*1 Creditor, Judgment v. CHICAGO DOWLING, Plaintiff-Appellee and BRIAN ASSOCIATES, INC., al., (Supplementary et Defendants OPTIONS LLP, Third-Party (US), Rudnick, Gray, Cary Proceedings Against Piper, DLA Respondent Appellant). Citation Division) (2nd No. 1 — 05—1426 First District Opinion filed 2006.

HALL, J., dissenting. (Gerald Lurie, Rudnick, (US), LLP, Chicago Piper, Gray, Cary B. of

DLA counsel), for appellant. Stevenson, Ltd.,

Robbins, Patt, Chicago (Tracy E. & Salomon counsel), appellee. opinion of the court: JUSTICE GARCIA delivered

PRESIDING instituted appeal proceedings from supplementary This comes us Piper, Gray, DLA plaintiff, Dowling, against Brian Rudnick). (US), (Piper Dowling supplementary LLP instituted the Cary against Piper cli- proceedings judgments entered to enforce Rud- ent, $817,830.45. appeal, Piper Michael which totaled argues authority its when nick circuit court exceeded ordered turn over deposited by anticipation Davis in of legal services.

BACKGROUND In May and October judgments the circuit court entered totaling $817,830.45 favor Davis. These judgments became final and on February enforceable *2 February 26,

On 2003, Piper began representation Rudnick its of Davis and wife his and an signed, letter was in stating pertinent part: Engagement;

“Re: Client 308813—000020 Emily: Dear Michael and pleased opportunity you

We are to have the represent regard- to ing your purchase a give you of home in Florida and general to regarding protection. advice asset % * customarily monthly send invoices services rendered and charges your previous

other incurred for during account month. monthly performed The invoice details the work and the of types (30) charges Payment thirty days incurred. due will be after the *** date of our invoice. $100,000 You have authorized us to allocate of the cash on hand applied as a funds payment retainer. These will be toward of monthly final containing invoice with to respect entries the above- subject repayment by referenced matter and will be us if of amount our fees for work done and costs incurred that remain unpaid equal by do not the amount of retainer then held us. circumstances, Under such balance retainer would then you you be returned to our on when this matter ceases. 'fi v

Finally, you taking very aggressive positions remind we are attempt protect your satisfy your related assets and concerns. likely positions litigation These to be attacked in in or Florida not, will, likely Illinois. While we believe that our advice more than upheld court, animosity be given you judg- between and the creditor, certainty.” litigation ment is a virtual 19, 2003, $100,094.72 On March and his Davis wife transferred (the Piper Rudnick from their Bank of bank America account funds). 10, 2003, July Between March applied $12,518.19 Rudnick of the March 2003 retainer funds to 1358074, 1365234, 1384802, These bill numbers bills performed work Rudnick connection with the covered home in Florida. purchase 2003, Dowling supplementary proceedings

In September instituted and turnover assets and issued citations discover Davis 17, 2003, Dowling issued citation parties. orders third On October was LLP Trust.” The citation “Piper Rudnick to discover assets to attorneys from North Dowling’s on a document received based Bank). (North Community Company Bank and Trust Shore Shore 2003, transfer, February 18, dated which document identified a wire by “Michael held $1,580,506.86, flowing from account showed LLP Trust” ac- “Piper Rudnick a.k.a. 4637 Manor LLC” attorney to by Dowling’s A note written count number 1405360564. that, appears to be “[t]his stated Piper Rudnick on October E. to a Florida funds made Michael Davis bank a transfer of On avoiding payment judgment.” of our November with intent 2003, applied of March in connection with provided number for services bill Dowling’s proceedings. supplementary Lurie) (Attorney Gerald B. Lurie November response Dowling’s motion and appeared in its ac-

represented no funds trust transcript 2003 hear- count Davis. There is from ing; however, reflecting there that the circuit court is written order “(2) moot, mo- stating: plaintiffs [The] denied motion as tion for LLP is turnover order directed to denied *3 moot, money Piper on that it holds no LLP’s belonging in its account Davis.” trust 2003, 21, Attorney Lurie delivered records reflect- November

ing activity on Davis’s Bank of America account from which March 3, paid retainer funds had been Rudnick. On December 2003, applied of the March 2003 retainer funds balance to bill number dated December Dowling’s to reach provided services resist efforts Davis’s assets. appeared On December for his citation examina- Davis examination, and at- During Dowling’s attorney tion. Davis’s been torney paid discussed the March 2003 retainer funds that had Attorney Lurie had Dowling’s attorney opined Rudnick. made a misrepresentation ac- money he in its trust

when asserted that Rudnick held Dowling’s attorney opined count for that the available balance issued cita- as of the date retainer October disclosed tion to discover assets to should have been attorney maintained that remain- pursuant to the citation. Davis’s pertinent part, ing property. retainer not Davis’s (Attorney attorney, Daniel J. conversation between Voelker Voelker), Lurie Attorney follows:

