Court Opinion

ID: 4433543
Source: CourtListenerOpinion
Date Created: 2019-08-27 14:08:22.300393+00
Date Added: 2024-06-11T14:58:25.283613
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                               APPROVAL OF THE APPELLATE DIVISION
        This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
     internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

                                                        SUPERIOR COURT OF NEW JERSEY
                                                        APPELLATE DIVISION
                                                        DOCKET NOS. A-0755-17T1
                                                                    A-0874-17T1

GLODACK CONSULTING, INC.,
a New Jersey Corporation,

         Plaintiff,
v.

DTL HS HOLDINGS LIMITED
LIABILITY COMPANY, a New
Jersey Limited Liability Company,
and L&S MOTORS, INC., a New
York Corporation with an assumed
name of HUNTINGTON HONDA,

         Defendants.

                   Argued November 15, 2018 - Decided August 27, 2019

                   Before Judges Accurso, Vernoia and Moynihan.

                   On appeal from the Superior Court of New Jersey,
                   Chancery Division, Mercer County, Docket No.
                   F-007622-11.

                   Francis X. Riley, III, argued the cause for appellant
                   Michael Saporito in A-0755-17 (Saul Ewing Arnstein
                   & Lehr LLP, attorneys; Francis X. Riley, III and
                   Michael Rowan, on the briefs).
            Hervé Gouraige argued the cause for appellant Don T.
            Lia in A-0874-17 (Sills Cummis & Gross, PC,
            attorneys; Hervé Gouraige and David Lawrence Cook,
            of counsel and on the briefs).

            George T. Dougherty argued the cause for respondent
            Katz & Dougherty, LLC in A-0755-17 and A-0874-17
            (Katz & Dougherty, LLC, attorneys; George T.
            Dougherty, on the brief).

PER CURIAM

      Michael Saporito appeals in A-0755-17 from Judge Innes's October 12,

2017 order imposing an equitable attorney's lien in favor of lawyers Katz &

Dougherty, LLC and Lisa Richford against property Saporito acquired pursuant

to a settlement agreement approved by Judge Innes, and permitting the lawyers

to commence foreclosure proceedings within thirty days of the order on

Saporito's failure to make payment in full. Don T. Lia, who holds a purchase

money mortgage on the property given as part of the same settlement, appeals

from the same order in A-0874-17.

      We denied Saporito's motion to stay the order, finding no likelihood of

success on the merits of the appeal. See Crowe v. De Gioia, 90 N.J. 126, 132-

34 (1982). Having now read the briefs in both matters and had the benefit of

oral argument on both appeals, we consolidate the matters for purposes of this

                                                                      A-0755-17T1
                                      2
opinion and affirm for the reasons expressed by Judge Innes on the record on

July 25, 2017.

      This order had its genesis in a foreclosure action filed in Mercer County

in 2011 by Richford on behalf of Glodack Consulting, Inc. against Lia's

companies DTL HS Holdings LLC and L&S Motors Inc., a/k/a Huntington

Honda. DTL had given Glodack Consulting a mortgage on property known as

Frank's Nursery to secure a $1.9 million note, personally guaranteed by

Saporito. Lia asserts that DTL's purchase of the property in 2005 was part of a

larger real estate deal in which a Saporito company bought a nearby parcel to

build a Honda dealership.

      Lia claims he let Saporito park dealership cars on the Frank's Nursery

property but stopped when he and Saporito got into a larger dispute on unrelated

matters. See Lia v. Saporito, 909 F. Supp. 2d. 149 (E.D.N.Y. 2012), aff'd, 541

Fed. Appx. 71 (2d Cir. 2013), cert. denied, 572 U.S. 1116 (2014). Lia claims

Saporito removed his cars from the Frank's Nursery property, but also stopped

the payments he had been making to Glodack Consulting on the $1.9 million

note, precipitating the foreclosure. The parties agree that Lia's defenses to the

foreclosure "implicated disputes between the Lia entities and the Saporito

entities."

