ABBATE v. WAL-MART STORES EAST, L.P.

Filing 80

MEMORANDUM OPINION re 76 Petition to Approve Charging Lien filed by NICHOLAS PEROT SMITH KOEHLER & WALL. Signed by Judge Susan Paradise Baxter on 1/28/22. (esa)

Case 1:17-cv-00288-SPB Document 80 Filed 01/28/22 Page 1 of 9

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
MONICA LEE ABATE,
Plaintiff,
v.
WAL-MART STORES EAST, L.P.
d/b/a WAL-MART STORE #2561,
Defendant.

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Case No. 1:17-cv-288-SPB

MEMORANDUM OPINION
Susan Paradise Baxter, United States District Judge
Pending before the Court in the above captioned matter is a petition by Intervenors
Michael J. Koehler, Esquire and the law firm Nicholas, Perot, Smith, Koehler & Wall, P.C.
(“Intervenors”) for approval of a charging lien in the total amount of $83,184.15, representing
attorneys’ fees ($77,500.00) and costs ($5,684.15) incurred in connection with the underlying
litigation. For the reasons that follow, the petition will be granted.1
I.

Background
This civil action was commenced after the Plaintiff, Monica Lee Abbate, was struck by a

ladder while on the premises of Defendant, Wal-Mart Stores East, L.P., d/b/a Wal-Mart Store
#2561 (“Walmart”). Attorney Koehler was Plaintiff’s counsel of record and filed the instant
lawsuit against Walmart on her behalf.

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The Court had subject-matter jurisdiction over the underlying action and retains ancillary jurisdiction over the
instant dispute. See Novinger v. E.I. DuPont de Nemours & Co., Inc. 809 F.2d 212 (3d Cir. 1987); Walker v.
Mankey, No. 2:14-cv-1504, 2019 WL 7494209 at *1 (W.D. Pa. Aug. 7, 2019); Frank v. Allstate Ins. Co., No. CV
14-1121, 2015 WL 13873969, at *1-2 (E.D. Pa. Sept. 2, 2015).
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During the course of the litigation, WalMart made a settlement offer of $250,000, which
defense counsel memorialized in a release agreement. See ECF No. 77-3. Plaintiff signed the
last page of the release agreement on November 23, 2019, see id.; however, she later claimed, in
a pro se letter to this Court, that she had been “bullied” into signing by Attorney Koehler and,
moreover, was denied an opportunity to review the agreement in its entirety. See ECF No. 37.
On December 11, 2019, the Court held a hearing concerning Plaintiff’s pro se
correspondence. ECF No. 38. During those proceedings, Plaintiff confirmed that she was firing
Attorney Koehler and would oppose the settlement. Mr. Koehler indicated at the hearing, and
through subsequent correspondence, that he would be asserting a charging lien to recover his
fees and costs. ECF No. 46 at 36; see also ECF Nos. 77-5 and 77-9. Defense counsel stated at
the hearing that Walmart would be filing a motion to enforce the settlement, which it eventually
did on February 27, 2020. ECF No. 47. In the meantime, Attorney John Knox entered an
appearance on Plaintiff’s behalf and continues to represent her in connection with the pending
proceedings.
On November 30, 2020, the Court issued a Memorandum Opinion and Order granting
Walmart’s motion to enforce the settlement, with the exception of one paragraph in the Release
Agreement which required a certification from Plaintiff’s treating physician that no further
medical treatment or services would be required relative to the injuries for which Plaintiff was
suing Walmart. ECF No. 57 at 18-26; ECF No. 58. Plaintiff did not appeal the Court’s ruling.
Walmart subsequently disbursed $16,268.61 to the collection agency for Medicare in
satisfaction of a lien that Medicare held relative to the settlement funds. Walmart paid the
remainder of the proceeds to Attorney Knox on Plaintiff’s behalf, less the disputed amount of
$83,184.15, which Attorney Koehler claimed was subject to his charging lien. By Memorandum

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Order dated May 11, 2021, the undersigned granted Walmart’s motion to pay the disputed funds
into Court. ECF No. 69; see also ECF Nos. 70, 71, 72.
The Court subsequently granted Attorney Koehler and the Law Firm leave to intervene in
these proceedings for purposes of filing their petition for a charging lien. ECF No. 75.
Intervenors’ petition was filed on July 27, 2021 and, following briefing by the parties, it is now
ripe for adjudication. See ECF Nos. 76, 77, 78, 79.
II.

