Opinion
Index No. 653508/2022
06-14-2023
Dallin Fuchs and JULIE FUCHS, Plaintiffs, v. Catherine Volz and ANDREW VOLZ, Defendants.
Queller, Fisher, Washor, Fuchs & Kool, and the Law Office of William A. Gallina, LLP, New York, NY (Pablo A. Sosa and Matthew Maiorana of counsel), for plaintiffs. Kishner Miller Himes P.C., New York, NY (Ryan O. Miller and Rachel K. Marcoccia of counsel), for defendants.
Unpublished Opinion
Queller, Fisher, Washor, Fuchs & Kool, and the Law Office of William A. Gallina, LLP, New York, NY (Pablo A. Sosa and Matthew Maiorana of counsel), for plaintiffs.
Kishner Miller Himes P.C., New York, NY (Ryan O. Miller and Rachel K. Marcoccia of counsel), for defendants.
Gerald Lebovits, J.
BACKGROUND
Defendants entered into a contract to purchase a condominium apartment from plaintiffs, and paid a deposit of $449,500.00 held in escrow with plaintiffs' attorney, Peter Graubard, Esq., in accordance with the terms of the contract. Plaintiffs claim that defendants failed to purchase the apartment by the agreed upon closing date. (NYSCEF No. 1 at 2-3.) Accordingly, they brought a cause of action for anticipatory repudiation seeking the release of the deposit to the plaintiffs as their liquidated damages pursuant to paragraphs 3 (a) (i) and 16 of the contract. (NYSCEF No. 2 at ¶ 3, 16.) Defendants oppose allowing plaintiffs to retain the deposit. In addition, they claim that plaintiffs have breached by failing to address a title objection and issuing a "time of the essence" closing notice demanding that they close on the apartment. (NYSCEF No. 5 at ¶ 184.)
Plaintiffs base their motion to disqualify Miller and his firm on the ground that they are likely to call him as a witness. Plaintiffs argue that Miller's testimony is necessary to their case and prejudicial to Miller's clients, and therefore that plaintiffs have met the standard for disqualification.
Specifically, plaintiffs claim that, on August 3, 2022, in a conversation with Graubard, plaintiffs' counsel responsible for the sale of the apartment, Miller commented that the deal to close on the sale of the condominium was dead. They also claim that he went on to comment that the purchaser, his clients, had "moved on," were "out," and "would not be purchasing this apartment." (NYSCEF No. 34 at ¶ 10.) Plaintiffs argue that Miller's declarations and statements to Graubard on this date constitute prima facie evidence establishing defendants' anticipatory repudiation of the real-estate contract. Defendants claim that Miller's comments were a part of settlement discussion and accordingly are inadmissible. Therefore, they argue, the disqualification motion should be denied.
DISCUSSION
Under Rules of Professional Conduct, Rule 3.7, Lawyer As Witness, codified at 22 NYCRR 1200.0, a lawyer may not act as an advocate "in a matter in which the lawyer is likely to be witness of a significant issue of fact," or if "another lawyer in the lawyer's firm is likely to be called as a witness on a significant issue other than on behalf of the client, and it is apparent that the testimony may be prejudicial to the client." (22 NYCRR 1200.0.)
The advocate-witness rules are not binding on courts, however; they are instead meant to serve as guidance. (S & S Hotel Ventures Ltd. P'ship, v 777 S. H. Corp., 69 N.Y.2d 437, 440 [1987].) Courts should consider a party's right to choose its own counsel and the fairness and effect of their decision to grant disqualification or continue representation. (Id.) Since disqualification denies the substantive right of parties to choose their counsel, "any restrictions on that right must be carefully scrutinized," but that right can be overridden by a compelling public interest. (See Mayers v Stone Castle Partners, LLC, 126 A.D.3d 1, 6 [1st Dept 2015] [internal quotation marks omitted].)
The party seeking disqualification bears "the burden of making a clear showing that the disqualification is warranted." (Lake v Kaleida Health, 60 A.D.3d 1469, 1470 [4th Dept 2009] [internal quotation marks omitted].) A movant seeking disqualification must demonstrate that "(1) the testimony of the opposing party's counsel is necessary to his or her case, and (2) such testimony would be prejudicial to the opposing party." (Trimarco v Data Treasury Corp., 91 A.D.3d 756, 757 [2d Dept 2012].) A movant must also demonstrate that testimony is needed on a significant issue of fact, not an uncontested issue, for disqualification to be warranted. (See 22 NYCRR 1200.0 [Rule 3.7].)
