State ex rel. Raber v. Hongliang Wang

286 P.3d 1085, 230 Ariz. 476, 642 Ariz. Adv. Rep. 13, 2012 WL 3864993, 2012 Ariz. App. LEXIS 142
CourtCourt of Appeals of Arizona
DecidedSeptember 6, 2012
DocketNo. 1 CA-CV 11-0560
StatusPublished
Cited by1 cases

This text of 286 P.3d 1085 (State ex rel. Raber v. Hongliang Wang) is published on Counsel Stack Legal Research, covering Court of Appeals of Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State ex rel. Raber v. Hongliang Wang, 286 P.3d 1085, 230 Ariz. 476, 642 Ariz. Adv. Rep. 13, 2012 WL 3864993, 2012 Ariz. App. LEXIS 142 (Ark. Ct. App. 2012).

Opinion

OPINION

HOWE, Judge.

¶ 1 Hongliang Wang appeals the trial court’s grant of summary judgment in favor of the State of Arizona, ex rel. David Raber (“State”) on its claim for reimbursement of medical costs. Wang argues the trial court erred in failing to apportion attorneys’ fees under the common fund doctrine when determining the amount of the award. Finding no error, we affirm.

FACTS AND PROCEDURAL HISTORY

¶ 2 Wang was hit by a car while riding his bicycle. He suffered injuries and received $15,758.26 of medical care and treatment paid for by State-sponsored health insurance for employees. Wang later settled his claim against the car’s driver for $50,000. He incurred $16,666 in attorneys’ fees and $250.85 in costs in obtaining the settlement.

¶ 3 The State sought reimbursement of $15,758.26 in medical costs from Wang’s settlement and moved for summary judgment under Arizona Revised Statutes (“A.R.S.”) section 12-962(A) (West 2012).1 That statute allows the State to recover the reasonable value of medical care and treatment it has provided to a person injured from a third party’s tortious conduct. The recovery is limited “to the extent that such person has received money in settlement of the claim or satisfaction of a judgment against the third party.” A.R.S. § 12-962(B)(3).

¶ 4 Wang moved for summary judgment as well, arguing that the State was not entitled to recovery because it had not proved that it had directly paid for the medical care and because Wang’s settlement included compensation for pain and suffering to which the State was not entitled. He alternatively argued that if the State was entitled to recover, the common fund doctrine should reduce any recovery by a pro-rata share of the attorneys’ fees and costs he had incurred in obtaining settlement. Relying on Arizona Department of Administration v. Cox, 222 Ariz. 270, 213 P.3d 707 (App.2009), the court granted the State’s motion for summary judgment for the full amount of its claim and declined to apportion Wang’s attorneys’ fees against the claim.

¶ 5 Wang timely appealed. We have jurisdiction pursuant to Article 6, Section 9, of the Arizona Constitution, and A.R.S. §§ 12-120.21(A) and -2101(A)(1).

DISCUSSION

¶ 6 Contrary to his position before the trial court, Wang concedes on appeal that the State has a right to recover medical costs pursuant to § 12-962(B)(3), but argues that the trial court erred by failing to reduce the State’s award by a pro-rata share of his attorneys’ fees and costs under the common fund doctrine. Because the underlying facts are undisputed, “we determine de novo whether the trial court[ ] correctly interpreted and applied the relevant substantive law.” Hobson v. Mid-Century Ins. Co., 199 Ariz. 525, 528, ¶ 6, 19 P.3d 1241, 1244 (App.2001). We find that the trial court properly declined to apply the common fund doctrine to reduce the State’s award.

¶ 7 The common fund doctrine provides that a person who employs “attorneys for the preservation of a common fund may be entitled to have them attorney’s fees paid out of that fund.” LaBombard v. Samaritan Health Sys., 195 Ariz. 543, 548, ¶ 22, 991 P.2d 246, 251 (App.1998). The doctrine (1) en[478]*478sures fairness to the successful litigant, whose recovery may be consumed by the expenses of litigation; (2) prevents the unjust enrichment of others who benefit in the fund and should share the burden of recovery; and (3) encourages the attorney to diligently litigate a claim by ensuring payment of his or her fees. Id. at 549, ¶ 22, 991 P.2d at 252. Because the common fund doctrine is a rule of equity, however, it will not be applied if a statute precludes apportionment of attorneys’ fees. Id.

¶ 8 Section 12-962 does not permit the apportionment of attorneys’ fees and costs under Wang’s circumstances. The State’s reimbursement claim for the reasonable value of the medical care and treatment under § 12-962(A) is limited to the amount of money that the injured person has “received” in settlement of the tort claim that gave rise to the need for medical care and treatment. A.R.S. § 12-962(B)(3). Wang’s attorneys’ fees and costs were not “received” for purposes of § 12-962(B)(3) because they were deducted from the settlement before any funds were disbursed to him. See Cox, 222 Ariz. at 279, ¶¶ 36-37, 213 P.3d at 716 (holding that money received in settlement refers “to the injured person’s net recovery after paying attorney fees and costs”; a client does not “receive” attorneys’ fees under the statute because a lawyer has a claim to such fees “as soon as a settlement agreement is reached.”); see also Black’s Law Dictionary 1140 (5th ed. 1979) (“Receive” means to “take into possession and control; accept custody of collect.”).

¶ 9 The Arizona Supreme Court has recognized that in a contingency fee arrangement, attorneys’ fees are deducted from a judgment before any funds are disbursed to the client. Linder v. Lewis, Roca, Scoville & Beauchamp, 85 Ariz. 118, 123, 333 P.2d 286, 289 (1958). In Linder, a client hired a law firm to file a tort action and agreed to pay the firm a contingency fee of one-third of any judgment obtained against the tortfeasor. Id. The law firm obtained a judgment, and the client subsequently assigned his rights in the judgment to a third party. Id. at 121, 333 P.2d at 288. When the third party attempted to collect the judgment, the law firm intervened to obtain payment of its attorneys’ fees from the judgment before it was paid to the third party. Id. at 121-22, 333 P.2d at 288-89.

¶ 10 The issue on appeal was whether the law firm’s right to obtain payment of its fees from the judgment was superior to the third party’s right in the judgment. Id. at 123, 333 P.2d at 289. The Court found that the client had relied on the judgment itself to fund payment of the attorneys’ fees, thereby creating a “charging lien” against the judgment; therefore, the client could not assign that portion of the judgment necessary to pay the attorneys’ fees:

Where an attorney has a charging lien against a fund, a portion to the amount of his claim belongs to the attorney and cannot be assigned by the judgment creditor, and whoever receives it under an assignment is, in justice, to be considered as holding to the attorneys’ use and benefit.

Id.

¶ 11 Arizona eases since Linder have recognized that attorneys have a right superior to the client or other lien holders when the attorneys’ efforts created the funds in dispute. See, e.g., Langerman Law Offices, P.A v. Glen Eagles at Princess Resort, LLC, 220 Ariz. 252, 254, ¶ 9, 204 P.3d 1101

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Bluebook (online)
286 P.3d 1085, 230 Ariz. 476, 642 Ariz. Adv. Rep. 13, 2012 WL 3864993, 2012 Ariz. App. LEXIS 142, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-rel-raber-v-hongliang-wang-arizctapp-2012.