“[Attorney guess your Voelker]: I I am [Davis’s] confused because lawyers gone they have on any money record said do not hold you, you’re they as a retainer for saying but do? Well,

[Attorney Lurie]: wait a minute. [Attorney Voelker]: your That is what letter said me. That is you represented you... what to the Court. That [Attorney Lurie]: I said any money we didn’t hold that was ow- ing to Mr. Davis.

[Attorney Voelker]: any We asked for a money you turnover of on have retainer.

[Attorney Lurie]: No.

[Attorney Yeah, Voelker]: did. we I’m sure we did. [Attorney No, you Lurie]: did Any money not. all on is we...

[Attorney major Voelker]: have a problem here. [Attorney Lurie]: mayWe have disagreement.

[Attorney you your Voelker]: I misrepresented think have situa- tion Court.

[Attorney Lurie]: I said holding any we were not funds that were due to Mr. Davis.

[Attorney Voelker]: If it is a retainer and it isn’t earned is due to him. It is an money. advanced retainer. It is our

[Attorney Lurie]: I don’t think so.

[Attorney Voelker]: So we’ll resolve issue.

[Attorney agree, Lurie]: I I say but don’t misrepresented... [Attorney you Voelker]: I right my opinion. think did. I have a you I think did.

[Attorney Lurie]: You do. sure [Attorney Voelker]: We’lltake immediate action on it.

v ^[*] v [Attorney Lurie]: You said that told the Court weren’t we hold- any ing money Your on retainer. motion for a turnover order your citation were issue to Rudnick’s trust account. We money have no in a trust trust account Mr. Davis. Our account money was cleared of funds owed to Mr. Davis March. The that we as a retainer that is held in our account is segregated...

[Attorney story judge. you Voelker]: You tell that If look the citation...

[Attorney just you. Lurie]: Fine. I want make it to to clear [Attorney Well, you judge going Voelker]: I think the is who going to to clear have make it to. Because we are to make a motion contempt. for

[Attorney Well, surprise. Lurie]: what a [Attorney Well, a surprise.” Voelker]: think it would be would

93 to retainer funds 2004, applied the March 2003 Piper Rudnick ($5,781.75), 1479806 ($44,224.11), 1471321 numbers 1461259 bill January April ($3,241.24), ($5,133.64) between and 1490054 issued resist provided to Davis to bills were for services referenced $100,094.72 this the point, Davis’s assets. At Dowling’s efforts reach retainer was exhausted. 2004, pending 8, the citation to discover assets On June however, court, The circuit September

Davis since 2003 was dismissed. Davis. On June Dowling to issue a second citation to gave leave (the June $50,000 Piper Davis’s wife transferred funds). 25, 2004, with Dowling On served Davis 2004 retainer June and August assets. Between June second citation discover to bill numbers Piper applied the June 2004 retainer ($6,467.61), ($8,525.12), ($6,467.61), 1514487 ($5,044.39). Piper Rudnick ($12,433.37), Again, and 1535567 with provided that bills connection asserts these were services 6, 2004, Dowling Dowling’s August On also served collection efforts. discover Piper Rudnick with second citation to assets. over February Dowling presented a motion turn requesting be him Piper pay

