{
  "id": 834362,
  "name": "Carol M. CHERPELIS, Plaintiff, v. Barbara Jane CHERPELIS, Defendant/Third-Party Plaintiff, v. George CHERPELIS, Third-Party Defendant; MILLER, STRATVERT, TORGERSON & SCHLENKER, P.A. Claimant/Appellant, v. Carol M. CHERPELIS, Respondent/Appellee",
  "name_abbreviation": "Cherpelis v. Cherpelis",
  "decision_date": "1998-05-07",
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    "judges": [
      "DONNELLY and WECHSLER, JJ., concur."
    ],
    "parties": [
      "Carol M. CHERPELIS, Plaintiff, v. Barbara Jane CHERPELIS, Defendant/Third-Party Plaintiff, v. George CHERPELIS, Third-Party Defendant, MILLER, STRATVERT, TORGERSON & SCHLENKER, P.A. Claimant/Appellant, v. Carol M. CHERPELIS, Respondent/Appellee."
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      {
        "text": "OPINION\nBUSTAMANTE, Judge.\n{1} The law firm of Miller, Stratvert and Torgerson (Miller) appeals the district court\u2019s decision denying it a charging lien on monies currently deposited in the district court\u2019s registry. The sole issue raised is whether the common-law attorney\u2019s charging lien, as first recognized and described in New Mexico in Prichard v. Fulmer, 22 N.M. 134, 159 P. 39 (1916), may be asserted when there is no explicit provision for a lien in the attorney\u2019s agreement with the client. As explained below, this equitable right remains intact. Consequently, we reverse the decision below and remand for reconsideration.\nFACTUAL AND PROCEDURAL BACKGROUND\n{2} Barbara Jane and George Cherpelis were divorced in 1982. Pursuant to the divorce decree, George wtas obligated to pay spousal support to Barbara Jane until her remarriage or the death of either party. See Cherpelis v. Cherpelis, 1996-NMCA-037, \u00b6 2, 121 N.M. 500, 914 P.2d 637. In early 1988 George married Carol, and later that year, they constructed a marital residence (the Hideaway Property). In 1991, upon George\u2019s motion, his spousal support obligation was reduced from $2000 to $650 a month. Id. \u00b6 3, 121 N.M. 500, 914 P.2d 637. During 1992, George conveyed his interest in the Hideaway Property to Carol as her sole and separate property. In 1993, Barbara Jane recorded two notices on the Hideaway Property claiming liens to secure payment of George\u2019s future spousal support. In late 1994, Carol entered into a contract to sell the Hideaway Property to a third party. A title commitment was obtained, but final issuance of the policy was contingent on release of Barbara Jane\u2019s purported liens.\n{3} On December 20, 1994, Carol executed a written letter of engagement, hiring the Miller firm to represent her in obtaining a release of the liens. The engagement contemplated institution of an action, if required, to quiet title to the Hideaway Property and to obtain damages for slander of title if Barbara Jane refused to release the liens. In the engagement letter, Carol agreed to pay Miller on a time and expense basis, with payment to be made within two weeks after receipt of billing statements.\n{4} Barbara Jane refused to voluntarily release the liens, and on January 20, 1995, Miller filed an amended complaint on Carol\u2019s behalf asserting claims to quiet title, for slander of title, and for prima facie tort. Miller also filed a motion for a preliminary injunction to immediately release the liens so that the pending sale could proceed. During the injunction hearing on February 3, 1995, the district court ordered release of the liens, thus permitting the sale of the property, on the condition that $20,000 be deposited into the court\u2019s registry pending further action in the matter. On February 13, 1995, Barbara Jane filed her counterclaim seeking to impose a judicial lien on the Hideaway Property and seeking damages, alleging that George had fraudulently transferred the property to Carol. Additionally, Barbara Jane filed a third-party complaint against George arising from the same asserted fraudulent transfer.