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Colin Gomez v. Lopez

United States District Court, N.D. Alabama, Southern Division

October 29, 2018

MARIA CRISTINA COLIN GOMEZ, Plaintiff,
v.
JOSE J. LOPEZ, et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          T. MICHAEL PUTNAM UNITED STATES MAGISTRATE JUDGE.

         This matter is before the court on Plaintiff's Motion to Vacate Order and Reinstate Case, filed on September 12, 2018 (doc. 18), and the Motion to Reinstate, Motion to Intervene, and Motion to Enforce Attorney's Lien (doc. 20), filed on October 3, 2018 by Steven Mezrano and the Mezrano Law Firm P.C. A hearing was held via telephone on October 3, 2018, and the parties were instructed to brief the issue of the court's continuing jurisdiction to resolve the attorney's lien dispute. The matter has been fully briefed. The original parties have consented to the dispositive jurisdiction by a United States Magistrate Judge pursuant to 28 U.S.C. § 636(c) (doc. 9), but the putative intervenors have not.

         I. Background

         This lawsuit was removed to this court on August 30, 2017, from the Circuit Court of Jefferson County, Alabama, on the basis of diversity of citizen jurisdiction. (Doc. 1). The action was originally filed in the state court in a complaint signed by both the plaintiff's current attorney, Mary Amari Bruce, and putative intervenor, Steven Mezrano. It alleged a claim arising out of a vehicle collision on August 17, 2015. (Doc. 1-2, p. 6). At the time, both lawyers were associated with the Mezrano Law Firm, P.C., the other putative intervenor. The plaintiff signed an undated “Power of Attorney and Contingent Fee Agreement” with the Mezrano Law Firm, P.C. (doc. 20-1), agreeing to pay the firm a fifty percent (50%) contingency fee if suit were filed with respect to the vehicle accident.

         Following the removal to this court, the parties reached a settlement of the case on July 9, 2018, filing a Notice of Settlement with the court on July 11, 2018. Based on the Notice, the court dismissed the instant case without prejudice on July 31, 2018, reserving to the parties the right to seek reinstatement of the case to the active docket within forty-five (45) days in the event a problem developed in completing the settlement. The plaintiff filed her timely motion to vacate the dismissal and reinstate the case to the active docket on September 12, 2018. (Doc. 18). The defendants did not oppose the motion, and on October 3, Steven Mezrano and the Mezrano Law Firm, P.C., filed their motion to intervene and enforce an attorney's lien against the proceeds of the settlement. (Doc. 20). That motion alleged that, just prior to the settlement of the case, on June 22, 2018, attorney Bruce left her employment with the Mezrano Law Firm, P.C. On June 29, she presented a letter to the plaintiff, notifying her of Ms. Bruce's separation from the law firm and advising the plaintiff that it was her choice whether to continue to be represented by Ms. Bruce, or by the Mezrano Law Firm, P.C., or by an entirely different attorney. The plaintiff signed the letter on June 29 to indicate her choice to continue to be represented by Ms. Bruce. In response, Mezrano and the Mezrano Law Firm, P.C. filed a statement of an attorney's lien in the Office of the Probate Judge of Jefferson County, Alabama, on August 14, claiming a lien for expenses and a quantum meruit portion of the fee earned in the settlement of the plaintiff's case. The statement of lien asserts the Ms. Bruce was an employee of the Mezrano Law Firm, P.C., until she left on June 22, 2018. In a telephone hearing on October 3, 2018, counsel for the original defendants confirmed that he is still in possession of the proposed settlement proceeds, but has not delivered them to Ms. Bruce because of the outstanding attorney's lien.

         II. Jurisdiction

         The immediate question posed by the pending motions is whether the court has subject-matter jurisdiction to resolve the attorney's lien controversy. No purpose would be served reopening the case if the court lacks jurisdiction to resolve the dispute prompting its reopening. Likewise, the court need not grant the motion to intervene if there is no jurisdiction to resolve the question presented by it.

         The original lawsuit was removed to this court on the basis of diversity jurisdiction, alleging that the plaintiff and the two named defendants were citizens of different states and the amount in controversy was sufficient to meet the jurisdictional minimum of $75, 000.00.[1] See 28 U.S.C. § 1332. That controversy, however, now has been settled, as everyone agrees. The issue is whether the dispute over the distribution of the plaintiff's attorney's fees is within the court's jurisdiction. The court must determine whether this dispute is part of the original “case or controversy” that was removed to the court on diversity grounds. In Kokkonen v. Guardian Life Ins. Of Am., 511 U.S. 375, 114 S.Ct. 1673, 128 L.Ed.2d (1994), the Supreme Court reiterated that federal courts are courts of limited jurisdiction. In that case, where a party sought enforcement a settlement agreement on which the original lawsuit was dismissed by a Rule 41(a)(1)(ii) stipulation, the Court noted, “Enforcement of the settlement agreement, however, whether through award of damages or decree of specific performance, is more than just a continuation or renewal of the dismissed suit, and hence requires its own basis for jurisdiction.” Id. at 378, 114 S.Ct. at 1675-76.

