Opinion
2019-3184
11-01-2019
Carl W. HIBBARD, Jr., Plaintiff, v. SHARP ENTITIES, LLC; Scott A. Sharp, Peole of the State of New York, and "John and Jane Doe" (Said Names Being Fictitious, it Being the Intention of the Plaintiff To Designate Any Occupants of the Mortgaged Premises Herein), Defendants.
FOR PLAINTIFF: MELVIN & MELVIN, Michael R. Vaccaro, Esq., of Counsel FOR DEFENDANTS SCOTT A. SHARP and SHARP ENTITIES, LLC.: NEWMAN & LICKSTEIN, Michael G. Jubelt, Esq., of Counsel
FOR PLAINTIFF: MELVIN & MELVIN, Michael R. Vaccaro, Esq., of Counsel
FOR DEFENDANTS SCOTT A. SHARP and SHARP ENTITIES, LLC.: NEWMAN & LICKSTEIN, Michael G. Jubelt, Esq., of Counsel
Anthony J. Paris, J.
This Decision and Order addresses Plaintiff's motion to disqualify the law firm of Newman & Lickstein and Scott A. Lickstein, Esq., as attorneys for Defendants in this commercial foreclosure action.
This motion was brought on by Order to Show Cause filed on June 21, 2019 and made returnable before the Hon. James P. Murphy on August 1, 2019. The motion was opposed by Newman & Lickstein, Scott A. Lickstein and Sharp Entities. Subsequent to an initial appearance before Justice Murphy, this matter was transferred to this Court and on October 16, 2019 a Hearing was held on the issue of disqualification.
During the course of this Hearing, the Court heard sworn testimony from Plaintiff and Attorney Scott A. Lickstein, and had the unique opportunity to observe their demeanor and evaluate and assess their credibility.
Based on the record before the Court and the testimony elicited during the course of the Hearing, it appears that on April 30, 2015, Plaintiff advanced $280,000 to Defendants Sharp to finance Defendants' purchase of the real property commonly known and designated as 900 Old Liverpool Road, situate in the Town of Salina, County of Onondaga, from Water Street Associates, LLC. As security, Defendants executed a Note in said amount secured by a mortgage encumbering the property.
Defendants were tenants of this commercial parcel and entered into a purchase contract with Water Street. Attorney Lickstein was and remains a member of Water Street Associates, LLC. Defendant Scott Sharp had a relationship with Plaintiff and an agreement was reached between them for Plaintiff to privately finance Defendants' purchase. Neither Plaintiff nor Defendants wanted to hire a lawyer to represent their interests in this transaction. Therefore, Attorney Lickstein and his law firm prepared and filed all the closing documents, including the deed, note and mortgage, the gains tax affidavit, equalization affidavit and statement of sale. See Exs. P-1 and D-4. Attorney Lickstein and his firm also secured the abstract continuation, survey and tax search necessary to evidence the seller's clean title.
The above scenario and factual description is uncontroverted up to that point. Thereafter, however, the testimony of Plaintiff and Attorney Lickstein is in sharp contrast. Plaintiff testified that prior to this transaction, he had not interacted with Attorney Lickstein in any manner. In fact, it was Defendant Sharp who pulled the three together because neither wanted to spend money on a lawyer and Lickstein was a lawyer as well as a member of the seller. Nevertheless, Plaintiff felt that Lickstein was representing him because he drew up the note and mortgage under Plaintiff's direction and because he asked Lickstein some questions about what would happen if Defendants Sharp defaulted on the terms of the instruments. Plaintiff also testified that he had used attorneys in the past on other real estate transactions, but thought it easier for Lickstein to prepare all the documents and did not want to pay any legal fees. Lickstein did, in fact, prepare the boilerplate note and mortgage and included the terms that Plaintiff wanted including interest rate, late fees, elements of foreclosure, and life insurance provision. Plaintiff felt it was a good boilerplate note and mortgage and contained the terms he required. There was no testimony that Lickstein suggested any of these terms or advised that they be included. Except for the life insurance provision, these terms were boilerplate and explained to him by Lickstein.
