United States v. Olson

4 F.3d 562, 1993 U.S. App. LEXIS 18317, 1993 WL 267356
CourtCourt of Appeals for the Eighth Circuit
DecidedJuly 21, 1993
DocketNo. 92-3202
StatusPublished
Cited by11 cases

This text of 4 F.3d 562 (United States v. Olson) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Olson, 4 F.3d 562, 1993 U.S. App. LEXIS 18317, 1993 WL 267356 (8th Cir. 1993).

Opinion

HENDREN, District Judge.

This appeal involves a claim for attorneys’ fees in connection with a bankruptcy matter which claim was initially denied by a bankruptcy court and then, on appeal, by the district court’s affirmance of that denial.

The claimants are the appellants, William L. Needier of William L. Needier & Associates, Ltd. and Frank C. Heinisch of the Heinisch Law Firm (hereinafter called the “lawyers”) who represented Ted and Sandra Olson (the “Olsons”) in a Chapter 11 bankruptcy which was filed March 1,1982 in U.S. Bankruptcy Court, District of Nebraska.1 By their legal advice and counseling, the lawyers, over the protests and objections of several creditors, rendered services which facilitated the harvesting of a substantial corn crop in 1982. After payment of certain administrative claims authorized by the bankruptcy court, there remained of the proceeds from 1982 corn crop some $294,000.00 (the “fund”). Numerous parties — not including the lawyers — claimed an interest in this fund and, by agreement of Olsons and all such claimants, the fund was placed in an escrow account with Overland National Bank of Grand Island (the “bank”). The bankruptcy court ordered that the liens of all claimants to the 1982 corn crop be transferred to the fund and that any entity or individual with a claim to the 1982 crop proceeds make application for payment of that claim out of the fund by February 25,1983. The lawyers made no such application. Thereafter, on January 27, 1984, the first bankruptcy case was dismissed by the bankruptcy court. The United States District Court for the District of Nebraska affirmed this dismissal and there was no appeal from that affirmance.

On March 15,1984, the lawyers obtained a judgment against Ted Olson (but not against Sandra Olson) in Nebraska state court for some $359,030.33, plus costs and interest (the “lawyers’ judgment”).

On July 27, 1984, the bank filed an inter-pleader action in district court and paid the fund into the registry of the court. On May 13, 1985, Olsons filed a second Chapter 11 bankruptcy petition.2

On July 8, 1984, the district court transferred the interpleader action filed by the bank over to the bankruptcy court for disposition as an adversary proceeding in connection with the bankruptcy case.

The bankruptcy court denied the lawyers’ claims for a lien on the fund holding, inter alia, that the lawyers (a) could not properly claim a lien under the Nebraska Attorney Lien Statute (Nebraska Revised Statute § 7-108 (reissued 1987)); (b) could not claim an interest in the fund based upon a judgment lien; and (c) could not claim an interest in the fund as a matter of equity. In re Olson, 101 B.R. 134 (Bankr.D.Neb.1989).

The decision of the bankruptcy court was affirmed by the United States District Court for the District of Nebraska (Hon. William G. Cambridge) in a Memorandum Opinion, and Order dated July 6,1992, and filed for record July 8, 1992.

Standard of Review

A district court may review a bankruptcy court’s legal conclusions de novo, but the bankruptcy court’s findings of fact shall not be set aside unless clearly erroneous. Bankr.R. 8013; See e.g., In re Hunter, 771 F.2d 1126 (8th Cir.1985); In re Martin, 761 F.2d 472 (8th Cir.1985); See also Bankr.R. 7052 (Fed.R.Civ.P. 52 applies in adversary bankruptcy proceedings). The circuit court, as the second court of review, conducts an independent review of the bankruptcy court’s [565]*565judgment asking whether the bankruptcy court’s legal conclusions are correct and whether its factual findings are clearly erroneous. Wegner v. Grunewaldt, 821 F.2d 1317, 1320 (8th Cir.1987).

Accordingly, we review the appellants’ contentions based on the foregoing standards of review.

Discussion

The central issue on appeal is whether the lawyers, in a second bankruptcy, should have a lien on a fund generated during the first bankruptcy when no such lien was claimed before the first bankruptcy was finally terminated. Nebraska law governs this issue. In re Pierce, 809 F.2d 1356, 1359 (8th Cir.1987) (nature, extent and validity of claimed attorneys’ lien in federal bankruptcy proceedings is determined by state law).

The lawyers assert their lien under several different theories, all of which will be discussed:

Statutory Attorney’s Lien Theory

The lawyers claim they are entitled to an attorneys’ lien on the fund under Nebraska law and that the lower courts erred in failing to so hold.

In Nebraska, the only statutory provision providing for a lien for an attorney’s fee is Nebraska Code § 7-108 which reads as follows:

An attorney has a lien for a general balance of compensation upon any papers of his client which have come into his possession in the course of his professional employment; and upon money in his hands belonging to his client, and in the hands of the adverse party in an action or proceeding in which the attorney was employed from the time of giving notice of the lien to that party.

The above statute, in derogation of common law, must be strictly construed. Lewis v. Gallemore, 175 Neb. 279, 121 N.W.2d 388, 391 (1963).

The account held by the bank was created pursuant to an order of the bankruptcy court in the first bankruptcy case which directed that the proceeds of the 1982 corn crop be deposited in an escrow account selected by the parties. The lawyers were not among the “parties” making this agreement, and, in fact, were not at that time claiming a lien for services rendered. The bank was acting for the benefit of all known claimants to the fund. It had no interest in the proceeds and was completely indifferent as to which claimant would ultimately get all or part of the fund. Other than having an interest in obtaining their escrow fees, it is undisputed that the bank had no beneficial interest in the funds thus placed in escrow.

Where it appears that money is neither in the hands of the attorney nor in the hands of an adverse party — but rather is in the hands of a third party — an attorney may not have a lien under Nebraska law. See Lewis v. Gallemore, 175 Neb. 279, 121 N.W.2d 388 (Neb.1963); and Culhane v. Anderson, 17 F.2d 559 (8th Cir.1927). Under Nebraska law, a bill of interpleader is an equitable remedy whereby a disinterested stakeholder in possession of a fund or other property claimed by rivals may require the rivals to litigate among themselves as to the issue of the ownership without embroiling the stakeholder. See Burke Lumber & Coal Co. v. Anderson, 162 Neb. 551, 76 N.W.2d 630 (1956).

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Cite This Page — Counsel Stack

Bluebook (online)
4 F.3d 562, 1993 U.S. App. LEXIS 18317, 1993 WL 267356, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-olson-ca8-1993.