This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2006).
STATE OF MINNESOTA
IN COURT OF APPEALS
Faye A. Hilgart,
Craig S. Hunter,
Thomas W. Reed,
Filed April 8, 2008
Reversed and remanded; motion denied
Toussaint, Chief Judge
Dissenting, Klaphake, Judge
St. Louis County District Court
File No. 69VI-CV-05-523
Dexter Branwall, Post Office Box 142, Soudan, MN 55782 (pro se respondent)
Eline Branwall, Post Office Box 142, Soudan, MN 55782 (pro se respondent)
Craig S. Hunter, Northland Law, 11 East Superior Street, Suite 328, Duluth, MN 55802
(attorney pro se)
Thomas W. Reed, Reed Law Office, LLC, 11 East Superior Street, Suite 562, Duluth,
MN 55802 (attorney pro se)
Considered and decided by Toussaint, Chief Judge; Klaphake, Judge; and
TOUSSAINT, Chief Judge
Appellants Craig S. Hunter and Thomas W. Reed applied to the district court for
attorney liens and an award of attorney fees in the amount of $123,000, based on
contingent-fee agreements signed by respondent Dexter Branwall and his mother in
which they agreed to pay 20% of the agreed-upon value of the property recovered. The
district court found the contingent-fee agreements unreasonable and instead calculated
the fee on an hourly basis, determining that the reasonable value of attorney fees for both
attorneys was $25,000, which Branwall’s mother had already paid.
It denied the
application for the attorney liens. Because contingent-fee agreements are valid unless
procured by fraud, of which there is no evidence; because, although Branwall has
cognitive disabilities, he has never been adjudicated incapacitated or deemed
incompetent; and because Branwall’s mother, who was his attorney-in-fact, also signed
the agreements, we reverse and remand for an award of attorney fees pursuant to the
contingent-fee agreements and for the imposition of attorney liens. The motion of Hunter
and Reed to supplement the record is denied.
In 1992, Branwall’s mother deeded the family home to Branwall and to his sister
as joint tenants. It is undisputed that Branwall has cognitive disabilities and is dependent
on his elderly mother for his day-to-day needs. On January 26, 1999, Branwall signed a
power-of-attorney form, appointing his mother and his sister to act as his attorneys-infact. The form specifically provided that it continued to be effective if Branwall became
incapacitated or incompetent. On August 11, 1999, Branwall, apparently represented by
an attorney, conveyed his interest in the property to his sister by quit-claim deed for less
than $500, allegedly based on a promise, later repudiated, that she would take care of him
during his lifetime.
With the assistance of his cousin and mother, Branwall sought legal counsel to
obtain the return of his share of the property from his sister. On October 25, 2004,
Branwall entered into an attorney-client relationship with Hunter and Reed to represent
him in his claim against his sister to set aside the property transfer. The initial retainer
agreement was signed by Branwall and approved by his mother on October 25, 2004. It
provided that the attorneys “shall receive 20% of the value of all property recovered.”
A complaint was served on Branwall’s sister in July 2005, in which Branwall
sought either restoration of his one-half interest in the property as a tenant in common or,
in the alternative, the grant of a constructive lien against the property in an amount equal
to one-half of its present value and permission to then foreclose the constructive lien. His
sister served an answer in August 2005.
On October 12, 2005, in documents drafted by Reed, Branwall revoked his sister’s
existing power of attorney and executed a new power of attorney, retaining his mother as
his attorney-in-fact and adding his cousin as successor attorney-in-fact. On the same
date, Branwall’s mother also revoked the power of attorney previously given her
daughter, Branwall’s sister, and instead named Branwall as her attorney-in-fact and
Branwall’s cousin as her successor attorney-in-fact, in documents also drafted by Reed.
On the same date, Reed drafted wills for Branwall and his mother, in which both
intentionally omitted Branwall’s sister from the provisions of their will, named each other
as personal representatives with Branwall’s cousin as the successor personal
representative, and left the residue of their estates to the other.
