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Johnson v. Jones

California Court of Appeals, Second District, Seventh Division
Sep 24, 2009
No. B208858 (Cal. Ct. App. Sep. 24, 2009)

Opinion

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

APPEAL from an order of the Superior Court of Los Angeles, Jerry K. Fields, Judge., No. BC381330

Benjamin Robinson, in pro. per., for Intervener and Appellant.

Law Offices of Ivie, McNeill & Wyatt, Rickey Ivie and Charlie L. Hill for Plaintiff and Respondent.


PERLUSS, P. J.

James Jones agreed to pay Bernard Johnson $120,000 to settle this breach of contract action brought in late 2007 by Johnson. Benjamin Robinson intervened in the action and moved for an order directing Jones to pay him the $120,000 to satisfy a judgment Robinson had obtained against Johnson in 2000. Robinson appeals from the trial court’s order granting the motion in part and denying it in part. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

1. Robinson’s Judgment Against Johnson

In July 1996 Johnson sued Robinson, his former attorney, claiming Robinson had been negligent when providing legal services. Robinson filed a cross-complaint for breach of contract to recover uncollected attorney fees. In March 2000 a jury found Robinson had not been negligent. The jury also found Johnson had breached his contract with Robinson and awarded Robinson $83,609.96.

2. Johnson’s Lien Against Jones’s Property and Robinson’s Attempt To Levy

Johnson had a lien against property owned by Jones, apparently securing a 1999 judgment against Jones in Johnson’s favor. When Jones applied for a loan to refinance the property in mid-2007, the escrow company handling the transaction requested the judgment be paid off and Johnson execute a satisfaction of judgment and release of lien. Robinson, who had been unable to collect any portion of his 2000 judgment against Johnson, learned of Johnson’s lien in early July 2007. A few days later Robinson served Jones, Johnson and the escrow company with a notice of levy under writ of execution and a writ of execution specifying an amount due of $144,639.80—the initial judgment of $83,609.96 plus accrued interest.

According to Jones, the escrow company requested that Johnson agree to place the amount necessary to satisfy his judgment against Jones in a separate escrow pending a resolution of the competing claims and that Johnson execute a lien release to permit the refinancing of Jones’s property. Johnson refused. The refinancing failed.

3. Johnson’s Contractual Claim and Robinson’s Intervention

On September 25, 2007 Johnson retained the law firm Ivie, McNeill & Wyatt to represent him in the collection of the debt owed by Jones. The retainer agreement granted the firm “a lien upon the cause of action... and upon any sum received to the extent of the foregoing [attorney] fees and costs incurred or advanced.”

On November 20, 2007 Jones agreed to pay Johnson $120,000 in exchange for a release of the lien against Jones. The terms of the settlement, however, required Johnson to file a complaint against Jones for enforcement of the outstanding judgment; Jones to answer the complaint and deposit $120,000 in an escrow account; and Johnson, upon receipt of the funds, to execute an acknowledgement of satisfaction of judgment and file a dismissal of the lawsuit. Jones required a lawsuit be filed so the settlement would take place under court supervision because Jones did not trust Johnson.

On November 27, 2007 Johnson filed the initial complaint in the underlying contract action against Jones. An amended complaint was filed on November 30, 2007. Jones answered the amended complaint on December 11, 2007. On December 14, 2007 he filed a cross-complaint to quiet title and for release of lien.

On December 14, 2007 Robinson served Johnson and Jones with a notice of judgment lien and a certified copy of the 2000 judgment Robinson had obtained against Johnson. On December 17, 2007 Robinson filed an ex parte application for leave to intervene in the underlying action, arguing, as a judgment creditor, he was permitted to intervene to ensure diligent prosecution notwithstanding the notice of lien and certified copy of the judgment he had filed were sufficient to establish his right to payment from any recovery by Johnson in the underlying action.

Johnson filed a request for dismissal of the action, which was granted. On January 29, 2008 the dismissal was vacated; and Robinson’s application to intervene, which had been set as a motion for hearing, was granted. On March 3, 2008 Robinson filed an ex parte application for an order directing Jones to pay Robinson the $120,000 Jones had agreed to pay Johnson. Johnson opposed the application arguing, in part, a lien had been created in favor of his attorneys for the fees owed them when they executed the retainer agreement in September 2007 and that lien had priority over Robinson’s lien.

