Shulikov v. Rolfe, 75266-9-I

• Decision Date: 14 August 2017
• Docket Number: No. 75266-9-I,75266-9-I
• Court: Washington Court of Appeals
• Parties: In the Matter of the Marriage of: NATALYA SHULIKOV, Respondent, and ALEX SHULIKOV, Respondent, RHEA J. ROLFE, Appellant.

In the Matter of the Marriage of: NATALYA SHULIKOV, Respondent, and ALEX SHULIKOV, Respondent, RHEA J. ROLFE, Appellant.

No. 75266-9-I

COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION ONE

August 14, 2017

UNPUBLISHED OPINION

APPELWICK, J. — Rolfe appeals the trial court's order invalidating her attorney lien and releasing funds to Shulikov. She contends that RCW 60.40.010(1)(d) permits attorney liens over the "proceeds" of an action, and does not provide an exception for dissolution proceedings. She argues that the trial court erred in awarding attorney fees and imposing sanctions against her. We reverse the court's order, vacate the attorney fees and sanctions, and remand for further proceedings consistent with this opinion.

FACTS

Natalya Shulikov hired Rhea Rolfe to represent her in a dissolution proceeding. Shulikov signed a written fee agreement to pay Rolfe for services rendered.

In August 2015, Shulikov and her former husband reached an agreement pursuant to CR 2A. They agreed that the husband would pay Shulikov a sum of $7,890 per month. This figure included $1,500 in maintenance and $1,581 in child support. The remainder constituted a monthly payment for the business the couple had jointly owned. Rolfe was to draft final orders according to the CR 2A agreement.

On February 23, 2016, Rolfe filed a notice of intent to withdraw as Shulikov's counsel, effective March 3. And, she filed a notice of attorney's claim of lien under RCW 60.40.010, seeking reasonable compensation for services in the amount of $16,886. On February 25, Rolfe filed a motion to establish judgment for attorney fees pursuant to chapter 2.44 RCW. Rolfe sought a judgment for her fees as a condition of her withdrawal from representing Shulikov in the dissolution. On March 10, the court denied Rolfe's motion to establish judgment for attorney fees under chapter 2.44 RCW.

Aware of the attorney lien, Shulikov's former husband made payments under the property settlement agreement into the court registry, rather than directly to Shulikov. He continued to pay Shulikov directly the sums due for spousal maintenance and child support.

Shulikov, having retained new counsel, filed a motion to release the funds in the court registry to her. She claimed that Rolfe could not attach a lien under the attorney lien statute, because she did not have a judgment to which the lien could attach. Shulikov also sought attorney fees and sanctions. In response, Rolfe argued that the court should release the funds in the court registry to her pursuant to her attorney lien.

On April 22, the court granted Shulikov's motion. The court found that because the funds that had been paid into the court registry were part of the property settlement reached by the parties, the funds were not proceeds of an action subject to an attorney lien under RCW 60.40.010. The court ordered the funds in the court registry to be disbursed to Shulikov. The court also awarded attorney fees in the amount of $3,500 against Rolfe. And, the court imposed sanctions against Rolfe in the amount of $500 for filing the lien under these circumstances. Rolfe appealed the order granting Shulikov's motion to release funds and awarding fees and sanctions.

On August 5, the court entered the decree of dissolution. The decree incorporated by reference the CR 2A agreement that the parties had previously executed.

DISCUSSION

Rolfe asserts that she had a valid attorney lien on the proceeds of the dissolution, including the monthly payments under the property settlementagreement.¹ She contends that the trial court erred in awarding attorney fees and sanctions against her.

I. RCW 60.40.010

Rolfe contends that the trial court erroneously interpreted RCW 60.40.010 in deciding to disburse funds from the court registry to Shulikov. Shulikov responds that the trial court properly concluded that the property distribution was not subject to an attorney lien, because the property distribution did not constitute "proceeds" within the meaning of RCW 60.40.010(1)(d).

The meaning of RCW 60.40.010 is a question of law that this court reviews de novo. Aiken, St. Louis & Siljeg, P.S. v. Linth, 195 Wn. App. 10, 15, 380 P.3d 565 (2016). Our fundamental objective in interpreting a statute is to ascertain and carry out the legislature's intent. Smith v. Moran, Windes & Wong, PLLC, 145 Wn. App. 459, 463, 187 P.3d 275 (2008). Where the meaning of a statute is plain on its face, we give effect to the plain meaning. Id. If a statute is ambiguous, we look to outside sources, such as legislative history, to determine legislative intent. Id. at 463-64. We will not interpret a statute in such a way as to render any portionmeaningless or that results in strained meanings or absurd consequences. Id. at 464.

