*3 BRISCOE, MARY BECK Chief Judge. (ACF) Plaintiff Corp. ACF 2006 filed diversity action seeking accounting an and turnover of the assets of an Oklahoma City law firm to whom ACF had loaned money. A receiver was appointed and he proposed to portion disburse to ACF a proceeds of a litigation settlement ob- tained firm law on behalf of one of Craige, Mark A. Dunlevy, Crowe & entities, its clients. Four Bean & Associ- Hicks, Morrel, West, Saffa, R. James ates, Sciences, Safety L.L.C., Sandia Hicks, OK, Tulsa, & Craige Roger G. Ernst, (col- Inc., and Consulting, TKS Inc. Jones, Bradley Arant Boult Cummings Intervenors), lectively the intervened and LLP, Nashville, TN, Plaintiff-Appellee. objected disbursement, to the proposed ar- guing they had contributed services Merritt, OK, John M. City, Oklahoma litigation connection with the and were pro se. paid entitled to be first from the settle- Frasier, Tulsa, OK, James E. рro se. proceeds. The district court ulti- mately granted summary judgment in fa- Brooks, OK, Gary City, L. Oklahoma vor of ACF. The Intervenors now appeal pro se. from Exercising jurisdiction that decision. pursuant 1291, § to 28 U.S.C. we affirm Alden, III, Charles F. Barbara A. Mer- the district court’s decision. ritt, Offices, A. Barbara Merritt Law Mi- Brooks, chael L. Hartzog Conger Cason & I Neville, Robert Thompson, C. Cheek & Falcone, PLLC, Allison, Wayne Henry background Factual III, Meyer, Leonard, Esq., Meyer Adam & a) financing The between PLLC, Emmerson, David Merritt & Asso- ACF Offices, PLLC, ciates Law Oklahoma City, 2009, Between 2002 and ACF loaned OK, Hazlewood, N. Russell Graybill & Ha- (the money Associates, to Merritt & P.C. zlewood, Wichita, KS, Frasier, Frank W. Firm), Law a law firm based Oklahoma III, Hickman, Steven R. Fraiser Fraiser Oklahoma, City, represented plaintiffs Hickman, Tulsa, OK, G. Patrick Gar- personal injury, medical malpractice and rett, Office, Edmond, OK, Pat Garrett Law products liability cases. The Firm for Defendants. typically into contingent entered fee ar- Watts,
Beverley Quarles Philip O. rangements with its clients and advanced Watts, Watts, City, Watts & Oklahoma repaid various to be from OK, for Intervenors-Appellants. recoveries. The Law Firm used the loans * cited, however, binding prece- persuasive This order and is not be for its val- dent, except R.App. under the doctrines of law of the ue consistent with Fed. P. 32.1 and case, judicata, estoppel. res and collateral It 10th Cir. R. 32.1. Thereafter, various amendments filed opera- ACF finance its from
it obtained ACF statement. financing to its UCC tions. Firm the Law from ACF to loans b) The Rice agree- by a series memorialized were 25, 2010, On 2002, March 21, October ments. On an individual named agreed represent and Securi- a Master Loan Firm executed (Rice) wrong- in a plaintiff Rice Kelli of ACF. On Agreement favor October ty of her hus- arising action out ful death 2009, 2008 and 21st of agreement, of that part As band’s death. John M. Mer- partner, named Firm and its a fee the Law Firm entered into Rice and *4 (Mr. Merritt), Amended entered into ritt (Fee provid- which Agreement) Security Master Loan and and Restated ed, as follows: pertinent part, of those with ACF. On two Agreements 21, 21, 2002, dates, and October October BE FEES WILL THE ATTORNEY’S guar- personal executed Mr. Merritt THE TOTAL RECOVERY 50% OF in favor of ACF. anties SETTLEMENT, BY WHETHER OR JUDGMENT OTHERWISE. and original agreement both Under IF BE NO FEE THERE WILL ensuing agreements, amended RECOVERY, NO UNLESS THERE IS continuing granted ACF a Firm THIS TERMINATES CLIENT collateral, in- items of in various REQUIRES AN OR AGREEMENT cluding: BE FILED. ATTOR- APPEAL TO instruments, accounts, paper, chattel All Qh) PAY ONE-HALF NEYS SHALL intangibles intangibles, payment general EXPENSES ALL LITIGATION OF (all the [Uni- in Article 9 of as defined IN THE PROSECUTION INCURRED Code), all similar and Commercial] form AND CLAIMS OF CLIENT’S may have of Law rights [the Firm] NOT BE SHALL RESPON- CLIENT kind, including specifi- every nature and REPAY TO EVER ATTOR- SIBLE TO limitation, cally without all of [the and NEY THIS AMOUNT UNDER [sic] to receive rights Firm’s] Law IN THE ANY CIRCUMSTANCE. otherwise, legal and services or for other RECOVERY, A CLIENT EVENT OF rendered, and for rendered and to be SHARE OF SHALL FROM CLIENT’S to be expenses and costs and advanced RECOVERY, AT- REIMBURSE ANY advanced, inter- rights all other and and REMAINING ONE- TORNEYS THE may have est that Gfe) EX- THE LITIGATION HALF OF every each and Client respect with BY INCURRED ATTOR- PENSES Matter. IS NEYS. IN THE EVENT THERE undisputed that this App. at 220-21. It is RECOVERY, THEN NO CLIENT any legal and all security interest covered BE RESPONSIBLE TO SHALL NOT Firm, well as to the Law fees owed ANY PAY REIMBURSE LITIGA- OR owed to the and all reimbursements THE EXPENSES TION EXPENSES. expenses any incurred costs and Firm for DO NOT INCLUDE OF LITIGATION any litigation. arising out of LIENS, EXPENSES, SUB- MEDICAL CLAIMS, ANY OR security in- initially its ROGATION perfected ACF MAY BE WHICH OWED by filing a UCC AMOUNTS in this collateral terest SUPPORT FOR DUE CHILD with Oklahoma PAST financing statement PAYMENTS, THE FOR WHICH County office on Clerk’s October CLIENT IS SOLELY RESPONSI- stituted itself as counsel for the Law BLE. cases, Firm’s clients including numerоus the Rice case. Supp.App. at 237. disbarment, his Following Mr. Merritt subsequently filed suit on began working Legal
