Matter of Bacot v Winston

[*1] Matter of Bacot v Winston 2008 NY Slip Op 52163(U) [21 Misc 3d 1123(A)] Decided on October 29, 2008 Supreme Court, Bronx County Roman, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 October 29, 2008
Supreme Court, Bronx County

IN THE MATTER OF THE APPLICATION FOR THE APPOINTMENT OF MARION BACOT, Petitioner(s), AS GUARDIAN OF THE PROPERTY OF

against

ERNEST WINSTON, Respondent(s)



92522/08

Nelson Roman, J.

Petitioner moves seeking an Order appointing her guardian of ERNEST WINSTON'S (AIP) property pursuant to Article 81 of the Mental Hygiene Law. Petitioner avers that the AIP is unable to personally handle his affairs, in particular, the maintenance of his bank accounts and the collection of rent from rental properties owned by the AIP. Absent the appointment of a guardian, petitioner avers that the AIP shall suffer significant financial harm. CEDRIC WIGGINS (Wiggins), opposes the instant application, averring that the AIP is in all respects competent and is thus able to manage his affairs as they relate to his property management. While not making a formal cross-motion or filing a cross-petition, Wiggins seeks an Order disqualifying petitioner's counsel, the firm of Hertzfeld & Rubin, P.C. (Hertzfeld). Wiggins avers that disqualification is warranted pursuant to DR 5-108(a)(1), insofar as Hertzfeld previously represented the AIP in another action and is thus precluded from representing someone adverse to him, which is the case in [*2]the instant proceeding. Alternatively, Wiggins seeks an Order appointing him or AIP's wife, BURMADINE HINES WINSTON (Winston), also represented by separate counsel, as guardian of AIP's property. Petitioner opposes Wiggins' application seeking to have Hertzfeld disqualified as her counsel insofar as there is no basis for such relief. The Court Evaluator, Steven Lubowitz (Lubowitz), appointed by this Court pursuant to the Mental Hygiene Law, submits a report wherein he states that the AIP opposes the instant petition but does not want counsel. This case was conferenced before this Court on October 23, 2004. At said conference it was represented to this Court that if the Court saw fit to appoint counsel, the AIP wanted to hire his own counsel and would hire counsel for Wiggins. Both petitioner and Lubowitz objected to such action, averring a conflict of interest.

For the reasons that follow hereinafter, whether the AIP is in need of a guardian is hereby reserved until after a hearing is held, Wiggins' application seeking disqualification of Hertzfeld as petitioner's counsel is hereby denied, and the Court hereby appoints independent counsel for the AIP.

The instant action is a special proceeding under Article 81 of the Mental Hygiene Law. A review of the petition, evinces that petitioner seeks to be appointed or have someone else appointed as guardian over the AIP's property. Petitioner avers that the AIP is unable to personally handle his affairs, in particular, the maintenance of his bank accounts and the collection of rent from rental properties owned by the AIP. Absent the appointment of a guardian, petitioner avers that the AIP shall suffer significant financial harm. As an example of the AIP's inability to manage his property, petitioner details that on April 18, 2007, Wiggins sold real property owned by the AIP and located at 827 East 233rd Street, Bronx, NY. Said property was sold for $555,000. Wiggins, who resides in Virginia, took the proceeds of the sale removing the same from this State. Thereafter, AIP filed a complaint in this Court, thereby initiating an action, in order to determine the whereabouts of the aforementioned sale and to ensure that the AIP got his fair share of the proceeds. The AIP was represented by Hertzfeld and that action was ultimately heard before JSC Suarez. On August 14, 2007, this Court issued an Order mandating that Wiggins account for the proceeds of the aforementioned sale and that he deposit the same with the Court. Thereafter, Wiggins did not comply and instead persuaded the AIP to discontinue the action against him. Thereafter, this Court held a hearing and once again mandated that Wiggins account for the proceeds and deposit the same with the Court. The Court also issued a decision wherein it directed petitioner to file the instant action and further concluded that Wiggins had taken advantage of the AIP insofar as the AIP signs documents without reading them.

