Matter of Kaufman (Kaufman)

[*1] Matter of Kaufman (Kaufman) 2013 NY Slip Op 51420(U) Decided on August 28, 2013 Sur Ct, Nassau County McCarty, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 28, 2013
Sur Ct, Nassau County

In the Matter of the Application of Allen M. Kaufman, M.D., As Co-Executor of the Estate of

against

Ruth Kaufman, Deceased, and Co-Trustee of the Trust Created Under Article Third (B) of the Last will and Testament of Ruth Kaufman, To Revoke the Letters Testamentary and Letters of Trusteeship Issued to Kenneth Kaufman, as Co-Executor and Co-Trustee. In the Matter of the Application of Allen M. Kaufman, M.D., As Co-Executor of the Estate of RUTH KAUFMAN, Deceased, and Co-Trustee of the Trust Created Under Article Third (B) of the Last will and Testament of Ruth Kaufman, To Revoke the Letters Testamentary and Letters of Trusteeship Issued to Kenneth Kaufman, as Co-Executor and Co-Trustee. In the Matter of the Application of Allen M. Kaufman, M.D., As Co-Executor of the Estate of HYMAN KAUFMAN, Deceased, To Revoke the Letters Testamentary Issued to Kenneth Kaufman, as Co-Executor.



355054/H



John R. Morken, Esq. (co-counsel for petitioner)

Farrell Fritz, P.C. 1320 RXR Plaza

Uniondale, NY 11556

Henry Klosowski, Esq. (for respondent)

Moritt Hock & Hamroff, LLP

400 Garden City Plaza

Garden City, NY 11530

Howard Meyers, Esq. (for Merrill Lynch, interested party)

Meyers Meyers & Tonachio

48 Wall St.

11th Floor

New York, NY 10005

Pamela Corey, Esq. (co-counsel for petitioner)

Law Offices of John Lang

60 East 42nd Street, Ste. 4600

New York, NY 10165

Edward W. McCarty III, J.

This is a motion for an order disqualifying the law firm of Farrell Fritz, P.C. as counsel for Allen M. Kaufman, the executor of the estate of Ruth Kaufman and the estate of Hyman Kaufman and the trustee of the Trust Created under Article Third (B) of the last will and testament of Ruth Kaufman.

Facts:

Allen M. Kaufman (hereinafter "Allen"), and his brother, Kenneth Kaufman (hereinafter "Ken"), are co-executors, co-trustees and the sole beneficiaries of the estates of their parents, Ruth Kaufman and Hyman Kaufman. On May 15, 2013, Ken filed a notice of motion to disqualify Farrell Fritz, P.C., as attorneys for Allen, on the grounds that Ken had met with two Farrell Fritz, P.C. (hereinafter "Farrell Fritz") attorneys, Michael Stafford and Frank Santoro (hereinafter "Stafford" and "Santoro"), on October 6, 2011. The meeting was for the purpose of Ken retaining Farrell Fritz to represent him in his litigation against Allen in connection with his parents' estates.

Prior to the meeting with Stafford and Santoro, Ken had several telephone conversations with Stafford and sent Stafford six emails with attached documents relating to Ken's parents' estates and trusts. Ken's emails also addressed what he was "most concerned about" regarding the litigation. Stafford responded to Ken's emails by stating, "thanks for the six emails containing the background of your matter. Frank Santoro, Esq. and [I] will review the material before our meeting on Thursday." At the meeting, Ken provided Stafford and Santoro with "four tote bags full of documents" concerning his parents' estates, which were reviewed by Stafford and Santoro. Additionally, at the meeting Ken "disclosed his inner most fears and concerns relating to the pending litigation." After the meeting, Ken emailed Santoro asking for advice about a particular issue and [*2]Santoro responded that he will "talk to John about it"[FN1] to determine what would be a "sore for Allen to pick at" regarding the litigation. Ultimately however, Ken did not retain Farrell Fritz. Therefore, Farrell Fritz did not open a new file, bill Ken for the firm's time, prepare memoranda or retain any documents other than the documents Ken sent to Stafford via email.

In February 2013, Allen retained Farrell Fritz to represent him in the ongoing litigation against Ken in connection with his parents' estates. John R. Morken, (hereinafter "Morken") the lead attorney on the matter, performed a conflict check at Farrell Fritz upon his retention. The conflict check did not yield any results because Farrell Fritz had not opened a new file for Ken. For over two months, Farrell Fritz represented Allen and participated in conferences and a mediation session. Ken was unaware that Morken was from the same firm as Stafford and Santoro and therefore did not object to Farrell Fritz's representation of Allen during this time period.

