Galloway v. Galloway

[Cite as Galloway v. Galloway, 2017-Ohio-87.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 103837
MARK GALLOWAY
PLAINTIFF-APPELLANT
vs.
MICHAEL GALLOWAY, INDIVIDUALLY AND AS
TRUSTEE, ET AL.
DEFENDANTS-APPELLEES
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Probate Division
Case No. 2014 ADV 196672
BEFORE: Keough, A.J., E.A. Gallagher, J., and Celebrezze, J.
RELEASED AND JOURNALIZED: January 12, 2017
ATTORNEY FOR APPELLANT
Kevin T. Roberts
The Roberts Law Firm
7622 Columbia Road
Olmsted Falls, Ohio 44138
ATTORNEYS FOR APPELLEE
David G. Finley
Finley & Company, L.P.A.
1701 East 12th Street, #108
Cleveland, Ohio 44114
Adam M. Fried
Adriann S. McGee
Reminger Co., L.P.A.
1400 Midland Building
101 Prospect Avenue, West
Cleveland, Ohio 44115
KATHLEEN ANN KEOUGH, A.J.:
{¶1} Appellant, Mark Galloway (“Galloway”), appeals from the probate court’s
judgment entry granting the motion to enforce a charging lien filed by Reminger Co.,
L.P.A. (“Reminger”). For the reasons that follow, we affirm.
{¶2} Reminger was retained by Galloway to represent him in a trust dispute
involving his father’s trust. This representation consisted of filing an action to set aside
the amendment to his father’s trust, seek declaratory relief, request removal of the trustee,
request an accounting, and other relief. The attorney-client relationship expanded when
related lawsuits were filed against Galloway challenging his inheritance of real property
from another family member. Ultimately, Reminger negotiated a settlement wherein
Galloway obtained title to two parcels of land that were held in the name of his father’s
trust while retaining the real property that he already owned. Following the favorable
result to Galloway and his nonpayment of legal fees, Reminger filed a charging lien on
the real property in the amount of $112,665.08. Galloway opposed the motion for the
lien contending that Reminger had a legal remedy for breach of contract and that a
charging lien could not be placed on real property.
{¶3} Following an evidentiary hearing, the probate court entered judgment in favor
of Reminger, finding that because Reminger obtained the favorable resolution Galloway
specifically sought, nothing prohibited the allowance of a charging lien on real property.
The trial court found that allowing the charging lien is equitable and necessary due to the
failure of Galloway paying Reminger’s fees. Accordingly, the court ordered that the
attorney fees and expenses in the amount of $112,665.08 be enforced by a charging lien
to be paid out of the proceeds of the sale of the real property.
{¶4} Galloway now appeals, raising five assignments of error, each pertaining to
the probate court granting Reminger’s request for a charging lien on the real property
judgment. No argument is raised challenging the reasonableness of Reminger’s
outstanding and unpaid attorney fees.
I. Subject Matter Jurisdiction
{¶5} In his first assignment of error, Galloway contends that the probate court
lacked subject matter jurisdiction to hear a collection action between a law firm and its
client, where the fees were not being paid by a trust, estate, or other party over whom the
court has original and exclusive jurisdiction.
{¶6} Probate courts are courts of limited jurisdiction and probate proceedings are
limited to such actions as are permitted by statute and the Ohio Constitution. Corron v.
Corron, 40 Ohio St.3d 75, 531 N.E.2d 708 (1988). A probate court has concurrent
jurisdiction with, and the same powers at law and in equity as, the general division of the
court of common pleas * * * to hear and determine “any action that involves an inter
vivos trust.” R.C. 2101.24(B)(1)(b).
{¶7} In this case, the probate court’s jurisdiction over the underlying action
regarding the Revocable Living Trust of William Galloway (“Trust”) was within the
probate court’s concurrent jurisdiction pursuant to R.C. 2101.24(B)(1)(b). Accordingly,
the probate court was within its jurisdiction when it entered a judgment in favor of
Galloway that he obtain the two properties under the Trust.
{¶8} Subsequently, when Reminger moved for an attorney charging lien on that
judgment award to Galloway, the motion invoked the probate court’s plenary power
jurisdiction to consider all matters pertaining to its jurisdiction of this case. Pursuant to
R.C. 2101.24(C), “the probate court has plenary power at law and in equity to dispose
fully of any matter that is properly before the court, unless the power is expressly
otherwise limited or denied by statute.”
