*1
3H
Patrick Petitioner/Plaintiff-
Appellant,
v. Hawai'i,
STATE of
Respondent/Defendant-Appellee.
No. SCWC-11-0000512.
Supreme Court of Hawai'i.
Feb.
Opinion of the Court RECKTENWALD, C.J. wheth- appeal requires
This us to consider Support er a lien recorded the Child (CSEA) unpaid Agency for Enforcement an priority child has over payment for of fees in an lien established unrelated, In subsequently filed action. statutory recorded a lien on the CSEA Lopez’s personal property real and Patrick delinquent support. More than a for later, 2008, Lopez decade on June en- contingency agreement tered into a with the legal representa- firm Eric A Seitz for law personal in unrelated civil action for tion injury. agreement, Seitz’s law Under any recovery firm was to receive one-third of personal law firm filed a obtained. Seitz’s Lopez against the injury action on behalf of $9,000 State, in which resulted arbitration dispute favor. A then arose award and Seitz’s law firm as to between the State the 1997 CSEA which amount- whether $9,000, priority than had over ed to more attorney’s lien. Seitz’s Lopez requested that the circuit court or- to, alia, pay- inter “make full der the State ment” of the arbitration award. Seitz assert- from ed that his interest fees was distinct opposition, Lopez’s property. lien on Stat- argued the State that Hawai’i Revised (HRS) 576D-10.5, governs which utes liens, provides that CSEA liens have CSEA except all liens for tax priority over argued that HRS liens. The State also liens, 507-81, governs attorney’s attorney’s lien is established provides that an action; thus, be- after commencement Lopez’s action commenced after cause recorded, the CSEA lien has CSEA lien was priority. The circuit court ruled that Lo- lien had CSEA’s Seitz, Honolulu, petitioner. Eric A. attorneys’ and denied mo- pez’s Honolulu, Guidry, Kimberly Tsumoto tion.1 respondent. circuit Lopez appealed, arguing that
RECKTENWALD, C.J., NAKAYAMA, denying motion because his court erred in LEE, POLLACK, JJ., Judge lien constitutes and Circuit McKENNA, J., Recused, Lopez’s interest independent that is with place thus, equitable ACOBA, J., judgment, and that dissenting separately. presided. W. Border 1. The Honorable Patrick
public policy giving fees, costs, considerations favor and is authorized to deduct such over the expenses CSEA’s lien. therefrom and to the bal- (ICA) Appeals The Intermediate Court of [Lopez].” ance to affirmed the circuit court’s order. v. July On Seitz’s law firm filed a State, CAAP-11-0000512, No. 128 Hawai'i complaint Lopez against on behalf of at n (Haw.App. WL Nov. *3 injuries Lopez allegedly State for suffered 13, 2012). during his incarceration at the Halawa Cor- below, For the reasons set forth we hold Facility. damages, rectional In addition to that HRS provide supe- 507-81 does not Lopez sought “reimbursement of his costs independent right rior or for an herein, expenses and including reasonable property in judgment prior over a provision for his fees[.]” recorded CSEA Accordingly, we affirm 18, 2010, May On the CSEA notified Seitz the ICA’s judgment. December asserting it was its 1997 Lopez’s lien on property and that the lien amount was Background I. $23,969.99 April as of 2010: The following background factual is taken 576D-10.5, In accordance with HRS from the appeal. record on hereby the CSEA asserts its upon Lopez’s personal all of prop- and real Attorney’s A. CSEA and Liens erty including any settlement or other 20, 1997, August On the Office of Child you funds holding which are now or will be Support Hearings of Department the State holding Lopez, in the future for to be Attorney of the General filed an administra- applied against Lopez’s support child ar- tive in Family order Court of the First rears. $17,964 Circuit stating Lopez owed in support debt. The administrative order The Lopez may CSEA has learned that was filed in the Conveyances state Bureau of receiving be an award of funds in the September Thus, on 1997. a CSEA lien captioned litigation. requires The CSEA placed Lopez’s was on personal real and you pay any property such funds or property. See HRS 576D-10.5.2 pursuant due to him up to CSEA’s lien to 30, 2008, On June Lopez entered into a $23,969.99, owing the amount contingency agreement with Seitz’s law firm change, pursuant be to HRS legal representation for in a civil action for § 576D-10.5. personal injury. agreement The stated that Seitz’s law firm would receive placed one-third of civil action was in the Court any obtained, recovery provided that the Program, Annexed Arbitration Au- and on fees, costs, given firm “is gust a lien for its Lopez arbitrator found that expenses upon any judgment or damages settlement was entitled to in the amount of (Supp.1997) provided, in (c) part: relevant support The child order or filed through judicial proceedings or administrative (a) any obligor through judicial Whenever any in this State other state shall be record- any administrative in this State or conveyances. ed in the bureau of The recorda- other state has been ordered to an allow- tion of the order or in the bureau of maintenance, support, ance for the or edu- deemed, time, conveyances shall be at such child, cation of a or for the purposes all and without further spouse spouse maintenance of a or former procure registered a lien on land the land conjunction support, with child and the obli- chapter court under 501. The lien gor shall be- delinquent payments, becomes in those immediately upon come effective recordation obligor’s per- lien shall arise on the real and of the child obligor's order and shall attach to per- sonal and the real and personal property foreclosure, all sonal shall interests real or then subsequently acquired by obligor distraint, sale, seizure and owned or or order to with- deliver, including any hold and which shall interests not be executed in recorded with the applicable ju- conveyances accordance with state bureau of law. No or filed in the land hearing necessary dicial notice or shall be court. added). (Emphasis to creation of such a lien. requested that
$9,000 Rule 69. The motion costs.3 but did not award 9, 2010, the arbitrator’s award make September State] On “command[ ] [the circuit court was the State favor of herein entered payment full in the ease. Ac- final entered as interest, plus September on Seitz, Seitz’s law firm and the cording to fees and costs [Lopez] award Sep- between exchanged then letters State motion, appear or to before bringing this expressing 2010 and December tember why [the State] and show cause Court [the] regarding opposing their views has not done so.”4 attorney’s lien. lien and the of the CSEA’s 9, 2011, the State filed a memo- On March Proceedings B. Circuit Court Lopez’s motion. opposition randum in State noted that resolution 14, 2011, Lopez filed a Motion January On interpretation of HRS motion turned on for Issuance of Writ Execution/Mandamus *4 The State ar- §§ 507-815 and 576D-10.5.6 Rules of Civil Procedure pursuant to Hawaii year entry (3)Not after later than one Plaintiff” under the In a blank entitled "To disposition any judgment Prevailing Party” filed and section of the arbitra- final “Costs to appeal document, arbitrator filled in tion award the thereof. (i) (g) Except provided by and as subsections “$0.00.” attorney’s by (j), affected a the lien is not attached to the mo- 4. Based on Seitz’s affidavit action, parties between the to the settlement suit, tion, brought Lopez's appears motion was it judg- proceeding the or before or after capacity judgment as a State in its the ment, decree, order, or award. a CSEA lien- in the case rather than as debtor (i) (h) provided by Except and subsections holder. action, suit, proceeding (j), party or or to the right any person shall not have the to other (2006) provides: § 5. HRS 507-81 decree, any judgment, discharge or dismiss (a) attorney upon: has a lien An settlement, entered in the or award Actions, suits, (1) proceedings and after suit, proceeding the lien and claim of or until action; the commencement of based thereon is satisfied for fees decrees, orders, settlements, (2) Judgments, in full. by the court in favor of the and awards entered (i) may pay the full amount A debtor client; and court, or decree into and of a (3) Any proceeds paid in satisfaction satisfy thereupon fully clerk of the court shall decree, order, settlement, judgment, or award. record, and the or decree on the (b) The lien shall be for: thereby released from debtor shall be (1) specifically compensation The fees and any client; claims