Ong Law Firm, P.A. v. Demster

• Decision Date: 05 May 2023
• Docket Number: 124,809
• Parties: Ong Law Firm, P.A., Appellee, v. Karen Demster, Appellant.
• Court: Kansas Court of Appeals

1

Ong Law Firm, P.A., Appellee, v. Karen Demster, Appellant.

No. 124,809

Court of Appeals of Kansas

May 5, 2023

NOT DESIGNATED FOR PUBLICATION

Appeal from Johnson District Court; PAUL C. GURNEY, judge.

Allison G. Kort, of Kort Law Firm LLC, of Kansas City Missouri, for appellant.

Michael R. Ong, of Ong Law Firm, P.A., of Overland Park, for appellee.

Before HURST, P.J., MALONE and BRUNS, JJ.

MEMORANDUM OPINION

PER CURIAM.

This case concerns a dispute over attorney fees arising from an underlying familial conflict.In 2017, Karen Demster hired Ong Law Firm (the Firm) to represent her in an action to recover money her daughter had inherited from Demster's mother.As part of that representation, Demster signed a written attorney representation and fee agreement in which she agreed to pay the Firm fixed hourly billing rates plus all costs and expenses incurred through the representation.However, after some period of time, Demster could no longer make regular payments to the Firm for her attorney fees and costs.Thereafter, Demster and the Firm orally agreed that the Firm would delay its receipt of regular payments from Demster and take its fees and costs from the judgment it recovered on her behalf.

After recovering a judgment on Demster's behalf, the Firm sought to retain its outstanding attorney fees from that judgment, but Demster objected.The Firm sought a declaratory judgment regarding its ability to retain the outstanding fees and costs from the judgment, and after denying Demster's summary judgment motion and conducting a bench trial, the district court found for the Firm and ordered that the Firm was entitled to recover its outstanding attorney fees of $98,057.32 and $764.74 in costs from the judgment.Demster appeals, claiming the district court lacked subject matter jurisdiction to declare the Firm's rights to the unpaid attorney fees and costs and order recovery from the judgment proceeds.

FACTUAL AND PROCEDURAL HISTORY

In February 2012, Demster's mother, Mary Margaret Bridges, died.Upon Bridges' death, certain assets passed to her granddaughter, Natalie Nelson.In July 2017, Demster and her husband hired the Firm to represent them in an action against Nelson, Demster's daughter-captioned Demster v. Nelson, Case No. 17CV06351-to recover money Nelson had received from Bridges.Demster signed a written attorney representation and fee agreement in which she agreed to pay fixed hourly billing rates and all costs and expenses incurred by the Firm on their behalf.The agreement required a $1,500 retainer and provided that billing statements would be due and payable upon receipt.The Demsters paid the $1,500 retainer and made further payments upon receipt of statements which totaled $6,730 by the end of 2017.

Eventually, however, the Demsters could not continue to pay the attorney fees and expenses as they were incurred during the litigation.Thereafter, Demster orally agreed to pay any further-incurred attorney fees and expenses out of any judgment the Firm secured against Nelson on Demster's behalf.

Demster ultimately prevailed in her action against Nelson and was awarded $226,719.91.The money judgment was deposited in the Firm's trust account.The Firm attempted to disburse the awarded funds to Demster, less its remaining unpaid attorney fees and expenses, but Demster disputed the Firm's claimed fees and expenses.

The Firm subsequently filed a petition for declaratory judgment, seeking a determination of its contractual right to recover the disputed unpaid attorney fees and expenses and the proper disposition of the disputed funds retained in the Firm's trust account.Demster filed a motion for summary judgment, arguing that the district court lacked subject matter jurisdiction to order Demster to pay the Firm's unpaid attorney fees and expenses out of the judgment awarded to her in the underlying litigation because her oral agreement to do so was never reduced to writing.After a hearing at which both sides presented argument, the district court denied Demster's motion for summary judgment, finding that it had subject matter jurisdiction to hear and decide the Firm's petition for declaratory judgment.

In August 2021, the district court conducted a bench trial on the Firm's petition for declaratory judgment.Following conclusion of the trial, the court issued a comprehensive order and judgment, awarding the Firm $98,057.32 in attorney fees and expenses and $764.74 in costs.The court ordered that the Firm could recover its awarded fees and costs from Demster's funds obtained in the judgment secured against Nelson and held in the Firm's trust account and that the remaining funds be disbursed to Demster.Demster now appeals.