\n{5} Eventually, after a series of claim amendments, motions, and corresponding re- \u2022 sponses, the parties agreed to settle their dispute. Their agreement provided for: (1) termination of all of George\u2019s future spousal support- obligations; (2) release of all pending claims with the parties to bear their costs and attorney fees; and (3) release of the funds in the court registry to Carol. At the time of the settlement, Carol\u2019s accumulated balance for services rendered by Miller was more than $26,000. When Carol did not bring her account balance current or make other arrangements, Miller requested a charging lien against the funds on deposit with the court.\nSTANDARD OF REVIEW\n{6} The district court took no evidence in connection with Miller\u2019s lien claim and expressly dismissed it as a matter of law. Consequently, as the parties agree, we treat the dismissal as a failure to state a claim upon which relief can be granted. See Rule 1-012(B)(6) NMRA 1998; cf. Prichard, 22 N.M. at 138, 159 P. at 40 (court proceeded to analyze attorney\u2019s charging lien after trial court sustained demurrer); Thompson v. Montgomery & Andrews, P.A., 112 N.M. 463, 464, 816 P.2d 532, 533 (Ct.App.1991) (trial court reviewed legal sufficiency of complaint alleging enforceable charging lien). Accordingly, the question we review here is whether the motion for a charging hen stated a claim for relief. See Blea v. City of Espa\u00f1ola, 117 N.M. 217, 218, 870 P.2d 755, 756 (Ct.App. 1994).\nDISCUSSION\n{7} As we have recently noted, states vary in their recognition and treatment of attorney\u2019s charging hens. See RobinsonVargo v. Funyak, 1997-NMCA-095, \u00b6 8, 123 N.M. 822, 945 P.2d 1040. Attorney charging hens are generally allowed as a right created by statute or common law. See, e.g., Frazee v. Frazee, 104 Idaho 463, 660 P.2d 928, 929-30 (1983) (attorney\u2019s charging hen did not exist at common law but has been codified in Idaho Code \u00a7 3-205 (1911)); see generally 7A C.J.S. Attorney & Client \u00a7\u00a7 357, 359 at 715 (1980) (\u201cWhile there are cases holding that the charging hen of an attorney does not exist, such [a] hen now exists in most jurisdictions either by statute or by virtue of judicial decision.\u201d) (footnotes omitted); D.E. Evins, Annotation, Attorney\u2019s Charging Lien Upon Continuing Payments to Which Client Becomes Entitled as Result of Litigation, 99 A.L.R.2d 451, 451 (1965) (\u201cGenerally speaking, an attorney has a special or charging hen for his services to secure compensation for obtaining a judgment, decree, or award for his client ....\u201d). Additionally, at least one state has taken the position that the right to an attorney\u2019s charging lien can be created by contract even when it does not exist by statute or in common-law. See Wagner v. Sariotti, 56 Cal.App.2d 693, 133 P.2d 430, 432 (1943) (\u201cIn this state an attorney has neither a retaining nor charging hen for compensation on a judgment secured by his services in the absence of a contract containing an agreement for a hen.\u201d); cf. Prichard, 22 N.M. at 140-41, 159 P. at 41 (in the absence of statutory or common-law right, attorney recovered fees and costs only upon theories of quantum meruit or by special agreement).\n{8} In New Mexico, the attorney\u2019s charging hen \u201chas its origin in the common law, and is governed by equitable principles.\u201d Northern Pueblos Enters. v. Montgomery, 98 N.M 47, 49, 644 P.2d 1036, 1038 (1982) (citing Prichard, 22 N.M. at 139, 159 P. at 40); accord Rhodes v. Martinez, 1996-NMCA-096, \u00b6 5, 122 N.M. 439, 925 P.2d 1201. It is an attorney\u2019s right to \u201crecover his fees and money expended on behalf of his client from a fund recovered by his efforts, and also the right to have the court interfere to prevent payment by the judgment debtor to the creditor in fraud of his right to the same.\u201d Prichard, 22 N.M. at 140, 159 P. at 41. The attorney\u2019s charging hen is intended \u201cto protect attorneys against dishonest chents, who, utilizing the services of the attorney to establish and enable them to enforce their claims against their debtors, sought to evade payment for the services which enabled them to recover their demand.