assets $137,576.53, comprised balance that remained on June funds as of October and the 2004 retainer funds Rudnick from wife. forwarded argument, reply, Dowling partially, his motion and based his at least system projects working identifying on Rudnick’s Dowling engagement argued on letter $100,000 to Davis called for a retainer for client and matter numbers home in Florida” dealing “purchase “308813 —000020” with the of a Dowling “general and maintained regarding protection.” advice asset began referring to beginning as work done for Davis client and matter numbers “308813 —000001.” Dowling assignment averred that the of a new matter number to in the represent concerned its efforts Davis work and, thus, supplementary proceedings by Dowling instituted engagement in the As scope outside work as outlined letter. such, Dowling maintained that the March 2003 retainer funds should not have been used cover fees from work that was outlined letter, Rud- should been have identified for relief nick to circuit court as funds due Davis. asked (f)(1)1 1402(c)(1), (c)(4), (c)(5), (c)(3), on based sections 2— court, Dowling incorrectly identified reply 1In his motion circuit (West 1402(f)(1) 1402(d)(1). (f)(1) 1402(d), ILCS 2— 2— 5/2 — Cf. 2002). argu However, it is clear of the motion that from context 1402(f)(1). ment was based on section 2— *5 94

Illinois of 1402(c)(1), Code Civil Procedure. 735 ILCS (c)(3), 5/2 — (f)(1) (West 2002). (c)(4), (c)(5), 6, 2005, Piper Rudnick answered motion denying $87,576.53 that the balance was property Davis’s and alternatively asserting the exempt that retainer funds from judg- were ment because the funds were transferred from a bank by account held Davis and his wife as tenants by entirety. Piper the that maintained it had not violated court statutory orders or restraints in accepting applying and the June 2004 retainer because were they received from wife after the supplementary proceedings September against instituted in 2003 Davis had been dismissed, and before a second citation issued. In supplementary was a answer, Piper Rudnick maintained the initial and that client matter matters, assigned “general” designation numbers and were the of a new matter number November 2003 specifically related to work on the supplementary proceedings against issued defense, also asserted affirmative even if March that the 2003 and June Piper Rudnick, 2004 funds were not property the they then property Davis and his wife as tenants exempt entireties and were a therefore from claims of creditor of one, both, but not of them.

On April argument the circuit court heard on Dowling’s motion and Rudnick was to turn ordered over Dowling. The specify ground circuit court’s order did not on what was relief. granting appeal This followed.

ANALYSIS I. Standard Of Review parties’ disagreement concerning We must first address our standard of review. Rudnick contends because circuit court conducted evidentiary fact, hearing findings and made no and because we (735 (West interpret section 2—1402 ILCS 5/2—1402

2002)), support position, should this issue de of its we review novo. Mauer, Inc. Diversified, citation to Northwest v. (2003), 341 3d App. Ill. 791 N.E.2d 1162 and Itasca Bank & Trust Son, Inc., App. Co. v. Larsen & 352 Ill. 3d 815 N.E.2d Thorleif (2004). Conversely, Dowling 1259 Sanding relies on Gonzalez v. Profile Inc., (2002), 3d Equipment, App. 333 Ill. N.E.2d 667 and as 776 rulings serts discretionary that a circuit court’s section 2—1402 “are should not be overturned absent an abuse discretion.” a trial court asked to determine whether court Gonzales a request denied defendant plaintiff erred when it creditor’s cause of action potential turn debtor over plaintiff proceeding from which underlying him in an representing Gonzalez, App. Ill. 3d at 685. judgment. received a creditor review, agreed the Gonzales determining proper standard of “may” use of the word legislature’s that the the defendant debtor with “ intended ‘to vest legislature 2—1402 indicated ” Gonzalez, Ill. awarding relief.’ the trial court with discretion App. Ill. 3d Causey, Buckner v. quoting 3d at (1999). additional went on to cite The Gonzalez court 724 N.E.2d 95 under sec of a turnover order authority that the standard of review agree: “[w]e are bound 2—1402 is an abuse of discretion. We tion this issue.” contrary] argument on precedent reject [the this *6 Gonzalez, 3d at App. 333 Ill. 693. are asked to determine whether this case we enter a turnover under section 2—1402 to authority

court had the of the disgorge Rudnick to itself of the balance requiring Piper order paid by Davis. To make this March 2003 and June 2004 retainer determination, must first consider whether section 2—1402 we authorized the circuit court to reach the March 2003 and June given Rudnick Davis. This first consideration retainer funds 1402, and de novo. requires interpret that we our review is 2— (whether Bank, gives 111. 3d at section 2—1402 App. Itasca authority judgment resign country court the to order a debtor to his is membership question statutory club is a construction novo). reviewed de If we find that section 2—1402 allows the circuit funds, then determine whether court to reach the retainer we must Gonzalez, doing the in 333 Ill. circuit court abused its discretion so. App. 3d at 693. March 2003 and June 2004 Retainer Funds

