Jackson, J. v. Shefa Investments, LLC ( 2019 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
JOYCE JACKSON : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
:
v. :
:
:
SHEFA INVESTMENTS, LLC, ET AL : No. 3302 EDA 2018
Appeal from the Order Entered October 5, 2018
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): No. 120400973
BEFORE: SHOGAN, J., NICHOLS, J., and MURRAY, J.
MEMORANDUM BY NICHOLS, J.: FILED AUGUST 05, 2019
Appellant Joyce Jackson appeals from the order granting Appellee Shefa
Investments, LLC’s motion for reconsideration, requiring a set-off of
judgments, and marking the judgment entered in the above captioned case
as satisfied. Appellant contends that the trial court erred in concluding that
Appellant’s counsel did not have an interest in the judgment in this case. We
vacate and remand for further proceedings.
The trial court opinion set forth the underlying procedural history of this
appeal as follows:
The instant matter stems from two underlying cases between
[Appellant] and [Appellee]. Appellant was a tenant of Appellee
and on April 9, 2012, Appellant filed a complaint [at No.
120400973] in the Philadelphia Court of Common Pleas against
Appellee alleging personal injuries from a slip and fall incident on
Appellee’s property. [Appellant was represented by David
Sherman, Esq.] On August 27, 2013, an arbitrators’ award was
entered against Appellee and in favor of Appellant for $18,337.49
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[(the 2013 judgment)]. Then on November 26, 2014, Appellee
filed suit against Appellant in Philadelphia Municipal Court for
money owed from unpaid rent.[fn1] On January 13, 2015, a default
judgment was entered against Appellant and in favor of Appellee
for $22,681.49[ (the 2015 judgment)].[1]
[fn1] Docket no. LT-14-11-26-5674.
Trial Ct. Op., 2/6/19, at 1-2.
On June 27, 2018, Appellee filed a motion for set-off, requesting that
Appellant and Appellee’s 2013 and 2015 judgments be equitably resolved
against each other. Appellee explained that “[h]aving the debt lien against [it
from the 2013 judgment] has provided a cloud to the title of [its] properties,”
and Appellee sought the set-off as “satisfaction of the judgment against [it,
which would leave it] with a remaining judgment against [Appellant] of
$3,720.12, notwithstanding interest and costs.” Mot. for Set-Off, 6/27/18, at
2 (unpaginated).
On July 17, 2018, Lionel Artom-Ginzburg, Esq., entered his appearance
as co-counsel on behalf of Appellant.2 That same day, Appellant filed a
response to Appellee’s motion and memorandum of law. Appellant noted, in
relevant part, that the 2013 judgment “will expire without a Writ of Revival in
40 days, as of this writing.” Resp. to Mot. for Set-Off, 7/17/18, at 1
(unpaginated). However, Appellant asserted:
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1 Appellant subsequently filed a pro se petition to open the judgment, which
the trial court denied on February 14, 2018. Mem. of Law, 7/17/18, at 1
(unpaginated).
2Attorney Artom-Ginzburg and Attorney Sherman are both counsel of record
on the Court of Common Pleas and Superior Court’s dockets.
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2. The set-off is improper in that Counsel’s earned fees are not
protected by [Appellee’s] proposal.
Pursuant to the litigation against [Appellee], [Appellant’s] counsel
was supposed to receive a contingent fee upon the [2013]
judgment . . . . To offset the judgments would be to take money
away from [Appellant’s] counsel as a result of a matter that did
not involve [Appellant’s] counsel’s representation, and directly as
a result of [Appellee’s] refusal to pay the earlier judgment.
Mem. of Law, 7/17/18, at 3 (unpaginated). Appellant did not attach a copy
of a contingency fee agreement to her response.
On August 9, 2018, the trial court denied Appellee’s motion for set-off.
The trial court reasoned that “granting the motion would deprive [Appellant’s]
attorneys of their right to collect a contingent fee on the judgment entered in
this case[.]” Order, 8/9/18.
