Souden v. Souden
303 Mich. App. 406
| Mich. Ct. App. | 2013Background
- Divorce judgment following binding arbitration included provision that each attorney retain a lien on the client’s share of marital assets to secure payment of fees and stated such liens were not dischargeable in bankruptcy.
- A. Lawrence Russell (attorney) represented Souden and later filed a petition in the divorce case seeking $26,291.47 in unpaid fees and requested payment from Souden’s divorce proceeds (accounts, annuities, real property, spousal support).
- Russell characterized his claim as an account stated/open account and as an attorney’s charging lien; he attached invoices showing a principal balance and a multi-thousand-dollar “finance charge.”
- The trial court found the invoices sufficiently detailed, awarded Russell $23,971 (after deducting a $2,500 credit), and authorized satisfaction of the judgment from marital proceeds.
- Souden appealed challenging subject-matter jurisdiction, procedural due process, reasonableness of fees (including the finance charge as usurious), and the propriety of attaching the charging lien to real property.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. Subject-matter jurisdiction to enforce attorney’s charging lien in divorce court | Trial court lacked jurisdiction over third-party creditor claims and amount-in-controversy under $25,000 | Charging lien arises from attorney-client contract and is an equitable remedy ancillary to the divorce court’s powers | Court: Divorce court had jurisdiction to enforce a charging lien arising from the divorce judgment (jurisdiction ancillary to divorce case) |
| 2. Procedural due process (service, summons, hearing) | Russell should have filed a separate suit and served a summons; plaintiff was prejudiced by process deficiencies | Judgment (signed by plaintiff) and petition provided notice; plaintiff was served, attended hearing, and objected | Court: No due process violation; plaintiff received notice, opportunity to be heard, and consented to lien language in judgment |
| 3. Reasonableness of attorney fees | Fees were unreasonable, inflated, insufficiently detailed; $2,500 credit and finance charge questioned | Invoices showed dates, rates, descriptions, hours—sufficient detail | Court: Trial court failed to adequately review reasonableness; vacated award and remanded for an evidentiary hearing considering MRPC 1.5 factors and fee agreement |
| 4. Finance charge — usury and applicability of TILA/Reg Z | Finance charge is usurious and triggers TILA/Reg Z disclosure/limits; violates MCL 438.31 | Russell is not a creditor under TILA; federal consumer-credit rules inapplicable | Court: TILA/Reg Z claims meritless; insufficient record to decide whether the finance charge is interest (potentially usurious) or a permissible late fee — remand to resolve characterization |
| 5. Attachment of charging lien to real property | Trial court effectively ordered payment from specified assets including real property | Judgment authorized satisfaction from marital proceeds; but charging liens generally do not attach to real property without express written agreement or proper execution | Court: Charging lien should not attach to real property under these circumstances; lien on other divorce proceeds may be enforced, but real-property attachment would be invalid absent compliance with George prerequisites |
Key Cases Cited
- Estes v. Titus, 481 Mich 573 (Michigan Supreme Court) (limits divorce court jurisdiction re: third parties)
- Yedinak v. Yedinak, 383 Mich 409 (Michigan Supreme Court) (divorce court lacks jurisdiction to adjudicate third-party creditors generally)
- George v. Sandor M. Gelman, P.C., 201 Mich App 474 (Michigan Ct. App.) (distinguishes charging vs. retaining liens; attorney charging lien and limits on attaching to real property)
- Smith v. Khouri, 481 Mich 519 (Michigan Supreme Court) (standard for appellate review of fee awards and MRPC 1.5 factors)
- Reed v. Reed, 265 Mich App 131 (Michigan Ct. App.) (when fees are contested, trial court must hold hearing to determine services rendered and reasonableness)
- Fisher Sand & Gravel Co. v. Neal A. Sweebe, Inc., 494 Mich 543 (Michigan Supreme Court) (distinguishing account-stated claim applicability)