J-A08032-21
2021 PA Super 100
VINCE AUSTIN : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
THYSSENKRUPP ELEVATOR :
CORPORATION :
: No. 772 EDA 2020
:
APPEAL OF: ANDREW J. SCHNEIDER, :
ESQ. :
Appeal from the Order Entered January 22, 2020
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): No. 160700347
BEFORE: PANELLA, P.J., MURRAY, J., and STEVENS, P.J.E.*
OPINION BY STEVENS, P.J.E.: FILED: MAY 14, 2021
Appellant, Andrew J. Schneider, Esquire (“Attorney Schneider”), appeals
from the order entered in the Court of Common Pleas of Philadelphia County
denying his motion for imposition of an attorney’s charging lien. After a
careful review, we reverse and remand for proceedings consistent with this
decision.
The relevant facts and procedural history are as follows: On February
19, 2016, Vince Austin (“Austin”) sustained injuries while he was riding in an
elevator, which suddenly and violently dropped. The elevator was owned and
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* Former Justice specially assigned to the Superior Court.
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maintained by Thyssenkrupp Elevator Corporation (“tkE”).1 On February 29,
2016, Austin retained Attorney Schneider to pursue a personal injury claim
against tkE. On that same date, Austin signed a contingency fee agreement
confirming that Attorney Schneider’s law firm would receive “forty (40%) of
any and all sums recovered.” Contingency Fee Agreement, dated 2/29/16.
On July 7, 2016, Attorney Schneider filed a civil complaint on behalf of
Austin and against tkE. Discovery commenced, and following a dispute
resolution proceeding on November 30, 2017, tkE and Austin reached an oral
settlement agreement in the amount of $60,000.00 in the underlying personal
injury lawsuit.
Accordingly, on December 19, 2017, Attorney Schneider advised the
trial court, in advance of a settlement conference scheduled for that day, that
Austin and tkE had reached a settlement. In response, the trial court marked
the case as settled on the docket and removed the matter from the trial list.
Thereafter, Austin changed his mind regarding the settlement, and on
January 11, 2018, Austin informed Attorney Schneider that he did not intend
to execute the written release.
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1 As discussed infra, issues underlying the instant matter were previously
presented to this Court. Austin v. Thyssenkrupp Elevator Corp., No. 2080
EDA 2018 (Pa.Super. filed 5/1/19) (unpublished memorandum). Therein, we
referred to Thyssenkrupp Elevator Corporation as “tkE,” and for the sake of
consistency, we shall continue to do so.
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On May 4, 2018, tkE filed a motion to enforce the settlement reached
between it and Austin. Therein, tkE indicated the “communications and
releases exchanged by counsel for the parties confirm that the parties agreed
to the material terms of settlement and fully intended to be bound by those
terms.” TkE’s Motion to Enforce Settlement, 5/4/18, at ¶ 10. Moreover, tkE
attached exhibits to its motion, including a letter from the dispute resolution
service confirming amicable resolution of the case, as well as various emails
exchanged between counsel for tkE and Austin regarding the proposed
release. In one such email, dated March 22, 2018, Attorney Schneider
informed tkE’s counsel that Austin “is now balking at the settlement, so he
hasn’t signed the release. Rest assured that I have no intention of trying to
renege on our settlement agreement. The only question for me is if I can
convince [Austin] to sign what he previously agreed to.” TkE’s Motion to
Enforce Settlement, 5/4/18, (exhibit). Accordingly, tkE sought judicial
intervention to enforce the settlement.
By order entered on June 1, 2018, the trial court granted tkE’s motion
and enforced the settlement agreement orally reached between tkE and
Austin. Further, the trial court directed Austin to execute the written release
and tkE to deliver a settlement check thereafter. Austin, however, continued
to refuse to execute the written release. Further, on June 29, 2018, Austin
discharged Attorney Schneider and his law firm.
