Court Opinion

ID: 158046
Source: CourtListenerOpinion
Date Created: 2010-08-14 05:11:46+00
Date Added: 2024-06-11T15:01:27.024223
License: Public Domain

F I L E D
                                                                 United States Court of Appeals
                                                                         Tenth Circuit
                   UNITED STATES COURT OF APPEALS
                                                                         JUN 8 1999
                          FOR THE TENTH CIRCUIT
                                                                    PATRICK FISHER
                                                                             Clerk

    In re:

    TULSA LITHO COMPANY,

             Debtor.                                   No. 98-5075
                                                 (D.C. No. 97-CV-195-K)
                                                       (N.D. Okla.)
    ROBERT G. GREEN,

             Appellant,

    v.

    TULSA LITHO COMPANY,

             Appellee.

                          ORDER AND JUDGMENT            *

Before TACHA , BARRETT , and MURPHY , Circuit Judges.

*
      This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
       After examining the briefs and appellate record, this panel has determined

unanimously to grant the parties’ request for a decision on the briefs without oral

argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore

ordered submitted without oral argument.

       Robert G. Green, as a creditor, appeals from an order by the United States

District Court for the Northern District of Oklahoma which affirmed a final

decision of the United States Bankruptcy Court issued in the Chapter 11

bankruptcy proceedings of Tulsa Litho Company (TLC).          See 28 U.S.C. § 158(a)

(giving district court jurisdiction to hear appeals from final decisions of

bankruptcy court). The bankruptcy court denied Green’s motions for relief from

stay, for imposition of constructive trust, and for an administrative expense claim.

We have appellate jurisdiction pursuant to 28 U.S.C. §§ 158(d) and 1291, and

affirm.

       Green raises two issues on appeal: when does an attorney have a perfected

charging lien on proceeds resulting from a judgment in favor of his client under

Oklahoma law, and, if a perfected lien exists, whether this lien is defeated by the

client’s bankruptcy filing. We review the district court’s legal conclusions     de

novo . See Osborn v. Durant Bank & Trust Co. (In re Osborn)        , 24 F.3d 1199,

1203 (10th Cir. 1994).

                                            -2-
      The facts are essentially undisputed. In 1993 TLC hired Green, an

attorney, to represent it in a breach of contract case against a group of three

companies (hereinafter collectively called “Fisher”). TLC won a judgment,

including attorney fees, against Fisher, but Fisher filed for bankruptcy before

TLC collected on its judgment. TLC paid Green part of the attorney fees it owed.

TLC hired other counsel, Brian Corrigan, to represent it in the Fisher bankruptcy

proceedings.

      Another company bought TLC’s stock in March 1996, and on May 15,

1996, TLC filed for reorganization under Chapter 11. TLC’s petition listed the

Fisher judgment as an asset, and it listed Green as a disputed unsecured creditor.

On May 29, 1996, through attorney Corrigan, TLC accepted an offer to settle its

outstanding judgment against Fisher for 55% of the original judgment. In

September 1996 Green requested relief from the automatic stay in TLC’s

bankruptcy to allow him to create or perfect an attorney’s lien against the Fisher

settlement by filing a notice of such in the Fisher litigation. The bankruptcy court

took his motion, which TLC opposed, under advisement. On November 26, 1996,

the bankruptcy court confirmed TLC’s plan of reorganization, which treated

Green as an unsecured Class 5 creditor whose recovery depended on the

performance of the trust.

                                          -3-
      In January 1997 the bankruptcy court entered an order concluding that

Green did not have an attorney’s lien on the proceeds of the Fisher settlement

because he failed to comply with the Oklahoma attorney’s lien statute, Okla. Stat.

tit. 5, § 6. That statute provides that an attorney has a lien for fees from the

commencement of an action      if the attorney has either served “notice upon the

defendant . . . in which he shall set forth the nature of the lien he claims and the

extent thereof; and said lien shall take effect from and after the service of such

notice” or if the attorney has “filed such pleading in a court of record, and

endorsed thereon his name, together with the words ‘Lien claimed.’”          Id. The

court rejected Green’s claim that he constructively satisfied the notice

requirement by showing that Fisher implicitly understood the nature and extent of

his attorney lien as evidenced in the May 29 settlement letter written by Corrigan.

