Pomerantz v. Schandler, 984
| Decision Date | 08 April 1983 |
| Docket Number | D,No. 984,984 |
| Citation | 704 F.2d 681 |
| Parties | John J. POMERANTZ, Walter Leiter, Alan Golub, Fred Pomerantz and Ralph Iannazzone, Plaintiffs-Counterclaim Defendants, v. Ira D. SCHANDLER, Carolina Erath 1978 Associates, Carolina Erath 1979 Associates and Carolina Energy Corporation, Defendants-Appellees, and M. Albert NISSIM, Defendant-Counterclaim Plaintiff, v. LESLIE FAY INC., Additional Counterclaim Defendant. Golenbock and Barell, Movants-Appellants. ocket 83-7034. |
| Court | U.S. Court of Appeals — Second Circuit |
Michael M. Meadvin, New York City (Arthur M. Handler, Golenbock and Barell, New York City, of counsel), for movants-appellants pro se.
Howard I. Rhine, New York City (R. Jeffrey More, Kramer, Coleman & Rhine, New York City, of counsel), for defendants-appellees Carolina Erath 1978 Associates, Carolina Erath 1979 Associates and Carolina Energy Corp.
Before MANSFIELD, OAKES and NEWMAN, Circuit Judges.
The law firm of Golenbock and Barell ("G & B"), a non-party which was defendant's former legal counsel not only in this lawsuit but with respect to other matters, appeals from two orders of the Southern District of New York entered by Judge Charles E. Stewart directing it, over its objection, to release to Kramer, Coleman & Rhine ("KC & R"), new counsel for all of the defendants except Ira D. Schandler, a large number of documents subject to G & B's attorney's lien for approximately $66,361 for unpaid services and disbursements in this lawsuit and other matters. We reverse and remand for further proceedings.
Beginning in 1977 G & B was retained as outside corporate counsel by various of the defendants and in November 1980 became counsel to the defendants in this lawsuit, in which a number of securities fraud claims are asserted against them. In the course of its general corporate representation of the defendants G & B created or came into possession of a large quantity of legal materials, including correspondence with defendants and others, legal memoranda, drafts and copies of offering materials, loan documents and closing binders prepared for securities offerings and transactions, all relating to the defendants' business. After the commencement of the present action G & B as litigation counsel maintained files relating to the case, including pleadings, correspondence, memoranda, research papers, and some 8400 photocopies of documents culled from defendants' files for use in responding to plaintiffs' motion under Fed.R.Civ.P. 34.
On November 18, 1982, G & B notified the defendants that because of their failure to pay charges of more than $66,361 for its legal services and disbursements (of which approximately $50,000 was for defense of the lawsuit), it had no choice but to withdraw as counsel. With the court's approval KC & R was substituted as counsel in the action and when it sought to obtain various files and papers held by G & B the latter asserted an attorney's lien. Defendants' request for an order directing G & B to turn over some of the documents was then presented to Judge Stewart, to whom the action had been assigned, for resolution. At an informal court hearing on December 10, 1982, at which no stenographic record appears to have been made, KC & R represented that the defendants were the subject of a grand jury criminal investigation being conducted by the United States Attorney for the Southern District of New York, in connection with which KC & R desired to have the 8400 photocopies of defendants' papers in G & B's possession for use in trying to persuade the U.S. Attorney not to seek an indictment and to defend against any charges that might be filed. Over G & B's objection the court orally directed turnover of the 8400 photocopies, which was done, on condition that G & B's attorney's lien be preserved.
On December 16, 1982, Judge Stewart signed an order presented by KC & R which was broader in scope than his oral direction; it ordered G & B forthwith to turn over to KC & R all files in G & B's possession "relating to the subject matter of" the grand jury investigation for use solely in connection with the investigation on the understanding that no photocopies be made, that the files be returned to G & B on completion of the investigation, and that the order not be construed as a release of G & B's attorney's lien. When G & B objected to the broad scope of the order the court modified it by a supplementary order providing that the files turned over must also be "relevant to this action" and denying G & B's application for a bond as a condition to turning over the documents. A 10-day stay was granted pending review by us.
The district court's two orders, being directed to non-parties, are appealable either as final orders as to them or under the doctrine of Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 546-47, 69 S.Ct. 1221, 1225-1226, 93 L.Ed. 1528 (1949). The issue before us, the nature and extent of an attorney's lien, is controlled by federal law. National Equipment Rental Ltd. v. Mercury Typesetting Co., 323 F.2d 784, 786 n. 1 (2d Cir.1963).
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