Opinion
54225/2015
11-30-2017
Jennifer Dayan, Plaintiff, v. Maurice S. Dayan, Defendant.
Butterman & Kahn, LLP Former Attorneys for Plaintiff 219 E. 31st Street New York, NY 10016 Walter E. Anderocci, Esq. Attorney for Defendant 32 Court Street Brooklyn, NY 11201 Coffinas & Lusthaus, PC Attorneys for Plaintiff 186 Joralemon Street Brooklyn, NY 11201 Susan Smith, Esq. Attorney for the Children 26 Court Street, Suite 1809 Brooklyn, NY 11242
Butterman & Kahn, LLP Former Attorneys for Plaintiff 219 E. 31st Street New York, NY 10016 Walter E. Anderocci, Esq. Attorney for Defendant 32 Court Street Brooklyn, NY 11201 Coffinas & Lusthaus, PC Attorneys for Plaintiff 186 Joralemon Street Brooklyn, NY 11201 Susan Smith, Esq. Attorney for the Children 26 Court Street, Suite 1809 Brooklyn, NY 11242 Jeffrey S. Sunshine, J.
Introduction
In New York State an attorney has the right at common law to secure a retaining lien on a file to secure payment pending a hearing to establish a security interest if available for counsel to secure a fee or determination of a charging lien pursuant to Judiciary Law § 475. In a matrimonial action it now appears that the right to a charging lien must be held in abeyance in order to satisfy the dictates of Charnow v. Charnow (134 AD3d 875, 876, 22 N.Y.S.3d 126 [2d Dept., 2015]).
In Charnow the Appellate Division, Second Department held that:
"a charging lien is a security interest in the favorable result of litigation, giving the attorney equitable ownership interest in the client's cause of action and ensuring that the attorney can collect his fee from the fund he has created for that purpose on behalf of the client ( Chadbourne & Parke, LLP v. AB Recur Finans, 18 AD3d 222, 223, 794 N.Y.S.2d 349 [citation omitted]); see Judiciary Law § 475). In a matrimonial action, a charging lien will be available 'to the extent that an equitable distribution award reflects the creation of a new fund by an attorney greater than the value of the interests already held by the client' ( Moody v. Sorokina, 50 AD3d 1522, 1523, 856 N.Y.S.2d 755 [internal quotation marks omitted]). However, '[w]here the attorney's services do not create any proceeds, but consist solely of defending a title or interest already held by the client, there is no lien on that title or interest' (Theroux v.Theroux, 145 AD2d 625, 627—628, [2d Dept., 1988])."
Charnow creates the situation where plaintiff cannot secure her file and properly prosecute her matrimonial action because the issue of a charging lien is not ripe for adjudication pendente lite since the case has not yet been tried and determined. Thus this Court herein as a matter of first impression must establish that outgoing counsel has a right to a hearing on the issue of a retaining lien and that the court may set a security interest and an "interim charging lien." That lien would then be subject to a further hearing at the conclusion of the trial and after decision to determine the amount of a "final charging lien" that would attach to proceeds that is limited "to the extent that an equitable distribution award reflects the creation of a new fund by an attorney greater than the value of the interests already held by the client" (Charnow supra at 876). To hold otherwise would leave a party without recourse to obtain their file and in effect deprive a party of the ability to prosecute or defend an action for divorce.
Plaintiff's incoming counsel moves by order to show cause (motion seq. #15), dated August 31, 2017, for the following relief: 1) Directing Butterman & Kahn, LLP to deliver the file with respect to this action to plaintiff's new attorney; or in the alternative 2) Directing Butterman & Kahn, LLP to deliver a copy of the file with respect to this action to Plaintiff's new attorney; and 3) For such additional and different relief as to this court seems equitable just and fair. Plaintiff's former counsel submitted an affirmation in opposition on September 15, 2017. Defendant did not respond or take a position regarding this order to show cause.
