter fully agreeing with Horne and Wells’ position in this case. 1

However, Mr. Krelstein was never made a party to this case in the trial court or on appeal pursuant to

Tennessee Rules of Civil Procedure 19(e) (allowing for the addition of parties upon motion by the parties

or the Court). Thus, Mr. Krelstein is not a party to this appeal. 

The loans entered into by Appellants are not at issue on appeal. According to counsel for 2

Appellants at oral argument, those loans have now been satisfied. The record contains a consent order

(continued...)

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IT IS, THEREFORE, ORDERED, ADJUDGED, AND

DECREED that all funds necessary for the Defendants to satisfy

the Judgments ($200,000.00 for Holly Castle and $150,000.00

for Jana Clark plus post-judgement interest) will be paid into an

interest-bearing account, until the disputes between and among

the various parties making claim to the Judgment proceeds are

resolved and further Orders of this Court are entered directing

distribution of the funds.

The order was signed by counsel for Appellants, Defendants, Horne and Wells, and Mr.

Krelstein. The Defendants paid the owed amounts into the registry of the Circuit Court Clerk

and a Satisfaction of Judgment was entered on January 11, 2012.

3

On January 20, 2012, Horne and Wells filed its Motion to Recover Attorneys Fees and

Costs. Horne and Wells attached its contract for legal services with the Appellants to the

motion, which contract indicates that Horne and Wells was to receive forty percent of the

total recovery if the case went to trial. Appellants filed a response in opposition on January

25, 2012, arguing that the motion was improper and that the trial court did not have

jurisdiction to consider a dispute between one party to a lawsuit and its own attorney.

On January 27, 2012, the trial court orally ruled that it had jurisdiction to hear the

dispute between Appellants and Horne and Wells regarding the attorney fee dispute. The trial

court further directed Horne and Wellsto provide documentation showing the amount of time

spent working on the case in order to award Horne and Wells a reasonable attorney fee. On

February 1, 2012, Horne and Wells filed several affidavits concerning its work on the case,

as well asthe affidavits of other attorneys concerning the reasonableness of the requested fee.

On February 7, 2012, counsel for the Appellants informed the trial court that he

intended to file motions soon, but that a hearing on the motion for attorneys fees had not yet

been set. The trial court informed counsel for the Appellants that it intended to file an order

ruling on the attorney fee motion the following day. Accordingly, Appellants filed a Motion

for Recusal, a Motion to Release Funds, and a Motion for Interlocutory Appeal on February

7, 2012. On February 8, 2012, the trial court entered an order granting Horne and Wells’ an

(...continued) 2

entered by the parties disbursing $44,262.50 to Harwood Investment Group, LLC, on January 3, 2012.

After the Defendants paid the jury verdict into the Circuit Court Clerk, the Defendants no longer 3

participated in this litigation and are not a party to this appeal. 

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award for attorney fees in the amount of $144,115.45. The trial court specifically relied on

the consent order providing that funds would only be disbursed upon order of the trial court

to conclude that it had jurisdiction over the dispute. The trial court then directed Horne and

Wells to provide some documentation “that no other claims are made in objection to the

attorney fees alleged by Horne and Wells [], to be due and owing in the amount of

$144,115.45, other than those objections already presented by [Appellants] in response to the

original motion.” Horne and Wells complied by filing a “Statement of Interest” from both

Mr. Krelstein and attorneys for the Defendants, in which they stated that they claimed no

interest in and did not dispute Horne and Wells’ $144,115.45 attorney fee award.

On February 16, 2012, Horne and Wells filed a response to the Appellants’ pending

motions. On February 24, 2012, a hearing was held on all pending motions. The trial court

orally denied the motion to recuse and the motion to release funds. The trial court ordered

additional briefing on the issue of whether a jury trial was required to award attorney fees.

Ultimately, the trial court entered an order on March 20, 2012 denying Appellants’ recusal

motion, motion to release funds, and request for jury trial. The trial court entered another

order on March 21, 2012 awarding Horne and Wells its full requested attorney fees.

Appellants timely appealed.

