New York State Court of Claims

New York State Court of Claims

KALODIMOS v. THE STATE OF NEW YORK, #2003-028-534, Claim No. 92102, Motion No. M-66155


Case Information

Claimant short name:
Footnote (claimant name) :

Footnote (defendant name) :

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
Motion number(s):
Cross-motion number(s):

Claimant's attorney:
Defendant's attorney:
BY: Donald E. Shehigian, Esq. and
Rose Farrell Lowe, Esq.Assistant Attorneys General
Third-party defendant's attorney:

Signature date:
May 12, 2003

Official citation:

Appellate results:

See also (multicaptioned case)


The following papers were read on Claimant's application pursuant to Court of Claims Act § 22:

1) ORDER TO SHOW CAUSE filed December 19, 2002 with Supporting Affidavit of Alan Wasser, Esq., (Wasser Affidavit) with annexed Exhibits A -L

2) Affirmation in Response of Assistant Attorney General Donald E. Shehigian, filed December 17, 2002 (Shehigian Affirmation)

3) Affirmation in Opposition of Assistant Attorney General Rose Farrell Lowe filed January 10, 2003, (Lowe Affirmation) and annexed Exhibits A-B
4) Affidavit in Response of David J. Demeter, Esq., filed December 19, 2002 with annexed Exhit A

5) Affidavit in Support of Alan M. Wolinsky, Esq., Filed December 18, 2002 with annexed Exhibits 1-7

6) Reply Affirmation of Alan Wasser, Esq., (Wasser Reply) with annexed Exhibit A

This Claim, which involved the appropriation of a permanent partial taking of a parcel and a temporary easement in the Town of Smithtown, New York, was filed on July 10, 1995 and settled by stipulation of the parties in open court on January 22, 2002. The Stipulation of Settlement placed upon the record on January 22, 2002 provided for the payment of "$102,500.00 less the principal amount of the advanced payment... the settlement is inclusive of any claim that the Claimants (sic) may have under EDPL Section 701" (see Lowe Affirmation, Exhibit A). Pursuant to the Agreement of Adjustment dated February 4, 2002 (Wasser Affidavit, Exhibit C) the principal balance due is $68,800.00 (id. at ¶ 9).

Claimant, by this Order to Show Cause, seeks an order pursuant to Court of Claims Act

§ 22 directing payment of attorneys fees upon the lien of the Flower, Medalie & Markowitz firm (Flower firm) and then determining the distribution of any remaining funds. The State, by its attorney general, opposes the application on procedural and jurisdictional grounds (Shehigian Affirmation ¶¶ 4-6), albeit acknowledging that the Flower firm has a lien on the settlement proceeds (Shehigian Affirmation ¶ 7). The Department of Taxation and Finance, by its attorney, asserts that its three tax warrants, the earliest docketed May 19, 1997, are entitled to be paid (see Demeter Affidavit ¶ 5). The first mortgage holder, 1095 Diner Partners, as successor in interest to Greenpoint Savings Bank, and Smithtown Development Associates, the current owner of the fee[1], support the application of the Flower firm (Wolinsky Affidavit ¶ 2) and assert the priority of 1095 Diner Partners first mortgage (id. ¶ 5). Proofs of service on all entities as directed by the Order to Show Cause, and as certified by the Attorney General (see Wasser Affidavit, Exhibit E), were filed and except as set forth above, there were no appearances on the return date.

Court of Claims Act § 22, captioned "Determination of ownership of awards for property appropriated" provides in pertinent part as follows:
In the event there may be adverse and conflicting claims asserted to an award for property appropriated by the state or any part thereof, or if there be any apparent lien or encumbrance on the property so appropriated, or on any interest therein, or any dower or other interest which has been asserted by any party as affecting the rights to an award, or which has caused the attorney general or other official of the state to refuse to make payment of any portion of the award, the court may, upon motion of a party in an action to determine the amount of said award, order the interpleader or joinder of anyone claiming or imputed to have such a claim or interest.

The court shall determine the respective interests and rights of the parties to the award and the method of apportionment thereof, and direct to whom the same shall be paid.
(Court of Claims Act § 22[1], emphasis added).

The State's argument that the procedure set forth in Court of Claims Act § 22 is inconsistent with the procedure set forth in EDPL § 505 and hence EDPL § 505 controls (see EDPL 705, Shehigian Affirmation ¶¶ 4-6) is without merit. The purpose of both sections of law are consistent; namely, to determine the rights of all the parties who may have an interest to the appropriation award. This Court does not view the mechanism of how the community of interested parties is created - whether by joinder, as permitted by Court of Claims Act § 22(1), or by interpleader, as permitted by both the Court of Claims Act and EDPL § 505 - as legally significant regarding the consistency of statutes issue, particularly when "the fundamental purpose of joinder is 'to implement a requisite of due process -- the opportunity to be heard before one's rights or interests are adversely affected' " (Matter of Cassidy v New York City Dept. of Correction, 95 AD2d 733, 734, quoting Matter of Martin v Ronan, 47 NY2d 486, 490).