The trial court placed Robinson’s ex parte application on its motion calendar and scheduled a hearing. After briefing, including a reply and supplemental reply filed by Robinson, and a hearing, on April 16, 2008 the court granted in part and denied in part Robinson’s motion: $72,000 was awarded to Robinson to partially satisfy the 2000 judgment, but $48,000 was awarded to Johnson’s attorneys pursuant to the terms of the September 2007 retainer agreement.

CONTENTIONS

Robinson contends a lien was created in his favor when he rendered legal services to Robinson in 1993 through 1996 and that lien had priority over Ivie, McNeill & Wyatt’s lien for attorney fees created by the September 2007 retainer agreement. Robinson alternatively contends Johnson was a constructive trustee for Robinson of the money Jones agreed to pay to settle the underlying action.

Robinson did not argue in the trial court that, even if valid, the Ivie, McNeill & Wyatt lien only entitled the lawyers to one-third of the $120,000 to be paid by Jones ($40,000), not 40 percent of that sum ($48,000). Accordingly, that argument, raised for the first time on appeal, has been forfeited. (Sea & Sage Audubon Society, Inc. v. Planning Com. (1983) 34 Cal.3d 412, 417 [issues not raised in trial court cannot be raised for first time on appeal]; In re Marriage of Eben-King & King (2000) 80 Cal.App.4th 92, 117 [“issues or theories not properly raised or presented in the trial court may not be asserted on appeal, and will not be considered by an appellate tribunal”]; Kolani v. Gluska (1998) 64 Cal.App.4th 402, 412 [failure to raise issue or argument in the trial court results in forfeiture on appeal].)

DISCUSSION

1. Ivie, McNeill & Wyatt’s Contractual Attorney Lien Has Priority Over Robinson’s Judgment Creditor Lien

a. Creation of the liens

Code of Civil Procedure section 708.410, subdivision (a), provides, “A judgment creditor who has a money judgment against a judgment debtor who is a party to a pending action or special proceeding may obtain a lien under this article, to the extent required to satisfy the judgment creditor’s money judgment.” To obtain a judgment lien in a pending action, “the judgment creditor shall file a notice of lien and an abstract or certified copy of the judgment creditor’s money judgment in the pending action or special proceeding.” (Code Civ. Proc., § 708.410, subd. (b).) Although a judgment creditor with a judgment lien may seek to intervene in the action (Code Civ. Proc., § 708.430, subd. (a))—as Robinson did in this action—“intervention is not necessary to enforce the lien.” (Brown v. Superior Court (2004) 116 Cal.App.4th 320, 327.) Robinson’s judgment creditor lien was created on December 14, 2007 when he filed a notice of judgment lien and certified copy of the judgment in the underlying action.

Different from a judgment creditor lien, “a lien in favor of an attorney upon the proceeds of a prospective judgment in favor of his client for legal services rendered... may be created either by express contract... or it may be implied if the retainer agreement between the lawyer and his client indicates that the former is to look to the judgment for payment of his fee [citation].” (Cetenko v. United California Bank (1982) 30 Cal.3d 528, 531; accord, Waltrip v. Kimberlin (2008) 164 Cal.App.4th 517, 525; see Fletcher v. Davis (2004) 33 Cal.4th 61, 66 [“attorney’s lien ‘upon the fund or judgment which he has recovered for his compensation as attorney in recovering the fund or judgment... is denominated a “charging lien”’”]; see also Civ. Code, §§ 2881 [lien is created by “contract of the parties” or by “operation of law”], 2883, subd. (a) [“agreement may be made to create a lien upon property not yet acquired by the party agreeing to give the lien, or not yet in existence”].) “An attorney’s contractual lien is created and takes effect when the fee agreement is executed.” (Waltrip, at p. 525.) “Unlike a judgment creditor’s lien, which is created when the notice of lien is filed (Code Civ. Proc., § 708.410, subd. (b)), an attorney’s lien... is created and the attorney’s security interest is protected even without a notice of lien.” (Carroll v. Interstate Brands Corp. (2002) 99 Cal.App.4th 1168, 1172; accord, Cetenko, at p. 533; Waltrip, at p. 525.) Thus, an attorney lien in favor of Ivie, McNeill & Wyatt on any recovery it was able to obtain for Johnson was created on September 25, 2007, the date of their retainer agreement, which expressly provided for the lien.

b. Priority of the liens

Generally, when there are competing liens on the same property and the parties’ “[i]nterests are equal in equity,” liens have priority according to their time of creation. (Del Conte Masonry Co. v. Lewis (1971) 16 Cal.App.3d 678, 681; Waltrip v. Kimberlin, supra, 164 Cal.App.4th at p. 525; Civ. Code, § 2897.) “‘Interests are equal in equity when each is entitled to the same recognition and protection by reason of possessing to an equal degree those elements of right and justice which are recognized and aided by courts of equity.’ [Citation.] Priority based on time of creation may therefore be subordinated to the equitable preference accorded to the party who is first to assert his claim.... Moreover, even if time of creation were controlling, an equitable lien may be deemed created, not at the time of the judgment or order which declares its existence, but at the time of the occurrences which gave rise to the underlying substantive right.” (Del Conte Masonry Co., at p. 681; accord, Waltrip, at p. 527.)

