Opinion ID: 1636991
Heading Depth: 2
Heading Rank: 4

Heading: Attorney Trust Accounts

Text: Having concluded that the statute does not support creating a distinction for non-bank garnishees, we next address AME's argument that attorneys should be exempt from any stop payment duty because of the nature of attorney trust account checks and the Rules Regulating the Florida Bar. We are unable to find any statutory basis for making this distinction. First, the garnishment statute does not address attorney trust accounts. Second, we note that the Legislature elsewhere in the Florida Statutes has chosen to exempt several funds from garnishment, including the cash surrender value of life insurance, see § 222.14, Fla. Stat. (2007); disability income benefits, see § 222.18, Fla. Stat. (2007); firefighters pension benefits, see § 175.241, Fla. Stat. (2007); and veterans' benefits, see § 744.626, Fla. Stat. (2007). However, the Legislature has not created an exemption for attorney trust accounts. We also reject AME's attempts to analogize attorney trust account checks to both certified and cashier's checks, which are immediately negotiable. [10] A certified check is a check accepted by the bank on which it is drawn. § 673.4091(4), Fla. Stat. (2002); see also Black's Law Dictionary 252 (defining certified check as [a] depositor's check drawn on a bank that guarantees the availability of funds for the check). A cashier's check is a draft with respect to which the drawer and drawee are the same bank or branches of the same bank. § 673.1041(7), Fla. Stat. (2002); see also Black's Law Dictionary 252 (defining cashier's check as [a] check drawn by a bank on itself, payable to another person, and evidencing the payee's authorization to receive from the bank the amount of money represented by the check). A bank is subject to severe penalties for wrongfully stopping payment on a cashier's or certified check. See § 673.4111(2), Fla. Stat. (2002). [11] A bank may honor the check for at least the ninety days following the date of a cashier's check or the date of acceptance of a certified check. See § 673.3121(2), Fla. Stat. (2002). [12] Only after this time has expired may the bank pay the check to someone other than the original payee. See id. [13] Conversely, a stop payment order can be executed on a personal check on the same day. See § 674.403(1), Fla. Stat. (stating that a stop payment order must be received by an officer of the bank during a banking day and at a time and in a manner that affords the bank a reasonable opportunity to act on it). As evidenced by the procedures involved in stopping payment, the difference between the two categories of checks is a critical one because an attorney trust account check is simply not addressed by any of these statutory provisions. Further, a trust account check lacks the guarantee inherent in a certified or cashier's check that the funds represented by the check are available. See Hudgins v. Fla. Fed. Sav. & Loan Ass'n, 399 So.2d 990, 991-92 (Fla. 5th DCA 1981) (Tender of a personal check is not the equivalent of cash or a certified check. The delivery of a personal check is at best `conditional' payment because whether or not it is drawn on a trust account or escrow account, it is not `finally paid' until the conclusion of the `settlement' process and in the interim, the account may fluctuate in amount, it may be garnished, set off by the Bank, or the drawer may stop payment on the check.) (emphasis added) (footnotes omitted). Because of the salient differences between attorney trust account checks and the guaranteed funds that are represented by cashier's and certified checks, we reject AME's assertion that the two categories of checks should be treated similarly. Certainly, we recognize that through the Rules Regulating Trust Accounts, as contained in Chapter 5 of the Rules Regulating the Florida Bar, every effort is made to ensure the integrity of an attorney's trust account and the checks drawn upon it. Rule Regulating the Florida Bar 5-1.1(a)-(b), provides that a client's funds held in an attorney's trust account are held in trust and directs that such funds be handled pursuant to the instruction of the client. The rule specifically states that a lawyer must hold in trust . . . funds and property of clients . . . that are in a lawyer's possession in connection with a representation. R. Regulating Fla. Bar 5-1.1(a)(1). Further, [m]oney or other property entrusted to an attorney for a specific purpose . . . is held in trust and must be applied only to that purpose. Id. R. 5-1.1(b). In addition, an attorney is also obligated under the rules to promptly distribute to the client monies received from a third party not subject to dispute. See id. R. 5-1.1(e)-(f). Moreover, an attorney can accept another attorney's trust account check before the funds have been credited to the attorney's trust account if the attorney has a reasonable and prudent belief that the deposit would clear and represent collected funds in the trust account in a reasonable amount of time. R. Regulating Fla. Bar 5-1.1(j)(4). However, another provision of the rule, rule 5-1.1(e), specifically provides that [u]pon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person.  (Emphasis added.) Further, the comment to rule 5-1.1 states: Third parties, such as a client's creditors, may have lawful claims against funds or other property in a lawyer's custody. A lawyer may have a duty under applicable law to protect such third party claims against wrongful interference by the client. When the lawyer has a duty under applicable law to protect the third-party claim and the third-party claim is not frivolous under applicable law, the lawyer must refuse to surrender the property to the client until the claims are resolved.[ [14] ] In Robert C. Malt & Co. v. Colvin, 419 So.2d 745 (Fla. 4th DCA 1982), the Fourth District Court of Appeal wrote: We are aware that generally the provisions of the garnishment statute, being in derogation of the common law, should be adhered to with strictness. We are also sensitive to the unique circumstance of the attorney-client relationship which existed between the garnishee and the judgment debtor whose assets were sought to be reached. Nonetheless, the law looks to substance, not form. We hold that when [the attorney] knew the writ of garnishment contained a known and obvious clerical error, i.e., identifying Malt as the defendant whose assets were sought to be garnished by Malt, and knew the writ was obviously intended to garnish assets of the judgment debtor (his own client), neither a strict adherence to the letter of the writs command nor the attorneys duty to his client will permit [the attorney] to ignore with impunity what he knew the writ clearly and obviously intended to command. Id. at 747 (footnote omitted). Thus, as recognized by the Fourth District, the special relationship between an attorney and his or her client is an insufficient basis upon which to circumvent the requirements of the garnishment statute. Furthermore, because attorneys and their trust accounts are subject to the same provisions of the garnishment statute as any other bank or non-bank garnishee, we cannot discern a principled basis for holding that funds located in an attorney's trust account warrant any greater protection from creditors than funds located in the client's personal account. As the Second District stated in this case, [t]o exempt trust accounts from the garnishment provisions that apply to bank and non-bank garnishees would result in allowing the client a protection in the trust account that he would not have if the funds were in his own account. First American, 955 So.2d at 1235. We agree with the Second District that such a result is not justified and therefore reject AME's assertion that attorneys and their trust accounts should be exempt from the obligations imposed on garnishees under the Florida garnishment statute.