Michael W. Wittkop, et al., Appellants, vs. Gould Holding Corp., Defendant, Fredrikson & Byron, P.A., attorney's lien claimant, Respondent.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

C8-03-69

 

 

Michael W. Wittkop, et al.,

Appellants,

 

vs.

 

Gould Holding Corp.,

Defendant,

 

Fredrikson & Byron, P.A., attorney's lien claimant,

Respondent.

 

Filed July 22, 2003

Affirmed in part, reversed in part, and remanded

Lansing, Judge

 

Chisago County District Court

File No. C401540

 

 

David R. Knodell, Knodell Law Office, 20305 County Road 50, Corcoran, MN  55340 (for appellants)

 

John M. Koneck, Fredrikson & Byron, P.A., 4000 Pillsbury Center, 200 South Sixth Street, Minneapolis, MN  55492 (for respondent)

 

            Considered and decided by Peterson, Presiding Judge, Lansing, Judge, and Wright, Judge.

U N P U B L I S H E D   O P I N I O N

LANSING, Judge

            This appeal from an order enforcing an attorneys' lien involves two separate actions.  In the first action, Fredrikson and Byron (Fredrikson) obtained a settlement on

behalf of a corporation and placed an attorneys' lien on the settlement fund.  In the second action, the district court dissolved the corporation and disbursed to shareholders Michael Wittkop and Kathleen Casiday the settlement fund minus the amount of the attorneys' lien.  On Wittkop and Casiday's motion, the district court ordered Fredrikson  to show cause why the settlement fund should not be paid to Wittkop and Casiday.  Following a hearing, the district court granted Fredrikson the full amount of its lien.  Wittkop and Casiday appeal, challenging both the validity and amount of the lien.  We affirm in part, reverse in part, and remand for additional findings.

F A C T S

            Michael Wittkop and Kathleen Casiday and two other individuals, Edward Gould and Michael Corwin, together owned all the shares in Gould Holding Corporation (GHC).  The corporation's principal asset was an option to purchase a parcel of real property for $200,000.  Casiday and Wittkop purportedly advanced $200,000 to GHC for purposes of exercising the option.  The owners of the land sued GHC and Wittkop and Gould individually seeking a declaration that the GHC option was void.  Fredrikson & Byron (Fredrikson) appeared on behalf of Gould and GHC in the option dispute.  Wittkop was separately represented. 

During the pendency of the option litigation in Anoka County District Court (the "Anoka litigation"), Wittkop and Casiday brought a separate action in Chisago County District Court against GHC, Gould, and Corwin seeking appointment of a receiver for GHC, dissolution of GHC, distribution of its assets to Wittkop and Casiday, and a money judgment (the "Chisago litigation").  Wittkop and Casiday later amended the complaint to add counts of fraud and conversion against Gould.

The Anoka litigation was ultimately resolved by settlement.  Under the terms of the settlement agreement, the plaintiffs agreed to pay GHC $200,000, which was to be deposited into an escrow account requiring the signatures of both Wittkop and Gould for release of any of the funds.  After the Anoka litigation was settled, Fredrikson gave notice of an attorneys' lien on the interests of Gould and GHC in the settlement fund.

            Nearly a year later, the Chisago litigation was partially resolved when the district court granted Wittkop and Casiday summary judgment on all counts.  On claims against GHC for money advanced, the district court awarded Wittkop approximately $48,000 and Casiday a judgment of approximately $154,000.  On Wittkop and Casiday's claims against Gould and GHC for dissolution of GHC and other equitable relief, the district court ordered the contents of the Anoka settlement fund to be disbursed to Wittkop and Casiday, minus $22,124, the amount of Fredrikson's attorneys' lien.  The district court simultaneously ordered Fredrikson to show cause why the remaining $22,124 held in the escrow account "should not be distributed to Michael W. Wittkop and Kathleen Casiday for application by them toward payment of the judgments granted to them."

The parties briefed the issue of the validity and amount of the attorneys' lien extensively, with each side submitting two memoranda of law.  After oral argument, the district court issued an order enforcing Fredrikson's attorneys' lien.  This appeal followed.

D E C I S I O N

I

            The attorneys' lien statute establishes that "[a]n attorney has a lien for compensation whether the agreement for compensation is expressed or implied * * * upon the interest of the attorney's client in any money or property involved in or affected by any action or proceeding in which the attorney may have been employed[.]"  Minn. Stat. § 481.13, subd. 1(a)(2) (2002)[1].  Wittkop and Casiday argue that the district court erred in granting Fredrikson's lien against GHC's interest in the Anoka settlement fund because GHC was not Fredrikson's client.  Wittkop and Casiday rest this argument on the fact that Fredrikson's engagement letter names only Gould as the party Fredrikson agreed to represent.