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Austin retained new counsel, Charles W. Campbell, Esquire, who entered
his appearance on behalf of Appellant on July 2, 2018. On that same date,
Attorney Campbell filed on behalf of Austin a timely notice of appeal to this
Court from the trial court’s June 1, 2018, order.
On appeal, this Court affirmed the trial court’s order granting tkE’s
motion to enforce the settlement agreement. See Austin v. Thyssenkrupp
Elevator Corp., No. 2080 EDA 2018 (Pa.Super. filed 5/1/19) (unpublished
memorandum). Relevantly, we agreed with the trial court that tkE and Austin
entered into an oral settlement agreement. Id. Moreover, we found no error
in the trial court directing Austin to sign the settlement release so that tkE
could release the settlement money. Austin did not file a petition for allowance
of appeal with our Supreme Court.
On August 15, 2019, Attorney Schneider filed a motion to assert an
attorney’s charging lien.2 Therein, Attorney Schneider indicated that, as of
the filing of his motion, Austin had not yet complied with the court’s order
directing him to sign the settlement release. Also, he relevantly averred the
following:
18. Plaintiff Austin has failed to honor the terms of the fee
agreement[.]
19. Per the terms of the agreement, the services rendered and
costs expended, Vince Austin owes [Attorney Schneider’s law
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2 While Austin’s appeal in the underlying matter was pending in this Court,
Attorney Schneider filed two motions for an attorney’s charging lien. Since an
appeal was pending, the trial court denied the first motion without prejudice.
Attorney Schneider withdrew the second motion.
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firm] $24,000.000 in attorney’s fees and costs in the amount of
$6,304.01. ($2,468.75 mediation fee, $2,497.00 elevator expert
fee, plus filing fees, deposition transcripts, etc.).
20. The total attorney’s charging lien requested totals $30,304.01.
21. Vince Austin has not paid for the legal services rendered by
[Attorney Schneider’s law firm].
22. Vince Austin has not reimbursed [Attorney Schneider’s law
firm] for costs expended.
23. [Attorney Schneider] requests the [trial] court impose a lien
on the settlement funds payable to Vince Austin in this matter.
Attorney Schneider’s Motion, filed 8/15/19, at ¶¶ 18-23.
On October 30, 2019, the Honorable Denis P. Cohen entered an order
denying Attorney Schneider’s motion, and on November 11, 2019, Attorney
Schneider filed a motion for reconsideration. On November 18, 2019, Judge
Cohen vacated the October 30, 2019, order. On January 22, 2020, Judge
Cohen vacated the November 18, 2019, order and denied Attorney
Schneider’s motion for an attorney’s charging lien.3
This timely appeal followed. The trial court did not direct Attorney
Schneider to file a Rule 1925(b) statement, and consequently, no such
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3 For reasons unclear from the record, Attorney Schneider’s motion was
assigned to two separate trial court judges: Judge Cohen and the Honorable
Shelley Robins-New. Both judges initially entered orders denying Attorney
Schneider’s motion. Thereafter, Attorney Schneider filed motions for
reconsideration with both judges. Judge Robins-New vacated her order, and
as discussed supra, Judge Cohen entered an order on January 22, 2020,
denying the motion.
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statement was filed. However, on November 6, 2020, the trial court filed a
Pa.R.A.P. 1925(a) opinion in support of its order.
On appeal, Attorney Schneider sets forth the following issue in his
“Statement of the Questions Involved” (verbatim):
1. Did the Trial Court abuse its discretion in denying Appellant’s
motion for attorney charging lien?
Attorney Schneider’s Brief at 4 (suggested answer omitted).4
In the case sub judice, Attorney Schneider contends the trial court erred
in failing to impose an attorney’s charging lien against the funds of
$60,000.00, which represents the amount of the oral settlement agreement
between tkE and Austin. “Equitable principles govern whether a charging lien
is enforceable.” Smith v. Hemphill, 180 A.3d 773, 776 (Pa.Super. 2018)
(citation omitted). Specifically, in its seminal case on the issue, our Supreme
Court held that, before a charging lien will 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.
