Court Opinion

ID: 4023256
Source: CourtListenerOpinion
Date Created: 2016-08-10 17:07:24.473934+00
Date Added: 2024-06-11T14:37:01.682633
License: Public Domain

STATE OF MINNESOTA

                                   IN SUPREME COURT

                                         A15-0055

Court of Appeals                                                              Lillehaug, J.
                                                                   Took no part, Chutich, J.

City of Oronoco,

                     Respondent,
vs.                                                                  Filed: August 10, 2016
                                                                  Office of Appellate Courts
Fitzpatrick Real Estate, LLC, et al.,

                     Respondents,
vs.

Whitney National Bank of New Orleans, Louisiana,

                     Appellant.

                               ________________________

Daniel J. Heuel, O’Brien & Wolf, L.L.P., Rochester, Minnesota, for respondents
Fitzpatrick Real Estate, LLC, et al.

Thomas H. Boyd, John C. Holper, Winthrop & Weinstine, P.A., Minneapolis, Minnesota,
for appellant.
                          ________________________

                                        SYLLABUS

       1.     Minnesota Statutes § 481.13, subd. 1(a) (2014), creates two distinct

attorney’s liens: a cause-of-action lien and a property-interest lien.

       2.     Minnesota Statutes § 481.13, subd. 1(a), does not require an attorney with a

cause-of-action attorney’s lien to file notice for the lien to have priority over third-party

claims.

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                                        OPINION

LILLEHAUG, Justice.

       This case arises from a lien priority dispute between Whitney National Bank

(Whitney) and a law firm, O’Brien & Wolf, L.L.P. (O’Brien). Whitney obtained a

judgment in Florida against respondents Daniel Fitzpatrick and his business entities

(collectively Fitzpatrick) and docketed the judgment in Minnesota. In a separate matter,

Fitzpatrick, represented by O’Brien, obtained a judgment against the City of Oronoco

(the City). The judgment against the City became the focus of two creditors: Whitney,

by way of a garnishment summons, and O’Brien, by way of an attorney’s lien.

       The district court held that Whitney’s garnishment lien was superior to O’Brien’s

attorney’s lien. The court of appeals reversed. Because the plain language of Minn. Stat.

§ 481.13, subd. 1(a)(1) (2014) does not require an attorney with a cause-of-action

attorney’s lien to file notice of the lien claim for the lien to have priority over third-party

claims, we affirm.

                                              I.

       On March 31, 2009, Whitney obtained a judgment in the amount of $273,189.69

against Fitzpatrick in Florida. On May 21, 2009, the foreign judgment was entered and

docketed in Olmsted County District Court.

       On September 3, 2010, the City sued Fitzpatrick and several of his entities in

Olmsted County District Court. Fitzpatrick, represented by O’Brien, counterclaimed.

The district court ordered a judgment for Fitzpatrick in the amount of $120,440.40. The

City appealed. The court of appeals affirmed the judgment against the City. City of

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Oronoco v. Fitzpatrick Real Estate, LLC, No. A13–1741, 2014 WL 1272405, at *1-2

(Minn. App. Mar. 31, 2014), rev. denied (Minn. June 17, 2014). Whitney was not

involved in this case.

       On June 19, 2014, Whitney served a garnishment summons and related papers on

the City to establish and perfect a garnishment lien against the judgment proceeds won by

Fitzpatrick. Minn. Stat. § 571.81 (2014). On June 23 and 26, 2014, Whitney mailed

copies of the garnishment papers to Fitzpatrick at his last known addresses.

       On June 30, 2014, Whitney received O’Brien’s notice of its attorney’s lien “on the

cause of the action . . . and in the judgment” against the City. On July 2, 2014, O’Brien

filed a UCC Financing Statement with the Minnesota Secretary of State to provide public

notice of its attorney’s lien.

