Lynnhill Condominium

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
at Greenbelt
IN RE: :
:
LYNNHILL CONDOMINIUM : Case No. 05-38059PM
Debtor : Chapter 11
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CHADWICK, WASHINGTON, :
MORIARTY, ELMORE & BUNN, P.C. :
Movant :
vs. :
LYNHILL CONDOMINIUM :
Respondent :
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MEMORANDUM OF DECISION
Before the court is the Motion of the law firm of Chadwick, Washington, Moriarty,
Elmore & Bunn, P.C. (“Chadwick”), seeking relief from the stay of 11 U.S.C. § 362(a).
Chadwick seeks an order of the court allowing it to set off against funds in its possession
belonging to the Debtor its claim for professional services rendered the Debtor in connection
with a foreclosure proceeding and expenses incurred in connection therewith. These services
were rendered prior to the filing of this bankruptcy case. After the hearing on the Motion,
Chadwick made an oral motion to reduce to $4,251.18 the amount of its claim that it seeks to set
off.
This case was filed on October 13, 2005. No one advised Chadwick of the filing of the
case until the first week in January, at the time of the settlement of the August 5, 2005,
foreclosure sale. Chadwick continued to represent the Debtor after the filing of this bankruptcy
case under Chapter 11 with respect to the day-to-day affairs of the condominium association.
Debtor’s original bankruptcy counsel was replaced, and replacement counsel filed a motion to
Date signed March 24, 2006
Entered: March 24, 2006 Case 05-38059 Doc 70 Filed 03/24/06 Page 1 of 2

employ another law firm in place of Chadwick.
The Motion, as modified, was consented to by the Debtor. No creditor opposed the
Motion. But the office of the United States Trustee appeared in court at the hearing on the
Motion in opposition to any compensation. One position of the United States Trustee is that the
Movant cannot recover for any post-filing actions, not having been retained by the Debtor. The
Movant does not take issue with this proposition. The United States Trustee also argues that the
Movant is not entitled to a Maryland attorney’s lien on the proceeds now in its possession,
because these funds do not fall within the category of recovering money as a result of a
settlement judgment or award that the Debtor received as a result of legal services performed.
See Md. Code Ann. Bus. Occ & Prof. § 10-501(a) (2004).
While this issue is one that could only be settled with absolute certainty by the Court of
Appeals of Maryland following certification of this cause to it, the court is guided by the
language of the Court of Appeals in the case of Consolidated Construction Services, Inc. v.
Simpson, 813 A.2d 260, 273-79 (Md. 2002). In Simpson, the Court of Appeals strictly construed
the statute as it was then written and held a lien did not attach to funds obtained by settlement. In
response to Simpson, the Maryland Legislature amended this statute in 2002 by adding
settlements as possible triggering events for a lien. The court reaffirmed its position that
charging liens, such as the lien asserted here, were created for the purpose of securing an
attorney’s interest in funds received. Here, the work had been accomplished by Chadwick long
prior to the filing of the bankruptcy case under Chapter 11. At the time of filing, it was holding
the deposit made by the successful purchaser that was in an amount in excess of what was sought
here.
The court views this case in the light of Citizens Bank of Maryland v. Strumpf, 516 U.S.
16 (1995), as authorizing the creditor here to freeze these funds pending the resolution of the
right of setoff asserted. The court finds that the foreclosure of the condominium lien asserted,
and its subsequent approval by the Circuit Court, was a final judgment authorizing the imposition
of the lien. An appropriate order will be entered.
cc:
Elizabeth L. Hileman, Esq., 7979 Old Georgetown Road, Suite 600, Bethesda, MD 20814
John D. Burns, Esq., 6303 Ivy Lane, Suite 102, Greenbelt, MD 20770
United States Trustee, Attn: Lynn A. Kohen, 6305 Ivy Lane, #600, Greenbelt MD 20770
End of Memorandum
Case 05-38059 Doc 70 Filed 03/24/06 Page 2 of 2