An attorney maintains a common law and statutory charging lien in the judgment

Posted on by

Under common law, an attorney was originally only entitled to a lien upon the judgment but the scope of the charging lien was extended by statute [Judiciary Law §475] to give the attorney a lien upon the client’s cause of action as well. The lien comes into existence, without notice or filing, upon commencement of the action or proceeding. See, Matter of Heinsheimer, 241 NY 361 [1915]. In Matter of Heinsheimer, Judge Cardozo stated,

If the attorney got possession of the fund, he had a general lien. If he did not get possession, his lien was for the services that brought the fund into existence. This charging lien still exists under our statutes. It has been enlarged to the extent that it now attaches to a cause of action even before judgment. ‘From the commencement of an action or special proceeding‘ the attorney now has a lien ‘upon his client’s cause of action, claim or counterclaim, which attaches to a verdict, report, decision, judgment or final order in his client’s favor, and the proceeds thereof in whosoever hands they may come.‘ (Judiciary Law, Cons. Laws, ch. 30, sec. 475.) Except as thus changed, the charging lien is today what it was at common law.

The concept of protecting an attorney’s lien in litigation from inception through and after entry of judgment is an old one. As stated in the decision of Fischer-Hansen v. The Brooklyn Heights Railroad Company, 173 NY 492 [1903].

There is much learning in the books relating to the lien of an attorney upon a judgment for his costs as it existed before the statute, and though now virtually obsolete, it shows the fixed determination of the courts to protect attorneys against fraudulent settlements. The lien upon a judgment was not created by statute, but was ‘a device invented by the courts for the protection of attorneys against the knavery of their clients by disabling their clients from receiving the fruits of recoveries without paying for the valuable services by which the recoveries were obtained.’ Goodrich v. McDonald, 112 NY 157 [1889].

In Peri v. The New York Central and Hudson River Railroad Company, 152 NY 521 [1897], the Court of Appeals held that an attorney’s charging lien is a statutory lien “of which all the world must take notice, and any one settling with a plaintiff without the knowledge of his attorney, does so at his own risk.” In this case, that risk is borne by all of the defendants.

New York Judiciary Law Section 475 provides:

From the commencement of an action, special or other proceeding in any court or before any state, municipal or federal department, except a department of labor, or the service of an answer containing a counterclaim, or the initiation of any means of alternative dispute resolution including, but not limited to, mediation or arbitration, or the provision of services in a settlement negotiation at any stage of the dispute, 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, award, settlement, judgment or final order in his client’s favor, and the proceeds thereof in whatever hands they may come; and the lien cannot be affected by any settlement between the parties before or after judgment, final order or determination. The court upon the petition of the client or attorney may determine and enforce the lien.

The Court of Appeals noted, in Matter of City of New York (United States of America-Coblentz), 5 NY2d 300 [1959], that the statute gives an attorney a lien on the cause of action which attaches to the judgment from the commencement of the action. In the decision, the Court stated that Section 475, in substance, declares the common law. The origin of an attorney’s lien, whether as retaining or as charging, is obscure, but in all events, irrespective of type, has been recognized and enforced by the courts from very early times (see Fourth Annual Report of N. Y. Judicial Council, 1938, p. 49; 7 C. J. S., Attorney and Client, § 210 et seq.; 5 Am. Jur., Attorneys at Law, § 208 et seq.). The underlying purpose at both common law and now, by statute, is to protect an attorney against the ‘knavery of his client’ (Matter of Rosentover v. Weiss, 247 AD 137 affirmed 272 N.Y 557; Goodrich v. McDonald, 112 NY 157) and, being created by statute, does not require the giving of any notice in order to bring it into existence (Matter of Drake v. Pierce Butler Radiator Corp., 202 Misc. 935) for it is generally regarded as an equitable assignment to the attorney of the fund procured by his efforts to the extent of the amount of his lien (Matter of Herlihy, 274 AD 342).

Other parties do not have the ability to destroy the attorney’s vested property rights in and to the Judgment. See, LMWT Realty Corp. v. Davis Agency, Inc., 85 NY2d 462 [1995] (“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”).

In enforcing the charging lien, the attorney is not required to solely chase after his client for the money he is owed; he can also pursue the other defendants. In Haser v. Haser, 271 AD2d 253 [1 Dept. 2000], the court held that, under New York law, a plaintiff’s attorney may enforce her statutory charging lien against the defendant’s own assets, if he still possesses the settlement proceeds or knowingly paid them to the plaintiff so as to deprive the attorney of her compensation (citing to Kaplan v Reuss, 113 AD2d 184, 186-187, affd 68 NY2d 693; Fischer-Hansen v Brooklyn Hgts. R. R. Co., 173 NY 492, 502). The lien which attaches in the attorney’s favor cannot be impaired by a collusive settlement.

by Richard A. Klass, Esq.

