Day v Davis

[*1] Day v Davis 2007 NY Slip Op 52337(U) [17 Misc 3d 1138(A)] Decided on December 5, 2007 Supreme Court, Kings County Kramer, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 December 5, 2007
Supreme Court, Kings County

Mary Day, Plaintiff,

against

Theodore M. Davis, Esq., Defendant.



3676/07



Plaintiff was represented by Lavoott Bluestone, 233 Broadway, NY, NY 10279. Defendant was represented by Doron Zanani, Esq., 11 Broadway, NY, NY 10004

Herbert Kramer, J.

What rules govern the withdrawal of a New York attorney from the representation of a Virginia resident at an NASD arbitration conducted in the District of Columbia?

In this attorney malpractice proceeding, defendant who previously represented the plaintiff in an arbitration proceeding before the National Association of Securities Dealers [NASD] moves to dismiss the malpractice complaint on statute of limitations grounds. Defendant claims that he resigned as plaintiff's counsel more than three years before plaintiff commenced this suit. Plaintiff responds saying in essence that the NASD rules and the NY Practice rules render the defendant's resignation ineffective and therefore the statute has not run on her claims.

The retainer agreement dated June 11, 2003 authorized the defendant to withdraw from representation on notice to the plaintiff if the claim had no merit or if for whatever reason the defendant was of the opinion that a suit would be unwarranted or could not be adequately prosecuted. The retainer agreement called for the arbitration of fee disputes through arbitration proceedings in New York City in accordance with 22 NYCRR 137.2 and indicated that New York Law will govern the dispute.

By letter dated December 15, 2003, defendant informed the plaintiff that effective immediately, he was resigning as her counsel in the arbitration matter.[FN1] Defendant on that same [*2]day by letter informed the NASD of his withdrawal as counsel. The summons in this matter was filed on January 31, 2007 more than three years later.After defendant resigned, plaintiff wrote two letters to the defendant in June and July of 2004.[FN2] In these letters plaintiff reiterated her insistence that defendant continue in his representation of her.

Plaintiff argues that defendant's resignation was ineffective under Rule 9142 of the NASD which requires the attorney to give 30 days' notice of withdrawal to the Adjudicator setting forth good cause for same. Defendant counters that this provision does not apply to arbitration proceedings. This Court agrees. Rule 9142 applies to proceedings involving disputes between NASD members rather than arbitration proceedings involving members and their customers. The underlying arbitration is covered under a separate set of rules the NASD Rule 10300 series. Representation by counsel is covered in Rule 10316 which gives the parties the right to representation at any stage of the proceeding, but does not provide any guidance for attorney withdrawal from a matter. Indeed, this Court has not been directed to any rule in this series that governs attorney resignation.

Plaintiff further argues that CPLR §321, requires a consent to change attorney or judicial permission to withdraw neither of which were obtained.However, this argument assumes that New York law governs the attorney conduct at issue here a matter that requires some analysis.

This proceeding involves a New York attorney, who represented a Virginia resident at a NASD arbitration conducted in Washington D.C. " NASD serves as a self regulatory organization for the NASDAQ and over-the-counter markets, operating under the oversight of the Securities and Exchange Commission. NASD is headquartered in Washington, D.C." Merrill Lynch, Pierce, Fenner & Smith, Inc. v. East, 1993 WL 764642(NY Sup. 1993).

Thus the question becomes whether the law of New York, where defendant lives and practices, or of the District of Columbia where the underlying arbitration took place and NASD has its headquarters, or of Virginia, where the plaintiff resides, governs this determination.

"New York applies a grouping of contacts' or center of gravity' approach to choice of law questions in contract cases. The five generally significant contacts in contract cases are the place of contracting, negotiation and performance of the contract; the location of the subject matter of the contract and the domicile of the parties. A court considering these factors must focus on the contacts that are significant in the particular contract dispute." Ackerman v. Price Waterhouse, 252 AD2d 179(lst Dept. 1998) citing Zurich Ins. Co. v. Shearson Lehman Hutton, 84 NY2d 309(1994).

"The purpose of grouping contacts is to establish which State has the most significant relationship to the transaction and the parties' . . . .in contract cases, where grouping of contacts is the primary analytical tool, in certain instances the policies underlying conflicting laws in a [*3]contract dispute are readily identifiable and reflect strong governmental interest, and therefore should be considered'." Id at 317, 318-319.

Under these principles in this court's view, the domicile of the plaintiff is the least weighty factor since it does not figure at all in this dispute. Thus the contest lies between the law of New York and the law of the District of Columbia. Our first step is to determine whether there is an actual conflict between the governing provisions in these jurisdictions.

The rules of the District of Columbia mandate that an attorney who wishes to withdraw from representation may do so by obtaining the written and acknowledged consent of the client and a substitution has been effected. Where a trial date has been set, or where the client's written consent has not been obtained or where the client is not represented by another attorney, then the withdrawal can be accomplished only by order of the court upon motion by counsel. DC R RCP Rule 101(c). The New York rule is that the attorney must either obtain the acknowledged consent of the client or by order of the court upon motion. CPLR §321(b). Thus, in the District of Columbia Courts, even where the client has consented, unless there has been a substitution the outgoing attorney must obtain a court order authorizing his or her withdrawal. In New York, consent is required but the client need not have obtained new counsel.

