Adkins v Lipner, Gordon & Co.

[*1] Adkins v Lipner, Gordon & Co. 2005 NY Slip Op 52073(U) [10 Misc 3d 1062(A)] Decided on December 20, 2005 Supreme Court, Nassau County Austin, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 20, 2005
Supreme Court, Nassau County

William H. Adkins, and WEST BABYLON CHEVROLET-GEO, INC. d/b/a PALANKER CHEVROLET, a Delaware Corporation, Plaintiff,

against

Lipner, Gordon & Co., d/b/a LIPNER, SOFFERMAN & CO., KEN LIPNER, SAMUEL GORDON, FRANK OSMAN and RANDY SOFFERMAN, Individually and as Partners, , Defendants, LIPNER, GORDON & CO., d/b/a LIPNER, SOFFERMAN & CO., KEN LIPNER, SAMUEL GORDON, FRANK OSMAN and RANDY SOFFERMAN, Individually and as Partners, Third-Party Plaintiffs MARY BRUNO GEHRLEIN and GENERAL MOTORS CORPORATION, Third-Party Defendants.



00761-02



COUNSEL FOR PLAINTIFFS

The Cochran Firm

233 Broadway

New York, New York 10279

COUNSEL FOR DEFENDANTS

Krieg Associates, P.C.

5 Heather Court Dix Hills, New York 11746

(For Third-party Defendant General Motors)

Bingham McCutchen, LLP

399 Park Avenue

New York, New York 10022-4689

(for Third-party Defendant Mary Bruno Gehrlein)

Robert G. Del Grasso, Esq.

114 Old Country Road - Suite 616

Mineola, New York 11501

Leonard B. Austin, J.

This is an accounting malpractice action in which Plaintiffs William H. Adkins ("Adkins") and West Babylon Chevrolet-Geo, Inc. d/b/a/ Palanker Chevrolet ("Palanker") [*2]have sued Defendant Lipner, Gordon & Co, their accountants and the individual partners in the firm.

Richard J. Burton, Esq. is an attorney duly admitted to practice in the State of Florida who maintains offices for the practice of law in Miami. Laura P. Templer, Esq. is an attorney duly admitted to practice in the State of Florida who is associated with the offices of Richard J. Burton & Associates, P.A.

Mr. Burton is also admitted to practice to the federal courts in Florida, the courts of the District of Columbia, the United States Circuit Courts of Appeal for the First, Fifth and Eleventh Circuits and the United States Supreme Court. He avers that he is presently in good standing in all of the Courts before which he is admitted to practice.

Mr. Burton was admitted pro hac vice in the United States District Court of the Eastern District of New York to represent Adkins in connection with an action brought by Adkins against General Motors ("General Motors action").

Defendants do not object to Templer's admission pro hac vice. However, they strenuously object to the admission of Burton.

DISCUSSION

A. Pro Hac Vice Application

An application for admission pro hac vice is one addressed to the discretion of the court. Matter of Ancona, 17 AD3d 584 (2nd Dept. 2005); and Neal v. Ecolab, Inc., 252 AD2d 716 (3rd Dept. 1998).

The rules of the Court of Appeals provide that an attorney in good standing of the bar of another state, territory, district or foreign country "may be admitted pro hac vice in the discretion of any court of record." 22 NYCRR 520.11(a)(1). The rules of the Appellate Division, Second Department similarly provide, "An attorney and counselor at law or the equivalent from another state, territory, district or foreign country may be admitted pro hac vice ... in the discretion of the court in which the cause is pending." 22 NYCRR 690.3(a).

Admission pro hac vice is conditioned upon counsel being familiar and complying with the standards of conduct imposed upon those duly admitted to practice in New York. 22 NYCRR 520.11(d)(1).

An attorney seeking admission pro hac vice must also agree to be subject to the jurisdiction courts of New York with respect to all acts occurring during the course of the attorney's participation in the action. 22 NYCRR 520.11(d)(2).

Neither Mr. Burton nor Ms. Templer state in their affidavits in support of their application for admission that they are familiar with, and agree to be bound by, the rules governing conduct of attorneys in this state or that they agree to be subject to the jurisdiction of the court of this state with respect to their actions and activities related to this case. For this reason alone, their applications for admission pro hac vice are defective and must be denied. See, Matter of Ancona, supra.

There is, however, a more fundamental reason why Mr. Burton should not be admitted pro hac vice. Burton was admitted to practice in Florida in 1974. He has been disciplined by the Florida Bar on four occasions. In 1992, he was publically admonished for professional misconduct. In 1993, he was suspended from practice for ninety (90)

days with probation. In 1995, he received a public reprimand. In 1998, he was [*3]

suspended from practice for sixty (60) days with probation.