R. A. Klass
Your Court Street Lawyer

Previous post
Next post

The Result when a Foreclosing Mortgagee Fails to Comply with RPAPL Section 1304

Posted on by

In Real Property Actions and Proceedings Law [RPAPL] Section 1304, a pre-commencement notice to a borrower-homeowner is required to be served by registered or certified mail and also by first-class mail at least ninety days prior to commencement of the foreclosure action. Further, pursuant to RPAPL Section 1304, the pre-commencement notice must be sent by the lender or mortgage loan servicer. In the RPAPL Section 1306, the lender, assignee, or mortgage loan servicer has to file another notice with the Superintendent of Banks within three days of mailing the notice.

The Second Department held in Aurora Loan Services LLC v. Weisblum, 85 A.D.3d 95, 103 [2 Dept. 2011], that, ” [P]roper service of the RPAPL Section 1304 notice containing the statutorily-mandated content is a condition precedent to the commencement of the foreclosure action. The plaintiff’s failure to show strict compliance requires dismissal. ” Moreover, the Second Department stated in Aurora Loan Services LLC v. Weisblum, that the co-mortgagor (who signed the mortgage but not the note, as in this case) was deemed a “borrower” under RPAPL Section 1304 who was also entitled to receive the 90-day notice prior to the commencement of the action.

In Deutsche Bank National Trust Company v. Spanos, 102 A.D.3d 909 [2 Dept. 2013], further upheld its findings in the above Aurora Loan Services case, adding that a cross-motion for summary judgment dismissing the action should include proof that the plaintiff failed to comply with the statute.

Where there is a failure to comply with the above condition precedent, the court lacks subject matter jurisdiction over this action. Thus, the mortgage foreclosure proceeding should be dismissed in its entirety (and the cross-motion granted) based upon the Plaintiff’s complete and utter disregard of the requirements under RPAPL Section 1304 and lack of subject matter jurisdiction. See, Binkley v. O’Connor, 58 A.D.3d 834 [2 Dept. 2009].

by Richard A. Klass, Esq.

R. A. Klass
Your Court Street Lawyer

Previous post
Next post

Defendants in Mortgage Foreclosure Cases May Recover Their Attorney’s Fees and Expenses under Real Property Law Section 282

Posted on by

A defendant/mortgagor who prevails in the successful defense of a mortgage foreclosure proceeding may be entitled to recover his  reasonable attorney’s fees and expenses under Real Property Law Section 282, which provides as follows:

Section 282. Mortgagor’s right to recover attorneys’ fees in actions or proceedings arising out of foreclosures of residential property

      1. Whenever a covenant contained in a mortgage on residential real property shall provide that in any action or proceeding to foreclose the mortgage that the mortgagee may recover attorneys’ fees and/or expenses incurred as the result of the failure of the mortgagor to perform any covenant or agreement contained in such mortgage, or that amounts paid by the mortgagee therefor shall be paid by the mortgagor as additional payment, there shall be implied in such mortgage a covenant by the mortgagee to pay to the mortgagor the reasonable attorneys’ fees and/or expenses incurred by the mortgagor as the result of the failure of the mortgagee to perform any covenant or agreement on its part to be performed under the mortgage or in the successful defense of any action or proceeding commenced by the mortgagee against the mortgagor arising out of the contract, and an agreement that such fees and expenses may be recovered as provided by law in an action commenced against the mortgagee or by way of counterclaim in any action or proceeding commenced by the mortgagee against the mortgagor. Any waiver of this section shall be void as against public policy.
      2. For the purposes of this section, “residential real property” means real property improved by a one- to four-family residence, a condominium that is occupied by the mortgagor or a cooperative unit that is occupied by the mortgagor.

In an appropriate case, where the mortgage provides for the recovery of the mortgagee’s attorney’s fees and expenses, the above statute applies, and the subject real property constitutes residential real property (one family) that is the mortgagors’ home, the court may award the defendant legal fees and costs.

by Richard A. Klass, Esq.

R. A. Klass
Your Court Street Lawyer

Previous post
Next post

New York State Court of Appeals adopts “likely to succeed” standard in legal malpractice cases

Posted on by

The New York State Court of Appeals decided an issue of first impression in New York State concerning an issue that arises in legal malpractice cases. In Grace v. Law, [October 21, 2014], the Court had to decide whether a client’s failure to pursue an appeal in the original, underlying lawsuit (which failed) bars him from pursuing a legal malpractice case against the attorney who lost the case.

In an opinion by Justice Sheila Abdus-Salaam, the Court of Appeals held that the proper standard for trial courts to consider in legal malpractice cases brought by losing clients against their original attorneys is whether the client would have been “likely to succeed” on appeal. Enunciating the proper standard, the decision stated that, “prior to commencing a legal malpractice action, a party who is likely to succeed on appeal of the underlying action should be required to press an appeal. However, if the client is not likely to succeed, he or she may bring a legal malpractice action without first pursuing an appeal of the underlying action.

