Springer v Fensterstock & Partners, LLP

[*1] Springer v Fensterstock & Partners, LLP 2006 NY Slip Op 50258(U) [11 Misc 3d 1057(A)] Decided on February 24, 2006 Supreme Court, New York County York, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on February 24, 2006
Supreme Court, New York County

Jay Springer, Plaintiff,

against

Fensterstock & Partners, LLP, BLAIR C. FENSTERSTOCK and ROY B. OSER, Defendants. FENSTERSTOCK & PARTNERS, LLP, BLAIR C. FENSTERSTOCK and ROY B. OSER, Third-party Plaintiffs, ROBERT B. MCKAY, Third-party Defendant.



109627/05

Louis B. York, J.

In this action, plaintiff asserts that Fensterstock & Partners, LLP, Blair C. Fensterstock and Roy B. Oser are guilty of gross malpractice in their representation of him in an earlier action against the executor of his father's estate. Of particular relevance here, in the underlying lawsuit plaintiff accused the executor of conveying valuable property from the estate to plaintiff and then causing it to be resold to the executor's children for $130,000, or about a tenth of the value of the property.

Shortly after they served their Answer in the current litigation, defendants commenced a third party action against Robert B. McKay, plaintiff's current counsel. Defendants argue that if they are found guilty, McKay must pay a proportionate share because he also was involved in the litigation of the underlying lawsuit. Currently, defendants move to disqualify McKay. McKay [*2]opposes the motion. For the reasons below, the court grants the motion to the limited extent of holding a hearing on the issues presented in the third party action.

Plaintiff apparently hired defendants in the summer of 2000, in connection with the estate litigation. The case went to trial on August 2-4, 2004. According to the allegations in the complaint, defendants allegedly erred at the outset of the litigation, when they brought the action as a diversity proceeding in Federal rather than in Surrogate's Court, which is designed to deal with such matters more expeditiously and which holds executors to strict standards. In addition, plaintiff states that defendants overbilled him for their services, double billing and also charging $165 per hour for the support services of a college student to whom defendants improperly referred as a paralegal. Plaintiff also accuses defendants of failing to focus on the crucial issues in the case and of asserting claims that were not viable ones.

Plaintiff asserts that defendants continued to make critical errors when the case proceeded to trial in early August, 2004. Among other errors, plaintiff alleges: First, defendants failed to notify the defendants in the underlying action in a timely fashion of a crucial witness in the lawsuit; and, as a result, they were precluded from producing him at trial to support their claims. Second, they failed to move to strike the inadmissible testimony of the executor, a non-expert, as to the value of the property he conveyed to his children in the underlying lawsuit; and, as the Court relied on this evidence in reaching his decision in the case, this failure was especially damaging. Third, plaintiff states that defendants ignored his request that they demand that the executor provide an accounting. Fourth, defendants failed to challenge an improper jury instruction regarding a key issue.

Finally, plaintiff alleges that he paid defendants $300,000 for their services, but that he refused to pay the additional $700,000 in bills that they sent him. In his complaint, he seeks the return of the $300,000 he expended. In addition, he asserts that he lost at least $1,000,000 or, the money he allegedly lost in the conveyance and resale of his father's property due to defendants' malpractice. Therefore, he seeks a total of $1,300,000 from defendants.

In their answer, defendants deny the allegations in the complaint that relate to their litigation skill and to the appropriateness of the charges. They state that plaintiff still owes them $673,235.03 for their legal services. In their fourth affirmative defense, which is relevant here, they assert that even if plaintiff did sustain damages, they were due to plaintiff's negligence or to the wrongdoing or negligence of third persons. In addition, defendants counterclaim against plaintiff for $673,235.03 on breach of contract, account stated and quantum meruit grounds.

