[Cite as Prokos v. Hines, 2014-Ohio-1416.]
IN THE COURT OF APPEALS OF OHIO
FOURTH APPELLATE DISTRICT
ATHENS COUNTY
LAISA PROKOS, :
:
Plaintiff, : Case No. 12CA31
:
vs. :
: DECISION AND JUDGMENT
PAM HINES, : ENTRY
:
Defendant/Third-Party :
Plaintiff, : Released: 03/28/14
:
and :
:
NICKOS PROKOS :
:
Third-Party Defendant, :
:
and :
:
L. JACKSON HENNIGER, :
:
Appellant. :
_____________________________________________________________
LAISA PROKOS, :
:
Plaintiff, :
:
vs. :
:
DEMETRIOS PROKOS, :
:
Defendant-Appellee, :
:
and :
:
Athens App. No. 12CA31 2
NICKOS PROKOS, :
:
Defendant, :
:
and :
:
L. JACKSON HENNIGER :
:
Appellant. :
_____________________________________________________________
APPEARANCES:
David J. Winkelmann, Athens, Ohio, for Appellant L. Jackson Henniger.
John P. Lavelle and Robert R. Rittenhouse, Lavelle and Associates, Athens,
Ohio, for Appellee Demetrios Prokos.
Jeffrey Finley, Eachus & Finley, Gallipolis, Ohio, for the Estate of Laisa
Prokos.
_____________________________________________________________
McFarland, J.
{¶1} L. Jackson Henniger, (hereinafter “Appellant”) appeals the
“Judgment Entry on Garnishment and Findings of Contempt” filed October
16, 2012, in which the trial court held that funds held in Appellant’s IOLTA
account belonged to Appellant’s client Kucik, and were subject to
garnishment. Upon review of the record, we find the trial court’s judgment
is supported by competent, credible evidence. Because we find no error in
the trial court’s judgment, we overrule Appellant’s sole assignment of error.
FACTS
Athens App. No. 12CA31 3
{¶2} The underlying facts of this matter culminated in a lengthy jury
trial in the Athens County Common Pleas Court in March-May 2010.
Appellee is Demetrios Prokos, (hereinafter “Prokos”). For purposes of this
appeal, it is sufficient to note Prokos obtained a judgment against Barry
Kucik, Barry M. Kucik, and the Kucik Revocable Living Trust (hereinafter
“Kucik”) for approximately $600,000.00, after the jury returned a verdict
against Kucik for fraud. Appellant undertook representation of Kucik on
appeal. In December 2010, Prokos filed a garnishment action, seeking to
garnish Kucik’s funds held in Appellant’s IOLTA account.1
{¶3} The garnished funds, and various motions for contempt and
attorney fees filed against Appellant during the post-trial proceedings, have
been the subject of multiple hearings. The evidence in the record
demonstrates Kucik paid $80,000 in funds into Appellant’s IOLTA account
on or about May 21, 2010. Prokos’ garnishment action against Kucik was
filed in late December 2010. On December 30, 2010, the court ordered
Appellant to file an answer of garnishee. The trial court also ordered
Appellant to safeguard anything of value belonging to Kucik. Appellant was
1
“IOLTA” refers to accounts known as “Interest on Lawyer’s Trust Accounts.” Pursuant to Ohio Prof.
Rule 1.15, attorneys are to keep client funds in a separate interest-bearing account in an institution
authorized to do business in Ohio and situated where the lawyer’s office is located. The trust account at
issue here was held in the name of “Henniger and Associates, L.P.A.”
Athens App. No. 12CA31 4
served the garnishment complaint on January 11, 2011. At that time,
Appellant’s IOLTA account contained over $30,000.00.2
{¶4} On January 13, 2011, Appellant requested a hearing. On
January 18, 2011, Appellant filed an answer to the garnishment. He also
filed a motion to quash, motion to stay execution of judgment,3 and a motion
for recusal.4 On January 19, 2011, Prokos filed a motion to compel an
answer to the garnishment and to comply with the trial court’s order. Also
on January 19, 2011, Appellant paid himself $26,328.50 from the subject
funds.
