Jessamy v Doran Group

[*1] Jessamy v Doran Group 2012 NY Slip Op 51408(U) Decided on July 30, 2012 Supreme Court, Westchester County Connolly, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 July 30, 2012
Supreme Court, Westchester County

Thomas Jessamy and Mayritta Jessamy, Plaintiffs,

against

The Doran Group, NOVASTAR HOME MORTGAGE, INC. MILDRED DIDIO, ESQ., DOREEN SWENSEN, HUBERT (PHIL) HALL, WILMA GECAY, REBACK & POTASH, LLP, DAVID REBACK, ESQ., EILEEN POTASH, ESQ., ROBERT C. BALLARD, SR., AMERIGO DiPETRO d/b/a INTERSTATE MONETARY CONCEPTS and AMERIGO DiPETRO, Individually, Defendants.



30693/10



Mildred Didio, Esq. -Inmate Identification No. 12GO112

Albion Correctional Facility

3595 State School Road

Albion, New York 14411

Richard A. Roberts, Esq.

Attorney for Plaintiffs

200 East Post Rd.

White Plains, NY 10601

By facsimile: (866) 938-9981

The Doran Group

c/o Doreen Swensen

143 Holabird Ave.

Winsted, CT 06098-1728

Novastar Home Mortgage, Inc.

141 North State Rd.

Briarcliff Manor, NY 10510

Traub Lieberman Straus & Shrewsberry LLP

Movant/Attorneys for Mildred Didio, Esq.

Mid-Westchester Executive Park

7 Skyline Dr.

Hawthorne, NY 10532

By facsimile: (914) 347-8898

Doreen Swensen

143 Holabird Ave.

Winsted, CT 06098-1728

Hubert (Phil) Hall

31 West Elizabeth Ave.

Tarrytown, NY 10591

Hubert (Phil) Hall

143 Holabird Ave.

Winsted, CT 06098-1728

Wilma Decay

20 Valley Ave., No. E10

Westwood, NJ 07675-3608

David C. Reback, Pro Se

6470 Terra Rosa Circle

Boynton Beach, FL 33472

Reback & Potash, LLP

10 Fiske Place, Ste. 521

Mount Vernon, NY 10550

David C. Reback and

Reback & Potash, LLP

6470 Terra Rosa Circle

Boynton Beach, FL 33472

Eileen Potash

10 Fiske Place, Ste. 521 Mount Vernon, NY 10550

Eileen Potash

6165 Metropolitan Ave.

Middle Village, NY 11379-1602

Michael J. Lendino, Esq.

Attorney for Defendant Robert C. Ballard, Sr.

350 Theodore Fremd Ave.

Rye, NY 10580-1573

By facsimile: (914) 921-1107

Amerigo DiPietro and Amerigo DiPietro

d/b/a Interstate Monetary Concepts

40 Guinea Rd.

Brewster, NY 10509-2611

Francesca E. Connolly, J.

The following papers numbered 1 to 13 were read on this motion by Traub Lieberman Straus & Shrewsberry LLP (hereinafter "Traub Lieberman") for an order granting it leave to withdraw as counsel for defendant Mildred Didio, Esq. (hereinafter "Didio"). Didio opposes the motion and co-defendant David Reback (hereinafter "Reback") partially opposes the motion.

Order to Show Cause - Affirmation - Exhibits1-7

Memorandum of Law in Support8

Affidavits of Service of Order to Show Cause9-10

Affidavit in Opposition by Reback11

Affidavit of Service of Opposition by Reback12

Didio's Unsworn Letter in Opposition [FN1]13

Upon the foregoing papers and the proceedings held on July 16, 2012, the motion is decided as follows:

In this action, plaintiffs seek to recover damages for fraud and conspiracy in connection with the transfer of their home to defendant Richard Ballard, which plaintiffs allege was arranged by defendant The Doran Group to prevent foreclosure of plaintiffs' home. Plaintiffs allege The Doran Group asserted that it would assist plaintiffs in keeping their home by finding a buyer to [*2]hold the home in a constructive trust in favor of the plaintiffs and then help the plaintiffs obtain financing within a repurchase period to buy back their home. Plaintiffs went forward with the transaction proposed by defendants, but were unable to obtain the financing to repurchase the home and as a result, were evicted. Plaintiffs further allege that defendants knew, and acted upon their knowledge in furtherance of the fraudulent scheme, that plaintiffs would be unable to obtain financing on their own and would be unable to tender the repurchase price to regain fee title to the home. Plaintiffs allege that Didio was the attorney representing the "Trust Account."