Civil Code section 2897 provides, “Other things being equal, different liens upon the same property have priority according to the time of their creation....”

Public policy favors the priority of an attorney lien. “If an attorney’s claim for a lien on the judgment based on a contract for fees earned prior to and in the action cannot prevail over the lien of a subsequent judgment creditor, persons with meritorious claims might well be deprived of legal representation because of their inability to pay legal fees or to assure that such fees will be paid out of the sum recovered in the latest lawsuit. Such a result would be detrimental not only to prospective litigants, but to their creditors as well.” (Cetenko v. United California Bank, supra, 30 Cal.3d at pp. 535-536; accord, Waltrip v. Kimberlin, supra, 164 Cal.App.4th at p. 525.) “Equitable considerations also favor the attorney lien. It is a principle of equity that ‘those whose labor, skills and materials resulted in the creation of a fund should be entitled to priority in the payment of their claims from such source.’ [Citation.]... It is the attorney’s labor, skill and materials, and his willingness to take the risk of no recovery, that results in the judgment or settlement paid to the debtor.” (Waltrip, at pp. 525-526, fn. omitted.)

c. The trial court did not abuse its discretion in determining Ivie, McNeill & Wyatt’s attorney lien had priority over Robinson’s judgment creditor lien

Robinson’s principal argument in the trial court focused, not on the judgment creditor lien he created in December 2007, but on a purported equitable lien created between 1993 and 1996 when he performed legal services for Johnson for which Johnson refused to pay. Robinson asserted he gave notice of this lien to Johnson and Jones by serving them with a notice of levy and writ of execution on July 6, 2007, well before the September 2007 retainer agreement between Johnson and Ivie, McNeill & Wyatt. Robinson argued his equitable lien should have priority because Johnson engaged in unfair and fraudulent conduct by hiding his assets from 2000 to 2007 and refusing to permit the funds Jones was attempting to obtain through refinancing his property to be placed in a separate escrow account so the rights of the parties could be determined. Robinson also insisted Johnson’s attempt to dismiss the underlying action after Robinson had filed his notice of judgment lien on December 14, 2007 supported the inference the retainer agreement between Johnson and Ivie, McNeill & Wyatt had not actually been entered into in September 2007, but at some time after Robinson served the notice of judgment lien.

At the hearing on Robinson’s motion the trial court permitted extensive argument from Robinson supporting his theory of unfair and deceptive conduct by Johnson and Ivie, McNeill & Wyatt and allowed Robinson to examine Jones’s attorney to attempt to corroborate some of his assertions. Although the court acknowledged Johnson “was doing his best to avoid payment of [Robinson’s] lien,” it characterized many of Robinson’s assertions as inferences unsupported by the evidence. The court found Ivie, McNeill & Wyatt’s lien (for $48,000) was created first and took priority over Robinson’s and ordered Robinson to receive $72,000. Given the public policy and equitable considerations favoring the priority of attorney liens, on this record we cannot say the trial court acted arbitrarily or otherwise abused its discretion in determining Robinson’s lien—even if deemed to have been created at the time Robinson’s legal services were rendered—did not take priority over Ivie, McNeill & Wyatt’s lien. (See Brown v. Superior Court (2004) 116 Cal.App.4th 320, 334-335 [“[W]hether to apply the judgment proceeds to satisfy... judgment lien, in the face of [attorney’s] competing lien claim, was a discretionary decision for the trial court. ‘The only limitation that the law places upon the exercise of that judicial discretion is that it not be abused. [Citation.] [¶] “Under no circumstances is the discretion of the Court to be exercised arbitrarily, but it is a discretion governed by legal rules, to do justice according to law or to the analogies of the law, as near as may be.... It must be exercised within the limitations above stated to promote substantial justice in the case.”’”].)

