Kang v Jun Hee Lee
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Kang v Jun Hee Lee 2012 NY Slip Op 31396(U) May 2, 2012 Supreme Court, Nassau County Docket Number: 006611-10 Judge: Timothy S. Driscoll Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] SUPREME COURT- STATE OF NEW YORK SHORT FORM ORDER Present: HON. TIMOTHY S. DRISCOLL Justice Supreme Court -------------------------------------------------------------------x WILLIAM KANG AND BIG PLUS PRINTING & PACKAGING CORP. D/B/A BIG PLUS AMERICA, TRIALIIAS PART: 16 NASSAU COUNTY Plaintiffs Index No: 006611- Motion Seq. No. Submission Date: 3/15/12 -againstJUN HEE LEE AND JOHN DOE, Defendants. ------------------------------------------------------------------- x Papers Read on tbis Motion: Notice of Motion , Affirmation in Support and Exhibits................. Affirmation in Opposition........ Reply Afrm a It.. tion and Exhibits. I.'....'... ..... .... t........ ........ This matter is before the court on the motion by Plaintiffs fied on April 29, 2011 and submitted on March 15, 2012. I For the reasons set forth below , the Court grants the motion to disqualify the law finn of Weisberg & Weisberg from appearing as counsel for Defendant Jun Hee Lee in the above-captioned action , stays the instant action for a period of thirt (30) days and directs counsel for Plaintiffs, and substitute counsel for Defendant Lee, to appear before the Court for a Preliminar Conference on June 6 , 2012 at 9:30 a. m. Counsel for the parties not be required to appear before the Court on May 30, 2012 shall as previously directed. 1 This matter was adjourned numerous times by counsel for the parties who were engaged in extensive settlement discussions. [* 2] BACKGROUND A. Relief Sought Plaintiffs move for an Order disqualifying the law firm of Weisberg & Weisberg Weisberg Law Firm ) from appearing as counsel for Defendant Jun Hee Lee (" Lee ) in the above-captioned action (" Instant Action Defendant Lee opposes the motion. B. The Paries ' History As noted in a prior Order of the Court dated December 17, 2010 (" Prior Order ), this matter was the subject of an earlier action (" Related Action Printing v. Packaging Corp.. d/b/a Big Plus America County Index Number 022354. 09. Wiliam Kang and Big Plus ) titled Jun Hee Lee and John Doe Nassau In a decision dated March 28 , 2010 (" Related Decision (Ex. C to Yoo Aff. in Supp. ), the Court (Warshawsky) J. inter alia granted the motion of Defendant Lee to dismiss the complaint for failure to obtain personal jurisdiction, without prejudice to renewal upon completion of proper service. Plaintiffs then filed the Instant Action to which Lee has interposed a Verified Answer dated March 25 , 2011 (id. at Ex. B). In the Prior Order, the Cour outlined in detail the allegations in the Complaint and the As Court incorporates the Prior Order by reference as if set forth in full herein. noted in the Prior Order, the Complaint contains five (5) causes of action. In the first cause of action Plaintiffs allege that Lee violated his fiduciar duty to Plaintiff. In the second cause of action Plaintiffs allege that Defendants committed fraud by falsely representing to Kang that they would provide capital fuds to Big Plus. In the third cause of action, Plaintiffs allege that Defendants misappropriated and converted Big Plus ' propert, including its customer list and Account information. In the fourth cause of action, Plaintiffs seek equitable relief including rescission of the Contract and an injunction preventing Defendants from transferring Big Plus funds from the Account. In the fift cause of action , Plaintiffs seek punitive damages. In support of the instant motion , Plaintiffs ' counsel (" Plaintiffs ' Counsel" ) affinns that in the Related Action . the Weisberg Law Firm represented Plaintiff Big Plus America, as reflected by the Order with Notice of Entry provided (Ex. D to Yoo Aff. in Supp. ). Plaintiffs Counsel submits that the Instant and Related Actions involve identical allegations. In opposition , Lee s counsel , a member of the Weisberg Law Firm ("Lee s Counsel" 2 Plaintiffs have provided copies of