Northern Hospitality Mgt., LLC v Moskos

[*1] Northern Hospitality Mgt., LLC v Moskos 2018 NY Slip Op 50651(U) Decided on May 8, 2018 Supreme Court, Warren County Muller, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 May 8, 2018
Supreme Court, Warren County

Northern Hospitality Management, LLC d/b/a A LIFE MADE SIMPLE, Plaintiff,

against

Katelyn Moskos, A LIFE MADE SIMPLE, LLC and NORTHERN LIVING, LLC, Defendants.



64091



Bartlett, Pontiff, Stewart & Rhodes, P.C., Glens Falls (John D. Wright of counsel), for plaintiff.

Timothy R. Shevy, Castleton, for defendants.
Robert J. Muller, J.

Plaintiff is a property management company in the Town of Lake George, Warren County. Fred Vogel, Jr. is its principal member and manager. In 2007, plaintiff hired defendant Katelyn Moskos (hereinafter defendant) as a housekeeper and she was later promoted to head of housekeeping. She then left the company in 2017 and formed defendants A Life Made Simple, LLC and Northern Living, LLC (hereinafter collectively referred to as Northern Living). These appear to be the only undisputed facts, with each side offering very different accounts of what transpired prior to defendant's departure.

This discussion begins with defendant's version of events. Defendant contends that she advised Vogel in 2013 that "[she] was leaving [her] employment with [plaintiff] to resume and expand operations of a housekeeping business [she] created in 2007 under the trade name, 'A Life Maid Simple'". Defendant further contends that Vogel did not want her to leave and "proposed that [she] remain under [plaintiff's] employ in a management position and . . . partner with [p]laintiff in the operation and expansion of A Life Maid Simple from housekeeping to vacation property management[, with the new business] operat[ing] under the trade name, 'A Life Made Simple'". According to defendant, she accepted this proposal and "[a]n oral partnership agreement was reached", with A Life Made Simple (hereinafter ALMS) commencing operations in 2013. Defendant states that, under the terms of the partnership agreement, she was responsible for the day-to-day operations of ALMS and plaintiff "was responsible for, among other things, providing mentoring, guidance, business acumen, office space, bookkeeping, maintenance and housekeeping staff to . . . ALMS".

Defendant contends that she became concerned with plaintiff's bookkeeping practices in 2016, "particularly [its] apparent . . . inability to accurately document the profitability of [*2][ALMS]". She presented these concerns to Vogel but did not feel that he adequately addressed them. As such, she sent an email to him on February 9, 2017 advising that she had "elected to terminate [her] partnership [with plaintiff] in [ALMS], effective immediately".

In stark contrast to defendant's version of events, plaintiff contends that there was never any partnership agreement. Rather, according to plaintiff, "[s]tarting in or about 2014, [defendant began to] manage a portion of [its] business called 'A Life Made Simple[]' . . . which focuse[s] on renting and maintaining short-term vacation rentals in the Lake George region". Defendant "invested no money in the operation of ALMS, and [she] was paid a salary by [plaintiff] for the work she performed . . . in connection [with ALMS]". She "never shared in any expenses [nor] in any of the losses of ALMS".[FN1] Defendant was plaintiff's employee and nothing more.

Plaintiff contends that "[i]n or about January 2017, [Vogel] informed [d]efendant . . . that [plaintiff] was no longer willing to fund [ALMS], as it was not producing a reasonable return on [plaintiff's] investment[] and had sustained an overall loss in its three years of operation". "Shortly thereafter, [Vogel] was on a family vacation out of the country[ and, w]hile [he] was away, and without notifying [him, defendant] removed several items of [plaintiff's] property from [its] offices, including original customer contracts[] and customer lists". She then formed Northern Living and, according to plaintiff, began "soliciting [its] clients to terminate existing contracts".

