Attorney Did Contest Small Judgment Lien Found To Have Priority and May Have Tried To Subvert Lien Through Earlier Payoff From Judgment Creditor.
Don’t think that the equities of a situation—good or bad smell to things—don’t make a difference. They did in Suojanen v. USA Specialized Services, Inc., Case No. G049555 (4th Dist., Div. 3 Dec. 28, 2015) (unpublished).
Briefly told, Novell, Inc. was ordered to pay $1 million in fees/costs to plaintiffs, with plaintiffs’ attorney becoming involved intimately in the subsequent dispute by claiming that he was entitled to the entire fee award. However, there were already judgment liens against plaintiffs’ fee/costs recovery (apparently judgment lienors providing services to plaintiffs’ attorney), but plaintiffs’ attorney managed to get Novell to pay him $250,000 without satisfying the prior judgment liens. Plaintiffs’ attorney commenced a declaratory relief action (close in nature to an interpleader) basically contesting competing judgment lienors’ interest to the fee award. Veritext, one of the judgment lien claimants for $17,500, assigned its interest to USA, even though it was not named in the declaratory relief action but eventually got involved. A trial judge eventually ruling that Veritext/USA has a first priority lien and awarding USA about $80,000 in post-judgment enforcement costs as against plaintiffs/their counsel under Code of Civil Procedure section 685.040.
The post-judgment fee/costs award was affirmed on appeal.
Acting Presiding Justice Rylaarsdam, on behalf of a 3-0 panel, rejected the primary challenge that this was a case about lien priority versus post-judgment enforcement. Appellant argued that Slates v. Gorabi, 189 Cal.App.4th 1210, 1212 (2010) controlled, but the reviewing court disagreed—that case involved two lien claimants’ priority dispute between each other (trying to tag the judgment debtor with a priority dispute), hardly comparable to this dispute between an attorney trying to dispute the validity of a judgment lien of $17,500 for services provided to the attorney. Also, the equities did not favor this argument because the facts showed that plaintiffs/their attorney were trying to subvert the $17,500 judgment lien by obtaining a large voluntary payment from Novell so as to attempt to render the smaller lien uncollectible. Fee/costs award affirmed.