Bluxome Street Associates v. FIREMAN'S FUND INS.

206 Cal. App. 3d 1149, 254 Cal. Rptr. 198
CourtCalifornia Court of Appeal
DecidedDecember 22, 1988
DocketA039296
StatusPublished
Cited by20 cases

This text of 206 Cal. App. 3d 1149 (Bluxome Street Associates v. FIREMAN'S FUND INS.) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bluxome Street Associates v. FIREMAN'S FUND INS., 206 Cal. App. 3d 1149, 254 Cal. Rptr. 198 (Cal. Ct. App. 1988).

Opinion

206 Cal.App.3d 1149 (1988)
254 Cal. Rptr. 198

BLUXOME STREET ASSOCIATES et al., Plaintiffs; ERIC H. WOODS, et al., Defendants and Respondents,
v.
FIREMAN'S FUND INSURANCE COMPANY et al., Claimants and Appellants; FLYNN & STEWART, Claimant and Respondent.

Docket No. A039296.

Court of Appeals of California, First District, Division Three.

December 22, 1988.

*1151 COUNSEL

David E. Bunim, Timothy H. Power, Robert B. Ehrenworth, Haas & Najarian, Paul A. Epstein, Deborah B. Honig and Epstein & Harris for Claimants and Appellants.

Michael J. Flynn, Paul A. Stewart and Flynn & Stewart for Claimant and Respondent.

No appearance for Defendants and Respondents.

OPINION

STRANKMAN, J.

The issue for our determination is the priority among a prior contractual lien on litigation settlement proceeds, of which no notice was filed in the litigation, and a subsequent attachment lien and a contractual lien, notices of which were filed. The trial court held that the prior contractual lien has priority, and we agree.

I

Procedural Background and Issues on Appeal

In March 1987, a settlement was reached in a legal malpractice action entitled Woods v. Neisar (action No. 781175, hereafter Woods v. Neisar), one of several consolidated actions pending in the Superior Court of the City and County of San Francisco. The settlement provided in part for payment of the sum of $582,500 to Eric H. Woods. This sum was put into a trust account of the law firm of Hassard, Bonnington, Rogers & Huber (Hassard Bonnington), Woods's attorneys in Woods v. Neisar. Hassard *1152 Bonnington, appellant Haas & Najarian, appellant Fireman's Fund Insurance Company (Fireman's Fund), and respondent Flynn & Stewart, among others, each claimed a lien on the settlement proceeds.

On May 6, 1987, Woods filed a motion for order establishing lien priorities and allowing distribution of proceeds. Following extensive briefing by all lien claimants and two hearings, the trial court ordered the $582,500 in settlement proceeds to be disbursed as follows: (1) $352,562.14, plus interest, to Hassard Bonnington, pursuant to a retainer agreement which provided for a lien in favor of Hassard Bonnington on any judgment or proceeds recovered in the litigation; (2) $72,500 plus interest to Charles Schilling; (3) the remainder (approximately $150,000) to respondent Flynn & Stewart, not to exceed $180,852.46, plus interest, pursuant to a security agreement to secure payment of past and future legal services rendered by Flynn & Stewart unrelated to Woods v. Neisar; (4) the remainder (none), if any, to appellant Haas & Najarian, Woods's former attorneys, pursuant to a written stipulation for lien; (5) the remainder (none), if any, to Rubloff, Inc., a judgment lien creditor; (6) the remainder (none), if any, to appellant Fireman's Fund pursuant to an attachment lien (Code Civ. Proc., § 491.410).

Appellants Haas & Najarian and Fireman's Fund do not challenge the priority of the liens of Hassard Bonnington or Charles Schilling. Rather, they contend that their liens have priority over the lien of respondent Flynn & Stewart and that, accordingly, their liens have third and fifth priority, respectively. Flynn & Stewart contends that its lien was created prior in time to those of appellants and that, under the "first in time is first in right" rule, its lien takes priority.

II

Creation of Liens

By a "security agreement" dated December 17, 1984, Woods granted to Flynn & Stewart a security interest in Woods's interest in Woods v. Neisar and any proceeds thereof, to secure payment for past and future legal services rendered by Flynn & Stewart for the benefit of Woods, unrelated to Woods v. Neisar. As discussed infra, the security agreement created an enforceable contractual lien pursuant to Civil Code section 2881, subdivision 1.

On June 23, 1986, Haas & Najarian filed in Woods v. Neisar a "stipulation for lien," whereby Woods stipulated to a lien in favor of Haas & Najarian on any recovery in that action in the sum of $77,400, plus interest, *1153 based upon an unpaid promissory note. The stipulation created an enforceable contractual lien pursuant to Civil Code section 2881, subdivision 1.

