Opinion
CASE NO. 01-71705
October 22, 2003
OPINION AND ORDER
I. INTRODUCTION
This matter is before the Court on Attorney Alan B. Posner's Motion to Compel Payment of Attorney's Lien. Attorney Stuart Brickner has responded. Mr. Posner has replied to the response and Mr. Brickner has filed a supplement to his response. The Court finds that the facts and legal arguments are adequately presented in the attorneys' papers and the decision process would not be significantly aided by oral argument. Therefore, pursuant to E.D. MICH. LR 7.1(e)(2), it is hereby ORDERED that this motion be resolved on the briefs submitted. For the reasons set forth below. Mr. Posner's Motion to Compel Payment of Attorney's Lien is GRANTED IN PART.
II. BACKGROUND
A. FactsAttorney Alan B. Posner. on behalf of the law firm Kelman, Loria, Will. Harvey Thompson, represented Plaintiff from the commencement of this action up until the Court dismissed Plaintiff's Complaint with prejudice on April 22, 2002. During this period of representation, Mr. Posner represented Plaintiff on a contingency fee basis, and advanced Plaintiff the costs of litigation as allowed by Michigan Rule of Professional Conduct 1.8(e)(1). Following the dismissal of Plaintiff's Complaint, Mr. Posner agreed to represent Plaintiff on appeal, but required payment of the costs advanced so far on Plaintiff's behalf, which amounted to $4,660.07. Plaintiff declined to pay these costs and instead retained the services of Stuart Brickner to handle the appeal. Eventually, Mr. Brickner negotiated a settlement with the Defendants and Plaintiff settled the matter for $5.000.00. Mr. Brickner claims that his fees and costs associated with the appeal are $5,000.00. In addition, on October 26, 2001, Blue Cross/Blue Shield of Michigan, (hereinafter BC/BSM), had filed a Notice of Contractual Lien against any potential recovery by Plaintiff in the amount of $4,005.59. BC/BSM asserted this Lien to recover medical benefits it paid on behalf of Plaintiff between January 25. 2000, and June 16, 2000. Although it filed a special appearance, BC/BSM did not intervene, and is not a party to the instant action.
B. Attorney's Positions
As stated above, Mr. Posner has filed a Motion to Compel Payment of Attorney's Lien. Mr. Posner seeks to collect the $4.660.07 in costs from the $5.0000.00 settlement negotiated by Mr. Brickner. Mr. Posner claims to have filed a Notice of Lien with this Court on May 28, 2002, for these costs. Mr. Posner now asserts this lien against the proceeds and claims that he is entitled to this amount ahead of any right asserted by Mr. Brickner. Mr. Posner makes two arguments. First, he only seeks the out-of-pocket costs associated with representing Plaintiff. Second, Mr. Posner represented Plaintiff first, and. therefore, his lien comes first in time. Mr. Posner relies upon Mahesh v. Mills, 602 N.W.2d 618 (Mich.Ct.App. 1999). for support.
Although it does not affect the Court's analysis, there is no indication any document was filed with the Court on May 28, 2002. On May 29. 2002. however, Mr. Brickner filed his initial appearance on behalf of the Plaintiff.
In response, Mr. Brickner argues that the settlement amount is insufficient to satisfy Mr. Posner's costs, Mr. Brickner s fees and costs, and the lien asserted by BC/BSM. In addition, Mr. Brickner claims that the Plaintiff believed that the costs associated with her case were a part of the contingency fee agreement and would not have to be paid if the action were unsuccessful. Finally, Mr. Brickner argues that the correct approach is for the Court to apportion the $5,000.00 as provided by MlCH. COMP. LAWS § 418.827(6). Mr. Brickner relies upon Beaudrie v. Anchor Packing Co., 586 N.W.2d 96 (Mich.Ct.App. 1998), for support.
III. DISCUSSION
The Court agrees that Mr. Posner's and Mr. Brickner's attorneys' fees and costs should be divided between Mr. Brickner and Mr. Posner out of the $5.000.00 settlement amount pursuant to MlCH. COMP. LAWS § 418.827(5) and (6). The relevant language of § 418.827(5) and (6) provides the following:
(5) In an action to enforce the liability of a third party, the plaintiff may recover any amount which the employee or his or her dependents or personal representative would be entitled to recover in an action in tort. Any recovery against the third party for damages resulting from personal injuries or death only, after deducting expenses of recovery, shall first reimburse the employer or carrier. . . . (6) Expenses of recovery shall be reasonable expenditures, including attorney fees, incurred in effecting recovery. Attorney fees, unless otherwise agreed upon, shall be divided among the attorneys for the plaintiff as directed by the court. Expenses of recovery shall be apportioned by the court between the parties as their interests appear at the time of the recovery.
MICH. COMP. LAWS § 418.827(5) (6).
In the present case, this action was originally brought to enforce the liability of a third party, ( i.e., Defendant HH N/Turner). The $5.000.00 settlement negotiated by Mr. Brickner is the amount recovered to settle this third-party action. Accordingly, the Court is first to deduct the expenses of recovery and then reimburse the employer or worker's disability compensation insurance carrier. See MICH. COMP. LAWS § 418.827(5). In deducting the expenses of recovery, the Court is to divide attorney fees among the Plaintiff's attorneys. See MlCH. COMP. LAWS § 418.827(6). See also Beaudrie, 586 N.W.2d at 98-99. From the facts as presented, the amount recovered is insufficient to satisfy the expenses of recovery. Nevertheless, the Court must divide the recovery between Mr. Brickner and Mr. Posner. In order to do so, the Court will examine the recovery sought by these two attorneys.