In support of the instant application and insofar as relevant to the issue this Court has endeavored to determine at this time, petitioner submits a copy of summons and complaint in an action titled Ernest Winston v. Cedric Wiggins. Hertzfeld is listed as counsel on said summons and complaint and the complaint Is verified by the AIP. A review of said complaint evinces that AIP asserted six causes of action. The complaint alleges the following. AIP and Wiggins jointly owned real property located at 827 East 233rd Street, Bronx, NY (827). On April 18, 2007, said property was sold by Wiggins for $550,000. Wiggins received all proceeds from the sale of said property. The AIP owns real property located at 725 East 223rd Street, Bronx, NY (725). At some point, AIP represented to petitioner that he wanted her to share in the proceeds from the sale of 725. Petitioner obtained a copy of the deed for 725 and noted that the same reflected that 725 was owned by Wiggins and the AIP rather than the AIP and his deceased wife. The AIP was never aware of said change and handwritten notes on the same were not his own. The change in the deed was a mistake committed by Wiggins or fraud on his part. The causes of action in the complaint are for an accounting, unjust enrichment, breach of fiduciary duty and trust, deed recision and revocation, and fraud. [*3]

Insofar as relevant to the instant decision, petitioner submits this Court's Order dated March 25, 2008, wherein the Court ordered that Wiggins provide an accounting with regard to the sale of 827, that he deposit the proceeds of said sale with the Court, and that he be enjoined from disposing of said proceeds. The Court further ordered that Wiggins was enjoined from encumbering or disposing of 725. The Court also directed petitioner to file the instant action and further concluded that Wiggins had taken advantage of the AIP insofar as the AIP signs documents without reading them.

In opposition to the instant proceeding, Wiggins submits no evidence pertinent to the Court's decison.

Lubowitz' report states that the AIP opposes the instant special proceeding but does not wish to have counsel appointed.

Attorney Disqualification, Subsequent Representation Adverse to Prior Client

22 NYCRR 1200.27(a), also known as DR 5-108(a), states

(a) Except as provided in section 1200.45(b) of this Part with respect to current or former government lawyers, a lawyer who has represented a client in a matter shall not, without the consent of the former client after full disclosure:

(1) Thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client.

(2) Use any confidences or secrets of the former client except as permitted by section 1200.19(c) of this Part, or when the confidence or secret has become generally known.

Based on the foregoing and on case law, traditionally, an attorney has been barred from representing a party in an action where one of the opposing parties is the lawyer's former client. Tekni-Plex, Inc. v. Meyner and Landis, a New Jersey partnership, 89 NY2d 123 (1996); Greene v. Greene, 47 NY2d 447 (1979). This is because an attorney has a continuing duty to a former client, broader in scope than the attorney client privilege, not to reveal confidences learned in the course of the professional relationship. Greene v. Greene, 47 NY2d 447 (1979); Kassis v. Teacher's Insurance and Annuity Association, 93 NY2d 611 (1999). As Kassis and 22 NYCRR 1200.27 make clear, an attorney is absolutely precluded from representing a client in a proceeding adverse to a prior client. Kassis v. Teacher's Insurance and Annuity Association, 93 NY2d 611 (1999) As per 22 NYCRR 1200.27(a)(2), an attorney owes a continuing duty to all former clients not to reveal confidences learned in the course of a professional relationship and this duty gives rise to 12 NYCRR 122.27(a)(2), which precludes an attorney from representing a client only if his interests are adverse to those of an attorney's former client and the actions, former and prior, are substantially related matter. Id.

