Christopher N. Link, P.A. v. Anu Rut and Tomasz Rut

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
CHRISTOPHER N. LINK, P.A.,
Appellant,
v.
ANU RUT and TOMASZ RUT,
Appellees.
No. 4D12-4320
[May 20, 2015]
Appeal from the Circuit Court for the Seventeenth Judicial Circuit,
Broward County; Ronald J. Rothschild, Judge; L.T. Case No. 06-
15685FMCE.
Christopher N. Link, P.A., Plantation, for appellant.
Robert J. Moraitis and Peter M. Raimondi of Robert J. Moraitis, P.A.,
Fort Lauderdale, for appellee, Tomasz Rut.
MAY, J.
A law firm appeals an order that adversely determined the priority of
its charging lien against an indemnification agreement in a final judgment
of dissolution. The law firm argues the court erred in placing its charging
lien behind the former husband’s right to indemnification for attorney’s
fees against the former wife, pursuant to an agreement.1 We disagree and
affirm.
After the former husband petitioned for dissolution of marriage, and
the former wife answered and counter-petitioned, the former spouses
voluntarily dismissed the dissolution proceeding and entered into an
agreement. That agreement provided a right of indemnification to either
spouse for attorney’s fees should one of them prevail in a challenge to the
agreement. Alas, the reconciliation failed, and the proceedings began
anew.
1 The agreement was titled “Mediated Post-Nuptial Agreement,” but will be
referred to as the “agreement.”
The former husband moved to reopen his petition and filed a new
verified petition for dissolution of marriage. The former husband sought
to enforce the agreement, including the right to indemnification for
attorney’s fees.
The trial court entered an order substituting the law firm for the former
wife’s prior attorney.2 Through the new law firm, the former wife filed her
amended counter-petition, and attached the agreement. She then filed a
second amended counter-petition, requesting the court to set aside the
agreement.
The law firm began filing a series of motions to withdraw and to impose
charging and retaining liens. After a hearing, the trial court upheld the
parties’ agreement. The law firm then filed another motion to withdraw
and impose charging and retaining liens, and a motion to establish the
amount, enforce, and foreclose its charging and retaining liens.
The trial court rendered the final judgment of dissolution, but deferred
ruling on the law firm’s motion to establish the amount, enforce, and
foreclose upon its charging and retaining liens. The trial court found the
agreement valid and enforceable and awarded the former wife “all relief
she [was] entitled to thereunder.” It also found that the former “[h]usband
[was] entitled to a set off . . . as a result of his Motions for Attorneys [sic]
Fees and Costs.”
The trial court awarded the former husband $207,371.25 in attorney’s
fees. The court heard the law firm’s motion to establish the amount,
enforce, and foreclose its charging and retaining liens. This resulted in an
order on the law firm’s motion and a final judgment against the former
wife in favor of the law firm. Both the order and judgment contained the
following language:
With regard to the priority of [the law firm’s] lien and/or lien
rights compared to the Former Husband’s right to
indemnification and hold harmless from the Former Wife as
set forth in the parties’ . . . Agreement dated March 27, 2007,
the Court finds that Former Husband’s lien and claims arising
out of the Agreement are superior in time and first in right to
those of [the law firm]. The terms of the parties’ . . . Agreement
were in place at the time [the law firm] was retained by the
Former Wife.
2The former wife’s first attorney filed his notice of charging lien. The trial court
entered an agreed order for the first attorney’s charging lien.
2
The law firm appeals the order determining the priority of its lien. It
argues its lien had priority because it was a charging lien, relating back to
the signing of the retainer agreement, which predated the final judgment
of dissolution. The former husband responds that his right to
indemnification is superior in time and right to the law firm’s charging lien
because it was established under the agreement, which predated the law
firm’s retainer agreement.
We review the trial court’s order and judgment for an abuse of
discretion. See Ginsberg v. Keehn, 550 So. 2d 1145, 1148 (Fla. 3d DCA
1989).
“‘The charging lien is an equitable right to have costs and fees due an
attorney for services in the suit secured to him in the judgment or recovery
in that particular suit.’” Rudd v. Rudd, 960 So. 2d 885, 887 (Fla. 4th DCA
2007) (quoting Cole v. Kehoe, 710 So. 2d 705, 706 (Fla. 4th DCA 1998)).
“Equity came into existence as a means of granting justice in cases
wherein the law by its rigid principles was deficient. It has been truly
called a court of conscience. It should not be shackled by rigid rules of
procedure and thereby preclude justice being administered according to
good conscience.” Degge v. First State Bank of Eustis, 199 So. 564, 565
(Fla. 1941).
Here, the agreement was first in time, and provided:
26. ATTORNEY’S FEES: Should either party fail to abide by
the terms of this Agreement, then the defaulting party will
indemnify and hold the other harmless for all reasonable
expenses and costs, including attorney’s fees and
disbursements incurred, regardless of whether or not an action
in court is filed, in successfully enforcing this Agreement or
asserting or defending his or her rights hereunder as against
the other party or third parties at the trial level and through
all appeals as may be applicable.
26.1 In the event that either party, at any time, challenges the
validity of this Agreement or seeks enforcement of it, then the
prevailing party in any such proceeding shall be entitled to
recover all of their costs and expenses, regardless of whether
or not they are deemed “taxable” costs as well as all attorney’s
fees, including appellate fees incurred by them from the non-
prevailing party.
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(Emphasis added).
The former husband and former wife entered into the agreement on
March 27, 2007. The law firm began representing the former wife
approximately eighteen months later in September 2008. Beginning
fourteen months later, the law firm filed a series of motions to withdraw
and to impose charging and retaining liens. On August 24, 2012, the trial
court awarded the former husband $207,371.25 in attorney’s fees,
pursuant to the agreement. On November 26, 2012, the trial court
awarded the law firm a charging lien for $113,011.76 against the former
wife.
