Opinion
442 2009.
Decided August 10, 2010.
Felipe Orner, Esq., Flushing, NY, for Plaintiff.
Ginsburg Misk, by Hal R. Ginsburg, Esq., Queens Village, NY, for Defendants.
The present motion presents an interesting issue under New York's recently implemented Code of Professional Conduct, concerning attorney disqualification under the potential conflict when a lawyer must serve as both advocate and witness. Even when a lawyer is both a witness and an advocate, not all such situations require removal of the lawyer as advocate.
Upon the foregoing papers, it is ordered that the motions and cross motion are determined as follows:
This is an action based upon a contract for the sale of commercial property. The plaintiffs are the one-third owners as tenants in common, as successor Administrators DBN of the Estate of Livingston Mandel Deans, of the premises located at 217-19/21 Merrick Boulevard, Laurelton, New York (the premises), located in Queens County. The other equal one third tenants in common owners of this property were Byron Dean and Sharon Deans. Pursuant to court orders issued by Surrogate's Court and two partition actions in Supreme Court, Queens County, under Index Numbers 23091/2004 and 13613/2004, the plaintiffs as Administrators, on behalf of all tenants in common, were ordered to sell the property without Sharon Deans's involvement in the sale of the property. This partition order was not issued until November 5, 2008.
Prior to the court-ordered partition, the plaintiffs and the defendant Aranbayev entered into an agreement to sell the property. On or about July 25, 2008, the defendant Aranbayev executed a contract to purchase the premises for $1,400,000.
The contract was sent by the defendant's counsel to the plaintiffs' counsel, Felipe Orner, Esq., along with a cover letter and a down payment check from the defendant 227 Merrick Realty LLC (227 Merrick) in the sum of $140,000. The defendants alleged that after sending the contact to the plaintiffs they were advised that the seller/owners were not yet able to sign the contract as there was a pending partition action.
On July 29, 2008, counsel for the defendants sent a letter to the plaintiffs' counsel in which defendants' counsel authorized the plaintiffs' counsel to hold the down payment check until the completion of the partition action when the sellers could legally sign the contract of sale, and upon notice of completion, the defendants' counsel would give written consent to deposit the down payment check.
The defendants allege that in September, 2008, the plaintiffs advised them that the title issues had been resolved. The defendants' counsel then wrote to the plaintiffs' counsel on September 8, 2008, and requested that the plaintiffs' counsel confirm in writing that the title issues had, in fact, been resolved and, if so, authorized him to deposit the down payment check.
The plaintiffs deny that such a conversation took place in September, 2008. Instead, the plaintiffs allege that they did not communicate to the defendants that the contract could be executed until Nov., 2008. The plaintiffs produce a letter from the defendants dated Nov. 6, 2008, listing exceptions and judgments on the title report that needed to be cleared before closing could take place. The plaintiffs allege that the letter sent from the defendants with a date of Sept. 8, 2008, was actually sent on Nov. 8, 2008, and authorized the plaintiffs to deposit the down payment check, as the title issues had been resolved.
The defendant Aranbayev, on the other hand, alleges that, after not receiving the contracts back for months, he withdrew his offer to purchase the premises in early November. On Nov. 6, the defendant 227 Merrick stopped payment on the down payment check. The defendants' counsel alleges that, on both Nov. 10 and 12, he called Mr. Orner and, on each occasion, left messages advising him of the withdrawal of the offer to purchase. The plaintiff Orner denies receiving the phone calls or messages withdrawing the offer to purchase the subject premises.
The plaintiffs executed the contract on Nov. 6, 2008. On Nov. 11, 2008, the co-tenant in common, Byron Dean, executed the contract of sale. The fully executed contract was sent to the purchasers on Nov. 13, 2008 and received by the purchaser on Nov. 14, 2008. After receiving the executed contract, the purchaser's counsel wrote back and stated that the offer had been withdrawn and the contract of sale was null and void.