4

II. Issues Presented

1. Whether the trial court erred in retaining jurisdiction over Horne and Wells’ Motion

to Recover and Receive Attorney Fees pursuant to Starks v. Browning, 20 S.W.3d

645 (Tenn. Ct. App. 1999) and then subsequently granting Horne and Wells’ motion?

2. Whether the trial court erred in denying Appellants’ motion for jury trial?

3. Whether the trial court erred in denying Appellants’ motion for release of funds?

4. Whether the trial court erred in denying Appellants’ motion for recusal?

III. Analysis

A. Subject Matter Jurisdiction

Appellants’ first argue that the trial court erred in retaining jurisdiction over the fee

We note that nothing in the record suggests that the trial court ever entered an order denying 4

Appellants’ Motion for Interlocutory Appeal. However, after the trial court entered the orders on March 20 

& 21, 2012, no issues remained pending in the trial court. Thus, the trial court’s ruling was final and

appealable, and the issue of an interlocutory appeal became moot. Accordingly, we conclude that, despite

the trial court’s failure to enter an order on that motion, this Court has jurisdiction to consider this appeal.

See Tenn. R. App. 13.

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dispute between Appellants and Horne and Wells based on Horne and Wells’ attorney lien.

Subject matter jurisdiction implicates a court’s power to adjudicate a particular case or

controversy. Osborn v. Marr, 127 S.W.3d 737, 739 (Tenn. 2004); Earls v. Mendoza, No.

W2010-01878-COA-R3-CV, 2011 WL 3481007, at *5 (Tenn. Ct. App. Aug. 10, 2011). “In

the absence of subject-matter jurisdiction, a court cannot enter a valid, enforceable order.”

Earls, 2011 WL 3481007, at *5 (citing Brown v. Brown, 281 S.W.2d 492, 497 (Tenn.

1955)). When subject matter jurisdiction is questioned, we must ascertain whether the

Tennessee Constitution, the Tennessee General Assembly, or the common law have

conferred upon the court the power to adjudicate the case before it. Id. (citing Staats v.

McKinnon, 206 S.W.3d 532, 542 (Tenn. Ct. App. 2006)). “Since a determination of whether

subject matter jurisdiction exists is a question of law, our standard of review is de novo,

without a presumption of correctness.” Northland Ins. Co. v. State, 33 S.W.3d 727, 729

(Tenn. 2000).

Attorney liens are governed by Tennessee Code Annotated Section 23-2-102, which

provides that: “Attorneys and solicitors of record who begin a suit shall have a lien upon the

plaintiff's or complainant's right of action from the date of the filing of the suit.” This lien

attaches to any proceeds flowing from a judgment, as long as the lawyer worked to secure

the judgment for the client. See Butler v. GMAC, 203 Tenn. 366, 370–71, 313 S.W.2d, 260,

262 (Tenn. 1958).

This Court explained the purpose and historical background of attorney liensin Starks

v. Browning, 20 S.W.3d 645 (Tenn. Ct. App. 1999):

The relationship between a client and an attorney is

essentially contractual. See Alexander v. Inman, 974 S.W.2d

689, 694 (Tenn. 1998); In re Ellis, 822 S.W.2d 602, 607 (Tenn.

Ct. App. 1991). In its most basic terms, this contract involves

the exchange of competent legal services in return for an

agreement to pay a reasonable fee. The attorney is obligated to

exercise the utmost good faith in the discharge of his or her

duties to represent the client. See Crawford v. Logan, 656

S.W.2d 360, 364 (Tenn. 1983); Fitch v. Midland Bank & Trust

Co., 737 S.W.2d 785, 789 (Tenn. Ct. App. 1987). If the attorney

discharges his or her duties appropriately, he or she is entitled to

the reasonable, agreed-upon compensation without regard to the

actual benefit the services might have been to the client. See

Spofford v. Rose, 145 Tenn. 583, 611, 237 S.W. 68, 76 (1922);

Bills v. Polk, 72 Tenn. 494, 496 (1880); Adams v. Mellen, 618

S.W.2d 485, 488 (Tenn. Ct. App. 1981).

