City of Oronoco v. Fitzpatrick Real Estate, LLC v. Whitney National Bank of New Orleans, Louisiana , 2016 Minn. LEXIS 488 ( 2016 )

STATE OF MINNESOTA
IN SUPREME COURT
A15-0055
Court of Appeals Lillehaug, J.
Took no part, Chutich, J.
City of Oronoco,
Respondent,
vs. Filed: August 10, 2016
Office of Appellate Courts
Fitzpatrick Real Estate, LLC, et al.,
Respondents,
vs.
Whitney National Bank of New Orleans, Louisiana,
Appellant.
________________________
Daniel J. Heuel, O’Brien & Wolf, L.L.P., Rochester, Minnesota, for respondents
Fitzpatrick Real Estate, LLC, et al.
Thomas H. Boyd, John C. Holper, Winthrop & Weinstine, P.A., Minneapolis, Minnesota,
for appellant.
________________________
SYLLABUS
1. Minnesota Statutes § 481.13, subd. 1(a) (2014), creates two distinct
attorney’s liens: a cause-of-action lien and a property-interest lien.
2. Minnesota Statutes § 481.13, subd. 1(a), does not require an attorney with a
cause-of-action attorney’s lien to file notice for the lien to have priority over third-party
claims.
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OPINION
LILLEHAUG, Justice.
This case arises from a lien priority dispute between Whitney National Bank
(Whitney) and a law firm, O’Brien & Wolf, L.L.P. (O’Brien). Whitney obtained a
judgment in Florida against respondents Daniel Fitzpatrick and his business entities
(collectively Fitzpatrick) and docketed the judgment in Minnesota. In a separate matter,
Fitzpatrick, represented by O’Brien, obtained a judgment against the City of Oronoco
(the City). The judgment against the City became the focus of two creditors: Whitney,
by way of a garnishment summons, and O’Brien, by way of an attorney’s lien.
The district court held that Whitney’s garnishment lien was superior to O’Brien’s
attorney’s lien. The court of appeals reversed. Because the plain language of Minn. Stat.
§ 481.13, subd. 1(a)(1) (2014) does not require an attorney with a cause-of-action
attorney’s lien to file notice of the lien claim for the lien to have priority over third-party
claims, we affirm.
I.
On March 31, 2009, Whitney obtained a judgment in the amount of $273,189.69
against Fitzpatrick in Florida. On May 21, 2009, the foreign judgment was entered and
docketed in Olmsted County District Court.
On September 3, 2010, the City sued Fitzpatrick and several of his entities in
Olmsted County District Court. Fitzpatrick, represented by O’Brien, counterclaimed.
The district court ordered a judgment for Fitzpatrick in the amount of $120,440.40. The
City appealed. The court of appeals affirmed the judgment against the City. City of
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Oronoco v. Fitzpatrick Real Estate, LLC, No. A13–1741, 2014 WL 1272405, at *1-2
(Minn. App. Mar. 31, 2014), rev. denied (Minn. June 17, 2014). Whitney was not
involved in this case.
On June 19, 2014, Whitney served a garnishment summons and related papers on
the City to establish and perfect a garnishment lien against the judgment proceeds won by
Fitzpatrick. Minn. Stat. § 571.81 (2014). On June 23 and 26, 2014, Whitney mailed
copies of the garnishment papers to Fitzpatrick at his last known addresses.
On June 30, 2014, Whitney received O’Brien’s notice of its attorney’s lien “on the
cause of the action . . . and in the judgment” against the City. On July 2, 2014, O’Brien
filed a UCC Financing Statement with the Minnesota Secretary of State to provide public
notice of its attorney’s lien.
On July 15, 2014, O’Brien filed a motion in Olmsted County District Court to
establish and determine the amount and priority of its attorney’s lien. On August 1, 2014,
pursuant to a court order, the City deposited funds in the amount of $149,113.241 with the
court administrator to satisfy the judgment in favor of Fitzpatrick. On December 2, 2014,
the district court held that Whitney’s garnishment lien in the amount of $144,123.642 was
superior to O’Brien’s attorney’s lien in the amount of $37,297.77. The court ordered that
the deposited funds be paid first to Whitney and then the remaining balance to O’Brien.