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                                       3
      After years of litigation, the foreclosure case finally went to trial in August

2015. On the second day of trial, Lia claims just before Saporito was scheduled

to testify pursuant to Lia's subpoena, the case settled. Lawyers for the parties,

their principals and Saporito put the terms on the record before Judge Innes.

Glodack Consulting agreed to release and discharge the $1.9 million note and

mortgage it was foreclosing in order to allow DTL to sell the propert y free and

clear to Saporito, or an entity he would create. Saporito agreed to execute a

five-year, $1.9 million unsecured note at five percent interest to Glodack

Consulting, with interest-only payments of $9000 a month and a balloon

payment at the end of the term, and to indemnify and "pay $210,000 to reimburse

Glodack for part of the attorneys' fees incurred through his representation by

Katz and Dougherty, LLC [1]. . . in equal monthly installments of $3500 for 60

months."

      L&S Motors, a Lia entity with a long-term lease on the Frank's Nursery

property, agreed to assign the lease to Saporito. DTL, L&S and Lia agreed to

execute a consent order to release escrowed rent payments to Glodack

Consulting. DTL agreed to sell the Frank's Nursery property to a Saporito entity,

1
  By the time of trial, Richford had left solo practice and joined Katz &
Dougherty.
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                                         4
645 Holdings, LLC, for $4.025 million with no money down, secured by a five-

year note at four percent interest, a first mortgage on the property, and Saporito's

unconditional personal guaranty. Lia also agreed to convey his interest in four

parcels jointly owned with Saporito on Crosswicks-Hamilton Square Road to

Saporito for $1.6 million to be paid over five years with interest at four percent,

secured by a note and Saporito's personal guaranty.

      Although Richford had a signed retainer agreement with Glodack

Consulting with a $550 hourly fee arrangement, President Steven Glodack

represented the company lacked the resources to fund the litigation or pay

attorney's fees. Richford accordingly advanced the costs of the case agreeing

she would be paid from the proceeds of the foreclosure, an arrangement

continued when she joined Katz & Dougherty. The matter was aggressively

litigated with Richford, and later Katz & Dougherty, representing Glodack

Consulting in twelve depositions, eighteen motions, ten case management

conferences and having responded to voluminous discovery demands before

finally preparing for and appearing at trial.

      Glodack negotiated the settlement directly with Lia and Saporito the

evening after the first day of trial. When he advised his lawyers of the agreement

the following morning, they discussed payment of the legal fees. Richford

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                                         5
estimated the fees to be $500,000. Richford expressed a willingness to accept

$400,000 in full payment and Saporito agreed to indemnify Glodack for up to

$210,000 of the fees he owed his lawyers by making monthly payments of $3500

for five years, leaving the remaining $190,000 to be paid by Glodack. Saporito's

agreement was read into the record as part of the settlement terms. Richford and

Dougherty continued to negotiate payment of the remainder of the fee with

Glodack, with the firm insisting on receiving at least some of the remainder in

a lump sum from the approximately $150,000 in rental proceeds in their tr ust

account and Glodack requesting itemization of the fees.

      As Richford and Dougherty worked to document the global settlement

over the next few months, their relations with Glodack soured over payment of

their fees and Glodack's dissatisfaction with the settlement. Glodack demanded

an immediate release to him of all fees held in escrow and eventually refused to

pay the firm anything. The firm sent Glodack an itemized bill for $625,154.31

in fees and $12,300.88 in expenses and advised him of his right to seek fee

arbitration. Shortly before final execution of the settlement documents, they

advised Judge Innes of these facts by way of certification, as well as their

outstanding offer to accept $400,000, inclusive of the $210,000 Saporito

                                                                        A-0755-17T1
                                       6
payment, and petitioned for imposition of a lien on the proceeds of the

settlement.

