STAND. COM. REP. NO. 1016-04
Honolulu, Hawaii
, 2004
RE: S.B. No. 2443
S.D. 1
H.D. 1
Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twenty-Second State Legislature
Regular Session of 2004
State of Hawaii
Sir:
Your Committee on Judiciary, to which was referred S.B. No. 2443, S.D. 1, entitled:
"A BILL FOR AN ACT RELATING TO ATTORNEYS' LIENS,"
begs leave to report as follows:
The purpose of this bill is enact an attorneys'-lien statute modeled after the Oregon statute relied on in Banaitis v. Commissioner of Internal Revenue, 340 F.3d 1074 (9th Cir. 2003) ("Banaitis") to clarify an attorney's property interest in settlements and awards, and to ensure that those amounts are not subject to double taxation.
Four concerned individuals testified in support of this bill.
Your Committee finds that:
(1) Under recent federal-court decisions, attorney's fees paid out of a settlement or judgment may be taxed twice (i.e., first to the client, then the attorney) depending on the relevant state law concerning attorneys' liens;
(2) Hawaii has long recognized attorneys' liens on settlements and judgments. Carroll v. Miyashiro, 50 Haw 413, 441 P.2d 638 (1968);
(3) In Banaitis, the court held that certain provisions in Oregon's attorneys'-lien statute prevented the double taxation of the subject attorneys' fees; and
(4) This measure clarifies that attorneys' liens on settlements and judgments vest attorneys with clear property interests, and those amounts should not be taxed to the client.
Your Committee has amended this bill by deleting its substance and replacing it with language that effectuates the following changes:
(1) Applies this measure to Chapter 507, Hawaii Revised Statutes (HRS), relating to liens, instead of Chapter 605, HRS, relating to attorneys;
(2) Deletes the provision that specified the payees required on a check satisfying a judgment, settlement, or award;
(3) Deletes the requirement that "(t)his Act shall be liberally construed";
(4) Deletes the provision that limited the measure to attorneys' fees and compensation paid on or after the effective date of this Act;
(5) Clarifies that the lien may be used for costs advanced by the attorney;
(6) Provides that the attorney's lien survives as long as the subject judgment, decree, order, settlement, or award remains valid;
(7) Specifies the time period within which the attorney's lien must be filed;
(8) Specifies that a party may not discharge or dismiss a judgment or settlement until an attorney's lien is satisfied, except:
(a) By payment in full by a judgment debtor; or
(b) If more than one lawyer from the same firm appears of record for a party, then the satisfaction of the lien by one of those lawyers is conclusive evidence that the lien is fully satisfied;
(9) Adds a reference in section 605-8, HRS, to the new section in chapter 507, HRS, with respect to the collection of attorney's fees or commissions taxed or allowed by courts; and
(10) Makes technical, nonsubstantive changes for clarity and style.
As affirmed by the record of votes of the members of your Committee on Judiciary that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2443, S.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2443, S.D. 1, H.D. 1, and be placed on the calendar for Third Reading.
Respectfully submitted on behalf of the members of the Committee on Judiciary,
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____________________________ ERIC G. HAMAKAWA, Chair |
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