Before Judges Skillman, Conley and Landau.
On appeal from Superior Court of New Jersey, Law Division, Bergen
County, Docket No. L- 1902-95.
The opinion of the court was delivered by: Skillman, P.J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted February 27, 2001
The issue presented by this appeal is whether the enforcement of a judgment creditor's charging lien on a partner's interest in partnership property and profits, obtained under the provisions of the Uniform Partnership Law, N.J.S.A. 42:1-1 to - 43, is subject to the limitation on executions provided by N.J.S.A. 2A:17-56. We conclude that a partner's distributive share of partnership profits is a "profit" within the intent of N.J.S.A. 2A:17-56, and that the enforcement of a charging lien on that profit is subject to the ten percent limitation on executions provided thereunder. Consequently, a court order is required for a judgment creditor to collect more than ten percent of a partner's share of partnership profits.
Plaintiff Allen Zavodnick and defendant Lawrence Leven are both attorneys. At one time defendant was an associate in a law practice owned and operated by plaintiff. In May 1988, defendant and another associate, co-defendant George Rios, left plaintiff's firm, taking a substantial number of case files and client information cards with them. Plaintiff asserted claims against both defendants for the work he had performed on the files removed from his office and a claim against Leven for repayment of loans. The parties eventually agreed to submit both claims to arbitration.
The arbitrator awarded plaintiff $140,601 for legal fees jointly owed to him by both defendants, $76,000 for loans he had made to Leven, and $10,000 in "special damages," and the Law Division subsequently entered final judgment confirming the award. On appeal, we set aside the award of $10,000 in "special damages" in an unpublished opinion, but affirmed the judgment in all other respects. Zavodnick v. Leven, A-5380-94T2 (Mar. 28, 1996). Plaintiff has collected the part of the arbitration award representing his legal work. However, the part of the award representing repayment of the $76,000 in loans to Leven plus interest thereon remains unpaid.
Leven is now a partner in a law firm operating under the name Fuchs, Altschul, Greenberg, Sapin and Leven. Plaintiff filed a motion to charge Leven's interest in the law firm with payment of the outstanding amount of the judgment. On November 8, 1999, the trial court granted the motion and directed the law firm to distribute to plaintiff all sums due to Leven, "except such monies that are legally exempt from execution under the laws of the State of New Jersey."
A dispute subsequently developed as to whether this order required the law firm to distribute to plaintiff all moneys due Leven or only ten percent of those sums, as provided under N.J.S.A. 2A:17-56. After an exchange of correspondence between plaintiff and the law firm debating this legal point, plaintiff filed a motion in aid of litigant's rights for an order requiring the law firm to pay him the full amount of a $17,280 distribution made to Leven subsequent to entry of the November 8, 1999 order as well as the full amount of all future distributions payable to Leven. Leven filed a cross-motion seeking clarification or modification of the November 8, 1999 order. One of the firm's partners submitted a certification in support of the cross-motion which stated that all money the firm distributes to plaintiff constitutes "income derived from net profits."
The trial court concluded that the charging lien did not entitle plaintiff to collect all money the law firm is obligated to distribute to Leven until the judgment is satisfied. The court ruled that the wage execution statute "modifies and limits the extent to which a judgment creditor can enforce a charging lien[.]"
Plaintiff appeals from the order memorializing this ruling. Plaintiff argues that Leven's cross motion resulting in entry of the order on appeal was filed beyond the time allowed under Rule 4:49-2. Plaintiff also argues that a charging order against a partner entered in accordance with the Uniform Partnership Law is not subject to the limitation on executions provided by N.J.S.A. 2A:17-56. Leven cross appeals from the denial of his application for counsel fees.
We conclude that Leven's motion for clarification of the terms of the charging order entered on November 8, 1999 was timely, and that the trial court correctly determined that the charging order on partnership distributions to Leven is subject to the limitation on executions provided by N.J.S.A. 2A:17-56. We also reject Leven's cross appeal from the denial of counsel fees. However, the language of the order entered by the trial court is too broad. Accordingly, the case must be remanded for entry of an amended order that modifies the relief granted to Leven. Subject to this modification, the order on appeal is affirmed.
Plaintiff's argument that Leven's motion was untimely is without merit. The November 8, 1999 charging order provided in relevant part "[t]hat the partnership . . . [is] . . . directed to pay to [plaintiff] . . . all monies (or other property) due now or hereafter to be paid to . . . Leven by said partnership, except such monies that are legally exempt from execution under the laws of the State of New Jersey[.]" (Emphasis added). The order did not indicate what monies due Leven from the partnership "are legally exempt from execution under the laws of the State of New Jersey." Plaintiff interpreted the order to mean that the law firm was required to pay him the full amount of Leven's share of partnership profits, while Leven and the law firm construed "monies . . . legally exempt from execution" to include, in accordance with N.J.S.A. 2A:17-56, any amount in excess of ten percent of Leven's partnership profits. The resolution of this dispute obviously required interpretation or clarification of the November 8, 1999 order. Such a motion may be filed at any time, without regard to the time limitations on a motion for reconsideration (R. 4:49-2) or a motion to vacate a judgment (R. 4:50-2). Cf. Securities & Exchange Comm'n v. Hermil, Inc., 838 F.2d 1151, 1153 (11th Cir. 1988) (noting that a court's power to enforce an order includes "the power to construe and interpret the language of the original order."). Therefore, we proceed to the merits of the parties' dispute concerning the scope of the exemption from execution provided by the Uniform Partnership Law.
The Uniform Partnership Law was approved by the Conference of Commissioners on Uniform State Laws in 1914, Unif. P'ship Act § 1-45 (1914), and enacted in New Jersey in 1919. L. 1919, c. 212.*fn1 Section 28 of the Law, which was adopted verbatim in New Jersey as N.J.S.A. 42:1-28, established a "charging order" as the method by which a judgment creditor of a partner may enforce the judgment. FDIC v. Birchwood Builders, ...