      On the day noticed for the plenary hearing on the petition, Glodack failed

to appear in court. After delaying the proceedings to see whether Glodack or a

representative would appear, Judge Innes heard the firm's proofs and

subsequently granted its unopposed petition approving an attorney's lien in favor

of the firm for fees of $625,154.31 and costs of $12,300.882 against all proceeds

of the foreclosure litigation, including all funds representing ground lease

payments held in the firm's trust account, ground lease payments due to Glodack

Consulting for August through November 2015 pursuant to the settlement

agreement, and all payments due to Glodack Consulting from Saporito pursuant

to the settlement agreement "in consideration of its dismissal of this matter

against the defendant mortgagor and of its release and discharge of the defendant

mortgagor," including the $210,000 due from Saporito to Glodack Consulting

as reimbursement for a portion of Glodack's attorney's fees.

      Judge Innes the following day entered a final judgment at the request of

the signatories, approving the settlement agreement, "finding it to be consistent

2
  The total amount of the lien was subsequently amended by order of May 16,
2017, denying Glodack Consulting's Rule 4:50-1(c) motion but reducing the
total amount of the lien to $630,780.19.
                                                                         A-0755-17T1
                                       7
with the terms read into the record with the consent of all parties and non-parties

on August 12, 2015, and that the Settlement Agreement is effective and binding

upon entry of this Judgment." The judgment also approved the consent order

releasing funds in escrow to Katz & Dougherty.

      After Katz & Dougherty obtained approximately $26,000 of the fees owed

from escrow and $7,495.62 due to Glodack Consulting from Saporito for his

share of the three months of ground lease payments due under the settlement

agreement, Katz & Dougherty learned that Glodack had released Saporito from

his $1.9 million obligation under the settlement agreement, leaving Katz &

Dougherty without a fund from which to collect their fees. The firm filed a

motion to enforce its lien, and Judge Innes signed an order directing Saporito

and Glodack to provide the firm with a fully executed copy of the settlement

agreement, discovery under oath regarding modification of the agreement and

an accounting of any monies due or received from one to the other or entities

either controlled.

      Glodack made no response to the order. Saporito filed an affidavit with

the court averring that he did not execute the note to Glodack Consulting at the

closing when the Frank's Nursery property was transferred "based on Steve

Glodack's agreement with me that a credit would be applied against the $1.9

                                                                          A-0755-17T1
                                        8
[million] set forth in the Settlement Agreement which equaled the amount of

money I loaned him over the course of several years" prior to the parties '

settlement of the foreclosure matter.

        Saporito also swore that "[w]hen Steve Glodack executed the Settlement

Agreement he knew I had not and would not be executing the Note." Saporito

averred that Glodack subsequently informed him that Glodack was releasing him

from his "obligation under the Settlement Agreement with respect to the

execution of any promissory note, the payment of any portion of the $1.9

[million] reflected in the Settlement Agreement, and all other payment and

indemnity obligations set forth in the Settlement Agreement." Finally, Saporito

swore

             [t]he aggregate amount of money that I loaned Steve
             Glodack over a period of approximately five and one-
             half (5.5) years and which he agreed would be applied
             against any amount I owed him under the Settlement
             Agreement or otherwise is $658,000.00. However, as
             previously stated, Steve Glodack released me from any
             and all monetary claims, obligations, debts and
             promises known about before and after the execution of
             the Settlement Agreement.

        After receipt of the response from Saporito, Katz & Dougherty filed a

second motion to enforce its lien. Arguing that Glodack and Saporito submitted

a settlement agreement to the court for approval "with an undisclosed intent that

                                                                         A-0755-17T1
                                        9
they would not be bound," the firm asked the court to enforce its order that they

produce a fully executed copy of the settlement agreement, declare any

modification to the agreement void ab initio, and direct payment by Saporito of

all payments due under the agreement.         Both Glodack and Saporito filed

opposition to the motion.

      On the return date, the court recounted how contentious the foreclosure

had been, "I'm talking years of a history of contentiousness between these

parties," and then, at settlement, how all three men had represented to the court

that there was a $1.9 million obligation from Saporito to Glodack that the court

was now advised, after an order granting Katz & Dougherty a statutory

attorney's lien, was "suddenly forgiven." Noting neither Glodack nor Saporito

had produced any record of the $658,000 Saporito had supposedly lent to

Glodack, the court deferred decision on Katz & Dougherty's application and

granted its request for discovery of five years of their personal tax returns and

those of any entities they controlled.

