Opinion
Index Number 151675/2018
03-05-2019
PATRICK QUADROZZI and PCM DEVELOPMENT LLC, Plaintiffs, v. CLAUDE CASTRO and CLAUDE CASTRO & ASSOCIATES PLLC, Defendants.
NYSCEF DOC. NO. 43 DECISION AND ORDER FRANK P. NERVO, J.S.C. Plaintiffs seek to disqualify defense counsel on the basis that defense counsel, an associate at defendants' law firm, was closely involved in plaintiff s real estate closing and defendants' conduct in preparing for and during the closing formed the basis for the instant legal malpractice suit. As relevant here, Plaintiff Quadrozzi was involved in an estate dispute with his nephew. The dispute was settled, by a separate law firm, and the settlement of that dispute included a transfer of real property to Plaintiff Quadrozzi. Defendants represented plaintiff in that real estate closing. Plaintiffs allege, inter alia, that defendants failed to properly identify or satisfy all liens against the subject property and defendants' failure resulted in the lien(s) accruing substantial interest. Plaintiffs cite defense counsel's email correspondences to Plaintiff Quadrozzi, including an email for approval of an appellate brief on the real estate matter, and that brief's reference to the underling settlement agreement, as evidence of defense counsel's close involvement with the underlying matter. Additionally, plaintiffs cite defense counsel's billing records, showing a combined 4.25 hours worked by defense counsel, and billed to Plaintiff Quadrozzi, for work on an affirmation and motion in the underlying real estate matter. Plaintiffs, therefore, argue that defense counsel should be disqualified, as a conflict exists between counsel's former and current clients and they have not consented to this representation, counsel will be a material fact witness, and even if an actual or potential conflict does not exist, an appearance of impropriety does. The strong presumption in favor of a client being represented by the counsel of his or her own choosing may be rebutted and overcome by a showing of an actual conflict, a serious potential for conflict, or the appearance of impropriety (Wheat v. U.S., 486 US 153, 164 [1988]; Halberstam v. Halberstam, 122 AD3d 679 [2d Dept 2014]). Disqualification of an attorney on a particular matter is within the discretion of the Court (Falk v. Gallo, 73 AD3d 685 [2d Dept 2010]). However, disqualification requires the Court to determine whether a conflict exists "'not with the wisdom of hindsight after the trial has taken place, but in the murkier pretrial context' where conflicts are hard to predict" (People v. Watson, 26 NY3d 620 [2016] quoting People v. Carncross, 14 NY3d 319 [2010]). Rule 1.7 of the Rules of Professional Conduct, addressing conflict of interests involving current clients, provides "a lawyer shall not represent a client if a reasonable lawyer would conclude that either: (1) the representation will involve the lawyer in representing differing interests; or (2) there is a significant risk that the lawyer's professional judgment on behalf of a client will be adversely affected by the lawyer's own financial business, property or other personal interests" (22 NYCRR 1200.0). However, where the representation is not prohibited by law, does not involve the assertion of claims by one client against another client in the same litigation, and the affected client gives informed consent, a lawyer may represent both clients if the lawyer believes he or she will be able to provide "competent and diligent representation" to each affected client (Id.) Rule 1.9 of the Rules of Professional Conduct, addressing conflicts of interest involving former clients, provides that "a lawyer who has formerly represented a client in a matter shall not thereafter 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 unless the former client gives informed consent, confirmed in writing" (22 NYCRR 1200.0). Successive representations of clients with differing goals raises the specter that a lawyer's loyalty may be divided between a prior and current client. Given that the lawyer is obligated to maintain the former client's confidences and secrets, a potential conflict between the former and current client may, therefore, arise (People v. Watson, 26 NY3d 620 [2016]; People v. Prescott, 21 NY3d 925 [2013]). On a motion to disqualify, pursuant to a conflict of interest with a former client, the movant bears the burden of proving the existence of a prior attorney-client relationship, that the matters of both representations are substantially related, and the present client and former client have materially adverse interests (see Tekni-Plex, Inc. v. Meyner and Landis, 89 NY2d 123 [1996]; see also Campbell v. McKeon, 75 AD3d 479 [1st Dept 2010]). Rule 3.7(a) of the Rules of Professional Conduct, addressing advocate-witnesses, provides that a "lawyer shall