{¶5} On January 20, 2011, the trial court held a hearing on
Appellant’s request. Appellant did not bring documentation with him to the
hearing. The trial court verbally ordered Appellant to leave all monies
belonging to Kucik in the trust account until further order of the court. On
January 21, 2011, Appellant filed an amended answer asserting: (1) the
funds in the IOLTA account were protected by the attorney-client privilege;
(2) the funds were exempt from garnishment; (3) the funds belonged to the
garnishee or his wife; and, (4) the trial court’s ordered raised due process
concerns. On March 21, 2011, Prokos served a subpoena on Appellant
2
The record reveals $50,000 had been withdrawn from the IOLTA account by November 15, 2010.
3
Kucik later filed a motion to stay the garnishment proceedings, which was denied by the trial court. Kucik
then filed a motion for stay in the court of appeals, which was granted on the condition that Kucik post a
supersedeas bond. However, bond was never posted and the appeal was dismissed.
4
Kucik’s motion that the trial judge recuse himself was denied by the Supreme Court.
Athens App. No. 12CA31 5
seeking information regarding the IOLTA account, as well as a copy of the
attorney representation agreement with Kucik. Kucik and Appellant filed a
motion to quash the subpoena.
{¶6} In May 2011, Prokos filed charges of contempt against
Appellant and a motion to show cause. On July 12, 2011, the trial court held
a hearing on Prokos’ charges and motion. The subject of Appellant’s motion
to quash the subpoena was also addressed. On July 13, 2011, the trial court
issued an entry in pertinent part as follows:
A review of the subpoena reveals it was issued March 11, 2011.
It was served March 14, 2011. L. Jackson Henniger filed a
Motion to Quash the subpoena on March 15, 2011. He did not
raise the typographical error issue in this Motion. In the body
of the subpoena it requested compliance by March 30, 2010.
The Court made a finding during the hearing that this was an
insufficient justification to fail to respond (or seek clarification_
to a validly issued and served subpoena as a reasonable person
would understand the date requested for compliance was March
30, 2011 or would seek clarification… Other than the argument
that he could not comply with the subpoena because of the
typographical error in the stated year, L. Jackson Henniger
declined to present any witnesses or evidence.
The Court hereby continues the ORDER announced
during the January 20, 2011 hearing…L. Jackson Henniger is
ORDERED to refrain from taking any money out of his IOLTA
trust account that is associated with the Kucik Defendants and
that he leave all monies attributed to any of the Kucik
defendants in place in his IOLTA account until further ORDER
of the court.
Athens App. No. 12CA31 6
On July 13, 2011, Appellant re-deposited the $26,328.50 amount he had
previously withdrawn.
{¶7} On July 20, 2011, the trial court issued a nunc pro tunc entry
ordering Appellant to file an accounting under seal of his trust account.5 On
July 25, 2011, Appellant and Kucik appealed the nunc pro tunc order. On
July 27, 2011, Appellant filed a copy of the representation agreement with
Kucik for purposes of the appeal. On December 15, 2011, this court found
the July 20, 2011 nunc pro tunc order was not a final appealable order.
{¶8} On April 30, 2012, the Internal Revenue Service (IRS) levied
against the $30,000 in Appellant’s IOLTA account. On May 23, 2012,
transcripts from the 2010 trial were completed and filed. On June 29, 2012,
Prokos filed a contempt charge against Appellant based on the July 20, 2011
nunc pro tunc order to file trust account records under seal.
{¶9} On August 23, 2012, the trial court held a hearing on contempt
regarding two issues: (1) Appellant’s failure to provide his trust records
pursuant to the court order and, (2) Appellant’s failure to safeguard the
money as ordered. Again, at the August 23, 2012 contempt hearing,
Appellant failed to bring his trust account records. He also failed to bring
documents pertaining to the IRS levy on his funds.