On August 11, 2005, defendants commenced their third-party action against Mr. McKay, who represents plaintiff in the current lawsuit. The third-party complaint asserts that Mr. McKay assisted defendants in the underlying litigation. Defendants state that Mr. McKay "provided advice and guidance" and assisted them during settlement negotiations and the mediation. Third-Party Complaint ¶ 9. In particular on these issues, defendants allege: (1) Mr. McKay "attended and participated in" the JAMS mediation on July 21, 2004; (2) defendants revealed both their case and settlement strategies to Mr. McKay and showed him copies of the court orders issued by the Federal Magistrate and by the Judge, along with other documents; and, Mr. McKay "shared his opinion" with them, id. ¶ 10; (3) Mr. McKay attended the trial, sitting in the audience with the plaintiff and passing defendants notes which offered strategic advice; and (4) Mr. McKay not only attended but was actively involved in settlement discussions on August 3, [*3]2004. Based on these contentions, defendants seek contribution from Mr. McKay. In addition, though without setting forth any basis for their request, they seek attorney's fees against Mr. McKay.

"[T]he disqualification of an attorney is a matter which rests within the sound discretion of the trial court." Zutler v. Drivershield Corp., - AD3d -, -, 790 NYS2d 485, 486 (2nd Dept. 2005). In determining whether to disqualify counsel, the court balances several critical factors. Primary is the party's right to be represented by the counsel of his or her choice, "a valued right which should not be abridged absent a clear showing that disqualification is warranted." Id.; see St. Barnabas Hosp. v. New York City Health and Hospitals Corp., 7 AD3d 83, 84, 775 NYS2d 9, 11 (1st Dept. 2005). The court must also consider whether prejudice would result if it granted a motion to disqualify, "and whether the motion is a tactical ploy." Moorman v. Huntington Hosp., Index No. 28514-95, 8 Misc 3d 1012(A), 801 NYS2d 779 (Sup. Ct. Suffolk County May 5, 2005) (avail at 2005 WL 1618056, at **4). This last element comes into play because unfortunately, "in the current reality of litigation, disqualification motions are often utilized as a tactical tool." First Hudson Financial Group, Inc. v. Martinos, Index No. 114378/05, - NYS2d , (Sup. Ct. NY County Dec. 6, 2005) (avail at 2005 WL 3700724, at *2).

Finally, because of the above concerns, the party bringing a motion to disqualify an attorney has a high burden of proof. First Hudson Financial Group, Inc., 8 Misc 3d 1012(A) at -, 801 NYS2d 779 at - (avail at 2005 WL 3700724, at *2). In particular, movant must make a clear showing that the disqualification of the plaintiff's attorney is warranted . . . ." Unger v. Unger, 15 AD3d 389, 390, 790 NYS2d 176, 176 (2nd Dept. 2005)(internal quotation marks omitted). On the other side of the scales, "courts must balance the vital interest in avoiding even the appearance of impropriety." Cremers v. Brennan, 196 Misc 2d 262, 264, 764 NYS2d 326, 328 (Civ. Ct. NY County 2003). Therefore, if there are any doubts as to the propriety of allowing the counsel in question to continue in his or her representation of the client, they "are to be resolved in favor of disqualification." Stober v. Gaba & Stober, P.C., 259 AD2d 554, 555, 686 NYS2d 440, 441 (2nd Dept. 1999).

Here, movants base their motion to disqualify on the advocate-witness rule. "The advocate-witness rule requires an attorney to withdraw from pending litigation if it appears that his or her testimony is necessary and he or she ought to be called as a witness." Skiff-Murray v. Murray, 3 AD3d 610, 611, 771 NYS2d 230, 232 (3rd Dept. 2004)(citing Code of Professional Responsibility DR 5-102[a] [22 NYCRR 1200.21]; internal quotation marks omitted). If the counsel's testimony is not necessary to the issues in the case, the fact that the counsel is or may be called as a witness is not sufficient to justify disqualification. See In re Estate of Levinson, 11 AD3d 826, 828, 784 NYS2d 165, 167 (3rd Dept. 2004), lv denied, 4 NY3d 704, 792 NYS2d 1 (2005). However, if the counsel is called as a witness to argue the credibility of his or her client's testimony, disqualification is proper. Feinstein v. Carl, Index No. 18984-03, 4 Misc 3d 1008(A), 791 NYS2d 869 (Sup. Ct. Nassau County July 14, 2004) (avail at 2004 WL 1620792, *2). The fact that the attorney is also a litigant who might be called upon at trial is not clearly dispositive. See Old Saratoga Square Partnership v. Compton, 19 AD3d 823, -, 798 NYS2d 743, 744 (3rd Dept. 2005).