Determining whether attorney testimony is necessary involves weighing the "significance of the matters, weight of the testimony, and availability of other evidence." (S&S Hotel Ventures, 69 N.Y.2d at 445-446.) If the attorney's testimony is cumulative, meaning that the same relevant testimony could be obtained from other witnesses instead, then the attorney is not a necessary witness. (Id.)
In this case, plaintiffs claim that Miller's declarations and statements to Graubard on August 3, 2022, constitute prima facie evidence of defendants' anticipatory repudiation of the real-estate contract. (See NYSCEF No. 32 at 10-11, citing Fonda v First Pioneer Farm Credit, ACA, 86 A.D.3d 693 [3d Dept 2011]. This court agrees with plaintiffs that an attorney's testimony about compliance with contractual terms can be used as evidence to support a claim for breach of contract based on anticipatory repudiation. Miller's statements in his August 2022 conversation, in particular, are potentially relevant and necessary to resolving whether defendants repudiated the parties' agreement. But even assuming that plaintiffs are correct that Miller's testimony would be necessary and prejudicial if admitted, disqualifying Miller is unwarranted because CPLR 4547 bars admission of that testimony.
Defendants contend that their August 18, 2022, letter notes that the August 3 phone call was a settlement discussion, rendering inadmissible statements made during that phone call. (NYSCEF No. 44 at 12.) Plaintiffs argue that regardless whether Miller's statements occurred during the course of settlement discussion, they represent admissions of fact and are therefore admissible. (NYSCEF No. 51 at 3.) This court agrees with defendants.
CPLR 4547 makes settlement discussions and offers generally inadmissible to prove liability or the merits of claims. Admissions of fact in the course of a settlement discussion can be admitted. (See DSA Realty Servs., LLC v Marcus & Millichap Real Estate Inv. Servs. of NY, Inc., 128 A.D.3d 587, 588 [1st Dept 2015]; Cent. Petro. Corp. v Kyriakoudes, 121 A.D.2d 165, 165 [1st Dept 1986].) But statements or documents articulating a party's negotiating position in settlement negotiations, or made or prepared solely for the purposes of those negotiations, are inadmissible. (See 82 Retail LLC v Eighty Two Condo., 117 A.D.3d 587, 589 [1st Dept 2014]; D.B. Zwirn Special Opportunities Fund, L.P. v Brin Inv. Corp., 96 A.D.3d 447, 448 [1st Dept. 2012].)
This court concludes that the statements at issue were made for settlement purposes, rather than constituting factual admissions. Graubard's affidavit suggests that the August 3, 2022, telephone call occurred in the context of "several telephone discussions" between Graubard and Miller "to see if there was a way in which [they] could amicably resolve [the] dispute." (NYSCEF No. 38 at ¶ 9.) And Graubard represents that in the August 3 call, Miller, after stating he "moved on," was "out," and would "not be purchasing this apartment," then "went on to propose a division of the contract deposit." (NYSCEF No. 38 at ¶ 10.)
In these circumstances, the statements by Miller on which plaintiffs now seek to rely are inadmissible settlement-related communications. A contrary conclusion would require carefully distinguishing two statements made in a single conversation-as later briefly summarized in an affidavit-and concluding that one statement was an admission of fact (rather than a negotiating position) while the other statement was made for settlement purposes. This court lacks a basis in the record to parse so finely Graubard's paraphrase of Miller's statements. The court would also be reluctant to do so in any event, given the policy interests in encouraging frank settlement negotiations that CPLR 4547 is intended to further.
Miller's statements about which plaintiffs would seek his testimony are inadmissible under CPLR 4547. As a result, no advocate-witness-related reason exists to disqualify him (or his law firm) from representing defendants.
Accordingly, it is
ORDERED that plaintiffs' motion to disqualify Ryan O. Miller, and his firm, Kishner Miller Himes, P.C., from further representing the defendants in this matter is denied.