5
In the nunc pro tunc order, the parties were also ordered to supplement their memoranda of law as to the
purpose for the money deposited in the IOLTA account. Also, the names of Appellant’s clients were to be
redacted from these records, except for the Kucik defendants.
Athens App. No. 12CA31 7
{¶10} At the August 23rd hearing, Appellant testified he had
discussions with an IRS field agent about his obligations and had advised the
IRS that the $30,000 in his trust account belonged to him. Appellant further
directed the IRS to the IOLTA account at Century National Bank. Appellant
did not put on any witnesses or evidence. At the conclusion of the hearing,
Prokos argued Appellant’s actions with regard to the money did not show
prudence and did show disregard of the court’s two previous orders to
safeguard the money. Prokos further argued the proper procedure, when the
IRS became involved, would have been to notify the judgment creditor, the
Court, and take steps so that all parties could be heard.
{¶11} Appellant provided the IRS records on August 24, 2012.
These records demonstrated that on April 13, 2012, the IRS notified
Appellant it was levying the trust account at Century National Bank.
Appellant had returned a waiver of due process hearing to the IRS and had
written on the waiver: “It is my money.” The trial court found Appellant in
contempt of the July 20, 2011 nunc pro tunc order and ordered Appellant to
file an accounting and provide documentation of the IRS levy.
{¶12} On August 27, 2012, Prokos filed another motion for contempt,
alleging Appellant violated the court’s July 2011 order to safeguard the
money associated with Kucik. On September 14, 2012, the trial court held a
Athens App. No. 12CA31 8
hearing on this issue of Appellant’s alleged disobedience of the August 23,
2012 order of the court.6 The trial court also heard testimony about the legal
representation contract between Appellant and Kucik and the merits of the
garnishment issue.
{¶13} At the September, 2012 hearing, Appellant testified the
contract signed June 9, 2010, was to memorialize an earlier verbal
agreement. Previously, $80,000.00 had been paid into Appellant’s trust
account. Appellant received the garnishment notice in late December 2010.
Appellant testified $50,000 was for his attorney services on appeal and
$30,000 was for producing a transcript for purposes of the appeal.
Appellant testified there was a provisional condition that the $30,000 would
belong to Appellant in the event it was not used for the transcript. Appellant
testified at the time he signed the contract, he understood he had a pecuniary
interest in the $30,000. Appellant testified at the time the IRS levied on the
$30,000, the transcripts had been paid for. At the end of the hearing, all
parties agreed the evidence would be incorporated into an upcoming October
hearing.
{¶14} On October 4, 2012, the trial court held another hearing on
cross motions for attorney fees and Appellant’s motions for contempt for
6
Although Appellant filed the documents with the court, Appellant did not receive the information within
24 hours as ordered.
Athens App. No. 12CA31 9
violation of the December 30, 2011 and July 13, 2011 orders. On October
16, 2012, the trial court issued its journal entry on garnishment and
contempt. The court found: (1) Prokos was entitled to garnish the $30,000
of Kucik’s funds held in Appellant’s IOLTA account on December 30,
2010; (2) Appellant was in contempt for failing to comply with various
orders of the court; and (3) Appellant owed Prokos attorney fees for
expenses he caused Prokos to incur.
{¶15} This appeal regarding Prokos’ entitlement to garnish the funds
of Kucik held in Appellant’s IOLTA account on December 30, 2010,
followed.
ASSIGNMENT OF ERROR
I. THE TRIAL COURT’S REFUSAL TO GIVE EFFECT TO
HENNIGER’S INTEREST IN THE FUNDS ORIGINALLY
EARMARKED FOR PAYMENT FOR A TRANSCRIPT, IF THOSE
FUNDS WERE NOT USED TO PAY FOR THE TRANSCRIPT
CONSTITUTED ERROR.