Plaintiff's Contentions
Plaintiff contends that she retained the law firm of Butterman & Kahn, LLP "on or about August 2015" in connection with the above captioned matrimonial action. She avers that pursuant to this Court's March 6, 2017 decision and order, the Court directed defendant to pay "directly to Butterman & Kahn, LLP pendente lite counsel fees in the sum of $100,000.00 within 45 days of service of notice of entry." She asserts that the payment "was due by May 9, 2017" and "to date, defendant has not paid any portion of the pendente lite counsel award." At oral argument plaintiff's outgoing counsel asserted he has already secured a judgment against defendant directly for $100,000.00.
Plaintiff avers that "in or about July 2017" she received an invoice from Butterman & Kahn, LLP "reflecting a balance due in the approximate sum of $288,000.00." She contends that "as of the date of that invoice, I had already paid the firm a total sum of $95,000.00." She contends that her attorney "requested that I pay the balance due on his invoice or seek other representation." She states that on July 28, 2017 she "substituted the law firm of Coffinas & Lusthaus, P.C." as the attorney of record on consent (annexed as exhibit A to the order to show cause).
It should be noted that Mr. Butterman did not move before the Court to be relieved. Had he done so, the Court would have had to consider that non-payment of the fee alone may not have been a basis to be relieved (Weiss v. Spitzer, 46 AD3d 675, 848 N.Y.S.2d 237 (2d Dep't., 2007); George v. George, 217 AD2d 913, 629 N.Y.S.2d 602 (4th Dep't 1995). (cf. Where the clients were in substantial arrears in the payment of legal fees and failed to cooperate in their representation, the motion for leave to withdraw as counsel should have been granted. Aragona v. Shaibani, 138 AD3d 649, 29 N.Y.S.3d 68 (2d Dep't., 2016).). It is unclear at this time if the plaintiff was aware of this standard.
Plaintiff asserts that incoming counsel, Meredith Lusthaus, Esq., sent a letter to outgoing counsel, Jay Butterman, Esq., on August 1, 2017 (annexed as exhibit B to the order to show cause) requesting the plaintiff's file in the above-captioned matrimonial matter. She avers that by letter dated August 3, 2017 (annexed as exhibit C to the order to show cause), Mr. Butterman "declined to turn over the file and asserted both a retaining lien and a charging lien." She then states that Ms. Lusthaus sent a letter to Mr. Butterman dated August 11, 2017 (annexed as exhibit D to the order to show cause) requesting "at least" a copy of the file, to which Mr. Butterman responded by letter dated August 14, 2017 (annexed as exhibit E to the order to show cause) in which he declined to provide a copy of the file to incoming counsel.
Plaintiff contends that "there has been extensive litigation in this case" and that the file "consists of numerous documents that cannot be reproduced from the Court file, such as documents and other evidence that I provided to Mr. Butterman, documents provided in response to numerous subpoena demands and discovery documents obtained from non-parties and out of state proceedings." She avers that "there will be a significant delay of the matrimonial proceedings if the file is held until resolution of the fee dispute" and that "without the file, or at least a copy of the file, my attorney will not be able to adequately represent my interests in the matrimonial action and in turn, I will be severely prejudiced."
Plaintiff contends that "the case law with respect to the assertion of a retaining lien does not support a former attorney's refusal to deliver a copy of the file." She also argued during oral argument on September 18, 2017 that "there are documents that were made part of the file that belong to the plaintiff directly that weren't necessarily work product. So, I would argue that at least those documents be made available, not only documents but other types of evidence which again was supplied directly by plaintiff and I would ask that those at least be made available to her pending a hearing."
Plaintiff's Former Counsel's Contentions
Mr. Butterman contends that "the file which plaintiff seeks turnover consists of 15 boxes, including massive amounts of work product, and numerous boxes of discovery material." He affirms that "the parties have heavily litigated custody, including emergency motions and proceedings, time consuming negotiations on the custody issues with opposing counsel and the children's attorney Susan Smith, numerous drafts of parenting plans, and addressing a myriad of requirements of both parties with regard to the children." He argues that "the financial case required even greater effort [...] involving substantial assets."
