North Valley Bank v. McGloin, Davenport, Severson & Snow, P.C.

North Valley Bank (the bank) (plaintiff) loaned BLR Construction Company, LLC (BLR) money for which the bank perfected a security interest in BLR’s accounts receivables and any proceeds resulting from the accounts. Later, BLR was hired by a landscaper to provide landscaping on a project funded by the state of Colorado (Colorado). BLR provided the landscaping and invoiced the landscaper. However, the landscaper did not pay the bill, and BLR hired a law firm, McGloin, Davenport, Severson & Snow, P.C. (the law firm) (defendants) to assist with debt collection. The law firm sued the landscaper and Colorado and followed the procedure for filing an attorney’s lien under Colorado law against any judgment. The bank alerted the law firm that it had a perfected security interest in the judgment. The lawsuit resulted in an award of $51,402 for BLR. Colorado sent the amount due directly to the law firm, which kept $41,381 for its services and $3,000 as a retainer for possible future services. The firm sent BLR $7,021. The bank felt it had a claim to the entire judgment and filed suit against the law firm for conversion, declaratory relief, and replevin. A trial court ruled in favor of the law firm, holding that an attorney’s lien had priority over a perfected security interest. The court also held that the money received by BLR was a general intangible, not a receivable. On appeal, the bank argued that (1) the trial court erred in holding the bank’s perfected interest as inferior to the attorney’s lien, (2) § 4-9-333 of the Uniform Commercial Code (UCC) granted the bank’s interest priority, and (3) the bank was entitled to the entire money judgment.