Court Opinion

ID: 3208876
Source: CourtListenerOpinion
Date Created: 2016-06-02 17:05:08.680467+00
Date Added: 2024-06-11T13:55:24.685374
License: Public Domain

132 Nev., Advance Opinion 41
                        IN THE SUPREME COURT OF THE STATE OF NEVADA

                GOLIGHTLY & VANNAH, PLLC,                              No 67927
                Appellant,
                vs.
                TJ ALLEN, LLC; AND RENOWN
                                                                           FILED
                REGIONAL MEDICAL CENTER,                                   JUN 0 2 2016
                Respondents.                                                rIE 1,7"1•77t.arkvh1

                                                                      BY
                                                                           IEF EPOTMERK

                            Appeal from a final judgment in an interplegdier action.
                Second Judicial District Court, Washoe County; Patrick Flanagan, Judge.
                            Affirmed.

                Golightly & Vannah, PLLC, and Robert D. Vannah and L. DiPaul
                Marrero, II, Reno,
                for Appellant.

                Maupin, Cox & LeGoy and Kim G. Rowe and Paul J. Anderson, Reno,
                for Respondent Renown Regional Medical Center.

                TJ Allen, LLC,
                in Pro Se.

                BEFORE DOUGLAS, CHERRY and GIBBONS, JJ.

                                                 OPINION
                By the Court, CHERRY, J.:
                            NRS 18.015(3) requires an attorney to perfect a lien by serving
                notice "upon the party against whom the client has a cause of action,
                claiming the lien and stating the amount of the lien." NRS 18.015(4)
                provides that the lien attaches to recovery "from the time of service of the
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                notices required." In contingency cases, it can be impossible for an
                attorney to know the exact amount of the lien because the attorney's
                percentage is based upon the ultimate recovery itself. Additionally,
                attorneys' costs often continue to accrue after the recovery. Therefore, we
                hold that in order to comply with both subsections of the statute, attorneys
                must, prior to recovery, perfect their liens by serving notice that states
                both the attorney's percentage of the recovery and that the lien will
                include court costs and out-of-pocket costs advanced by the attorney in an
                amount to be determined.
                            Golightly & Vannah (G&V) received settlement funds from a
                personal injury claim without first filing perfection notices. In fact, G&V
                waited until after initiating an interpleader action and moving for
                distribution, only to serve notices late in the process, after Renown pointed
                out that G&V had failed to do so. We affirm the district court's decision to
                order a pro-rata distribution because G&V did not perfect its lien until
                well after it recovered funds in the personal injury settlement. We also
                affirm the denial of costs. Additionally, we take this opportunity to clarify
                that an attorney need not deposit funds with the court in an interpleader
                action so long as the attorney keeps the funds in his or her client trust
                account for the duration of the interpleader action.
                                 FACTS AND PROCEDURAL HISTORY
                Underlying personal injury case
                            Juan Quinteros was injured in an automobile accident in
                February 2013. Quinteros hired G&V to represent him on a contingency
                basis for his personal injury claims. G&V was to receive 33 percent of the
                recovery. In July 2013, the insurer settled for $15,000, the upper limit of
                the insured's coverage.

