O'Rourke v O'Rourke

[*1] O'Rourke v O'Rourke 2011 NY Slip Op 51619(U) Decided on August 8, 2011 Supreme Court, Nassau County Palmieri, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 August 8, 2011
Supreme Court, Nassau County

Dennis O'Rourke, Plaintiff,

against

Denise O'Rourke, Defendant.



201779/10

 

Attorney for Plaintiff

Sari M. Friedman, P.C.

666 Old Country Road, Ste. 704

Garden City, NY 11530

Former Attorney for Defendant

Genevieve Lane LoPresti, Esq.

219 Mineola Blvd.

Mineola, NY11501

Attorney for the Children

James E. Flood, Jr., Esq.

670 Broadway

Massapequa, NY11758

Defendant Pro Se

Denise O'Rourke

25 Pound Hollow Court

Old Brookville, NY 11545

Daniel R. Palmieri, J.

This motion by the defendant to vacate her default in answering the motion of the plaintiff, inter alia, to disqualify Genevieve Lane LoPresti, Esq., and for related relief is granted to the extent that the request for sanctions sought in such motion is denied; to the extent that defendant seeks to interpose a defense to the motion to disqualify defense counsel it is denied. Upon vacatur of the stay granted at the Appellate Division, plaintiff's cross motion for sanctions is denied. All requests for relief not specifically addressed are denied.

In sum, the Court's original decision, which disqualified defense counsel remains, but the award of sanctions is rescinded. Plaintiff's present cross motion for sanctions against defense counsel is denied, as the Court finds defense counsel's conduct not frivolous.

Initially, the Court notes that under the terms of an order to show cause granted by Justice Skelos at the Appellate Division on June 30, 2011, all proceedings in the action are stayed, with the one exception of this motion to vacate the default. The stay is in effect until either a determination by the Appellate Division of the motion to that Court or a determination by this Court of this motion to vacate, which ever first occurs. As of the date of this decision this Court is unaware of any decision by the Appellate Division of the motion before it. Accordingly, the stay remains in effect until today's date.

By order dated April 25, 2011 ("Prior Order") this Court disqualified defense counsel from representing the defendant in the present divorce action because she had represented both of the current matrimonial parties in a foreclosure action brought against them in a matter entitled Chase Home Finance, LLC v O'Rourke, et al. (Nassau County Index no. 24115/09), prior to and then during the time this action was pending. It also found her conduct to be frivolous within the meaning of Part 130-1 of the Rules of the Chief Administrator, and ordered a hearing on the amount of costs, in the form of counsel fees, LoPresti was to pay plaintiff in the present action.

The motion to disqualify was submitted without opposition, and LoPresti now moves to vacate her default, and, upon such vacatur, to consider her papers in opposition to the motion to disqualify, for sanctions against plaintiff and his attorney incurred in the making of this motion, for a referral to the District Attorney for perjury for allegedly perjured statements by such persons, and a hearing on these issues. There was also a request for a stay of proceedings, which was ultimately addressed by Justice Skelos at the [*2]Appellate Division, as noted above.

In order to vacate a default in not responding to the motion, the defendant is required to demonstrate a reasonable excuse for the default and a potentially meritorious defense to the motion. See, e.g., Winthrop Univ. Hosp. v Metropolitan Suburban Bus Auth., 78 AD3d 685 (2d Dept. 2010); Costanza v Gold, 12 AD3d 551 (2d Dept. 2004).

The Court finds that a reasonable excuse has been offered for the failure to oppose the disqualification motion.

By way of a conference order of this Court dated March 23, 2011, the plaintiff's motion to disqualify was to be submitted for decision on April 21, 2011. Opposition was to be served on April 13, 2011. Ms. LoPresti contends that there was no default, in that she appeared in court on that date and made application for an oral, off the record application for an adjournment of the submission deadline, and the Court's part clerk informed her that an adjournment to April 28, 2011 had been granted. She states that she was shocked upon receiving the decision, which was dated prior to the date she believed was the new return date, and which also bore a submission date of April 1, 2011.

The Court cannot know precisely what was said by court personnel to one another in relaying the adjournment request, nor why a part clerk had notified her that an adjournment had been granted when it had not been, or why there was an incorrect submission date on the decision.[FN1]There has been no history in this case of defaults by defendant with respect to any prior proceedings. In any event, there a misunderstanding on the part of defense counsel as to the date her opposition was required to be submitted, and the error, at least in part, appears to be the Court's. Under these circumstances the Court finds that a reasonable excuse for not submitting opposing papers has been demonstrated.

However, the Court does not find merit to the defense of the motion to disqualify counsel. It is undisputed that the matrimonial action has been pending since June 2010, with Ms. LoPresti as counsel to the defendant wife from its inception. On the prior motion, this Court found that LoPresti was engaged by both plaintiff and defendant to represent them as defendants in the foreclosure action, and as recently as November 10, 2010, while the current matrimonial action was pending, attended a foreclosure conference on behalf of both plaintiff and defendant. There was also a finding that she had actively participated in this Court representing only the defendant, the Court referring to a stipulation dated January 14, 2011, and to a letter from counsel dated August 23, 2010, to plaintiff's former attorney, which referenced the foreclosure proceeding, reflecting an awareness of the conflict. In that letter defense counsel suggested that [*3]plaintiff should obtain separate counsel in the foreclosure action, while she continued to represent defendant in this action.

