Cottonwood Hill, Inc. v. Ansay

782 P.2d 1207, 13 Brief Times Rptr. 167, 1989 Colo. App. LEXIS 52, 1989 WL 12654
CourtColorado Court of Appeals
DecidedFebruary 16, 1989
Docket86CA0821
StatusPublished
Cited by6 cases

This text of 782 P.2d 1207 (Cottonwood Hill, Inc. v. Ansay) is published on Counsel Stack Legal Research, covering Colorado Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cottonwood Hill, Inc. v. Ansay, 782 P.2d 1207, 13 Brief Times Rptr. 167, 1989 Colo. App. LEXIS 52, 1989 WL 12654 (Colo. Ct. App. 1989).

Opinions

Opinion by

Judge PLANK.

Lienholder, Knight & Lesher, P.C. (Le-sher), appeals the trial court’s determination that its attorney’s lien under § 12-5-119, C.R.S. (1985 Repl.Vol. 5) does not have priority over the interest of inter-venor, First Colorado Bank & Trust, N.A. We affirm.

On September 23, 1983, plaintiff, Cottonwood Hill, Inc., gave notice that it intended to exercise its option to purchase property owned by defendants, Ronald J. and Clara E. Ansay, pursuant to a lease with option to purchase. Defendants refused to convey the property because of a dispute over the purchase price. Plaintiff sued to compel specific performance of the sale of the property. Lesher represented the defendants in the specific performance action pursuant to a written fee agreement dated September 30, 1983.

On April 6, 1984, intervenor loaned defendants $670,000. The debt was evidenced by a promissory note, which was secured by a first deed of trust against the property that was the subject of the specific performance action. The deed of trust was filed of record on April 18, 1984. Le-sher assisted the defendants in obtaining the financing from intervenor.

[1209]*1209On May 24, 1984, the trial court entered a specific performance order requiring the property to be sold for $575,000. In anticipation of the closing on the property, the intervenor made arrangements for its deed of trust to be released.

The closing, however, did not take place because the defendants appealed the trial court’s ruling. The defendants also terminated the services of Lesher and retained other counsel to handle the appeal.

Defendants’ new counsel by inadvertence or mistake released intervenor’s deed of trust on July 23, 1984, even though the closing had not taken place. Three days later, plaintiff deposited into the court registry $545,000, which was the remaining balance of the $575,000 purchase price determined by the trial court.

On August 15, 1984, the trial court clarified its order of May 24, 1984, and ordered that the closing be held immediately. Before the closing could occur, a stay was issued by this court.

Intervenor testified that it was unaware that the deed of trust had been released until the end of August or the first part of September 1984. On September 5, 1984, defendants executed another deed of trust against the property for the benefit of in-tervenor and it was recorded on September 6, 1984. Intervenor also obtained an assignment from the defendants of the funds on deposit in the court registry on September 10, 1984. It was not until September 20, 1984, that Lesher filed its attorney’s lien with the court.

On June 27, 1985, this court affirmed the trial court’s final order dated August 15, 1984, 709 P.2d 62, but the closing on the property did not occur until December 20, 1985. Pursuant to a stipulation, it was agreed that, at the closing, the proceeds of the sale of the property, less $34,000 and certain closing costs, would be distributed to intervenor. The $34,000 was to be retained pending judicial resolution of priority to those funds as between intervenor and Lesher.

On March 25, 1986, the trial court held, as an equitable principle, that the rights and interests of the parties in this case were fixed as of August 15, 1984, by the final order of the trial court, which had been subsequently affirmed by this court. It then ruled that the intervenor had priority to the $34,000, as of August 15, 1984.

Lesher contends its attorney’s lien on the funds is superior to the interest of the intervenor. We reject each of the arguments regarding priority asserted by Le-sher.

I.

The attorney’s charging lien is statutory in nature and is governed by § 12-5-119, C.R.S. (1985 Repl.Vol. 5). See In re Storage Technology Corp., 45 B.R. 363 (Bankr.D.Colo.1985). The statute requires that before an attorney can enforce the lien against third parties, he must give notice pursuant to the statute. In re Marriage of Berkland, 762 P.2d 779 (Colo.App.1988); see People ex rel. MacFarlane v. Harthun, 195 Colo. 38, 581 P.2d 716 (1978); Dolan v. Flett, 41 Colo.App. 40, 582 P.2d 694 (1978); § 12-5-119, C.R.S. (1985 Repl.Vol. 5).

Here, intervenor initially recorded its deed of trust on the property on April 18, 1984, and recorded its replacement deed of trust on September 6, 1984. Lesher did not attempt to perfect its lien as to third parties until September 20, 1984, when it filed its notice of attorney’s lien with the court.

Lesher, however, relies on Board of County Commissioners v. Berkeley Village, 40 Colo.App. 431, 580 P.2d 1251 (1978), and Collins v. Thuringer, 92 Colo. 433, 21 P.2d 709 (1933) in an attempt to persuade us that: (1) its lien priority related back to the time the law firm was retained on September 30, 1983, and (2) inter-venor had a duty to inquire about Lesher’s lien. This reliance is misplaced.

In order for the lien to apply to third parties, the case law has emphasized that the attorney’s lien claimant must give notice. See People ex rel. MacFarlane v. Harthun, supra; In re Marriage of Berkland, supra; and Dolan v. Flett, supra. The claimant’s priority as to third parties is then fixed as to the date of proper notice. [1210]*1210Thus, the attorney’s lien priority as to third parties does not relate back to the time the attorneys commenced work. In re Marlin Oil Co., 67 B.R. 284 (Bankr.D.Colo.1986).

Furthermore, had the general assembly intended for attorneys’ liens to “relate back,” or have “super priority” it could have chosen specific language to that effect, like the language appearing in the mechanics’ lien and tax lien statutes. See § 38-22-106(1), C.R.S. (1982 Repl.Vol. 16A); § 39-1-107(2), C.R.S. (1982 Repl.Vol. 16B). We cannot infer a meaning of the attorney’s lien statute which has no basis in the language of the statute.

Even though Collins v. Thuringer, supra, and Board of County Commissioners v. Berkeley Village, supra, are attorneys’ lien cases that deal with third-person priorities, a careful review of the holdings in those cases reveals fact patterns regarding notice that are not present in the case before us. We believe these cases should be narrowly construed.

The reason the court in Collins held an attorney’s lien superior to a garnishment, which had been filed before the notice of attorney’s lien was filed, was because the plaintiff in garnishment was deemed to have notice of the lien between attorney and client. Thus, “the holding turns upon the presumption of notice to a certain class of lien claimants, namely plaintiffs in garnishment.” In re Marlin Oil Co., supra.

In Board of County Commissioners v. Berkeley Village, supra,

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Cottonwood Hill, Inc. v. Ansay
782 P.2d 1207 (Colorado Court of Appeals, 1989)

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Bluebook (online)
782 P.2d 1207, 13 Brief Times Rptr. 167, 1989 Colo. App. LEXIS 52, 1989 WL 12654, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cottonwood-hill-inc-v-ansay-coloctapp-1989.