Although the United States District Court for the Eastern District of New York admitted Burton pro hac vice in the General Motors action, that admission was not without incident. After several depositions had been conducted, counsel for General Motors contacted the assigned federal magistrate judge regarding what counsel considered improper and unprofessional conduct by Mr. Burton in conducting the depositions. The magistrate judge found Mr. Burton's conduct to be "unprofessional" and "uncivil". Mr. Burton was directed to write an apology to counsel and file a copy with the Court. The magistrate judge advised Mr. Burton that if he continued to act in such a manner, he would be required to show cause why his admission pro hac vice should not be revoked. The magistrate judge also directed that all future depositions be videotaped to show the entire scene and not merely to focus on the witness. Finally, the magistrate judge indicated that if Mr. Burton persisted in his unprofessional conduct that he would be subject to sanctions. See, Dalton v. General Motors Corp., Civ. No. 05-727 (SRC) (D.N.J. 8/16/05).

Mr. Burton was less than forthright with this Court when making his application for admission pro hac vice. This application was initially made by motion served on June 10, 2005. At that time, Mr. Burton was subject to an ongoing investigation by the Florida Bar relating to his conduct during trials in the United States District Court for the Southern District of Florida, Fort Lauderdale Division. Mr. Burton did not reveal this information or any information regarding his prior disciplinary history to this Court. While Mr. Burton was ultimately found not to have violated any rules regulating the Florida Bar, the matter proceeded through the entire disciplinary procedure including a hearing. See, Florida Rules of Discipline, Rule 3-7, et seq.

Based upon Mr. Burton's past actions and disciplinary record, the United States District Court for the District of New Jersey has recently denied Mr. Burton admission pro hac vice. The decision discusses in great detail Mr. Burton's past disciplinary problems and conduct. See, Dalton v. General Motors Corp., supra.

Mr. Burton's conduct in the General Motors action clearly violated the Standards of Civility set forth in 22 NYCRR 1200, Appendix A. These rules require that attorneys should be courteous and civil in all professional dealings and should avoid disparaging personal remarks toward other counsel, parties or witnesses. The magistrate judge characterized Mr. Burton's conduct at depositions in the General Motors action as "unprofessional" and "uncivil". Mr. Burton's apology to the court and counsel acknowledged that his conduct and remarks were uncivil and the he [Mr. Burton] regretted them.

Admission pro hac vice is a privilege, not a right. See, Leis v. Flynt, 439 U.S. 438 (1979). In deciding whether to admit an attorney pro hac vice, the court must strike a balance between the right of a litigant to be represented by counsel of the litigant's choosing (See, S & S Hotel Ventures Ltd. Partnership v. 777 S.H. Corp., 69 NY2d 437 [1987]) and the court's obligation to assure that proceedings are conducted with order and decorum (See, 22 NYCRR 100.3[B][2]), to dispose of matters promptly, efficiently and fairly (22 NYCRR 100.3[B][7]) and to assure that an attorney's conduct comports with the Code of Professional Responsibility (22 NYCRR 100.3[D][2]).

This action has been pending since 2002. Plaintiff has failed to establish that Mr. [*4]Burton possesses special legal skills or knowledge which would be relevant to this case or that Plaintiff's ability to fully and adequately present his case would be adversely affected if he is not represented by Mr. Burton.

Further, Mr. Burton has not even attempted to explain the circumstances which resulted in his being subject to disciplinary action in Florida. Despite his prior disciplinary history, Mr. Burton has persisted in engaging in unprofessional and uncivil conduct. Based upon these factors, this Court concludes that Mr. Burton should not be admitted pro hac vice in this matter.

B. Default Judgment

Third-party Plaintiffs seeks leave to enter a default judgment on the issue of liability against the Third-party Defendant Mary Bruno Gehrlein ("Gehrlein").

Plaintiffs allege causes of action for accounting malpractice. The third-party complaint seeks contribution or indemnification.

The affidavit of service indicates that service was made upon Gehrlein by "nail and mail" service. CPLR 308(4). Gehrlein admits the place at which the nailing and mailing was purportedly accomplished was her residence. Gehrlein avers that at the time service was made, she and her husband were on vacation in Virginia. When she returned home, she claims that she did not find a copy of the third-party summons and complaint affixed to the door of her residence. She also denied receipt of a copy of the third-party summons and complaint in the mail. Gehrlein asserts that had she been properly served she would have answered. Gehrlein claims that the first time she learned of the pendency of the third-party action was when she was served with the motion papers seeking leave to enter a default judgment against her.

A party seeking leave to enter a default judgment must establish proof of service of the summons and complaint, a meritorious claim and default by the Defendant. Siegel, New York Practice 4th §295; and CPLR 3215(f).