The plaintiffs then commenced this action alleging two causes of action. The first cause of action is for breach of contract against the defendant Aranbayev. The second cause of action is asserted against the defendant 227 Merrick for stopping payment on the down payment check.
A party moving for summary judgment must show by admissible evidence that there are no material issues of fact in controversy and that they are entitled to judgment as a matter of law ( see, Alvarez v Prospect Hosp., 68 NY2d 320; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853). Here, multiple issues of fact prevent the granting of summary judgment, including when the withdrawal of the offer to purchase was actually conveyed to the sellers. Inasmuch as there are conflicting accounts on whether the purchaser's attorney left a message withdrawing the offer prior to the acceptance of the offer, summary judgment is inappropriate.
The defendant Aranbayev's argument that he cannot be liable because the defendant 227 Merrick wrote and then stopped payment on the down payment check is without merit. The cause of action against the defendant Aranbayev is for breach of contract. Since Aranbayev signed the contract, he can be held liable for breach of contract, regardless of whether he wrote the down payment check.
Among some lawyers there is a notion that in every case where a lawyer must act as a witness, he must decline being the advocate. That notion simply is incorrect. In New York, the former Code of Professional Responsibility has now been replaced by the recently implemented Code of Professional Conduct found at 22 NYCRR 1200.0. Rivera v. Lutheran Med. Ctr., 73 AD3d 801 [2nd Dept. 2010]. There are a number of situations contemplated by the new Codes of Professional Conduct where the lawyer can testify and still serve as advocate. Recent cases under the new Code that discuss the propriety of the lawyer serving as both witness and advocate and whether or not disqualification is mandated are Falk v. Gallo , 73 AD3d 685 [2nd Dept. 2010], and In re Essex Equity Holdings USA, LLC, v. Lehman Bros. Inc., ___ Misc 3d ___, 2010 WL 2331407, 2010 NY Slip Op 20225 [Sup Ct NY County 2010] [Yates, J.].
Significantly, Rule 3.7(3) of the new Rules of Professional Conduct state that a lawyer should not serve as both attorney and witness unless "disqualification of a lawyer would work substantial hardship on the client." The Appellate Division, Second Department, stated: "A party's entitlement to be represented in ongoing litigation by counsel of its own choosing is a valued right which should not be abridged absent a clear showing that disqualification is warranted" ( Dominguez v Community Health Plan of Suffolk, 284 AD2d 294).
Orner is a pro se plaintiff, representing both himself and his co-fiduciary. The movants failed to establish that disqualification is warranted. While it is likely that Orner will testify at trial, it would be a substantial hardship to the plaintiffs to replace him. Orner has represented related matters stemming from this estate dating back to 2002, including over ten Supreme Court matters, as well as four appeals at the Appellate Division. Furthermore, there is no evidence that Orner's testimony will be prejudicial to either himself or his co-fiduciary. The branch of the motion to disqualify Mr. Orner as attorney for the plaintiff is thus denied. The request by plaintiffs for sanctions is also denied since the motion for disqualification was not frivolous.
The cross motion by the plaintiffs to compel production of the redacted phone logs is denied as moot since the defendant seller's counsel has produced such phone logs.
Finally, the motion by the plaintiffs to compel the defendants' former counsel Nathan Pinkhasov's compliance with the non-judicial subpoena duces tecum dated March 1, 2010, requiring his testimony, is denied. In light of the production of the requested phone logs, in response to the subpoena, the post-note of issue deposition of Nathan Pinkhasov is not necessary.
Accordingly, the branch of the defendants' motion for summary judgment motion dismissing the complaint is denied. The branch of the defendants' motion to disqualify Felipe Orner, Esq., is denied. The cross motion by the plaintiffs to compel the production of the phone logs and for sanctions is denied. The plaintiffs' motion to compel compliance with the non-judicial subpoena is denied.
The foregoing constitutes the decision and order of the Court.
Either counsel shall serve a copy of this decision bearing the Clerk's stamped date of entry together with notice of entry upon all parties.