1
The difference between the $120,440.40 judgment and the amount deposited
represents pre- and post-judgment interest.
2
Although Whitney’s garnishment summons was for the full amount of its Florida
judgment against Fitzpatrick, Whitney did not object when the City disclosed it owed
$144,123.64.
3
Referencing Minn. Stat. § 481.13, subd. 1(a) (2014), the district court concluded
that a cause-of-action attorney’s lien is perfected, as against third parties, from the time
the attorney files notice of the lien claim. Because the court determined that O’Brien’s
attorney’s lien was perfected no earlier than June 30, 2014, it concluded that Whitney’s
earlier-perfected garnishment summons had priority. O’Brien appealed.
The court of appeals reversed and remanded. City of Oronoco v. Fitzpatrick Real
Estate, LLC, 869 N.W.2d 332, 333 (Minn. App. 2015). The court determined that Minn.
Stat. § 481.13, subd. 1(a), creates two kinds of attorney’s liens: a cause-of-action lien
governed by subdivision 1(a)(1), and a property-interest lien governed by
subdivision 1(a)(2). See 869 N.W.2d at 336. The court read subdivision 1(a)(1) as not
requiring an attorney to file notice of a cause-of-action attorney’s lien claim to have
priority over third-party claims. See id. By contrast, reasoned the court, a property-
interest lien under subdivision 1(a)(2) requires notice to third parties. Id. Therefore, the
court concluded, O’Brien’s cause-of-action attorney’s lien, which attached no later than
October 22, 2010—when O’Brien began representing Fitzpatrick—has priority over
Whitney’s garnishment lien, which attached on June 18, 2014. Id. We granted review.
II.
An attorney’s lien “prevent[s] a client from benefiting from an attorney’s services
without paying for those services.” Dorsey & Whitney LLP v. Grossman, 749 N.W.2d
409, 420 (Minn. App. 2008). “An attorney[’s] lien traces its origins to common law, but
the Minnesota legislature has long since preempted this field and has substituted statutory
procedures.” Id. (citation omitted) (internal quotation marks omitted); see also Minn.
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Stat. § 481.13.
This case requires that we interpret the attorney’s lien statute, Minn. Stat.
§ 481.13. “Interpretation of a statute is subject to de novo review.” Schroeder v. W. Nat.
Mut. Ins. Co., 865 N.W.2d 66, 67 (Minn. 2015). “When we interpret statutes, our
objective is to ascertain and effectuate the intent of the Legislature.” Marks v. Comm’r of
Revenue, 875 N.W.2d 321, 324 (Minn. 2016); see also Minn. Stat. § 645.16 (2014).
Statutory words and phrases must be construed according to the rules of grammar and
common usage. See Minn. Stat. § 645.08(1) (2014). We consider the statute “as a whole
so as to harmonize and give effect to all its parts, and where possible, no word, phrase, or
sentence will be held superfluous, void, or insignificant.” Anderson v. Comm’r of
Taxation, 253 Minn. 528, 533, 93 N.W.2d 523, 528 (1958).
Subdivision 1(a) of the statute reads as follows:
(a) An attorney has a lien for compensation whether the agreement for
compensation is expressed or implied (1) upon the cause of action from
the time of the service of the summons in the action, or the
commencement of the proceeding, and (2) 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, and, as
against third parties, from the time of filing the notice of the lien claim,
as provided in this section.
Minn. Stat. § 481.13, subd. 1(a).