behalf of Research & Man- During litigat- Rice. the course of agement case, Systems (LRMS), ing employee Rice’s an the Law Firm incurred leasing company. Like the New Law expenses. Approximately Firm, $170,000 operated LRMS at the of those same ad- were incurred also, dress as the Law Firm. Mr. Merritt by the Law Firm in connection with con- by way purported of a employee leasing tracts it entered into with the Intervenors arrangement, services, for the worked for the provision of various in- New Law Firm as a legal assistant. cluding court-reporting complex scien- tific testing. undisputed It d) The Law Firm’s on its loan
Intervenors had no direct contractual rela- default obligations with ACF tionship with Rice. The Law Firm defаulted on its loan
Rice’s case was ultimately settled for a *5 obligations and, with ACF February as of $700,000. gross amount of The terms of the 6, 2012, $1,597,175.28 owed ACF a total of settlement agreement provided for Rice to interest, in principal, expenses. fees and receive a “Defined in Payment” the Mr. Merritt has refused or failed to honor $200,000. amount of At the time of settle- personal guaranties the signed he ment, with $191,460.04of litigation expenses ACF. Firm, by incurred the Law including the $170,000
approximately owed to Interve- background Procedural nors, unpaid. remained 13, 2012, February On filed ACF c) The demise the Law Firm and the Firm, diversity against action the Law creation the New Law Firm Firm, Merritt, New Law Mr. and four 2011, disciplinary June other named defendants. The proceedings complaint against alleged, were filed Mr. in pertinent part, Merritt with the that ACF was Oklahoma Bar Association. Mr. “entitled to receive attorneys’ Merritt all the fees was subsequently January disbarred in and recovered in ... cases in which the Law New Firm substituted itself 2012. for Law for [the counsel Law [the At or about the time of Mr. Merritt’s SuppApp. clients.” at 96. Firm’s] The disbarment, firm, a new law named Mer- complaint sought, turn in pertinent part, Offices, ritt & Associates Law P.L.L.C. an accounting and turnover of collateral of (the Firm), New Law was formed. Short- Firm, the Law Firm and New Law as well thereafter, ly opera- the Law Firm ceased money judgment as a against tions. The proceeded New Law Firm Firm, Firm, the New Law and Mr. Mer- operate address, at the same use the same ritt.1 Id. at 100-01. number, physical phone assets and and employ many 1, 2012, attorneys, of the same as the On June the district court ap- Nazar, Firm. The Nеw Law Firm also pointed attorney sub- Edward an based 4, 2012, them, April against On ACF filed an amended serted are ap- at issue in this complaint that added five named defendants. peal. defendants, Neither those nor the claims as- No. Firm.” Docket Kansas, the New Law Dist. Ct. Wichita, the receiver to act as Firm, subsequently 1-2. That motion was 442 at and the New
for court. Dist. Ct. custody granted by the district possession, take exclusive and to personal and No. 490. all the real Docket. and control of New Firm and the of the Law property 26, 2012, counsel for ACF November On Law Firm. appeared Intervenors before and the 31, 2012, filed a the receiver conference and August pretrial On court for district pro- of settlement appropriate procedural for disbursement agreed mоtion (Motion to Dis- dispute over resolving ceeds in the Rice for mechanism burse). to Disburse stated $191,460.04 The Motion Receiver allocated Funds) (the receive Receiver shall Disputed unpaid expenses “[t]he [$700,000 ... funds settlement summary judgment. in] for be a motion would account in the trust deposit shall the same a motion January filed On ACF the benefit Receiver maintains for that the summary judgment argued partial App. at 136-37. Firm].” Disputed all of the that it was entitled to “requested] in turn Motion to Disburse date, the Interve- Funds. On that same of the approval by the Court objec- support of their nors filed a brief including outstanding expenses,” the Motion for Disbursement and tion to Party Ex- Third “Unpaid summary grant court to asked district penses.” Id. at 137. respect in their favor with $170,000 On Janu- Disputed Funds. 24, 2012, the Intervenors September
On 9, 2013, ary the Receiver filed a memoran- objec- intervene and filed their motion to *6 support partial of motion for dum ACF’s The Inter- to the Motion to Disburse. tion summary judgment. they entitled to venors asserted that were $170,000 approximately for be reimbursed 7, 2013, court February the district On expense unpaid of granting and order issued a memorandum object did not claims. The Intervenors summary judg- partial motion for ACF’s out- any proposed of the other allocations Funds. respect Disputed ment with to the Disburse. The dis- lined in the Motion to concluded, pertinent The district court $200,000 ultimately allowed of trict court as follows: part, to be disbursed to proceeds the settlement between Agreement [the The Fee (i.e., Payment amount Rice the Defined Rice provides Law and Kelli Firm] agreement), called for in the settlement attorneys’ fifty