None of the foregoing is disputed in her present papers. Rather, LoPresti argues that her representation of plaintiff in the foreclosure was superficial, and that she included his name on the answer to the foreclosure complaint as a co-mortgagor simply to prevent the marital residence from being foreclosed. She also contends she never obtained any information from him, as she never spoke to him, and never gave him any legal advice. She adds that after the representation in the foreclosure began he paid her a $4,000 retainer to represent his wife in the matrimonial action, with full knowledge that she, LoPresti, had appeared on behalf of both of them in the foreclosure matter.

Further, she states that plaintiff, who is an attorney, had acknowledged that there was no conflict and that his prior counsel had, prior to his discharge, volunteered to provide a letter to that effect. The letter was never written.

Ms. LoPresti also asserts that in papers submitted in the foreclosure proceeding, in which she moved to be relieved, plaintiff denied having met with her regarding that case, and she quotes sections of an affidavit plaintiff had submitted in opposition to that branch of the motion that was for an attorney's lien. By order dated March 8, 2011 the Court (Adams, J.) granted Ms. LoPresti's motion to be relieved from representing plaintiff in the foreclosure action, but the request for a lien was denied.

Justice Adams noted that the she had appeared on behalf of the mortgagors, the parties herein, in the foreclosure action by answer dated January 11, 2010. He further found that in June of 2010 Denise O'Rourke [FN2] instituted an action for divorce, represented by Ms. LoPresti. The Court stated, "Obviously, her dual representation should not continue." However, the Court denied a cross motion by Dennis O'Rourke for sanctions based on what he described as "multiple violations of the Rules of Professional Conduct," and stated that any claims in that regard are more properly brought to the Nassau County Bar Association Grievance Committee. No findings on the merits of the alleged violations were made.

Finally, and as indicated above, Ms. LoPresti stresses that in the affidavit Mr. O'Rourke acknowledged that he never met with her, and denied that he ever signed a written retainer agreement, yet in another submitted in the instant matrimonial swears that she made "many representations, as attorney, to Defendant [wife] and me in the foreclosure action." She also contends that in the context of the foreclosure proceedings their interests were not adverse, but rather were identical.

Defendant wife Denise O'Rourke has also submitted an affidavit, in which she states that both she and her husband are both attorneys, and that prior to the divorce action they had been served with foreclosure papers. She had asked her husband and he agreed [*4]that Ms. LoPresti could put in an answer on behalf of both of them. Defendant states that during Ms. LoPresti's representation of both parties in the foreclosure, she never was provided with personal financial information, never was introduced to plaintiff, never provided plaintiff with a telephone number where counsel could be reached, and never gave counsel any information about plaintiff. When Ms. O'Rourke and her husband decided to hire attorneys to represent them in the matrimonial matter, she told him she wanted to use Ms. LoPresti, and he expressed "no issues" with her and gave her a $4,000 check for her representation from his own funds.

Defendant further states that on the first appearance on the calendar of the matrimonial action, she, Ms. LoPresti, her husband and his then-attorney discussed the need for Mr. O'Rourke to now obtain his own attorney in the foreclosure action, but after that attorney was discharged Ms. LoPresti made the motion to be relieved in the foreclosure action. Ms. O'Rourke also discusses, as does Ms. LoPresti, alleged misrepresentations made to the Court by Mr. O'Rourke, and indicates her opposition to her disqualification.

In his response, plaintiff contends that counsel's representation of him in the foreclosure after his wife hired her to represent her in the matrimonial constituted a breach of ethical behavior, and denies that he implicitly consented to her representation of his wife. However, he does not deny that he never met with her, never shared any information with her regarding his finances or any other topic, that he paid the initial retainer on behalf of the defendant, or that his former attorney had offered to assist in resolving any conflict arising from her representation of both parties in the earlier-commenced foreclosure.

The Court concludes that the disqualification must stand, but the papers do not reveal a pattern of behavior by Ms. LoPresti that would justify sanctions.

None of the foregoing alters the conclusion that until counsel moved to be relieved she was in the untenable position of simultaneously representing plaintiff in a foreclosure action — which was directed at the marital residence in the matrimonial action — and defendant in this divorce case. Although aware of the conflict, counsel did not obtain a written waiver from Mr. O'Rourke, which should have occurred at the same time her representation of Ms. O'Rourke was being contemplated.

As noted in the Prior Order, the Rules of Professional Conduct ("Rules") provide that an attorney may not represent a party if there had been a prior attorney-client relationship with an opposing party, the matters are substantially related, and the interests of the former and present clients are adverse. 22NYCRR §1200.1.9(a). Solow v Grace & Co., 83 NY2d 303, 308 (1994); Nationwide Associates v. Targee Street Internal Medical Group, P.C., 286 AD2d 717 (2d Dept. 2001).The Rule itself is as follows:

Rule 1.9: Duties to Former Clients (a) A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or substantially related matter in which that [*5]person's interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing.

