Matter of Fidelity Standard Mortg. Corp., Bankruptcy No. 82-00637-BKC-JAG
| Decision Date | 25 October 1984 |
| Docket Number | 82-00638-BKC-JAG,Adv. No. 83-0482-BKC-JAG-A.,Bankruptcy No. 82-00637-BKC-JAG |
| Parties | In the Matter of FIDELITY STANDARD MORTGAGE CORP., f/k/a S.B.I. Investors Corp., and First Fidelity Financial Services, Inc., Debtors. Kenneth S. SANDLER, P.A., Plaintiff, v. A.W. BECK, Trustee, etc., Defendant. |
| Court | United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Southern District of Florida |
Chad P. Pugatch, Fort Lauderdale, Fla., for trustee.
A.W. Beck, Trustee.
Kenneth S. Sandler, P.A., Hollywood, Fla., for plaintiff.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
THIS CAUSE came on for trial on July 18, 1983, upon the Plaintiff's Complaint seeking, primarily, imposition of an attorney's charging lien or an equitable lien upon the proceeds of sale of certain real properties which are a part of the Debtors' estate herein. The Defendant, A.W. BECK, TRUSTEE, has filed his Answer and Affirmative Defenses, denying Plaintiff's right to imposition of such liens and raising, in addition, the Trustee's avoiding powers pursuant to 11 U.S.C. § 544(a).
The facts are not in material dispute. The Debtors were engaged in the sale and servicing of fractionalized interests in mortgages in the State of Florida. The Debtors filed Voluntary Petitions under Chapter 7 of the Bankruptcy Code on April 9, 1982. Pursuant to the Debtors' application, the cases were converted to Chapter 11 on May 20, 1982. The Debtors voluntarily reconverted to Chapter 7 on January 10, 1983.
Prior to the initial filing on April 9, 1982, the Plaintiff, KENNETH S. SANDLER, P.A., was retained by the Debtors to perform legal services to foreclose certain mortgages held or serviced by the Debtors. The verbal fee arrangement between the Plaintiff and the Debtors provided that in the event a Final Judgment of Foreclosure was entered and the subject real property was subsequently acquired by the Debtors or their investors at the resulting foreclosure sale, the Debtors would pay to Plaintiff the court-awarded fee as set forth in the Final Judgment of Foreclosure. This amount was to be paid from the proceeds of the ultimate sale of the subject real property by the Debtors.
Prior to the filing of the Voluntary Petitions on April 9, 1982, the Plaintiff had been awarded attorney's fees by the state court in various foreclosure actions which had not been paid by the Debtors at the time of filing. There was no evidence presented to indicate that these properties had been sold prior to the filing therefore triggering the obligation to render the payment which was accrued but not yet due. Plaintiff further, without having been formally appointed by the Court completed, with the apparent knowledge and consent of the Debtor in Possession, two foreclosures on cases known as "Palumbo" and "Ambros" in which total court awarded fees of $4,680.00 were accrued. Plaintiff may have engaged in certain work during the initial Chapter 7 phase of the case between April 9, 1982 and May 20, 1982, however, there is no evidence that this was performed with the approval or consent of the Trustee or that court approval was obtained for said services.
Those properties for which Plaintiff had rendered services and foreclosure was completed prior to the filing of the initial Voluntary Petitions on April 9, 1982, and for which Certificate of Title was issued in favor of the Debtors became, upon filing property of the estate herein pursuant to the provisions of 11 U.S.C. § 541. The foreclosures in progress at the time of filing which were completed during the Chapter 11 phase of this case were also assets of the estate pursuant to 11 U.S.C. § 541 and remain property of the estate after completion of the foreclosures and issuance of Certificate of Title in favor of the Debtor in Possession. This interest passed to the Trustee after reconversion of the case on January 10, 1983.
Based upon the foregoing, Plaintiff asserts a right, under Florida law, to a charging lien upon the ultimate proceeds of sale of the real properties in keeping with his original fee arrangement with the Debtors. In the alternative, he seeks an equitable lien upon the proceeds of sale based upon unjust enrichment to the Debtors. The Court finds that Plaintiff, under applicable law, and in view of the Trustee's avoiding powers, is not entitled to either a charging lien or equitable lien upon the proceeds of sale.
Under Florida law, an attorney's charging lien does not attach until after the judgment or recovery has been obtained. Cooper v. McNair, 49 F.2d 778 (D.C.Fla. 1931). However, such a lien will normally relate back and take effect from the time of commencement of services rendered in the action. Randall v. Archer, 5 Fla. 438 (1854).
The Court first notes that no evidence was presented establishing the ultimate sale of the real properties resulting in proceeds to which Plaintiff's asserted lien would attach. Plaintiff, pursuant to his fee agreement with the Debtors, claims his lien only on the proceeds of sale of the properties and not the real property itself. This is further supported by the general principles of Florida law, wherein it is clear that, in the absence of statutory authority or express contract or implied agreement arising out of special equitable circumstances, an attorney is not entitled to the imposition of a charging lien on the real estate of his client, even if he has successfully prosecuted a suit to establish a client's title or recover title or possession for the client. Guthrie v. Home Building & Loan Company, 116 Fla. 822, 156 So. 882 (1934); Billingham v. Thiele, 107 So.2d 238 (2nd DCA Fla.1958), cert. dismissed, 109 So.2d 763. Overholser v. Walsh and Nottebaum, 362 So.2d 471 (3rd DCA Fla.1978). Absent the existence of such proceeds then, no lien could even attach.
Assuming that the lien did not attach, the Court must still determine the priority of the charging lien as measured against the Trustee's avoiding powers under 11 U.S.C. § 544(a), in that a charging lien will be subject to any rights in property which are valid against the client at the time the lien attaches. 4 Fla.Jur. 2, Attorneys at Law, § 162. See, also, Re: Diplomat Electric, Inc., 499 F.2d 342 (5th Cir. 1974). In Re: Hanson Dredging, Inc., 15 B.R. 79 (B.C.S.D.Fla.1981).
The Trustee's avoiding powers under 11 U.S.C. § 544(a) are well established, and, undisputedly, the Trustee will occupy the position of the...
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