On April 2, 2006, both Branwall and his mother signed an amended fee agreement
clarifying “that the attorneys shall receive 20% of the present value of the real estate
recovered in the action by Dexter Branwall” against his sister, who had agreed to deed
the property to their mother in settlement of the case. A few days later, the parties
stipulated to dismiss the lawsuit, and judgment was entered on April 11, 2006. Title was
transferred back to Branwall’s mother shortly thereafter.
On September 11, 2006, Reed and Hunter filed notice of attorney liens with the
county registrar’s office, and on October 25, 2006, Reed and Hunter gave notice of their
application to the district court for attorney lien judgments. On October 26, Branwall and
his mother stipulated with Hunter and Reed that, based on the successful recovery of the
property, the retainer agreement and the amended retainer agreement, the attorneys were
to receive 20% of the value of the property recovered, at an appraised value of $615,000,
leading to total attorney fees of $123,000. On October 31, Branwall’s mother paid the
attorneys $25,000 toward the fees.
Summary proceedings under the attorney lien act were commenced. Ultimately,
the district court stated that the contingency fee of $123,000 was not reasonable, citing
the possibility of overreaching, the questions as to the capacity of Branwall and his
mother, and the fact that the lawsuit did not involve formal discovery, alternative dispute
resolution, or novel or difficult issues. Applying the factors set out in Minn. R. Prof.
Conduct 1.5, it ruled that a rate of $200 per hour was appropriate. Finding that Hunter
spent approximately 60 hours on the file, and assuming that Reed also spent
approximately 60 hours on the matter, it calculated that each was entitled to $12,000 in
Branwall’s mother had already paid Reed $25,000 in attorney fees, and
the court then split the difference of the remaining $1,000 between the attorneys, and
noted that Hunter was entitled to $12,500 of the amount already paid to Reed. It denied
the request for attorney liens on the property at issue.
An appellate court reviews the application of the attorney-lien statute as a question
of law and reviews questions of the reasonable value of attorney fees as a question of
fact. Thomas A. Foster & Assocs., Ltd. v. Paulson, 699 N.W.2d 1, 4 (Minn. App. 2005).
Questions of law are subject to de novo review. Id. Questions of fact are reviewed under
the clearly erroneous standard. Ashford v. Interstate Trucking Corp. of Am., Inc., 524
N.W.2d 500, 502 (Minn. App. 1994).
An attorney has a lien for compensation on the interest of the attorney’s client in
property involved in the action or proceeding in which the attorney was employed. Minn.
Stat. § 481.13, subd. 1(a) (2006). The lien is an equitable one and “protects against a
successful party receiving a judgment secured by an attorney’s services without paying
for those services.” Foster, 699 N.W.2d at 5. The attorney lien attaches to any recovery
of money or property of the client pursuant to a judgment in the proceeding in which the
attorney represented the client. Minn. Stat. § 481.13, subd. 1(a), (b) (2006); Foster, 699
N.W.2d at 5. An attorney may apply to the district court for a lien, and “the amount of
the lien may be determined, summarily by the court.” Minn. Stat. § 481.13, subd. 1(c)
(2006). “The value of the lien ordinarily is determined based on the terms of the fee
provisions of a retainer agreement.” Foster, 699 N.W.2d at 6. But where there is no
retainer agreement, the court may determine the amount of the lien by the reasonable
value of services rendered. Id.
A contract for attorney fees that is fairly entered into and does not involve fraud
by the attorneys is valid and enforceable. Kittler & Hedelson v. Sheehan Properties, Inc.,
295 Minn. 232, 235, 203 N.W.2d 835, 838 (1973). Contingent-fee agreements are valid
unless unreasonable or unconscionable. Hollister v. Ulvi, 199 Minn. 269, 276, 271 N.W.
493, 497 (1937). In fact, the supreme court also recognized that contingent fees may
benefit one with a meritorious cause of action who has no other means to pay an attorney.
