                                     2017 IL App (1st) 161609

                                                                              SIXTH DIVISION
                                                                    Opinion filed: April 28, 2017

                                 No. 1-16-1609
______________________________________________________________________________

                                             IN THE

                                 APPELLATE COURT OF ILLINOIS

                                        FIRST DISTRICT


 CARMELLA MORDKOVICH,                          )     Appeal from the

                                               )     Circuit Court of

        Plaintiff-Appellee,                    )     Cook County

                                               )

 v.                                            )     No. 11 L 0657
                                               )

 TISHMAN SPEYER PROPERTIES, OTIS               )

 ELEVATOR COMPANY, and 161 NORTH CLARK, )

 LLC,                                          )

                                               )

        Defendants,                            )

                                               )     Honorable

 (Douglas B. Warlick & Associates,             )     Eileen M. Brewer,

 Intervenor-Appellant).                        )     Judge, Presiding.

______________________________________________________________________________

       PRESIDING JUSTICE HOFFMAN delivered the judgment of the court, with opinion.
       Justices Rochford and Delort concurred in the judgment and opinion.

                                           OPINION

¶1     Douglas B. Warlick & Associates (Warlick) appeals from an order of the circuit court

dismissing its motion to intervene and for an adjudication of its alleged lien on the sums paid in

settlement of this personal injury action. Based upon the following analysis, we affirm the

judgment of the circuit court.
No. 1-16-1609


¶2     The following facts are taken from the allegations contained in Warlick’s motion to

intervene and for an adjudication of its alleged lien and the documents submitted in support

thereof.

¶3     Beginning in November 2010, Warlick represented Carmella Mordkovich in an unrelated

family law matter pending in Kane County, Illinois (hereinafter referred to as the family law

case). On June 10, 2011, Mordkovich filed the instant negligence action in the circuit court of

Cook County against Tishman Speyer Properties and others arising from injuries she sustained in

May 2010 (hereinafter referred to as the personal injury action). Warlick did not represent

Mordkovich in the personal injury action; rather, she was represented by Kent Lucaccioni.

¶4     On March 27, 2013, Mordkovich executed a series of documents, including an $80,000

promissory note payable to Warlick for legal services rendered in the family law case which

states that it is payable immediately upon Mordkovich’s right to receive a recovery in this

personal injury action. On that same date, Mordkovich also executed a document titled

“Assignment of Lien,” which provides that any outstanding sums due Warlick as a result of its

representation of her in the family law case “will automatically be considered a lien on any assets

and/or proceeds that [she] may receive from [her] personal injury litigation” and directing

Lucaccioni to withhold $80,000 from any proceeds of the personal injury action to pay

approximately $60,000 that was outstanding at that time and to satisfy Warlick’s final bill; and

an “Irrevocable Letter of Direction” addressed to Lucaccioni, directing him to pay Warlick from

the proceeds of any recovery in this personal injury action such sums which may be due on the

promissory note (all of which documents are hereinafter referred to as the encumbrance

documents). Copies of the encumbrance documents were forwarded to Lucaccioni under cover

of March 27, 2013, along with a notice of lien addressed to Lucaccioni in which Warlick claimed

a lien upon the proceeds of this personal injury action for fees due in the family law case.

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¶5       The encumbrance documents were amended twice, culminating in the “First Amended”

encumbrance documents dated March 28, 2014, increasing the principal sum on the promissory

note to $160,000 and amending the remaining documents accordingly. On April 23, 2014,

Lucaccioni executed a document titled “Acknowledgement of Lien,” attesting to his receipt of

the first amended encumbrance documents and stating: “I will honor and protect those lien

interests.”

¶6      On May 22, 2015, Douglas B. Warlick sent a certified letter to Lucaccioni setting forth

his understanding that this personal injury action had been settled and enclosing an updated bill

for Warlick’s services in the family law case in the amount of $242,215. The letter directed

Lucaccioni to tender funds in that amount out of the proceeds of the settlement directly to

Warlick pursuant to the “First Amended Assignment of Lien” document executed by

Mordkovich on March 28, 2014.

¶7      On May 28, 2015, the instant personal injury action was dismissed pursuant to a

$975,000 settlement. The trial court’s order dismissing the action states that the court retained

jurisdiction “to adjudicate any liens.”

