Sheryl Aarnio v. Village Bank, Christensen Law Office, PLLC, third party ( 2014 )

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2012).
STATE OF MINNESOTA
IN COURT OF APPEALS
A14-0218
Sheryl Aarnio, et al.,
Appellants,
vs.
Village Bank, et al.,
Defendants,
Christensen Law Office, PLLC, third party petitioner,
Respondent.
Filed November 3, 2014
Affirmed
Larkin, Judge
Chisago County District Court
File No. 13-CV-11-773
Wayne B. Holstad, Frederic W. Knaak, Holstad & Knaak, PLC, St. Paul, Minnesota (for
appellants)
Carl E. Christensen, Kevin Lampone, Christensen Law Office PLLC, Minneapolis,
Minnesota (for respondent)
Considered and decided by Smith, Presiding Judge; Larkin, Judge; and Bjorkman,
Judge.
UNPUBLISHED OPINION
LARKIN, Judge
Appellant clients challenge the district court’s grant of respondent law firm’s
request for an attorney lien, arguing that the parties’ retainer agreement unambiguously
caps attorney fees at $10,000. Because it is clear from the plain language of the retainer
agreement that a $10,000 cap on attorney fees does not apply, we affirm.
FACTS
This appeal stems from a dispute regarding the amount of an attorney lien.
Appellant Sheryl Aarnio1 sought legal representation regarding a business loan that was
secured by a mortgage on her home. Aarnio claimed that her former business partner,
Craig Beuning, fraudulently procured the mortgage. After communicating regarding
potential attorney-fee arrangements, Aarnio and respondent Christensen Law Office
PLLC (the firm), executed a written attorney-retainer agreement.
The firm brought a lawsuit on behalf of Aarnio, suing Village Bank, Craig
Beuning, GMAC Mortgage Corporation, John Doe Trust, JP Morgan Chase Bank, and
The RiverBank. During the course of the firm’s representation, the district court awarded
partial summary judgment to Aarnio, voiding the fraudulent mortgage and granting
Aarnio quiet title to the property. After months of litigation, Beuning was the only
remaining defendant. Aarnio agreed to settle her claims against Beuning for $1,500,
which resolved the remaining claims in her case. The settlement agreement did not
provide for payment of Aarnio’s attorney fees and costs.
1
Thomas Aarnio is also a named appellant in this case.
2
After the settlement, Aarnio contacted the firm and asked “why under the
representation agreement [she has] to pay . . . all [the] fees.” Later, Aarnio e-mailed the
firm:
It was my understanding from the beginning of this
process [that my] fees would be capped at $10,000, which
your firm has been paid. The retainer agreement had a lot of
detail and Christen [sic] Law should have made it more
specific in their language if the mortgage was voided. This
was the firm’s responsibility to make changes to the retainer
agreement during the representation. As of today, I was
served with documentation from Chicago Title trying to
collect the $168K+ they paid to [the mortgage lender] and
attorney fees. Now I have to deal with that. I am sorry, but I
will not be offering any additional fees to be paid to the firm.
The firm withdrew as Aarnio’s counsel and filed a third-party petition for an
attorney lien against Aarnio’s property in the amount of $47,500.39. The district court
held a hearing on the petition and ruled that the parties’ retainer agreement was
ambiguous. Later, the district court held an evidentiary hearing to ascertain the parties’
intent. The district court ruled in favor of the firm and ordered that “[a]n attorney’s lien
in the amount of $47,500.39 shall be entered in favor of Christensen Law Office.”
Aarnio appeals.
DECISION
“An attorney has a lien for compensation . . . 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.” Minn. Stat. § 481.13, subd. 1(a) (2012).
Such lien “may be established, and the amount of the lien may be determined, summarily
by the court under this paragraph on the application of the lien claimant or of any person
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or party interested in the property subject to the lien.” Id., subd. 1(c) (2012). “When
there is an express agreement between an attorney and a client that sets the attorney’s
compensation, the amount of the attorney’s lien for legal services is properly determined
by reference to the agreement.” Dorsey & Whitney LLP v. Grossman, 749 N.W.2d 409,
418 (Minn. App. 2008).
