Goren v Barnett

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Goren v Barnett 2020 NY Slip Op 32952(U) September 8, 2020 Supreme Court, New York County Docket Number: 653221/2019 Judge: Andrew Borrok Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [* 1] INDEX NO. 653221/2019 NYSCEF DOC. NO. 97 RECEIVED NYSCEF: 09/08/2020 SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: PART HON. ANDREW BORROK IAS MOTION 53EFM Justice ----------------------------------------------------------------- ----------------X LELA GOREN, INDIVIDUALLY, AS WELL AS DERIVATIVELY ON BEHALF OF EXTELL NEW YORK REGIONAL CENTER, LLC,A DELAWARE LIMITED LIABILITY COMPANY, INDEX NO. MOTION DATE 653221/2019 09/08/2020 003 MOTION SEQ. NO. Plaintiff, -vGARY BARNETT INDIVIDUALLY, OMS MANAGER, LLC,555 TENTH AVENUE MANAGER, LLC,CPT EB5 MANAGER, LLC,WNCE MANAGER, LLC,HRH NCE MANAGER, LLC,INTERNATIONAL GEM TOWER FUND, LLC,INTERNATIONAL GEM TOWER FUND II, LLC,EXTELL NEW YORK REGIONAL CENTER, LLC,EX HOLDINGS LLC,A NEW YORK LIMITED LIABILITY COMPANY DECISION + ORDER ON MOTION Defendant. ------------------------------------------------------------------- --------------X The following e-filed documents, listed by NYSCEF document number (Motion 003) 59, 60, 61, 62, 63 were read on this motion to/for DISQUALIFY COUNSEL Gary Barnett, OMS Manager, LLC (OMS), 555 Tenth Avenue Manager, LLC (555), CPI EB5 Manager, LLC (CPT), WNCE Manager, LLC (WNCE), HRH NCE Manager, LLC (HRH), International Gem Tower Fund, LLC, (IGTF I), and International Gem Tower Fund II, LLC (IGTF II, and together with Mr. Barnett, OMS, 555, CPI, WNCE, HRH, and IGTF I, collectively, the Defendants) move to disqualify the law firm of Saul Ewing Amstein & Lehr LLP (Saul Ewing) from representing Extell New York Regional Center, LLC (the Regional Center) pursuant to Rules 1.7 and 1.9 of the New York Rules of Professional conduct. Upon the foregoing documents, and for the reasons set forth below, the motion is granted without opposition. 653221/2019 LELA GOREN, INDIVIDUALLY, AS vs. BARNETT INDIVIDUALLY, GARY Motion No. 003 1 of 4 Page 1 of4 [* 2] INDEX NO. 653221/2019 NYSCEF DOC. NO. 97 RECEIVED NYSCEF: 09/08/2020 From 2010 to approximately 2013, the law firm of Amstein & Lehr LLP (Arnstein & Lehr) represented the Regional Center as securities counsel in various matters related to its EB-5 program administered by the United States Citizen and Immigration Services. In 2017, Amstein & Lehr merged with Saul Ewing LLP. Saul Ewing represents Lela Goren in this matter, both individually and derivatively on behalf of the Regional Center. Rule 1.9 of the Rules of Professional Conduct (22 NYCRR 1200.0) provides: "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 person's interests are materially adverse to the interests of the former client." In addition, Rule 1. 7 provides, in relevant part, that: "a lawyer shall not represent a client if a reasonable lawyer would conclude that ... the representation will involve the lawyer in representing differing interests." In support of their motion, the Defendants submit certain invoices (the Invoices) from Amstein & Lehr from 2011-2013 for work on matters that related to Ms. Goren's allegations in this case, including the International Gem Tower Fund LLC Operating Agreement (the Operating Agreement) and the finder's fee arrangements (NYSCEF Doc. No. 63). The Invoices were paid by the Regional Center or Mr. Barnett's company, Extell Development Company (Extell). At least three Amstein & Lehr attorneys who worked on these matters for the Regional Center are now partners at Saul Ewing. 653221/2019 LELA GOREN, INDIVIDUALLY, AS vs. BARNETT INDIVIDUALLY, GARY Motion No. 003 2 of 4 Page 2 of 4 [* 3] INDEX NO. 653221/2019 NYSCEF DOC. NO. 97 RECEIVED NYSCEF: 09/08/2020 The Invoices submitted by the Defendants establish that the subject matter of Amstein & Lehr's prior representation of the Regional Center in connection with the Operating Agreement and finder's fee arrangements is substantially related to the issues in this case and that Ms. Goren's interests are materially adverse to those of Gary Barnett and the Regional Center. In addition, Saul Ewing's representation of both Ms. Goren and the Regional Center presents a concurrent conflict of interest because it would require the firm to argue that the same transactions that it previously advised the Regional Center to undertake were part of the fraudulent scheme alleged by Ms. Goren. Finally, the former Amstein & Lehr attorneys' conflicts of interest are imputed to the entire firm of Saul Ewing under Rule 1.10 (a) of the Rules of Professional Responsibility, therefore no lawyer in the firm may undertake the representation. For the foregoing reasons, the motion to disqualify is granted. Accordingly, it is ORDERED that the motion to disqualify counsel for plaintiff is granted and Saul Ewing Amstein & Lehr LLP is hereby disqualified from representing plaintiff in this matter, and it is further ORDERED that counsel for the movant, within 21 days after the entry of this order, shall serve a copy of this order with notice of entry upon counsel for all other parties and upon plaintiff; and it is further 653221/2019 LELA GOREN, INDIVIDUALLY, AS vs. BARNETT INDIVIDUALLY, GARY Motion No. 003 3 of 4 Page 3 of 4 [* 4] INDEX NO. 653221/2019 NYSCEF DOC. NO. 97 RECEIVED NYSCEF: 09/08/2020 ORDERED that the action is stayed from this date until 30 days after service of a copy of this order with notice of entry upon counsel for all parties and upon plaintiff, who shall, within said period, retain another attorney in place of the attorney named above; and it is further ORDERED that the new attorney retained by plaintiff shall serve upon all parties a notice of appearance and file same with the Clerk of the General Clerk's Office (60 Centre Street, Room 119) and the Clerk of the Part within said 30-day period; and it is further ORDERED that such filing with the Clerk of the General Clerk's Office and the Clerk of the Part shall be made in accordance with the procedures set forth in the Protocol on Courthouse and County Clerk Procedures for Electronically Filed Cases (accessible at the "E-Filing" page on the court's website at the address www.nycourts.gov/supctmanh); and it is further ORDERED that in the event that plaintiff intends to proceed prose pursuant to CPLR 321, plaintiff is directed to notify the Clerk of the Part in writing within said 30-day period; and it is further 9/08/2020 DATE CHECK ONE: ANDREW BORROK, J.S.C. CASE DISPOSED GRANTED D NON-FINAL DISPOSITION DENIED GRANTED IN PART APPLICATION: SETTLE ORDER SUBMIT ORDER CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT 653221/2019 LELA GOREN, INDIVIDUALLY, AS vs. BARNETT INDIVIDUALLY, GARY Motion No. 003 4 of 4 D D OTHER REFERENCE Page4 of 4