The law firm undertook representation of the former wife subject to the
terms of the one-and-a-half-year-old agreement, which included the
indemnification language in paragraphs 26 and 26.1. It knew of the
indemnification provisions because the agreement was the apex of the
parties’ dispute. In fact, it was the law firm who challenged the agreement
on the former wife’s behalf, and lost.
A charging lien is an equitable right. See Rudd, 960 So. 2d at 887. It
would be inequitable to give priority to a charging lien that became effective
a year and a half after the agreement, and arose out of efforts to attack the
very agreement upon which the former husband’s right to indemnification
arose. Although the former husband was awarded indemnification for his
attorney’s fees after the date of the law firm’s retainer agreement with the
former wife, the former husband’s right to indemnification arose prior to
the entry of the retainer agreement. The court did not abuse its discretion
in finding the former husband’s claim “superior in time and first in right
to those of” the law firm.
The rationale underlying the priority of a charging lien cannot equitably
apply here. In Miles v. Katz, 405 So. 2d 750 (Fla. 4th DCA 1981), this
Court stated:
The attorney fee lien has priority over judgments obtained
against the client subsequent to the commencement of the
attorney’s services. It is only inferior to judgments entered
prior to the commencement of the services. . . . This result
allows the attorney who created the funds to be paid for his
services.
Id. at 752. A law firm should not be able to benefit from a charging lien
that seeks to undermine an indemnification agreement that predates the
retainer agreement.
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The cases cited by the law firm are distinguishable. See Sinclair, Louis,
Siegel, Heath, Nussbaum & Zavertnik, P.A. v. Baucom, 428 So. 2d 1383,
1384–86 (Fla. 1983) (holding that an attorney was entitled to enforcement
of his charging lien, but not in the context of a priority dispute); Shawzin
v. Donald J. Sasser, P.A., 658 So. 2d 1148, 1150–51 (Fla. 4th DCA 1995)
(holding that the trial court did not err in granting the law firm a charging
lien where the requirements were met, even after the appellee withdrew
from representation before a marital settlement, but not in the context of
a priority dispute); Miles, 405 So. 2d at 750 (holding “that a charging lien
is superior to a judgment lien obtained after commencement of an
attorney’s services”).
We acknowledge the dissent, but disagree with its suggestion that our
decision conflicts with Rebecca J. Covey, P.A. v. American Import Car Sales,
944 So. 2d 1202, 1206 (Fla. 4th DCA 2006). There, it is true that we gave
priority to an attorney’s charging lien over a subsequent judgment lien.
But, this case contains some important factual distinctions leading to a
different result.
First, the law firm actually lost its challenge to the agreement in this
case. Second, the law firm failed to create a positive recovery from which
it was entitled to priority of its lien. Third, the law firm moved to withdraw
multiple times, long before the court ruled on its challenge to the
agreement. See Rochlin v. Cunningham, 739 So. 2d 1215, 1216–18 (Fla.
4th DCA 1999).
Here, equity does not support the law firm’s request for priority of its
lien over the opposing party’s judgment. Covey is factually
distinguishable. Our decision does not conflict.
Nevertheless, we limit the prioritization to the unique facts before us.
Were we to decide otherwise, it would encourage lawyers to challenge
marital settlement agreements containing indemnification rights to
prevailing party attorney’s fees with impunity, knowing that even if they
lose, their charging lien would take priority over the agreement they
challenged. This would defeat the very equity that liens were designed to
protect. We therefore affirm.
Affirmed.
GERBER, J., concurs.
WARNER, J., dissents with opinion.
5
WARNER, J., dissenting.
I would reverse based upon Rebecca J. Covey, P.A. v. American Import
Car Sales, 944 So. 2d 1202, 1206 (Fla. 4th DCA 2006), where we held that
an attorney’s charging lien takes priority over a subsequent judgment lien
for prevailing party attorney’s fees. In Covey, the judgment creditor was
the bank which loaned money for the purchase of a car. The purchaser
later filed suit based upon various theories of fraud and unfair and
deceptive trade practices, claiming the vehicle was defective. She joined
the bank, which later counterclaimed, suing for a deficiency after the sale
of the vehicle. It sought attorney’s fees based upon a prevailing party
provision in the loan agreements, mentioned in the concurring opinion.
Although the trial court gave priority to the judgment creditor, our court
reversed, concluding that the charging lien took priority. Thus, Covey is
in direct conflict with the majority opinion.
The majority distinguishes Covey on matters which did not affect the
trial court’s ruling. In essence, the majority suggests that the facts of this
case, unlike Covey, show that Link was not entitled to a charging lien,
because he did not make any recovery for the wife and withdrew. Even if
the facts supported that view, the trial court had already ruled several
years earlier that Link was entitled to a charging lien and did not change
its ruling when determining priority of the liens. Thus, the court did not
grant priority on the basis that Link was not entitled to a charging lien.
The majority holds that a prevailing party attorney’s fees provision in a
contract can create priority over a charging lien for representation
commenced after the contract is made, even though a determination of
who is the prevailing party cannot be made until the merits of the
controversy is decided. I can find no authority to give such priority to a
judgment lien based upon the date of the execution of a contract on which
the judgment is based, rather than the date when the judgment was
obtained. Although this is a post-nuptial settlement agreement in marital
proceedings, prevailing party attorney’s fees have been held valid in such
contracts based upon ordinary contract principles. Lashkajani v.
Lashkajani, 911 So. 2d 1154, 1160 (Fla. 2005). There is no policy reason
to provide for an exception to the general rule of priority in this type of
contract over any other type which has a prevailing party attorney’s fees
provision.
* * *
Not final until disposition of timely filed motion for rehearing.
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