This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).




Dr. Bruce W. Peterson,



Elida Lozano,


Rodney C. Hanson,


St. Paul Fire & Marine

Insurance Company,


Filed April 14, 1998


Peterson, Judge

Kandiyohi County District Court

File No. C596975

John E. Mack, Mack & Daby, 26 Main Street, P.O. Box 302, New London, MN 56273 (for appellant)

Gregory R. Anderson, Anderson Larson Hanson & Saunders, P.L.L.P., 331 Professional Plaza, 331 Southwest Third Street, P.O. Box 130, Willmar, MN 56201 (for respondent)

Considered and decided by Lansing, Presiding Judge, Crippen, Judge, and Peterson, Judge.



Appellant Dr. Bruce Peterson claimed that his patient had granted him a lien against the settlement proceeds in a personal injury action. In distributing the settlement proceeds, the patient's attorney, respondent Rodney Hanson, failed to pay Peterson. This appeal is from the district court judgment denying Peterson's claim to recover the amount owed him from Hanson. We affirm.


Peterson treated Elida Lozano for a lower-back injury she incurred in an accident. Lozano signed an agreement granting Peterson a lien against any recovery she received from a personal injury action arising out of the accident. Peterson sent a copy of the agreement to Hanson, Lozano's attorney. Hanson also received a copy of a notice of assignment signed by Lozano. The notice of assignment directed Hanson to pay Peterson out of any settlement, judgment, or verdict Lozano received from the personal injury action and also stated that Lozano granted Peterson a lien against any such proceeds.

The personal injury action was settled for $4,500. Hanson retained $856.74 for attorney fees and costs, which was less than the amount he was entitled to under a retainer agreement with Lozano. Hanson paid $400 to the Noran Clinic to settle its account and paid the remaining $3,243.26 to Lozano. Hanson forgot to pay Peterson. Peterson claimed he was owed $3,304.81 for treating Lozano for the injury incurred in the accident. Peterson was able to collect only $384.40 from Lozano.

The district court concluded that Hanson was not liable to Peterson.[1] The court explained:

[Peterson] has not met his burden of establishing liability on the part of * * * Hanson. Hanson clearly should have taken [Peterson's] claim into account in the distribution of the settlement proceeds. Hanson retained only $850, however, which is significantly less than the amount to which Hanson was entitled under his retainer agreement, and [Peterson] does not dispute that Hanson's right to attorney's fees and costs is superior to [Peterson's] provider lien. The lion's share of the settlement proceeds, and the res to which [Peterson's] lien would attach, is in the hands of Lozano. Since [Peterson] has not proven that Hanson has been unjustly enriched by the possession of such proceeds, [Peterson] is not entitled to equitable relief against Hanson.


Peterson first argues that the district court erred in declining to impose an equitable lien against Hanson. "Granting equitable relief is within the sound discretion of the trial court. Only a clear abuse of that discretion will result in reversal." Nadeau v. County of Ramsey, 277 N.W.2d 520, 524 (Minn. 1979).

An equitable lien arises in an equity proceeding when a person is allowed to reach the property of another and hold it as security for a claim on the ground that otherwise the latter would be unjustly enriched. An equitable lien is essentially a form of a constructive trust. A court may impose a constructive trust when there is clear and convincing evidence that such imposition is justified to prevent unjust enrichment. A constructive trust may arise in favor of a person equitably entitled to property when legal title to the property is obtained through fraud, oppression, duress, undue influence, force, crime, or similar means, or by taking improper advantage of a confidential or fiduciary relationship.

Fredin v. Farmers State Bank, 384 N.W.2d 532, 535 (Minn. App. 1986) (citations omitted); see also Edward G. Jennings & Irving S. Shapiro, The Minnesota Law of Constructive Trusts and Analogous Equitable Remedies, 25 Minn. L. Rev. 667, 671-74 (1941) (explaining distinction between constructive trust and equitable lien; principal difference is that constructive trust applies to ownership of entire property and equitable lien creates security interest in property). An equitable lien can only be enforced against an "identifiable res." Bonneville Power Admin. v. Washington Pub. Power Supply Sys., 956 F.2d 1497, 1507 (9th Cir. 1992).

In distributing the settlement proceeds, Hanson retained for himself less than the amount to which he was entitled. Peterson claims no entitlement to the settlement proceeds retained by Hanson; Peterson claims entitlement to any settlement proceeds remaining after payment to Hanson. Hanson, thus, was not unjustly enriched by the distribution of the settlement proceeds. There is no evidence that Hanson committed any misconduct of the type listed in Fredin. Also, Peterson did not attempt to enforce his claimed lien against Hanson until after Hanson distributed the settlement proceeds. As a result, no "identifiable res" existed against which a lien could be enforced. See Bonneville Power Admin., 956 F.2d at 1507 (when allegedly misallocated funds had already been disbursed, no "identifiable res" on which a lien could be imposed existed). Under these circumstances, the district court did not abuse its discretion by declining to impose an equitable lien against Hanson. See Fredin, 384 N.W.2d at 535 (equitable lien was inappropriate when facts of case did not fit into any of the situations under which constructive trusts usually arise).

Peterson next contends that the supreme court's holding in Conner v. Caldwell, 208 Minn. 502, 294 N.W. 650 (1940), supports enforcement of his lien against Hanson. The lien at issue in Conner was a lien against a motor vehicle that had been properly filed pursuant to statutory authority. Id. at 503, 294 N.W. at 651. The supreme court held that a third party who bought the vehicle after the lien had been filed and then resold it was liable to the lienholder in conversion. Id. at 508, 294 N.W. at 654; see also Williams v. Dow Chem. Co., 415 N.W.2d 20, 25-27 (Minn. App. 1987) (attorney's lien enforceable against defendant who paid judgment directly to plaintiffs; governing statute expressly allowed enforcement against third parties). Unlike the lienholder in Conner, Peterson did not follow any statutory procedure for creating a lien, and the record does not support his claim that his lien was filed. In reference to liens, filed is a term of art, and filing must be performed in the manner required by law. See, e.g., Minn. Stat. § 481.13(4) (1996) (notice of attorney's lien against client's interest in personal property "shall be filed in the same manner as provided for by law for the filing of a security interest").

Finally, Peterson argues that because his lien was set forth in a contract, it should be enforced against Hanson. But Hanson did not enter into a contract granting Peterson a lien. Only Lozano signed the lien agreement. Merely providing Hanson with a copy of the lien agreement and a notice of assignment did not form a contract between Peterson and Hanson. See Crince v. Kulzer, 498 N.W.2d 55, 57 (Minn. App. 1993) ("Mutual assent of the parties is essential for formation of a contract.").

Peterson cites no authority allowing enforcement of a lien like the one he attempted to create against anything other than the actual property subject to the lien. We, therefore, conclude that the district court did not err in denying Peterson's claim against Hanson.


[1] The district court also concluded that the tortfeasor's insurer was not liable to Peterson, but Peterson does not challenge that conclusion on appeal.