Id. at 276-77, 271 N.W. at 497. Further, this is a proceeding that produced a res out of
which the attorneys could be paid. Cf. Thomton, Sperry & Jensen, Ltd. v. Anderson, 352
N.W.2d 467, 469 (Minn. App. 1984) (noting that contingency fee in partition proceeding
could be considered inappropriate because it produced no res out of which to pay the
Hunter and Reed dispute the district court’s questions as to the capacity of
Branwall and his mother to enter into the contingent-fee agreements. They also contend
that the contingent-fee agreements were valid and reasonable under the circumstances
and that Branwall and his mother stipulated to the validity and amount of attorney fees
submitted to the court for approval. No party or interested person has appeared in
opposition to this appeal.
We agree with Hunter and Reed. Although Branwall suffered from cognitive
disabilities, and his elderly mother apparently had some difficulties, there has been no
judicial determination that either was incapacitated, and no guardians were appointed
under Minn. Stat. § 524.5-310 (2006). Nor has there been any definitive finding that
Branwall or his mother was incompetent to sign the contingent-fee agreement or the
power of attorney forms. Persons are presumed to be competent to enter into contracts.
Fisher v. Schefers, 656 N.W.2d 592, 595 (Minn. App. 2003). In any event, Branwall had
appointed his mother as his attorney-in-fact as early as 1999.
See Younggren v.
Younggren, 556 N.W.2d 228, 232 (Minn. App. 1996) (holding that person was competent
to sign power of attorney if person had enough mental capacity to understand to
reasonable extent nature and effect of what person was doing). There has been no finding
of fraud. The attorneys here obtained an excellent result for Branwall; instead of only
obtaining the return of his half of the property from his sister, Branwall’s sister agreed to
return all of the property to their mother.
We note that at the same time Branwall and his mother revoked the power of
attorney previously given to Branwall’s sister, Reed prepared wills for Branwall and his
mother to ensure that the problem of Branwall having no resources would not arise again
in the future. Consequently, we uphold the contingent-fee agreements as valid and
reasonable. We reverse the district court and remand for an award of attorney fees under
the contingent-fee agreements and imposition of attorney liens under the statute.
After oral argument, Hunter and Reed moved under Minn. R. Civ. App. P. 110.05
to supplement the record with documents that were not part of the record below. Rule
110.05 authorizes this court to consider documents that were filed and provided to the
district court but not placed in the file due to a filing technicality. Stanek v. A.P.I., Inc.,
474 N.W.2d 829, 831-32 (Minn. App. 1991), review denied (Minn. Oct. 31, 1991). “The
papers filed in the trial court, the exhibits, and the transcript of the proceedings, if any,
shall constitute the record on appeal in all cases.” Minn. R. Civ. App. P. 110.01. “An
appellate court may not base its decision on matters outside the record on appeal, and
may not consider matters not produced and received in evidence below.” Thiele v. Stich,
425 N.W.2d 580, 582-83 (Minn. 1988). Because Hunter and Reed have not shown that
the supplemental documents were presented to the district court, the record cannot be
corrected to include those documents and their motion to supplement the record is denied.
Reversed and remanded; motion denied.
KLAPHAKE, Judge (dissenting)
I respectfully dissent.
Both the validity and the amount of a lien to secure payment of attorney fees may
be summarily established by the district court. Minn. Stat. § 481.13, subd. 1(c) (2006).
The reasonable value of attorney fees, which the district court is empowered by this
statute to establish, is a question of fact. Thomas A. Foster & Assoc. v. Paulson, 699
N.W.2d 1, 4 (Minn. App. 2005). We will not set aside the district court’s findings of fact
unless clearly erroneous. Ashford v. Interstate Trucking Corp., 524 N.W.2d 500, 502
(Minn. App. 1994).
Findings of fact are clearly erroneous only if contrary to the
evidence or not reasonably supported by the weight of the evidence.
Vangness, 607 N.W.2d 468, 474 (Minn. App. 2000).
The district court made detailed findings in this matter, which are supported by the
record. Respondent Eline Branwall, an elderly widow, deeded her real property to her
children, Dexter Branwall and Faye Hilgert.
In 1999, Dexter Branwall deeded the
property to his sister, assuming that she would care for him. When Hilgert stated that she
would not, Dexter Branwall decided to recover his one-half share of the property.
