Court Opinion

ID: 5139035
Source: CourtListenerOpinion
Date Created: 2021-12-21 15:32:10.324921+00
Date Added: 2024-06-11T08:24:14.110585
License: Public Domain

2020 UT App 151

               THE UTAH COURT OF APPEALS

                      C. ROBERT DAHL,
                          Appellee,
                              v.
    STEVE S. CHRISTENSEN, HIRSCHI CHRISTENSEN PLLC, AND
               CHRISTENSEN THORNTON PLLC,
                         Appellants.

                            Opinion
                        No. 20190330-CA
                    Filed November 5, 2020

           Fourth District Court, Provo Department
                The Honorable Thomas Low
                        No. 120400862

      Steve S. Christensen and Clinton Brimhall, Attorneys
                         for Appellants
          Rosemond G. Blakelock and Megan Blakelock,
                   Attorneys for Appellee

     JUDGE DIANA HAGEN authored this Opinion, in which
  JUDGE RYAN M. HARRIS concurred. JUDGE GREGORY K. ORME
                 concurred, with opinion.

HAGEN, Judge:

¶1      As a means to secure payment for the fees owed to him by
his client, Kim Dahl, attorney Steve S. Christensen placed a $2
million lien against Ms. Dahl’s interest in a property co-owned
by her ex-husband, C. Robert Dahl. In response, Mr. Dahl
brought a wrongful lien action against Christensen and his law
firms (collectively, Christensen). Following a bench trial, the
district court agreed with Mr. Dahl that all or most of the lien
was wrongful and entered judgment on that claim in Mr. Dahl’s
favor. Christensen appeals, arguing that the court erred in its
determination that the lien was wrongful. Because we agree that
                        Dahl v. Christensen

the lien does not fall within the statutory definition of a
wrongful lien, we reverse the court’s ruling and vacate the
judgment against Christensen.

                         BACKGROUND

¶2     Before the initiation of the proceedings that led to this
appeal, Christensen acted as counsel for Ms. Dahl in connection
with a variety of legal matters, including (1) a case concerning an
irrevocable trust, (2) a divorce action, (3) a legal malpractice case
brought against Ms. Dahl’s former attorney, and (4) appeals
stemming from the foregoing actions. Ms. Dahl signed multiple
retainer agreements in connection with the divorce case, as well
as a retainer agreement in the malpractice case. To secure any
potential unpaid attorney fees, the divorce retainers and the
malpractice retainer purported to grant Christensen “an
immediate lien” on a home that Ms. Dahl co-owned with Mr.
Dahl (the property). Christensen thereafter recorded a $2 million
notice of lien against Ms. Dahl’s interest in the property.

¶3      The divorce and trust actions eventually made their way
to the Utah Supreme Court and were consolidated. See Dahl v.
Dahl, 2015 UT 79, ¶ 11, 459 P.3d 276. In the resulting opinion, the
court concluded that the divorce retainers “constituted a
prohibited fee arrangement.” Id. ¶ 197. Because the divorce
retainers purported to grant Christensen an interest in the
property—the ownership of which was at issue in the divorce
case—they ran afoul of rule 1.8(i)(1) of the Utah Rules of
Professional Conduct, which prohibits attorneys from acquiring
“a proprietary interest in the cause of action or the subject matter
of litigation the lawyer is conducting for a client.” Id. ¶ 191
(cleaned up). Although the rule contains an exception for liens
otherwise authorized by law, the court concluded that the
divorce retainers did not qualify for that exception because Utah
Code section 38-2-7, the statute governing attorneys’ liens,
prohibits attorneys from obtaining “a lien in the representation

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                        Dahl v. Christensen

of a client in a domestic relations matter unless a final order of
divorce has been secured,” and no final divorce decree had yet
been issued when Christensen recorded the lien. Id. ¶¶ 193–94.
Accordingly, the fee arrangements laid out in the divorce
retainers were invalidated. Id. ¶ 211.

¶4      Separately, Mr. Dahl brought the present action to nullify
the lien. 1 The district court concluded both that the lien was
wrongful and that Christensen had reason to know of its
wrongfulness at the time that it was recorded and was
consequently liable for statutory damages and attorney fees. The
district court’s holding that the lien was wrongful was based on
two facts: (1) the supreme court’s holding in Dahl that the
divorce retainers were unlawful, and (2) “the attorney’s fees
claimed in the divorce action, alone, were reported to be
$2,186,568,” see id. ¶ 166, so “the vast majority—and perhaps
all—of [the $2 million lien] reflects the attorney fees incurred in
the divorce action.” The district court explained that only “the
portion of the lien that was representing the divorce case was
wrongful” and that “some small portions” of the lien “may not
have been wrongful” insofar as they were authorized by other
documents, such as the malpractice retainer. The court also
found that Christensen knew the lien was wrongful when it was
recorded, making him liable for statutory damages and attorney
fees.