Mr. Posner seeks reimbursement for expenditures he made on behalf of the Plaintiff while he represented Plaintiff. Mr. Posner seeks reimbursement by asserting an attorney's charging lien. "The special or charging lien of an attorney is an equitable right to have the fees and costs due to him for services in a suit secured to him out of the judgment or recovery in that particular suit." Kysor Indus. Corp. v. DM. Liquidating Co., 161 N.W.2d 452, 455 (Mich.Ct.App. 1962) (quoting 7 CJS, Attorney and Client, § 211 p. 1142). Mr. Posner seeks no recovery for attorney fees. Accordingly, the Court need not determine whether Mr. Posner is entitled to the reasonable value of his services based upon quantum meruit or the actual value of those services. See Ambrose v. Detroit Edison Co., 237 N.W.2d 520 (Mich.Ct.App. 1975).
In determining the amount to apportion to each attorney, the Court distinguishes between costs and fees. Costs and other expenses of litigation are costs to be borne by the client, even though they may be advanced by the attorney. See MICH. RULE PROF'L CONDUCT 1.8(e)(1). Attorney's fees are compensation to the attorney for his or her actual services. As between costs and fees, any recovery would equitably first reimburse an attorney for costs advanced on behalf of the client, since these costs were actually expended on the client's behalf out of the attorney's own pocket. Furthermore, in the context of a contingency fee arrangement, it is more equitable to first reimburse an attorney for costs expended on the client's behalf than to compensate the attorney based upon quantum meruit, since by entering into a contingency fee arrangement, that attorney acknowledges the risk that he will never be compensated for his services, but always expects to be reimbursed for costs.
Accordingly, the Court finds that Mr. Brickner and Mr. Posner should first be reimbursed for costs expended on their client's behalf. If the $5,000.00 settlement is insufficient to cover these amounts, the $5.000.00 should be equitably apportioned between the attorneys. In this case, the Court finds that it would be equitable for each attorney to share equally in the apportionment of costs. For example, Mr. Posner s costs amounted to $4,660.07. If Mr. Brickner's costs amounted to $4.660.07, then each attorney would receive an equal share of the $5.000.00, ($2,500.00). If Mr. Brickner's costs amounted to $800.00. however, then since Mr. Brickner's $800.00 would constitute roughly 15% of the total costs expended by Mr. Brickner and Mr. Posner, ( i.e., $800/($800 + $4.660.07)). Mr. Brickner would be entitled to roughly 15% of the $5.000.00 settlement, ($732.59). and Mr. Posner would be entitled to roughly 85%, ($4.267.41).
The Court notes that while Mr. Posner has submitted his costs. Mr. Brickner merely claims that he is owed $5,000.00 in fees and costs, without supporting documentation, and without distinguishing between fees and costs. Not having been provided Mr. Brickner's bill of costs, the Court is not presently in a position to apportion costs. Accordingly, the Court will provide Mr. Brickner and Mr. Posner fourteen days to resolve this matter in accordance with the terms of this Opinion and Order. If the matter has not been resolved by the fourteenth day, the Court will apportion costs pursuant to the bills of costs submitted. Therefore, if Mr. Brickner seeks reimbursement for costs in excess of $339.93, ($5,000.00-$4.660.07), Mr. Brickner must submit a bill of costs within fourteen days of the date of this Opinion and Order.
As a final matter the Court finds that Mr. Brickner's and Mr. Posner's interests in the $5.000.00 settlement come before BC/BSM's contractual lien. In Michigan, "an insurer who pays a claim is generally subrogated in a corresponding amount to the insured's rights against the person responsible for the loss. "MICH. L. PRACTICE, INSURANCE § 261 Subrogation. This is true whether subrogation is equitable or pursuant to the terms of an insurance policy. See, e.g., Neal v. Neal, 557 N.W.2d 133 (Mich.Ct.App. 1996). BC/BSM, however, is in no better position than its insured, the Plaintiff, who stands to collect nothing from the $5,000.00 settlement. See American Employers Ins. Co. v. Owens, 210 N.W.2d 114 (Mich.Ct.App. 1973). Accordingly, the Court concludes that Mr. Brickner's and Mr. Posner "s "expenses of recovery" come before BC/BSM's interest in the $5.000.00. The Court notes that this approach is consistent with § 418.827(5)'s requirement that the "expenses of recovery" be deducted from the amount to be used to reimburse the worker's disability insurance carrier. See MlCH. COMP. LAWS § 418.827(5).
IV. CONCLUSION
Accordingly, and as set forth above, Mr. Pesner's Motion to Compel Payment of Attorney's Lien is GRANTED IN PART. The $5,000.00 settlement negotiated by Mr. Brickner is to be equally apportioned, as set forth above, to reimburse Mr. Posner and Mr. Brickner for costs associated with this action. Fourteen days from the date of this Opinion and Order, Mr. Posner and Mr. Brickner are to submit a document, signed by both Mr. Brickner and Mr. Posner, setting forth the terms of this apportionment. A failure to do so will result in an apportionment of costs pursuant to the bills of costs submitted by the attorneys.IT IS SO ORDERED.