Discussion
Pursuant to Recht v. Urban Redevelopment Authority of City of Clairton, 168 A.2d 134

(Pa. 1961), Pennsylvania courts utilize a five-part test to determine the enforceability of a
charging lien. In order for a charging lien to be recognized and applied, it must appear:
(1) that there is a fund in court or otherwise applicable for distribution on
equitable principles,
(2) that the services of the attorney operated substantially or primarily to secure
the fund out of which he seeks to be paid,
(3) that it was agreed that counsel look to the fund rather than the client for his
compensation,
(4) that the lien claimed is limited to costs, fees or other disbursements incurred in
the litigation by which the fund was raised and
(5) that there are equitable considerations which necessitate the recognition and
application of the charging lien.
Recht, 168 A.2d at 138–39; see also Shenango Sys. Solutions, Inc. v. Micro-Systems, Inc., 887
A.2d 772, 774 (Pa. Super Ct. 2005).
Here, there is no dispute that conditions 1, 2, and 4 are met. There is a fund in court for
distribution on equitable principles, as Walmart has deposited the disputed $83,184.15 into Court
pending resolution of the Intervenors’ petition. Moreover, there is no dispute that Mr. Koehler’s
services operated substantially or primarily to secure the settlement fund, out of which
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Intervenors now seek to recover the disputed $83,184.15 payment. In addition, the amount of
the claimed charging lien is limited to the costs and fees that Mr. Koehler incurred in the
underlying personal injury litigation, which gave rise to the fund.
Plaintiff nevertheless contends that the third and fifth conditions outlined in Recht are not
satisfied. As to the third condition, Plaintiff posits: “there is no agreement that Attorney
Koehler look to any fund where the settlement proceeds are held, rather than looking to the
Plaintiff for his compensation due [to] the fact that Plaintiff terminated her agreement for
legal representation with Previous Counsel on December 11, 2019.” ECF No. 78 at 8
(emphasis in the original).
This line of argument is unpersuasive. In this case, Intervenors entered into an agreement
with Plaintiff whereby they would be paid attorneys’ fees, on a contingent basis, in the amount of
“33.33 percent of all sums collected if settled prior to trial[.]” ECF No. 76-1 (all-caps typeface
omitted).2 The parties further agreed that Intervenors would be “reimbursed from the settlement
for all out-of-pocket costs” associated with their representation. Id. (all-caps typeface omitted).
The parties plainly contemplated from the outset that, in the event Plaintiff achieved a settlement
of her lawsuit against Walmart, Mr. Koehler and his law firm would be paid from the settlement
fund, as opposed to billing Plaintiff directly under an hourly fee-for-services arrangement.
Plaintiff’s subsequent decision to fire Attorney Koehler did not alter the terms of their contract as
it relates to fees and costs previously incurred.
Plaintiff’s position relative to the fifth Recht condition is predicated upon her prior
argument relative to the third condition. “[S]ince the third factor in Recht cannot be satisfied,”
Plaintiff reasons, “there are no equitable considerations which necessitate the recognition and