thereunder. further agreed upon with the (j) one from the same If more than (2) of the services of The reasonable value appears party, of record for a the satisfac- firm agreement; attorney, if there is no fee by by this section one of (3) attorney; tion of the lien created Any by the costs advanced (4) evidence that the is conclusive Any taxed or al- fees or commissions fully by lien is (k) satisfied. the court. lowed (c) Except liens, prior power Attorneys tax liens of record have the same personal property actions, suits, judgments, proceedings, to de- on the real and over crees, orders, section, provid- settlements, and as the lien created this and awards to en- attorney's superior (d), lien ed section have for the liens as their clients force their to all other liens. to them. amount due thereon judg- (d) attaches to a added). When the (Emphases allowing ment, settlement, or decree or enforc- ing lien, lien has 1997) a client’s provided: (Supp. § 576D-10.5 6.HRS regard priority client's lien with same personal as the through judicial any obligor (a) or Whenever property subject to the client’s or real any or in this State administrative pay ordered to an allow- state has been decree, (e) judgment, attorney’s lien on a maintenance, support, edu- or ance for the order, settlement, award remains valid as or child, support of a or for cation decree, order, long ment, judgment, settle- as the spouse in spouse former of a maintenance remains valid. or award support, and the obli- section, with child connection (f)To under this be enforceable payments, gor delinquent in those attorney's becomes lien shall be filed: notice of claim of per- obligor's (1) complaint real and arise on the lien shall is dismissed Before the per- obligor's stipulation; and the real sonal foreclosure, complaint shall be sonal or- is dismissed Before sale, distraint, court; order to with- seizure der of the § gued plain reading Washington that a of HRS 576D- the State of as reimbursement priority payments 10.5 mandates of the CSEA lien over for welfare made the State of Lopez’s attorneys’ Washington. argued lien. The State also ar- The CSEA that its lien that, gued priority Lopez’s when HRS 576D-10.5 is read takes over claim 507-81, question with HRS “there is no fees and costs “because the priority.” that CSEA liens have The State child lien was recorded twelve years contended that “unrecorded attor- before commenced the instant suit, ney’s lien” became effective in when gives and HRS a child commenced, action priority and that over claim or CSEA in Septem- acquired, was recorded unrecorded lien except whenever 1997, “clearly priority ber previously acquired.”7 has over the attor- tax liens The CSEA ney’s Finally, argued lien.” the State that to also discussed several circuit court orders in interpret give attorney’s 507-81 to unrelated cases which held that CSEA re- priority liens over CSEA liens would contra- priority corded liens had over unrecorded public policy parents sup- vene that favors Finally, argued liens. the CSEA porting them children. The State asked the that the CSEA lien should have deny Lopez’s circuit court Lopez’s attorney’s motion and fees as a matter of “order judgment pro- policy. the State all directly ceeds this case [CSEA] reply, Lopez argued In his that the CSEA applied [Lopez’s] outstanding sup- lien does not have over his attor- port obligation.” *5 neys’ § lien under HRS 507-81 because the 14, 2011, legislature
On March the CSEA give § filed a intended HRS 507-81 “to opposition, attorneys Substantive Joinder in the State’s property their own in interest a stating April judgment as of Lopez compensation that owed for their in- which is $23,969.99 arrears, in support including dependent judg- of the client’s interest in the $7,225.61 Mother, $16,744.39 Lopez to the ment[.]” also noted that HRS deliver, provided hold and which shall be executed in the liens for in this section or for the applicable ju- recording filing accordance with state law. No any requested or of releases in hearing necessary dicial notice or shall be conjunction with the liens. prior Any provided by to creation (e) of such a lien. lien for this section shall subsequently (b) dependents obligor Whenever the priority any of the take over lien ac- public moneys, receive assistance the child quired except or recorded tax liens. support agency designated enforcement or its (f) The lien shall be enforceable [CSEA] may public counsel establish the assistance designated obligee by or its counsel or through appropriate judicial debt or admin- appropriate by bringing in the suit court or proceeding. Upon istrative the establishment action in an administrative tribunal or shall be debt, public subject of the assistance action, it shall be enforceable as a claim the estate of the personal to collection and the real and obligor by any or lawful means of collection. property obligor subject of the shall be to lien [CSEA], (g) designated its counsel or the foreclosure, distraint, sale, seizure and or obligee, appropriate, where shall issue certifi- order to (c) withhold deliver. upon cates of release satisfaction of the support judgment The child order or filed any Certificates of real release of shall through judicial proceedings or administrative conveyances be recorded in the bureau of any in this State or other state be record- shall registrar filed in the office of the assistant conveyances. ed in the bureau of The recorda- the land court. Recordation certificate tion of the order in the bureau of responsibility shall of release be the of the deemed, time, conveyances shall be at such obligor. purposes any all and without further added). (Emphases procure registered lien in on land the land chapter court under 501. The lien shall be- "any 7.Thereference to unrecorded lien whenev immediately upon come effective recordation acquired” er refers to 2001 amendment to HRS of the child order and shall attach to 576D-10.5, § which is discussed infra. See 2001 personal property all interests in real or then (empha § subsequently acquired Haw. Sess. Laws Act 1 at obligor owned or added).
including any pro sis The 1997 version of the statute interests not recorded with the conveyances priority vided that CSEA lien "shall take bureau of or filed in the land subsequently acquired over lien or recorded court. (d) 576D-10.5(e) except (Supp. charged tax liens.” HRS [CSEA] No fee shall be or its 1997) added). designated recording filing (emphasis counsel for 576D-10.5(a) (b) ty attorney’s liens over the provide §§ that “a de- to contractual statutory Lopez ar- liens.” also support payments gives [CSEA’s] in child linquency ‘obligor’s ambiguities” gued that there are “sufficient only lien on the real and rise to a ” altered). §§ in 507-81 and 576D-10.5 such that property.’ (Emphasis personal have considered the circuit court should Therefore, argued, Lopez the CSEA pari in materia. those statutes does not have over to the inde- which attaches argued Lopez also that the circuit court’s Lopez. pendent “property” from the due to application of HRS 576D-10.5 is unconsti- Lopez argued that until he filed the un- also process rights tutional and violates the due “per- in was no derlying action there Lopez’s attorneys, the attor- afforded to as CSEA could have made property” sonal that ney’s represents property. his counsel’s lien when it was recorded subject to its Specifically, Lopez argued, “[i]nasmuch Lopez argued, the CSEA Accordingly, judg- have a superior- exempt general from the lien is not clients, ments awarded to their then Article ity attorney’s liens under HRS 507- I, the Hawai'i State Constitution Section 5 of 81(c), part, provides, relevant that Lopez argued that HRS applies[.]” also “[ejxcept ... liens of record on the requires that enforcement of personal property real and liens “be to due CSEA section, ... the attor- omitted). lien created this process safeguards[.]” (Emphasis ney’s superior to all other liens.” Fi- lien is Finally, argued public policy policy nally, Lopez argued favors ruling equitable considerations priority over other giving liens greater priority that an lien has persons “because it is often crucial for liens over the CSEA lien this case. may to be able to who be debtors argued public poli- it is “well-established legal legal retain counsel to obtain remedies cy” have liens entitled, they and a to which are elient/debt- it creditors’ liens because ability may counsel also accrue or’s to retain judg- persons “often crucial for who clientydebtor’s credi- to the benefit legal able to retain coun- ment debtors to be *6 (Citation omitted). tors.” legal they to which are sel to obtain remedies Lopez argued judg- that a entitled.” also Following hearing, a the circuit court en- ability legal represen- ment debtor’s to retain denying Lopez’s motion. The tered an order may judgment tation benefit creditors such consistent, that “to be it will order stated legal as the CSEA insofar as assistance rulings that prior the on this issue follow proceeds. obtaining in additional result statutory lien has [CSEA’s] ordered that the [Lopez’s] lien for at- priority over counsel’s opinion, the ICA af In a memorandum torney’s The order also directed that fees.” denying Lo firmed the circuit court’s order pending the the State hold the funds at issue pez’s motion for writ of execution/mandamus. at n 2. The any appeal. outcome of ICA Lopez, 2012 WL language in