II. 1402(c)(3) allows the Piper Rudnick admits that section 2— belonging assets to a compel party circuit court to a third to deliver however, judgment debtor; encourages us to focus on belong judgment the fact that the assets must to the debtor. 735 ILCS 1402(c)(3) (West 2002). argues that even primarily 5/2 — funds, if March 2003 retainer the divulged it had it was a turnover because those funds circuit court could not have ordered debtor, Piper Rudnick. belong judgment did but to not contract, i.e., that, parties’ Piper Rudnick contends based on the letter, only way that Davis could have collected if he terminated balance of the retainer funds was provide not reference representation. note that Rudnick does Instead, its claim. any supreme support citation or court rule to case Davis states that “Illinois courts have held that section 2—1402 itself imposes upon limitations a trial authority court’s to order relief’ and support citations to that contention. Bank, underlying judgment Itasca was entered Mark During proceedings assets, Larsen. on a citation to discover Itasca Bank learned that Larsen had a membership at the Medinah Country (the club). Club Itasca Bank motioned the trial court to order Larsen club, to turn over his membership interest in the but the trial court denied the motion. Itasca Bank then filed a second motion for turnover requesting that the trial court order Larsen to sell his interest club and turn over the resulting profit Bank; to Itasca the trial court again denied the motion. Itasca Bank then filed a third motion and asked the trial court to order resign membership Larsen to his club and hearing allow to be sold. At the on Itasca Bank’s third mo tion, Larsen resignation membership admitted that yield would $17,000, about Nonetheless, less amount he owed the club. trial court finding denied the motion that it impermis would be an expansion Bank, sible of section 2—1402. App. Itasca 352 Ill. 3d at appeal, Itasca Bank argued that the trial court erred in concluding that section 2—1402 did give power not it the to reach membership Larsen’s interest the club. The Itasca Bank court noted provision that no in section 2—1402 explicitly authorized an order resign club, would have Larsen to membership his in the may “[t]his commented that mean that the membership, despite being category explicitly of assets exempted from the judgments, satisfaction of beyond plaintiff’s [the] is nevertheless Bank, reach.” Itasca 352 Ill. 3d at 266. The Itasca Bank *7 although powers then clarified that in section 2—1402 had been interpreted expansively, the statute could not interpreted be to allow the trial court powers to take on not listed. The Itasca Bank court then affirmed the trial court’s denial of Itasca Bank’s motion for turnover, finding authority that the trial court had no to direct Lars rights Bank, en’s assets or contract in favor of Itasca Bank. Itasca App. Ill. 3d at 266-68. Bureau,

Similarly, Martin, in Business Inc. Ill. App. Service v. (1999), appellate 3d 715 N.E.2d 764 court found that a requiring trial unemployed judgment court’s order an debtor to search joba keep for record of his efforts was not authorized appellate agreed liberally 2—1402. The that it was language supplementary proceeding provisions, construe the of the unambiguous language” but found that under “clear and statute, provision creating ordering no for or the creation of assets Bureau, Ill. existed. Business Service 3d find neither Itasca Bank nor Business Service Bureau We Bank, In any support Piper argument Rudnick’s in this case. Itasca club, being sought, membership the asset Larsen’s in the had terms court, discretion, and conditions attached to it which the trial its difficult, impossible, determined made the if turn over for asset liquidation. Bureau, In Business Service the trial court had ordered action, i.e., perform employment the debtor to to search for generate portion would income allow the creditor to claim a of its judgment, Here, clearly which the statute did not allow. the asset turnover, funds, sought for readily was accessible because it and, by Piper was a cash asset held in an account Rudnick as of 2003, partially only October unearned. The issue in this case is whether belonged Piper the unearned retainer funds Rudnick or