      The court explained it was ordering production of the tax returns "because

of a clear suspicion with regard to what was going on between Saporito and

Glodack." The court noted that if what was being represented about these loans

"is accurate," it would be "verified and confirmed by any tax returns because

                                                                         A-0755-17T1
                                         10
what Mr. Glodack expects this court to believe is that he forgave a $1.9 million

loan from Mr. Saporito. And if that were done, of course we all have to

recognize that would have been income to Mr. Saporito." Production of the tax

returns would permit confirmation of the loan in the absence of any other record.

      Glodack's counsel filed opposition to the proposed form of order, arguing

Glodack Consulting ceased doing business in 2007 and "as a result has not filed

any State or Federal income tax returns since that time."           Counsel also

represented "[t]he same goes for Mr. Glodack personally as well as [his

company] Atlantic Explore Diver, Inc." Saporito, in lieu of producing his tax

returns, entered into a consent order stipulating that Saporito's federal and state

income tax returns for 2010-2015 "do not document 'income' related to

transactions engaged in with Glodack or with [Glodack Consulting] or any

person related to either of them, including the waiver and release by [Glodack

Consulting] or Glodack of Saporito's obligations to [Glodack Consulting]

pursuant to the Settlement Agreement," that he had not been issued "an IRS 1099

form by Glodack or [Glodack Consulting] reporting the waiver and release of

his obligations under the Settlement Agreement" and that he had not "issued (or

caused to be issued) an IRS 1099 to Glodack or to [Glodack Consulting] relating

to amounts credited to Glodack from the repayment of loans as set forth in prior

                                                                          A-0755-17T1
                                       11
certifications" to the court and did "not intend to make any related disclosur es

for the years 2016 or 2017 in his related IRS and State tax returns."

      Following receipt of proof from Saporito that there is no record of any

loans between Glodack and Saporito and that Saporito did not declare the $2.1

million forgiveness of obligations undertaken in the settlement agreement as

income to the taxing authorities, Katz & Dougherty renewed its motion to

enforce its attorney's lien. The firm asked the court to declare that Saporito's

obligations under the settlement agreement "continue to be binding and

enforceable by all parties to whom the Agreement inures" and that no agreement

between Glodack Consulting or Glodack and Saporito was "effective to waive,

alter [or] diminish" Saporito's obligations to Glodack or Glodack Consulting

under the settlement agreement "by operation of N.J.S.A. 2A:13-5," the

attorney's lien statute. The firm sought an order directing Saporito to make all

payments due under the agreement directly to Katz & Dougherty until the full

amount of the lien balance, $452,377.60, was satisfied.

      Saporito opposed the motion and submitted a certification to the court

averring on "legal advice of tax counsel" that he had no obligation to report as

income Glodack's 2016 waiver and release of Saporito's obligations in the

settlement agreement. Saporito argued he was not a party to the foreclosure and

                                                                        A-0755-17T1
                                      12
thus "not subject to any potential claim by [Glodack Consulting] relative to

DTL's default under its mortgage or note." Saporito explained that because he

and Lia "had several on-going unrelated business disputes and because [he]

wished to purchase the Frank's Property from DTL which required the resolution

of [Glodack Consulting's] foreclosure action against DTL," he "voluntarily

agreed to include the resolution of his disputes with DTL, which would include

the purchase of the Frank's Property, as part of the settlement agreement."

      Saporito asserted that his involvement was thus "not the settlement,

discharge or release of any causes of action asserted in the action by [ Glodack

Consulting] or DTL against" Saporito "as no such causes of action existed." He

asserted Lia and DTL sought approval of the settlement agreement "in an

attempt to take advantage of certain 'income' exceptions to tax regulations that

they believ[ed] were applicable if the transfer of the Frank's Property was

required by court order." Saporito asserted his obligations under the settlement

agreement ran to Glodack not Glodack Consulting, and nothing in the settlement

agreement "prohibit[ed] any party from compromising, reducing, or even

releasing or foregoing a benefit it stood to receive" under the agreement.