Plaintiff commenced this action in June 2017, alleging four causes of action: (1) unfair competition in violation of the Lanham Act (see 15 USC § 1125); (2) tortious interference with contract; (3) conversion; and (4) unjust enrichment. Issue was thereafter joined with defendants asserting two counterclaims: (1) that plaintiff "immediately cease its use and operation of the partnership name, property and good will for profit, and . . . provide defendant . . . access to all partnership books and records for purposes of winding up partnership affairs"; and (2) that plaintiff return all items of personalty belonging to defendant. Plaintiff served discovery demands in August 2017 but no responses have been forthcoming. Presently before the Court is (1) defendants' motion seeking to disqualify counsel for plaintiff; and (2) plaintiff's motion to compel responses to its discovery demands. The motions will be addressed ad seriatim.

Motion to Disqualify

Defendant contends that John D. Wright, Esq. of Bartlett, Pontiff, Stewart & Rhodes, P.C. (hereinafter BPSR) is disqualified from representing plaintiff because he will likely be called as a witness.

Rule 3.7 of the Rules of Professional Conduct (22 NYCRR 1200.0) — the so-called advocate-witness rule — provides as follows:

"(a) A lawyer shall not act as advocate before a tribunal in a matter in which the lawyer is [*3]likely to be a witness on a significant issue of fact unless:(1) the testimony relates solely to an uncontested issue;(2) the testimony relates solely to the nature and value of legal services rendered in the matter;(3) disqualification of the lawyer would work substantial hardship on the client;(4) the testimony will relate solely to a matter of formality, and there is no reason to believe that substantial evidence will be offered in opposition to the testimony; or(5) the testimony is authorized by the tribunal."

The advocate-witness rule "is not to be mechanically applied, as disqualification of an attorney in a matter which rests within the sound discretion of the trial court" (Advanced Visual Concepts, Ltd. v Saffron Props., LLC, 51 Misc 3d 50, 51 [App Term 2016] [citations omitted]; see S & S Hotel Ventures Ltd. Partnership v 777 S. H. Corp., 69 NY2d 437, 444-445 [1987]; Lauder v Goldhamer, 122 AD3d 908, 910 [2014]). "Since a party's right to be represented by counsel of its choosing is a valued right, a party seeking disqualification of an opposing party's counsel bears the burden of demonstrating that disqualification is warranted" (Advanced Visual Concepts, Ltd. v Saffron Props., LLC, 51 Misc 3d at 51 [citations omitted]; see Mediaceja v Davidov, 119 AD3d 911, 911 [2014]; Halberstam v Halberstam, 122 AD3d 679, 679 [2014).

Here, defendant has demonstrated that Wright could be called as a witness on the issue of whether there was a partnership — a central issue in the case. "'A partnership is an association of two or more persons to carry on as co-owners a business for profit'" (Fasolo v Scarafile, 120 AD3d 929, 929 [2014], lv dismissed 24 NY3d 992 [2014], quoting Partnership Law § 10 [1]; see Czernicki v Lawniczak, 74 AD3d 1121, 1124 [2010]). "'When there is no written partnership agreement between the parties, the court must determine whether a partnership in fact existed from the conduct, intention, and relationship between the parties'" (Fasolo v Scarafile, 120 AD3d at 929, quoting Czernicki v Lawniczak, 74 AD3d at 1124 ; see Bianchi v Midtown Reporting Serv., Inc., 103 AD3d 1261, 1261 [2013]; Griffith Energy, Inc. v Evans, 85 AD3d 1564, 1565 [2011]). "Relevant factors for the court to consider in determining whether a partnership existed include the intent of the parties, whether there was a sharing of profits and losses, and whether there was joint control and management of the business" (Fasolo v Scarafile, 120 AD3d at 930; Bianchi v Midtown Reporting Serv., Inc., 103 AD3d at 1261-1262; Kyle v Ford, 184 AD2d 1036, 1036-1037 [1992]; Blaustein v Lazar Borck & Mensch, 161 AD2d 507, 508 [1990]). "'No one factor is determinative[ but, rather,] it is necessary to examine the parties' relationship as a whole'" (Fasolo v Scarafile, 120 AD3d at 930, quoting Kyle v Ford, 184 AD2d at 1037).