the Complaint in the Instant Action and Amended Complaint in the Related Action (Exs. A and D to Y 00 Aft. in Supp. ), which contain similar allegations and causes of action. [* 3] submits that the instant motion is " nothing more than an attempt to distract this Court' s attention from the lack of merit of Plaintiff's case " (Weisberg Aff. in Opp. at 2). Lee s Counsel provides the following factual background regarding the parties ' dispute: The company known as Big Plus CRE manufactures and sells fake nails internationally. Defendant Lee, the President of Big Plus CRE , wished to sell his products in the United States and was introduced to Plaintiff Wiliam Kang ("Kang ) as a potential employee afer Lee formed a new corporate entity for ths purose. Big Plus CRE and Lee funded the corporation , Big Plus Printing & Packaging Corp. (" Big Plus ) with milions of dollars. The sole business of Big Plus was the sale of fake nails, and its name bears no relation to the product it sells; it was named Big Plus " due to its relationship with Big Plus CRE. In October of2009, Lee came to the United States to detennine why Big Plus was not more profitable. When Lee reviewed Big Plus ' books and records, he discovered that Kang had issued stock to Lee and to himself, and that Kang had made himself an offcer of Big Plus. When Lee confronted Kang, Kang admitted his wrongful acts and agreed to leave Big Plus immediately and retu his stock to the company. Kang also executed an affdavit resigning from Big Plus. Immediately after Lee left the United States to return to Korea, Plaintiffs commenced this action. In the Related Action , Lee retained the Weisberg Law Firm to represent Big Plus interest in the Related Action. Lee s Counsel affnns that the Weisberg Law Firm s paricipation in the Related Action was limited to a motion to intervene, and it was never grated access to the books and records of Big Plus which were in the exclusive control of Plaintiffs. No one from the Weisberg Law Firm has ever spoken to or met with Kang. In addition , the Cour in the Related Decision denied the motion to intervene on behaf of Big Plus , holding inter alia as follows: While Lee has not yet effectively been made a defendant , because of the failure of plaintiff to comply with the Hague Convention in making service , it is Lee who claims to be the owner of the assets of Big Plus America, which are placed at risk by the allegations of the plaintiff. Lee is therefore a proper par, whereas the corporation, which is the property in dispute, is not a necessar par to the controversy. Pennitting a corporation whose ownership is at issue to appear presupposes tht the par representing the corporation has authority to do so; and who has actual authority is the ultimate matter in controversy. Lee s Counsel argues that Plaintiffs have failed to ariculate the par on whose behalf they are moving. Lee s Counsel submits that if Plaintiffs ' Counsel is moving on behalf of Kang, then the Court must deny the motion because there is no relationship between the Weisberg Law [* 4] Firm and Kang. Lee s Counsel contends , furter , that if Plaintiffs ' Counsel is moving on behalf of Big Plus, then the Court must dismiss such a derivative action because it is facially defective. Lee s Counsel notes that Kang has alleged that Lee defrauded him out of his interest in the company by forcing him to sign over his shares of stock and argues that , as Kang is no longer a shareholder of Big Plus, he lacks standing to maintain a shareholder derivative action against Defendants. In reply, Plaintiffs ' Counsel disputes the assertion of Lee s Counsel that his involvement in the Related Action was limited to a motion to intervene. Plaintiffs Counsel provides a copy of a letter from the Weisberg Finn to a ban in Queens County dated March 3, 2010 (Ex. A to Yoo Reply Aff. ) in which the Weisberg Finn advised the ban representative that the Weisberg Finn represented Big Plus and that the Cour pending furter (Warshawsky, l) had frozen all accounts of Big Plus cour order. In the letter , the Weisberg Finn also requested that the bank provide it with copies