STANDARD OF REVIEW
{¶16} In reviewing a trial court’s judgment, it is well established that
every reasonable presumption must be made in favor of the judgment and
findings of fact. Shemo v. Mayfields Hts., 88 Ohio St. 3d 7, 2000-Ohio-258,
722 N.E.2d 1018; Seasons Coal Co., v. Cleveland, 10 Ohio St. 3d 77, 461
N.E.2d 1273 (1984). Furthermore, judgments supported by competent,
Athens App. No. 12CA31 10
credible evidence going to the material elements of the case will not be
disturbed as being against the manifest weight of the evidence. Shemo,
supra; C.E. Morris Co. v. Foley Constr. Co, 54 Ohio St. 2d 279, 376 N.E.2d
578 (1978), syllabus. See, also, First Bank of Marietta v. Mascrete, Inc., et
al., 125 Ohio App. 3d 257, 708 N.E. 2d 262, (4th Dist. 1998).
LEGAL ANALYSIS
{¶17} Appellant relies on (1) the evidence of the legal representation
agreement between Kucik and Appellant dated June 9, 2010, and (2) the
evidence that the appeal transcripts were paid for by another source to
support his argument that he owned the $30,000 Appellee garnished. The
financial terms of the contract are set forth in pertinent part as follows:
2.a. Client has paid to the trust account of Attorney the sum of
$80,000 as consideration for this agreement as entered into on
5/21/2010.7
b. Fixed Fee. Client shall pay the fixed non-refundable fee
(“Fee”) of Fifty Thousand Dollars ($50,000) to Attorney, which
shall be deducted from the aforesaid $80,000; provided that the
non-refundable fee is subject to the following rule, and Client
hereby is advised of the same* * *.
Additionally, in the event that the Writ of Prohibition is granted
without the cost of a transcript, the sum of $30,000 shall be
added to the Fixed Fee, in consideration for bearing the
additional retrial responsibilities called for above.
7
The date “5/21/10” was handwritten into the contract.
Athens App. No. 12CA31 11
The fee is nonrefundable and earned upon receipt subject to the
qualifications set forth above as to the ethical rules noted.
c. $30,000 of the said $80,000 shall be escrowed for a transcript
for appeal, but if it does not need to be used for this, as where
the Writ of Prohibition is granted, then the $30,000 shall be
deemed part of the Fixed Fee for the purposes set forth above.
And at paragraph 11:
In the event that any creditor, receiver or Court in Bankruptcy
attaches or successfully lays claim to any or all funds paid to
Attorney by Client, the representation shall cease and Attorney
may withdraw from representation.
{¶18} Appellee contends the trial court correctly determined the
Kucik funds were subject to garnishment. Appellee argues: (1) the fact that
the Kucik funds were in Appellant’s trust account reflects that they belonged
to the Kucik defendants; (2) the authenticity of the legal representation
agreement between Kucik and Appellant is suspect; (3) at the time of notice
of garnishment, pursuant to the alleged terms of the contract for legal
services, Appellant did not have an interest in the $30,000 contained in his
trust account.
{¶19} Appellant argues because of the 2010 garnishment action,
Kucik made other arrangements to pay the cost of transcript fees for
purposes of appealing the verdict in favor of Prokos. The transcripts were
completed on May 23, 2012 and were paid for from another source.
Appellant argues he had a pecuniary interest in the funds at the time they
Athens App. No. 12CA31 12
were garnished in December 2010. This argument might be more well-
received if Appellant had produced the legal agreement earlier in the
proceedings and had testified to considerably more persuasive, reliable
knowledge as to the procurement of the appeal transcripts.
{¶20} We begin by citing the reasoning on which the trial court based
its decision:
“The Court finds that the $30,000 in the IOLTA account was
the property of the Kucik Defendants and, therefore, was
subject to garnishment. First, its placement in Henniger’s
IOLTA account per Haddasah, parag. 9, is indicative of its
status as client (Kucik) money/property, not Henniger’s.
Second, the transcript was not complete until May 2012. In
addition, the Plaintiff could have garnished the $30,000 earlier
if Henniger had complied with previous orders of this Court to
retain the money and had not consented to the I.R.S. levy on the
IOLTA account.