¶8      Having not received any portion of the proceeds of the settlement, on June 29, 2015,

Warlick filed a “Motion to Vacate the Dismissal and For Leave to Intervene for Adjudication of

Lien.” Attached to the motion are copies of the “First Amended Assignment of Lien,” the “First

Amended Promissory Note,” the “Irrevocable Letter of Direction,” the “First Amended Notice of

Lien,” and correspondence from Lucaccioni addressed to Warlick dated December 13, 2013,

stating “[w]e will continue to protect your lien interests.”

¶9      On September 9, 2015, Mordkovich, by substitute counsel, filed a “Countermotion to

Adjudicate Lien,” arguing that Warlick possessed no actionable lien on the proceeds of the

settlement in this action, and in the alternative, that Warlick’s claimed fees were excessive. On

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No. 1-16-1609


September 16, 2015, the trial court entered an order granting Warlick leave to intervene and

providing that Mordkovich’s countermotion would stand as her response to Warlick’s motion for

an adjudication of its lien rights.

¶ 10     In response to a motion filed by Warlick, the trial court entered an order on November 4,

2015, requiring, inter alia, that Mordkovich maintain the status quo and not alienate or dissipate

any funds that she had received from the settlement of the instant personal injury action. In

addition, that order directed Lucaccioni not to alienate or dissipate any of the settlement funds

being held by him.

¶ 11     On November 18, 2015, the matter came before the trial court on Warlick’s motion to

compel Mordkovich and Lucaccioni to place the proceeds of the settlement into escrow. Counsel

representing Lucaccioni represented that the net proceeds of the settlement had been distributed

to Mordkovich. Following that hearing, the trial court entered an order requiring Mordkovich to

tender $160,000 to her new attorneys to be deposited in their escrow account or deposited with

the clerk of the circuit court.

¶ 12     When the matter next came before the trial court on December 2, 2015, Mordkovich’s

attorney represented that Mordkovich had only $80,000 remaining from her net settlement

proceeds of $495,000. The trial court ordered Mordkovich to deposit the $80,000 with her

attorneys and provide an accounting of the expenditures which she made from the net proceeds

of the settlement. The accounting was due by December 16, 2015, but no accounting was ever

filed.

¶ 13     On January 5, 2016, after considering the briefs of the parties and entertaining arguments

from their attorneys, the trial court orally found that Warlick did not possess an equitable lien

upon the proceeds of the settlement in this personal injury action as the language in the First

Amended Promissory Note is merely a promise to pay. The trial court did not enter a written

                                                -4­
No. 1-16-1609


order memorializing those findings. It did, however, enter an order granting Mordkovich’s

“supplemental response in opposition to escrow of funds with the clerk of the court;” and

vacating its orders of November 4, November 18, and December 2, 2015, which required

Mordkovich to the escrow funds and account for the expenditure of the settlement proceeds. The

trial court continued the matter to January 13, 2016, for “status on dismissal of Warlick’s

adjudication of lien motion.” On January 13, 2016, Warlick filed a motion for reconsideration of

the January 5 order, requesting that the trial court set a date certain for an evidentiary hearing on

its motion to adjudicate its asserted lien.

¶ 14    On January 29, 2016, Mordkovich filed a pleading titled “Motion to Dismiss Intervenor’s

Motion to Adjudicate Lien and to Terminate Warlick’s Status as an Intervenor.” The motion

references section 2-619(a)(1) of the Code of Civil Procedure (Code) (735 ILCS 5/2-619(a)(1)

(West 2014)) and is predicated on the argument that, since the trial court found that Warlick did

not possess an equitable lien on the proceeds of her personal injury settlement, the trial court did

“not possess any jurisdiction to adjudicate Warlick’s claimed lien.”

¶ 15    On March 25, 2016, the trial court entered an order setting Warlick’s January 13, 2016,

motion for reconsideration for hearing on May 10, 2016. In addition, the order provided that

Mordkovich’s motion to dismiss and Warlick’s motion to set an evidentiary hearing date were

“entered and continued for status only to the next hearing date.”

¶ 16    When the matter came on for hearing on May 10, 2016, the trial court entered an order

denying Warlick’s January 13, 2016, motion for reconsideration; denying Warlick’s motion for

an evidentiary hearing on its motion to adjudicate its lien; and dismissing Warlick’s “action” and

its motion to vacate the dismissal of the underlying personal injury action and to adjudicate its

lien. The order provides that it was entered “sua sponte for lack of subject matter jurisdiction and

[section 2-619(a)(1) of the Code].” This appeal followed.

