Picciolo v. THE STATE OF NEW YORK and ORCHARD GROVE OF DUTCHESS, INC.,
#2000-010-006, Claim No. None, Motion No. SP-088
Petitioner's application for an order of distribution pursuant to the Eminent
Domain Procedure Law was denied. Petitioner, an attorney who formerly
represented the property owner whose property was taken by eminent domain, could
not enforce an attorney's lien against the advance payment because such arose by
operation of law and was not created by the attorney's efforts.
ANTHONY S. PICCIOLO, ESQ.
Footnote (claimant name)
THE STATE OF NEW YORK and ORCHARD GROVE OF DUTCHESS, INC.
Footnote (defendant name)
Terry Jane Ruderman
Anthony S. Picciolo, Esq., pro se
State of New York:
Hon. Eliot Spitzer, Attorney General
by: Donald Shehigian, Assistant Attorney General
Orchard Grove of Dutchess, Inc.:John A. Porco, P.C.
March 8, 2000
See also (multicaptioned
The following papers were read and considered on Petitioner's application for
an order of distribution pursuant to E.D.P.L. 304(E)(1) and Orchard Grove of
Dutchess, Inc.'s cross-petition for an order of distribution:
Order to Show Cause, Petition and Exhibits 1
Notice of Cross-Petition, Answer and Cross-Petition 2
Answer of State of New York 3
Answer to Cross-Claim of Anthony S. Picciolo, Esq. 4
Affidavit in Opposition of Edward Ginsberg and Exhibits 5
Affirmation of Donald Shehigian, Asst. Attorney General 6
Reply Affirmation and Exhibits 7
Supplemental Reply Affirmation 8
This proceeding arises, somewhat indirectly, from the appropriation by the
State of New York of property owned by Orchard Grove of Dutchess, Inc., in
April, 1999. The property in question is located in Dutchess County, adjacent
to the Taconic State Parkway at its intersection with Bogardus Lane, and the
purpose of the appropriation was the "elimination of the Taconic State
Parkway/Bogardus Lane intersection."
required by E.D.P.L §303, the State made an offer of $123,000.00 to Orchard
Grove for "the value of all claims for the property appropriated and legal
damages caused by such appropriation."
accordance with E.D.P.L. §304(A), Orchard Grove was advised that it had the
right to reject the State's offer as payment in full and elect instead to accept
it as an advance payment while preserving its right to seek further compensation
by means of an action in the Court of Claims. Orchard Grove elected to treat
the offer as an advance payment and subsequently filed a claim with this court
on July 9, 1999 (Claim No. 100686, seeking $250,000.00 direct damages and
$750,000.00 consequential damages).
In the meantime, having determined that it was unable to make certification of
the person or persons legally entitled to the advance payment, the Attorney
General's office deposited the amount in question, including interest, in
Eminent Domain Account W005094, pursuant to E.D.P.L. §304(E)(1) and Court
of Claims Act §23, subject to the right of any interested party to commence
a distribution proceeding. Anthony S. Picciolo, Esq, who formerly represented
Orchard Grove, has now commenced such a proceeding, asserting that he has an
enforceable lien in the amount of $41,000.00 against the $123,000.00 pursuant
to Judiciary Law §475. It appears from the filed papers that due notice of
this proceeding has been served on all interested parties as certified by the
Attorney General, namely Orchard Grove, the Pawling Savings Bank, Dutchess
County, the State of New York, and the attorneys who formerly represented
Petitioner's claim arises out of a June 12, 1997 handwritten retainer agreement
that states, in its entirety, as follows:
It is agreed by + between the undersigned as follows:
Edward Ginsberg + William Nesbeth
engage Anthony S. Picciolo as their attorney to prosecute their claim against
the State of N.Y., Dept. of Transportation, regarding the issue of ACCESS at the
Taconic Parkway to their BOGARDUS LANE property.
Fee to be paid as follows:
(1) out of pocket expenses - $500 paid to A.S. Picciolo this date -
(2)(A) 33 1/3 % of any monies paid to Ginsberg + Nesbeth (Orchard Grove) by
N.Y.S. for the purchase of the Bogardus Lane access up to $125,000.00.
(B) $20,000.00 flat if the State grants access to the Taconic Parkway rather
The agreement is signed by Edward Ginsberg and Anthony S. Picciolo.
On June 17, 1997, Picciolo wrote a letter to the Acting Commissioner of the
Department of Transportation (D.O.T.) in which he advised that he represented
the "above named
with regard to their
application for a permit to improve access to the existing Bogardus Lane exit of
the Taconic Parkway," and that he was writing in an effort to avoid litigation.