Henniger has not complied with Court orders and the
notice of garnishment that he retain the money in his IOLTA
account until the Court decided if it could be garnished. He did
not produce the ostensibly then-existing agreement between
himself and Kucik Defendants at the January 20, 2011 hearing.
The Plaintiff correctly argued that moneys held by an
attorney are not immune from garnishment. (Jan. 20, 2011,
Trans. pp. 10-14) The Plaintiff also correctly stated that
Henniger did not state a legal reason why the funds were
exempt. (Jan. 20, 2011, Tran. p. 30)
{¶21} The first district court of appeals in Hadassah v. Schwartz, 197
Ohio App. 3d 94, 2011-Ohio-5247, 966 N.E.2d 298, began by discussing
garnishment actions in general at ¶ 6, stating:
Athens App. No. 12CA31 13
“In a garnishment action, a creditor proceeds to satisfy a debt
owed to that creditor by collecting a debtor’s property in the
possession of a third person, called the garnishee. In re Estate
of Mason, 109 Ohio St. 3d 532, 2006-Ohio-3256, 849 N.E. 2d
998, ¶ 18, citing Union Properties, Inc. v. Patterson, 143 Ohio
St. 192, 195, 54 N.E. 2d 668 (1944)(superseded by probate
statute). As explained in the garnishment statutes, R.C.
2716.01 et seq., ‘[a]person who obtains a judgment against
another person may garnish the property, other than personal
earnings, of the person against whom judgment was obtained, if
the property is in the possession of a person other than the
person against whom judgment was obtained, only ***300
through a proceeding in garnishment and only in accordance
with this chapter.’” R.C. 2715.01(B).
{¶22} The first district opinion also quoted the rule in
Investment Research Institute, Inc., v. Sherbank Marketing, Inc. 134
Ohio App. 3d 478, 731 N.E. 2d 690 (1st Dist. 1998), that “[a]debtor’s
funds generally are not exempt from garnishment merely because the
funds are placed with an attorney.”
{¶23} We agree with the trial court that Hadassah is particularly
instructive to our considerations herein. Hadassah was a judgment creditor
who brought a garnishment action to garnish $150,000.00 in a law firm’s
attorney IOLTA trust account. The trial court permitted garnishment of the
$150,000.00 belonging to Schwartz. Schwartz appealed, arguing the trial
court erred by ordering garnishment of his funds in the IOLTA account
because those funds had been designated as a retainer for legal services and
were no longer being held for settlement purposes.
Athens App. No. 12CA31 14
{¶24} In Hadassah, the law firm, BG&L, had asserted in its
answer that the money Schwartz paid the firm had been deposited in
the firm’s IOLTA account and the funds served as a retainer for legal
services. The appellate court noted neither Schwartz nor the firm ever
produced the alleged retainer agreement and nothing in the record
indicated the law firm acquired an ownership interest in the retainer,
or that the retainer was nonrefundable.
{¶25} At the outset, we first agree with the trial court when it
pointed out Appellant has never stated a legal reason why the funds
were exempt from garnishment. Hadassah, ¶ at 10, acknowledged
that property in the form of an attorney-fee retainer does not appear in
the somewhat lengthy list of exempted property in R.C. 2329.66. The
appellate court further noted garnishment is a purely statutory
procedure and the appellate court was not in the position to create
exceptions to the garnishment statute. Hadassah, ¶ 12; see, Ohio Bell
Tel. Co. v. Antonelli, 29 Ohio St. 3d 9, 11, 504 N.E. 2d 717 (1987).
Analyzing the case sub judice has necessitated review of decisions
involving garnishment of attorney accounts in other jurisdictions. For
instance, in Arnold, et al., vs. First American Holdgs., 982 So.2d 628,
(2008), the Supreme Court of Florida interpreted its state’s
Athens App. No. 12CA31 15
garnishment statute and the obligations it imposed on third parties,
including attorneys served with writs of garnishment. As in Ohio Bell
Tel. Co. vs. Antonelli, supra, the Florida high court also noted that
under the Florida garnishment statutes, attorney trust accounts are not
exempted.