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No. 1-16-1609


¶ 17    As this matter comes to us on appeal from a dismissal for lack of jurisdiction pursuant to

section 2-619(a)(1) of the Code, our review is de novo. People v. Philip Morris, Inc., 198 Ill. 2d

87, 94 (2001).

¶ 18    Warlick argues that the trial court erred in dismissing its lien claim for want of

jurisdiction based upon a finding that it did not possess an equitable lien on the proceeds of

Mordkovich’s settlement of the instant personal injury action. Warlick asserts that, contrary to

the trial court’s finding, the first amended encumbrance documents constitute more than a mere

promise to pay the sums due it from the settlement proceeds. We disagree.

¶ 19    An equitable lien may arise in circumstances where a party expresses in writing an

intention to make real or personal property, or some fund, the security for a debt. Oppenheimer v.

Szulerecki, 297 Ill. 81, 87 (1921); Lewsader v. Wal-Mart Stores, Inc., 296 Ill. App. 3d 169, 178

(1998). To give rise to an equitable lien upon a fund, however, the written agreement must

constitute an assignment of the fund or some designated part, proportion, or percentage thereof.

Lewis v. Braun, 356 Ill. 467, 477-78 (1934); Lewsader, 296 Ill. App. 3d at 178. A mere promise

to pay cannot support an equitable lien. Wegner v. Arnold, 305 Ill. App. 3d 689, 696 (1999).

There is a clear distinction between an actual assignment of a part of a claim or fund and a mere

promise or agreement to pay a part of a debt or claim out of a fund. Cameron v. Boeger, 200 Ill.

84, 91 (1902). An agreement providing that payment of a debt is to be made out of the proceeds

of litigation does not operate as an equitable assignment of any portion of the proceeds and does

not give rise to an equitable lien. Id. at 91-92.

¶ 20    We start our examination of the encumbrance documents with the “First Amended

Promissory Note.” The terms of that note provide that it was “intended to pay” all of the fees and

costs owed by Mordkovich to Warlick for its representation of her in the family law action. The

note states that full payment is due immediately upon Mordkovich’s right to receive “any

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No. 1-16-1609


recovery whatsoever” from her personal injury action. However, if the note had not been fully

satisfied by December 31, 2014, Mordkovich obligated herself to commence making monthly

payments of $1,000 commencing on January 1, 2015. Included within the note is a paragraph

which provides, in relevant part, as follows:

       “This Note is a secured instrument. In addition to the protections given to the Note

       Holder [(Warlick)] under this Note, the underlying Assignment of Lien, dated the same

       date as this Note, protects the Note Holder [(Warlick)] from possible losses which might

       result if I [(Mordkovich)] do not keep the promises which I [(Mordkovich)] make in this

       Note. The Security Instrument describes how and under what conditions I

       [(Mordkovich)] may be required to make immediate payment in full of all amounts I

       [(Mordkovich)] owe under this Note.”

By its very terms, the note is Mordkovich’s personal promise to pay, stating “I *** hereby

promise to pay.” There is no language in the “First Amended Promissory Note” assigning any

interest in Mordkovich’s underlying personal injury action or any portion of the recovery

thereunder to Warlick.

¶ 21   We turn next to the provisions of the “First Amended Assignment of Lien” which

Mordkovich also executed on March 28, 2014, and which is referred to in the above-quoted

portion of the “First Amended Promissory Note.” That document states that Mordkovich agreed

that, by signing the document, “any outstanding balance due to DOUGLAS B. WARLICK &

ASSOC., as a result of [her] litigation *** [in the family law case] will automatically be

considered a lien on my assets and/or proceeds that [she] may receive from [her personal injury

action] *** in Cook County, Illinois.” The “First Amended Assignment of Lien” also directs

Lucaccioni to withhold $160,000 from any settlement proceeds in the personal injury action “in

order to pay approximately $140,000 that is outstanding at this time and to satisfy the final bill

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No. 1-16-1609


from DOUGLAS B. WARLICK & ASSOC. ***.” The document states that “Although I

[Mordkovich] have hereunto granted an assignment and placed a lien in the amount of $160,000

against my interest in the aforesaid personal injury litigation, I fully understand that said lien or

assignment shall be automatically adjusted as follows ***.” Also contained within the “First

Amended Assignment of Lien” is the following provision:

                “Assignor [Mordkovich] authorizes and directs KENT M. LUCACCIONI, LTD.,

       or any successor attorneys, to withhold from the proceeds at any time due to Assignor,

       sufficient funds to pay the Promissory Note and further authorize and direct such attorney

       to pay such funds directly to DOUGLAS B. WARLICK & ASSOC., in Geneva, Illinois.