A probate court’s plenary power or jurisdiction authorizes probate courts to
exercise full and complete jurisdiction over the subject matter as well as the
parties to a controversy. See Wolfrum [v. Wolfrum, 2 Ohio St.2d 237, 208
N.E.2d 537 (1965)], paragraph one of syllabus; see also Black’s Law
Dictionary [1039 (5th Ed.1979)]. Plenary power is defined as “authority
and power as broad as is required in a given case.” Black’s Law
Dictionary [at id.]. Thus, the probate courts have broad authority and
power as is required to exercise full and complete jurisdiction over the
subject matter.
Goff v. Ameritrust Co., NA, 8th Dist. Cuyahoga No. 65196, 1994 Ohio App. LEXIS 1916,
*16-17 (May 5, 1994).
{¶9} Relevant to the issue of attorney charging liens,
“[u]ntil a judgment is fully executed, the court retains jurisdiction of the
subject matter and the parties for the purpose of hearing any motion
affecting such judgment, and if the attorney desires to have his lien
established and declared against such judgment, he may apply to the court
for that purpose. * * * An attorney’s lien is enforceable through the control
the courts have of their judgments and records, and by means of their own
process.”
Fire Protection Resources, Inc. v. Johnson Fire Protection Co.,72 Ohio App.3d 205, 209,
594 N.E.2d 146 (6th Dist.1991), quoting Babin v. Royal Indemn. Co., 28 Ohio N.P.(n.s.)
148, 153, 1930 Ohio Misc. LEXIS 1211 (June 16, 1930).
{¶10} Additionally, “where the parties are not strangers to the suit, ‘* * * the
compensation of the plaintiffs should be worked out by application to the court holding
the fund, and in which the services were rendered.’” Fire Protection at 210, quoting Olds
v. Tucker, 35 Ohio St. 581, 584 (1880). Additionally, it is “significant that ‘* * * the
amount was in some degree to be determined by the judge before whom the services were
rendered, from his own knowledge of their value.’” Fire Protection at id., quoting Diehl
v. Friester, 37 Ohio St. 473, 478 (1882).
{¶11} In Fire Protection, the Sixth District set forth the primary considerations
Ohio courts review when confronted with charging liens:
(1) the right of the client to be heard on the merits; (2) the right of an
attorney to invoke the equitable jurisdiction of the courts to protect his fee
for services rendered; (3) the elimination of unnecessary and duplicative
litigation; (4) the opportunity for the client to obtain counsel to litigate the
claim for attorney fees; (5) the propriety of an order as opposed to a
judgment; (6) a forum for the presentation of witnesses, if necessary; and
(7) the equitable nature of the proceeding.
Id. at ¶ 210-211. After weighing those considerations, the court ultimately concluded
that:
a motion to declare and enforce an attorney’s charging lien on the proceeds
of judgment must be entertained by the court in the action in which the
judgment was rendered when, * * * (1) the client against whom such
motion is filed has been given an opportunity to obtain new counsel; and (2)
there is a final judgment in the case which the claiming attorney helped
secure by his services in that litigation or incident to that litigation.
Id. at 211.
{¶12} Applying those considerations to the facts in this case, the parties involved
were not strangers to the underlying lawsuit; the probate court had knowledge of the
value of the services rendered by Reminger to Galloway because the court presided over
the underlying Trust dispute. Additionally, Galloway retained new counsel following
Reminger’s withdrawal for the purpose of opposing the charging lien. Finally, the record
supports the conclusion that Reminger’s representation helped secure the judgment
obtained in the underlying trust dispute. Accordingly, the probate court was the
appropriate jurisdiction to consider Reminger’s motion for a charging lien; any other
forum would only cause unnecessary and duplicative litigation.
{¶13} Galloway further contends that Reminger was not a party to the probate
action because the firm had already withdrawn as counsel for Galloway and did not seek
to intervene in the action. However, being a party to the action is not a prerequisite for
obtaining an charging lien on the judgment. Cuyahoga Cty. Bd. Of Commrs. v. Maloof
Properties, Ltd., 197 Ohio App.3d 712, 2012-Ohio-470, 968 N.E.2d 602, ¶ 20 (8th Dist.).