\u201d Id. at 145, 159 P. at 42; see also Schroeder, Siegfried, Ryan & Vidas v. Modern Elec. Prods., Inc., 295 N.W.2d 514, 516 (Minn.1980) (\u201cHistorically the general theory behind the charging lien was that a successful plaintiff should not be permitted the whole of any judgment secured by the services of his attorney without paying for those services.\u201d).\n{9} In New Mexico, the traditional attorney\u2019s charging lien is solely an equitable remedy administered by the court in its discretion. See Prichard, 22 N.M. at 145, 159 P. at 42 (\u201cThe court, having control of its own process, would not permit the client to have the benefit thereof without paying the attorney, because in equity and good conscience he should compensate the attorney....\u201d) (cited with approval in Northern Pueblos Enters., 98 N.M. at 49, 644 P.2d at 1038); Hilburn v. Brodhead, 79 N.M. 460, 464, 444 P.2d 971, 975 (1968) (\u201c[A] court of equity has power to meet the problem presented, and to fashion a proper remedy to accomplish a just and proper result .... \u201d); cf. Sanders v. Rosenberg, 1997-NMSC-002, \u00b6 10, 122 N.M. 692, 930 P.2d 1144 (\u201c \u2018The touchstone of equity is that it is flexible; the court of equity has the power of devising its remedy and shaping it so as to fit the changing circumstances of every ease and the complex relations of all the parties.... [T]he comprehensiveness of this equitable jurisdiction is not to be denied or limited in the absence of a clear and valid legislative command.\u2019 \u201d (citation omitted)).\n{10} Here, Carol contends this appeal is easily resolved by our Supreme Court\u2019s decision in Sunwest Bank of Roswell, N.A. v. Miller\u2019s Performance Warehouse, Inc., 112 N.M. 492, 816 P.2d 1114 (1991). Carol\u2019s position is that in Sunwest Bank, the Court fundamentally changed the nature of the charging lien, transforming it into a right based only on contract when it stated that the \u201cattorney-client contract must provide that an attorney\u2019s charging lien can attach to client\u2019s award.\u201d 112 N.M. at 496, 816 P.2d at 1118. Carol reasons that since her engagement agreement with Miller did -not expressly provide for a lien, Miller\u2019s claim must fail.\n{11} At first blush, Sunwest Bank appears to be directly on point. A careful comparison of the issues presented for review, however, supports the idea that Sun-west Bank did not intend to supplant the long recognized equitable attorney lien in favor of a purely contract-based right. Cf. Sims v. Sims, 1996-NMSC-078, \u00b629, 122 N.M. 618, 930 P.2d 153 (\u201cThere is no requirement that the creation of a statutory remedy at law for a particular type of claim will automatically supplant an equitable remedy that addresses the same claim.\u201d).\n{12} Sunwest Bank originated as a mortgage foreclosure action. The debtors counterclaimed, contending their debt should be reduced or voided because the bank had acted wrongfully in its various collection efforts. The debtors agreed to pay their attorneys a contingency fee on \u201cany money or property paid, received or collected by compromise or otherwise in satisfaction or settlement of any such claims.\u201d 112 N.M. at 495 n. 1, 816 P.2d at 1117 n. 1. The district court granted the bank summary judgment on its claims in the amount of $388,080, plus interest. After trial on the debtors\u2019 counterclaims, a jury awarded them $82,000. Id. at 493, 816 P.2d at 1115. The debtors\u2019 attorneys filed a Notice of Attorney\u2019s Charging Lien for $48,449\u2014 forty percent of debtors\u2019 judgment. The district court found that the attorney\u2019s lien took precedence over any set-off rights the bank might have under the judgment and directed the bank to pay debtors\u2019 attorneys in accordance with the lien. Id. at 493-49, 816 P.2d at 1115-16.\n{13} The Court in Sunwest Bank was not faced with questions regarding expansion or contraction of the traditional attorney\u2019s charging lien. Rather, the Court was presented squarely with two different, though related issues. The first dealt with whether a lien would attach in the absence of \u201cactual pecuniary recovery.