Superior Court of New Jersey, Law Division, Middlesex County

Berkowitz v. Haigood
256 N.J. Super. 342 (N.J. Super. Law Div. 1992) •
606 A.2d 1157
Decided Mar 12, 1992

343 Decided March 12, 1992. *343 (a) that there is no insurance company
obligated to pay for the services, or if the
Robert G. Berkowitz, pro se, Plaintiff.
insurance company involved refuses to
James Nichols, Esq., pro se, Defendant. acknowledge an assignment to the
Doctor(s) or make other provisions for the
344 *344 protection of the interest of the Doctors; or

(b) if a liability claim exists, and my

MATHIAS E. RODRIGUEZ, J.S.C. attorney refuses to agree to protect the
The plaintiff, Robert G. Berkowitz is a interest of the Doctor(s), or if I have not
chiropractic doctor, who brought an action against engaged the services of an attorney.
his patient, Joseph Haigood, and his patient's On April 27, 1987, Haigood signed another
attorney, James Nichols, for the payment of document which purported to create a lien against
medical bills. Judgment by default has been the proceeds of his personal injury action and
granted against Mr. Haigood. directed and authorized his attorney to disburse
Both remaining parties, Dr. Berkowitz and Mr. 345 *345 the funds to the medical provider. The

Nichols, move for summary judgment. The issue assignment was to be irrevocable regardless of any
to be determined is whether an attorney-at-law is substitution of attorney.1
personally liable to the medical provider for 1 "I hereby authorize and direct you, my
failing to honor an assignment by the client of the attorney, to pay directly to said doctor such
proceeds from a personal injury action. sums as may be due and owing him for
medical service rendered me both by
The facts material to the decision in this case are
reason of this accident and by reason of
not in dispute. Plaintiff rendered medical services
any other bills that are due his office and to
from about October 26, 1986 to June 10, 1987, to
withhold such sums from any settlement,
the defendant, Joseph Haigood, who suffered judgment or verdict as may be necessary to
personal injuries in an automobile accident. The adequately protect said doctor. And I
medical bills amounted to $2,435.00. To secure hereby further give a lien on my case to
payment of the medical bills, defendant Haigood said doctor against any and all proceeds of
executed a document to plaintiff on April 6, 1987. my settlement, judgment or verdict which
That document stated that (1) plaintiff would wait may be paid to you, my attorney, or myself,
for payments from either Haigood's insurance as the result of the injuries for which I have
proceeds or from pending personal injury been treated or injuries in connection

settlement funds; or (2) Haigood would pay the therewith.

medical bills in full if it was determined either:

1
 Berkowitz v. Haigood 256 N.J. Super. 342 (N.J. Super. Law Div. 1992)

I agree never to rescind this from such a claim may be assigned. Costanzo v.
document and that a rescission Costanzo, 248 N.J. Super. 116 , 122, 590 A.2d 268
will not be honored by my (Law Div. 1991). N.J.S.A. 2A:25-1 provides that
attorney. I hereby instruct that in
judgments are assignable and, therefore, by clear
the event another attorney is
implication, any proceeds derived from a
substituted in this matter, the new
settlement of a claim for personal injuries must
attorney honor this lien as
also be assignable.
inherent to the settlement and
enforceable upon the case as if it A valid assignment must contain clear evidence of
were executed by him." the intent to transfer the person's rights and "the
subject matter of the assignment must be
The two documents were sent to Haigood's
described sufficiently to make it capable of being
original attorney, Sanford F. Juman. That attorney
readily identified." 3 Willston, Contracts (3 ed.
did not refuse to agree to protect the interests of
Jaeger 1957) Section 404 at 4; Transcon Lines v.
the doctor. When James Nichols replaced Juman
Lipo Chem., Inc. 193 N.J. Super. 456, 474 A.2d
as Haigood's attorney on April 20, 1990, the two
1108 (D.Ct. 1983).
documents allegedly were transferred to Nichols
as a part of the file. James Nichols accepted the The assignment must be clear and unequivocal in
file and undertook the representation of Mr. order to be effective as to the obligor. Costanzo v.
Haigood without raising any objection to the Costanzo at 124, 590 A.2d 268. Obviously the
assignment. obligor must be properly notified of the existence
of the assignment.
On October 29, 1990, Dr. Berkowitz notified
James Nichols, by certified mail, of the existence Once properly notified of the assignment, the
of the two documents and provided him with obligor is charged with the duty to pay the
copies of the documents. Mr. Nichols' secretary assignee and not the assignor. See Russell v. Fred
received and signed for the certified letter sent by A. Pohl, Co., 7 N.J. 32 , 40, 80 A.2d 191 (1992);
Dr. Berkowitz. Spilka v. South America Managers, Inc. 54 N.J.
452, 462, 255 A.2d 755 (1969); Burke v. Hoffman
Shortly thereafter, on November 19, 1990, Mr.
28 N.J. 467, 473-4, 147 A.2d 44 (1958).
Nichols and Mr. Haigood entered into an
agreement which distributed the settlement funds In this matter, the document signed by Mr.
of $16,000.00; $10,226.24 to Haigood, $3,543.76 Haigood, (the "assignor"), on April 27, 1987,
to Juman and $2,230.00 to Nichols. The clearly and unequivocally evinced his intent to
agreement also provided that "[a]ll medical and assign and transfer the proceeds of the personal
other bills are to be paid by the client out of injury litigation to Dr. Berkowitz, (the "assignee"),
his/her share of proceeds." Berkowitz's claim was and authorized and directed Mr. Nichols, (the
346 not paid and has remained unpaid. *346 "obligor"), to pay the sums owed the doctor for
347 medical treatment. *347
Initially, we must consider whether a client may
assign the proceeds from a personal injury action In addition, the obligor, Mr. Nichols, was properly
to a medical provider. notified of the existence of the assignment and,
therefore, had the duty to pay the assignee and not
Generally, as a matter of public policy, a claim for
the assignor.
damages in tort for personal injuries is not
assignable before judgment. N.J.S.A. 2A:25-1; However, the attorney, obligor, interposes R.P.C.
DiTolvo v. DiTolvo, 131 N.J. Super. 72 , 79, 328 1.15(b) as a defense for failing to transfer the
A.2d 625 (App.Div. 1974). However, the proceeds settlement funds to the medical provider. This

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 Berkowitz v. Haigood 256 N.J. Super. 342 (N.J. Super. Law Div. 1992)

Rule of Professional Conduct states: power to validly assign the proceeds, the attorney
has the obligation to honor such an assignment, if
"Upon receiving funds or other property in
properly notified. The attorney does not violate the
which a client or third person has an
Rule because the funds in his trust account no
interest, a lawyer shall promptly notify the
longer belong to his client. The funds belong to
client or third person. Except as stated in
the assignee of the client and, therefore, the client
this Rule or otherwise permitted by law or
is not entitled to receive them under RPC 1.15(b).2
by agreement with the client, a lawyer
shall promptly deliver to the client or third 2 See Herzog v. Irace, 594 A.2d 1106 (Me.

person any funds or other property that the 1991) where the Maine Supreme Court
client or third person is entitled to receive." interpreted a similar Rule of Professional
Conduct in a comparable manner.
The attorney argues that, as a fiduciary, and
because of this Rule, he had an obligation to Therefore, the plaintiff's motion for summary
promptly turn over the proceeds from the litigation judgment is granted. Defendant's motion is denied.
to his client.
348 *348

This Rule, however, does not prohibit the client

from assigning the proceeds from the pending
litigation to third parties. Since the client has the