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The courts may decline to enforce an attorney's fee

contract only (1) when the attorney did not negotiate the contract

in good faith, see Alexander v. Inman, 974 S.W.2d at 693–94,

(2) when the contract provides for an unreasonable fee, see

White v. McBride, 937 S.W.2d 796, 800–01 (Tenn. 1996), or (3)

when the attorney has otherwise breached his or her fiduciary

obligations to the client and this breach has prejudiced the

client's interests. See Crawford v. Logan, 656 S.W.2d at 365;

Alexander v. Inman, 903 S.W.2d 686, 694 (Tenn. Ct. App.

1995); Coleman v. Moody, 52 Tenn.App. 138, 155, 372 S.W.2d

306, 311–314 (1963).

Two types of attorney's liens exist today either by the

common law or by statute. The first type of lien is a retaining

lien. A retaining lien is a possessory lien, see Andrew Hall &

Assocs. v. Ghanem, 679 So.2d 60, 61 (Fla. Dist. Ct. App. 1996);

In re Coronet Ins. Co., 298 Ill.App.3d 411, 232 Ill.Dec. 507,

698 N.E.2d 598, 601 (1998); Panarello v. Panarello, 245

N.J.Super. 318, 585 A.2d 428, 430 (Ch. Div. 1990), that permits

a lawyer to retain a client's books, papers, securities, or money

coming into his or her possession during the course of the

representation until the attorney and client have settled their fee

dispute or until the client has otherwise posted appropriate

security for the outstanding fee. See McDonald, Shea & Co. v.

Charleston, C. & C. Railroad, 93 Tenn. 281, 293, 24 S.W. 252,

255–56 (1893); Brown & Reid v. Bigley, 3 Tenn. Ch. (Cooper)

618, 621 (1878); Hunt v. McClanahan, 48 Tenn. (1 Heisk.)

503, 506–07 (1870) . . . .

The second type of lien, a charging lien, is based on a

lawyer's equitable right to have the fees and costs due for the

lawyer's services in a particular action secured by the judgment

or recovery in that action. See Southern v. Beeler, 183 Tenn.

272, 301–02, 195 S.W.2d 857, 870 (1946); Keith v. Fitzhugh,

83 Tenn. 49, 50 (1885); see also Bennett v. Weitz, 220

Mich.App. 295, 559 N.W.2d 354, 355 (1997); Mack v. Moore,

107 N.C.App. 87, 418 S.E.2d 685, 688 (1992); Shaffer v.

Charleston Area Med. Ctr., Inc., 199 W.Va. 428, 485 S.E.2d

12, 20–21 (1997). Unlike a retaining lien, a charging lien is not

limited to the property in the attorney's possession. See Brauer

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v. Hotel Assocs., Inc., 192 A.2d at 834. It attaches to any

proceedsflowing from a judgment, as long as the lawyer worked

to secure that judgment for the client. See Butler v. GMAC, 203

Tenn. 366, 370–71, 313 S.W.2d 260, 262 (1958); see also

Crolley v. O'Hare Int'l Bank, 346 N.W.2d 156, 159

(Minn.1984).

Both retaining and charging lien rights may be waived or

forfeited in a variety of ways. They may be lost if a lawyer fails

to represent his or her client's interests faithfully, honestly, and

consistently or fails to discharge his or her duties with the

utmost faith. See First Nat'l Bank of Cincinnati v. Pepper, 454

F.2d 626, 633 (2d Cir.1972); Western Life Ins. Co. v. Nanney,

296 F.Supp. 432, 441 (E.D. Tenn. 1969); People ex rel.

MacFarlane v. Harthun, 195 Colo. 38, 581 P.2d 716, 718

(1978). Accordingly, a client may assert an affirmative defense

or counterclaim based on professional negligence in response to

a lawyer's action to enforce a charging lien. See Paramount

Eng'g Group, Inc. v. Oakland Lakes, Ltd., 685 So.2d 11, 12

(Fla.Dist.Ct.App.1996); Jarman v. Hale, 112 Idaho 270, 731

P.2d 813, 814 (App. 1986); Coughlin v. SeRine, 154 Ill.App.3d

510, 107 Ill.Dec. 592, 507 N.E.2d 505, 508 (1987); Neylan v.