Our consideration of whether GHC was Fredrikson's client is complicated by the fact that the district court made no findings on this issue.  It is undisputed, however, that Fredrikson appeared as counsel for GHC and that Fredrikson provided legal services which inured to the benefit of the corporation.  The settlement agreement also lists Fredrikson as GHC's attorney, and the agreement was signed by both Wittkop and Casiday.  Wittkop disputes Fredrikson's characterization of Gould as president of GHC, but Gould's status as president is confirmed by GHC's amended articles of incorporation, which were signed by Wittkop.  As president, Gould had the authority to enter into a contract for legal services on behalf of GHC.  See Minn. Stat. § 302 A. 305, subd. 2(d) (2002) (recognizing authority of chief executive officer to sign and deliver contracts in the name of the corporation).  In these circumstances, we are not convinced that the district court erred in treating GHC as Fredrikson's client.

II

            Wittkop and Casiday contend that GHC did not have an interest in the Anoka settlement fund to which Fredrikson's lien could attach because the fund was ultimately awarded to Wittkop and Casiday.  Wittkop and Casiday rest this argument on language of the lien statute which subordinates attorneys' liens to "rights existing between the parties."  Minn. Stat. § 481.13, subd. 1(b) (2002).  

This argument fails for two reasons.  First, the Fredrikson lien was placed on property involved in litigation rather than on a judgment, and is therefore governed by Minn. Stat. § 481.13, subd. 1(a)(2) rather than § 481.13, subd. 1(b).  Compare Minn. Stat. § 481.13, subd. 1(a)(2) (recognizing an attorneys' lien "upon the interest of the attorney's client in any * * * property involved in * * * any action or proceeding in which the attorney may have been employed") with Minn. Stat. § 481.13, subd. 1(b) (recognizing an attorneys' lien "upon a judgment").  Section 481.13, subdivision 1(a)(2), does not contain the subordination-of-rights language relied on by Wittkop and Casiday.  Second, even if section 481.13, subdivision 1(b), did apply to the Fredrikson lien, Wittkop and Casiday did not receive an interest in the settlement funds until after Fredrikson had given notice of its lien.  Therefore at the time the lien attached, there were no pre-existing rights to the funds to which the lien could be subordinated.  GHC was the sole recipient of the settlement fund under the terms of the settlement agreement, and the fact that Wittkop and Gould had joint control over access to the escrow account has no bearing on the question of ownership of the contents of the account.  Wittkop and Casiday acquired an interest in the settlement funds only at the conclusion of the Chisago litigation, and therefore took control of the funds subject to Fredrikson's lien.

III

Wittkop and Casiday contend that the district court erred in enforcing Fredrikson's lien in the full amount of $22,123.54, because that amount exceeds the value of the services Fredrikson provided during the relevant period of the Anoka litigation.  The reasonable value of attorneys' fees is a question of fact which this court reviews under a standard of clear error.  Amerman v. Lakeland Dev. Corp., 295 Minn. 536, 537, 203 N.W.2d 400, 400-01 (1973). 

Our review of the district court's determination of the amount of the lien is hampered by the fact that the district court made no findings of fact on the amount or value of legal services provided.  The district court's memorandum states simply that a Fredrikson attorney "filed his lien for services provided by his firm * * * which brought about the settlement * * * .  Obviously, [he] is entitled to collect the fees due for the work done to reach a settlement."  Because Wittkop and Casiday contested the value of the services provided by Fredrikson, the court should have made specific findings on that question.  See Roberson v. Roberson, 296 Minn. 476, 478, 206 N.W.2d 347, 348 (1973) (stating that when record is not clear and facts are in dispute, finding of fact should be made). Fredrikson contends that the district court was not required to make factual findings because the order-to-show-cause procedure is "essentially a motion procedure" and findings of fact are unnecessary on decisions on motions.  We disagree.  Regardless of the label attached to a district court decision, the court must make sufficient findings to permit meaningful appellate review.  Minn. R. Civ. P. 52.01; Crowley Co. v. Metro. Airports Comm'n, 394 N.W.2d 542, 544-45 (Minn. App. 1986).

The absence of factual findings is particularly problematic because the underlying facts and the filed documents appear to preclude an award of the full amount of the lien against the GHC escrow account.  In the Anoka litigation, Fredrikson represented two separately named defendants, Gould and GHC.  Accordingly, Fredrickson's notice of attorneys' lien, filed with the Minnesota Secretary of State, states that the lien is "claimed for legal services rendered * * * to Edward Bruce Gould and Gould Holding Corp."  But the district court's order effectively requires one client, GHC, to pay for all of the legal services provided to both Gould and GHC.

Because the district court failed to make specific findings on the amount and value of legal services that Fredrikson provided to GHC, we must remand for further fact-finding on the services provided to GHC and the reasonable value of those services.

            Affirmed in part, reversed in part, and remanded.

[1] Minn. Stat. § 481.13 was amended in 2002.  2002 Minn. Laws ch. 403, § 2.  The 2000 version of the statute was in effect at the time Fredrikson gave notice of its attorneys' lien and when the district court issued its order to show cause.  The amendment does not alter the substance of the applicable section.