On appeal from the Superior Court of New Jersey, Law Division, Bergen County.
Approved for Publication July 16, 1996.
Before Judges King, Kleiner and Humphreys. The opinion of the court was delivered by Humphreys, J.A.D.
The opinion of the court was delivered by: Humphreys
The opinion of the court was delivered by HUMPHREYS, J.A.D.
This appeal is from an order releasing certain funds from escrow. An earlier order permitted a notice of lis pendens to be filed by the law firm of Cole, Schotz, Bernstein, Meisel and Forman ("Cole") against real property owned by its former client, Carole Owens ("Owens"). The lis pendens served as notice that Cole was asserting an attorney's lien against the property. The lien was to secure fees owed by Owens to Cole. Due to the filing of the lis pendens, proceeds from the later sale of the property were placed in escrow.
After a thorough review of the record and the arguments of counsel, we hold that Cole does not have a lien on the property and the court should not have permitted the lis pendens to be filed. The order releasing the funds from escrow is affirmed.
Cole was engaged to represent Owens in March 1990 in a matrimonial action. In July 1991, Cole moved for leave to withdraw as her counsel. In the same motion, Cole sought leave to file "a statement with the Bergen County Clerk evidencing the existence of a charging lien" on behalf of Cole pursuant to N.J.S.A. 2A:13-5. Cole alleged that Owens owed Cole some $40,000 in legal fees. An order was entered on August 12, 1991 relieving Cole as counsel and granting leave to Cole "to file a lis pendens evidencing its attorney lien pursuant to N.J.S.A. 2A:13-5."
Cole filed the lis pendens on August 16, 1991, against real property in Englewood, New Jersey owned solely by Owens. The property was being sold. An escrow agreement was entered into on November 4, 1991, under which the lis pendens would be discharged and $42,400 would be held in escrow "until the resolution of the dispute for attorney's fees" between Cole and Owens. The agreement also provided that the "matter of counsel fees may be referred to arbitration"; that neither party released any claims against each other, including Owens' claims as to the legality of the lis pendens ; and that if there was any court determination that the lis pendens "was incorrectly filed," then the escrow funds would be released. The parties to the agreement included Cole, Owens and the trustee in bankruptcy for Cole's husband.
Cole by letter dated November 4, 1991, informed Owens that she had the option of pursuing fee arbitration. See
R. 1:20A-6. The letter contained the name and address of the person to contact regarding that option.
Owens filed a motion dated November 22, 1991 to have the escrowed funds released to her. She argued that the lis pendens was improper because the requisite fee arbitration notice had not preceded the filing of the lis pendens, see R. 1:20A-6, and because N.J.S.A. 2A:15-6 did not allow a lis pendens to be filed in a matrimonial action. The Judge denied the motion saying he saw nothing in the lis pendens statute which would prohibit the use of a lis pendens. He also said that litigation had to be pending and therefore he required that litigation be instituted within fourteen days.
On February 3, 1992, Cole instituted suit for its fees. In May 1993, Owens moved to dismiss the suit on the ground that Cole failed to comply with R. 1:20A-6. She also sought other relief including the release of the funds in escrow. The motion was denied. We denied a motion for leave to appeal.
In July 1993, Owens filed a malpractice action against Cole. Owens unsuccessfully moved to consolidate that action with the Cole action for fees. We denied leave to appeal from the order denying consolidation. Thereafter, Owens moved ...