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In fact, the fee which Intervenors now seek to recover represents only thirty-one (31%) of the settlement proceeds.
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application of the charging lien.” ECF No. 78 at 8 (internal quotation marks omitted). For the
reasons, discussed, however, the Court finds that the third Recht condition is satisfied. Therefore,
Plaintiff’s logic fails.
In opposing Intervenors’ petition, Plaintiff refers this Court to Walker v. SCI Employee
Mankey, Case No. 2:14-CV-01504-LPL, 2019 WL 7494209, 2019 U.S. Dist. LEXIS 224496
(W.D. Pa. Aug. 7, 2019). In that case, two different legal counsel simultaneously participated in
the prosecution of a civil action, pursuant to a fee-splitting agreement. The attorney originally
retained by the plaintiff -- Alvin F. De Levie (“de Levie”) -- brought additional counsel into the
case -- The Beasley Firm, LLC (“Beasley”). The latter firm was later terminated and its
involvement in the case ended in the midst of discovery. The court ultimately denied Beasley’s
motion for a charging lien because it found that “Beasley’s services did not operate substantially
or primarily to secure the funds at issue,” as the plaintiff’s original counsel (de Levie) had
conducted most of the depositions, defended and won summary judgment, and ultimately
achieved the settlement. 2019 WL 7494209, at *2. Because Beasley could not satisfy the
second “Recht” factor, it also could not show that “[t]he equitable considerations . . . necessitate
the recognition and application of the charging lien. Id. at *3. “To recover under this analysis,”
the court reasoned, “Beasley would have to have satisfied all of the factors and it falls short of
satisfying the second factor.” Id. Nevertheless, although the court concluded that Beasley was
not entitled to compensation via a charging lien, it found that Beasley was entitled to
compensation pursuant to an oral fee-splitting agreement that Beasley had entered into with de
Levie. Id. at *3-6.
Ultimately, Plaintiff’s reliance on Walker is unavailing. Plaintiff highlights the fact that
the attorney asserting the charging lien (Beasley) terminated his services in the middle of

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discovery and, as such, his services “did not operate substantially or primarily to secure the funds
at issue.” ECF No. 78 at 9 (citation and additional quotation marks omitted). That fact materially
distinguishes Walker from the instant case. Because Mr. Koehler was Plaintiff’s only counsel
from the inception of the litigation up to and including the point when settlement was reached,
his services plainly operated “substantially” and “primarily” to achieve the settlement.
Plaintiff also finds significance in the fact that, once Beasley’s representation ended in
the Walker case, the court looked to the absence of any direct fee agreement between the client
and Beasley in evaluating the third Recht factor. Again, this fact is materially distinguishable,
since there was a written fee letter in this case -- signed by both Mr. Koehler and the Plaintiff -indicating that Mr. Koehler would be paid from any future settlement proceeds. Thus, the third
Recht factor is satisfied. Plaintiff nevertheless reads Walker for the proposition that, once a fee
agreement with a prior attorney is terminated, that attorney can no longer point to the terminated
fee agreement as evidence that counsel was meant to look to the fund, rather than to the client,
for his compensation. ECF No. 78 at 9. Plaintiff draws this inference from the fact that, in
Walker, Beasley would not have satisfied the third Recht factor, but for his fee-splitting
arrangement with de Levie. However, Plaintiff’s interpretation of Walker depends upon a
misreading of the facts: what the Walker court referred to in its analysis was not the absence of a
post-termination fee agreement per se, but rather the absence of any fee agreement at all
between the client and Beasley, as Attorney de Levie had apparently retained Beasley’s services
to assist with his prosecution of the plaintiff’s case. See 2019 WL 7494209, at *2-3. In this
Court’s view, neither Recht nor Walker can be read as placing dispositive importance on the
existence or absence of a post-termination fee agreement between a plaintiff and a subsequently
terminated lawyer.

