Opinion
Index No.: 603423/06
12-05-2013
KENNETH ORR, Plaintiff, v. DANIEL YUN AND BELSTAR GROUP, LLC, Defendants.
For Plaintiff: Richard Paul Stone, Esq. For Defendants: Heller, Horowitz & Feitz, P.C.
DECISION AND ORDER
For Plaintiff:
Richard Paul Stone, Esq.
For Defendants:
Heller, Horowitz & Feitz, P.C.
Papers considered in review of this motion to disqualify counsel (motion seq. no. 017):
Notice of MotiodAffirm. of Counsel in Supp./Exhibit..........1
Affirm in Opp..........................2
Reply Affirm...........................3
Supplemental Affirm, in Supp/Exhibits ..........................4
HON. SALIANN SCARPULLA, J.
In this breach of contract action, plaintiff Kenneth Orr ("Orr") moves to disqualify defendants' counsel Martin Stein ("Stein") on the grounds that he is a necessary witness to Orr's case.
In addition, Orr moves to strike the defendants' answer and to strike the note of issue. On September 11, 2013, I issued a decision and order on the record addressing that branch of Orr's motion.
On September 28, 2006, Orr commenced this action seeking damages and injunctive relief based on defendants Daniel Yun ("Yun") and Belstar Group LLC's ("Belstar Group") alleged breach of an employment contract. In the complaint, Orr alleges that he and Yun entered into a contract on February 28, 2006, in which Yun agreed to give Orr: (i) an annual salary of $300,000; (ii) a 25% ownership interest in Belstar Group; and (iii) a $50,000 signing bonus ("the contract").
Orr alleges that he performed under the contract, and that the defendants breached the contract on or about June 25, 2006. Specifically, Orr alleges that the defendants failed to compensate him under the contract, and they failed to give him 25% ownership interest in Belstar Group. Orr also alleges that Yun breached the duty of good faith and fair dealing by failing to attend meetings and by acting in bad faith to deprive Orr from receiving the benefits of the contract.
Orr's second cause of action for fraudulent misrepresentation was dismissed on summary judgment. Orr v. Yun, 95 A.D.3d 661, 661-62 (1st Dep't 2012).
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In the answer, the defendants admitted that Orr and Belstar Group entered into an agreement on February 28, 2006. However, the defendants assert several affirmative defenses, including the defenses that: (1) defendants terminated the contract; (2) the parties mutually terminated the contract; (3) Orr materially breached the contract; and (4) Orr fraudulently induced defendants to enter into the contract.
In the current motion, Orr argues that Stein should be disqualified because he is a necessary witness who can testify about the contract. Orr claims that Stein is a key witness because he was involved with the formation of Belstar Group and every aspect of the underlying transactions. Orr further contends that Stein's testimony is necessary to explain the relationships between Belstar Group and other Belstar entities.
In support of his motion to disqualify, Orr submits a list of questions that he intends to ask Stein at trial. Orr argues that he only seeks testimony from Stein regarding information that is not protected by attorney-client privilege. He further argues that the defendants waived any attorney-client privilege by asserting their affirmative defenses.
In opposition, defendants argue that Stein should not be disqualified because his testimony is not necessary to Orr's case, and there is no evidence that Stein's testimony would be prejudicial to defendants. The defendants also argue that any of their communications with Stein regarding the contract is protected by attorney-client privilege. The defendants further contend that Stein's disqualification would severely prejudice them because he is their only attorney and this case is close to trial. The defendants state that they do not intend to call Stein as a witness.
Stein submits an affirmation stating that he "never met or spoke to Orr prior to this litigation." At oral argument on September 25, 2013, Stein stated, on the record, that he was not aware of the contract until June 2006 "when I rendered legal advice to Mr. Yun" and that he was "not aware of the agreement except for my rendering of legal advice four months after." Discussion
The advocate-witness rule requires an attorney to withdraw from a case where it is likely that he will be called as a witness. N.Y. Rules of Prof. Conduct, Rule 3.7(a) (22 N.Y.C.R.R. § 1200.0). Disqualification is only required where the attorney's testimony is considered necessary. Sokolow v. Lacher, 299 A.D.2d 64, 74 (1st Dep't 2002).
Here, I deny Orr's motion to disqualify defendants' counsel Martin Stein because he failed to show that Stein's testimony is necessary. Stein stated that he did not have knowledge of the contract between Orr and the defendants until June 2006 - four months after the contract was executed. While Stein may have useful knowledge about the events surrounding the contract beginning in June 2006, Orr failed to demonstrate that Stein's testimony regarding the contract is necessary to prove his case. S & S Hotel Ventures Ltd. Partnership v. 777 S. H. Corp., 69 N.Y.2d 437, 446 (1987) ("Testimony may be relevant and even highly useful but still not strictly necessary"); Phoenix Assurance Co. of New York v. C.A. Shea & Company, 237 A.D.2d 157, 157 (1st Dep't 1997). Both Orr and Yun have knowledge about the contract from which the fact finder can determine whether a valid contract exists, and whether defendants breached the contract.
Orr also failed to show that Stein's testimony is necessary to explain the relationships between Belstar Group and the other Belstar entities. Yun has been deposed multiple times in this action, and he has testified to the relationships between Belstar Group and the other Belstar entities.
In addition, Orr did not identify any non-privileged factual information that he seeks to elicit from Stein's testimony. Any communications between Stein and the defendants concerning the contract, which were made for the purpose of rendering or obtaining legal advice are protected by attorney-client privilege. CPLR § 4503; Spectrum Sys. Int'l Corp. v. Chem. Bank, 78 N.Y.2d 371, 377-78 (1991). Contrary to Orr's claim, the defendants did not waive attorney-client privilege as they did not place their privileged communications at issue by asserting their affirmative defenses. An "at issue" waiver occurs where "a party affirmatively places the subject matter of its own privileged communication at issue in litigation." Deutsche Bank Trust Co. of Ams. v. Tri-Links Inv. Trust, 43 A.D.3d 56, 63 (1st Dep't 1997).
Lastly, Orr made no showing that Stein would testify adversely to his clients' interests. Disqualification of an attorney is only required where the attorney's continued representation would be prejudicial to his or her client's interests. Broadwhite Associates v. Truong, 237 A.D.2d 162, 163 (1st Dep't 1997).
For the above stated reasons, I deny Orr's motion to disqualify defendants' counsel Martin Stein.
In accordance with the foregoing, it is hereby
ORDERED that plaintiff Kenneth Orr's motion to disqualify defendants' counsel Martin Stein is denied; and it is further
ORDERED that the parties shall appear for trial on March 10, 2014 at 9:30 a.m., 60 Centre Street, Room 335.
This constitutes the decision and order of the Court.
Dated: New York, New York
December 5, 2013
ENTER:
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Saliann Scarpulla, J.S.C.