percent will be fees the receiver’s Motion but otherwise denied recovery total whether settle- of the to Disburse. ment, Fee judgment, or otherwise. The 31, 2012, Agreement provides for the [Law Firm] moved for On October ACF recovery fifty percent to receive of the respect with partial summary judgment (a) pay fifty percent of the money judgment against and to its claim for a provides It for Rice to expenses. for also Law Firm and Mr. Merritt recovery and fifty percent of the agreements the loan receive amounts owed under (b) fifty to reimburse [the Firm] and its claim personal guaranties, in- litigation expenses it percent of the declaratory judgment against for a is provisions curred. The effect of these the New Law Firm “that Law Firm and Rice, client, half of that the is to receive in the [Law ACF’s recovery the net while [the continued accounts receivable Firm’s] half, in receives the other conformance were transferred when those accounts
753 such, law. As with Oklahoma source and has become final appealable. See all Ardmore, of the funds to the Intervenors Montgomery City v. 365 F.3d (10th 926, Cir.2004); would come from fees or other accounts 934 Bowdry v. United Airlines, Inc., (10th 1483, rights or contract in favor of 58 F.3d 1489 Cir.1995). priority Consequently, Since ACF has the first we “pro- Firm]. security interest in all of the ceed to the merits of disputed appeal.” Mont- [the] funds, priority gomery, it has over the 365 F.3d at Interve- nors’ unsecured claims. Standard review
Id. at 289. appeal The Intervenors now from the grant summary We rеview a judg- ruling. district court’s novo, applying de the same standard as the district court. Braswell v. Cincin-
II Inc., (10th 1081, nati 731 F.3d Cir. 2013). “Summary judgment appropriate Appellate jurisdiction if ‘there is no genuine dispute as to matter, As an initial we must determine material fact and the movant is entitled to whether we appellate jurisdiction. ” judgment as a matter of law.’ Squires v. 17, 2013, May On we issued an order toll- Ctr., Breckenridge Outdoor Educ. 715 F.3d ing briefing on directing the merits and (10th Cir.2013) (quoting Fed. the parties responses to file written ad- 56(a)). R.Civ.P. dressing appellate jurisdiction. the issue of so, doing this, expressed diversity we concern that the In a case such as the laws summary state, Oklahoma, appealed order did not of the forum govern here resolve all of the claims alleged analysis underlying ACF’s our claims. complaint Cо., might and thus not be a final Reid v. Geico Gen. Ins. 499 F.3d (10th Cir.2007). appealable § order. See 28 1291 1167 U.S.C.
(“The courts of ... appeals shall have jurisdiction appeals from all final deci- Are the Disputed Funds owed sions of the district courts of the United to the Law Firm? *7 States”). begin analysis, our We as did the district court, response
ACF’s brief language alleviates our with the Agree- of Fee alleges, concerns. ACF and a review of ment between the Law Firm and Rice. the district court’s electronic Agreement, docket sheet Under the Fee a settlement or confirms, 19, 2013, that on February judgment on behalf triggered of Rice a (a) district court “dispos[ing] duty issued an order on the part pay of Rice to: remaining of all causes of action in the Law Firm an attorneys’ amount of fees 1; Response сase.” ACF at see id. 4 equal recovery”; at to “50% of the total and (chart (b) Firm, summarizing disposition of each reimburse the Law from Rice’s action). result, Qfc) cause of As a recovery, the order share of the “one-half of the challenged by in appeal litigation expenses by” Intervenors incurred the Law has now merged into the final Firm in connection with the case.2 The concludes, sponte, 2. The dissent sua that the aside the fact that the Intervenors have never Agreement’s argued interpretation, Fee use of the term in of "reimburse” favor such an we obligated repay interpretation wrong. simply means that Rice was believe this only litigation expenses repay, Law Firm for those The term "reimburse” means rec- "[t]o (a actually paid. Setting omрense person that the Law Firm had to whom one is indebted 754 caveat, expenses). litigation Law total that the provided also Agreement
Fee however, the settle- one-half of the terms of pay Firm would is that $700,000.00 Thus, light expenses. provided that apparently was achieved recovery that (or settlement recovery de- achieve a net Rice would case, Agreement obligat- the Fee the Rice $200,000.00, meaning payment) fined (a) Rice to ed effectively earn the Law Firm would (an amount $350,000.00 attorneys’ fees less, i.e., $184,685.73, in net attor- slightly (b) recovery), and of the total equal to 50% provided for neys’ fees than was otherwise $157,657.13 the Law Firm for to reimburse Agreement. Fee in the incurred litigation expenses one-half of the $700,000 settlement The allocation of the have left Firm. That would by the Law thus, into account both taking can amount recovery approximately a net Rice with Agreement and the terms of the Fee $192,342.87, the Law Firm with as be broken down agreement, settlement attorneys’ in net fees amount identical follows: minus its share of ($350,000 fees $700,000.00 Recovery:
Total $342,342.87 $157,657.14 Fees: Law Firm’s Gross Law Firm’s Share Expenses: $184,685.73 Net Fees: Law Firm’s $357,657.13 $157,657.13 Recovery: Rice’s Gross Rice’s Share of Expenses: Recovery: Rice’s Net (3d "pay,” presumably Dictionary and thus English "reimburse” Oxford (9th ed.2009); Dictionary carry see Black’s intends for each of these terms to ed.2009) (defining as ”[r]e- "reimbursement” meaning. Supp.App. separate See at case, Agreement
payment”). In this the Fee ("IN NO RECOV- THE EVENT THERE IS scope of Rice's "reim- expressly defined the ERY, NOT BE RE- THEN CLIENT SHALL words, obligation other bursement” —in ANY TO PAYOR REIMBURSE SPONSIBLE of her indebtedness to amount not, EXPENSES.”). That does LITIGATION litigation expenses the event of a re- —in however, interpretation the Fee alter our covery: FROM CLIENT'S "CLIENT SHALL view, "pay,” Agreement. the term our RECOVERY, REIMBURSE SHARE OF ANY Agreement, intended to in the Fee was used THE REMAINING ONE-HALF ATTORNEYS directly litiga- paying a vendor for the refer to IN- LITIGATION EXPENSES OF THE 0/9 And, ex- provided. as we have tion services Supp.App. ATTORNEYS.” at CURRED BY intended plained, term “reimburse” was Quite added). clearly, (emphasis the Fee her paying Rice the Law Firm for to refer to "expenses in- Agreement's phrase use of the expenses. reim- of the incurred belies notion that Rice’s share curred” only obligation implies, relatedly, was limited bursement also that the The dissent actually litigation expenses that had those obligated the Law *8 Agreement have Fee by Black’s Law paid the Law Firm. See been litigation expenses as it Firm "to all the (9th ed.2009) Dictionary (defining “incur” as In Dissent at 760 n. 4. our incurred them.” (a bring liability on oneself or suffer or "[t]o however, view, nothing Agreement in the Fee event, And, any expense)”). we find it Firm speaks matter of when the Law to the parties the Fee to believe that the to difficult litigation obligated pay the incurred was to interpre- Agreement have intended the would understandably so. As the expenses. And dissent, i.e., limiting suggested by the tation establishes, record in this case obligation to the ex- Rice’s reimbursement relating including to the ser- expenses, those actually paid by the Law Firm. In our penses Intervenors, in- provided by were vices view, only interpretation reasonable Firm, and, as we solely by the Law curred that, Agreement рortion of the Fee is this obligated Agreement explained, the Fee recovery, Law Firm and the event of a for half of all Rice reimburse the Law Firm to equally ex- in all of the Rice would share expenses of a recov- in the event the incurred by the Law Firm in connec- penses incurred when the ery. Consequently, the matter of litigation. with the tion actually paid expenses the incurred out, Law Firm points acknowledge, dissent We as the irrelevant. was Agreement uses both the terms that the Fee
755 turn, obligated the receiver is $700,000.00 allocate the between Rice in the following and manner:
Law Firm: $342,342.87 -Gross Fees $157,657.13 -Expense reimbursement from Rice $500,000.003 Total allocation Client: (and allocation) $200,000.00 Recovery -Net Total scope The Article security ACF’s effectivеness of agreement), 1-9- (when security security perfected), interest interest is (perfection 1-9-312 of security interests in whether, question next as the (2013). deposit accounts and money) concluded, district security court ACF’s portion interest extends to that of the set- As a result of the above-described tlement obligated funds that the receiver is funds, allocation of the Rice settlement to allocate to the Law Firm. As we have entire allocated to the Law noted, the Law Firm expressly granted, by Firm must be treated as the Law Firm’s way of the Master Loan Security and property, specifically as an “account” or amendments, Agreement subsequent a “right payment” to receive under continuing security interest ac- “[a]ll And, terms of security ACF’s interest. ... counts and all similar rights thаt [the because perfected security ACF has a in every have of nature terest property, such and because the kind, including specifically and without Law Firm is indebted to in the ACF limitation, all of rights Firm’s] $1,597,175.28, amount of legally ACF is otherwise, receive or legal $500,000 entitled to the due from the re and other services rendered and to be ceiver to the Law Firm. To the extent that rendered, and for costs and ad- security Intervenors have a interest in vanced and to be advanced.” It is undis- funds, the same there is no evidence puted that security interest covered perfected. such interest has been As a legal and all fees and cost reimburse- consequence, the claim any Intervenors’ ments due to the Law Firm from a client. $500,000 remaining in settlement It is undisputed perfected also that ACF perfected funds is subordinate to ACF’s its security by filing interest fi- UCC 12A, security interest. See Okla. Stat. tit. nancing statement with the Oklahoma l-9-322(a)(2) § (providing that per “[a] (and County Clerk’s office continuing to fected ... priority has statement). financing amend that See over a conflicting unperfected security in terest”). 12A, §§ Okla. Stat. tit. (general 1-9-201 *9 allocation, 314.27), equals