Traub Lieberman was retained to represent Didio in this action by her professional liability insurance carrier. Subject to a reservation of rights, the insurer agreed to provide Didio with a defense under the terms and conditions of the insurance policy by retaining Traub Lieberman, counsel of the insurer's choice, to represent Didio and to pay the firm's legal fees and expenses in connection with its defense of Didio.

By letter dated November 16, 2011, the insurer advised Didio that due to her criminal conviction arising from the underlying facts of this action, it was denying coverage and would cease paying her defense costs and expenses as of November 15, 2011. Upon being advised that the insurer would no longer pay Didio's legal fees and expenses, Traub Lieberman requested that Didio execute a retainer agreement. Didio refused to sign the retainer agreement, stating she was unable to pay any legal fees or expenses. Didio's refusal prompted Traub Lieberman to move to be relieved as her counsel. That application was denied by decision and order of this Court (Lefkowitz, J.) dated January 23, 2012, on the basis that the motion to withdraw was an inappropriate means to test an insurer's obligation to defend and that the appropriate vehicle was a declaratory judgment action. In her opposition to that motion, Didio indicated she would seek a declaratory judgment that the insurer was obligated to provide her coverage with respect to the claims asserted against her and to provide her with legal representation in this action.

Traub Lieberman brings the instant motion seeking once again to be relieved as counsel. In support of its renewed application, Traub Lieberman argues that it is not seeking to test the disclaimer of coverage, but is seeking to be relieved on the separate grounds of Didio's refusal to pay the firm's legal fees or enter into a retainer agreement and her failure to commence a declaratory judgment to determine insurance coverage. Traub Lieberman argues that this matter can be distinguished from the line of cases forbidding use of a motion to withdraw to test an insurer's disclaimer of coverage. In support of this argument, Traub Lieberman asserts that its application to withdraw is not connected to the insurer's disclaimer of coverage and that in fact, the firm was willing to continue its representation of Didio even after the insurer's disclaimer of coverage. It was only after Didio refused to execute a retainer agreement or pay Traub Lieberman's fees that it sought to withdraw as counsel for Didio. Traub Lieberman also represents Didio in two other matters both pending in Westchester County Supreme Court: Michelle Fassino Viehl v The Doran Group, et al., Index No. 16966/08 and Miller v Shkreli, et [*3]al., Index No.21000/08.[FN2] Additionally, in the matter of Michelle Fassino Viehl, Traub Lieberman asserts that significant and irreconcilable differences of opinion have arisen between the firm and Didio concerning the appropriate strategy to use in defending that litigation, which differences of opinion on litigation strategy will, in all probability, extend to the instant matter as well.

Didio has submitted an unsworn letter in opposition to the motion in which she argues that Traub Lieberman's application is not founded on the separate grounds it asserts, but rather, the motion to withdraw is made as a result of the insurer's denial of coverage and refusal to continue to pay defense costs. Didio's position is, as it was on Traub Lieberman's earlier application, that the insurer is obligated to provide a defense to Didio and is obligated to pay Didio's legal expenses in connection with that defense. Didio contends that she filed a complaint against the insurer with the New York State Department of Financial Services and, as a result of this and other measures taken by Didio, the insurer continued its coverage to on or about December 15, 2011. Didio also argues that due to her incarceration and denial of bail she is unable to pursue a declaratory judgment action against the insurer. She also contends that, rather than pursuing coverage on her behalf or enforcement of the insurer's agreement to pay the firm's legal fees, Traub Lieberman seeks to create a presumption, where none exists, that Didio is the one obligated to commence the declaratory judgment action, when the insurer has the right and standing to do so. Didio also states she is unaware of the "significant and irreconcilable differences" Traub Lieberman alleges as a ground for its seeking to withdraw as her counsel. Didio contends further that the order to show cause was not timely served in that service was directed to occur on or before June 15, 2012 and she did not receive it until June 19, 2012.

