In Re $1,683.05 Deposited in Attorney's Trust Account ( 2012 )

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
April 25, 2012 Session
IN RE $1,683.05 DEPOSITED IN ATTORNEY’S TRUST ACCOUNT
Appeal from the Chancery Court for Davidson County
No. 11-419-III Ellen H. Lyle, Chancellor
No. M2011-02079-COA-R3-CV - Filed August 10, 2012
Attorney representing the husband in a divorce proceeding claimed a statutory lien on funds
in his trust account to secure payment of his fee; the attorney filed a separate action seeking
a determination of his rights to funds held in his trust account. The trial court dismissed the
action for failure to state a claim. Finding that the court dismissed the case employing an
erroneous legal standard, we reverse the judgment of the trial court.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Reversed;
Case Remanded
R ICHARD H. D INKINS, J., delivered the opinion of the court, in which F RANK G. C LEMENT,
J R., J., and B EN H. C ANTRELL, S P. J., joined.
George E. Copple, Jr., Nashville, Tennessee, Pro Se.
John Lyons Meadows, Lebanon, Tennessee, for the Appellee, Valerie Manning.
MEMORANDUM OPINION 1
George E. Copple, Jr., an attorney, represented Jesse Manning (“Husband”) in a
divorce action filed in Wilson County Circuit Court, and received cash retainers from
1
Tenn. R. Ct. App. 10 states:
This Court, with the concurrence of all judges participating in the case, may affirm, reverse
or modify the actions of the trial court by memorandum opinion when a formal opinion
would have no precedential value. When a case is decided by memorandum opinion it shall
be designated “MEMORANDUM OPINION,” shall not be published, and shall not be cited
or relied on for any reason in any unrelated case.
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Husband totaling $8,000.00; the money was deposited into Mr. Copple’s client trust account.
Mr. Copple’s representation of Husband lasted from July 16 to November 10, 2010, when
he was discharged. Mr. Copple filed a motion to withdraw as well as a motion to intervene
in the divorce case “for the limited purpose of protecting his own rights to his agreed
attorney’s fees in this case.” On December 2, 2010, the court entered an order granting the
motions to withdraw and to intervene; the court reserved “the issue of Mr. Copple’s attorney
fee and of the use and distribution of the funds in his trust account” for trial. Valerie
Manning (“Wife”) filed a motion to reconsider the court’s allowance of intervention and on
December 7, the court entered an order granting Wife’s motion. The order provided further
that $5,858.00 of the funds remaining in Mr. Copple’s trust account would be placed in the
account of Husband’s new attorney and that Mr. Copple “may hold $2,142.00 in his trust
account for purposes of his attorney fee claim against Plaintiff/Counter-Defendant.”
The court entered a Final Decree of Divorce on January 3, 2011. The court found that
the marital property available for division at the time of the divorce included cash totaling
$38,082.09, of which Wife was entitled to $19,041.05. The court found that Wife had
received $17,358.00 of that amount, leaving a shortfall of $1,683.05 “from the court’s
division of the cash assets.” The court ordered Mr. Copple to pay Wife the $1,683.05 from
the funds in his trust account.2
On March 29, 2011, Mr. Copple filed a complaint in Davidson County Chancery
Court seeking a judicial determination of his rights to the $1,683.05 in his trust account.
Wife filed a motion to transfer Mr. Copple’s complaint to Wilson County Circuit Court, to
dismiss the complaint, or for a summary ruling requiring Mr. Copple to comply with the
Final Decree of Divorce.3 Mr. Copple filed a response to Wife’s motion. On July 25, 2011,
the Davidson County Chancery Court entered an order and memorandum dismissing Mr.
Copple’s complaint for failure to state a claim. The court held that Mr. Copple’s lien “for
work he performed for Mr. Manning is subordinated to the allocation to the Wife, by the
Wilson County Court, of the $1,683.05 in marital funds located in Attorney Copple’s Trust
Account” and that, because of the subordination of the lien, Mr. Copple had no property
interest in the money located in his trust account upon which to premise a due process claim.
The court also held that the claimed lien only attached to funds awarded to or recovered by
Husband and not to the funds awarded to Wife.
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The court also found that Husband had “secreted the marital money, even though approximately
90% of the money in the checking and savings accounts was Wife’s separate inheritance,” withdrew money
from the marital accounts without Wife’s permission, and had refused to provide an accurate accounting of
marital funds.
3
The motion was styled “Motion to Transfer Attorney Copple’s Complaint to Wilson County Court,
Dismiss Attorney Copple’s Complaint, or a Summary Ruling that Attorney Copple Must Honor the Wilson
County Circuit Court’s Ruling in the Underlying Divorce Proceeding.”
2
Mr. Copple appeals, and asserts that the trial court erred by:
dismissing, at the pleading stage, a complaint alleging that the Plaintiff had
been deprived by another court of $1,683.05 in funds subject to a statutory
attorney’s lien, without making the Plaintiff a party, or serving him with a
pleading or summons, or giving him an opportunity to be heard and defend
against the adjudication of his lien and property.
D ISCUSSION
Mr. Copple’s complaint was dismissed for failure to state a claim pursuant to Tenn.
R. Civ. P. 12.02(6). Such a motion admits the truth of all of the relevant and material
averments contained in the complaint, Stein v. Davidson Hotel Co., 945 S.W.2d 714, 716
(Tenn. 1997), and challenges the legal sufficiency of the allegations to state a claim for relief.