3.- This total minus the ex- total the Law Firm’s Net Fees ($315,- ($184,685.73). penses by incurred the Law Firm is, we as demonstrated The end result contrary Agreement Fee Is the fee in above, the Law Firm’s award law? that to Oklahoma net 50% of the precisely is any instance how- appeal, on argue Intervenors (unless, oc- recovery the as amount of contrary ever, Agreement is the Fee that case, of a in the terms settle- curred this the requires it law because to Oklаhoma the effectively lowers ment attorneys’ fees Law Firm’s of the amount fees). See the Law Firm’s amount of gross the amount based on to be calculated Advisory Opinion Bar Ass’n Ethics OWa. than on recovery, rather of the settlement (1932) proper “that the (opining No. 26 (i.e., recovery the of the the net amount 5, § tit. of’ Okla. Stat. construction recovery minus all of the gross amount fifty percent that the maximum “would be Consequently, Inter- expenses). the amount of the operate upon should has, contrary Law Firm argue, the venors client, to-wit, recovery by the actual net law, benefit of “derived the to Oklahoma the less the costs the of amount Aplt. the Rice settlement funds.” 75% of it.”). obtaining expended incurred or Br. at 14. relatedly, that argue, also Intervenors to Ti- point the Intervenors support, of the district court’s “deduc- statutes, “the effect” 7 of the Oklahoma tle Section expenses from the settlement tion of the on “Contingent fee—Limitation entitled actual requiring without the Compromise or settlement —Ef- amount — “in an void,” expenses” resulted unlawful the contracts on lien—Certain fect (and, ultimate- as fol- pertinent part, [the windfall provides, which ACF).” “Essentially,” Br. at 18. ly, Aplt. lows: recovery “the client argue, Intervenors attorney for an shall be lawful It the with the full amount computed was portion of percentage for a or contract consideration, while into taken action of a client’s cause of proceeds the suggested, and the [district] the Receiver fifty percent not to exceed claim or agreed, firm] court should (50%) judg- net amount of such for of the ex- responsible not be recovered, or such com- may as be ment Id. at 19. made, penses.” the whether promise as be delicto, ex arises ex contractu or same arguments, Contrary to the Intervenors’ en- compromise or settlement and no however, court’s order not district did such attor- by into a client without tered respon- Law Firm’s entirely eliminate abrogate ney’s consent shall affect or Rather, the Intervenors. sibility pay chapter. lien provided cor- simply court’s order the district 7(2013). 5, § Stat. tit. Okla. the allocation of the set- rectly calculated between tlement amount Agree conclude that the Fee We with the terms of and Rice in accordance ment, clarity, although not a mоdel of modifying and the Agreement their Fee statutory ultimately consistent with this agreement. The settlement terms sure, Agree Fee To be limitation. Intervenors be question whether would attorneys’ part, that the provides, proceeds, from settlement howev- paid recovery.” “will be 50% of total fees er, of law separate was a issue goes also on to Agreement But the Fee correctly resolved in accor- district court one- that the Law Firm must provide will, Article 9 of UCC un dance with litigation expenses and half of all sure, law. To be circumstances, adopted under Oklahoma no be reimbursed der issue of this latter resulted expenses. the resolution client for that share of the *10 757 result, in ACF’s entitlement to all of the remain- As a Intervenors have failed to But, ing settlеment far establish that their proceeds. as we in the settle- record, superior can determine from the funds is to that of ACF. Firm remains indebted to the Intervenors Lastly, Intervenors argue they unpaid expenses. for the were “also beneficiaries of a constructive same, trust relative to the discreetly de-
Equitable/contractual liens fined fund.” Id. at 23. In support, Inter- and constructive trust argue venors that a fiduciary relationship “likely existed” between themselves and Intervenors next assert that a contractu- the Law Firm because the Law Firm al lien in was created their favor because “clearly occupied position a ... in which agreement “entered into an special trust and confidence had been re- with the Intervenors under the terms of posеd relationship parties of the be- promised satisfy which the firm —the ing such that the Intervenors were essen- unpaid proceeds bills from the any set- tially mercy at the to do [Law Firm] tlement or obtained in the Rice right thing with those funds that might litigation, in exchange promise for the ultimately be recovered in the case.” Id. each Intervenor to continue their assis- at 24. participation tance and in Aplt. the case.” Br. at 20. While it is true that Oklahoma failed, Intervenors clearly law recognizes that liens be created however, to establish the existence of a contract, Amarex, by see Inc. v. El Paso law, constructive trust. Under Oklahoma Co., (Okla. 905, Natural Gas 772 “ P.2d 907 ‘[constructive trusts’ are such as are 1987), the Intervenors have failed to in- by raised in equity respect of proрerty copy clude the record a of the purported fraud, which has been acquired by or agreement
written
between themselves where,
fraud,
though acquired without
it is
Thus,
and the Law Firm.
it
impossible
against equity that it should be
retained
for us to confirm whether or not there is a
Leverett,
him who holds it.” Morris v.