Once Ken was advised that Morken worked with Stafford and Santoro, Ken requested that Farrell Fritz voluntarily withdraw from representing Allen. Farrell Fritz declined to withdraw as counsel, on the grounds that the meeting with Ken was held 16 months prior, Stafford and Santoro did not recall the details of their meeting or the documents that they had reviewed, and they had never discussed the meeting with any other Farrell Fritz attorney. Additionally, once Farrell Fritz became aware of the conflict they proceeded with screening measures and erected a "Chinese Wall"[FN2] around Stafford and Santoro. Farrell Fritz advised Stafford and Santoro not to work on Allen's matter or discuss their earlier meeting with Ken with any member of Farrell Fritz's trust and estates department. The members of Farrell Fritz's trust and estates department were also instructed not to discuss Allen's case with Stafford and Santoro. Ken, however, unsatisfied with these measures, proceeded with this motion.

Analysis:

According to Ken, " the Court must disqualify Farrell Fritz from representing Allen against Ken Farrell Fritz clearly has a conflict of interest which warrants its immediate [*3]disqualification." Although "the Court takes the issue of a potential conflict of interest very seriously" (Susan K. v Thomas C. 25 Misc 3d 1207(A) 2 [Fam Ct, Monroe County 2009]), the assertion that a consultation between an attorney and a prospective client can lead to per se disqualification is erroneous.

Lawyers have an ongoing duty of loyalty and confidentiality to former clients, thus "lawyers may not represent a client in a matter and thereafter represent another client with interests materially adverse to interests of the former client in the same or a substantially related matter" (Kassis v Teacher's Ins. & Annuity Assoc., 93 NY2d 611, 615-16 [1999]). Therefore, if a party can establish 1) the existence of a prior attorney- client relationship and 2) that the former and current representations are both adverse and substantially related, then such party can seek to disqualify the attorney (Solow v Grace & Co., 83 NY2d 303, 308 [1994]). Moreover, the conflict may be imputed to the entire firm, because there is a presumption of shared confidences across a law firm (Solow v Grace & Co., 83 NY2d 303, 309 [1994]).

However, the Court of Appeals in Solow v Grace made it clear that such a presumption is rebuttable and that the entire law firm is not subject to a "per se disqualification" as it "is unnecessarily preclusive as it disqualifies all members of a law firm indiscriminately, whether or not they share knowledge of former client's [sic] confidences and secrets" (Solow v Grace & Co., 83 NY2d 303, 309 [1994]). Therefore, a law firm can rebut the presumption as long as it can establish that any information acquired by the disqualified lawyer is "unlikely to be significant or material in the litigation" (Kassis v Teacher's Ins. & Annuity Assoc., 93 NY2d 611, 678 [1999]). If the presumption is rebutted, then a "Chinese Wall" must be erected around the disqualified lawyer in order to avoid firm disqualification (Kassis v Teacher's Ins. & Annuity Assoc., 93 NY2d 611, 678 [1999]).

Here, an attorney-client relationship was established between Ken and Farrell Fritz because an initial consultation creates an attorney-client relationship even if the lawyer is not subsequently retained (Burton v Burton, 39 AD2d 554 [2d Dept 1988]). Moreover, a substantial relationship is defined as matters that are "essentially the same" (Sgromo v St. Joseph's Hosp. Health Ctr., 245 AD2d 1096, 1097 [4th Dept 1997]). Farrell Fritz's representation of Allen and the prior meeting between Ken and the two Farrell Fritz attorneys concerned the same matter. Furthermore, it is undisputed that Ken and Allen's interests are adverse, thus satisfying the second prong of the analysis. However, although Ken has been able to meet his burden for disqualifying Stafford and Santoro, individually, Farrell Fritz is not thereby automatically disqualified (Kassis v Teacher's Ins. & Annuity Assoc., 93 NY2d 611, 677 [1999]). Instead, Farrell Fritz has the burden of rebutting the presumption that the entire firm should be disqualified based on Stafford and Santoro's disqualification. Therefore, the court must determine if Farrell Fritz can rebut the presumption by establishing that the information acquired by Stafford and Santoro is not significant or material to the current litigation (Kassis v Teacher's Ins. & Annuity Assoc., 93 NY2d 611, 618 [1999]).

