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Unresolved judgment lien costs lawyer $176K

A Baltimore County jury has awarded damages of more than $176,000 against a longtime Pikesville lawyer who erroneously assured a client that a judgment lien on his Howard County home had been discharged in bankruptcy.

A cursory review of judgment records at the time of the 1998 bankruptcy would have alerted attorney Jay Fred Cohen to the continuing pendency of Wachovia Bank’s lien on Ted Annenberg’s then-home on Cipher Row in Jessup, said Annenberg’s attorney, Bryan A. Levitt.

Because of that lien, Annenberg ended up selling the Jessup house for $38,000 less than his best offer, Levitt said.

Annenberg later purchased a house in West Friendship, which he ultimately lost to foreclosure, added Levitt, a Towson solo practitioner.

“It ultimately worked to ruin my client’s financial life,” Levitt said of Cohen’s negligence. “He lost two houses, and his credit was irreparably damaged.”

Cohen, a solo practitioner and Maryland bar member since 1960, said he will appeal the verdict the jury reached Wednesday in Baltimore County Circuit Court.

Cohen said he still disputes Annenberg’s claims and the lawsuit was filed too late. The problem stemmed from a bankruptcy filing in 1998, 10 years before Annenberg sued him on Aug. 25, 2008, Cohen said.

“We will file appeals as soon as we get the order” from the circuit court, Cohen added.

Levitt, though, said Annenberg’s negligence claim against Cohen was filed within the three-year window because Annenberg did not discover that Cohen’s assurances were erroneous until 2006.

After a two-day trial before Judge Judith C. Ensor, the six-member jury found Cohen was negligent and awarded Annenberg, a Columbia acupuncturist, $176,549 in damages, Levitt said.

Annenberg first learned of the outstanding judgment lien in 2003, when he sought a home equity loan, according to his lawsuit. Cohen then contacted Annenberg, who had represented him in the 1998 bankruptcy. Cohen called the lien a clerical error and told Annenberg he would take care of it, the complaint stated.

But Cohen never filed a corrective petition, the lawsuit added.

Annenberg discovered the lien was still pending in 2006 after he found a buyer for his home. The purchaser backed out of the contract when a title company found the active lien, which had more than doubled from its original amount of $90,000 to $190,000.

Annenberg was forced to take out a second mortgage on the West Friendship home he had purchased after receiving the initial offer, Levitt said.

Wachovia Bank, which held the lien and the mortgage on the Cipher Row home, began foreclosure proceedings on that house in early 2007.

The lien stemmed from a loan Annenberg cosigned for his brother, who was purchasing a marina in Florida. After the brother defaulted, the bank won a $90,000 judgment against Annenberg, attached his Cipher Row home and recorded the lien on March 23, 1998.

Annenberg filed for bankruptcy two months later, in June 1998. The Cipher Row home was mistakenly listed as an exempt property in that filing by Cohen, the lawsuit stated.

Cohen could have avoided the lien under federal bankruptcy law, as it was recorded within the code’s 90-day “preference” period for striking such debts, Levitt said. Cohen also could have reopened the bankruptcy case to avoid the lien at any time up to two years after the U.S. Bankruptcy Court in Baltimore discharged Annenberg in September 1998, Levitt added.

“That’s where Cohen dropped the ball,” Leavitt said. “He did not protect the house, and it was completely protectable in bankruptcy.”

With the 2007 foreclosure on the Cipher Row home pending, Annenberg retained Florida attorney Jacob Mitrani, at a fee of $1,800, to negotiate what would become a $74,313 settlement with Wachovia. The lien was lifted and the foreclosure action dismissed, according to the lawsuit.

The jury’s calculation of damages represented compensation for Annenberg’s settlement with Wachovia, Mitrani’s fee, the $38,563 difference between the original offer for the Cipher Row house and the ultimate sale price, and the remaining mortgage-related debt of $61,622 on his second foreclosed home, Levitt said.

TED ANNENBERG V. JAY FRED COHEN

Court:

Baltimore County Circuit Court

Case No.:

03C08009031

Judge:

Judith C. Ensor

Outcome:

Jury Verdict ($176,549 damages award)

Dates:

Event: 1998-2006

Suit filed: Aug. 25, 2008

Jury verdict: Nov. 14, 2012

Plaintiff’s Attorney:

Bryan A. Levitt of Towson.

Defendant’s Attorney:

Jay B. Shuster of Pikesville.

Count:

Negligence.