Miloslavskaya v Gokhberg
Annotate this CaseDecided on March 15, 2012
Supreme Court, Kings County
Sofia Miloslavskaya, YEVGENIYA SHTEYMAN, Plaintiffs,
against
Marat Gokhberg and YURY GOKHBERG, MICHAEL H. MICHAEL, ESQ., and MICHAEL AND SWERDLOFF, LLC, Defendants.
489/2011
Plaintiffs Attorney is
Albert Feinstein, Esq.
Law Offices of Albert Feinstein
1500 Broadway, Suite 1900
New York, New York 10036
(212) 224-0224
Defendant Michael H Michael, Esq. is pro se and also is counsel to his firm,
Michael and Swerdloff, LLC.,
2226 Ocean Avenue
Brooklyn, New York 11229
(718) 339-1400
Defendants Marat Gokhberg and Yury Gokhberg
have not yet appeared in the action
Francois A. Rivera, J.
On January 7, 2011, plaintiff commenced the instant action by filing a summons and verified complaint with the Kings County Clerk's office. The original complaint was brought, solely against Michael H. Michaels, Esq. and Michael and Swerdloff, LLC (the defendant attorneys) as attorneys for the seller of certain real estate property located at 2666 East 7th Street, Brooklyn, New York (the subject property) and as the escrow agents of the real estate contract for the subject property in which the plaintiffs were the unsuccessful buyers.
This decision and order will discuss the first six consecutive motions brought by the original parties, parts of which were already decided. The discussion is necessary to explain the decision reached on parts that the court reserved for later treatment. [*2]
Plaintiffs have moved under motion sequence number one for summary judgment dismissing the defendant attorneys answer and for sanctions. Defendant attorneys have cross-moved under motion sequence number two for dismissal of the plaintiffs' complaint pursuant to CPLR 3211; for a default judgment on its counterclaim pursuant to CPLR 3215; and for sanctions.
The court determined that the sellers were necessary parties to the action and issued a decision and order dated May 13, 2011, which directed the plaintiffs to join the sellers of the subject property to the action pursuant to CPLR 1001(a) within thirty days or the complaint would be dismissed. The court also denied plaintiffs' motion and defendants' cross motion sequence numbers one and two.
On June 13, 2011, in compliance with the court's May 13, 2011 order, plaintiffs filed a supplemental summons and amended complaint which added the sellers, Marat Gokhberg and Yury Gokhberg, as defendants.
By notice of motion filed on August 2, 2011, under motion sequence three, plaintiffs have moved pursuant to CPLR 3215 for a default judgment on its amended complaint and for an order disqualifying the defendant attorneys from representing the sellers in the instant action on ethical grounds.
By notice of cross motion filed on August 22, 2011, under motion sequence number four and by an amended notice of cross motion filed on September 1, 2011, under motion sequence number five, the defendant attorneys have moved for dismissal of the complaint and amended complaint pursuant to CPLR 3211, a default judgment on their counterclaims pursuant to CPLR 3215 and for sanctions pursuant to CPLR 8303-a. The amended cross-motion was meant to correct an error in the cross-motion and to replace it. Plaintiff did not object to the amended cross-motion.
By decision and order dated November 4, 2011, the court denied that part of plaintiffs' motion under motion sequence number three which sought a default judgment on its amended complaint; and denied defendants' amended cross motion under motion sequence number five. The court reserved decision on that part of plaintiffs' motion which sought an order disqualifying the defendant attorneys from representing the sellers, defendants Marat Gokhberg and Yury Gokhberg. The court also stayed the time for all defendants to answer the amended complaint until resolution of the disqualification issue.
By notice of motion filed on November 28, 2011, under motion sequence six, the defendant attorneys have moved for an order pursuant to CPLR 1006(f) relieving and discharging them as stakeholders of any responsibility, duty or obligation to any party herein and pursuant to CPLR 2601 granting leave to pay certain disputed funds into court or other depository as the court directs.
BACKGROUND
On January 7, 2011, plaintiff commenced the instant action by filing a summons and verified complaint with the Kings County Clerk's office. On January 31, 2011, defendants, Michael H. Michael, Esq. and Michael and Swerdloff, LLC filed their verified answer containing two counterclaims.
Plaintiffs' original complaint contained twenty five allegations of fact in support of three causes of action. The first cause of action seeks a declaratory judgment; the second and third [*3]cause of action seek monetary damages on a theory of money had and received and for breach of contract. The defendants are Michael H. Michaels, Esq. and Michael and Swerdloff, LLC as attorneys for the seller of certain real estate property located at 2666 East 7th Street, Brooklyn, New York (the subject property) and as escrow agents under the real estate contract for the property in which the plaintiffs were the buyers. Plaintiff claims that the defendants breached the terms of the escrow agreement and the contract of sale for the subject property and improperly withheld plaintiffs' security deposit. The complaint did not name the sellers of the subject property as defendants.
Pursuant to CPLR 1001(a), the court determined that the sellers were necessary parties and issued a decision and order dated May 13, 2011, which denied plaintiffs' motion sequence number one and defendants' motion sequence number two. The court directed the plaintiffs to join all necessary parties within thirty days or the complaint would be dismissed.
On June 13, 2011, in compliance with that order, plaintiffs filed a supplemental summons and amended complaint which added the sellers, Marat Gokhberg and Yury Gokhberg, as defendants and served all parties. No defendant has answered the amended complaint.