These rules ensure that a lawyer remain loyal to his clients and also avoid the appearance of impropriety. Id. These rules also foster an open dialogue between attorney and client, necessary for effective representation, insofar as it frees the client of any apprehension that matters disclosed will be used against him in subsequent litigation. Jamaica Public Service Co. Ltd. v. AIU Insurance Company, 92 NY2d 631 (1998); Tekni-Plex, Inc. v. Meyner and Landis, a New Jersey Partnership, 89 NY2d 123 (1996). [*4]

A party seeking disqualification of former counsel, pursuant to 22 NYCRR 1200.27(a)(2), the current representation of an adverse party bears the burden of establishing (1) that there was a prior attorney-client relationship between the moving party and opposing counsel; (2) that the matter before the court and the matter involving past representation are substantially related; and (3) that the interest of the present client and prior client are materially adverse. Falk v. Chittenden, 11 NY3d 73 (2008) (Court granted plaintiff's seeking to disqualify defendant's counsel on grounds that said counsel previously represented plaintiff in a substantially related matter and that plaintiff and defendant had adverse interests. The court found that all three prongs had been satisfied.); Jamaica Public Service Co. Ltd. v. AIU Insurance Company, 92 NY2d 631 (1998) (Court denied defendant's motion seeking to disqualify plaintiff's counsel finding that plaintiff's counsel had not represented defendant in a substantially related matter.); Tekni-Plex, Inc. v. Meyner and Landis, a New Jersey Partnership, 89 NY2d 123 (1996) (Court granted plaintiff's motion seeking to disqualify plaintiff's counsel based on prior representation. Court held that all three prongs had been satisfied, namely, prior attorney-client privilege, substantially related matters, and adverse interest by the clients.); Solow v. W.R. Grace & Company, 83 NY2d 303 (1994) (Court denied motion by defendant seeking to disqualify plaintiff's counsel insofar as plaintiff rebutted the irrebuttable presumption of disqualification by demonstrated that the firm did not possess any client secrets or confidences.); Pellegrino v. Oppenheimer & Co., Inc., 49 AD3d 94 (1st Dept. 2008) (Motion by defendant to disqualify plaintiff's counsel denied insofar as defendant failed to establish a prior attorney-client relationship.); Medical Capital Corporation v. MRI Global Imaging, Inc., 27 AD3d 427 (2nd Dept. 2006) (Plaintiff's motion seeking disqualification of prior counsel denied insofar as the Court concluded that the prior and present matters were not substantially related.). Once movant satisfies all three prongs of the aforementioned test, disqualification must be granted insofar as an irrebuttable presumption of disqualification arises. Id.

Disqualification of former counsel can also be obtained pursuant to 22 NYCRR 1220.27(a)(2) on grounds that prior counsel in the course of representing an adverse party can and will disclose secrets and confidences obtained by virtue of the prior professional relationship. Jamaica Public Service Co. Ltd. v. AIU Insurance Company, 92 NY2d 631 (1998); Greene v. Greene, 47 NY2d 447 (1979); Pellegrino v. Oppenheimer & Co., Inc., 49 AD3d 94 (1st Dept. 2008). Disqualification pursuant to this section does not require establishment that confidential information will be disclosed during the course of litigation and instead merely requires a showing that disclosure is reasonably probable. Id. Bearing in mind that public policy favors a party's right to freely choose his counsel of choice and disfavors disqualification motions used to gain tactical advantages, a party seeking disqualification must do more than simply aver that prior counsel had access to confidences and secrets. Id. Instead, the proponent of disqualification must at a minimum provide the court with facts sufficient to determine whether there is a reasonable probability that 22 NYCRR 1220.27(a)(2) shall be violated. Jamaica Public Service Co. Ltd. v. AIU Insurance Company, 92 NY2d 631 (1998).