Respondent Dexter Branwall, a man who never advanced beyond kindergarten-level
educational achievement, who has cognitive disabilities, and who lives with and is
closely supervised by his 90-year old mother, agreed to pay a 20% contingency fee to
appellants upon “the value of all property recovered,” presumably by him, because this
retainer agreement lists him as “client.” Although Dexter Branwall is a 67-year-old man,
the agreement was “approved” by his mother, Eline Branwell, suggesting that Dexter
Branwall may have issues of competency.
This contingent fee agreement was signed October 25, 2004. A complaint seeking
recovery of real property from Dexter Branwall’s sister, Hilgert, was issued on July 21,
2005, alleging, among other things, that Dexter Branwall was a vulnerable adult and that
Hilgert had used undue influence to acquire the property from him. Hilgert filed an
answer on August 9, 2005; while denying the allegations of the complaint, Hilgert
acknowledged that Dexter Branwall had “some cognitive disabilities.” The court file
includes no depositions, no interrogatories, no discovery, and no activity except a
scheduling order filed in November 2005. The next documents filed in the court record
are a Release and Indemnification Agreement dated April 2, 2006, and a stipulated order
for judgment dated April 11, 2005.
According to the Release and Indemnification Agreement, Dexter Branwall and
Hilgert settled their differences by agreeing that Hilgert would deed the disputed property
back to their mother, Eline Branwall. Dexter Branwall did not acquire an interest in the
disputed property, which Hilgert deeded back to the sole ownership of Eline Branwall.
Appellant Craig Hunter, who claims a 10% contingent fee from the property worth
$615,000, did not support his request for an attorney lien with time records. Appellant
Thomas Reed supplied time records, recording a total of 76.7 hours. According to the
time records, a significant number of these hours involved estate planning for Dexter and
Eline Branwall, and research and preparation of the attorney lien.
Even more interesting is the fact that the settlement agreement and supporting
documents were prepared prior to April 2, 2006. On that date, appellants had Eline
Branwall sign an “Amendment to the Retainer Agreement,” in which she agreed to base
the contingent fee on property that she recovered through appellants’ efforts. Thus,
knowing that the matter was settled without Dexter Branwall actually recovering any
property, appellants redrew the retainer agreement so that Eline Branwall would now be
their client. By doing so, appellants now claim a contingent fee of $123,000 for recovery
of this property.
An attorney lien is a well-established and important part of legal practice,
designed to protect an attorney from a successful party who receives a judgment secured
by an attorney, but who then refuses to pay the attorney for those services. Thomas A.
Foster, 699 N.W.2d at 5. But Minn. R. Prof. Conduct 1.5(a) states, “A lawyer shall not
make an agreement for, charge, or collect an unreasonable fee[.]” The comment to this
Contingent fees, like any other fees, are subject to the
reasonableness standard of paragraph (a) of this rule. In
determining whether a particular contingent fee is reasonable,
or whether it is reasonable to charge any form of contingent
fee, a lawyer must consider the factors that are relevant under
Minn. R. Prof. Conduct 1.5 2005 cmt. . The rule sets out a non-exclusive list of
factors to consider, including novelty and difficulty of issues, the customary local fee for
such services, the amount of the claim and the results achieved, the nature and length of
the professional relationship, the experience and ability of the attorney, and the fee
agreement itself. Minn. R. Prof. Conduct 1.5(a).
Ultimately, however, the district court is charged with summarily determining the
amount of the attorney lien that may be placed against the client’s property, which also
necessarily involves a determination of the reasonableness of the fee, including a
contingent fee. Here, the district court, based on factual findings supported by the record,
determined that the $25,000 already paid by the Branwalls was reasonable in light of all
the factors set forth in the rule governing attorney fees. On the record before us, we
should not second-guess the district court.
An attorney lien is based on principles of equity. Thomas A. Foster, 699 N.W.2d
at 5. Those who seek equity must do equity. Peterson v. Holiday Recreational Indus.,
726 N.W.2d 499, 505 (Minn. App. 2007). Given the circumstances here, which include a
vulnerable adult, an elderly widow, a limited amount of legal work, and a quick
settlement well short of trial, I am not persuaded that equity will be done by reversing the
district court’s order. I would affirm the district court.