Ms. Smith takes no position on the instant application.
Plaintiff's former counsel avers that he has "been completely transparent to the Court and plaintiff as to the amount of my fees throughout this litigation, and the difficulty of my firm was facing in the absence of payment." He argues that "I fully appreciate the difficult position plaintiff is placed in, but [...] I am unable to place my firm in a position of financial distress solely for the benefit of one case which required an enormous amount of effort and which produces no revenue." Plaintiff's former counsel contends that "plaintiff not only did not object to these efforts, but was either personally present for much of the work or in constant contact with me or my office by phone, text or email." He avers that "plaintiff consistently demanded specific work be done on her behalf, often in response to requests from me for payment" and "plaintiff made no objection when I referenced the sums due in Court and in papers."
Mr. Butterman contends that "as of my statement which runs through the end of June (exhibit A in counsel's opposition), the last bill sent before I was discharged, the total outstanding fees and disbursements due and owing amount to $278,591.12. Additional time and disbursements since June but prior to discharge amount to $288,841.25 (exhibit B in counsel's opposition)." Counsel then states he sent a "notice to charging lien in the amount of $288,792.65 (exhibit C in counsel's opposition)." Counsel acknowledges that "since July of 2015, when my firm was retained by [plaintiff], we have been paid a total of $95,250.00" (exhibit D in counsel's opposition) and "the last payment of fees was made on January 4, 2017."
Former counsel argues that "to turn over the file to plaintiff's new counsel until the issue of my retaining and charging liens are addressed by the Court would be to abandon many of the rights I retain with regard to payment of the fees due to my firm." He acknowledges that "there is an exception to this rule in cases of exigent circumstances" but contends that "plaintiff does not claim any exigent circumstances recognized under the law." Counsel contends that "the entire point of a retaining lien is to exchange an object of value in litigation, i.e., the case file, for payment or security." Counsel avers that the "plaintiff, while certainly placed in financial difficulties by her husband, cannot be deemed "indigent" for the purposes of extinguishing the retaining lien." He contends that "plaintiff does have the ability to pay at least a substantial portion of the fees due [...] plaintiff had previously promised to pay over to my firm the proceeds of a ring in her possession which is separate property." Counsel states that "to my knowledge she never sold the ring" and that "plaintiff's net worth statement lists numerous items of jewelry, both marital and pre-marital" that counsel believes could be sold with the Court's permission. While counsel does acknowledge that he is "extremely reluctant to demand that plaintiff sell her jewelry" he asserts that he "cannot ignore the obligations due and owing my firm." During oral argument on September 18, 2017, Mr. Butterman argued "there is one piece of separate property which had been pledged to me, which she rather promised that it would be utilized and it wasn't. I gather it still exists. It can be utilized to pay down those fees."
It is unclear from the record herein how much plaintiff has paid her new attorney at this time.
Counsel requests the Court to direct a hearing to set the counsel fees due his firm and that he only be directed to turn over the file "in exchange for payment of that fee or the posting of adequate security for that amount, following said hearing."
Discussion
Discharged Attorney's Right to Fees
"A client has an absolute right to discharge an attorney at any time. If the discharge is without cause before the completion of services, then the amount of the attorney's compensation must be determined on a quantum meruit basis" (Theroux v. Theroux, 145 AD2d 625, 536 N.Y.S.2d 151 [2d Dept., 1988]). "An attorney who is discharged without cause has three remedies to recover the value of his or her legal services: the retaining lien, the charging lien, and the plenary action in quantum meruit." (Butler, Fitzgerald & Potter v. Gelmin, 235 AD2d 218, 218—19, 651 N.Y.S.2d 525 [1st Dept., 1997). "These remedies are not exclusive, but cumulative." (Schneider, Kleinick, Weitz, Damashek & Shoot v. City of New York, 302 AD2d 183, 186, 754 N.Y.S.2d 220, 223 [1st Dept., 2002]). The Court also notes that in New York, fee disputes up to $50,000.00 are subject to arbitration. (See Part 137.1 of the Rules of the Chief Administrator).
