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Partners Pharmacy, LLC v. Integrated Health Services of New Jersey at Somerset Valley


January 9, 2008


On appeal from the Superior Court of New Jersey, Law Division, Union County, L-651-06.

Per curiam.


Submitted: December 12, 2007

Before Judges Axelrad and Sapp-Peterson.

Michael I. Bernstein, P.A., the attorney of record for Integrated Health Services of New Jersey at Somerset Valley, Inc., a/k/a IHS of New Jersey at Somerset Valley (IHS), appeals from an order of the Law Division dated February 16, 2007 requiring him to serve full and complete answers to the information subpoena served by plaintiff's counsel as a prerequisite for being relieved as counsel, and the March 30, 2007 order denying his motion for reconsideration. We reverse in part and remand.

Plaintiff pharmacy sued IHS, a Delaware corporation and operator of a nursing facility in New Jersey, on a delinquent invoice for goods. The parties entered into an August 17, 2006 consent order providing for installment payments and entry of a judgment upon default. Defendant was represented by Bernstein, a licensed New Jersey attorney who had an office in Miami. In connection with the settlement, Bernstein notarized and presented to plaintiff's counsel a release signed by Avi Klein as authorized agent of IHS. The release did not specify Klein's relationship to IHS and Bernstein apparently did not provide this information to plaintiff's counsel despite a request to do so. Subsequent certifications stated that Bernstein shared space with and was corporate counsel for Tri-State Health Investors, LLC (TSHI), a Florida company that performed "back-office" administrative support and management services for IHS, and that Klein was TSHI's president/manager.

Defendant defaulted in October after making two payments, when it apparently stopped operating the New Jersey facility. Plaintiff obtained an order enforcing settlement and entering judgment on December 15, 2006, which it served on Bernstein with an Information Subpoena on January 5, 2007.

Bernstein moved to withdraw as counsel, claiming that around October 2006, the client "ceased operations and advised our office that no further payment for legal services would be forthcoming" and "indicated its unwillingness to pay for any further legal fees and expenses incurred by our firm for representation in the within manner as a result of the change in ownership." What specific communication efforts were undertaken were not outlined in the certification. We also do not know the specifics of what is meant by the company no longer being operational. Bernstein also did not state in his certification that he forwarded the Information Subpoena to IHS, nor is it clear from the colloquy during argument on reconsideration or in the brief on appeal whether he did so.

Based on the papers submitted, by order of February 16, 2007, the court denied Bernstein's motion to be relieved as counsel and for a thirty-day stay, and further ordered as follows: that within 14 days of the entry of this Order, Michael I. Bernstein, P.A. and Defendant, Integrated Health Services of New Jersey at Somerset Valley, Inc. must fully comply with and serve full and complete answers to the Information Subpoena duly served upon them by Plaintiff's counsel; and it is further ORDERED that within 7 days after Plaintiff's receipt of the full and complete answers to the Information Subpoena, Plaintiff's counsel shall so inform the court which will thereafter issue an Order relieving Michael I. Bernstein, P.A. as counsel for Defendant in this matter.

There is no explanation in the record for the decision but the reasons set forth in the transcript of the motion denying reconsideration and a stay pending appeal appear to be the court's concern of potential inappropriate conduct or collusion based on the attorney's space-sharing arrangement with TSHI.*fn1

The court concluded it would not permit the New Jersey attorney of record to defeat the "New Jersey Judgment Consent Order . . . by . . . getting out of the case at a time that would be convenient for [his] client if [his] client wished to avoid further supplemental proceedings," and directed the order stand. The court further assumed "that after this ruling today, that Mr. Bernstein will see to it that the appropriate representative of his client get[s] the Information Subpoena so that they can be on notice as [to] their obligations." The court provided no explanation for its requirement that Bernstein answer the Information Subpoena as a condition of being relieved as counsel for IHS.

On appeal, Bernstein contends his service ended when judgment was entered and there was no obligation for him to continue to represent defendant post judgment. He further argues the court erred in conditioning his withdrawal as counsel on providing "full and complete" answers to the Information Subpoena, which under Rule 6:7-2(b), solely requires responses by the judgment debtor, and by allowing opposing counsel to step into the role of the court and determine "compliance" with the court's directive.

There is no question that Bernstein represented IHS when he was served with the judgment and Information Subpoena on January 5, 2007. See R. 1:11-3 (attorney's responsibility terminates on expiration of time for appeal). The Information Subpoena procedure of Rule 6:7-2 is incorporated in Rule 4:59-1(e) but its service requirement is superseded by Rule 1:5-2, thus it was properly served on Bernstein as attorney of record. Accordingly, Bernstein had an obligation to forward the Information Subpoena to his client. The Court Rules provide for the standard Information Subpoena questions to be answered by the judgment debtor, R. 6:7-2(b)(1); Information Subpoena and Written Questions, Pressler, Current N.J. Court Rules, Appendix XI-L to R. 6:7-2(b)(1) at 2405-09 (2008), and provide for sanctions for the judgment debtor's failure to answer, R. 6:7-2(e). Bernstein is correct that there is nothing in the rules imposing an obligation on the debtor's attorney to respond to the Information Subpoena and provide information to the creditor about his client's assets. The court thus abused its discretion in imposing an obligation on the attorney of record to answer the Information Subpoena on behalf of his client and we therefore reverse that portion of the order.

That does not mean, however, that the court cannot impose upon Bernstein reasonable conditions as a prerequisite to his withdrawal as counsel. Bernstein is not the guarantor of his defaulting client, but based on our review of the record it does not appear as if he has sufficiently fulfilled his obligation to permit him to withdraw as counsel. As attorney of record he was obligated to forward the Information Subpoena to his client promptly upon receipt. We remand for further proceedings so a determination can be made as to whether or not Bernstein fulfilled this obligation. If he did not, the court shall make such further order as it deems appropriate under the circumstances, including, but not limited to, requiring Bernstein to make diligent inquiry to locate and serve his client and report to the court his efforts, and to provide plaintiff's counsel with proof of service.

Reversed in part and remanded for further proceedings consistent with this opinion.

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