Bero-Wachs v. Law Office of Logar & Pulver
| Decision Date | 03 May 2007 |
| Docket Number | No. 44488.,No. 46865.,44488.,46865. |
| Citation | 157 P.3d 704 |
| Court | Nevada Supreme Court |
| Parties | Francesca BERO-WACHS, Appellant, v. THE LAW OFFICE OF LOGAR & PULVER, Respondent. Law Office of Logar & Pulver, APC and Dan Degeus, C.P.A., Petitioners, v. The Second Judicial District Court of the State of Nevada, in and for the County of Washoe, the Honorable Chuck Weller, as Successor to the Honorable Scott Jordan, Department 11 Thereof, Presiding, Respondent, and Francesca Bero-Wachs and Jeffrey Alan Wachs, Real Parties in Interest. |
Law Office of William M. O'Mara and David C. O'Mara and William M. O'Mara, Reno, for Appellant/Real Party in Interest Bero-Wachs.
Richard F. Cornell, Reno, for Respondent/Petitioners.
Law Office of Logar & Pulver, APC, and Ronald J. Logar and Eric A. Pulver, Reno, for Respondent.
Donald K. Coppa, Reno, for Real Party in Interest Wachs.
Before the Court En Banc.
In this opinion, we consider two issues regarding attorney's liens. First, we consider whether an attorney's lien attaches to property awarded in a divorce decree that is exempt from execution by a creditor. Second, we consider whether an attorney can include a forensic accountant's fees in his attorney's lien if the client entered into an independent contract with the accountant to pay for the accountant's fees.
As to the first issue, we conclude that an attorney's lien does not attach to exempt property awarded in a divorce decree. Although the attorney's lien statute broadly encompasses all money or property recovered in an action, this broad language must yield to Nevada's exemption statute. As to the second issue, we conclude that an attorney cannot include an accountant's fees in his attorney's lien if the client has already entered into an independent contract with the accountant to pay for the accountant's fees. In this situation, the client is the sole principal for purposes of the contract, and the attorney is not responsible for accounting services rendered under the contract. Consequently, the attorney cannot include these accounting fees as costs in the attorney's lien.
Appellant Francesca Bero-Wachs filed for divorce against her husband, Dr. Jeffrey Alan Wachs, in August of 2000. Bero-Wachs believed that her husband was concealing assets, that he was intentionally living beyond his means to deplete marital assets before a divorce decree could be entered, and that he was intentionally and extensively commingling his personal finances with those of his medical practice in an attempt to hide income and assets.
Approximately one year into the divorce proceedings, Bero-Wachs substituted in attorney Ronald J. Logar as her counsel. Logar recommended that Bero-Wachs hire Dan DeGeus, a forensic accountant, to conduct a thorough valuation of Wachs's practice and to evaluate whether Wachs wasted community assets by living above his means. Bero-Wachs then entered into an independent retainer agreement with DeGeus.
With regard to the issue of waste, Bero-Wachs sent Logar and DeGeus several letters requesting that they uncover hidden assets and that they perform a complete valuation of Wachs's personal expenses and medical practice to uncover any income that Wachs may have hidden in his medical practice. Logar filed numerous motions on Bero-Wachs's behalf in an attempt to accomplish this goal. Logar and DeGeus worked together to separate Wachs's personal expenses from his business expenses, and they performed a relatively complex valuation of Wachs's medical practice. Logar represented Bero-Wachs through trial, and he also filed several post-trial motions on Bero-Wachs's behalf. After the decree of divorce was entered, Bero-Wachs notified Logar and DeGeus in writing of her refusal to pay the fees for their services.
Logar subsequently filed and obtained an attorney's lien in the divorce proceedings, which included DeGeus's fees and costs in addition to his own fees and costs. The district court ultimately upheld the lien and determined that the lien did not attach to Bero-Wachs's alimony award, but that it attached to all other assets awarded to her in the divorce decree, including four individual retirement accounts (IRAs).
Bero-Wachs has appealed, contending that the district court erroneously determined that an attorney's lien could attach to her purportedly exempt IRAs, which were awarded to her in the divorce decree, and that the district court erroneously included DeGeus's accountant fees in the attorney's lien. Logar, on his part, has filed a petition for a writ of mandamus, requesting that this court compel the district court to declare, among other things, that Bero-Wachs's alimony award is not exempt from his attorney's lien.
