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Jacobson v. Krafchick

United States District Court, Western District of Washington, Seattle

February 24, 2015

RACHEL JACOBSON, Plaintiff,
v.
STEVEN KRAFCHICK, Interested Party.

ORDER ENFORCING ATTORNEY LIEN AND GRANTING ATTORNEY'S FEES

JOHN C. COUGHENOUR UNITED STATES DISTRICT JUDGE

This matter comes before the Court on the Interested Party's Amended Motion for Summary Judgment to Enforce Amended Lien (Dkt. No. 41). Having thoroughly considered the parties' briefing and the relevant record, the Court finds oral argument unnecessary and hereby GRANTS the motion and grants the Interested Party an attorney's lien on $65, 560.83 of the proceeds currently held in the Court's registry and awards $86, 459.75 in reasonable attorney's fees for the reasons explained herein.

I. BACKGROUND

Interested Party Steven Krafchick and his firm Krafchick Law Firm (Krafchick) represented Plaintiff Rachel Jacobson (Jacobson) in her ERISA case against her former employer and insurer (Defendants). Dkt. No. 1 at 1-2; Dkt. No. 41 at 2. Under the contingency fee agreement reached by the parties, Krafchick was entitled to 40% of back benefits awarded at the time they were paid and 25% of future benefits for ten years if a lawsuit was filed to obtain relief for Jacobson. Dkt. No. 41 at 3-4. On March 2, 2014, the parties notified this Court that a settlement had been reached between Jacobson and the Defendants. Dkt. No. 21. ]

Subsequently, Jacobson indicated that she would not pay the fees owed to Krafchick, and he filed a Notice of Attorney's Lien. Dkt. No. 26 at 2. The Defendants filed a motion that, inter alia, requested permission to deposit $63, 082.68 of disputed settlement funds into the Court's registry, along with monthly payments of $3, 290.00 as they came due. Dkt. No. 30 at 2. The Court granted Defendants' motion for leave to deposit the disputed settlement funds into the Court registry and dismissed the Defendants with prejudice, discharging them from further liability. Dkt. No. 37. Judgment in the underlying case was issued by this Court on December 5, 2014. Dkt. No. 38. The current value of proceeds in the Court registry subject to dispute is $72, 952.68 (the original deposit plus three monthly installments). Dkt. No. 41 at 5.

Krafchick has filed an Amended Motion for Summary Judgment to Enforce Amended Lien, claiming that: (1) Krafchick possesses a clear right to a lien against Jacobson's recovery pursuant to RCW 60.04.101(l)(d), which currently consists of the $72, 952.68 in the Court's registry; (2) Krafchick has fully performed by obtaining Jacobson's recovery award and is therefore entitled to fees under the contingency fee contract; (3) the Court should award prevailing party attorney fees to Krafchick pursuant to the contingency fee agreement between the parties; and (4) any claims by Jacobson of legal malpractice or breach of fiduciary duty on the part of Krafchick are unfounded. Dkt. No. 41 at 11-18, 21-23. Krafchick now claims total outstanding costs of $153, 501.08 ($64, 588.33 for the contingency fee on back benefits, $4, 453.00 for unreimbursed case costs, $33, 740.00 for outside attorney fees, and $52, 719.75 for fees incurred by Krafchick related to this dispute). Dkt. No. 41 at 24, Ex. 4-7.

II. DISCUSSION

A. Jurisdiction

Under Washington law, adjudication of an attorney lien proceeding is considered an ancillary matter to the underlying case. King County v. Seawest Inv. Assoc's, LLC, 170 P.3d 53, 55 (Wash.Ct.App. 2007). The attorney lien statute of Washington does not set out a procedure for adjudicating a lien against a judgment, and a court possesses discretion as to how to properly adjudicate such a claim. Id. at 58.

All prior proceedings in this case have been tried before this Court and the underlying issue arises under ERISA, a federal law. The Court retains jurisdiction over the attorney lien dispute between the parties as an ancillary matter to the underlying action.

B. Merits

1. Attorney Lien Filed by Krafchick

An attorney has a lien for his or her compensation for services rendered pursuant to a special agreement whether specially agreed upon or implied. RCW 60.40.010(l)(d). A contingency fee agreement is considered a special agreement under the statute. See, e.g., Ross v. Scannell, 647 P.2d 1004 (Wash. 1982). A lien created pursuant to subsection (l)(d) is not affected by settlement between the parties, and proceeds under the statute include identifiable cash that comes into the possession of a client through payment by an opposing party or distribution from the attorney's trust account or registry of the court. RCW 60.40.010(4)-(5).

The contingency fee agreement between Krafchick and Jacobson is a valid special agreement under the Washington attorney lien statute. This instrument, including proposed changes by Jacobson which were accepted by Krafchick, was specially agreed upon by the parties. Dkt. No. 41 at 11. This contingency fee agreement was not affected by the settlement of the underlying case, and therefore applies to the proceeds currently held in the Court's registry or which have been distributed to Jacobson. Although the present motion by Krafchick was inappropriately named as a summary ...


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