       On July 15, 2014, O’Brien filed a motion in Olmsted County District Court to

establish and determine the amount and priority of its attorney’s lien. On August 1, 2014,

pursuant to a court order, the City deposited funds in the amount of $149,113.241 with the

court administrator to satisfy the judgment in favor of Fitzpatrick. On December 2, 2014,

the district court held that Whitney’s garnishment lien in the amount of $144,123.642 was

superior to O’Brien’s attorney’s lien in the amount of $37,297.77. The court ordered that

the deposited funds be paid first to Whitney and then the remaining balance to O’Brien.

1
       The difference between the $120,440.40 judgment and the amount deposited
represents pre- and post-judgment interest.
2
       Although Whitney’s garnishment summons was for the full amount of its Florida
judgment against Fitzpatrick, Whitney did not object when the City disclosed it owed
$144,123.64.

                                            3
       Referencing Minn. Stat. § 481.13, subd. 1(a) (2014), the district court concluded

that a cause-of-action attorney’s lien is perfected, as against third parties, from the time

the attorney files notice of the lien claim. Because the court determined that O’Brien’s

attorney’s lien was perfected no earlier than June 30, 2014, it concluded that Whitney’s

earlier-perfected garnishment summons had priority. O’Brien appealed.

       The court of appeals reversed and remanded. City of Oronoco v. Fitzpatrick Real

Estate, LLC, 869 N.W.2d 332, 333 (Minn. App. 2015). The court determined that Minn.

Stat. § 481.13, subd. 1(a), creates two kinds of attorney’s liens: a cause-of-action lien

governed    by   subdivision 1(a)(1),   and       a   property-interest   lien   governed   by

subdivision 1(a)(2). See 869 N.W.2d at 336. The court read subdivision 1(a)(1) as not

requiring an attorney to file notice of a cause-of-action attorney’s lien claim to have

priority over third-party claims. See id. By contrast, reasoned the court, a property-

interest lien under subdivision 1(a)(2) requires notice to third parties. Id. Therefore, the

court concluded, O’Brien’s cause-of-action attorney’s lien, which attached no later than

October 22, 2010—when O’Brien began representing Fitzpatrick—has priority over

Whitney’s garnishment lien, which attached on June 18, 2014. Id. We granted review.

                                              II.

       An attorney’s lien “prevent[s] a client from benefiting from an attorney’s services

without paying for those services.” Dorsey & Whitney LLP v. Grossman, 749 N.W.2d

409, 420 (Minn. App. 2008). “An attorney[’s] lien traces its origins to common law, but

the Minnesota legislature has long since preempted this field and has substituted statutory

procedures.” Id. (citation omitted) (internal quotation marks omitted); see also Minn.

                                              4
Stat. § 481.13.

       This case requires that we interpret the attorney’s lien statute, Minn. Stat.

§ 481.13. “Interpretation of a statute is subject to de novo review.” Schroeder v. W. Nat.

Mut. Ins. Co., 865 N.W.2d 66, 67 (Minn. 2015). “When we interpret statutes, our

objective is to ascertain and effectuate the intent of the Legislature.” Marks v. Comm’r of

Revenue, 875 N.W.2d 321, 324 (Minn. 2016); see also Minn. Stat. § 645.16 (2014).

Statutory words and phrases must be construed according to the rules of grammar and

common usage. See Minn. Stat. § 645.08(1) (2014). We consider the statute “as a whole

so as to harmonize and give effect to all its parts, and where possible, no word, phrase, or

sentence will be held superfluous, void, or insignificant.”        Anderson v. Comm’r of

Taxation, 253 Minn. 528, 533, 93 N.W.2d 523, 528 (1958).

       Subdivision 1(a) of the statute reads as follows:

          (a) An attorney has a lien for compensation whether the agreement for
          compensation is expressed or implied (1) upon the cause of action from
          the time of the service of the summons in the action, or the
          commencement of the proceeding, and (2) upon the interest of the
          attorney’s client in any money or property involved in or affected by
          any action or proceeding in which the attorney may have been
          employed, from the commencement of the action or proceeding, and, as
          against third parties, from the time of filing the notice of the lien claim,
          as provided in this section.

Minn. Stat. § 481.13, subd. 1(a).