first the HRS stated Appeal C. ICA governing § CSEA liens is “not 576D-10.5 ambiguous, clearly priori the but articulates appeal. Lo- Lopez timely filed a notice of subsequent ty liens over of child single point error: The Cir- pez raised a of liens, *1. The other than tax liens.” Id. at denying [Lopez’s] Court erred in Motion cuit noted that the CSEA recorded the ICA for Issuance of Writ of Exeeution/Mandamus years ten lien in more than statutory concluding the [CSEA’s] and Id. at n 2. arose. before the lien priority [Lopez’s] over counsel’s lien lien has held, Thus, language plain ICA Lopez argued that his fees. § the CSEA lien su HRS 576D-10.5 affords underly- in attorneys’ property interest subsequent attor perior priority over the independent from ing arbitration award is ney’s lien. Id. Therefore, in the award. Lopez’s interest granting pri- policy The ICA further stated that argued, “equitable and Lopez pursuant to HRS greater priori- ority to the CSEA lien affording favor considerations § duty give plain § 507- to effect and 576D-10.5 is consistent with HRS sole is to its 81(c). plain meaning.” Moreover, The ICA Id. determined that the Id. in “implicit obvious 507-81(e) § language gives HRS a statutory the task of construction is our fore- recorded lien such as the CSEA lien to ascertain to obligation give most and effect subsequent attorney’s Final- over a lien. Id. legislature, the intention of is ly, contrary the ICA noted that primarily obtained from con- language prop- §HRS a assertion that 507-81 creates in statute tained itself.” Id. “[W]hen erty attorney independent interest for the doubt, meaning, or there is doubleness of client, 507-81(k) provides § from the HRS uncertainty expres- indistinctiveness of an “[attorneys right have the same statute, ambiguity sion used in a exists.” power judgments ... ... over awards to Id. enforce their liens as the for the clients have amount thereon due to them.” Id. There- III.Discussion held, fore, § the ICA HRS “does not A. The lien takes Lo- CSEA provide superior separate for an right pez’s attorney, grants but the same judgment to the as the Id. The client.” Lopez argues language HRS in ICA, thus, judg- affirmed the circuit court’s ambiguous; specifically, he 576D-10.5 subsequently ment. Id. ICA its entered (f) (a), (b), argues of the that subsections judgment appeal on on December 2012. ambiguity por- statute create as to what timely application filed an for writ property tions of a are the certiorari, following which he raises the obligor, as to what “applicable questions: govern law[s]” state the execution of CSEA’s gravely failing the ICA Did err in liens. contends that because proper ambiguous,
apply the
the statute is
it must be con-
well-established rules
507-81,
statutory interpretation
pari
materia with
as enunciated
strued
State,
which,
[,
according
attorneys
Lopez, gives
Haole v.
(e) Any a CSEA lien becomes effective when it this section recorded, it attaches to all real lien subse- shall take over quently acquired except personal property then owned or subse or recorded tax acquired. unequivo quently The statute also liens. cally liens take states that CSEA (f) The lien be enforceable shall liens, any subsequent except for tax designated or its counsel or [CSEA] liens. obligee appropriate suit in the court by bringing an action in an administrative Nevertheless, Lopez argues that HRS be enforceable as a claim tribunal or shall of lan ambiguous § 576D-10.5 is because obligor by any against the estate of the in, alia, (f), guage inter subsection lawful means of collection. provides part “[u]pon service of added). (Emphases the individual or notice of child entity served shall withhold the amount subsequently amended so statute was proceeds judg ... the lien from the sought that when the CSEA to enforce its obligor ... due the and deliver ment (e) Lopez’s judgment in sections lien on added). (Emphasis [CSEA].” funds to the (f) provided, part: in relevant *8 suggests ambiguity there be is (e) judgment regard- A or recorded order any judgment ... ... due “proceeds cause ing or assistance debt obligor” interpreted could be to mean the priority from becomes effective and takes judgment that the obli- only proceeds of the the time it recorded or the time the child is to, gor to the exclusion of counsel’s is entitled obligation be- described therein lien amount. delinquent, whichever is later. A comes by provided § that HRS 576D- and further contends lien that is with pari materia shall 10.5 should be construed becomes effective under this section any 507-81, which, Lopez suggests, pro- § unrecorded lien HRS take 507-81(e) attorneys property pez’s theory. provides § his “a vested inter- HRS vides therefore, judgment,” est in the and that the attorney’s superior lien is to all other liens “attorney’s judgment, lien attaches to the for[,]” alia, “[ejxcept “prior inter liens of (i.e., independently proceeds ‘per- of the the personal property record on the real and Thus, property’) Lopez[.]” due sonal to Mr. Thus, subject attorney’s to” the lien. the according Lopez, to interest attorney’s expressly provides lien statute judgment Lopez’s “per- the is not considered by property attorney’s attached the lien property” subject sonal that is to the CSEA prior is also to recorded liens. lien. words, contention, contrary other property attorney’s that is to an lien 507-81, however, §
HRS
does not
does not become immune from other liens.
language creating
property
contain
a
interest
attorney separate
for the
from that of the
Moreover,
§
expressly
HRS
507—81(a)(2),
Lopez points
client.8
to HRS
provides
attorney
for an
to have a “lien”—
provides
attorney
which
that an
has a lien
alia,
outright
award—upon,
not an
inter
upon “[jjudgments
... and awards entered
judgments,
proceeds paid
and
in satisfaction
client!,]”
by the court
in favor of the
and
507-81(a)(2)-
judgment.
§§
See HRS
507—81(b)(1),
provides
HRS
that the
(3). A
“legal right
“lien” is a
or interest
attorney’s
compen
hen shall be for “fees and
property!]”
a creditor has
in another’s
specifically agreed upon
sation
with the
(9th
2009)
Dictionary
Black’s Law
ed.
client[.j”
grants
Neither
subsection
attor
added);
(emphasis
(defining
see also id.
“at
neys
independent
torney’s
right
attorney
lien” as
of an
attorney’s
“[t]he
client such that
money
Moreover,
share is secure from
liens.
hold or retain a client’s
or
507-81(e)
directly contrary
attorney’s
prop-
to Lo-
... until the
fees have been
(2)
complaint
by
provides:
8. HRS 507-81
Before the
is dismissed
or-
court;
attorney
upon:
(a)
der of the
or
An
has a lien
(3)
year
entry
Actions, suits,
(1)
proceedings
Not later than one
after
after
action;
judgment
disposition
commencement of the
final
is filed and
Judgments, decrees, orders, settlements,
(2)
appeal thereof.
by
and awards entered
the court in favor of the
(i)
(g) Except
provided by
as
subsections
client; and
(j),
by
lien
not affected
Any proceeds paid
in satisfaction of the
action,
parties
settlement between the
suit,
to the
judgment, decree, order, settlement, or award.
proceeding
judg-
or
before or after the
(b) The lien shall be for:
ment, decree, order, or award.
compensation specifically
The fees and
(h)
(i)
Except
provided by
subsections
client;
agreed upon with the
action, suit,
(j), party
proceeding
(2) The reasonable value of the services of
person
right
shall not have the
attorney,
agreement;
if there is
fee
no
decree,
discharge
any judgment,
or dismiss
(3) Any
by
attorney;
costs advanced
settlement,
or award entered in the
(4) Any fees or commissions taxed or al-
suit,
proceeding
until the lien and claim of
lowed
the court.
for fees based thereon is satisfied
Except
liens, prior
(c)
for tax
liens of record
in full.