¶5   In response to the district court’s ruling, Christensen
moved for additional findings of fact and an amended ruling or
judgment. In that motion, Christensen argued that the lien was
not wrongful because it was “authorized pursuant to a
document signed by the owner of the real property.” See Utah

1. Mr. Dahl also asserted a slander of title claim and that various
other liens were wrongful, but those claims are not relevant to
this appeal.

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                        Dahl v. Christensen

Code Ann. § 38-9-102(12)(c) (LexisNexis 2018). 2 Specifically, he
contended that the lien was authorized, at least in part, by the
malpractice retainer bearing Ms. Dahl’s signature and that it
therefore did not qualify as wrongful under the Wrongful Lien
Act (the Act), even if some portion of the lien was unenforceable.
Christensen employed the same logic to challenge the district
court’s finding that he knew or should have known that the lien
was wrongful at the time it was recorded; that is, he argued that
he could not have had reason to know the lien was wrongful
because it was authorized, at least in part, by Ms. Dahl’s
signature on the malpractice retainer.

¶6     In its ruling, the district court rejected these arguments.
Because it was “undisputed that at least some of the attorney’s
fees underlying [the lien] were incurred in the divorce action,”
the court found it “unnecessary” to determine “[e]xactly how
much of [the lien] was wrongful and how much was not.” To the
extent the lien was based on the divorce retainers, it was not
authorized because Ms. Dahl’s “assent was illegally obtained
and [was] invalid.” “By recording a lien that was, at least in part,
wrongful,” the court reasoned, Christensen “violated the [Act].”
The court denied Christensen’s motion and entered judgment
awarding Mr. Dahl $49,568.65 in statutory damages and attorney
fees.

             ISSUE AND STANDARD OF REVIEW

¶7     Christensen appeals the district court’s determination that
the lien at issue violated the Act. 3 Whether a lien constitutes a

2. Because the pertinent language of the statute has not changed,
we cite the current version for convenience.

3. In the alternative, Christensen argues that the district court
clearly erred in finding that he knew the lien was wrongful
                                                  (continued…)

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                        Dahl v. Christensen

wrongful lien is a question of law, which we review for
correctness. Bay Harbor Farm, LC v. Sumsion, 2014 UT App 133,
¶ 6, 329 P.3d 46.

                           ANALYSIS

¶8     Christensen argues that the district court erred in ruling
that he violated the Act, because the lien was authorized, at least
in part, by the malpractice retainer agreement signed by Ms.
Dahl. The Act defines a wrongful lien as:

      [A]ny document that purports to create a lien,
      notice of interest, or encumbrance on an owner’s
      interest in certain real property and at the time it is
      recorded is not:

      (a) expressly authorized by this chapter or another
          state or federal statute;

      (b) authorized by or contained in an order or
          judgment of a court of competent jurisdiction in
          the state; or

      (c) signed by or authorized pursuant to a
          document signed by the owner of the real
          property.

(…continued)
when it was recorded and that he was therefore liable for
statutory damages and attorney fees pursuant to Utah Code
section 38-9-203(3)(a)–(b). Because we reverse the district court’s
determination that the lien was wrongful and vacate the
judgment, we have no need to reach the second issue.

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                        Dahl v. Christensen

Utah Code Ann. § 38-9-102(12) (LexisNexis 2018). Under the Act,
a person “who records or causes to be recorded a wrongful lien,”
while “knowing or having reason to know” that the lien is “a
wrongful lien,” “groundless,” or “contains a material
misstatement or false claim,” is “liable to the record owner of the
real property for $10,000 or for treble actual damages, whichever
is greater, and for reasonable attorney fees and costs.” Id. § 38-9-
203(3)(a)–(c).

