Smith, W. v. Hemphill, B. , 180 A.3d 773 ( 2018 )

J-S71016-17
2018 PA Super 45WILLIAM SMITH SR. AND EVERGREEN IN THE SUPERIOR COURT OF
MANAGEMENT GROUP, INC. PENNSYLVANIA
v.
BRIAN HEMPHILL AND COMMERCIAL
SNOW + ICE, LLC
APPEAL OF BARRY M. ROTHMAN,
No. 1351 EDA 2017
ESQUIRE
Appeal from the Order entered March 29, 2017
In the Court of Common Pleas of Chester County
Civil Division at No: 2012-04425-CT
BEFORE: PANELLA, STABILE, and PLATT,* JJ.
OPINION BY STABILE, J.: FILED MARCH 01, 2018
Appellant, Barry M. Rothman, Esquire, appeals from an order of the
Chester County Court of Common Pleas directing him to distribute $19,277.76
held in Appellant’s escrow account to Evergreen Management Group, Inc.
(“Evergreen”). Appellant, who represented Evergreen and William Smith, Sr.
(“Smith”) in this civil action, argues that he has a valid charging lien of
$7,209.79 against the funds held in escrow. We reverse the trial court’s order
and remand for disbursement of $4,819.44 to Appellant and $14,458.32 to
Evergreen.
Appellant represented Smith and Evergreen in an action against Brian
Hemphill and Commercial Snow + Ice, LLC (“Commercial Snow”) seeking
collection of a business debt. The dispute first went to compulsory arbitration,
____________________________________________
* Retired Senior Judge assigned to the Superior Court.
J-S71016-17
in which the panel entered an award for Smith and Evergreen. Commercial
Snow and Hemphill appealed to the trial court, which held a non-jury trial and
entered a verdict in favor of Evergreen and against Commercial Snow.1
Evergreen entered judgment in its favor in the amount of $19,819.54.
Evergreen filed nunc pro tunc post-trial motions, which the trial court agreed
to entertain on the merits but ultimately denied. Smith and Evergreen filed a
cross-motion for attorney fees, which the trial court denied.
On December 5, 2014, Commercial Snow appealed to this Court at 3486
EDA 2014 and filed a supersedeas bond with the prothonotary. On December
8, 2014, Smith and Evergreen filed a cross-appeal at 3489 EDA 2014 from the
order denying their motion for attorney fees. On July 17, 2015, this Court
affirmed its orders in both appeals. Commercial Snow filed a petition for
allowance of appeal to the Supreme Court, which the Court denied.
With all appeals exhausted, Evergreen filed a motion in the trial court
for release of the supersedeas bond from the prothonotary. On October 12,
2016, the trial court ordered release of the supersedeas bond in an amount
not to exceed $21,219.37, the total of the verdict of $16,045.40 plus pre-
judgment and post-judgment interest. On November 3, 2016, the
prothonotary issued a check in the amount of $19,277.762 payable to
____________________________________________
1 The trial court’s decision stated that Smith and Hemphill were dismissed as
parties. Nevertheless, Smith later joined with Evergreen in moving for
attorney fees against Commercial Snow.
2 This appears to be the entire amount of the supersedeas bond that
Commercial Snow posted with the prothonotary.
-2-
J-S71016-17
Evergreen and Appellant jointly. The prothonotary sent the check to
Evergreen. Smith deposited the check into his account at Keybank without
Appellant’s endorsement. Appellant notified the prothonotary about this
development, and according to the trial court, “[t]he check was returned[,]
and the prothonotary reissued the check [in the same amount] and sent it to
[Appellant,] who deposited it in his escrow account.” Trial Ct. Op., 6/6/17, at
2.
On December 21, 2016, Appellant filed a petition for approval of
distribution of escrow funds. Appellant alleged that he had a charging lien for
$7,209.79, which consisted of: (1) $4,819.44, representing Appellant’s 25%
contingent fee with Evergreen in the present case; and (2) $2,390.35 for fees
that Evergreen and Smith allegedly owed him for services in four other cases
in Chester County and Delaware County.
On December 23, 2016, the trial court issued a rule to show cause
directing Smith and Evergreen to answer Appellant’s petition. Smith and
Evergreen did not file an answer. Nevertheless, on March 29, 2017, the trial
court entered an order directing Appellant to distribute the entire check of
$19,277.76 to Evergreen.
On April 20, 2017, Appellant filed a notice of appeal. On June 6, 2017,
the trial court filed a Pa.R.A.P. 1925(a) opinion3 recommending that this Court
____________________________________________
3 The trial court acknowledged that Appellant did not file a concise statement
of matters complained of on appeal because the court failed to docket or sent
an order directing Appellant to file this statement.
-3-
J-S71016-17
quash Appellant’s appeal because the March 29, 2017 order was not final or
otherwise appealable. Trial Ct. Op., at 1. Even if the appeal was timely, the
court continued, Appellant failed to allege a valid charging lien because his
petition “provided no support for the amount requested and . . . [sought]
amounts allegedly due for services provided in four other cases.” Id. at 3.
Appellant raises the following issues in this appeal:
I: Is the court’s order a final order?
II: Did the court below commit[] an error of law when it
assumed that Keybank received its money back from
[Evergreen] to justify the court’s decision to look no further
to look no further (sic)?
III: Did the court below commit[] an error of law when it
disregarded the admitted facts in [Appellant’s] petition and
did not grant [Appellant’s] fees?
IV: Did the court below commit[] an error of law when it
disregarded [Appellant’s] retaining and charging liens on
escrow funds to satisfy [Appellant’s] claim for fees?
V: Did the court below abuse its discretion in denying
[Evergreen’s] counsel fees based upon his stated animus
toward [Appellant?]