Wright and BPSR have represented plaintiff for several years, providing counsel with respect to all legal issues that arise. In May 2015, ALMS received correspondence from Robert E. Van Vranken, Esq. who represented "Life Maid Simple Cleaning & Organizing, LLC d/b/a Life Maid Simple," a Saratoga County business. Van Vranken requested that ALMS change its name so as to avoid being confused with his client. Wright was given a copy of this correspondence and discussed it with both defendant and Vogel. He then responded by correspondence dated June 2, 2015, stating as follows:

"This firm represents Katelyn Moskos and Northern Hospitality Management, who currently operate A Life Made Simple . . . ."I have enclosed a copy of a 'Business Certificate,' filed in Washington County on February 4, 2008, showing that our client and its affiliate have been using the name 'A Life Maid Simple" longer than your client. More recently, our clients have changed the name to 'A Life Made Simple' to reflect the broader range of services they offer. Thus, our clients respectfully disagree with the allegation that it is infringing on any of your client's rights""While our clients do not currently operate in Saratoga County, they may be interested in doing so. In that light, please advise if your client would be interested in discussing the prospect of our client acquiring her business" [June 2, 2015 Correspondence, attached as Exhibit "F" to Moskos Affidavit].

Wright again worked with defendant in October 2015 to resolve a dispute that arose relative to a rental property managed by ALMS. Wright corresponded with defendant via email on multiple occasions, looking to her for direction on how ALMS wished to proceed.

Under the circumstances, Wright could certainly testify on the issue of whether ALMS was jointly controlled and managed by the parties. He conferred with both Vogel and defendant on multiple occasions when considering legal issues related to ALMS. Further — and more significantly — he represented to Van Vranken that ALMS was operated jointly by the parties, providing him with a Business Certificate filed in defendant's name alone. Incidentally, while Wright indicates that defendant was only included in his June 2015 letter because "Van Vranken had written to her personally", defendant submitted a copy of Van Vranken's letter and it was directed "[t]o Whom It May Concern".

In opposition to the motion, plaintiff contends that Wright's testimony is not necessary. Indeed, "[d]isqualification of an attorney under the advocate-witness rule is required only when it is likely that the testimony to be given by the attorney as witness is 'necessary'" (Anderson & Anderson LLP-Guangzhou v North Am. Foreign Trading Corp., 45 Misc 3d 1210[A], 2014 NY Slip Op 51530[U], *3 [Sup Ct, NY County 2014] [citations omitted], quoting S & S Hotel Ventures Ltd. Partnership v 777 S. H. Corp., 69 NY2d at 446). To that end, "[t]estimony may be relevant and even highly useful but still not strictly necessary" (S & S Hotel Ventures Ltd. Partnership v 777 S. H. Corp., 69 NY2d at 446; accord Anderson & Anderson LLP-Guangzhou v North Am. Foreign Trading Corp., 2014 NY Slip Op 51530[U] at *3). "A finding of necessity takes into account such factors as the significance of the matters, weight of the testimony, and availability of other evidence" (S & S Hotel Ventures Ltd. Partnership v 777 S. H. Corp., 69 NY2d at 446; accord Anderson & Anderson LLP-Guangzhou v North Am. Foreign Trading Corp., 2014 NY Slip Op 51530[U] at *3).

Here, the parties have not yet engaged in any discovery and, as such, it is unclear whether plaintiff has other employees — or even clients — who could testify on the issue of whether the parties jointly controlled and managed ALMS. The Court accordingly observes that Wright's testimony, while perhaps relevant and even highly useful, is not strictly necessary — at least not at this juncture.

