Opinion
No. FA 08-4040118S
August 12, 2009
MEMORANDUM OF DECISION RE PLAINTIFF'S MOTION FOR ORDER #159
The plaintiff has moved for an order that defendant's counsel, Louis Kiefer, be disqualified from representing the defendant in this action to dissolve the parties' marriage because the defendant signed a document captioned "Mortgage Deed" on the marital home, to which he does not have legal title, to secure payment of a promissory note of $20,000 from the defendant to his counsel. The plaintiff claims that the defendant's attorney has thereby acquired "a proprietary interest in this litigation," plaintiff's brief at 3, in violation of rule 1.8(i) of the Rules of Professional Conduct and should therefore be disqualified from representing the plaintiff in this action. Both parties have submitted written memoranda setting forth their positions on this issue. For the following reasons, the motion is denied.
Rule 1.8 of the Rules of Professional Conduct, captioned "Conflict of Interest: Prohibited Transactions," provides, in relevant part, as follows: "(i) A lawyer shall not acquire a proprietary interest in the cause of action or subject matter of litigation the lawyer is conducting for a client, except that the lawyer may (1) Acquire a lien granted by law to secure the lawyer's fee or expenses; and (2) Contract with a client for a reasonable contingent fee in a civil case."
In Ankerman v. Mancuso, 271 Conn. 772, 779 (2004), our Supreme Court noted, but declined to resolve for this state, a conflict of authority interpreting rule 1.8 of the Rules of Professional Conduct "as to whether an attorney's taking of a security in a client's property that is the subject of litigation in which the attorney represents the client constitutes the acquisition of a proprietary interest in violation of the rule." Such a division of authority extends to this jurisdiction, the Statewide Grievance Committee having determined in In re Kiefer, Statewide Grievance Committee Op. No. 86-0673 (1988), that an attorney representing a party in a dissolution proceeding violated rule 1.8 by acquiring mortgages on two properties owned by the client, whereas Informal Opinion No. 97-4 (1997) of the Connecticut Bar Association Committee (CBA) on Professional Ethics, explicitly disagreeing with the Statewide Grievance Committee's decision in Kiefer, has concluded that rule 1.8 does not prohibit an attorney from taking "a consensual security interest or mortgage in client property which is subject to litigation in which the lawyer represents the client." In Ankerman v. Mancuso, supra, 271 Conn. 780 n. 4, the Supreme Court described the Ethics Committee's Informal Opinion as having concluded that a mortgage taken out to secure a promissory note for payment of legal fees is a "conditional interest in property rather than proprietary interest and thus not prohibited by rule 1.8." The Ankerman court found it unnecessary to resolve this conflict, for it concluded that "the plaintiff's action to enforce the promissory note alone, an instrument separate from the mortgage, is not bared by rule 1.8 . . ." Id.
The Statewide Grievance Committee and CBA Committee on Professional Ethics both assumed that an attorney who takes a mortgage on real property owned by a client to secure the attorneys fee for representing the client in a dissolution of marriage proceeding acquires, in the language of rule 1.8, " an interest in property that is the subject matter of the litigation." The recent decision in Clark v. Clark, 115 Conn.App. 500 (2009), however, casts that assumption into serious doubt. In Clark, a party in a dissolution of marriage proceeding had signed a promissory note and mortgage deed payable to a law firm on the marital home, to which the former client had sole title, to compensate the law firm for its services in the proceeding. While the action was still pending, the client discharged the law firm. Rejecting the law firm's subsequent effort to intervene in the pending dissolution action, the Appellate Court concluded that the law firm's mortgage on the marital home did not give it "a direct and substantial interest in the subject matter of the litigation." Id., 504. The court reasoned that
As a mortgagee, Rutkin holds legal title to the property, while the plaintiff and defendant hold equitable title. Even if the dissolution judgment transferred equitable title in the marital home to one party, that transfer would not affect Rutkin's legal title pursuant to the mortgage. Furthermore, our conclusion that Rutkin's rights under the mortgage would not be impaired without its involvement in the dissolution action also demonstrates that those rights are not part of the subject matter of this dissolution action.
Rutkin fails to recognize the distinction between its interest in the mortgage on the marital property and the underlying debt that the mortgage is intended to secure. A mortgage is a conveyance of title to property that is given as security for the payment of a debt. A mortgage is a separate instrument from the promissory note creating the debt, itself. To illustrate this point, it may be observed that a transfer of the equitable title of the mortgaged marital home would not, by itself, result in a transfer of the debt underlying that mortgage; the obligation to repay that debt would remain, in this instance, the defendant's alone. Unless the grantee has agreed to assume an existing mortgage debt, the mere taking of title to the mortgaged property imposes no personal liability on the grantee to satisfy the debt, and the obligation to pay remains that of the mortgagor alone. We conclude, therefore, that Rutkin's property right arising from its mortgage is not part of the subject matter of the dissolution action.
Id., 505-06. (Citations omitted; quotations omitted; internal alterations omitted.)
Moreover, in this case, the document purporting to be a mortgage deed does not actually convey any interest in property, for the defendant does not presently have legal title to the marital home, and should more properly be regarded as an executory contract to convey the property, if acquired by him by agreement or court order during the dissolution proceeding, in the future. As the court pointed out in Ackerman v. Mancuso, supra, 271 Conn. 772, there is a distinct difference between a promissory note, which is a contractual promise to pay a sum of money, and a mortgage deed to secure that note, the mortgage deed being an actual conveyance of legal title to real property. In the present case, the defendant has signed a promissory note to pay his attorney $20,000, but, not having legal title to the real property, did not and could not convey legal title that he did not hold. Regardless of its caption, the "mortgage deed" is not presently a deed, as the law regards that term. For the mortgage deed to be enforceable, this action must have concluded and the real property in question have been transferred to the defendant.
This court thus concludes, on the facts of this case, and without needing to decide the issue left unresolved by Ankerman v. Mancuso, that the defendant's attorney has not acquired a proprietary interest in property that is the subject of the present litigation. The motion for disqualification is therefore DENIED.