He never received a retainer agreement or bill from Lickstein. Nevertheless, on the basis of Lickstein preparing this boilerplate note and mortgage and explaining its terms, Plaintiff was of the feeling that he was being represented by Attorney Lickstein.
Attorney Lickstein testified that as an attorney and member of the seller LLC and due to the fact that neither Plaintiff nor Defendants wanted to pay for a lawyer, he and his law firm prepared all of the necessary closing documents and secured their recording. According to his testimony, he acted only on behalf of the seller and did not represent either the Defendants as buyers or the Plaintiff as lender. He did all the work to make sure the work was done and the deal closed. He did not negotiate any terms between Plaintiff and Defendants concerning the note and mortgage and did not make any representations to either party that he was representing either of them. He did not submit a bill to either party and only acted on behalf of the seller. In essence, he was acting as a scrivener of the documents so as to close the transaction.
On this basis he perceived no conflict of interest as he was acting solely for the seller and he was not privy to any confidential information of either party because there did not appear to be any such information germane to his representation of the seller and his actions as scrivener.
Although it is usually recognized that a party has a right to select the attorney of his or her choice in a litigation setting, this right is not without limitation. Green v. Green , 47 NY2d 447 (1979).
Mindful of the possible appearance of impropriety and the desire to avoid same, Rule 1.9(a) and (c) of the Rules of Professional Conduct as set forth in 22 NYCRR Section 1200 dictate two prohibitions on attorney conduct relating to former clients. That is, an attorney may not represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client. Also, an attorney may not use any confidences or secrets of that former client. A party seeking disqualification of its adversary's lawyer pursuant to Rule 1.9 must prove that there was an attorney-client relationship between the moving party and opposing counsel, that the matters involved in both representations are substantially related, and that the interests of the present client and former client are materially adverse. Jamaica Pubic Service v. AIU Insurance , 92 NY2d 631 (1988) ; D'Alessandro v. Eastman Kodak , 309 AD2d 1162 (4th Dept. 2002).
While not absolute, the right of an individual or entity to employ counsel of choice, is a valid right, and any restrictions to this right need to be carefully scrutinized. Therefore, in deciding a motion to disqualify counsel, the Court must balance the interest in avoiding the appearance of impropriety with a party's right to representation by counsel of choice and the danger that disqualification motions can be utilized to secure a tactical advantage in a contested matter. Matter of Peters , 124 AD3d 1266 (4th Dept. 2015).
Based on the record before the Court, Plaintiff does not meet the first prong of this three prong test. He has not shown that Attorney Lickstein or his law firm represented him in the financing of Defendants' purchase of the property from the LLC of which Lickstein was a member. By his own testimony, he established that he, like Defendants, did not want to spend money on a lawyer and thought it would be easier if Lickstein did everything. Sworn testimony also established that Lickstein prepared a boilerplate note and mortgage and included the terms that Plaintiff himself directed. In addition, it was established that Lickstein only answered questions from Plaintiff as to default by Defendants which remedies were contained in the boilerplate instrument. Moreover, there was never any retainer agreement between Plaintiff and Lickstein, and Plaintiff never received a bill for services from Lickstein or his law firm. Furthermore, it is clear from the record that Lickstein also did not represent Defendants in that transaction, but only represented the LLC, of which he was a member, as seller.
Even assuming arguendo that Plaintiff met the first prong of the test, it is abundantly clear from the record that there was no confidential information in the financing between Plaintiff and Defendants to which Lickstein was privy and/or which would have any bearing on this matter.
Therefore, based on the foregoing and the record before the Court, Plaintiff's motion to disqualify Attorney Lickstein or the law firm of Newman & Lickstein from representing Defendants in this foreclosure action is hereby DENIED.