Accordingly, the Court finds that pursuant to Court of Claims Act § 22 it has jurisdiction to determine the instant application and now turns to address the merits of the application.

In New York, an attorney's charging lien is governed by statute (see Judiciary Law § 475; see also Banque Indosuez v Sopwith Holdings Corp., 98 NY2d 34) and it may be determined and enforced upon an application by either "the client or attorney" (Judiciary Law § 475). The lien comes into existence, without notice or filing, upon commencement of the action or proceeding (LMWT Realty Corp. v Davis Agency, 85 NY2d 462, 467). The charging lien does not merely give an attorney an enforceable right against the property of another, it gives the attorney an equitable ownership interest in the client's cause of action (id.). As noted, Defendant acknowledges the existence of the Flower firm's lien. The Court of Claims has jurisdiction under section 475 of the Judiciary Law to fix the fees and enforce the lien of an attorney (see Estate of Dresner v State of New York, 242 AD2d 627, 628; Butler v State of New York, 180 Misc 127).

It is well established that where, as here, the attorney's professional services created the fund at issue the attorney's lien is entitled to priority (see Estate of Dresner v State of New York, 242 AD2d 627, 628, LMWT Realty Corp. v Davis Agency, 85 NY2d 462 [even though a prior lien against the specific fund exists]; see also Banque Indosuez v Sopwith Holdings Corp., 98 NY2d 34, 43 [attorney's charging lien maintains superiority over a right of setoff where the setoff is unrelated to the judgment or settlement to which the attorney's lien attached] ). As such, the Court finds that the lien of the Flower firm is entitled to be paid from the proceeds of the condemnation award prior to the satisfaction of the tax liens and the lien of 1095 Diner Partners.

As to the priority between 1095 Diner Partners and the New York State tax liens, 1095 Diner Partners, by virtue of its position as holder of the first mortgage, which is prior in time to the tax warrants, stands first in the line of priority after the satisfaction of the Flower firm's lien followed by the Department of Taxation and Finance.

The Court, having determined that the Flower firm has a lien which is entitled to be enforced first from the settlement proceeds, now must fix the amount of that lien. In the arena of appropriation litigation, the contingent fee retainer agreement between Claimant and his counsel (Wasser Affidavit, Exhibit K) is frequently utilized and reasonable (Ventre v State of New York, Ct Cl, unreported decision filed Dec. 21, 2000, Midey, J., Claim No. 88013, Motion No. M-61718; see Matter of Hoffman v Town of Malta, 189 AD2d 968; Norboro Realty v State of New York, Ct Cl, unreported decision filed Oct. 5, 2000, O' Rourke, J., Claim No. 96631, Motion No. M-61971). Although the Flower firm's lien necessarily includes reimbursement of disbursements, the Court finds that the only reimbursement of disbursement to which the Flower firm is entitled is the $3,000.00 payable to the appraiser (see Wasser Affidavit ¶ 24). The Claimant's payment of a portion of the appraiser's fee (see Wasser Reply ¶ 7) is not reimbursable as Claimant waived his right to make an application pursuant to EDPL § 701 as part of the settlement. Notwithstanding the foregoing, the Flower firm's one third contingency fee pursuant to the retainer agreement (Exhibit K) is properly calculated on the principal (see, Wasser Affirmation, Exhibit B [$68,800.00]) and interest, following a deduction of any disbursement made by the firm or Claimant, to wit $6,000.00. The parties agree, and the Court finds, that the calculation of the precise lien amount falls into the hands of the State Comptroller owing to, inter alia, such adjustments, including interest on the proceeds, which must be made.

By virtue of the foregoing, the Court finds that the Flower firm has a lien for attorneys fees upon the settlement proceeds which shall be calculated consistent herewith. Pursuant to Court of Claims Act § 22, the Defendant State of New York shall disburse the funds to satisfy such lien, and reimbursement of disbursements in the amount of $3,000.00, first from the settlement proceeds. The remaining settlement proceeds shall then be distributed to 1095 Diner Partners and then to the Department of Taxation and Finance.

For the reasons set forth above, Claimant's application is GRANTED to the extent set forth herein.

May 12, 2003
Albany, New York

Judge of the Court of Claims

[1] Smithtown Development Associates acquired title through foreclosure of its mortgage.