Court Opinion

ID: 5928195
Source: CourtListenerOpinion
Date Created: 2022-01-13 04:56:34.879238+00
Date Added: 2024-06-11T08:46:40.442803
License: Public Domain

Levine, J. (dissenting).
I respectfully dissent. The pleadings allege that plaintiffs were retained by and performed legal services for defendants Dennis Pemberton and Dagny Management Corporation (hereinafter the clients) consisting, inter alia, of prosecuting actions against defendant Dolphin Development Corporation for the acquisition of real property of Dolphin. Plaintiffs further allege that, as their legal efforts were about to bear fruit, they were discharged and a settlement of the actions was effected. However, plaintiffs allege in substance that the clients, Dolphin and defendant Treasure Lake Associates entered into a conspiracy to defeat plaintiffs’ rights to an attorney’s statutory charging lien (Judiciary Law § 475) by structuring the settlement whereby Treasure Lake, the nominee of the clients, with full knowledge of plaintiffs’ rights to a charging lien, would receive a conveyance of a portion of the real property which was the subject of the actions and contractual rights to acquire the remainder subject to a 40% interest therein in favor of the clients.
The foregoing allegations must be taken as true in determining whether plaintiffs have demanded relief by way of a judgment affecting "the title to, or the possession, use or enjoyment of, real property” (CPLR 6501), so as to authorize the filing of a notice of pendency on the real property Dolphin conveyed to Treasure Lake and the real property covered by the contract of sale between Treasure Lake and Dolphin (see, CPLR 6501; 5303 Realty Corp. v O & Y Equity Corp., 64 NY2d 313, 320).
The majority appears to agree that, under plaintiffs’ allegations that the settlement was achieved through their efforts, the lands conveyed or to be conveyed to Treasure Lake were proceeds of the settlement to which an attorney’s statutory charging lien could attach (see, West v Bacon, 13 App Div 371, mod on other grounds 164 NY 425; Steuart v D’Esterre, 170 NYS 936, affd 187 App Div 935; 7 NY Jur 2d, Attorneys at Law, § 186, at 114; see also, Butts v Carey, 143 App Div 356, appeal dismissed 207 NY 667). The majority, however, concludes that plaintiffs’ charging lien could not attach to such proceeds because "there is no allegation in the complaint” that the clients, as the parties plaintiffs represented in the litigation leading to the settlement, "received any interest in the real property itself as a result of the settlement”. Thus, *435under the majority’s ruling, the clients and their coconspirators will have succeeded in defeating plaintiffs’ statutory lien by the simple expedience of structuring the settlement so as to have the interest in the real property proceeds thereof flow to Treasure Lake, the clients’ nominee, in return for cash or other consideration they received from Treasure Lake.
In my view, the majority’s conclusion is inconsistent with the provision in Judiciary Law § 475 that the lien attaches to the proceeds into "whatever hands they may come” and the liberal construction traditionally given by the courts to that language in protecting lawyers from settlement devices such as that allegedly employed in this case. Illustrative is Todd v Mutual Factors (3 AD2d 537, affd 4 NY2d 759), a case indistinguishable on the issue of whether an attorney’s charging lien attaches to proceeds of litigation delivered directly to the client’s designee. There the plaintiff attorney administratively prosecuted contract claims for payment against the United States Government on behalf of a client who had engaged in marine repair and construction work for the Navy. Once collection was assured, the client assigned the claims to its factor. The court in Todd upheld enforcement of the plaintiff’s lien on the proceeds in the hands of the assignee, stating "that when such a lien exists within the frame of the statute, it cannot be defeated by direct assignment of the proceeds of litigation from the client to a third-party assignee, and that the lawyer may follow his lien against the proceeds in the hands of such an assignee” (supra, at 542).
Likewise, I see no reason why plaintiffs’ lien does not attach to the equitable interests of Treasure Lake in the remainder of the real property, arising out of its contractual rights to purchase as provided under the settlement, even though title has not yet passed from Dolphin. Dolphin, a defendant in the actions plaintiffs undertook for the clients, allegedly entered into the settlement arrangement with knowledge that it was procured through plaintiffs’ efforts and that it was structured to defeat plaintiffs’ rights. Under such circumstances, plaintiffs’ lien should attach to the remainder of the property as proceeds of the settlement while still in Dolphin’s possession. The rights of Treasure Lake, the nominee of the clients, to obtain title and possession of that real property had been established in the settlement, just as if a judgment had been entered to that effect. The case law permits an attorney’s statutory charging lien to be enforced against such proceeds of settlement in the hands of a defendant prior to transfer to the *436attorney’s client (see, Kaplan v Reuss, 113 AD2d 184, 186, affd 68 NY2d 693; see also, Matter of King, 168 NY 53, 59-60; Matter of Gutchess, 90 AD2d 663, 663-664).
For all the foregoing reasons, I would affirm Supreme Court’s denial of the motion to cancel and vacate the notice of pendency.
Mahoney, P. J., Kane and Mercure, JJ., concur with Casey, J.; Levine, J., dissents and votes to affirm in an opinion.
Amended order reversed, on the law, with one bill of costs to defendants filing briefs, and motion granted.