¶9      For purposes of this appeal, Christensen does not take
issue with the district court’s ruling that the portion of the lien
based on the divorce retainers was not authorized under any of
the three subsections. 4 Rather, Christensen asserts that his lien
on the property cannot be considered wrongful because it was
authorized by the malpractice retainer Ms. Dahl signed and,
thus, it satisfies Utah Code section 28-9-102(12)(c) because it was
“authorized” by “a document signed by the owner of the real
property.” Christensen argues that “[i]f a lien arises out of fees in
connection with a variety of lawsuits, some of which are valid
and enforceable, the notice of [the lien] should not have resulted
in a determination that the notice was a wrongful lien.” Because
the lien was “at least partially backed by the signature” of Ms.
Dahl on the malpractice retainer, Christensen contends that the
lien is outside the purview of the Act.

¶10 “[T]he Wrongful Lien Act defines ‘wrongful lien’
narrowly.” Anderson v. Wilshire Invs., LLC, 2005 UT 59, ¶ 10, 123
P.3d 393. Importantly, a lien can be void or unenforceable and
yet still not constitute a wrongful lien as defined by the Act.
Id. ¶ 35. For example, in Hutter v. Dig-It, Inc., 2009 UT 69, 219

4. Accordingly, we do not address or express an opinion on
whether a lien based exclusively on the divorce retainers would
be properly characterized as wrongful within the meaning of the
Act.

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                        Dahl v. Christensen

P.3d 918, the Utah Supreme Court affirmed the district court’s
ruling that a mechanic’s lien was unenforceable because it failed
to comply with the preliminary notice requirements of the
mechanic’s lien statute. Id. ¶ 43. At the same time, the supreme
court reversed the district court’s determination that such a lien
was “wrongful” within the meaning of the Act. Id. ¶ 52.

¶11 The property owner in Hutter had argued that “an
unenforceable lien cannot be expressly authorized by statute”
under subsection (a) of section 38-9-102(12) because “the statute
only allows liens to be recorded that comply with the statutory
terms.” Id. ¶ 46. Because such an interpretation was a plausible
reading of the statutory text, the supreme court looked to the
Act’s legislative history as an aid to ascertain the intent of the
legislature. Id. ¶ 49. The court recited portions of the floor
debate, including the sponsor’s statement that the purpose of the
Act “was to impose penalties on those filing common law liens
on the property of public officials in retaliation for prosecution.”
Id. ¶ 50. Based on this legislative history, the court concluded
that “the legislature intended that the definition of ‘wrongful
lien’ should encompass only common law liens.” Id. ¶ 52. The
Act “does not include statutorily created liens that ultimately
prove unenforceable.” Id.

¶12 Like statutory liens, liens “signed by or authorized
pursuant to a document signed by the owner of the real
property” are excluded from the definition of a “wrongful lien,”
even if such liens ultimately prove unenforceable. See Lindstrom
v. Custom Floor Covering Inc., 2017 UT App 141, ¶ 21, 402 P.3d 171
(applying the Hutter analysis to contractual or other consensual
liens as identified in Utah Code section 38-9-102(12)(c)). Here, by
finding that “[o]nly the portion of lien representing the divorce
case was wrongful,” the district court implicitly found that the
remainder of the lien was authorized by the malpractice retainer
agreement signed by Ms. Dahl. However, because “the vast
majority—and perhaps all—of [the lien] reflects the attorney fees

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                         Dahl v. Christensen

incurred in the divorce action,” the court concluded that the lien
was wrongful. This was error.

¶13 The $2 million debt listed in the lien may well exceed the
value of the work Christensen performed on the malpractice
case. But the validity of the underlying debt goes to the
enforceability of the lien, not its wrongfulness. See Pratt v. Pugh,
2010 UT App 219, ¶¶ 11–13, 238 P.3d 1073 (holding that liens
authorized by a document signed by the property owner were
not wrongful at the time they were recorded even if they
ultimately proved to be based on an invalid contract); see also I-D
Elec. Inc. v. Gillman, 2017 UT App 144, ¶ 23, 402 P.3d 802
(holding that a mechanic’s lien that encumbered the wrong
property was not wrongful because it was authorized by statute,
even if it was unenforceable).

¶14 This court drew such a distinction in Skypark Airport Ass’n
v. Jensen, 2013 UT App 229, 311 P.3d 575. In that case, the
defendants argued that their wrongful lien claims should have
been submitted to the jury to determine whether the amount of
assessments levied against them was permissible under the
parties’ contract. Id. ¶ 25. This court rejected that argument
because a determination that the amount listed in the lien was
incorrect would not render the lien wrongful. Id. ¶¶ 25–26.
“[W]hether a lien is wrongful depends only on whether the
lienor has the authority to record it,” not on whether the lien
accurately reflects the amount that the lienor is entitled to collect.
Id.