In Maloof, this court reiterated that a party’s former attorney is permitted to intervene in
an action in order to pursue a charging lien, but also a law firm is permitted to assert a
charging lien merely upon a motion. Id.; see also First Bank of Marietta v. Roslovic &
Partners, Inc., 10th Dist. Franklin Nos. 03AP-332 and 03AP-333, 2004-Ohio-2717, ¶ 44;
Mathews v. E. Pike Local School Dist. Bd. Of Edn., 4th Dist. Pike No. 12CA832,
2013-Ohio-4438, ¶ 22; Babin at 153 (“the attorney’s lien upon a judgment may be
established and enforced upon an application to the court in the case wherein the
judgment was rendered, and although it is sometimes held that this lien may be enforced
in an independent action by the attorney, yet ordinarily a motion in the cause is the proper
remedy”).
{¶14} In this case, Reminger’s status as a nonparty to the underlying lawsuit was
irrelevant where Reminger sought the lien through a motion. The trial court’s decision to
proceed on the motion rather than have Reminger intervene as a party to the lawsuit was
not an abuse of discretion.
{¶15} Accordingly, we find no error in the probate court exercising jurisdiction
over Reminger’s motion for a charging lien; the probate court properly had jurisdiction
through its plenary power to consider such request. The first assignment of error is
overruled.
II. Charging Lien Obtained from Hourly Fee Agreement
{¶16} In his second assignment of error, Galloway contends that the trial court
erred in allowing a charging lien to collect the overdue balance on a written hourly fee
agreement. Specifically, Galloway contends a charging lien is only allowable when a
contingency fee agreement or some other express agreement to a lien exists. We
disagree.
{¶17} “Ohio recognizes two types of attorney liens: (1) general, or retaining liens,
and (2) special, or charging liens.” Putnam v. Hogan, 122 Ohio App.3d 351, 353, 701
N.E.2d 774 (10th Dist.1997), citing Fire Protection at 209. An attorney may have a
special or charging lien upon a judgment, decree, or award obtained for a client. Putnam
at 354, citing Mancino v. Lakewood, 36 Ohio App.3d 219, 223-224, 523 N.E.2d 332 (8th
Dist.1987); “‘An attorney of record who has obtained a judgment has a security interest
therein, as security for his fees in the case and for proper payments made and liabilities
incurred during the course of proceedings.’” Maloof Properties at ¶ 13, quoting 2
Restatement of Law 2d, Agency Section 424(e) (1958).
{¶18} In Mancino, this court stated: “An attorney’s lien is found on the equitable
principle that an attorney is entitled to be paid his or her fees out of the judgment
rendered in the case.” The right for an attorney to be paid for his or her services “exists
regardless of whether the fee is contingent or otherwise and ‘* * * notwithstanding the
fact that no express agreement existed as to the payment of * * * fees.’” Fire Protection
Resources, Inc., 72 Ohio App.3d at 209, 594 N.E.2d 146, quoting Babin, 28 Ohio
N.P.(n.s.) at 152, 1930 Ohio Misc. LEXIS 1211.
{¶19} In the seminal case on charging liens, the Ohio Supreme Court stated that
attorneys retain the benefit of [charging] liens even “in the absence of an agreement with
their client that they should have a lien.” Cohen v. Goldberger, 109 Ohio St. 22, 28, 141
N.E. 656 (1923); see also Walcutt v. Huling, 5 Ohio App. 326, 1913 Ohio App. LEXIS
235 (10th Dist.1913), aff’d without opinion, 92 Ohio St. 518, 112 N.E. 1087 (1915)
(although no express agreement existed regarding fees or that the attorney would have a
lien against the judgment, the amount of recovery was based on quantum meruit); Truman
v. Coghlin Mach. & Supply Co., 11 Ohio App. 220, 1919 Ohio App. LEXIS 203 (6th
Dist.) (attorney allowed fees out of the fund produced by litigation, although no actual
agreement for such participation in the fund existed with the client). “The attorney is
entitled to be protected not by reason of his agreement, but ‘on the equity of such attorney
to be paid out of the judgment by him obtained and on the theory that his services and
skill created the fund.’” Babin at 152 quoting Cohen, at paragraph one of the syllabus;
First Bank of Marietta v. Roslovic & Partners, Inc., 10th Dist. Franklin Nos. 03AP-332
and 03AP-333, 2004-Ohio-2717, ¶ 46 (whether the fund is generated by the efforts of an
attorney working on an hourly basis or a contingent basis seems immaterial).
{¶20} In this case, the contract for legal fees between Reminger and Galloway was
based on an hourly fee rate contract. Even though the Galloways specifically rejected a
contingency fee arrangement with Reminger where a lien on the property was included,
the case law does not preclude Reminger from placing a charging on lien on the
properties based on the hourly fee rate contract. The record clearly demonstrates that
Reminger’s services generated the judgment that Reminger seeks to attach. Accordingly,
the probate court did not abuse its discretion in allowing a charging lien to collect the
overdue balance on a written hourly fee agreement. The assignment of error is
overruled.