Picciolo then referenced a June 20, 1995 determination of the D.O.T. "denying
said access" and opined that such determination "cannot withstand judicial
review" (Picciolo aff., ex. "D"). This 1995 determination was in response to a
plan that had been submitted by Orchard Grove to subdivide the property in
question into 18 residential lots, a plan that required D.O.T. approval because
of the increase in traffic that would be generated at the Taconic
Parkway/Bogardus Lane intersection. After explaining why the resulting increase
in traffic at the intersection would have been unacceptable, the D.O.T. advised
that it would "not grant approval to improve the westerly leg of Bogardus Lane
as proposed, but will proceed to acquire the property or the rights of access to
the Parkway via Bogardus Lane" (Picciolo aff., ex. "E"). Picciolo's position
was that this determination was "arbitrary and capricious" because the mere
statement that the State intended to acquire the right of access rendered his
client's property worthless without the State actually acquiring such rights and
concomitantly paying due compensation.
In response to Picciolo's letter, the D.O.T.'s Assistant Commissioner and
Chief Engineer advised that the State in fact intended to acquire the access
rights and that "After obtaining the necessary approvals, we should be able to
extend an offer to your client by mid 1998" (Picciolo aff., ex. "F").
According to Picciolo, Orchard Grove did not actually own the property at this
time but it had a contract to purchase it for $275,000.00. He states that
Ginsberg was elated to receive the news that the State intended to acquire the
right of access, that Orchard Grove proceeded to renegotiate the purchase
contract downward, to $125,000.00, and that it subsequently purchased the
property for that amount.
Picciolo further advises that he continued his representation of Orchard
Grove, as manifested primarily by correspondence with the D.O.T. intended to
accelerate the State's plans with respect to the pending acquisition of access
rights by the State. In June 1998, Picciolo received a letter from Ginsberg
advising of his dissatisfaction with the services rendered by Picciolo and
stating that he had obtained new counsel (Picciolo aff., ex. "L"). That same
month, Picciolo prepared a purported "Notice of Attorney's Lien" in the form of
a letter addressed to the D.O.T. stating that he had been retained by Orchard
Grove "to prosecute a claim or cause of action against you by reason of the
proposed TAKING of access to the Taconic State Parkway at Bogardus Lane in
Dutchess County" and that he was claiming "a lien on such claim or cause of
action and upon any and all moneys or property to which the above named client
may become entitled by any reason of any verdict, report, determination,
decision, final order or settlement in favor of said client, and which may be
recovered on account of such claim or cause of action" up to $41,666.00, or
one-third of $123,000.00 (Picciolo aff., ex. "A").
Next, Orchard Grove commenced an Article 78 proceeding, in February 1999,
seeking a judgment directing the State to file a taking map and proceed with the
appropriation of the access rights. This proceeding was rendered moot by the
State's offer of $123,000.00, conveyed to Orchard Grove in the April 2, 1999
letter, and the filing of the taking map on April 15, 1999.
ORCHARD GROVE'S ALLEGATIONS
Ginsberg advises that his corporation acquired title to the subject property
in June 1997, pursuant to a 1994 contract of sale. He confirms Picciolo's
statements that the original purchase price was $275,000.00, but that this
figure was negotiated down to $125,000.00 as the result of the uncertainty
arising from the State's refusal to permit access to Bogardus Lane. According
to Ginsberg, Picciolo was involved in the closing as the attorney for the
mortgage company, and after becoming aware of Orchard Grove's frustration over
the access situation, he offered to represent the corporation to prosecute a
claim against the State of New York, including an Article 78 proceeding and a
claim in the Court of Claims for damages. Thus, the retainer agreement that
forms the basis of this proceeding was entered into.
Ginsberg's position is that the representation his corporation received from
Picciolo was unsatisfactory in many respects, notably that no litigation was
ever commenced by him. Ginsberg states that he became concerned about
Picciolo's ability to adequately represent the corporation's interests and, in
May 1998, Ginsberg discharged Picciolo and retained new counsel, Robert
Lusardi, and commenced the Article 78 proceeding that immediately preceded the
commencement of appropriation proceedings. Subsequent to the appropriation,
Orchard Grove retained experienced appropriation counsel, upon the advice of
Lusardi, and Claim No. 100686, which is still pending, was filed.
