Opinion
No. 18686/03.
2013-02-26
Christopher ZAMBROTTA, Plaintiff, v. 2935 EQUITIES LLC, Vitra Inc., and Vanguard Construction & Development Co., Inc., Defendants.
John R. Marquez, Esq., Hoey, King, Epstein, Prezioso & Marquez, for Defendant/third-party plaintiff/second third-party plaintiff, 29–35 Equities LLC s/h/a 2935 Equities LLC and defendant/third-party defendant Vitra, Inc.
JACK M. BATTAGLIA, J.
Recitation in accordance with CPLR 2219(a) of the papers considered on the motion of defendant/ third-party plaintiff/second third-party plaintiff 2935 Equities LLC and defendant/third-party defendant Vitra, Inc. for an order, among other things, “granting dismissal of the Third–Party Complaint ... pursuant to CPLR 3215(c) as voluntarily abandoned”:
—Notice of Motion for Dismissal of Third–Party Action and Response to Court Order
Affirmation in Support
Memorandum of Law in Support of Motion for Dismissal
Exhibits A–G
On November 6, 2002, plaintiff Christopher Zambrotta allegedly sustained personal injuries during the course of his work at a construction site located at 299th Avenue in New York County. Plaintiff alleges that Defendants were negligent and violated Labor Law §§ 240(1) and 241(6). Defendant 2935 Equities LLC owned the premises; defendant Vitra, Inc. leased the premises; and defendant Vanguard Construction & Development Company, Inc. was the general contractor. Defendant 2935 Equities commenced third-party actions against Vitra and Vanguard; and Vanguard commenced a third-party action against State Painting and Decorating, which was Plaintiff's employer. In its Verified Third–Party Complaint against Vitra, its lessee, 2935 Equities alleges claims for contractual indemnification, common-law indemnification and contribution, and breach of an agreement to procure insurance.
Subsequent to the commencement of the third-party action by 2935 Equities against Vitra, the law firm of Hoey, King, Epstein, Prezioso & Marquez (“the Firm”) was substituted as counsel for 2935 Equities. Issue was never joined in the 2935 Equities/Vitra third-party action.
Plaintiff then served a Supplemental Summons and Amended Complaint naming 2935 Equities, Vitra, and Vanguard as direct defendants. (The original Summons and Verified Complaint named only 2935 Equities as Defendant.) The Firm served a Verified Answer on behalf of both 2935 Equities and Vitra. The Verified Answer asserts cross-claims as an affirmative defense for contribution and indemnity against Vanguard, and asserts the benefit of CPLR Article 16 for 2935 Equities and Vitra.
With a prior motion, 2935 Equities and Vitra sought an order, pursuant to CPLR 3212, granting them conditional summary judgment against Vanguard, purportedly in the second third-party action that 2935 Equities had commenced against Vanguard (“purportedly” because only 2935 Equities is a plaintiff in that action.) The Court denied the motion with leave to renew. ( See Zambrotta v. 2935 Equities, LLC, 37 Misc.3d 1208[A], 2012 N.Y. Slip Op 51941[U] [Sup Ct, Kings County 2012].)
With a Decision and Order on the prior motion ( see2012 N.Y. Slip Op 51941 [U] ), the Court sua sponte raised the question whether the Firm had a clear conflict of interest in representing both 2935 Equities and Vitra, such that it must be disqualified from representing one or both. ( See Rules of Professional Conduct [22 NYCRR 1200.0] Rule 1.7; Greene v. Greene, 47 N.Y.2d 447, 451 [1979];Georgius v. Village of Morrisville, 83 AD3d 1158, 1158–59 [3d Dept 2011]; Alcantara v. Mendez, 303 A.D.2d 337, 338 [2d Dept 2003]; Sidor v. Zuhoski, 261 A.D.2d 529, 530 [2d Dept 1999]; Caravousanos v. Kings County Hosp., 27 Misc.3d 237, 239–42 [Sup Ct, Kings County 2010].) The Court noted that the third-party action had not been dismissed as abandoned ( seeCPLR 3215[c] ); nor had 2935 Equities discontinued the third-party action prior to the Firm taking on the representation of both clients; nor did the papers show any agreements that might have been made between or among 2935 Equities, Vitra, or their respective insurers that would resolve the conflict.
