BURK v. TEUFEL

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NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES. See Ariz. R. Supreme Court 111(c); ARCAP 28(c); Ariz. R. Crim. P. 31.24 DIVISION ONE FILED: 07/03/2012 RUTH A. WILLINGHAM, CLERK BY: sls IN THE COURT OF APPEALS STATE OF ARIZONA DIVISION ONE In re the Marriage of: ) ) ANGELA T. BURK, ) ) Petitioner/Appellee, ) ) v. ) ) DENNIS E. TEUFEL, ) ) Respondent/Appellee. ) __________________________________) ) UDALL, SHUMWAY & LYONS, P.L.C., ) ) Real Party in Interest/ ) Appellant. ) __________________________________) No. 1 CA-CV 11-0317 DEPARTMENT D MEMORANDUM DECISION (Not for Publication Rule 28, Arizona Rules of Civil Appellate Procedure) Appeal from the Superior Court in Maricopa County Cause No. FN2008-002605 FN2008-091601 (Consolidated) The Honorable M. Jean Hoag, Retired Judge AFFIRMED AND REMANDED Angela T. Burk In Propria Persona Mariscal, Weeks, McIntyre & Friedlander, P.A. By Robert L. Schwartz Leonce A. Richard Attorneys for Respondent/Appellee Tempe Phoenix Udall, Shumway & Lyons, P.L.C. By Steven H. Everts David R. Schwartz Attorneys for Real Party in Interest/Appellant Mesa S W A N N, Judge ¶1 This is an attorney s fees collection case. Appellant Udall, Shumway & Lyons, P.L.C. ( the Firm ) represented appellee Angela T. Burk ( Wife ) with respect to the dissolution of her marriage with appellee Dennis E. Teufel ( Husband ). When post- decree disagreements arose between Husband and Wife concerning the amount to which Wife was entitled for spousal maintenance and attorney s fees, Husband s funds were deposited into the Firm s trust account to preserve resolution of the disputes. the status quo pending The parties eventually purported to settle all claims between them, including all attorney s fees claims, with undisbursed Wife portion agreeing of the to the funds immediate held in release trust. of The the Firm claimed unsuccessfully that it has a lien on those funds to secure the unpaid balance of its fees. Wife acquired only a claim to the We hold that because funds -- and adjudicated the owner of them -- no lien attached. was never We therefore affirm the superior court s rejection of the claimed lien. FACTS AND PROCEDURAL HISTORY ¶2 In July 2009, after a entered a decree of dissolution. 2 trial, the superior court The court ordered Husband to pay Wife a lump sum of $250,000 for spousal maintenance, and $74,237 for attorney s fees and costs incurred through March 2009. The court further ordered Wife s counsel to file a supplemental affidavit for fees and costs incurred after March 2009. ¶3 the Husband moved for a new trial regarding, inter alia, spousal maintenance and attorney s fees award, and also moved to stay enforcement proceedings pending resolution of his motion for new trial. Before the motion for new trial was decided, Wife filed an application for a writ of garnishment on Husband s bank account. The garnishee bank answered and stated that it was holding the sum of $334,626, and Husband requested a garnishment hearing. Shortly thereafter, the court awarded $20,000 in additional, post-March 2009 attorney s fees and costs to Wife based on the supplemental affidavit provided pursuant to the court s earlier order. ¶4 At a later Resolution Management Conference, the parties agreed that the total amount of spousal maintenance and attorney s fees awarded to Wife (excluding interest), adjusted for uncontested $264,237. offsets but not for contested offsets, was The court quashed the garnishment and ordered that the sum held by the bank be treated as follows: (1) $125,137 plus interest was to be disbursed to Wife; (2) $4,243 in exempt funds was to be disbursed to Husband; and (3) the balance of the 3 sum was to be placed in [the Firm s] Trust Account for disbursement according to Court Order and remain held/frozen pending a final order of the Court. The court did not specify whether the disbursement to Wife was to be attributed to the spousal maintenance award, the attorney s fees awards, or both. ¶5 Pursuant to the court s orders, the bank transferred $330,347 (the total amount held, minus the exempt funds ordered to Husband) to the Firm s trust account. Wife and the Firm then agreed between themselves that part of the $125,137 disbursement to Wife would be used to pay the Firm for all charges incurred through November 2009. ¶6 Thereafter, the court denied Husband s motion for new trial with respect to the spousal maintenance and attorney s fees award, and Husband filed a notice of appeal. Other post- decree disputes continued in the superior court. During the course of these disputes, the court ordered Husband [to] release an additional $30,000, which was then disbursed to Wife from the funds authorized the held release disbursed to Wife. completed Wife disagreed, award the of trust an account. additional Husband $45,624 that also was Husband asserted that these disbursements satisfaction maintenance in of the contending was still spousal that a maintenance portion outstanding award, but of the spousal because the initial $125,137 disbursement had been, in part, for the two attorney s 4 fees awards. Wife then moved for additional attorney s fees