Brann v. Williams, Love, O'Leary, & Powers, PC et al

Filing 31

Opinion and Order: The decision of the Bankruptcy Court is Affirmed. Appellant's and Sterling's requests for oral argument are denied as unnecessary. Signed on November 17, 2012 by Chief Judge Ann L. Aiken. (cp)

UNITED STATES DISTRICT COURT
DISTRICT OF OREGON

In re:

Civ. No. 3:12-cv-00563-AA

WILLIAMS, LOVE, O'LEARY &
POWERS, P. C . ,

Adv. Proc. No. 11-03279-elp

Debtor.

OPINION AND ORDER

HEATHER A. BRANN,
Appellant-Defendant,

v.
WILLIAMS, LOVE, O'LEARY &
POWERS, P. C . ,
Appellee-Plaintiff.
AIKEN, Chief Judge:
Appellant

Heather

Brann

appeals

a

decision

of

the

United

States Bankruptcy Court concluding that Appellant's claim against
the debtor is not secured by an attorney's lien giving her claim
1

- OPINION AND ORDER

priority

over

other

creditors'

claims.

After

Bankruptcy Court's decision and the parties'

review

arguments,

of

the

I affirm

the decision.
FACTUAL BACKGROUND
This is an appeal in an adversary proceeding related to a
Chapter 11 bankruptcy.

Debtor-Appellee Williams,

Powers,

P. C.

(WLOP)

is a

medical

and

pharmaceutical

Love, O'Leary &

law firm specializing in the areas of
products

liability

and

mass

tort

litigation. As pertinent to this appeal, WLOP represented over one
hundred

clients

in

products

liability

cases

involving

medical

devices known as pain pumps (the pain pump cases). In these cases,
the

clients

(the

pain

pump

clients)

alleged

serious

injuries

arising from the post-surgical use of pain pumps to infuse pain
medications directly into their shoulder joints.
WLOP entered into retainer and fee agreements with pain pump
clients, with the agreements following one of two forms. Under one
form

of

agreement,

retains WLOP,

"Agreement

to

Hire

Attorneys,"

the

client

Kalur Law Office and the Law Offices of Jeffrey B.

Wihtol (Wihtol) as "my attorneys" and agrees "to pay my attorneys
for their services a percentage of the total recovery whether this
recovery is obtained by settlement to by judgment after a trial."
WLOP Suppl. Excerpt of Record (SER) 652. The agreement contemplates
association of counsel and the sharing of fees among them:
If my attorneys associate with any other attorney in
another law firm, any fees earned may be shared between
2

- OPINION AND ORDER

those attorneys as well. The sharing of attorney fees
will not cost me any more money because the total amount
of fees I owe will remain the same, whether one law firm
works on my case or whether more than one firm works on
my case. I will be notified of, and will be asked to
approve of, any change in these fee-sharing percentages.
WLOP SER 653.
In the second agreement, the "Pain Pump Fee Agreement," the
client retains WLOP,

I

l

Portis

&

Miles,

P.C.

Wihtol,

and Beasley, Allen,

(Beasley-Allen)

Crow,

Methvin,

as the client's attorneys.

WLOP SER 657. This agreement also provides:
Client agrees that BEASLEY-ALLEN, WILLIAMS-LOVE, WIHTOL
may associate additional lawyers/firms to assist with
this case and Client agrees to the sharing of fees
between lawyers. Client understand the terms herein apply
to other lawyers associated on this case and that
association of other lawyers or law firms does not
increase the amount of the attorney fee due to lawyers on
successful resolution of the claim.

***
If no recovery (by settlement or trial) is obtained,
client will not owe a legal fee or expenses. If BEASLEYWIHTOL obtains settlement or
ALLEN,
WILLIAMS-LOVE,
judgment for Client, Client will pay to BEASLEY-ALLEN,
WILLIAMS-LOVE, WIHTOL forty [percent] (40%) of the net
recovery, after reimbursement of expenses.

