Larry R. Froelich v. Nita Odean Cox and Billy Dean Graham

NOT DESIGNATED FOR PUBLICATION

DIVISION IV

ARKANSAS COURT OF APPEALS

LARRY R. FROELICH

APPELLANT

v.

NITA ODEAN COX AND BILLY DEAN GRAHAM

APPELLEES

CA00-479

DECEMBER 20, 2000

APPEAL FROM THE WASHINGTON COUNTY CHANCERY COURT,

E-83-916

HON. JAMES ROBERT HANNAH, JUDGE

REVERSED AND REMANDED

ANDREE LAYTON ROAF, Judge

Larry R. Froelich, an attorney, appeals a decision of the Washington County Chancery Court finding that Arkansas's Attorney's Lien Law did not entitle him to a lien on a check for $23,642.71 settling a claim for unpaid alimony, to secure his recovery of $19,143 in unpaid fees that he claimed was owed to him by appellee Nita Odean Cox. The check had been tendered by Cox's ex-husband, Walter Cox, when his attorney conceded during a contempt hearing that his unilateral termination of alimony was untenable. On appeal, Froelich argues that the trial court erred in refusing to enforce his attorney's lien, asserting that while there were other claims for relief included in Ms. Cox's petition, these claims were litigated at the same time and were "inextricably connected" to the principal claim. We agree,and reverse and remand for further proceedings not inconsistent with this opinion.

Nita and Walter Cox were divorced on June 21, 1984. The divorce decree required that Walter pay $2,000 per month in alimony until Nita's death or remarriage. Walter stopped making payments after the December 1997 installment. Nita engaged the services of Froelich, the attorney who had handled the divorce of Nita's boyfriend, Billy Dean Graham, and on March 2, 1998, Nita petitioned to have Walter found in contempt and the arrearage reduced to judgment. In his response, Walter admitted that he had stopped making the payments; however, he affirmatively asserted that for the past eighteen months, Nita and Graham had been holding themselves out as husband and wife and that they were, in fact, lawfully married. He also asserted that there had been a material change of circumstances warranting a modification of the alimony payments. Nita subsequently amended her petition, adding five additional counts praying for: enforcement of the divorce decree's award of one-half of the $12,000 cash value of a life insurance policy; reimbursement for the out-of-pocket medical expenses she incurred as a result of the decrease in benefits paid by the health insurance policy that Walter maintained on her; an increase in alimony; enforcement of an agreement between the parties whereby Walter would continue to pay child support for his son for six months beyond the child's eighteenth birthday; and payment of suit money in the amount of $2,500. The case was heard on three separate days. Between the second hearing day, November 6, 1998, and the third, December 4, 1998, Walter's trial counsel became aware of a decision of the Arkansas Supreme Court, Herman v. Herman, 335 Ark. 36, 977 S.W.2d 209 (1998), which was handed down on November 4, 1998. He concluded that it made Walter's de facto marriage defense untenable, and he announced to the court at theDecember 4 hearing that he would tender a check for the back alimony plus interest. The remaining issues were submitted to the chancellor.

On January 14, 1999, Froelich filed notice of an attorney's lien, asserting that, pursuant to his agreement with Nita, he had accrued fees and expenses in the amount of $19,143, and that, pursuant to Ark. Code Ann. § 16-22-304 (Repl. 1999), that lien attached to the settlement check that Walter had paid to Nita. In a letter opinion, filed on February 24, 1999, the chancellor found Walter in willful contempt and awarded Nita $2,200 in attorney fees. The chancellor also found a material change in circumstances since the entry of the original decree and terminated Walter's alimony payments.

Froelich subsequently petitioned to enforce the attorney's lien against the alimony settlement. In a letter order, the chancellor, purporting to rely on Grayson v. Bank of Little Rock, 334 Ark. 180, 971 S.W.2d 788 (1998), found that the petition for contempt based on Walter's unilateral termination of alimony constituted a cause of action that was separate and distinct from the causes of action concerning the issues of whether alimony should be continued or terminated and whether Walter had violated other orders of the court. The chancellor further found that $2,200, the amount that he had previously awarded for the contempt and which had already been paid to Froelich, constituted a reasonable attorney fee for the "cause of action involving the contempt proceeding" as it related to Walter's failure to pay spousal support. Accordingly, he concluded that Arkansas Attorney's Lien Law did not give Froelich an attorney's lien on the $23,642.71 check for back alimony.

