Judith K. Schermer v. Municipal Building Commission , 742 F.3d 1065 ( 2014 )

United States Court of Appeals
For the Eighth Circuit
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No. 13-1300
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Brian Kaibel; Daniel Dotse; Garfield Campbell; Rick Iskierka
lllllllllllllllllllll Plaintiffs
Judith K. Schermer; Daniel W. Schermer
lllllllllllllllllllllMovants - Appellants
v.
Municipal Building Commission; Mike Opat, individually and in his
representative capacity; R. T. Rybak, individually and in his representative
capacity; Mark Stenglein, individually and in his representative capacity; Lisa
Goodman, individually and in her representative capacity
lllllllllllllllllllll Defendants - Appellees
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Appeal from United States District Court
for the District of Minnesota - Minneapolis
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Submitted: October 23, 2013
Filed: January 9, 2014
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Before BYE, SMITH, and BENTON, Circuit Judges.
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BENTON, Circuit Judge.
Judith K. and Daniel W. Schermer represent four security guards suing the
Municipal Building Commission for unlawful termination. The Commission, created
by statute, supervises public buildings in Minneapolis. In 2011, the Commission
terminated the employment of the guards. They sued the Commission for violating
Minn. Stat. § 383B.751 and 42 U.S.C. § 1983. The Schermers represented the guards,
with a fee agreement. The district court ordered the Commission to either show cause
or reinstate the guards with back pay. The Commission chose reinstatement, issuing
checks for back pay to the guards. The Schermers’ names were not on the checks.
With the Section 1983 action still pending, the Schermers moved to establish an
attorneys’ lien against the Commission.1 The district court denied the motion. This
court reverses and remands.
I.
This court has jurisdiction of appeals from the final decisions of the district
courts. 28 U.S.C. § 1291. Final decisions include a “small class” of judgments that
“although they do not end the litigation, are appropriately deemed ‘final’” under the
collateral order doctrine. Mohawk Indus., Inc. v. Carpenter, 558 U.S. 100, 106
(2009). This class of judgments “includes only decisions that are conclusive, that
resolve important questions separate from the merits, and that are effectively
unreviewable on appeal from the final judgment in the underlying action.” Swint v.
Chambers Cnty. Comm’n, 514 U.S. 35, 42 (1995); Howard v. Norris, 616 F.3d 799,
802 (8th Cir. 2010). A decision is effectively unreviewable on appeal when it
involves “an important right which would be ‘lost, probably irreparably’ if review had
to await final judgment.” Abney v. United States, 431 U.S. 651, 658 (1977) (quoting
Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546 (1949)).
1
The Schermers also seek attorney fees under 42 U.S.C. § 1988 and Rogers
Group, Inc. v. City of Fayetteville, 683 F.3d 903 (8th Cir. 2012). Unlike in Rogers
Group, the guards were awarded back pay and reinstated in response to the district
court’s Alternative Writ of Mandamus. The guards have not prevailed on a state law
claim. Id. at 910.
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Attorneys’ lien decisions are often held to satisfy the collateral order doctrine.
See Sanders v. Providence Washington Ins. Co., 442 F.2d 1317, 1319 (8th Cir.
1971) (finding jurisdiction over an attorneys’ lien under the collateral order doctrine);
Sutton v. N.Y.C. Transit Auth., 462 F.3d 157, 160 (2d Cir. 2006) (finding “orders
adjudicating attorney’s fees are normally considered sufficiently distinct from the
main litigation to be appealable as collateral orders”); United States v. Metsch &
Metsch, P.A., 187 Fed. Appx. 946, 947 (11th Cir. 2006) (finding the denial of an
attorneys’ lien effectively unreviewable on appeal); Preston v. United States, 284
F.2d 514, 515 n.1 (9th Cir. 1960) (finding appeal of an attorneys’ lien decision “too
independent of the cause itself to require that appellate consideration be deferred until
the whole case is adjudicated”).
An attorneys’ lien in Minnesota is governed by Minn. Stat. § 481.13, subd.
1(a).
An attorney has a lien for compensation whether the agreement for
compensation is expressed or implied . . . 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 . . . .
The lien exists “from the commencement of the action.” Id. It “attaches at the
commencement of the legal representation.” Dorsey & Whitney LLP v. Grossman,
749 N.W.2d 409, 420 (Minn. App. 2008). Not recognizing the lien denies an interest
in the “money or property . . . affected by” the attorneys’ representation. Minn. Stat.