Co-defendant Reback has submitted partial opposition to this application. While Reback does not oppose counsel's application to withdraw, he requests that the traverse hearing currently scheduled for July 31, 2012 go forward as scheduled even if the application is granted. The traverse hearing is being held to determine the sufficiency of service of the summons and complaint upon Reback and co-defendant Eileen Potash. Reback lives in Florida and has already purchased his airline tickets to appear for the hearing. He argues that due to his financial situation, it would be a hardship for him to incur additional fees associated with changing the tickets or purchasing new tickets.

An attorney may withdraw as counsel upon a showing of good and sufficient cause and reasonable notice (CPLR 321[b][2]; Rivardeneria v New York City Health and Hospitals Corp., 306 AD2d 394 [2d Dept 2003]). The question of whether such cause exists is a matter addressed to the court's discretion (Id.; Cashdan v Cashdan, 243 AD2d 598 [2d Dept 1997]). An attorney may withdraw from representing a client, if the client "renders the representation unreasonably difficult for the lawyer to carry out employment effectively" (Rules of Professional Conduct [22 NYCRR] § 1200.16 [c][7]). Irreconcilable differences concerning litigation strategy or the failure to accept counsel's advice renders it unreasonably difficult for counsel to represent the [*4]client effectively and are grounds for withdrawal (see Winters v Rise Steel Erection Corp., 231 AD2d 626 [2d Dept 1996]; Ashker v International Business Machines Corp., 201 AD2d 765 [3d Dept 1994]; Sansiviero v Sanders, 117 AD2d 794 [2d Dept 1986]). Moreover, an attorney may be permitted to withdraw from representation where a client refuses to pay reasonable legal fees (Rules of Professional Conduct [22 NYCRR 1200.0] rule 1.16 [c][5]; Weiss v Spitzer, 46 AD3d 675 [2d Dept 2007]; Winters v Winters, 25 AD3d 601 [2d Dept 2006]). However, non-payment of counsel fees alone will not entitle an attorney to withdraw from representation (Cashdan v Cashdan, 243 AD2d at 598).

In denying Traub Lieberman's prior application for the same relief sought herein, the court relied on the well-settled principle that, in the absence of a judicial determination as to the insurer's duty to provide a defense in that action, a motion to withdraw should be denied (Holloman v Manginelli Realty Co., 81 AD3d 413 [1st Dept 2011]; Iacobellis v A-1 Tool Rental, 65 AD3d 1015 [2d Dept 2009]; Laura Accessories v A.P.A. Warehouses, 140 AD2d 182 [1st Dept 1988]; Rusolo v Skate Odyssey, 109 AD2d 875 [2d Dept 1985]). Rather than utilizing a motion to withdraw to test the insurer's obligation to defend, courts have held that "[t]he appropriate vehicle for resolving a dispute over the coverage offered by a policy is a declaratory judgment action in which the [insured] would be able to adequately litigate the facts of the insurance carrier's disclaimer" (Pryer v DeMatteis Orgs., 259 AD2d 476, 477 [2d Dept 1999]).

Inasmuch as Traub Lieberman has failed to provide the court with specific information concerning the breakdown in its relationship with Didio, its attempt to establish an independent ground for withdrawal based upon alleged irreconcilable differences is deemed insufficient (see Catrone v Catrone, 92 AD2d 559 [2d Dept 1983]; Isser v Berg, 38 Misc 2d 957 [Sup Ct Nassau County 1963]). To avoid any potential prejudice to Didio that might result from disclosure of confidential information it received by virtue of the attorney-client relationship, Traub Lieberman offered to provide further information to the court at an ex parte conference concerning the nature of the alleged irreconcilable differences. However, given that Didio is incarcerated and therefore, she is unable to be present in court to hear and respond to Traub Lieberman's allegations, this offer of proof is unacceptable. (cf. LeMin v Central Suffolk Hospital, 169 AD2d 821 [2d Dept 1991] [where the plaintiff's counsel's motion to withdraw was properly denied where there was no proof submitted that plaintiff was served with the motion papers]). If irreconcilable differences exist, Traub Lieberman could have sought court permission in the order to show cause to submit an affidavit detailing the alleged irreconcilable differences for in camera review and that a copy of the affidavit be served upon Didio without disclosure to the other parties.