Retaining Lien
It is well established according to the common law that "[i]f a client discharges an attorney without cause, the attorney possesses a common-law retaining lien on the client's file in his or her possession and is entitled to recover compensation from the client measured by the fair and reasonable value of the services rendered, regardless of whether that amount is more or less than the amount provided in the contract or retainer agreement" (Sterling Corporate Tax Credit Fund XXV, L.P. v. Youngblood Senior Hous. Assoc., LLC, 115 AD3d 932, 932, 982 N.Y.S.2d 392 [2d Dept., 2014]; see also Cohen v. Cohen, 183 AD2d 802, 803, 584 N.Y.S.2d 116 [2d Dept., 1992]). "Such lien arises upon the rendition of services by the attorney, regardless of whether the attorney has commenced any action on his client's behalf; and such lien arises and exists independently of the rights created by statute (Judiciary Law, § 475)" (Lerner v. Seigel, 22 AD2d 816, 816, 254 N.Y.S.2d 802, 804 [2d Dept., 1964])). Thus the common-law retaining lien is founded and determined by possession of the file and operates outside of Judiciary Law §475 which governs charging liens.
The retaining lien "is extinguished only when the court, which controls the functioning of the lien, orders turnover of the file in exchange for payment of the lawyer's fee or the posting of an adequate security therefor [sic] following a hearing" (Cohen v. Cohen, supra at 803). "Absent exigent circumstances, the attorney may generally not be compelled to surrender the papers and files until an expedited hearing has been held to ascertain the amount of the fees or reimbursement to which he or she may be entitled" (Mosiello v. Velenzuela, 84 AD3d 1188, 1189, 924 N.Y.S.2d 480 [2d Dept., 2011]). However, "Judiciary Law §475 cannot be an umbrella under which an attorney may seek shelter from the demands of a client for the return of excessive fees paid [...] It has long been recognized that courts have the traditional authority to supervise the charging of fees for professional services under the court's inherent and statutory power to regulate the practice of law" (Hom v. Hom, 210 AD2d 296, 622 N.Y.S.2d 282 [2d Dept. 1994]).
Furthermore, "an attorney's retaining lien attaches to all property, papers, books, documents, or securities of the client that come to the attorney professionally or in the course of his or her professional employment" (1B Carmody-Wait 2d § 3:551; (See Leviten v. Sandbank, 291 NY 352, 52 N.E.2d 898 (1943)). "The lien encompasses not only documents and property given by the client to his attorney, but also the work product of the attorney: his mental creations, his interviews with witnesses, and all documents secured or prepared by him in connection with the litigation at hand" (Attorney's Retaining Lien over Former Client's Papers, 65 Colum. L. Rev. 296, 299 (1965); (cf In re Rapid Road Transit Co., [1909] 1 Ch. 96 (1908), and Matter of Knapp, 85 NY 284 (1881), with Hughes v. Hughes, [1958] P. 224 (C.A.), and Sorin v. Shahmoon Indus., Inc., 20 Misc 2d 149, 191 N.Y.S.2d 14 (Sup. Ct. 1959)). Thus, plaintiff's request at oral argument for those documents that she alleges were provided by her to plaintiff's former counsel and should not be considered "work product" are hereby subject to the retaining lien.
It is clear to the Court at first instance that this matter has been extensively litigated by both sides and that further court intervention is necessary to decide this issue. This matrimonial action is quickly approaching its third year of litigation and as the plaintiff finds herself in the midst of a fee dispute with Mr. Butterman, the defendant continues to defy this Court's order of pendente lite counsel fees to Mr. Butterman's firm in its March 6, 2017 decision. At the same time defendant admits that his attorney has been paid $100,000.00 as of this Court's March 6, 2017 decision and in excess of $200,000.00 according to plaintiff's former counsel, which defendant claims are payments made from family members. The plaintiff is in a difficult position financially as a result of this litigation but the Court notes that she has retained new counsel, although it is unclear in the papers submitted how much she has paid her new attorney. While the Court does not reach the issue as to the value or necessity to sell plaintiff's jewelry or alleged separate property at this time, the Court does find that any claim of indigency is sufficiently controverted by Mr. Butterman (and conceded by the plaintiff) as to require a hearing before a retaining lien can be extinguished and the Court can fix the required security pending completion of the case.
