Court Opinion

ID: 4665159
Source: CourtListenerOpinion
Date Created: 2021-03-05 10:08:05.635321+00
Date Added: 2024-06-11T08:02:40.639487
License: Public Domain

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                 revision until final publication in the Michigan Appeals Reports.

                           STATE OF MICHIGAN

                             COURT OF APPEALS

DAVID E. CHRISTENSEN, P.L.L.C.,                                      UNPUBLISHED
                                                                     March 4, 2021
               Plaintiff-Appellant,

v                                                                    No. 351737
                                                                     Washtenaw Circuit Court
PIONEER STATE MUTUAL INSURANCE                                       LC No. 19-000330-CZ
COMPANY,

               Defendant/Third-Party Plaintiff-
               Appellee,
and

HURLEY MEDICAL CENTER,

               Third-Party Defendant/Third-Party
               Plaintiff-Appellee,
and

AMELIA WARREN,

               Third-Party Defendant.

Before: GLEICHER, P.J., and K. F. KELLY and RIORDAN, JJ.

GLEICHER, J. (concurring).

        In this case involving the validity of a law firm’s asserted charging lien, I concur with the
result reached by the majority for two reasons. An attorney charging lien is an equitable creation
intended to do justice when a lawyer is unfairly deprived of compensation for work benefitting a
client. Enforcement of an equitable lien requires proof of notice and that the attorney’s efforts
generated at least a portion of the fund to which the lien applies. Both elements are missing here.

       Christensen’s client, Amelia Warren, sustained serious injuries in a single-car, roll-over
accident. She received treatment at third-party defendant Hurley Hospital. Pioneer insured the
vehicle involved in the accident. The vehicle’s owner advised Pioneer that the driver had taken

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the car without the owner’s permission. Pioneer learned that law enforcement personnel were
actively investigating whether the car had been stolen. A stolen vehicle would preclude coverage,
Pioneer asserted.

        After the accident, an attorney employed by plaintiff’s firm contacted Pioneer by letter and
claimed “a lien on behalf of this office upon any and all settlements and/or judgments resulting
from this occurrence.” Three months later, Pioneer concluded that it was Warren’s insurer of first
priority and informed plaintiff in writing of its decision. Pioneer promptly paid Warren’s Hurley
Hospital bill. According to the attorney’s affidavit, a number of hours were spent by law firm
personnel in an effort to secure payment of Warren’s medical bills. But no lawsuit had been filed
before payment was made, nor had plaintiff’s office threatened a suit, or negotiated with Pioneer
regarding payment.

       Before coverage was approved, plaintiff’s office had also contacted Hurley’s billing
department and advised that Pioneer was the primary insurer responsible for payment of Warren’s
medical bills. The attorney provided Hurley with the claim number, the adjuster’s name, and
contact information. The law firm did not send Hurley a letter asserting a lien.

        Under the American Rule, litigants such as Warren pay their own attorney fees. Unpaid
fees may be recovered only through a contract enforcement action. But equitable exceptions to
this rule exist. Here, plaintiff asserts that it had an equitable charging lien on the proceeds of
Pioneer’s payment of medical bills its client incurred at Hurley Hospital.

         A charging lien “is an equitable right to have the fees and costs due for services secured
out of the judgment or recovery in a particular suit.” George v Sandor M Gelman, PC, 201 Mich
App 474, 476; 506 NW2d 583 (1993). The common-law right to charging lien stems from the
notion that an attorney should get paid for services that create a fund benefitting his or her client.
“The attorney’s charging lien creates a lien on a judgment, settlement, or other money recovered
as a result of the attorney’s services.” Id. No Michigan caselaw supports that an equitable charging
lien is created against a third party by the mere fact that an attorney performed services on behalf
of his or her client. Rather, the law requires a showing that the attorney’s work achieved a positive
result for the client—in this case, insurance proceeds that otherwise would not have been paid.

        A valid charging lien also requires notice. “An attorney’s lien is not enforceable against a
third party unless the third party had actual notice of the lien, or unless circumstances known to
the third party are such that he should have inquired as to the claims of the attorney.” Doxtader v
Sivertsen, 183 Mich App 812, 815; 455 NW2d 437 (1990). Notice allows the parties to formally
or informally contest any disputes regarding a claimed lien. It also empowers an attorney to detain
delivery of money to a client pending judicial resolution of a contested lien. Notice is particularly
important when third parties are potentially on the hook; without it, they are unable to protect
themselves from a subsequent lawsuit.

        No evidence supports that the law firm’s efforts on Warren’s behalf convinced Pioneer to
pay her medical bills. Rather, the record establishes that Pioneer withheld payment pending a
police investigation, and paid promptly once that investigation ended. Second, plaintiff notified
Pioneer of a lien contingent on “settlement” or “judgment.” There was no judgment. Nor was
there a “settlement.” A settlement presumes a lawsuit, a threat of a lawsuit, or at a minimum,

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negotiations intended to avoid a lawsuit. Settlements are almost always memorialized in writing
because they are legally binding agreements. Pioneer had no reason to interpret the term
“settlement” to include the voluntary payment made in this case.

        In my view, plaintiff failed to establish two requisite ingredients for an equitable lien and
on that basis, I concur with the majority.

                                                              /s/ Elizabeth L. Gleicher

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