On September 10, 2018, Appellee filed a motion for reconsideration.
Appellee initially argued that its motion for set-off “was not intended to
deprive [Attorney Sherman] of fees.” Mot. for Recons., 9/10/18, at 1
(unpaginated). Appellee stated that it did not have specific knowledge of
Appellant’s fee arrangement with Attorney Sherman, but the fees could “be
included in the set-off calculations.” Id.
In the alternative, Appellee claimed that “in the more than five years
from the entry of [the 2013] judgment in favor of [Appellant], counsel for
[Appellant] has not attempted to collect the arbitration award, other than the
entry of a final judgment and bill of costs just after the award became final.”
Id. at 2. Appellee argued that “the judgment lien against [Appellee] has now
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expired, having not been revived within five years of entry.” Id. Appellee
concluded that “the equitable interest and/or charging lien on behalf of counsel
has also dissipated.”3 Id.
The trial court granted Appellee’s motion for reconsideration on October
5, 2018, ordering that the judgments be set-off. The trial court’s order also
indicated that “the [2013] judgment against [Appellee] is satisfied.” Order,
10/5/18.
Appellant timely filed a notice of appeal and a court-ordered Pa.R.A.P.
1925(b) concise statement of errors complained of on appeal. The trial court
filed a responsive opinion. The trial court concluded that Attorney Sherman
did not have an interest in the 2013 judgment because (1) Appellant did not
make a good faith effort to collect the 2013 judgment or file a writ of revival
following the expiration of the judgment; (2) Appellant did not provide
evidence of a contingent fee agreement for Attorney Sherman; and (3)
Appellant did not provide evidence in furtherance of the equitable
considerations arising from the Municipal Court matter.
Appellant now raises three questions for our review:
[1]. Did the [t]rial [c]ourt commit an error of law in holding that
[Appellant’s] judgment would expire [at] the end of five years, no
Writ of Revival having been filed?
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3Appellee did not cite to any authority to support its specific assertion that an
attorney’s charging lien dissipates upon expiration of a judgment lien. See
Mot. for Recons. at 2 (unpaginated).
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[2]. Did the [t]rial [c]ourt err in granting a complete set-off of the
judgments where David B. Sherman, Esquire held an equitable
interest in his fee for the original judgment?
[3]. Do the equities favor Appellant, who had previously defended
an attempt to set-off this judgment for almost three years in the
Philadelphia Municipal Court before the Motion was withdrawn?
Appellant’s Brief at 2. In all three of her issues, Appellant claims that the trial
court erred in requiring a set-off without adequately protecting Attorney
Sherman’s interest in the 2013 judgment.
At the outset, we note that “[o]ne judgment may be set-off against
another, through the equitable powers of the court[.]” Fidelity Bank v. Act
of America, Inc., 392 A.2d 784, 785 (Pa. Super. 1978). “We are loathe to
reverse the exercise of the court’s equitable powers unless an abuse of
discretion is clearly evident.” Gondek v. Bio-Medical Applications of
Pennsylvania, Inc., 919 A.2d 283, 286 (Pa. Super. 2007) (citation omitted).
“A trial court abuses its discretion if it renders a judgment that is manifestly
unreasonable, arbitrary or capricious; that fails to apply the law; or that is
motivated by partiality, prejudice, bias or [i]ll-will.” Id. (citation and
quotation marks omitted). “Similarly, the standard of review of a motion for
reconsideration is limited to whether the trial court manifestly abused its
discretion . . . .” Dahl v. AmeriQuest Mortg. Co., 954 A.2d 588, 593 (Pa.
Super. 2008) (citation omitted).
However, “[t]he right of an attorney to secure an equitable charging lien
upon a fund has been frequently recognized by the appellate courts of the
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Commonwealth.” Recht v. Urban Redevelopment Auth., 168 A.2d 134,
136 (Pa. 1961).