{¶26} We further agree with the trial court, and Appellee, that
the fact the funds were in Appellant’s trust account is persuasive
evidence that the funds belonged to Appellant’s client, Kucik. Citing
Hadassah, the trial court noted the placement of the funds in
Appellant’s IOLTA account was indicative of its status as client
property. The Hadassah opinion in particular noted the Ohio Rules of
Professional Conduct require that property belonging to a client or a
third party be kept in a client’s trust account and that property
belonging to an attorney be kept separate from a client’s property.
Hadassah, ¶ 9; Prof. R. 1.15; Disciplinary Counsel v. Miller, 126
Ohio St. 3d 221, 2010-Ohio-3287, 932 N.E. 2d 323, ¶ 8. The
Hadassah opinion pointed out that the law firm kept Schwartz’s
$150,000.00 retainer in an IOLTA account, *98 which indicates that,
at that specific point in time, Schwartz and not the firm, retained the
Athens App. No. 12CA31 16
ownership rights over the retainer. Therefore, reasoned the court, the
retainer was property subject to garnishment under R.C. 2716.01.
{¶27} Finally, like the trial court, we are also unpersuaded by
the evidence of the contract between Appellant and Kucik. Although
the contract date is June 9, 2010, Appellant did not produce the
agreement where it would have been relevant, at the initial hearing on
January 20, 2011. Appellant did not produce the agreement in
response to Appellee’s March 2011 subpoena for records. The
agreement was filed on July 27, 2011, for purposes of appeal of the
nunc pro tunc order, yet not placed into evidence by Appellant.
Further, the agreement was not provided by Appellant at the July 12,
2012 hearing.
{¶28} At the September 14, 2012 hearing, Appellant testified
as to the relevant dates of the contract, the contract’s terms, and the
language of the contract which, he asserts, gave him ownership of the
$30,000. In the October 16, 2012 decision, the trial court also noted
the “ostensibly then-existing agreement” was not produced much
earlier. Appellee argues this is “suspect.” We must agree, especially,
in light of Appellant’s evasive testimony on the second part of his
Athens App. No. 12CA31 17
argument, that per the contract, he was entitled to the funds because
other arrangements had been made to pay for the appeal transcripts.
{¶29} On cross-examination at the September 14, 2012 hearing,
Appellant’s testimony regarding his knowledge as to payment of the
transcripts, presents as evasive:
Q: Mr. Henniger, according to the records of the Court, the transcript of
which you are speaking of was filed May 23, 2012. Your account was
garnished by the IRS, levied by the IRS April of 2012. Were you aware of
that sir?
A: Is that your testimony? I, I don’t know what your saying is true.
Q: I am saying were you aware the transcript was filed May 23, 2012?
And there is a file stamped copy of it right there in the Judge’s file?
A: I can’t say as I’m particularly aware of that date no. My
understanding was that it had been paid for and that it was done.
Appellant further testified:
Q: Now after the garnishment was filed, other arrangements were made
to pay the court reporters through funds through a Florida individual who
happens to be attorney. A Mr. John Cardaris, or some name like that.
Would that be correct?
A: I don’t have any direct knowledge of the particulars of that
arrangement. My understanding is that such an arrangement may have been
made. I think that’s how it was paid for.
Q: You’ve never been replaced as the attorney of record for this appeal,
correct?
A: I have not.
Athens App. No. 12CA31 18
Q: You’re testifying to this Court that you have no knowledge on how
the transcript for this appeal that you had to write was going to be paid for?
BY ATTORNEY WINKELMANN: Objection that question has been
asked and answered.
A: I answered his question.
BY THE JUDGE: Just a minute. Overruled.
A: I’m sorry.
Q: I said as attorney of record for this appeal, are you testifying to this
Court that you don’t have any knowledge on how the transcript was going to
be paid for, for the appeal that you are supposed to be writing that is due
September 20th?