III. Charging Lien on Real Property
{¶21} In his third assignment of error, Galloway contends that the probate court
erred by entering an attorney charging lien on real property. Galloway argues that a
charging lien can only be placed on a fund of money.
{¶22} Whether an attorney should be granted a charging lien “is left to the sound
discretion of the court of equity, the exercise of which should be based on the facts and
circumstances of the case.” Minor Child of Zentack v. Strong, 83 Ohio App.3d 332,
334-335, 614 N.E.2d 1106 (8th Dist.1992). A reviewing court will not reverse the equity
court’s decision to enforce an attorney’s right to recover pursuant to a charging lien
unless there is an abuse of discretion. Kerger & Hartman, L.L.C. v. Ajami,
2015-Ohio-5157, 54 N.E.3d 682, ¶ 25 (6th Dist.), citing Garrett v. Sandusky, 6th Dist.
Erie No. E-03-024, 2004-Ohio-2582, ¶ 25. An abuse of discretion connotes that the trial
court’s decision was unreasonable, arbitrary, or unconscionable and not merely an error of
law or judgment. Blakemore v. Blakemore, 5 Ohio St.3d 217, 219, 450 N.E.2d 1140(1983).
{¶23} In this case, the trial court noted that Galloway brought the action against
the Trust specifically seeking to obtain the real property rather than a monetary
distribution. The court concluded that because “Reminger was able to obtain the
resolution sought by Galloway, this court finds no prohibition on allowing a lien on the
real property.” We agree and find no abuse of discretion by the trial court.
{¶24} In Cohen, the Ohio Supreme Court held that “[t]he right of an attorney to
payment of fees earned in the prosecution of litigation to judgment, though usually
denominated a lien, rests on equity of such attorney to be paid out of the judgment by him
obtained, and is upheld on the theory that his services and skill created the fund.”
(Emphasis added.) Cohen, 109 Ohio St. 22, 141 N.E. 656, at paragraph one of the
syllabus.
{¶25} As correctly noted by the trial court, the judgment Reminger was able to
obtain for Galloway was the result Galloway sought — ownership of the two parcels of
real property. To secure the payment of fees, Reminger sought to place a charging lien
on the judgment obtained. Because the judgment was real property, the trial court did not
abuse its discretion in allowing the attorney charging lien.
{¶26} In Kerger & Hartman, 2015-Ohio-5157, 54 N.E.3d 682, appeal not allowed,
14 Ohio St.3d 1459, 2016-Ohio-2807, 49 N.E.3d 321, the Sixth District upheld the trial
court’s decision allowing a charging lien to be placed on real property. While the facts
and circumstances of the Kerger case were quite unique, the result is the same as applied
to the facts in the case before this court — the attorney, at the client’s instruction and
agreement, provided legal work to obtain an interest in real property, and as a result of the
attorney’s skill and services, real property was obtained.
{¶27} Accordingly, the trial court did not abuse its discretion in granting
Reminger’s motion for a charging lien on the real property judgment. The third
assignment of error is overruled.
IV. Inclusion of Charging Lien
{¶28} Galloway argues in his fourth assignment of error that the probate court
erred by including fees for services rendered for the defense of claims in a separate case
in the attorney charging lien. In support, Galloway cites Petty v. Kroger, 165 Ohio
App.3d 16, 2005-Ohio-6641, 844 N.E.2d 869 (10th Dist.), where the attorney sought to
assert a charging lien on the future judgment in a civil personal injury case for attorney
fees owed in his representation of the client in a prior traffic case. The Tenth District
held an attorney may not assert a charging lien on a recovery of funds for the client in one
case for fees due from the client in a separate unrelated matter. Id. at ¶ 10.
{¶29} In this case, the evidence demonstrated that Reminger was retained to
pursue the underlying litigation and then to defend the related lawsuits with the primary
objective to obtain the parcels of property contained in his father’s trust, while retaining
the parcels he inherited from his Aunt June. In fact, Galloway testified:
We wanted, like I said, multiple purposes. Number one, I wanted to get
back into the trust, which I was left out of, thrown out of.
I wanted to get, hopefully, the two parcels that my dad had there. And the
reason for that was the two parcels that my dad had were really not worth
anything because he didn’t have the frontage to build on — that was always
his — his dilemma — and then the other two parcels that my Aunt June,
that I acquired did have. And without the other two being next to each
other, they would really be worthless.