Appellant is an attorney licensed to practice law in Oregon
who entered into a contractual agreement with WLOP to provide legal
services in pain pump cases. On August 17, 2009, Appellant and WLOP
entered into a written agreement (effective November 1, 2008) that
set forth the "terms and conditions" of Appellant's "engagement"
with WLOP. WLOP SER 660-65.
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- OPINION AND ORDER

Appellant's agreement states that WLOP "will pay" Appellant
"on an hourly basis" for her legal services on pain pump matters
(First-Tier-Rate fees), with additional "success-based hourly fees"
if WLOP obtains favorable results in certain numbers of cases. WLOP
SER 661. Specifically,

if WLOP obtained favorable settlements or

judgments in ten pain pump cases, Appellant would be entitled to
enhanced hourly fees for her services (Second-Tier-Rate fees), and
if WLOP obtained favorable results in fifty percent of its pain
pump cases, Appellant would be entitled to an additional hourly-fee
enhancement

for

her

services

(Third-Tier-Rate

fees).

Appellant's agreement also provides that "WLOP shall ensure that
any client with respect to which [Appellant] renders legal services
for a

[pain pump] matter consents to WLOP sharing its fees with

[Appellant]." Id. Appellant's agreement further states:
My hourly rates contemplate that the risk of any postsettlement or post-entry-of-judgment delay in payments to
WLOP' s clients, reduction of legal fees by a court,
insolvency of responsible defendants (or responsible
defendants' insurers), disputes by WLOP over fees with
its associated counsel, or voluntary reductions by WLOP
in fees or costs will be solely borne by WLOP. Such risks
borne by WLOP will not, however, affect WLOP's right to
dispute any legal fees or cost reimbursements billed by
me to WLOP.
All legal fees and costs reimbursements due to me from
WLOP (including First-Tier-Rate fees, Second-Tier-Rate
fees, and Third-Tier-Rate fees) will be payable to me by
WLOP under the above terms, regardless of whether or not
I am engaged by WLOP at the time such payment obligations
arise.
WLOP SER 662.

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- OPINION AND ORDER

On December 31,

2010, WLOP terminated Appellant's agreement

pursuant to its terms. WLOP SER 660. At that time, WLOP had paid
Appellant the full amount of her First-Tier-Rate fees.
In January 2011,
Appellant

WLOP and Appellant agreed that WLOP owed

success-based Second-Tier-Rate fees,

because WLOP had

successfully resolved ten pain pump cases. However, WLOP asserts
that it did not have sufficient funds to pay Appellant her SecondTier-Rate fees when they became due. In June 2001, Appellant filed
suit against WLOP to recover these fees.
In August 2011, WLOP filed a voluntary bankruptcy proceeding
under

Chapter

11.

During

the

bankruptcy

proceedings,

WLOP

apparently acknowledged that it owes Appellant both Second-TierRate fees and Third-Tier-Rate fees, as it had successfully resolved
more than fifty percent of its pain pump cases.
Appellant

asserted

an

attorney's

lien

in

the

bankruptcy

proceeding with respect to her claim for fees. WLOP then filed this
adversary proceeding, seeking a declaratory judgment that Appellant
does not possess an attorney's lien and is an unsecured creditor
whose claims will be paid in the normal course of the proceedings.
WLOP's lender, Sterling Savings Bank (Sterling) intervened in the
adversary proceedings and sought a similar declaratory judgment.
On motions for summary judgment, the Bankruptcy Court found
that Appellant does not have an attorney's lien and granted summary
judgment in favor of WLOP and Sterling. This appeal followed.

5

- OPINION AND ORDER

STANDARD
This court reviews the Bankruptcy Court's conclusions of law
de novo, while its findings of fact are reviewed for clear error.
In re

Schwarzkopf,

626

F.3d 1032,

1035

(9th Cir.

2010).

Mixed

questions of law and fact are reviewed de novo. In re Hamada, 291
F.3d 645, 649 (9th Cir. 2002).
DISCUSSION
The issue presented in this appeal is whether the Bankruptcy
Court correctly found that Appellant did not have an attorney's
lien giving her claim against WLOP priority over other creditors'
claims. As the Bankruptcy Court emphasized, the issue on appeal is
not whether WLOP owes Appellant Second- or Third-Tier-Rate fees
(WLOP admits that it does), whether Appellant's contract with WLOP
is enforceable

(again,

WLOP admits that it owes Appellant under

said contract), or whether WLOP engaged in questionable conduct to
shirk its contractual obligations to Appellant. Instead, the sole
issue before the court is whether WLOP's fee agreements with pain
pump

clients,

combined

with

Appellant's

agreement

with

WLOP,

created an enforceable attorney's lien in Appellant's favor under
Or.

Rev.

Stat.