         Plaintiff's current lawyer, Ms. Bruce, alleges that this court has supplemental jurisdiction pursuant to 28 U.S.C. § 1367(a). She cites two cases for authority in the Eleventh Circuit, Broughten v. Voss, 634 F.2d 880 (5th Cir. 1981), [2] and Moreno Farms, Inc. v. Tomato Thyme Corp., 490 Fed.Appx. 187 (11th Cir. 2012) (citing Broughten), for the proposition that the district court has the discretion to exercise “ancillary jurisdiction”[3] to resolve fee disputes between parties and lawyers in the case. But these cases must be understood in the light cast by the Supreme Court's discussion of ancillary jurisdiction in Kokkonen.

         In Kokkonen, the Supreme Court defined two circumstances under which a court may exercise ancillary jurisdiction:

Generally speaking, we have asserted ancillary jurisdiction (in the very broad sense in which that term is sometimes used) for two separate, though sometimes related, purposes: (1) to permit disposition by a single court of claims that are, in varying respects and degrees, factually interdependent, see, e.g., Baker v. Gold Seal Liquors, Inc., 417 U.S. 467, 469, n. 1, 94 S.Ct. 2504, 2506, n. 1, 41 L.Ed.2d 243 (1974); Moore v. New York Cotton Exchange, 270 U.S. 593, 610, 46 S.Ct. 367, 371, 70 L.Ed. 750 (1926); and (2) to enable a court to function successfully, that is, to manage its proceedings, vindicate its authority, and effectuate its decrees, see, e.g., Chambers v. NASCO, Inc., 501 U.S. 32, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991) (power to compel payment of opposing party's attorney's fees as sanction for misconduct); United States v. Hudson, 11 U.S. (7 Cranch) 32, 34, 3 L.Ed. 259 (1812) (contempt power to maintain order during proceedings). See generally 13 C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure § 3523 (1984); cf. 28 U.S.C. § 1367 (1988 ed., Supp. IV).

Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 379-80, 114 S.Ct. 1673, 1676, 128 L.Ed.2d 391 (1994). The Court went on to reject the notion that enforcement of a settlement agreement is a claim that is interdependent with the merits of the underlying lawsuit. Id. at 380 (“[T]he facts underlying respondent's dismissed claim for breach of agency agreement and those underlying its claim for breach of settlement agreement have nothing to do with each other”). The Court also rejected the argument that enforcement of a settlement agreement (where the court has not expressly reserved jurisdiction to do so) is necessary for a court to protect its proceedings and vindicate its authority. The dismissal of the original lawsuit was “in no way flouted or imperiled by the alleged breach of the settlement agreement.” Id. at 380-381. Although dismissal of the underlying lawsuit was part of the contractual consideration for the settlement agreement, the breach did nothing more than create a new controversy for breach of contract that had to be resolved in another action.

         Notwithstanding the limitations in Kokkonen or the putative intervenors' argument that the cases cited by the plaintiff are factually and legally distinguishable, the court finds that it possesses supplemental jurisdiction to address the merits of the fee dispute. First, Kokkonen recognizes a proper use of ancillary jurisdiction is to resolve interrelated disputes in a way that allows the court to successfully manage its docket.[4] That is the case here. Despite the putative intervenors' contention that this is not a dispute that affects the client, but is only a dispute between lawyers, the basis of the attorney's lien filed by Mezrano and the Mezrano Law Firm P.C. is the contingent fee contract signed by the client. The lien is enforceable against the settlement proceeds as an undivided corpus, as proceeds have not been distributed and are still in the possession of defense counsel. There has been no division of the funds into separate parts, differentiating between those held by the client apart from those paid to a lawyer. Thus, the lien attaches to the entire res of the settlement proceeds, directly implicating the interests of the original plaintiff and the original defendant, and thus potentially impacting the court's ability to manage the controversy before it.

         For purposes of analysis, this case is properly viewed as one in which the client has terminated the representation of Mezrano and the Mezrano Law Firm as her counsel. There is no dispute that, until shortly before the settlement of the case, the plaintiff was represented by Ms. Bruce and the putative intervenors, Mezrano and Mezrano Law Firm P.C. On June 29, 2018, the plaintiff essentially exercised her option to terminate representation of her by Mezrano and the Mezrano Law Firm when she affirmatively elected to continue to be represented by Ms. Bruce alone. In such instances, the courts have exercised ancillary jurisdiction to “protect its officers” from being deprived of an earned fee. Broughten v. Voss, 634 F.2d 880, ...


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