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.

American Asset Finance, LLC v. Trustees of Client Protection Fund of Bar

Court of Special Appeals of Maryland

February 28, 2014

AMERICAN ASSET FINANCE, LLC
v.
TRUSTEES OF THE CLIENT PROTECTION FUND OF THE BAR OF MARYLAND

Appeal from the Circuit Court for Baltimore County. Robert E. Cahill, Jr., Judge.

Argued by: Timothy J. Foley (American Asset Finance, LLC on the brief) all of West Milford, NJ for Appellant.

Argued by: Leo W. Ottey, Jr. of Baltimore, MD for Appellee.

Panel: Eyler, Deborah S., Kehoe, Rubin, Ronald B., (Specially Assigned), JJ.

OPINION

[216 Md.App. 307] Eyler, Deborah S., J.

In this appeal, American Asset Finance, LLC (" AAF" ), the appellant, challenges a decision of the Trustees of the Client Protection Fund of the Bar of Maryland (" the Fund" ), the appellee, to deny in all or in part four claims submitted by AAF. The Fund's final determination of AAF's claims was affirmed on judicial review by the Circuit Court for Baltimore County. AAF presents one question for our review, which we have rephrased: Did the Fund err in determining that AAF lacked standing to seek compensation with respect to three of its claims and part of a fourth

Page 74

claim?[1] For the reasons to follow, we shall affirm the judgment of the circuit court.

[216 Md.App. 308] FACTS AND PROCEEDINGS

The facts are undisputed. AAF is a limited liability company registered under the laws of New Jersey. It is owned and operated by Sherry and Tim Foley. As part of its business, AAF purchases from attorneys interests in settlements and estates that are not yet subject to disbursement. AAF pays the attorney a lump-sum cash payment in exchange for the attorney's promise to assign to AAF a portion of his or her interest in the proceeds of the settlement, or estate disbursement. The amount of the assignment ( i.e ., AAF's interest) increases over time to give the attorney an incentive to promptly and efficiently close out the case and disburse AAF's share to it.

In the instant case, between May 2007 and July 2008, AAF entered into four such agreements with one Bradley Schwartz, who at that time was a member of the Maryland Bar. In the first, on May 22, 2007, AAF agreed to pay Schwartz $100,000 in exchange for his assignment of the first $110,000 of $149,000 in attorneys' fees from a $449,000 total settlement. In the second, on September 18, 2007, AAF agreed to pay Schwartz $60,000 in exchange for his assignment of the first $64,800 of $83,333.33 in attorneys's fees from a $250,000 total settlement. In the third agreement, on June 16, 2008, AAF agreed to pay Schwartz $50,000 in exchange for his assignment of the first $54,000 of $62,000 in attorneys' fees from a $150,000 total settlement. In the fourth and final agreement, executed on July 25, 2008, AAF agreed to pay Schwartz $65,000 in exchange for his assignment of the first $70,200 of $150,000 in attorneys' fees from a $362,000 total settlement.

AAF also entered into an assignment agreement with one of Schwartz's clients, Tara Jackson. Jackson was the beneficiary of an estate in a case related to the case giving rise to AAF's September 18, 2007 assignment agreement with Schwartz. On October 26, 2007, AAF agreed to pay Jackson $2,500 in exchange for her assignment of $2,750 of her $9,000 interest in the estate.

[216 Md.App. 309] The four assignment agreements between Schwartz and AAF all were structured the same way and used nearly identical language, although the amount paid to Schwartz, the amount AAF was assigned, and the penalties for late payment varied. Each was titled, " Assignment of Interest in Settlement and Limited Irrevocable Power of Attorney" (" Assignment Agreement" ). Schwartz was designated as the " Assignor" and AAF as the " Assignee."

In the recitals and Section 1, Schwartz agreed that he was an attorney of record in a specified case, had an interest in a settlement of a specified amount, and wished to " receive an immediate lump sum cash payment for a portion of [his] interest in the Settlement and to that end wish[ed] to assign such interest to [AAF]." In

Page 75

each Assignment Agreement, Schwartz represented the extent of his interest in the particular settlement and agreed that he was " hereby sell[ing] and assign[ing] to [AAF] [his] entire right, title and interest in and to [his interest in the settlement] to the extent described herein." Thereafter, each Assignment Agreement set forth the exact sum Schwartz was assigning to AAF, as well as a formula for increasing that amount incrementally depending upon how long it took for AAF to receive its payment.[2]

Section 2 set out fourteen " Representations, Warranties, and Agreements" by Schwartz, including that: he owned title to his interest in the settlement free and clear of any liens or claims; he understood that AAF was " relying on [his] professional expertise and the representations made by [him] in pricing this transaction" ; he would " take all steps necessary to ensure that [AAF] receive[d] the Property" ; he was " an attorney competent to understand the transaction provided for [216 Md.App. 310] in this agreement" ; after receiving the settlement proceeds and until such time as AAF's interest was disbursed, he would " hold [AAF's interest] in safekeeping as [its] agent and fiduciary" ; and he would disburse to AAF its interest in the settlement within four days of his receiving it and depositing it in his IOLTA account.

At Section 12 of each Assignment Agreement, Schwartz agreed to execute and/or to authorize AAF to execute a financing statement securing AAF's " first priority security interest" in its assigned interest in the settlement, which AAF agreed to terminate upon receiving payment.

Each Assignment Agreement included an attached and incorporated Power of Attorney agreement by which Schwartz appointed AAF his attorney-in-fact for the purposes of endorsing any checks payable to him with respect to the particular case and executing documents necessary to effectuate the payment of its interest in the settlement of that case.

Finally, in each case, Schwartz executed a " Notice of Assignment, Irrevocable Direction of Payment, & Authorization to Release Information" (" Notice of Assignment" ). Each Notice of Assignment was addressed to defense counsel in the underlying case in which the settlement had been reached. It informed defense counsel of the Assignment Agreement between Schwartz and AAF, and directed defense counsel to pay AAF its interest in the settlement directly. AAF agreed, however, to hold each Notice of Assignment in " escrow" and only deliver it to defense counsel if Schwartz failed to respond within seven days to a request for an update on the status of the case.

AAF's Assignment Agreement with Jackson differed in certain respects. As relevant here, Jackson warranted that she had " irrevocably authorized and directed [Schwartz] to arrange for delivery of [AAF's interest] to him and [for him] to remit it to [AAF] immediately on receipt in accordance with [AAF's] instructions." She further warranted that Schwartz would act " as [AAF's] fiduciary" in this respect.

[216 Md.App. 311] Within days of executing each Assignment Agreement, including the one between AAF and Jackson, AAF wired the agreed upon lump-sum payment directly to Schwartz, less a $20 wire transfer fee. In each case, within months, the settlement proceeds in the underlying case were ...


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.