Based upon the foregoing analysis defendants' motion to disqualify counsel for plaintiff is denied without prejudice.

Motion to Compel

Uniform Rules of Trial Courts (22 NYCRR) § 202.8 (f) provides as follows:

Where [a] motion relates to disclosure . . . and a preliminary conference has not been held, the court shall notify all parties of a scheduled date to appear for a preliminary conference, which shall be not more than 45 days from the return date of the motion unless the court orders otherwise, and a form of a stipulation and order . . . shall be made available which the parties may sign, agreeing to a timetable which shall provide for completion of disclosure within 12 months, and for a resolution of any other issues raised by the motion. If all parties sign the form and return it to the court . . . , such form shall be "so ordered" by the court, and the motion shall be deemed withdrawn. If such stipulation is not returned by all parties, the conference shall be held on the assigned date. Issues raised by the motion and not resolved at the conference shall be determined by the court.

A preliminary conference shall scheduled in an effort to resolve the issues raised in the motion to compel.[FN2]

Therefore, having considered the Affirmation of Timothy R. Shevy, Esq. with exhibits "A" through "O" attached thereto, dated November 6, 2017, submitted in support of the motion to disqualify counsel, the Affidavit of Katelyn Moskos sworn to November 6, 2017, Memorandum of Law of Timothy R. Shevy, Esq., dated November 14, 2017 submitted in support of the motion to disqualify; the Affidavit of John D. Wright, Esq. with exhibit "1" attached thereto, sworn to December 7, 2017, submitted in opposition to the motion to disqualify; the opposing Affidavit of Frederick M. Vogel sworn to December 7, 2017 together with Exhibits "1" and "2", the Reply Affirmation of Timothy R. Shevy, Esq. dated December 13, 2017 together with Exhibit "A" and oral argument having been heard on May 7, 2018 with Timothy R. Shevy, Esq. appearing on behalf of defendants and John D. Wright, Esq. appearing on behalf of plaintiff, it is hereby

ORDERED that defendants' motion to disqualify plaintiff's counsel is denied, without prejudice; and it is further

ORDERED that plaintiff's motion to compel is denied pursuant to Uniform Rules of Trial Courts (22 NYCRR) § 202.8 (f); and it is further

ORDERED that counsel shall appear at Chambers on May 31, 2018 at 10:30 a.m. for the purposes of preparing a preliminary scheduling order UNLESS the same is submitted to the Court more than 48 hours prior to such date; and it is further

ORDERED that any relief not specifically addressed has nonetheless been considered and is hereby expressly denied.

The above constitutes the Decision and Order of this Court.

The original of this Decision and Order has been filed by the Court together with the Notice of Motion dated November 14, 2017, Notice of Motion to Compel dated February 6, 2018 [*4]and the submissions enumerated above. Counsel for plaintiff is hereby directed to promptly obtain a filed copy of the Decision and Order for service with notice of entry upon counsel for defendants in accordance with CPLR 5513.

ENTER:
Dated: May 8, 2018
Lake George, New York
____________________________________
ROBERT J. MULLER, J.S.C. Footnotes

Footnote 1:Defendant in fact concedes that she was paid a salary by plaintiff. According to defendant, the partnership agreement provided that she "would receive a salary, paid to her by [plaintiff] for her services to [plaintiff], and was to receive a separate salary for her efforts on behalf of ALMS". The agreement further provided "that for [plaintiff's contributions to ALMS, [it] would share equally in the profits of ALMS, once ALMS had generated and accumulated a to-be-determined monetary surplus".

Footnote 2:The motion was returnable on February 23, 2018 and, as such, the 45-day time period prescribed under Uniform Rules of Trial Courts (22 NYCRR) § 202.8 (f) has now expired. With that said, given the language "unless the court orders otherwise" (Uniform Rules of Trial Courts [22 NYCRR] § 202.8 [f]), the Court finds this time period is not mandatory and a conference may nonetheless be held.