¶15 Here, whether the lien exceeded the amount authorized
by the malpractice retainer goes to the validity of the lien, not its
wrongfulness. See Total Restoration Inc. v. Merritt, 2017 UT App
162, ¶ 11, 405 P.3d 778 (noting that “a lien may be invalid but not
wrongful”). Because the lien was authorized by Ms. Dahl’s
signature on the malpractice retainer, it does not meet the
definition of a wrongful lien even if it exceeded the amount of

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                        Dahl v. Christensen

the underlying debt. Under such circumstances, the lien may be
partially unenforceable, but that does not render an otherwise
authorized lien wrongful for purposes of the Act.

¶16 Notably, on appeal, Mr. Dahl does not defend the district
court’s ruling that a lien authorized, in part, by a valid retainer
agreement can nonetheless be wrongful. Instead, he argues that
the malpractice retainer, too, was invalid and asks us to affirm
on that basis. Specifically, he claims that Christensen was not
authorized to record a lien based on the malpractice retainer
because the attorney lien statute does not authorize attorneys to
file a lien against property unless that property is the subject of
the lawsuit. See Utah Code Ann. § 38-2-7(2) (LexisNexis 2018)
(authorizing an attorney lien for unpaid compensation on “any
money or property owned by the client that is the subject of or
connected with work performed for the client”). Mr. Dahl
contends that Christensen had no “good-faith basis for claiming
a statutory lien” because he knew that the property was not at
issue in the malpractice case. See Bay Harbor Farm, LC v. Sumsion,
2014 UT App 133, ¶¶ 11-13, 329 P.3d 46 (holding that, so long as
the claimant has a “sufficiently plausible good-faith claim that
his lien complied with the requirements of the attorney’s lien
statute,” the lien is not subject to nullification under the Act even
if it is ultimately unenforceable because the property was
unconnected to the legal work performed or for any other
reason).

¶17 As explained above, a lien is not wrongful if it is
authorized by statute, a court order, or a document signed by the
property owner. See Utah Code Ann. § 38-9-102(12). Because the
lien in this case was authorized by the malpractice retainer
signed by Ms. Dahl, it is excluded from the definition of
“wrongful lien” under Utah Code section 38-9-102(12)(c). It is
unnecessary for us to consider whether the lien was also
authorized by the attorney lien statute and therefore excluded

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                        Dahl v. Christensen

under subsection (a) as well. 5 Accordingly, we reject the basis for
affirmance urged by Mr. Dahl.

                         CONCLUSION

¶18 The district court erred in concluding that the lien was
wrongful even though it was authorized, at least in part, by a
document signed by the property owner. Accordingly, we vacate
the judgment and remand for further proceedings consistent
with this opinion.

ORME, Judge (concurring):

¶19 I concur fully in the lead opinion. I write separately only
to note a concern. As the lead opinion makes clear, Christensen’s
lien expressly attached only to Ms. Dahl’s interest in the
property. By its terms, it did not attach to Mr. Dahl’s interest. It
is not clear to me that, under any scenario, his property interest

5. The district court’s factual findings would also preclude us
from affirming on this alternative basis. To affirm on an
alternative ground, “not only must the alternative ground be
apparent on the record, it must also be sustainable by the factual
findings of the [district] court.” State v. Topanotes, 2003 UT 30,
¶ 9, 76 P.3d 1159. Here, the district court listed each of the cases
on which the lien was based—including the malpractice case—
and then found that “[e]ach of the foregoing cases was related to
the ownership and/or possession of” the encumbered property.
This unchallenged factual finding provides no basis for
sustaining the district court’s decision on the alternative ground
that Christensen lacked a “sufficiently plausible good-faith
claim” that the malpractice case was related to the property. See
Bay Harbor Farm, 2014 UT App 133, ¶ 13, 329 P.3d 46.

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                        Dahl v. Christensen

was impacted by the lien, wrongful or otherwise. That said, this
issue appears not to have been raised by the parties below, and it
was not considered by the district court. Likewise, it has not
been raised as an issue on appeal. Still, I think the point is worth
mentioning, lest subsequent readers of the opinion take it as
authority for the proposition that a co-owner has standing to
complain about a lien that affects only another co-owner’s
property interest. The opinion should not be taken as suggesting
any such thing, given that this issue was neither raised by the
parties nor considered by us in resolving this appeal.

20190330-CA                     11               2020 UT App 151