       The issue in this case turns on the effect of the phrase at the end of subdivision

1(a): “and, as against third parties, from the time of filing the notice of the lien claim, as

provided in this section.” We will call this phrase “the third-party clause.” Plainly, the

third-party clause modifies the preceding words in subdivision 1(a)(2), which governs

                                              5
money or property attorney’s liens—property-interest liens. But does it also modify

subdivision 1(a)(1), which governs cause-of-action attorney’s liens? If it does, Whitney’s

garnishment lien has priority. If it does not, O’Brien’s attorney’s lien has priority. For

three reasons, we conclude that the third-party clause clearly does not modify subdivision

1(a)(1).

       First, there is no textual indication that the third-party clause modifies subdivision

1(a)(1). The third-party clause is part of subdivision 1(a)(2). The immediately preceding

text and the third-party clause are separated only by a comma, not by a semicolon or a

line break. “[W]hile matters like punctuation are not decisive of the construction of a

statute, where they reaffirm conclusions drawn from the words themselves they provide

useful confirmation.” United States v. Naftalin, 441 U.S. 768, 774 n.5 (1979) (citations

omitted) (internal quotations omitted). A semicolon or a line break might signify that the

third-party clause modifies all that goes before, but there is no such signal.

       By contrast, the statute clearly provides that the initial words of subdivision 1(a)

govern both paragraphs (1) and (2) in that subdivision.            And, in the very same

subdivision 1, the Legislature showed that it knows how to use numbering and line

breaks to tell us when a provision applies to all that precedes it. Specifically, subdivision

1(c) governs how to establish and determine a lien, and expressly refers to subdivisions

1(a) and 1(b).3 Nothing in the third-party clause within subdivision 1(a)(2) refers to

3
       “A lien provided by paragraphs (a) and (b) may be established, and the amount of
the lien may be determined, summarily by the court under this paragraph on the

                                                         (Footnote continued on next page.)

                                              6
subdivision 1(a)(1).

       Second, the rules of grammar suggest that the third-party clause modifies only

subdivision 1(a)(2). See Minn. Stat. § 645.08(1) (“[W]ords and phrases are construed

according to rules of grammar . . . .”). In particular, the last antecedent canon “instructs

that a limiting phrase . . . ordinarily modifies only the noun or phrase that it immediately

follows . . . .” Larson v. State, 790 N.W.2d 700, 705 (Minn. 2010). As the United States

Supreme Court has explained, this “rule reflects the basic intuition that when a modifier

appears at the end of a list, it is easier to apply that modifier only to the item directly

before it.” Lockhart v. United States, __ U.S. __, 136 S. Ct. 958, 963 (2016). The last

antecedent canon supports our reading that the third-party clause modifies only the

paragraph clause immediately preceding it, which is subdivision 1(a)(2).

       Third, the last words of the third-party clause, “as provided in this section,” tell us

that the clause is limited to the property-interest attorney’s lien. The words “as provided

in this section” clearly refer to subdivision 2 of section 481.13, which contains a detailed

procedure to perfect a property-interest attorney’s lien.       Subdivision 2 provides no

comparable instructions on how to perfect a cause-of-action attorney’s lien. See Minn.

Stat. § 481.13, subd. 2. This tells us that the attorney need not do anything after the

attorney’s cause-of-action lien has attached for it to have priority over the claims of third

(Footnote continued from previous page.)

application of the lien claimant or of any person or party interested in the property subject
to the lien.” Minn. Stat. § 481.13, subd. 1(c).

                                              7
parties. Instead, such a lien is effective “from the time of the service of the summons” or

“the commencement of the . . . proceeding.” Minn. Stat. § 481.13, subd. 1(a)(1).

       For these reasons, we hold that Minn. Stat. § 481.13, subd. 1(a), creates two

distinct attorney’s liens: a cause-of-action lien and a property-interest lien. But they

have different notice requirements. Specifically, the third-party clause that is part of

subdivision 1(a)(2) does not require an attorney with a cause-of-action attorney’s lien to

file separate notice of the lien to have priority over third-party claims. Accordingly,

O’Brien’s lien is superior to Whitney’s claim.

      Affirmed.

      CHUTICH, J., took no part in the consideration or decision of this case.

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