The Court notes that it has issued a separate decision on this matter dated November 30, 2017 relating to motions sequences # 13 and 14, to renew and reargue this Court's March 6, 2017 pendente lite decision and order that delves into further detail regarding the contentious nature of this matrimonial action.
As such, the Court must refer this matter to a hearing to determine plaintiff's counsels appropriate fee and the posting of adequate security to satisfy the retaining lien (see, Pileggi v. Pileggi, 127 AD2d 751, [2d Dept. 1987]; Artim v. Artim, 109 AD2d 811, [2d Dept., 1985]; Rosen v. Rosen, 97 AD2d 837, [2d Dept., 1983]; Petrillo v. Petrillo, 87 AD2d 607, [2d Dept., 1982]; Gamble v. Gamble, 78 AD2d 673, [2d Dept., 1980]). However, the Court notes that while counsel is entitled to a summary determination of the value of the services in connection with the assertion of a lien, the outgoing attorney is not entitled to an order directing the entry of a money judgment against their former clients, either before or after they relinquished the file (cf., Matter of Rosenblum, 121 AD2d 546, 547, [2d Dept., 1986]; Ryan v. Ryan, 75 AD2d 1000, [4d Dept., 2000], lv. dismissed 51 NY2d 709, 435 N.Y.S.2d 1025, 416 N.E.2d 1058). Obviously, the pendente lite award is subject to entry of a judgment which has been effectuated, however "A law firm is not entitled to a money judgment against a former client pursuant to Judiciary Law § 475, absent the commencement of a plenary action" (Wasserman v. Wasserman, 119 AD3d 932, 934, 990 N.Y.S.2d 571 [2d Dept., 2014]).
Charging Lien
Along with a common-law retaining lien, an attorney of record who is discharged without cause possesses a charging lien pursuant to Judiciary Law §475. The New York Court of Appeals held in LMWT Realty Corp. v. Davis Agency Inc., (85 NY2d 462, 467—68, 649 N.E.2d 1183, 1186 (1995)) that "with the signing of a retainer agreement that expressly assigns a portion of the proceeds of a cause of action to the attorney, the attorney 'acquires * * * a vested property interest which cannot subsequently be disturbed by the client or anyone claiming through or against the client.' Manifestly, then, an attorney's charging lien is something more than a mere claim against either property or proceeds; an attorney's charging lien 'is a vested property right created by law and not a priority of payment." The Appellate Division, Second Department held in Wasserman v. Wasserman (119 AD3d 932, 933, 990 N.Y.S.32 932 [2d Dept., 2014])"Judiciary Law §475 provides that, from the commencement of an action in any court, the attorney who appears for a party has a lien upon his client's cause of action, claim, or counterclaim, which attaches to a verdict, report, determination, decision, judgment, or final order in his client's favor, and the proceeds thereof." Moreover, pursuant to 22 NYCRR § 1400.5:
(a) An attorney may obtain a confession of judgment or promissory note, take a lien on real property, or otherwise obtain a security interest to secure his or her fee only where:
(1) the retainer agreement provides that a security interest may be sought;
(2) notice of an application for a security interest has been given to the other spouse; and
(3) the court grants approval for the security interest after an application for counsel fees.
(b) Notwithstanding the provisions of subdivision (a) of this section, an attorney shall not foreclose on a mortgage placed on the marital residence while the spouse who consents to the mortgage remains the titleholder and the residence remains the spouse's primary residence.