In Recht our Supreme Court set forth the five conditions which
must be met before a charging lien will be recognized and applied:
[I]t must appear (1) that there is a fund in court or
otherwise applicable for distribution on equitable principles,
(2) that the services of the attorney operated substantially
or primarily to secure the fund out of which he seeks to be
paid, (3) that it was agreed that counsel look to the fund
rather than the client for his compensation, (4) that the lien
claimed is limited to costs, fees or other disbursements
incurred in the litigation by which the fund was raised and
(5) that there are equitable considerations which
necessitate the recognition and application of the charging
lien.
Shenango Sys. Sols., Inc. v. Micros-Systems, Inc., 887 A.2d 772, 774
(Pa. Super. 2005) (citation omitted).
“While equity recognizes the validity of an attorney’s charging lien to
collect fees on a fund secured by the attorney’s efforts [on] behalf of a client,
the principles of equity also allow for a set-off under the inherent powers of
the courts in the administration of justice.” Id. (citations omitted). The
following considerations apply to a court’s consideration of a request for a set-
off:
Set-off is a form of payment. The right to set-off one judgment
against another is, more properly, the right to pay and satisfy one
judgment by another. Since a judgment creditor cannot levy on
a judgment against himself, set-off is the appropriate remedy and
a motion to obtain a set-off is tantamount to a levy. Similar to a
levy, a motion to set-off is the initial step in obtaining satisfaction
of a judgment. A judgment to be paid in whole or in part by set-
off is tantamount to a fund paid into court for distribution.
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Proie Bros., Inc. v. Proie, 323 F. Supp. 503, 508 (W.D. Pa. 1971) (citation
omitted).4
The Proie Court further analyzed an attorney’s right to payment from a
judgment that is the subject of a motion for set-off:
[A]s pointed out in Recht, an attorney does have a charging lien
where there is a fund in court or otherwise applicable for
distribution on equitable principles.
As stated, we think a judgment procured by an attorney who must
look to the payment of that judgment for his compensation nay
[sic] be equated to a fund produced by his legal efforts when a
set-off is attempted by the defendant in the judgment. Both the
judgment and the fund are in the grasp of a court of equity; both
should be distributed according to equitable principles. A court of
equity is competent to dispose of every question connected with
the judgments to be paid by set-off. The allowance of counsel
fees has always been under the control of the chancellor in equity.
* * *
In Turtle Creek Bk. & Tr. Co. v. Murdock, . . . 28 A.2d 320[(Pa. Super. 1942)], Judge Baldridge cited with seeming approval
the statement in 7 C.J.S. Attorney & Client 228:
The judgment, which has been procured by the efforts of an
attorney while acting on behalf of his client, is, primarily,
the subject matter of a charging lien in favor of such
attorney.
We believe this quotation to be good law in Pennsylvania when a
fund has been created, or, as here, a motion is made to pay the
judgment so procured by way of set-off.
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4Although “federal court decisions do not control the determinations of the
Superior Court,” we may rely on them to the extent we find them persuasive.
See NASDAQ OMX PHLX, Inc. v. PennMont Secs., 52 A.3d 296, 303 (Pa.
Super. 2012) (citation omitted).
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It would be an injustice to turn over the fees for the services
rendered by the attorneys for the plaintiffs to the defendant, their
opponent, whom they had defeated in a difficult and expensive
trial and appeal.
Id. at 508-09 (internal quotation marks omitted).
In her first issue, Appellant asserts the trial court erroneously concluded
that the 2013 judgment, and by extension Attorney Sherman’s interest in that
judgment, expired due to Appellant’s failure to file a writ of revival.
Appellant’s Brief at 5. Appellant contends that the failure to file a writ of
revival merely signifies “that the judgment lien loses priority in the Judgment
Index as to real property.” Id. at 6. Appellant insists that “[a]s to an
execution against personal property, . . . whether as to a garnishment of bank
accounts or the judicial sale of personal property, the judgment itself, without
any priority, continues for twenty years regardless of its place in the index.”