Because the Court had raised the disqualification question sua sponte, the summary judgment motion was denied with leave to renew after a determination as to whether the Firm must be disqualified from representing 2935 Equities, LLC or Vitra, Inc. or both. The Court also ordered that the Firm file and serve motion papers addressing the conflict of interest and disqualification by a specified date, or be disqualified from representing both 2935 Equities and Vitra.
This motion followed, made by both 2935 Equities and Vitra, seeking an order “granting Dismissal of the Third–Party Complaint ... pursuant to CPLR 3215(c) as voluntarily abandoned,” and permitting the “continued representation” of 2935 Equities and Vitra by the Firm ( see notice of motion for dismissal of third-party action and response to court order, dated November 30, 2012.) No other party has submitted papers either supporting or opposing either aspect of the motion.
CPLR 3215(c) provides, “If the plaintiff fails to take proceedings for the entry of judgment within one year after the default, the court ... shall dismiss the complaint as abandoned, ... unless sufficient cause is shown why the complaint should not be dismissed.” The third-party action by 2935 Equities against Vitra was commenced on November 17, 2003, and, as noted above, Vitra never answered. But since Vitra did not move for dismissal pursuant to CPLR 3215(c) before the Firm undertook the representation of both the third-party plaintiff and third-party defendant, it is difficult to see how a motion now by the Firm, purportedly on behalf of both, avoids the conflict.
An Affirmation in Support submitted by a member of the Firm sets out the history of the Firm's joint representation of 2935 Equities and Vitra. After commencement of the third-party action on behalf of 2935 Equities by the law firm of Smith & Laquercia, LLP, a stipulation dated December 31, 2003 was signed by that firm and the firm of Guzov–Ofsinh, LLC on behalf of Vitra, extending Vitra's time to answer or move until January 26, 2004. On January 14, 2004, Chubb Group of Insurance Companies advised UTC Risk Management Services, Inc., insurer for 2935 Equities, that Federal Insurance Company, as insurer for Vitra, accepted 2935 Equities's “tender for defense and indemnification ... up to the liability limit as set forth in [the Federal/Vitra] policy.”
The Firm, described as “House Counsel to the Chubb Group of Insurance Companies,” was “assigned by Chubb Insurance to represent its insured Vitra and indemnitee Equities in this litigation.” ( See affirmation in support ¶ 7.) A Consent to Change Attorney dated March 5, 2004 was signed on behalf of 2935 Equities and Smith & Laquercia, LLP, substituting the Firm as counsel for 2935 Equities. After Plaintiff amended his verified complaint, the Firm served a Verified Answer to Amended Complaint dated November 28, 2005 on behalf of 2935 Equities and Vitra.
During the seven years since the filing and service of the Amended Verified Complaint, 15 motions have been made (not counting this one), a note of issue has been filed, and the action has appeared on the calendar in the Jury Coordinating Part, where another appearance is scheduled for March 8, 2013. There is no indication that any problem has arisen by reason of the Firm's joint representation of 2935 Equities and Vitra.
In support of the motion, counsel submit an Affidavit in Support of David Katz, “member of Katz Associates, L.L.C., member of 29–35 Equities LLC” ( see affidavit in support ¶ 1); and an Affidavit of Rolf Gisler, the Chief Financial Officer of Vitra. Mr. Katz asserts that he is aware that the Firm “has been and continues to defend 29–35 Equities while also defending Vitra in this action”; that he “consents to [the Firm] continuing to defend 29–35 Equities while at the same time defending Vitra”; and that he supports dismissal of the third-party action “and the continued representation of 29–35 Equities by [the Firm].” ( See affidavit in support ¶¶ 8, 9, 11.) Ignoring that Mr. Gisler's affidavit is not in admissible form ( seeCPLR 2309[c] ), he “consent[s] to [the Firm] continuing to defend 29–35 Equities while at the same time defending Vitra in this law suit.”