Moser, 400 N.W.2d 538, 540 (Iowa 1987).

Starks, 20 S.W.3d at 650–51.

Appellants do not dispute that Horne and Wells filed a proper attorney charging lien

in this case. Instead, they argue that the trial court lacked subject matter jurisdiction to

consider a dispute between a party and its own attorneys based on the specific circumstances

in this case. Both parties agree that the case of Starks v. Browning, 20 S.W.3d 645 (Tenn.

Ct. App. 1999), is directly on point and is controlling in this case. However, each party

argues that application of Starks supports its position. Therefore, we first turn to consider the

facts in Starks.

In Starks, the plaintiff and the defendant entered into a post-trialsettlement agreement

for substantially less than the jury verdict awarded to the plaintiff. The plaintiff asserted that

her attorneys were negligent in inducing her to accept the settlement. Accordingly, plaintiff’s

original attorneys moved to withdraw and to assert an attorney lien on the settlement.

Plaintiff retained new counsel, who indicated that he would be willing to pay the disputed

amount into an escrow account. From our review of the opinion, there is no indication in the

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opinion whether the new attorney ever deposited the funds into an escrow account. Instead,

the trial court entered an order directing the new attorney to pay the fees and expenses

allegedly owed to the original attorneys to the Circuit Court Clerk. The new attorney

complied and deposited the funds with the Circuit Court Clerk. A malpractice action against

the original attorneys was later filed in another court. After a hearing, the trial court in the

underlying action eventually awarded the original attorneys their full fee pursuant to the

client’s contract. The plaintiff appealed, arguing that “the mere establishment of the lien does

not amount to an adjudication of the rights between her and [her original attorneys].” The

Court of Appeals agreed, stating:

While a charging lien serves to secure an attorney's fees,

it does not function as an adjudication of the rights between the

lawyer and his or her client. See Pierce v. Lawrence, 84 Tenn.

572, 577–78, 1 S.W. 204, 205–06 (1886). A trial court may

declare the existence of an attorney's lien in the suit out of which

the dispute regarding the attorney's fee arose, but ordinarily an

attorney, not being a party to the proceeding, may not obtain a

judgment with respect to his or her fee in that action. See State

v. Edgefield & Kentucky R.R., 63 Tenn. 92, 97 (1874); Perkins

v. Perkins, 56 Tenn. (9 Heisk.) 95, 97–98 (1871). Once the court

declares the existence of the attorney's lien in the underlying

litigation, the lien becomes an equitable charge on any recovery

the client receives in the litigation.

After a court has declared an attorney's lien, the lawyer

may then commence a separate proceeding in a court of

competent jurisdiction to enforce his or her contractual right to

a fee. See Keith v. Fitzhugh, 83 Tenn. 49, 50 (1885); McCamy

v. Key, 71 Tenn. 247, 250–51 (1879); Brown & Reid v. Bigley,

3 Tenn. Ch. at 626; Fain v. Inman, 53 Tenn. (6 Heisk.) 5, 12

(1871). In this separate suit, the issues relating to the attorney's

entitlement to the fee and costs secured by the lien and to the

attorney’s professional negligence may be litigated. See Perkins

v. Perkins, 56 Tenn. at 97–98; Palmer v. Palmer, 562 S.W.2d

833, 839 (Tenn. Ct. App. 1977); Manson v. Stacker, 36 S.W.

188, 190–91 (Tenn. Ch. App. 1896); Brown & Reid v. Bigley,

3 Tenn. Ch. at 626. This separate proceeding offers the client,

now in the posture of a defendant, an opportunity to present

defenses to the attorney's claim for a fee, including defenses that

the attorney is not entitled to a fee because of professional

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negligence or some other basis. See First Nat'l Bank of

Cincinnati v. Pepper, 454 F.2d 626 at 633; Western Life Ins.

Co. v. Nanney, 296 F.Supp. at 441.

Starks, 20 S.W.3d at 652–53 (footnote omitted). Thus, the Appellants argue that the trial

court in this case likewise erred in adjudicating the rights between Appellants and Horne and

Wells.

