Olszewski v. Jordan

• Citation: 144 Conn.App. 144,71 A.3d 1276
• Decision Date: 16 July 2013
• Docket Number: No. 34584.,34584.
• Parties: Ralph OLSZEWSKI v. James F. JORDAN III.
• Court: Appellate Court of Connecticut

144 Conn.App. 144

71 A.3d 1276

Ralph OLSZEWSKI

v.James F. JORDAN III.

No. 34584.

Appellate Court of Connecticut.

Argued Jan. 3, 2013.

Decided July 16, 2013.

Eric H. Rothauser, with whom, on the brief, was John L. Bonee III, West Hartford, for the appellants (defendant Carlo Forzani et al.).

Stephen F. McEleney, Hartford, for the appellee (plaintiff).

BEACH, BEAR and ESPINOSA, Js.^*

BEAR, J.

The important question raised by this appeal is whether an attorney charging lien can arise by operation of law to be applied to assets or an interest in assets assigned to a party in a dissolution of marriage action. The trial court answered that question in the negative. We disagree and, accordingly, reverse the judgment of the trial court.

In August, 2009, the court rendered a judgment dissolving the marriage of James F. Jordan III and Diane M. Jordan. James Jordan had been represented by the defendant Carlo Forzani, an attorney of the defendant law firm, Carlo Forzani, LLC, in that proceeding.¹ At the time of the dissolution of marriage judgment, James Jordan and Diane Jordan jointly owned, among other assets, an account at Northwestern Mutual (account), from which the dissolution court ordered that 50 percent of the attorney's fees (fees) of the defendants be paid and, after payment of certain other obligations, that the balance remaining in that account be divided equally between James Jordan and Diane Jordan.

While an appeal to this court from the judgment of dissolution was pending, ² in October, 2009, Ralph Olszewski, the plaintiff in the present case, who is the father of Diane Jordan, brought this action against James Jordan to collect the outstanding balance on James Jordan's promissory note to him. ³ In November, 2009, the plaintiff obtained a prejudgment remedy, which authorized the attachment of the proceeds of the account. In April, 2011, the court rendered judgment in favor of the plaintiff in the amount of $128,135.04. The plaintiff, thereafter, applied for a property execution. Subsequently, pursuant to General Statutes § 52–356c, James Jordan filed a claim for a determination of interests in the account. He asserted that by virtue of the 2009 dissolution judgment, he had a claim to proceeds in that account that was prior in right to that of the plaintiff.⁴ The defendants filed a separate claim for determination of interests in the account, alleging that “Carlo Forzani, LLC has a claim prior in right” to the plaintiff's claim by virtue of the dissolution judgment and the “charging lien arising by operation of law” in the dissolution of marriage action.

The court held a hearing to determine the competing claims in the account and, subsequently, concluded that the defendants had no superior interest in the account by virtue of either an attorney charging lien or the dissolution judgment.⁵ Specifically, the court held, inter alia, that a charging lien in connection with a dissolution action would be prohibited by rule 1.5(d)(1) of the Rules of Professional Conduct, that an attorney must create a new asset for the client before a charging lien can be recognized and that the recognition of a charging lien in a dissolution action would violate public policy. The defendants then filed this appeal.⁶

On appeal, the defendants claim that the trial court improperly held that “an attorney's charging lien is [not] applicable to a marriage dissolution action.” The defendants argue that Forzani “acquired a perfected charging lien for the full amount of his fees ... when he successfully obtained a judgment for his client that included a property distribution award.”

Whether an attorney has a common-law charging lien is a question of law. See D'Urso v. Lyons, 97 Conn.App. 253, 255, 903 A.2d 697, cert. denied, 280 Conn. 928, 909 A.2d 523 (2006). “When ... the trial court draws conclusions of law, our review is plenary and we must decide whether its conclusions are legally and logically correct and find support in the facts that appear in the record.” (Internal quotation marks omitted.) Id., at 255–56, 903 A.2d 697.

“Although not often litigated in the courts of Connecticut, the common-law charging lien has been recognized since 1836....” Id., at 256, 903 A.2d 697. Our common-law charging lien is an equitable lien. “If an attorney has rendered services and expended money in instituting and conducting a suit and the plaintiff orally agrees that he may retain so much of the avails thereof as will pay him for his services and expenses therein and for previous services in other matters, and he thereafter conducts the suit to a favorable conclusion, he has, as against such plaintiff, an equitable lien upon the avails for the services and expenses in the suit, and for the previous services embraced in the agreement....” Cooke v. Thresher, 51 Conn. 105, 107 (1883).

