Dahl v. Christensen, No. 20190330-CA

• Court: Court of Appeals of Utah
• Writing for the Court: HAGEN, Judge
• Citation: 478 P.3d 50
• Parties: C. Robert DAHL, Appellee, v. Steve S. CHRISTENSEN, Hirschi Christensen PLLC, and Christensen Thornton PLLC, Appellants.
• Docket Number: No. 20190330-CA
• Decision Date: 05 November 2020

478 P.3d 50

C. Robert DAHL, Appellee,
v.
Steve S. CHRISTENSEN, Hirschi Christensen PLLC, and Christensen Thornton PLLC, Appellants.

No. 20190330-CA

Court of Appeals of Utah.

Filed November 5, 2020

Opinion

HAGEN, Judge:

478 P.3d 52

¶1 As a means to secure payment for the fees owed to him by his client, Kim Dahl, attorney Steve S. Christensen placed a $2 million lien against Ms. Dahl's interest in a property co-owned by her ex-husband, C. Robert Dahl. In response, Mr. Dahl brought a wrongful lien action against Christensen and his law firms (collectively, Christensen). Following a bench trial, the district court agreed with Mr. Dahl that all or most of the lien was wrongful and entered judgment on that claim in Mr. Dahl's favor. Christensen appeals, arguing that the court erred in its determination that the lien was wrongful. Because we agree that the lien does not fall within the statutory definition of a wrongful lien, we reverse the court's ruling and vacate the judgment against Christensen.

BACKGROUND

¶2 Before the initiation of the proceedings that led to this appeal, Christensen acted as counsel for Ms. Dahl in connection with a variety of legal matters, including (1) a case concerning an irrevocable trust, (2) a divorce action, (3) a legal malpractice case brought against Ms. Dahl's former attorney, and (4) appeals stemming from the foregoing actions. Ms. Dahl signed multiple retainer agreements in connection with the divorce case, as well as a retainer agreement in the malpractice case. To secure any potential unpaid attorney fees, the divorce retainers and the malpractice retainer purported to grant Christensen "an immediate lien" on a home that Ms. Dahl co-owned with Mr. Dahl (the property). Christensen thereafter recorded a $2 million notice of lien against Ms. Dahl's interest in the property.

¶3 The divorce and trust actions eventually made their way to the Utah Supreme Court and were consolidated. See Dahl v. Dahl , 2015 UT 79, ¶ 11, 459 P.3d 276. In the resulting opinion, the court concluded that the divorce retainers "constituted a prohibited fee arrangement." Id. ¶ 197. Because the divorce retainers purported to grant Christensen an interest in the property—the ownership of which was at issue in the divorce case—they ran afoul of rule 1.8(i)(1) of the Utah Rules of Professional Conduct, which prohibits attorneys from acquiring "a proprietary interest in the cause of action or the subject matter of litigation the lawyer is conducting for a client." Id. ¶ 191 (cleaned up). Although the rule contains an exception for liens otherwise authorized by law, the court concluded that the divorce retainers did not qualify for that exception because Utah Code section 38-2-7, the statute governing attorneys' liens, prohibits attorneys from obtaining "a lien in the representation of a client in a domestic relations matter unless a final order of divorce has been secured," and no final divorce decree had yet been issued when Christensen recorded the lien. Id. ¶¶ 193–94. Accordingly, the fee arrangements laid out in the divorce retainers were invalidated. Id. ¶ 211.

¶4 Separately, Mr. Dahl brought the present action to nullify the lien.¹ The district court concluded both that the lien was wrongful and that Christensen had reason to know of its wrongfulness at the time that it was recorded and was consequently liable for statutory damages and attorney fees. The district court's holding that the lien was wrongful was based on two facts: (1) the supreme court's holding in Dahl that the divorce retainers were unlawful, and (2) "the attorney's fees claimed in the divorce action, alone, were reported to be $2,186,568," see id. ¶ 166, so "the vast majority—and perhaps all—of [the $2 million lien] reflects the attorney fees incurred in the divorce action." The district court explained that only "the portion

478 P.3d 53

of the lien that was representing the divorce case was wrongful" and that "some small portions" of the lien "may not have been wrongful" insofar as they were authorized by other documents, such as the malpractice retainer. The court also found that Christensen knew the lien was wrongful when it was recorded, making him liable for statutory damages and attorney fees.

¶5 In response to the district court's ruling, Christensen moved for additional findings of fact and an amended ruling or judgment. In that motion, Christensen argued that the lien was not wrongful because it was "authorized pursuant to a document signed by the owner of the real property." See Utah Code Ann. § 38-9-102(12)(c) (LexisNexis 2018).² Specifically, he contended that the lien was authorized, at least in part, by the malpractice retainer bearing Ms. Dahl's signature and that it therefore did not qualify as wrongful under the Wrongful Lien Act (the Act), even if some portion of the lien was unenforceable. Christensen employed the same logic to challenge the district court's finding that he knew or should have known that the lien was wrongful at the time it was recorded; that is, he argued that he could not have had reason to know the lien was wrongful because it was authorized, at least in part, by Ms. Dahl's signature on the malpractice retainer.

¶6 In its ruling, the district court rejected these arguments. Because it was "undisputed that at least some of the attorney's fees underlying [the lien] were incurred in the divorce action," the court found it "unnecessary" to determine "[e]xactly how much of [the lien] was wrongful and how much was not." To the extent the lien was based on the divorce retainers, it was not authorized because Ms. Dahl's "assent was illegally obtained and [was] invalid." "By recording a lien that was, at least in part, wrongful," the court reasoned, Christensen "violated the [Act]." The court denied Christensen's motion and entered judgment awarding Mr. Dahl $49,568.65 in statutory damages and attorney fees.

ISSUE AND STANDARD OF REVIEW

¶7 Christensen appeals the district court's determination that the lien at issue violated the Act.³ Whether a lien constitutes a wrongful lien is a question of law, which we review for correctness. Bay Harbor Farm, LC v. Sumsion , 2014 UT App 133, ¶ 6, 329 P.3d 46.

ANALYSIS

¶8 Christensen argues that the district court erred in ruling that he violated the Act, because the lien was authorized, at least in part, by the malpractice retainer agreement signed by Ms. Dahl. The Act defines a wrongful lien as:

[A]ny document that purports to create a lien, notice of interest, or encumbrance on an owner's interest in certain real property and at the time it is recorded is not:

(a) expressly authorized

...