DISCUSSION

Demster appeals the district court's declaratory judgment and order, arguing that the district court lacked subject matter jurisdiction to order Demster to pay the Firm's unpaid attorney fees and expenses out of the judgment it received on her behalf.

Before reaching the merits of the parties' dispute, this court must address two disputed ancillary issues.First, the Firm contends that volumes seven and eight of the record on appeal should not be considered because Demster did not timely request the addition of these volumes.But Demster responds that she requested these additions to the record on appeal in accordance with the governing Kansas Supreme Court Rules.Demster is correct.

Supreme Court Rule 3.02(d)(2023 Kan. S.Ct. R. at 21) provides that "[a]party may request adding to the record on appeal any part of the entire record under Rule 3.01(a)."Supreme Court Rule 3.01(a)(2023 Kan. S.Ct. R. at 20) in turn provides:

"The entire record consists of:

(1) all original papers and exhibits filed in the district court;

(2)the court reporter's notes and transcripts of all proceedings;

(3) any other court authorized record of the proceedings including an electronic recording; and

(4) the entries on the appearance docket in the district court clerk's office."

Finally, Supreme Court Rule 3.02(d)(3)(B)(2023 Kan. S.Ct. R. at 22) provides that, if the record on appeal has not yet been transmitted to the clerk of the appellate courts, "[t]he clerk must add the requested addition to the record on appeal.No court order is required."

Demster filed her request to add volumes seven and eight to the record on appeal on September 12, 2022, before the record on appeal was transmitted to the clerk of the appellate courts on October 6, 2022.Moreover, the contents of both volumes- documents and exhibits filed in the district court-are within the definition of the entire record as provided in Rule 3.01(a).The Firm cites no contrary authority to support its argument that the added volumes should not be considered by this court.Demster complied with the governing Supreme Court Rules in requesting to add volumes seven and eight to the record on appeal, and it is therefore appropriate for this court to consider the contents of those records.

Second, the Firm argues this court may not consider the contents of the exhibits Demster attached to her motion for summary judgment(upon which she sometimes relies in her appellate brief) because the district court refused to do so.At the hearing on Demster's summary judgment motion, the district court explained that the exhibits were "unverified documents . . . lacking in evidentiary value" and, therefore, it would "not consider such documents or arguments based on any specific content of such documents."In its subsequent journal entry denying the motion, the court reiterated that the documents "are not part of the case record."This court need not decide this issue because the contested exhibits are immaterial to its analysis governing the sole issue presented in this appeal.So, this court will consider volumes seven and eight but need not consider the summary judgment exhibits.

On appeal, this court reviews "issues of subject matter jurisdiction and statutory interpretation de novo," as they are both questions of law subject to unlimited review.Chalmers v. Burrough, 314 Kan. 1, 7, 494 P.3d 128(2021);Kingsley v. Kansas Dept. of Revenue, 288 Kan. 390, 395, 204 P.3d 562(2009)("The question as to whether subject matter jurisdiction exists is a question of law over which this court's scope of review is unlimited.").

I.The District Court Had Subject Matter Jurisdiction

Demster claims that "[b]ecause any oral contingency fee agreement was never reduced to writing, no valid agreement existed between these parties" and therefore, the district court lacked subject matter jurisdiction over the Firm's petition for declaratory judgment concerning that agreement.Demster argues that "[t]he trial Court lacked jurisdiction under the Declaratory Judgments Act to concoct never-written terms of an employment contract and then bind the parties to those terms."Subject matter jurisdiction is a prerequisite for a court to enter a valid judgment.In re Estate of Heiman, 44 Kan.App.2d 764, 766, 241 P.3d 161(2010)("If a court lacks subject matter jurisdiction, its actions have no legal force or effect and cannot bind the parties.")."Subject matter jurisdiction is the power of the court to hear and decide a particular type of action," which is conferred by the Kansas Constitution and statutes.Chalmers, 314 Kan. at 7;In re Marriage of Williams, 307 Kan. 960, 967, 417 P.3d 1033(2018)("Sources of Kansas courts' subject-matter jurisdiction include the Kansas Constitution and Kansas statutes.").

This court exercises unlimited review over the interpretation of the statutes governing subject matter jurisdiction in this case.Kingsley, 288 Kan. at 395.And when interpreting these statutes, this court must give effect to the...