personal property subject
on the real and
(i)
may pay
A
debtor
the full amount
section,
provid-
the lien created
this
and as
court,
aof
or decree into
and the
(d),
attorney's
superior
ed in
section
lien is
thereupon fully satisfy
clerk of the court shall
to all other liens.
record,
or decree on the
and the
(d)
judg-
When the
to a
attaches
thereby
debtor shall be
released from
ment, settlement,
allowing
or decree
or enforc-
any further claims thereunder.
ing
a client’s
lien has the
(j)
If more than one
from the same
regard
same
as the client’s lien with
appears
party,
firm
of record for a
the satisfac-
personal
property subject
or real
to the client’s
tion of
created
this section
one of
is conclusive evidence that the
(e)
decree,
judgment,
lien on a
fully
order,
lien is
satisfied.
settlement, or award remains valid as
(k) Attorneys
power
decree, order,
have the same
long
ment,
judgment,
as the
settle-
actions, suits,
proceedings, judgments,
over
crees, orders, settlements,
de-
or award remains valid.
section,
(f)
and awards to en-
To be enforceable under this
a no-
attorney's
force their liens as their clients have for the
tice of claim of
lien shall be Hied:
*9
(1)Before
complaint
amount due thereon to them.
the
is dismissed
stipulation;
added).
(Emphases
added)).
history
that lawmak-
legislative
demonstrates
paid” (emphasis
erly determined
attorneys’ property
“clearly recognized
merely
right
to
ers
Accordingly, a lien
creates
compensation for
judgments
interests
not divide the
property;
it does
another’s
indepen-
separate
which is
their services
distinct, independently-owned
property into
obligor’s personal
client’s or
dent from the
properties.
judgment.” Specifi-
property interest
supported by the
conclusion is further
This
Judiciary
cally, Lopez points to a 2004 House
attorney’s
that
provision in the
lien statute
stated,
alia, that
report
Committee
that
inter
power
right
“[a]ttorneys have the same
“clarifies that at-
lien statute
judgments,
suits,
actions,
proceedings,
judgments
torneys’ liens on settlements and
settlements,
decrees, orders,
and awards to
interests,
attorneys
property
with clear
vest
as their clients have for
enforce their liens
amounts should not be taxed to the
those
to them.” HRS
the amount due thereon
1016-04,
Rep.
H.
No.
client.”
Stand. Comm.
507-81(k)
added).
(emphases
§
Under
Journal,
in 2004 House
at 1814.
provision, attorneys
express terms of this
purpose
By way
background,
right
enforce their liens
merely have a
to
that Hawai'i resi-
2004 act was to “ensure
judgments
clients’
and awards.
upon their
nonphysical injury settle-
dents who receive
Therefore,
§
create a
HRS
507-81 does not
ments or awards are not
to double
independent right for an attor-
superior or
Haw. Sess. Laws Act
federal taxation.” 2004
attorney
right
the same
ney,
provides
but
added).
48,
(emphasis
§ 1 at 241
Some fed-
sum,
In
HRS
as the client.
to
position
had taken the
that the
eral courts
grant attorneys
superior
§
does not
507-81
required
minimum tax
that such
alternative
property
separate
to their clients’
injured party,
be taxed in full to the
awards
lien.9
over a
recorded
deducting any
without
amounts recovered
stated,
legislature
if
intended to
Simply
However,
attorneys.
v.
their
Id.
Banaitis
judgments
attorney’s liens on client
preclude
Revenue, 340 F.3d
Commissioner
Internal
liens,
becoming subject
to CSEA
it
(9th Cir.2003),
the Ninth Circuit Court
language
such
expressly
could have
included
Appeals, relying
Oregon
on
§
§
and HRS
507-81.
in HRS
576D-10.5
law,
statute,
Oregon
lien
ruled that “under
However,
any such
neither statute contains
contingent
fees are
court-ordered or
above,
Instead,
language.
as stated
HRS
property of the
and not
considered
provides
§
that a CSEA
subject to double taxation.” 2004 Haw. Sess.
lien
priority over
unrecorded
lien takes
Accordingly,
§ 1
241.
Laws Act
at
507—81(c)
liens,
and HRS
except for tax
legislature enacted Act which was
Hawai'i
provides
attached
the attor-
Oregon attorneys’
provi-
lien
modeled on the
prior recorded liens.
ney’s lien is
relied on in
the Ninth Circuit
sions
its lien in
Because the CSEA recorded
Banaitis.
Id.
before
unrecorded
Banaitis,
In
the Ninth Circuit noted
arose,
takes
over the
the CSEA lien
Oregon
“superior
attorney’s lien.
except “tax liens” and “vests
all other liens”
foregoing
plain language of the
cannot
Despite
attorneys
with
interests that
statutes,
argues
parties
extinguished
discharged
nonetheless
that the
except by payment to the attor-
history
dictates
to the action
legislative
of HRS
ney!;.]”
Because the
that the
Lopez’s legislative history reliance on the of Hawaii’s lien unper- statute is Accordingly, priority CSEA’s lien takes suasive. The statement the House com- over attorneys’ lien. report mittee “attorneys’ that liens on settle- judgments ments and vest with process policy B. argu- due clear interests” for federal income unavailing ments are purposes tax does not mean that the Lopez argued before the ICA that has an exclusive that application circuit court’s of HRS therefore not any prior recorded § attorneys’ 576D-10.5 violated his Again, pro due purpose liens. rights. Lopez argued cess legislation liens also before the prevent was to the amount of ICA and this court that paid fees the due out of a protections being provided taxed twice. H. Stand. HRS 576D-10.5 as Rep. Comm. 1016-04, Journal, well as language No. in 2004 of HRS “sug House at 507-81 gest language broadly There is no might ] HRS 507-81 that that the [CSEA] be supports Lopez’s theory subordinate to attorneys’ ques other claims and that liens upon judgments their ought clients’ tions of never be be decided refer subject or general subordinate to a ence to principles equity.” (Quot lien. To the Lizzoli, contrary, above, as stated Nicoletti v. ing the statute ex- Cal.App.3d pressly provides (1981)).12 result. See for that Cal.Rptr. appears It quoted Oregon providing
Banaitis court
Supreme
law as
at
judicial Any applied” tribunal.” “as substantive due process would also lack merit.14 “To claim omitted). (Emphasis applied’ establish violation of an ‘as substan First, process, aggrieved person due lacks the tive an must contention merit. procedural process” safeguards prove government’s Lo- that the action was “due unreasonable, clearly § pez arbitrary having and points to in HRS 576D-10.5 serve health, protect rights no to the process the due of the CSEA’s substantial relation morals, safety, general does indicate that or welfare.” In re debtor. The statute not Herrick, protect Applications 82 Hawai'i the CSEA statute is intended to of (1996). attorneys. 