      Saporito acknowledged that the ground lease payment of $7,495.62 he

made at closing on the Frank's Property, which was owed by DTL but which

                                                                        A-0755-17T1
                                      13
Saporito agreed to make on its behalf for the benefit of Glodack Consulting as

"part of the consideration Mr. Saporito paid for the Frank's Property" pursuant

to the settlement agreement, was "an example of actual proceeds of the

Settlement Agreement to which the charging lien appropriately applied:

Payment was due, payment was made, and the lien applied." Saporito reiterated,

however, that Glodack waived and released him at closing from executing the

balloon note called for in the settlement agreement "in light of Steve Glodack's

acknowledgment and agreement that a credit was due," adding "[t]hus it was

contemplated that a note of a different amount would subsequently be

negotiated" (emphasis added). Saporito asserted he and Glodack agreed "that

because the amount of the Promissory Note should be reduced, that it should not

be executed" by Saporito "but rather a Promissory Note for a lower amount

should be prepared and executed after the Settlement Agreement was executed."

      Saporito acknowledged that his execution of the promissory note attached

to the settlement agreement "would have created a creditor-debtor relationship"

between Glodack and himself, but Glodack, "as the party who stood to become

a creditor" under the note, waived Saporito's "obligation to create the

obligation." He argued, "[i]n reality, however," Glodack's waiver "actually

served to reduce the value of the consideration to be provided" by Saporito "in

                                                                       A-0755-17T1
                                      14
exchange for DTL's transfer of the Frank's Property to him." Saporito thus

reasoned,

            [a]ccordingly, [he] never owed a debt to [Glodack
            Consulting] or Mr. Glodack that was released, does not
            currently owe a debt to either, was never subject to a
            claim, cause of action or chose in action or final
            judgment owed by [Glodack Consulting] or Steve
            Glodack and there are no proceeds paid or payable,
            which are maintained in an account or otherwise.

      Judge Innes rejected those arguments. After hearing argument, the judge

placed his findings of fact and conclusions of law on the record as follows:

                   Katz and Dougherty's original involvement in
            this case, actually Ms. Richford's original involvement
            and then Katz and Dougherty's involvement, was to
            represent Glodack Consulting with regard to the
            foreclosure of a 1.9 million dollar mortgage on property
            known as Frank's Nursery.           That property was
            mortgaged by DTL and its principal, Don Lia, to
            [Glodack Consulting]. Mr. Michael Saporito was a
            guarantor on the note underlying that mortgage.

                   This is a long and torturous litigation. It's
            involved a number of court appearances. And in fact
            the case was not settled until the second day of trial.
            The settlement agreement was a rather complicated and
            lengthy settlement agreement. And it in fact brought
            into the settlement agreement, Mr. Saporito.

                   Mr. Saporito had obligations, but also benefitted
            from the settlement agreement. His benefit was his
            right to have the property, Frank's Nursery, conveyed
            to him free and clear of the Glodack Consulting

                                                                        A-0755-17T1
                                      15
mortgage. And as I said, that mortgage was originally
[a] 1.9 million dollar mortgage.

       And his obligation was to make payment to the
Katz and Dougherty law firm for up to $210,000 in
legal expenses on behalf of Glodack.

       Subsequent to the parties' settlement agreement it
is claimed by Mr. Saporito that Mr. Glodack forgave
Mr. Saporito's responsibility to pay him any attorney's
fees earned by Katz and Dougherty. And as I said
already, the Katz and Dougherty firm does have an
attorney's charging lien in this case.

