John Giovanni Granata v. Edward F. Broderick, Jr.
143 A.3d 309
| N.J. Super. Ct. App. Div. | 2016Background
- Granata sued his former counsel (Broderick) and obtained a jury verdict later vacated; after remand the case settled for $840,000 and one-third ($279,720) was held for attorney fees.
- Diane Acciavatti originally represented Granata, withdrew while appeal was pending, then claimed quantum meruit for extensive work (828 hours); trustee Caruso was appointed for her practice.
- Three creditors claimed interests in any fees due to Acciavatti: Gourvitz (judgment and judge-ordered attorney’s lien for $82,500), Rotenberg (consent judgment and lien for accounting fees), and OKS (December 2, 2010 UCC-1 financing statement securing a $125,000 loan to Acciavatti, LLC by pledging anticipated Granata attorney fees).
- The trial judge awarded Acciavatti $279,720 (quantum meruit), denied Granata’s reconsideration, and ordered distribution giving priority to Gourvitz and Rotenberg over OKS.
- OKS appealed the priority ruling arguing its UCC filing perfected a security interest in anticipated fees before the other judgment liens; Granata appealed the fee award and denial of reconsideration and sought to bar Acciavatti via a separate malpractice claim.
Issues
| Issue | Granata (plaintiff) / OKS (where applicable) | Gourvitz/Rotenberg (defendants/creditors) | Held |
|---|---|---|---|
| 1. Whether awarding Acciavatti attorney fees required a formal petition under the Attorney’s Lien Act/H.&H. Ranch procedure | Granata: Fee award was procedurally improper because no petition pursuant to H.&H. Ranch was filed | Gourvitz/Rotenberg: Petition not required where the matter was presented and litigated on motions and certifications; equitable relief available | Court: Affirmed fee award; procedural requirements satisfied by motions, cross-motions, hearings and evidence—no reversible error |
| 2. Whether Granata’s malpractice complaint required a stay of the fee award under Saffer | Granata: Malpractice claim undermines fee award; stay required pending resolution | Acciavatti/creditors: No substantial basis for malpractice; stay unwarranted | Court: Denied stay; malpractice claim lacked substantial basis—no abuse of discretion in refusing stay |
| 3. Whether Acciavatti’s fee award on quantum meruit exceeded contingent-retainer rights | Granata: Acciavatti discharged; only limited recovery permitted; award excessive | Acciavatti: Quantum meruit appropriate given time, quality, result and judge’s familiarity with case | Court: Affirmed quantum meruit award—judge’s factual findings supported and discretionary split appropriate |
| 4. Whether OKS’s December 2010 UCC-1 perfected a security interest in anticipated attorney fees and thus had priority over later judgment liens | OKS: UCC-1 perfected a security interest in anticipated legal fees (accounts) before Gourvitz/Rotenberg — it has priority | Gourvitz/Rotenberg: OKS’s interest wasn’t in an existing asset; UCC filing premature or ineffective; other technical defenses | Court: Reversed distribution order; held attorney’s right to anticipated fees qualifies as an Article 9 account, OKS’s security interest attached and was perfected by the 2010 UCC-1, giving OKS priority over subsequent lien creditors |
Key Cases Cited
- Musikoff v. Jay Parrino's the Mint, L.L.C., 172 N.J. 133 (N.J. 2002) (Attorney's Lien Act grounded in equitable principles protecting unpaid counsel).
- H. & H. Ranch Homes, Inc. v. Smith, 54 N.J. Super. 347 (App. Div. 1959) (procedure for petition to determine and enforce attorney’s lien).
- Saffer v. Willoughby, 143 N.J. 256 (N.J. 1996) (test for stay of fee award when malpractice claim arises—substantial basis standard).
- Shaw Mudge & Co. v. Sher-Mart Mfg. Co., 132 N.J. Super. 517 (App. Div. 1975) (perfected security interest has priority over subsequent lien creditors; after-acquired collateral covered).
- Cadle Co. v. Schlichtmann, 267 F.3d 14 (1st Cir. 2001) (contractual rights to contingent legal fees are ‘‘accounts’’ under UCC Article 9).
- Cont’l Fin., Inc. v. Cambridge Lee Metal Co., 56 N.J. 148 (N.J. 1970) (recorded lien attaches to accounts receivable when they materialize).