Id. (citations omitted). Appellant concludes that “the charging lien for Mr.
Sherman’s fees, which were contingency fees and thus embedded in the
original judgment . . . did not expire without a writ of revival.” Id.
By way of background:
Judgment liens are a product of centuries of statutes which
authorize a judgment creditor to seize and sell the land of debtors
at a judicial sale to satisfy their debts out of the proceeds of the
sale. The judgment represents a binding judicial determination of
the rights and duties between the parties, and establishes their
debtor-creditor relationship for all the world to notice when the
judgment is recorded in a Prothonotary’s Office. When entered of
record, the judgment also operates as a lien upon all real property
of the debtor in that county.
The judgment lien represents security for the underlying debt, and
conveys a right of execution to the judgment creditor in
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satisfaction of his debt. The judgment not only affects all real
property owned by the debtor, but extends to his equitable
interests, and beneficial interests as well[.]
In re Upset Sale, Tax Claim Bureau of Berks Cty., 479 A.2d 940, 943 (Pa.
1984) (citations omitted).
(a) Real property.―Any judgment or other order of a court of
common pleas for the payment of money shall be a lien upon real
property on the conditions, to the extent and with the priority
provided by statute or prescribed by general rule adopted
pursuant to section 1722(b) (relating to enforcement and effect
of orders and process) when it is entered of record in the office of
the clerk of the court of common pleas of the county where the
real property is situated, or in the office of the clerk of the branch
of the court of common pleas embracing such county.
42 Pa.C.S. § 4303(a); see also Pa.R.C.P. 3023(a) (stating that “a judgment[5]
when entered in the judgment index shall create a lien on real property located
in the county, title to which at the time of entry is recorded in the name of the
person against whom the judgment is entered”), (b). A judgment lien “shall
continue for five years from the date the judgment was entered in the
judgment index unless the judgment is sooner discharged or the lien is sooner
revived.” Pa.R.C.P. 3023(c); see also 42 Pa.C.S. § 5526(1) (reiterating that
“[a]n action for revival of a judgment lien on real property” must be
commenced within five years).
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5 “As used in this chapter, ‘judgment’ means a judgment, order or decree
requiring the payment of money entered in any court which is subject to these
rules, including a final or interlocutory order for payment of costs, except a
judgment against the Commonwealth or a political subdivision.” Pa.R.C.P.
3020.
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“A judgment lien . . . merely prevents a debtor from encumbering or
conveying any real property he might own in such a way as to divest the effect
of the judgment, [and] also prevent[s] later lienholders from satisfying their
debt without first paying the earlier lien.” Shearer v. Naftzinger, 747 A.2d
859, 860-61 (Pa. 2000) (citations and quotation marks omitted). “Thus, a
writ of revival of a judgment lien does nothing more than preserve the
judgment creditor’s existing rights and priorities.” Id. at 861.
Instantly, the trial court concluded:
In this case, Appellant’s initial August 27, 2013 judgment against
Appellee expired on August 27, 2018, after the statutory five (5)
year period. Since that date, Appellant has not filed a Writ of
Revival of the original judgment, thereby rendering the judgment
expired until such time as a Writ has been filed.
Trial Ct. Op. at 4.
Contrary to the trial court’s assertion, the judgment itself did not
expire.6 Rather, only the judgment lien on real property expired. See
Pa.R.C.P. 3023(c); 42 Pa.C.S. § 5526(1); see also 42 Pa.C.S. § 5529
(explaining that “[a]n execution against personal property must be issued
within twenty years after the entry of the judgment upon which the execution
is to be issued”). Therefore, we cannot agree with the trial court’s
determination that Appellant’s failure to file a writ of revival or otherwise
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6 We acknowledge that Appellant, in response to Appellee’s motion for set-off,
initially conceded that the 2013 judgment would expire without the filing of a
writ of revival. Resp. to Mot. for Set-Off at 1. However, Appellant did not
have an opportunity to correct this error, as the trial court subsequently
granted Appellee’s motion for reconsideration without the benefit of a
response from Appellant.
