Graca v Krasnik

[*1] Graca v Krasnik 2008 NY Slip Op 51640(U) [20 Misc 3d 1127(A)] Decided on July 28, 2008 Supreme Court, Kings County Saitta, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 28, 2008
Supreme Court, Kings County

Rozalia Graca, Plaintiff,

against

Aleksandr Krasnik and Honda Lease Trust, Defendants.



16121/2007



Plaintiff's Attorney -

Dajka & Poplawski

596 Manhattan Avenue

Brooklyn, New York 11222

(718) 383-0909

Damian Dajka, Esq.

Defendant Attorney -

Law Offices of Robert Tusa

1 Metro Tech Cente, 19th

Brooklyn, New York 11201

(718) 250-0400

Debra L. Dash, Esq.

Wayne P. Saitta, J.

Attorneys for Defendants, KRASNIK and HONDA LEASE TRUST, (hereinafter "Defendants"), move this Court for an Order pursuant to CPLR § 3211 (a)(7) dismissal for failure to state a cause of action against the Plaintiff and granting such further relief [*2]as this Court deems just and proper.

Upon reading the Defendants' Motion to Dismiss by Debra I. Dash, Esq., Attorney for the Defendants, ALEKSANDR KRASNIK and HONDA LEASE TRUST, dated January 3rd, 2008, together with the Affirmation in Support, dated January 3rd, 2008, together with all exhibits annexed thereto; the Affirmation in Opposition by Damian Dajka, Esq., Attorney for Plaintiff, ROZALIA GRACA, dated January 22nd, 2008, together with Affidavit by Plaintiff, ROZALIA GRACA, dated January 26th, 2008; the Reply Affirmation by, Debra I. Dash, Esq., Attorney for Defendant's, ALEKSANDR KRASNIK and HONDA LEASE TRUST, dated April 1st, 2008, and all exhibits annexed thereto; and after argument of counsel and due deliberation thereon, Defendants' motion for dismissal pursuant to CPLR § 3211 (a)(7) is denied for the reasons set forth below and counsel for Defendants is disqualified from continuing to represent both Defendants simultaneously.

FACTS

The underlying action involves a motor vehicle accident in which Plaintiff, who was a pedestrian, alleges she sustained personal injuries. The accident occurred on June 28th, 2006 at or near the intersection of 15th Avenue and 48th Street in Brooklyn, NY. Defendant Krasnik was the driver of the vehicle, and Honda Lease Trust the owner.

Plaintiff's complaint sets forth a cause of action against Defendant Honda Lease Trust, (hereinafter "Honda") as the owner of the vehicle to Defendant Aleksandr Krasnik, (hereinafter "Krasnik").

In its answer, Defendants' attorneys asserted on behalf of Honda the affirmative defense of the Graves Amendment, 49 U.S.C.A. §30106, which generally precludes claims based on vicarious liability against a leasing company that owns a vehicle. Defendants now move to dismiss the complaint against Defendant Honda only, based on the Graves Amendment.

During argument of the motion the Court raised the question of whether it was a conflict for Defendants' attorney to represent both the driver and the owner where they are moving to dismiss against the owner only.

ARGUMENTS

Defendants argue that Plaintiff's complaint alleges vicarious liability against Honda as the lessor of the vehicle driven by Krasnik and that the Graves Act provides an affirmative defense against such a claim.

Counsel for Defendants further deny that there is any conflict in interest in their representing both Defendants; they argue that the Graves Act renders any possible conflict regarding the joint representation as moot.

In opposition, Plaintiff argues that she did not allege that Honda was the lessor of the vehicle nor did Honda annex to its motion any documentation, a lease or affidavit from a person with knowledge, which would substantiate that claim.

Plaintiff did not submit any written position as to the conflict of interest issue at it [*3]was raised by the Court at oral argument.

ANALYSIS

Motion to Dismiss

Defendants move to dismiss the claim against Defendant Honda for failure to state a cause of action. Defendants assert that due to the existence of the Graves Amendment, Congress prohibited the imposition of vicarious liability against entities who rent or lease their vehicles when the driver has an accident. If in fact the Amendment is applicable, the appropriate relief for Defendants to seek would be summary judgment and the Court will treat the motion to dismiss as a motion for summary judgment.

Plaintiff argues that Honda has not submitted any evidence, either a lease agreement or an affidavit of a person with knowledge, in support of the allegation that the Graves Amendment is applicable here.

The police accident report annexed to Defendants' motion lists the owner as "Honda Lease Trust". The complaint alleges Honda was the owner of the vehicle Krasnik was driving, and that Krasnik was driving the vehicle with the "consent and permission of its owner, express or implied". Nothing further is stated or submitted as to the relationship between the Defendants.

Defendants, in their motion, assert that the Graves Amendment provides a basis for dismissal against Honda but they fail to provide any admissible evidence to demonstrate Defendants had a lessor/lessee relationship. Also Defendants provide no affidavit of a person with personal knowledge attesting that Honda Lease Trust is in the business of leasing cars. Although, Defendants, in reply submit a largely illegible copy of a lease, that lease appears to indicate a party other than Honda Lease Trust as lessor. Defendants fail to show that there are no questions of fact as to whether they are a lessor or in the business of leasing cars, accordingly summary judgment must be denied.