Robinson also asserts for the first time on appeal that, notwithstanding he intervened in this action on the ground he was a judgment creditor (Code Civ. Proc., § 708.430, subd. (a)), he in fact had a contractual attorney lien pursuant to Civil Code section 2881 as a product of the attorney-client fee agreement he had with Johnson in the mid-1990s. That attorney lien, Robinson now argues, was created before Ivie, McNeill & Wyatt’s lien in September 2007. To the extent the argument has not been forfeited (Sea & Sage Audubon Society, Inc. v. Planning Com. (1983) 34 Cal.3d 412, 417 [issues not raised in trial court cannot be raised for first time on appeal]), it is without merit. Robinson failed to present any evidence to the trial court regarding the terms of his agreement with Johnson from which it could be determined whether the agreement either expressly created a lien, as did Ivie, McNeill & Wyatt’s retainer agreement, or impliedly created one on the proceeds of a prospective judgment from which the attorney’s compensation is to be paid. (See, e.g., Cetenko v. United California Bank, supra, 30 Cal.3d at p. 530 [agreement provided “fees owed by Cetenko would become a lien upon any recovery in the action”].) That an attorney-client agreement provides for the payment of fees and the client has failed to pay those fees, without more, is insufficient to create an attorney lien. (Fletcher v. Davis, supra, 33 Cal.4th at p. 66 [“‘[u]nlike a service lien or mechanic’s lien,... an attorney’s lien is not created by the mere fact that an attorney has performed services in a case’”].)

The trial court did not abuse its discretion in admitting into evidence the declaration of Damon Brown, with Ivie, McNeill & Wyatt, in which Brown stated Johnson had “entered into a retainer agreement with my law firm on September 25, 2007.” Although Robinson contends the declaration failed to include facts establishing Brown had personal knowledge the firm had entered into the retainer agreement, Brown stated at the hearing it was his signature on the retainer agreement. Moreover, Robinson’s argument Brown mischaracterized the terms of the retainer agreement in the declaration is without merit because the retainer agreement itself was admitted into evidence.

Robinson contends Johnson is collaterally estopped from asserting there was no evidence of an attorney-client contract between Robinson and Johnson by the predicate finding for the 2000 judgment that Johnson had breached such a contract. The issue, however, is not merely whether there was a contract but whether the terms of the contract expressly or impliedly created a lien. If this issue had also been litigated, then it was up to Robinson to present evidence of its determination to the trial court.

2. A Constructive Trust Remedy Is Inapplicable

Robinson also agues Johnson’s refusal to pay $83,609.96 due under the 2000 judgment made Johnson a constructive trustee, in favor of Robinson, of the $120,000 Jones was obligated to pay Johnson. That argument is misplaced. A constructive trust may be imposed as an equitable remedy whenever the evidence establishes a party has gained property by fraud, breach of trust or other wrongful act: “‘A constructive trust is not a true trust but an equitable remedy available to a plaintiff seeking recovery of specific property in a number of widely differing situations. The cause of action is not based on the establishment of a trust, but consists of the fraud, breach of fiduciary duty, or other act which entitles the plaintiff to some relief. That relief, in a proper case, may be to make the defendant a constructive trustee with a duty to transfer to the plaintiff.’” (Olson v. Toy (1996) 46 Cal.App.4th 818, 823; see Martin v. Kehl (1983) 145 Cal.App.3d 228, 237 [“‘constructive trust is a remedial device primarily created to prevent unjust enrichment; equity compels the restoration to another of property to which the holder thereof is not justly entitled’”]; see generally Civ. Code, §§ 2223 [“[o]ne who wrongfully detains a thing is an involuntary trustee therefor, for the benefit of the owner”], 2224 [“[o]ne who gains a thing by fraud, accident, mistake, undue influence, the violation of a trust, or other wrongful act, is, unless he or she has some other and better right thereto, an involuntary trustee of the thing gained, for the benefit of the person who would otherwise have had it”].) Even if Robinson’s theory of entitlement to a larger share of the $120,000 settlement fund had merit, Robinson is not entitled to avail himself of such a remedy without having properly asserted a cause of action against Johnson.

DISPOSITION

The order is affirmed. Johnson is to recover his costs on appeal.

We concur: WOODS, J., ZELON, J.


Summaries of

Johnson v. Jones

California Court of Appeals, Second District, Seventh Division
Sep 24, 2009
No. B208858 (Cal. Ct. App. Sep. 24, 2009)
Case details for

Johnson v. Jones

Case Details

Full title:BERNARD JOHNSON, Plaintiff and Respondent, v. JAMES C. JONES, Defendant…

Court:California Court of Appeals, Second District, Seventh Division

Date published: Sep 24, 2009

Citations

No. B208858 (Cal. Ct. App. Sep. 24, 2009)