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                    Interpleader action
                                The settlement award was not enough to cover all of
                    Quinteros' medical bills, as Quinteros owed over $34,000 to Renown
                    Regional Medical Center (Renown) alone. There were at least five other
                    potential creditors, including TJ Allen, LLC. To determine how the
                    settlement money should be allocated, G&V filed an NRCP 22 interpleader
                    action, on its own behalf, in March 2014, naming Quinteros, Renown, TJ
                    Allen, and the other potential creditors as defendants. In the complaint,
                    G&V alleged that it had an attorney lien on the $15,000 recovery and that
                    its lien took priority. Because Renown and TJ Allen were the only
                    creditors to answer the complaint, the other potential creditors defaulted
                    in the interpleader action.
                                In January 2015, G&V filed a motion for distribution of the
                    settlement award to defendants, to enforce its attorney lien, and to recover
                    costs of the interpleader action. Specifically, G&V asked for $5,085.58 via
                    its attorney lien and $630 in costs. Renown filed an opposition, arguing
                    that G&V's lien should not be given priority because there was no evidence
                    that it was ever perfected pursuant to NRS 18.015(3) or that G&V had
                    ever deposited the funds with the district court.
                                After receiving Renown's opposition, G&V sent perfection
                    notices to Quinteros, Renown, Renown's counsel, and TJ Allen on
                    February 10, 2015. G&V sent a similar notice to the insured on February
                    12, 2015. G&V also deposited the $15,000 with the district court. In its
                    reply, G&V stated that it had deposited the funds and perfected its
                    attorney lien since the filing of Renown's opposition; therefore, Renown's
                    argument was moot.

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                             The district court disagreed, finding that the perfection notice
                 was untimely because G&V mailed the notices long after reaching
                 settlement in the underlying case. The district court also found that G&V
                 was not entitled to its costs because there was no authority to grant such
                 an award. Because G&V's lien was not perfected, the district court
                 ordered a pro-rata distribution of the recovery: G&V received $1,800; Tel
                 Allen received $975; and Renown received $12,225.
                                                DISCUSSION
                 The district court did not err in ordering pro-rata distribution because
                 G&V did not perfect its lien until after receiving the settlement funds
                             G&V argues that perfection was not possible before it received
                 the settlement because the exact amount of its lien would be unknown
                 until after the settlement was reached and all costs could be calculated.
                 G&V also argues that it could perfect any time before the district court
                 ultimately distributed the funds in the interpleader action. Renown,
                 however, argues that Nevada law mandates perfection before the attorney
                 receives the funds. We agree with Renown.
                             Attorney liens typically enjoy priority over those from medical
                 providers. Michel v. Eighth Judicial Dist. Court, 117 Nev. 145, 150, 17
                 P.3d 1003, 1007 (2001). An attorney lien, however, is only enforceable
                 when it is attached and perfected pursuant to statute. Leventhal v. Black
                 & LoBello, 129 Nev., Adv. Op. 50, 305 P.3d 907, 911 (2013). Because an
                 attorney's charging lien is a creature of statute, the attorney must meet all
                 of the statutory requirements before the lien can be enforced.    Id. at 909.
                 This issue requires us to interpret NRS 18.015, and we review questions of
                 statutory interpretation de novo.   L Cox Constr. Co., LLC v. CH2 Invs.,
                 LLC, 129 Nev., Adv. Op. 14, 296 P.3d 1202, 1203 (2013).

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                                 An attorney "shall have a lien ... (a) [ton any claim,
                     demand or cause of action . upon which a suit or other action has been
                     instituted." NRS 18.015(1). The lien "is for the amount of any fee which
                     has been agreed upon by the attorney and client." NRS 18.015(2). To
                     perfect such a lien, the attorney must "serv[e] notice in writing, in person
                     or by certified mail, return receipt requested, upon his or her client and, if
                     applicable, upon the party against whom the client has a cause of action,
                     claiming the lien and stating the amount of the lien." NRS 18.015(3).
                     This lien "attaches to ... any money or property which is recovered on
                     account of the suit . . . from the time of service   of the notices." NRS
                     18.015(4)(a) (emphasis added).
                                 We have previously held that when an attorney does not
                     attempt to perfect his or her lien until after settlement is reached and the
                     proceeds have been received, the lien does not attach to settlement
                     proceeds.   Leventhal, 129 Nev., Adv. Op. 50, 305 P.3d at 910-11. NRS
                     18.015(4) mandates that we hold no differently now.
                                 In the present case, G&V represented its client in a personal
                     injury claim and obtained a $15,000 settlement. It received the settlement
                     on July 13, 2013, but did not send all of the required notices until
                     February 12, 2015. NRS 18.015(4) provides that the lien attaches only to
                     funds received after the notices are sent and G&V received the funds well
                     before it sent the notices. Because a lien only attaches to proceeds
                     received after the date of service of the notices, we conclude that the
                     district court correctly found that G&V did not have a priority lien against
                     the settlement funds received before those notices were served.
                     Accordingly, we affirm the district court's pro-rata distribution of the
                     settlement proceeds. Although we affirm the district court's order on this