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4 We note that neither Austin nor tkE filed a brief in the instant matter.
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Recht v. Urban Redevelopment Authority of City of Clairton, 402 Pa.
599, 168 A.2d 134, 138–39 (1961). See Smith, supra.
We review decisions relating to charging liens for an abuse of discretion.
See Molitoris v. Woods, 618 A.2d 985, 992 (Pa.Super. 1992). An abuse of
discretion “is not merely an 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).
With these standards in mind, we examine the five factors set forth supra in
Recht to determine whether the trial court abused its discretion in holding
Attorney Schneider failed to demonstrate his entitlement to an attorney’s
charging lien.
With regard to the first Recht factor, whether there is a fund in court or
otherwise applicable for distribution on equitable principles, the trial court held
as follows:
[I]t is unclear to [the trial] court whether [Austin] had
executed the release necessary for [tkE] to distribute [Austin’s]
settlement funds such that an attorney’s charging lien could be
imposed under [the] first factor. [Attorney Schneider] fails to
demonstrate to [the trial] court that a settlement fund subject to
distribution existed such that the [trial] court could impose a
charging lien on such fund. At the time of [Attorney Schneider’s]
Motion, [Austin] refused to execute the release necessary to
finalize settlement and create a settlement fund subject to
distribution. [Austin] indicates in his Answer to [Attorney
Schneider’s] Motion that he intended to execute the release the
week of September 2, 2019. However, [Attorney Schneider] does
not allege any facts in [his] Motion [for an attorneys’ charging
lien] or subsequent filings demonstrating to the [trial] court that
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[Austin] had indeed executed the release and that a settlement
fund subject to distribution had been established. [The trial] court
cannot grant and impose a charging lien without an established
fund subject to distribution upon which to impose the lien.
[Attorney Schneider’s] Motion was thus properly denied at the
time it was decided under the first factor[.]
Trial Court Opinion, filed 11/6/20, at 5-6 (citations omitted).
Attorney Schneider contends the trial court erred in its analysis of the
first Recht factor. Specifically, he contends that he proved there is a
settlement fund of $60,000.00 “otherwise applicable for distribution on
equitable principles.” Attorney Schneider’s Brief at 14-15. Specifically, he
asserts that a fund was established upon the oral settlement agreement
reached between Austin and tkE (as previously confirmed by this Court). He
further notes tkE’s willingness to make payment of the settlement proceeds,
as well as tkE’s efforts to enforce the settlement agreement. Moreover, he
notes the trial court marked its own docket to reflect that Austin’s personal
injury lawsuit had settled. Attorney Schneider avers that the fact the
settlement money is still in the possession of tkE, due to Austin’s failure to
sign the settlement release as court-ordered to do so, does not require a
finding that there is no fund for purposes of Recht’s first factor. We agree
with Attorney Schneider’s argument.
In Appeal of Harris, 323 Pa. 124, 186 A. 92 (1936), our Supreme
Court broadened the scope of an attorney’s charging lien. Therein, an
attorney, after litigation, secured a favorable award in the condemnation
proceeding for the owner of the condemned property. After the award was
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made, but before it was paid by the city, the holder of a mortgage on the
property filed a petition to have the whole award paid to it as lien creditor.
Our Supreme Court, however, held that the award, although not yet paid,
constituted a fund, which was first subject to the attorney’s claim for the
reasonable value of his services. See id.
Our Supreme Court recognized:
The charging lien, originally, was defined to be the right of an
attorney at law to recover compensation for his services from a
fund recovered by his aid, and also the right to be protected by
the court to the end that such recovery might be effected. Unlike
the retaining lien, the charging lien does not depend upon
possession, but upon the favor of the court in protecting
attorneys, as its own officers, by taking care, ex oequo et bono,
[according to the right and good] that a party should not run away
with the fruits of the cause without satisfying the legal demands
of the attorney by whose industry those fruits were obtained.
