Opinion
No. CV 07 4014607
October 19, 2011
MEMORANDUM OF DECISION
Before the court are five motions which address the same issue: plaintiff's motion for contempt, dated August 9, 2011, #232; plaintiff's motion for order to modify prejudgment remedy, dated August 9, 2011, #233; defendant's motion for sanctions and objections to the motion for disclosure of assets or attachment of funds due from Attorney Alan J. Rome and others, dated August 12, 2011, #234; and plaintiff's memorandum in support of garnishment and opposition to motion for sanctions, dated August 27, 2010 (sic), #236.
The issue before the court is whether sums owed to an attorney for services rendered are "earnings" as defined in General Statutes § 52-350a and therefore exempt from garnishment or attachment under a prejudgment remedy attachment. By way of background, on October 13, 2010, a jury returned a verdict in favor of the plaintiff, Stanley Kosiorek, Executor, against the defendant, Jacek I. Smigelski, on counts of breach of contract, breach of good faith and fair dealing, breach of fiduciary duty, violation of the Connecticut Unfair Trade Practices Act (CUTPA), and civil conversion. On October 14, 2010, the court entered orders in accordance with the jury's verdict for a total amount of verdict in favor of the plaintiff of $226,762.20. On December 1, 2010, the court found that the plaintiff was entitled to attorneys fees and costs in the amount of $71,696.09, and ordered that judgment enter in the total amount of $298,458.29. Smigelski has filed an appeal of the judgment and the court's orders. The court had previously issued a prejudgment remedy in this matter, and that amount was modified to $298,458.29. In addition, the defendant has been ordered to disclose any and all assets, and the defendant remains under a continuing duty to disclose assets.
The court is unaware what the fee arrangements were — either hourly or contingent. However, for purposes of this discussion and decision, the arrangement is not material.
The litigation arose "out of a civil lawsuit, a probate matter, and a real estate closing handled by the defendant, [an attorney,] for the Kosiorek family . . . After concluding certain matters in which [the defendant] represented [the plaintiff,] [the defendant] paid himself a fee out of estate funds that he was holding. The Plainville Probate Court thereafter determined that the fee was excessive and that a lesser amount was allowable out of the estate funds for the work done by the [defendant.] [The defendant] nonetheless took the position that he had charged and paid himself a reasonable amount pursuant to a valid fee agreement. He refused to acquiesce in the finding of the Probate Court by adjusting his fee and refunding the difference." Disciplinary Counsel v. Smigelski, Superior Court, judicial district of New Britain at New Britain, Docket No. CV 08 4019323 (August 31, 2009).
The defendant was an attorney licensed to practice in Connecticut, and is currently under suspension from the practice of law due to circumstances related to the facts in the present matter. Attorney Bozena Wysocki was appointed as trustee over the cases of Smigelski, and after a thorough accounting, disbursed funds to Smigelski for past due fees for services he rendered in several matters. In addition, prior to being suspended from the practice of law, Smigelski performed services for a client, Jan T. Sklepinski, who later retained another attorney, Alan J. Rome, to complete the handling of his lawsuit. Smigelski performed legal services in his matter, and Rome agreed to pay him for his services when the matter was resolved.
The plaintiff became aware that the court in Disciplinary Counsel v. Jacek L Smigelski, Docket No. HHB-CV-08-4019323, issued an order on July 1, 2011, in which the trustee assigned to oversee Smigelski's law practice, Attorney Bozena Wysocki, was ordered to turn over certain funds to the defendant. Furthermore, the plaintiff became aware that the defendant is owed money with respect to a settlement of a lawsuit and an arrangement that Smigelski made with Attorney Alan Rome. The plaintiff is now seeking to garnish the funds which the defendant is to receive from Attorney Wysocki as well as from Attorney Rome to satisfy the judgment obtained against the defendant. In addition, he is requesting a renewed disclosure from the defendant of any similar expected income streams.
The defendant has filed a motion for sanctions as well as an objection to the motion for disclosure of assets and attachment of the funds from Attorney Wysocki and Attorney Rome. He argues that because the matter is on appeal there is no final judgment, and all proceedings that the plaintiff is attempting are under the category of pre-judgment remedies. Therefore, General Statutes § 52-278b applies which excludes earnings from any garnishment. Smigelski argues that General Statutes § 52-278b does not allow the garnishment or attachment of earnings as defined, and the monies that are being paid to him are money for "personal services" performed by him and are therefore exempt from prejudgment garnishment.
General Statutes § 52-278b provides in pertinent part: "Notwithstanding any provision of the general statutes to the contrary, no prejudgment remedy shall be available to a person in any action at law or equity . . . (2) for the garnishment of earning as defined in subdivision (5) of Section 52-350a." Furthermore, General Statutes § 52-329 provides that ". . . when a debt other than earnings, as defined in subdivision (5) of Section 52-350a, is due from any person to such defendant . . . the plaintiff may insert in his writ . . . a direction to the officer to leave a true and attested copy thereof and of the accompanying complaint . . . with such . . . debtor of the defendant . . . and any debt due from any such garnishee to the defendant . . . not exempt from execution, shall be secured in the hands of the garnishee to pay such judgment as the plaintiff may recover . . ." (Emphasis added.)