434
contractual basis for imposing a lien on the
¶
912,
(Okla.1967).
Syllabus
P.2d
In
proceeds
Rice settlement
in favor of the
case,
allegation
there has been no
And,
indeed,
Intervenors.
Intervenors
and,
part
fraud on the
of the Law Firm
concede in their opening brief that “the
event,
receiver,
any
it is the
rather than
[purported] agreement
spe-
did not use the
Firm,
who held the Rice settle
” Aplt.
cific term ‘lien.’
Br. at 21.
prior
ment funds
to the district court’s
event,
even assuming
summary
that a writ-
order of
judgment. Nor is it
that,
ten
exists
“against
under Okla-
equity”
perfected
for ACF’s
secu
law,
homa
it created a contractual or equi-
rity interest
in the Law Firm’s accounts
table lien in
upon
favor of Intervenors
priority
receivables to take
over the
-
some
the Rice
proceeds,
settlement
unperfected
Intervenors’
interests in that
there is no evidence that the
specifically,
Intervenors
same collateral. More
perfected
ever
a
interest in those Law Firm has not received “an extraordi
Thus,
proceeds.
although
fee,”
nary,
attorneys’
Intervenors ar-
unlawful
Br.
Aplt.
at
is,
gue
opening
they
their
brief that
are
and it
for the reasons we have
above,
ACF,
“secured creditors in
proceedings
apparent
outlined
rather
the[se]
ACF,”
Intervenors,
... and ...
...
parity with
id. at
right”
than
has “the better
issue,
nothing
Morris,
there is
in the record that
the funds at
The of motion and appellees’ Both right to AFFIRMED. possess the Did Intervenors motion for leave to appellees’ the amended beyond was that settlement funds supplemental appen- supplement appellees’ reach the Receiver? of are GRANTED. dix error, of Inter- proposition In their final that, light promises argue venors in PHILLIPS, dissenting. Judge, Circuit by them the of made to of completion in the exchange for respectfully I dissent. case, Law Firm work on the the their Rice by two security is limited ACF’s interest through which merely “was a conduit (1) security agree- the of things: terms transmitted, and that money was [their] (2) ment; rights to the Firm’s proceeds which portion of the settlement reasons, re- two I would collateral. For was no more equals unpaid their bills summary judgment, grant verse the money than by owned the [Law Firm] security interest found that which ACF’s FedEx is owned shipped on FedEx First, Disputed Funds.1 reached Br. at 27. riding plane.” Aplt. on its while security agreement do not terms of the words, argue, is- “[i]t In other Intervenors Second, be- Funds. Disputed reach the prop- and-always-has-been separate [their] right keep had no cause the Law Firm and, such, beyond been erty, has Funds, neither can ACF. Disputed initio.” Id. receivership reach of the ab (italics original). Security Agree- I. The Terms of Intervenors fail surprisingly, Not case or statute point single to a Funds Further, Disputed majority treats arguments. of their
support ‘right pay- to receive an ‘account’ or supрorts their con- “as nothing the record $191,460.04 supra dispute. See at majority the settlement total is agree I with $200,000 $700,000 total, with the goes in accordance disputes to Rice No one that of the 752-53. Also, Law Firm's reaches the agreement. undisputed ACF’s it is settlement $123,854.23 $184,685.73 expenses it Firm’s and the Law reimbursement net fees paid before the settlement: $700,000.00 Recovery Total -$200,000.00 Recovery Rice's Net -$184,685.73 Fees Law Firm’s Net -$123,854.23 Expenses Paid Law Firm’s Reimbursement for Disputed Funds *12 security Disputed
ment’ under the terms of ACF’s on the Funds because the Law at I Swpra interest.” 755. don’t see how paid portion never that of the ex- applies Disputed either to the Funds. Moreover, penses. under the security agreement’s language, actual ACF did not An Account. the security agree- Under Disputed “advance” the Funds. To “ad- ment, a continuing security ACF has inter- vance” means to in pay anticipation of est accounts ... that “[a]ll [Law future reimbursement.2 The Law Firm may have....” at App. 220-21. couldn’t “advance” expenses Oklahoma’s version of the UCC defines paying without them. Continuing on with “account” as “a right payment to of a security agreement’s language, I am monetary obligation, whether or not (ii) uncertain what a by performance: security earned in ex- for services penses “to be rendered or to be rendered.” 12A Okla. advanced” even means. l-9-102(a)(2)(A)(ii). Stat. Ann. I agree meaning, that Whatever its the facts of this fees, legal contracts for including fees case don’t support application against its contingency cases, pending fee are “ac- the Disputed Funds. Unquestionably,
counts” under Article 9.
right
payment
has a
to
for
II. The Law
Rights
Firm’s
legal
ACF,
services it rendered-and
For a creditor to
a
security
have
valid
turn,
security
has a
interest in those fees.
interest under Article
the debtor must
But, here, the dispute
legal
is not about
rights
the collateral. 12A Okla.
fees,
money
it’s about
forwarded to the
l-9-203(b)(2).
§
Stat. Ann.