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Plaintiff also reads Walker for the proposition that, when even one of the Recht factors is
not met, a charging lien is not enforceable. Here, for the reasons discussed, the Court finds that
all necessary conditions are satisfied. Accordingly, Intervenors’ lien is valid and enforceable by
this Court.
Plaintiff’s final argument is that equitable considerations weigh against enforceability of
the charging lien because Mr. Koehler is allegedly proceeding here with “unclean” hands. See
Brandywine Savings and Loan Ass’n v. Redevelopment Auth. of Chester Cty., 514 A.2d 673, 676
(Pa. Commw. Ct. 1986) (“He who comes into equity must come with clean hands.”). In essence,
Plaintiff suggests that Attorney Koehler fraudulently induced her to sign a document that she did
not know was a release. See ECF No. 78 at 10. And at the very least, she claims, Mr. Koehler
“had [her] sign a document which he purports is the Release containing a requirement that he
fully knew Plaintiff could not meet.” ECF No. 78 at 14. Here, Plaintiff is referring to the fact
that her physician would not certify that all relevant medical treatments had concluded, as was
contemplated by the terms of the Release Agreement. She states that Walmart’s attorney and
Mr. Koehler both acknowledged on the record that by signing the Release without the
certification from Plaintiff’s physician, there was a strong possibility “Medicare comes back and
decides not to pay for some future medical treatment because of -- they believe it should have
been subject to a set-aside....” Id. (ellipsis in the original). Thus, Plaintiff insists, she was
“placed at medical and financial risk for settling a case when her ongoing medical treatment
would not be paid for into the future.” Id.
While the undersigned appreciates Plaintiff’s frustration concerning the resolution of her
underlying lawsuit, the Court finds no merit in her present arguments. In resolving Walmart’s
motion to enforce the settlement agreement, the Court found -- based upon the record before it --

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that Mr. Koehler had express authority to enter into the subject settlement agreement, the terms
of the settlement were sufficiently definite to allow specific enforcement, and the agreement was
supported by adequate consideration. ECF No. 57 at 12, 26. Additionally, the Court found that
there had been no clear showing of fraud, duress or mistake in connection with the Plaintiff’s
execution of the agreement, as would justify setting aside the settlement. Id. at 13, 15-16, 26.
To the extent Plaintiff wishes to revisit these findings at the present time, the Court declines to
do so.
Nor is the Court persuaded that the doctrine of “unclean hands” otherwise precludes
Intervenors’ requested relief.
[A] court may deprive a party of equitable relief where, to the detriment of the other
party, the party applying for such relief is guilty of bad conduct relating to the
matter at issue. The doctrine of unclean hands requires that one seeking equity act
fairly and without fraud or deceit as to the controversy in issue.
Eye Ctr. of Cent. Pennsylvania, LLP v. Fassero, 240 A.3d 904 (Pa. Super. Ct. 2020), appeal
denied, No. 549 MAL 2020, 2021 WL 855173 (Pa. Mar. 8, 2021) (quoting Terraciano v. Dep't.
of Transp., Bureau of Driver Licensing, 753 A.2d 233, 237-38 (Pa. 2000)) (alteration in the
original). The burden of proving unclean hands is on Plaintiff. Id. (citing Montgomery Bros.,
Inc. v. Montgomery, 112 A. 474, 475 (Pa. 1921)). “Even where a party has acted with unclean
hands, the trial court ‘is free to refuse to apply the unclean hands doctrine if consideration of the
record as a whole convinces the court that its application will cause an inequitable result.’” Id.
(quoting Matenkoski v. Greer, 213 A.3d 1018, 1028 (Pa. Super. Ct. 2019)). In this case,
notwithstanding Plaintiff’s disappointment with the terms of her settlement, the Court is not
persuaded that any actions on the part of Attorney Koehler justify the denial of the equitable
relief the Intervenors now seek. Having fully considered all of Plaintiff’s objections, the Court is

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satisfied that equitable considerations necessitate the recognition and application of the subject
charging lien.
III.

Conclusion
Based upon the foregoing reasons, the Intervenors’ Petition to Approve Charging Lien

will be granted. An appropriate order follows.

______________________________
SUSAN PARADISE BAXTER
United States District Judge

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