Carroll v. Interstate Brands Corp.

• Decision Date: 28 June 2002
• Docket Number: No. A094472.,A094472.
• Citation: 99 Cal.App.4th 1168,121 Cal.Rptr.2d 532
• Court: California Court of Appeals Court of Appeals
• Parties: Theodis CARROLL, Jr., et al., Plaintiffs and Respondents, v. INTERSTATE BRANDS CORPORATION, Defendant; Waukeen Q. McCoy, Claimant and Appellant.

121 Cal.Rptr.2d 532

99 Cal.App.4th 1168

Theodis CARROLL, Jr., et al., Plaintiffs and Respondents, v. INTERSTATE BRANDS CORPORATION, Defendant;

Waukeen Q. McCoy, Claimant and Appellant.

No. A094472.

Court of Appeal, First District, Division 5.

June 28, 2002.

Zachary M. Best, for claimant and appellant.

Daniel U. Smith, Los Angeles, Paul B. Justi; Angela Alioto, San Francisco, Steven L. Robinson, Law Offices of Joseph Alioto & Angela Alioto, San Francisco, for plaintiffs and respondents.

JONES, P.J.

The question before us in this appeal is whether the trial court properly ordered an attorney's lien "expunged." We conclude the trial court lacked jurisdiction to assess the validity of the lien, and we reverse the order.

BACKGROUND

In two consolidated actions below, trial was held on the claims of several plaintiffs for damages resulting from race-based employment discrimination. All 23 plaintiffs were initially represented by the Law Offices of Joseph Alioto and Angela Alioto (hereafter Alioto). Alioto in turn hired attorney Waukeen Q. McCoy to perform certain legal work on the case. According to McCoy, he was promised a percentage of the recovery as compensation for his services.

Eventually McCoy left the employ of Alioto, and three of the plaintiffs substituted McCoy as their attorney of record in place of Alioto. Those three plaintiffs were represented by McCoy through trial. A jury verdict was rendered in favor of plaintiffs, although retrials are pending for the three plaintiffs represented at trial by McCoy.

Alioto and McCoy hotly disputed the attorney fees owed to McCoy, and that dispute resulted in a separate lawsuit filed by McCoy against Alioto to recover his "earnings." ¹ Additionally, McCoy filed a notice of lien within the instant employment discrimination lawsuit for the value of his services performed for 11 of the plaintiffs represented by Alioto.

After the verdict was rendered, the 11 plaintiffs filed a motion to expunge McCoy's attorney's lien, asserting that because McCoy had no contractual relationship with them, McCoy had no valid attorney's lien. McCoy opposed the motion on the ground that the trial court had no jurisdiction to determine the validity of an attorney's lien. The trial court granted the plaintiffs' motion. McCoy now appeals from the order directing that his attorney's lien be expunged as to the 11 plaintiffs represented by Alioto.²

DISCUSSION

A. Creation of an Attorney's Lien

A lien may be created by contract or by operation of law. (Civ.Code, § 2881.) In most jurisdictions a lien is established by operation of law in favor of an attorney to satisfy attorney fees and expenses out of the proceeds of a prospective judgment. (See 1 Witkin, Cal. Procedure (4th ed. 1996) Attorneys, § 192, p. 248.) In California, an attorney's lien is created only by contract—either by an express provision in the attorney fee contract (Cetenko v. United California Bank (1982) 30 Cal.3d 528, 531, 179 Cal.Rptr. 902, 638 P.2d 1299; Haupt v. Charlie's Kosher Market (1941) 17 Cal.2d 843, 112 P.2d 627) or by implication where the retainer agreement provides that the attorney is to look to the judgment for payment for legal services rendered (Wagner v. Sariotti (1943) 56 Cal.App.2d 693, 697, 133 P.2d 430; see Gelfand, Greer, Popko & Miller v. Shivener (1973) 30 Cal.App.3d 364, 375, 377, 105 Cal.Rptr. 445; Skelly v. Richman (1970) 10 Cal.App.3d 844, 865, 89 Cal.Rptr. 556).³ Unlike a service lien or a mechanic's lien, for example (Civ.Code, §§ 3051, 3110), an attorney's lien is not created by the mere fact that an attorney has performed services in a case. (Ex parte Kyle (1850) 1 Cal. 331; see Isrin v. Superior Court (1965) 63 Cal.2d 153, 157, 45 Cal. Rptr. 320, 403 P.2d 728; see generally 1 Witkin, Cal. Procedure, supra, Attorneys, §§ 192-193, pp. 248-249.)

Because an attorney's lien is not automatic and requires a contract for its creation, a direct contractual relationship between the attorney and the client is essential. When the client enters into a retainer agreement with one particular attorney, a lien in favor of another, albeit associated attorney is neither express nor implied and does not exist. (Law Offices of Stanley J. Bell v. Shine, Browne & Diamond (1995) 36 Cal.App.4th 1011, 1019, 43 Cal.Rptr.2d 717; Trimble v. Steinfeldt, supra, 178 Cal.App.3d at p. 651, 224 Cal. Rptr. 195.) Associate counsel must look to the client's attorney for compensation, not to the client. (178 Cal.App.3d at pp. 651-652, 224 Cal.Rptr. 195.)

