Frenkel v. Frenkel

• Decision Date: 06 December 1991
• Citation: 252 N.J.Super. 214,599 A.2d 595
• Parties: Stephen FRENKEL, Plaintiff-Respondent, v. Michelle FRENKEL, Defendant, Landi & Kessler, Intervenor-Appellant.
• Court: New Jersey Superior Court — Appellate Division

Page 214

252 N.J.Super. 214

599 A.2d 595

Stephen FRENKEL, Plaintiff-Respondent, v. Michelle FRENKEL, Defendant Landi & Kessler, Intervenor-Appellant.

Superior Court of New Jersey Appellate Division.

Argued Oct. 22, 1991.

Decided Dec. 6, 1991.

Joel Kessler, Red Bank, for intervenor-appellant Landi & Kessler (Landi & Kessler, attorneys, pro se; Joel Kessler, of counsel, and on the brief).

No appearance was made on behalf of plaintiff-respondent Stephen Frenkel.

Before Judges MICHELS, HAVEY and CONLEY.

The opinion of the court was delivered by

MICHELS, P.J.A.D.

We granted intervenor Messrs. Landi & Kessler, the law firm formerly representing plaintiff Stephen Frenkel, leave to appeal from an order of the Chancery Division, Family Part, that in part, compelled it to turn over photocopies of plaintiff's file to Messrs. Blaustein & Wasserman, plaintiff's present attorneys in this matrimonial action. Landi & Kessler refused to turn over the photocopies of the file, contending that it was entitled to retain the file under an attorney's common law retaining lien until the balance of its fees had been paid by plaintiff.

Briefly, plaintiff retained Landi & Kessler to represent him in this matrimonial action. While the action was pending, plaintiff filed a bankruptcy petition with the Federal Bankruptcy Court, naming Landi & Kessler as one of his creditors. However, Landi & Kessler was not advised that a bankruptcy petition had been filed and continued to represent plaintiff. Sometime thereafter, Landi & Kessler was advised that plaintiff had retained Blaustein & Wasserman to represent him. Blaustein & Wasserman requested that Landi & Kessler turn over plaintiff's file and execute a substitution of attorney in its favor. At that time, plaintiff owed Landi & Kessler in excess of $5,000 for legal services performed in this matter, and, therefore, refused to execute the substitution of attorney or to turn over the file until its bill for legal services was paid. Landi & Kessler asserted its attorney's common law retaining lien and a lien under the New Jersey Attorney's Lien Act, N.J.S.A. 2A:13- and moved to be relieved as counsel for plaintiff. Plaintiff immediately filed a cross-motion to compel Landi & Kessler to turn over the original file or a photocopy thereof. Following a hearing, the trial court relieved Landi & Kessler as attorneys for plaintiff and ordered it to turn over a photocopy of the file to Blaustein & Wasserman. The cost of photocopying the file was to be paid by plaintiff.

On appeal, Landi & Kessler contends that since plaintiff's bankruptcy petition was pending in the Bankruptcy Court, the State court did not have jurisdiction to order it to turn over plaintiff's file and that it was entitled to hold the file under its attorney's common law retaining lien. At oral argument, we were informed by counsel that during the pendency of this appeal plaintiff was discharged from bankruptcy and Landi & Kessler's claim for counsel fees was remanded to the State court for resolution. Thus, the only issue remaining before us is whether the trial court properly ordered Landi & Kessler to turn over photocopies of plaintiff's file to Blaustein & Wasserman even though the former's counsel fees had not been fully paid. We are satisfied that it did and, therefore, affirm the order under review.

Under New Jersey law, an attorney has a common law retaining lien which "attaches to all papers, books, documents, securities, moneys, and property of the client which come into the possession of the attorney in the course of, and with reference to, his professional employment." Brauer v. Hotel Associates, Inc., 40 N.J. 415, 419, 192 A.2d 831 (1963); H. & H. Ranch Homes, Inc. v. Smith, 54 N.J.Super. 347, 351-52, 148 A.2d 837 (App.Div.1959); Norrell v. Chasan, 125 N.J.Eq. 230, 234, 4 A.2d 88 (E. & A. 1938); see In re Samuel August & Co., 228 F.Supp. 443, 445 (D.N.J.1964). The attorney's common law retaining lien is a general lien which gives an attorney the right to retain possession of the client's property until the entire balance due for legal services, as well as for costs and disbursements, is paid. However, the attorney's common law retaining lien, unlike the common law charging lien, is a passive lien which is not enforceable through legal proceedings. Brauer v. Hotel Associates, Inc., supra, 40 N.J. at 419-420, 192 A.2d 831; accord Panarello v. Panarello, 245 N.J.Super. 318, 323, 585 A.2d 428 (Ch.Div.1990). In Brauer v. Hotel Associates, Inc., the Supreme Court explained the difference between the attorney's common law retaining lien and the common law special or charging lien as follows:

The retaining lien is distinguishable from the common-law special or charging lien which an attorney may have for services rendered in a particular cause of action and which attaches to the judgment in the cause for which the services were rendered. Visconti v. M.E.M. Machinery Corp., supra [7 N.J.Super. 271, 73 A.2d 74] [ (App.Div.1950) ]. The charging lien may be actively enforced and does not rest upon possession. Republic Factors, Inc. v. Carteret Work Uniforms, 24 N.J. 525, 534 (1957); 7 Am.Jur.2 d, supra, § 281. Its scope was enlarged by N.J.S. 2A:13-5. H. & H. Ranch Homes, Inc. v. Smith, 54 N.J.Super. 347 (App.Div.1959). It is, however, only the common-law general or retaining lien with which we are herein concerned.

The attorney's retaining lien can only attach to property that comes into the possession of the attorney in the course of, and with respect to, his professional employment. It cannot arise if possession of the property is maintained for a special purpose inconsistent with his claim to a lien. Ideal Tile Corp. v. N.T. Investment Co., 111 N.J.Eq. 241 (Ch.1932); Annotation, 2 A.L.R. 1488 (1919); Annotation, 1917D Ann.Cas. 147, 150-151; 7 Am.Jur.2d, supra, § 275. [40 N.J. at 420, 192 A.2d 831].

The Supreme Court further emphasized that the value or effectiveness of the attorney's common law retaining lien

is not the value of the property itself.... Rather, the effectiveness of the lien is proportionate to the inconvenience of the client in being denied access to his property.... The focal point is not upon the objective worth of the property, but upon its subjective worth to the client and those who represent him. If the property loses this latter value, the attorney's possession becomes meaningless, and his passive lien, to all effects, worthless. Therefore, it is the inconvenience suffered by the client which determines the value of the lien, and if the client or his representative considers the elimination of this inconvenience to be as valuable as the amount of the attorney's charges, then the client will satisfy the charges, the lien will dissolve, and the client's property will be returned. The nature of the lien thus evokes the conclusion that the intrinsic value of the property is immaterial. [Brauer, supra, 40 N.J. at 422-23, 192 A.2d 831 (citations omitted) ].

Thus, under an attorney's common law retaining lien, the attorney does not have to relinquish possession of the client's property until the attorney has been paid. However, that lien is not absolute and without qualification. Steiner v. Stein, 141 N.J.Eq. 478, 480, 58 A.2d 102 (Ch.1948). Although an attorney may hold a client's property under the common law retaining lien, the property of the client should be returned when that attorney withdraws so that the client can continue with the prosecution or defense of the case. The conflict between the former attorney, on the one hand exercising the common law retaining lien, and the client, on the other hand demanding the return of the file, should not be allowed to delay the prosecution of the underlying action. The rights of the parties must give way to the overriding consideration of the prompt and effective administration of justice. The retaining lien serves as a protection for the attorney, however, "an attorney should not be permitted to use it wantonly to injure his client." Steiner v. Stein, supra, 141 N.J.Eq. at 480-81, 58 A.2d 102. Therefore, in order to prosecute the underlying action and to accommodate the competing interests between the former attorney and the client, the court must have the power to order the former attorney to turn over the file to the client. The client can prosecute or defend the case and the attorney's common law retaining lien for the unpaid fee can still be protected. By the court ordering the former attorney to turn over the client's file, there has not been a voluntary surrender of possession which would extinguish the attorney's common law retaining lien. On the contrary, the lien is not relinquished. See Brauer v. Hotel Associates, Inc., supra, 40 N.J. at 423, 192 A.2d 831; H. & H. Ranch Homes, Inc. v. Smith, supra, 54 N.J.Super. at 352, 148 A.2d 837; see also 7 Am.Jur.2d, Attorneys at Law, § 322 (19...