Orchard Grove's position is that Picciolo did not perform the legal work that
was the basis of the contingent fee referenced in the retainer agreement (i.e.,
commencement of the Article 78 proceeding and the appropriation claim), that all
Picciolo did was to prepare and send a few letters, make a few telephone calls
and attend one meeting, and that the work that it had contemplated would have
been performed by Picciolo in exchange for the contingent fee was and will be
performed by Lusardi and by counsel in the pending appropriation claim.
Ginsberg claims that all that Picciolo achieved was a non-binding statement
from the State that it intended to acquire the access rights.
Although the papers submitted by the State do not address many of the
contentions at issue between Picciolo and Ginsberg, they do raise a number of
1) The title search in connection with the appropriation was made on February
1, 1999 and title was certified on March 22, 1999. The filing of the Article 78
proceeding had no effect on the acquisition process and, in fact, the State
could not have been compelled through an Article 78 proceeding to acquire
property because it is a discretionary act.
2) The July 25, 1997 letter from the Assistant Commissioner and Chief Engineer
was not a commitment to purchase the property, or the acquisition rights,
because only the Commissioner of Transportation, or his designee by official
order, the Director of the Real Estate Division, has the authority to make such
3) The State always intended to acquire the access rights at Bogardus Lane, as
part of its ongoing policy of eliminating hazardous at-grade crossings on the
Taconic Parkway, however the lengthy acquisition process, which included public
hearings, the approval of the Comptroller and the appropriation of funding by
the Legislature, prevented the State from meeting its original timetable, as
expressed in the correspondence to Picciolo.
There are many factual disputes between Picciolo and Ginsberg reflected in the
submitted papers. Nevertheless, analysis of the relevant law makes clear that
resolution of these issues is neither required nor appropriate to the only issue
before this court; i.e., whether Picciolo has a valid attorney's lien that is
enforceable against the amount deposited by the State pursuant to the Notice of
Appropriation and the Agreement for Advance Payment.
Judiciary Law §475, relied upon by Picciolo, provides in relevant
From the commencement of an action, special or other proceeding ***, or the
service of an answer containing a counterclaim, the attorney who appears for a
party has a lien upon his client's cause of action, claim or counterclaim
It is well-established that a lien under this section may only be asserted by
an attorney who appears as attorney of record for a party in a judicial
proceeding (Rodriguez v City of New York, 66 NY2d 825;
Cataldo v Budget Rent a Car Corp., 226 AD2d 574) and that the lien
comes into existence "upon commencement of the action or proceeding" (LMWT
Realty Corp. v Davis Agency, Inc., 85 NY2d 462, 467). Since it is
undisputed that Picciolo never appeared in any action as attorney of record,
and indeed that no action or proceeding was commenced until well after his
representation of Orchard Grove ceased, §475 does not serve to provide him
with a lien against the funds on deposit.
Although Picciolo somewhat surprisingly never addresses the issue, Judiciary
Law §475-a, which provides for the creation of an attorney's charging lien
pursuant to notice, prior to the commencement of an action or proceeding, is the
only provision of law which might provide support for the lien that he asserts.
That section provides, in relevant part:
If prior to the commencement of an action, special or other proceeding, an
attorney serves a notice of lien upon the person or persons against whom his
client has or may have a claim or cause of action, the attorney has a lien upon
the claim or cause of action from the time such notice is given ***. The notice
shall, (1) be served by either personal service or registered mail; (2) be in
writing; (3) state that the relationship of attorney and client has been
established, the nature of the claim or cause of action, and that the attorney
claims a lien on such claim or cause of action; (4) be signed by the client, or
by a person on his behalf whose relationship is shown, and which signature shall
also be witnessed by a disinterested person whose address shall also be given;
and (5) be signed by the attorney. A lien obtained under this section shall
otherwise have the same effect and be enforced in the same manner as a lien
obtained under section .
While it appears that the purported Notice of Attorney's Lien that Picciolo
served upon the State did not comply with this statute in a number of respects,
most significantly that it was not signed by the client or by a disinterested
witness, his application must be denied for more fundamental reasons.