While there is a difference in these provisions, the difference does not affect the determination here since the defendant would not be deemed to have satisfied either provision because he did not obtain formal consent to his withdrawal.

However, there is yet another distinction between the provisions. This involves the applicability of the practice rules to the circumstances at bar. In the District of Columbia, the Superior Court Rules govern the procedure in all suits of a civil nature in the Civil Division of the Superior Court of the District of Columbia" except as provided for in Rule 81 which makes these rules applicable to "proceedings relating to arbitration" "only to the extent that matters of procedure are not provided for in applicable statutes." Thus where as here there is no provision in the arbitration rules governing the withdrawal of attorneys, then the Superior Court rules would govern.

In New York, by way of contrast, CPLR 101 recites that the "civil practice law and rules shall govern the procedure in civil judicial proceedings in all courts of the state and before all judges . . ."[emphasis added]. The conduct at issue here did not involve an attorney's withdrawal from the representation of a client in an action or proceeding in the courts of this State, cf. CPLR §103, Lauratex Textile Corp. v. Gorin, 37 AD2d 540 (lst Dept. 1971), but rather involved a withdrawal from representation in an NASD arbitration. Accordingly, the New York Civil Procedure Act does not govern the attorney conduct at issue here since it involved a matter that did not inhere to our courts.

However, there is another body of law in New York that is in fact applicable to the issues at bar. The Appellate Divisions of the Supreme Court adopted as joint rules the Disciplinary Rules of the Code of Professional Responsibility . . . which are promulgated under 22 NYCRR Art 1200 , set out in McKinney's New York Rules of Court pamphlet. . . .[and] are applicable to all attorneys admitted to practice in New York State. . . " Code of Prof. Resp., Refs & Annos McK. Consol. Laws, Book 29 App. These rules "state the minimum level of conduct below which no lawyer can fall without being subject to disciplinary action. The Disciplinary Rules should be uniformly applied to all lawyers, regardless of the nature of their professional activities." Id. Preliminary Statement. [*4]

Thus regardless of the tribunal before which a New York attorney appears, these Disciplinary Rules are in full force and effect. DR 2-110(C) permits an attorney to withdraw from a matter where as here withdrawal is permissive because the tribunal here the NASD does not set forth any requirements for withdrawal.[FN3]

As to the selection of the governing law, the State with the most significant relationship to the transaction and the parties' and the strongest policy interest in the outcome is the State most interested in regulating the conduct of the defendant attorney. New York has an overarching interest in influencing and regulating the conduct of its attorneys especially where, as here, the forum has not created a rule to cover the situation at issue. In this regard it is also of moment to note that the parties had agreed to apply New York Law to any fee dispute that might arise. Although this is not a fee dispute, and thus the selection of New York law is not dispositive here, it is informative and lends further credence to the choice of law determination. Thus, although the proceedings took place in the District of Columbia, and the District of Columbia is the headquarters of the NASD, it cannot be said that the District of Columbia has a greater interest than does New York in regulating the conduct of a New York State attorney whose client is not a resident of the District of Columbia.

In assessing the defendant's resignation in light of the controlling New York law, this Court finds that the defendant did not violate the Disciplinary Rules in that he gave the plaintiff notice of his resignation with adequate time for the plaintiff to have retained substitute counsel to represent her in this proceeding. Indeed, when this Court rules upon motions to be relieved, this Court imposes a thirty to forty five day stay to allow the affected party to retain other counsel. In the instant matter, the plaintiff had a much longer interval of time in which to retain counsel if she so chose. Moreover, it is apparent from the resignation letter that defendant appears to have discussed the plaintiff's options with her and indicated his views of the case such that the plaintiff was neither surprised nor unprepared. The fact that plaintiff may have wanted to keep the defendant on as her attorney, does not control here. There has been no evidence provided that supports a continuous representation theory. Piliero v. Adler & Stavros, 282 AD2d 511(2d Dept.. 2001). Accordingly, this court finds that the defendant's resignation is effective and that the representation concluded more that three years prior to the commencement of this action.

The defendant's motion is granted and the action is dismissed.

This constitutes the decision and order of the Court.

J.S.C. Footnotes

Footnote 1:He reiterated his client's wishes that he not attempt to negotiate a settlement before he resigns or get consent for her to pursue certain remedies under the NASD rules or attempt to refer her case to one of his colleagues. He also indicated that he would send her a final invoice and reiterated her request that he not return her documents to her, but indicated that he would mail back some documents that he thought she should have. Plaintiff confirmed receipt of this fax and indicated that she did not want him to send any of her documents.

Footnote 2:In one, she makes reference to a motion to dismiss that was apparently made in the arbitration proceeding acknowledging that the defendant had answered it and then saying that she supplemented it and appeared pro se on the motion. The motion was denied. The NASD proceeding went to judgment in October of 2004.

Footnote 3:The rule provides that a "lawyer may withdraw from representing a client if withdrawal can be accomplished without material adverse effect on the interests of the client." Further DR 2-110(A)(2) mandates that even where withdrawal is otherwise permitted "a lawyer shall not withdraw from employment until the lawyer has taken steps to the extent reasonably practicable to avoid foreseeable prejudice to the rights of the client, including giving due notice to the client, allowing time for employment of other counsel, delivering to the client all papers and property to which the client is entitled and complying with applicable laws and rules" 22 NYCRR 1200.15.