So I wanted to obtain, I wanted to get into the trust * * *.
(Tr. 94.)
{¶30} The trial court noted, and the record supports, that the related lawsuits were
resolved as part of the overall settlement in the underlying lawsuit, therefore, it was part
of the result arising from the skill and services of Reminger to protect the “fund” created
as a result of the settlement. Therefore, unlike in Petty, the fees in this case were not
from a separate matter or case; the defense of the related lawsuits were intertwined to
achieve Galloway’s overall goal of obtaining and retaining the real properties at issue.
{¶31} Accordingly, we find no abuse of discretion by the trial court to include the
defense fees as part of the charging lien. The fourth assignment of error is overruled.
V. Proper Party
{¶32} In his fifth assignment of error, Galloway contends that the probate court
erred by entering an attorney fee charging lien on property whose owner was not a party
to the litigation and for whom the attorneys had performed no services. Essentially,
Galloway contends that because the property was titled in the name of his family trust and
not Galloway’s name individually, the trial court could not order the charging lien to
attach to the real property. Galloway also contends that he had no notice of Reminger’s
fraudulent transfer claim because no lawsuit or motion was filed against him; rather, the
claim was “buried in [Reminger’s] reply brief sprung on them at the hearing.”
{¶33} The Ohio Supreme Court has held that a complaint for fraudulent
conveyance is not required for the court to make a finding that the transfer is invalid for
the purposes of avoiding the creditor’s claim. Wagner v. Galipo, 50 Ohio St.3d 194, 553
N.E.2d 610 (1990).
{¶34} In Wagner, a husband and wife, when faced with foreclosure on their real
property, transferred title of their real property from a joint ownership with rights of
survivorship to a tenancy by the entireties. Id. at 197. They argued that because the
foreclosure was only filed against the husband, the foreclosure could not attach to the
wife’s interest in the property under the tenancy by the entireties title. A complaint for
fraudulent conveyance was not filed or pled in the foreclosure action. Id. The court
found that regardless of whether or not the claim for fraudulent conveyance was pled in a
complaint, the facts in the record established that the transfer of title was made for the
purpose of avoiding the creditor’s claim and therefore constituted a fraudulent
conveyance under R.C. 1336.01 et seq. In its holding, the court noted:
The issue of whether a particular conveyance is fraudulent could be raised
in the pleadings, but it could also arise while an action is pending, or even
after a judgment is rendered, depending on the actions of the debtor and the
knowledge of the creditor. No purpose would be served by formally
requiring the creditor to amend the pleadings or file a supplemental
complaint whenever the debtor makes, or the creditor discovers, during
foreclosure proceedings, a transfer which appears to be a fraudulent
conveyance.
Id.; see also Springfield v. Palco Invest. Co., 2d Dist. Clark No. 2012 CA 52,
2013-Ohio-2348 (a complaint for fraudulent conveyance is not necessary for a court to
make a factual finding that the conveyance was fraudulent and attach a creditor’s claim to
property even where the claim is not a foreclosure).
{¶35} The evidence in the record reveals that after Reminger filed the motion for
charging lien, Galloway transferred the real property out of his individual name and into
the name of his family trust — Mark and Susan Galloway 2013 Family Trust. Therefore,
the record supports the trial court’s conclusion that Galloway’s transfer of the real
property after notice of the creditor’s claims “negates Galloway’s argument that the
charging lien cannot attach to that property.” In the instance of a trust, where the
transferor is the settlor, trustee, and beneficiary of the trust, the transferee maintains
possession and control of the property. Accordingly, Galloway’s transfer of the real
property into his family trust does not prevent attachment of Reminger’s charging lien.
See UAP-Columbus JV326132 v. Young, 10th Dist. Franklin No. 09AP-646,
2010-Ohio-485 (a trust beneficiary’s interest in a revocable trust where property was
transferred into that trust to avoid a creditor’s claim is a fraudulent transfer and cannot
prevent attachment of the creditor’s claim).
{¶36} Galloway’s fifth assignment of error is overruled.
{¶37} Judgment affirmed.
It is ordered that appellee recover from appellant costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said court to carry this judgment into
execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure.
KATHLEEN ANN KEOUGH, ADMINISTRATIVE JUDGE
EILEEN A. GALLAGHER, J., and
FRANK D. CELEBREZZE, JR., J., CONCUR