and costs, requesting fees incurred since July 2009. ¶7 Before the court resolved the parties dispute concerning the characterization of the $125,137 disbursement or decided Wife s motion parties personally for additional negotiated and attorney s entered into a fees, the settlement agreement that purported to resolve all disputed claims between them, including claims. As all part spousal of the maintenance settlement and attorney s agreement, and fees upon her receipt of a settlement payment from Husband, Wife agreed to immediately direct [Husband] . . . of and all authorize of the the remaining release garnished to funds currently being held in trust by her attorney. ¶8 After Husband s counsel filed notice of the parties settlement with the court, a dispute arose between Husband and the Firm release regarding of the the funds settlement held in the agreement s trust directive account. The for Firm contended that it had a security interest or charging lien in those funds pursuant to its fee agreement with Wife, and objected to any disbursement until Wife s account with the Firm was paid. Husband argued that the funds should immediately be disbursed to him pursuant to the terms of the settlement. parties and their counsel eventually stipulated to The a disbursement of all but $40,000 (roughly equal to the amount 5 claimed owing from Wife to the Firm), and the court ordered that this amount remain in the trust account pending further order. ¶9 The court initially remarked that it was inclined to enforce the previous attorney s fees and costs awards, and that the trust account funds did not belong to Husband because they were garnished. The court ultimately ruled, however, that the Firm did not have a charging lien or security interest in the funds remaining in the trust account, and reiterated its order that this $40,000 would remain in the Firm s trust account as a reserve to cover the Firm s disputed attorney fees claim. ¶10 The Firm thereafter withdrew from its representation of Wife and timely filed a notice of appeal on its own behalf. Citing the pending notice of appeal, the superior court declined to consider $40,000. Husband s later motion for the release of the The $40,000 remains in the trust account. JURISDICTION ¶11 initial Though neither party raises the issue, we must as an matter determine consider this appeal. whether we have jurisdiction to Sorenson v. Farmers Ins. Co. of Ariz., 191 Ariz. 464, 465, 957 P.2d 1007, 1008 (App. 1997). ¶12 party. An appeal generally must be taken by an aggrieved ARCAP 1 ( An appeal may be taken by any party aggrieved by the judgment. ); Farmers Ins. Grp. v. Worth Ins., 8 Ariz. App. 69, 71, 443 P.2d 431, 433 (1968) ( It is a prerequisite to 6 our appellate jurisdiction that the appellant be a party aggrieved by the judgment or order from which the appeal is taken. ). The Firm was not a party to the proceedings below. The Firm was, however, aggrieved by the court s conclusion that it had no charging lien or security interest in the funds. The Firm had a direct, substantial, and immediate pecuniary interest in that ruling, and its interests were adversely affected by the ruling. See Douglas v. Governing Bd. of Window Rock Consol. Sch. Dist. No. 8, 221 Ariz. 104, 108, ¶ 7, 210 P.3d 1275, 1279 (App. 2009) (describing indicia of a grievance for purposes of appellate jurisdiction). In these circumstances, we have jurisdiction over the Firm s timely appeal pursuant to A.R.S. § 12-2101(A)(2) and (4). See Wieman v. Roysden, 166 Ariz. 281, 284, (App. 802 P.2d 432, 435 1990) (non-party attorney was aggrieved by sanctions imposed against him, and was therefore permitted to appeal from the portion of the judgment affecting him). STANDARD OF REVIEW ¶13 This appeal requires us to consider: (1) the availability of a contractual lien pursuant to the fee agreement between Wife and the Firm; and (2) charging lien pursuant to Arizona law. contract interpretation de novo. the availability of a We review issues of Ahwatukee Custom Estates Mgmt. Ass n, Inc. v. Turner, 196 Ariz. 631, 634, ¶ 5, 2 P.3d 1276, 7 1279 (App. 2000). We generally review the application of an equitable remedy (such as a charging lien, Millsap v. Sparks, 21 Ariz. 317, 320, 188 P. 135, 136 (1920)) for an abuse of discretion, but aspects of the court s decision -- including a decision to deny the remedy based on a legal conclusion -- may be reviewed de novo. See McCloud v. State, 217 Ariz. 82, 86-87, ¶ 10, 170 P.3d 691, 695-96 (App. 2007). DISCUSSION ¶14 The Firm contends that it has a contractual security interest in the undisbursed trust account funds pursuant to its fee agreement with Wife, and a charging lien pursuant to Arizona law. ¶15 A legal prerequisite to either a contractual or common-law lien on the funds is Wife s ownership of or legal entitlement to the funds. The fee agreement (to which Husband is not a party) specifies that the Firm shall have a security interest in property recovered, awarded or obtained pursuant to any action filed on behalf of [Wife] by [the Firm], or otherwise obtained by [Wife] pursuant to the representation. Similarly, Arizona law provides that a charging lien may only attach to monies received via a