922 P.2d There is no evi rights of other lienholders such as Moreover, supra, arbitrary dence the State’s action was as discussed above, grant not As established Lo lien statute does own- unreasonable. to a portion property. pez’s interest is limited lien on ership of a client’s counsel’s Judgments, settlements, (B) lotteries; granted broadly suggests a lien’ creditor be might the lien be subordinate to other questions priority ought that by of claims and (2) By attaching seizing of assets the obli- general principles decided reference to institutions; gor held in financial equity. (3) By attaching public private retirement Nicoletti, Cal.App.3d Cal.Rptr. at funds; and 685. (4) By imposing liens in accordance with this case, In instant neither the CSEA lien and, cases, appropriate section to force the provides statute nor statute proceeds. sale of and distribution discretion, and, above, judge’s as stated both pro- procedures These shall be to due expressly regulate priority liens. See statutes including, appropriate, safeguards, cess quirements as re- 576D-10.5; §HRS HRS 507-81. notice, opportunity to contest §HRS 576D-10.5 does not make refer- 13. opportunity appeal for an on liens, although ence to HRS 576D- independent to an administrative or record part: 10.5(g)provides, in relevant judicial tribunal. shall be enforceable ... [CSEA] A lien added). (Emphases necessity obtaining a court or- without following manner: der in the ICA, Lopez Reply his brief before clari- intercepting seizing periodic (1)By "asserting fied that both substantive and he was payments lump-sum from: rights procedural attorneys in of his due (A) agency, including A state or local unem- benefits; challenge ap- to HRS Section 576D-10.5 as ployment compensation, and other plied the State in this case.” however, (“[W]e judgment; liberty interpret counsel never had a are not at a statu- tory provision policy distinct and exclusive to further a that is not judgment. regard With articulated in either the of the stat- 507-81(c) above, clearly stated sets legislative history, ute or the relevant even if to, forth that are hens subordinate interpretation we believe that such would alia, prior inter recorded result, liens. HRS produce a more beneficent for ‘[t]he 576D-10.5(e) provides also that a CSEA application function in Court’s and inter- lien takes from the time it is record- *12 pretation carefully of such laws must be lim- Lopez’s attorneys’ ed. lien arose more than encroaching power ited to avoid on the a decade after the CSEA recorded its lien legislature] policies [the to determine and against Lopez’s personal property, real and (citation carry make laws to them out.’” and is thus subordinate to the CSEA’s lien. omitted)); Harada, 18, State v. 98 Hawai'i shown, Lopez ap- has not nor does he even (2002) 50, 174, (Acoba, J., 41 P.3d 206 concur- pear allege, that the State’s action has no (“[NJeither ring dissenting) the courts public relation to the welfare. The State did agencies nor empow- the administrative are apply not 576D-10.5 in a manner ered to rewrite statutes to suit their notions unreasonable, arbitrary that was or in a public policy of sound legislature when the manner that had no substantial relation to clearly unambiguously spoken.” has health, morals, safety, general (quoting Singer, 1 N. Statutory Sutherland challenged welfare. The State action—the (5th 3.06, Construction at 55 ed. 1992- application circuit court’s of the statutes— 94))). legitimate furthers the State’s ob- Moreover, Lopez the cases that cites to taining money support for child because Lo- support policy his equitable consider- pez’s go arbitration award will to CSEA to distinguishable ations are from the instant pay part outstanding of his child support case. Several of the do eases not even con- obligations. application Such an is thus not lienholders, competing cern but rather in- “arbitrary.” attorney volve represented whether an who a Lopez’s policy arguments are parent support in a child action recover First, unavailing. also because neither the proceeds litigation. fees from of the See In language legislative history nor the of HRS Marriage Wageman, Kan.App.2d re 25 supports 576D-10.5 or HRS 507-81 Lo 682, 1114, (1998) (holding, P.2d 968 1115-18 pez’s theory attorneys’ superi- that his lien is dispute attorney in a between and his exempt or to or otherwise from the CSEA’s client, recovery that in an action for of un- improper it would be for this court to paid support, attorney child “the for the rely policy principles contrary on to reach a attorney’s claimant is entitled to an lien Indeed, interpretation. against judg- the amount of settlement or change language [w]e cannot of the obtaining ment for fees incurred in the set- statute, want, supply enlarge upon a it Earl, judgment”); tlement or Eastmond v. in order to make it suit a certain state of (Utah 994, 912 Ct.App.1996) P.2d 995-96 legislate facts. We do not or make laws. (holding represented that an who a Even when the court is convinced its support mother in a child under an action [legislature really own mind that agreement that the was to receive a something meant and intended not ex- portion delinquent support of collected child [a]et, pressed by phraseology of the it pursue was entitled to lien authority depart plain has no from the father); Roebuck, Landry v. 193 meaning used. 431, 402, Mich.App. 484 N.W.2d 402-03 Klie, 519, 525, State v. (resolving dispute attorneys 116 Hawai'i 174 P.3d between 358, Sakamoto, (quoting 364 by holding State v. and their client that the 409, 413, 635, (2003)); 101 Hawai'i 70 P.3d who obtained increased child Ltd., Inc., properly retaining see also Ross v. Hotel Co. their client asserted a lien Stouffer 1037, 76 Hawai'i P.2d proceeds payable 1050 on the of a check (1994) (Klein, J., concurring dissenting) unpaid support). client for sum, the cases cites to
Lopez also cites cases where the
argument
equitable
that
considerations
before the
lien
lien was established
justify granting priority
attorneys’
to his
Capital Corp. v.
was created. See All Points
distinguishable
are
from the instant case. In
Products, Inc., No. C
Architectural Metal
event,
“equitable
considerations”
VRW,
2010 WL
at *3
interpreting
do not warrant
2010)
(N.D.Cal.
(finding
April
that
contrary
plain
scheme in a manner
to its
nearly
lien was created
seven
language. Lopez argues,
example,
plaintiffs judgment
months before the
granting priority
contractual
priority);
v.
and thus had
Cetenko United
debtors will be
liens ensures
Bank,
528,179
Cal.Rptr.
30 Cal.3d
Calif.
legal
to retain counsel to obtain
reme-
able
(Cal.1982)
(holding
P.2d
they
to which
are entitled.
also
dies
it
lien had
because
argues
ability
debtor’s
years
created several
before a third
was
creditors,
retain counsel benefits
lien). However,
granted
in the
party was
provide
because “counsel
their
labor and
case, the
lien was established
instant
CSEA
*13
proceeds
create additional
from
skills to
arose,
attorney’s lien
and Hawai'i
before the
which the
creditors’ liens can be
provide priority to the CSEA lien.15
statutes
satisfied.”
Finally, Lopez
Pangborn Plumbing
cites
However,
notes, recognizing
as the State
Skiffington,
Corp. v. Carruthers &
97 Cal.
open
Lopez’s equitable arguments could
(2002),
App.4th
Cal.Rptr.2d
potential
making
door to other
lienholders
governing
proposition
that “statutes
de
arguments.
questions
policy
Such
similar
priority among
‘simply
liens
termination of
properly
legislature, particu-
are
left to the
equitable principiéis] that
those
reflect the
larly
statutory language.
in the face of clear
labor, skills,
in
all,
whose
and materials resulted
unsympathetic
are not
to
Above while we
fund
be entitled to Lopez’s
only
the creation of a
should
would
arise in
concerns—which
their
payment
in the
claims from cases where the CSEA lien amount exceeds
recovery—we
apply
Pangbom
The
court stated
are also bound to
such source.’”
legisla-
language established
pro
contractual lien over
that an
ture,
clearly spoken on
which has
this issue.