Appeal of Harris, supra, 186 A. at 95 (italics in original). See Johnson v.
Stein, 385 A.2d 514 (Pa.Super. 1978). As the appellate courts have
indicated, the attorney’s charging lien arises out of the equities of the
situation. Id.
In the case sub judice, as this Court previously held in affirming the trial
court’s order granting tkE’s motion to enforce the $60,000.00 settlement, a
valid settlement agreement was orally reached between tkE and Austin in the
underlying lawsuit. See Austin, supra. We specifically disagree with the
trial court that the fact the settlement proceeds are still in the possession of
tkE, and have not yet been paid out due to Austin’s failure to sign the release,
results in the conclusion there is no “fund.” Rather, as the Supreme Court
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held in Appeal of Harris, supra, where there is an award or, as in the case
sub judice, settlement proceeds that have not yet been paid out, a fund exists
for purposes of the first Recht factor. Simply put, in the case sub judice, a
“fund,” which is in the possession of tkE, exists.
With regard to the second, third, and fourth Recht factors, the trial
court suggested that (assuming there is a fund) there is no dispute that the
second, third, and fourth factors were met by Attorney Schneider. With regard
to the second Recht factor, we agree the record reveals the services of
Attorney Schneider, who undisputedly represented Austin from the
commencement of the underlying personal injury lawsuit until after tkE and
Austin reached the oral settlement agreement, operated substantially or
primarily to secure the fund out of which he seeks to be paid. See Recht,
supra; Smith, supra.
Further, with regard to the third Recht factor, it is undisputed Austin
and Attorney Schneider entered into an express written contingency fee
agreement on February 29, 2016, related to the underlying personal injury
lawsuit. The contingency fee agreement specifically provided Austin “agree[s]
to pay a legal fee in the amount of forty (40%) of any and all sums recovered.”
Contingency Fee Agreement, dated 2/29/16.5 Therefore, we agree the record
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5 The contingency fee agreement also provided specific provisions related to
the payment of “out of pocket” costs, expenses, and medical charges from
“any and all settlements and/or verdict and/or judgments[.]” Contingency
Fee Agreement, dated 2/29/16.
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reveals Attorney Schneider would look to the fund (i.e., the proceeds of the
settlement agreement) rather than Austin for his compensation. See Recht,
supra; Smith, supra.
Moreover, with regard to the fourth Recht factor, it is undisputed that,
in his motion to assert an attorney’s charging lien, Attorney Schneider sought
costs, fees, or other disbursements exclusively related to the settlement
agreement reached between tkE and Austin. He did not seek fees or costs for
any unrelated matters. Therefore, we agree the record reveals the lien claimed
by Attorney Schneider is limited to costs, fees, or other disbursements
incurred in the litigation by which the fund was raised. See Recht, supra;
Smith, supra.
With regard to the fifth Recht factor, whether there are equitable
considerations which necessitate the recognition and application of the
charging lien, the trial court held as follows:
[Attorney Schneider] fails to establish any reason as to why
equitable considerations necessitate the imposition of an
attorney’s charging lien on [Austin’s] settlement funds under
Recht’s fifth factor. [Attorney Schneider] fails to establish that
either (1) [Austin’s] settlement fund is subject to depletion by
creditors, (2) [Austin] is insolvent, (3) [Austin] is attempting to
defraud [Attorney Schneider], or (4) [Attorney Schneider] would
be precluded from enforcing the contingency fee agreement
against [Austin] directly. [Attorney Schneider] has not sufficiently
established that equity demands a lien be placed on [Austin’s]
settlement funds for satisfaction of [Austin’s] contractual
obligations to [Attorney Schneider]; while [Attorney Schneider]
may have a claim at contract against [Austin] pursuant to the
contingency fee agreement, there has been no established
urgency to the claim that such a lien is necessary, for there is no
suggestion in the record that [Austin] will not be able to pay
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[Attorney Schneider] if in response to an appropriate action a
court so orders.