What is not essential to creation of an attorney's lien is the filing of a notice of lien. Unlike a judgment creditor's lien, which is created when the notice of lien is filed (Code Civ. Proa, § 708.410, subd. (b)), an attorney's lien is a "secret" lien; it is created and the attorney's security interest is protected even without a notice of lien. (Cetenko v. United California Bank, supra, 30 Cal.3d at pp. 532-533, 179 Cal. Rptr. 902, 638 P.2d 1299; Cappa v. F & K Rock & Sand, Inc. (1988) 203 Cal.App.3d 172, 174-175, 249 Cal.Rptr. 718; Hansen v. Jacobsen (1986) 186 Cal.App.3d 350, 357, 230 Cal.Rptr. 580.) An attorney may, however, choose to file a notice of lien in the underlying action, and the common practice of doing so has been held permissible and even advisable. (Valenta v. Regents of University of California (1991) 231 Cal.App.3d 1465 1470, 282 Cal. Rptr. 812; Hansen v. Jacobsen, supra, 186 Cal.App.3d at pp. 357-358, 230 Cal.Rptr. 580.)

It bears emphasizing that a notice of lien is not the same as the lien (the security interest) or the lien claim. As will be seen in the discussion that follows, a lack of precision in the use of these terms all too often creates confusion. (See Valenta v. Regents of University of California, supra, 231 Cal.App.3d at pp. 1469-1470, 282 Cal.Rptr. 812; Hansen v. Jacobsen, supra, 186 Cal.App.3d at pp. 354, 357, 230 Cal. Rptr. 580.)

B. Determining the Existence of an Attorney's Lien

Appellate courts have consistently held that the trial court in the underlying action has no jurisdiction to determine the existence or validity of an attorney's lien on the judgment. (Law Offices of Stanley J. Bell v. Shine, Browne & Diamond, supra, 36 Cal.App.4th at pp. 1019-1020, 43 Cal.Rptr.2d 717; Valenta v. Regents of University of California, supra, 231 Cal.App.3d at p. 1470, 282 Cal.Rptr. 812; Hansen v. Jacobsen, supra, 186 Cal. App.3d at p. 356, 230 Cal.Rptr. 580; Hendricks v. Superior Court (1961) 197 Cal. App.2d 586, 588-589, 17 Cal.Rptr. 364.) The trial court does have fundamental jurisdiction over the subject matter and over the parties. Nevertheless, because the attorney is not a party to the underlying action and has no right to intervene, the trial court acts in excess of its jurisdiction when it purports to determine whether the attorney is entitled to foreclose a lien on the judgment. (Hendricks v. Superior Court, supra, 197 Cal.App.2d at pp. 588-589, 17 Cal.Rptr. 364; see also Law Offices of Stanley J. Bell v. Shine, Browne & Diamond, supra, 36 Cal.App.4th at pp. 1019-1024, 43 Cal.Rptr.2d 717; Valenta v. Regents of University of California, supra, 231 Cal.App. at p. 1470, 282 Cal.Rptr. 812; Hansen v. Jacobsen, supra, 186 Cal. App.3d at p. 356, 230 Cal.Rptr. 580) Nor can the court entertain a motion to terminate the lien. (Valenta v. Regents of University of California, supra, 231 Cal.App. at p. 1470, 282 Cal.Rptr. 812.) After the client obtains a judgment, the attorney must bring a separate, independent action against the client to establish the existence of the lien, to determine the amount of the lien, and to enforce it. (Law Offices of Stanley J. Bell v. Shine, Browne & Diamond, supra, 36 Cal.App.4th at p. 1020, 43 Cal.Rptr.2d 717; Valenta v. Regents of University of California, supra, 231 Cal. App.3d at pp. 1469-1470, 282 Cal.Rptr. 812; Bandy v. Mt. Diablo Unified Sch. Dist, supra, 56 Cal.App.3d at pp. 234-235, 126 Cal.Rptr. 890; see Hansen v. Jacobsen, supra, 186 Cal.App.3d at p. 356, 230 Cal.Rptr. 580.) An order within the underlying action purporting to affect an attorney's lien is void. (Valenta v. Regents of University of California, supra, at p. 1469, fn. 2, 282 Cal.Rptr. 812.)

In the case before us, the trial court's oral remarks reflect a finding that McCoy had no attorney's lien because the essential element of a direct contractual relationship was missing: "I just don't think there's any question that ... there is a right to file a lien, only if there is an agreement between, in this case, Mr. McCoy and the client.... [A] lien has been improperly filed on the face of it, not because Mr. McCoy didn't do any work, or not because his agreement with Ms. Alioto is different from what Ms. Alioto claims, but simply because it appears indisputably that there is no direct agreement between Mr. McCoy and these clients.... All I'm saying is that Mr. McCoy, since he did not have an agreement directly with the clients, does not have a right to file a lien against any recovery the clients may obtain in this litigation."

It is apparent that the trial court had no jurisdiction to determine the existence of an attorney's lien. Whether McCoy and the 11 plaintiffs had a direct contract and whether that contract impliedly created an attorney's lien are questions of fact to be decided in an independent action brought by McCoy to enforce his lien claim. (Gelfand, Greer, Popko & Miller v. Shivener, supra, 30 Cal.App.3d at p. 375, 105 Cal. Rptr. 445.) They are not questions to be resolved in the underlying action.

The trial court seems to have relied on Trimble v. Steinfeldt, supra, 178 Cal. App.3d 646, 224 Cal.Rptr. 195. In that case, the associated attorney filed a notice of lien in the underlying action, and the plaintiff/client moved to "expunge" the lien. The trial court denied the motion, but the appellate court held that the motion to expunge should have been granted. (Id. at pp. 649, 650, 224 Cal.Rptr. 195.) The appellate...