Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

ROSEWOOD APARTMENTS CORPORATION v. PERPIGNANO

May 2, 2005.

ROSEWOOD APARTMENTS CORPORATION, Plaintiff,
v.
PETER ROBERT PERPIGNANO, LEONARD EISENBERG, IRVING EISENBERG, ANTHONY ALIZIO, and JOSEPH ALIZIO, Defendants and Third Party Plaintiffs, v. CASDEN PROPERTIES OPERATING PARTNERSHIPS, L.P. and CASDEN PROPERTIES SUB LLC, Third Party Defendants. SCHIFF HARDIN LLP, Petitioner, v. ROSEWOOD APARTMENTS CORPORATION, CASDEN PROPERTIES OPERATING PARTNERSHIPS, L.P., CASDEN PROPERTIES SUB LLC, XYZ HOLDINGS LLC, and ALAN CASDEN, Respondents.



The opinion of the court was delivered by: NAOMI BUCHWALD, District Judge

MEMORANDUM AND ORDER

Petitioner pro se Schiff Hardin LLP, as successor to Schiff Hardin & White (collectively, "Schiff Hardin"), brings this petition to fix and enforce an attorneys' charging lien against its former clients, respondents Rosewood Apartments Corp. ("Rosewood"),

Casden Properties Operating Partnerships, L.P., Casden Properties Sub LLC, XYZ Holdings LLC ("XYZ") and Alan Casden pursuant to Section 475 of the Judiciary Law of the State of New York. For the following reasons, we deny Schiff Hardin's petition to fix and enforce an attorneys' charging lien.

  BACKGROUND

  In 1978, New Haven Plaza Associates ("NHPA" or "the partnership") was formed as a tax shelter for a number of high net worth individuals.*fn1 The partnership built the New Haven Plaza Apartments ("the Project"), a Section 8 subsidized housing project. Subsequent to the construction of the Project, Real Estate Associates Limited II ("REAL II") became the general partner of NHPA and designated its affiliate, Rosewood, as the replacement general operating partner.*fn2

  This action has its origin in a three-stage transaction that took place on December 30, 1998, in which REAL II sold its 85% stake in the partnership to Casden Properties Sub LLC, which in turn transferred the interest to an affiliated entity, Casden New Haven LLP. Rosewood then transferred its general partnership interest and the defendants' limited partnership interest to Casden New Haven LLP in exchange for shares in a Real Estate Investment Trust known as Casden Properties Operating Partnership ("the REIT"). The result of the transaction was that the defendants and Rosewood, who had collectively owned about 15% of the interest in the title to the property, instead owned 55,556 operating partnership units ("OPUs") in the REIT, which were the sole remaining asset of the partnership.

  In 1999, Rosewood brought a declaratory action seeking a judgment that its transfer of the Project was authorized and proper. Rosewood I. On June 11, 2001, we found the transfer was unauthorized because it "so fundamentally change[d] the character of the limited partners' investment that it [could not] be considered in furtherance of the partnership's stated purposes," and we granted summary judgment to defendants. Id., 2001 WL 649824 at *6.

  In September 2001, plaintiff agreed to substitute $268,000 in cash for the defendants' share of the OPUs held by NHPA. While defendants objected to the transaction because of its tax implications, on March 20, 2002, we declined to issue a preliminary injunction to prevent the cash transaction. Rosewood II, 200 F. Supp. 2d at 279-80. We also ordered an accounting to determine whether the defendants received the distributions due to them under the Partnership Agreement for the period before December 30, 1998, holding that defendants would prevail on their counterclaim for breach of fiduciary duty if the sum of the distributions due to them exceeded $268,000. Id. at 280. On July 16, 2003, on the eve of trial, the case was settled on the record and thereafter closed on the Court's docket.

  Apparently, the parties then agreed on different settlement terms; Rosewood's account of the actual settlement arrangements follows. Recall that as of the Rosewood I opinion, NHPA owned OPUs in the REIT and the REIT owned the Project. Following our ruling in Rosewood I, Rosewood earmarked $268,000 in cash on NHPA's books to substitute for the defendants' share of the OPUs. Declaration of Alan I. Casden ("Casden Decl.") ¶ 28. In April 2002, NHPA formally assigned the OPUs to The Casden Company. Id. ¶¶ 28, 36. In July 2003, the Project was owned by Apartment Investment and Management Company ("AIMCO"), which had acquired the REIT from XYZ in December of 2001. Casden Decl. ¶ 29. By virtue of that acquisition, the REIT OPUs assigned to The Casden Company had been converted into AIMCO OPUs in March, 2002. Id. ¶ 31.

  In order to effect a settlement, the parties unwound the transfer of the Project. AIMCO sold the Project to Anthony Alizio — a limited partner in NHPA and one of the Rosewood defendants. Id. ¶¶ 41-42. Alizio agreed, in turn, to settle the claims of the remaining defendant limited partners by paying $750,000 into NHPA for distribution to them. In exchange for their shares of the $750,000, those limited partners agreed to divest themselves of their interests in NHPA and forego claims to additional NHPA assets. Following the distribution of the $750,000, the parties agreed that NHPA would dissolve and all residual assets of NHPA, including the $268,000 pledged as substitution for the OPUs, would go to the general partner, Rosewood.

  When Rosewood brought this action, NHPA owned the OPUs and the REIT owned the Project. At the conclusion of settlement, the Project had been transferred from AIMCO to Anthony Alizio and $750,000 was transferred from him to NHPA to the other limited partners. The OPUs went from NHPA to The Casden Company, and the $260,000 Rosewood had pledged as substitution for the OPUs went back to Rosewood. In sum, the parties unwound the impermissible trade of the Project for the OPUs; Alizio supplied $750,000 to compensate the other limited partners for their shares in the Project; and Alizio bought the Project from AIMCO, presumably at a $750,000 discount for which the Casden entities somehow compensated AIMCO in order to facilitate settlement.

  Robert J.A. Zito has represented Rosewood, the REIT, and Casden Properties Sub LLC throughout this litigation, but only joined petitioner Schiff Hardin on March 3, 2003. Petitioner claims it is owed $293,251.44 for legal services rendered in this case. On February 4, 2005, Schiff Hardin filed a petition to fix and enforce an attorneys' charging lien against respondents pursuant to Section 475 of the Judiciary Law of the State of New York. In addition to naming the plaintiff and third-party defendants it represented in Rosewood, petitioner names XYZ and Alan Casden, who it claims controlled and were responsible for those parties. Petitioner therefore seeks a lien on the $268,000, as well as on the OPUs what went from NHPA to The Casden Company.

  DISCUSSION

  N.Y. Judiciary Law § 475 provides:
From the commencement of an action, special or other proceeding in any court or before any state, municipal or federal department, except a department of labor, 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, which attaches to a verdict, report, determination, decision, judgment or final order in his client's favor, and the proceeds thereof in whatever hands they may come; and the lien cannot be affected by any settlement between the parties before or after judgment, final order or determination. The court upon the petition of the client or attorney may determine and enforce the lien.
  The principle underlying an attorney's lien is that "[the attorney's] services have aided in creating the value to which the lien attaches." Matter of the Petition of Gertrude M. Jones, 76 Misc. 331, 333, 136 N.Y.S. 819, 820 ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.