The Court is mindful that, generally, "[w]hen challenged, counsel fees must be proved in an adversarial atmosphere where, upon presentation of testimony, the opposing parties may assert the right to cross-examine" (Weinberg v Weinberg, 95 AD2d 828, 829 [2d Dept., 1983]). "A hearing on attorney's fees is particularly warranted where the record before the Court is patently deficient to allow for a proper fee determination" (see Singer v Singer, 106 AD2d 623, 624 [2d Dept., 1984]). "A hearing is not only required in cases where an opposing party seeks to challenge the award of attorney's fees sought by his or her adversary, but also may be necessary to determine the appropriate amount of legal fees due to counsel from his or her own client" (see Silver v Silver, 45 AD3d 759, 759 [2d Dept., 2007]).
Pursuant to existing case law, in a matrimonial action a charging lien will be available "'to the extent that an equitable distribution award reflects the creation of a new fund by an attorney greater than the value of the interest already held by the client' Moody v. Sorokina, 50 AD3d 1522, 1523, 856 N.Y.S.2d 755, quoting Zelman v. Zelman, 15 Misc 3d 372, 375, 833 N.Y.S.2d 375 [Sup. Ct., New York County]; cf. J.K.C. v. T.W. C., 39 Misc 3d 899, 908, 966 N.Y.S.2d 812 [Sup. Ct., Monroe County]" (Wasserman v. Wasserman, supra at 933).
"It is well settled that as a matter of public policy a charging lien does not attach to an award of alimony or maintenance" (Turner v. Woolworth, 221 NY 425, 117 N.E. 814 (1917); Theroux v. Theroux, 145 AD2d 625, 627, [2d Dept., 1988]). Additionally, the New York courts have held that as a matter of public policy "an attorney's charging lien cannot attach to an award of child support (CPLR 5205 [d] [3])" (Haser v. Haser, 271 AD2d 253, 254, [1st Dept., 2000]).
The Appellate Division, Fourth Department held in Mura v. Mura (128 AD3d 1344, 1347, 7 N.Y.S.3d 766 (4d Dept., 2014), leave to appeal dismissed, 26 NY3d 951, 38 N.E.3d 812 [4d Dept., 2015]) that a charging lien could attach to a child support award because "plaintiff did not seek to enforce the 16-year-old support obligation until the parties' children, who were the intended beneficiaries of the support, were either emancipated or nearly emancipated. This is therefore not a situation in which the enforcement of a lien pursuant to Judiciary Law § 475 will result in the depletion of monies necessary for the ongoing support of a minor child or children" and thus the funds to which the charging lien attached were not considered "child support" in violation of the case law and statute.
Thus matrimonial attorneys are left to consider the equitable distribution of marital assets when asserting a charging lien and it is well settled that a charging lien will be available to attach to an award of equitable distribution "'to the extent that an equitable distribution award reflects the creation of a new fund by an attorney greater than the value of the interests already held by the client' (Moody v. Sorokina, 50 AD3d 1522, 1523, 856 N.Y.S.2d 755 [internal quotation marks omitted]). However, '[w]here the attorney's services do not create any proceeds, but consist solely of defending a title or interest already held by the client, there is no lien on that title or interest' (Theroux v. Theroux, 145 AD2d 625, 627—628, 536 N.Y.S.2d 151)" (Charnow v. Charnow134 AD3d 875, 876, 22 N.Y.S.3d 126, 127—28 ).
In Charnow, pursuant to the parties' stipulation of settlement the defendant was to pay to plaintiff's counsel $150,000.00. When the defendant failed to pay those fees, plaintiff's counsel moved to enforce a charging lien for the amount owed. The Supreme Court denied plaintiff's counsel's motion; the Appellate Division, Second Department held "the plaintiff and the defendant already owned the marital residence jointly as tenants by the entirety. Thus, the parties' settlement agreement merely permitted the plaintiff to retain her existing interest in the marital residence. "Although the nature of the property was converted from realty into dollars, her interest remained the same. Thus, no equitable distribution fund to which a charging lien can attach was created by the efforts of the [plaintiff's] attorney."
The question of what "recovery" the charging lien may attach to in a matrimonial proceeding has been the subject of recent commentary.