Conflict of Interest in Representation of Multiple Defendants

The Court has raised sua sponte whether it is a conflict for Defendants' attorney to represent both the driver and owner where the attorney moved to dismiss the action against the driver pursuant to the Graves Amendment. While the motion was made by the attorney for both Defendants, no affidavit in support from the driver was included and it is unclear that he gave informed consent to the motion.

An attorney's representation of multiple parties to the same action can create an impermissible conflict of interest.

Generally under the Code of Professional Responsibility, "an attorney may not represent adverse interests or undertake to discharge conflicting duties and must avoid even the appearance of representing conflicting interests, except where the conflict of interest is nominal or negligible, [*4]or where there has been complete disclosure or consent". 7 NY Jur. 2d Attorneys at Law § 162

As was articulated in Hill v. Berkshire Farm Center and Services For Youth, 137 Misc 2d 429, 521 NYS2d 358, N.Y.Sup.,1987,

Ethical Consideration 5-14 of the Code of Professional Responsibility precludes acceptance of representation of multiple clients who have conflicting interests (See, also, EC 5-1 and EC 5-15). As the Court of Appeals has declared:

"The standards of the profession exist for the protection and assurance of the clients and are demanding; an attorney must avoid not only the fact, but even the appearance, of representing conflicting interests (Rotante v Lawrence Hosp., 46 AD2d 199 [361 NYS2d 372]; Edelman v Levy, 42 AD2d 758 [346 NYS2d 347] ).

Defendants' attorneys do not argue that no conflict exists but that because of the Graves Amendment, any concern about a conflict of interest is moot because legislation relieves a leasing company from vicarious liability as a matter of law.

However, the mere assertion of a Graves Amendment defense does not mean there are no questions of fact as to whether the Amendment applies. A party asserting the defense must show they are engaged in the business of leasing vehicles. Also, the Amendment is only a defense to vicarious liability, so a defendant must also demonstrate that there was no negligence on their part.

Furthermore, there is an inherent conflict of interest in representing two named defendants where, if the case against one defendant (owner/lessor) is dismissed pursuant to the Graves Amendment, the other defendant (driver) is left bearing full liability for the claims alleged in Plaintiff's complaint. Defendants' attorneys cannot zealously represent both Defendants where they seek dismissal of the claims against one of the defendants they represent while the other has no independent advocate to oppose the motion which would result in their shouldering full liability.

"[A]n attorney who undertakes the joint representation of two parties in a lawsuit [should] not continue as counsel for either one after an actual conflict of interest has arisen" because continued representation of either or both parties would result in a violation of the ethical rule requiring an attorney to preserve a client's confidences or the rule requiring an attorney to represent a client zealously. Sidor v. Zuhoski, 61 AD2d 529, 690 NYS2d 637 (2nd Dept. 1999), citing Matter of H. Children, 160 Misc 2d 298, 300.

The conflict exists at the point the attorney recognizes that one of their two clients may have a Graves Amendment defense.

Analogous to this situation is where a law firm is retained to cover both insurer, issuing a policy, and an individual insured, who purchased the policy, in an action for damages.

While an attorney representing an insured and his insurer has potentially differing interests, whether an attorney can fairly and adequately protect the interests of multiple clients in these situations depends upon an analysis of each case. When counsel, paid by an insurance company, undertakes to represent the policyholder, he owes to his client, the insured, an undeviating and single allegiance. If there is a conflict of interest, he cannot continue to represent both the [*5]insurer and the insured. 7 NY Jur. 2d Attorneys at Law § 165.

An exception to the conflict of interest in representing multiple clients may be found where any possible conflict is found to be one that can be effectively managed by the attorney, ensuring that the representation of each defendant is not compromised.

"Counsel considering representation of multiple clients must first determine whether a disinterested lawyer could competently represent the respective interest of all potential clients, and if the answer is yes, then, after full disclosure of the implications of simultaneous representations, the parties may give consent to the joint representation and waive the potential conflict of interest, but if the answer is no, then the conflict may not be waived and joint representation would be unethical." N.Y.Ct.Rules, § 1200.24 [DR 5-105]. Dorsainvil v. Parker, 14 Misc 3d 397, 829 NYS2d 851, N.Y.Sup.,2006.

Here, the issue giving rise to the conflict of interest, the dismissal of the claim against one defendant shifting liability to the other, rises to a level that full disclosure and consent would not cure. The driver has the right to an advocate who will zealously investigate and assess whether there is a basis to contest the applicability of the Graves Amendment, and if so, vigorously oppose the defense.

This Court has the authority to raise this issue sua sponte, despite the relief not having been sought by either party. Indeed, the Court has an obligation to intervene where it recognizes a possible conflict in a case before it.

Accordingly, Defendants' cannot be adequately represented by the same counsel where counsel seeks to have all liability dismissed as to Honda, leaving Defendant Krasnik without an independent opportunity to resist that motion. Separate counsel must be provided to Defendant Krasnik.

WHEREFORE, the Court denies Defendant's motion for summary judgment and disqualifies the Law Office of Robert Tusa from continuing to represent both Defendants simultaneously. This action is stayed 60 days from the date of entry of the Order for new counsel to be provided to Defendant Krasnik, Defendant Honda, or both. This shall constitute the decision and order of this Court.

E N T E R ,

__________________________

J. S. C.