\u201d Id. at 493, 816 P.2d at 1115. This issue arose because the debtors received no payment as such. The debtors\u2019 judgment was smaller than the bank\u2019s judgment and subject to the bank\u2019s set-off right. Sunwest Bank, 112 N.M. at 493, 816 P.2d at 1115. Second, the Court was required to determine whether an attorney\u2019s charging lien took \u201cpriority over a set-off of judgments awarded the attorney\u2019s client and an adverse party.\u201d Id. The analysis in Sunwest Bank related primarily to the priority determination. See id. at 495-96, 816 P.2d at 1117-18; see generally, Jay M. Zitter, Annotation, Priority Between Attorney\u2019s Charging Lien Against Judgment and Opposing Party\u2019s Right of Setoff Against Same Judgment, 27 A.L.R.5th 764, 785 (1995) (reporting the Sunwest case in full and discussing issue of setoff versus priority).\n{14} However, in the Court\u2019s view, the priority issue was initially dependent on whether the attorney had any claim under the attorney-client agreement to what the client actually received; that is, a judgment subject to set-off by a larger judgment, rather than an award of actual money or property. If the attorney-client agreement provided a fee based only on money or property actually received, and no fee if some other, non-pecuniary award resulted from the representation, then no lien could be asserted because no fee had been earned. This focus explains the Court\u2019s observation and concern that:\nThe contingency fee agreement between [the debtors] and their counsel appears to clearly anticipate an actual monetary recovery by the [debtors] before their attorneys would collect a fee.... However, if the trial court determines that the agreement is ambiguous, and the contract could be understood to include payment of attorney fees upon a judgment, then the trial court will balance the equities between the attorney\u2019s charging lien and the set-off.\u201d\n112 N.M. at 495-96, 816 P.2d at 1117-18 (footnote omitted).\n{15} Thus the Court was concerned with whether the attorney was due a fee under the terms of the contract. If a fee had been earned and was due, an equitable balancing of the attorney\u2019s lien and the right of set-off would be required. If no fee had been earned, no lien could be asserted and no balancing was required. The Court was not concerned with the existence of an explicit statement in the attorney-client contract reserving a lien. We are bolstered in this conclusion by the Court\u2019s favorable citation to Miller v. Miller, 83 S.D. 227, 157 N.W.2d 537, 541 (1968), recognizing that either an express or implied contract for fees is necessary for the existence of a lien. It can be easily contemplated that an implied contract for fees would not expressly provide for a lien. The pertinent inquiry is whether the attorney has earned a fee under the contract. If so, the attorney\u2019s lien is available as a means of collection.\n{16} In this regard, Sunwest Bank is not unlike the Court\u2019s decision in Forrest Currell Lumber Co. v. Thomas, 82 N.M. 789, 790, 487 P.2d 491, 492 (1971). In Forrest Currell Lumber Co., the plaintiff and intervenor had a $129,952 judgment entered in their favor. 82 N.M. at 789, 487 P.2d at 491. Defendants successfully counterclaimed against intervenor \u201cbecause of certain illegal acts.\u201d Id. The attorney representing the defendants filed a motion requesting an attorney\u2019s charging lien on the $13,000 judgment. Intervenor responded, arguing it was entitled to a set-off in the full amount. The Court, recognizing the \u201cmodern trend is to protect the attorney against such a set-off,\u201d held the attorney\u2019s charging lien to be superior. Id. at 790, 487 P.2d at 492. It based its determination, in part, on the existence of a valid contract for fees. There is no mention in Forrest Currell Lumber Co. of any requirement that the contract explicitly assert a lien against the client\u2019s recovery.