The retainer agreement in this case states, in relevant part:
CLIENTS agree to pay ATTORNEY for these legal services
the fees computed as follows:
1. In the event, CLIENTS prevail at trial, ATTORNEY
agrees to seek an award of attorney’s fees. In seeking this
award, ATTORNEY shall submit an itemization of time spent
and out of pocket expenses and disbursements incurred,
employing ATTORNEY’S customary hourly rate for cases of
this kind in effect at the time of the entry of judgment, which
is currently $275 for time spent by Carl Christensen, $225 for
time spent by associates, $150 per hour for time spent by
legal assistants, and $130 for time spent by law clerks. If the
Court awards attorney’s fees as requested, those fees will
represent ATTORNEY’S fees for the case. If the Court does
not order such award, or if the award is not adequate
compensation to ATTORNEY for ATTORNEY’S services
(i.e. less than the number of hours expended by ATTORNEY
in this case times ATTORNEY’S hourly rate in effect at the
time of the entry of judgment), then CLIENT shall pay
ATTORNEY as attorney’s fees the greater of the following:
a. one-third of the total monetary award recovered
from all Defendants including any award of attorney’s fees,
compensatory or punitive damages, costs and disbursements,
or other money damages; or
b. the amount actually awarded as attorney’s fees
by the Court.
2. In the event CLIENTS enter a stipulated settlement in
their claim or claims against any or all Defendants and such
settlement does not provide for an award of attorney’s fees in
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an amount sufficient to compensate ATTORNEY for
ATTORNEY’S services at ATTORNEY’S hourly rates in
effect at the time of the settlement, CLIENTS agree to pay
ATTORNEY the remainder as determined in paragraph 1.
3. If there is no recovery, CLIENTS will pay fees and
expenses as calculated in paragraph 1 capped at $10,000.
4. IN THE EVENT OF A STRUCTURED
SETTLEMENT whereby CLIENTS receive their recovery
over a period of time, (1) ATTORNEY shall receive full
payment for expenses from the initial payment made under
the structured settlement agreement, and (2) ATTORNEY
and CLIENTS will address the issue of the timing of the
payment of fees and make it the subject of a written
agreement between them.
5. In the event that CLIENTS terminate ATTORNEY as
his/her legal representative before the completion of
representation in this action, CLIENTS shall pay
ATTORNEY on an hourly basis at the rates fixed in
paragraph 1, above, for all legal services and expenses
incurred in the defense and prosecution of this matter to the
date of termination.
“The primary goal of contract interpretation is to determine and enforce the intent
of the contracting parties.” Id. at 418. “When interpreting a written instrument, the
intent of the parties is determined from the plain language of the instrument itself.” Id.(quotation omitted). But when a contract’s terms are ambiguous, courts may rely on
parole evidence to determine the parties’ intent. Dykes v. Sukup Mfg. Co., 781 N.W.2d
578, 582 (Minn. 2010). “A contract is ambiguous . . . if it is reasonably susceptible of
more than one interpretation.” Grossman, 749 N.W.2d at 419 (quotation omitted).
“Whether a contract provision is ambiguous is a question of law, which we review de
novo.” Id.5
Aarnio contends that “the retainer agreement was not ambiguous and it clearly
stated that the legal fees would be capped at $10,000.00 unless the attorneys obtained an
award of attorney fees against and from the defendants or a monetary cash judgment.”
Aarnio’s contention is based on paragraph three of the retainer agreement. Aarnio argues
that the word “recovery” in paragraph three refers to a recovery of attorney fees and not
to any other type of recovery. Aarnio asserts that “recovery” is defined in paragraphs 1.a.
and 1.b., which describe the following alternative methods of computing attorney fees:
“one-third of the total monetary award recovered from the Defendants” or “the amount
actually awarded as attorney’s fees by the Court.” Aarnio concludes that because
“[n]either of those contingencies occurred in this case,” fees are capped at $10,000 under
paragraph three.2
For the reasons that follow, we disagree with Aarnio’s contention that paragraph
three governs the computation of attorney fees in this case. First, Aarnio’s assertion that
“[t]he primary statement of fees is that the legal fees would be $10,000 and that amount
was capped” runs counter to the surrounding paragraphs. See Chergosky v. Crosstown
Bell, Inc., 463 N.W.2d 522, 525 (Minn. 1990) (“We construe a contract as a whole and
attempt to harmonize all clauses of the contract.”). Paragraph three sets forth one of
several methods of computing attorney fees. The method to be used depends on the
circumstances (e.g., “[i]n the event[] CLIENTS prevail at trial,” “[i]n the event CLIENTS
enter a stipulated settlement,” “[i]f there is no recovery,” and “[i]n the event that
CLIENTS terminate ATTORNEY as his/her legal representative.”). Because the method
2
Aarnio does not otherwise challenge the amount of the attorney’s lien.
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to be used depends on the particular circumstances and those circumstances may be
exclusive or overlap, we disagree that the retainer agreement sets forth one “primary”
method of computing attorney fees.
Second, Aarnio’s argument that the word “recovery” in paragraph three clearly—
and only—refers to a recovery of attorney fees is not persuasive because the retainer
agreement uses the word “recovery,” or other forms of the word, to describe damages
other than attorney fees. See id. For example, paragraph 1.a. refers to “the total
monetary award recovered from all Defendants including any award of attorney’s fees,
compensatory or punitive damages, costs and disbursements, or other money damages.”
