Phillips v. Smith

768 P.2d 449, 100 Utah Adv. Rep. 3, 1989 Utah LEXIS 3, 1989 WL 6384
CourtUtah Supreme Court
DecidedJanuary 23, 1989
Docket20873
StatusPublished
Cited by6 cases

This text of 768 P.2d 449 (Phillips v. Smith) is published on Counsel Stack Legal Research, covering Utah Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Phillips v. Smith, 768 P.2d 449, 100 Utah Adv. Rep. 3, 1989 Utah LEXIS 3, 1989 WL 6384 (Utah 1989).

Opinions

ZIMMERMAN, Justice:

Nilda Phillips appeals from an order enforcing an attorney’s lien. Nilda and her now-deceased husband, Elmer Lee Phillips, brought a medical malpractice action, initially retaining the law firm of Ungricht, Randle & Deamer (“the Ungricht firm”). Before any resolution was achieved, the Phillipses terminated their relationship with the Ungricht firm and hired new counsel. The new counsel negotiated a settlement. The Ungricht firm sought to enforce an attorney’s lien on the settlement amount, claiming it was entitled to a contingency fee of one-third of the settlement figure. The trial court ruled in favor of the Ungricht firm. We reverse because we find the attorney’s lien to be invalid.

In November of 1983, the Phillipses retained the Ungricht firm to represent them in a medical malpractice claim against Dr. J.A. Smith, Jr., the University of Utah Medical Center, and others. The claim arose out of an operation performed by Dr. Smith on Mr. Phillips. The Phillipses and the Ungricht firm entered into a preprinted written contract that provided for the payment to the firm of a contingent fee of one-third of the “amount recovered.”

The Ungricht firm gave defendants advance notice of the Phillipses’ intent to sue, as required by section 78-14-8 of the Code, and then opened settlement negotiations. Utah Code Ann. § 78-14-8 (1987). The hospital and other defendants offered $35,-000 to settle the case. The Ungricht firm sent the Phillipses a letter dated June 15, 1984, advising them to accept the offer and expressing doubt that either further negotiations or a trial would result in a larger recovery. The letter, written by Michael L. Deamer, stated in pertinent part:

In my opinion and in the opinion of Jerry Ungricht of this office, we very strongly recommend that you consider and take the settlement offer. This is based upon our careful evaluation of the case and subsequent evaluations in light of conversations with you and subsequent evaluations in light of our investigation of recoveries for similar personal injuries. I can appreciate that you feel you have [450]*450been badly wronged and you ought to receive $100,000 or even a Million Dollars. In my opinion you will never receive those amounts.

The letter also described four alternative courses of action then available to the Phil-lipses. Options one and three are at issue here.

1. Terminate this law firm’s representation of the matter and turn the matter over to another law firm.
2. Hire another attorney at your expense to make a “second opinion” analysis of the facts and evidence.
3. Authorize me to make a counter offer for $25,000 in cash plus a pass through of the medical bills with further authorization to accept some amount in that range including a figure half way between, subject to your final approval.
4. Accept the offer as currently stated.

The Phillipses rejected the offer and instructed the Ungricht firm to continue settlement negotiations and to make a $45,000 counter offer. Through further negotiations, the firm obtained a settlement offer of approximately $40,000. The firm communicated the offer to the Phillipses, who rejected it and terminated the employment of the Ungricht firm. The Phillipses then retained another firm to pursue their claim.

After being discharged, and before any suit was filed or settlement consummated, the Ungricht firm filed a “Notice of Attorney’s Lien” against the Phillipses for $13,-161.44, one-third of the $40,000 settlement offer negotiated by the firm. The Phillips-es, through their new counsel, then formally filed suit against the hospital and other defendants. Eventually, new counsel negotiated and the Phillipses accepted a settlement of approximately $40,000, on terms essentially identical to those defendants had offered before the Ungricht firm was discharged and new counsel retained.

The hospital, having been notified of the Ungricht firm’s lien on the settlement amount, moved for a determination of the Ungricht firm’s entitlement to the claimed attorney fee. The Ungricht firm moved for an order enforcing its attorney’s lien. The trial court issued an order enforcing the lien for $13,314.78. That order is the subject of this appeal. The parties have placed $15,000 in an interest-bearing account to await a final determination of this issue.

Before this Court, Mrs. Phillips1 challenges the trial court’s order on various procedural grounds that we do not reach because we find the underlying attorney’s lien to be invalid. The lien asserted by the Ungricht firm is a statutory creature governed by section 78-51-41 of the Code. That section provides in pertinent part:

The compensation of an attorney and counselor for his services is governed by agreement, express or implied, which is not restrained by law. From the commencement of an action,2 or the service of an answer containing a counterclaim, the attorney who appears for a party has a lien upon his client’s cause of action or counterclaim, which attaches to a verdict, report, decision or judgment in his client's favor and to the proceeds thereof in whosesoever hands they may come, and cannot be affected by any settlement between the parties before or after judgment.

Utah Code Ann. § 78-51-41 (1987).

Under the statute, an attorney’s lien can arise only out of the “agreement, express or implied” between the lawyer and the client. Therefore, the statutory lien is only as good as the underlying agreement regarding compensation. Cf. Bishop v. [451]*451Parker, 103 Utah 145, 151, 134 P.2d 180, 183 (1943) (applying the predecessor to section 78-51-41). Here, the agreement was set forth in a written contract between the Ungricht firm and the Phillipses that states in relevant part: “I agree to pay my attorneys for the above legal services as follows: Retainer $500 for costs. One-third (Vs) of amount recovered and value less costs advanced.”3 In order for the statutory lien to attach as the Ungricht firm argues, this agreement must be read as providing for payment to the firm of a fee of one-third of the amount of any recovery obtained by the Phillipses on their malpractice claim, even a recovery resulting from the efforts of a successor attorney after the termination of the relationship between the Ungricht firm and the Phillipses and without regard to any fee arrangement the Phillipses may have made with successor counsel. We conclude that the contract cannot be so read.

In interpreting the contract, we must be mindful of the general principle that a court will strictly construe terms in a contract against one who is “both the attorney draftsman of and a party to the instrument.” Continental Bank & Trust Co. v. Bybee, 6 Utah 2d 98, 102, 306 P.2d 773, 775 (1957). We also note that in the present circumstances, this principle is reinforced by the fact that the instrument at issue relates to an attomey/client contingent fee arrangement.

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

Related

Fadel v. Deseret First Credit Union
2017 UT App 165 (Court of Appeals of Utah, 2017)
Berg v. Richards Brandt Miller Nelson
2016 UT App 16 (Court of Appeals of Utah, 2016)
Jones, Waldo v. Cade
98 F. App'x 740 (Tenth Circuit, 2004)
McDonald v. McDonald
866 P.2d 1253 (Court of Appeals of Utah, 1993)
Neilson v. Neilson
780 P.2d 1264 (Court of Appeals of Utah, 1989)
Phillips v. Smith
768 P.2d 449 (Utah Supreme Court, 1989)

Cite This Page — Counsel Stack

Bluebook (online)
768 P.2d 449, 100 Utah Adv. Rep. 3, 1989 Utah LEXIS 3, 1989 WL 6384, Counsel Stack Legal Research, https://law.counselstack.com/opinion/phillips-v-smith-utah-1989.