2012 IL App (1st) 112971
Ill. App. Ct.2014Background
- Pedersen & Houpt (P&H) represented Summit in a 2004-05 specific-performance action to obtain real property; judgment ordered conveyance to Summit. P&H did not serve any Attorneys Lien notice during the original suit or before the property transfers.
- The property was conveyed in two parts (Aug 22, 2005 and Jan 12, 2006); Summit immediately reconveyed the second part to Main Street Village West on Jan 13, 2006, with a closing Jan 25, 2006 where P&H did not assert payment.
- P&H sent a single notice claiming an attorney’s lien on Jan 17, 2006 to only one of the three original defendants; that defendant disputed the lien on Jan 23, 2006.
- P&H later sued Summit (Aug 1, 2006) to recover fees and obtained a money judgment and a law-division ruling (June–Nov 2009) that an attorneys’ lien attached as of Jan 17, 2006; P&H did not record the judgment in the grantor‑grantee index or join/serve subsequent owners.
- A separate mechanic’s-lien foreclosure action was later pending; P&H filed a counterclaim/third-party complaint there seeking foreclosure on the property to collect its attorney-fee lien and priority over other lienholders.
- The mechanic’s-lien court dismissed P&H’s foreclosure claim, holding the Attorneys Lien Act does not authorize foreclosure to collect a statutory attorney’s lien and that P&H failed to perfect/notice the lien as required.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an attorneys’ lien under the Attorneys Lien Act may be enforced by foreclosure in a mechanic’s-lien proceeding | P&H: Its statutory lien attached as of Jan 17, 2006 (per law‑division ruling), predating other liens, so it can foreclose and obtain priority | Opponents: Attorneys Lien Act contains no foreclosure remedy; foreclosure is not an authorized collection method and would harm innocent third parties | Court: Attorneys Lien Act does not provide for foreclosure; P&H cannot collect statutory attorney’s lien by foreclosure in mechanic’s-lien court |
| Whether P&H’s lien was properly perfected and provided constructive notice to subsequent purchasers/creditors | P&H: Lis pendens filings (using mechanic’s PIN) and law-division ruling gave constructive notice and priority | Opponents: Notice must be served on parties against whom the client had claims and recorded in grantor‑grantee index; P&H failed to serve all required parties, record notice, or perfect judgment | Court: P&H failed to properly perfect or record; lis pendens using mechanic’s PIN did not place lien in grantor‑grantee index and did not give constructive notice |
| Whether an attorney can assert a lien after judgment is satisfied and property conveyed to third parties | P&H: Cites authority that attorneys’ liens can attach to property recovered in litigation even if conveyances occurred | Opponents: Authorities require notice while litigation pending and before disposition; allowing after-conveyance liens would deprive third parties of due process | Court: Lien must be asserted while attorney is acting for client and prior to disposition; belated notice after conveyance cannot bind innocent third parties |
| Whether P&H had alternative statutory remedies to collect fees against its client | P&H: Sought priority over liens instead of pursuing other remedies | Opponents: P&H could (and did) obtain a money judgment and then enforce that judgment by recording or other execution remedies; Attorneys Lien Act contemplates different enforcement procedures | Court: P&H’s proper remedy was enforcement of its money judgment or compliance with statute’s enforcement procedures; foreclosure is not authorized |
Key Cases Cited
- People v. Philip Morris, 198 Ill. 2d 87 (2001) (attorney’s lien is a lien on proceeds of litigation; lien rights are statutory and must be properly perfected)
- Catherwood v. Morris, 360 Ill. 473 (1935) (attorney’s lien may attach to property recovered in litigation where notice and timing requirements are met)
- Process Color Plate Co. v. Chicago Urban Transit District, 125 Ill. App. 3d 885 (1984) (attorney who fails to act to have lien paid from proceeds cannot later enforce lien against defendants or third parties)
- Baker v. Baker, 258 Ill. 418 (1913) (attorney becoming joint claimant in proceeds when lien notice served)
- Krueger v. Oberto, 309 Ill. App. 3d 358 (1999) (constructive notice of an encumbrance requires recording in the grantor‑grantee index)