Opinion ID: 6500405
Heading Depth: 2
Heading Rank: 2

Heading: The Aurora Park Lawsuit Attorney’s Lien

Text: Alaska Statute 34.35.430(a)(1)-(4) delineates four types of attorney’s liens. JLG asserted a charging lien under AS 34.35.430(a)(3), giving an attorney a lien “upon money in the possession of the adverse party in an action or proceeding in which the attorney is employed, from the giving of notice of the lien to that party.” The Marion Bowen court ruled that JLG held a valid $250,000 attorney’s lien in the Aurora Park lawsuit but that the lien was applicable only to settlement funds which had not been paid into the court registry by the date of the attorney’s lien — a sum of $127,840.50. The Marion Bowen court held that the attorney’s lien took priority over Duffus’s charging order and observed that this would result in partial recovery for Duffus and partial payment for JLG. Duffus challenges the attorney’s lien on several fronts. Duffus argues that by accepting a confession of judgment from Patricia and Northern Trust in the Aurora Park lawsuit settlement agreement, JLG waived its right to assert an attorney’s lien. Duffus explains that two conditions must be met under AS 34.35.430(a)(3) to establish a valid attorney’s lien: “(1) compensation due from a client to an attorney, and (2) money in the possession of an adverse party in an action or proceeding in which the attorney is employed.” Duffus claims Baker “asserted, but never demonstrated” that JLG was “due compensation” in the Aurora Park lawsuit, and “[t]here [was] no evidence in the trial record” of either an express or implied fee agreement. Duffus calls the settlement agreement “highly problematic” evidence of an agreement, given that the funds otherwise would go to Duffus, not to JLG’s client, Baker.43 43 Duffus does not contest the second prong of his statutorily derived test: whether the “money [is] in the possession of an adverse party in an action or proceeding (continued...) -16- 7602 Quoting Law Offices of Steven D. Smith, P.C. v. Ceccarelli, Duffus also argues that, even if the lien were valid, “enforcement of a valid attorney’s lien is accomplished ‘based on equitable considerations.’ ”44 Duffus points to Baker’s 2008 Marion Bowen assignment to Duffus of “any proceeds” from “any sale, conveyance, transfer or disposition of the [Apartments] on the basis of [Baker’s] 50% member interest in Aurora Park.” Duffus argues that Baker’s transfer of his interest in Aurora Park to Patricia as part of the Aurora Park settlement agreement triggers this assignment and that Duffus’s claim to the settlement funds therefore should be equitably prioritized over the attorney’s lien.45 For reasons explained below, we decline to address the priority of the various claims to the settlement funds and analyze only the validity of the attorney’s lien. 43 (...continued) in which [JLG] is employed.” We note that the settlement funds yet to be paid into the court registry meet this definition, as they currently are held by some combination of Aurora Park, Patricia, and Northern Trust, who were adverse parties in the Aurora Park lawsuit that produced the settlement. The parties agree with the Marion Bowen court that validity of an attorney’s lien from that litigation can be resolved in the Marion Bowen case. 44 385 P.3d 841, 844 (Alaska 2016) (quoting In re Sea Catch, Inc., 36 B.R. 226, 230 (Bankr. D. Alaska 1983)). 45 The 2008 assignment of proceeds appears similar to a charging order, but the 2008 assignment also appears to be limited to a distribution by Aurora Park to its members from a sale of the Apartments, which has yet to occur. Duffus’s assertion that Baker’s sale of his Aurora Park LLC membership to Patricia triggers the 2008 assignment of proceeds is yet a step beyond the Marion Bowen court’s assertion that Patricia’s personal payments for her purchase of Baker’s LLC membership was an LLC distribution. Whether Patricia took Baker’s LLC interest subject to Baker’s earlier assignment of proceeds to Duffus is not at issue in this case. -17- 7602
Baker argues that Duffus did not contest the validity of the attorney’s lien in his supplemental briefing before the Marion Bowen court and therefore waived the issue. We disagree. Duffus advanced several arguments against the enforceability of the lien, including that: (1) JLG surrendered its claim for fees against Baker by agreeing to the settlement in which it would be paid directly by Patricia and Northern Trust; (2) an attorney’s lien could not apply because the settlement actually was a buyout of Baker’s interest in Aurora Park and not a fund generated by JLG’s efforts; and (3) the amount due JLG under the settlement included compensation for “matters outside of the subject litigation” for which the firm was not entitled to an attorney’s lien. Duffus did not further litigate the validity of the attorney’s lien in the Marion Bowen court because subsequent proceedings were about the priority of the attorney’s lien against Duffus’s charging order and the Marion Bowen court’s jurisdiction; the lien’s validity was not an issue after the Marion Bowen court ruled that it was valid. Duffus thus did not waive the attorney’s lien issue.