§ 481.13. See Stageberg v. Stageberg, 695 N.W.2d 609, 616 (Minn. App. 2005)
(recognizing attorney’s interest in contingent fees as marital property). The district
court’s order was final, separate from the merits, and involved the loss of an
important right. This court has jurisdiction under the collateral order doctrine.
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II.
The district court found that Minn. Stat. § 481.13 applied in “certain factual
situations” where “equity demands.” Since the Schermers have not tried to collect
fees from their clients, the district court held that “equity does not warrant the
imposition of a lien.” But see Kubu v. Kabes, 172 N.W. 496, 496 (Minn. 1919) (“The
client may be perfectly solvent and able to pay the fees of the attorney, but that fact
does not affect the attorney’s legal rights under the lien.”).
Interpretation of a state statute is a matter of law subject to de novo review.
Johnson v. Methorst, 110 F.3d 1313, 1315 (8th Cir. 1997). Under Minnesota law,
an attorney need not seek to recover from their client before establishing a lien
against the opposing party. Kubu, 172 N.W. at 496-97. The defendant in Kubu
settled directly with the plaintiff. Plaintiff’s attorney sued the defendant and was
awarded attorney fees. Whether the plaintiff was able to pay the attorney fee was
immaterial.
[Defendant] was charged with notice of the lien, and it is immaterial that
he paid the amount of the settlement to the plaintiff in good faith. Since
he had notice of the lien, he must pay again. Although defendant had
the right to make the settlement without consulting his [plaintiff’s]
attorney, and there was no purpose or design to defraud the attorney, for
his own protection he was bound to guard against a possible second
liability on the lien . . . . This he could have done by withholding
payment until the attorney’s lien had been released or discharged.
Id. (internal citations omitted); Krippner v. Matz, 287 N.W. 19, 23 (Minn. 1939); see
also Georgian v. Minneapolis & St. Louis R.R. Co., 154 N.W. 962, 963 (Minn.
1915) (“Ordinary prudence would suggest that defendant, before it paid any money,
should consult the attorney of record . . . and . . . retain money enough to protect
itself. . . . [The defendant] should bear the consequences of its lack of caution.”);
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Deskman v. Buller Bros., 131 N.W. 463, 464 (Minn. 1911) (“The statute does not
require that notice of this lien be given to the opposite party or to his attorneys.”);
Byram v. Miner, 47 F.2d 112, 116-17 (8th Cir. 1931) (“[S]ettlement may be made by
plaintiff and defendant notwithstanding the attorney’s lien, but that defendant will be
liable to the attorney for amount of the lien if settlement is made in disregard of the
attorney’s rights of which defendant is bound to take notice.”) (applying Minnesota
law).
The district court felt it had equitable discretion to deny the lien. Minnesota
does label an attorneys’ lien as “an equitable lien.” See Blazek v. N. Am. Life & Cas.
Co., 121 N.W.2d 339, 342 (Minn. 1963) (finding that an attorneys’ lien is “deemed
to be an equitable assignee of plaintiff’s judgment”); Thomas A. Foster & Assocs.,
LTD v. Paulson, 699 N.W.2d 1, 5 (Minn. App. 2005) (“As an equitable lien, the
attorney lien protects against a successful party receiving a judgment secured by an
attorney’s services without paying for those services.”). Despite the origin of the
attorneys’ lien in equity, it is now wholly governed by statute, which preempts the
field. Schroeder, Siegfried, Ryan & Vidas v. Modern Elec. Products, Inc., 295
N.W.2d 514, 516 (Minn. 1980) (“Although the attorney’s charging lien existed at
common law and at equity, it is now wholly governed by statute.”); Village of New
Brighton v. Jamison, 278 N.W.2d 321, 324 (Minn. 1979) (finding statutes had
“preempted the field of law regarding attorneys liens and substituted statutory
procedures for those of common law and equity”); Akers v. Akers, 46 N.W.2d 87, 91
(Minn. 1951) (“The lien of an attorney, whatever it may have been at common law,
is in this state regulated by statute . . . .” (quoting Forbush v. Leonard, 8 Minn. 303,
305 (1863)).
The Schermers’ clients had an interest in “money . . . affected by [an] action”
in which the Schermers were employed. Minn. Stat. § 481.13. The statutory
requirements for an attorneys’ lien are met. Equitable principles do not trump the
lien.
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The Commission was “charged with notice of the lien” and so “must pay
again.” Kubu, 172 N.W. at 497. The Schermers are entitled to an attorneys’ lien.
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The judgment is reversed, and the case remanded.
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