In response Piper arguments, Dowling Rudnick’s contends unearned, because the March 2003 retainer fees the funds belonged recoup affecting to Davis and he could them without Piper representation. Rudnick’s Dowling emphasizes parties’ engagement letter stated that it customary Piper was Rudnick to send monthly service invoices its clients which the clients would pay by brief, then cash or check. In reply Piper gives its Rudnick credence Dowling’s suggestion if requested that Davis a refund of balance, the retainers’ it signaled Piper would not have the end of representation. fact, Rudnick’s response Dowling’s suggestion, footnote, Dowling commented in a “[i]f is serious about *** argument[,] this displays [he] considerable naivete about taking representation economics of a law firm’s on the judgment debtor.” find Piper argument regarding the ownership of the

retainer funds to disingenuous. response be initial assets, Piper citation to discover that it was not answered holding any had, money belonging to Davis. Bank, evidenced accepted wire transfer from North Shore money from Davis and Manor LLC that subsequently was used to purchase Later, Davis’s home in Florida. Davis transferred the March Rudnick, 2003 retainer funds and when issued the partially citation to the March 2003 fees were unearned. holding that it was not money, against Piper court dismissed citation Now, divulge as moot. Rudnick asserts that it did not the March fund because held, holding, any portion “[it] was not nor had it ever ***

$100,094.72retainer it received from Davis in its clients’ fund *8 contrary, always [Piper account. To the the retainer was held general Rudnick’s] account.” placed May account in which

The obligation funds is not determinative of to disclose 2003, Piper Rudnick should that it held these funds. funds, have the circuit court about the March 2003 retainer told these funds thereby allowing the circuit court to determine whether Instead, represented could be ordered for turnover. money belonging it held in its trust account and the When, in circuit court dismissed turnover order as “moot.” reemerged regarding belonging what funds December issue argu- by Piper held motions filed and to Davis were result, again April ments were held. The 2005 order instructing Piper Dowling. to turn over represented amount the balance of the March 2003 retainer This funds, retainer funds that were transferred and the June 2004 the citations is- Piper Rudnick after the circuit court had dismissed did not against Piper Rudnick and Davis. We find the trial court sued unpersuaded by Piper unsup- abuse its discretion belong funds did not ported argument the unearned retainer

CONCLUSION reasons, foregoing the decision of the circuit court is af- For the firmed.

Affirmed.

WOLFSON, J., concurs. HALL, dissenting:

JUSTICE the funds held disagree majority’s with the determination subject a turnover belonged to Mr. Davis and were by Piper Rudnick the “retainer” the relation- majority overlooks the role of order. ship attorney and client. for a “[a] client’s authorization

A is defined as both “retainer” lawyer legal to secure paid a “fee to a lawyer to act in a case” and 1999). (7th “A ed. Dictionary representation.” Black’s Law attorney; it also denotes employing client is the act of a to act him.” he retains the fee the client when paid Inc., 306 Ill. 3d Grimsley Trading, v. Omni Carter & (1999). Thus, money than a sum of a retainer is more 716 N.E.2d employ It firm down its fees. establishes a law draws from which attorney by the client. ment of the letter,

According paid to the Mr. Davis and his wife $100,000 retainer. The fact that Rudnick could diminish satisfy its fees as earned from this fund does not the fact *9 that the deposits signified existence of the retainer and various the relationship of client and between Mr. Davis and his wife and Piper Rudnick. property As such it was the subject provision to the at representation, any the end of the remaining balance would be refunded to Mr. Davis and his wife.

The majority states that the “account which placed May 2003 retainer funds is not determinative of obligation to disclose that it held these funds.” 365 Ill. 3d at Again, disagree.

Rule 1.15 of the Rules of “lawyer Professional Conduct shall hold property parties of clients or third lawyer’s that is in a pos session representation connection with a separate lawyer’s from the 1.15(a). own property.” 188 Ill. 2d R. In the absence of contention Rudnick violated the Rules of Professional Conduct retaining separate account, these funds they fact that were held in Piper general account establishes that the funds Piper Rudnick’s, were subject to reimbursement to the client event funds remaining were representation. the end of the

The majority’s decision in this case will have a chilling effect on a person’s ability counsel, legal obtain if paid retainers to law firms attorney-client establish the relationship subject to turnover orders as in this case. case, Under the decision in this judg- where a ment debtor legal representation seeks in a citation to discover assets proceeding and pays retainer, the firm a firm may law lose the retainer even before it can commence work on the practical case. As a matter, reluctant, law firms will be understandably, to take on individuals, of such thus depriving legal them of representation.

I would conclude that as the funds were the property Rudnick, Piper Rudnick was correct when it informed the court that it holding any was not result, Mr. belonging Davis. As a circuit court abused its discretion in ordering Piper Rudnick to turn over the Dowling. to Mr.

Therefore, I respectfully dissent.