A basic principle that applies to an attorney's charging lien, whether asserted
under §475 (subsequent to the commencement of an action or proceeding) or
under §475-a (prior to such commencement) is that it applies to "proceeds
created through the attorney's efforts" (Oppenheim v Pemberton,
164 AD2d 430, 433). These statutes do "not authorize the court to impose a
charging lien upon any and all property owned by the attorney's client. ***
Rather, an attorney is limited to a lien on the judgment ‘in his client's
favor.' The attorney may collect out of funds or property he obtains on behalf
of his client *** on the theory that ‘it is the attorney who has created
the fund out of which he is paid by his efforts.' " (In re Rosenman &
Colin v Richard, 850 F. 2d 57, 61 [2d Cir., 1988]). Thus, an "attorney
who merely defends or protects his client's interest in property without
obtaining an affirmative recovery is not entitled to a lien on the property that
his client retains" (id.). Where an attorney's services "have not
created any proceeds, there is nothing to which a lien can attach" (Surdam
v Marine Midland Bank, N.A., 198 AD2d 578, 579).
This principle must be kept in mind when considering the fund to which
Picciolo seeks to attach his lien.
Eminent Domain is one of the powers inherent in the State, as sovereign, to
take private property for public use. The only limitation on the exercise of
this power is that the use must in fact be public, that compensation must be
made for the taking, and that due process of law must be observed. (Seacombe
v Railroad Co., 23 Wall. [90 U.S.] 108.) Subject to these constitutional
limitations, the State may take property at will (People v Adirondack Ry.
Co., 160 N.Y. 255, affd. 176 U.S. 335). (Cannata v City of New
York, 24 Misc 2d 694, 700, modified on other grounds 14 AD2d 813, affd
11 NY2d 210, appeal dismissed 371 U.S. 4).
The continued efforts upon the part of the State to improve the safety of its
thoroughfares are a paramount public purpose and the condemnation of properties
designed to attain this end represents an unquestioned exercise of the sovereign
power of eminent domain. (K J C Realty, Inc. v State of New York,
69 Misc 2d 99, 102, affd 32 NY2d 664).
The State's obligation to provide just compensation to the owner of property
taken by the sovereign under the power of eminent domain arises from the Fifth
Amendment to the United States Constitution, and the procedural mechanism for
effectuating the State's duty in this regard is contained in the Eminent Domain
Procedure Law, specifically in §303 thereof, which provides that "The
condemnor shall establish an amount which it believes to represent just
compensation for the real property to be acquired. The condemnor shall make a
written offer to acquire the property for one hundred per centum of the
valuation so established. In no event shall such amount be less than the
condemnor's highest approved appraisal."
It can thus be readily seen that the fund in question did not arise from
Picciolo's efforts, but rather from the State's constitutional and statutory
obligation, once it had determined to acquire the property for a public purpose
via the power of eminent domain, to determine the fair market value of the
property rights taken and to pay that amount to the owner. The State's actions
herein were not and could not have been motivated by any action taken by
Picciolo, or by Orchard Grove, or by any other attorney representing Orchard
Grove, but rather were the result of (1) its decision to acquire the property,
and (2) its duty to offer and in fact pay what it had determined was just
compensation. Simply stated, the fund was not created by the attorney's
efforts, but by operation of law. Having created no funds by his efforts,
Picciolo has no lien that may attach to the advance payment and his petition
must be and hereby is dismissed. Of course, this determination leaves
unaffected any cause of action that Picciolo may have to recover his fees, but
this cause of action must be brought in a court that would have jurisdiction to
litigate such a claim, not in the Court of Claims.
ORCHARD GROVE'S CROSS-PETITION
Orchard Grove also asks the court to enter an order of distribution, arguing
that none of the parties that the Attorney General has identified as having a
potential interest in the fund has a valid claim, with the exception of itself,
as fee owner, and Pawling Savings Bank, as mortgagee. While this assertion is
correct, Pawling Savings Bank has not appeared in this proceeding (despite
having been served) and it is not possible to determine the extent of its
interest (i.e., the outstanding balance of the mortgage). In view of Orchard
Grove's admission that the lien of the bank is valid and should be applied
against the fund, it would not be proper to enter an order distributing the
entire amount to Orchard Grove. Accordingly, the cross-petition is denied at
this time, without prejudice to a further distribution proceeding being brought
in which the respective interests of Orchard Grove and the Pawling Savings Bank
may be determined.
March 8, 2000
Plains, New York
HON. TERRY JANE RUDERMAN
Judge of the Court of
April 2, 1999 letter from Alan D. Silverman,
Senior Right of Way Agent, to Orchard Grove of Dutchess, Inc. (Ginsberg aff.,
Agreement for Advance Payment dated April 10,
1999 (Ginsberg aff., ex. "D").
The barely-legible agreement appears to refer
to a "Nesbeth," but other submitted papers indicate that the person's name may
Who the phrase "above named" referred to is
unclear, since the letter only referenced the property, not the owners, but the
intent is nevertheless clear.