Horne and Wells, however, argues that the trial court properly awarded its fee because

the case-at-bar falls within the exception to the general rule expressed in Starks. Indeed, the

Court in Starks did note one exception to the general rule that a fee dispute must be

commenced in a separate lawsuit:

This exception applies to cases in which the money or property

upon which the lien is to be enforced comes within the control

of the court in the case in which the services were rendered.

When the court is able to exert jurisdiction directly over the

funds or property, the attorney need not resort to a separate suit

to enforce his or her lien.

Id. at 653 (citing State v. Edgefield & Kentucky R.R., 63 Tenn. at 97; Palmer v. Palmer, 562

S.W.2d at 839).

Horne and Wells argues that, because the parties agreed to pay the damages into the

registry of the Circuit Court Clerk, the money “c[a]me within the control of the court in

which the services were rendered.” Starks, 20 S.W.3d at 653. Thus, Horne and Wells asserts

that, by obtaining control over the funds at issue through the agreement of the parties, “the

court [was] able to exert jurisdiction over the funds or property.” Id. To support this

argument, Horne and Wells rely on the Tennessee Supreme Court case of Schmitt v. Smith,

118 S.W.3d 348 (Tenn. 2003). The Court in Schmitt applied the exception in Starks to hold

that the trial court had jurisdiction to consider the fee dispute between a client and her/his

attorney regarding a divorce action. The Schmitt Court noted that the Starks Court refused

to apply the exception in that case because “the lien involved a post-judgment dispute

between the attorneys and the client over legal fees and expenses.” However, the Court

concluded that the present case was different:

We have here a divorce action in which the trial court

adjudicated the distribution of the marital property owned by

[husband and wife]. The residence that was the subject of [the

attorney] lien was included in the marital property ultimately

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divided by the trial court. As such, the property upon which the

lien was to be enforced, the house, was within the control of the

trial court. . . . Therefore, we hold that the trial court properly

adjudicated the attorney's lien in this case.

Id. at 354. The Court further held that the trial court retained jurisdiction over the property

despite the entry of a final judgment on the divorce because, at the time the lien was filed,

a petition was pending in the trial court to force the sale of the property at issue. Therefore,

“the subject of the lien was still within the jurisdiction of the trial court.” Id. at 355.

In contrast, Appellants argue that the facts presented in this case do not fall within the

“narrow” exception outlined in Starks and applied in Schmitt. See Starks, 20 S.W.3d at 653.

As argued by Appellants, in Starks, as in the instant appeal, the funds at issue were the result

of personal injury lawsuit. The Court of Appeals concluded that the trial court correctly

granted the lien in favor of the original attorneys, but that the trial court erred in awarding

the attorneys the fees that were in dispute. The Court explained:

The facts of this case do not fall within the narrow

confines of the exception to the general requirement that a

lawyer must file a separate suit against his or her client to collect

a disputed fee. The October 7, 1997 order directing [plaintiff] to

pay $51,091.99 into court was not part of the underlying

litigation between [plaintiff] and [the original defendants] and

was entered after that litigation had been concluded. Rather, the

order was part of the post-judgment dispute between the

[original attorneys] and [plaintiff] over legal fees and expenses.

Accordingly, because the settlement proceeds were never

brought under the control of the trial court during the

underlying litigation, the [original attorneys] should have filed

a separate action against [plaintiff] for its fee rather than

attempting to obtain it in this case.

Starks, 20 S.W.3d at 653. Appellants argue that the situation presented in this case is highly

analogous to the facts in Starks, and thus, this Court must likewise conclude that the trial

court lacked jurisdiction. Appellants point out that, as in Starks, the trial court here did not

gain control over the funds “during the underlying litigation,” but only during the postjudgment dispute regarding the attorney fees in this case. Appellants further distinguish the

facts in this case from the case relied on by Horne and Wells, Schmitt v. Smith. According

to Appellants, the Schmitt trial court retained jurisdiction to award the original attorneystheir

fee only because the property upon which the lien was based, a piece of real property jointly

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owned by the parties, came within the control of the court in the underlying litigation. Indeed,

Tennessee Code Annotated Section 36-4-121 authorizes courts with divorce jurisdiction,

upon request of either party in a divorce action, to equitably divide or distribute the marital

property. Thus, a trial court having jurisdiction over a divorce also has jurisdiction over the

property at issue in the divorce during the underlying litigation. In contrast, Appellants argue

that the funds at issue, like the funds in Starks, were not subject to the control of the trial

court during the underlying litigation; instead, they assert that the consent order placing the

funds with the court “was entered after that litigation had been concluded[, and that ] . . . the

order was part of the post-judgment dispute between [Horne and Wells] and [Appellants]

over legal fees and expenses.” Starks, 20 S.W.3d at 653.