Here, Traub Lieberman has presented nothing to justify a different result from that which was rendered on its first motion to be relieved. Apart from conclusory allegations of irreconcilable differences between Didio and Traub Lieberman in another action, its arguments are essentially the same as they were in its first application for this relief and as such, warrant the same conclusion. Until such time as good and sufficient cause and reasonable notice to the client are established to warrant termination of the attorney-client relationship, or a judgment is entered [*5]declaring that the insurer is not obligated to provide Didio a defense in this action, Traub Lieberman is obligated to continue with her defense. Given the lack of proof submitted with the motion along with the recycled arguments, this motion appears to be nothing more than another attempt by the insurer to avoid commencing a declaratory judgment action, which it may be required to do to obtain the relief sought. Although Didio's opposition is neither sworn to nor affirmed, this fact is immaterial, as Traub Lieberman's proof is prima facie insufficient to support the relief requested (see generally Isser v Berg, 38 Misc 2d at 957) .

Traub Lieberman's allegiance is to Didio, not to the insurance company that retained the firm (Federal Ins. Co. v North American Specialty Ins. Co., 47 AD3d 52 [1st Dept 2007]). Traub Lieberman owes Didio a duty of good faith and may not take a position adverse to her interests (see 7A CJS Attorney & Client § 182; 7 NY Jur 2d Attorneys at Law § 195, citing Trieber v Hopson, 27 AD2d 151 [3d Dept 1967]). Since its undeviating and single allegiance is owed to Didio, until such time a judgment is entered declaring that the insurer is not obligated to defend and indemnify Didio, Traub Lieberman should be pursuing payment of its legal fees from the insurer, and not from Didio directly. (See generally Id; cf. Alvarado-Vargas v 6422 Holding Corp., 85 AD3d 829 [2d Dept 2011] [where the motion to withdraw as counsel for Forthright was properly granted where Forthright did not oppose the motion and it was undisputed that the insurer would no longer pay the law firm's legal fees for Forthright's defense due to entry of a judgment declaring that the insurer was not obligated to defend or indemnify Forthright]; Cullen v Olins Leasing, 91 AD2d 538 [1st Dept 1982] [where counsel retained by the insurer to represent the defendant was permitted to withdraw when the insurer was found to be insolvent and placed in liquidation]).

The Court finds Didio's allegations that the order to show cause was not timely served to be without merit. Service of the order to show cause was to be made on or before June 15, 2012, which is the date by which the order to show cause was to be mailed, not the date by which it was to be received. June 15, 2012 was a Friday and Didio received the motion papers on the following Tuesday, June 19, 2012. Given the intervening weekend, and allowing for additional time for the motion papers to be delivered from the mailroom of the Albion Correctional Facility to Didio personally, receipt of the papers on June 19, 2012 appears consistent with the affidavit of service, which indicates service was made on June 15, 2012.

In view of the foregoing, it is

ORDERED that, the motion by Traub Lieberman Straus & Shrewsberry LLP to withdraw as counsel for defendant Mildred Didio is denied with leave to renew; and it is further

ORDERED that, Traub Lieberman Straus & Shrewsberry LLP shall serve a copy of this order with notice of entry upon defendant Mildred Didio and all parties within 10 days of entry; and it is further

ORDERED that counsel and any individual parties appearing pro se are directed to [*6]appear at the Preliminary Conference Part, Courtroom 800, for a conference on August 24, 2012 at 9:30 A.M.

The foregoing constitutes the Decision and Order of this Court.

Dated: White Plains, New YorkJuly 30, 2012

___________________________________HON. FRANCESCA E. CONNOLLY, J.S.C. Footnotes

Footnote 1: The Court is in receipt of a 15-page, unsworn, handwritten letter, including a one-page addendum, setting forth Didio's objections and opposition to this order to show cause.

Footnote 2: Traub Lieberman has also moved to be relieved as Didio's counsel in those matters. Those applications are also currently before this Court.