Trial Court Opinion, filed 11/6/20, at 6 (citation, quotation marks, and
quotation omitted).
Attorney Schneider contends the trial court erred in its analysis of the
fifth Recht factor. Specifically, he contends the trial court’s analysis
improperly and unreasonably limits the “equitable considerations” to four
distinct categories without recognizing there are other situations which qualify
as “equitable considerations.” Moreover, Attorney Schneider avers he
demonstrated “equitable considerations which necessitate the recognition and
application of the charging lien” as required by Recht and its progeny. We
agree with Attorney Schneider’s argument.
Initially, we agree with the trial court that potential depletion by
creditors, a client’s insolvency, a client’s attempt to defraud an attorney, and
an attorney’s inability to enforce a contingency agreement are all valid
considerations in determining whether equity necessitates the recognition and
application of the charging lien. See generally Johnson, supra. However,
to the extent the trial court limits the “equitable considerations” inquiry to
these four situations, we conclude the trial court erred.
As this Court has recognized:
The imposition of a charging lien is based upon the interest of the
courts “in protecting attorneys, as its own officers,” and in
assuring that a party “not run away with the fruits [of a lawsuit]
without satisfying the legal demands of the attorney by whose
industry those fruits were obtained.”
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Molitoris, 618 A.2d at 992 (quotations omitted). Thus, in addition to the
situations set forth by the trial court supra, this Court has considered other
situations and found the necessary “equitable considerations” to impose a
charging lien. See Molitoris, supra (holding enforcement of attorney’s
charging lien must be governed by equitable principles and, since a subrogee
insurer has an equitable duty to share in costs of attaining a recovery, it would
be inequitable to not permit attorney’s charging lien to ensure payment to
attorney).
With these precepts in mind, we agree with Attorney Schneider that
there are equitable considerations necessitating the recognition and
application of an attorney’s charging lien in the instant case. Specifically, it is
clear from the record that if the attorney’s fees are not paid from the
settlement agreement proceeds, no compensation will be paid to Attorney
Schneider. Austin and tkE reached the oral settlement agreement on
November 30, 2017, and on May 1, 2019, this Court expressly held that such
an agreement existed. Thereafter, for almost two years, and for reasons
unknown, Austin refuses to sign the written release. Meanwhile, Attorney
Schneider has not been paid for his efforts, which directly resulted in the
settlement agreement. Further, inasmuch as Austin discharged Attorney
Schneider after the settlement agreement was reached, Attorney Schneider is
no longer the counsel to whom the proceeds will be distributed, in the event
Austin signs the written release. Thus, Attorney Schneider is faced with the
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prospect of watching Austin “run off with the fruits” of the lawsuit. Molitoris,
618 A.2d at 992. Given this scenario, we conclude there are “equitable
considerations” which necessitate the recognition and application of the
charging lien, and the trial court erred in holding otherwise.6
In light of the aforementioned, we reverse the trial court’s January 22,
2020, order, which denied Attorney Schneider’s motion for imposition of an
attorney’s charging lien against the $60,000.00 settlement proceeds. As
indicated supra, Attorney Schneider demonstrated his entitlement to a
charging lien under the Recht factors. Accordingly, we remand for the trial
court, upon consideration of the contingency fee agreement between Austin
and Attorney Schneider, to determine the appropriate amount of the
attorney’s charging lien.
Order Reversed; Case Remanded; Jurisdiction Relinquished.
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6 In its Rule 1925(a) opinion, the trial court urges this Court to deny Attorney
Schneider relief on the basis that “in Philadelphia, fee disputes between
counsel and their client(s) as non-adversaries are often best resolved through
the Philadelphia Bar Association’s Lawyer-Client Fee Dispute Resolution
Program.” Trial Court Opinion, filed 11/6/20, at 7. While such alternative
dispute resolution methods may be available, we conclude this does not
preclude Attorney Schneider from seeking an attorney’s charging lien as
permitted by our Supreme Court. Recht, supra.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 5/14/21
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