We agree. A judgment on the jury verdict was entered on October 25, 2011. A Motion

for New Trial was denied on January 3, 2012. The funds at issue did not come within control

of the Court until the Motion for New Trial was denied on January 3, 2012 pursuant to the

consent order signed by the parties. Despite arguments to the contrary, this case simply does

not fall within the “narrow” exception expressed in Starks because the funds at issue were

not within the trial court’s control during the underlying litigation. Indeed, during the

underlying litigation there were no funds at issue because the Defendants had not yet been

ordered to pay damages to the Appellants until the order on the jury verdict was entered. In

contrast in Schmitt, the property at issue was within the trial court’s jurisdiction from the

inception of the underlying litigation because it constituted marital property subject to

equitable division pursuant to Tennessee Code Annotated Section 36-4-121. Thus, in this

case, the funds at issue were not within the control of the trial court “during the underlying

litigation,” and the trial court therefore, had no jurisdiction to award Horne and Wells its

alleged fee in this case.

Horne and Wells argues, however, that the facts in Starks are distinguishable because

the plaintiff in Starks never agreed to submit the settlement proceeds to the court pending

resolution of the disputes. In this case the damages represent a jury verdict, the entirety of

which was paid directly to the Circuit Court Clerk by the original Defendants. In contrast,

in Starks, the funds represented a settlement that was forwarded to the plaintiff’s new

attorney, who agreed to pay the disputed funds into an escrow account and was later ordered

by the court to pay only the amount allegedly owed to the original attorneys to the Circuit

Court Clerk. In short, Horne and Wells argues that the jurisdiction of the trial court over the

dispute at issue rests upon the consent order allowing the funds to be paid into the court and

held until all disputes were resolved. Indeed, in its brief, Horne and Wells asserts that

“perhaps most damaging to the [Appellants’] position to the contrary, [Appellants] expressly

consented to the court’s continued jurisdiction over the funds in that Consent Order[.]”

Defendants in this case were clearly entitled to deposit the amount representing the jury

verdict with the Circuit Court Clerk pursuant to Rule 67.01 of the Tennessee Rules of Civil

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Procedure. Rule 67.01 provides:

In an action in which any part of the relief sought is a judgment

for a sum of money or the disposition of a sum of money or the

disposition of any other thing capable of delivery, a party upon

notice to every other party and by leave of court may deposit

with the court all or any part of such sum or thing.

Therefore, the trial court clearly had jurisdiction pursuant to Rule 67.01 to allow Defendants

to deposit the funds at issue with the Circuit Court Clerk pending resolution of all pending

disputes. Although the deposit of the funds was clearly authorized by the above rule, nothing

in Rule 67.01 confers jurisdiction on the trial court to consider a post-trial dispute between

one party and its own attorney. Horne and Wells cites no cases in which the simple act of

taking advantage of the procedure available in Rule 67.01 was found to have conferred

jurisdiction on the trial court to resolve a post-trial dispute between one party and its own

attorney. Our research has likewise failed to reveal such a case. Nor does the fact that the

parties agreed that the funds should remain in the court pending resolution of all disputes and

“further [o]rders of the Court” confer jurisdiction on the trial court in this case. Indeed, it

is well-settled that the court does not gain jurisdiction through the consent of the parties.