“ ‘An attorney, as against his client, has a lien upon all papers in his possession, for his fees and services performed in his professional capacity, as well as upon judgments received by him.’ This quoted passage obviously refers to both retaining liens on papers and charging liens on judgments.” Marsh, Day & Calhoun v. Solomon, 204 Conn. 639, 644, 529 A.2d 702 (1987). “An attorney's retaining lien is a possessory lien on a client's papers and files that the attorney holds until his fee has been paid.... A retaining lien differs from a charging lien, which is a lien placed upon any money recovery or fund due the client at the conclusion of suit.” (Citations omitted.) Id., at 643, 529 A.2d 702. “[I]t has long been held that an attorney has an equitable lien upon the avails [of his actions for a client] for the services and expenses in the suit.” (Internal quotation marks omitted.) D'Urso v. Lyons, supra, 97 Conn.App. at 257, 903 A.2d 697.

Although a charging lien has not been recorded or otherwise been made known to third parties, in some circumstances, such charging lien can have priority over a prejudgment remedy or property execution. “Conflicts between an attorney claiming a charging lien for his fees on a judgment recovered through his efforts and a third-party creditor seeking to satisfy a debt owed by the attorney's client by impressing a lien on the same judgment have usually been resolved by determining which lien first attached to the judgment or its proceeds. ... Since an attorney's lien generally attaches to a judgment as of the date the attorney commenced to represent the client in the action which terminates in the judgment, the courts have generally recognized the priority of the attorney's lien over competing liens which were perfected after he commenced his services ... while upholding the priority of the competing lien which was perfected before the commencement of the attorney's services.” (Citations omitted.) Annot., Priority Between Attorney's Lien for Fees Against a Judgment and Lien of Creditor Against Same Judgment, 34 A.L.R.4th 665, § 2 (1984).⁷

In the present case, although recognizing that an attorney in Connecticut may have a right to a charging lien in a civil action, the trial court concluded that such a right could not exist, as a matter of law, in a marital dissolution action. The court specifically determined that such a lien would violate rule 1.5(d)(1) of the Rules of Professional Conduct and that it would violate the public policy of Connecticut. The court further determined that before a charging lien can be recognized, the attorney must create a new asset, a previously not existing pool of funds for the client, such as occurs, for example, when the client is successful in a personal injury case, but which it determined does not occur when dividing existing marital property pursuant to General Statutes § 46b–81.⁸

Neither of the parties to this case, nor the trial court, has cited any state statute or a case based on the Connecticut common law that holds that a charging lien may not be acquired by an attorney in a dissolution action as a matter of law. On the basis of the record before us and our independent research, we disagree with the court's analysis and can discern no viable reason why a charging lien should be absolutely prohibited as a matter of law in a marital dissolution action.

As previously set forth in this opinion, the court held that to recognize a charging lien in a dissolution of marriage action would violate rule 1.5(d) of the Rules of Professional Conduct, which provides: “A lawyer shall not enter into an arrangement for, charge, or collect: (1) Any fee in a domestic relations matter, the payment or amount of which is contingent upon the securing of a dissolution of marriage or civil union or upon the amount of alimony or support, or property settlement in lieu thereof....” (Emphasis added.) We conclude that recognizing a charging lien in a dissolution of marriage action would not implicate rule 1.5(d)(1) because a charging lien would not render the attorney's fee “contingent upon the securing of a dissolution of marriage ... or upon the amount of alimony or support, or property settlement in lieu thereof....” ⁹Rules of Professional Conduct 1.5(d)(1). Clearly, this rule prohibits an attorney from making his or her fee contingent upon specific outcomes in a dissolution of marriage action. As explained in the official commentary to rule 1.5: “Subsection (d) prohibits a lawyer from charging a contingent fee in a domestic relations matter when payment is contingent upon the securing of a divorce or upon the amount of alimony or support or property settlement to be obtained.” W. Horton & K. Knox, 1 Connecticut Practice Series: Connecticut Superior Court Civil Rules (2012–2013 Ed.) Rule 1.5, official comments, p. 23. The recognition of a charging lien, which is a type of security interest, however, would not tie the attorney's fees in a dissolution of marriage action billed at hourly rates or agreed to be a specific amount to the outcome of the case; it merely would allow the attorney to secure...