Daniel Mones, P.A. v. Smith

• Decision Date: 20 March 1986
• Docket Number: No. 66296,66296
• Citation: 486 So.2d 559,11 Fla. L. Weekly 114
• Parties: , 11 Fla. L. Weekly 114 DANIEL MONES, P.A., Petitioner, v. Jeffrey SMITH and First Impression Industries, Inc., Respondents.
• Court: Florida Supreme Court

Page 559

486 So.2d 559

70 A.L.R.4th 817, 11 Fla. L. Weekly 114

DANIEL MONES, P.A., Petitioner, v. Jeffrey SMITH and First Impression Industries, Inc., Respondents.

No. 66296.

Supreme Court of Florida.

March 20, 1986.

Rehearing Denied May 6, 1986.

Thomas M. Ervin, Jr. of Ervin, Varn, Jacobs, Odom and Kitchen, Tallahassee, for petitioner.

Robert J. Levine of Toland and Levine, Miami, for respondents.

McDONALD, Justice.

We have for review Smith v. Daniel Mones, P.A., 458 So.2d 796 (Fla. 3d DCA 1984), which expressly and directly conflicts with Dowda & Fields, P.A. v. Cobb, 452 So.2d 1140 (Fla. 5th DCA 1984), and Conroy v. Conroy, 392 So.2d 934 (Fla. 2d DCA 1980), review denied, 399 So.2d 1141 (Fla.1981). This Court has jurisdiction pursuant to article V, section 3(b)(3), Florida Constitution. The issue here is whether the attorney acquired a valid lien on his client's settlement proceeds, thereby allowing him to retain the funds until a dispute over fees is settled. We hold that Mones may claim a retaining lien.

This is an action filed by an attorney, Daniel Mones, P.A., to collect fees which his former clients, Jeffery Smith and First Impression Industries, Inc. (clients), allegedly owe to him. According to the pleadings, Mones had represented the clients in several legal matters prior to this suit. The last such matter was a mechanics lien action which was settled for approximately $37,000.00. Of that amount, Mones immediately disbursed $15,000.00 to the clients. Mones deposited the remaining $22,000.00 of the settlement proceeds into an attorney's trust account. ^* Afterward, Mones presented to the clients a claim for attorney's fees amounting to $14,400.00 on the mechanics lien action (forty percent contingency claim) and approximately $30,000.00 for services rendered in prior matters. Even though the clients fiercely disputed these charges, Mones transferred the balance of the settlement proceeds from the trust fund to his personal account. The clients demanded that Mones immediately disburse the proceeds to them, but Mones refused and filed this suit. In response to the clients' motion for immediate disbursement of the proceeds, Mones contended he could hold the funds pending final resolution of the fee dispute because he held both a retaining lien and a charging lien on the funds. The trial court ruled in favor of Mones, finding both liens present.

The third district reversed on interlocutory appeal, ruling against the existence of either lien. According to the district court, Mones had not perfected a charging lien because he had neither filed a notice of lien nor pursued the charging lien in the original mechanics lien action. The district court further denied Mones a retaining lien, ruling that setoffs for past legal services rendered in unrelated cases could not be imposed on an attorney's trust account.

Additionally, the district court ordered Mones to transfer the settlement proceeds to the clients immediately. Instead, Mones transferred the funds to the court registry. After both the district court and the trial court refused to stay the transfer order, this Court granted Mones an emergency stay of all proceedings below pending further order from this Court.

Both retaining liens and charging liens arose under common law. Maryland Casualty Co. v. Westinghouse Credit Corp. (In re Hanson Dredging, Inc.), 15 B.R. 79 (S.D.Fla.1981). See Nichols v. Kroelinger, 46 So.2d 722 (Fla.1950). No statutes outline the requirements for valid attorney's liens in Florida. Rather, case law acts as the sole guide for both attorneys and courts as to these liens. Sinclair, Louis, Siegel, Heath, Nussbaum & Zavertnik, P.A. v. Baucom, 428 So.2d 1383 (Fla.1983); St. Ana v. Wheeler Mattison Drugs, Inc., 129 So.2d 184 (Fla. 3d DCA), cert. denied, 133 So.2d 646 (Fla.1961). In Sinclair, Louis, 428 So.2d at 1385, this Court set out four requirements for a valid charging lien. To impose such a lien, the attorney must show: (1) an express or implied contract between attorney and client; (2) an express or implied understanding for payment of attorney's fees out of the recovery; (3) either an avoidance of payment or a dispute as to the amount of fees; and (4) timely notice. In the case at bar the district court determined that Mones did not give timely notice of his charging lien claim. We agree.