Attorney Disqualification, Simultaneous Representation of Multiple Clients

22 NYCRR 1220.24(a)(1), (2), and (3), state

(a) A lawyer shall decline proffered employment if the exercise of independent professional judgment on behalf of a client will be or is likely to be adversely affected by the acceptance of the proffered employment, or if it would be likely to involve the lawyer in representing differing interests, except to the extent permitted under subdivision (c) of this section. (b) A lawyer shall not continue multiple employment if the exercise of independent professional judgment on behalf of a client will be or is likely to be adversely affected by the lawyer's representation of another client, or if it would be likely to involve the lawyer in representing differing interests, except to the extent permitted under subdivision (c) of this section. [*5] (c) In the situations covered by subdivisions (a) and (b) of this section, a lawyer may represent multiple clients if a disinterested lawyer would believe that the lawyer can competently represent the interest of each and if each consents to the representation after full disclosure of the implications of the simultaneous representation and the advantages and risks involved.

Thus, an attorney is duty bound to decline employment when a conflict of interest exists, and shall terminate employment when such a conflict arises. Generally, a lawyer may not represent conflicting or adverse interests because such representation threatens the confidential relationship between a lawyer and his client. Kelly v. Gleason, 23 NY2d 368 (1968). A lawyer is duty bound to preserve the secrets shared by the clients who employ him and such duty continues even after the representation has terminated. Cardinale v. Golinello, 43 NY2d 288 (1977). Consequently, an attorney is forbidden to accept employment if such employment adversely affects the confidences of both current and former clients. Id. Generally, consent, if given after full disclosure can mitigate any potential conflict and can, if given, serve as the basis for continued representation. Kelly v. Gleason, 23 NY2d 368 (1968). However, in cases where the attorney simultaneously represents adverse parties, even when consent is given, representation of the adverse parties will rarely be sanctioned. Greene v. Greene, 47 NY2d 447 (1979).

It then follows, that an attorney cannot represent multiple clients where said client's interests are adverse. Hill v. Berkshire Farm Center and Services for Youth, 137 Misc 2d 429 (Supreme Court Onondaga County 1987) (Court found that the attorney representing multiple defendants needed to be disqualified when there was a cross-claim asserted against one defendant by the other). In such a situation, if there is a conflict, an attorney is prohibited from representing any of the clients at all. Matter of H. Children, 160 Misc 2d 298 (Supreme Court Kings County 1994).

While the disqualification of attorneys has been granted in cases where the clients have cross-claims against each other, Hill v. Berkshire Farm Center and Services for Youth, supra, or where the clients will have discordant interests at trial, O'Reilly v. Executone of Albany, Inc., 135 AD2d 999 (3rd Dept. 1987), disqualification shall not be granted where the movant fails to make a clear showing that disqualification is warranted. Olmoz v. Town of Fishkill, 258 AD2d 447 (2nd Dept. 1999). The decision to disqualify an attorney rests within the discretion the court. Id. The person seeking disqualification bears the burden of establishing grounds for disqualification. Id. The requisite burden is that the clients jointly represented have divided, adverse and conflicting interest. Robbins v. Ellman, 65 AD2d 519 (1st Dept. 1978). Mere conclusory allegations, falling short of factual assertions, do not give rise to disqualification. Olmoz v. Town of Fishkill, 258 AD2d 447 (2nd Dept. 1999); Lewis v. Palestine, 50 AD2d 752 (1975); Giblin v. Sechzer, 97 AD2d 833 (2nd Dept. 1983).

This issue often arises in cases involving motor vehicle accidents. Representation by one attorney of both the passenger and driver in suit involving a motor vehicle accident violates the Code of Professional Responsibility Disciplinary Rule 105 (a) and in fact, creates a conflict of interest as a matter of law. Sidor v. Zuhoski, 261 AD2d 529 (2nd Dept. 1999); Perssoni v. Rabkin, 220 AD2d 732 (2nd Dept. 1995); Ganiev v. Nazi, 189 Misc 2d 83 (Appellate Term Dept. 2001); Fugnitto v. Fugnitto, 113 Misc 2d 666 (Appellate Term 1982); Shaik v. Waiters, 185 Misc 2d 52 (Supreme Court Nassau County 2000).