The appeal and writ petition raise two issues of first impression that we now address: (1) whether an attorney's lien attaches to property awarded in a divorce decree that is exempt from execution by creditors; and (2) whether an attorney can include a forensic accountant's fees in his attorney's lien if the client has independently contracted with the accountant to pay the fees.
An attorney's lien does not attach to assets awarded in a divorce decree that are exempt from execution by creditors
The first question before the court is whether an attorney's lien attaches to court-ordered alimony and to qualified IRAs awarded in a divorce decree, both of which may otherwise be exempt from execution by creditors. These exemptions arise from the Nevada Constitution, which mandates that debtors enjoy certain exemptions from payment of any debts:
The privilege of the debtor to enjoy the necessary comforts of life shall be recognized by wholesome laws, exempting a reasonable amount of property from seizure or sale for payment of any debts or liabilities hereafter contracted . . . .1
The Legislature enacted what is now NRS 21.090 to fulfill the mandate set forth in the Nevada Constitution. NRS 21.090(1)(s) provides that alimony is exempt from execution, including:
All money and other benefits paid pursuant to the order of a court of competent jurisdiction for the support and maintenance of a former spouse, including the amount of any arrearages in the payment of such support and maintenance to which the former spouse may be entitled.
NRS 21.090(1)(s) specifically exempts all money and benefits paid "for the support and maintenance of a former spouse," including the amount of any arrearages. Additionally, NRS 21.090(1)(q) exempts qualified IRAs to the extent that they conform to specific provisions of the Internal Revenue Code.
While NRS 21.090 exempts alimony and certain retirement accounts from execution, NRS 18.015 allows an attorney to place a lien upon his client's claim or cause of action in the amount of a reasonable fee for the attorney's services. This lien "attaches to any verdict, judgment or decree entered and to any money or property which is recovered on account of the suit or other action, from the time of service of the notices required by this section."2 Therefore, NRS 18.015 broadly allows an attorney's lien to attach to a client's interest in the judgment or decree.
We have recognized that "[t]he attorney's right to be paid is not based upon, or limited to, his lien"; instead it is based upon an express or implied contract, and "[t]he lien is but security for [the attorney's] right."3 The purpose of NRS 18.015 is to secure attorney fees and to "encourag[e] attorneys to take cases of those who could not otherwise afford to litigate."4
However, Article 1, Section 14 of the Nevada Constitution provides that certain assets shall be exempt from execution for any debts or liabilities. Because an attorney's lien attaches to any verdict, judgment or decree, and exempt assets are exempt from any debt or liability, a statutory conflict arises.
Logar cites a handful of Nevada cases for the proposition that attorney's liens can attach to exempt property. Logar's reliance on these cases is misplaced, however, because these cases primarily deal with the district court's power to enforce alimony obligations by instituting contempt proceedings and whether alimony is a debt within the meaning of Article 1, Section 14 of the Nevada Constitution.5 Logar's right to payment and his statutory attorney's lien arise out of an implied contractual relationship to perform legal services. Thus, unlike court-ordered alimony, we conclude that attorney fees and costs are debts within the meaning of Article 1, Section 14 of the Nevada Constitution. We conclude that, contrary to Logar's arguments, these cases do not resolve the issue.
Although this court has not previously decided this issue, we have determined that an attorney could not claim his client's workers' compensation award in violation of a workers' compensation statute. In a 1929 decision, Dunseath v. Industrial Commission,6 this court held that an attorney's claim for fees was subject to the exemption contained in a former workers' compensation statute,7 now codified as NRS 616C.205. The former workers' compensation statute provided that a workers' compensation award was to be paid only to the claimant.8 In interpreting that former statute, this court concluded that it 9 This court further concluded that "[the client] and [the attorney] were not prohibited by the section from contracting for the payment of an attorney fee to the latter, but from agreeing that it should be paid out of the [workers' compensation] award."10
Similar to NRS 616C.205, NRS 21.090 provides no exception to its exemption for attorney's liens. Additionally, NRS 21.090 arises out of a constitutional mandate. We now adopt the approach used in Northwestern National Bank of South St. Paul v. Kroll and conclude that "the exemption statutes...
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