Lower Court Did Not Err In Adjudicating Lien Claim In The Underlying Action Because The Parties Stipulated To The Procedure.
Plaintiff’s attorney in USS Cal Builders, Inc. v. San Francisco Bay Area Rapid Transit Dist., Case No. A168102 (1st Dist., Div. 5 Sept. 20, 2024) (unpublished) had a lien on settlement proceeds which was way earlier in time than plaintiff’s assignment of claims to its surety, which intervened in the case. Plaintiff and BART reached a $1.6 million settlement, with the parties stipulating that the lower court could adjudicate who had superiority to the settlement proceeds. Plaintiff won that battle, being awarded almost $1.339 million.
Surety appealed, but it was unsuccessful. Surety first argued that the lower court had no jurisdiction to adjudge the lien claim in the underlying action, which is the general rule but subject to an exception that the trial judge can if the parties allow him/her to—which happened based on the stipulation. The attorney’s lien did have superiority over the general assignment, with surety even recognizing that in a pledge agreement indicating surety’s rights were subject to attorney lien claims. An equitable subrogation argument was rejected because the attorney did no wrongdoing and was entitled to the settlement proceeds based on his lien/work on the case. Surety argued that it had been a former client of the attorney so that there was a conflict of interest, but attorney had obtained a waiver from surety previously.