An application for a default judgment must be supported by either an affidavit of facts made by one with personal knowledge of the facts surrounding the claim (Zelnick v. Biderman Industries U.S.A., Inc., 242 AD2d 227 [1st Dept 1997]; and CPLR 3215[f]) or a complaint verified by a person with actual knowledge of the facts surrounding the claim (Hazim v. Winter, 234 AD2d 422 [2nd Dept. 1996]; and CPLR 105[u]).

The application for a default judgment herein is supported only by an attorney's affirmation and the third-party complaint, which does not appear to have been verified. The attorney who has submitted the affirmation does not appear to have first hand knowledge of the facts giving rise to the third party action. See, Zuckerman v. City of New York, 49 NY2d 557 (1980). An unverified complaint and an attorney's affirmation are insufficient to support the entry of a default judgment. See, Hazim v. Winter, supra; and Mullins v. DiLorenzo, 199 AD2d 218 (1st Dept. 1993).

Since Third-party Plaintiff has failed to establish a prima facie entitlement to the relief demanded in the third party complaint, the motion for leave to enter a default judgment must be denied. However, this would not ultimately resolve this issue.

Ordinarily, the court may grant relief to a party opposing the motion only if that party makes a cross-motion. CPLR 2215. Thus, even though Gehrlein has arguably established an excusable default and a meritorious defense (CPLR 317 and 5015[a][1]), her failure to move for leave to serve a late answer should result in her request being [*5]denied.

Gehrlein claims she received neither the "nail" nor "mail" service of the third-party

summons and complaint.

Plaintiff bears the burden of establishing that service of process was made in the statutorily prescribed manner. Kanner v. Gerber, 197 AD2d 673 (2nd Dept. 1993). An affidavit of service which sets forth the that service was made in accordance with CPLR 308 is prima facie proof of service. Remington Investments, Inc. v. Seiden, 240 AD2d 647 (2nd Dept. 1997). An affidavit of service is not conclusive proof of service once the party who was allegedly served controverts service in a sworn statement. Friedman v. Ramlal, 282 AD2d 499 (2nd Dept. 2001); and Poet v. Kolenda, 142 AD2d 633 (2nd Dept. 1988).

Once service has been controverted, the court should direct a hearing to determine if service was properly made. Taylor v. Jones, 172 AD2d 745 (2nd Dept. 1991). If service was not properly made, then the court lacks jurisdiction over the defendant and the action should be dismissed. European American Bank & Trust Co. v. Serota, 242 AD2d 363 (2nd Dept. 1997).

However, in this case, Gehrlein has not requested a dismissal of the action for failure to make service. Upon a full reading of her papers, she is conceding that service upon her at the address at which service was made and in the manner stated in the affidavit of service would constitute good service. She urges that although she was properly served, she should be granted leave to serve a late answer because she has an excusable default and a meritorious defense.

Where the default is not wilful and the party has offered a reasonable excuse for its delay in answering, has proffered a possibly meritorious defense, has demonstrated that their will be no prejudice to the plaintiff, and, in view of the strong public policy favoring resolution of cases on the merits, the court should exercise its discretion and permit the service of a late answer. Nunez v. Bertram, -A.D.3d- , 2005 WL 3429459 (2nd Dept. 2005).

Adkins and Palanker's complaint alleges that Lipner, Gordon failed to discover that Gehrlein, who was Palanker's comptroller and/or bookkeeper, was improperly keeping the corporate financial records. Despite these specific allegations in the complaint, the third-party complaint generally alleges a claim for contribution and/or indemnification and does not make any specific allegations regarding the basis of Gehrlien's liability.

In order for Plaintiffs to establish their claim, they must prove that Gehrlein manipulated the books of Palanker and that Lipner, Gordon failed to discovery these irregularities. Thus, the proof needed to establish the underlying claim is essentially the same proof that would establish the third-party claim against Gehrlein.

These factors, when coupled with Third-party Plaintiff's failure to make a prima facie showing of entitlement to a default judgment, permit this Court to grant Gehrlein leave to serve a late answer.

Accordingly, it is,

ORDERED, that the motion of Richard J. Burton, Esq. for admission pro hac vice is denied; and it is further, [*6]

ORDERED, that the motion of Laura Templer, Esq. for admission pro hac vice is denied with leave to renew upon the presentation of proper papers; and it is further,

ORDERED, that the motion of Third-party Plaintiff for leave to enter a default judgment on the issue of liability against the Third-party Defendant Mary Gehrlein is denied; and it is further,

ORDERED, that the proposed answer of Third-party Defendant Mary Gehrlein attached as Exhibit A to her affidavit in opposition to Third-party Plaintiff's motion for a default judgment shall be deemed served upon service of a copy of this order with notice of entry; and it is further,

ORDERED, that counsel for the parties are directed to appear for a status conference on January 27, 2006 at 9:30 a.m.

This constitutes the decision and order of this Court.

Dated: Mineola, NY _____________________________

December 20, 2005 Hon. LEONARD B. AUSTIN, J.S.C.