In order to give timely notice of a charging lien an attorney should either file a notice of lien or otherwise pursue the lien in the original action. Sinclair, Louis, 428 So.2d at 1385; Dowda & Fields, P.A. v. Cobb, 452 So.2d 1140 (Fla. 5th DCA 1984). See Rosenkrantz v. Hall, 161 So.2d 673 (Fla. 3d DCA 1964); Pasin v. Kroo, 412 So.2d 43 (Fla. 3d DCA 1982); Fickle v. Adkins, 385 So.2d 1141 (Fla. 3d DCA 1980). A summary proceeding in the original action represents the preferred method of enforcing an attorney's charging lien in Florida. Sinclair, Louis, 428 So.2d at 1385; Dowda, 452 So.2d at 1143. While such a proceeding is not the exclusive mechanism for enforcing a charging lien, Mones was obligated to notify his clients in some way before the close of the original proceeding that he intended to pursue the charging lien. Simply filing suit gave his former clients insufficient notice. Therefore, no valid charging lien can be imposed on the settlement proceeds in the case at bar.

Turning now to the district court's denial of a retaining lien, we find the court erred in ruling that trust accounts are not subject to setoffs for past legal services rendered in unrelated cases. In Florida an attorney has a right to a retaining lien upon all of the client's property in the attorney's possession, including money collected for the client. E.g., Dowda, 452 So.2d at 1142. Unlike a charging lien, a retaining lien covers the balance due for all legal work done on behalf of the client regardless of whether the property is related to the matter for which the money is owed to the attorney. Conroy v. Conroy, 392 So.2d 934 (Fla. 2d DCA 1980), review denied, 399 So.2d 1141 (Fla.1981).

The district court interpreted our decision in The Florida Bar v. Bratton, 413 So.2d 754 (Fla.1982), as authority for the proposition that attorney's trust accounts are not subject to setoffs for past legal services rendered in unrelated cases. Such an interpretation of Bratton is unwarranted. In Bratton we ruled that an attorney cannot impose a valid retaining lien on client's funds entrusted to the attorney for a specific purpose where the parties have not agreed that fees should be paid out of the entrusted funds. In the case at bar the funds were not held for a specific purpose and, accordingly, Bratton is inapplicable.

The district court's reliance on Florida Bar Integration Rule, article XI, rule 11.02(4) is also unjustified. Rule 11.02(4) expressly provides that it does not "preclude the retention of money or other property upon which the lawyer has a valid lien for his services or ... preclude the payment of agreed fees from the proceeds of transactions or collections." This rule permits retaining liens on trust funds where otherwise valid. Accordingly, Mones is entitled to a retaining lien for the full balance of all fees still owed him up to the balance which remained in the trust account prior to its transfer to the court registry.

Therefore, we approve that portion of the district court's decision relating to the charging lien and quash that portion relating to the retaining lien. We further quash the order instructing the trial court to order the surrender of the proceeds to the clients and instruct that the registry retain the funds pending the final outcome of the fee dispute. The stay order is vacated.

It is so ordered.

ADKINS, OVERTON, EHRLICH and SHAW, JJ., concur.

BOYD, C.J., concurs in part and dissents in part with an opinion.

BOYD, Chief Justice, concurring in part and dissenting in part.

I concur in the Court's conclusion that petitioner did not have a charging lien on the proceeds of the settlement for his fees for services provided in obtaining the settlement. I dissent to that portion of the Court's decision that holds that the lawyer had a retaining lien on the funds to secure payment of fees owed including those said to be owed for legal services previously performed in entirely separate matters.

This interlocutory appeal on the issue of whether the lawyer could retain funds of the client pending resolution of the lawyer's legal action for payment of fees went before the district court without any appeal record. The legal questions presented, however, turn on issues of fact and the parties vigorously dispute the facts. It is impossible for us to evaluate the contradictory assertions of fact by the normal method of reference to the trial record because no trial record has as yet been developed. Yet these factual issues are relevant not only to the question of entitlement to attorney's fees but also to the lawyer's asserted right to retain funds received on behalf of the client.

I agree that there was no charging lien on the settlement proceeds because after settlement and dismissal of the litigation there was no judgment, fund, or res, within the control of the court, to which the lien could attach. See, e.g., Gay v. McCaughan, 105 So.2d 771 (Fla.1958); Dowda and Fields, P.A. v. Cobb, 452 So.2d 1140 (Fla. 5th DCA 1984). The charging lien does not simply exist by operation of law but depends on some action of the court. There have been cases where this Court has approved imposition of equitable lawyer's liens on real and personal property after termination of the proceedings in which the fund or property was recovered, but all such cases showed special equitable circumstances. See, e.g., Forman v. Kennedy, 156 Fla. 219, 22 So.2d 890 (1945); Ward v. Forde, 154 Fla. 383, 17 So.2d 691 (1944), receded from to extent of inconsistency, Billingham v. Thiele, 109 So.2d 763 (Fla.1959); Knabb v. Mabry, 137 Fla. 530, 188 So. 586 (1939);...