TC Power Ltd. v. Guardian Industries Corp.

969 F. Supp. 2d 839, 2013 WL 4546616, 2013 U.S. Dist. LEXIS 122254
CourtDistrict Court, E.D. Michigan
DecidedAugust 28, 2013
DocketCase No. 09-13330
StatusPublished
Cited by1 cases

This text of 969 F. Supp. 2d 839 (TC Power Ltd. v. Guardian Industries Corp.) is published on Counsel Stack Legal Research, covering District Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
TC Power Ltd. v. Guardian Industries Corp., 969 F. Supp. 2d 839, 2013 WL 4546616, 2013 U.S. Dist. LEXIS 122254 (E.D. Mich. 2013).

Opinion

OPINION AND ORDER

LAWRENCE P. ZATKOFF, District Judge.

I. INTRODUCTION

This matter is before the Court on Plaintiffs counsel’s Motion to Enforce Charging Lien and Settlement Agreement [dkt. 29]. The Motion has been fully [840]*840briefed. The Court finds that the facts and legal arguments are adequately presented in the parties’ papers such that the decision process would not be significantly aided by oral argument. Therefore, pursuant to E.D. Mich. L.R. 7.1(f)(2), it is hereby ORDERED that the Motion be resolved on the briefs submitted. For the following reasons, Plaintiffs counsel’s Motion is DENIED.

II. BACKGROUND

The law firm of McAlpine & Associates (“McAlpine”) represented Plaintiff during the pendency of this action and eventually helped negotiate a Settlement Agreement (“the Agreement”) between the parties. Consistent with the Agreement and upon the parties’ stipulation, the Court entered an Order dismissing this case with prejudice on March 4, 2011. See Dkt. 28. Although it provided legal services to Plaintiff in connection with the Agreement, McAlpine was not a party to it.

The Agreement required Defendants to pay $90,000 to Plaintiff in exchange for Plaintiff performing certain work for Defendant. At the behest of McAlpine, the Agreement also included a requirement that the payment be made via separate installments of $10,000 and $80,000, and that the installments be deposited into McAlpine’s client trust account opened for Plaintiff. McAlpine alleges to have made several attempts via telephone and email to ensure that Defendants made the payments to the trust account. Yet, Defendants nevertheless made the payments directly to Plaintiff.

In or around July 2012, after receiving the settlement amounts from Defendants, Plaintiff filed for bankruptcy in the United Kingdom — before paying McAlpine in full for services rendered in connection with the Settlement Agreement. McAlpine asserts that, as of the date of this Motion, Plaintiff owed the firm $30,898.76 in outstanding legal fees. McAlpine subsequently filed the instant Motion seeking to recover the outstanding amount from Defendants.

III. ANALYSIS

McAlpine asks the Court to compel Defendants to pay Plaintiffs outstanding fees on two distinct grounds, claiming: 1) that it effectuated a charging lien that was violated by Defendants when they made the installment payments directly to Plaintiff; and 2) that it was a third-party beneficiary of the Agreement that could enforce the Agreement against Defendants. In response, Defendants argue first that the Court need not and should not exercise supplemental jurisdiction over the attorney fee dispute and that, notwithstanding this, McAlpine cannot establish the existence of any charging hen or third-party beneficiary rights that would compel Defendant to pay McAlpine’s fees. As further discussed below, the Court agrees with Defendants and finds that it need not and should not exercise jurisdiction in this case.

In Kalyawongsa v. Moffett, 105 F.3d 283 (6th Cir.1997), the Sixth Circuit addressed the issue of whether a court has jurisdiction over attorney fee disputes arising out of the main action before that court:

Lawyers are officers of the court. Their fees are part of the overall costs of the underlying litigation. Resolution of related fee disputes is often required to provide a full and fair resolution of the litigation. Unlike a state court judge hearing a separate contract action, a federal judge who has presided over a case is already familiar with the relevant facts and legal issues. Considerations of judicial economy are at stake. Thus, we hold that although attorneys’ fee arrangements are contracts under state law, the federal court’s interest in fully [841]*841and fairly resolving the controversies before it requires courts to exercise supplemental jurisdiction over fee disputes that are related to the main action. The fact that the district court here incorporated the fee awards into the judgment by essentially perfecting a lien which it had the power to declare does not change this jurisdictional analysis.

105 F.3d at 287-88 (emphasis added).

Based on the above portion of Kalyawongsa, McAlpine argues that the Court is required to exercise supplemental jurisdiction pursuant to 28 U.S.C. § 1367(a) over any attorney fee controversy that is related to the main action. The Court finds, however, that such a reading is too strict and is at odds with traditional notions of supplemental jurisdiction that grant the district courts discretion in exercising jurisdiction.

First, as noted by at least two cases in this district, it is questionable whether the Sixth Circuit used the word “requires” in Kalyawongsa to mean that a district court must exercise jurisdiction over any attorney fee dispute where that dispute is related to the main action. See Fairlane Car Wash, Inc. v. Knight Enterprises, Inc., 07-10165, 2011 WL 164108 at *2-3 (E.D.Mich. Jan. 19, 2011); United States v. Four Hundred Seventy Seven (477) Firearms, 09-CV-10463, 2011 WL 4062378 at *2-3 (E.D.Mich. Sept. 13, 2011). In this regard, it is notable that the Kalyawongsa court looked to prior decisions by the Second, Third, Ninth, and Tenth Circuits. Kalyawongsa, 105 F.3d at 286-87. These cases — comprising the foundation of the court’s decision — used permissive language to describe district courts’ authority to exercise supplemental jurisdiction in attorney fee disputes. See Cluett, Peabody & Co. v. CPC Acquisition Co., 863 F.2d 251, 256 (2d Cir.1988) (“[i]t is well settled that a federal court may, in its discretion, exercise ancillary jurisdiction to hear fee disputes between litigants and their attorneys when the dispute relates to the main action.”) (emphasis added) (quotations omitted); Curry v. Del Priore, 941 F.2d 730 (9th Cir.1991) (“fee disputes arising from litigation pending before a district court fall within that court’s ancillary jurisdiction. Ancillary jurisdiction permits courts to adjudicate matters ... [that] affect the court’s ability either to render an efficacious judgment or to control the litigation before it.”) (emphasis added); Jenkins v. Weinshienk, 670 F.2d 915 (10th Cir.1982) (“[a]neillary jurisdiction rests on the premise that a federal court acquires -jurisdiction of a case or controversy in its entirety. Incident to the disposition of the principal issues before it, a court may decide collateral matters necessary to render complete justice.”) (emphasis added). The Kalyawongsa court itself even acknowledged and endorsed the permissive tone of these other rulings, noting that “other circuits have allowed supplemental jurisdiction over attorneys’ fees disputes[,]” and that the “reasoning of [these] Circuits [was] sound.” Kalyawongsa, 105 F.3d at 286-87 (emphasis added).

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969 F. Supp. 2d 839, 2013 WL 4546616, 2013 U.S. Dist. LEXIS 122254, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tc-power-ltd-v-guardian-industries-corp-mied-2013.