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Ruby v. Scherzer

Court of Appeals of Kentucky

September 27, 2013








Attorney John H. Ruby has appealed from the October 1, 2012, order of the Jefferson Circuit Court denying his motion to alter, amend, or vacate the court's August 29, 2012, order granting his former client Marcia Scherzer's motion to set aside a summary judgment, remanding a commissioner's sale, and dismissing his action. Because we agree with the circuit court that Ruby misapplied Kentucky Revised Statutes (KRS) 376.460, the attorney's lien statute, we affirm.

In October 2011, Ruby, a licensed and practicing attorney, filed a foreclosure action against Scherzer, whom Ruby had represented in a dissolution action filed by her husband, Frank Scherzer. In the complaint, Ruby sought to enforce an attorney's lien he filed in the Jefferson County Clerk's office on September 16, 2011, on real property owned by Scherzer that he claimed had been the subject of the litigation for which he had been representing her. Ruby filed the lien to protect his claim for attorney fees, which totaled $13, 502.84, plus 18% interest pursuant to their agreement, and he stated that he mailed the lien to Scherzer the date that he filed it. Ruby requested that the property be sold by the Master Commissioner to pay his lien. On November 21, 2011, Scherzer filed a pro se response to the complaint, disputing that she owed any additional attorney fees to Ruby and stating that she had already paid him more than $8, 000.00 to represent her in the dissolution action and had filed a complaint against him with the Kentucky Bar Association. She listed 5301 Layne Road in Louisville as her address.

Ruby filed a motion for default judgment and order of sale on December 22, 2011, stating that no papers had been served on him by Scherzer. In the attached certificate, Ruby stated that Scherzer had been served on November 14, 2011, and that the amount due was $14, 110.47, inclusive of 18% interest, pursuant to the September 16, 2011, agreement. He also attached a copy of the legal description of Scherzer's property on Bates Lane upon which he had filed the lien. The Master Commissioner filed a report stating that Scherzer had filed an answer, making the entry of a default judgment inappropriate.

In February 2012, Ruby filed a motion for summary judgment, serving Scherzer at the Bates Lane address. In support of his motion, Ruby stated that he held a lien on the Bates Lane property and that Scherzer was the title holder of the property. While she had filed an answer, Ruby claimed that Scherzer had failed to demonstrate the existence of any genuine issues of material fact. Accordingly, Ruby was entitled to a summary judgment. Ruby attached a copy of the lien to the motion, in which he listed Scherzer's property on Layne Road and Bates Lane as being subject to the lien. In March 2012, the Master Commissioner filed a report indicating that Ruby had tendered evidence showing that he was the holder of the note and mortgage and that Scherzer had not responded to the motion for summary judgment.

On March 30, 2012, the circuit court entered a judgment and order of sale, finding that no genuine issues of material fact were in dispute and that Ruby was entitled to a judgment as a matter of law. In granting the motion, the court enforced the attorney's lien, awarded Ruby a judgment of $13, 502.84 plus interest, and directed the Master Commissioner to sell the Bates Lane property.

On August 22, 2012, Scherzer moved the circuit court to set aside the judgment and order of sale. She stated that the Master Commissioner's sale was scheduled for September 4, 2012. In support of her motion, Scherzer stated that she had never received a copy or notice of the motion for summary judgment or the judgment and order of sale because she did not live at the Bates Lane address and Ruby knew that she lived at the Layne Road address. She had inherited the Bates Lane property, but did not receive any mail at that address, and the house had been vacant for more than two years. Scherzer also contested the basis for the suit, arguing that the lien only applied to funds received, not in a dissolution action, and did not attach to real estate. She again stated that she believed she had been overcharged by Ruby for representing her in the dissolution action. Scherzer requested that her motion be treated as a response to Ruby's motion for summary judgment and that the Master Commissioner's sale be taken off of the docket. Scherzer supported her motion with an affidavit.

The court held a hearing on Scherzer's motion to set aside the summary judgment. At the hearing, Scherzer stated that she had not received a copy of Ruby's motion for summary judgment or the judgment and order of sale because both had been sent to the incorrect address. She also discussed the application of the attorney's lien statute, KRS 376.460, which she claimed did not apply to a dissolution proceeding, but only to personal injury or collection cases. In addition, Scherzer disputed the attorney fees Ruby claimed. In response, Ruby stated that the two-year dissolution was highly contested and contentious. Through his actions, Ruby claimed that he obtained the rental property for her, noting the hard work he had done for her in order to keep that property, and to obtain child support and funds to pay for her child's private school tuition. Finally, Ruby argued that Scherzer's motion was filed too late.

After considering the parties' arguments, the court noted it had concerns about the case, recognizing that various attorneys had been making inappropriate use of the attorney's lien statute to collect fees and that this was not the purpose of the statute. The court stated it had ruled the same way in an earlier case involving Ruby and would rule the same way in this case. The court was not aware that a judgment had ever been entered, stating that Ruby had "skipped over" the lawsuit and judgment step, which would have afforded Scherzer due process and established a ruling that Scherzer owed him money, to immediately place a lien on her property and foreclose on it as if he had a judgment. The court stated that attorneys were not permitted to deny others their due process rights by relying on this statute, indicating that Ruby should have sued Scherzer in a civil action to recover the fees, which would have allowed Scherzer to defend herself. Once he had obtained a judgment, Ruby would have been able to collect on it. The court also noted that it was inclined to dismiss the lawsuit, with which Ruby agreed; he indicated that he would be hiring collections attorney Steven Snow, who had given him the idea to file the lien and foreclosure action, to file a civil action against Scherzer to collect his fees.

Following the hearing, and pursuant to what the court and the parties discussed, the circuit court entered an order on August 29, 2012, followed by an amended order on September 5, 2012, granting Scherzer's motion, setting aside its March 20, 2012, judgment and order of sale, remanding the Master ...

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