Arizona Court ofAppeals Division One Holds That a Plaintiff’s Attorney Has No Common-Law Charging Lien on a Judgment if Sanctions Awarded Under Arizona Rule of Civil Procedure 68(g) Exceed the Plaintiff’s Award, Resulting in a Net Judgment in Favor of the Defendant.

Plaintiff Langerman Law Offices P.A. (“Langerman”) represented Kari Killian on a contingent fee basis in a lawsuit against Defendant Glen Eagles at the Princess Resort (“Gleneagles”).  Killian was awarded $100,000 in damages and $21,756.91 in costs.  Notwithstanding this victory for the plaintiff, the Court awarded GlenEagles $151,891.69 in sanctions under Ariz. R. Civ. P. 68(g) because Killian rejected an offer of settlement that exceeded the jury award.  Killian subsequently filed for bankruptcy, and she and Gleneagles entered into a settlement agreement in which they agreed to have their awards offset, leaving Gleneagles with an unsecured claim for 30,134.78.  Thereafter, Langerman asserted a claim against Gleneagles for the amounts awarded to Killian under the theory that it had an attorneys’ charging lien on those awards.  The trial Court dismissed the suit and Langerman timely appealed.

The ArizonaAppeals Court affirmed, holding that Langerman had no charging lien because the net judgment was in favor of GlenEagles, not Killian.  The Court rejected Langerman’s argument that there were really three separate judgments in the case, finding that there was only a single judgment containing three different awards that offset each other in favor of Gleneagles.  The Court also discussed the purpose of charging liens – which is to prevent dishonest clients from absconding with judgments without paying their lawyers – and found that there could be no charging lien in this case because there was no award with which Killian could have absconded, given that she was the net loser in the case.  Moreover, citing numerous cases from other jurisdictions, the court explained that the fact that the superior court did not offset the awards in the final judgment was irrelevant because it did not alter the reality that there was a single judgment favoring Gleneagles.

Presiding Judge Hall authored the opinion; Judges Portley and Brown concurred.