Rangel v. Save Mart, Inc.

2006 NMCA 120, 142 P.3d 983, 140 N.M. 395
CourtNew Mexico Court of Appeals
DecidedAugust 11, 2006
DocketNo. 24,769
StatusPublished
Cited by28 cases

This text of 2006 NMCA 120 (Rangel v. Save Mart, Inc.) is published on Counsel Stack Legal Research, covering New Mexico Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Rangel v. Save Mart, Inc., 2006 NMCA 120, 142 P.3d 983, 140 N.M. 395 (N.M. Ct. App. 2006).

Opinion

OPINION

PICKARD, Judge.

{1} In this case, we determine whether the district court abused its discretion in awarding sanctions under Rule 1-011 NMRA, based on the filing of an attorney charging lien. Because we determine that the appellant’s assertion of the charging lien was colorable as a matter of law, we hold that the district court abused its discretion in imposing sanctions, and we reverse the order imposing sanctions.

BACKGROUND

{2} This dispute originated as a slip-and-fall ease brought by Plaintiff, Otilia Rangel, against Save Mart. Appellant, the Lovett Law Firm (Lovett), represented Plaintiff. On the day after she sustained her injuries, Plaintiff met with staff at Lovett and signed a contingency fee contract, which stated that Lovett would be entitled to one-third of any monies recovered before the filing of a lawsuit and 40% of any monies recovered after the filing of a lawsuit. About a week later, Lovett sent a letter of representation to Save Mart’s insurance company. The insurance company responded with a letter denying fault, but stating as follows: “However, there is $5,000 in medical payment coverage that can be applied to this incident. The coverage will provide payment for any out of pocket expense related to this incident____ Please submit documentation for any medical expense that you wish us to consider.” Lovett sent Plaintiffs medical bills, totaling $5,657, to the insurance company, which sent Lovett a check for $5,000, payable to Lovett and Plaintiff. Lovett used some of this money to pay Plaintiffs outstanding medical bills, and he apparently retained approximately one-third of this $5,000 pursuant to the contingency fee agreement with Plaintiff.

{3} Approximately a month later, in March of 2002, Lovett filed suit on behalf of Plaintiff. It appears from the record that some discovery took place after the filing of the complaint. Lovett answered interrogatories and participated in a deposition of Plaintiff. Lovett also participated in a formal mediation. In September and October of 2002, Lovett filed motions to withdraw as counsel for Plaintiff. The motions were granted on October 2, 2002.

{4} The district court found that (1) while Lovett was representing Plaintiff, Save Mart made a settlement offer of $15,000 and (2) subsequent to Lovett’s representation, Save Mart made a settlement offer of $18,000. It appears that Plaintiff rejected the $15,000 offer obtained by Lovett, discharged Lovett, and then a short time later accepted the $18,000 settlement offer. There is no indication in the district court’s findings or in the record that Lovett was discharged for cause.

{5} Two days after withdrawing as Plaintiffs counsel, Lovett filed a notice of charging lien. That document states in full as follows: “COMES NOW Lovett Law Firm and respectfully notifies the Court and counsel that it is asserting an attorney charging lien in the above captioned matter. Lovett Law Firm requests that no funds be disbursed until [a] hearing is held on recovery of monies owed to the firm.” Lovett later argued that it was entitled to a charging lien for its full contingency fee.

{6} Plaintiff retained new counsel and filed a motion to strike the lien and to recover the portion of the $5,000 obtained for medical bills that Lovett had retained. The district court eventually granted the motion and struck the lien. In striking the lien, the district court made the following findings, which are substantially unchallenged on appeal:

13. Other than the $5,000.00 med pay payment made by the insurance company representing Save Mart, Attorney Lovett did not collect any funds during his representation of [Plaintiff].
15. Regarding the claim of lien, Attorney Lovett is relying on the [contingency fee] contract for his claim.
16. Attorney Lovett bases his claim upon the contract!,] not on time/work.
29. Under Save Mart’s insurance policy, they would not and did not contest medical payments.
30. Save Mart’s requirements to pay medical insurance payments were solely based on presentation of medical bills and was done without regard to fault.

The district court ruled that a charging lien can be asserted only where there is a “fund recovered by the attorney.” The court determined that the only money recovered by Lovett was the $5,000 obtained to pay medical bills and that such money did not qualify as “recovery” for purposes of a charging lien. The court also entered findings indicating that a contingency fee on medical payments is not a reasonable fee.

{7} Prior to the district court’s striking the lien, Plaintiff filed a motion for sanctions under Rule 1-011. Plaintiff argued that sanctions were appropriate because (1) the claim of lien was unfounded, since Lovett never recovered any money on behalf of Plaintiff, and (2) Lovett knowingly took an inconsistent position in a similar case. Plaintiff requested that the court impose sanctions in the form of the attorney fees incurred in opposing the lien. The court entered an order granting the motion and awarding Plaintiff the requested fees. The court did not enter findings of fact or conclusions of law with regard to the sanctions.

{8} On appeal, Lovett contends that there was no sanctionable conduct in this case. Lovett does not contest the propriety of the district court’s order striking the lien. Accordingly, we examine only whether Lovett’s conduct constituted a violation of Rule 1-011, and we do not decide whether the district court properly denied the lien.

DISCUSSION

{9} We begin by setting forth the requirements for a Rule 1-011 violation and the appropriate standard of review. We then examine the substantive requirements for an attorney charging lien, and we address whether Lovett’s filing of the charging hen in this ease violated Rule 1-011. Finally, we address several additional arguments made by Plaintiff.

1. The Rule 1-011 Standard

{10} The pertinent provision of Rule 1-011 states the following: “The signature of an attorney ... constitutes a certificate by the signer that the signer has read the pleading, motion or other paper; that to the best of the signer’s knowledge, information and belief there is good ground to support it; and that it is not interposed for delay.” In this case, there is no allegation that Lovett failed to read any pleadings or that the charging lien was filed in order to cause delay or for some other improper purpose. Plaintiff did argue that courts need to control attorneys who prejudice their clients by filing unfounded liens in order to tie up the clients’ files. However, (1) the district court did not make any findings or comments along those lines, and (2) there is no evidence that such occurred in this case. Accordingly, the only question is whether “to the best of [Lovett’s] knowledge, information and belief, there [was] good ground to support” the charging lien. See Rule 1-011.

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Cite This Page — Counsel Stack

Bluebook (online)
2006 NMCA 120, 142 P.3d 983, 140 N.M. 395, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rangel-v-save-mart-inc-nmctapp-2006.