The issue in this case turns on the effect of the phrase at the end of subdivision
1(a): “and, as against third parties, from the time of filing the notice of the lien claim, as
provided in this section.” We will call this phrase “the third-party clause.” Plainly, the
third-party clause modifies the preceding words in subdivision 1(a)(2), which governs
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money or property attorney’s liens—property-interest liens. But does it also modify
subdivision 1(a)(1), which governs cause-of-action attorney’s liens? If it does, Whitney’s
garnishment lien has priority. If it does not, O’Brien’s attorney’s lien has priority. For
three reasons, we conclude that the third-party clause clearly does not modify subdivision
1(a)(1).
First, there is no textual indication that the third-party clause modifies subdivision
1(a)(1). The third-party clause is part of subdivision 1(a)(2). The immediately preceding
text and the third-party clause are separated only by a comma, not by a semicolon or a
line break. “[W]hile matters like punctuation are not decisive of the construction of a
statute, where they reaffirm conclusions drawn from the words themselves they provide
useful confirmation.” United States v. Naftalin, 441 U.S. 768, 774 n.5 (1979) (citations
omitted) (internal quotations omitted). A semicolon or a line break might signify that the
third-party clause modifies all that goes before, but there is no such signal.
By contrast, the statute clearly provides that the initial words of subdivision 1(a)
govern both paragraphs (1) and (2) in that subdivision. And, in the very same
subdivision 1, the Legislature showed that it knows how to use numbering and line
breaks to tell us when a provision applies to all that precedes it. Specifically, subdivision
1(c) governs how to establish and determine a lien, and expressly refers to subdivisions
1(a) and 1(b).3 Nothing in the third-party clause within subdivision 1(a)(2) refers to
3
“A lien provided by paragraphs (a) and (b) may be established, and the amount of
the lien may be determined, summarily by the court under this paragraph on the
(Footnote continued on next page.)
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subdivision 1(a)(1).
Second, the rules of grammar suggest that the third-party clause modifies only
subdivision 1(a)(2). See Minn. Stat. § 645.08(1) (“[W]ords and phrases are construed
according to rules of grammar . . . .”). In particular, the last antecedent canon “instructs
that a limiting phrase . . . ordinarily modifies only the noun or phrase that it immediately
follows . . . .” Larson v. State, 790 N.W.2d 700, 705 (Minn. 2010). As the United States
Supreme Court has explained, this “rule reflects the basic intuition that when a modifier
appears at the end of a list, it is easier to apply that modifier only to the item directly
before it.” Lockhart v. United States, __ U.S. __, 136 S. Ct. 958, 963 (2016). The last
antecedent canon supports our reading that the third-party clause modifies only the
paragraph clause immediately preceding it, which is subdivision 1(a)(2).
Third, the last words of the third-party clause, “as provided in this section,” tell us
that the clause is limited to the property-interest attorney’s lien. The words “as provided
in this section” clearly refer to subdivision 2 of section 481.13, which contains a detailed
procedure to perfect a property-interest attorney’s lien. Subdivision 2 provides no
comparable instructions on how to perfect a cause-of-action attorney’s lien. See Minn.
Stat. § 481.13, subd. 2. This tells us that the attorney need not do anything after the
attorney’s cause-of-action lien has attached for it to have priority over the claims of third
(Footnote continued from previous page.)
application of the lien claimant or of any person or party interested in the property subject
to the lien.” Minn. Stat. § 481.13, subd. 1(c).
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parties. Instead, such a lien is effective “from the time of the service of the summons” or
“the commencement of the . . . proceeding.” Minn. Stat. § 481.13, subd. 1(a)(1).
For these reasons, we hold that Minn. Stat. § 481.13, subd. 1(a), creates two
distinct attorney’s liens: a cause-of-action lien and a property-interest lien. But they
have different notice requirements. Specifically, the third-party clause that is part of
subdivision 1(a)(2) does not require an attorney with a cause-of-action attorney’s lien to
file separate notice of the lien to have priority over third-party claims. Accordingly,
O’Brien’s lien is superior to Whitney’s claim.
Affirmed.
CHUTICH, J., took no part in the consideration or decision of this case.
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