litigation
had
over a
ceeds
Klie,
work he did and of reimbursement for ad- holding will be Lopez.” the future for vances he made to cover the costs of the suit $23,969.99, in the amount of was record- ultimately benefitted the child. That 15,1997. September on ed result is neither fair nor balanced. The out- come is not in the interest or com- Lopez’s suit was referred to the Court pelled by any principle. constitutional *14 Annexed Program. July Arbitration On Therefore, I respectfully must dissent. arbitrator Lopez awarded $9,000.00. requested pay Seitz State I. Lopez compliance the amount due in with the
A. award, terms of the arbitration and stated 30, 2008, On June firm that the firm law of Erie A. would retain the amount owed (Seitz) Seitz firm, entered into an eon- pay to the law but the remainder to the contingency agreement foreclosure, 1. The property fee stated as fol- sonal shall be distraint, seizure, sale, lows: and or notice to with- deliver, hold and which shall be executed in professional agreed For our fees we have applicable accordance with this section or (33-1/3%) our law firm will receive one-third judicial hearing state law. No notice or shall any recovery by judgment, of obtained whether necessary prior be to creation of such a lien. settlement, otherwise, or such fees that Court, by my be awarded My at sole discretion. (c) support judgment hereby The child given order or filed firm shall have and a lien fees, costs, expenses upon any judg- through judicial proceeding or administrative for its and any in this State or other state shall record- ment or settlement and is authorized to deduct fees, costs, conveyances. expenses such ed in the and bureau The recorda- therefrom and to pay you. judgment the balance to tion of the order or in the bureau of added.) (Emphases deemed, time, conveyances shall be at such purposes all and without further presided. 2. The Honorable Patrick W. Border procure registered a lien on in land the land chapter court under 501. The lien shall be- provided part 3. HRS 576D-10.5 in relevant as immediately upon come effective recordation follows: of the child order and shall attach to person property all interest in real any then (a) obligor through judicial Whenever subsequently acquired by obligor process owned or any administrative in this State or including any pay interests not recorded with the other state has been ordered to an allow- support, maintenance, conveyances bureau of or filed in the land ance for the or edu- child, court. cation of a or for the spouse spouse maintenance aof or former Any provided by conjunction (e) support, lien this section shall subsequently with child and the obli- gor delinquent payments, take over becomes in those ac- obligor's per- quired except lien shall arise on the real or recorded tax liens. property added.) obligor’s per- (Emphases sonal and the real and arguing lien did not Reply CSEA that the State file CSEA. Seitz also asked judgment owed to portion in the attach to the of the interpleader action with the court Seitz, property pay. The State took the lien created a it refused to because Seitz’s event satisfy required and therefore the position that it was not in the interest proper- because “the CSEA Seitz was not money owed to priority over all other [Lopez] public policy has ty. asserted that Seitz also agreed to file an inter- liens.” The State priority “over giving favored liens However, an request with the court. pleader May On judgment creditors’ liens.” interpleader request was never filed. 31, 2011, denying Order the court issued an of Exe- Lopez’s Motion for Issuance of Writ January Lopez filed a Motion On Mandamus. cution/ for Issuance of Writ Execution/Mandamus court, pay requesting that the State with the The State filed an the amount due. B. memorandum, arguing pursu- opposition denying Mo- Lopez appealed the Order (a)-(c)4, (Supp.2004)
ant to HRS tion for Issuance of Writ of 576D-10.5, Execution/Man- CSEA lien had and HRS Appeals Court of damus to the Intermediate There- Seitz’s (ICA). Brief, argued, Opening In his fore, deny requested that the court the State alia, inter have a and “order that State motion judgments awarded to their interest proceeds directly ... all clients, pro- was and that join- The CSEA filed a substantive [CSEA.] ” I, by the due clause Article opposition. Lopez filed a tected der in the State’s (1) complaint Before the is dismissed provided follows: 4. HRS 507-81 as stipulation; (a) upon: An has a lien (2) complaint is dismissed or- Before Actions, suits, proceedings after court; or der of the (3) action; commencement of the (2) entry year than one after Not later decrees, orders, settlements, Judgments, disposition final is filed in favor of and awards entered the court appeal thereof. client; and (i) provided by (g) Except subsections Any proceeds paid satisfaction (j), attorney's affected lien is not *15 settlement, judgment, decree, order, or action, parties to the between the settlement award. suit, judg- proceeding before or after the or (b) The lien shall be for: ment, decree, order, or award. (1) specifically compensation The fees and (i) (h) provided by Except subsections as client; agreed upon with the action, suit, proceeding (j), party to the or or a of The reasonable value of the services right person the shall not have agreement; attorney, if is no fee the there decree, discharge any judgment, or dismiss by attorney; Any costs advanced the settlement, entered in the or award (4) Any al- fees or commissions taxed or suit, proceeding until the lien and claim of or by lowed the court. thereon is satisfied the for fees based liens, prior Except (c) record for tax liens of in full. personal property on the real and (i) may pay full amount debtor the A provid- by section, court, created this and as the lien judgment or into and the of a decree superior (d), attorney's lien is ed in section fully satisfy thereupon court shall clerk of the record, to all other liens. and the or decree on the (d) judg- attorney's lien attaches to a When the thereby released from debtor shall be ment, settlement, allowing or enforc- or decree thereunder. further claims attorney's ing lien has the client's a (j) from the same If more than one regard party, as the client’s lien with appears same a the satisfac- firm of record for property personal real to the client's one of or lien created this section tion of the attorneys lien. (e) evidence that the is conclusive decree, judgment, fully lien on a lien is satisfied. settlement, order, (k) right power Attorneys valid or award remains as have the same order, decree, actions, suits, judgments, long judgment, proceedings, de- settle- as over crees, orders, settlements, ment, to en- and awards valid. or award remains section, (f) have for the liens as their clients this a no- force their To be enforceable under them. due thereon to lien shall amount tice of claim of added.) (Emphases filed:
327
the Hawai'i
deprived
litigant
Section 5 of
Constitution. Lo-
some state action has
of
pez’s Reply
“[Lopez]
constitutionally
Brief stated that
protected ‘liberty’
‘prop
a
or
”
asserting
proce-
erty’
(quoting
Support
[the]
both
substantive and
interest.’
Child
En
(“CSEA
”)
process rights
Doe,
dural
Agency
due
of his
v.
v. Doe
forcement
240, 247,
461,
challenge
applied
his
to HRS 576D-10.5 as
109 Hawai'i
125 P.3d
468
(2005)));
also, Slupecki
in this
[S]tate
ease.”
see
v. Admin. Dir. of
Courts,
407, 412,
1199,
110 Hawai'i
133 P.3d
deny
The ICA affirmed the court’s order
(2006) (recognizing
guarantee
1205
in art.
ing Lopez’s Motion for Issuance of
ofWrit
I, section 5 of the Hawai'i Constitution that
State,
Lopez v.
No.
Execution/Mandamus.
life,
person
deprived
liberty,
“no
shall be
CAAP-11-0000512,
497,
128 Hawai'i
2012
law.”).
property
process
or
without due
WL 5520465 at n 2012)
(Haw.App.
Nov.
(mem.).
recognized
The ICA did not
This court has
“[t]o
discuss
have a
benefit,
process arguments.
property
person
due
interest in a
clear
ly must have more than an abstract need or
desire for it. He must have more than a
C.
must, instead,
expectation
unilateral
of it. He
Application
filed an
for Writ of Cer-
legitimate
have a
claim of entitlement to it.”
tiorari,
alia,
asking, inter
whether
ICA
Sandy
City
Cnty.
Beach
Fund v.
&
Def.
gravely
concluding
erred in
that HRS 507- Honolulu,
361, 377,
70 Haw.
773 P.2d
“provide
superior
separate
81 did not
(1989) (internal quotation
marks
cita
attorney’s property
for an
interest in a
omitted). Further,
person’s
tion
“[a]
prior
over
recorded lien.”
‘legitimate
in a benefit constitutes a
claim of
again
asserted
“constitutional consider-
supported by
entitlement’ if it is
contractual
ations” such
inter-
statutory language
might
be invoked
judgment, supported satisfying
est in a
hearing.” Alejado
City
Cnty.
at a
v.
&
prior
payment
of the CSEA Honolulu,
221, 227,
89 Hawai'i
971 P.2d
(App.1998) (quoting Perry
v. Sinder
Response,
In its
the State contended that mann,
408 U.S.
92 S.Ct.
“[Lopez’s]
substantive due
[ ]
claim is
(1972)) (other
omitted).
L.Ed.2d 570
citation
only property
frivolous” because
inter-
“[t]he
case,
contractually
agreed
this
Seitz
[Lopez’s] attorney presently
est
has is
basis,
represent Lopez
contingency
on a
fee
State,
According
form of a lien.”
sup-
and thus
claim of
entitlement
507-81(c),
under
HRS
recorded liens
were,
ported by contract. Seitz’s fees
are accorded
liens
effect, wages
earnings
for the firm’s labor
established
507-81. The State
“property”
on the ease. Such fees are
giving priority
asserted that
to the CSEA
process purposes.
e.g.,
due
See
Sniadach v.