Paragraph four also uses the word “recovery” in a way that suggests that a recovery may
include monetary damages as well as attorney fees.
Third, Aarnio’s use of the word “recovery” is inconsistent with common usage of
the word. See Brookfield Trade Ctr., Inc. v. Cnty. of Ramsey, 584 N.W.2d 390, 394
(Minn. 1998) (“In interpreting a contract, the language is to be given its plain and
ordinary meaning.”). For example, Black’s Law Dictionary defines recovery as “1. The
regaining or restoration of something lost or taken away. 2. The obtainment of a right to
something (esp. damages) by a judgment or decree. 3. An amount awarded in or
collected from a judgment or decree.” Black’s Law Dictionary 1389 (9th ed. 2009). As a
result of the firm’s legal services, the district court voided the fraudulent mortgage on
Aarnio’s property, valued at approximately $146,000, and Aarnio settled her claims
against Beuning for $1,500. The voiding of the mortgage and the $1,500 settlement
payment both fall under the commonly understood meaning of “recovery.”
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In sum, the language of the retainer agreement does not support Aarnio’s
contention that the word “recovery” in paragraph three refers only to attorney fees or her
conclusion that paragraph three therefore governs the computation of attorney fees.
Because paragraph three states that Aarnio’s fees would be capped at $10,000 if there
was “no recovery” and she obtained a recovery, paragraph three is inapplicable. Instead,
because Aarnio “enter[ed] a stipulated settlement [of her] claim or claims against any or
all Defendants and such settlement does not provide for an award of attorney’s fees,”
paragraph two governs the computation of attorney fees.
Although it is clear from the plain language of the retainer agreement that the
$10,000 cap under paragraph three does not apply, we note that the extrinsic evidence
confirms that the parties did not intend to cap legal fees under the circumstances here.
The district court determined that “[t]he testimony of the parties and the Exhibits
establish that at the time the Retainer Agreement was signed neither party intended that
attorney fees would be capped at $10,000 in the event of a voiding of the mortgage.” The
record evidence supports the district court’s determination.3
Carl Christensen, the firm’s founder, testified that he explained to Aarnio that she
would pay the $10,000 retainer and that if they were able to prevail on the case at trial or
if the case was settled, she would be responsible for fees in the amount of one-third of the
cost of the voided mortgage or the actual amount of fees expended by the firm.
3
In fact, Aarnio does not challenge the district court’s findings regarding the parties’
intent.
8
Christensen also testified that he told Aarnio that the fees in the case would likely reach
$35,000 or more and that the firm sent monthly billing statements to Aarnio.
Dan Eaton, an attorney at the firm who worked on Aarnio’s case, testified that
near the time of settlement, Aarnio indicated that she did not want to incur the costs of a
trial. Eaton testified that Aarnio told him that her business partners would pay some of
her attorney fees. Eaton also testified that he explained the fees to Aarnio so that she
could communicate those fees to her partners.
The record evidence also includes several e-mails from Aarnio to the firm
indicating that she anticipated paying more than $10,000 in fees. For example, on
April 18, 2001, Aarnio wrote:
Payment of Fees . . . Can you please extend the
balance by June 15, 2011?
Also . . . I thought you stated that $10,000 upfront and
depending on if we won or lost, we would get refunded or pay
what is owed? Did I misunderstand this?
The next day, Aarnio wrote:
[W]hat do you mean by monetary award?[]
[If] you have the mortgage declared invalid and
removed from the property[,] [w]ould I owe you 1/3 of that
amount which is about $146,000 and all fees?
Of if you get them [to] pay us back the monies that we
paid on the loan[,] 1/3 of this amount with the above
mortgage being invalid $146,000?
The district court acknowledged Aarnio’s testimony that “she believed her fees
would be capped at $10,000 and that the law firm would cover additional expenses.”
Nonetheless, the district court found that “neither party intended that attorney fees would
be capped at $10,000 in the event of a voiding of the mortgage.” The district court’s
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finding that the parties’ mutual intent was contrary to Aarnio’s testimony is based on a
credibility determination to which we defer. See Minn. R. Civ. P. 52.01 (“Findings of
fact, whether based on oral or documentary evidence, shall not be set aside unless clearly
erroneous, and due regard shall be given to the opportunity of the [district] court to judge
the credibility of the witnesses.”).
In conclusion, it is clear from the plain language of the retainer agreement that the
$10,000 cap on attorney fees does not apply. Because Aarnio does not otherwise
challenge the amount of the attorney lien ordered by the district court, we affirm.
Affirmed.
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