AIG Annuity Insurance v. Law Offices of Theodore Coates, P.C. ( 2012 )

FILED
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS April 16, 2012
FOR THE TENTH CIRCUIT Elisabeth A. Shumaker
Clerk of Court
AIG ANNUITY INSURANCE
COMPANY,
Plaintiff-Appellee,
v. No. 11-1000
(D.C. No. 1:07-CV-01908-MSK-MJW)
LAW OFFICES OF THEODORE (D. Colo.)
COATES, P.C.,
Defendant-Appellant,
and
KRISTI S. BENNETT, DONALD J.
EGAN, M.D.,
Defendants-Appellees,
and
MARC E. BENNETT,
Defendant.
ORDER AND JUDGMENT *
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument. This order and judgment is
not binding precedent, except under the doctrines of law of the case, res judicata,
and collateral estoppel. It may be cited, however, for its persuasive value
consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
Before KELLY, MURPHY, and MATHESON, Circuit Judges.
The Law Offices of Theodore Coates, P.C. (Coates) appeals from orders by
the district court in an interpleader action filed by AIG Annuity Insurance
Company (AIG). In a series of orders, the district court determined the respective
rights of several parties, including Coates, to a stream of annuity payments.
Coates, which sought an attorney’s lien on the annuity, appeals from the court’s
rulings as to its requested lien. We affirm.
The parties are familiar with the facts, so we recite only the briefest
background information and incorporate by reference all of the factual and
procedural background information set out by the district court in its
December 22, 2008, February 12, 2009, and March 2, 2010 orders (the Orders).
AIG was the issuer of a stream of annuity payments originally owed to a minor,
Ryan Bennett. Ryan died intestate and his divorced parents, Kristi Bennett
(Kristi) and Marc Bennett (Marc), engaged in lengthy conservatorship litigation,
followed by probate litigation to determine their respective rights to the annuity
stream. Coates represented Kristi in those proceedings and unsuccessfully
appealed the probate court’s ruling that Kristi and Marc were each entitled to 50%
of the annuity stream. In 2006, all the parties to the probate court proceedings
entered into a settlement agreement resolving Kristi’s and Marc’s respective
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rights to the annuity stream. The probate court approved the settlement, directed
final disposition of the estate’s assets and closed the probate estate (the Probate
Judgment).
Only then did Coates file a claim in the probate court for an attorney’s lien
under Colo. Rev. Stat. § 12-5-119, for approximately $420,000 of its legal fees
against all of the annuity stream. This type of lien, called a “charging lien,” gives
an attorney a lien on “any monies or property due or owing to the client on any
underlying judgment the attorney may have obtained or assisted in obtaining to
the extent of the attorney’s reasonable fees remaining due and unpaid.” Gold v.
Duncan, Ostrander & Dingess, P.C., 143 P.3d 1192, 1193 (Colo. App. 2006).
“Such lien may be enforced by the proper civil action.” Colo. Rev. Stat.
§ 12-5-119. The probate court denied Coates’s claim because the probate estate
was already closed. AIG then filed the current interpleader action pursuant to
28 U.S.C. § 1335, requesting the court determine the relative priority of Coates’s
lien and a lien of Kristi’s creditor, Dr. Donald Egan (Egan), on the annuity
stream.
The district court directed AIG to deposit $411,207.31 with the court. In a
2008 order, it ruled that Coates did not have a valid charging lien on Marc’s
annuity stream because it never represented Marc. In 2009, it ruled that Coates
did have a valid charging lien on Kristi’s annuity stream but, under § 12-5-119,
Coates was entitled only to reasonable fees billed for services rendered in
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connection with obtaining the Probate Judgment, because only that judgment gave
Kristi an interest in the annuity stream. See N. Valley Bank v. McGloin,
Davenport, Severson & Snow, P.C., 251 P.3d 1250, 1253 (Colo. App. 2010)
(holding that charging lien only includes fees generated in obtaining the
judgment, not fees unrelated to the judgment). The district court ruled that
further proceedings were required to determine that amount.
Coates then filed a motion for summary judgment attaching an affidavit,
without supporting evidence, stating its accrued fees were $671,196. In response,
Kristi provided Coates’s billing statements, its responses to her discovery
requests and other evidence identifying which of Coates’s fees were related to
obtaining the Probate Judgment.
In its final 2010 order deciding these and other motions, the district court
ruled that (1) AIG was entitled to attorney fees for the interpleader action,
payable equally by Kristi, Coates, and Egan, and not by Marc; (2) based on the
undisputed evidence presented, Coates’s charging lien on Kristi’s annuity interest
totaled $54,919.47, or $39,722.80 after deducting its share of AIG’s attorney fees;
(3) Egan’s lien totaled $172,303.33 after deducting AIG’s fees; and (4) because
both Coates’s and Egan’s liens could be satisfied in full by the interpled funds of
approximately $400,000, it was unnecessary for the court to determine the relative
priority of Coates’s and Egan’s liens.
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After the district court entered judgment, Coates filed a Fed. R. Civ. P.
59(e) motion requesting the district court alter its judgment to award Coates
prejudgment interest on the amount of its determined lien. The district court
denied the motion, explaining that such an award was premature because the court
had not adjudicated the merits of any substantive claim by Coates against Kristi
for attorney fees, including prejudgment interest, which would have to be
resolved in a separate proceeding. The district court explained it had determined
only the relative rights of the parties to the interpled funds.
Coates appeals, claiming the district court erred by (1) treating its
charging lien as a judicial lien; (2) cutting down the value of its lien to an
arbitrary equitable amount and leaving its remaining fees as an unsecured claim;
(3) not giving full faith and credit to the settlement approved by the Probate
Judgment; (4) misapplying its jurisdiction; (5) not adjudicating the priority of
Coates’s lien in relation to Egan’s; and (6) denying it prejudgment interest.
“We review de novo the grant of summary judgment, applying the same
legal standard as the district court under Fed. R. Civ. P. 56(a).” Cypert v. Indep.
Sch. Dist. No. I-050, 661 F.3d 477, 480 (10th Cir. 2011) (internal quotation marks
omitted). The district court had jurisdiction under 28 U.S.C. § 1335 to determine
the relative priority of the parties’ interests in the interpled funds, and we find no
basis for Coates’s assertion that the court misapplied or exceeded its jurisdiction
thereunder. We conclude that the district court appropriately determined that
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Marc was not a client of Coates; that Coates did have a valid charging lien under
§ 12-5-119 for its services relating to Kristi’s Probate Judgment, but that the
amount of that lien “is limited to securing the payment of the reasonable value of
[those] attorney fees,” People v. Carvell (In re Estate of Benney), 790 P.2d 319,
323 (Colo. 1990) (en banc). We further conclude that the undisputed evidence
supports the district court’s findings as to the amount of Coates’s reasonable fees
related to obtaining the Probate Judgment. The record also supports the district
court’s findings that the interpled funds are sufficient to satisfy the full amount of
Egan’s lien and the enforceable amount of Coates’s charging lien. Because the
district court did not adjudicate any substantive claim by Coates against Kristi for
its attorney fees, but only determined the parties’ relative rights in the interpled
funds, the district court correctly concluded that Coates’s request for prejudgment
interest was premature. We affirm for substantially the reasons given by the
district court in its Orders.
Coates’s motion for certification to the Colorado Supreme Court is
DENIED. The judgment of the district court is AFFIRMED.
Entered for the Court
Michael R. Murphy
Circuit Judge
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