On appeal, Froelich argues that the trial court erred in refusing to enforce an attorney's lien against proceeds of the alimony settlement where the same petition, litigatedcontinuously and tried in the same hearing, included other claims for relief that were inextricably connected to the principal claim. He asserts that pursuant to Ark. Code Ann. § 16-22-304(a)(1) (Repl. 1999), the attorney's lien arose upon the filing of the initial petition for contempt, and when the petition was amended to include other counts arising from the same factual context, the lien was extended to those counts as well. Froelich contends that the settlement fund came into existence after discovery, motion practice, and trial in which all the issues were treated as a single case and that the trial judge's decision to deny enforcement of the lien on funds produced through the prosecution of this lawsuit is "an attempt to amputate one limb of a whole lawsuit from the remainder," which is inconsistent with the statute. Furthermore, Froelich argues that the chancellor's reliance on Grayson v. Bank of Little Rock, supra, was misplaced because that case is factually distinguishable in that Grayson involved distinct matters in different courts, with different parties, and no shared factual nexus. By comparison, Froelich asserts that the matters associated with the instant case are intimately connected, in that they were filed in the same court, in the same amended petition, involved the same parties, were litigated together as a whole, were disposed of in a single letter opinion and judgment, and, with the exception of one minor count out of the six, all the issues involved the 1984 divorce decree. This argument is persuasive.

It has long been established that the appellate court will only reverse the decision of a chancery court if its findings are clearly erroneous. Childs v. Mid-Century Ins. Co., 55 Ark. App. 168, 934 S.W.2d 533 (1996). The Arkansas Attorney's Lien Law states in pertinent part:

(a)(1) From and after service upon the adverse party of a written notice signedby the client and by the attorney at law, solicitor, or counselor representing the client, which notice is to be served by certified mail, a return receipt being required to establish actual delivery of the notice, the attorney at law, solicitor, or counselor serving the notice upon the adversary party shall have a lien upon his client's cause of action, claim, or counterclaim, which attaches to any settlement, verdict, report, decision, judgment, or final order in his client's favor, and the proceeds thereof in whosoever's hands they may come.

(2) The lien cannot be defeated and impaired by any subsequent negotiation or compromise by any parties' litigant.

(3) However, the lien shall apply only to the cause or causes of action specifically enumerated in the notice.

(b) In the event that the notice is not served upon the adverse party by an attorney at law, solicitor, or counselor representing his client, the same lien created in this section shall attach in favor of the attorney at law, solicitor, or counselor from and after the commencement of an action or special proceeding or the service upon an answer containing a counterclaim, in favor of the attorney at law, solicitor, or counselor who appears for and signs a pleading for his client in the action, claim, or counterclaim in which the attorney at law, solicitor, or counselor has been employed to represent the client.

. . .

(d) The court or commission before which an action was instituted, or in which an action may be pending at the time of settlement, compromise, or verdict, or in any chancery court of proper venue, upon the petition of the client or attorney at law, shall determine and enforce the lien created by this section.

Ark. Code Ann. § 16-22-301 (Repl. 1999). "The compensation of an attorney at law, solicitor, or counselor for his services is governed by agreement, expressed or implied, which is not restrained by law." Ark. Code Ann. § 16-22-303 (Repl. 1999).

We find that the chancellor's reliance on Grayson v. Bank of Little Rock, supra, was clearly misplaced. In Grayson, the supreme court affirmed a trial court's finding that an attorney was not entitled to a share of the proceeds from his successful effort to have anoverpayment of workers' compensation premiums refunded based on a general balance owed to him as the result of unrelated legal work. The supreme court cited what it stated was the well-recognized general rule that an attorney's lien extends only to fees and disbursements rendered in the particular action in which they were incurred, and does not cover a general balance due the attorney, or charges rendered in other causes, or charges in causes not intimately connected with the particular action. Id. (citing Wanda E. Wakefield, Attorney's Charging Lien as Including Services Rendered or Disbursements Made in Other Than Instant Action or Proceeding, 23 A.L.R.4th 336 (1983)). In the instant case, the causes of action were indeed "intimately connected." As Froelich correctly notes, they were filed in the same court, in the same amended petition, involved the same parties, were litigated together as a whole, were disposed of in a single letter opinion and judgment, and, with the exception of one minor count out of the six, all the issues involved the 1984 divorce decree. The chancellor was clearly erred when he determined that an attorney's lien did not attach to the alimony settlement. Because the chancellor denied the lien in its entirety, there was no further determination of the amount to which Froelich was entitled. Consequently, we reverse and remand for further proceedings not inconsistent with this opinion.

Reversed and remanded.

Robbins, C.J., and Stroud, J., agree.