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Hadassah, the Women's Zionist v. Robert L. Schwartz

October 14, 2011

HADASSAH, THE WOMEN'S ZIONIST ORGANIZATION OF AMERICA, INC., JUDGMENT CREDITOR-APPELLEE,
v.
ROBERT L. SCHWARTZ, JUDGMENT DEBTOR-APPELLANT.



TRIAL NO. EX-1000723 Civil Appeal From: Hamilton County Court of Common Pleas Judgment Appealed From Is: Affirmed

The opinion of the court was delivered by: Fischer, Judge.

Cite as Hadassah v. Schwartz,

OPINION.

OHIO FIRST DISTRICT COURT OF APPEALS

{¶1} Judgment debtor-appellant Robert L. Schwartz appeals the trial court's judgment denying his motion to quash and overruling his objections to a garnishment order, which permitted garnishment of Schwartz's property held in a law firm's IOLTA account to help satisfy a $2,292,469 judgment owed by Schwartz to judgment creditor-appellee Hadassah, The Women's Zionist Organization of America, Inc., ("Hadassah"). For the reasons stated below, we determine that Schwartz's appeal is without merit, and we affirm the judgment of the trial court.

{¶2} Hadassah initiated this garnishment action in the Hamilton County Common Pleas Court on August 18, 2010. In connection with the garnishment action, Hadassah sent a notice of garnishment pursuant to R.C. 2716.13 to the law firm Bieser, Greer & Landis, LLP, ("BG&L"), to collect $150,000 held in BG&L's IOLTA account. Hadassah knew that Schwartz, at its request, had placed $150,000 in trust with BG&L during ongoing settlement talks between the parties, but settlement had not been reached.

{¶3} BG&L answered in the garnishment action and acknowledged that it held $150,000 of Schwartz's property in an IOLTA account. BG&L, on behalf of itself as garnishee and on behalf of Schwartz, filed objections to the garnishment order and later filed a motion to quash the order. BG&L and Schwartz argued that the funds in the IOLTA account represented a retainer for ongoing legal services involving Schwartz, and that professional conduct rules mandated that the funds stay in the account until resolution of the dispute between Hadassah and Schwartz. BG&L and Schwartz further argued that public policy forbade garnishment of the funds. Hadassah opposed the motions, arguing that Schwartz's funds were not exempt from garnishment.

{¶4} After a hearing, the trial court overruled BG&L's and Schwartz's objections. The trial court subsequently denied their motion to quash, and this appeal from both rulings ensued.

{¶5} In his sole assignment of error, Schwartz contends that the trial court erred by ordering garnishment of Schwartz's funds in BG&L's IOLTA account because those funds had been designated as a retainer for legal services and were no longer being held for settlement purposes.

{¶6} In a garnishment action, a creditor proceeds to satisfy a debt owed to that creditor by collecting a debtor's property in the possession of a third person, called the garnishee. In re Estate of Mason, 109 Ohio St.3d 532, 2006-Ohio-3256, ¶18, 849 N.E.2d 998, citing Union Properties, Inc. v. Patterson (1944), 143 Ohio St. 192, 195, 54 N.E.2d 668. As explained in the garnishment statutes, R.C. 2716.01 et seq., "[a] person who obtains a judgment against another person may garnish the property, other than personal earnings, of the person against whom judgment was obtained, if the property is in the possession of a person other than the person against whom judgment was obtained, only through a proceeding in garnishment and only in accordance with this chapter." R.C. 2716.01(B).

{¶7} A debtor's funds generally are not exempt from garnishment merely because the funds are placed with an attorney. Invest. Research Inst., Inc. v. Sherbank Marketing, Inc. (1998), 134 Ohio App.3d 478, 483, 731 N.E.2d 690.

{¶8} Ohio law authorizes Hadassah to enforce its judgment against Schwartz by collecting Schwartz's property in the possession of BG&L. BG&L asserted in its answer that the money Schwartz had paid to BG&L had been deposited in an IOLTA account, and that the funds served as a retainer for legal services. Neither BG&L nor Schwartz produced the alleged retainer agreement, and nothing in the record indicates that BG&L acquired an ownership interest in the retainer, or that the retainer was nonrefundable.

{¶9} The Ohio Rules of Professional Conduct mandate that property belonging to a client or third party be kept in a client's trust account, and that property belonging to an attorney be kept separate from a client's property. Prof.Cond.R. 1.15; Disciplinary Counsel v. Miller, 126 Ohio St.3d 221, 2010-Ohio- 3287, 932 N.E.2d 323, ¶8. BG&L kept Schwartz's $150,000 retainer in an IOLTA account, which indicates that, at that specific point in time, Schwartz, and not BG&L, retained the ownership rights over the $150,000 retainer. Therefore, the retainer was property subject to garnishment under R.C. 2716.01.

{ΒΆ10} Property of a debtor otherwise subject to garnishment by creditors may be exempt from garnishment as provided in R.C. 2329.66. If a debtor claims an exemption from garnishment, the debtor must point to a specific statutory exemption. Ohio Bell Tel. Co. v. Antonelli (1987), 29 Ohio St.3d 9, 11, 504 N.E.2d 717. Property in the form of an attorney-fee retainer does not appear in the somewhat lengthy list of exempted property in R.C. 2329.66. ...


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