“[T]he base-
pay as-yet
Law Firm to
unpaid litigation
security
line rule is that a
interest attaches
expenses. Obtaining money
pay
to
third
only
have,
to
rights
whatever
a debtor
parties for
give
their services doesn’t
broad or limited as those rights may be.”
Law Firm “right
payment”
a
for ser-
(2000).3
§
U.C.C.
9-203 cmt. 6
For the
rendered,
vices it
so the Disputed Funds
below,
provided
reasons
I believe that
qualify
don’t
as an “account.”
does not have rights
Disputed
ACF
to the
Right
A
to Receive Payment. Under
Funds.
the sеcurity agreement,
has a con-
ACF
Oklahoma Law. The Law
rights
Firm’s
tinuing security interest in “all of the [Law
beyond
cannot extend
the limits of Okla-
rights
Firm’s]
to receive
or other-
7,§
homa law.
wise,
Under 5 Okla. Stat. Ann.
legal
for
and other services rendered
the Law Firm’s
rendered,
lawfully
fees could not
and to be
costs and
fifty percent
exceed
of the net settlement.
expenses
advanced and to be
ad-
If
kept
...”
the Law Firm had
App.
Disputed
vanced.
at 220-21. As the ma-
fees,
notes,
jority
“It
Funds as collected
it
undisputed
that
would have vio-
security
Similarly,
lated that statute.
interest covered ...
and all
even if the
reimbursements owed
Law Firm somehow had a right
to the Law Firm for
to reim-
any incurred
expenses arising
costs and
bursement
for what
it
paid,
hadn’t
any litigation.”
But,
out of
Supra
simply keep
at 750.
cоuld
expense money
all the
here, there are no
owed
spend
pleased,
money
reimbursements
as it
would
(3d ed.2011)
addition,
English
ACF’scounsel conceded at oral
Dictionary
2. Oxford
("advance,
means,
alia,
pay
v."
inter
To
"7.b.
argument
rights
money
that ACF’s
to the
can
(a
due,
money)
sum of
before it is
or in
larger
be no
than what the Law Firm’s would
done;
anticipation
of work still to be
have been.
or lend on
ment”).
of future reimburse-
word)
(the
fees)
Firm’s
(and
“Reimburse”
collected
income
become
repaid.5 By
are to be
expenses
means the
to the
contingent debt
Firm. The
to “reimburse” the
Mrs. Rice
requiring
money
cancel out
wouldn’t
Intervenors
half of the
Firm for her
(or
money) in the Law
interest on
rea-
recovery,
fee
upon
reason, I don’t
*13
For this
pocket.
Firm’s
requiring the Law Firm
sоnably reads as
the
keep
could
Law Firm
how the
see
incurred
expenses
the
before
pay
to
all of
violating 5 Okla.
without
Funds
Disputed
its
Acting accordingly, until
recovery.
the
Firm
§
the Law
7. Because
Stat. Ann.
it, the Law Firm
overwhelmed
problems
money,
keep the
right
have a
to
does not
$123,854.28 of
expenses
pay
did
far as
incurred —
only extend as
rights
ACF’s
Thus,
$315,314.27
the Law Firm
the
total.
Firm,
not have
Law
ACF does
those
$33,802.91 of its half of the
all but
paid
money.
the
right
keep
to
settlement,
leaving Mrs.
before
expenses
The Law Firm’s
Agreement.
The Fee
($157,-
expenses
total
Rice’s half of the
fee
contingent
the
are set forth in
rights
657.13)unpaid.
notes,
fee
majority
the
As the
agreement.
”
“reimburse
some-
Because one cannot
clarity.
of
See
is not a model
agreement
“imbursed,” Mrs.
that has not beеn
thing
agree-
construing
In
supra at 756.
“reimburse” the Law
duty
Rice had no
to
ment,
that the Law
should
we
remember
To con-
unpaid.
it left
Firm for
not benefit
it and
should
Firm drafted
thus
contorting
require
would
clude otherwise
rights
draftsmanship. Its
sloppy
from its
“pay,” which we
“reimburse” to mean
shrink,
incon-
grow, with each
not
should
agreement
fee
not do. The
itself
should
ambiguity.
sistency and
paying
reim-
distinguishes between
there is no recov-
split
litigation bursing
agreement
The fee
event
—“In
imprecise
responsible
In
not be
to
ery,
two
then client
expenses into
halves.
shall
any litigation expenses.”
promised
pay
to
or reimburse
pay
language,
added).
(emphasis
Be-
Supp.App.
that Mrs.
at 237
emphasized
half and
first
duty to “reim-
re-
Mrs. Rice
no
responsible to ever
cause
had
“shall not be
Rice
Firm her half of the ex-
the Law
amount under
burse”
Attorney
to
this
pay
them,
paid
until it
Firm
penses
It re-
Supp.App. at 287.
circumstance.”
keep
to
corresponding right
no
her
the sec- had
Mrs. Rice to “reimburse”
quired
Disputed
share
Funds.6
recovery.4
of a
Id.
half in the event
ond
"reimburse” from the
language guaranteed
The first definition of
Although
4.
(a
repay
majority’s
is "La. To
cited source
responsible for this
Mrs. Rice would never be
lost).”
spent
money
has been
or
sum of
which
it meant
expenses, I don’t believe
half of the
(3rd ed.2009).
