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2010 OK CIV APP 69
Case Number: 106901
Decided: 06/11/2010
Mandate Issued: 07/09/2010

ANGELA HUDSON, Plaintiff/Appellant,
Jerry Fisher, an individual, and Richard Harris, d/b/a Harris Contractors, Defendants,





Doak Willis, Tahlequah, Oklahoma, for Appellant,
Michael R. Green, Tulsa, Oklahoma, for Appellees.

Larry Joplin, Presiding Judge:

¶1 Plaintiff/Appellant Angela Hudson seeks review of the trial court's order directing her attorney to refund a portion of his attorney's fees to satisfy a claim by one of Plaintiff's medical lien holders. Plaintiff challenges the trial court's order as affected by errors of law and fact.

¶2 Plaintiff suffered injury in an automobile collision with the vehicle operated by Defendant Jerry Fisher, and owned by Defendant Richard Harris. For her injuries, Plaintiff received medical treatment from, inter alia, Appellee MRI Specialists of Tulsa (Appellee).

¶3 Plaintiff subsequently employed attorney Doak Willis (Willis) to press her claim for tort damages against Defendants. Plaintiff agreed to pay Willis attorney fees of up to fifty percent (50%) of recovery.

¶4 The case proceeded to mediation, where the parties reached a settlement agreement. However, the amount of the settlement was insufficient to pay all medical claims and the full amount of the contingent fee.

¶5 Defendants subsequently filed a petition in interpleader, asserting their status as mere stakeholders of the settlement fund. The trial court granted interpleader and discharged Defendants.

¶6 Plaintiff then filed a Motion to Allocate the settlement proceeds between Appellee, ten other medical lien claimants, her previous attorney, and her current attorney, Willis. However, Willis failed to mail a copy of the motion to Appellee.

¶7 On May 16, 2008, the trial court conducted a hearing on the Motion to Allocate. Willis appeared for Plaintiff, and representatives of three other medical lien claimants also appeared, but Appellee did not. On Willis's representation of proper notice to all claimants, and on consideration of the argument of those present, the trial court directed payment of $35,000.00 to Plaintiff, $35,080.63 in attorney's fees to Willis, and the remainder to five medical lien holders.

¶8 On June 5, 2008, Appellee filed a motion to vacate, challenging validity of the allocation order for lack of notice to them. The trial court agreed with Appellee and vacated the earlier order.

¶9 Appellee then filed an Application for an order directing repayment of the funds previously distributed and a reallocation of the settlement proceeds. After a hearing, and by amended findings of fact and conclusions of law, the trial court held:

Plaintiff Angela Hudson and her attorney, Mr. Doak Willis, were aware of the medical lien asserted by MRI Specialists of Tulsa against the settlement proceeds.

Counsel for Plaintiff Angela Hudson, Mr Doak Willis, moved the Court for allocation of funds, pled to the Court and represented to the Court that he had given proper notice to all of the medical lien holder providers.

Mr. Willis has admitted in open Court on several occasions that he failed to give adequate and proper notice to MRI Specialists of Tulsa, Inc., in the Motion to Allocate Funds or of the hearing date to distribute the settlement funds.

. . . .

Mr. Doak Willis represented to the Court that MRI Specialists of Tulsa, Inc., medical lien holder had been provided adequate notice pursuant to the Oklahoma Constitution.

. . . .

Mr. Doak Willis failed to provide adequate and proper notice to MRI Specialists of Tulsa pursuant to the Oklahoma Constitution and by presenting an Order Allocating Funds and Amended Order Allocating Funds representing to the Court that proper notice was given to MRI Specialists of Tulsa, Inc. prior to the distribution of the settlement funds.

. . . .

Mr. Doak Willis, by filing his Order Allocating Funds and Amended Order Allocating Funds caused the pleading to be filed which was a misrepresentation of the facts.

The distribution of settlement funds to Plaintiff Angela Hudson without making provisions for the liens of MRI Specialists of Tulsa constitutes a wrongful payout of the settlement funds in derogation of their liens . . .

Plaintiff Angela Hudson and her attorney, Mr. Doak Willis, are ordered to deposit $9,857 with the Court Clerk of Cherokee County, Oklahoma. This is consistent with the Court's Order of October 30, 2008. This amount will satisfy the claims of those lien holders who were not given notice of distribution of funds.

Plaintiff filed a motion to vacate, which the trial court denied.

¶10 Plaintiff now appeals. In seven propositions, Plaintiff challenges the trial court's order as contrary to law, equity and the facts of this case.1

¶11 "It is recognized that the right of interpleader is an equitable remedy[,] [a]nd, where the request for interpleader is approved the questions to be considered are equitable in nature." Welch v. Montgomery,

¶12 "When there are several competing claimants of whom it has timely knowledge, the agent . . . acts at its own peril when paying out the proceeds without interpleading all parties claimant in a proper action." Shebester v. Triple Crown Insurers,

¶13 A medical lien claimant clearly possesses such a protected property right. So, where an affected medical lien claimant receives no notice of the interpleader of settlement proceeds from which payment for the medical treatment should be made, we hold the trial court possesses the equitable authority and discretion to vacate the previous division, recapture funds previously paid out, and affect a new division of the settlement proceeds as is just and reasonable.

¶14 In the present case, Willis's attorney's lien is superior only to funds in which junior lienholders have no interest.

¶15 Further, Willis confessed he did not adequately notify Appellee of his Motion to Allocate, and the trial court held Willis misrepresented the adequacy of notice given to Appellee. For lack of notice, Appellee was deprived of its right to appear and assert its claim to a portion of the settlement proceeds. The rights of Appellee could not be terminated without notice.

¶16 Given this lack of notice, we hold the trial court, in the proper exercise of its equitable powers, vacated the initial division, and recaptured the funds previously paid out to Willis as attorney's fees to satisfy the claim of Appellee. Having reviewed the record, and under the circumstances of this case, we cannot say the trial court abused its discretion.