Consent to joint representation, when given by all clients, and after full disclosure of risks and benefits is sufficient to allow representation in spite of the inherent conflict of interest. Shaik v. Waiters, 185 Misc 2d 52 (Supreme Court Nassau County 2000). However, the consent given must not only comply with DR 105(c), but must also survive the objective test set out by case law. Id. The law invalidates any consent given by clients, in cases where a conflict of interest exist, such as joint representation, if a disinterested attorney would advise the client against giving consent to continued representation given the existing conflict. Shaik [*6]v. Waiters, 185 Misc 2d 52 (Supreme Court Nassau County 2000). Thus, if a disinterested attorney would advise the client to withhold consent to representation given the conflict of interest, such as joint or continued representation, then any consent given, even after full disclosure by current counsel, is invalidated and disqualification of the attorney is necessary. Id. DR 105(c), states that "[a] lawyer may represent multiple clients if a disinterested lawyer would believe that the lawyer can competently represent the interest of each and if each consents to the representation after full disclosure of the implications of the simultaneous representation and the advantages and risks involved." In Shaik, a case involving a lawyer representing both passenger and driver in a motor vehicle action, the court, after applying the disinterested lawyer test, held that joint representation was inappropriate and the consent to the same, given by the client, would not stand. Id. The court held that by not suing the driver, a potential tortfeasor, who could and should have been sued, the passenger ran the risk of non-recovery if there was a verdict in defendant's favor. Id. The court, found that under such circumstances, a disinterested lawyer would have advised the passenger to assert a claim against the driver and would have advised against consent to joint representation. Id. Thus, despite the consent given, the court concluded that the disinterested lawyer test was not satisfied. Id.

An attorney who violates DR 105, is not entitled to legal fees for any services rendered. Perssoni v. Rabkin, 220 AD2d 732 (2nd Dept. 1995).

Discussion

Wiggins' application seeking to disqualify Hertzfeld is hereby denied. A party seeking to disqualify an attorney, pursuant to 22 NYCRR 1200.27, on grounds that the prior attorney now representing an adverse party once represented the moving party, must make one of two showings. Disqualification pursuant to 22 NYCRR 1200.27(a)(2), requires a showing that(1) there was a prior attorney-client relationship between the moving party and opposing counsel; (2) that the matter before the court and the matter involving past representation are substantially related; and (3) that the interest of the present client and prior client are materially adverse. Disqualification pursuant to 22 NYCRR 122.27(a)(1) requires a showing that disclosure of confidential or secret information learned by virtue of the professional relationship is probable. Thus, the party seeking disqualification must do more than simply aver that prior counsel had access to confidences and secrets. Instead, the proponent of disqualification must at a minimum provide the court with facts sufficient to determine whether there is a reasonable probability that 22 NYCRR 1220.27(a)(2) shall be violated.

Preliminarily, the Court notes that insofar as Wiggins has never been represented by Hertzfeld, his application fails from the outset. In actuality, Wiggins' motion fails for lack of standing. While he moves on his own behalf, he is advocating for the AIP. However, insofar as nothing demonstrates that he has the authority to act on behalf of the AIP, his application fails for lack of standing.

Notwithstanding the foregoing, assuming that Wiggins has standing to seek disqualification of Hertzfeld on behalf of the AIP, the instant application nonetheless warrants denial. With regard to disqualification pursuant to 22 NYCRR 1220.27(a)(2), the instant application fails insofar as Wiggins fails to establish the existence of a prior attorney-client relationship, and more importantly fails to establish, that the instant action and the prior action by the AIP are substantially related. With respect to the issue of a prior attorney-client relationship, Wiggin's affirmation in opposition belies or at the very least casts doubt about the existence of a prior attorney-client relationship between Hertzfeld and the AIP. While the complaint is verified by the AIP, thus evincing that he was in fact represented by Hertzfeld, Wiggins, by counsel avers

The facts establish that Hertzfeld & Rubin, P.C. prepared a summons and complaint, at MARION BACOT'S urging, allegedly on behalf of ERNEST WINSTON as against Cedric Wiggins. MS. BASCOT then took the summons and complaint to her father ERNEST WINSTON, and induced him to sign it, effectively verifying the complaint. However, no single attorney at Hertzfeld & Rubin, P.C. ever even spoke to ERNEST WINSTON regarding the suit, and further, MARION BACOT never explained to ERNEST [*7]WINSTON that he was verifying a complaint against his son Cedric.