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                basis, we take this opportunity to address other aspects of attorney liens
                at issue in this case.
                NRS 18.015(3) does not require attorneys to state an exact dollar amount
                for their liens
                             G&V argues that perfection was impossible prior to settlement
                because it did not know how much its lien would be worth until after
                settlement was reached and all costs were calculated. We agree that G&V
                could not state an exact dollar amount before settlement. However, NRS
                18.015(3) does not require the attorney to state an exact dollar amount.
                             NRS 18.015(3) requires a lien notice to "stat[e] the amount of
                the lien." The statute does not require a specific dollar amount. NRS
                18.015(4) requires that such notice be served before any funds are
                received. In general, attorneys working on a contingency basis cannot
                state an exact dollar amount until a settlement or verdict is obtained and
                all costs are calculated.
                             In order to allow attorneys working on a contingency basis the
                ability to comply with MRS 18.015(4)'s requirement to perfect before
                receiving the funds, the notice of the lien must disclose an attorney's
                agreed upon contingency percentage and claim court costs and out-of-
                pocket costs advanced by the attorney in an amount to be determined.
                This rule enables attorneys who work on a contingency basis to notice
                their liens in a manner that satisfies both MRS 18.015(4)'s requirement of
                serving the notices before recovery and NRS 18.015(3)'s requirement of
                "stating the amount of the lien." Thus, G&V was not prohibited from
                perfecting their lien prior to settlement and receipt of the proceeds.

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                An attorney need not deposit contested funds with the district court so long
                as the funds remain in the attorney's trust account
                            G&V argues that any requirement that an attorney deposit
                the contested funds with the district court makes it more difficult for all
                parties to eventually receive their awards. G&V further contends that it
                would be more prudent to allow the attorney in an interpleader action to
                keep the funds in the attorney's trust account and disburse according to
                the court's eventual order. We agree.
                            We previously held in Michel, 117 Nev. at 151, 17 P.3d at
                1007, that in an NRCP 22 interpleader action, the attorney must tender
                the entirety of the disputed funds to the district court. We so held because
                the interpleader action would not protect the attorney "from liability
                arising out of disputed funds that were not covered by the adjudication."
                Id.
                            In revisiting this issue, we conclude that the attorney need not
                deposit the funds with the court so long as the attorney keeps the funds in
                his or her trust account. Keeping the funds in the trust account enables
                the attorney to distribute the funds according to the court's order with
                maximum efficiency. Further, there is nothing within the text of NRCP 22
                requiring funds to be deposited with the court.    See Gelfgren v. Republic
                Nat'l Life Ins. Co., 680 F.2d 79, 81-82 (9th Cir. 1982) (stating that
                although statutory interpleader under 28 U.S.C. § 1335 required the funds
                to be deposited with the court, FRCP 22 interpleader did not).
                Accordingly, we clarify Michel and note that an attorney may keep the
                funds in his or her trust account until the court directs disbursement.

