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TM Ryan Co. v. 5350 South Shore9/27/2005
South Shore, L.L.C. (South Shore), received $115,000 from its liability insurer to pay the costs of its underlying litigation. The law firm representing South Shore says it owns an attorney's lien on $73,380 of the funds. The trial court held the lien was not perfected. The court found Ben A. Borenstein Co. (BABCO) was entitled to priority in the fund based on a prior judgment against South Shore in favor of BABCO. We affirm.
FACTS
In the underlying litigation, South Shore filed a series of amended complaints against BABCO for breach of contract and Consumer Fraud Act violations. On December 18, 2003, the trial court dismissed South Shore's complaints and granted BABCO's motion for summary judgment on its counterclaim. South Shore was ordered to pay BABCO $387,683 in damages. This court affirmed the trial court's judgment on July 27, 2004. TM Ryan Co. v. 5350 South Shore, L.L.C., et al., Nos. 1-03-1835 and 1-04-0184, Cons. (2004) (unpublished order under Supreme Court Rule 23).
On December 30, 2003, BABCO filed a Citation to Discover Assets against South Shore, with a return date of January 26, 2004. The citation was directed to Tem Horwitz, the principal of South Shore. On January 26, 2004, the court entered an order continuing the citation "generally for good cause based on the parties' agreement." Horwitz's deposition was taken on June 2, 2004.
On June 30, 2004, BABCO filed a petition for relief pursuant to section 2-1402 of the Code of Civil Procedure. 735 ILCS 5/2-1402 (West 2002). In the petition, BABCO claimed entitlement to certain insurance proceeds owned by South Shore. The money had been deposited into the client funds account of Weinberg Richmond, LLP (Weinberg), the law firm representing South Shore.
In its response to the petition, South Shore contended: (1) Weinberg had perfected a lien on the insurance proceeds in the sum of $73,380, pursuant to the Attorney's Lien Act (770 ILCS 5/1 (West 2002)); and (2) BABCO's citation, and the lien asserted under it, had expired, pursuant to Illinois Supreme Court Rule 277(f) (134 Ill. 2d R. 277(f)).
South Shore says it submitted a claim to Indiana Insurance Company (Indiana), its general liability carrier, demanding it provide indemnity and a defense in the underlying litigation. After initially denying coverage, on May 16, 2002, Indiana sent a letter to South Shore acknowledging its duty to defend.
South Shore says it sent a letter to Indiana on June 27, 2002. In the letter, South Shore advised Indiana the matter had been settled and compromised. South Shore demanded payment from Indiana in the amount of $317,650, including $72,656.40 in attorney's fees and costs. The June 27 letter is not in the record. South Shore concedes the letter was not served by registered or certified mail.
In a letter to Indiana on December 19, 2003, South Shore demanded $436,939.55, including $72,642.73 in attorney's fees and costs. In a letter to Weinberg dated March 16, 2004, Indiana enclosed a Policyholder Release & Settlement Agreement. Also enclosed with the agreement were two checks totaling $115,000. The checks were made out to "Weinberg Richmond, Client Trust Account, for benefit of 5350 South Shore LLC." Weinberg deposited the money in its client trust account. South Shore says it currently owes Weinberg $73,380 in attorney's fees, the amount of the claimed attorney's lien.
On August 6, 2004, South Shore moved to dismiss BABCO's citation, arguing it had expired by operation of law, pursuant to Illinois Supreme Court Rule 277(f). 134 Ill. 2d R. 277(f). The trial court denied the motion to dismiss. Weinberg filed its own petition asserting its
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