October 24, 2017
certification to the Superior Court, Appellate Division,
whose opinion is reported at 446 N.J.Super. 449 (App. Div.
L. Podvey argued the cause for appellant Rotenberg, Meril,
Solomon, Bertiger & Gutilla, P.C. (Connell Foley,
attorneys; Robert L. Podvey, of counsel and on the brief).
Gourvitz argued the cause for appellant Elliot H. Gourvitz,
Esq. (Gourvitz & Gourvitz, attorneys; Ari. H. Gourvitz,
on the briefs).
D. LaGrotta argued the cause for respondent OKS Realty
(LaGrotta Law, attorneys; Robyne D. LaGrotta, of counsel and
on the briefs).
appeal, the Court considers whether an attorney's pledge
of anticipated attorney's fees can be considered an
account receivable and secured under Article 9 of the Uniform
Commercial Code (UCC), and whether the lender here complied
with the requirements of the UCC to perfect its security
2007, plaintiff John Giovanni Granata retained Diane
Acciavatti to bring a legal malpractice complaint against
defendants Edward F. Broderick Jr., and Broderick, Newmark,
& Grather. Acciavatti accepted a $10, 000 retainer and
agreed to a contingent fee arrangement. After a jury trial,
Granata was awarded a judgment of $1, 597, 193, and the trial
judge granted Acciavatti's motions for fees, costs, and
pre-judgment interest. Defendants appealed, and Granata filed
a cross-appeal. Acciavatti had an oral agreement with Granata
to represent him at $350 per hour and told him she would seek
counsel fees from defendants after the appeal.
the appeal was pending, Acciavatti withdrew from the practice
of law. In April 2013, Dominic Caruso was appointed
attorney-trustee for Acciavatti's practice. On March 28,
2013, the firm of Roper & Twardowsky, LLC (the Roper
firm), filed a substitution of counsel form for Acciavatti.
In July 2013, the Appellate Division reversed and remanded
for a new trial. In January 2014, following a two-day
mediation, the case settled for $840, 000. Three of
Acciavatti's creditors then claimed liens upon any legal
fees owed to her from the case.
Gourvitz Lien: Acciavatti agreed to pay Gourvitz &
Gourvitz, LLC, and Elliot H. Gourvitz (collectively Gourvitz)
$82, 500 from fees she expected to receive in the Granata
v. Broderick matter. On August 19, 2011, a trial judge
entered an order declaring that a "lien is placed on the
file in the Granata v. Broderick matter in favor of
[Gourvitz] for the sum of $82, 500" and that there would
be no disbursements of attorney's fees to Acciavatti in
Granata v. Broderick until the fees were paid to
Gourvitz. On October 6, 2011, Acciavatti defaulted on the
consent judgment, and a $98, 638.65 judgment was entered
against her. On November 4, 2011, the judgment was recorded
as a lien. On August 19, 2013, Gourvitz filed a writ of
Rotenberg Lien: On March 21, 2011, Acciavatti agreed to pay
the accounting firm of Rotenberg, Meril, Solomon, Bertiger
& Guttilla, P.C. (Rotenberg), $75, 000 as part of a
settlement agreement. Acciavatti signed an affidavit of
judgment by confession and agreed to assign a lien on
recovery of any attorney's fees due in Granata v.
Broderick. The agreement provided that if Acciavatti
defaulted on her obligation, the amount due would increase to
$151, 652.42, less any payments Acciavatti made toward the
debt. Acciavatti then defaulted and, on December 28, 2012, a
final judgment of default was entered against Acciavatti in
the amount of $133, 652.42. The judgment was recorded as a
lien on January 24, 2013. In January 2014, a writ of
execution was filed.
Lien: On October 27, 2010, OKS Realty (OKS) loaned Diane
Marie Acciavatti, LLC (Acciavatti, LLC) $125, 000. On that
date, a security agreement, a promissory note, and a guaranty
of payment were all signed by Acciavatti on behalf of
Acciavatti, LLC. The security agreement identified as
"collateral" the legal fees owed to Acciavatti. On
December 2, 2010, OKS filed a UCC-1 financing statement with
the Department of Treasury, which listed as debtors both
Acciavatti, LLC, and Acciavatti individually as guarantor of
the loan. The statement listed as collateral the
attorney's fees due to Acciavatti in the litigation
captioned Granata v. Broderick.
February 12, 2014, Granata, through the Roper firm, initiated
this current action by filing a motion seeking "an order
declaring that no attorney's lien attaches to any
settlement proceeds payable to [Granata]." On March 14,
2014, the judge who had presided over the original trial
heard argument on Granata's motion. The judge determined
that Granata was entitled to two-thirds of the settlement
amount and ordered Broderick to issue a check for the full
settlement amount of $840, 000 to the Roper firm, with
two-thirds to be released to Granata and one-third to be held
in escrow for any subsequent award of attorney's fees.
Acciavatti acknowledged that any fee award was first
"subject to allocation between [her] and [the Roper
firm]" and would then be distributed among her
7, 2014, the Roper firm informed trustee Caruso that the
Roper firm and Granata agreed to a flat fee of $40, 000. The
judge indicated that, of the $279, 720 available for
distribution, $40, 000 would go to the Roper firm. The judge
then addressed distribution of Acciavatti's
attorney's fee award to her creditors. The judge
determined that OKS was last in priority because the $840,
000 settlement was not finalized until January 2014, and
before that, OKS had "done nothing but filed a UCC back
in 2010 . . . on an asset that didn't exist until four
years later." The judge reasoned that OKS had "a
security interest in something that didn't even exist,
" while Rotenberg and Gourvitz both had judgments and
issued writs of execution. On January 26, 2015, the judge
entered an order memorializing the court's January 9,
2015 decision, setting the amounts to be distributed and the
order of priority of Acciavatti's creditors: (1) $83,
284.97 to Gourvitz; (2) $133, 652.42 to Rotenberg; and (3)
$13, 185.05 to OKS.
appealed, claiming error in its placement last in priority
among Acciavatti's creditors. The Appellate Division
agreed and vacated the order setting distribution priorities.
446 N.J.Super. 449, 478 (App. Div. 2016).
appellate panel considered whether Acciavatti possessed an
interest in her anticipated legal fees in 2010 and whether
OKS's UCC filing granted it a perfected interest in those
fees. Id. at 474. The panel reasoned that,
"[i]f both questions [we]re answered in the affirmative,
OKS, as a perfected secured creditor, would enjoy priority
over Gourvitz and Rotenberg, who are subsequent lien
creditors seeking to levy on the same ...