Although the Disciplinary Rule provides a court with guidance, it is not binding authority on the issue of disqualification. Zaccaro v. Bowers, 2 Misc 3d 733, 734, 771 NYS2d 332, 334 [*4](Civ. Ct. NY County 2003). "Courts must, in addition, consider such factors as the party's valued right to choose its own counsel, and the fairness and effect in the particular factual setting of granting disqualification or continuing representation." S & S Hotel Ventures Ltd. Partnership v. 777 S.H. Corp., 69 NY2d 437, 439, 515 NYS2d 735, 736 (1987). Therefore, the court considers the issue carefully, in light of the various factors above.

It is clear that plaintiff wants to retain Mr. McKay as his counsel. Indeed, his own affidavit, submitted in opposition to defendants' current motion, shows how strongly he feels on this issue. Second, in this case, plaintiff asserts malpractice and evidences his distrust of defendants, his former attorneys. It would be particularly unfortunate to separate plaintiff from the counsel of his choosing a friend of long standing whom he likes and trusts. Moreover, Mr. McKay feels strongly on the issue as well. In particular, the court notes that plaintiff and Mr. McKay's mutual loyalty and friendship, as much as their strong attorney-client relationship, is quite evident in their affidavit and affirmation.

On the other hand, by virtue of their indemnification argument, defendants have created at least a facial conflict in this case. The court finds that there is another problem more serious than the danger that Mr. McKay might be called as a witness in this case. Instead, if Mr. McKay must pay a portion of whatever judgment is awarded on behalf of his client, the more money he wins for his client the greater his personal liability. Thus, his personal financial interest arguably is adverse to that of his client. If there is merit to the third-party complaint, then his presence as plaintiff's would create at least the appearance of impropriety.

However, plaintiff and Mr. McKay strenuously object to defendants' argument that Mr. McKay functioned as counsel. Instead, they characterize his involvement as that of a friend with legal knowledge who lent emotional support before and during trial. They point to evidence, such as one of plaintiff's e-mails to defendants, that lends some credence to this position. Moreover, they suggest that the third-party action is nothing more than a tactical measure designed to deprive plaintiff of his chosen attorney.

In addition, the uncontested facts show that plaintiff hired defendants in 2000, and Mr. McKay did not have any personal or legal involvement in the estate litigation until 2004, around the time of the trial's conclusion. It also appears to be undisputed that Mr. McKay did not sit at the attorney's table during the four days of the trial and that he did not make any formal motions or objections to the court or at trial. Even defendants, in their third-party complaint and their current application, principally describe Mr. McKay's activities as somewhat passive; according to defendants, he primarily read the file, sat with plaintiff at trial, listened to the trial and to the mediation, and made some suggestions during both trial and mediation. It is unclear whether and to what extent he actively participated in the mediation process though, as stated, plaintiff's e-mail on the point suggests that plaintiff considered Mr. McKay to be there in a non-legal capacity. Finally on this issue, it appears to be undisputed that Mr. McKay did not charge plaintiff, or otherwise view himself as an attorney on the case. In light of these points, defendants' allegations that Mr. McKay is partially liable for their alleged malpractice at best appear to justify a small contribution and at worst are meritless allegations that should not deprive plaintiff of the right to counsel of his choosing.

Thus, the court has a dilemma. On the one hand, if it is valid, the third-party complaint justifies Mr. McKay's disqualification. On the other hand, if it is meritless, the court would be [*5]disinclined to disqualify him as plaintiff's counsel. As Mr. McKay suggests, his testimony would not be critical to the case. In light of the above, the court shall address the question of Mr. McKay's involvement in the underlying litigation first. Mr. McKay can stay on as counsel for plaintiff if the claims in the third-party action have no merit. Therefore, it is

ORDERED that the motion is granted to the limited extent of ordering the parties to appear for a hearing on the issue of Mr. McKay's involvement as attorney in the underlying estate litigation. Based on its findings, the court will determine whether Mr. McKay should be disqualified or may remain as counsel. Counsel for both sides are directed to contact the court at 646-386-3852, via conference call, and schedule a hearing date with Ms. Felix, the Part Clerk.

ENTER:

Dated: February 24, 2006_______________________

LOUIS B. YORK, J.S.C.