Both the district and bankruptcy courts concluded that because the letter was

written after TLC’s petition for bankruptcy had been filed and the automatic stay

was in effect, the implicit “notice” violated the stay, was ineffective, and Green

had no perfected attorney’s lien that would give him priority over any other

unsecured creditor.   See Appellant’s App. at 86-88; 74-75. We agree.

      We have previously held that “[t]he validity and extent of an attorney’s lien

in bankruptcy is determined by state law.”         Electronic Metal Prods., Inc. v.

Bittman (In re Electronic Metal Prods., Inc.)       , 916 F.2d 1502, 1504 (10th Cir.

                                             -4-
1990) (quotation omitted). While Green had a charging lien against TLC that

arose by operation of law, because he did not comply with the requirements of the

Oklahoma attorney lien statute before TLC filed for bankruptcy, his lien was not

perfected against third parties and was invalid against TLC’s trustee in

bankruptcy as of the date of the bankruptcy filing.       See Edwards v. Andrews,

Davis, Legg, Bixler, Milsten & Murrah, Inc.,       650 P.2d 857, 862 (Okla. 1982)

(stating that the attorney’s charging lien is based on an equitable doctrine that the

attorney should be paid out of the collection of the judgment secured by the

attorney’s efforts); cf. In re Electronic Metal Prods     ., 916 F.2d at 1505 (holding

that, even though the charging lien is effective against the client, unless it has

been perfected as to third parties, it is not effective against the client’s

bankruptcy trustee). Green argues that his charging lien that arose by operation

of the common law is not affected by the Oklahoma attorney lien statute because

the purpose of that statute is simply to provide additional remedies against third

parties and a statute of limitations. His argument misses the point. Under

bankruptcy law, the creation of an interest in property is not synonymous with

perfection of that interest.   See 11 U.S.C. 362(a)(4) (staying “any act to create,

perfect, or enforce any lien against property of the estate”);    In re Electronic Metal

Prods. , 916 F.2d at 1505 (treating creation and perfection of lien as two distinct

events). A statute like the one in Oklahoma requires the attorney to perform some

                                             -5-
affirmative act or comply with some procedure to perfect the interest created by

common law. Cf. id. (applying Colorado attorney lien statute);      In re Del Grosso ,

111 B.R. 178, 182 (Bankr. N. D. Ill. 1990) (noting procedures required in order to

perfect attorney’s lien under Illinois law and holding that because service was not

effectuated properly, there was no perfected attorney’s lien). The New York

cases cited by Green are distinguishable because New York does not require any

additional procedures to perfect an attorney’s charging lien as to third parties

except when the lien is for services rendered prior to the commencement of an

action. See N.Y. Judiciary Law § 475 (McKinney 1999) (providing that the

attorney’s lien is created from the commencement of the action and attaches to a

judgment and its proceeds “in whatever hands they may come”);         Hoffman &

Schreiber v. Medina , 224 B.R. 556, 562 n.4 (D.N.J. 1998);      cf. N.Y. Judiciary Law

§ 475-a (McKinney 1999) (providing that, prior to commencement of an action, a

lien is created only if attorney serves notice of the lien upon the person against

whom the client may have a cause of action).

       Green argues that First Nat’l Bank & Trust Co. v. Abel (In re Western Real

Estate Fund, Inc.) , 922 F.2d 592 (10th Cir. 1990),    modified, Abel v. West , 932

F.2d 898 (10th Cir. 1991), controls the resolution of this case. We disagree. As

noted by the district court,   In re Western Real Estate   involved an attorney who

had perfected his lien prior to the bankruptcy of his client by notice to the

                                             -6-
defendant and filed his proof of claim in the bankruptcy case.     See id. at 594-95.

Having failed to perfect his charging lien as to third parties before his client filed

for bankruptcy, Green is an unsecured creditor with no priority over other

creditors in a similar position.

       The judgment of the United States District Court for the Northern District

of Oklahoma is AFFIRMED.

                                                        Entered for the Court

                                                        Michael R. Murphy
                                                        Circuit Judge

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