A: Well I’ve answered your question, but I’ll attempt to respond to the
question you have just asked as well. Which is slightly different. I didn’t
say I had no knowledge of it. I said my understanding of it was, that the
transcript was being paid for through the offices of another person. But I
didn’t oversee that or I was not privy to that exact arrangement.
Appellant later testified:
Q: If your client was the one making these payments through this agent
in Florida, to these court reporters, you’re telling this court you were
unaware of that?
A: I didn’t say that. I said I’m unaware of the exact arrangement. I’m
aware that he had made some arrangement to pay for it.
Q. Do you know how many different payments it took him to pay for the
transcript and over what period of time?
A: I am not.
Q. And I am going to represent to you that he still owed money for the
transcript in May of 2012 after the IRS levied your account. Would you
agree or disagree with that?
Athens App. No. 12CA31 19
A: I don’t know exactly. I thought it was paid for.
Q: You simply don’t know.
A: That’s what I said.
{¶30} The facts showing the alleged existence of an agreement that
was not produced until much later in the proceedings, along with
Appellant’s testimony about the transcripts for an appeal which he
adamantly claimed to be preparing, apparently raised a credibility issue with
the trial court. It is well-settled the weight to be given evidence and the
credibility to be afforded testimony are issues to be determined by the trier
of fact. State v. Frazier, 73 Ohio St. 3d 323, 339, 1995-Ohio-235, 652
N.E.2d 1000, citing State v. Grant, 67 Ohio St. 3d 465, 477, 1993-Ohio-171,
620 N.E. 2d 50. The fact finder “is best able to view the witnesses and
observe their demeanor, gestures, and voice inflections, and use these
observations in weighing the credibility of the proffered testimony.”
Seasons Coal Co. v. Cleveland, 10 Ohio St. 3d 77, 80, 461 N.E. 2d 1273
(1984). Based on the evidence contained in the record, we will not second-
guess the trial judge’s credibility determination in this matter.
{¶31} In the alternative, Appellant has asserted an equitable
argument, that no attorney would take a case to the court of appeals if the
client were unable to pay for the work due to a garnishment, to support his
Athens App. No. 12CA31 20
claim of error. In the Hadassah appeal, Schwartz made the argument that
garnishment of his law firm’s IOLTA account deprived him of
representation and that the deprivation was unfair in the absence of evidence
that Schwartz had engaged in collusion or concealment to avoid
garnishment. As indicated above, the appellate court based its decision, in
part, on the fact that a statutory exemption for attorneys and attorney
accounts has not been created. And, although the appellate court in
Hadassah was not completely unsympathetic with Schwartz’s argument that
garnishment of an IOLTA account might deprive a client of legal
representation, the court suggested a client in Schwartz’s position could
avoid such a result by reaching a representation agreement with the attorney
that gives the attorney an ownership interest in some or all of the legal fee
upon receipt. The court emphasized as a contract giving the attorney an
ownership interest in the legal fee deposited might be permissible, as long as
the agreement was not used as a tool to evade garnishment and did not place
the attorney in the position of receiving an excessive fee. Hadassah, ¶ 13;
see, Prof.Cond.R. 1.5.
{¶32} In our research of the resolution of these issues in other
jurisdictions, a recurring theme, throughout various stages of garnishment
proceedings, has been whether or not those attempting to defend or avoid
Athens App. No. 12CA31 21
garnishment acted in a collusive or evasive manner. For instance, as far back
as 1852, in Wheelock v. Tuttle, 64 Mass. 123, 1852 WL 4624 (1852), the
Supreme Court of Massachusetts noted: “There is no authority for assuming
that the payment of proper fees to counsel in advance, [***], is unlawful.
However, the court also cautioned:
“[I]f the facts in a case show an unlawful consideration or
undertaking (internal citation omitted); or constitute a collusive
or dishonest bargain, so as to be void at common law; (internal
citation omitted); or involve considerations in themselves
immoral or dishonorable- - such a case would have to be
decided on its own merits.
