Submitted May 7, 2020
from the Court of Appeals for Cuyahoga County, No. 105287,
Kisling, Nestico & Redick, L.L.C., Christopher J. Van
Blargan, and John Reagan, for appellee.
Collins, Roche, Utley & Garner, Richard M. Garner, and
David G. Utley, for appellants, Progressive Max Insurance
Company, Progressive Southeastern Insurance Company, and
Progressive John Doe Companies.
Reminger Co., L.P.A., and Brian D. Sullivan, urging reversal
for amicus curiae Ohio Association of Civil Trial Attorneys.
& Murray Co., L.P.A., and Margaret M. Murray, urging
affirmance for amicus curiae Ohio Association for Justice.
1} In this discretionary appeal from the Eighth
District Court of Appeals, we consider whether an insurer who
settles a personal-injury claim with an accident victim has a
duty to distribute a portion of the settlement proceeds to
the victim's former lawyers pursuant to a charging lien.
We hold that an action to enforce a charging lien is an in
rem proceeding against a particular fund and that when a
matter is resolved by settlement, the fund comes into being
at the time the settlement is paid. A discharged law firm
cannot call upon the equitable powers of the court to enforce
a charging lien against a tortfeasor's insurer when no
court action was initiated on behalf of the victim and an
out-of-court settlement was paid to the victim. The
discharged law firm must instead proceed against its former
client for payment. We therefore reverse the judgment of the
court of appeals.
AND PROCEDURAL HISTORY
2} Darvale Thomas was injured in an automobile
accident and hired a law firm, appellee, Kisling, Nestico
& Redick, L.L.C. ("KNR"), to represent him.
Todd Thornton was the alleged tortfeasor whose negligence
caused the accident; his insurer was appellant Progressive
Southeastern Insurance Company ("Progressive").
3} On July 10, 2014, Thomas and KNR entered into a
contingent-fee agreement that purported to give KNR a
charging lien on the proceeds of any insurance settlement,
judgment, verdict award, or property obtained on Thomas's
behalf. The contract between Thomas and KNR provides:
The Attorneys shall receive as a fee for their services,
one-quarter (1/4) of the total gross amount of recovery of
any and all amounts recovered, and Client hereby assigns said
amount to Attorneys and authorizes Attorneys to deduct said
amount from the proceeds recovered. Attorney[s] shall have a
charging lien upon the proceeds of any insurance proceeds,
settlement, judgment, verdict award or property obtained on
4} Negotiations commenced between KNR and
Progressive, and Progressive offered to settle the matter for
$12, 500. Thomas subsequently discharged KNR. On July 9,
2015, KNR informed Progressive that it had been discharged by
Thomas and that it was claiming a lien against any settlement
funds paid to Thomas by Progressive. But there was no
agreement between Progressive and KNR that Progressive would
protect any lien. On July 14, 2015, Thomas settled his claims
himself for $13, 044, and Progressive paid the full
settlement amount to Thomas. Thomas did not pay KNR the
attorney fees and expenses that KNR claims he owes for its
work on the settlement prior to KNR's discharge.
5} KNR sued Thomas, Thornton, and Progressive to
recover its attorney fees. Regarding Thomas, KNR alleged
breach of contract, breach of fiduciary duty, bad faith,
quantum meruit, and unjust enrichment. The trial court
entered a default judgment against Thomas for attorney fees