Marceaux v. Sundquist, 107 S.W.3d 527 (Tenn. Ct. App. 2002). Accordingly, a court
considering a Rule 12.02(6) motion “must construe the complaint in favor of the plaintiff,
accept the allegations of fact as true, and deny the motion unless it appears that the plaintiff
can establish no facts supporting the claim that would warrant relief.” Doe v. Sundquist, 2
S.W.3d 919, 922 (Tenn. 1999). When this Court reviews the dismissal of a complaint under
Tenn. R. Civ. P. 12.02(6), we must take the factual allegations contained in the complaint as
true and review the trial court’s legal conclusions de novo without affording those
conclusions any presumption of correctness. Marceaux, 107 S.W.3d 527, 531. Considered
against this standard, we have determined that the complaint should not have been dismissed.
The complaint filed in Chancery Court was an effort to collaterally attack the Circuit
Court judgment. Mr. Copple’s complaint asserted that the Circuit Court had no jurisdiction
over him and, consequently, the order that he pay over funds in his trust account to Wife was
“in violation of his rights not to be deprived of his property without due process of law”; he
also asserted that the funds in his trust account were subject to the lien available to him at
Tenn. Code Ann. § 23-2-102. He sought “a judicial determination adjudicating his rights to
the $1,683.05 in his trust account.”
Under the facts alleged, which we must accept as true, the judgment against him and
order that he pay funds in his trust account over to Wife was void and unenforceable. One
of the basic principles of American law is that a person is not bound by a judgment in
personam rendered in an action to which the person is not a party. Pennoyer v. Neff, 95 U.S.
714 (1877); Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950). Tennessee
courts have consistently recognized and applied this principle. Burnette v. Sundeen, 152
S.W.3d 1, 5 (Tenn. Ct. App. 2004); Phillips v. State Bd. of Regents, 863 S.W.2d 45, 50
(Tenn. 1993). The Wilson County Circuit Court had no jurisdiction over Mr. Copple, having
reconsidered its earlier order allowing him to intervene in the action.
3
Mr. Copple erred, however, in asserting that the funds in his trust account were
subject to the lien available to him at Tenn. Code Ann. § 23-2-102; rather, the lien he claimed
was a common law retaining lien, which is “a possessory lien . . . that permits a lawyer to
retain a client’s . . . money coming into his or her possession during the course of the
representation until the attorney and client have settled their fee dispute or until the client has
otherwise posted appropriate security for the outstanding fee.” Starks v. Browning, 20
S.W.3d 645, 650 (Tenn. Ct. App. 1999). In contrast, the lien at Tenn. Code Ann. § 23-2-102
“attaches to any proceeds flowing from a judgment, as long as the lawyer worked to secure
the judgment for the client.” Id.
Construing the allegations of the complaint most favorably to Mr. Copple, he has
stated a claim for the trial court to declare what rights he has to the funds in his trust account;
we make no determination of any issue in that regard.
We have observed that Jesse Manning, Mr. Copple’s former client and the husband
in the Wilson County divorce action, has not been served and is not a named party in this in
rem action. Rule 19.01 of the Tennessee Rules of Civil Procedure provides:
A person who is subject to service of process shall be joined as a party if (1)
in the person's absence complete relief cannot be accorded among those
already parties, or (2) the person claims an interest relating to the subject of the
action and is so situated that the disposition of the action in the person's
absence may (i) as a practical matter impair or impede the person's ability to
protect that interest, or (ii) leave any of the persons already parties subject to
a substantial risk of incurring double, multiple, or otherwise inconsistent
obligations by reasons of the claimed interest. If the person has not been so
joined, the court shall order that the person be made a party. If the person
properly should join as a plaintiff but refuses to do so, he or she may be made
a defendant, or in a proper case, an involuntary plaintiff.
The rule “is designed to protect the interests of absent persons as well as those already
before the court from multiple litigation and inconsistent judicial determinations.” Citizens
Real Estate & Loan Co., Inc. v. Mountain States Dev. Corp., 633 S.W.2d 763, 766 (Tenn. Ct.
App. 1981) (citing 7 Wright & Miller, Federal Practice and Procedure, § 1602).
As this court observed in Baker v. Foster, No. W2009–00214–COA–R3–CV, 2010
WL 174773, at *4 (Tenn. Ct. App. Jan. 20, 2010),
[T]he language of Rule 19 is mandatory and directive; one who is an
indispensable and necessary party “shall be joined as a party.” Tenn. R. Civ.
P. 19.01 (emphasis added). The requirement of joinder of indispensable and
4
necessary parties “appears absolute and inflexible,” and applies to both trial
courts and appellate courts. Pope v. Kelsey, No. 86–17–II, 1986 WL 6564, at
*2 (Tenn. Ct.App. June 13, 1986), no perm. app. (quoting Glickauf v. Moss,
23 Ill. App. 3d 679, 320 N.E.2d 132, 135–316 (Ill.1974)). When an
indispensable and necessary party has not been joined, neither the trial court
nor the appellate court may proceed further with the matter. Id. The parties
are of course obliged to bring to the court's attention the necessity of such a
joinder; however, even if the parties fail to do so, the trial court or even the
appellate court must sua sponte enforce this principle of law. Id. (quoting
Glickauf, 320 N.E.2d at 135–36).
We likewise make no determination as to whether Jesse Manning is or is not an
indispensable party. Nevertheless, we believe the trial court, Mr. Copple and Valerie
Manning should address the issue before proceeding on the merits of the case.
C ONCLUSION
For the foregoing reasons, the judgment of the Chancery Court for Davidson County
is reversed and the case remanded for further proceedings.
___________________________________
RICHARD H. DINKINS, JUDGE
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