       That charging lien is pursuant to N.J.S.A.
2A:13-5. And that statute reads as follows: "After the
filing of a complaint or third party complaint or the
service of a pleading containing a counterclaim or
cross-claim, the attorney or counselor-at-law, who shall
appear in the cause for the parties instituting the action
or maintaining the third party claim or counterclaim or
cross-claim, shall have a lien for compensation upon his
client's action, cause of action, claim or counterclaim
or cross-claim, which shall contain and attach to a
verdict, report, decision, award, judgment or final order
in his client's favor and the proceeds thereof in
whosoever hands they may come. The lien shall not be
affected by any settlement between the parties before
or after judgment or final order, nor by the entry of
satisfaction or cancellation of a judgment on the record.
The court in which the action or other proceeding is
pending upon the petition of the attorney or counselor-
at-law, may determine and enforce the lien."

     Here the cause of action, which [Glodack
Consulting] retained first Ms. Richford and Katz and
Dougherty was the prosecution of the foreclosure of the
1.9 million dollar mortgage on the Frank's Nursery

                                                             A-0755-17T1
                           16
property. Certainly as explained during argument, if
Katz and Dougherty had proceeded to judgment and
were successful in prosecuting the foreclosure matter
on behalf of [Glodack Consulting], Katz and Dougherty
would have had a right to either go against the proceeds
of any third party purchase of the property at sheriff's
sale or if the property were to be struck to [Glodack
Consulting], a right to any proceeds from either the sale
of the property or to have the property sold to satisfy
the Katz and Dougherty charging lien.

      What Mr. Glodack has attempted to do here is to
try to undercut Katz and Dougherty's right to the
charging lien by allegedly forgiving Mr. Saporito the
obligation to pay the Katz & Dougherty legal fees.

      And I say I have problems just with the way that
that was structured. The fact of the matter is I have my
doubts about whether or not there was in fact a
forgiveness of the debt by Mr. Glodack.

      And I say that because apparently Mr. Saporito
has indicated that he never claimed the 1.9 million
dollar debt forgiveness as income on any report to any
taxing authority. So I think that belies that what was
claimed here actually occurred.

       But that doesn't really affect my decision here,
but I just point it out because I do think it goes to why
there is a need for the court to exercise its equitable
powers in this particular case.

      So as I said, what Mr. Glodack attempted to do
was to undercut Katz and Dougherty's right to
collection of its fees pursuant to its charging lien by
forgiving the Saporito indebtedness on the property.

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                          17
      The charging lien is "intended to protect
attorneys who do not have actual possession of assets
against clients who may not pay for services rendered."
Martin v. Martin, 335 N.J. Super. 212, 222 [App. Div.
2000].

       The lien is rooted in equitable considerations.
And its enforcement is within the equitable jurisdiction
of the courts. That's also from Martin at page 222.

      The charging lien as termed [is] "really a claim
to the equitable intervention of the court for the
attorney's protection when having obtained judgment
for his client if there is probability of the client
depriving him of his costs." Cole, Schotz, Bernstein,
Meisel and Forman, P.A. v. Owens, 292 N.J. Super.
453, 460 (App. Div. 1996).

      The common-law charging lien is a judicial
device to protect the attorney's rights where he has been
unable to get possession. To this end the attorney is
considered an equitable assignee of the judgment to the
extent of his debt. Republic Factors v. Carteret Work
Uniforms, 24 N.J. 525, 534 (1957).

       The statute not only modified the charging lien
that existed at common-law, but expanded the common-
law lien, which had attached only to a judgment.
Musikoff v. Jay Parrino's The Mint, L.L.C., 172 N.J.
133, 139 (2002).

       The statute in its pertinent part provides that an
attorney appearing for a client in any action asserting a
claim "shall have a lien for compensation upon his
client's claim," which shall attach to any "verdict,
report, decision, award, judgment, or final order in his
or her client's favor and the proceeds thereof in
whosoever's hands they may come." Schepisi &

                                                            A-0755-17T1
                          18
McLaughlin, P.A. v. LoFaro, 430 N.J. Super. 347, 355
(App. Div. 2013).

      An attorney's statutory lien is one that's
impressed upon the client's interest in the claim of
judgment and can rise no higher than that interest.
Hobson Construction Company v. Max Drilling
Incorporated, 158 N.J. Super. 263, 268 (App. Div.
1978).