In rejecting the defendant-attorney’s argument that there should be an absolute bar to a legal malpractice case unless the client appealed the underlying court’s decision, the decision noted that following the “likely to succeed” standard would not be unfair; this standard requires trial courts to speculate on the success of an appeal just as those courts engage in the same analysis when deciding other aspects of legal malpractice actions generally.

by Richard A. Klass, Esq.

R. A. Klass
Your Court Street Lawyer

Previous post
Next post

Commercial tenants/Sublessors are responsible entities under the Labor Law

Posted on by

Pursuant to binding Court of Appeals precedents, as well as Appellate Division, First and Second Department precedents, commercial tenants/sublessors are responsible entities for purposes of Labor Law Section 240(1).

See Glielmi v. Toys “R” Us, Inc., 62 N.Y.2d 664, 666, 476 N.Y.S.2d 283, 284, 464 N.E.2d 981, 982 (1984) (“The jury was charged that the owner trustees and the tenant were to be considered a single unit for purposes of determining liability to the injured plaintiff. There was evidence from which the jury could properly have found that both were absolutely liable under subdivision 1 of section 240 of the Labor Law”); Godoy v. Baisley Lumber Corp., 40 A.D.3d 920, 921, 837 N.Y.S.2d 682, 683- 684 (2d Dep’t 2007); Murphy v. Sawmill Construction Corp., 17 A.D.3d 422, 424, 792 N.Y.S.2d 616, 618 (2d Dep’t 2005) (“We note that the term ‘owner,’ for purposes of Labor Law §§ 240(1) and 241(6), has been construed to include not only property owners but, under certain circumstances, also those who have an interest in property, such as easement holders and lessees (see Kane v. Coundorous, 293 A.D.2d 309, 739 N.Y.S.2d 711;  Copertino v. Ward, 100 A.D.2d 565, 473 N.Y.S.2d 494).”); Bell v. Bengomo Realty, Inc., 36 A.D.3d 479, 480, 829 N.Y.S.2d 42, 44 (1st Dep’t 2007) (“Summary judgment in favor of plaintiff on the issue of liability under Labor Law Section 240 (1) should have been granted as against Bengomo Realty as the owner of the property); see Coleman v. City of New York, 91 N.Y.2d 821, 822-823, 666 N.Y.S.2d 553, 689 N.E.2d 523 [1997]; Spagnuolo v. Port Auth. of N.Y. & N.J., 8 A.D.3d 64, 778 N.Y.S.2d 23 [2004] ), and Willow Media who, as lessee, contracted for the work (see Guzman v. L.M.P. Realty Corp., 262 A.D.2d 99, 691 N.Y.S.2d 483 [1999] ).”); Meade v. Rock-McGraw, Inc., 307 A.D.2d 156, 158-159, 760 N.Y.S.2d 39, 41-42 (1st Dep’t 2003) (“After discovery, plaintiff moved for summary judgment against defendants, Rock-McGraw, Inc., the building owner, McGraw-Hill Companies, Inc., the building lessee, and Morgan Stanley & Co., Incorporated, the sublessee of the 44th floor, on his Labor Law § 240(1) claim, arguing that the ladder was not secured by another worker, that the ladder fell because the floor was slippery and the ladder lacked footings and that defendants had breached their duty to insure that the ladder was placed so as to give him proper protection. …Depending on the fact finder’s determination, plaintiff may, however, establish a section 240(1) violation for failure to provide a proper safety device.”); Kane v. Coundorous, 293 A.D.2d 309, 311, 739 N.Y.S.2d 711, 714 (1st Dep’t 2002) (“A lessee of property under construction is deemed to be an ‘owner’ for purposes of liability under Article 10 of New York’s Labor Laws (see, e.g., Glielmi v. Toys “R” Us, 62 N.Y.2d 664, 476 N.Y.S.2d 283, 464 N.E.2d 981; Bart v. Universal Pictures, 277 A.D.2d 4,5, 715 N.Y.S.2d 240; Tate v. Clancy Cullen Storage Co., 171 A.D.2d 292, 295, 575 N.Y.S.2d 832; Copertino v. Ward, 100 A.D.2d 565, 566, 473 N.Y.S.2d 494).”); Wehmeyer v. Port Authority of New York and New Jersey, 248 A.D.2d 187, 188, 669 N.Y.S.2d 578, 579 (1st Dep’t 1998).

copyr. 2014 Richard A. Klass, Esq.
The firm’s website: www.CourtStreetLaw.com
Richard A. Klass, Esq., maintains a law firm engaged in civil litigation in Brooklyn Heights, New York.
He may be reached at (718) COURT-ST or e-ml to RichKlass@courtstreetlaw.comcreate new email with any questions.
Prior results do not guarantee a similar outcome.

R. A. Klass
Your Court Street Lawyer

Previous post
Next post