\n{17} The Sunwest Bank decision did not make the charging lien a matter of pure contract, and it did not abrogate the long-established equitable right of an attorney to seek the aid of the Court to get paid for his or her services. See Sunwest Bank, 112 N.M. at 494, 816 P.2d at 1116 (citing Prichard with approval). To the extent that Rhodes, 1996-NMCA-096, \u00b6 8, 122 N.M. 439, 925 P.2d 1201, suggests that a fee agreement must include an explicit charging lien provision before it will be effective, it is hereby overruled.\n{18} Having determined that the attorney\u2019s common-law right to impose a charging lien survives, we now address Carol\u2019s contention that the monies deposited in the Court\u2019s registry are not \u201crecovered funds.\u201d In support, Carol relies on Albuquerque National Bank v. Albuquerque Ranch Estates, Inc., 101 N.M. 656, 687 P.2d 91 (1984), which reiterates the requirement that a charging hen can be imposed only on funds recovered through the attorney\u2019s efforts.\n{19} Here, the district court found that monies were recovered through the efforts of the Miller firm. Our review of the record indicates that the funds were deposited pursuant to the district court\u2019s order so that the sale of the Hideaway Property could proceed. The total represented an amount which was arguably sufficient to cover Barbara Jane\u2019s aheged liens for spousal support which were still in dispute. At this point, Carol was not entitled to the funds. Her right to the funds did not arise until the final underlying settlement was reached. Thus, the deposited funds are clearly different from the real estate payments in Albuquerque National Bank because in that case there existed \u201cno valid recovery fund upon which an attorney\u2019s charging lien could be imposed.\u201d Id. at 657, 687 P.2d at 92. Accordingly, we determine that the district court did not err in determining that the monies were \u201c \u2018recovered funds\u2019 within the meaning of applicable New Mexico case authorities establishing the requirements for assertion and attachment of an attorney\u2019s charging lien.\u201d\nCONCLUSION\n{20} Miller\u2019s request to obtain the assistance of the court to be paid its fees and costs from a fund recovered by its efforts states an appropriate claim for relief. See Prichard, 22 N.M. at 140, 159 P. at 40-41. While it would have been a better practice for the engagement agreement to contain an explicit attorney\u2019s charging lien provision {e.g., for priority purposes), its absence is not fatal to Miller\u2019s claim. Accordingly, we reverse the decision of the district court and remand. The district court must now decide whether, and to what extent, if any, Miller is entitled to \u201cthe equitable interference of [the] court\u201d in collecting its fees. See id.; Northern Pueblos Enters., 98 N.M. at 49, 644 P.2d at 1038 (\u201cBecause a court exercises its equitable powers in enforcing an attorney\u2019s charging lien, it may inquire into the reasonableness of the asserted fee for the purposes of enforcing the lien.\u201d).\n{21} IT IS SO ORDERED.\nDONNELLY and WECHSLER, JJ., concur.",
        "type": "majority",
        "author": "BUSTAMANTE, Judge."
      }
    ],
    "attorneys": [
      "David H. Thomas, III, Dean G. Constantine, Miller, Stratvert & Torgerson, P.A., Albuquerque, for ClaimanVAppellant.",
      "George Cherpelis, Scottsdale, AZ, for Appellee."
    ],
    "corrections": "",
    "head_matter": "1998-NMCA-079\n959 P.2d 973\nCarol M. CHERPELIS, Plaintiff, v. Barbara Jane CHERPELIS, Defendant/Third-Party Plaintiff, v. George CHERPELIS, Third-Party Defendant, MILLER, STRATVERT, TORGERSON & SCHLENKER, P.A. Claimant/Appellant, v. Carol M. CHERPELIS, Respondent/Appellee.\nNo. 18304.\nCourt of Appeals of New Mexico.\nMay 7, 1998.\nDavid H. Thomas, III, Dean G. Constantine, Miller, Stratvert & Torgerson, P.A., Albuquerque, for ClaimanVAppellant.\nGeorge Cherpelis, Scottsdale, AZ, for Appellee."
  },
  "file_name": "0248-01",
  "first_page_order": 288,
  "last_page_order": 293
}