      Here the court finds that the stipulated settlement
agreement that was fully, freely and voluntarily entered
in by the parties, including Mr. Saporito, on February
25th, 2016 is a decision that was in the favor of
[Glodack Consulting] and Mr. Glodack.

        The cause of action against which the charging
lien applies is the foreclosure action that was brought
on behalf of [Glodack Consulting]. As I said earlier, .
. . but for the agreement in this case, there would never
have been a conveyance of the Frank's Nursery property
to Mr. Saporito free and clear.

      Mr. Glodack's attempt to avoid the payment of
attorney's fees and the payment of the attorney's fees
through the auspices of the settlement agreement
cannot be countenanced by this court. The fact of the
matter is Katz and Dougherty should at least have
exactly what it would have been entitled to had the
matter not been settled. And that would be an equitable
lien against the Frank's Nursery property.

      So I'm going to grant the application of Katz and
Dougherty for enforcement of the court's prior orders
by the imposition of an attorney's charging lien on the
Frank's Nursery property. I'm going to direct that Mr.
Saporito has 30 days to make payment of the amount of

                                                            A-0755-17T1
                          19
            $459,052.60, which is the outstanding balance on the
            Katz and Dougherty attorney's fees.

      Saporito and Lia objected to the form of the order drafted by Katz &

Dougherty. Saporito argued the settlement agreement did not obligate him to

make any lump sum payment, and thus the court's ruling "effectively imposes

on Saporito obligations that he did not agree to undertake whether on the record"

or in the executed settlement agreement. He argued "it would seem just and

equitable for the payment terms [to] be no different than agreed to" by DTL,

Glodack and Saporito. Saporito further argued that "[e]rroneously affording"

Katz & Dougherty first-lien status "also raises the possibility that Mr. Lia will

declare his mortgage and note in default and claim Saporito owes him the full

$4.025 [million]." Counsel represented that Saporito would not be able to repay

the total amount of the note as "he neither has the funds nor can refinance the

Property because its current value is less than the mortgage" amount.

      Lia and DTL objected to the form of order because it would impose a

superior lien on the Frank's Nursery property, adversely affecting its mortgage.

Lia took no position on the dispute between Saporito and Katz & Dougherty

regarding the payment of the firm's fees. He only noted that after four years of

litigation, the settlement agreement permitted DTL to transfer the Frank 's

Nursery property "free and clear" of Glodack Consulting's $1.9 million

                                                                         A-0755-17T1
                                      20
mortgage "in return for a note and mortgage in the amount of $4.025 million."

In order to accomplish that, Lia explained "it was necessary to get Glodack

Consulting to discharge that mortgage as part of the settlement terms before such

transfer." In return for that discharge, "Glodack Consulting got Saporito to

agree to pay the $1.9 million note that had been secured by the original mortgage

upon which DTL was originally sued in this action."         Lia complained the

proposed order "if approved by the court, threatens to undermine and unravel

this complex settlement structure."

      Lia argued that as Glodack Consulting never obtained the property, which

was instead transferred to a third party, placing a lien on the Frank 's Nursery

property "would impermissibly place a lien on the property of another lawyer's

client, not its own client's settlement proceeds." Lia claimed imposing a first

lien on the Frank's Nursery property in favor of Katz & Dougherty "would

unfairly penalize [him] by having his interest subordinated to [the firm's] after

a carefully negotiated complex and balanced settlement by all the parties." Lia

did not challenge Saporito's claim that the property was under water, as the face

value of the mortgage exceeded its market value.

      Judge Innes rejected those arguments, entering the October 12, 2017 order

making Katz & Dougherty's charging lien in the amount of $459,052.60 a first

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lien against the Frank's Nursery property, which the firm could file an action to

foreclose if Saporito failed to make payment in full within thirty days of the

order.

         Saporito and Lia appeal, reprising their arguments to the Chancery court,

most prominently that the property against which the court imposed the charging

lien is not "proceeds of the foreclosure action" and that the court "inequitably

rewrote the parties' settlement agreement."