Disqualification is mandatory irrespective of any actual detriment, i.e. even when there may not in fact be any conflict of interest; if the criteria set forth in the Rule are found to exist, an irrebuttable presumption of disqualification arises. Tekni-Plex, Inc. v. Meyner and Landis, 89 NY2d 123 (1996); Melnick v. Isernia Construction Inc., 28 Misc 3d 1235(A) (Supreme Court, New York County 2010). "By mandating disqualification irrespective of any actual detriment — that is, even when there may not, in fact, be any conflict of interest' — the rule also avoids any suggestion of impropriety on the part of he attorney [citations omitted]. This not only preserves the client's expectation of loyalty but also promotes public confidence in the integrity of the Bar. Finally, the bright line rule provides a clear test that is easy to apply, thereby allowing self-enforcement among members of the Bar [citation omitted]." Tekni-Plex, Inc. , at 131.In this case, the criteria exist, even if defendant's proffered version of events are accepted as true. The former client, the plaintiff, was represented in a substantially related matter, the foreclosure of the marital residence, and the interests of the plaintiff and counsel's current client, the defendant, are clearly adverse. Under the applicable Rule and case law, disqualification must result.

The Solow case, relied upon by defendant, does not yield a different result. The Court of Appeal's decision to permit a large law firm (Stroock & Stroock & Lavan) to continue as counsel to plaintiffs against a former client turned on its recognition of the difference between a such large firms and smaller ones, and the particular circumstances of the case. In that matter only one of Stroock's partners, and her associate, had contact with the former client, and she, her associate and support staff had all departed the firm by the time the disqualification motion reached the courts. None of the remaining many attorneys were found to have possessed confidences or secrets of the client. It therefore allowed Stroock to rebut the presumption of disqualification. However, the Court also stated that "[i]n smaller, more informal settings the imputation of knowledge as a matter of law is necessary to protect the client and avoid the appearance of impropriety." Id., at 311. It thus distinguished the circumstances in the Solow case from those present in other cases involving smaller firms.

The Court restated earlier holdings, noting that "any fair rule of disqualification should consider the circumstances of the prior representation. If an attorney has represented a client in an earlier matter and then attempts to represent another in a substantially related matter which is adverse to the interests of the former client, the presumption of disqualification is irrebuttable." Solow, at 313. The Court thus did not depart from the mandatory disqualification rule in circumstances such as the ones present in the instant case, where counsel is a sole practitioner, emphasizing that the rule would still be applied in those cases. Disqualification will be imposed as a matter of law [*6]without a hearing. Id.

It thus appears to this Court that to permit a challenge to disqualification based upon averments of very limited and indirect contact with the former client would undercut this appellate rule, something this Court cannot do as a matter of stare decisis.The argument that the parties' positions in the foreclosure were not adverse to one another's misses the mark. The question is whether the interests of the present client are materially adverse to the former client. See, Tekni-Plex, Inc. v. Meyner and Landis, 89 NY2d 123, supra, at 135. They clearly are here.

Disqualification under the Rules of Professional Conduct and relevant case law is mandatory in this case and the motion to vacate the default is therefore is denied on the merits.

However, as to sanctions the Court finds that counsel had a good-faith basis for believing that representation of defendant in the foreclosure action was "name only" and thus her acceptance of defendant as a client was not a violation of the Rules, and that plaintiff, an attorney himself, had effectively endorsed that position. The Court therefore finds her behavior not to have been frivolous within the meaning of Part 130-1 of the Uniform Rules, and cancels the hearing on costs to be paid to the plaintiff.

As this Court has now decided the motion to vacate the default, the stay granted by Justice Skelos is dissolved by its terms. Further, given the finding that Ms. LoPresti's behavior was not frivolous, the motion to vacate the default cannot be deemed frivolous either, and the Court therefore denies the plaintiff's cross motion for additional sanctions/costs for the making of this motion. To separately calendar the cross motion and to later decide it in the face of the determination made here would elevate form over substance, and constitute a waste of the parties' and judicial resources. Accordingly, the cross motion is denied in its entirety.

This matter was assigned a control date of September 19, 2011 pending the disposition of the motion. This Court now imposes its own stay of all proceedings until such date to permit defendant the opportunity to obtain another attorney. A conference will be held on that day, at 11 a.m.

This shall constitute the Decision and Order of this Court.

E N T E R

DATED: August 8, 2011

_____________________________

HON. DANIEL PALMIERI

Acting Supreme Court Justice

[*7] Footnotes

Footnote 1: The insertion of April 1 instead of April 21 on the decision as the date of submission appears to be a carryover of an incorrect marking in the Court's Case Management System, as the conference order establishing the later date predates April 1 and had clearly adjourned the motion, over plaintiff's objection, to April 21.

Footnote 2: The plaintiff in the action here is Dennis, not Denise, but the dates of the foreclosure and matrimonial actions are undisputed.