VI: Did the court below abuse its discretion in ordering the
full release of escrow funds to [Evergreen] who had already
received those funds from the court thus making the court’s
order an approval of a fraud on the court[?]
Appellant’s Brief at 5-6.4 Smith and Evergreen did not file a brief in this Court.
____________________________________________
4Appellant included his second, third and fourth issues twice in his Statement
of Questions Involved. We only state them once.
-4-
J-S71016-17
Appellant first argues that his appeal is a timely appeal from a final
order. We agree. Pennsylvania Rule of Appellate Procedure 341 provides that
a final order is “any order that . . . disposes of all claims and all parties.”
Pa.R.A.P. 341(b)(1). The order deciding Appellant’s petition was final because
no other claims or parties remain for disposition. All other issues were decided
prior to the cross-appeals at 3486 and 3489 EDA 2016 in December 2014.
We can condense Appellant’s other arguments on appeal into a single
issue: whether the trial court abused its discretion in denying Appellant’s
petition for approval of distribution of escrow funds.
Appellant contends that he has a charging lien against the funds of
$19,277.76 available for distribution. Equitable principles govern whether a
a charging lien is enforceable. See Molitoris v. Woods, 618 A.2d 895, 992
n.7 (Pa. Super 1992). Specifically,
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 v. Urban Development Authority of City of Clairton, 168 A.2d 134,
138-39 (Pa. 1961).
We review decisions relating to charging liens for abuse of discretion.
See Molitoris, 618 A.2d at 992. An abuse of discretion “is not merely an
-5-
J-S71016-17
error of judgment, but if in reaching a conclusion, the law is overridden or
misapplied, or the judgment exercised is manifestly unreasonable, or the
result of partiality, prejudice, bias, or ill will, as shown by the evidence or the
record, discretion is abused.” Id. (citation omitted). In this case, the trial
court properly exercised its discretion in part and abused it in part.
Appellant sought a charging lien for (1) $4,819.44, Appellant’s 25%
contingent fee from the $19,277.76 recovered in the present case, and (2)
$2,390.35 for fees that Evergreen and Smith allegedly owed him for services
in four other cases in Chester County and Delaware County. The trial court
properly exercised its discretion to the extent it denied a charging lien for fees
and costs incurred in the other cases. As Recht teaches, a charging lien
cannot extend to fees incurred in cases other than “litigation in which the fund
is raised.” Id., 168 A.2d at 139.
Conversely, the trial court abused its discretion to the extent it denied
a charging lien for Appellant’s fee in the present case. The record establishes
that Appellant represented Evergreen throughout this case and obtained a
judgment for Evergreen against Commercial Snow in the amount of
$19,819.54. Further, Commercial Snow posted a bond with the prothonotary,
and following Commercial Snow’s unsuccessful appeal, the prothonotary
issued a check payable jointly to Evergreen and Appellant in the amount of
$19,277.76. Appellant placed this check in his escrow account and filed a
petition asserting that he had a charging lien of $4,819.44 representing his
-6-
J-S71016-17
25% contingent fee with Evergreen in this case. The trial court issued a rule
to show cause instructing Smith and Evergreen to answer Appellant’s petition.
Smith and Evergreen failed to file an answer, thus rendering all factual
averments in the petition subject to admission, including Appellant’s averment
that he had a 25% contingent fee with Evergreen in this case. See Pa.R.Civ.P.
206.7(a) (if answer is not filed to petition following rule to show cause, “all
averments of fact in the petition may be deemed admitted for the purposes of
this subdivision and the court shall enter an appropriate order”).
Under these circumstances, Appellant satisfies the first, second, third
and fifth Recht elements for a charging lien relating to his fee in this case.
There exists a fund available for distribution, namely the proceeds of the check
from the prothonotary in Appellant’s escrow account. Appellant’s services in
this case gave rise to this fund out of which he seeks payment. Appellant’s
averment in his petition that he had a 25% “contingent fee” with Evergreen,
which Evergreen did not deny, demonstrates that Appellant and Evergreen
agreed that Appellant would look to the fund instead of Evergreen for
compensation. Lastly, as a matter of equity, Appellant was entitled to receive
his fee from the fund, for without his efforts, the fund would never would have
been created.
This leaves the fourth Recht element for consideration. The trial court
held that Appellant violated this element by asserting a charging lien for his
fee in the present case and in four other cases. This was not a proper exercise
-7-
J-S71016-17
of the court’s discretion. Although Appellant overstepped his bounds in
asserting a charging lien for the other cases, Recht, supra, it is equally clear
that Appellant has a lien against the proceeds for his fee in this case. The
equitable principles articulated in Recht counsel against denial of the entire
charging lien when the trial court can easily distinguish between the portion
of the lien that has merit and the portion that does not. Instead, the court
should enforce the portion of the lien that has merit while denying the portion
that does not. Thus, the trial court’s refusal to enforce Appellant’s charging
lien for his fee of $4,819.44 in the present case was an abuse of discretion.
The trial court also denied Appellant’s petition on the ground Appellant
“provided no support for the amount requested.” Trial Ct. Op., at 3. We
disagree. The record clearly establishes that Appellant’s efforts were
instrumental in creating the fund of $19,277.76 in this case. Further, in his
petition, Appellant made the unrebutted averment that he was owed a 25%
contingent fee of $4,819.44 in this case. There was no reason under these
circumstances for the trial court to deny enforcement of Appellant’s lien for
this fee.
Order reversed. Case remanded with instructions to order disbursement
of $4,819.44 to Appellant and $14,458.32 to Evergreen from the check held
in escrow by Appellant. Jurisdiction relinquished.
-8-
J-S71016-17
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 3/1/18
-9-