[Lopez’s] attorney
lien “did not mean that
337, 338-39,
Family
Corp.,
Fin.
395 U.S.
interest;
only
lost his
it means
*16
(1969)
1820,
(applying
S.Ct.
due of law.” The thus protects deprived “property” individuals of a A. Doe, state action. See Doe v.
(“Doe”) Contingency agreements 116 Hawai'i 172 P.3d fee afford access (2007) (“‘To courts, commonly 1077 state a claim under the most for those indi- fourteenth [to amendment the United States viduals who otherwise would not be able to Constitution], litigant contingent a “A must assert afford counsel. fee contract
328 contract, lawyer portion a agreement fee is awarded defined as a fee under has been recovery attorney paid will not be unless the because it is assumed that which the of Rossi, L. Attor- client is successful.” Robert the client lacks sufficient assets with which to 2:1; neys’ see also Black’s Law Dic- Andersen, Fees pay attorney. See Arthur 945 2009) (9th (defining a contin- tionary 362 ed. S.W.2d at 818. charged lawyer’s a gent fee as fee “[a] Similarly, the American Bar Association only if the lawsuit is successful services (ABA) Responsi- Code of Professional Model court”); favorably out of Hawai'i settled historically, contingen- bility recognizes that (HRPC) Conduct Rule Rules of Professional “(1) they cy allowed because often fees were 1.5(c) (“A may contingent on the out- fee only practical provide ... means of the matter for which the service is come having against a claim another can which one rendered!)]”). Consequently, “[m]ost com- afford, finance, economically and obtain the monly, attorney, compensation as for ser- lawyer prosecute competent of a services claim, litigating vices rendered in the client’s (2) claim, prosecution a successful of percentage por- stipulated is to receive a produces the claim a res out of the fee recovery in the event of a success- tion of paid.” Respon- l can be Model Code of Prof prosecution defense of the action.” ful (1980). sibility EC 2-20 “it is not While Rossi, Attorney’s (emphases § 2.1 add- Fees so, necessarily improper” lawyer to do “a ed); Dictionary Black’s Law see also generally accept employ- decline to should (“Contingent usually calculated as a fees are contingent fee one who is ment on a basis recovery!)]”). percentage of the client’s net able to a reasonable fixed fee.” Id. only Allowing the to receive recovery” “portion of the is consonant with agree represented Clients who to be on a purpose contingency agreements. The contingency generally basis lack the funds to system purpose contingency fee is to attorney personally. B. pay an See William the courts for those who could allow access to Hairston, III, Ranking Attorney’s attorney by “pay[ing] afford an not otherwise Against Liens Other Liens in the United any recovery.” lawyer out of Arthur (“If (1983) States, Legal 7 J. Prof. 193 Perry Equipment Corp., Andersen & Co. v. fee out of is unable to recover his added); (emphasis 945 S.W.2d probably go judgment, then he will [the] 2.3; Rossi, Attorney’s E. see also Fees Victor client, with uncompensated since a so much Christopher Appel, Exporting & E. Schwartz attaching possi- debt that creditors are even Importance States Tort Law: The United client, probably judgments ble of that Learning Authenticity, Necessity, and ”). proof.’ ‘judgment Inasmuch Mistakes, Pepp. L.Rev. our contingent agree- generally enter into fee (2011) (noting “contingency can fees not otherwise ments with clients who could worthy namely providing purpose, have a services, personal suit afford their legal system regardless of a access to the recover the amount owed as a con- client to Root, ability pay”); David A. person’s likely tingency fee is to be futile. Note, Attorney Fee-Shifting America: addition, against clients can be suits Contrasting Combining the Comparing, attorney’s profes- extremely damaging to an Rule”, “English “American Rule” and Eisner, Zach Com- reputation. sional See Comp. L.Rev. Ind. Int’l ment, Why Rethinking Attorney Liens: (“[T]he major purpose contingency fee Washington Attorneys are Forced into “In- provide open was to access to the courts for Bono, L. voluntary” Pro 27 Seattle U. Rev. people, regardless of their financial sta- all *17 827, (noting “filing suit 828 that tion.”); (stating 1.8 emt. HRPC Rule cf. may damage the against a client lawyer litiga- can advance court costs attorney and that no “wants to reputation,” expenses, regardless of whether those tion attorney who sues their [an] be known as repaid, such advances funds will be because Robertson, Jr., clients.”); R.J. Attor- see also “virtually indistinguishable contin- are Analysis and ney’s in Illinois: An Liens gency help ensure access to the fees (2005) (“[S]u- courts”). words, contingency Critique, 30 S. Ill. U. L.J. in a In other ing a client product is not attractive from a the work. Conse- Thus, perspective.”)- practical relations quently, as a attorney’s right to lien is effec- matter, exhausted, any- once the is tively extinguished, ethically both and as a remaining attorney’s abrogated. lien will be practical matter.5 Eisner, Liens, Rethinking See Attorney (“For Rev., Seattle prac- U. L. at 844 n. 128 B. reasons, attorney
tical a reasonable would likely against contingency not assert a provided a former fee contract client pay.”). who is practice, unable to in the attor- action filed on behalf “in neys simply do not sue their clients to recov- connection injury an suffered [with] to [his] contingent er if judg- fees funds from hand at the Halawa Correctional Facili- ment are exhausted. ty year,” See id. professional last our “[f]or we fees agreed have that our law firm will receive Finally, contingency because fee-based any recovery one-third [] obtained[.]” generally clients do not ability have the [RA at firm granted 51] Seitz’s was “a lien fees, pay attorneys’ require an attor fees, costs, upon any for its and expenses ney to assert a lien those clients added.) (Emphasis settlement.” when the entire or settlement re appears This to be standard ceived from the depleted places lawsuit is contingency example, fee contracts. For attorneys those ethically compromising in an sample contingency fee contract offered position. The ABA attorney advises that an the State Bar of California states that “should not sue a client for a fee unless attorney will have a lien that “will attach to necessary prevent gross imposi fraud or any recovery obtain, [the e]lient whether tion the client.” Model Code of Prof'l award, settlement, judgment, arbitration Responsibility, EC 2-23. “The same stan California, or otherwise.” The State Bar of applied dard should be in determining wheth Sample Forms, Agreement Written Fee at er or not to exercise an lien.” Comm, http://www.calbar.ca.gov/ available at ABA on Responsibili Ethics & Profl (1980) (withdrawn Attorneys/Forms.aspx. ty, Informal Op. 1461 on grounds by Op. Informal expressio The maxim of unius est exelusio (1986)). inability “Financial of the client to applies interpretation alterius of con pay owing,” however, the amount on a tractual terms. Plumbers & Steamfitters gross “does not constitute imposi fraud or Local No. 150 Pension Fund v. Vertex Const. tion the client.” Id. Co., Inc., (11th 1443, 1449 Cir.1991); 932 F.2d Therefore, “ethically is not see Long-Term also Smart v. Gillette Co. justified” in asserting a lien when the client (1st Plan, Disability 70 F.3d Cir. financially pay. is unable to Under such 1995). By providing that Seitz’s firm had a circumstances, the ABA advises the settlement,” any “judgment lien on Id.; forego the lien. see also Jenkins v. contingency fee contract indicated that Weinshienk, 670 F.2d (stating only lien would extend to a “[ajn exception asserting [to an attor- settlement, seemingly, provision the standard neys’ recognized lien] is also when the client contingency such contracts. financially post unable to a bond or pay....”). Generally, contingency-based IV. fees, pay clients are unable to matter, Here, said, as ethical would have no the State claimed the entire compensation recourse to ty obtain for their proceeds of the settlement under Thus, recovery entirely services if the contingen consumed CSEA lien. inasmuch as a creditor, by the recovery even where cy extinguish was fee lien would not survive an paid ground 5. The legal lien must be out the ins created services in criminal cases through prosecution the successful of a claim. produce do not fee.”). a res with which to Responsibility See Model Code EC 2-20 remains, of Prof'l Where no such res attor ("Public policy properly contingent condemns ney’s effectively lien is null. cases, arrangements largely fee in criminal on *18 330 in settlements attorney’s property proceeds, the lien settlement