In Crain v. Gould, 46 Ill. 293, 1867 WL 5371 (Ill.) (1867), the Supreme
Court of Illinois held “When the answer of a garnishee is vague and evasive
in stating the amount of his claim, it will be construed most strongly against
him.” More recently, in Abbott v. Cunningham, 377 S.W.3d 565, 2012 Ky.
App. LEXIS 249, a Kentucky appellate court concluded that a “flat fee,”
such as the ones accepted in [the underlying criminal case], is earned
immediately by the attorney due to the inherent risk the attorney takes by
accepting the fee and representation of the client regardless of the time and
effort which could be involved. In a concurring opinion, another judge
cautioned:
“If counsel’s answer should, however, disclose that he holds
money to secure payment of services which will be performed,
and it appears that the sum held is larger than he could
Athens App. No. 12CA31 22
reasonably expect as his fee, or if it appears that evasive tactics
are being resorted to, the court will undoubtedly permit
garnishment of the funds. [Footnotes omitted].” (reversed on
other grounds by Abbott v. Cunningtham, 2011-SC-000291-
DG, 2013 Ky. LEXIS 367.
And, in State ex rel. Koster v. Cain, 383 S.W.3d 105, 2012 Mo. App.
LEXIS 1438 (C.A. Mo. W.D.Div. III) 2012, the State of Missouri appealed
from a trial court’s judgment that sustained a motion to quash a garnishment
filed by a law firm garnishee. The law firm had defended the action, in part,
on the basis of attorney-client privilege. In rendering its decision, the
appellate court noted :
“In fact, the attorney-client privilege does not afford an attorney
with a blanket exemption from garnishment proceedings
seeking to attach client funds…Nor should the argument be
relied on that counsel is entitled to retain the funds to secure
payment of any fees due or to become due in any business for
which he has been retained by the client before the service of
process on him. It is likely that the court would look upon the
situation as an attempted fraud on creditors, since it would
permit a debtor to put his property beyond their reach pending
payment for services which the attorney might in the future
render the client….”
{¶33} In his brief, Appellee posits additional arguments that (1) even
if the contract for legal services was authentic, the $30,000 fixed fee was
unenforceable, and (2) under the terms of the purported representation
agreement at paragraph 11, the very filing of the garnishment entitled the
Kucik defendants to a refund of the $30,000 held in Appellant’s trust
Athens App. No. 12CA31 23
account. Given the trial court’s reasoning, and the case law clearly
supporting it, we decline to additionally consider whether or not the $30,000
fixed fee was excessive and unenforceable. The trial court proceedings
produced a voluminous record, court appearances were frequent, and the
issues complex. Appellee’s second argument, that under the terms of the
agreement the filing of the garnishment entitled the Kucik defendants to a
refund, may also have merit. Suffice it to say, based on our review of the
record, we believe the trial court had competent credible evidence to support
its finding that the $30,000.00 held in Appellant’s IOLTA account was
subject to garnishment. As such, we affirm the judgment of the trial court
and overrule the assignment of error.
JUDGMENT AFFIRMED.
Athens App. No. 12CA31 24
JUDGMENT ENTRY
It is ordered that the JUDGMENT BE AFFIRMED and that the
Appellee recover of Appellant costs herein.
The Court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this Court directing
the Athens County Common Pleas Court to carry this judgment into
execution.
Any stay previously granted by this Court is hereby terminated as of
the date of this entry.
A certified copy of this entry shall constitute the mandate pursuant to
Rule 27 of the Rules of Appellate Procedure.
Harsha, J. and Hoover, J.: Concur in Judgment and Opinion.
For the Court,
BY: ________________________________
Matthew W. McFarland, Judge
NOTICE TO COUNSEL
Pursuant to Local Rule No. 14, this document constitutes a final
judgment entry and the time period for further appeal commences from
the date of filing with the clerk.
Prokos v. Hines
Combined Opinion