§

Bankruptcy Court,

87.445.

That is the only issue decided by the

and the only issue the court will consider in

this appeal. Accordingly, Appellant's arguments regarding WLOP's
contractual and ethical obligations are not discussed or addressed,
as they are irrelevant.

6

- OPINION AND ORDER

lj

I
I

The Bankruptcy Court found that Appellant did not possess an
attorney's lien on settlements or awards

from pain pump cases,

because she did not contract - either expressly or impliedly - with
pain pump clients regarding the payment of her fees.

Instead, the

~

I

I
I

Bankruptcy Court found that WLOP's fee agreements and Appellant's
agreement with WLOP established that WLOP, not pain pump clients,
was solely responsible for Appellant's compensation. After de novo
review, I find no error.

I
Under Oregon law:
An attorney has a
lien upon actions,
suits and
proceedings
after
the
commencement
thereof,
and
judgments, orders and awards entered therein in the
client's favor and the proceeds thereof to the extent of
fees and compensation specially agreed upon with the
client, or if there is no agreement, for the reasonable
value of the services of the attorney.

I
i

'

Or. Rev. Stat.

§

a

(1)

charge

on

87.445. "Under the statute, an attorney's lien is
actions,

commencement thereof;

(2)

suits,

and

proceedings

judgments, decrees,

orders,

after

the

and awards

entered therein in the client's favor; and (3) the proceeds thereof
to the extent of fees and compensation specially agreed upon with
the client." Potter v. Schlesser Co.,

Inc.,

335 Or. 209, 213,

63

P.3d 1172 (2003).
In other words, as cogently explained by the Bankruptcy Court,
an attorney's lien is a "mechanism to enforce an attorney's right
to compensation from the client." Mem. Op. at 12. Section 87.445
thus creates a lien on the client's property, based on the client's

7

- OPINION AND ORDER

obligation to pay an attorney the compensation "specially agreed
upon" or the reasonable value of legal services rendered by the
attorney. Potter, 335 Or. at 214-15, 63 P.3d 1172 (explaining that
an

attorney's

parties

to

lien

the

is

"a

charge

action are

on the

obligated to

action"

such that

satisfy the

the

attorney's

lien). Consequently, an attorney's lien in favor of Appellant must
attach to one or more pain pump actions by virtue of the pain pump
client's agreement to pay Appellant's fees. Democratic Cent. Comm.
of Dist. of Columbia v. Washington Metro. Area Transit Comm'n, 941
F.2d 1217,

1220

(D.C.

Cir.

1991)

("In sum,

in order to assert a

valid attorney's charging lien, there must be an agreement between
client and counsel, either express or implied, that the attorney's
fee would be paid from any recovery in the case."). Here, no such
agreement or obligation exists.
Contrary to Appellant's assertion, WLOP's fee agreements with
pain pump clients do not establish fees or compensation "specially
agreed upon" by Appellant and pain pump clients or obligate the
clients

to

pay

Appellant's

fees.

Instead,

the

fee

agreements

require the pain pump clients to pay the specified fees to WLOP,
the Kalur Law Office, and Wihtol, or to "Beasley-Allen, WilliamsLove,

Wihtol." WLOP SER 652,

65 7.

In short,

the fee agreements

obligate pain pump clients to pay WLOP, not Appellant.
Moreover, the fact that the pain pump clients agreed that WLOP
may "share" fees with associated counsel does not create a separate

8

- OPINION AND ORDER

agreement or obligation to pay the fees of associated counsel such
as Appellant. The plain language of the fee agreements obligate the
pain pump clients to pay only WLOP and the other identified law
firms, and the pain pumps clients' "knowledge and acquiescence" of
associated counsel does not establish a obligation to pay their
fees.

See Hahn v.

Oregon Physician's Serv.,

786 F.2d 1353,

1355

(9th Cir. 1985) ("[N]either knowledge and acquiescence, nor consent
by the client,

is sufficient to make the client liable,

in the

absence of the circumstances from which it can be inferred by the
client that the fees

are to be paid for by him.")

(quoting 7A

C.J.S. Attorney and Client§ 297 (West 1980)).
Appellant's agreement with WLOP further precludes the creation
of

an

attorney's

lien.

First,

Appellant's

agreement

expressly

provides that Appellant's engagement is with WLOP, that WLOP may
terminate Appellant's engagement at any time, and that Appellant is
providing legal services to WLOP - not to any specific pain pump
client -

on a "work for hire" basis.