An attorney may sue his or her client for unpaid fees. Ferguson Firm, PLLC v. Teller & Assocs., PLLC, 178 Wn. App. 622, 631, 316 P.3d 509 (2013). Or, an attorney may assert a lien to ensure payment without having to sue the client. Id. The attorney lien statute, RCW 60.40.010, provides in part,

(1) An attorney has a lien for his or her compensation, whether specially agreed upon or implied, as hereinafter provided:

(a) Upon the papers of the client, which have come into the attorney's possession in the course of his or her professional employment;

(b) Upon money in the attorney's hands belonging to the client;

(c) Upon money in the hands of the adverse party in an action or proceeding, in which the attorney was employed, from the time of giving notice of the lien to that party;

(d) Upon an action, including one pursued by arbitration or mediation, and its proceeds after the commencement thereof to the extent of the value of any services performed by the attorney in the action, or if the services were rendered under a special agreement, for the sum due under such agreement; and

(e) Upon a judgment to the extent of the value of any services performed by the attorney in the action, or if the services were rendered under a special agreement, for the sum due under such agreement, from the time of filing notice of such lien or claim with the clerk of the court in which such judgment is entered, which notice must be filed with the papers in the action in which such judgment was rendered, and an entry made in the execution docket, showing name of claimant, amount claimed and date of filing notice.

The statute defines proceeds as, "any monetary sum received in the action." RCW 60.40.010(5).

The first two sections of the statute, RCW 60.40.010(1)(a) and (b), pertain to possessory attorney liens. These liens apply to the client's papers or money in the attorney's hands. RCW 60.40.010(a), (b). The Court of Appeals has recognized that due to the possessory and passive nature of these liens, they are generally not enforceable by foreclosure and sale. In re Marriage of Glick, 154 Wn. App. 729, 732, 230 P.3d 167 (2009). But, RCW 60.40.030 creates summary adjudication procedures for liens that are asserted against the client's money or papers. Id. at 733.

The other three sections pertain to charging liens. RCW 60.40.010(1)(c)-(e); Ross v. Scannell, 97 Wn.2d 598, 604, 647 P.2d 1004 (1982). Charging liens have the capacity to be adjudicated or enforced. Id. The summary adjudication procedures outlined in RCW 60.40.030 do not apply when an attorney claims a lien on something other than the money or papers of the client. King County v. Seawest Inv. Assocs., LLC, 141 Wn. App. 304, 311, 170 P.3d 53 (2007). In Seawest, the court acknowledged that the statute does not set out a procedure for enforcing charging liens. Id. at 315. But, it concluded that trial courts are authorized to fashion appropriate proceedings to adjudicate this type of attorney lien. Id. Such an action need not be separate from the underlying proceeding. Id.

Rolfe's claim of attorney lien did not specify under which provision of RCW 60.40.010 she claimed a lien. Her notice stated only,

NOTICE IS HEREBY GIVEN that the undersigned attorney claims an attorney's lien pursuant to RCW 60.40.010 for her services rendered to Petitioner, Natalya Shulikov, with interest from the dateof filing this claim of lien. Said lien is for reasonable compensation for attorney services rendered to date in the amount of $16,886.

After Shulikov moved to release funds from the court registry, Rolfe clarified the basis for her attorney lien. She asserted that her lien attached to the "proceeds" of the property settlement agreement. And, she contended that the lien applied to money in the hands of Shulikov's former husband, the "adverse party" in the dissolution action. Thus, we interpret Rolfe's claim of attorney lien as based on RCW 60.40.010(1)(c) and (d).

The trial court appears to have based its ruling on RCW 60.40.010(1)(d). It concluded,

This is a family law action for legal separation or dissolution of a marriage. The funds paid into the registry of the court by respondent husband are part of the property settlement/CR 2A agreement reached by the parties in this family law action. These property settlement funds are not proceeds of an action subject to an attorney's prejudgment lien under RCW 60.40.010 and should be disbursed by the clerk of the court to petitioner wife, Natalya Shulikov, forthwith.

(Emphasis added.)

Thus, this case involves which funds an attorney lien may be asserted against. The statute and case law provide for two types of funds that clearly cannot be the basis for an attorney lien. First, an attorney lien may not be asserted against child support. RCW 60.40.010(6); see also Fuqua v. Fuqua, 88 Wn.2d 100, 107, 558 P.2d 801 (1977). Second, an attorney lien cannot be asserted against the client's real property. Ross, 97 Wn.2d at 605.

Washington courts have not squarely addressed whether an attorney lien can attach to a property settlement agreement in a dissolution case. However,several cases have assumed that funds awarded in a dissolution action can be the subject of an attorney lien. In Glick,...