Delores Gebhardt, Esq., in her August 23, 2017 New York Law Journal Article, Charging Liens in Matrimonial Actions: A Vanishing Right writes:
"A charging lien may not attach to the client's share of an IRA, which had been funded through a rollover of the share of the other spouse's IRA, because the rollover did not create "proceeds" for the client. J.K.C. v. T.W.C., supra.
The most valuable asset that many divorcing couples have is their home the "marital residence." However, several courts have held that a client's share of the proceeds of sale of the marital residence is not a "new fund" because the client already owned an interest in the marital residence with his or her spouse as tenants by the entirety. Charnow v. Charnow, 134 AD3d 875, 22 N.Y.S.3d 126 (2d Dept. 2015); Moody v. Sorokina, 50 AD3d 1522, 856 N.Y.S.2d 755 (4th Dept. 2008); Zelman v. Zelman, 15 Misc 3d 372, 833 N.Y.S.2d 375 (Supreme Ct., New York Co. 2007). [...]
"In light of the elimination of maintenance and child support awards, and now awards of an equitable share of the enhanced earnings generated by a license or degree obtained during the marriage, I submit that there is not much left to which a charging lien may attach in many matrimonial cases [...] The attorney's sole recourse is to commence a plenary action against the client, or, if the unpaid fees are less than $50,000.00, seek fee arbitration if the client consents."
Delores Gebhardt, Charging Liens in Matrimonial Actions: A Vanishing Right, NYLJ, August 24, 2017 at 8, col 1-3).
Here, in light of the fact that the instant divorce action is still pending, and as such, no final decision on equitable distribution has been determined, there is no "recovery" for the charging lien to attach to. The Court will deem Mr. Butterman's application as one for a final charging lien and as such that branch of Mr. Butterman's application is denied without prejudice as premature under existing Appellate Division, Second Department case law (See Charnow v. Charnow supra). The case law now in effect prevents the attorney, pendente lite, from attaching a final charging lien to any fund prior to a determination as to whether a "new fund" has been created by the attorney's efforts as this matter has not yet proceeded to trial and no judgments have been issued. Thus any establishment of a charging lien must be delineated as an interim charging lien subject to a hearing on a final charging lien once the matter is concluded consistent with Charnow.
Conclusion
Plaintiff has been placed in a position by the defendant while at the same time his own counsel has been paid in excess of $200,000.00 according to plaintiff's former counsel, ostensibly by defendant's father, which has not been disputed by defendant. Thus, the plaintiff, who was benefitting from the parties' prior lifestyle, the less-monied spouse, is left with very few remedies based upon her husband's actions and the inability to obtain her case file and transfer it to her newly retained counsel. Defendant steadfastly maintains that the plaintiff owns her own successful clothing business and is secreting her income. As such, the Court must refer this issue of fixing the security interest and interim charging lien to a hearing to a Referee to hear and report pursuant to CPLR §4212, or to hear and determine on consent of the parties pursuant to CPLR §4317, before Referee Carolyn Genovesi, Part 5CG, subject to compliance with 22 NYCRR part 1400 (Hovanec v. Hovanec, 79 AD3d 816, 817, 912 N.Y.S.2d 442 [2d Dept., 2010]). Counsel shall contact Referee Genovesi by conference call to schedule the hearing on Tuesday December 5, 2017. The annexed referral form must be completed and returned to the Court by Friday December 8, 2017.
If any lien is established by the Court, plaintiff's former attorney will then be ordered by the Court to turn over the file for posting adequate security under the present statutory and case law requirements or outgoing counsel may be granted an "interim charging lien." The interim charging lien would serve to prevent this matter from further delay and give counsel adequate security to extinguish the retaining lien. However, that security interest and the "interim charging lien" would be subject to further adjustment once the case has been properly adjudicated and then a further hearing can be held to determine what role Mr. Butterman or his firm had in obtaining the result achieved in equitable distribution consistent with the dictates of Charnow. Then and only then would a final charging lien attach.
This shall constitute the decision and order of the Court. ENTER: Hon. Jeffrey S. Sunshine J. S. C.