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                                     Appellate Court                         Date: 2017.07.24
                                                                             13:57:09 -05'00'




             Mordkovich v. Tishman Speyer Properties, 2017 IL App (1st) 161609



Appellate Court         CARMELLA MORDKOVICH, Plaintiff-Appellee, v. TISHMAN
Caption                 SPEYER PROPERTIES, OTIS ELEVATOR COMPANY, and 161
                        NORTH CLARK, LLC, Defendants (Douglas B. Warlick &
                        Associates, Intervenor-Appellant).



District & No.          First District, Sixth Division
                        Docket No. 1-16-1609



Filed                   April 28, 2017



Decision Under          Appeal from the Circuit Court of Cook County, No. 11-L-0657; the
Review                  Hon. Eileen M. Brewer, Judge, presiding.



Judgment                Affirmed.


Counsel on              Douglas B. Warlick and Stephen D. Brown, of Douglas B. Warlick &
Appeal                  Associates, of Geneva, for intervenor-appellant.

                        Ross W. Bartolotta and Amy R. Miller, of Swanson, Martin & Bell
                        LLP, of Lisle, for appellee.



Panel                   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.
¶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 to 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 these 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.
¶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.


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¶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 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
       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.


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¶ 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.
¶ 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 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 $1000 commencing on January 1, 2015. Included within the
       note is a paragraph which provides, in relevant part, as follows:

                                                  -4-
               “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 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


                                                  -5-
       the 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, 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 that 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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