There can be little doubt that, absent the effect of full contractual indemnification or insurance coverage, the Firm's continued representation of 2935 Equities and Vitra would violate Rule 1.7 of the Rules of Professional Conduct (22 NYCRR 1200.00), and warrant remedy by disqualification. “[T]he representation ... involve[s] the lawyer in representing different interests” ( see rule 1.7[a][1] ), and “involve[s] the assertion of a claim by one client against another client represented by the lawyer in the same litigation” ( see rule 1.7[b][3].) ( See also Caravousanos v. Kings County Hosp., 27 Misc.3d at 239–42.) The Firm does not contend otherwise. Indeed, in neither counsel's Affirmation in Support nor the Memorandum of Law in Support of Motion for Dismissal is there even a mention of Rule 1.7 or the citation of any legal authority in support of continued representation (other than CPLR 3215[c], addressed above.)
Even assuming that the third-party action can be deemed discontinued with prejudice on the consent of 2935 Equities and Vitra, although neither the affidavit of Mr. Katz or Mr. Gisler so states ( seeCPLR 3217), in the face of the conflict, the Firm would yet be representing “different interests” ( see rule 1.7[a][1].)
The Firm does not describe the claims asserted against 2935 Equities and Vitra, except as they might be found in the Amended Verified Complaint. Plaintiff alleges two causes of action, one for common-law negligence, the other for violation of Labor Law §§ 240 and 241. Each of the cited Labor Law provisions establishes a basis for the liability of “[a]ll contractors and owners and their agents” based upon the failure to comply with the provision's requirements. Labor Law §§ 240(1) and 241(6) are said to impose “a nondelegable duty on owners.” ( See Morton v. State of New York, 15 NY3d 50, 57 n3 [2010].) For purposes of this statutory liability, a lessee will deemed the “owner” under some circumstances. ( See Allan v. DHL Express (USA), Inc., 99 AD3d 275, 278 [2d Dept 2012].)
Subject to statutory limitation ( seeGeneral Obligations Law § 5–322.1), there might be contractual indemnification between parties, as well as common-law indemnification or contribution in appropriate circumstances ( see McCarthy v. Turner Constr., Inc., 17 NY3d 369 [2011];Racquet v. Braun, 90 N.Y.2d 177 [1997].) Even in the absence of an asserted claim for indemnity or contribution, an allocation of fault between or among two or more tortfeasons jointly liable to the plaintiff would limit the respective liability of the tortfeasors for non-economic loss ( see CPLR Article 16.) Here, as noted above, although the joint answer of 2935 Equities and Vitra does not now allege cross-claims between them, it asserts the benefit of CPLR Article 16, so that each of them would bear the burden of proving “its equitable share of the total liability” ( seeCPLR 1603), to the necessary detriment of the other.
The availability of insurance coverage from the carrier for one of the represented parties that would fully indemnify both represented parties should they both be found liable to the plaintiff might obviate the parties' “different interests,” at least where, as here, there is no qualification to the insurer's acknowledgment of coverage. ( Compare Paladino v. Safe Skate, Inc., 24 Misc.3d 1227[A], 2010 N.Y. Slip Op 51512[U] [Sup Ct, Nassau County 2010].) Here, the only qualification stated by Vitra's carrier in accepting the tender of defense of 2935 Equities was “the liability limit as set forth in our policy.”