WLOP SER 660-62.

Further,

Appellant's agreement clearly states that WLOP "will pay" Appellant
for her legal services,

that Appellant will "seek reimbursement

from WLOP" for her expenses, that WLOP will be subject to statutory
interest if it fails to pay Appellant,

that WLOP has a right to

dispute Appellant's legal fees and expenses, and that "all legal
fees and cost reimbursements ... will be payable to me by WLOP."
WLOP SER 661-62.

9

None of these provisions would be necessary or

- OPINION AND ORDER

even make sense if pain pump clients had agreed to pay Appellant's
fees.

Appellant's agreement also requires WLOP to "ensure" that

each pain pump client consents to "WLOP sharing its fees with"
Appellant,

further evincing the intent that WLOP -

not the pain

pump client - is obligated to pay Appellant. WLOP SER 661 (emphasis
added).
Second, Appellant's agreement provides that her eligibility
for Second- and Third-Tier Rates is based on WLOP's overall success
in a certain number or percentage of pain pump cases, regardless of
"whether

[Appellant's]

legal

services

for

such

[pain pump

matters] have been allocated by WLOP to one or more specific [pain
pump] client." WLOP SER at 661. Thus, as found by the Bankruptcy
Court, Appellant's fees are not dependent on WLOP's success in the
cases for which Appellant provided legal services, or on the amount
WLOP

recovers

in

a

specific

pain

pump

case.

It

follows

that

Appellant has no attorney's lien that attaches to any particular
pain pump action.

1

Finally, Appellant's agreement expressly provides that WLOP
alone will bear any and all risk of non-payment or delayed payment
to "WLOP's clients," and that WLOP will pay Appellant the agreed
rates regardless of whether or when WLOP actually recovers its fees

1

In her
rates "were
created the
contradicts
WLOP.
10

reply brief, Appellant claims that her success-based
only triggered when her work on the pain pump cases
success." Reply at 8. However, this statement
the plain language of Appellant's agreement with

- OPINION AND ORDER

in pain pump cases.

WLOP SER

662.

In other words,

Appellant's

agreement expressly places the entire responsibility and burden of
Appellant's fees on WLOP, not on any pain pump client. WLOP SER 662
(expressly providing that the "risk" of delayed or non-payments of
judgments, monetary awards, and settlement amounts or the reduction
of costs and fees "will be solely borne by WLOP"). Thus, the plain
language of Appellant's agreement with WLOP precludes a finding
that Appellant's legal services created an attorney's lien on the
property of a pain pump client, i.e., a pain pump action.
The Ninth Circuit has addressed this issue in analogous facts
and similarly found no creation of an attorney's lien.

In Hahn,

attorney King was retained to pursue antitrust litigation on behalf
of individual podiatrists. Hahn, 786 F.2d at 1354. King's retainer
agreement

set

associate

with

Subsequently,

forth

King's

counsel

to

compensation and authorized King to
assist

him

in

the

litigation.

Id.

King and his clients executed an addendum to the

retainer agreement providing that King bore sole responsibility for
the compensation of any associated counsel.

Id.

King associated

with a second attorney on the case, and both attorneys ultimately
withdrew from representation after filing notices of attorneys'
liens.
The

district

court

vacated

the

attorney's

lien

associated counsel and disallowed any attorney's fees.
Circuit affirmed:

11

- OPINION AND ORDER

filed

by

The Ninth

------------------------------------------------------------------------------------------------------------------------------------------------------------

l

'

Appellant's arrangement for fees was contained solely in
the agreement he executed with King, which expressly
provided that King would retain overall direction and
control of the case. The First Addendum to the Retainer
Agreement very clearly reflects the intention of King and
the doctors that any attorneys associated in the case
would look exclusively to King for the payment of their
fees.
Although appellant had a claim to a part of King's share
in the ultimate recovery in this case, he had no claim to
the recovery before distribution to King. We conclude
that, because no independent contract between appellant
and the doctors ever existed, appellant does not have a
right to a lien against the doctors' recovery in this
case even though his proper recourse for fees has been
cut off as a result of King's bankruptcy.
Id. at 1355.
Similarly,

Appellant's "arrangement for

fees was contained

solely in the agreement" she executed with WLOP,
independent
compensation.

contract
Id.

with

pain

pump

and she had no

clients

for

fees

or

Further, WLOP's fee agreements do not obligate

the pain pump clients to pay Appellant for her legal services.
Rather, the fee agreements provide that the clients will pay only
WLOP and other specified law firms,

and that

such fees may be

shared among associated counsel. Thus, Appellant has no independent
agreement with pain pump clients to establish an attorney's lien.
Appellant attempts to distinguish Hahn on grounds that WLOP's
fee agreements do not expressly disclaim any obligation by the pain
pump clients

to

pay associated counsel.