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                 The district court did not err in denying G&V costs in this case
                             G&V argues that because it had an equitable duty to file the
                 interpleader action on behalf of its client, reason dictates that it should
                 not be forced to bear the entire cost of said action. G&V also argues that a
                 party need only seek in excess of $2,500, but not necessarily recover that
                 much to be eligible for costs. Renown argues that because G&V did not
                 prevail and recover more than $2,500 in the district court, it was not
                 entitled to an award of costs. We agree with Renown to the extent that
                 G&V did not prevail because G&V asserted a priority lien, and the district
                 court ruled that the lien did not have priority.
                             This issue requires us to interpret NRS 18.020 and NRS
                 18.050, and we review questions of statutory interpretation de novo.      Cox
                 Constr., 129 Nev., Adv. Op. 14, 296 P.3d at 1203. When an award of costs
                 is discretionary, rather than mandatory, we review for an abuse of
                 discretion. Cadle Co. v. Woods & Erickson, LLP, 131 Nev., Adv. Op. 15,
                 345 P.3d 1049, 1054 (2015).
                             "Costs must be allowed of course to the prevailing party
                 against any adverse party against whom judgment is rendered ... an
                 action for the recovery of money or damages, where the plaintiff seeks to
                 recover more than $2,500." NRS 18.020(3). In actions not specifically
                 enumerated in NRS Chapter 18, the district court has discretion in
                 awarding fees to the prevailing party. NRS 18.050. Under either statute,
                 a party must prevail before it may win an award of costs.
                             This decision turns on the definition of prevailing party as
                 used in NRS 18.020(3) and NRS 18.050. A prevailing party must win on
                 at least one of its claims. See Close v. Isbell Constr. Co., 86 Nev. 524, 531,
                 471 P.2d 257, 262 (1970). In Close, this court held that a party prevailed
                 when it won on its mechanic's lien claim but had its damages reduced
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                significantly by the adverse party's counterclaim. Id. at 525, 531, 471 P.2d
                at 258, 262. Although Isbell received net damages significantly less than
                the award on its successful claim, it nonetheless prevailed. Id. at 531, 471
                P.2d at 262.
                               G&Vs argument fails, however, because it was not a
                prevailing party in the interpleader action. G&V sought a ruling that its
                lien had priority and that it receive its contingency fee from the recovery.
                Renown, the adverse party, claimed that the lien was not perfected and
                therefore had no priority. The district court ruled in favor of Renown,
                awarding it a full pro-rata share at the expense of G&V's claimed
                recovery. Although G&V, like the respondent in Close, received some
                money, G&V did not prevail on its sole claim of priority, thus it did not
                prevail 1 Accordingly, G&V is not entitled to costs pursuant to NRS
                18.020(3) or the discretionary provisions contained in NRS 18.050 because
                both require the party to prevail.
                               G&V also argues that it should recover its costs because
                interpleader is an equitable proceeding. "Interpleader is an equitable
                proceeding to determine the rights of rival claimants to property held by a
                third person having no interest therein." Balish v. Farnham, 92 Nev. 133,
                137, 546 P.2d 1297, 1299(1976) (emphasis added); see also Perkins State
                Bank v. Connolly, 632 F.2d 1306, 1311 (5th Cir. 1980) (stating that
                although an attorney who initiates an interpleader as a neutral
                stakeholder is typically awarded costs, an attorney who enters the conflict
                by contesting ownership or disputing the correct amount of his recovery is

                       'Because we conclude that G&V did not prevail, we decline to rule
                on its argument about whether a prevailing party who seeks in excess of
                $2,500, but wins a lesser amount, is entitled to costs.

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                not). G&V is not a neutral third party in this case, but one of the rival
                claimants seeking its share of the funds.
                             Because G&V did not prevail below and the applicable
                statutes only award costs to prevailing parties, we conclude that the
                district court was correct to deny the request for costs.
                                               CONCLUSION
                             Accordingly, we affirm the judgment of the district court. An
                attorney must serve perfection notices as required by statute before
                receiving any funds he or she claims a lien against. Attorneys working on
                a contingency basis, however, may perfect their liens by stating the
                agreed-upon contingency percentage, and claim court costs and out-of-
                pocket costs advanced by the attorney in an amount to be determined. We
                further clarify that attorneys are not required to deposit the subject funds
                with the district court so long as those funds remain in the attorney's trust
                account.

                                                                                    J.

                We concur:

                Gibbons

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