On April 20, 1987, Fireman's Fund, the plaintiff in a separate action against Woods,[1] obtained a writ of attachment (Code Civ. Proc., § 488.010 et seq.) against Woods's interest in Woods v. Neisar, and an order creating a lien thereon pursuant to Code of Civil Procedure section 491.410.

Fireman's Fund also filed a "notice of lien" in Woods v. Neisar.

III

Validity of Liens

A. Liens of Flynn & Stewart and Haas & Najarian.

Civil Code section 2881, subdivision 1, provides that liens may be created by contract: "A lien is created: [¶] 1. By contract of the parties; or, [¶] 2. By operation of law." (1a) The liens of Flynn & Stewart and Haas & Najarian were valid contractual liens under this section. (See Cetenko v. United California Bank (1982) 30 Cal.3d 528, 531-535 [179 Cal. Rptr. 902, 638 P.2d 1299, 34 A.L.R.4th 657].) (2) That the security agreement in favor of Flynn & Stewart did not use the term "lien" did not prevent the creation of a lien under Civil Code section 2881, subdivision 1. (Gelfand, Greer, Popko & Miller v. Shivener (1973) 30 Cal. App.3d 364, 371 [105 Cal. Rptr. 445] [the parties are not required to use the term lien in their contract in order to create the lien].) The security agreement provides that Woods "grants to Flynn & Stewart, ... a security interest in any and all of the collateral," defined to include Woods's interest in Woods v. Neisar, to secure payment of a promissory note plus any additional amounts owing arising from the rendition of services by Flynn & Stewart to Woods. Such language describes a lien as defined by Civil Code section 2874.[2]

(1b) Fireman's Fund contends that the Flynn & Stewart lien is unenforceable because its purpose is to secure payment of attorney fees for services rendered unrelated to the litigation and which did not generate the settlement proceeds. Fireman's Fund argues that an equitable or implied attorney's lien arises only "to ensure that an attorney whose labors have *1154 created a fund for his client's benefit will not be deprived of his legitimate compensation," which is not the purpose of the Flynn & Stewart lien.

Fireman's Fund misconstrues the Flynn & Stewart lien as a purported equitable attorney's lien. Unlike certain attorney liens arising by equity, e.g., a lien upon a judgment to secure payment of legal fees based upon a contingency fee agreement (see discussion in Gelfand, supra, 30 Cal. App.3d at pp. 370-375), the Flynn & Stewart lien is based upon contract, not equitable grounds. That Flynn & Stewart is a law firm and the purpose of the lien is to secure payment of attorney fees is immaterial to the creation and enforceability of the lien under Civil Code section 2881, subdivision 1. The lien would be enforceable, barring other factors, even if Flynn & Stewart were not a law firm and the obligation secured were not payment of legal fees.

Our holding is supported by the reasoning applied by the federal bankruptcy court in In re Dickinson (Bankr.S.D. Cal. 1982) 24 Bankr.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Rice v. Downs
California Court of Appeal, 2021
Scottsdale Insurance Company v. the Soni Law Firm
518 F. App'x 576 (Ninth Circuit, 2013)
Brown v. Superior Court
9 Cal. Rptr. 3d 912 (California Court of Appeal, 2004)
Broach v. Michell (In Re Bouzas)
294 B.R. 318 (N.D. California, 2003)
Oldham v. California Capital Fund, Inc.
134 Cal. Rptr. 2d 744 (California Court of Appeal, 2003)
Pangborn Plumbing Corp. v. Carruthers & Skiffington
119 Cal. Rptr. 2d 416 (California Court of Appeal, 2002)
Law Offices of Jonathan A. Stein v. Cadle Co.
250 F.3d 716 (Ninth Circuit, 2001)
Owen v. CNA INS./CONTINENTAL CAS
750 A.2d 211 (New Jersey Superior Court App Division, 2000)
Weinberger v. Croshier (In Re Croshier)
228 B.R. 468 (S.D. California, 1998)
Shapiro, Lifschitz & Schram, P.C. v. Hazard
24 F. Supp. 2d 66 (District of Columbia, 1998)
LiMandri v. Judkins
52 Cal. App. 4th 326 (California Court of Appeal, 1997)
Wolf v. Sherman
682 A.2d 194 (District of Columbia Court of Appeals, 1996)
Saltarelli & Steponovich v. Douglas
40 Cal. App. 4th 1 (California Court of Appeal, 1995)
New England Mortgage Services Co. v. Petit
590 A.2d 1054 (Supreme Judicial Court of Maine, 1991)

Cite This Page — Counsel Stack

Bluebook (online)
206 Cal. App. 3d 1149, 254 Cal. Rptr. 198, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bluxome-street-associates-v-firemans-fund-ins-calctapp-1988.