of the latest statements for the accounts of Big Plus. Plaintiffs ' Counsel also provides a copy ofa leter dated January 28, 2010 (id. at Ex. C) from Plaintiffs ' Counsel to the Weisberg Finn reflecting that Plaintiffs ' Counsel provided the Weisberg Finn with hundreds of pages of corporate records. Plaintiffs ' Counsel submits that this correspondence refutes the assertion of Lee s Counsel that the Weisberg Finn was never provided with access to the corporation s books and records. Finally, Plaintiffs ' Counsel disputes the claim of Lee Counsel that he never met Kang. Plaintiffs ' Counsel affirms that he and Lee s Counsel were present during a conference in the Related Action when Kang was prepared to testify before Justice Warshawsky. Plaintiffs' Counsel also disputes the claim that the Plaintiffs ' Counsel instat motion is a litigation tactic. afrms that he contacted the Weisberg Finn in the past to attempt to settle this matter but , after those negotiations proved unsuccessful , the instant application became necessary. C. The Paries ' Positions Plaintiffs submit that they have demonstrated their right to disqualification of the Weisberg Firm by establishing that 1) there is an attorney-client relationship between the Weisberg Finn and Big Plus by virte of its representation of Big Plus in the Related Action; 2) the matters involved in both representations are identical; and 3) the interests of the present client and the former client are materially adverse. Lee opposes the motion , submitting that Plaintiffs have not made the required showing [* 5] that disqualification is waranted. RULING OF THE COURT Disqualification of Counsel Although a par' s entitlement to be represented in ongoing litigation by counsel of his own choosing is a valued right that should not be abridged, such right wil clear 88 A. D. 3d 782, 784 (2d Dept. Scopin v. Goo/sby, showing that disqualification is waranted. not supersede a 10 N. app. dism., Q., 45 AD. 3d 852 , 853 (2d Dept. 2007), Camp% ngo v. Campolongo, 2 AD. 3d 476 (2d Dept. 2003). A par Matter of Marvin 2011), citing 927 (2008), quoting seeking disqualification of its adversary s lawyer must prove: 1) the existence of a prior attorney-client relationship between the moving par and opposing counsel , 2) that the matters involved in both representations are substantially related, and 3) that the interests of the present Id. client and fonner client are materially adverse. Landis 89 N. B. 2d 123, 131 (1996), reh. den., quoting 89 N. Tekni-P/ex, Inc. v. Meyner & 2d 917 (1996). Application of these Principles to the Instant Action The Cour grants the motion , and disqualifies the Weisberg Law Finn as counsel for Defendant Lee based on the Court' s conclusion that 1) there was a prior attorney-client relationship between the moving par and opposing counsel by virte of the Weisberg Law Finn s representation of Big Plus in the Related Action, 2) the matters involved in the Instant and Related Actions are substantially related, and 3) the interests of the present client, Lee, and former client, Big Plus, are materially adverse , particularly in light of Plaintiffs ' allegation that Defendants misappropriated and converted Big Plus ' propert, including its customer list and Account information. Accordingly, the Court grants the motion , stays the instant action for a period of thirt (30) days and directs counsel for Plaintiff, and substitute counsel for Defendant Lee , to appear before the Cour for a Preliminar Conference on June 6 , 2012 at 9:30 a. m. Counsel for the partes shall not be required to appear before the Court on May 30, 2012 as previously directed. [* 6] All matters not decided herein are hereby denied. Ths constitute the decision and order of the Cour. The Court reminds counsel for Plaintiffs and counsel for Defendant Lee of the required appearance of counsel for Plaintiffs, and substitute counsel for Defendant Lee , at a Preliminar Conference before the Court on June 6, 2012 at 9:30 a. DATED: Mineola , NY May 2 , 2012 ENTERED MAY 0 9 2012 NASSAU COUNTY cOUTY ClIRK' S OFFICE
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