Olszewski v. Jordan

• Decision Date: 03 March 2015
• Docket Number: No. 19215.,19215.
• Citation: 315 Conn. 618,109 A.3d 910
• Court: Connecticut Supreme Court
• Parties: Ralph OLSZEWSKI v. James F. JORDAN III, et al.

315 Conn. 618

109 A.3d 910

Ralph OLSZEWSKI

v.James F. JORDAN III, et al.

No. 19215.

Supreme Court of Connecticut.

Argued Dec. 2, 2014.

Decided March 3, 2015.

Stephen F. McEleney, Hartford, with whom were David J. Taylor and Emily Peterson, for the appellant (plaintiff).

Eric H. Rothauser, West Hartford, with whom, on the brief, were John L. Bonee III and Lee B. Ross, West Hartford, for the appellees (defendant Carlo Forzani et al.).

ROGERS, C.J., and PALMER, ZARELLA, EVELEIGH, McDONALD, ROBINSON and VERTEFEUILLE, Js.

Opinion

ZARELLA, J.

The principal issue in this appeal is whether attorneys are entitled by operation of law to equitable charging liens against marital assets for fees and expenses incurred in obtaining judgments for their clients in marital dissolution actions. The plaintiff, Ralph Olszewski, challenges the Appellate Court's conclusion that equitable charging liens are permissible in marital dissolution actions in Connecticut. He claims that they are barred by the Rules of Professional Conduct, they are not supported by Connecticut precedent, and the public policy considerations that justify equitable charging liens in other contexts do not apply in marital dissolution actions. The defendants Carlo Forzani and Carlo Forzani, LLC,¹ respond that equitable charging liens against marital assets are permissible in Connecticut because the Rules of Professional Conduct specifically provide for charging liens, the rules do not preclude the use of charging liens in marital dissolution actions, and public policy considerations support their use in domestic relations matters. We agree with the plaintiff and reverse the judgment of the Appellate Court.

The following facts and procedural history are set forth in the Appellate Court's opinion. “In August, 2009, the [dissolution] court rendered a judgment dissolving the marriage of [James Jordan and Diana Jordan]. James Jordan had been represented by ... Carlos Forzani, an attorney of the ... law firm, Carlo Forzani, LLC, in that proceeding. At the time of the dissolution of marriage judgment, James Jordan and Diana 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 Diana Jordan.

“While an appeal to this court from the judgment of dissolution was pending, in October, 2009, [the plaintiff], who is the father of Diana Jordan, brought this action against James Jordan to collect the outstanding balance on James Jordan's promissory note to him. In November, 2009, the plaintiff obtained a prejudgment remedy, which authorized the attachment of the proceeds of the account. In April, 2011, the [trial] court [found] 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. The defendants filed a separate claim for [a] determination of interests in the account, alleging that ‘Carlo Forzani, LLC ha[d] 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's] charging lien or the dissolution judgment. 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.” (Footnotes omitted.) Olszewski v. Jordan, 144 Conn.App. 144, 146–48, 71 A.3d 1276 (2013). The defendants appealed to the Appellate Court, which reversed the trial court's judgment. Id., at 148, 160, 71 A.3d 1276.

The Appellate Court explained that it could “discern no viable reason why a charging lien should be absolutely prohibited as a matter of law in a marital dissolution action.” Id., at 151, 71 A.3d 1276. The court stated that “recognizing a charging lien in a dissolution of marriage action would not implicate rule 1.5(d)(1) ”; id.; and “that rule 1.8(i)(1) permits a charging lien in connection with a dissolution action.” Id., at 152, 71 A.3d 1276. The court further stated that an attorney need not create a new asset before a charging lien can be acquired; id.; and that this state's equitable lien jurisprudence supports the view that equitable charging liens may arise by operation of law in marital dissolution actions “when the arrangement between the attorney and client intends that a lien exist on the proceeds of the action.” Id., at 156, 71 A.3d 1276. The court thus concluded that, “under some circumstances an attorney may acquire a charging lien in a dissolution of marriage action and that the trial court erred in holding otherwise as a matter of law.” Id., at 160, 71 A.3d 1276. The court thereafter remanded the case to the trial court to consider whether the agreement between James Jordan and the defendants established that the defendants intended to look specifically to the funds in the jointly owned account as the source of future payment of their fees. Id., at 160, 71 A.3d 1276. In a dissenting opinion, Judge Espinosa concluded that an attorney may not acquire an equitable charging lien in a marital dissolution action and that the trial court's judgment should be affirmed. Id., at 161, 165, 71 A.3d 1276 (Espinosa, J., dissenting). This appeal followed.²

We begin by setting forth the applicable standard of review. “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.) D'Urso v. Lyons, 97 Conn.App. 253, 255–56, 903 A.2d 697, cert. denied, 280 Conn. 928, 909 A.2d 523 (2006). Accordingly, whether the plaintiff in the present case is entitled by operation of law to an equitable charging lien against James Jordan's marital assets for fees and expenses incurred in obtaining the judgment of dissolution is a question of law subject to our plenary review. See id., at 255, 903 A.2d 697.

The concept of an attorney's charging lien is rooted in common law and is “founded on the equitable right of an attorney to recover ... fees and costs due ... for ... services out of the judgment ... obtained. Thus, an attorney's charging lien does not merely give the attorney an enforceable right against the property of another, but rather it gives the attorney an equitable ownership interest in the client's cause of action, and the client's property right in his or her own cause of action is only what remains after transfer to the attorney of the attorney's agreed-on share.” (Footnote omitted.) 7 Am.Jur.2d 352, Attorneys at Law § 317 (2007). An attorney's charging lien is distinguishable from an attorney's retaining lien, which is “a possessory lien on a client's papers and files that the attorney holds until his fee has been paid.” Marsh, Day & Calhoun v. Solomon, 204 Conn. 639, 643, 529 A.2d 702 (1987).

Although there is no statutory basis for an attorney's charging lien in Connecticut, as there is in many states; see 7 Am.Jur.2d, supra, at § 318, p. 353 (authority for charging lien in many states rests entirely on statutes); see also W. Hairston, comment, “The Ranking of Attorney's Liens Against Other Liens in the United States,” 7 J. Legal Prof. 193, 193–95 (1982) (attorney's liens are creatures of statute in thirty-two states); this court expressly recognized the common-law basis for an attorney's charging lien nearly 180 years ago in Gager v. Watson, 11 Conn. 168, 173 (1836).³ In Gager, we established the principle that “[a]n 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.” Id. This principle was affirmed in Andrews v. Morse, 12 Conn. 444 (1838), in which we reiterated that “attorneys ... have, in certain cases ... a claim upon [the judgments and papers of their clients] as courts of law and equity will protect and enforce, until their lawful fees and disbursements are paid....” Id., at 446.

Almost one-half century later, we concluded, without reference to Gager and Andrews, that, “[i]f 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). Cooke thus added to Gager and Andrews that an equitable charging lien also may arise when a client orally agrees to pay attorney's fees and expenses from the newly acquired proceeds of a favorable judgment.⁴ See id.; see also DeWandelaer v. Sawdey, 78 Conn. 654, 655, 658, 63 A. 446 (1906) (relying on Cooke for principle that attorney, by “ ‘taking up a case’ with the understanding that he must look to the judgment to be obtained for compensation for his...