LAW AND APPLICATION
Plaintiffs seek to disqualify the defendants Michael and Swerdloff, LLC from acting as attorneys for, Marat Gokhberg and Yury Gokhberg, the defendant sellers, on two grounds. The first is that the interest of the defendant attorneys improperly conflicts with the interest of the sellers. The second is that the defendant attorneys are likely to be called as witnesses on a significant issue.
Although the defendant attorneys answered plaintiffs' original complaint, that complaint was replaced by the amended verified complaint which added Marat Gokhberg and Yury Gokhberg as necessary parties. As a threshold issue, the court notes that an amended complaint, once served, replaces the initial complaint and becomes the only complaint in the case as though the initial complaint was never served (Elegante Leasing, Ltd. v. Cross Trans Svc, Inc., 11 AD3d 650 [2d 2004] see also Titus v. Titus, 275 AD2d 409 [2d 2010]).
On June 17, 2011, the defendant attorneys served plaintiffs notice that they were rejecting the amended complaint on the basis that it was untimely, unverified and contained no proof of service. The reasoning behind the defendant attorneys rejection of the amended complaint was explained in the affidavit of Michael H. Michael in support of amended cross-motion sequence number five. Defendant attorneys contend that in accordance with CPLR 1003, the plaintiffs needed leave of the court to amend the complaint to add the sellers as necessary parties and therefore needed to make a motion to do so. They further contend that the amended complaint was defective because it was not verified and that it was not timely served.
On June 9, 2011, plaintiffs properly served the amended complaint upon the defendant attorneys by regular mail in accordance with CPLR 2103. By ordering the plaintiff to add necessary parties under penalty of dismissal, there was no need for plaintiffs to ask for permission by motion to do so because the plaintiff was mandated to do so. Defendant attorneys did not cite any legal authority explaining to either the plaintiffs, in their notice of rejection, or to the court, in their amended cross-motion, why the amended complaint needed to be verified in the instant action. In fact it did not have to be verified (see CPLR 3020(a)). Therefore, the amended complaint was not defective for lack of verification, was not untimely served, and was [*4]not improperly served on the defendant attorneys.
Pursuant to CPLR 3025(d), plaintiffs' amended complaint required an amended answer by the defendant attorneys within twenty days of service of the amended complaint. Furthermore, by plaintiffs proper service of the amended complaint to the defendant attorneys, the prior complaint as well as the defendant attorneys' answer and counterclaims in response to the replaced complaint were rendered nullities.
The sellers and the defendant attorneys must answer the amended complaint. However, by decision and order dated November 4, 2011, the court stayed the time for all defendants time to answer the amended complaint until the plaintiffs' motion for disqualification of the attorney defendants was resolved.
For the following reasons, the court vacates the stay and directs the defendants to serve their respective answers within twenty days of notice of entry of the instant decision and order. The court also denies without prejudice, due to prematurity, defendant attorneys' motion for an order pursuant to CPLR 1006(f) discharging them as stakeholders of any responsibility, duty or obligation to any party herein.
The issue of whether the defendant attorneys should be disqualified from representing the defendant sellers is premature until such time as issue is joined by the answer of all defendants to the amended complaint. By analyzing the answer of all defendants the court will then be able to determine if the sellers have chosen to use the defendant attorneys as their counsel. If they do not, then there is no disqualification issue. If they do, the court will also be able to determine by examining the pleadings whether an actual or potential conflict exist, and if so, whether the conflict may be waived.
Furthermore, until issue is joined, the court will not be able to determine whether the defendant attorneys representation of the sellers will run afoul of the advocate witness rule set forth in rule 3.7 of The Rules of Professional Conduct (22 NYCRR 1200.29, former Code of Professional Responsibility DR 5—102 [22 NYCRR 1200.21] ).
The purpose of the advocate-witness rule is to avoid the unseemly situation where an attorney must both testify on behalf of a client and argue the credibility of his or her testimony at trial (Weksler v. Weksler, 81 AD3d 401 [1d 2011] citing Skiff—Murray v. Murray, 3 A.D.3d 610 [3d 2004]).
The advocate-witness disqualification rules contained in the Code of Professional Responsibility provide guidance, not binding authority ... [and courts must also] 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 (Stuart v. WMHT Educ. Telecom., 195 AD2d 918, [1d 1993] citing, S & S Hotel Ventures Ltd. Partnership v. 777 S. H. Corp., 69 NY2d 437, 440 [1987]). In exercising its discretion, Supreme Court is to balance the substantive rights of litigants, on the one hand, against the ethics of the legal profession, on the other (Stuart v. WMHT Educ. Telecom., 195 AD2d 918, [1d 1993] citing, S & S Hotel Ventures Ltd. Partnership v. 777 S. H. Corp., 69 NY2d at 443).
Although the plaintiffs did not offer any proof as to the content or subject matter of the testimony that might be elicited from the attorney defendants nor demonstrate why it would be necessary to call the attorney defendants as a witness, the court elects to deny the motion without prejudice until issue is joined. [*5]
With regard to the attorney defendants motion which seeks, among other things, discharge from the action pursuant to CPLR 1006 after payment into the court of the plaintiffs security deposit on the contract for the subject property, that motion is denied without prejudice as premature. CPLR 1006(f) provides in pertinent part that a stakeholder may move for discharge after the time for all parties to plead has expired. The defendants time to plead has not expired. Defendants may move for this relief after issue is joined.
The foregoing constitutes the decision and order of this court.
Enter:
J.S.C.
Enter forthwith:
J.S.C.
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