Wiggins' Affirmation in Opposition at ¶8. Accordingly, the forgoing evinces that the AIP never retained Hertzfeld, never knew that an action was initiated against Wiggins and never spoke to anyone from Hertzfeld. Thus, by virtue of this evidence, Wiggins fails to establish the existence of an attorney-client relationship between the AIP and Hertzfeld and in fact establishes the absence of such a relationship. Although based on the foregoing, Wiggins' application pursuant to 22 NYCRR 1200.27(a)(2)fails, this Court also notes that the instant action is not substantially related to the prior action. The instant action is for the appointment of a guardian while the former action was a plenary action seeking a host of remedies not the least of which was an accounting and recovery of money. While concedely, one of the issues that shall be explored inthis action is the claims made in the former, the actions are independent, the issues are different and the questions of law are not at all related. Thus, for this additional reason, Wiggins' application fails.

Wiggins' application seeking to disqualify Hertzfeld pursuant to 22 NYCRR 1200.27(a)(1) is also denied insofar as Wiggins fails to tender any facts leading this Court to conclude that Hertzfeld, with reasonable probability, shall disclose secrets or confidences imparted to it by the AIP in the prior proceeding. Beyond merely asserting that this is likely to occur, Wiggins offers no facts to support the same. Moreover, Wiggins, as discussed above, negates the likelihood of such an occurrence since in his affirmation, as cited above, he states that the AIP never even spoke to anyone from Hertzfeld. As such, according to Wiggins' own assertion, there was no opportunity to impart any secrets or confidences. Wiggin's application is thus denied.

Insofar as Lubowitz apprises the Court that the AIP opposes the application herein, pursuant to MHL §81.10(c)(2), the Court must appoint counsel to represent the AIP despite his aversion to the same. To the extent that the AIP seeks to be represented by counsel for Wiggins, such application is denied insofar as the same would present a conflict for Wiggins' counsel. An attorney is duty bound to decline employment when a conflict of interest exists, and shall terminate employment when such a conflict arises. Generally, a lawyer may not represent conflicting or adverse interests because such representation threatens the confidential relationship between a lawyer and his client. It then follows, that an attorney can not represent multiple clients where said client's interest are adverse. In this case, to the extent that the AIP opposes the instant proceeding and Wiggins argues, albeit in the alternative, that he be appointed AIP's guardian, the AIP and Wiggins have diverging interests. Wiggins' attorney cannot zealously and effectively advocate on behalf of the AIP in opposition to the instant proceeding without inadequately advocating and representing Wiggins' interests should he take the absolute position that the AIP needs a guardian. As such, counsel for Wiggins cannot represent the AIP and the Court shall appoint independent counsel. It is hereby

ORDERED that Mental Hygiene Legal Services (MHLS), with offices at 41 Madison Avenue, New York, NY 10021, be hereby appointed counsel for the AIP. It is further

ORDERED that the hearing in the instant special proceeding, currently scheduled to be held on October 23, be hereby adjourned to December 2, 2008. It is further

ORDERED that all interested parties appear at the Supreme Court, Bronx County, 851 Grand Concourse, Room 407, on December 2, 2008 at 10AM for a hearing. It is further

ORDERED that petitioner serve a copy of this Order, along with the Order to Show Cause, petition, all exhibits annexed thereto, and all other papers exchanged in this action, upon MHLS, by First Class Mail, on or before November 3, 2008. It is further

ORDERED that petitioner serve a copy of this Order, upon all other interested parties, by First Class Mail, within five (5) days hereof.

This constitutes this Court's Interim Order. [*8]

Dated: __________________Hon.___________________________

`NELSON ROMAN, J.S.C.