That limit is not revealed, however, anywhere in the papers submitted on this motion, and no showing is therefore made that both represented parties would be fully indemnified if found liable to the plaintiff. “The mere fact that two co-defendants do not plan to implicate each other does not eliminate a conflict”; “where a co-defendant could prevail by implicating the other a conflict exists.” ( See Ingenito v. Horn, ––– Misc.3d ––––[A], 2011 N.Y. Slip Op 31955[U], * * 12 [Sup Ct, N.Y. County 2011].) There is no showing here that there would be no viable claim by one of the represented parties against the other. ( See Matter of Ravitch, 82 AD3d 126, 131 [1st Dept 2011].) There is no showing that Vitra contractually agreed to fully indemnify 2935 Equities, or to name 2935 Equities as an insured on its liability coverage. Neither the lease nor the policy are included among these papers.
The Firm relies almost entirely on the consent of 2935 Equities and Vitra, as reflected in the affidavits of Mr. Katz and Mr. Geiser. But consent, even after full disclosure, is not enough ( see Greene v. Greene, 47 N.Y.2d at 451–52;LaRusso v. Katz, 30 AD3d 240, 243–44 [2006] ), and here neither of the client affidavits nor counsel's Affirmation in Support makes reference to any disclosure beyond the simultaneous representation.
“While the Rules of Professional Conduct generally prohibit a lawyer from simultaneously representing clients with different interests, an attorney may represent such clients where a disinterested lawyer would believe that the lawyer can competently represent the interest of each client and that each consents to the representation after full disclosure of the implications of simultaneous representation as well as the advantages and risks involved.” (Ferolito v. Vultaggio, 99 AD3d 19, 27 [1st Dept 2012]; see also Rules of Professional Conduct [22 NYCRR 1200.0] rule 1.7[b] [former Code of Professional Responsibility DR 5–105 (22 NYCRR 1200.24[c] ) ].) The “disinterested lawyer” prong of the consent requirement “has been interpreted to mean that a lawyer is not permitted to seek client consent to a conflict if a disinterested lawyer would advise the client to refuse consent and that a client consent that is given is not valid if the objective test of a disinterested lawyer is not met.” (Shaikh v. Waiters, 185 Misc.2d 52, 56 [Sup Ct, Nassau County 2000]; see also Tavarez v. Hill, 23 Misc.3d 377, 382 [Sup Ct, Bronx County 2009].)
There is nothing in the papers submitted on this motion that acknowledges the “disinterested lawyer” prong of the consent requirement, or that the Firm has, in any event, made the requisite determination. Particularly where there is no showing that avoids or ameliorates the apparent different interests of the two clients, the Court will not speculate.
In sum, the Firm fails to show that 2935 Equities and Vitra do not have different interests implicated in this action, or that a disinterested lawyer would believe that the lawyer could competently represent the interest of each client, or that full disclosure of the advantages and risks of joint representation was made to each client as the basis of the clients' respective consent. Indeed, there is little evidence that the Firm reviewed Rule 1.7 of the Rules of Professional Conduct or the other authorities cited by the Court in the October 15, 2012 Decision and Order before proceeding.
The Court is aware that arrangements of the type that 2935 Equities and Vitra appear to have been made here are not uncommon, and suspects that often joint representation might be undertaken without violating the ethical responsibilities of counsel. The Court notes, again, that apparently no problem has surfaced during the long pendency of this action, and that no party opposes the Firm's motion to allow the joint representation to continue. None of that, however, is reason to ignore the question when it is obvious and it has not been satisfactorily answered by counsel.
The motion is denied. No later than March 22, 2013, either 2935 Equities LLC and Vitra, Inc. shall each file a substitution of counsel, or the Firm shall submit, directly to the Court in Chambers, an affirmation of counsel, supported by such affidavits and other documents, as to fully respond to the deficiencies in the instant application noted above, including a discontinuance of the third-party action. Absent full and timely compliance, the Firm will be disqualified from representing either 2935 Equities LLC or Vitra, Inc. in this action.