The opinion of the court was delivered by: NAN NOLAN, Magistrate Judge
MEMORANDUM OPINION AND ORDER
This interpleader action has been referred to this Court for
resolution of Morrison & Mix's Petition to Adjudicate Attorneys Lien
[136-1] and Mathias Burlet's Motion to Invalidate Morrison & Mix's
Notice of Attorneys' Lien [137-1]. For the reasons explained below,
Morrison & Mix's Petition to Adjudicate Attorneys Lien is granted in
part and denied in part, and Mathias Burlet's Motion to Invalidate
Morrison & Mix's Notice of Attorneys' Lien is granted.
American National Bank ("ANB") brought this interpleader action
pursuant to 28 U.S.C. § 13 35 to determine the rights of several
claimants to approximately $10.1 million it held in an account in the
name of Donald West. After depositing the funds in an account maintained
by the Clerk of the Court, ANB was dismissed from this action. Defendant
NIT Holdings Limited ("NIT") filed an answer and an appearance but did
not assert a claim to the funds at issue. A default judgment was
entered against NIT. Defendant Donald West did not assert any claim
to the interplead funds, and in his deposition testified that the
interplead funds belonged to Defendant Alps Electric Co., Ltd. ("Alps").
Seishin, Ltd. ("Seishin") was granted leave to intervene. The remaining
parties, Defendant Mathias Burlet ("Burlet"), Alps, and Seishin reached a
settlement dividing the interplead funds among them.
Burlet and his former attorneys, the law firm of Morrison & Mix,
now seek to determine who is entitled to approximately $175,000 from the
settlement funds that Burlet received. Morrison & Mix claims that it
has an attorney's lien over these funds. The district court ordered the
law firm of Altheimer & Gray to retain $175,000 of the interplead
funds in its client trust fund pending resolution of Morrison & Mix's
purported attorney's lien.
Burlet raises three main arguments in support of his request that the
Court invalidate the attorney's lien asserted by Morrison & Mix over
the funds distributed in settlement of this action: 1) the November 15,
1999 Notice of Attorney's Lien (Lien Notice) failed to comply with the
statutory requirements; 2) Morrison & Mix cannot assert an equitable
lien; and 3) Morrison & Mix has already been paid reasonable
compensation for its services. The Court addresses Burlet's arguments in
The requirements for an effective statutory lien are set forth in the
Illinois Attorney's Lien Act. The statute provides in pertinent part:
Attorneys at law shall have a lien upon all
claims, demands and causes of action, including
all claims for unliquidated damages, which may be
placed in their hands by their clients for suit or
collection, or upon which suit or action has been
for the amount of any fee which may have been
agreed upon by and between such attorneys and
their clients, or, in the absence of such
agreement, for a reasonable fee, for the services
of such suits, claims, demands or causes of
action, plus costs and expenses.
To enforce such lien, such attorneys shall serve
notice in writing, which service may be made by
registered or certified mail, upon the party
against whom their clients may have such suits,
claims or causes of action, claiming such lien and
stating therein the interest they have in such
suits, claims, demands or causes of action.
Thus, the statute sets forth three requirements for an effective
lien: 1) the attorney was hired by a client to assert a claim; 2) the
attorney must perfect the lien by serving notice in writing; and 3) the
notice must be served on the party against whom the client has the claim.
Rhoades v. Norfolk & Western Railway Co., 399 N.E.2d 969,
973 (Ill. 1979). Morrison & Mix bears the burden of establishing
valid service. Zazove v. Wilson, 80 N.E.2d 101, 103 (Ill.App.
Burlet argues that the Lien Notice failed to comply with the second and
third requirements of the statute. The Court agrees that notice was not
served on Alps, a party against whom Burlet had a claim.*fn2 Burlet
served the Lien Notice on certain parties' attorneys: John Heaphy,
attorney for Alps; Daniel DuPre, in-house counsel for Bank One; Donald
West, attorney and/or officer of NIT; and Howard Brinton, attorney for
Donald West. Alps was only served through its counsel, John Heaphy.
Service on a party's attorney is insufficient to perfect an attorney's
lien. In re Del Grosso, 111 B.R. 178, 182 (Bankr. N.D.
Ill. 1990); Cazalet et. al. v. Cazalet et. al., 54 N.E.2d 61, 63
Morrison & Mix argue that ANB, the stakeholder, "was the only
person against which Mr. Burlet asserted a claim" and thus, the only
party requiring service of the Lien Notice to perfect the lien. Morrison
& Mix's Petition, p. 11. The statute requires service "upon the party
their clients may have such suits, claims or causes of action."
Morrison & Mix's argument is inconsistent with the nature of the
interpleader action. Interpleader has long existed for the purpose of
enabling "a neutral stakeholder, usually an insurance company or a bank,
to shield itself from liability for paying over the stake to the wrong
party. This is done by forcing all the claimants to litigate their claims
in a single action brought by the stakeholder." Indianapolis Colts
y. Mayor and City Council of Baltimore, 733 F.2d 484, 486 (7th Cir.
1984). Parties in interpleader actions have claims against each other,
not only the stake holder. "In fact, federal interpleader ...