judgment or settlement in favor of the lienor-attorney s client. Langerman Law Offices, P.A. v. Glen Eagles at the Princess Resort, LLC, 220 Ariz. 252, 254, ¶ 6, 204 P.3d 1101, 1103 (App. 2009) ( To establish that it has a common- 8 law charging lien on the judgment, [the law firm] must demonstrate, at a minimum, that it is owed attorneys fees under its contingency fee contract with [the client] and that there is some judgment in [the client s] favor to which a charging lien can attach. ); Richfield Oil Corp. v. La Prade, 56 Ariz. 100, 105, 105 P.2d 1115, 1118 (1940) ( It is true that if the proceeds of a settlement pass through the hands of plaintiff s attorneys, they have an attorney s lien thereon for the amount of their fee . . . . ). ¶16 Here, Wife never obtained remaining in the trust account. ownership of the funds The trust account funds were initially identified and held pursuant to Wife s application for a writ of garnishment, but because no writ was ever entered, the funds were not payable to Wife except by court order. See Gillespie Land & Irr. Co. v. Jones, 63 Ariz. 535, 542, 164 P.2d 456, 459 (1945). As the court ordered, the funds were held/frozen until disbursements were required of or authorized by Husband. funds did ordered The Firm s reliance on the court s finding that the not that belong Husband to Husband could not is unavailing remove the -- funds the court arbitrarily because they were held in the trust account, but the funds did not belong to Wife until ordered to her. ¶17 The $40,000 remaining in the trust account has not been ordered or otherwise directed to Wife. 9 It remained in the trust account because there was a pending dispute as to Wife s entitlement -- a dispute she has purported to settle without payment of the funds to her. ¶18 Had the court adjudicated the dispute in Wife s favor, the Firm would have had a lien on the funds. But by purporting to relinquish her own claim against Husband for the fees she owed her counsel, Wife prevented entry of an order that would have vested her with a right to which a lien could attach. In effect, if the settlement agreement is interpreted to resolve the last remaining attorney s fee dispute, Wife has subjected herself to liability for the fees and insulated Husband (and the funds held in trust) from liability. ¶19 As of the time this appeal was commenced, therefore, the Firm did not have a lien on the funds in its trust account.1 But at that time, the court had not enforced the settlement agreement by ordering the return of the funds to Husband, and the question of the interpretation of the settlement agreement is not before us on this appeal. is internally inconsistent. Indeed, the court s own order First, the order states that Husband and Wife have, apparently, reached an agreement whereby Wife relinquished all claims to 1 the monies garnished from It is possible that the Firm could have asserted a valid contractual or common-law lien against funds ordered disbursed from the trust account or otherwise obtained by Wife. The Firm did not do so. 10 Husband s bank account. And in the next sentence, the court ordered that $40,000 be retained in the trust account as a reserve to cover the Firm s disputed attorney fees claim. This language leads us to conclude that the court may have been of the view that further Husband and Wife. proceedings were warranted as between On remand, the court may consider whether there remain any issues with respect to the settlement agreement that might necessitate a final resolution of Wife s request for fees, or whether the settlement agreement is dispositive of the issue as between Wife and Husband. Our decision does not preclude the Firm from pursuing any other claim for relief.2 CONCLUSION ¶20 We affirm the superior court s determination that the Firm had no lien rights in the funds held in trust. We remand so that the court can determine whether the settlement agreement is dispositive of Wife s remaining claim for fees, and whether to order the disbursement of the remaining funds to Husband. ¶21 We deny the Firm s request for attorney s fees and costs on appeal. Not only is the Firm not the prevailing party, but the Firm is ineligible for an award of its appellate fees in 2 We do not address the Firm s arguments on appeal that the parties settlement was collusive and should be set aside, and that Husband s counsel acted unethically with respect to the settlement. Those issues are beyond the scope of this appeal. The Firm s argument that it is entitled to a fee award against Husband under A.R.S. § 25-324 is similarly beyond the scope of this appeal. 11 any circumstances because it is self-represented. Connor v. Cal-Az Props., Inc., 137 Ariz. 53, 56, 668 P.2d 896, 899 (App. 1983). In the exercise of our discretion, we deny Husband s request for attorney s fees on appeal. As the prevailing party, Husband is entitled to an award of costs upon compliance with ARCAP 21. /s/ ___________________________________ PETER B. SWANN, Presiding Judge CONCURRING: /s/ ____________________________________ MICHAEL J. BROWN, Judge /s/ ____________________________________ JON W. THOMPSON, Judge 12

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