Sowder v. SowderSowder v. Sowder
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- Bustamante
{1} Walther Associates (Walther) appeals from the trial court’s release of an attorney charging lien Walther sought to assert over the former marital residence of Virginia Sowder (Virginia) and Elmer Sowder (Elmer). After an evidentiary hearing, the trial court concluded that Walther did not give Virginia proper notice of the lien and ordered it released. We affirm.
{2} The underlying cause of action in this matter is the divorce between Virginia and Elmer, both of whom are in their seventies. Virginia filed for divorce in January 1995, seeking an end to nearly fifty-two years of marriage. The case was contentious throughout. Virginia accused Elmer of infidelity and financial misdealing. Elmer admitted to having amassed considerable gambling debts while living in Las Vegas, Nevada, apart from Virginia. In addition, the trial court entered several orders to show cause, temporary restraining orders, injunctions, and ultimately a contempt order against Elmer for his failure to cooperate. Elmer and Virginia were able to agree on terms for a Marital Settlement Agreement (MSA), although, as evidenced by some of the trial court’s orders, Elmer was less than cooperative in carrying out those terms.
{3} Among the MSA’s terms was a provision that Elmer would pay Virginia half of the equity in their Los Alamos home (approximately $81,000), in exchange for which Virginia would quitclaim to Elmer all her right, title, and interest in the property. Elmer was also to pay down the mortgage on the home by $50,000, and to allow Virginia to lease back the property for the remainder of her life. During the lease term, Elmer was to “take all steps necessary to protect [the property] from creditors’ claims, including, without limit, discharge of such claims against [the property] in full and clearing of title in the real property records within a reasonable time after he discovers or should have discovered such claims.” Elmer’s failure to “promptly pay and discharge all real estate taxes, liens, construction/material-man’s liens, and so forth on the property” would constitute a default under the MSA. A default by Elmer would give Virginia “a right to cure the default and assume the ownership of [the property].”
{4} Elmer hired Walther to represent him in the divorce. Walther’s retainer agreement with Elmer included a clause that provided: “Our fee is secured by a charging lien on your share of the property division, pending payment, and we may withdraw from your case for non-payment of fees.” As Elmer’s attorney, Walther assisted in preparing the MSA. After the court approved the M.S.A. Elmer allegedly quit paying Walther for its services. Despite his failure to pay, Walther continued to represent Elmer during the time when the trial court entered several orders against Elmer for his refusal to abide by the terms of the MSA. According to Walther, Elmer accumulated a balance of $43,550.01 in legal fees between June 13, 1996 (when Elmer received money from a trust account and paid his bills to date), and February 18,1997.
{5} Walther sent Elmer a letter on February 18, 1997, advising him of the outstanding balance. The letter also informed Elmer that Walther intended to withdraw as counsel, and it reminded Elmer of Virginia’s rights under the M.S.A. in the event of a default. Finally, the letter indicated that Walther had filed a charging lien on the property it recovered for Elmer in the divorce, pursuant to the lien provision of the retainer agreement. Walther had filed the Notice of Charging Lien in the County Clerk’s Office in Los Alamos a week earlier, on February 11, 1997. Walther withdrew from the case on March 10,1997.
{6} Elmer did nothing to satisfy his debt to Walther. Instead, he told Virginia he was in default under the M.S.A. (without telling her what the default was) and quitclaimed the property to her on July 21, 1997. Virginia discovered the lien only after taking title to the property. She moved the trial court for release of the lien in October 1997. The trial court granted Virginia’s motion and Walther appealed.
DISCUSSION
{7} Walther argues, quite simply, that the trial court was wrong as a matter of law in concluding that its lien was invalid. We review questions of law de novo. See Western Bank v. Malooly
{8} This ease requires us to clarify further the law of attorney charging liens in New Mexico. Attorneys have all the usual tools available to creditors to protect against defaults by their clients. For example, they can obtain mortgages on client real property or security interests in client personal property. Also, if a client fails to pay what is due, the attorney can file a claim in court
{9} Although in many states attorney charging liens are governed by statute, in New Mexico they have their origin in common law and are governed by equitable principles. See Cherpelis v. Cherpelis,
the right of an attorney or solicitor to recover his fees and money expended on behalf of his client from a fund recovered by his efforts, and also the right to have the court interfere to prevent payment by the judgment debtor to the creditor in fraud of his right to the same, and also to prevent or set aside assignments or settlements made in fraud of his right.
Prichard,
{10} In New Mexico, there are four requirements for the imposition of an attorney charging lien. A charging lien first requires a valid contract, either express or implied, between attorney and client. See Sunwest Bank of Roswell, N.A. v. Miller’s Performance Warehouse, Inc.,
{11} The second requirement is that there be a fund “recovered by” the attorney. See Albuquerque Nat’l Bank v. Albuquerque Ranch Estates, Inc.,
{12} The third requirement is “that clear and unequivocal notice be given of the intention to assert a lien against any judgment or recovery so that all parties concerned are aware that no voluntary payment should be made without protecting the attorney’s claim of fees and costs.” Thompson v. Montgomery & Andrews, P.A.,
{13} We do not decide here, however, whether notice was proper. We agree with the trial court that the lien was invalid; as we discuss below, we hold it was invalid because the fourth requirement of a charging lien' — timely assertion — was not met. While we decide on a basis different from that of the trial court, we perceive no unfairness to the parties because they addressed the issue of timely assertion of the lien both here and
{14} The fourth requirement of a valid charging lien is that assertion of the lien be timely. As our Supreme Court indicated in Prichard, a charging lien is waived if the attorney fails to give notice of his intention to assert it before the proceeds of the judgment have been distributed: ‘“The attorney waives his lien by his acquiescence in a satisfaction of the judgment by the payment of money or the transfer of property to his client, and he cannot afterwards enforce his lien upon such money or property, but must look to his client alone for his compensation.’ ”
{15} That is what happened here. Although Walther mentioned a lien in its retainer agreement, that did nothing more than indicate an intent to assert a charging lien in the event that Walther recovered property for Elmer and Elmer refused to pay Walther for its services. Indeed, as we have already noted, “[a]n attorney’s charging lien attaches to the fruits of the attorney’s skill and labor.” 7 Am.Jur.2d Attorneys at Law § 357; see also Albuquerque Nat’l Bank,
{16} We are not unsympathetic to Walther. But we agree that a charging lien “ ‘is a peculiar lien, to be enforced by peculiar methods.’ ” Prichard,
{17} We address one final issue briefly. During oral argument before this Court Walther suggested that, by virtue of the written lien language in the retainer letter, its agreement with Elmer was more in the nature of a mortgage than a lien. We disagree. “New Mexico has never departed from the early definition of a ‘mortgage’ as a ‘conveyance of real estate, or some interest therein, defeasible upon the payment of money or the performance of some other condition.’ ” Kuntsman v. Guaranteed Equities, Inc.,
{18} Walther asserted its charging lien too late by doing so after distribution of the property under the terms of the MSA. The trial court was correct in releasing the lien. And because there was no lien, Virginia had no obligation to Walther under the MSA. We therefore affirm.
{19} IT IS SO ORDERED.