Farrell Fritz has submitted affirmations, which reflect that Stafford and Santoro do not recall the details of the meeting with Ken or their review of any of his documents. Therefore, Farrell Fritz asserts that the lack of recollection renders the information immaterial or insignificant. However, lack of recall is not an indication that the material learned is insignificant or immaterial. In a case similar to the present matter, the defendant met with two attorneys from the same firm for an initial [*4]consultation that lasted an hour and twenty minutes but did not culminate in retention. When the opposing plaintiff retained this same firm, mid-proceeding, the defendant moved to disqualify the firm. The firm, however, believed that disqualification was not necessary because the attorneys were unable to recall the meeting and what was discussed. The court held that because the defendant had met with two attorneys it "doubles the likelihood" that a memory can be triggered, as "one never knows what event will stimulate one's memory and bring recollections to the surface." Therefore, lack of recall was not a persuasive argument to avoid firm disqualification. (I Heng Ngan v Wei Su, 13 Misc 3d 1229(A) [Sup Ct, Queens County 2006]).

Moreover, although Farrell Fritz asserts that it is not clear what details were discussed during the consultation "it is reasonable to infer that, during the course of the interview with the defendant [the attorney] obtained confidential or strategically valuable information about the parties ..." (Burton v Burton, 39 AD2d 554, 555 [2d Dept 1988]). In the present case, Ken provided "four tote bags full of documents" necessary for the litigation proceeding and Ken's emails addressed his utmost concerns about the litigation. Under Kassis "all a movant must show is a risk that client confidences were acquired" (Rodeo Family Enterprises, LLC v Matte, 31 Misc 3d 1227(A), 4 [Sup Ct, Nassau County 2011]). Here however, Ken has unequivocally established that the material obtained by Stafford and Santoro was confidential and strategically valuable.

Furthermore, Farrell Fritz relies heavily on Cummin v Cummin, 264 AD2d 637 [1st Dept 1999], believing it to be particularly instructive in this matter. However, even if the court were to apply Cummin, the facts in the instant case are essentially different. In Cummin, an attorney retained by the plaintiff discovered that the firm's managing partner had a consultation with the defendant six years earlier that did not culminate in retention. Although the firm billed the defendant, a new file was not opened and the firm did not have any notes or memoranda on the matter. The court found that because the firm did not have any notes or memoranda regarding the consultation, and there was no indication that the conflicted attorney shared any information with his colleagues, the presumption of shared confidences was rebutted. However, Ken's consultation with Farrell Fritz took place only 16 months prior to Allen's retention of Farrell Fritz and, unlike the attorney in Cummin, Santoro actually retained documents relating to the consultation. Additionally, whereas in Cummin it was clear that no confidences were shared, in this case Santoro did advise Ken that he "will speak to John"[FN3] about Ken's matter. Although Santoro avers in his affirmation that he did not share this information with John it is certainly not sufficient to "free [Ken] from apprehension and certainty that [his] interests will not be prejudiced" (Cardinale v Golinello, 43 NY2d 288, 296 [1977]).

Based on the foregoing, the court cannot conclude that Farrell Fritz has established that the material acquired by Stafford and Santoro is unlikely to be significant or material in the current litigation. Farrell Fritz is unable to rebut the presumption of disqualification; accordingly the court does not need to discuss the erection of the "Chinese Wall" or an adequate screen. Based on all the facts presented here and because "doubts as to the existence of a conflict of interest must be resolved in favor of disqualification" (Sperr v. Gordon L. Seaman, Inc., 284 AD2d 449, 457 [2d Dept 2001]), the motion to disqualify Farrell Fritz, P.C., is granted.

Dated: August 28, 2013 [*5]

EDWARD W. McCARTY III

Judge of the

Surrogate's Court Footnotes

Footnote 1: The reference to "John" is apparently a reference to John R. Morken, a Farrell Fritz partner who is a member of the firm's trust and estates department.

Footnote 2: A "Chinese Wall" is a screening device that separates a disqualified attorney from a conflicting case and enables the other attorneys in the firm to proceed with the representation; "These procedures aim to isolate the disqualification to the lawyer or lawyers infected with the privileged information that is the source of the ethical problem, and thereby to allow other attorneys in the firm to carry on the questioned representation free of any taint of misuse of confidences. Typical walling procedures include prohibiting the tainted attorney(s) from having any connection with the case or receiving any share of the fees attributable to it, banning relevant discussions with or the transfer of relevant documents to or from the tainted attorney(s), restricting access to files, educating all members of the firm as to the importance of the wall, and separating, both organizationally and physically, groups of attorneys working on conflicting matters."(The Chinese Wall Defense to Law-Firm Disqualification, 128 U. PA. L. REV.

677, 678 [1980]).

Footnote 3: Farrell Fritz does not concede that this reference to "John" was a reference to John R. Morken, who currently represents Allen.