I

do

not

find

such a

distinction persuasive given the facts of this case. WLOP's fee
agreements and Appellant's agreement with WLOP make it abundantly

12

- OPINION AND ORDER

clear

that

WLOP

bears

sole

responsibility

for

the

payment

of

Appellant's fees.
Despite the plain language of the relevant agreements and the
Ninth Circuit's decision in Hahn, Appellant nonetheless argues that
Oregon caselaw supports the creation of an attorney's lien in these
circumstances.

In support, Appellant primarily cites Potter,

335

Or. 209, 63 P.3d 1172, and Carson v. McMahan, 215 Or. 38, 332 P.2d
84 (1958). Appellant's reliance is misplaced, as these cases do not
support her argument.
In Potter, the Oregon Supreme Court did not address whether an
attorney's lien was created in favor an attorney who associated
with lead counsel.
lien existed,

Rather,

it was undisputed that an attorney's

and the only issue was whether the lien could be

enforced against an party-opponent who had settled with the partyclient without the attorney's knowledge.

See Potter,

335 Or.

at

211-12, 63 P.3d 1172. The Oregon Supreme Court held that because an
attorney's lien attaches to the action rather than the proceeds,
the plaintiff-attorney could enforce the lien against the partyopponent, even though the proceeds from the action were no longer
in the party-opponent's possession.

Id. at 214-15,

63 P.3d 1172.

Potter's holding has no relevance to this appeal.
In Carson, the issue involved the division of a contingent fee
between attorneys in the absence of a fee-sharing agreement; the
Oregon Supreme Court did not address or discuss the creation of an

13

- OPINION AND ORDER

attorney's lien.

Carson,

215 Or.

at 42,

332 P.2d 84.

The Court

ultimately found that no specific agreement existed between the
attorneys and affirmed the equal division of the fee.

Id. at 44,

332 P.2d 84. Therefore, Carson is inapposite.
Appellant also argues that even if she had no agreement with
pain pump clients regarding compensation,
created nonetheless

for

an attorney's lien was

the "reasonable value of her services"

under§ 87.445. Granted, § 87.445 provides that an attorney's lien
is created "to the extent of fees and compensation specially agreed
upon

with

the

client,

or

if

there

is

no

agreement,

for

the

reasonable value of the services of the attorney." Or. Rev. Stat.
§ 87.445. However, Appellant's argument is unavailing.
First, a plain reading of the statute reveals that the phrase
"if

there

is

no

agreement"

regarding the amount

of fees

pertains

to

the

or compensation,

lack
not

of
the

agreement
lack of

agreement to pay the attorney in the first place. Second, Appellant
fails to recognize that there is an agreement in this case,
agreement by the pain pump clients to pay WLOP,

an

not Appellant.

There is also a second agreement, Appellant's agreement with WLOP,
that

includes

agreed-upon

fees

and

expressly

places

the

responsibility for Appellant's fees on WLOP and not the pain pump
clients. 2

2

Taking Appellant's argument to its logical conclusion would
allow attachment of an attorney's lien to a client's action even
though the client has no obligation to pay the attorney.
14

- OPINION AND ORDER

I

In sum, neither Appellant's agreement with WLOP nor the pain
pump

clients'

fee

agreements

with

WLOP

create

an

enforceable

attorney's lien in favor of Appellant. While Appellant has a claim
against

WLOP

pursuant

to

her

agreement,

she

does

not

have

an

attorney's lien under§ 87.445 that gives her claim priority.
CONCLUSION
For

the

reasons

explained

above,

the

decision

of

the

Bankruptcy Court is AFFIRMED. Appellant's and Sterling's requests
for oral argument are denied as unnecessary.
IT IS SO ORDERED.
DATED this

~day

of November, 2012.

AnnAiken
United States District Judge

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- OPINION AND ORDER