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attempt to collect the judgment caused the 2013 judgment to expire. See
Trial Ct. Op. at 4. Accordingly, we are constrained to conclude that the trial
court erred in granting Appellee’s motion for reconsideration on this basis.
See Dahl, 954 A.2d at 593.
In her second issue, Appellant challenges the trial court’s conclusion that
she failed to provide evidence of Attorney Sherman’s contingent fee
agreement. Appellant’s Brief at 6. Appellant insists that the parties and the
trial court did not request proof of Attorney Sherman’s fee agreement beyond
the averments contained in Appellant’s response to Appellee’s motion for set-
off. Id. Appellant argues that the trial court’s reliance on the lack of evidence
“extended well beyond what [Appellee] had asked for in the text of its motion
for reconsideration,” where Appellee acknowledged that Attorney Sherman
“had some interest in the 2013 judgment . . . .” Id. at 7.
As noted above, Appellant filed a response and memorandum of law in
opposition to Appellee’s motion for set-off. The memorandum of law, which
was submitted by both Attorney Artom-Ginzburg and Attorney Sherman,
advanced Appellant’s argument that a set-off would be improper unless the
parties protected Attorney Sherman’s counsel fees.7 The trial court apparently
found Appellant’s argument persuasive. Specifically, the trial court originally
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7 Appellant’s response and memorandum of law did not include a copy of
Attorney Sherman’s contingent fee agreement. See Pa.R.P.C. 1.5(c)
(reiterating that contingent fee agreements shall be in writing). However,
Appellant did provide a signed verification from Attorney Artom-Ginzburg,
indicating that the facts in Appellant’s filings were true to the best of his
knowledge, information and belief. See Verification, 7/17/18.
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denied Appellee’s motion for set-off “because granting the motion would
deprive [Appellant’s] attorneys of their right to collect a contingent fee on the
judgment entered in this case . . . .” Order, 8/9/18.
In its motion for reconsideration, Appellee did not challenge the validity
of the assertion that Attorney Sherman could have an interest in the
judgment. See Mot. for Recons. at 1 (indicating that Appellee’s motion for
set-off “was not intended to deprive [Attorney Sherman] of fees”). Instead,
Appellee asserted that the failure to revive the judgment lien on the 2013
judgment caused Attorney Sherman’s interest in the judgment to lapse.
Instantly, the trial court now concludes that set-off was proper because
Appellant did not provide evidence of Attorney Sherman’s contingent fee
agreement. However, the averments in Appellant’s memorandum of
law―submitted by Attorney Artom-Ginzburg and Attorney
Sherman―obligated the trial court to explore the validity of any charging lien
or equitable interest that Attorney Sherman held in the 2013 judgment before
deciding the matter of a set-off. See Recht, 168 A.2d at 136; Shenango
Sys Sols., 887 A.2d at 774; see also Proie, 323 F. Supp. at 508. Because
the trial court did not address whether Attorney Sherman had a charging lien
under the five-factor test in Recht, the decision to set-off the judgments was
premature and amounted to an abuse of discretion. See Gondek, 919 A.2d
at 286; Fidelity Bank, 392 A.2d at 785.
In sum, we vacate the order granting Appellee’s motion for
reconsideration and requiring a set-off of the judgments. Upon remand, we
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direct the trial court to conduct an evidentiary hearing to determine whether
Attorney Sherman possesses a valid charging lien. If Attorney Sherman does
not possess a valid charging lien, the trial court may order a set-off of the
judgments and mark the 2013 judgment as satisfied. If Attorney Sherman
does possess a valid charging lien, the trial court must determine the
appropriate counsel fees that the parties must carve out from any further set-
off calculations.8
Order vacated. Case remanded with instructions. Jurisdiction
relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 8/5/19
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8 Due to our disposition, we need not address Appellant’s third issue regarding
the various equitable considerations. See Appellant’s Brief at 8-10.
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