Johnson v. Stein

385 A.2d 514, 254 Pa. Super. 41, 1978 Pa. Super. LEXIS 2815
CourtSuperior Court of Pennsylvania
DecidedApril 13, 1978
Docket964
StatusPublished
Cited by26 cases

This text of 385 A.2d 514 (Johnson v. Stein) is published on Counsel Stack Legal Research, covering Superior Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Johnson v. Stein, 385 A.2d 514, 254 Pa. Super. 41, 1978 Pa. Super. LEXIS 2815 (Pa. Ct. App. 1978).

Opinion

SPAETH, Judge:

This is a fee dispute between two attorneys. Initially, appellant was the plaintiffs’ attorney in a tort case, on a contingent fee. In the court below, he sought an equitable charging lien on the fund recovered by the plaintiffs, asking that that percentage of the fund which represented the contingent fee be apportioned between himself and appellee, whom the plaintiffs had subsequently retained, and who in mid-trial had negotiated a settlement. '

When the plaintiffs retained appellant, appellee was an associate attorney in appellant’s office, and was assigned by *43 appellant to work on the case. (The trial judge made no finding about how much work appellee did.) In January of 1975, appellant gave appellee notice that his employment with appellant’s office would be terminated as of February 28, 1975. By letters dated February 24, 1975, appellee notified the plaintiffs that he was leaving appellant’s office, adding: “Since your present fee agreement is with Martin H. Philip [appellant], your case will remain in his office, and my connection with it will terminate as of February 28, 1975, unless you direct otherwise.” He then stated his office and home telephone numbers, should the plaintiffs wish more information. By two separate but identical letters dated March 1, 1975, the plaintiffs discharged appellant and requested a statement of expenses incurred on their behalf. Thereafter they were represented by appellee, who went to trial with the case and negotiated the settlement. When appellant filed a “Notice of Attorney’s Lien” in the Office of the Prothonotary, the defendants received permission to pay the proceeds of the settlement ($62,336.33) into court. On January 27, 1976, the court entered an order striking the “Notice of Attorney’s Lien.” This appeal is from that order.

Pending disposition of his appeal, appellant petitioned the lower court for an order of supersedeas staying distribution of the fund. The court refused the petition, and on February 4, 1976, ordered distribution of the fund. Thereupon the fund was disbursed to appellee, who distributed it to the plaintiffs after first paying to himself the percentage of the fund representing the contingent fee, and reimbursing appellant for advanced costs.

In Recht v. Clairton Urban Redevelopment Authority, 402 Pa. 599, 168 A.2d 134 (1961), the Supreme Court set out the requirements for an attorney’s equitable charging lien:

A review of these authorities illustrates that before a charging lien will be recognized and applied, it must *44 appear (1) that there is a fund in court or otherwise applicable for distribution on equitable principles, (2) that the services of the attorney operated substantially or primarily to secure the fund out of which he seeks to be paid, (3) that it was agreed that counsel look to the fund rather than the client for his compensation, (4) that the lien claimed is limited to costs, fees or other disbursements incurred in the litigation by which the fund was raised and (5) that there are equitable considerations which necessitate the recognition and application of the charging lien.
402 Pa. at 608, 168 A.2d at 138-39.

We have no difficulty in finding that requirements (1) and (4) have been met. Appellee argues that the fund is not “in court” but has been disbursed. While this is true, there was a fund in court at the time the lower court made its decision to strike appellant’s notice of lien.

With respect to requirement (2), the parties differ on whether the services of appellant “operated substantially or primarily to secure the fund,” each party enumerating the services he performed and minimizing the services of the other. We do not undertake to resolve this difference of opinion, nor do we consider requirement (3), for we have concluded that in any event, requirement (5) has not been met.

Requirement (5) focuses attention on the fact that there must be “considerations which necessitate” imposition of a lien if the attorney whose efforts brought about the existence of a fund is to be paid for his services. Thus in Harris’s Appeal, 323 Pa. 124, 186 A. 92 (1936), the Court imposed a lien at the expense of the owner’s mortgagee, who otherwise would have been entitled to the entire recovery:

It would be manifestly unjust to permit the mortgagee to reap all the benefits of the attorney’s endeavors and to “get out from under” even the smallest share of the burden which produced the benefits. We will impose on *45 the fund the payment of the reasonable costs of its creation.
322 Pa. at 135, 186 A. at 97.
[T]he charging lien [depends] upon possession, but upon the favor of the court in protecting attorneys, as its own officers, by taking care, ex aequo et bono, that a party should not run away with the fruits of the cause without satisfying the legal demands of the attorney by whose industry those fruits were obtained.
Id., 323 Pa. at 130-31, 186 A. at 95.

Accordingly, the court will impose a lien where the fund from which the attorney’s fee is to come would be depleted by creditors with prior claims, leaving the attorney unpaid and unable to recover against his client. McKelvy’s and Sterrett’s Appeals, 108 Pa. 615 (1885) (insolvent client who tried, by other counsel, to get the fund out of the court’s control without paying his attorney); Jones v. City of Pittsburgh, 157 Pa.Super. 528, 43 A.2d 554 (1945) (set-off for delinquent taxes in excess of amount of judgment); Turtle Creek Bank & Trust Co. v. Murdock, 150 Pa.Super. 277, 28 A.2d 320 (1942) (prior judgment would consume fund).

Where considerations of protecting the attorney do not necessitate imposition of a lien, the court will not impose one. Thus in Recht v. Clairton Urban Redevelopment Auth., supra, the Court in reversing the lower court’s imposition of a lien, noted: “It does not appear that Herman Recht is attempting to defraud counsel nor that he is insolvent. There is no adverse or third-party attempting to appropriate the fund.” 402 Pa. at 610, 168 A.2d at 140. Similarly, the Court of Appeals for the Third Circuit, in deciding whether there were such considerations as necessitated imposition of a lien, has said:

Finally, always a significant factor in deciding the equities, there is nothing in the record to indicate that the attorney claimants will be, or were, precluded from press *46 ing their claims directly against their clients or the estates thereof.
United States v. Fidelity Philadelphia Trust Co., 459 F.2d 771, 778 (3d Cir. 1972).

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Cite This Page — Counsel Stack

Bluebook (online)
385 A.2d 514, 254 Pa. Super. 41, 1978 Pa. Super. LEXIS 2815, Counsel Stack Legal Research, https://law.counselstack.com/opinion/johnson-v-stein-pasuperct-1978.