Pangborn Plumbing Corp. v. Carruthers & Skiffington

In this case, we address the issue of the relative priorities and enforcement of a judgment lien and a competing contractual lien for attorney’s fees claimed by the debtor’s law firm for its work in creating the very fund from which the creditor seeks to satisfy its judgment lien. For the reasons discussed below, in this factually complex case, we conclude that the law firm’s contractual lien has priority.

Factual and Procedural Background

American Benefit Plan Administrators (Benefit Administrators) sued Pangborn Plumbing Corporation and R. Pangborn (collectively Pangborn) for failing to fund Pangborn’s employees’ benefit plan. Benefit Administrators recovered a judgment of approximately $35,000 against Pangborn. The relationship between Benefit Administrators on the one hand, and Pangborn on the other, thus became that of judgment creditor and judgment debtor, and, for purposes of this appeal, we shall henceforth refer to Pangborn as Debtor and to Benefit Administrators as Creditor.

Debtor’s surety company, Insurance Company of the West (ICW), sued Debtor (the accounting litigation). Debtor cross-complained against (1) ICW, (2) Carruthers & Skiffington, Debtor’s own…