       *** In the event of a partial or structured settlement, no funds shall be distributed to the

       Assignor, or her heirs, successors, or assigns, until such time as the Note has been paid in

       full.”

Although the document contains the words assignor and assignment, nowhere is there an express

statement that Mordkovich assigned a specified portion of the proceeds from this personal injury

action to Warlick, nor is there any provision stating that Warlick was to look to the settlement

proceeds for payment of the “First Amended Promissory Note” and any additional fees billed in

relation to the family law case rather than to Mordkovich personally for payment. See Cameron,

200 Ill. at 91-92; Department of Public Works of Illinois v. Exchange National Bank, 93 Ill. App.

3d 390, 394 (1981).

¶ 22   We agree with the trial court’s finding that the first amended encumbrance documents

merely contain Mordkovich’s promise to pay the sums due Warlick on the First Amended

Promissory Note along with unspecified additional attorney fees from the proceeds of her

settlement in this personal injury action and do not contain an assignment of some specified

portion of those proceeds. We conclude, therefore, that the trial court correctly determined the

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No. 1-16-1609


terms of the first amended encumbrance documents did not form the basis of an equitable lien in

favor of Warlick on the proceeds of Mordkovich’s settlement.

¶ 23   Warlick next argues that the principles of fairness and justice required the trial court to

recognize an equitable lien in its favor on the proceeds of Mordkovich’s settlement. However,

Warlick failed to cite any authority in support of the proposition other than the general principle

that, when there is no other remedy available, a trial court may employ its equitable power to

grant relief when the circumstances require. Lewsader, 296 Ill. App. 3d at 175. The argument

has, therefore, been forfeited. Ill. S. Ct. R. 341(h)(7) (eff. Jan. 1, 2016); Chicagoland Chamber of

Commerce v. Pappas, 378 Ill. App. 3d 334, 365 (2007). Forfeiture aside, the argument lacks

merit under the circumstances of this case. Warlick’s own brief contends that it has claims

against Mordkovich and Lucaccioni for fraud, breach of fiduciary duty, promissory estoppel,

conversion, and unjust enrichment; and during oral argument, it was admitted that Warlick is

presently pursuing independent actions. Simply stated, Warlick is not without legal remedies to

pursue his claims against either Mordkovich or Lucaccioni, and there was, therefore, no reason

for the trial court to invoke its power and fashion an equitable remedy.

¶ 24   Having determined that the trial court correctly found that Warlick did not possess an

equitable lien on the proceeds of Mordkovich’s settlement, we turn next to the effect that such a

finding had upon the subject matter jurisdiction of the trial court. Intervention for the purposes of

lien adjudication in a tort action is not an independent proceeding. It is an ancillary and

supplemental proceeding which is subordinate to the underlying action. See Ackmann v. Clayton,

39 Ill. App. 3d 1013, 1015 (1976). The trial court’s jurisdiction to adjudicate an asserted lien is

derived from its jurisdiction over the underlying proceeding or the recovery therefrom. Having

jurisdiction over the underlying action or the proceeds of any recovery provides the requisite

subject matter jurisdiction to adjudicate any claimed lien upon those proceeds. Philip Morris,

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198 Ill. 2d at 95-96; see also DeKing v. Urban Investment & Development Co., 155 Ill. App. 3d

594, 600 (1987). However, in the absence of a lien on the proceeds, the trial court had no further

jurisdiction in the intervention proceeding to determine any other right of action that the

intervenor may have against the parties to the underlying action. DeKing, 155 Ill. App. 3d at 600.

¶ 25   When, as in this case, a trial court determines that an intervenor who is solely asserting a

lien in a tort action has no enforceable lien rights in the proceeds of that action, the court’s

jurisdiction over any claim that the intervenor may have against the parties to the underlying

action is exhausted, and the appropriate course is to deny the petition for lien adjudication and

dismiss the intervention petition for want of jurisdiction, which is exactly what the trial court did

in this case. Obviously, such a dismissal is without prejudice to any independent claim which the

intervenor might bring in a separate action against any of the parties to the underlying action.

¶ 26   Based upon the foregoing analysis, we affirm the judgment of the trial court.

¶ 27   Affirmed.




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