         We reject those arguments. Saporito and Lia misapprehend the nature of

the order they appeal. When the court approved the settlement agreement and

incorporated it into the final judgment ending the foreclosure action, it had

already imposed a statutory lien against the proceeds to which Glodack

Consulting was entitled in whosever "hands they may come." N.J.S.A. 2A:13-5.

         Saporito concedes those proceeds would certainly have included the

payments on the $1.9 million balloon note and the $210,000 specifically

earmarked for Katz & Dougherty's fees had Glodack not determined to release

him from those obligations. That release was done in anticipation of a fut ure

note that "would subsequently be negotiated" to reflect a $658,000 credit for

monies Saporito had allegedly lent Glodack years before, of which the parties

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were necessarily aware when they put the terms of the settlement agreement on

the record, and for which there are apparently no records.

      Lia concedes his $1.9 million mortgage to Glodack Consulting was in

default, the foreclosure trial had commenced, and in order to transfer the

property to Saporito in exchange for a $4.025 million note, "it was necessary to

get Glodack Consulting to discharge" the mortgage it was foreclosing "as part

of the settlement terms." The consideration for that discharge was, of course,

Saporito's promise to execute the balloon note and indemnify Glodack for

$210,000 of his legal fees, a critical part of the "carefully negotiated complex

and balanced settlement by all the parties" which mysteriously evaporated after

Judge Innes's imposition of the charging lien.

      The Chancery court was not attempting to enforce the parties' settlement;

indeed, quite the opposite.     Judge Innes carefully explained why he felt

compelled to exercise his equitable powers in the face of Glodack and Saporito's

attempt "to undercut Katz and Dougherty's right to collection of its fees pursuant

to its charging lien." "Equity will not knowingly become an instrument of

injustice." Warner v. Giron, 141 N.J. Eq. 493, 498 (Ch. 1948).

      The parties were, of course, free to negotiate as complex a settlement of

the foreclosure case as they liked, involving new parties and different properties

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in order to achieve their goals. Glodack and Lia could have done so and simpl y

advised the court the case had settled and filed a stipulation of dismissal. See

R. 4:37-1(a). When they and Saporito, however, asked the court to approve their

settlement and incorporate it into a judgment, for whatever their reasons, be it

supposed tax advantages or otherwise, they submitted themselves to the court 's

equitable oversight of enforcement of that judgment as an order of the court.

See Haynoski v. Haynoski, 264 N.J. Super. 408, 414 (App. Div. 1993).

      Having found inequitable conduct in the implementation of the settlement

agreement for which the parties invoked the court's approval and oversight, the

court was compelled to fashion an equitable remedy. "[T]hat equity 'will not

suffer a wrong without a remedy'" is, as our Supreme Court has noted "the

maxim lying at the very foundation of equitable jurisprudence."           Crane v.

Bielski, 15 N.J. 342, 349 (1954). We are satisfied the remedy the court chose

was both fair and no broader than necessary to achieve substantial justice under

the circumstances.

      The court was undoubtedly correct that had the foreclosure been

successfully litigated to conclusion, Katz & Dougherty would have had a lien

"against the proceeds of any third party purchase of the property at sheriff 's sale

or if the property were to be struck to [Glodack Consulting], a right to any

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proceeds from either the [private] sale of the property or to have the property

sold to satisfy the Katz and Dougherty charging lien."         We find nothing

"inequitable" in Judge Innes's determination to provide the firm the same right

in these circumstances. Both Saporito and Lia achieved substantial benefits

from this settlement, which remain largely intact. Having the Katz & Dougherty

lien come behind Lia's mortgage would be no remedy at all, as Saporito, owner

of the property, represents to us that Lia's mortgage exceeds the sum for which

it could be sold. As these parties have already demonstrated their adeptness at

refashioning agreements to suit themselves at the expense of others, the court 's

remedy of permitting Katz & Dougherty a first lien on the Frank's Nursery

property appears a straightforward way of achieving a just result.

      We accordingly affirm the order of October 12, 2017, substantially for the

reasons expressed by Judge Innes in his thorough and thoughtful opinion from

the bench on July 25, 2017.

      Affirmed.

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