Under these sections, earnings are not subject to garnishment. The definition of earnings set forth in General Statutes § 52-350a(5) ". . . means any debts accruing by reason of personal services, including any compensation payable by an employer to an employee for such personal services, whether denominated as wages, salary, commission, bonus or otherwise." The key to determining whether the exemption is applicable is the finding as to whether the earning are a payment accrued by reason of performance of personal services, and that determination is to be made on a case-by-case basis. Board of Education v. Booth, 232 Conn. 216, 221, n. 11, 654 A.2d 717 (1995). Earnings are not limited to wages, and can encompass a much broader application than the terminology wages. Id. The Supreme Court found that funds which constituted payment for accumulated sick leave and for a salary increase that became payable upon the termination of the defendant's employment were "earnings" exempt from prejudgment garnishment. "[T]he plaintiff's claim that the legislature intended to limit the scope of the term earnings to include only wages finds no support in the legislative history . . ." Id., 223.
The funds that were to be released to the defendant from Attorney Wysocki are payments of fees for personal services rendered by him to various clients after an accounting ordered by the court. With regard to the funds from Attorney Rome, the defendant referred a matter in which he had performed work on, and Attorney Rome negotiated a successful settlement for the defendant's former client. The defendant and Attorney Rome had agreed on compensation for the services that the defendant had performed in the file as well as reimbursement for costs in that matter.
The defendant attached to his motion and objection a letter which was sent to the plaintiff's counsel by Attorney Rome indicating that his office was holding $4,500 "representing the earned fees of Attorney Smigelski as well as a reimbursement of $850 in costs . . ." Attorney Rome is holding the funds in his clients' fund account pending order of the court.
There are no cases which directly address whether funds received by an attorney are "earnings." See Harrington v. Dyer, 50 Conn.Sup. 460, 937 A.2d 77 (2007) [ 44 Conn. L. Rptr. 45] (commissions due a real estate salesperson are a debt accruing by reason of her personal services, therefore exempt from garnishment); Farren v. Farren, Superior Court, judicial district of Stamford-Norwalk at Stamford, (June 14, 2011) [ 52 Conn. L. Rptr. 142] (pension fund was exempt from garnishment because it represented money earned by the defendant as a result of his many years of employment); Caliendo v. Coassin, Superior Court, judicial district of Fairfield, Docket No. CV 94-0314356 (October 28, 1994) (lawyer's partnership draw constitutes "earnings" exempt from garnishment prejudgment remedy). The first phrase in § 52-350a(5), which defines "earnings," broadly encompasses "any debt accruing by reason of personal services . . ." Smigelski was engaged in personal services when he performed work as an attorney, on a contingency fee basis or otherwise. These funds due him both from Attorney Wysocki and Attorney Rome, as well as any other fee arrangement he may have on other matters, are debts accruing by reason of his personal service. Accordingly, the court finds that the funds due the defendant both from Attorney Wysocki as well as Attorney Rome are earnings exempt from garnishment in a prejudgment remedy.
Neither party raised the question of whether the funds to be received by the defendant amounted to an asset in the form of an account receivable. Account receivable has been defined as "the amount one person owes to another on an unsettled account." 1 Am.Jur. 2d, Accounts Accounting § 2 (2005). Other jurisdictions have adopted the definition as set forth in Black's Law Dictionary, 20 (8th Ed. 2004) and defined it as "an account that is left open for ongoing debit and credit entries by two parties and that has a fluctuating balance until either party finds it convenient to settle and close." Tingey v. Haisch, 129 Wn.App. 109, 111, 117 P.3d 1189; or as "[a] balance due from a debtor on an open account usually for services rendered or goods provided; such a debt arises in the normal course of business dealings." Medi-Cen Corp. of Maryland v. Birschbach, 123 Md.App. 765, 772, 720 A.2d 966 (1998). Because the account receivable can consist of moneys owed for services rendered, the court reaches the same conclusion as to whether these funds are exempt from garnishment under a prejudgment remedy.
Therefore, plaintiff's motion for contempt dated August 9, 2011, #232 — denied; Plaintiff's motion for order to modify prejudgment remedy, dated August 9, 2011, #233, denied; Defendant's motion for sanctions and objections to the motion for disclosure of assets or attachment of funds, dated August 12, 2011, #234 — the court denies the defendant's request for sanctions, sustains the objection as to the attachment of funds and orders that any money to be paid the defendant by Attorney Wysocki and/or Attorney Rome shall be released to the defendant. However, the defendant remains under a continuing duty to disclose any assets, and the plaintiff may file any further motions for a court determination of whether a garnishment is in order.