ment of the Rep. No. §§ and 507-81 H. Stand. Comm. HRS and awards.” statutes Journal, 1016-04, to the circumstances at 1814. would have no relevance in 2004 House matter, in practical § As an ethical and HRS 507-81 explained here. that The committee cases, attorneys cannot lien contingency fee attorneys inter with clear “vest[ed] bring suit property or added). their clients’ (emphasis Other courts Id. ests.” judgment proceeds are once the their clients explicitly held that an have also exhausted, previ the reasons indicated v. property right. See Reed Garner lien is a able to ously. Nothing indicates (Mo.Ct. 945, Industries, Inc., 948 832 S.W.2d reim of his fees or to pay Seitz the value (“An attorney’s upon a cause App.1992) ABA advanced. Model burse Seitz for costs property right [gives] [to] action of (“A 2-20 Responsibility EC Code Prof'l Realty Corp. v. Davis attorney.”); LMWT cf. accept decline to lawyer generally should 39, Inc., Agency N.Y.2d 626 N.Y.S.2d by one contingent fee basis employment on a (holding that a N.E.2d fee.”) a reasonable fixed is able to who contingent fee pursuant to a lien created forego must his lien. See Accordingly, Seitz prop a “vested agreement gives an id., EC 2-23. at interest”). However, consider erty such supra, State action resulted As noted attorney may only apply if the ations do not lien. Ac- of Seitz’s fees and the elimination recovery to satis proceeds of the look to the deprived Seitz of cordingly, the State’s action lienors, the contin fy Unlike other his fees. the fees property interest the vested attorney cannot retain lien gency-fee based to release represented. The State’s refusal hope in the that the rights into the future to satis- proceeds part of the settlement may liened. assets that debtor will obtain by applying HRS fy fees Seitz’s legislature majority maintains that the The 576D-10.5(e) § is funda- § and HRS “exclu grant an an did not intend to the lien statutes as- mentally unfair because not property interest that is therefore sive right to continuing existence of sume the Majori any prior recorded liens.” come into property of a client original). How ty opinion (emphasis 26at however, noted, As existence in the future. ever, “property interest” in the had a Seitz attorney’s lien was contingency-fee based process purposes of the due clause fees for upon the State’s forfeiture abrogated Constitution, separate apart the Hawai'i there was no proceeds because settlement right place a lien on purported nothing for judgment and therefore longer a recovery. Enforcing attorney’s lien to attach to. cit- among liens under the statutes priorities meaning- majority is ed the State and the B. enforce no lien that Seitz could
less if there is 576D-10.5, to ob- HRS purpose proceeds in the first beyond the settlement State, monetary funds for the tain additional Accordingly, Seitz’s due place. fees, Hawai'i sue on behalf promoted i.e. his under the when property, successful, Constitution, obligors. was violated. If a suit is paid. could be the child some or all of hand, this supra. On the other See note V. attorneys are not when interest is diminished A. represen- their fees earned able to obtain they brought into tation from a fund attorney’s lien itself Recognizing that v. United existence. Cetenko California is consistent Cf. “property interest” constitutes Bank, Cal.Rptr. 30 Cal.3d 507-81, history legislative of HRS with the discourag- (noting that P.2d 1299 noted, attor- provides the basis for which as initiating suits on behalf ing attorneys from promulgating HRS neys’ generally. liens detrimen- debts “would be of clients who owe 507-81, that one legislature affirmed litigants, but to only prospective “clarify tal not 507-81 was purpose of *19 well). extinguished by their creditors as 6Thiscase is not were in effect the State’s choosing paying attorney7 about between assertion of the CSEA lien. There is no rather, paying support; “presumption child of law” that the stat the lien statute utory applied by applied would have to be scheme as the State and the to foreclose contin- gency-based majority both the fees when such fails and the child fees could not be support system generally. Allowing rightful of the lien statutes the first place. Respectfully, remuneration to the for services under circum- already stances, performed preserves opportunities it cannot be assumed that Seitz had notice, where, recovery support explained for the of child constructive monies.8 su- pra, seemingly acting against the State was VI. public’s in promoting the recov- ery support by of child precluding Seitz’s majority The states that Seitz had “con- recovery of the fees he earned and the costs structive notice of the CSEA lien insofar as he advanced. regarding Lopez’s administrative order support debt was filed in the Bureau of VII. Conveyances before the entered contingency agreement Lopez.” into a with interpretation by Under the the State and Majority opinion Similarly, at 30. at oral majority, attorneys are not entitled to argument, the State contended that Seitz had labor, compensation for their even when the notice of the CSEA lien because it was re- ultimately State be able to increase the corded. accruing amount to child beneficia- However, through attorneys. ries the labor of such standpoint, from a factual it is cannot, any evident that This under conceivable factual Seitz did not have actual notice scenario, firm be said to further that the would not receive inter- fees from representation, est. their because had the firm this, known it would not have entered into majority The contends that “it would be contingency Lopez. fee contract with See improper rely policy for this court on Second, supra. footnote neither the State principles interpretation [an to reach con- majority nor authority sup- cite trary legislative history to the port of their assertion that Seitz would have 507-81],” 576D-10.5 or HRS ma- had “constructive notice” that the firm would However, jority opinion “policy at 31. Seitz’s contingency not be able to recover its fee. principles” actually point to the lack of a Dictionary Law
Black’s defines “constructive operation rational basis for the of HRS arising by presumption notice” as “notice 576D-10.5(e) 507-81(e) and HRS in this law from the existence of facts and circum- that, Despite majority case. the fact as the “ duty pai’ty stances that a had a to take notice out, points ‘neither the courts nor the ad- of, registered pending such as a deed or a agencies empowered ministrative are to re- lawsuit, presumed by notice law to have been write statutes to suit their notions of sound acquired by person imputed and thus public policy legislature clearly when the has ” person.” Dictionary Black’s Law unambiguously spoken,’ majority’s (alteration case, omitted) In opinion (quoting this there can be no constructive at 32 Harada, imputed notice to Seitz that the firm would State v. Hawai'i P.3d (Aeoba, J., payment. contingency concurring not receive fees cases, argument, explained recovery 6. At oral Seitz that due to "the risk of no and the conscion- interpretation §§ the CSEA’s of HRS light recovery ability of the fee in of the net 507-81, repre- his firm had discontinued its client” must be considered. HRPC Rule prospective sentation of clients who are the sub- 1.5(a)(8). ject of CSEAliens. course, if were 8.Of the amount recovered suffi- 7. The amount of fees would be con- component cient to cover the child 1.5(a) states, “[a] strained HRPC Rule dispute this case and the would fees no for, lawyer agreement charge, shall not make an arise. or collect an unreasonable fee or an unreason- expenses.” contingency able amount for fee empowered dissenting)), courts are to hold due government’s action violates the *20 individual. The law
process rights of an remedy deprivation for the
must afford remedy right, “right” that lacks a
is no at all. reason, respectfully dis-
For that I must
sent. P.3d 341 LALES, Respondent/Plaintiff-
Gerard R.
Appellant,
v. COMPANY, dba
WHOLESALE MOTORS Group, Johnny Martinez, Automotive
JN Marxen, Sr., Gary Petitioners/De
fendants-Appellees.
No. SCWC-28516.
Supreme Hawai'i. Court of
Feb.