“‘Subject matter jurisdiction differsfundamentally from personal jurisdiction in that the latter

can be conferred by express or implied consent,’ while subject-matter jurisdiction cannot

be conferred ‘by appearance, plea, consent, silence, or waiver.’” Landers v. Jones, 872

S.W.2d 674, 675 (Tenn. 1994) (emphasis added). Thus, despite the parties’ apparent consent

to allow the trial court to hold the funds pending resolution of the dispute, the consent order

did not operate to confer jurisdiction on the trial court to consider the fee dispute between

the Appellants and Horne and Wells.

This decision does not leave Horne and Wells without a remedy to recover its alleged

attorney fee. As explained in Starks:

Holding that the trial court should not have entertained

the claim for legal fees and costs in the litigation between

[plaintiff] and [the defendants] will not deprive [the original

attorneys] of its opportunity to adjudicate its right to recover its

fees and expenses. [Plaintiff’s] pending malpractice action

provides the [original attorneys] with an avenue to counterclaim

for the unpaid attorney's fees and costs. If [plaintiff] does not

prevail with her malpractice claim and if the [the original

attorneys] can establish that it is entitled to the claimed

attorney’s fees and costs, then the trial court in that case will be

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able to enter a judgment accordingly.

Starks, 20 S.W.3d at 653. Indeed, it appears in this case that the Appellants have likewise

filed a legal malpractice action against Horne and Wellsin another division of Shelby County

Circuit Court. Thus, Horne and Wells has a proper and convenient forum in which to bring

its action to recover attorney fees.

Based on the foregoing, we conclude that the trial court lacked subject matter

jurisdiction to award Horne and Wells its alleged attorney fee in this case. As such, the order

awarding Horne and Wells $144,115.45 in attorney fees is reversed and this cause is

remanded to the trial court for dismissal of Horne and Wells’ Motion to Recover Attorney

Fees. Although Appellants raise additional arguments regarding recusal of the trial judge and

the trial judge’s denial of jury trial in this case, Appellants indicated, both at oral argument

and in their brief, that such issues would be moot should this Court conclude that the trial

court lacked subject matter jurisdiction to award Horne and Wells its attorney fees.

Accordingly, the issues of the denial of both the jury trial and recusal motions are

pretermitted.

B. Motion to Release Funds

Appellants next argue that the trial court erred in denying its motion to release funds

when at least some portion of the funds held by the court clerk is not in dispute. At this time,

however, both Horne and Wells and Mr. Krelstein have pending attorney liens on the funds,

which have yet to be adjudicated by a court of competent jurisdiction. Accordingly, the

amount owed to both of the Appellants’ former law firms remains in dispute. The Consent

Order in this case clearly states that the funds will remain with the Circuit Court Clerk “until

the disputes between and among the various parties making claim to the Judgement proceeds

are resolved.” As such, this Court is reluctant to release funds for which the parties have

clearly agreed to remain with the Circuit Court Clerk pending resolution of the fee dispute

between Appellants and their former law firm. Therefore, the order denying Appellants’

Motion to Release Funds is affirmed. We note, however, that Horne and Wells, with the full

concurrence of Mr. Krelstein, acquiesced in its brief to the release of those funds that did not

represent any of Horne and Wells’ alleged fee and accrued interest. Thus, Horne and Wells

has conceded that a portion of the funds being held by the clerk is properly released to the

Appellants in this case. Horne and Wells, however, failed to assign a numerical value to the

amount of the funds that it did not dispute. Unfortunately, the disposition of this case

reversing the judgment of the trial court and directing Horne and Wells to file its suit in

another court leaves considerable remaining issuesto be decided regarding the funds at issue.

Because Horne and Wells has conceded that at least a portion of the funds at issue are subject

to no dispute, we encourage the parties to come to a mutually satisfactory resolution of this

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issue on remand as soon as possible.

IV. Conclusion

The judgment of the Shelby County Circuit Court is reversed in part and affirmed in

part. This cause is remanded for dismissal of Appellee Horne and Wells, PLLC’s Motion to

Recover Attorney Fees and for all further proceedings as may be necessary and consistent

with this opinion. Costs of this appeal are taxed one-half to Appellants, Holly Castle, Emily

Castle, and Jana Clark, and their surety, and one-half to Appellees, Horne and Wells, PLLC,

for all of which execution may issue if necessary.

_________________________________

J. STEVEN STAFFORD, JUDGE

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