New York law firm Einbinder & Dunn is facing a lawsuit in a Texas federal court for allegedly accepting a fraudulent transfer to pay the firm's attorney fees from funds that its client was supposed to use for a court judgment.

Einbinder & Dunn, with two New York offices and one in New Jersey, employs eight business and franchise attorneys who represent clients nationwide, according to the firm's website. It was representing a company called Creative American Education in the underlying case, Creative American Education v. The Learning Experience Systems, in the U.S. District Court for the Southern District of Florida.

The plaintiff in the new lawsuit, Edgefield Holdings v. Einbinder & Dunn, filed Monday in the U.S. District Court for the Northern District of Texas, is The Learning Experience Systems, a franchise business of early childcare facilities, which later sold its business interests to Edgefield Holdings.

In the underlying case, Learning Experience won a $948,000 judgment against Creative American in 2015. Back then, because Creative American was already selling its assets, the Florida court certified the final judgment in Colorado, Texas and California. The Florida court in 2015 also issued an order for Creative American, its two owners and an affiliate, Aces Creative American Investments, to pay the judgment whenever they collected revenue or distributed interests from properties or the company. In 2017, the Florida court also issued an attorney fee judgment that said Creative American had to pay $84,000 in attorney fees to Learning Experience.

But the complaint alleged that didn't happen. It claimed that in 2016, Aces Creative sold one of its properties in Dallas and earned $109,000 from the sale. The company is insolvent, and the property was its only asset, the complaint said. Aces Creative violated the court's order by failing to tell the Florida court or Learning Experience about the sale. Another violation: Creative American did not send the money to Learning Experience to pay the judgment, but instead, it paid Einbinder & Dunn's attorney fees.

“Their lawyers—officers of the court—helped themselves to the very sales proceeds that this court prohibited judgment debtors from using,” the complaint said. “Defendant Einbinder refused to return or hand over the proceeds.”

Learning Experience is suing Einbinder & Dunn for fraudulent transfer under the Texas Business and Commerce Code, and it seeks to recover $109,000 in actual damages, costs and attorney fees and pre- and post-judgment interest.

Read the complaint.