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Accident Insurance Company, Inc. v. US Bank N.A.

United States District Court, D. South Carolina, Columbia Division

July 3, 2019

Accident Insurance Company, Inc., a South Carolina Corporation Plaintiff,
v.
U.S. Bank National Association, Defendant. U.S. Bank National Association, Third-Party Plaintiff,
v.
Southport Lane Advisors, Southport Specialty Finance, Administrative Agency Services, and Alexander Chatfield Burns, Third-Party Defendants.

          ORDER

         Plaintiff Accident Insurance Company, Inc. (“AIC”) filed this action against Defendant U.S. Bank National Association (“U.S. Bank”) seeking monetary damages for breach of contract, breach of fiduciary duty, negligence/gross negligence, negligent misrepresentation, and civil conspiracy regarding a trust agreement. (ECF No. 154 at 21 ¶ 116-25 ¶ 141.)

         Before the court for review is Intervenor Black & Lobello's (“B&L”) Motion to Adjudicate Attorney's Lien (ECF Nos. 227, 227-1). Because the court finds B&L's Motion is premature, the court DENIES the Motion without prejudice.

         I. RELEVANT FACTUAL AND PROCEDURAL HISTORY

         On March 27, 2019, B&L filed a Motion to Adjudicate Attorney's Lien. (ECF Nos. 227, 227-1.) From May 2, 2015, until June 29, 2018, AIC retained the law firm B&L for legal services “related to claims concerning the Destra Targeted Income fund and related matters.” (Id. at 1, 3.) During that time, the parties executed two engagement letters outlining their attorney-client relationship. (Id. at 1-2.) The Original Engagement Letter was executed on or about May 2, 2015. (Id. at 1.) The Amended Engagement Letter, executed on or about March 14, 2016, “acted as a complete restatement of the Original Engagement Letter except the effective date which remained at May 26, 2015.” (Id. at 2.) The Amended Engagement Letter stated that “[AIC] agrees and understands that B&L will be paid both an hourly rate until Destra Collateral is received, and a contingency fee on any recovery that is above the Destra Collateral.” (ECF No. 250 at 11.) The Amended Engagement Letter also established that (1) “B&L . . . shall [not] be entitled to any contingency amount unless and until the recovery of the sum identified as ‘Destra Units'”; (2) “[i]n the event B&L is discharged or withdraws, B&L only shall be paid the hourly rate of $275.00 per hour”; and (3) “B&L will be paid an hourly rate of $275.00 until such time as the Destra Collateral is recovered. . . . In the event of a discharge or withdrawal by B&L, B&L shall be paid hourly based on the sum of $275 per hour.” (Id. at 11, 12.) Additionally, the Amended Engagement Letter provided that “[t]his . . . letter shall be interpreted and enforced in accordance with the laws of the State of Nevada. B&L's services shall be governed by the Rules of Professional Conduct[, ] as adopted by the Nevada Supreme Court, without regard to where the services are actually performed.” (Id. at 14.)

         B&L alleges that “[f]rom May 1, 2017[, ] to June 29, 2018, AIC failed to pay B&L the hourly rate and costs pursuant to the Amended Engagement Agreement.” (ECF No. 227-1 at 3.) On June 29, 2018, “[a]fter negotiations to resolve the unpaid fees and costs failed, AIC terminated B&L.” (Id.) B&L asserts that “[t]he unpaid invoices for the period of May 1, 2017[, ] to June 29, 2018 . . . due to B&L totaled $339, 139.53, which included $324, 984.71 in attorneys' fees, costs of $1, 695.55, and interest due of $12, 59.27.” (Id. at 4.) “On July 27, 2018, B&L sent a Notice of Attorneys' Lien pursuant to Nevada Revised Statute [(“NRS”)] 18.015 for unpaid costs and expenses, reasonable attorneys' fees, and interest in the amount of $339, 139.53.” (Id.).

         On August 14, 2018, B&L filed a Motion to Withdraw (ECF No. 149), which the court granted on August 14, 2018. (ECF No. 150.) B&L asserts that it is entitled to adjudicate its attorneys' lien under NRS 18.015 because (1) “B&L was retained by [] AIC and filed and prosecuted the above-captioned action for AIC (along with co-counsel)” (id. at 8); (2) “B&L properly perfected its lien because it provided proper notice to the client, AIC, by certified mail, return receipt requested to numerous locations” (id.); (3) “[t]he Amended Engagement Agreement clearly set forth that upon either discharge or termination, B&L is entitled to the discounted rate of $275 per hour, plus cost for its services” (id. at 9); and (4) “this case has been set for mediation and set for trial” (id. at 10).

         On April 30, 2019, AIC filed a Response in Opposition to B&L's Motion. (ECF No. 251.) First, AIC asserts the court should apply federal law in determining procedural issues, such as when the court can award relief, because this is a diversity action. (Id. at 2.) Second, AIC argues the relief requested by B&L is governed by Local Rule 54.02 (D.S.C.) and Rule 54(d) of the Federal Rules of Civil Procedure, and because B&L “d[id] not analyze the requirements” under these Rules, B&L is not entitled to the relief requested.” (Id. at 2-3.) Third, AIC argues that B&L's request is also barred by Nevada law because, under Nevada law, “a judgment (or settlement) is a pre-requisite before adjudication by the court.” (Id. at 4.)

         II. ANALYSIS

         The court first considers whether B&L is entitled to relief under Nevada Law.[1] Under NRS 18.015 (West 2019), 1. An attorney at law shall have a lien:

(a) Upon any claim, demand or cause of action, including any claim for unliquidated damages, which has been placed in the attorney's hands by a client for suit or collection, or upon which a suit or other action has been instituted.
2. A lien pursuant to subsection 1 is for the amount of any fee which has been agreed upon by the attorney and client. In the absence of an agreement, the lien is for a reasonable fee for the services which the attorney has rendered for the client.
3. An attorney perfects a lien described in subsection 1 by serving notice in writing, in person or by certified mail, return receipt requested, upon his or her client and, if applicable, upon the party against whom the client has a cause of action, claiming the lien and stating the amount of the lien.
4. A lien pursuant to:
(a) Paragraph (a) of subsection 1 attaches to any verdict, judgment or decree entered and to any money or property which is recovered on ...

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