Stiner v. Planned Management Services, Inc.

Opinion by

Judge KAPELKE.

Defendant, Planned Management Services, Inc. (Planned Management), appeals from the trial court’s order denying its motions to alter or amend judgment and for entry of a net judgment in its favor. We affirm.

Gale and Kim Stiner (the Stiners), through their attorney, Daniel W. Dean, brought this action against Planned Management based on wrongful termination. Planned Management filed counterclaims against the Stiners, asserting a claim based on unlawful detainer as well as various tort and contract claims.

The trial court bifurcated the claim for unlawful detainer and held the trial on that claim in May of 1992. Following that trial, the court entered judgment in favor of the Stiners, awarding them $2,358 for attorney’s fees and costs. Planned Management appealed, and a division of this court affirmed the judgment. Stiner v. Planned Management Services, Inc., (Colo.App. No. 92CA0960, May 6, 1993) (not selected for official publication).

Following a jury trial on the other claims and counterclaims in November 1993, the trial court entered a judgment in favor of Planned Management on its counterclaims in the amount of $254,775 and against the Stin-ers on their remaining claims. On December 3,1993, Dean filed notice of a statutory attorney lien on the Stiners’ judgment against Planned Management. Thereafter, the trial court awarded the Stiners additional attorneys fees in the amount of $6,642.

After Dean had filed notice of his attorney lien, Planned Management filed its motion to alter or amend judgment and for entry of a single net judgment in its favor in the amount of the difference between its judgment against the Stiners and their judgment against it. Thereafter, Dean foreclosed on his attorney lien and obtained assignment of the Stiner’s judgment against Planned Management. Dean thus appears as appellee in this appeal.

I.

Planned Management contends that the trial court erred in denying its motions for setoff and entry of a net judgment in its favor. We disagree.

When there are judgments in favor of each party and against the other, the trial court should generally enter a single judgment in the amount of the net difference between the two judgments. Husband v. Colorado Mountain Cellars, Inc., 867 P.2d 57 (Colo.App.1993). However, our' supreme court has held that when an attorney lien on one of the judgments attached prior to the request for setoff, that lien has priority and precludes entry of a net judgment. Dankwardt v. Kermode, 68 Colo. 225, 187 P. 519 (1920). See also Aleman v. Annable, 110 Colo. 61,129 P.2d 987 (1942).

In Dankwardt, Kermode entered into a contract with two attorneys to represent her in a suit against Dankwardt. The attorneys were retained under a contingent fee arrangement by which each was to receive one-third of any judgment obtained. While Ker-mode’s suit was pending, Dankwardt obtained two judgments in two separate suits against Kermode. In her action against Dankwardt, Kermode obtained a judgment in her favor. Dankwardt sought entry of a single net judgment for the difference between the previous judgments in his favor and the judgment against him. The issue was whether the attorneys’ lien on the judgment of their client against Dankwardt had priority over Dahkwardt’s claimed entitlement to set off the judgment in his favor. Our supreme court held that the lien of Kermode’s attorneys took priority over Dankwardt’s right to a setoff. In reaching its decision, the court relied on the then existing statute governing attorney liens and concluded that the provision conferring a “first lien” status on the attorney lien gave that hen priority. Dankwardt v. Kermode, supra.

The current statute governing attorney hens is almost identical to the statute in effect at the time of the Dankwardt decision and provides, in pertinent part:

[In] the case of judgments obtained in whole or in part by any attorney, such attorney may file ... notice of his claim as henor ... which notice, duly entered of record, shall be notice to ah persons and to ah parties, including the judgment creditor ... that the attorney has a first hen on such demand in suit or on such judgment for the amount of his fees.

Section 12-5-119, C.R.S. (1991 Repl.Vol. 5A) (emphasis added).

Here, Planned Management had notice of Dean’s attorney hen no later than December 3, 1993, which was before Planned Management sought entry of a net judgment.

In hght of the Dankwardt holding, we are compehed to conclude that Dean’s attorney hen takes priority over Planned Management’s right to offset the opposing judgments and obtain a single net judgment in its favor.

A.

Planned Management, however, argues that Dankwardt is not controlling because that ruling is hmited to situations in which the opposing judgments grew out of prior independent transactions. We are not persuaded.

Planned Management rehes on the following language for its assertion that Dank-wardt does not apply here:

[T]he following decisions held that an attorney’s hen cannot be defeated by any right of set-off of judgments thereafter recovered, growing out of prior independent transactions ...

Dankwardt v. Kermode, 68 Colo, at 229, 187 P. at 520 (1920).

However, the quoted language is at most, dictum, and the court in Dankwardt did not indicate that its decision would have been different had the judgments stemmed from claims asserted in the same suit and involving related transactions. The critical fact remains that Dean gave notice of his attorney hen before Planned Management apphed for a setoff of the judgment. We see no meaningful significance in the fact that the judgments were rendered in a single action. See Annot., 27 A.L.R.5th 764 (1995) (recognizing that Colorado determines priority between attorney hen and right to setoff judgments based on the order in which the rights were asserted).

We also find unpersuasive Planned Management’s argument that this case is controlled by Whitehead v. Jessup, 7 Colo.App. 460, 43 P. 1042 (1896). In Whitehead, the court held that a setoff was appropriate even though one of the parties had assigned his judgment proceeds to his attorney. However, the Dankwardt court distinguished Whitehead based upon the fact that the attorney in that case had not obtained a hen, but rather was relying solely upon his status as assignee.

Here, Dean filed notice of his hen before Planned Management requested entry of a net judgment. Thus, the rule in Dankwardt apphes. The fact that Dean ultimately foreclosed the hen and obtained an assignment of the judgment, pursuant to § 12-5-119, C.R.S. (1991 Repl.Vol. 5A), does not mandate the conclusion that Planned Management’s right to a setoff has priority over Dean’s attorney hen.

B.

Planned Management finally contends that the statute governing attorney hens does not require the result reached by the trial court and that if the General Assembly had intended such hens to have “super” priority, there would be express language in the statute to that effect.

This argument ignores the holding of Dankwardt and the court’s interpretation of an almost identical predecessor statute in that ease. We therefore reject this contention as well.

We conclude that the trial court did not err in denying the motion for entry of a net judgment.

The order denying the motions of Planned Management is affirmed.

TAUBMAN, J., concurs. NEY, J., dissents.