According to Duffus, JLG’s participation in the Aurora Park lawsuit settlement negated its ability to assert an attorney’s lien in two ways. Duffus first points to a clause whereby each party agreed to bear its own costs and fees as evidence that JLG was surrendering any claim for attorney’s fees. Duffus characterizes JLG as a “party” to the settlement agreement and argues that JLG agreed to bear its own costs and fees and “released its claims against . . . Baker in exchange for a new promise by Aurora Park.” Duffus next points out that JLG secured an agreement that Patricia and Northern Trust would confess judgment and argues that this negated JLG’s right to assert an attorney’s lien against the settlement funds. The Marion Bowen court did not find these arguments persuasive; nor do we. -18- 7602 The settlement agreement clause making each party responsible for paying its own fees is, as Baker points out, standard language intended simply to prevent parties from upsetting a settlement by later seeking attorney’s fees through additional litigation. And Baker’s agreement to be responsible for his own attorney’s fees (to JLG) does not on its own obviate JLG’s right to an attorney’s lien on Baker’s settlement funds. Duffus’s argument that JLG was a “party” to the settlement also is not persuasive. As the Marion Bowen court noted, JLG represented Baker throughout the Aurora Park lawsuit; it was not advocating on its own behalf as a litigant. It is true that JLG participated in the settlement negotiations, but it appears to have done so to secure attorney’s fees through the settlement funds. Although this may be unusual, this activity on its own does not transform JLG into a “party” to the underlying litigation. Nor does JLG’s arrangement to receive fees under the settlement agreement preclude its ability to pursue an attorney’s lien against the settlement funds. As the Marion Bowen court observed, we have recognized that the attorney’s lien statute is liberally construed to allow attorneys to recover compensation for their services.46 We have held that a lien may be pursued even after receiving a confession of judgment because an attorney is “entitled to pursue any other collateral concurrent remedy before satisfaction of [the] judgment.”47 JLG’s participation in the settlement agreement may have been unusual, but it did not preclude JLG from seeking to recoup fees through an 46 AS 34.35.930 (“The intent of this chapter is remedial and its provisions shall be liberally construed.”); see Phillips v. Jones, 355 P.2d 166, 172 (Alaska 1960) (recognizing that attorney’s lien statute is to be liberally construed). 47 Sheehan v. Est. of Gamberg, 677 P.2d 254, 258 (Alaska 1984). Duffus correctly notes that in Sheehan the confession of judgment came from the attorney’s own client, not an adverse party. Id. But this distinction does not change the analysis; the confession of judgment comes from the possessor of the funds, and the claim for attorney’s fees properly lies against the client. See id. -19- 7602 attorney’s lien. JLG’s efforts “created the property against which the lien is being asserted,”48 the Marion Bowen court found “the payments were intended to reduce . . . Baker’s debt to JLG,” and we see no clear error in that finding.49 JLG permissibly could assert an attorney’s lien against the settlement funds. 3. Evidentiary issues concerning attorney’s lien Although we conclude that JLG’s attorney’s lien is valid, Duffus casts doubt on the actual value of JLG’s services rendered in the Aurora Park lawsuit. As Duffus notes, evidence of the value of JLG’s legal services is scant, at best. Baker argues that the Marion Bowen court’s conclusion that the parties in the Aurora Park lawsuit intended the portion of the funds designated for JLG to be compensation for 48 Id. at 257 (emphasizing attorney’s right to assert lien against property attorney helped create); see also Sea Catch, 36 B.R. at 234 (endorsing equity of giving attorney right to assert lien over fund designed in part to be “compensation for the attorney’s services”). 49 The Marion Bowen court noted the general rule that an “attorney cannot assert an attorney’s lien in one case to recover fees and costs resulting from a different case.” After supplemental briefing, the Marion Bowen court concluded — and the parties agreed — that JLG could have filed a separate action to enforce its lien. See Ceccarelli, 385 P.3d at 843-45 (finding attorney’s lien filed in separate action against party that had been adverse to attorney’s client in previous case valid and enforceable). The Marion Bowen court concluded that it had authority to enforce JLG’s attorney’s lien even though JLG sought to recover for fees incurred in the Aurora Park lawsuit. The Marion Bowen court said this would promote “judicial economy” and avoid forcing JLG to file a separate action for its attorney’s lien, an action which could have ended up back before the very same court, and, given that Aurora Park was indifferent to the outcome of the attorney’s lien dispute, would serve no purpose other than “elevating form over function.” Because the parties appear to agree that JLG may in this case seek to enforce an attorney’s lien on the Aurora Park settlement funds for the value of its services in the Aurora Park lawsuit, we move forward under this arrangement without ruling on the matter. -20- 7602 JLG’s services in that case is “amply supported by the record.” The record support Baker points to includes: (1) the complaint in the Aurora Park lawsuit; (2) the Aurora Park settlement agreement; (3) the Harvest Properties charging order; and (4) Baker’s assertions (through JLG) that the entire $250,000 was for fees in the Aurora Park lawsuit. Baker’s evidence comes up short. Even though the Marion Bowen court decided to enforce an attorney’s lien filed in the Aurora Park lawsuit, not the Marion Bowen lawsuit, the lien itself can extend only to the services rendered in the Aurora Park lawsuit.50 The Harvest Properties charging order Baker cites contradicts his claim and suggests that JLG’s fees are for services rendered in multiple cases: “The $250,000 to be paid to [JLG] is presumably for attorney[’s] fees [Baker] incurred in the present litigation, the [Aurora Park litigation], or in other matters.” The other sources are little better, amounting to Baker’s own assertions and proof that the Aurora Park lawsuit was filed and then settled. In Ceccarelli we remanded an attorney’s lien dispute when the parties disagreed about the fee amount and we found no evidence supporting the fee calculation.51 Similarly, more evidence outside of Baker’s assertions, such as fee agreements and billing records, is needed to establish the value of the legal services JLG provided in the Aurora Park lawsuit, especially because a portion of the settlement funds 50 See Ceccarelli, 385 P.3d at 844 (stating that attorney has “right to have fees and costs due to the attorney for services in a particular suit secured by the judgment or recovery in such suit” (emphases added) (quoting Sea Catch, 36 B.R. at 230)); WILLISTON ON CONTRACTS, supra note 48, § 62:11 (“A charging lien does not cover all amounts outstanding that may be due the attorney from the client for professional services rendered in other transactions. . . . [Such a] lien extends only to charges and fees in the suit in which the judgment was obtained.”(footnote omitted)). 51 385 P.3d at 846. -21- 7602 JLG claims could be paid to Duffus if his charging order is valid. We therefore remand to the superior court to make the appropriate evidentiary inquiries.52