English
So
responsible
pay
Firm
not
to
that the Law
was
Dictionary
Oxford
"reimbursed,”
reading,
by my
the Law
to be
litigation expenses
it
them.
incurred
all the
is,
spent money
first
Firm must
agreement
if there was
fee
also said that
—that
"Litigation expenses
expenses.
in-
paid the
responsi-
recovеry,
Rice
not be
no
Mrs.
"shall
by attorneys” simply
the total that
sets
any litigation
curred
pay
ex-
ble to
or reimburse
divided
half—it doesn't authorize
is to be
pay
expenses—
penses.” Someone
to
had
it
Rice,
Firm to
for what
reimbursement
then
Law Firm.
if not Mrs.
By limiting
Rice’s reim-
paid.
Mrs.
hasn’t
duty
"litigation expenses
in-
bursement
to
(9th ed.2009).
Dictionary
Black’s Law
5.
says
attorneys,”
by
the fee
curred
duty to
majority
only that Mrs.
has no
reimburse
2 of the
Rice
response
footnote
"litigation
anything except,
ex-
meaning
"reim-
a share of
opinion, I
assert
instance,
by attorneys”
penses
incurred
even if followed
remains the same
burse”
—for
litigation expenses
non-litigation expenses, or
by attorneys.”
"litigation expenses incurred
Mere Possession. Rather
than reim-
ed to the
Firm
must be treated as the
bursing the Law Firm for her share of the
property,
Law Firm’s
specifically as an
expenses,
pay
Mrs. Rice was left to
her
‘account’ or ‘right to receive payment’ un-
share of the
which I
expenses,
surmise she
der the
terms ACF’s
interest.”
voluntarily through
did
the settlement
view,
my
Id. In
equates
this too
mere
ease,
agreement.7
For
administrative
possession
property
with a more sub-
likely,
most
provided
she
her half of the
stantial interest.
(or
litigation expenses to the
Here, even though the Law Firm
Receiver) for it
persons
those
or
Receiver)
(through
possessed
the Dis-
litigation expenses.
entities owed
It ap-
Funds,
puted
it did not
right
have a
pears that she chose this route rather than
*14
keep them. See In re
Enterprises,
Howell
going to the trouble of tracking down the
Inc.,
969,
(8th Cir.1991)
934 F.2d
972
expensеs, calculating what the Law Firm
(“[M]ere possession of [a letter of
is
credit]
already paid
expenses,
had
issuing
insufficient
right
to establish a
to collateral
essence,
her own
checks.
interest”);
upon
security
which to base a
Mrs. Rice allowed the
Firm possess
to
Poulson,
Pontchartrain State Bank v.
684
the money
pay
expenses. Similarly,
to
the
(10th
Cir.1982) (“[M]ere
F.2d
pos-
the unpaid
of the Law Firm’s
goods
session of
or the
option
unexercised
are,
half of the expenses before settlement
buy goods
to
is not a
right
sufficient
to
most, merely possessed by
at
the Law
grant
security
goods”).
interest
pay
Firm to
the balance
expenses.
most,
At
the Law Firm was serving as a
it,
IAs
understand
the district court
mere conduit of the funds. See In re
security
assumed that
interest at-
Inc.,
Enterprises,
Howell
that the Law Firm have a
to
right
keep
purpose
serving
limited
aas
conduit for
money.
simply
It
found that ACF’s
funds).
security
money
interest reached the
be-
cause “the
pay
source of all the funds to
discussed,
For
the reasons
the Law
the Intervenors would come from fees or Firm did not have a right
keep
other accounts or
rights
contract
in favor
(1)
contingency
funds:
agreement
fee
Corp.
Firm].” ACF 2006
v. only gave
right
the Law Firm the
to own-
Merritt,
(W.D.Okla.
Similarly, majority opinion Firm finds that Law could own the funds meant for undisputed security unpaid legal expenses by “[i]t treating [ACF’s] them as legal (fees), interest covered and all fees property agree- and Law Firm the fee cost reimbursements due to the Law Firm ment would violated 5 Okla. Stat. written, Supra § from a client.” at 755. Then it Ann. 7. broadly However $500,000 concludes that “the entire allocat- security interest cannot exceed the Law attorneys. argument, not incurred As we're counsel about it at oral and coun- agreement’s forced to tussle over the fee lan- opportunity speak sel had a full to the guage, repeating it bears that the Law Firm issue. language drafted this and that we should re- And, ambiguities against finally, solve its it. parties did not include the settlement although party meaning no stressed the appeal. in the record on brief, question “reimbursement” in I its did And, after to the collateral. rights Firm’s agreement,
the settlement (or really) to duty, “right” had a
merely expenses. money
possess the reasons, I would reverse these
For summary judg- grant court’s
district and direct in favor of ACF does not perfected
ACF’s The dis- Funds. Disputed to the
extend who could then have decided
trict court creditors, including unsecured
among the
ACF, amount. should receive what *15 (a/k/a FARMER, George
George L.
Farmer), Plaintiff-Appellant,
v. OF NORTH
BANCO POPULAR
AMERICA, 1-100, John Does
Defendants-Appellees.
No. 13-1252. Appeals, States Court
United
Tenth Circuit. 21, 2014.
Feb.