not act as an advocate before a tribunal in a matter in which the lawyer is likely to be a witness on a significant issue of fact" (22 NYCRR 1200.0). On a motion to disqualify counsel, based on the advocate-witness rule, the challenging party bears the heavy burden to identify the expected testimony of the advocate-witness and demonstrate that such testimony would be adverse to the client's factual allegations (Dishi v. Federal Ins. Co., 112 AD3d 484 [1st Dept 2013; see also Broadwhite Assoc. v. Truong, 237 AD2d 162 [1st Dept 1997]). Disqualification is required "only when it is likely that the testimony to be given by the witness is necessary. Testimony may be relevant and even highly useful but still not strictly necessary. A finding of necessity takes into account such factors as the significance of the matters, weight of the testimony, and availability of other evidence" (S&S Hotel Ventures Ltd. Partnership v. 777 S.H. Corp., 69 NY2d 437, 445-456 [1987]). Where an advocate-witness' testimony would be cumulative, it is necessarily unessential and a motion to disqualify is properly denied (Shah v. Ortiz, 112 AD3d 543 [1st Dept 2013]). Conversely, where an attorney is closely involved in an underlying matter which forms the basis for a subsequent legal malpractice action, and it is likely the attorney will be a witness on a significant issue of fact, the attorney is properly disqualified from representing the law firm in the legal malpractice action (Delgado v. Bretz & Coven, LLP, 109 AD3d 38, 47 [1st Dept 2013]; Chang v. Chang, 190 AD2d 311 [1st Dept 1993]; see also Lauder v. Goldhamer, 122 AD3d 908 [2d Dept 2014]). Plaintiffs' argument that a conflict of interest exists under Rule 1.7 is unavailing, plaintiffs having made no showing that they are current clients of defense counsel and thus, the rule pertaining to conflicts with current clients does not form a basis to disqualify defense counsel. However, the Court finds it is likely that defense counsel will be a witness on a significant issue of fact, namely the defendants' representation of plaintiff in the real estate closing and research regarding liens. Plaintiff has established that defense counsel performed legal work on the matter giving rise to the instant malpractice action, and although defense counsel characterizes his involvement in the matter as more closely related to that of an assistant, he does not refute that he corresponded with plaintiff regarding the matter and billed plaintiff for 4.25 hours of said work. Defendant does not identify any other witness, besides Defendant Castro, who may be able to provide testimony relating to standard of legal work performed for the closing. Consequently, defense counsel's testimony regarding the closing is likely to be necessary, and he should be disqualified from representing defendants (Delgado, 109 AD3d at 47; Chang, 190 AD2d at 311). Likewise, defense counsel's prior representation of plaintiffs and subsequent representation of defendants gives rise to a potential conflict between the former and current clients. Defendants do not contest that plaintiffs were former clients and that plaintiffs have not waived defense counsel's representation of defendants. Plaintiffs have demonstrated a substantial relationship between both representations. Defense counsel, while employed by defendants, performed legal work on plaintiffs' real estate closing and is also defending defendants in the instant legal practice matter, which stems from alleged failures during the closing. Therefore, plaintiffs have also established that their interests are materially adverse to those of defendants. Accordingly, it is ORDERED that the motion to disqualify counsel for defendants is granted and Paul Martin, Esq., is hereby disqualified from representing defendants in this matter; and it is further ORDERED that the action is stayed for 30 days from service of a copy of this order with notice of entry upon the parties and upon defendants, who shall, within said period, retain another attorney in place of the attorney named above; and it is further ORDERED that the new attorney retained by defendants shall serve upon all parties a notice of appearance and file same with the Clerk of the Trial Support Office (Room 158), and the Clerk of the Part within said 30-day period; and it is further ORDERED that in the event that Defendant Claude Castro intends to proceed pro se pursuant to CPLR § 321, he is directed to notify the Clerk of the Part in writing within said 30-day period; and it further ORDERED that the conference scheduled March 19, 2019 has been adjourned and counsel are directed to appear for a conference in Part 4, Room 327, 80 Centre Street, on May 10, 2019, 2019 at 10:00am. THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT. Dated: March 5, 2019
ENTER:
/s/_________
J.S.C.